Xxxxxxxx
Municipal Fund Series, Inc.
__________________________________________________
--------------------------------------------------------------------------------
National Fund
Colorado Fund
Georgia Fund
Louisiana Fund
Maryland Fund
Massachusetts Fund
Michigan Fund
Minnesota Fund
Missouri Fund
New York Fund
Ohio Fund
Oregon Fund
South Carolina Fund
Annual Report
September 30, 2008
Seeking Income Exempt From Regular Income Tax
[LOGO]
J. & X. XXXXXXXX & CO.
INCORPORATED
ESTABLISHED 1864
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000
[LOGO]
Experience
Xxxxxxxx has been in business for more than 140 years, at times playing a
central role in the financial development of the country and its markets. Over
that time, the firm has managed clients' wealth through dramatic market changes
and has remained a consistent, reliable presence on Wall Street. Today,
Xxxxxxxx is drawing on its long history and long-term perspective as we focus
on the future and on developing investment solutions that help clients arrive
at their goals.
Insight
Asset management is driven by insight -- into the direction of the economy, how
companies will perform, how markets will behave, and how investors will
respond. Portfolio managers at the firm have been in the investment business,
on average, for more than 20 years. Over that time, they have refined their
ability to assess a company's prospects, management, and products, while also
weighing the impact of economic and market cycles, new trends, and developing
technologies.
Solutions
Xxxxxxxx'x commitment to the development of innovative investment products --
including the nation's first growth mutual fund, pioneering single-state
municipal funds, and one of the country's premier technology funds -- defines
our past and informs our future. Our ongoing research into the nature of
investment risk -- begun in the early 1990s -- has resulted in the Xxxxxxxx
Time Horizon Matrix(R) asset allocation strategy that redefines the
relationship between risk and reward over time. The strategy offers investors a
variety of investment solutions for goals ranging from college savings to
retirement planning. Whether you select Xxxxxxxx for one investment product, or
as a comprehensive asset manager, we believe we can help you reach your goals.
Table of Contents
To The Shareholders................ 1
Interview With Your
Portfolio Managers................. 2
Performance and
Portfolio Overview................. 4
Understanding and
Comparing Your Fund's
Expenses........................... 19
Portfolios of Investments.......... 21
Statements of Assets
and Liabilities.................... 34
Statements of Operations........... 36
Statements of Changes
in Net Assets...................... 37
Notes to Financial
Statements......................... 42
Financial Highlights............... 54
Report of Independent
Registered Public
Accounting Firm.................... 74
Matters Relating to the Directors'
Consideration of the Approval of
the Investment Management
Services Agreement................. 75
Proxy Results...................... 81
Directors and Officers............. 82
Additional Fund Information. 85
To The Shareholders
The annual shareholder report for Xxxxxxxx Municipal Fund Series, Inc. follows
this letter. The report contains a discussion with your Portfolio Managers, as
well as each Fund's investment results, financial statements, and portfolio of
investments on September 30, 2008.
On November 7, 2008, the acquisition of the Funds' investment manager, J. & X.
Xxxxxxxx & Co. Incorporated ("Xxxxxxxx"), by RiverSource Investments, a
subsidiary of Ameriprise Financial (NYSE: AMP), will be complete. Xxxxxx Xxxxx
and Xxxxxx Xxxxxxxxx will continue to serve as the Funds' portfolio managers.
Shareholders voted in favor of approving a new investment management services
agreement between the Funds and RiverSource Investments, LLC at a Special
Meeting of Shareholders held on November 3, 2008. Shareholders also voted 10
directors to the Funds' Board at the Special Meeting. Details of the proxy vote
can be found on page 81 of this report.
We believe the acquisition of Xxxxxxxx by RiverSource Investments will create a
stronger combined investment management business having greater resources,
which should no doubt be in the best interest of shareholders. In conjunction
with the acquisition of Xxxxxxxx, Xxxxxxx Xxxxx will become the Chairman of the
Funds and Xxxxxxx Xxxxxxxx will assume the position of President.
We thank you for your continued support of Xxxxxxxx Municipal Fund Series, and
for the opportunity to have served as members of the Funds' Board.
Respectfully,
/s/ Xxxxx X. Xxxx
/s/ Xxxxxxx X. Xxxxxx Xxxxx X. Xxxx
President
Xxxxxxx X. Xxxxxx
Chairman
November 6, 2008
--------------------------------------------------------------------------------------------------------
Manager Shareholder Service Agent Independent Registered
Until November 6, 2008 Xxxxxxxx Data Corp. Public Accounting Firm
X.&W. Xxxxxxxx & Co. Incorporated 000 Xxxx Xxxxxx Deloitte & Touche LLP
000 Xxxx Xxxxxx Xxx Xxxx, XX 00000
Xxx Xxxx, XX 00000 Important Telephone Numbers
Mail Inquiries To:
From November 7, 2008 P.O. Box 9759
RiverSource Investments, LLC Providence, RI 02940-9759 (000) 000-0000 Shareholder Services
200 Ameriprise Financial Center
Minneapolis, MN 55474 (000) 000-0000 Retirement Plan Services
General Distributor (000) 000-0000 Outside the United States
Xxxxxxxx Advisors, Inc.
000 Xxxx Xxxxxx (000) 000-0000 24-Hour Automated
New York, NY 10017 Telephone Access Service
1
Interview With Your Portfolio Managers
Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxxx
X.Xxx did the Funds within the Xxxxxxxx Municipal Fund Series, Inc. perform for
the fiscal year ended September 30, 2008?
A.For the fiscal year ended September 30, 2008, the performance of each of the
thirteen Funds in the Xxxxxxxx Municipal Fund Series was between -4.4% and
1.8%, based on the net asset value of Class A shares of each Fund (excluding
sales charge). The Xxxxxx Brothers Municipal Bond Index returned -1.9% for
the same period. All Funds, with the exception of Georgia and Louisiana, have
top quartile performance results within their respective peer groups for the
year ended September 30, 2008.
Q.What market conditions and economic events materially impacted the
performance of the Funds in Xxxxxxxx Municipal Fund Series during the fiscal
year ended September 30, 2008?
A.This past fiscal year has been one of the most remarkable periods in the
25-year history of the Xxxxxxxx Municipal Funds. The credit crisis, which
began with sharp credit rating downgrades of securities backed by sub-prime
mortgages during the third quarter of 2007, continues to challenge individual
investors and investment professionals alike. In the early months of the
fiscal year, the municipal market was largely unaffected by the credit
crisis. It wasn't until January 2008, when Financial Guarantee Insurance
Company (FGIC) -- one of the top four municipal bond insurers -- lost its
coveted triple-A rating, that the municipal market began to experience the
extraordinary volatility and dislocation that was occurring in most other
sectors of the financial market. FGIC provides credit enhancement on public
finance, structured finance, and global infrastructure and utility
securities. FGIC typically guarantees the scheduled payments of principal and
interest on an issuer's obligation.
The municipal market had hardly begun to deal with the negative implications
of the FGIC downgrade when it was forced to deal with the collapse of the
auction rate securities (ARS) market. Investors, concerned about liquidity,
were increasingly avoiding any money market product that lacked a liquidity
back-stop -- an assurance the vehicles' obligations will be repaid when they
are tendered even if they cannot be resold -- including ARS. Remarketing
agents were reluctant, due to their own capital constraints, to provide the
degree of support needed to prevent auction failures.
By Xxxx, municipal bond insurers MBIA and Ambac lost their triple-A ratings
due to their exposure to mortgage-backed securities. The sudden loss of
high-quality investments made it extremely difficult for money market funds,
which are prohibited from purchasing securities rated less than double-A, to
locate a sufficient supply of securities to meet their needs. This led to a
spike in yields on money market securities rated single-A and below.
The continuing deterioration in the housing market led to a high degree of
anxiety about the financial health of government sponsored mortgage
corporations Xxxxxx Xxx (Federal National Mortgage Association, or FNMA) and
Freddie Mac (Federal Home Loan Mortgage Corp., or FHLMC). The fear of a
complete collapse of the financial markets prompted the US government to
place these government sponsored entities into conservatorship and to provide
a guarantee to holders of FNMA and FHLMC debt. The lack of an explicit US
government guarantee, however, remains a source of concern.
As the third quarter of 2008 progressed, conditions continued to deteriorate
as the rapidly decelerating economy thwarted stock market performance. State
and local finances were weakening, prompting further risk aversion in the
market. The stunning collapse of Xxxxxx Brothers in mid-September created
severe repercussions across all financial markets, including the municipal
sector. The value of the Reserve Primary Fund fell below its constant $1.00
share price, "breaking the buck." This led to a run on the fund and ignited a
run on other funds as well, including tax-exempt money market funds. The
government eased the panic by agreeing to guarantee money market deposits. An
imbalance in the supply and demand of longer-term municipal bonds developed,
sending prices down and yields to a six-year high. Leveraged positions were
forced to unwind, placing further pressure on bond prices. The resulting
decline in the net asset value of many municipal bond funds led to
shareholder redemptions, which necessitated additional selling by the funds.
Throughout the past year, the Federal Reserve and US Treasury have been
creating a series of new facilities aimed at easing the liquidity crisis and
encouraging lending. These programs have had varying degrees of success, but
the ultimate goal of restoring investor confidence has, to date, eluded them.
Q.What investment strategies or techniques materially impacted the Funds'
performance during the period?
A.During 2007, long-term municipal yields fell to a 40-year low, the slope of
the municipal yield curve (the difference between 1-year and 30-year yields)
narrowed to its lowest level on record, and credit quality yield spreads were
near the tightest in history. We were concerned that these municipal market
trends could not be sustained and positioned the Funds' portfolios for their
reversal. By the end of the reporting period, long-term yields had risen to
2
Interview With Your Portfolio Managers
Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxxx
the highest level since 2002, the yield differential between high-quality and
lower-quality bonds had increased dramatically, and the municipal yield curve
slope had steepened to the widest level since 2004.
To protect the Funds from an anticipated increase in interest rates and to
ensure sufficient liquidity in the event of redemptions, we set a higher
target level for cash balances. Further, we elected to maintain an overweight
in pre-refunded and escrowed-to-maturity bonds. At fiscal year-end, refunded
bonds comprised 30% of total net assets in the Series, although percentages
varied among the individual Fund portfolios. Over the years, a significant
percentage of fund holdings has been refunded. As interest rate conditions
permit, State and local governments issue new bonds at lower yields and use
the proceeds to replace outstanding, higher cost debt. All but a few of the
Series' refunded bonds are escrowed with direct US government securities,
making them safe and highly liquid investments. For the 12 months ended
September 30, 2008, the prerefunded bond sector was the best performing
sector of the Xxxxxx Brothers Municipal Bond Index with a return of 4.1%.
In a rising interest rate environment, longer-maturity bonds are more
sensitive to yield changes than shorter-maturity bonds. Given our expectation
that interest rates would trend higher, we concentrated new purchases in the
intermediate maturity sector (10- to 20-year maturities), which is
considerably shorter than in years past. For the year ended September 30,
2008, the best performing maturity sector was the short-end of the yield
curve and the worst performing sector was for maturities of 22 years and
longer. Our avoidance of the longest maturity bonds contributed to our
competitive investment returns; however, the Funds would have had stronger
results had a greater percentage of holdings been invested in the 1- to
10-year range.
Premium coupon bonds (i.e., bonds trading above par) are inherently more
defensive than discount coupon bonds (i.e., bonds trading below par).
Therefore, with few exceptions, premium coupon bonds were favored. The
premium bond sector of the Xxxxxx Brothers Municipal Bond Index returned
1.4%, substantially outperforming the discount bond sector, which suffered a
decline of 11.1%, and the current coupon sector, which fell 5.4%. While our
preference was for bonds with coupons of 5.25% to 5.75%, the supply of bonds
with these characteristics was limited over the past year. The recent spike
in long-term interest rates has, however, resulted in an increase in the
issuance of bonds within this coupon range.
The credit crisis has had a significant impact on credit quality yield
spreads. For many years now, steadily declining interest rates led investors
to seek lower quality bonds, given their relatively higher yields.
Eventually, the increased demand for the sector, as well as strong credit
trends, would cause the yield spread between higher-quality and lower-quality
to narrow to historical lows. Since the credit turmoil began, investors have
become more quality-conscious, which has contributed to a dramatic widening
of credit spreads, particularly within the high-yield sector. Another reason
for the increase in quality yield spread has been the downgrades of the
municipal monoline insurers. During the first half of 2008, three of the top
four insurers lost their triple-A rating. The fourth, Financial Security
Assurance, was downgraded after the close of the reporting period. High
quality bonds are now in short supply and are trading at a premium. The
non-investment grade sector was down 10.0% for the fiscal year while the
insured bond sector fell 3.3%.
The Xxxxxxxx Municipal Funds are permitted to purchase only investment-grade
bonds (i.e., rated within the four highest rating categories). We have always
viewed insurance as an enhancement and will not purchase a bond unless we
approve the underlying credit. Therefore, while we were disappointed with the
monoline insurer downgrades, we were not compelled to sell any bonds as a
result.
In keeping with our emphasis on quality, we do not participate in sectors of
the market that historically have been more prone to credit deterioration,
such as tobacco bonds, airline debt, automotive industry bonds, nursing
homes, convention centers, and stadium facilities. The pollution
control/industrial development bond sector fell 10.6%, underperforming all
other sectors of the Xxxxxx Brothers Municipal Bond Index. Most of the Funds
have some exposure to this sector, and total return would have been higher
absent these holdings. It also bears noting that the Funds are not permitted
to hold derivative investments. Derivative losses have contributed to lagging
performance for many of the Funds' competitors over the past year.
--------
The views and opinions expressed are those of the Portfolio Managers, are
provided for general information only, and do not constitute specific tax,
legal, or investment advice to, or recommendation for, any person. There can
be no guarantee as to the accuracy of market forecasts. Opinions, estimates,
and forecasts may be changed without notice.
3
Performance and Portfolio Overview
This section of the report is intended to help you understand the performance
of each Fund of Xxxxxxxx Municipal Fund Series and to provide a summary of the
portfolio characteristics of each Fund.
Performance data quoted in this report represents past performance and does not
guarantee or indicate future investment results. The rates of return will vary
and the principal value of an investment will fluctuate. Shares, if redeemed,
may be worth more or less than their original cost. Current performance may be
lower or higher than the performance data quoted. Total returns of the Funds as
of the most recent month-end will be available at xxx.xxxxxxxx.xxx/0/ by the
seventh business day following that month-end. Calculations assume reinvestment
of distributions. Performance data quoted does not reflect the deduction of
taxes that an investor may pay on distributions or the redemption of shares. A
portion of each Fund's income may be subject to applicable state and local
taxes, and any amount may be subject to the federal alternative minimum tax.
Capital gain distributions are subject to federal, state and local taxes. An
investment in a Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Returns for Class A shares are calculated with and without the effect of the
initial 4.5% maximum sales charge that became effective on January 7, 2008.
Although for all periods presented, returns for the Funds' Class A shares
reflect the initial 4.5% maximum sales charge, the actual returns for periods
prior to January 7, 2008 would have been lower if the 4.75% maximum sales
charge then in effect was incurred. Returns for Class C shares are calculated
with and without the effect of the 1% contingent deferred sales charge
("CDSC"), charged on redemptions made within one year of purchase. Returns for
Class C shares would have been lower for periods prior to June 4, 2007 if the
1% initial sales charge then in effect was incurred. On May 16, 2008, Class D
shares of the Funds were converted to Class C shares at their respective net
asset values. Effective at the close of business on May 16, 2008, Class D
shares are no longer offered by the Funds.
The chart for each Fund compares a $10,000 hypothetical investment made in
Class A shares, with and without the initial 4.5% maximum sales charge, to a
$10,000 investment made in the Xxxxxx Brothers Municipal Bond Index (the
"Xxxxxx Index") for the 10-year period ended September 30, 2008. The
performance of Class C shares of each Fund, which commenced on a later date,
and of Class A shares for other periods, with and without applicable sales
charges and CDSCs, is not shown in the charts but is included in the total
returns table below each chart. The Xxxxxx Index does not include the effect of
fees, taxes or sales charges, and does not reflect state-specific bond market
performance.
--------
/1/The website reference is an inactive textual reference and information
contained in or otherwise accessible through this website does not form a
part of this report or the Series' prospectus or statement of additional
information.
4
Performance and Portfolio Overview
National Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
-----------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
-----------------------------------------------------------------------------------------
Class A
-----------------------------------------------------------------------------------------
With Sales Charge (7.12)% (6.42)% 1.44% 2.68% n/a
-----------------------------------------------------------------------------------------
Without Sales Charge (2.75) (2.07) 2.39 3.16 n/a
-----------------------------------------------------------------------------------------
Class C
-----------------------------------------------------------------------------------------
With 1% CDSC (4.14) (4.01) n/a n/a n/a
-----------------------------------------------------------------------------------------
Without CDSC (3.18) (3.07) 1.47 n/a 2.43%
-----------------------------------------------------------------------------------------
Benchmarks**
-----------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
-----------------------------------------------------------------------------------------
Lipper General Municipal Debt Funds Average (3.92) (4.83) 1.73 2.98 3.18
-----------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.31 $7.65 $7.74
--------------------------------
Class C 7.31 7.65 7.75
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 69%
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 16
----------------------------------------------------
General Obligation Bonds 15
----------------------------------------------------
Option-Adjusted Duration/3/ 7.23 years
----------------------------------------------------
Weighted Average Maturity/3/ 12.38 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend Per Share and Yield Information
For Periods Ended September 30, 2008
-----------------------------------------
Dividend+ SEC 30-Day Yield++
-------------------------------------
Class A $0.279 3.78%
-------------------------------------
Class C 0.210 3.03
-------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 30%
-------------------------------
AA 50
-------------------------------
A 20
-------------------------------
5
Performance and Portfolio Overview
Colorado Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
------------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
------------------------------------------------------------------------------------------
Class A
------------------------------------------------------------------------------------------
With Sales Charge (6.70)% (4.79)% 1.84% 3.30% n/a
------------------------------------------------------------------------------------------
Without Sales Charge (2.31) (0.31) 2.79 3.78 n/a
------------------------------------------------------------------------------------------
Class C
------------------------------------------------------------------------------------------
With 1% CDSC (3.71) (2.16) n/a n/a n/a
------------------------------------------------------------------------------------------
Without CDSC (2.75) (1.20) 1.87 n/a 3.03%
------------------------------------------------------------------------------------------
Benchmarks**
------------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
------------------------------------------------------------------------------------------
Lipper Colorado Municipal Debt Funds Average (3.45) (4.05) 2.11 3.16 3.33
------------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.14 $7.44 $7.43
--------------------------------
Class C 7.13 7.43 7.42
--------------------------------
Holdings by Market Sectoro
---------------------------------------------------
Revenue Bonds 50%
---------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 40
---------------------------------------------------
General Obligation Bonds 10
---------------------------------------------------
Option-Adjusted Duration/3/ 6.34 years
---------------------------------------------------
Weighted Average Maturity/3/ 9.63 years
---------------------------------------------------
--------
See footnotes on page 18.
Dividend Per Share and Yield Information
For Periods Ended September 30, 2008
-----------------------------------------
Dividend+ SEC 30-Xxx Xxxxxxx
-------------------------------------
Class A $0.274 3.25%
-------------------------------------
Class C 0.207 2.55
-------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 34%
-------------------------------
AA 52
-------------------------------
A 7
-------------------------------
BBB 7
-------------------------------
6
Performance and Portfolio Overview
Georgia Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
-----------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
-----------------------------------------------------------------------------------------
Class A
-----------------------------------------------------------------------------------------
With Sales Charge (8.35)% (8.76)% 0.37% 2.43% n/a
-----------------------------------------------------------------------------------------
Without Sales Charge (4.03) (4.44) 1.30 2.89 n/a
-----------------------------------------------------------------------------------------
Class C
-----------------------------------------------------------------------------------------
With 1% CDSC (5.40) (6.21) n/a n/a n/a
-----------------------------------------------------------------------------------------
Without CDSC (4.45) (5.29) 0.41 n/a 2.10%
-----------------------------------------------------------------------------------------
Benchmarks**
-----------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
-----------------------------------------------------------------------------------------
Lipper Georgia Municipal Debt Funds Average (3.96) (4.78) 1.55 3.04 3.19
-----------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $6.99 $7.43 $7.61
--------------------------------
Class C 7.01 7.45 7.63
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 68%
----------------------------------------------------
General Obligation Bonds 24
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 8
----------------------------------------------------
Option-Adjusted Duration/3/ 7.83 years
----------------------------------------------------
Weighted Average Maturity/3/ 13.57 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend Per Share and Yield Information
For Periods Ended September 30, 2008
-----------------------------------------
Dividend+ SEC 30-Xxx Xxxxxxx
-------------------------------------
Class A $0.297 3.57%
-------------------------------------
Class C 0.229 2.79
-------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 21%
-------------------------------
AA 37
-------------------------------
A 27
-------------------------------
BBB 15
-------------------------------
7
Performance and Portfolio Overview
Louisiana Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
----------------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
----------------------------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------------------------
With Sales Charge (6.91)% (6.98)% 1.10% 2.89% n/a
----------------------------------------------------------------------------------------------
Without Sales Charge (2.54) (2.60) 2.03 3.36 n/a
----------------------------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------------------------
With 1% CDSC (4.07) (4.41) n/a n/a n/a
----------------------------------------------------------------------------------------------
Without CDSC (3.11) (3.48) 1.09 n/a 2.60%
----------------------------------------------------------------------------------------------
Benchmarks**
----------------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
----------------------------------------------------------------------------------------------
Lipper Other States Municipal Debt Funds Average (4.03) (5.15) 1.89 3.14 3.18
----------------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.34 $7.67 $7.86
--------------------------------
Class C 7.33 7.67 7.85
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 65%
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 20
----------------------------------------------------
General Obligation Bonds 15
----------------------------------------------------
Option-Adjusted Duration/3/ 7.57 years
----------------------------------------------------
Weighted Average Maturity/3/ 12.90 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend and Capital Gain Per Share, and Yield
Information
For Periods Ended September 30, 2008
---------------------------------------------------
Dividend+ Capital Gain+ SEC 30-Day Yield++
---------------------------------------------------
Class A $0.294 $0.032 3.39%
---------------------------------------------------
Class C 0.225 0.032 2.62
---------------------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 46%
-------------------------------
AA 15
-------------------------------
A 23
-------------------------------
BBB 10
-------------------------------
Non-Rated 6
-------------------------------
8
Performance and Portfolio Overview
Maryland Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
------------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
------------------------------------------------------------------------------------------
Class A
------------------------------------------------------------------------------------------
With Sales Charge (6.44)% (4.94)% 1.75% 3.06% n/a
------------------------------------------------------------------------------------------
Without Sales Charge (1.98) (0.41) 2.69 3.54 n/a
------------------------------------------------------------------------------------------
Class C
------------------------------------------------------------------------------------------
With 1% CDSC (3.25) (2.26) n/a n/a n/a
------------------------------------------------------------------------------------------
Without CDSC (2.29) (1.30) 1.80 n/a 2.76%
------------------------------------------------------------------------------------------
Benchmarks**
------------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
------------------------------------------------------------------------------------------
Lipper Maryland Municipal Debt Funds Average (3.33) (4.52) 1.79 3.11 3.27
------------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.48 $7.76 $7.78
--------------------------------
Class C 7.50 7.77 7.80
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 51%
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 34
----------------------------------------------------
General Obligation Bonds 15
----------------------------------------------------
Option-Adjusted Duration/3/ 7.07 years
----------------------------------------------------
Weighted Average Maturity/3/ 13.65 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend and Capital Gain Per Share, and Yield
Information
For Periods Ended September 30, 2008
---------------------------------------------------
Dividend+ Capital Gain+ SEC 30-Day Yield++
---------------------------------------------------
Class A $0.271 $0.003 3.55%
---------------------------------------------------
Class C 0.201 0.003 2.79
---------------------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 36%
-------------------------------
AA 26
-------------------------------
A 31
-------------------------------
BBB 7
-------------------------------
9
Performance and Portfolio Overview
Massachusetts Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
-----------------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
-----------------------------------------------------------------------------------------------
Class A
-----------------------------------------------------------------------------------------------
With Sales Charge (4.91)% (2.81)% 1.77% 3.38% n/a
-----------------------------------------------------------------------------------------------
Without Sales Charge (0.41) 1.76 2.70 3.86 n/a
-----------------------------------------------------------------------------------------------
Class C
-----------------------------------------------------------------------------------------------
With 1% CDSC (1.83) (0.25) n/a n/a n/a
-----------------------------------------------------------------------------------------------
Without CDSC (0.86) 0.72 1.78 n/a 3.22%
-----------------------------------------------------------------------------------------------
Benchmarks**
-----------------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
-----------------------------------------------------------------------------------------------
Lipper Massachusetts Municipal Debt Funds Average (3.77) (4.79) 2.03 3.29 3.50
-----------------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.64 $7.82 $7.86
--------------------------------
Class C 7.64 7.82 7.87
--------------------------------
Holdings by Market Sectoro
---------------------------------------------------
Revenue Bonds 51%
---------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 44
---------------------------------------------------
General Obligation Bonds 5
---------------------------------------------------
Option-Adjusted Duration/3/ 4.97 years
---------------------------------------------------
Weighted Average Maturity/3/ 9.34 years
---------------------------------------------------
--------
See footnotes on page 18.
Dividend and Capital Gain Per Share, and Yield
Information
For Periods Ended September 30, 2008
---------------------------------------------------
Dividend+ Capital Gain+ SEC 30-Day Yield++
---------------------------------------------------
Class A $0.309 $0.051 2.67%
---------------------------------------------------
Class C 0.238 0.051 1.89
---------------------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 33%
-------------------------------
AA 59
-------------------------------
A 8
-------------------------------
10
Performance and Portfolio Overview
Michigan Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
------------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
------------------------------------------------------------------------------------------
Class A
------------------------------------------------------------------------------------------
With Sales Charge (6.84)% (6.07)% 1.03% 2.98% n/a
------------------------------------------------------------------------------------------
Without Sales Charge (2.42) (1.69) 1.98 3.46 n/a
------------------------------------------------------------------------------------------
Class C
------------------------------------------------------------------------------------------
With 1% CDSC (3.82) (3.51) n/a n/a n/a
------------------------------------------------------------------------------------------
Without CDSC (2.86) (2.57) 1.07 n/a 2.74%
------------------------------------------------------------------------------------------
Benchmarks**
------------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
------------------------------------------------------------------------------------------
Lipper Michigan Municipal Debt Funds Average (5.49) (6.86) 1.98 3.35 3.41
------------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.66 $8.00 $8.15
--------------------------------
Class C 7.65 7.99 8.14
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 57%
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 36
----------------------------------------------------
General Obligation Bonds 7
----------------------------------------------------
Option-Adjusted Duration/3/ 6.88 years
----------------------------------------------------
Weighted Average Maturity/3/ 12.49 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend and Capital Gain Per Share, and Yield
Information
For Periods Ended September 30, 2008
---------------------------------------------------
Dividend+ Capital Gain+ SEC 30-Day Yield++
---------------------------------------------------
Class A $0.308 $0.054 3.26%
---------------------------------------------------
Class C 0.236 0.054 2.48
---------------------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 34%
-------------------------------
AA 27
-------------------------------
A 31
-------------------------------
Non-Rated 8
-------------------------------
11
Performance and Portfolio Overview
Minnesota Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
-------------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
-------------------------------------------------------------------------------------------
Class A
-------------------------------------------------------------------------------------------
With Sales Charge (5.63)% (4.49)% 1.44% 3.01% n/a
-------------------------------------------------------------------------------------------
Without Sales Charge (1.20) 0.07 2.38 3.50 n/a
-------------------------------------------------------------------------------------------
Class C
-------------------------------------------------------------------------------------------
With 1% CDSC (2.62) (1.79) n/a n/a n/a
-------------------------------------------------------------------------------------------
Without CDSC (1.64) (0.83) 1.46 n/a 2.71%
-------------------------------------------------------------------------------------------
Benchmarks**
-------------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
-------------------------------------------------------------------------------------------
Lipper Minnesota Municipal Debt Funds Average (3.03) (3.41) 2.11 3.26 3.39
-------------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.26 $7.47 $7.55
--------------------------------
Class C 7.27 7.48 7.56
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 43%
----------------------------------------------------
General Obligation Bonds 31
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 26
----------------------------------------------------
Option-Adjusted Duration/3/ 6.67 years
----------------------------------------------------
Weighted Average Maturity/3/ 11.22 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend and Capital Gain Per Share, and Yield
Information
For Periods Ended September 30, 2008
---------------------------------------------------
Dividend+ Capital Gain+ SEC 30-Day Yield++
---------------------------------------------------
Class A $0.262 $0.038 3.08%
---------------------------------------------------
Class C 0.194 0.038 2.31
---------------------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 49%
-------------------------------
AA 40
-------------------------------
A 10
-------------------------------
BBB 1
-------------------------------
12
Performance and Portfolio Overview
Missouri Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
------------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
------------------------------------------------------------------------------------------
Class A
------------------------------------------------------------------------------------------
With Sales Charge (6.60)% (5.84)% 1.27% 3.03% n/a
------------------------------------------------------------------------------------------
Without Sales Charge (2.24) (1.38) 2.20 3.50 n/a
------------------------------------------------------------------------------------------
Class C
------------------------------------------------------------------------------------------
With 1% CDSC (3.63) (3.21) n/a n/a n/a
------------------------------------------------------------------------------------------
Without CDSC (2.67) (2.26) 1.26 n/a 2.83%
------------------------------------------------------------------------------------------
Benchmarks**
------------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
------------------------------------------------------------------------------------------
Lipper Missouri Municipal Debt Funds Average (3.85) (5.24) 1.76 3.18 3.31
------------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.20 $7.50 $7.61
--------------------------------
Class C 7.20 7.50 7.61
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 74%
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 26
----------------------------------------------------
Option-Adjusted Duration/3/ 6.72 years
----------------------------------------------------
Weighted Average Maturity/3/ 11.76 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend and Capital Gain Per Share, and Yield
Information
For Periods Ended September 30, 2008
---------------------------------------------------
Dividend+ Capital Gain+ SEC 30-Day Yield++
---------------------------------------------------
Class A $0.275 $0.039 3.25%
---------------------------------------------------
Class C 0.207 0.039 2.48
---------------------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 18%
-------------------------------
AA 55
-------------------------------
A 17
-------------------------------
BBB 10
-------------------------------
13
Performance and Portfolio Overview
New York Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
------------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
------------------------------------------------------------------------------------------
Class A
------------------------------------------------------------------------------------------
With Sales Charge (6.69)% (5.64)% 1.60% 3.17% n/a
------------------------------------------------------------------------------------------
Without Sales Charge (2.23) (1.19) 2.53 3.65 n/a
------------------------------------------------------------------------------------------
Class C
------------------------------------------------------------------------------------------
With 1% CDSC (3.63) (3.02) n/a n/a n/a
------------------------------------------------------------------------------------------
Without CDSC (2.67) (2.07) 1.61 n/a 3.00%
------------------------------------------------------------------------------------------
Benchmarks**
------------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
------------------------------------------------------------------------------------------
Lipper New York Municipal Debt Funds Average (4.25) (5.24) 1.91 3.16 3.31
------------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.63 $7.96 $8.07
--------------------------------
Class C 7.64 7.97 8.08
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 66%
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 32
----------------------------------------------------
General Obligation Bonds 2
----------------------------------------------------
Option-Adjusted Duration/3/ 6.82 years
----------------------------------------------------
Weighted Average Maturity/3/ 14.71 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend and Capital Gain Per Share, and Yield
Information
For Periods Ended September 30, 2008
---------------------------------------------------
Dividend+ Capital Gain+ SEC 30-Day Yield++
---------------------------------------------------
Class A $0.316 $0.038 3.29%
---------------------------------------------------
Class C 0.244 0.038 2.52
---------------------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 39%
-------------------------------
AA 32
-------------------------------
A 29
-------------------------------
14
Performance and Portfolio Overview
Ohio Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
--------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
--------------------------------------------------------------------------------------
Class A
--------------------------------------------------------------------------------------
With Sales Charge (6.65)% (5.73)% 1.28% 2.92% n/a
--------------------------------------------------------------------------------------
Without Sales Charge (2.31) (1.27) 2.21 3.39 n/a
--------------------------------------------------------------------------------------
Class C
--------------------------------------------------------------------------------------
With 1% CDSC (3.69) (3.09) n/a n/a n/a
--------------------------------------------------------------------------------------
Without CDSC (2.73) (2.14) 1.31 n/a 2.66%
--------------------------------------------------------------------------------------
Benchmarks**
--------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
--------------------------------------------------------------------------------------
Lipper Ohio Municipal Debt Funds Average (3.49) (4.31) 1.99 3.20 3.35
--------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.44 $7.74 $7.82
--------------------------------
Class C 7.49 7.79 7.87
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 54%
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 24
----------------------------------------------------
General Obligation Bonds 22
----------------------------------------------------
Option-Adjusted Duration/3/ 7.44 years
----------------------------------------------------
Weighted Average Maturity/3/ 12.94 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend and Capital Gain Per Share, and Yield Information
For Periods Ended September 30, 2008
-----------------------------------------------------------
Dividend+ Capital Gain+ SEC 30-Day Yield++
-----------------------------------------------------------
Class A $0.270 $0.019 3.12%
-----------------------------------------------------------
Class C 0.199 0.019 2.34
-----------------------------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 40%
-------------------------------
AA 50
-------------------------------
A 9
-------------------------------
BBB 1
-------------------------------
15
Performance and Portfolio Overview
Oregon Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
----------------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
----------------------------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------------------------
With Sales Charge (6.18)% (4.90)% 1.73% 3.25% n/a
----------------------------------------------------------------------------------------------
Without Sales Charge (1.75) (0.44) 2.66 3.72 n/a
----------------------------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------------------------
With 1% CDSC (3.16) (2.29) n/a n/a n/a
----------------------------------------------------------------------------------------------
Without CDSC (2.19) (1.33) 1.74 n/a 2.96%
----------------------------------------------------------------------------------------------
Benchmarks**
----------------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
----------------------------------------------------------------------------------------------
Lipper Other States Municipal Debt Funds Average (4.03) (5.15) 1.89 3.14 3.18
----------------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.35 $7.62 $7.68
--------------------------------
Class C 7.34 7.61 7.67
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 61%
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 33
----------------------------------------------------
General Obligation Bonds 6
----------------------------------------------------
Option-Adjusted Duration/3/ 6.68 years
----------------------------------------------------
Weighted Average Maturity/3/ 12.35 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend and Capital Gain Per Share, and Yield
Information
For Periods Ended September 30, 2008
---------------------------------------------------
Dividend+ Capital Gain+ SEC 30-Day Yield++
---------------------------------------------------
Class A $0.290 $0.013 3.30%
---------------------------------------------------
Class C 0.221 0.013 2.54
---------------------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 33%
-------------------------------
AA 33
-------------------------------
A 21
-------------------------------
BBB 9
-------------------------------
Non-Rated 4
-------------------------------
16
Performance and Portfolio Overview
South Carolina Fund
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
----------------------------------------------------------------------------------------------
Average Annual
-----------------------------------
Class C
Six One Five Ten Since Inception
Months* Year Years Years 5/27/99
----------------------------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------------------------
With Sales Charge (7.30)% (6.72)% 1.58% 3.13% n/a
----------------------------------------------------------------------------------------------
Without Sales Charge (2.96) (2.29) 2.52 3.60 n/a
----------------------------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------------------------
With 1% CDSC (4.34) (4.10) n/a n/a n/a
----------------------------------------------------------------------------------------------
Without CDSC (3.39) (3.16) 1.61 n/a 2.91%
----------------------------------------------------------------------------------------------
Benchmarks**
----------------------------------------------------------------------------------------------
Xxxxxx Brothers Municipal Bond Index (2.60) (1.87) 2.84 4.24 4.42#
----------------------------------------------------------------------------------------------
Lipper Other States Municipal Debt Funds Average (4.03) (5.15) 1.89 3.14 3.18
----------------------------------------------------------------------------------------------
Net Asset Value Per Share
--------------------------------
9/30/08 3/31/08 9/30/07
--------------------------------
Class A $7.51 $7.89 $8.01
--------------------------------
Class C 7.51 7.89 8.01
--------------------------------
Holdings by Market Sectoro
----------------------------------------------------
Revenue Bonds 66%
----------------------------------------------------
Pre-refunded/Escrowed-to-Maturity Bonds 20
----------------------------------------------------
General Obligation Bonds 14
----------------------------------------------------
Option-Adjusted Duration/3/ 7.94 years
----------------------------------------------------
Weighted Average Maturity/3/ 13.49 years
----------------------------------------------------
--------
See footnotes on page 18.
Dividend and Capital Gain Per Share, and Yield
Information
For Periods Ended September 30, 2008
---------------------------------------------------
Dividend+ Capital Gain+ SEC 30-Day Yield++
---------------------------------------------------
Class A $0.313 $0.015 3.73%
---------------------------------------------------
Class C 0.241 0.015 2.96
---------------------------------------------------
Holdings by Credit Quality/2o/
-------------------------------
AAA 36%
-------------------------------
AA 31
-------------------------------
A 29
-------------------------------
BBB 4
-------------------------------
17
Performance and Portfolio Overview
--------
/2/ Credit ratings are primarily those issued by Xxxxx'x Investors Service,
Inc. ("Xxxxx'x"). Where Xxxxx'x ratings have not been assigned, ratings
from Standard & Poor's Ratings Services ("S&P") were used. A generic rating
designation has been utilized, and therefore, it cannot be inferred solely
from the rating category whether ratings reflect those assigned by Moody's
or S&P. Pre-refunded and escrowed-to-maturity securities that have been
rerated as AAA or its equivalent by either Xxxxx'x or S&P have been
included in the AAA category. Holdings and credit ratings are subject to
change.
/3/ Excludes variable rate demand notes. Duration is the average amount of time
that it takes to receive the interest and principal of a bond or portfolio
of bonds. The duration formula is based on a formula that calculates the
weighted average of the cash flows (interest and principal payments) of the
bond, discounted to present time, taking into account call dates and
related call premiums, if any. Weighted average maturity is the number of
years to stated maturity, weighted based upon current market value.
* Returns for periods of less than one year are not annualized.
** The Xxxxxx Brothers Municipal Bond Index ("Xxxxxx Index"), the Lipper
General Municipal Debt Funds Average, the Lipper Single-State Municipal Debt
Funds Average (e.g., Lipper Colorado Municipal Debt Funds Average) and the
Lipper Other States Municipal Debt Funds Average ("Lipper Averages") are
unmanaged benchmarks that assume reinvestment of all distributions and
exclude the effect of fees, taxes, and sales charges. The Xxxxxx Index also
excludes the effect of expenses. The Xxxxxx Index is an unmanaged index of
long-term, fixed-rate, investment-grade, tax-exempt bonds representative of
the municipal bond market and is composed of approximately 60% revenue bonds
and 40% state government obligations. The Lipper General Municipal Debt
Funds Average measures the performance of funds that invest primarily in
municipal debt issues in the top four credit ratings. The Lipper
Single-State Municipal Debt Funds Average measures the performance of funds
that limit their assets to those securities exempt from taxation in a
specified State (double tax-exempt) or City (triple tax-exempt). The Lipper
Other States Intermediate Municipal Debt Funds Average measures the
performance of funds that invest in municipal debt issues with
dollar-weighted average maturities of five to ten years and are exempt from
taxation on a specified City or State basis. Investors cannot invest
directly in an index or average.
# From 5/28/99.
o Percentages based on current market values of long-term holdings at September
30, 2008.
+ Represents per share amount paid or declared for the year ended September 30,
2008.
++ Current yield, representing the annualized yield for the 30-day period ended
September 30, 2008, has been computed in accordance with SEC regulations and
will vary.
18
Understanding and Comparing Your Fund's Expenses
As a shareholder of a Series of the Fund, you incur ongoing expenses, such as
management fees, distribution and/or service (12b-1) fees, and other fund
expenses. The information below is intended to help you understand your ongoing
expenses (in dollars) of investing in a Series and to compare them with the
ongoing expenses of investing in other mutual funds. Please note that the
expenses shown in the tables are meant to highlight your ongoing expenses only
and do not reflect any transactional costs, such as sales charges (also known
as loads) on certain purchases or redemptions. Therefore, the tables are useful
in comparing ongoing expenses only, and will not help you to determine the
relative total expenses of owning different funds. In addition, if
transactional costs were included, your total expenses would have been higher.
The tables are based on an investment of $1,000 invested at the beginning of
April 1, 2008 and held for the entire six-month period ended September 30, 2008.
Actual Expenses
The table below provides information about actual expenses and actual account
values. You may use the information, together with the amount you invested, to
estimate the expenses that you paid over the period. Simply divide your account
value at the beginning of the period by $1,000 (for example, an $8,600 account
value divided by $1,000 = 8.6), then multiply the result by the number under
the heading entitled "Expenses Paid During Period" for the share class of the
Series that you own to estimate the expenses that you paid on your account
during the period.
Hypothetical Example for Comparison Purposes
The table below also provides information about hypothetical expenses and
hypothetical account values based on the actual expense ratios of each Series
and an assumed rate of return of 5% per year before expenses, which is not the
actual return of any Series. The hypothetical expenses and account values may
not be used to estimate the ending account value or the actual expenses you
paid for the period. You may use this information to compare the ongoing
expenses of investing in a Series and other mutual funds. To do so, compare
this 5% hypothetical example with the 5% hypothetical examples that appear in
the shareholder reports of the other mutual funds.
Actual Hypothetical
--------------------------- -----------------------------
Beginning Ending Ending
Account Annualized Account Expenses Paid Account Expenses Paid
Value Expense Value During Period Value During Period
Series 4/1/08 Ratio* 9/30/08 4/1/08 to 9/30/08** 9/30/08 4/1/08 to 9/30/08**
---------------------------------------------------------------------------------------------
National
---------------------------------------------------------------------------------------------
Class A $1,000.00 0.96% $972.50 $4.73 $1,020.20 $4.85
---------------------------------------------------------------------------------------------
Class C 1,000.00 1.86 968.20 9.15 1,015.70 9.37
---------------------------------------------------------------------------------------------
Colorado
---------------------------------------------------------------------------------------------
Class A 1,000.00 0.99 976.90 4.89 1,020.05 5.00
---------------------------------------------------------------------------------------------
Class C 1,000.00 1.89 972.50 9.32 1,015.55 9.52
---------------------------------------------------------------------------------------------
Georgia
---------------------------------------------------------------------------------------------
Class A 1,000.00 1.05 959.70 5.14 1,019.75 5.30
---------------------------------------------------------------------------------------------
Class C 1,000.00 1.95 955.50 9.53 1,015.25 9.82
---------------------------------------------------------------------------------------------
Louisiana
---------------------------------------------------------------------------------------------
Class A 1,000.00 0.98 974.60 4.84 1,020.10 4.95
---------------------------------------------------------------------------------------------
Class C 1,000.00 1.88 968.90 9.25 1,015.60 9.47
---------------------------------------------------------------------------------------------
Maryland
---------------------------------------------------------------------------------------------
Class A 1,000.00 0.97 980.20 4.80 1,020.15 4.90
---------------------------------------------------------------------------------------------
Class C 1,000.00 1.87 977.10 9.24 1,015.65 9.42
---------------------------------------------------------------------------------------------
Massachusetts
---------------------------------------------------------------------------------------------
Class A 1,000.00 0.92 995.90 4.59 1,020.40 4.65
---------------------------------------------------------------------------------------------
Class C 1,000.00 1.82 991.40 9.06 1,015.90 9.17
---------------------------------------------------------------------------------------------
(continued on next page.)
--------
See footnotes on page 20.
19
Understanding and Comparing Your Fund's Expenses
Actual Hypothetical
--------------------------- -----------------------------
Beginning Ending Ending
Account Annualized Account Expenses Paid Account Expenses Paid
Value Expense Value During Period Value During Period
Series 4/1/08 Ratio* 9/30/08 4/1/08 to 9/30/08** 9/30/08 4/1/08 to 9/30/08**
----------------------------------------------------------------------------------------------
Michigan
----------------------------------------------------------------------------------------------
Class A $1,000.00 0.92% $975.80 $4.54 $1,020.40 $4.65
----------------------------------------------------------------------------------------------
Class C 1,000.00 1.82 971.40 8.95 1,015.92 9.16
----------------------------------------------------------------------------------------------
Minnesota
----------------------------------------------------------------------------------------------
Class A 1,000.00 0.94 988.00 4.67 1,020.30 4.75
----------------------------------------------------------------------------------------------
Class C 1,000.00 1.84 983.60 9.12 1,015.80 9.27
----------------------------------------------------------------------------------------------
Missouri
----------------------------------------------------------------------------------------------
Class A 1,000.00 0.98 977.60 4.85 1,020.10 4.95
----------------------------------------------------------------------------------------------
Class C 1,000.00 1.88 973.30 9.27 1,015.60 9.47
----------------------------------------------------------------------------------------------
New York
----------------------------------------------------------------------------------------------
Class A 1,000.00 0.91 977.70 4.50 1,020.45 4.60
----------------------------------------------------------------------------------------------
Class C 1,000.00 1.81 973.30 8.93 1,015.95 9.12
----------------------------------------------------------------------------------------------
Ohio
----------------------------------------------------------------------------------------------
Class A 1,000.00 0.91 976.90 4.50 1,020.45 4.60
----------------------------------------------------------------------------------------------
Class C 1,000.00 1.81 972.70 8.93 1,015.95 9.12
----------------------------------------------------------------------------------------------
Oregon
----------------------------------------------------------------------------------------------
Class A 1,000.00 0.94 982.50 4.66 1,020.30 4.75
----------------------------------------------------------------------------------------------
Class C 1,000.00 1.84 978.10 9.10 1,015.80 9.27
----------------------------------------------------------------------------------------------
South Carolina
----------------------------------------------------------------------------------------------
Class A 1,000.00 0.91 970.40 4.48 1,020.45 4.60
----------------------------------------------------------------------------------------------
Class C 1,000.00 1.81 966.10 8.90 1,015.95 9.12
----------------------------------------------------------------------------------------------
--------
* Expenses of Class C shares differ from the expenses of Class A shares due to
the differences in 12b-1 fees paid by each share class. See the Fund's
prospectus for a description of each share class and its expenses and sales
charges.
** Expenses are equal to the Fund's annualized expense ratios based on actual
expenses for the period April 1, 2008 to September 30, 2008, multiplied by
the average account value over the period, multiplied by 183/366 (number of
days in the period).
20
Portfolios of Investments
September 30, 2008
National Fund
-----------------------------------------------------------------------------------------------------------
Face
State Amount Municipal Bonds Rating+ Value
-----------------------------------------------------------------------------------------------------------
Alaska -- 0.2% $ 135,000 Alaska Housing Finance Corporation Mortgage
Rev., 5.75% due 6/1/2024* Aaa $ 135,909
-----------------------------------------------------------------------------------------------------------
Arizona -- 2.4% 1,500,000 Arizona Transportation Board Transportation
Excise Tax Rev.
(Maricopa County Regional Area Road Fund), 5%
due 7/1/2025 Aa2 1,440,660
-----------------------------------------------------------------------------------------------------------
California -- 6.0% 1,000,000 California State GOs, 5.50% due 3/1/2027 A1 1,000,680
-----------------------------------------------------------------------------------------------------------
2,585,000 East Bay Municipal Utility District, CA
(Wastewater System Rev.), 5% due 6/1/2024 Aa3 2,510,991
-----------------------------------------------------------------------------------------------------------
Florida -- 3.7% 1,000,000 Orange County, FL Health Facilities Authority
Hospital Rev.
(Orlando Regional Healthcare System), 5.25%
due 10/1/2035 A2 840,770
-----------------------------------------------------------------------------------------------------------
1,400,000 South Florida Water Management District
(Certificates of Participation), 5% due
10/1/2026 Aa3 1,314,558
-----------------------------------------------------------------------------------------------------------
Illinois -- 1.7% 1,000,000 Cook County, IL GOs, 5% due 11/15/2022 Aa2 978,440
-----------------------------------------------------------------------------------------------------------
Maryland -- 4.6% 2,500,000 Maryland State GOs (Capital Improvements),
5.25% due 3/1/2027 Aaa 2,695,500
-----------------------------------------------------------------------------------------------------------
Massachusetts -- 9.1% 2,335,000 Boston, MA GOs, 5% due 3/1/2022 Aa1 2,348,940
-----------------------------------------------------------------------------------------------------------
3,000,000 Massachusetts State School Building Authority
Dedicated Sales Tax Rev., 5% due 8/15/2023 Aaa 2,978,070
-----------------------------------------------------------------------------------------------------------
New York -- 1.8% 1,000,000 New York State Urban Development Corporation
Rev. (Service Contract), 5% due 1/1/2018 Aaa 1,036,670
-----------------------------------------------------------------------------------------------------------
North Carolina -- 4.2% 2,000,000 North Carolina Eastern Municipal Power Agency
Power System Rev., 5.25% due 1/1/2020 Aa3 1,943,580
-----------------------------------------------------------------------------------------------------------
500,000 North Carolina Municipal Power Agency Rev.
(Catawba Electric), 5.25% due 1/1/2020 A2 496,605
-----------------------------------------------------------------------------------------------------------
Puerto Rico -- 1.6% 1,000,000 Puerto Rico Electric Power Authority Rev.,
5.375% due 7/1/2023 A3 942,080
-----------------------------------------------------------------------------------------------------------
Tennessee -- 3.1% 2,000,000 Shelby County, TN Health, Educational and
Housing Facility Board Rev.
(St. Jude Children's Research Hospital), 5%
due 7/1/2026 Aa2 1,821,860
-----------------------------------------------------------------------------------------------------------
Texas -- 20.6% 2,500,000 Austin, TX Electric Utility Rev., 5% due
11/15/2020 Aa3 2,472,100
-----------------------------------------------------------------------------------------------------------
3,700,000 Xxxxxx County, TX Health Facilities
Development Corp. Hospital Rev.
(St. Luke's Episcopal Hospital Project),
6.75% due 2/15/2021++ AAA++ 3,710,101
-----------------------------------------------------------------------------------------------------------
4,750,000 Potter County, TX Industrial Development
Corp. Pollution Control Rev.
(Southwestern Public Service Company
Project), 5.75% due 9/1/2016 Aa3 4,758,312
-----------------------------------------------------------------------------------------------------------
1,055,000 San Antonio, TX Electric & Gas Rev., 5.50%
due 2/1/2020o AAA++ 1,134,209
-----------------------------------------------------------------------------------------------------------
Utah -- 4.1% 500,000 Intermountain Power Agency Subordinated Power
Supply Rev., 5.25% due 7/1/2022 A1 492,740
-----------------------------------------------------------------------------------------------------------
2,000,000 Utah Transit Authority Sales Tax Rev., 5% due
6/15/2025 Aa3 1,938,180
-----------------------------------------------------------------------------------------------------------
Washington -- 3.8% 2,500,000 Chelan County, WA Public Utility District No.
1 (Chelan Hydro Consolidated System Rev.),
5.60% due 1/1/2036* Aa2 2,261,175
-----------------------------------------------------------------------------------------------------------
Wisconsin -- 14.1% 6,000,000 La Crosse, WI Resource Recovery Rev.
(Northern States Power Company Project),
6% due 11/1/2021* A3 5,543,940
-----------------------------------------------------------------------------------------------------------
2,500,000 Wisconsin Health and Educational Facilities
Authority Rev.
(Wheaton Franciscan Services, Inc.), 5.75%
due 8/15/2030o AAA++ 2,724,351
-----------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $49,893,912) -- 81.0% 47,520,421
-----------------------------------------------------------------------------------------------------------
Short-Term Holdings
-----------------------------------------------------------------------------------------------------------
California -- 1.5% 900,000 California Infrastructure & Economic
Development Bank Rev. Series B
(X. Xxxx Getty Trust), VRDN, due 4/1/2033 VMIG 1 900,000
-----------------------------------------------------------------------------------------------------------
Kansas -- 1.4% 800,000 Kansas Development Finance Authority Rev.
(Sisters of Charity), VRDN, due 12/1/2019 VMIG 1 800,000
-----------------------------------------------------------------------------------------------------------
Massachusetts -- 3.3% 1,900,000 Massachusetts State Development Finance
Agency Rev. (Harvard University),
VRDN, due 7/15/2036 VMIG 1 1,900,000
-----------------------------------------------------------------------------------------------------------
Montana -- 1.5% 900,000 Montana Facilities Finance Authority Rev.
(Sisters of Charity), VRDN, due 12/1/2025 VMIG 1 900,000
-----------------------------------------------------------------------------------------------------------
New York -- 0.5% 300,000 New York City, NY GOs, VRDN, due 8/1/2015 VMIG 1 300,000
-----------------------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
21
Portfolios of Investments
September 30, 2008
National Fund (continued)
---------------------------------------------------------------------------------------------------
Face
State Amount Short-Term Holdings Rating+ Value
---------------------------------------------------------------------------------------------------
Tennessee -- 8.9% $5,000,000 Shelby County, TN Health, Educational and
Housing Facility Board Rev. (St. Jude
Children's Research Hospital), 5.375% due
7/1/2024o NR $ 5,203,300
---------------------------------------------------------------------------------------------------
Wyoming -- 1.5% 900,000 Lincoln County, WY Pollution Control Rev.
(Exxon Project), VRDN, due 11/1/2014 P-1 900,000
---------------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $10,562,779) -- 18.6% 10,903,300
---------------------------------------------------------------------------------------------------
Total Investments (Cost $60,456,691) -- 99.6% 58,423,721
---------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.4% 206,310
---------------------------------------------------------------------------------------------------
Net Assets -- 100.0% $58,630,031
---------------------------------------------------------------------------------------------------
Colorado Fund
---------------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
---------------------------------------------------------------------------------------------------
$ 485,000 Colorado Educational & Cultural Facilities Authority Rev.
(University of Denver Project), 5.375% due 3/1/2023o Aa3 $ 512,873
---------------------------------------------------------------------------------------------------
515,000 Colorado Educational & Cultural Facilities Authority Rev.
(University of Denver Project), 5.375% due 3/1/2023o Aa3 544,597
---------------------------------------------------------------------------------------------------
1,070,000 Colorado Health Facilities Authority Rev. (Evangelical
Lutheran Good Samaritan Society Project), 6.90%
due 12/1/2025o A3 1,183,730
---------------------------------------------------------------------------------------------------
680,000 Colorado Health Facilities Authority Rev. (Evangelical
Lutheran Good Samaritan Society Project), 6.90% due
12/1/2025 A3 703,467
---------------------------------------------------------------------------------------------------
2,250,000 Colorado Health Facilities Authority Rev. (Sisters of
Charity of Leavenworth Health Services Corporation),
5% due 12/1/2025 Aa2 2,008,485
---------------------------------------------------------------------------------------------------
1,250,000 Colorado State University Enterprise System Rev., 5% due
3/1/2027 Aaa 1,190,650
---------------------------------------------------------------------------------------------------
45,000 Colorado Water Resources & Power Development Authority
(Clean Water Rev.), 5% due 9/1/2021 Aaa 45,119
---------------------------------------------------------------------------------------------------
1,560,000 Colorado Water Resources & Power Development Authority
(Clean Water Rev.), 5% due 9/1/2021o Aaa 1,646,814
---------------------------------------------------------------------------------------------------
40,000 Colorado Water Resources & Power Development Authority
(Clean Water Rev.), 6.875% due 9/1/2011 Aaa 40,123
---------------------------------------------------------------------------------------------------
2,000,000 Denver, CO City & County Certificates of Participation,
5.50% due 12/1/2025o AAA++ 2,138,480
---------------------------------------------------------------------------------------------------
400,000 Denver, CO City & County GOs (Justice System Facilities
and Zoo Bonds), 5% due 8/1/2021 Aa1 401,120
---------------------------------------------------------------------------------------------------
1,000,000 Denver, CO City & County GOs (Justice System Facilities
and Zoo Bonds), 5% due 8/1/2025 Aa1 977,670
---------------------------------------------------------------------------------------------------
1,075,000 Denver, CO City & County School District GOs, 5% due
12/1/2023o Aa3 1,118,516
---------------------------------------------------------------------------------------------------
1,250,000 Xxxxxxx County, CO School District GOs (Xxxxxxx & Xxxxxx
Counties), 5% due 12/15/2023 Aa3 1,216,163
---------------------------------------------------------------------------------------------------
2,250,000 Jefferson County, CO Open Space Sales Tax Rev., 5% due
11/1/2019 Aa3 2,253,915
---------------------------------------------------------------------------------------------------
1,000,000 Platte River Power Authority, CO Power Rev., 5% due
6/1/2018 Aaa 1,025,770
---------------------------------------------------------------------------------------------------
1,750,000 Regional Transportation District, CO Sales Tax Rev., 5%
due 11/1/2024o AAA++ 1,872,115
---------------------------------------------------------------------------------------------------
1,000,000 Regional Transportation District, CO Sales Tax Rev.,
5.25% due 11/1/2024 Aa3 995,650
---------------------------------------------------------------------------------------------------
1,000,000 University of Colorado Enterprise System Rev., 5% due
6/1/2023 Aa3 968,610
---------------------------------------------------------------------------------------------------
1,750,000 University of Colorado Enterprise System Rev., 5.125% due
6/1/2028o Aa3 1,876,892
---------------------------------------------------------------------------------------------------
1,000,000 University of Colorado Hospital Authority Rev., 5.25% due
11/15/2022 Aa3 943,710
---------------------------------------------------------------------------------------------------
2,000,000 Virgin Islands Public Finance Authority Rev., 5.50% due
10/1/2022 BBB++ 1,880,920
---------------------------------------------------------------------------------------------------
1,240,000 Westminster, CO Special Purpose Sales & Use Tax Rev.
(Post Project), 5% due 12/1/2023 Aaa 1,200,209
---------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $26,836,282) -- 88.3% 26,745,598
---------------------------------------------------------------------------------------------------
Short-Term Holdings
---------------------------------------------------------------------------------------------------
1,640,000 Colorado Health Facilities Authority Hospital Improvement
Rev. (NCMC, Inc. Project), 5.75% due 5/15/2024o Aaa 1,691,347
---------------------------------------------------------------------------------------------------
500,000 Massachusetts State GOs, VRDN, due 3/1/2026 VMIG 1 500,000
---------------------------------------------------------------------------------------------------
500,000 Missouri State Health & Educational Facilities Authority
Rev. (Washington University), VRDN due 2/15/2034 VMIG 1 500,000
---------------------------------------------------------------------------------------------------
250,000 Northglenn, CO GOs, Joint Water & Wastewater Utility,
6.80% due 12/1/2008++ Aaa 251,628
---------------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $2,852,370) -- 9.7% 2,942,975
---------------------------------------------------------------------------------------------------
Total Investments (Cost $29,688,652) -- 98.0% 29,688,573
---------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 2.0% 613,388
---------------------------------------------------------------------------------------------------
Net Assets -- 100.0% $30,301,961
---------------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
22
Portfolios of Investments
September 30, 2008
Georgia Fund
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$2,000,000 Atlanta, GA Airport Rev., 5.625% due 1/1/2030* A1 $ 1,772,400
--------------------------------------------------------------------------------------------
1,000,000 Atlanta, GA Water & Wastewater Rev., 5.75% due 11/1/2025 Aaa 1,002,100
--------------------------------------------------------------------------------------------
500,000 Augusta, GA Water & Sewer Rev., 5% due 10/1/2022 Aaa 490,385
--------------------------------------------------------------------------------------------
1,250,000 Barnesville-Xxxxx County, GA Industrial Development
Authority Rev. (Xxxxxx College Properties Foundation),
5% due 8/1/2025 A3 1,101,650
--------------------------------------------------------------------------------------------
1,250,000 Cartersville, GA Development Authority Rev. Water &
Wastewater Facilities (Anheuser-Xxxxx), 5.95% due
2/1/2032* Baa2 1,125,088
--------------------------------------------------------------------------------------------
1,000,000 Cartersville, GA Development Authority Rev. Water &
Wastewater Facilities (Anheuser-Xxxxx), 7.40% due
11/1/2010* Baa2 1,050,020
--------------------------------------------------------------------------------------------
1,270,000 Xxxxxx County, GA Development Authority Rev. (Georgia
Technology Athletic Association), 5.125% due 10/1/2032 Aa3 1,202,106
--------------------------------------------------------------------------------------------
1,615,000 Georgia Housing & Finance Authority Rev. (Single Family
Mortgage), 5.20% due 6/1/2029* Aa2 1,399,381
--------------------------------------------------------------------------------------------
1,500,000 Georgia State GOs, 5.50% due 7/1/2017 Aaa 1,595,595
--------------------------------------------------------------------------------------------
1,250,000 Gwinnett County, GA Hospital Authority GOs (Gwinnett
Hopsital System, Inc. Project), 5% due 10/1/2029 Aa1 1,133,700
--------------------------------------------------------------------------------------------
1,000,000 Gwinnett County, GA School District GOs, 6.40% due
2/1/2012 Aaa 1,102,910
--------------------------------------------------------------------------------------------
1,040,000 Xxxxx County, GA School District GOs, 6.45% due 8/1/2011 Aa3 1,103,461
--------------------------------------------------------------------------------------------
1,250,000 Hospital Authority of Valdosta and Lowndes County, GA
Rev. Certificates (South Georgia Medical Center Project),
5.25% due 10/1/2027 Aa3 1,140,587
--------------------------------------------------------------------------------------------
1,000,000 Metropolitan Atlanta Rapid Transit Authority, GA Sales
Tax Rev., 5.25% due 7/1/2026 Aa3 977,340
--------------------------------------------------------------------------------------------
500,000 Metropolitan Atlanta Rapid Transit Authority, GA Sales
Tax Rev., 6.25% due 7/1/2018 Aa3 552,845
--------------------------------------------------------------------------------------------
1,500,000 Private Colleges & Universities Authority Rev., GA
(Xxxxxx University Project), 6.50% due 11/l/2015++ A2 1,693,950
--------------------------------------------------------------------------------------------
1,250,000 Savannah, GA Economic Development Authority Pollution
Control Rev. (International Paper Company Projects),
4.95% due 5/1/2021 Baa3 1,029,787
--------------------------------------------------------------------------------------------
1,000,000 Upper Oconee Basin Water Authority, GA Rev., 5% due
7/1/2024 A1 965,040
--------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $21,598,573) -- 87.2% 20,438,345
--------------------------------------------------------------------------------------------
Short-Term Holdings
--------------------------------------------------------------------------------------------
560,000 Atlanta, GA Water & Wastewater Rev., 5% due 11/1/2038o AAA++ 573,737
--------------------------------------------------------------------------------------------
200,000 California Infrastructure & Economic Development Bank
Rev. Series B (X. Xxxx Getty Trust), VRDN, due 4/1/2033 VMIG 1 200,000
--------------------------------------------------------------------------------------------
1,750,000 Gwinnett County, GA Water & Sewerage Authority Rev.,
5.30% due 8/1/2022o AAA++ 1,810,690
--------------------------------------------------------------------------------------------
100,000 Xxxxxxxxxx County, MD GOs, VRDN, due 6/1/2026 VMIG 1 100,000
--------------------------------------------------------------------------------------------
100,000 Port Authority of New York & New Jersey Special
Obligation Rev., VRDN, due 5/1/2019 VMIG 1 100,000
--------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $2,679,074) -- 11.9% 2,784,427
--------------------------------------------------------------------------------------------
Total Investments (Cost $24,277,647) -- 99.1% 23,222,772
--------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.9% 213,370
--------------------------------------------------------------------------------------------
Net Assets -- 100.0% $23,436,142
--------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
23
Portfolios of Investments
September 30, 2008
Louisiana Fund
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$ 900,000 Baton Rouge, LA Public Improvement Sales Tax Rev., 5% due
8/1/2024 Aaa $ 871,244
--------------------------------------------------------------------------------------------
2,500,000 Calcasieu Parish, LA Industrial Development Board (Conoco
Inc. Project), 5.75% due 12/1/2026* A1 2,399,150
--------------------------------------------------------------------------------------------
470,000 East Baton Rouge Parish, LA Mortgage Finance Authority
(Single Family Mortgage Rev.), 5.40% due 10/1/2025 Aaa 459,777
--------------------------------------------------------------------------------------------
1,000,000 Xxxxxxxxx Xxxxxx, LA Hospital Service District Rev., 5%
due 7/1/2028 Aaa 922,020
--------------------------------------------------------------------------------------------
1,000,000 Xxxxxxxxx Xxxxxx, LA Special Sales Tax Rev., 5.25% due
12/1/2020 Aa3 1,010,370
--------------------------------------------------------------------------------------------
1,000,000 Lafayette Parish, LA School Board Public School Rev., 5%
due 4/1/2019 Aaa 1,014,550
--------------------------------------------------------------------------------------------
1,000,000 Lafayette, LA Public Improvement Sales Tax Rev., 5% due
5/1/2021 Aa3 988,650
--------------------------------------------------------------------------------------------
1,045,000 Louisiana Housing Finance Agency Single Family Mortgage
Rev. (Home Ownership Program), 4.875% due 12/1/2023 Aaa 980,356
--------------------------------------------------------------------------------------------
1,000,000 Louisiana Public Facilities Authority Rev. (Tulane
University of Louisiana Project), 5% due 2/15/2026 A2 940,180
--------------------------------------------------------------------------------------------
1,000,000 Louisiana Public Facilities Authority Rev. (Hurricane
Recovery Program), 5% due 6/1/2020 Aa3 960,520
--------------------------------------------------------------------------------------------
1,000,000 Louisiana State University Agricultural & Mechanical
College Auxiliary Rev., 5% due 7/1/2027 Aaa 936,310
--------------------------------------------------------------------------------------------
2,250,000 New Orleans, LA Public Improvement GOs, 5.35% due
12/1/2031 Baa3 1,991,610
--------------------------------------------------------------------------------------------
2,500,000 Ouachita Parish, LA Hospital Service District Rev.
(Glenwood Regional Medical Center), 5.75% due 5/15/2021o Aaa 2,625,900
--------------------------------------------------------------------------------------------
1,250,000 Port of New Orleans, LA Port Facility Rev., 5% due
4/1/2032* A2 1,021,800
--------------------------------------------------------------------------------------------
1,000,000 St. Tammany Parish Wide School District No.12, LA, 4.50%
due 3/1/2023 Aaa 904,530
--------------------------------------------------------------------------------------------
1,030,000 Sulphur, LA Housing & Mortgage Finance Trust (Residential
Mortgage Rev.), 7.25% due 12/1/2010++ NR 1,088,371
--------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $20,271,258) -- 78.1% 19,115,338
--------------------------------------------------------------------------------------------
Short-Term Holdings
--------------------------------------------------------------------------------------------
200,000 California Infrastructure & Economic Development Bank
Rev. Series B (X. Xxxx Xxxxx Trust), VRDN, due 4/1/2033 VMIG 1 200,000
--------------------------------------------------------------------------------------------
1,000,000 Connecuticut State Health & Education Rev. (Yale
University), VRDN, due 7/1/2035 VMIG 1 1,000,000
--------------------------------------------------------------------------------------------
100,000 Missouri State Health & Educational Facilities Authority
Rev. (Washington University), VRDN due 2/15/2034 VMIG 1 100,000
--------------------------------------------------------------------------------------------
100,000 New York City, NY GOs, VRDN, due 8/1/2017 VMIG 1 100,000
--------------------------------------------------------------------------------------------
900,000 New York City, NY Municipal Water Finance Authority
(Water & Sewer System Rev.), VRDN, due 6/15/2033 VMIG 1 900,000
--------------------------------------------------------------------------------------------
2,500,000 Shreveport, LA GOs, 5% due 3/1/2019o A3 2,528,050
--------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $4,785,900) -- 19.7% 4,828,050
--------------------------------------------------------------------------------------------
Total Investments (Cost $25,057,158) -- 97.8% 23,943,388
--------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 2.2% 545,551
--------------------------------------------------------------------------------------------
Net Assets -- 100.0% $24,488,939
--------------------------------------------------------------------------------------------
Maryland Fund
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$1,205,000 Xxxx Xxxxxxx County, MD Special Obligation Bonds (Arundel
Xxxxx Project), 5.125% due 7/1/2024 Aa1 $ 1,195,264
--------------------------------------------------------------------------------------------
1,500,000 Baltimore County, MD Consolidated Public Improvement GOs,
5% due 9/1/2014 Aaa 1,611,510
--------------------------------------------------------------------------------------------
1,500,000 Baltimore County, MD Rev. (Catholic Health Initiatives),
5% due 9/1/2026 Aa2 1,357,995
--------------------------------------------------------------------------------------------
2,500,000 Baltimore, MD Port Facilities Rev. (Consolidated Coal
Sales Co. Project), 6.50% due 10/1/2011 A++ 2,502,875
--------------------------------------------------------------------------------------------
2,000,000 Baltimore, MD Project Rev. (Water Projects), 5.50% due
7/1/2026o A1 2,161,340
--------------------------------------------------------------------------------------------
2,000,000 Baltimore, MD Wastewater Projects Rev., 5.125% due
7/1/2042 A1 1,854,780
--------------------------------------------------------------------------------------------
1,000,000 Xxxxxx County, MD Consolidated Public Improvement GOs, 5%
due 8/15/2020o Aaa 1,064,890
--------------------------------------------------------------------------------------------
2,375,000 Maryland Department of Transportation Project
Certificates of Participation (Mass Transit
Administration Project), 5.50% due 10/15/2025* Aa2 2,182,767
--------------------------------------------------------------------------------------------
1,500,000 Maryland Health & Higher Educational Facilities Authority
Rev. (Xxxx Xxxxxxx Medical Center), 5.125% due 7/1/2028 Aaa 1,420,515
--------------------------------------------------------------------------------------------
2,250,000 Maryland Health & Higher Educational Facilities Authority
Rev. (Xxxxxxx County General Hospital), 6% due 7/1/2037 Baa1 2,104,155
--------------------------------------------------------------------------------------------
2,000,000 Maryland Health & Higher Educational Facilities Authority
Rev. (Xxxxx Xxxxxxx University), 5% due 7/1/2041 Aa2 1,848,760
--------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
24
Portfolios of Investments
September 30, 2008
Maryland Fund (continued)
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$1,500,000 Xxxxxxxxxx County, MD GOs, 5% due 2/1/2017o Aaa $ 1,601,175
--------------------------------------------------------------------------------------------
450,000 Xxxxxx State University, MD Academic and Auxiliary
Facilities Fees Rev., 5% due 7/1/2032 A1 415,841
--------------------------------------------------------------------------------------------
2,000,000 Prince Xxxxxx's County, MD Consolidated Public
Improvement GOs, 5% due 10/1/2019o AAA++ 2,141,320
--------------------------------------------------------------------------------------------
1,775,000 Puerto Rico Electric Power Authority Power Rev., 5.25%
due 7/1/2031o A3 1,924,295
--------------------------------------------------------------------------------------------
1,000,000 Puerto Rico Highway & Transportation Authority Rev.,
5.375% due 7/1/2036o AAA++ 1,071,160
--------------------------------------------------------------------------------------------
1,000,000 University System of Maryland Auxiliary Facility &
Tuition Rev., 5% due 4/1/2013 Aa2 1,064,350
--------------------------------------------------------------------------------------------
1,500,000 Washington Suburban Sanitation District, MD (Water Supply
Bonds), 5% due 6/1/2018 Aaa 1,551,435
--------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $29,384,877) -- 88.9% 29,074,427
--------------------------------------------------------------------------------------------
Short-Term Holdings
--------------------------------------------------------------------------------------------
1,000,000 Kansas Development Finance Authority Rev. (Sisters of
Charity), VRDN, due 12/1/2019 VMIG 1 1,000,000
--------------------------------------------------------------------------------------------
1,000,000 Lincoln County, WY Pollution Control Rev. (Exxon
Project), VRDN, due 11/1/2014 P-1 1,000,000
--------------------------------------------------------------------------------------------
500,000 Massachusetts State GOs, VRDN, due 3/1/2026 VMIG 1 500,000
--------------------------------------------------------------------------------------------
290,000 New Jersey State Educational Facilities Authority Rev.
(Princeton University), VRDN, due 7/1/2023 VMIG 1 290,000
--------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $2,790,000) -- 8.5% 2,790,000
--------------------------------------------------------------------------------------------
Total Investments (Cost $32,174,877) -- 97.4% 31,864,427
--------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 2.6% 844,431
--------------------------------------------------------------------------------------------
Net Assets -- 100.0% $32,708,858
--------------------------------------------------------------------------------------------
Massachusetts Fund
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$2,330,000 Boston, MA GOs, 5% due 3/1/2022 Aa1 $ 2,343,910
--------------------------------------------------------------------------------------------
4,000,000 Boston, MA Water & Sewer Commission General Rev., 5.25%
due 11/1/2019 Aa2 4,241,480
--------------------------------------------------------------------------------------------
3,000,000 Martha's Vineyard, MA Land Bank Rev., 5% due 5/1/2032 Aa3 2,903,010
--------------------------------------------------------------------------------------------
1,000,000 Massachusetts Bay Transportation Authority Rev., 5% due
7/1/2024 Aa2 977,540
--------------------------------------------------------------------------------------------
500,000 Massachusetts Development Finance Agency Rev.
(Massachusetts College of Pharmacy & Allied Health
Sciences), 5.75% due 7/1/2033o A3 554,700
--------------------------------------------------------------------------------------------
1,500,000 Massachusetts Health & Educational Facilities Authority
Rev. (Berklee College of Music), 5% due 10/1/2021 A2 1,448,940
--------------------------------------------------------------------------------------------
4,000,000 Massachusetts Health & Educational Facilities Authority
Rev. (Harvard University), 6% due 7/1/2035o Aaa 4,274,600
--------------------------------------------------------------------------------------------
4,890,000 Massachusetts Health & Educational Facilities Authority
Rev. (Partners Healthcare System), 5.375% due 7/1/2024 Aa2 4,881,834
--------------------------------------------------------------------------------------------
1,845,000 Massachusetts Health & Educational Facilities Authority
Rev. (South Shore Hospital), 5.75% due 7/1/2029 A3 1,704,116
--------------------------------------------------------------------------------------------
2,140,000 Massachusetts Housing Finance Agency Rev. (Rental Housing
Mortgage), 5.50% due 7/1/2030* Aa3 2,156,392
--------------------------------------------------------------------------------------------
1,000,000 Massachusetts Housing Finance Agency Single Family
Housing Rev., 5.125% due 12/1/2028 Aa2 931,510
--------------------------------------------------------------------------------------------
2,500,000 Massachusetts State Consolidated Loan GOs, 5.875% due
2/1/2020o AAA++ 2,636,075
--------------------------------------------------------------------------------------------
2,000,000 Massachusetts State School Building Authority Dedicated
Sales Tax Rev., 5% due 8/15/2023 Aaa 1,985,380
--------------------------------------------------------------------------------------------
1,000,000 Massachusetts Water Pollution Abatement Trust Pool
Program, 5.50% due 8/1/2029 Aaa 1,002,340
--------------------------------------------------------------------------------------------
4,500,000 Massachusetts Water Resources Authority Rev., 5.75% due
8/1/2039o Aa2 4,754,655
--------------------------------------------------------------------------------------------
4,000,000 Puerto Rico Highway & Transportation Authority Rev.,
5.50% due 7/1/2036o Aaa 4,421,560
--------------------------------------------------------------------------------------------
2,500,000 Route 3 North Transportation Improvement Association, MA
Lease Rev., 5.375% due 6/15/2033o Aa3 2,618,475
--------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $42,225,501) -- 74.2% 43,836,517
--------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
25
Portfolios of Investments
September 30, 2008
Massachusetts Fund (continued)
--------------------------------------------------------------------------------------------
Face
Amount Short-Term Holdings Rating+ Value
--------------------------------------------------------------------------------------------
$1,500,000 Connecticut State Health & Educational Facilities
Authority Rev.Series V-2 (Yale University), VRDN, due
7/1/2036 VMIG 1 $ 1,500,000
--------------------------------------------------------------------------------------------
900,000 Lincoln County, WY Pollution Control Rev. Series A (Exxon
Project), VRDN, due 11/1/2014 P-1 900,000
--------------------------------------------------------------------------------------------
5,000,000 Massachusetts Bay Transportation Authority, MA General
Transportation System Rev., 5.75% due 3/1/2026o AAA++ 5,120,100
--------------------------------------------------------------------------------------------
3,155,000 Massachusetts Health & Educational Facilities Authority
Rev. (South Shore Hospital), 5.75% due 7/1/2029o A-++ 3,261,576
--------------------------------------------------------------------------------------------
950,000 Missouri State Health & Educational Facilities Authority
Rev. (Washington University), VRDN due 2/15/2034 VMIG 1 950,000
--------------------------------------------------------------------------------------------
600,000 Montana Facilities Finance Authority Rev. (Sisters of
Charity), VRDN, due 12/1/2025 VMIG 1 600,000
--------------------------------------------------------------------------------------------
500,000 Xxxxxxxxxx County, MD GOs, VRDN, due 6/1/2026 VMIG 1 500,000
--------------------------------------------------------------------------------------------
1,000,000 New York City, NY GOs, VRDN, due 10/1/2023 VMIG 1 1,000,000
--------------------------------------------------------------------------------------------
1,000,000 New York City, NY Municipal Water Finance Authority
(Water & Sewer System Rev.), VRDN, due 6/15/2033 VMIG 1 1,000,000
--------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $14,465,288) -- 25.1% 14,831,676
--------------------------------------------------------------------------------------------
Total Investments (Cost $56,690,789) -- 99.3% 58,668,193
--------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.7% 439,670
--------------------------------------------------------------------------------------------
Net Assets -- 100.0% $59,107,863
--------------------------------------------------------------------------------------------
Michigan Fund
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$1,280,000 Board of Regents of Eastern Michigan University General
Rev., 5.625% due 6/1/2030o A2 $ 1,342,502
--------------------------------------------------------------------------------------------
530,000 Canton Charter Township, MI GOs, 5% due 4/1/2021 Aaa 525,771
--------------------------------------------------------------------------------------------
2,000,000 Capital Region Airport Authority, MI Airport Rev., 5.25%
due 7/1/2021* A2 1,790,100
--------------------------------------------------------------------------------------------
3,000,000 Detroit, MI Sewage Disposal System Rev. (Senior Lien),
5.25% due 7/1/2023 A2 2,898,150
--------------------------------------------------------------------------------------------
1,290,000 Detroit, MI Water Supply System Rev., 5% due 7/1/2027 A2 1,176,983
--------------------------------------------------------------------------------------------
1,170,000 Detroit, MI Water Supply System Rev., 6.25% due 7/1/2012++ A2 1,238,375
--------------------------------------------------------------------------------------------
3,000,000 Forest Hills, MI Public Schools GOs, 5.50% due 5/1/2021o Aa2 3,137,790
--------------------------------------------------------------------------------------------
110,000 Grand Traverse County, MI Hospital Finance Authority Rev.
(Xxxxxx Healthcare Obligated Group), 5% due 7/1/2028 Aa3 102,536
--------------------------------------------------------------------------------------------
1,285,000 Kalamazoo, MI Public Schools (School Building and Site
Bonds), 5% due 5/1/2024 Aaa 1,239,113
--------------------------------------------------------------------------------------------
2,000,000 Michigan Comprehensive Transportation Rev., 5% due
5/15/2024 Aaa 1,928,420
--------------------------------------------------------------------------------------------
2,000,000 Michigan Comprehensive Transportation Rev., 5.25% due
5/15/2022 Aaa 2,026,340
--------------------------------------------------------------------------------------------
3,000,000 Michigan Hospital Finance Authority Rev. (Sparrow
Obligated Group), 5% due 11/15/2026 A1 2,683,230
--------------------------------------------------------------------------------------------
3,850,000 Michigan Municipal Bond Authority State Revolving Fund
Rev. (Drinking Water Bonds), 5% due 10/1/2022 Aaa 3,842,300
--------------------------------------------------------------------------------------------
1,500,000 Michigan Public Power Agency Rev. (Belle River Project),
5.25% due 1/1/2017 A1 1,582,020
--------------------------------------------------------------------------------------------
1,150,000 Michigan Public Power Agency Rev. (Belle River Project),
5.25% due 1/1/2018 A1 1,202,199
--------------------------------------------------------------------------------------------
1,000,000 Michigan State and Redevco, Inc. Certificates of
Participation, 5.50% due 6/1/2027o Aa3 1,047,980
--------------------------------------------------------------------------------------------
750,000 Michigan State Hospital Finance Authority Hospital Rev.
(Xxxxx Xxxx Health System), 5% due 11/15/2018 A1 712,365
--------------------------------------------------------------------------------------------
1,000,000 Michigan State Hospital Finance Authority Hospital Rev.
(Xxxxx Xxxx Health System), 5% due 11/15/2019 A1 936,190
--------------------------------------------------------------------------------------------
6,000,000 Michigan State Hospital Finance Authority Rev. (Ascension
Health Credit Group), 6.125% due 11/15/2026o AAA++ 6,301,380
--------------------------------------------------------------------------------------------
5,250,000 Michigan State Hospital Finance Authority Rev. (Mercy
Health Services Obligated Group), 5.75% due 8/15/2026++ NR 5,283,180
--------------------------------------------------------------------------------------------
4,000,000 Michigan State Hospital Finance Authority Rev. (Oakwood
Obligated Group), 5.125% due 8/15/2025 Aaa 3,861,760
--------------------------------------------------------------------------------------------
4,000,000 Michigan State Hospital Finance Authority Rev. (Trinity
Health Credit Group), 5% due 12/1/2026 Aa2 3,548,560
--------------------------------------------------------------------------------------------
5,000,000 Michigan State Trunk Line Rev., 5% due 11/1/2026 Aa3 4,821,000
--------------------------------------------------------------------------------------------
2,000,000 Puerto Rico Electric Power Authority Rev., 5% due 7/1/2024 A3 1,801,600
--------------------------------------------------------------------------------------------
2,000,000 Puerto Rico Electric Power Authority Rev., 5.25% due
7/1/2021 A2 1,983,340
--------------------------------------------------------------------------------------------
500,000 Puerto Rico Highway & Transportation Authority Rev.,
5.50% due 7/1/2020 A2 487,920
--------------------------------------------------------------------------------------------
2,500,000 Puerto Rico Infrastructure Financing Authority GOs, 5.50%
due 10/1/2040 Aaa 2,514,400
--------------------------------------------------------------------------------------------
5,000,000 Walled Lake, MI Consolidated School District GOs, 5.50%
due 5/1/2022o Aa3 5,229,650
--------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $67,246,150) -- 95.8% 65,245,154
--------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
26
Portfolios of Investments
September 30, 2008
Michigan Fund (continued)
--------------------------------------------------------------------------------------------
Face
Amount Short-Term Holdings Rating+ Value
--------------------------------------------------------------------------------------------
$ 300,000 California Infrastructure & Economic Development Bank
Rev. Series B (X. Xxxx Getty Trust), VRDN, due 4/01/2033 VMIG 1 $ 300,000
--------------------------------------------------------------------------------------------
200,000 Connecticut State Health & Education Rev. (Yale
University), VRDN, due 7/1/2035 VMIG 1 200,000
--------------------------------------------------------------------------------------------
1,000,000 Massachusetts State Development Finance Agency Rev.
(Harvard University), VRDN, due 7/15/2036 VMIG 1 1,000,000
--------------------------------------------------------------------------------------------
300,000 Xxxxxxxxxx County, MD GOs, VRDN, due 6/1/2026 VMIG 1 300,000
--------------------------------------------------------------------------------------------
130,000 New Jersey State Educational Facilities Authority Rev.
(Princeton University), VRDN, due 7/1/2023 VMIG 1 130,000
--------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $1,930,000) -- 2.8% 1,930,000
--------------------------------------------------------------------------------------------
Total Investments (Cost $69,176,150) -- 98.6% 67,175,154
--------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.4% 945,787
--------------------------------------------------------------------------------------------
Net Assets -- 100.0% $68,120,941
--------------------------------------------------------------------------------------------
Minnesota Fund
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$1,000,000 Anoka County, MN GOs, 5% due 2/1/2023 Aa2 $ 983,860
--------------------------------------------------------------------------------------------
2,000,000 Dakota County, MN Community Development Agency GOs, 5.25%
due 1/1/2019 Aaa 2,027,860
--------------------------------------------------------------------------------------------
4,000,000 Metropolitan Council (Minneapolis-Saint Xxxx Metropolitan
Area), MN General Obligation Waste Water Rev.,
5% due 5/1/2025 Aaa 3,955,400
--------------------------------------------------------------------------------------------
5,000,000 Minneapolis & Saint Xxxx, MN Metropolitan Airports
Commission Rev., 5.75% due 1/1/2032o AA-++ 5,237,900
--------------------------------------------------------------------------------------------
2,045,000 Minneapolis, MN GOs, 5% due 12/1/2016 Aa1 2,125,471
--------------------------------------------------------------------------------------------
395,000 Minneapolis, MN GOs, 5% due 12/1/2016o Aa1 417,436
--------------------------------------------------------------------------------------------
1,175,000 Minnesota Agricultural & Economic Development Board Rev.
(Evangelical Lutheran Good Samaritan Society Project),
5.15% due 12/1/2022 Aa3 1,135,920
--------------------------------------------------------------------------------------------
3,000,000 Minnesota GOs, 5% due 6/1/2020 Aa1 3,060,690
--------------------------------------------------------------------------------------------
3,500,000 Minnesota Higher Education Facilities Authority Rev. (St.
John's University), 5% due 10/1/2022 A2 3,357,025
--------------------------------------------------------------------------------------------
3,040,000 Minnesota Higher Education Facilities Authority Rev. (St.
Olaf College ), 5% due 10/1/2022 A2 2,901,467
--------------------------------------------------------------------------------------------
1,000,000 Minnesota Higher Education Facilities Authority Rev. (The
College of Saint Xxxxxxxxx), 5.375% due 10/1/2032 Baa1 875,150
--------------------------------------------------------------------------------------------
3,480,000 Minnesota Public Facilities Authority Drinking Water
Rev., 5% due 3/1/2019 Aaa 3,560,353
--------------------------------------------------------------------------------------------
1,000,000 Minnesota State Housing Finance Agency Rev., 4.65% due
7/1/2023 Aa1 914,790
--------------------------------------------------------------------------------------------
4,000,000 Minnesota State Retirement System Building Rev., 6% due
6/1/2030 Aaa 4,124,440
--------------------------------------------------------------------------------------------
1,000,000 Northern Municipal Power Agency, MN Electric System Rev.,
5% due 1/1/2021 Aaa 981,080
--------------------------------------------------------------------------------------------
1,000,000 Northern Municipal Power Agency, MN Electric System Rev.,
5% due 1/1/2026 Aa3 934,090
--------------------------------------------------------------------------------------------
1,105,000 Xxxxxx County, MN GOs (Series 2003A), 5% due 2/1/2017 Aaa 1,169,366
--------------------------------------------------------------------------------------------
1,395,000 Xxxxxx County, MN GOs (Series 2007A), 5% due 2/1/2017 Aaa 1,427,071
--------------------------------------------------------------------------------------------
3,000,000 Rochester, MN Electric Utility Rev., 5.25% due 12/1/2024o Aa2 3,161,730
--------------------------------------------------------------------------------------------
1,000,000 Rochester, MN Electric Utility Rev., 5.25% due 12/1/2030o Aa2 1,053,910
--------------------------------------------------------------------------------------------
3,305,000 Rochester, MN Waste Water GOs, 5% due 2/1/2025 Aaa 3,279,287
--------------------------------------------------------------------------------------------
3,750,000 Saint Cloud, MN Health Care Rev. (The Saint Cloud
Hospital Obligated Group), 5.875% due 5/1/2030 Aaa 3,785,288
--------------------------------------------------------------------------------------------
4,000,000 Southern Minnesota Municipal Power Agency - Power Supply
System Rev., 5% due 1/1/2012 Aa3 4,166,480
--------------------------------------------------------------------------------------------
1,000,000 Washington County, MN GOs, 4.25% due 2/1/2012 Aa1 1,036,980
--------------------------------------------------------------------------------------------
5,385,000 Western Minnesota Municipal Power Agency - Power Supply
Rev., 6.375% due 1/1/2016++ Aaa 5,867,657
--------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $61,996,293) -- 94.1% 61,540,701
--------------------------------------------------------------------------------------------
Short-Term Holdings
--------------------------------------------------------------------------------------------
300,000 Connecticut State Health & Educational Facilities
Authority Rev. (Yale University), VRDN, due 7/1/2036 VMIG 1 300,000
--------------------------------------------------------------------------------------------
650,000 Lincoln County, WY Pollution Control Rev. (Exxon
Project), VRDN, due 11/1/2014 P-1 650,000
--------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
27
Portfolios of Investments
September 30, 2008
Minnesota Fund (continued)
---------------------------------------------------------------------------------------------
Face
Amount Short-Term Holdings Rating+ Value
---------------------------------------------------------------------------------------------
$ 300,000 Massachusetts Health & Educational Facilities Authority
Rev. (Harvard University), VRDN, due 11/1/2049 VMIG 1 $ 300,000
---------------------------------------------------------------------------------------------
500,000 Massachusetts Health & Educational Facilities Authority
Rev. (Wellesley College), VRDN, due 7/1/2039 VMIG 1 500,000
---------------------------------------------------------------------------------------------
570,000 Massachusetts State GOs, VRDN, due 3/1/2026 VMIG 1 570,000
---------------------------------------------------------------------------------------------
400,000 Xxxxxxxxxx County, MD GOs, VRDN, due 6/1/2026 VMIG 1 400,000
---------------------------------------------------------------------------------------------
300,000 New York City, NY GOs, VRDN, due 8/1/2017 VMIG 1 300,000
---------------------------------------------------------------------------------------------
1,400,000 New York City, NY Municipal Water Finance Authority
(Water & Sewer System Rev.), VRDN, due 6/15/2033 VMIG 1 1,400,000
---------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $4,420,000) -- 6.7% 4,420,000
---------------------------------------------------------------------------------------------
Total Investments (Cost $66,416,293) -- 100.8% 65,960,701
---------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- (0.8)% (553,556)
---------------------------------------------------------------------------------------------
Net Assets -- 100.0% $65,407,145
---------------------------------------------------------------------------------------------
Missouri Fund
---------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
---------------------------------------------------------------------------------------------
$ 500,000 Xxxxx County, MO Hospital Rev. (Xxxxx Hospital Center),
5.75% due 8/1/2028 A3 $ 478,865
---------------------------------------------------------------------------------------------
1,000,000 Hannibal, MO Industrial Development Authority Health
Facilities Rev. (Hannibal Regional Hospital),
5% due 3/1/2022 BBB+++ 896,750
---------------------------------------------------------------------------------------------
1,000,000 Kansas City, MO Community Colleges Building Corporation
Rev., 5% due 7/1/2017 Aa3 1,022,820
---------------------------------------------------------------------------------------------
1,250,000 Metropolitan St. Louis, MO Sewer District Wastewater
System Rev., 5% due 5/1/2024 Aa2 1,211,788
---------------------------------------------------------------------------------------------
2,000,000 Missouri Development Finance Board Solid Waste
Disposal Rev. (The Procter & Xxxxxx Company Paper
Products Project), 5.20% due 3/15/2029* Aa3 1,771,980
---------------------------------------------------------------------------------------------
1,000,000 Missouri Highways & Transportation Commission (State Road
Bonds), 5.625% due 2/1/2018o Aaa 1,061,240
---------------------------------------------------------------------------------------------
1,750,000 Missouri State Board of Public Buildings Special
Obligation Rev., 5.125% due 5/1/2026 Aa1 1,728,947
---------------------------------------------------------------------------------------------
1,000,000 Missouri State Environmental Improvement & Energy
Resources Authority Rev. (State Revolving Fund Program),
5% due 7/1/2023 Aaa 988,620
---------------------------------------------------------------------------------------------
185,000 Missouri State Environmental Improvement & Energy
Resources Authority Rev. (State Revolving Fund Program),
6.55% due 7/1/2014 Aaa 185,520
---------------------------------------------------------------------------------------------
2,500,000 Missouri State Health & Educational Facilities Authority
Rev. (Xxxxxx X. Xxx Medical Centers Project),
5.25% due 6/1/2015 A2 2,619,275
---------------------------------------------------------------------------------------------
1,250,000 Missouri State Health & Educational Facilities Authority
Rev. (SSM Health Care), 5.25% due 6/1/2028o Aa3 1,328,575
---------------------------------------------------------------------------------------------
1,000,000 Missouri State Health & Educational Facilities Authority
Rev. (Washington University), 4.20% due 1/15/2021 Aaa 918,580
---------------------------------------------------------------------------------------------
60,000 Missouri State Housing Development Commission Single
Family Mortgage Rev. (Homeownership Loan Program),
5.90% due 9/1/2028* AAA++ 60,688
---------------------------------------------------------------------------------------------
2,000,000 Southeast Missouri Correctional Facility Lease Rev.
(Missouri State Project), 5.75% due 10/15/2016++ Aa2 2,186,000
---------------------------------------------------------------------------------------------
1,000,000 Springfield, MO Public Utility Rev., 5% due 8/1/2014 Aa3 1,053,830
---------------------------------------------------------------------------------------------
1,500,000 Springfield, MO School District GOs, 5.85% due 3/1/2020o AA+++ 1,559,235
---------------------------------------------------------------------------------------------
1,000,000 St. Xxxxxxx County, MO Certificates of Participation
(Public Water Supply), 5.10% due 12/1/2025 A2 943,120
---------------------------------------------------------------------------------------------
1,000,000 St. Louis, MO Airport Rev. (Xxxxxxx -- St. Louis
International Airport), 5% due 7/1/2023 Aaa 931,650
---------------------------------------------------------------------------------------------
1,250,000 St. Louis, MO Industrial Development Authority Pollution
Control Rev. (Anheuser-Xxxxx Companies, Inc. Project),
6.65% due 5/1/2016 Baa2 1,398,900
---------------------------------------------------------------------------------------------
1,000,000 The Curators of the University of Missouri System
Facilities Rev., 5% due 11/1/2026 Aa2 965,330
---------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $23,400,177) -- 93.6% 23,311,713
---------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
28
Portfolios of Investments
September 30, 2008
Missouri Fund (continued)
--------------------------------------------------------------------------------------------
Face
Amount Short-Term Holdings Rating+ Value
--------------------------------------------------------------------------------------------
$ 200,000 Massachusetts State GOs, VRDN, due 3/1/2026 VMIG 1 $ 200,000
--------------------------------------------------------------------------------------------
800,000 New York City, NY Municipal Water Finance Authority
(Water & Sewer System Rev.), VRDN, due 6/15/2033 VMIG 1 800,000
--------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $1,000,000) -- 4.0% 1,000,000
--------------------------------------------------------------------------------------------
Total Investments (Cost $24,400,177) -- 97.6% 24,311,713
--------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 2.4% 588,159
--------------------------------------------------------------------------------------------
Net Assets -- 100.0% $24,899,872
--------------------------------------------------------------------------------------------
New York Fund
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$2,500,000 Albany, NY Industrial Development Agency Civic Facility
Rev. (The College of Saint Rose Project),
5.375% due 7/1/2031o Aa3 $ 2,688,300
--------------------------------------------------------------------------------------------
1,000,000 Metropolitan Transportation Authority, NY (Dedicated Tax
Fund), 5% due 4/1/2023o AAA++ 1,076,680
--------------------------------------------------------------------------------------------
2,950,000 Metropolitan Transportation Authority, NY (State Service
Contract), 5.125% due 1/1/2029 A1 2,747,482
--------------------------------------------------------------------------------------------
1,000,000 New York City, NY GOs, 5% due 8/1/2017 Aaa 1,025,590
--------------------------------------------------------------------------------------------
2,900,000 New York City, NY GOs, 6% due 5/15/2030o AAA++ 3,091,574
--------------------------------------------------------------------------------------------
25,000 New York City, NY GOs, 6% due 5/15/2030 Aa3 25,388
--------------------------------------------------------------------------------------------
5,000 New York City, NY GOs, 7.25% due 8/15/2024 Aa3 5,016
--------------------------------------------------------------------------------------------
4,000,000 New York City, NY Municipal Water Finance Authority
(Water & Sewer System Rev.), 5.50% due 6/15/2033o AAA++ 4,241,040
--------------------------------------------------------------------------------------------
1,000,000 New York City, NY Transitional Finance Authority (Future
Tax Secured Bonds), 5% due 11/1/2024 Aa1 966,700
--------------------------------------------------------------------------------------------
1,035,000 New York City, NY Transitional Finance Authority (Future
Tax Secured Subordinate Bonds), 5% due 11/1/2026 Aa2 988,684
--------------------------------------------------------------------------------------------
1,000,000 New York City, NY Trust for Cultural Resources of the
City of New York Rev. (The Museum of Modern Art),
5.125% due 7/1/2031 Aa2 959,080
--------------------------------------------------------------------------------------------
2,000,000 New York State Dormitory Authority Lease Rev. (State
University Dormitory Facilities), 5% due 7/1/2025 Aa3 1,906,000
--------------------------------------------------------------------------------------------
2,000,000 New York State Dormitory Authority Rev. (Mental Health
Services Facilities Improvement), 5% due 8/15/2026 Aaa 1,895,700
--------------------------------------------------------------------------------------------
2,000,000 New York State Dormitory Authority Rev. (New York
University), 5% due 7/1/2024 Aa3 1,917,740
--------------------------------------------------------------------------------------------
2,000,000 New York State Dormitory Authority Rev. (Rockefeller
University), 5% due 7/1/2028 Aaa 1,912,760
--------------------------------------------------------------------------------------------
1,205,000 New York State Dormitory Authority Rev. (St. Xxxxx
University), 5.25% due 7/1/2026 A2 1,157,824
--------------------------------------------------------------------------------------------
1,000,000 New York State Dormitory Authority Rev. (St. John's
University), 5.25% due 7/1/2032 A2 950,470
--------------------------------------------------------------------------------------------
1,500,000 New York State Dormitory Authority Rev. (Vassar Brothers
Hospital), 5.375% due 7/1/2025 Aaa 1,490,865
--------------------------------------------------------------------------------------------
1,250,000 New York State Dormitory Authority Rev. (Yeshiva
University), 5% due 7/1/2030 Aa2 1,178,725
--------------------------------------------------------------------------------------------
4,000,000 New York State Energy Research & Development Authority
Gas Facilities Rev. (KeySpan Corporation),
5.50% due 1/1/2021 A2 4,014,880
--------------------------------------------------------------------------------------------
2,625,000 New York State Housing Finance Agency Rev. (Xxxxxxxx
Village Project), 7.75% due 8/15/2017* A2 2,660,385
--------------------------------------------------------------------------------------------
2,000,000 New York State Local Government Assistance Corporation
Rev., 5% due 4/1/2019 Aa3 2,048,420
--------------------------------------------------------------------------------------------
470,000 New York State Mortgage Agency Rev. (Homeowner Mortgage),
5.50% due 10/1/2028* Aa1 472,684
--------------------------------------------------------------------------------------------
305,000 New York State Mortgage Agency Rev. (Homeowner Mortgage),
5.65% due 4/1/2030* Aa1 308,465
--------------------------------------------------------------------------------------------
2,600,000 New York State Thruway Authority General Rev., 5% due
1/1/2025 Aa3 2,493,634
--------------------------------------------------------------------------------------------
500,000 New York State Thruway Authority Highway and Bridge
Revs., 5% due 4/1/2025 A2 479,390
--------------------------------------------------------------------------------------------
1,000,000 New York State Urban Development Corporation State
Personal Income Tax Rev. (State Facilities & Equipment),
5% due 3/15/2033o AAA++ 1,069,330
--------------------------------------------------------------------------------------------
2,000,000 New York State Urban Development Corporation State
Personal Income Tax Rev. (State Facilities & Equipment),
5.25% due 3/15/2032o AAA++ 2,136,980
--------------------------------------------------------------------------------------------
4,000,000 Onondaga County, NY Industrial Development Agency Sewer
Facilities Rev. (Xxxxxxx-Xxxxx Squibb Co. Project),
5.75% due 3/1/2024* A2 3,695,680
--------------------------------------------------------------------------------------------
2,250,000 Port Authority of New York and New Jersey Consolidated
Rev., 6.125% due 6/1/2094 Aa3 2,350,395
--------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
29
Portfolios of Investments
September 30, 2008
New York Fund (continued)
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$1,000,000 Rensselaer County, NY Industrial Development Agency Civic
Facility Rev. (Polytechnic Institute Dormitory Project),
5.125% due 8/1/2029 A2 $ 920,030
--------------------------------------------------------------------------------------------
380,000 Triborough Bridge & Tunnel Authority, NY General Purpose
Rev., 5% due 1/1/2032 Aa2 355,205
--------------------------------------------------------------------------------------------
2,120,000 Triborough Bridge & Tunnel Authority, NY General Purpose
Rev., 5% due 1/1/2032o AAA++ 2,246,988
--------------------------------------------------------------------------------------------
1,800,000 Triborough Bridge & Tunnel Authority, NY General Purpose
Rev., 5.50% due 1/1/2030o AAA++ 1,921,428
--------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $57,714,041) -- 91.3% 57,399,512
--------------------------------------------------------------------------------------------
Short-Term Holdings
--------------------------------------------------------------------------------------------
400,000 California Infrastructure & Economic Development Bank
Rev. Series B (X. Xxxx Xxxxx Trust), VRDN, due 4/1/2033 VMIG 1 400,000
--------------------------------------------------------------------------------------------
400,000 California Infrastructure & Economic Development Bank
Rev. Series D (X. Xxxx Getty Trust), VRDN, due 4/1/2033 VMIG 1 400,000
--------------------------------------------------------------------------------------------
300,000 Kansas Development Finance Authority Rev. (Sisters of
Charity), VRDN , due 12/1/2019 VMIG 1 300,000
--------------------------------------------------------------------------------------------
200,000 Lincoln County, WY Pollution Control Rev. (Exxon
Project), VRDN, due 11/1/2014 P-1 200,000
--------------------------------------------------------------------------------------------
205,000 Massachusetts Health & Educational Facilities Rev., VRDN,
due 11/1/2049 VMIG 1 205,000
--------------------------------------------------------------------------------------------
400,000 Massachusetts State GOs, VRDN, due 3/1/2026 VMIG 1 400,000
--------------------------------------------------------------------------------------------
600,000 Xxxxxxxxxx County, MD GOs, VRDN, due 6/1/2026 VMIG 1 600,000
--------------------------------------------------------------------------------------------
2,250,000 St. Xxxxxxxx County, NY Industrial Development Agency
Civic Facility Rev. (Clarkson University Project),
5.50% due 7/1/2029o A3 2,326,320
--------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $4,714,029) -- 7.7% 4,831,320
--------------------------------------------------------------------------------------------
Total Investments (Cost $62,428,070) -- 99.0% 62,230,832
--------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.0% 658,451
--------------------------------------------------------------------------------------------
Net Assets -- 100.0% $62,889,283
--------------------------------------------------------------------------------------------
Ohio Fund
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$3,000,000 American Municipal Power -- OH, Inc. Prairie State Energy
Campus Project Rev., 5.25% due 2/15/2025 A1 $ 2,872,710
--------------------------------------------------------------------------------------------
3,600,000 Cincinnati, OH GOs (Police and Firemen's Disability), 6%
due 12/1/2035o Aa1 3,774,924
--------------------------------------------------------------------------------------------
875,000 Cincinnati, OH GOs, 5% due 12/1/2023 Aa1 859,434
--------------------------------------------------------------------------------------------
500,000 Cleveland, OH Public Power System Rev., 5% due 11/15/2028 A2 463,455
--------------------------------------------------------------------------------------------
2,000,000 Cleveland, OH Water Rev., 5% due 1/1/2024 Aa2 1,927,480
--------------------------------------------------------------------------------------------
85,000 Cleveland, OH Waterworks Improvement First Mortgage Rev.,
5.75% due 1/1/2021 Aa2 85,132
--------------------------------------------------------------------------------------------
2,500,000 Columbus, OH GOs, 5% due 5/15/2011 Aaa 2,632,075
--------------------------------------------------------------------------------------------
1,435,000 Columbus, OH GOs, 5% due 12/15/2021 Aaa 1,449,422
--------------------------------------------------------------------------------------------
4,000,000 Columbus, OH Sewer System Rev., 5% due 6/1/2027 Aa2 3,858,560
--------------------------------------------------------------------------------------------
7,000,000 Franklin County, OH GOs, 5.375% due 12/1/2020 Aaa 7,159,320
--------------------------------------------------------------------------------------------
1,000,000 Franklin County, OH Hospital Improvement Rev. (The
Children's Hospital Project), 5% due 5/1/2025 Aa2 930,560
--------------------------------------------------------------------------------------------
4,000,000 Franklin County, OH Hospital Improvement Rev. (The
Children's Hospital Project), 5.25% due 5/1/2031o Aa2 4,255,880
--------------------------------------------------------------------------------------------
1,000,000 Xxxxxxxx County, OH Sales Tax Rev., 5% due 12/1/2026 Aa3 947,330
--------------------------------------------------------------------------------------------
1,000,000 Xxxxxxxx County, OH Sales Tax Rev., 5% due 12/1/2032 Aaa 928,470
--------------------------------------------------------------------------------------------
3,425,000 Xxxxxxxx County, OH Sewer System Improvement Rev. (The
Metropolitan Sewer District of Greater Cincinnati),
5% due 12/1/2025 Aa3 3,291,185
--------------------------------------------------------------------------------------------
1,000,000 Xxxxxxxx County, OH Sewer System Rev. (The Metropolitan
Sewer District of Greater Cincinnati), 5% due 12/1/2026 Aa3 956,210
--------------------------------------------------------------------------------------------
2,600,000 Xxxxxxxxxx County, OH GOs, 5% due 12/1/2024 Aa2 2,535,104
--------------------------------------------------------------------------------------------
2,000,000 Ohio Higher Educational Facilities Rev. (Case Western
Reserve University Project), 5% due 12/1/2029 A1 1,840,500
--------------------------------------------------------------------------------------------
4,000,000 Ohio Higher Educational Facilities Rev. (Xxxxxxx
University), 5% due 11/1/2023 Aa3 3,929,200
--------------------------------------------------------------------------------------------
1,250,000 Ohio Housing Finance Agency Residential Mortgage Rev.
(Mortgage-Backed Securities Program), 5.25% due 9/1/2028 Aaa 1,183,462
--------------------------------------------------------------------------------------------
885,000 Ohio Housing Finance Agency Rev. (Residential Mortgage),
5.40% due 9/1/2029o Aaa 787,420
--------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
30
Portfolios of Investments
September 30, 2008
Ohio Fund (continued)
--------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------
$2,120,000 Ohio State Mental Health Capital Facilities
Rev., 5% due 6/1/2012 Aaa $ 2,246,734
--------------------------------------------------------------------------------
2,230,000 Ohio State Mental Health Capital Facilities
Rev., 5% due 6/1/2013 Aaa 2,374,615
--------------------------------------------------------------------------------
1,000,000 Ohio State Sewage Facilities Rev.
(Anheuser-Xxxxx Project), 6% due 8/1/2038o Baa2 901,760
--------------------------------------------------------------------------------
3,000,000 Ohio State University (General Receipts
Bonds), 5% due 6/1/2025 Aa2 2,868,960
--------------------------------------------------------------------------------
1,000,000 Ohio State University (General Receipts
Bonds), 5.125% due 12/1/2031 Aa2 963,820
--------------------------------------------------------------------------------
3,000,000 Ohio State University (General Receipts
Bonds), 5.80% due 12/1/2029o Aa2 3,147,900
--------------------------------------------------------------------------------
2,625,000 Ohio State Water Development Authority Rev.
(Drinking Water Assistance Fund), 5.25% due
12/1/2022 Aaa 2,693,827
--------------------------------------------------------------------------------
430,000 Ohio State Water Development Authority Rev.
(Safe Water), 9.375% due 12/1/2010++ Aaa 451,384
--------------------------------------------------------------------------------
1,500,000 Ohio Turnpike Commission Rev., 5.25% due
2/15/2031 Aa3 1,470,885
--------------------------------------------------------------------------------
3,000,000 Ohio Turnpike Commission Rev., 5.50% due
2/15/2026 Aa3 2,979,900
--------------------------------------------------------------------------------
1,500,000 Puerto Rico Electric Power Authority Rev.,
5.375% due 7/1/2023 A3 1,413,120
--------------------------------------------------------------------------------
4,000,000 Puerto Rico Highway & Transportation
Authority Rev., 5.50% due 7/1/2036o Aaa 4,421,560
--------------------------------------------------------------------------------
2,500,000 Puerto Rico Infrastructure Financing
Authority GOs, 5.50% due 10/1/2040 Aaa 2,514,400
--------------------------------------------------------------------------------
2,300,000 University of Toledo, OH (General Receipts
Bonds), 5.125% due 6/1/2030o AAA++ 2,427,604
--------------------------------------------------------------------------------
Total Municipal Bonds (Cost $79,050,458) -- 92.7% 77,544,302
--------------------------------------------------------------------------------
Short-Term Holdings
--------------------------------------------------------------------------------
1,250,000 Franklin County, OH Hospital Improvement Rev.
(The Children's Hospital Project), 5.20% due
5/1/2029o Aa2 1,295,025
--------------------------------------------------------------------------------
445,000 Kansas Development Finance Authority Rev.
(Sisters of Charity), VRDN, due 12/1/2019 VMIG 1 445,000
--------------------------------------------------------------------------------
1,195,000 Lincoln County, WY Pollution Control Rev.
(Exxon Project), VRDN, due 11/1/2014 P-1 1,195,000
--------------------------------------------------------------------------------
500,000 Massachusetts Health & Educational Facilities
Authority Rev. (Wellesley College), VRDN, due
7/1/2039 VMIG 1 500,000
--------------------------------------------------------------------------------
1,150,000 Massachusetts State Development Finance
Agency Rev. (Harvard University), VRDN, due
7/15/2036 VMIG 1 1,150,000
--------------------------------------------------------------------------------
300,000 New York City, NY Municipal Water Finance
Authority (Water & Sewer System Rev.), VRDN,
due 6/15/2033 VMIG 1 300,000
--------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $4,824,428) -- 5.9% 4,885,025
--------------------------------------------------------------------------------
Total Investments (Cost $83,874,886) -- 98.6% 82,429,327
--------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.4% 1,202,864
--------------------------------------------------------------------------------
Net Assets -- 100.0% $83,632,191
--------------------------------------------------------------------------------
Oregon Fund
--------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------
$2,000,000 Xxxxxx County, OR Hospital Facilities
Authority Rev. (Samaritan Health Services
Project), 5.125% due 10/1/2028 A-++ $ 1,759,620
--------------------------------------------------------------------------------
1,500,000 Clackamas County, OR Hospital Facility
Authority Rev. (Legacy Health System), 5.25%
due 2/15/2018 A1 1,508,445
--------------------------------------------------------------------------------
1,000,000 Clackamas County, OR Hospital Facility
Authority Rev. (Legacy Health System), 5.25%
due 5/1/2021 A1 976,300
--------------------------------------------------------------------------------
1,350,000 Clackamas County, OR Recreational Facilities
Rev. (North Clackamas Parks & Recreation
District), 5.70% due 4/1/2013o NR 1,431,284
--------------------------------------------------------------------------------
1,000,000 Clackamas County, OR School District GOs, 5%
due 6/15/2025o Aaa 1,053,530
--------------------------------------------------------------------------------
1,500,000 Deschutes County, OR Administrative School
District No.1 (Bend-XxXxxx) GOs, 5.50% due
6/15/2016o Aaa 1,599,675
--------------------------------------------------------------------------------
2,000,000 Lake Oswego School District, OR GOs, 5.25%
due 6/1/2023 Aaa 2,018,220
--------------------------------------------------------------------------------
1,000,000 Multnomah County, OR Hospital Facilities
Authority Rev. (Providence Health System),
5.25% due 10/1/2024 Aa2 958,230
--------------------------------------------------------------------------------
2,000,000 Northern Wasco County, OR People's Utility
District Rev. (XxXxxx Dam Fishway Project),
5.20% due 12/1/2024 Aaa 1,999,820
--------------------------------------------------------------------------------
2,000,000 Oregon Department of Administrative Services
Certificates of Participation, 5% due 5/1/2026 Aa3 1,903,260
--------------------------------------------------------------------------------
1,000,000 Oregon Department of Administrative Services
Certificates of Participation, 6% due
5/1/2026o Aaa 1,059,550
--------------------------------------------------------------------------------
2,000,000 Oregon Department of Transportation Highway
User Tax Rev., 5.125% due 11/15/2026o AAA++ 2,144,400
--------------------------------------------------------------------------------
750,000 Oregon Facilities Authority Rev. (Linfield
College Project), 5% due 10/1/2025 Baa1 672,217
--------------------------------------------------------------------------------
390,000 Oregon Health Sciences University Rev., 5.25%
due 7/1/2028 A2 353,863
--------------------------------------------------------------------------------
2,000,000 Oregon Health, Housing, Educational &
Cultural Facilities Authority Rev. (Linfield
College Project), 5.25% due 10/1/2023 Baa1 1,803,500
--------------------------------------------------------------------------------
--------
See footnotes on page 33.
31
Portfolios of Investments
September 30, 2008
Oregon Fund (continued)
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$ 580,000 Oregon Housing & Community Services Department Mortgage
Rev. (Single Family Mortgage Program), 4.40% due 7/1/2020 Aa2 $ 536,071
--------------------------------------------------------------------------------------------
2,000,000 Oregon Housing & Community Services Department Rev.
(Multi-Family Housing), 6.05% due 7/1/2042* Aaa 1,864,420
--------------------------------------------------------------------------------------------
2,500,000 Oregon State Bond Bank Rev. (Oregon Economic & Community
Development Department), 5.50% due 1/1/2026 Aa3 2,509,725
--------------------------------------------------------------------------------------------
1,500,000 Oregon State Facilities Authority Rev. (Willamette
University Project), 5% due 10/1/2027 A++ 1,372,590
--------------------------------------------------------------------------------------------
1,500,000 Portland, OR Water System Rev., 5% due 10/1/2013 Aa2 1,599,255
--------------------------------------------------------------------------------------------
950,000 Port of Portland, OR International Airport Rev., 7.10%
due 7/1/2021*o A2 1,056,932
--------------------------------------------------------------------------------------------
1,000,000 Puerto Rico Electric Power Authority Rev., 5% due 7/1/2024 A3 900,800
--------------------------------------------------------------------------------------------
1,500,000 Puerto Rico Highway & Transportation Authority Rev.,
5.375% due 7/1/2036o AAA++ 1,606,740
--------------------------------------------------------------------------------------------
730,000 Puerto Rico Ports Authority Rev., 7% due 7/1/2014* Baa3 730,730
--------------------------------------------------------------------------------------------
500,000 Tri-County Metropolitan Transportation District, OR
Payroll Tax & Grant Receipt Rev., 5% due 5/1/2012 A1 523,405
--------------------------------------------------------------------------------------------
1,000,000 Umatilla County, OR Hospital Facility Authority Rev.
(Catholic Health Initiatives), 5.50% due 3/1/2032++ Aa2 1,003,040
--------------------------------------------------------------------------------------------
500,000 Virgin Islands Public Finance Authority Rev., 5.50% due
10/1/2022 BBB++ 470,230
--------------------------------------------------------------------------------------------
970,000 Washington County, OR GOs, 5% due 6/1/2019 Aa2 999,410
--------------------------------------------------------------------------------------------
1,300,000 Washington County, OR GOs, 5% due 6/1/2020 Aa2 1,321,645
--------------------------------------------------------------------------------------------
2,355,000 Washington County, OR GOs, 5% due 6/1/2026o Aa2 2,480,003
--------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $40,576,720) -- 89.2% 40,216,910
--------------------------------------------------------------------------------------------
Short-Term Holdings
--------------------------------------------------------------------------------------------
500,000 California Infrastructure & Economic Development Bank
Rev. Series B (X. Xxxx Xxxxx Trust), VRDN, due 4/1/2033 VMIG 1 500,000
--------------------------------------------------------------------------------------------
375,000 California Infrastructure & Economic Development Bank
Rev. Series D (X. Xxxx Getty Trust), VRDN, due 4/1/2033 VMIG 1 375,000
--------------------------------------------------------------------------------------------
300,000 Kansas Development Finance Authority Rev. (Sisters of
Charity), VRDN, due 12/1/2019 VMIG 1 300,000
--------------------------------------------------------------------------------------------
300,000 Lincoln County, WY Pollution Control Rev. (Exxon
Project), VRDN, due 11/1/2014 P-1 300,000
--------------------------------------------------------------------------------------------
1,600,000 Massachusetts Health & Educational Facilities Authority
Rev. (Harvard University), VRDN, due 11/1/2049 VMIG 1 1,600,000
--------------------------------------------------------------------------------------------
400,000 Massachusetts Health & Educational Facilities Authority
Rev. (Wellesley College), VRDN, due 7/1/2039 VMIG 1 400,000
--------------------------------------------------------------------------------------------
600,000 New York City, NY Municipal Water Finance Authority
(Water & Sewer System Rev.), VRDN, due 6/15/2033 VMIG 1 600,000
--------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $4,075,000) -- 9.0% 4,075,000
--------------------------------------------------------------------------------------------
Total Investments (Cost $44,651,720) -- 98.2% 44,291,910
--------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.8% 813,985
--------------------------------------------------------------------------------------------
Net Assets -- 100.0% $45,105,895
--------------------------------------------------------------------------------------------
South Carolina Fund
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$4,000,000 Berkeley County, SC GOs, 5% due 9/1/2028 Aaa $ 3,773,440
--------------------------------------------------------------------------------------------
1,340,000 Berkeley County, SC Water & Sewer Rev., 5.25% due
6/1/2023o A2 1,444,332
--------------------------------------------------------------------------------------------
245,000 Berkeley County, SC Water & Sewer Rev., 5.25% due 6/1/2023 A2 245,181
--------------------------------------------------------------------------------------------
1,810,000 Coastal Carolina University, SC Improvement Rev., 5.30%
due 6/1/2026 Aa3 1,765,275
--------------------------------------------------------------------------------------------
1,000,000 Georgetown County, SC Environmental Improvement Rev.
(International Paper Company), 5.95% due 3/15/2014 Baa3 993,090
--------------------------------------------------------------------------------------------
4,000,000 Grand Stand, SC Water & Sewer Authority Rev., 5% due
6/1/2031 Aaa 3,737,440
--------------------------------------------------------------------------------------------
3,760,000 Horry County, SC School District GOs, 5.125% due 3/1/2022 Aa1 3,772,370
--------------------------------------------------------------------------------------------
1,000,000 Lexington County, SC Hospital Rev. (Health Services
District, Inc.), 5% due 11/1/2020 A2 929,080
--------------------------------------------------------------------------------------------
2,000,000 Lexington County, SC Hospital Rev. (Health Services
District, Inc.), 5.125% due 11/1/2026 Aaa 1,919,080
--------------------------------------------------------------------------------------------
2,000,000 Lexington County, SC Hospital Rev. (Health Services
District, Inc.), 5.50% due 11/1/2032o A2 2,153,920
--------------------------------------------------------------------------------------------
1,240,000 North Charleston, SC Sewer District Rev., 6.375% due
7/1/2012 A2 1,317,674
--------------------------------------------------------------------------------------------
--------
See footnotes on page 33.
32
Portfolios of Investments
September 30, 2008
South Carolina Fund (continued)
--------------------------------------------------------------------------------------------
Face
Amount Municipal Bonds Rating+ Value
--------------------------------------------------------------------------------------------
$1,250,000 Piedmont, SC Municipal Power Agency Electric Rev., 6.25%
due 1/1/2021 Baa1 $ 1,331,500
--------------------------------------------------------------------------------------------
1,500,000 Puerto Rico Electric Power Authority Rev., 5.25% due
7/1/2021 A2 1,487,505
--------------------------------------------------------------------------------------------
2,320,000 Puerto Rico Electric Power Authority Rev., 5.25% due
7/1/2023 A2 2,270,862
--------------------------------------------------------------------------------------------
1,000,000 Puerto Rico Highway & Transportation Authority Rev.,
5.50% due 7/1/2036o Aaa 1,105,390
--------------------------------------------------------------------------------------------
2,500,000 Puerto Rico Industrial, Tourist, Educational, Medical &
Environmental Control Facilities Financing Authority
Higher Education Rev. (Inter American University of
Puerto Rico Project), 5% due 10/1/2022 A2 2,263,225
--------------------------------------------------------------------------------------------
4,000,000 Rock Hill, SC Utility System Rev., 5% due 1/1/2030 Aaa 3,760,360
--------------------------------------------------------------------------------------------
3,000,000 South Carolina Jobs Economic Development Authority
Hospital Rev. (Anderson Area Medical Center, Inc.),
5.25% due 2/1/2018 AA-++ 3,012,660
--------------------------------------------------------------------------------------------
3,165,000 South Carolina Jobs Economic Development Authority
Hospital Rev. (Bon Secours Health System, Inc.),
5.625% due 11/15/2030 A3 2,862,743
--------------------------------------------------------------------------------------------
835,000 South Carolina Jobs Economic Development Authority
Hospital Rev. (Bon Secours Health System, Inc.),
5.625% due 11/15/2030o A3 907,921
--------------------------------------------------------------------------------------------
3,100,000 South Carolina Public Service Authority Rev. (Xxxxxx
Xxxxxx), 5% due 1/1/2027 Aa2 2,929,438
--------------------------------------------------------------------------------------------
610,000 South Carolina State Housing, Finance & Development
Authority Mortgage Rev., 5.40% due 7/1/2029* Aaa 542,973
--------------------------------------------------------------------------------------------
5,000,000 South Carolina State Ports Authority Rev., 5.30% due
7/1/2026* Aaa 4,519,200
--------------------------------------------------------------------------------------------
5,000,000 South Carolina Transportation Infrastructure Bank Rev.,
5.375% due 10/1/2024o Aa3 5,199,400
--------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $55,555,809) -- 87.0% 54,244,059
--------------------------------------------------------------------------------------------
Short-Term Holdings
--------------------------------------------------------------------------------------------
400,000 California Educational Facilities Authority Rev. Series
S-4 (Stanford University), VRDN, due 11/1/2050 VMIG 1 400,000
--------------------------------------------------------------------------------------------
300,000 California Infrastructure & Economic Development Bank
Rev. Series B (X Xxxx Xxxxx Trust), VRDN, due 4/1/2033 VMIG 1 300,000
--------------------------------------------------------------------------------------------
3,190,000 Coastal Carolina University, SC Improvement Rev., 5.30%
due 6/1/2026o Aa3 3,285,158
--------------------------------------------------------------------------------------------
400,000 Lincoln County, WY Pollution Control Rev. (Exxon
Project), VRDN, due 11/1/2014 P-1 400,000
--------------------------------------------------------------------------------------------
1,200,000 Massachusetts Health & Educational Facilities Rev., VRDN,
due 11/1/2049 VMIG 1 1,200,000
--------------------------------------------------------------------------------------------
500,000 Missouri State Health & Educational Facilities Authority
Rev. (Washington University), VRDN due 2/15/2034 VMIG 1 500,000
--------------------------------------------------------------------------------------------
400,000 Montana Facilities Finance Authority Rev. (Sisters of
Charity), VRDN, due 12/1/2025 VMIG 1 400,000
--------------------------------------------------------------------------------------------
635,000 New Jersey State Educational Facilities Authority Rev.
(Princeton University), VRDN, due 7/1/2023 VMIG 1 635,000
--------------------------------------------------------------------------------------------
Total Short-Term Holdings (Cost $7,006,803) -- 11.4% 7,120,158
--------------------------------------------------------------------------------------------
Total Investments (Cost $62,562,612) -- 98.4% 61,364,217
--------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.6% 975,785
--------------------------------------------------------------------------------------------
Net Assets -- 100.0% $62,340,002
--------------------------------------------------------------------------------------------
--------
+ Credit ratings are primarily those issued by Xxxxx'x Investors Service, Inc.
("Xxxxx'x"). Where Xxxxx'x ratings have not been assigned, ratings from
Standard & Poor's Ratings Services ("S&P") were used (indicated by the symbol
++). Pre-refunded and escrowed-to-maturity securities that have been rerated
as AAA by S&P but have not been rerated by Moody's have been reported as AAA.
Ratings have not been audited by Deloitte & Touche LLP.
++ Escrowed-to-maturity security.
o Pre-refunded security. Such securities that will be paid off within one year
are classified as short-term holdings.
* Interest income earned from this security is subject to the federal
alternative minimum tax.
VRDN -- Variable Rate Demand Notes
See Notes to Financial Statements.
33
Statements of Assets and Liabilities
September 30, 2008
National Colorado Georgia Louisiana Maryland Massachusetts Michigan
Fund Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------
Assets:
------------------------------------------------------------------------------------------------------------------------------
Investments, at value (see
portfolios
of investments):
------------------------------------------------------------------------------------------------------------------------------
Long-term holdings $47,520,421 $26,745,598 $20,438,345 $19,115,338 $29,074,427 $43,836,517 $65,245,154
------------------------------------------------------------------------------------------------------------------------------
Short-term holdings 10,903,300 2,942,975 2,784,427 4,828,050 2,790,000 14,831,676 1,930,000
------------------------------------------------------------------------------------------------------------------------------
Total investments* 58,423,721 29,688,573 23,222,772 23,943,388 31,864,427 58,668,193 67,175,154
------------------------------------------------------------------------------------------------------------------------------
Cash** 218,892 185,617 74,993 219,852 261,596 60,774 235,729
------------------------------------------------------------------------------------------------------------------------------
Interest receivable 716,888 500,003 413,655 348,593 471,046 675,059 1,172,832
------------------------------------------------------------------------------------------------------------------------------
Receivable for Capital Stock sold 112,104 9,223 204 1,447 278,706 33,230 9,555
------------------------------------------------------------------------------------------------------------------------------
Expenses prepaid to shareholder
service agent 2,568 1,331 998 903 1,521 2,568 2,805
------------------------------------------------------------------------------------------------------------------------------
Receivable for securities sold -- -- -- 45,000 -- -- --
------------------------------------------------------------------------------------------------------------------------------
Other 4,047 1,864 1,514 2,488 1,983 3,610 4,442
------------------------------------------------------------------------------------------------------------------------------
Total Assets 59,478,220 30,386,611 23,714,136 24,561,671 32,879,279 59,443,434 68,600,517
------------------------------------------------------------------------------------------------------------------------------
Liabilities:
------------------------------------------------------------------------------------------------------------------------------
Payable for Capital Stock
repurchased 675,625 100 201,577 1,693 78,614 170,782 296,885
------------------------------------------------------------------------------------------------------------------------------
Dividends payable 100,142 42,813 37,624 34,922 48,644 93,705 101,866
------------------------------------------------------------------------------------------------------------------------------
Management fee payable 25,018 12,696 10,169 10,348 13,739 24,755 29,034
------------------------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1)
fees payable 6,430 2,917 2,727 2,742 3,771 6,647 7,030
------------------------------------------------------------------------------------------------------------------------------
Accrued expenses and other 40,974 26,124 25,897 23,027 25,653 39,682 44,761
------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 848,189 84,650 277,994 72,732 170,421 335,571 479,576
------------------------------------------------------------------------------------------------------------------------------
Net Assets $58,630,031 $30,301,961 $23,436,142 $24,488,939 $32,708,858 $59,107,863 $68,120,941
------------------------------------------------------------------------------------------------------------------------------
Composition of Net Assets:
------------------------------------------------------------------------------------------------------------------------------
Capital Stock, at par ($0.001 par
value; 100,000,000 shares
authorized
for each Fund):
------------------------------------------------------------------------------------------------------------------------------
Class A $ 7,722 $ 4,105 $ 3,205 $ 3,201 $ 4,169 $ 7,408 $ 8,645
------------------------------------------------------------------------------------------------------------------------------
Class C 299 140 146 137 202 334 251
------------------------------------------------------------------------------------------------------------------------------
Additional paid-in capital 61,552,761 30,081,280 25,136,162 25,166,968 32,862,173 56,543,310 69,542,592
------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment
income (Note 6) 237,109 141,236 77,045 101,946 87,985 282,366 403,020
------------------------------------------------------------------------------------------------------------------------------
Undistributed/accumulated net
realized gain (loss) (Note 6) (1,134,890) 75,279 (725,541) 330,457 64,779 297,041 167,429
------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments (2,032,970) (79) (1,054,875) (1,113,770) (310,450) 1,977,404 (2,000,996)
------------------------------------------------------------------------------------------------------------------------------
Net Assets $58,630,031 $30,301,961 $23,436,142 $24,488,939 $32,708,858 $59,107,863 $68,120,941
------------------------------------------------------------------------------------------------------------------------------
Net Assets:
------------------------------------------------------------------------------------------------------------------------------
Class A $56,445,706 $29,305,557 $22,414,350 $23,484,221 $31,192,234 $56,559,895 $66,199,463
------------------------------------------------------------------------------------------------------------------------------
Class C $ 2,184,325 $ 996,404 $ 1,021,792 $ 1,004,718 $ 1,516,624 $ 2,547,968 $ 1,921,478
------------------------------------------------------------------------------------------------------------------------------
Shares of Capital Stock Outstanding:
------------------------------------------------------------------------------------------------------------------------------
Class A 7,722,375 4,104,547 3,205,494 3,201,284 4,168,517 7,407,555 8,645,218
------------------------------------------------------------------------------------------------------------------------------
Class C 298,753 139,792 145,684 137,075 202,335 333,536 251,251
------------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share:
------------------------------------------------------------------------------------------------------------------------------
Class A $7.31 $7.14 $6.99 $7.34 $7.48 $7.64 $7.66
------------------------------------------------------------------------------------------------------------------------------
Class C $7.31 $7.13 $7.01 $7.33 $7.50 $7.64 $7.65
------------------------------------------------------------------------------------------------------------------------------
--------
* Cost of total investments $60,456,691 $29,688,652 $24,277,647 $25,057,158 $32,174,877 $56,690,789 $69,176,150
** Includes restricted cash as
follows: $ 13,000 $ 6,000 $ 2,000 $ 4,000 $ 5,000 $ 11,000 $ 11,000
See Notes to Financial Statements.
34
Statements of Assets and Liabilities
September 30, 2008
Minnesota Missouri New York Ohio Oregon South Carolina
Fund Fund Fund Fund Fund Fund
----------------------------------------------------------------------------------------------------------------------------
Assets:
----------------------------------------------------------------------------------------------------------------------------
Investments, at value (see portfolios of
investments):
----------------------------------------------------------------------------------------------------------------------------
Long-term holdings $61,540,701 $23,311,713 $57,399,512 $77,544,302 $40,216,910 $54,244,059
----------------------------------------------------------------------------------------------------------------------------
Short-term holdings 4,420,000 1,000,000 4,831,320 4,885,025 4,075,000 7,120,158
----------------------------------------------------------------------------------------------------------------------------
Total investments* 65,960,701 24,311,713 62,230,832 82,429,327 44,291,910 61,364,217
----------------------------------------------------------------------------------------------------------------------------
Cash** 172,290 331,932 304,274 51,528 211,020 351,943
----------------------------------------------------------------------------------------------------------------------------
Interest receivable 984,913 345,982 816,902 1,337,929 765,034 914,030
----------------------------------------------------------------------------------------------------------------------------
Receivable for Capital Stock sold 191 -- 201,995 47,015 -- 6,971
----------------------------------------------------------------------------------------------------------------------------
Expenses prepaid to shareholder service
agent 2,853 1,046 2,472 3,661 1,902 2,425
----------------------------------------------------------------------------------------------------------------------------
Other 4,114 1,605 3,954 5,326 2,755 3,854
----------------------------------------------------------------------------------------------------------------------------
Total Assets 67,125,062 24,992,278 63,560,429 83,874,786 45,272,621 62,643,440
----------------------------------------------------------------------------------------------------------------------------
Liabilities:
----------------------------------------------------------------------------------------------------------------------------
Payable for Capital Stock repurchased 1,547,100 18,302 494,052 30,441 40,955 131,555
----------------------------------------------------------------------------------------------------------------------------
Dividends payable 93,329 38,087 100,155 117,808 69,442 96,350
----------------------------------------------------------------------------------------------------------------------------
Management fee payable 28,180 10,556 26,633 35,721 18,908 26,509
----------------------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees
payable 5,850 2,341 9,143 7,963 5,406 8,641
----------------------------------------------------------------------------------------------------------------------------
Accrued expenses and other 43,458 23,120 41,163 50,662 32,015 40,383
----------------------------------------------------------------------------------------------------------------------------
Total Liabilities 1,717,917 92,406 671,146 242,595 166,726 303,438
----------------------------------------------------------------------------------------------------------------------------
Net Assets $65,407,145 $24,899,872 $62,889,283 $83,632,191 $45,105,895 $62,340,002
----------------------------------------------------------------------------------------------------------------------------
Composition of Net Assets:
----------------------------------------------------------------------------------------------------------------------------
Capital Stock, at par ($0.001 par value;
100,000,000 shares authorized for each
Fund):
----------------------------------------------------------------------------------------------------------------------------
Class A $ 8,937 $ 3,404 $ 7,594 $ 11,035 $ 5,803 $ 7,673
----------------------------------------------------------------------------------------------------------------------------
Class C 75 57 648 197 337 629
----------------------------------------------------------------------------------------------------------------------------
Additional paid-in capital 65,441,759 24,835,504 62,868,888 83,983,672 45,103,686 63,265,046
----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (Note
6) 333,756 164,732 209,391 340,426 218,390 212,713
----------------------------------------------------------------------------------------------------------------------------
Undistributed/accumulated net realized gain
(loss) (Note 6) 78,210 (15,361) -- 742,420 137,489 52,336
----------------------------------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (455,592) (88,464) (197,238) (1,445,559) (359,810) (1,198,395)
----------------------------------------------------------------------------------------------------------------------------
Net Assets $65,407,145 $24,899,872 $62,889,283 $83,632,191 $45,105,895 $62,340,002
----------------------------------------------------------------------------------------------------------------------------
Net Assets:
----------------------------------------------------------------------------------------------------------------------------
Class A $64,860,466 $24,490,212 $57,937,322 $82,155,550 $42,632,446 $57,618,969
----------------------------------------------------------------------------------------------------------------------------
Class C $ 546,679 $ 409,660 $ 4,951,961 $ 1,476,641 $ 2,473,449 $ 4,721,033
----------------------------------------------------------------------------------------------------------------------------
Shares of Capital Stock Outstanding:
----------------------------------------------------------------------------------------------------------------------------
Class A 8,936,705 3,403,699 7,593,632 11,035,136 5,803,268 7,673,250
----------------------------------------------------------------------------------------------------------------------------
Class C 75,204 56,926 648,035 197,105 337,031 628,983
----------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share:
----------------------------------------------------------------------------------------------------------------------------
Class A $7.26 $7.20 $7.63 $7.44 $7.35 $7.51
----------------------------------------------------------------------------------------------------------------------------
Class C $7.27 $7.20 $7.64 $7.49 $7.34 $7.51
----------------------------------------------------------------------------------------------------------------------------
--------
* Cost of total investments $66,416,293 $24,400,177 $62,428,070 $83,874,886 $44,651,720 $62,562,612
** Includes restricted cash as follows: $ 16,000 $ 5,000 $ 7,000 $ 13,000 $ 3,000 $ 5,000
See Notes to Financial Statements.
35
Statements of Operations
For the Year Ended September 30, 2008
National Colorado Georgia Louisiana Maryland Massachusetts Michigan
Fund Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------
Investment Income:
------------------------------------------------------------------------------------------------------------------------------
Interest $ 2,879,162 $ 1,495,905 $ 1,305,629 $ 1,282,609 $ 1,563,055 $2,992,418 $ 3,724,600
------------------------------------------------------------------------------------------------------------------------------
Expenses:
------------------------------------------------------------------------------------------------------------------------------
Management fees 304,747 157,069 130,084 130,634 168,641 303,090 380,250
------------------------------------------------------------------------------------------------------------------------------
Shareholder account services 106,228 54,209 45,956 44,228 61,011 104,057 132,973
------------------------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1)
fees 85,030 35,289 37,007 35,471 46,727 85,416 97,508
------------------------------------------------------------------------------------------------------------------------------
Registration 36,253 10,323 10,505 11,398 13,394 13,959 15,431
------------------------------------------------------------------------------------------------------------------------------
Auditing and legal fees 36,055 32,220 31,722 26,456 32,227 40,009 49,203
------------------------------------------------------------------------------------------------------------------------------
Custody and related services 13,834 6,910 7,160 6,320 6,543 16,826 19,233
------------------------------------------------------------------------------------------------------------------------------
Shareholder reports and
communications 7,770 4,271 5,575 3,097 3,132 6,954 7,601
------------------------------------------------------------------------------------------------------------------------------
Directors' fees and expenses 6,087 4,231 3,892 3,883 4,368 6,057 7,028
------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 6,686 5,022 4,369 4,376 4,839 6,704 8,393
------------------------------------------------------------------------------------------------------------------------------
Total Expenses 602,690 309,544 276,270 265,863 340,882 583,072 717,620
------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 2,276,472 1,186,361 1,029,359 1,016,746 1,222,173 2,409,346 3,006,980
------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain
(Loss) on Investments:
------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 10,099 58,110 -- 276,518 52,142 238,250 146,558
------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation of investments (3,631,708) (1,331,482) (2,129,270) (1,940,483) (1,411,015) (1,657,012) (4,244,249)
------------------------------------------------------------------------------------------------------------------------------
Net Loss on Investments (3,621,609) (1,273,372) (2,129,270) (1,663,965) (1,358,873) (1,418,762) (4,097,691)
------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net
Assets from Operations $(1,345,137) $ (87,011) $(1,099,911) $ (647,219) $ (136,700) $ 990,584 $(1,090,711)
------------------------------------------------------------------------------------------------------------------------------
Minnesota Missouri New York Ohio Oregon South Carolina
Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------
Investment Income:
------------------------------------------------------------------------------------------------------------------------------
Interest $ 3,183,223 $ 1,248,008 $ 3,280,068 $ 4,091,902 $ 2,289,343 $3,239,895
------------------------------------------------------------------------------------------------------------------------------
Expenses:
------------------------------------------------------------------------------------------------------------------------------
Management fees 351,237 131,308 332,574 456,120 236,911 330,349
------------------------------------------------------------------------------------------------------------------------------
Shareholder account services 121,856 47,038 108,262 158,081 76,192 105,838
------------------------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1)
fees 74,867 29,712 122,000 103,709 68,915 112,366
------------------------------------------------------------------------------------------------------------------------------
Registration 13,686 10,522 14,621 16,242 11,891 13,921
------------------------------------------------------------------------------------------------------------------------------
Auditing and legal fees 47,836 23,189 38,266 49,762 42,364 43,565
------------------------------------------------------------------------------------------------------------------------------
Custody and related services 13,706 4,602 14,466 21,403 12,887 16,487
------------------------------------------------------------------------------------------------------------------------------
Shareholder reports and
communications 9,278 2,983 7,539 8,509 4,744 6,032
------------------------------------------------------------------------------------------------------------------------------
Directors' fees and expenses 6,663 3,901 6,447 7,993 5,222 6,388
------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 7,962 4,833 7,431 9,594 5,972 7,571
------------------------------------------------------------------------------------------------------------------------------
Total Expenses 647,091 258,088 651,606 831,413 465,098 642,517
------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 2,536,132 989,920 2,628,462 3,260,489 1,824,245 2,597,378
------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain
(Loss) on Investments:
------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 78,101 (19,347) 387 617,859 116,700 20,832
------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation of investments (2,510,397) (1,336,843) (3,365,375) (4,760,286) (2,099,571) (4,117,624)
------------------------------------------------------------------------------------------------------------------------------
Net Loss on Investments (2,432,296) (1,356,190) (3,364,988) (4,142,427) (1,982,871) (4,096,792)
------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net
Assets from Operations $ 103,836 $ (366,270) $ (736,526) $ (881,938) $ (158,626) $ (1,499,414)
------------------------------------------------------------------------------------------------------------------------------
--------
See Notes to Financial Statements.
36
Statements of Changes in Net Assets
National Fund Colorado Fund Georgia Fund
------------------------ ------------------------ ------------------------
Year Ended September 30, Year Ended September 30, Year Ended September 30,
------------------------ ------------------------ ------------------------
2008 2007 2008 2007 2008 2007
----------- ----------- ----------- ----------- ----------- -----------
Operations:
--------------------------------------------------------------------------------------------------------------------
Net investment income $ 2,276,472 $ 2,716,830 $ 1,186,361 $ 1,312,107 $ 1,029,359 $ 1,122,241
--------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 10,099 370,912 58,110 (21,508) -- 107,234
--------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
of investments (3,631,708) (978,034) (1,331,482) (348,316) (2,129,270) (613,612)
--------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
from Operations (1,345,137) 2,109,708 (87,011) 942,283 (1,099,911) 615,863
--------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
--------------------------------------------------------------------------------------------------------------------
Net investment income:
--------------------------------------------------------------------------------------------------------------------
Class A (2,117,877) (2,536,640) (1,139,895) (1,267,630) (980,867) (1,035,097)
--------------------------------------------------------------------------------------------------------------------
Class C (52,895) (66,591) (8,558) (6,329) (18,353) (11,240)
--------------------------------------------------------------------------------------------------------------------
Class D (18,396) (33,452) (3,158) (4,259) (18,402) (27,481)
--------------------------------------------------------------------------------------------------------------------
Total (2,189,168) (2,636,683) (1,151,611) (1,278,218) (1,017,622) (1,073,818)
--------------------------------------------------------------------------------------------------------------------
Net realized long-term gain on
investments:
--------------------------------------------------------------------------------------------------------------------
Class A -- -- -- (214,719) -- --
--------------------------------------------------------------------------------------------------------------------
Class C -- -- -- (1,368) -- --
--------------------------------------------------------------------------------------------------------------------
Class D -- -- -- (936) -- --
--------------------------------------------------------------------------------------------------------------------
Total -- -- -- (217,023) -- --
--------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets from
Distributions (2,189,168) (2,636,683) (1,151,611) (1,495,241) (1,017,622) (1,073,818)
--------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
--------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 7,313,329 982,304 3,115,714 331,138 1,043,410 562,407
--------------------------------------------------------------------------------------------------------------------
Investment of dividends 1,317,564 1,614,180 654,238 710,242 660,669 714,020
--------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 2,320,618 1,892,797 -- 80,660 17,724 178,519
--------------------------------------------------------------------------------------------------------------------
Investment of gain distributions -- -- -- 154,513 -- --
--------------------------------------------------------------------------------------------------------------------
Total 10,951,511 4,489,281 3,769,952 1,276,553 1,721,803 1,454,946
--------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (9,105,186) (11,683,980) (2,948,274) (2,735,527) (2,990,079) (3,386,891)
--------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (473,200) (915,971) (140,158) (34,581) (95,817) (42,676)
--------------------------------------------------------------------------------------------------------------------
Total (9,578,386) (12,599,951) (3,088,432) (2,770,108) (3,085,896) (3,429,567)
--------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
from Capital Share Transactions 1,373,125 (8,110,670) 681,520 (1,493,555) (1,364,093) (1,974,621)
--------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets (2,161,180) (8,637,645) (557,102) (2,046,513) (3,481,626) (2,432,576)
--------------------------------------------------------------------------------------------------------------------
Net Assets:
--------------------------------------------------------------------------------------------------------------------
Beginning of year 60,791,211 69,428,856 30,859,063 32,905,576 26,917,768 29,350,344
--------------------------------------------------------------------------------------------------------------------
End of Year* $58,630,031 $60,791,211 $30,301,961 $30,859,063 $23,436,142 $26,917,768
--------------------------------------------------------------------------------------------------------------------
--------
* Including undistributed net invest-
ment income as follows: $ 237,109 $ 150,418 $ 141,236 $ 141,136 $ 77,045 $ 65,308
See Notes to Financial Statements.
37
Statements of Changes in Net Assets
Louisiana Fund Maryland Fund Massachusetts Fund
------------------------ ------------------------ ------------------------
Year Ended September 30, Year Ended September 30, Year Ended September 30,
------------------------ ------------------------ ------------------------
2008 2007 2008 2007 2008 2007
----------- ----------- ----------- ----------- ----------- -----------
Operations:
--------------------------------------------------------------------------------------------------------------------------
Net investment income $ 1,016,746 $ 1,246,277 $ 1,222,173 $ 1,319,621 $ 2,409,346 $ 2,669,229
--------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 276,518 106,413 52,142 2,910 238,250 348,960
--------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of
investments (1,940,483) (485,433) (1,411,015) (442,347) (1,657,012) (1,256,897)
--------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Operations (647,219) 867,257 (136,700) 880,184 990,584 1,761,292
--------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
--------------------------------------------------------------------------------------------------------------------------
Net investment income:
--------------------------------------------------------------------------------------------------------------------------
Class A (955,351) (1,179,396) (1,123,849) (1,180,633) (2,281,244) (2,522,719)
--------------------------------------------------------------------------------------------------------------------------
Class C (18,859) (14,072) (19,514) (10,815) (77,954) (91,810)
--------------------------------------------------------------------------------------------------------------------------
Class D (11,147) (20,150) (18,359) (39,300) (4,077) (13,986)
--------------------------------------------------------------------------------------------------------------------------
Total (985,357) (1,213,618) (1,161,722) (1,230,748) (2,363,275) (2,628,515)
--------------------------------------------------------------------------------------------------------------------------
Net realized long-term gain on investments:
--------------------------------------------------------------------------------------------------------------------------
Class A (108,197) (89,697) (12,438) (256,397) (373,526) (295,070)
--------------------------------------------------------------------------------------------------------------------------
Class C (1,825) (1,186) (137) (3,413) (18,701) (11,477)
--------------------------------------------------------------------------------------------------------------------------
Class D (2,307) (1,807) (421) (11,486) (1,404) (2,450)
--------------------------------------------------------------------------------------------------------------------------
Total (112,329) (92,690) (12,996) (271,296) (393,631) (308,997)
--------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets from Distributions (1,097,686) (1,306,308) (1,174,718) (1,502,044) (2,756,906) (2,937,512)
--------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
--------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 547,907 790,614 2,107,135 426,524 2,986,482 2,149,254
--------------------------------------------------------------------------------------------------------------------------
Investment of dividends 690,010 798,451 752,965 818,534 1,502,863 1,619,001
--------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 167,635 19,851 308,416 363,271 1,649,010 93,237
--------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 86,916 68,684 10,384 213,974 298,366 235,396
--------------------------------------------------------------------------------------------------------------------------
Total 1,492,468 1,677,600 3,178,900 1,822,303 6,436,721 4,096,888
--------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (2,852,379) (4,450,302) (3,017,039) (3,448,763) (6,181,925) (7,295,982)
--------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (167,085) (153,649) (301,479) (253,806) (304,161) (95,308)
--------------------------------------------------------------------------------------------------------------------------
Total (3,019,464) (4,603,951) (3,318,518) (3,702,569) (6,486,086) (7,391,290)
--------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets
from Capital Share Transactions (1,526,996) (2,926,351) (139,618) (1,880,266) (49,365) (3,294,402)
--------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets (3,271,901) (3,365,402) (1,451,036) (2,502,126) (1,815,687) (4,470,622)
--------------------------------------------------------------------------------------------------------------------------
Net Assets:
--------------------------------------------------------------------------------------------------------------------------
Beginning of year 27,760,840 31,126,242 34,159,894 36,662,020 60,923,550 65,394,172
--------------------------------------------------------------------------------------------------------------------------
End of Year* $24,488,939 $27,760,840 $32,708,858 $34,159,894 $59,107,863 $60,923,550
--------------------------------------------------------------------------------------------------------------------------
--------
* Including undistributed net investment
income as follows: $ 101,946 $ 126,300 $ 87,985 $ 45,287 $ 282,366 $ 250,122
See Notes to Financial Statements.
38
Statements of Changes in Net Assets
Michigan Fund Minnesota Fund Missouri Fund
------------------------ ------------------------ ------------------------
Year Ended September 30, Year Ended September 30, Year Ended September 30,
------------------------ ------------------------ ------------------------
2008 2007 2008 2007 2008 2007
----------- ----------- ----------- ----------- ----------- -----------
Operations:
------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 3,006,980 $ 3,506,745 $ 2,536,132 $ 3,015,875 $ 989,920 $ 1,073,154
------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 146,558 443,278 78,101 233,480 (19,347) 125,117
------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
of investments (4,244,249) (1,874,977) (2,510,397) (1,363,154) (1,336,843) (586,890)
------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Operations (1,090,711) 2,075,046 103,836 1,886,201 (366,270) 611,381
------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
------------------------------------------------------------------------------------------------------------------------------
Net investment income:
------------------------------------------------------------------------------------------------------------------------------
Class A (2,828,127) (3,316,492) (2,431,239) (2,920,069) (941,083) (1,023,879)
------------------------------------------------------------------------------------------------------------------------------
Class C (36,727) (28,690) (7,422) (5,905) (4,747) (1,216)
------------------------------------------------------------------------------------------------------------------------------
Class D (32,075) (56,227) (5,645) (13,041) (5,613) (8,119)
------------------------------------------------------------------------------------------------------------------------------
Total (2,896,929) (3,401,409) (2,444,306) (2,939,015) (951,443) (1,033,214)
------------------------------------------------------------------------------------------------------------------------------
Net realized long-term gain on investments:
------------------------------------------------------------------------------------------------------------------------------
Class A (516,985) (640,700) (354,523) (121,235) (135,007) (200,747)
------------------------------------------------------------------------------------------------------------------------------
Class C (5,435) (6,924) (632) (390) (223) (307)
------------------------------------------------------------------------------------------------------------------------------
Class D (11,541) (14,980) (1,652) (823) (1,698) (2,146)
------------------------------------------------------------------------------------------------------------------------------
Total (533,961) (662,604) (356,807) (122,448) (136,928) (203,200)
------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets from Distributions (3,430,890) (4,064,013) (2,801,113) (3,061,463) (1,088,371) (1,236,414)
------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 932,456 654,376 1,808,882 1,075,626 762,346 329,162
------------------------------------------------------------------------------------------------------------------------------
Investment of dividends 1,926,868 2,263,295 1,655,677 2,043,647 575,420 611,066
------------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 68,455 397,165 92,613 296,054 83,797 21,453
------------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 421,497 514,663 286,517 98,076 100,111 145,773
------------------------------------------------------------------------------------------------------------------------------
Total 3,349,276 3,829,499 3,843,689 3,513,403 1,521,674 1,107,454
------------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (12,006,425) (12,709,655) (6,574,362) (9,668,644) (1,725,057) (3,048,178)
------------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (199,889) (628,343) (433,441) (352,927) (45,623) (280,359)
------------------------------------------------------------------------------------------------------------------------------
Total (12,206,314) (13,337,998) (7,007,803) (10,021,571) (1,770,680) (3,328,537)
------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets
from Capital Share Transactions (8,857,038) (9,508,499) (3,164,114) (6,508,168) (249,006) (2,221,083)
------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets (13,378,639) (11,497,466) (5,861,391) (7,683,430) (1,703,647) (2,846,116)
------------------------------------------------------------------------------------------------------------------------------
Net Assets:
------------------------------------------------------------------------------------------------------------------------------
Beginning of year 81,499,580 92,997,046 71,268,536 78,951,966 26,603,519 29,449,635
------------------------------------------------------------------------------------------------------------------------------
End of Year* $68,120,941 $81,499,580 $65,407,145 $71,268,536 $24,899,872 $26,603,519
------------------------------------------------------------------------------------------------------------------------------
--------
* Including undistributed net investment income
as follows: $ 403,020 $ 319,439 $ 333,756 $ 308,564 $ 164,732 $ 131,752
See Notes to Financial Statements.
39
Statements of Changes in Net Assets
New York Fund Ohio Fund Oregon Fund
------------------------ ------------------------- ------------------------
Year Ended September 30, Year Ended September 30, Year Ended September 30,
------------------------ ------------------------- ------------------------
2008 2007 2008 2007 2008 2007
----------- ----------- ----------- ------------ ----------- -----------
Operations:
---------------------------------------------------------------------------------------------------------------------------
Net investment income $ 2,628,462 $ 2,836,293 $ 3,260,489 $ 3,877,636 $ 1,824,245 $ 1,973,112
---------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 387 269,498 617,859 431,228 116,700 44,433
---------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of
investments (3,365,375) (1,328,902) (4,760,286) (1,595,619) (2,099,571) (683,984)
---------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Operations (736,526) 1,776,889 (881,938) 2,713,245 (158,626) 1,333,561
---------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
---------------------------------------------------------------------------------------------------------------------------
Net investment income:
---------------------------------------------------------------------------------------------------------------------------
Class A (2,368,951) (2,583,515) (3,120,762) (3,704,295) (1,704,281) (1,849,453)
---------------------------------------------------------------------------------------------------------------------------
Class C (150,611) (143,563) (24,782) (22,382) (48,577) (38,994)
---------------------------------------------------------------------------------------------------------------------------
Class D (43,124) (67,524) (9,809) (18,355) (20,152) (33,992)
---------------------------------------------------------------------------------------------------------------------------
Total (2,562,686) (2,794,602) (3,155,353) (3,745,032) (1,773,010) (1,922,439)
---------------------------------------------------------------------------------------------------------------------------
Net realized long-term gain on investments:
---------------------------------------------------------------------------------------------------------------------------
Class A (282,803) (23,312) (226,302) -- (77,532) (384,647)
---------------------------------------------------------------------------------------------------------------------------
Class C (19,812) (1,781) (1,622) -- (2,095) (10,103)
---------------------------------------------------------------------------------------------------------------------------
Class D (9,243) (780) (1,458) -- (1,862) (9,046)
---------------------------------------------------------------------------------------------------------------------------
Total (311,858) (25,873) (229,382) -- (81,489) (403,796)
---------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets from Distributions (2,874,544) (2,820,475) (3,384,735) (3,745,032) (1,854,499) (2,326,235)
---------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
---------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 3,620,476 1,326,686 3,086,467 1,424,228 2,810,435 2,958,985
---------------------------------------------------------------------------------------------------------------------------
Investment of dividends 1,683,959 1,801,685 2,029,788 2,407,164 1,144,226 1,233,759
---------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 947,984 176,460 357,418 130,350 758,083 69,509
---------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 253,361 20,137 177,272 -- 67,918 325,124
---------------------------------------------------------------------------------------------------------------------------
Total 6,505,780 3,324,968 5,650,945 3,961,742 4,780,662 4,587,377
---------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (6,257,126) (6,057,460) (12,694,695) (9,507,395) (5,292,629) (6,764,412)
---------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (591,146) (219,342) (373,839) (393,405) (923,022) (717,845)
---------------------------------------------------------------------------------------------------------------------------
Total (6,848,272) (6,276,802) (13,068,534) (9,900,800) (6,215,651) (7,482,257)
---------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets
from Capital Share Transactions (342,492) (2,951,834) (7,417,589) (5,939,058) (1,434,989) (2,894,880)
---------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets (3,953,562) (3,995,420) (11,684,262) (6,970,845) (3,448,114) (3,887,554)
---------------------------------------------------------------------------------------------------------------------------
Net Assets:
---------------------------------------------------------------------------------------------------------------------------
Beginning of year 66,842,845 70,838,265 95,316,453 102,287,298 48,554,009 52,441,563
---------------------------------------------------------------------------------------------------------------------------
End of Year* $62,889,283 $66,842,845 $83,632,191 $ 95,316,453 $45,105,895 $48,554,009
---------------------------------------------------------------------------------------------------------------------------
--------
* Including undistributed net investment
income as follows: $ 209,391 $ 149,479 $ 340,426 $ 359,802 $ 218,390 $ 193,503
See Notes to Financial Statements.
40
Statements of Changes in Net Assets
South Carolina Fund
---------------------------
Year Ended September 30,
---------------------------
2008 2007
----------- ------------
Operations:
-------------------------------------------------------------------------------------------
Net investment income $ 2,597,378 $ 2,882,073
-------------------------------------------------------------------------------------------
Net realized gain on investments 20,832 81,932
-------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments (4,117,624) (1,013,594)
-------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from Operations (1,499,414) 1,950,411
-------------------------------------------------------------------------------------------
Distributions to Shareholders:
-------------------------------------------------------------------------------------------
Net investment income:
-------------------------------------------------------------------------------------------
Class A (2,399,612) (2,647,462)
-------------------------------------------------------------------------------------------
Class C (122,895) (123,908)
-------------------------------------------------------------------------------------------
Class D (34,897) (59,530)
-------------------------------------------------------------------------------------------
Total (2,557,404) (2,830,900)
-------------------------------------------------------------------------------------------
Net realized long-term gain on investments:
-------------------------------------------------------------------------------------------
Class A (116,599) (388,845)
-------------------------------------------------------------------------------------------
Class C (7,125) (22,658)
-------------------------------------------------------------------------------------------
Class D (3,320) (11,174)
-------------------------------------------------------------------------------------------
Total (127,044) (422,677)
-------------------------------------------------------------------------------------------
Decrease in Net Assets from Distributions (2,684,448) (3,253,577)
-------------------------------------------------------------------------------------------
Capital Share Transactions:
-------------------------------------------------------------------------------------------
Net proceeds from sales of shares 3,086,131 2,824,828
-------------------------------------------------------------------------------------------
Investment of dividends 1,670,339 1,884,567
-------------------------------------------------------------------------------------------
Exchanged from associated funds -- 14,492
-------------------------------------------------------------------------------------------
Investment of gain distributions 102,135 343,662
-------------------------------------------------------------------------------------------
Total 4,858,605 5,067,549
-------------------------------------------------------------------------------------------
Cost of shares repurchased (6,387,022) (12,451,158)
-------------------------------------------------------------------------------------------
Exchanged into associated funds (112,846) (160,879)
-------------------------------------------------------------------------------------------
Total (6,499,868) (12,612,037)
-------------------------------------------------------------------------------------------
Decrease in Net Assets
from Capital Share Transactions (1,641,263) (7,544,488)
-------------------------------------------------------------------------------------------
Decrease in Net Assets (5,825,125) (8,847,654)
-------------------------------------------------------------------------------------------
Net Assets:
-------------------------------------------------------------------------------------------
Beginning of year 68,165,127 77,012,781
-------------------------------------------------------------------------------------------
End of Year* $62,340,002 $ 68,165,127
-------------------------------------------------------------------------------------------
--------
* Including undistributed net investment income as follows: $ 212,713 $ 210,007
See Notes to Financial Statements.
41
Notes to Financial Statements
1. Organization and Multiple Classes of Shares -- Xxxxxxxx Municipal Fund
Series, Inc. (the "Series") is registered with the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end non-diversified management investment
company. The Series consists of 13 separate funds: the "National Fund," the
"Colorado Fund," the "Georgia Fund," the "Louisiana Fund," the "Maryland
Fund," the "Massachusetts Fund," the "Michigan Fund," the "Minnesota Fund,"
the "Missouri Fund," the "New York Fund," the "Ohio Fund," the "Oregon
Fund," and the "South Carolina Fund" (each, a "Fund", collectively, the
"Funds"). Each Fund of the Series offers the following two classes of shares:
Class A shares are sold with an initial sales charge of up to 4.5% (4.75%
prior to January 7, 2008) and a continuing service fee of up to 0.25% on an
annual basis. Class A shares purchased in an amount of $1,000,000 or more are
sold without an initial sales charge but are subject to a contingent deferred
sales charge ("CDSC") of 1% on redemptions within 18 months of purchase.
Effective January 7, 2008, eligible employee benefit plans which have at
least $2,000,000 in plan assets may purchase Class A shares at net asset
value, but, in the event of plan termination, will be subject to a CDSC of 1%
on redemption of shares purchased within 18 months prior to plan termination.
Class C shares are sold without an initial sales charge but are subject to a
distribution fee of up to 0.75% and a service fee of up to 0.25% on an annual
basis, and a CDSC, if applicable, of 1% imposed on redemptions made within
one year of purchase.
The Board of Directors of the Series approved the automatic conversion of all
of the Funds' outstanding Class D shares to Class C shares at their relative
net asset values. The conversion was implemented on May 16, 2008. Effective
at the close of business on May 16, 2008, the Funds no longer offer Class D
shares. The conversion did not affect individual shareholder account values.
All classes of shares for each Fund represent interests in the same portfolio
of investments, have the same rights and are generally identical in all
respects except that each class bears its separate distribution and certain
other class-specific expenses, and has exclusive voting rights with respect
to any matter on which a separate vote of any class is required.
2. Significant Accounting Policies -- The financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States of America, which require management to make certain estimates
and assumptions at the date of the financial statements. Actual results may
differ from these estimates. The following summarizes the significant
accounting policies of the Funds:
a. Security Valuation and Risk -- Traded securities are valued at the last
sales price on the primary market on which they are traded. Securities for
which there is no last sales price are valued by independent pricing
services based on bid prices which consider such factors as transactions in
bonds, quotations from bond dealers, market transactions in comparable
securities and various relationships between securities, or are valued by
the Funds' investment manager (the "Manager") based on quotations provided
by primary market makers in such securities.
Securities for which market quotations are not readily available (or are
otherwise no longer valid or reliable) are valued at fair value determined
in accordance with procedures approved by the Board of Directors. This can
occur in the event of, among other things, natural disasters, acts of
terrorism, market disruptions, intra-day trading halts, and extreme market
volatility. The determination of fair value involves subjective judgments.
As a result, using fair value to price a security may result in a price
materially different from the prices used by other mutual funds to determine
net asset value or the price that may be realized upon the actual sale of
the security. Short-term holdings maturing in 60 days or less are valued at
current market quotations or amortized cost if the Manager believes it
approximates fair value. Short-term holdings that mature in more than
60 days are valued at current market quotations until the 60th day prior to
maturity and are then valued as described above for securities maturing in
60 days or less.
Fixed-income securities owned by each Fund are subject to interest-rate
risk, credit risk, prepayment risk, and market risk. To the extent that the
Fund concentrates its investments in municipal securities issued by a single
state and its municipalities, specific events or factors affecting a
particular state may have an impact on the municipal securities of that
state without affecting the municipal market in general.
b. Restricted Cash -- Restricted cash represents deposits that are being held
by banks as collateral for letters of credit issued in connection with the
Series' insurance policies.
c. Multiple Class Allocations -- Each Fund's income, expenses (other than
class-specific expenses), and realized and unrealized gains or losses on
investments are allocated daily to each class of shares of that Fund based
upon the relative value of the shares of each class. Class-specific
expenses, which include distribution and service (12b-1) fees and any other
items that are specifically attributable to a particular class, are charged
directly to such class. For the year ended September 30, 2008, distribution
and service (12b-1) fees were the only class-specific expenses.
d. Security Transactions and Related Investment Income -- Investment
transactions are recorded on trade dates. Identified cost of investments
sold is used for both financial reporting and federal income tax purposes.
Interest income is recorded on the accrual basis. The Funds amortize
discounts and premiums paid on purchases of portfolio securities for
financial reporting purposes.
Short-term holdings include securities with stated or effective maturity
dates of less than one year.
Variable rate demand notes (VRDN) purchased by the Funds may be put back to
the designated remarketing agent for the issue at par on any day, for
settlement within seven days, and, accordingly, are treated as short-term
holdings. These notes bear interest at a rate that resets daily or weekly.
At September 30, 2008, the interest rates paid on these notes ranged from
2.50% to 7.50%.
e. Distributions to Shareholders -- Dividends are declared daily and paid
monthly. Other distributions paid by the Funds are recorded on the
ex-dividend date.
f. Taxes -- There is no provision for federal income tax. Each Fund has elected
to be taxed as a regulated investment company and intends to distribute
substantially all taxable net income and net gain realized.
On October 1, 2007, the Funds adopted Financial Accounting Standards Board
("FASB") Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in
Income Taxes -- an interpretation of FASB Statement No. 109." FIN 48
requires the Funds to measure and recognize in their financial statements
the benefit of a tax position taken (or expected to be taken) on an income
tax return if such position will more likely than not be sustained upon
examination based on the technical merits of the position. The Funds file
income tax returns in the US Federal jurisdiction, as well as the New York
State and New York City jurisdictions. Based upon their review of tax
positions for the Funds' open tax years of 2005-2008 in these jurisdictions,
the Funds have determined that FIN 48 did not have a material impact on the
Funds' financial statements for the year ended September 30, 2008.
3. Management Fee, Distribution Services, and Other Transactions -- The Manager
manages the affairs of the Funds (see Note 10) and provides the necessary
personnel and facilities. Compensation of all Officers of the Funds, all
Directors of the Funds who are employees of the Manager, and all personnel
of the Funds and the Manager is paid by the Manager. The Manager's fee,
calculated daily and payable monthly, is equal to 0.50% per annum of each
Fund's average daily net assets.
42
Notes to Financial Statements
For the year ended September 30, 2008, Xxxxxxxx Advisors, Inc. (the
"Distributor"), agent for the distribution of the Funds' shares and an
affiliate of the Manager, received commissions and concessions from sales of
Class A. Commissions were also paid to dealers for sales of Class A shares as
follows:
Commissions and
Concessions Retained Dealer
Fund by Distributor Commissions
------------------------------------------------
National $7,651 $50,241
------------------------------------------------
Colorado 4,731 32,931
------------------------------------------------
Georgia 1,550 10,046
------------------------------------------------
Louisiana 2,272 15,784
------------------------------------------------
Maryland 5,268 37,385
------------------------------------------------
Massachusetts 7,566 52,662
------------------------------------------------
Michigan 3,860 23,000
------------------------------------------------
Minnesota 6,427 43,070
------------------------------------------------
Missouri 2,485 15,912
------------------------------------------------
New York 7,550 41,174
------------------------------------------------
Ohio 4,907 31,765
------------------------------------------------
Oregon 5,911 41,673
------------------------------------------------
South Carolina 7,824 52,594
------------------------------------------------
The Funds each have an Administration, Shareholder Services and Distribution
Plan (the "Plan") with respect to distribution of its shares. Under the Plan,
with respect to Class A shares, service organizations can enter into
agreements with the Distributor and receive continuing fees of up to 0.25% on
an annual basis of the average daily net assets of the Class A shares
attributable to the particular service organizations for providing personal
services and/or the maintenance of shareholder accounts. Such fees are paid
monthly by the Funds to the Distributor pursuant to the Plan. For the year
ended September 30, 2008, fees incurred under the Plan, equivalent to
0.10% per annum of the average daily net assets of Class A shares, were as
follows:
Fund Fund
----------------------------------------------
National $58,758 Minnesota $69,767
----------------------------------------------
Colorado 31,095 Missouri 25,927
----------------------------------------------
Georgia 24,881 New York 57,994
----------------------------------------------
Louisiana 25,092 Ohio 90,035
----------------------------------------------
Maryland 31,998 Oregon 45,073
----------------------------------------------
Massachusetts 58,382 South Carolina 60,371
----------------------------------------------
Michigan 74,040
----------------------------------------------
Under the Plan, with respect to Class C and Class D shares (only through
May 16, 2008), service organizations can enter into agreements with the
Distributor and receive continuing fees for providing personal services
and/or the maintenance of shareholder accounts of up to 0.25% on an annual
basis of the average daily net assets of the Class C and Class D shares for
which the organizations are responsible, and fees for providing other
distribution assistance of up to 0.75% on an annual basis of such average
daily net assets. Such fees are paid monthly by the Funds to the Distributor
pursuant to the Plan. For the year ended September 30, 2008, fees incurred
under the Plan equivalent to 1% per annum of the average daily net assets of
Class C and Class D shares (only through May 16, 2008) were as follows:
Fund Class C Class D Fund Class C Class D
--------------------------------------------------------------
National $19,557 $ 6,715 Minnesota $ 3,010 $ 2,090
--------------------------------------------------------------
Colorado 3,079 1,115 Missouri 1,732 2,053
--------------------------------------------------------------
Georgia 6,044 6,082 New York 49,789 14,217
--------------------------------------------------------------
Louisiana 6,692 3,687 Ohio 10,039 3,635
--------------------------------------------------------------
Maryland 7,776 6,953 Oregon 17,000 6,842
--------------------------------------------------------------
Massachusetts 25,714 1,320 South Carolina 40,756 11,239
--------------------------------------------------------------
Michigan 12,652 10,816
--------------------------------------------------------------
The Distributor and Xxxxxxxx Services, Inc., also an affiliate of the
Manager, are eligible to receive distribution and service (12b-1) fees
pursuant to the Plan. For the year ended September 30, 2008, the Distributor
and Xxxxxxxx Services, Inc. received distribution and service (12b-1) fees
pursuant to the Plan, as follows:
Distribution and Distribution and
Service (12b-1) Service (12b-1)
Fund Fees Fund Fees
-----------------------------------------------------------------
National $5,613 Minnesota $ 1,993
-----------------------------------------------------------------
Colorado 2,000 Missouri 1,068
-----------------------------------------------------------------
Georgia 1,160 New York 10,184
-----------------------------------------------------------------
Louisiana 1,590 Ohio 4,685
-----------------------------------------------------------------
Maryland 1,507 Oregon 307
-----------------------------------------------------------------
Massachusetts 2,116 South Carolina 1,937
-----------------------------------------------------------------
Michigan 2,468
-----------------------------------------------------------------
The Distributor is entitled to retain any CDSC imposed on certain redemptions
of shares. For the year ended September 30, 2008, such charges were as
follows:
Fund Fund
----------------------------------------
National $230 Minnesota $ --
----------------------------------------
Colorado -- Missouri --
----------------------------------------
Georgia -- New York 699
----------------------------------------
Louisiana -- Ohio 750
----------------------------------------
Maryland -- Oregon --
----------------------------------------
Massachusetts 613 South Carolina 991
----------------------------------------
Michigan --
----------------------------------------
For the year ended September 30, 2008, Xxxxxxxx Data Corp., which is owned by
certain associated investment companies, charged each Fund at cost for
shareholder account services in accordance with a methodology approved by the
Series' Directors as follows:
Fund Fund
------------------------------------------------
National $106,228 Minnesota $121,856
------------------------------------------------
Colorado 54,209 Missouri 47,038
------------------------------------------------
Georgia 45,956 New York 108,262
------------------------------------------------
Louisiana 44,228 Ohio 158,081
------------------------------------------------
Maryland 61,011 Oregon 76,192
------------------------------------------------
Massachusetts 104,057 South Carolina 105,838
------------------------------------------------
Michigan 132,973
------------------------------------------------
Costs of Xxxxxxxx Data Corp. directly attributable to a Fund were charged to
that Fund. The remaining charges were allocated to each Fund by Xxxxxxxx Data
Corp. pursuant to a formula based on each Fund's net assets, shareholder
transaction volume and number of shareholder accounts.
The Series and certain other associated investment companies (together, the
"Guarantors") have severally but not jointly guaranteed the performance and
observance of all the terms and conditions of a lease entered into by
Xxxxxxxx Data Corp., including the payment of rent by Xxxxxxxx Data Corp.
(the "Guaranty"). The lease and the related Guaranty expire in January 2019.
The obligation of the Series to pay any amount due under the Guaranty is
limited to a specified percentage of the full amount, which generally is
based on the Series' percentage of the expenses billed by Xxxxxxxx Data Corp.
to all Guarantors in the most recent calendar quarter. As of September 30,
2008, the Series' potential obligation under the Guaranty was $537,800. As of
September 30, 2008, no event has occurred which would result in the Series
becoming liable to make any payment under the Guaranty. Each Fund would bear
a portion of any payments made by the Series under the Guaranty. A portion of
the rent paid by Xxxxxxxx Data Corp. is charged to the Funds as part of
Xxxxxxxx Data Corp.'s shareholder account services cost.
43
Notes to Financial Statements
During the year ended September 30, 2008, certain officers and directors of
the Series were officers or directors of the Manager, the Distributor,
Xxxxxxxx Services, Inc., and/or Xxxxxxxx Data Corp.
The Series has a compensation agreement under which Directors who receive
fees may elect to defer receiving such fees. Directors may elect to have
their deferred fees accrue interest or earn a return based on the performance
of the Funds or other funds in the Xxxxxxxx Group of Investment Companies.
Deferred fees and related accrued earnings are not deductible by the Funds
for federal income tax purposes until such amounts are paid. The cost of such
fees and earnings/loss accrued thereon is included in Directors' fees and
expenses, and the accumulated balances thereof at September 30, 2008 are
included in accrued expenses and other liabilities as follows:
Fund Fund
--------------------------------------------
National $ 975 Minnesota $1,043
--------------------------------------------
Colorado 758 Missouri 722
--------------------------------------------
Georgia 721 New York 1,014
--------------------------------------------
Louisiana 723 Ohio 1,200
--------------------------------------------
Maryland 776 Oregon 875
--------------------------------------------
Massachusetts 972 South Carolina 1,015
--------------------------------------------
Michigan 1,095
--------------------------------------------
4. Committed Line of Credit -- The Series is a participant in a joint $200
million committed line of credit that is shared by substantially all
open-end funds in the Xxxxxxxx Group of Investment Companies. The Directors
have currently limited each Fund's borrowings to 10% of its net assets.
Borrowings pursuant to the credit facility are subject to interest at a rate
equal to the overnight federal funds rate plus 0.50%. Each Fund incurs a
commitment fee of 0.12% per annum on its share of the unused portion of the
credit facility. The credit facility may be drawn upon only for temporary
purposes and is subject to certain other customary restrictions. The credit
facility commitment expires in June 2009, but is renewable annually with the
consent of the participating banks. There were no borrowings during the year
ended September 30, 2008.
5. Purchases and Sales of Securities -- Purchases and sales of portfolio
securities, excluding short-term investments, for the year ended
September 30, 2008, were as follows:
Fund Purchases Sales
---------------------------------------
National $ 8,730,305 $ 8,690,000
---------------------------------------
Colorado 5,391,711 5,290,000
---------------------------------------
Georgia -- 235,000
---------------------------------------
Louisiana 6,197,939 9,300,860
---------------------------------------
Maryland -- 2,440,310
---------------------------------------
Massachusetts 2,081,040 3,570,000
---------------------------------------
Michigan -- 9,720,900
---------------------------------------
Minnesota 9,723,046 13,931,500
---------------------------------------
Missouri 519,395 1,054,160
---------------------------------------
New York 1,318,041 235,100
---------------------------------------
Ohio 20,281,800 29,327,301
---------------------------------------
Oregon -- 4,665,620
---------------------------------------
South Carolina -- 2,800,000
---------------------------------------
6. Federal Tax Information -- Certain components of income, expense and
realized capital gain and loss are recognized at different times or have a
different character for federal income tax purposes and for financial
reporting purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their characterization
for federal income tax purposes. Any such reclassifications will have no
effect on net assets, results of operations or net asset value per share of
the Fund. As a result of the differences described above, the treatment for
financial reporting purposes of distributions made during the year from net
investment income or net realized gains may differ from their treatment for
federal income tax purposes. Further, the cost of investments also can
differ for federal income tax purposes.
At September 30, 2008, each Fund's tax basis cost was less than the cost for
financial reporting purposes, primarily due to the amortization of market
discounts for financial reporting purposes. The tax basis cost was as follows:
Tax
Basis
Fund Cost
---------------------------
National $60,219,582
---------------------------
Colorado 29,547,415
---------------------------
Georgia 24,200,602
---------------------------
Louisiana 24,955,212
---------------------------
Maryland 32,086,892
---------------------------
Massachusetts 56,458,983
---------------------------
Michigan 68,773,130
---------------------------
Minnesota 66,082,537
---------------------------
Missouri 24,233,936
---------------------------
New York 62,212,915
---------------------------
Ohio 83,534,460
---------------------------
Oregon 44,433,329
---------------------------
South Carolina 62,349,899
---------------------------
44
Notes to Financial Statements
At September 30, 2008, the tax basis components of accumulated earnings
(losses) were as follows:
National Colorado Georgia Louisiana Maryland
----------------------------------------------------------------------------------------------------------------------------
Gross unrealized appreciation of portfolio securities $ 896,838 $ 1,031,630 $ 564,052 $ 329,582 $ 525,925
----------------------------------------------------------------------------------------------------------------------------
Gross unrealized depreciation of portfolio securities (2,692,699) (890,472) (1,541,882) (1,341,406) (748,390)
----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of portfolio
securities (1,795,861) 141,158 (977,830) (1,011,824) (222,465)
----------------------------------------------------------------------------------------------------------------------------
Undistributed tax-exempt income 101,118 43,572 38,345 35,646 49,421
----------------------------------------------------------------------------------------------------------------------------
Capital loss carryforward (1,134,889) -- (725,541) -- --
----------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain -- 75,279 -- 330,456 64,779
----------------------------------------------------------------------------------------------------------------------------
Total accumulated earnings (losses) $ (2,829,632) $ 260,009 $ (1,665,026) $ (645,722) $ (108,265)
----------------------------------------------------------------------------------------------------------------------------
Massachusetts Michigan Minnesota Missouri New York
----------------------------------------------------------------------------------------------------------------------------
Gross unrealized appreciation of portfolio securities $ 3,023,299 $ 1,426,055 $ 1,606,075 $ 815,394 $ 1,784,769
----------------------------------------------------------------------------------------------------------------------------
Gross unrealized depreciation of portfolio securities (814,089) (3,024,031) (1,727,911) (737,617) (1,766,852)
----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of portfolio
securities 2,209,210 (1,597,976) (121,836) 77,777 17,917
----------------------------------------------------------------------------------------------------------------------------
Undistributed tax-exempt income 107,558 102,961 94,372 37,300 95,404
----------------------------------------------------------------------------------------------------------------------------
Undistributed ordinary income 50,559 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain 233,601 167,429 78,210 -- --
----------------------------------------------------------------------------------------------------------------------------
Total accumulated earnings (losses) $ 2,600,928 $(1,327,586) $ 50,746 $ 115,077 $ 113,321
----------------------------------------------------------------------------------------------------------------------------
Ohio Oregon South Carolina
---------------------------------------------------------------------------------------------------
Gross unrealized appreciation of portfolio securities $ 2,160,696 $ 1,191,477 $1,254,167
---------------------------------------------------------------------------------------------------
Gross unrealized depreciation of portfolio securities (3,265,829) (1,332,896) (2,239,849)
---------------------------------------------------------------------------------------------------
Net unrealized depreciation of portfolio securities (1,105,133) (141,419) (985,682)
---------------------------------------------------------------------------------------------------
Undistributed tax-exempt income 119,056 70,318 97,364
---------------------------------------------------------------------------------------------------
Undistributed net realized gain 742,372 137,489 52,336
---------------------------------------------------------------------------------------------------
Total accumulated earnings (losses) $ (243,705) $ 66,388 $ (835,982)
---------------------------------------------------------------------------------------------------
The tax characterization of distributions paid was as follows:
Year Ended 9/30/08 Year Ended 9/30/07
---------------------------------------------------------------------
Tax-exempt Long-term Tax-exempt Long-term
income capital gains income capital gains
---------------------------------------------------------------------
National $ 2,189,168 -- $ 2,636,683 --
---------------------------------------------------------------------
Colorado 1,151,611 -- 1,278,218 $217,023
---------------------------------------------------------------------
Georgia 1,017,622 -- 1,073,818 --
---------------------------------------------------------------------
Louisiana 985,357 $112,329 1,213,618 92,690
---------------------------------------------------------------------
Maryland 1,161,722 12,996 1,230,748 271,296
---------------------------------------------------------------------
Massachusetts 2,363,275 393,631 2,628,515 308,997
---------------------------------------------------------------------
Michigan 2,896,929 533,961 3,401,409 662,604
---------------------------------------------------------------------
Minnesota 2,444,306 356,807 2,939,015 122,448
---------------------------------------------------------------------
Missouri 951,443 136,928 1,033,214 203,200
---------------------------------------------------------------------
New York 2,562,686 311,858 2,794,602 25,873
---------------------------------------------------------------------
Ohio 3,155,353 229,382 3,745,032 --
---------------------------------------------------------------------
Oregon 1,773,010 81,489 1,922,439 403,796
---------------------------------------------------------------------
South Carolina 2,557,404 127,044 2,830,900 422,677
---------------------------------------------------------------------
At September 30, 2008, the National and Georgia Funds had net capital loss
carryforwards for federal income tax purposes of $1,134,889 (with $1,130,135
and $4,754 expiring in 2011 and 2012, respectively) and $725,541 (expiring in
2013), respectively, which are available for offset against future taxable net
capital gains. Accordingly, no capital gain distributions are expected to be
paid to shareholders of these Funds until net capital gains have been realized
in excess of the available capital loss carryforwards. During the year ended
September 30, 2008, the National Fund utilized $10,713 of prior year's capital
loss carryforwards.
45
Notes to Financial Statements
0.Xxxxxxx Share Transactions -- Transactions in shares of Capital Stock were as
follows:
Class A Class C
------------------------------------------------- ------------------------------------------
Year Ended September 30, Year Ended September 30,
------------------------------------------------- ------------------------------------------
2008 2007 2008 2007
---------------------------------------------------------------------------------------------------------------------------------
National Fund Shares Amount Shares Amount Shares Amount Shares Amount
---------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 915,102 $ 7,026,889 119,434 $ 931,601 30,802 $ 235,899 6,473 $ 50,567
---------------------------------------------------------------------------------------------------------------------------------
Investment of dividends 165,149 1,271,880 198,721 1,546,820 4,191 32,239 5,536 43,115
---------------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 235,185 1,814,259 191,139 1,493,189 51,904 398,599 12,766 99,327
---------------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 127,801 990,454 -- --
---------------------------------------------------------------------------------------------------------------------------------
Total 1,315,436 10,113,028 509,294 3,971,610 214,698 1,657,191 24,775 193,009
---------------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (1,027,708) (7,836,811) (1,360,733) (10,600,308) (134,190) (1,027,197) (93,350) (728,225)
---------------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (56,165) (435,200) (91,168) (712,474) (4,948) (38,000) (8,301) (64,350)
---------------------------------------------------------------------------------------------------------------------------------
Total (1,083,873) (8,272,011) (1,451,901) (11,312,782) (139,138) (1,065,197) (101,651) (792,575)
---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) 231,563 $ 1,841,017 (942,607) $ (7,341,172) 75,560 $ 591,994 (76,876) $(599,566)
---------------------------------------------------------------------------------------------------------------------------------
Class D
-------------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
--------------------------------------------------------------------------------------
National Fund Shares Amount Shares Amount
--------------------------------------------------------------------------------------
Net proceeds from sales of shares 6,488 $ 50,541 17 $ 136
--------------------------------------------------------------------------------------
Investment of dividends 1,738 13,445 3,114 24,245
--------------------------------------------------------------------------------------
Exchanged from associated funds 13,866 107,760 38,525 300,281
--------------------------------------------------------------------------------------
Total 22,092 171,746 41,656 324,662
--------------------------------------------------------------------------------------
Cost of shares repurchased (31,202) (241,178) (45,564) (355,447)
--------------------------------------------------------------------------------------
Exchanged into associated funds -- -- (17,864) (139,147)
--------------------------------------------------------------------------------------
Converted to Class C* (127,801) (990,454) -- --
--------------------------------------------------------------------------------------
Total (159,003) (1,231,632) (63,428) (494,594)
--------------------------------------------------------------------------------------
Decrease (136,911) $(1,059,886) (21,772) $ (169,932)
--------------------------------------------------------------------------------------
Class A Class C
------------------------------------------------- ------------------------------------------
Year Ended September 30, Year Ended September 30,
------------------------------------------------- ------------------------------------------
2008 2007 2008 2007
---------------------------------------------------------------------------------------------------------------------------------
Colorado Fund Shares Amount Shares Amount Shares Amount Shares Amount
---------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 328,413 $ 2,448,996 40,000 $ 298,925 87,798 $ 646,723 16 $ 116
---------------------------------------------------------------------------------------------------------------------------------
Investment of dividends 86,773 647,171 94,128 702,483 621 4,616 506 3,773
---------------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds -- -- 10,201 76,425 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 25,850 193,102 -- --
---------------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions -- -- 20,293 152,209 -- -- 183 1,368
---------------------------------------------------------------------------------------------------------------------------------
Total 415,186 3,096,167 164,622 1,230,042 114,269 844,441 705 5,257
---------------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (395,298) (2,943,786) (363,674) (2,710,946) (619) (4,488) (1,891) (14,088)
---------------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (18,800) (140,158) (4,608) (34,581) -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
Total (414,098) (3,083,944) (368,282) (2,745,527) (619) (4,488) (1,891) (14,088)
---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) 1,088 $ 12,223 (203,660) $ (1,515,485) 113,650 $ 839,953 (1,186) $ (8,831)
---------------------------------------------------------------------------------------------------------------------------------
Class D
-------------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
--------------------------------------------------------------------------------------
Colorado Fund Shares Amount Shares Amount
--------------------------------------------------------------------------------------
Net proceeds from sales of shares 2,687 $ 19,995 4,332 $ 32,097
--------------------------------------------------------------------------------------
Investment of dividends 328 2,451 535 3,986
--------------------------------------------------------------------------------------
Exchanged from associated funds -- -- 572 4,235
--------------------------------------------------------------------------------------
Investment of gain distributions -- -- 125 936
--------------------------------------------------------------------------------------
Total 3,015 22,446 5,564 41,254
--------------------------------------------------------------------------------------
Cost of shares repurchased -- -- (1,405) (10,493)
--------------------------------------------------------------------------------------
Converted to Class C* (25,850) (193,102) -- --
--------------------------------------------------------------------------------------
Total (25,850) (193,102) (1,405) (10,493)
--------------------------------------------------------------------------------------
Increase (decrease) (22,835) $ (170,656) 4,159 $ 30,761
--------------------------------------------------------------------------------------
--------
See footnotes on page 52.
46
Notes to Financial Statements
Class A Class C
-------------------------------------------- ---------------------------------------
Year Ended September 30, Year Ended September 30,
-------------------------------------------- ---------------------------------------
2008 2007 2008 2007
-------------------------------------------------------------------------------------------------------------------------
Georgia Fund Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 133,446 $ 1,007,467 55,767 $ 428,951 4,765 $ 35,143 671 $ 5,139
-------------------------------------------------------------------------------------------------------------------------
Investment of dividends 84,583 635,793 89,584 686,239 1,333 9,949 878 6,767
-------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 2,371 17,724 14,116 108,485 -- -- 9,095 70,034
-------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 127,826 966,365 -- --
-------------------------------------------------------------------------------------------------------------------------
Total 220,400 1,660,984 159,467 1,223,675 133,924 1,011,457 10,644 81,940
-------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (372,487) (2,790,699) (398,383) (3,046,381) (26,748) (199,380) (34,679) (267,937)
-------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (13,495) (95,817) (5,517) (42,676) -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
Total (385,982) (2,886,516) (403,900) (3,089,057) (26,748) (199,380) (34,679) (267,937)
-------------------------------------------------------------------------------------------------------------------------
Increase (decrease) (165,582) $(1,225,532) (244,433) $(1,865,382) 107,176 $ 812,077 (24,035) $(185,997)
-------------------------------------------------------------------------------------------------------------------------
Class D
--------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
---------------------------------------------------------------------------------
Georgia Fund Shares Amount Shares Amount
---------------------------------------------------------------------------------
Net proceeds from sales of shares 106 $ 800 16,574 $ 128,317
---------------------------------------------------------------------------------
Investment of dividends 1,966 14,927 2,737 21,014
---------------------------------------------------------------------------------
Total 2,072 15,727 19,311 149,331
---------------------------------------------------------------------------------
Cost of shares repurchased -- -- (9,412) (72,573)
---------------------------------------------------------------------------------
Converted to Class C* (127,826) (966,365) -- --
---------------------------------------------------------------------------------
Total (127,826) (966,365) (9,412) (72,573)
---------------------------------------------------------------------------------
Increase (decrease) (125,754) $ (950,638) 9,899 $ 76,758
---------------------------------------------------------------------------------
Class A Class C
-------------------------------------------- ---------------------------------------
Year Ended September 30, Year Ended September 30,
-------------------------------------------- ---------------------------------------
2008 2007 2008 2007
-------------------------------------------------------------------------------------------------------------------------
Louisiana Fund Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 66,694 $ 512,191 75,690 $ 598,910 1,036 $ 7,979 12,718 $ 100,857
-------------------------------------------------------------------------------------------------------------------------
Investment of dividends 85,556 663,472 97,586 769,976 2,177 16,812 1,708 13,467
-------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 21,409 167,635 2,546 19,851 -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 76,872 595,756 -- --
-------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 10,684 83,327 8,346 66,264 222 1,733 140 1,108
-------------------------------------------------------------------------------------------------------------------------
Total 184,343 1,426,625 184,168 1,455,001 80,307 622,280 14,566 115,432
-------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (366,188) (2,851,371) (517,974) (4,084,870) (132) (1,008) (39,436) (313,862)
-------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (21,203) (167,085) (9,302) (73,488) -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
Total (387,391) (3,018,456) (527,276) (4,158,358) (132) (1,008) (39,436) (313,862)
-------------------------------------------------------------------------------------------------------------------------
Increase (decrease) (203,048) $(1,591,831) (343,108) $(2,703,357) 80,175 $ 621,272 (24,870) $(198,430)
-------------------------------------------------------------------------------------------------------------------------
Class D
--------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
---------------------------------------------------------------------------------
Louisiana Fund Shares Amount Shares Amount
---------------------------------------------------------------------------------
Net proceeds from sales of shares 3,551 $ 27,737 11,440 $ 90,847
---------------------------------------------------------------------------------
Investment of dividends 1,247 9,726 1,901 15,008
---------------------------------------------------------------------------------
Investment of gain distributions 238 1,856 165 1,312
---------------------------------------------------------------------------------
Total 5,036 39,319 13,506 107,167
---------------------------------------------------------------------------------
Cost of shares repurchased -- -- (6,562) (51,570)
---------------------------------------------------------------------------------
Exchanged into associated funds -- -- (10,147) (80,161)
---------------------------------------------------------------------------------
Converted to Class C* (76,773) (595,756) -- --
---------------------------------------------------------------------------------
Total (76,773) (595,756) (16,709) (131,731)
---------------------------------------------------------------------------------
Decrease (71,737) $ (556,437) (3,203) $ (24,564)
---------------------------------------------------------------------------------
--------
See footnotes on page 52.
47
Notes to Financial Statements
Class A Class C
-------------------------------------------- ----------------------------------------
Year Ended September 30, Year Ended September 30,
-------------------------------------------- ----------------------------------------
2008 2007 2008 2007
--------------------------------------------------------------------------------------------------------------------------
Maryland Fund Shares Amount Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 211,218 $ 1,863,670 53,182 $ 416,313 31,267 $ 243,465 1,307 $ 10,051
--------------------------------------------------------------------------------------------------------------------------
Investment of dividends 92,898 724,740 99,211 775,081 1,825 14,222 1,299 10,172
--------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 68,339 308,416 15,172 119,404 -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 140,142 1,097,308 -- --
--------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 1,273 9,906 25,465 200,846 18 137 406 3,210
--------------------------------------------------------------------------------------------------------------------------
Total 373,728 2,906,732 193,030 1,511,644 173,252 1,355,132 3,012 23,433
--------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (368,809) (2,870,618) (361,585) (2,828,091) (16,470) (128,089) (19,289) (151,332)
--------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (36,328) (283,051) (3,324) (25,776) -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total (405,137) (3,153,669) (364,909) (2,853,867) (16,470) (128,089) (19,289) (151,332)
--------------------------------------------------------------------------------------------------------------------------
Increase (decrease) (31,409) $ (246,937) (171,879) $(1,342,223) 156,782 $1,227,043 (16,277) $ (127,899)
--------------------------------------------------------------------------------------------------------------------------
Class D
--------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
---------------------------------------------------------------------------------
Maryland Fund Shares Amount Shares Amount
---------------------------------------------------------------------------------
Net proceeds from sales of shares -- $ -- 20 $ 160
---------------------------------------------------------------------------------
Investment of dividends 1,789 14,003 4,253 33,281
---------------------------------------------------------------------------------
Exchanged from associated funds -- -- 31,694 243,867
---------------------------------------------------------------------------------
Investment of gain distributions 44 341 1,256 9,918
---------------------------------------------------------------------------------
Total 1,833 14,344 37,223 287,226
---------------------------------------------------------------------------------
Cost of shares repurchased (2,330) (18,332) (60,064) (469,340)
---------------------------------------------------------------------------------
Exchanged into associated funds (2,357) (18,428) (29,341) (228,030)
---------------------------------------------------------------------------------
Converted to Class C* (140,142) (1,097,308) -- --
---------------------------------------------------------------------------------
Total (144,829) (1,134,068) (89,405) (697,370)
---------------------------------------------------------------------------------
Decrease (142,996) $(1,119,724) (52,182) $ (410,144)
---------------------------------------------------------------------------------
Class A Class C
-------------------------------------------- ----------------------------------------
Year Ended September 30, Year Ended September 30,
-------------------------------------------- ----------------------------------------
2008 2007 2008 2007
--------------------------------------------------------------------------------------------------------------------------
Massachusetts Fund Shares Amount Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 360,406 $ 2,821,677 143,078 $ 1,134,575 21,043 $ 164,805 128,027 $1,014,630
--------------------------------------------------------------------------------------------------------------------------
Investment of dividends 187,487 1,470,719 198,940 1,572,694 3,628 28,472 4,541 35,954
--------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 204,537 1,604,542 9,156 71,799 5,672 44,468 -- --
--------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 23,419 184,305 -- --
--------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 36,877 287,999 28,398 226,616 1,178 9,210 922 7,357
--------------------------------------------------------------------------------------------------------------------------
Total 789,307 6,184,937 379,572 3,005,684 54,940 431,260 133,490 1,057,941
--------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (693,140) (5,425,186) (811,757) (6,423,308) (90,530) (712,018) (70,167) (554,528)
--------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (38,776) (304,161) (12,042) (95,308) -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total (731,916) (5,729,347) (823,799) (6,518,616) (90,530) (712,018) (70,167) (554,528)
--------------------------------------------------------------------------------------------------------------------------
Increase (decrease) 57,391 $ 455,590 (444,227) $(3,512,932) (35,590) $ (280,758) 63,323 $ 503,413
--------------------------------------------------------------------------------------------------------------------------
Class D
--------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
---------------------------------------------------------------------------------
Massachusetts Fund Shares Amount Shares Amount
---------------------------------------------------------------------------------
Net proceeds from sales of shares -- $ -- 6 $ 49
---------------------------------------------------------------------------------
Investment of dividends 468 3,672 1,309 10,353
---------------------------------------------------------------------------------
Exchanged from associated funds -- -- 2,704 21,438
---------------------------------------------------------------------------------
Investment of gain distributions 148 1,157 178 1,423
---------------------------------------------------------------------------------
Total 616 4,829 4,197 33,263
---------------------------------------------------------------------------------
Cost of shares repurchased (5,674) (44,721) (40,359) (318,146)
---------------------------------------------------------------------------------
Converted to Class C* (23,419) (184,305) -- --
---------------------------------------------------------------------------------
Total (29,093) (229,026) (40,359) (318,146)
---------------------------------------------------------------------------------
Decrease (28,477) $ (224,197) (36,162) $ (284,883)
---------------------------------------------------------------------------------
--------
See footnotes on page 52.
48
Notes to Financial Statements
Class A Class C
-------------------------------------------------- ---------------------------------------
Year Ended September 30, Year Ended September 30,
-------------------------------------------------- ---------------------------------------
2008 2007 2008 2007
----------------------------------------------------------------------------------------------------------------------------
Michigan Fund Shares Amount Shares Amount Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------------
Net proceeds from
sales of shares 110,746 $ 894,765 73,417 $ 602,688 4,697 $ 37,691 5,103 $ 41,861
----------------------------------------------------------------------------------------------------------------------------
Investment of dividends 235,123 1,895,988 270,872 2,220,126 2,590 20,826 2,799 22,909
----------------------------------------------------------------------------------------------------------------------------
Exchanged from
associated funds 8,380 68,455 46,350 382,164 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 201,419 1,625,453 -- --
----------------------------------------------------------------------------------------------------------------------------
Investment of gain
distributions 51,029 412,288 60,547 501,327 671 5,416 835 6,902
----------------------------------------------------------------------------------------------------------------------------
Total 405,278 3,271,496 451,186 3,706,305 209,377 1,689,386 8,737 71,672
----------------------------------------------------------------------------------------------------------------------------
Cost of shares
repurchased (1,402,928) (11,309,184) (1,505,817) (12,318,704) (71,415) (573,136) (10,501) (85,320)
----------------------------------------------------------------------------------------------------------------------------
Exchanged into
associated funds (24,793) (199,889) (74,907) (616,158) -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
Total (1,427,721) (11,509,073) (1,580,724) (12,934,862) (71,415) (573,136) (10,501) (85,320)
----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) (1,022,443) $ (8,237,577) (1,129,538) $ (9,228,557) 137,962 $1,116,250 (1,764) $ (13,648)
----------------------------------------------------------------------------------------------------------------------------
Class D
--------------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
--------------------------------------------------------------------------------
Michigan Fund Shares Amount Shares Amount
--------------------------------------------------------------------------------
Net proceeds from
sales of shares -- $ -- 1,212 $ 9,827
--------------------------------------------------------------------------------
Investment of dividends 1,243 10,054 2,473 20,260
--------------------------------------------------------------------------------
Exchanged from
associated funds -- -- 1,801 15,001
--------------------------------------------------------------------------------
Investment of gain
distributions 470 3,793 778 6,434
--------------------------------------------------------------------------------
Total 1,713 13,847 6,264 51,522
--------------------------------------------------------------------------------
Cost of shares
repurchased (15,534) (124,105) (37,157) (305,631)
--------------------------------------------------------------------------------
Exchanged into
associated funds -- -- (1,498) (12,185)
--------------------------------------------------------------------------------
Converted to Class C* (201,419) (1,625,453) -- --
--------------------------------------------------------------------------------
Total (216,953) (1,749,558) (38,655) (317,816)
--------------------------------------------------------------------------------
Decrease (215,240) $ (1,735,711) (32,391) $ (266,294)
--------------------------------------------------------------------------------
Class A Class C
-------------------------------------------------- ---------------------------------------
Year Ended September 30, Year Ended September 30,
-------------------------------------------------- ---------------------------------------
2008 2007 2008 2007
----------------------------------------------------------------------------------------------------------------------------
Minnesota Fund Shares Amount Shares Amount Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------------
Net proceeds from
sales of shares 226,272 $ 1,699,882 141,488 $ 1,075,145 14,411 $ 109,000 -- $ --
----------------------------------------------------------------------------------------------------------------------------
Investment of dividends 218,915 1,646,723 267,815 2,031,067 650 4,893 569 4,321
----------------------------------------------------------------------------------------------------------------------------
Exchanged from
associated funds 12,353 92,613 38,730 296,054 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 44,119 333,095 -- --
----------------------------------------------------------------------------------------------------------------------------
Investment of gain
distributions 37,899 284,622 12,715 97,277 71 533 37 286
----------------------------------------------------------------------------------------------------------------------------
Total 495,439 3,723,840 460,748 3,499,543 59,251 447,521 606 4,607
----------------------------------------------------------------------------------------------------------------------------
Cost of shares
repurchased (879,651) (6,558,494) (1,219,479) (9,243,317) (2,093) (15,868) (15,007) (114,108)
----------------------------------------------------------------------------------------------------------------------------
Exchanged into
associated funds (57,871) (433,441) (46,165) (352,927) -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
Total (937,522) (6,991,935) (1,265,644) (9,596,244) (2,093) (15,868) (15,007) (114,108)
----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) (442,083) $ (3,268,095) (804,896) $ (6,096,701) 57,158 $ 431,653 (14,401) $(109,501)
----------------------------------------------------------------------------------------------------------------------------
Class D
--------------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
--------------------------------------------------------------------------------
Minnesota Fund Shares Amount Shares Amount
--------------------------------------------------------------------------------
Net proceeds from
sales of shares -- $ -- 64 $ 481
--------------------------------------------------------------------------------
Investment of dividends 538 4,061 1,087 8,259
--------------------------------------------------------------------------------
Investment of gain
distributions 181 1,362 67 513
--------------------------------------------------------------------------------
Total 719 5,423 1,218 9,253
--------------------------------------------------------------------------------
Cost of shares
repurchased -- -- (40,782) (311,219)
--------------------------------------------------------------------------------
Converted to Class C* (44,119) (333,095) -- --
--------------------------------------------------------------------------------
Total (44,119) (333,095) (40,782) (311,219)
--------------------------------------------------------------------------------
Decrease (43,400) $ (327,672) (39,564) $ (301,966)
--------------------------------------------------------------------------------
------
See footnotes on page 52.
49
Notes to Financial Statements
Class A Class C
-------------------------------------------- --------------------------------------------
Year Ended September 30, Year Ended September 30,
------------------------------------------------------------------------------------------------------------------------------
2008 2007 2008 2007
------------------------------------------------------------------------------------------------------------------------------
Missouri Fund Shares Amount Shares Amount Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 83,328 $ 630,707 42,792 $ 329,162 10,807 $ 81,606 -- $ --
------------------------------------------------------------------------------------------------------------------------------
Investment of dividends 75,025 567,955 78,969 603,504 401 3,014 44 334
------------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 11,056 83,797 2,801 21,453 -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 42,861 325,316 -- --
------------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 12,997 98,372 18,571 143,739 29 222 17 139
------------------------------------------------------------------------------------------------------------------------------
Total 182,406 1,380,831 143,133 1,097,858 54,098 410,158 61 473
------------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (224,475) (1,692,803) (395,783) (3,017,372) (2,874) (21,656) (43) (334)
------------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (5,978) (45,623) (36,940) (280,359) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
Total (230,453) (1,738,426) (432,723) (3,297,731) (2,874) (21,656) (43) (334)
------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) (48,047) $ (357,595) (289,590) $(2,199,873) 51,224 $ 388,502 18 $ 139
------------------------------------------------------------------------------------------------------------------------------
Class D
--------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
---------------------------------------------------------------------------------
Missouri Fund Shares Amount Shares Amount
---------------------------------------------------------------------------------
Net proceeds from sales of shares 6,575 $ 50,033 -- $ --
---------------------------------------------------------------------------------
Investment of dividends 585 4,451 945 7,228
---------------------------------------------------------------------------------
Investment of gain distributions 201 1,517 245 1,895
---------------------------------------------------------------------------------
Total 7,361 56,001 1,190 9,123
---------------------------------------------------------------------------------
Cost of shares repurchased (1,395) (10,598) (3,945) (30,472)
---------------------------------------------------------------------------------
Converted to Class C* (42,861) (325,316) -- --
---------------------------------------------------------------------------------
Total (44,256) (335,914) (3,945) (30,472)
---------------------------------------------------------------------------------
Decrease (36,895) $ (279,913) (2,755) $ (21,349)
---------------------------------------------------------------------------------
Class A Class C
-------------------------------------------- --------------------------------------------
Year Ended September 30, Year Ended September 30,
-------------------------------------------- --------------------------------------------
2008 2007 2008 2007
------------------------------------------------------------------------------------------------------------------------------
New York Fund Shares Amount Shares Amount Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 324,845 $ 2,593,820 135,852 $ 1,104,127 76,521 $ 611,252 27,568 $ 222,559
------------------------------------------------------------------------------------------------------------------------------
Investment of dividends 196,408 1,576,573 206,241 1,671,892 9,140 73,385 9,052 73,581
------------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 117,131 919,306 14,374 117,422 1,052 8,326 4,617 37,097
------------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 289,225 2,328,264 -- --
------------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 29,115 233,481 2,235 18,323 1,395 11,205 133 1,095
------------------------------------------------------------------------------------------------------------------------------
Total 667,499 5,323,180 358,702 2,911,764 377,333 3,032,432 41,370 334,332
------------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (537,348) (4,300,669) (600,263) (4,881,963) (231,988) (1,837,938) (119,923) (977,489)
------------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (66,945) (531,584) (16,210) (131,391) (6,000) (47,700) (10,716) (87,685)
------------------------------------------------------------------------------------------------------------------------------
Total (604,293) (4,832,253) (616,473) (5,013,354) (237,988) (1,885,638) (130,639) (1,065,174)
------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) 63,206 $ 490,927 (257,771) $(2,101,590) 139,345 $ 1,146,794 (89,269) $ (730,842)
------------------------------------------------------------------------------------------------------------------------------
Class D
--------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
---------------------------------------------------------------------------------
New York Fund Shares Amount Shares Amount
---------------------------------------------------------------------------------
Net proceeds from sales of shares 51,569 $ 415,404 -- $ --
---------------------------------------------------------------------------------
Investment of dividends 4,212 34,001 6,919 56,212
---------------------------------------------------------------------------------
Exchanged from associated funds 2,522 20,352 2,736 21,941
---------------------------------------------------------------------------------
Investment of gain distributions 1,080 8,675 88 719
---------------------------------------------------------------------------------
Total 59,383 478,432 9,743 78,872
---------------------------------------------------------------------------------
Cost of shares repurchased (14,664) (118,519) (24,454) (198,008)
---------------------------------------------------------------------------------
Exchanged into associated funds (1,472) (11,862) (33) (266)
---------------------------------------------------------------------------------
Converted to Class C* (289,225) (2,328,264) -- --
---------------------------------------------------------------------------------
Total (305,361) (2,458,645) (24,487) (198,274)
---------------------------------------------------------------------------------
Decrease (245,978) $(1,980,213) (14,744) $ (119,402)
---------------------------------------------------------------------------------
------
See footnotes on page 52.
50
Notes to Financial Statements
Class A Class C
------------------------------------------------- ---------------------------------------
Year Ended September 30, Year Ended September 30,
------------------------------------------------- ---------------------------------------
2008 2007 2008 2007
------------------------------------------------------------------------------------------------------------------------------
Ohio Fund Shares Amount Shares Amount Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 324,370 $ 2,517,730 179,309 $ 1,408,711 73,143 $ 568,737 1,884 $ 14,901
------------------------------------------------------------------------------------------------------------------------------
Investment of dividends 256,483 2,000,961 302,317 2,373,374 2,412 18,898 2,150 16,990
------------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 35,458 275,036 16,466 128,547 10,519 82,382 226 1,803
------------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 55,730 438,592 -- --
------------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 22,387 174,596 -- -- 162 1,268 -- --
------------------------------------------------------------------------------------------------------------------------------
Total 638,698 4,968,323 498,092 3,910,632 141,966 1,109,877 4,260 33,694
------------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (1,577,718) (12,274,849) (1,165,168) (9,157,476) (30,038) (234,398) (24,966) (196,817)
------------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (49,052) (373,839) (49,649) (391,606) -- -- (227) (1,799)
------------------------------------------------------------------------------------------------------------------------------
Total (1,626,770) (12,648,688) (1,214,817) (9,549,082) (30,038) (234,398) (25,193) (198,616)
------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) (988,072) $ (7,680,365) (716,725) $(5,638,450) 111,928 $ 875,479 (20,933) $(164,922)
------------------------------------------------------------------------------------------------------------------------------
Class D
-------------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
--------------------------------------------------------------------------------------
Ohio Fund Shares Amount Shares Amount
--------------------------------------------------------------------------------------
Net proceeds from sales of shares -- $ -- 79 $ 616
--------------------------------------------------------------------------------------
Investment of dividends 1,261 9,929 2,127 16,800
--------------------------------------------------------------------------------------
Exchanged from associated funds -- -- -- --
--------------------------------------------------------------------------------------
Investment of gain distributions 179 1,408 -- --
--------------------------------------------------------------------------------------
Total 1,440 11,337 2,206 17,416
--------------------------------------------------------------------------------------
Cost of shares repurchased (23,910) (185,448) (19,292) (153,102)
--------------------------------------------------------------------------------------
Converted to Class C* (55,659) (438,592) -- --
--------------------------------------------------------------------------------------
Total (79,569) (624,040) (19,292) (153,102)
--------------------------------------------------------------------------------------
Decrease (78,129) $ (612,703) (17,086) $ (135,686)
--------------------------------------------------------------------------------------
Class A Class C
------------------------------------------------- ---------------------------------------
Year Ended September 30, Year Ended September 30,
------------------------------------------------- ---------------------------------------
2008 2007 2008 2007
------------------------------------------------------------------------------------------------------------------------------
Oregon Fund Shares Amount Shares Amount Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 317,096 $ 2,424,100 372,601 $ 2,870,048 42,001 $ 317,768 317 $ 2,438
------------------------------------------------------------------------------------------------------------------------------
Investment of dividends 141,621 1,085,654 152,410 1,175,110 5,851 44,753 5,004 38,534
------------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds 100,861 758,083 8,966 69,509 -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 130,230 1,000,166 -- --
------------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 8,394 64,299 39,527 307,517 272 2,085 1,293 10,044
------------------------------------------------------------------------------------------------------------------------------
Total 567,972 4,332,136 573,504 4,422,184 178,354 1,364,772 6,614 51,016
------------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (658,831) (5,039,572) (835,175) (6,453,648) (10,504) (80,170) (5,389) (41,744)
------------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (119,719) (923,022) (93,316) (717,845) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
Total (778,550) (5,962,594) (928,491) (7,171,493) (10,504) (80,170) (5,389) (41,744)
------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) (210,578) $ (1,630,458) (354,987) $(2,749,309) 167,850 $1,284,602 1,225 $ 9,272
------------------------------------------------------------------------------------------------------------------------------
Class D
-------------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
--------------------------------------------------------------------------------------
Oregon Fund Shares Amount Shares Amount
--------------------------------------------------------------------------------------
Net proceeds from sales of shares 8,994 $ 68,567 11,216 $ 86,499
--------------------------------------------------------------------------------------
Investment of dividends 1,799 13,819 2,611 20,115
--------------------------------------------------------------------------------------
Investment of gain distributions 201 1,534 973 7,563
--------------------------------------------------------------------------------------
Total 10,994 83,920 14,800 114,177
--------------------------------------------------------------------------------------
Cost of shares repurchased (22,659) (172,887) (34,679) (269,020)
--------------------------------------------------------------------------------------
Converted to Class C* (130,230) (1,000,166) -- --
--------------------------------------------------------------------------------------
Total (152,889) (1,173,053) (34,679) (269,020)
--------------------------------------------------------------------------------------
Decrease (141,895) $ (1,089,133) (19,879) $ (154,843)
--------------------------------------------------------------------------------------
------
See footnotes on page 52.
51
Notes to Financial Statements
Class A Class C
----------------------------------------------- -----------------------------------------
Year Ended September 30, Year Ended September 30,
----------------------------------------------- -----------------------------------------
2008 2007 2008 2007
------------------------------------------------------------------------------------------------------------------------------
South Carolina Fund Shares Amount Shares Amount Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of shares 327,219 $ 2,584,369 280,207 $ 2,263,016 51,645 $ 410,544 66,620 $ 539,740
------------------------------------------------------------------------------------------------------------------------------
Investment of dividends 195,374 1,553,375 217,402 1,751,733 11,139 88,424 11,004 88,602
------------------------------------------------------------------------------------------------------------------------------
Exchanged from associated funds -- -- 1,802 14,492 -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
Converted from Class D* -- -- -- -- 226,908 1,806,184 -- --
------------------------------------------------------------------------------------------------------------------------------
Investment of gain distributions 11,723 93,418 38,794 315,804 721 5,737 2,276 18,525
------------------------------------------------------------------------------------------------------------------------------
Total 534,316 4,231,162 538,205 4,345,045 290,413 2,310,889 79,900 646,867
------------------------------------------------------------------------------------------------------------------------------
Cost of shares repurchased (637,721) (5,065,794) (1,437,620) (11,593,186) (144,204) (1,147,661) (78,845) (634,596)
------------------------------------------------------------------------------------------------------------------------------
Exchanged into associated funds (10,747) (84,655) (11,295) (90,932) (3,511) (28,191) (8,679) (69,947)
------------------------------------------------------------------------------------------------------------------------------
Total (648,468) (5,150,449) (1,448,915) (11,684,118) (147,715) (1,175,852) (87,524) (704,543)
------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) (114,152) $ (919,287) (910,710) $ (7,339,073) 142,698 $ 1,135,037 (7,624) $ (57,676)
------------------------------------------------------------------------------------------------------------------------------
Class D
-----------------------------------------------
October 1, 2007 Year
to Ended
May 16, 2008+ September 30, 2007
------------------------------------------------------------------------------------
South Carolina Fund Shares Amount Shares Amount
------------------------------------------------------------------------------------
Net proceeds from sales of shares 11,480 $ 91,218 2,734 $ 22,072
------------------------------------------------------------------------------------
Investment of dividends 3,574 28,540 5,492 44,232
------------------------------------------------------------------------------------
Investment of gain distributions 374 2,980 1,146 9,333
------------------------------------------------------------------------------------
Total 15,428 122,738 9,372 75,637
------------------------------------------------------------------------------------
Cost of shares repurchased (21,734) (173,567) (27,547) (223,376)
------------------------------------------------------------------------------------
Converted to Class C* (226,908) (1,806,184) -- --
------------------------------------------------------------------------------------
Total (248,642) (1,979,751) (27,547) (223,376)
------------------------------------------------------------------------------------
Decrease (233,214) $(1,857,013) (18,175) $ (147,739)
------------------------------------------------------------------------------------
------
* Effective May 16, 2008, Class D shares were converted to Class C shares.
+ Date of conversion to Class C shares.
8. Other Matters -- In late 2003, X. & X. Xxxxxxxx & Co. Incorporated ("JWS")
conducted an extensive internal review concerning mutual fund trading
practices. JWS's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies then managed by JWS (the "Xxxxxxxx Funds"); this
arrangement was in the process of being closed down by JWS before September
2003. XXX identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January
2004, JWS, on a voluntary basis, publicly disclosed these four arrangements
to its clients and to shareholders of the Xxxxxxxx Funds. XXX also provided
information concerning mutual fund trading practices to the SEC and the
Office of the Attorney General of the State of New York ("NYAG").
In September 2005, the New York staff of the SEC indicated that it was
considering recommending to the Commissioners of the SEC the instituting of a
formal action against JWS and the Distributor relating to frequent trading in
the Xxxxxxxx Funds. XXX responded to the staff in October 2005 that it
believed that any action would be both inappropriate and unnecessary,
especially in light of the fact that JWS had previously resolved the
underlying issue with the Independent Directors of the Xxxxxxxx Funds and
made recompense to the affected Xxxxxxxx Funds.
In September 2006, the NYAG commenced a civil action in New York State
Supreme Court against JWS, the Distributor, Xxxxxxxx Data Corp. and Xxxxx X.
Xxxx (collectively, the "Xxxxxxxx Parties"), alleging, in substance, that, in
addition to the four arrangements noted above, the Xxxxxxxx Parties permitted
other persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by JWS is
and has been misleading. The NYAG included other related claims and also
claimed that the fees charged by JWS to the Xxxxxxxx Funds were excessive.
The NYAG is seeking damages of at least $80 million and restitution,
disgorgement, penalties and costs and injunctive relief. The Xxxxxxxx Parties
answered the complaint in December 2006 and believe that the claims are
without merit.
Any resolution of these matters may include the relief noted above or other
sanctions or changes in procedures. Any damages would be paid by JWS and not
by the Xxxxxxxx Funds. If the NYAG obtains injunctive relief, each of JWS,
RiverSource Investments, LLC ("RiverSource") and their affiliates could, in
the absence of the SEC in its discretion granting exemptive relief, be
enjoined from providing advisory and underwriting services to the Xxxxxxxx
Funds and other registered investment companies, including those funds in the
RiverSource complex.
Neither JWS nor RiverSource believes that the foregoing legal action or other
possible actions will have a material adverse impact on JWS, RiverSource or
their current and former clients, including the Xxxxxxxx Funds and other
investment companies managed RiverSource; however, there can be no assurance
of this or that these matters and any related publicity will not affect
demand for shares of the Xxxxxxxx Funds and such other investment companies
or have other adverse consequences.
9. Recently Issued Accounting Pronouncement -- In September 2006, the FASB
issued Statement of Financial Accounting Standards No. 157 ("SFAS 157"),
"Fair Value Measurements." SFAS 157 defines fair value, establishes a
framework for measuring fair value of assets and liabilities and expands
disclosure about fair value measurements. SFAS 157 is effective for fiscal
years beginning after November 15, 2007. The Funds are currently evaluating
the impact of the adoption of SFAS 157 but believe the impact will be
limited to expanded disclosures in the Funds' financial statements.
52
Notes to Financial Statements
10. Subsequent Events -- On November 7, 2008, RiverSource, a wholly owned
subsidiary of Ameriprise Financial, Inc., announced the closing of its
acquisition (the "Acquisition") of JWS. With the Acquisition completed and
shareholders of each Fund having previously approved (at a Special Meeting
held on November 3, 2008) a new investment management services agreement
between the Series (with respect to each Fund of the Series) and
RiverSource, RiverSource is the new investment manager of the Funds
effective November 7, 2008.
On September 3, 2008, the Boards of Directors of the Series and Xxxxxxxx
Select Municipal Fund, Inc. ("Select Municipal") approved the acquisition of
Select Municipal by the Series' National Fund. The proposed acquisition is
subject to approval by the Select Municipal's stockholders at a special
meeting of stockholders to be held on December 18, 2008. If Select
Municipal's stockholders approve the acquisition, it is expected that the
acquisition will close in the first quarter of 2009.
53
Financial Highlights
The tables below are intended to help you understand the financial performance
of each Class of each Fund for the periods presented. Certain information
reflects financial results for a single share of a Class that was held
throughout the periods shown. Per share amounts are calculated using average
shares outstanding during the period. Total return shows the rate that you
would have earned (or lost) on an investment in each Class, assuming you
reinvested all your dividends and capital gain distributions, if any. Total
returns do not reflect any sales charges or transaction costs on your
investment or taxes investors may incur on distributions or on the redemption
of shares, and are not annualized for periods of less than one year.
National Fund
CLASS A
---------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.74 $7.81 $7.88 $7.97 $7.98
---------------------------------------------------------------------------------------------
Income from Investment Operations:
---------------------------------------------------------------------------------------------
Net investment income 0.29 0.33 0.35 0.34 0.34
---------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.44) (0.08) (0.07) (0.09) (0.01)
---------------------------------------------------------------------------------------------
Total from Investment Operations (0.15) 0.25 0.28 0.25 0.33
---------------------------------------------------------------------------------------------
Less Distributions:
---------------------------------------------------------------------------------------------
Dividends from net investment income (0.28) (0.32) (0.35) (0.34) (0.34)
---------------------------------------------------------------------------------------------
Total Distributions (0.28) (0.32) (0.35) (0.34) (0.34)
---------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.31 $7.74 $7.81 $7.88 $7.97
---------------------------------------------------------------------------------------------
Total Return (2.07)% 3.21% 3.58% 3.18% 4.16%
---------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
---------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $56,446 $58,002 $65,846 $67,861 $73,970
---------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.95% 0.90% 0.92% 0.94% 0.91%
---------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.77% 4.19% 4.46% 4.29% 4.22%
---------------------------------------------------------------------------------------------
Portfolio turnover rate 15.97% 28.55% -- 4.55% --
---------------------------------------------------------------------------------------------
CLASS C
---------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.75 $7.81 $7.88 $7.97 $7.98
---------------------------------------------------------------------------------------------
Income from Investment Operations:
---------------------------------------------------------------------------------------------
Net investment income 0.22 0.26 0.28 0.27 0.26
---------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.45) (0.07) (0.07) (0.09) (0.01)
---------------------------------------------------------------------------------------------
Total from Investment Operations (0.23) 0.19 0.21 0.18 0.25
---------------------------------------------------------------------------------------------
Less Distributions:
---------------------------------------------------------------------------------------------
Dividends from net investment income (0.21) (0.25) (0.28) (0.27) (0.26)
---------------------------------------------------------------------------------------------
Total Distributions (0.21) (0.25) (0.28) (0.27) (0.26)
---------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.31 $7.75 $7.81 $7.88 $7.97
---------------------------------------------------------------------------------------------
Total Return (3.07)% 2.42% 2.66% 2.25% 3.23%
---------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
---------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $2,184 $1,729 $2,343 $2,998 $3,503
---------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.85% 1.80% 1.82% 1.84% 1.81%
---------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.87% 3.29% 3.56% 3.39% 3.32%
---------------------------------------------------------------------------------------------
Portfolio turnover rate 15.97% 28.55% -- 4.55% --
---------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
54
Financial Highlights
National Fund (continued)
CLASS D
--------------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
-------------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.75 $7.81 $7.88 $7.97 $7.98
--------------------------------------------------------------------------------------------------
Income from Investment Operations:
--------------------------------------------------------------------------------------------------
Net investment income 0.14 0.26 0.28 0.27 0.26
--------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.01) (0.07) (0.07) (0.09) (0.01)
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.13 0.19 0.21 0.18 0.25
--------------------------------------------------------------------------------------------------
Less Distributions:
--------------------------------------------------------------------------------------------------
Dividends from net investment income (0.13) (0.25) (0.28) (0.27) (0.26)
--------------------------------------------------------------------------------------------------
Total Distributions (0.13) (0.25) (0.28) (0.27) (0.26)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.75 $7.75 $7.81 $7.88 $7.97
--------------------------------------------------------------------------------------------------
Total Return 1.75% 2.42% 2.66% 2.25% 3.23%
--------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
--------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $1,060 $1,239 $1,600 $1,799
--------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.85%++ 1.80% 1.82% 1.84% 1.81%
--------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.86%++ 3.29% 3.56% 3.39% 3.32%
--------------------------------------------------------------------------------------------------
Portfolio turnover rate 15.97%+++ 28.55% -- 4.55% --
--------------------------------------------------------------------------------------------------
Colorado Fund
CLASS A
--------------------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.43 $7.56 $7.65 $7.66 $7.63
--------------------------------------------------------------------------------------------------
Income from Investment Operations:
--------------------------------------------------------------------------------------------------
Net investment income 0.28 0.31 0.31 0.31 0.31
--------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.30) (0.09) (0.09) (0.01) 0.03
--------------------------------------------------------------------------------------------------
Total from Investment Operations (0.02) 0.22 0.22 0.30 0.34
--------------------------------------------------------------------------------------------------
Less Distributions:
--------------------------------------------------------------------------------------------------
Dividends from net investment income (0.27) (0.30) (0.31) (0.31) (0.31)
--------------------------------------------------------------------------------------------------
Distributions from net realized capital gain -- (0.05) -- -- --
--------------------------------------------------------------------------------------------------
Total Distributions (0.27) (0.35) (0.31) (0.31) (0.31)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.14 $7.43 $7.56 $7.65 $7.66
--------------------------------------------------------------------------------------------------
Total Return (0.31)% 2.97% 2.92% 3.93% 4.49%
--------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
--------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $29,306 $30,496 $32,558 $35,058 $36,025
--------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.97% 0.94% 0.95% 0.96% 0.94%
--------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.79% 4.11% 4.13% 4.05% 4.05%
--------------------------------------------------------------------------------------------------
Portfolio turnover rate 18.08% 10.86% 3.27% -- 5.04%
--------------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
55
Financial Highlights
Colorado Fund (continued)
CLASS C
----------------------------------------------------------------------------------------------
Year Ended September 30,
--------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.42 $7.55 $7.64 $7.65 $7.62
----------------------------------------------------------------------------------------------
Income from Investment Operations:
----------------------------------------------------------------------------------------------
Net investment income 0.21 0.24 0.24 0.24 0.24
----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.29) (0.09) (0.09) (0.01) 0.03
----------------------------------------------------------------------------------------------
Total from Investment Operations (0.08) 0.15 0.15 0.23 0.27
----------------------------------------------------------------------------------------------
Less Distributions:
----------------------------------------------------------------------------------------------
Dividends from net investment income (0.21) (0.23) (0.24) (0.24) (0.24)
----------------------------------------------------------------------------------------------
Distributions from net realized capital gain -- (0.05) -- -- --
----------------------------------------------------------------------------------------------
Total Distributions (0.21) (0.28) (0.24) (0.24) (0.24)
----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.13 $7.42 $7.55 $7.64 $7.65
----------------------------------------------------------------------------------------------
Total Return (1.20)% 2.05% 2.01% 3.00% 3.56%
----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
----------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $996 $194 $206 $105 $121
----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.87% 1.84% 1.85% 1.86% 1.84%
----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.89% 3.21% 3.23% 3.15% 3.15%
----------------------------------------------------------------------------------------------
Portfolio turnover rate 18.08% 10.86% 3.27% -- 5.04%
----------------------------------------------------------------------------------------------
CLASS D
----------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
---------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.42 $7.55 $7.64 $7.65 $7.62
----------------------------------------------------------------------------------------------
Income from Investment Operations:
----------------------------------------------------------------------------------------------
Net investment income 0.14 0.24 0.24 0.24 0.24
----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.04 (0.09) (0.09) (0.01) 0.03
----------------------------------------------------------------------------------------------
Total from Investment Operations 0.18 0.15 0.15 0.23 0.27
----------------------------------------------------------------------------------------------
Less Distributions:
----------------------------------------------------------------------------------------------
Dividends from net investment income (0.13) (0.23) (0.24) (0.24) (0.24)
----------------------------------------------------------------------------------------------
Distributions from net realized capital gain -- (0.05) -- -- --
----------------------------------------------------------------------------------------------
Total Distributions (0.13) (0.28) (0.24) (0.24) (0.24)
----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.47 $7.42 $7.55 $7.64 $7.65
----------------------------------------------------------------------------------------------
Total Return 2.49% 2.05% 2.01% 3.00% 3.56%
----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
----------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $169 $141 $153 $138
----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.87%++ 1.84% 1.85% 1.86% 1.84%
----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.89%++ 3.21% 3.23% 3.15% 3.15%
----------------------------------------------------------------------------------------------
Portfolio turnover rate 18.08%+++ 10.86% 3.27% -- 5.04%
----------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
56
Financial Highlights
Georgia Fund
CLASS A
---------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.61 $7.74 $7.78 $7.84 $8.01
---------------------------------------------------------------------------------------------
Income from Investment Operations:
---------------------------------------------------------------------------------------------
Net investment income 0.30 0.31 0.32 0.31 0.32
---------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.62) (0.14) (0.04) (0.06) (0.16)
---------------------------------------------------------------------------------------------
Total from Investment Operations (0.32) 0.17 0.28 0.25 0.16
---------------------------------------------------------------------------------------------
Less Distributions:
---------------------------------------------------------------------------------------------
Dividends from net investment income (0.30) (0.30) (0.32) (0.31) (0.32)
---------------------------------------------------------------------------------------------
Distributions from net realized capital gain -- -- -- -- (0.01)
---------------------------------------------------------------------------------------------
Total Distributions (0.30) (0.30) (0.32) (0.31) (0.33)
---------------------------------------------------------------------------------------------
Net Asset Value, End of Year $6.99 $7.61 $7.74 $7.78 $7.84
---------------------------------------------------------------------------------------------
Total Return (4.44)% 2.18% 3.70% 3.19% 2.09%
---------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
---------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $22,414 $25,664 $27,966 $30,456 $32,928
---------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.02% 0.94% 0.95% 0.98% 0.94%
---------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 4.00% 4.03% 4.15% 3.93% 4.11%
---------------------------------------------------------------------------------------------
Portfolio turnover rate -- 6.42% -- 8.59% 20.43%
---------------------------------------------------------------------------------------------
CLASS C
---------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.63 $7.76 $7.80 $7.86 $8.02
---------------------------------------------------------------------------------------------
Income from Investment Operations:
---------------------------------------------------------------------------------------------
Net investment income 0.23 0.24 0.25 0.24 0.25
---------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.62) (0.14) (0.04) (0.06) (0.15)
---------------------------------------------------------------------------------------------
Total from Investment Operations (0.39) 0.10 0.21 0.18 0.10
---------------------------------------------------------------------------------------------
Less Distributions:
---------------------------------------------------------------------------------------------
Dividends from net investment income (0.23) (0.23) (0.25) (0.24) (0.25)
---------------------------------------------------------------------------------------------
Distributions from net realized capital gain -- -- -- -- (0.01)
---------------------------------------------------------------------------------------------
Total Distributions (0.23) (0.23) (0.25) (0.24) (0.26)
---------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.01 $7.63 $7.76 $7.80 $7.86
---------------------------------------------------------------------------------------------
Total Return (5.29)% 1.26% 2.76% 2.26% 1.30%
---------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
---------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $1,022 $294 $485 $586 $639
---------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.92% 1.84% 1.85% 1.88% 1.84%
---------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.10% 3.13% 3.25% 3.03% 3.21%
---------------------------------------------------------------------------------------------
Portfolio turnover rate -- 6.42% -- 8.59% 20.43%
---------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
57
Financial Highlights
Georgia Fund (continued)
CLASS D
------------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
-------------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.64 $7.76 $7.80 $7.86 $8.03
------------------------------------------------------------------------------------------------
Income from Investment Operations:
------------------------------------------------------------------------------------------------
Net investment income 0.15 0.24 0.25 0.24 0.25
------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.08) (0.13) (0.04) (0.06) (0.16)
------------------------------------------------------------------------------------------------
Total from Investment Operations 0.07 0.11 0.21 0.18 0.09
------------------------------------------------------------------------------------------------
Less Distributions:
------------------------------------------------------------------------------------------------
Dividends from net investment income (0.15) (0.23) (0.25) (0.24) (0.25)
------------------------------------------------------------------------------------------------
Distributions from net realized capital gain -- -- -- -- (0.01)
------------------------------------------------------------------------------------------------
Total Distributions (0.15) (0.23) (0.25) (0.24) (0.26)
------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.56 $7.64 $7.76 $7.80 $7.86
------------------------------------------------------------------------------------------------
Total Return 0.86% 1.39% 2.76% 2.26% 1.17%
------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $960 $899 $1,107 $1,479
------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.89%++ 1.84% 1.85% 1.88% 1.84%
------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.08%++ 3.13% 3.25% 3.03% 3.21%
------------------------------------------------------------------------------------------------
Portfolio turnover rate -- +++ 6.42% -- 8.59% 20.43%
------------------------------------------------------------------------------------------------
Louisiana Fund
CLASS A
------------------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.86 $7.97 $8.06 $8.22 $8.27
------------------------------------------------------------------------------------------------
Income from Investment Operations:
------------------------------------------------------------------------------------------------
Net investment income 0.30 0.34 0.34 0.34 0.34
------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.50) (0.10) (0.06) (0.13) (0.03)
------------------------------------------------------------------------------------------------
Total from Investment Operations (0.20) 0.24 0.28 0.21 0.31
------------------------------------------------------------------------------------------------
Less Distributions:
------------------------------------------------------------------------------------------------
Dividends from net investment income (0.29) (0.33) (0.34) (0.34) (0.34)
------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.03) (0.02) (0.03) (0.03) (0.02)
------------------------------------------------------------------------------------------------
Total Distributions (0.32) (0.35) (0.37) (0.37) (0.36)
------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.34 $7.86 $7.97 $8.06 $8.22
------------------------------------------------------------------------------------------------
Total Return (2.60)% 3.10% 3.51% 2.53% 3.77%
------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $23,484 $26,750 $29,877 $38,036 $41,960
------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.98% 0.94% 0.97% 0.95% 0.91%
------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.93% 4.25% 4.26% 4.16% 4.14%
------------------------------------------------------------------------------------------------
Portfolio turnover rate 25.43% 11.58% -- 2.54% 2.51%
------------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
58
Financial Highlights
Louisiana Fund (continued)
CLASS C
--------------------------------------------------------------------------------------------
Year Ended September 30,
--------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
--------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.85 $7.97 $8.06 $8.22 $8.27
--------------------------------------------------------------------------------------------
Income from Investment Operations:
--------------------------------------------------------------------------------------------
Net investment income 0.23 0.26 0.27 0.27 0.27
--------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.49) (0.10) (0.06) (0.14) (0.04)
--------------------------------------------------------------------------------------------
Total from Investment Operations (0.26) 0.16 0.21 0.13 0.23
--------------------------------------------------------------------------------------------
Less Distributions:
--------------------------------------------------------------------------------------------
Dividends from net investment income (0.23) (0.26) (0.27) (0.26) (0.26)
--------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.03) (0.02) (0.03) (0.03) (0.02)
--------------------------------------------------------------------------------------------
Total Distributions (0.26) (0.28) (0.30) (0.29) (0.28)
--------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.33 $7.85 $7.97 $8.06 $8.22
--------------------------------------------------------------------------------------------
Total Return (3.48)% 2.05% 2.58% 1.62% 2.84%
--------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
--------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $1,005 $447 $652 $759 $698
--------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.88% 1.84% 1.87% 1.85% 1.81%
--------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.03% 3.35% 3.36% 3.27% 3.24%
--------------------------------------------------------------------------------------------
Portfolio turnover rate 25.43% 11.58% -- 2.54% 2.51%
--------------------------------------------------------------------------------------------
CLASS D
--------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
---------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
--------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.86 $7.98 $8.06 $8.22 $8.27
--------------------------------------------------------------------------------------------
Income from Investment Operations:
--------------------------------------------------------------------------------------------
Net investment income 0.15 0.26 0.27 0.27 0.27
--------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.07) (0.10) (0.05) (0.14) (0.04)
--------------------------------------------------------------------------------------------
Total from Investment Operations 0.08 0.16 0.22 0.13 0.23
--------------------------------------------------------------------------------------------
Less Distributions:
--------------------------------------------------------------------------------------------
Dividends from net investment income (0.15) (0.26) (0.27) (0.26) (0.26)
--------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.03) (0.02) (0.03) (0.03) (0.02)
--------------------------------------------------------------------------------------------
Total Distributions (0.18) (0.28) (0.30) (0.29) (0.28)
--------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.76 $7.86 $7.98 $8.06 $8.22
--------------------------------------------------------------------------------------------
Total Return 1.04% 2.05% 2.71% 1.61% 2.84%
--------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
--------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $564 $598 $580 $464
--------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.90%++ 1.84% 1.87% 1.85% 1.81%
--------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.07%++ 3.35% 3.36% 3.27% 3.24%
--------------------------------------------------------------------------------------------
Portfolio turnover rate 25.43%+++ 11.58% -- 2.54% 2.51%
--------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
59
Financial Highlights
Maryland Fund
CLASS A
---------------------------------------------------------------------------------------------------
Year Ended September 30,
-------------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.78 $7.92 $7.97 $8.03 $8.05
---------------------------------------------------------------------------------------------------
Income from Investment Operations:
---------------------------------------------------------------------------------------------------
Net investment income 0.29 0.29 0.32 0.31 0.31
---------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.32) (0.09) (0.03) (0.02) --
---------------------------------------------------------------------------------------------------
Total from Investment Operations (0.03) 0.20 0.29 0.29 0.31
---------------------------------------------------------------------------------------------------
Less Distributions:
---------------------------------------------------------------------------------------------------
Dividends from net investment income (0.27) (0.28) (0.32) (0.31) (0.31)
---------------------------------------------------------------------------------------------------
Distributions from net realized capital gain + (0.06) (0.02) (0.04) (0.02)
---------------------------------------------------------------------------------------------------
Total Distributions (0.27) (0.34) (0.34) (0.35) (0.33)
---------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.48 $7.78 $7.92 $7.97 $8.03
---------------------------------------------------------------------------------------------------
Total Return (0.41)% 2.50% 3.78% 3.72% 3.94%
---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
---------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $31,192 $32,690 $34,623 $39,148 $41,082
---------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.97% 0.94% 0.95% 0.96% 0.93%
---------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.66% 3.76% 4.04% 3.87% 3.89%
---------------------------------------------------------------------------------------------------
Portfolio turnover rate -- 4.57% 13.33% 9.77% 5.66%
---------------------------------------------------------------------------------------------------
CLASS C
---------------------------------------------------------------------------------------------------
Year Ended September 30,
-------------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.80 $7.93 $7.98 $8.05 $8.06
---------------------------------------------------------------------------------------------------
Income from Investment Operations:
---------------------------------------------------------------------------------------------------
Net investment income 0.22 0.22 0.25 0.24 0.24
---------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.32) (0.09) (0.03) (0.03) 0.01
---------------------------------------------------------------------------------------------------
Total from Investment Operations (0.10) 0.13 0.22 0.21 0.25
---------------------------------------------------------------------------------------------------
Less Distributions:
---------------------------------------------------------------------------------------------------
Dividends from net investment income (0.20) (0.20) (0.25) (0.24) (0.24)
---------------------------------------------------------------------------------------------------
Distributions from net realized capital gain + (0.06) (0.02) (0.04) (0.02)
---------------------------------------------------------------------------------------------------
Total Distributions (0.20) (0.26) (0.27) (0.28) (0.26)
---------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.50 $7.80 $7.93 $7.98 $8.05
---------------------------------------------------------------------------------------------------
Total Return (1.30)% 1.71% 2.85% 2.66% 3.13%
---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
---------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $1,517 $355 $490 $421 $419
---------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.87% 1.84% 1.85% 1.86% 1.83%
---------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.76% 2.86% 3.14% 2.97% 2.99%
---------------------------------------------------------------------------------------------------
Portfolio turnover rate -- 4.57% 13.33% 9.77% 5.66%
---------------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
60
Financial Highlights
Maryland Fund (continued)
CLASS D
--------------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
-------------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.80 $7.93 $7.98 $8.05 $8.06
--------------------------------------------------------------------------------------------------
Income from Investment Operations:
--------------------------------------------------------------------------------------------------
Net investment income 0.14 0.22 0.25 0.24 0.23
--------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.02 (0.09) (0.03) (0.03) 0.02
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.16 0.13 0.22 0.21 0.25
--------------------------------------------------------------------------------------------------
Less Distributions:
--------------------------------------------------------------------------------------------------
Dividends from net investment income (0.13) (0.20) (0.25) (0.24) (0.24)
--------------------------------------------------------------------------------------------------
Distributions from net realized capital gain + (0.06) (0.02) (0.04) (0.02)
--------------------------------------------------------------------------------------------------
Total Distributions (0.13) (0.26) (0.27) (0.28) (0.26)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.83 $7.80 $7.93 $7.98 $8.05
--------------------------------------------------------------------------------------------------
Total Return 2.11% 1.71% 2.85% 2.66% 3.13%
--------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
--------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $1,115 $1,548 $1,932 $2,016
--------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.88%++ 1.84% 1.85% 1.86% 1.83%
--------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.77%++ 2.86% 3.14% 2.97% 2.99%
--------------------------------------------------------------------------------------------------
Portfolio turnover rate -- +++ 4.57% 13.33% 9.77% 5.66%
--------------------------------------------------------------------------------------------------
Massachusetts Fund
CLASS A
--------------------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.86 $8.01 $8.15 $8.27 $8.34
--------------------------------------------------------------------------------------------------
Income from Investment Operations:
--------------------------------------------------------------------------------------------------
Net investment income 0.32 0.34 0.34 0.34 0.33
--------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.18) (0.12) (0.11) (0.11) (0.07)
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.14 0.22 0.23 0.23 0.26
--------------------------------------------------------------------------------------------------
Less Distributions:
--------------------------------------------------------------------------------------------------
Dividends from net investment income (0.31) (0.33) (0.34) (0.33) (0.33)
--------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.05) (0.04) (0.03) (0.02) ++
--------------------------------------------------------------------------------------------------
Total Distributions (0.36) (0.37) (0.37) (0.35) (0.33)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.64 $7.86 $8.01 $8.15 $8.27
--------------------------------------------------------------------------------------------------
Total Return 1.76% 2.83% 2.86% 2.90% 3.18%
--------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
--------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $56,560 $57,796 $62,426 $69,598 $76,118
--------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.92% 0.89% 0.90% 0.91% 0.89%
--------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 4.01% 4.27% 4.25% 4.09% 3.98%
--------------------------------------------------------------------------------------------------
Portfolio turnover rate 3.78% 6.81% -- 4.55% 1.97%
--------------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
61
Financial Highlights
Massachusetts Fund (continued)
CLASS C
------------------------------------------------------------------------------------------------
Year Ended September 30,
----------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.87 $8.01 $8.15 $8.27 $8.34
------------------------------------------------------------------------------------------------
Income from Investment Operations:
------------------------------------------------------------------------------------------------
Net investment income 0.24 0.27 0.27 0.26 0.26
------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.18) (0.11) (0.12) (0.10) (0.08)
------------------------------------------------------------------------------------------------
Total from Investment Operations 0.06 0.16 0.15 0.16 0.18
------------------------------------------------------------------------------------------------
Less Distributions:
------------------------------------------------------------------------------------------------
Dividends from net investment income (0.24) (0.26) (0.26) (0.26) (0.25)
------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.05) (0.04) (0.03) (0.02) ++
------------------------------------------------------------------------------------------------
Total Distributions (0.29) (0.30) (0.29) (0.28) (0.25)
------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.64 $7.87 $8.01 $8.15 $8.27
------------------------------------------------------------------------------------------------
Total Return 0.72% 2.03% 1.93% 1.98% 2.25%
------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $2,548 $2,904 $2,450 $2,527 $3,052
------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.82% 1.79% 1.80% 1.81% 1.79%
------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.11% 3.37% 3.35% 3.19% 3.08%
------------------------------------------------------------------------------------------------
Portfolio turnover rate 3.78% 6.81% -- 4.55% 1.97%
------------------------------------------------------------------------------------------------
CLASS D
------------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
-----------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.86 $8.01 $8.15 $8.27 $8.34
------------------------------------------------------------------------------------------------
Income from Investment Operations:
------------------------------------------------------------------------------------------------
Net investment income 0.15 0.27 0.27 0.26 0.26
------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.06 (0.12) (0.12) (0.10) (0.08)
------------------------------------------------------------------------------------------------
Total from Investment Operations 0.21 0.15 0.15 0.16 0.18
------------------------------------------------------------------------------------------------
Less Distributions:
------------------------------------------------------------------------------------------------
Dividends from net investment income (0.15) (0.26) (0.26) (0.26) (0.25)
------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.05) (0.04) (0.03) (0.02) ++
------------------------------------------------------------------------------------------------
Total Distributions (0.20) (0.30) (0.29) (0.28) (0.25)
------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.87 $7.86 $8.01 $8.15 $8.27
------------------------------------------------------------------------------------------------
Total Return 2.76% 1.91% 1.93% 1.98% 2.25%
------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $224 $518 $607 $785
------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.82%++ 1.79% 1.80% 1.81% 1.79%
------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.06%++ 3.37% 3.35% 3.19% 3.08%
------------------------------------------------------------------------------------------------
Portfolio turnover rate 3.78%+++ 6.81% -- 4.55% 1.97%
------------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
62
Financial Highlights
Michigan Fund
CLASS A
-----------------------------------------------------------------------------------------------
Year Ended September 30,
-----------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $8.15 $8.33 $8.44 $8.57 $8.64
-----------------------------------------------------------------------------------------------
Income from Investment Operations:
-----------------------------------------------------------------------------------------------
Net investment income 0.32 0.33 0.34 0.35 0.35
-----------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.45) (0.13) (0.08) (0.14) (0.06)
-----------------------------------------------------------------------------------------------
Total from Investment Operations (0.13) 0.20 0.26 0.21 0.29
-----------------------------------------------------------------------------------------------
Less Distributions:
-----------------------------------------------------------------------------------------------
Dividends from net investment income (0.31) (0.32) (0.34) (0.34) (0.34)
-----------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.05) (0.06) (0.03) * (0.02)
-----------------------------------------------------------------------------------------------
Total Distributions (0.36) (0.38) (0.37) (0.34) (0.36)
-----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.66 $8.15 $8.33 $8.44 $8.57
-----------------------------------------------------------------------------------------------
Total Return (1.69)% 2.47% 3.12% 2.56% 3.51%
-----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
-----------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $66,199 $78,824 $89,978 $100,016 $108,791
-----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.92% 0.87% 0.88% 0.90% 0.87%
-----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.97% 4.02% 4.12% 4.11% 4.08%
-----------------------------------------------------------------------------------------------
Portfolio turnover rate -- 11.33% 10.63% 8.64% --
-----------------------------------------------------------------------------------------------
CLASS C
-----------------------------------------------------------------------------------------------
Year Ended September 30,
-----------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $8.14 $8.32 $8.43 $8.56 $8.63
-----------------------------------------------------------------------------------------------
Income from Investment Operations:
-----------------------------------------------------------------------------------------------
Net investment income 0.25 0.26 0.27 0.27 0.27
-----------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.45) (0.13) (0.09) (0.13) (0.05)
-----------------------------------------------------------------------------------------------
Total from Investment Operations (0.20) 0.13 0.18 0.14 0.22
-----------------------------------------------------------------------------------------------
Less Distributions:
-----------------------------------------------------------------------------------------------
Dividends from net investment income (0.24) (0.25) (0.26) (0.27) (0.27)
-----------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.05) (0.06) (0.03) * (0.02)
-----------------------------------------------------------------------------------------------
Total Distributions (0.29) (0.31) (0.29) (0.27) (0.29)
-----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.65 $8.14 $8.32 $8.43 $8.56
-----------------------------------------------------------------------------------------------
Total Return (2.57)% 1.55% 2.20% 1.64% 2.59%
-----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
-----------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $1,921 $923 $958 $918 $851
-----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.82% 1.77% 1.78% 1.80% 1.77%
-----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.07% 3.12% 3.22% 3.21% 3.18%
-----------------------------------------------------------------------------------------------
Portfolio turnover rate -- 11.33% 10.63% 8.64% --
-----------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
63
Financial Highlights
Michigan Fund (continued)
CLASS D
--------------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
-------------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $8.14 $8.32 $8.43 $8.56 $8.63
--------------------------------------------------------------------------------------------------
Income from Investment Operations:
--------------------------------------------------------------------------------------------------
Net investment income 0.16 0.26 0.27 0.27 0.27
--------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.03) (0.13) (0.09) (0.13) (0.05)
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.13 0.13 0.18 0.14 0.22
--------------------------------------------------------------------------------------------------
Less Distributions:
--------------------------------------------------------------------------------------------------
Dividends from net investment income (0.15) (0.25) (0.26) (0.27) (0.27)
--------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.05) (0.06) (0.03) * (0.02)
--------------------------------------------------------------------------------------------------
Total Distributions (0.20) (0.31) (0.29) (0.27) (0.29)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.07 $8.14 $8.32 $8.43 $8.56
--------------------------------------------------------------------------------------------------
Total Return 1.69% 1.55% 2.20% 1.64% 2.59%
--------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
--------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $1,753 $2,061 $2,101 $2,583
--------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.82%++ 1.77% 1.78% 1.80% 1.77%
--------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.08%++ 3.12% 3.22% 3.21% 3.18%
--------------------------------------------------------------------------------------------------
Portfolio turnover rate -- +++ 11.33% 10.63% 8.64% --
--------------------------------------------------------------------------------------------------
Minnesota Fund
CLASS A
--------------------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.55 $7.67 $7.75 $7.83 $7.87
--------------------------------------------------------------------------------------------------
Income from Investment Operations:
--------------------------------------------------------------------------------------------------
Net investment income 0.27 0.30 0.31 0.31 0.31
--------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.26) (0.11) (0.08) (0.09) (0.05)
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.01 0.19 0.23 0.22 0.26
--------------------------------------------------------------------------------------------------
Less Distributions:
--------------------------------------------------------------------------------------------------
Dividends from net investment income (0.26) (0.30) (0.30) (0.30) (0.30)
--------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.04) (0.01) (0.01) -- --
--------------------------------------------------------------------------------------------------
Total Distributions (0.30) (0.31) (0.31) (0.30) (0.30)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.26 $7.55 $7.67 $7.75 $7.83
--------------------------------------------------------------------------------------------------
Total Return 0.07% 2.52% 3.04% 2.90% 3.41%
--------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
--------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $64,860 $70,804 $78,066 $84,659 $91,022
--------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.91% 0.88% 0.89% 0.92% 0.88%
--------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.62% 4.01% 4.04% 3.96% 3.95%
--------------------------------------------------------------------------------------------------
Portfolio turnover rate 15.50% 4.48% 10.60% 8.09% 1.85%
--------------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
64
Financial Highlights
Minnesota Fund (continued)
CLASS C
----------------------------------------------------------------------------------------------
Year Ended September 30,
--------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.56 $7.68 $7.75 $7.83 $7.87
----------------------------------------------------------------------------------------------
Income from Investment Operations:
----------------------------------------------------------------------------------------------
Net investment income 0.20 0.24 0.24 0.24 0.24
----------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.26) (0.12) (0.07) (0.09) (0.05)
----------------------------------------------------------------------------------------------
Total from Investment Operations (0.06) 0.12 0.17 0.15 0.19
----------------------------------------------------------------------------------------------
Less Distributions:
----------------------------------------------------------------------------------------------
Dividends from net investment income (0.19) (0.23) (0.23) (0.23) (0.23)
----------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.04) (0.01) (0.01) -- --
----------------------------------------------------------------------------------------------
Total Distributions (0.23) (0.24) (0.24) (0.23) (0.23)
----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.27 $7.56 $7.68 $7.75 $7.83
----------------------------------------------------------------------------------------------
Total Return (0.83)% 1.59% 2.16% 1.95% 2.49%
----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
----------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $547 $136 $249 $287 $390
----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.81% 1.78% 1.79% 1.82% 1.78%
----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.72% 3.11% 3.14% 3.06% 3.05%
----------------------------------------------------------------------------------------------
Portfolio turnover rate 15.50% 4.48% 10.60% 8.09% 1.85%
----------------------------------------------------------------------------------------------
CLASS D
----------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
---------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.56 $7.68 $7.75 $7.83 $7.87
----------------------------------------------------------------------------------------------
Income from Investment Operations:
----------------------------------------------------------------------------------------------
Net investment income 0.13 0.24 0.24 0.24 0.24
----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.03 (0.12) (0.07) (0.09) (0.05)
----------------------------------------------------------------------------------------------
Total from Investment Operations 0.16 0.12 0.17 0.15 0.19
----------------------------------------------------------------------------------------------
Less Distributions:
----------------------------------------------------------------------------------------------
Dividends from net investment income (0.13) (0.23) (0.23) (0.23) (0.23)
----------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.04) (0.01) (0.01) -- --
----------------------------------------------------------------------------------------------
Total Distributions (0.17) (0.24) (0.24) (0.23) (0.23)
----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.55 $7.56 $7.68 $7.75 $7.83
----------------------------------------------------------------------------------------------
Total Return 2.10% 1.59% 2.16% 1.95% 2.49%
----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
----------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $328 $637 $762 $1,315
----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.80%++ 1.78% 1.79% 1.82% 1.78%
----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.74%++ 3.11% 3.14% 3.06% 3.05%
----------------------------------------------------------------------------------------------
Portfolio turnover rate 15.50%+++ 4.48% 10.60% 8.09% 1.85%
----------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
65
Financial Highlights
Missouri Fund
CLASS A
---------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.61 $7.78 $7.84 $7.89 $7.94
---------------------------------------------------------------------------------------------
Income from Investment Operations:
---------------------------------------------------------------------------------------------
Net investment income 0.29 0.29 0.31 0.31 0.30
---------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.38) (0.13) (0.04) (0.04) (0.04)
---------------------------------------------------------------------------------------------
Total from Investment Operations (0.09) 0.16 0.27 0.27 0.26
---------------------------------------------------------------------------------------------
Less Distributions:
---------------------------------------------------------------------------------------------
Dividends from net investment income (0.28) (0.28) (0.31) (0.31) (0.30)
---------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.04) (0.05) (0.02) (0.01) (0.01)
---------------------------------------------------------------------------------------------
Total Distributions (0.32) (0.33) (0.33) (0.32) (0.31)
---------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.20 $7.61 $7.78 $7.84 $7.89
---------------------------------------------------------------------------------------------
Total Return (1.38)% 2.20% 3.51% 3.39% 3.38%
---------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
---------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $24,490 $26,279 $29,097 $31,347 $33,899
---------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.97% 0.94% 0.95% 0.97% 0.94%
---------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.78% 3.83% 4.03% 3.95% 3.83%
---------------------------------------------------------------------------------------------
Portfolio turnover rate 2.09% 20.86% 15.02% -- 3.99%
---------------------------------------------------------------------------------------------
CLASS C
---------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.61 $7.77 $7.84 $7.89 $7.95
---------------------------------------------------------------------------------------------
Income from Investment Operations:
---------------------------------------------------------------------------------------------
Net investment income 0.22 0.22 0.24 0.24 0.23
---------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.38) (0.12) (0.05) (0.04) (0.05)
---------------------------------------------------------------------------------------------
Total from Investment Operations (0.16) 0.10 0.19 0.20 0.18
---------------------------------------------------------------------------------------------
Less Distributions:
---------------------------------------------------------------------------------------------
Dividends from net investment income (0.21) (0.21) (0.24) (0.24) (0.23)
---------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.04) (0.05) (0.02) (0.01) (0.01)
---------------------------------------------------------------------------------------------
Total Distributions (0.25) (0.26) (0.26) (0.25) (0.24)
---------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.20 $7.61 $7.77 $7.84 $7.89
---------------------------------------------------------------------------------------------
Total Return (2.26)% 1.28% 2.58% 2.46% 2.33%
---------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
---------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $410 $43 $44 $141 $139
---------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.87% 1.84% 1.85% 1.87% 1.84%
---------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.88% 2.93% 3.13% 3.05% 2.93%
---------------------------------------------------------------------------------------------
Portfolio turnover rate 2.09% 20.86% 15.02% -- 3.99%
---------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
66
Financial Highlights
Missouri Fund (continued)
CLASS D
-------------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
--------------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.62 $7.78 $7.84 $7.89 $7.95
-------------------------------------------------------------------------------------------------
Income from Investment Operations:
-------------------------------------------------------------------------------------------------
Net investment income 0.14 0.22 0.24 0.24 0.23
-------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments -- (0.12) (0.04) (0.04) (0.05)
-------------------------------------------------------------------------------------------------
Total from Investment Operations 0.14 0.10 0.20 0.20 0.18
-------------------------------------------------------------------------------------------------
Less Distributions:
-------------------------------------------------------------------------------------------------
Dividends from net investment income (0.13) (0.21) (0.24) (0.24) (0.23)
-------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.04) (0.05) (0.02) (0.01) (0.01)
-------------------------------------------------------------------------------------------------
Total Distributions (0.17) (0.26) (0.26) (0.25) (0.24)
-------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.59 $7.62 $7.78 $7.84 $7.89
-------------------------------------------------------------------------------------------------
Total Return 1.86% 1.42% 2.58% 2.46% 2.33%
-------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
-------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $281 $309 $362 $345
-------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.87%++ 1.84% 1.85% 1.87% 1.84%
-------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.85%++ 2.93% 3.13% 3.05% 2.93%
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 2.09%+++ 20.86% 15.02% -- 3.99%
-------------------------------------------------------------------------------------------------
New York Fund
CLASS A
-------------------------------------------------------------------------------------------------
Year Ended September 30,
-------------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $8.07 $8.19 $8.26 $8.27 $8.34
-------------------------------------------------------------------------------------------------
Income from Investment Operations:
-------------------------------------------------------------------------------------------------
Net investment income 0.32 0.34 0.35 0.33 0.35
-------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.40) (0.12) (0.06) (0.01) (0.06)
-------------------------------------------------------------------------------------------------
Total from Investment Operations (0.08) 0.22 0.29 0.32 0.29
-------------------------------------------------------------------------------------------------
Less Distributions:
-------------------------------------------------------------------------------------------------
Dividends from net investment income (0.32) (0.34) (0.34) (0.33) (0.34)
-------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.04) o (0.02) oo (0.02)
-------------------------------------------------------------------------------------------------
Total Distributions (0.36) (0.34) (0.36) (0.33) (0.36)
-------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.63 $8.07 $8.19 $8.26 $8.27
-------------------------------------------------------------------------------------------------
Total Return (1.19)% 2.76% 3.61% 3.96% 3.60%
-------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
-------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $57,937 $60,746 $63,794 $69,563 $71,698
-------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.89% 0.85% 0.88% 0.90% 0.88%
-------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 4.04% 4.22% 4.25% 4.03% 4.18%
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 0.38% 16.19% -- 10.47% --
-------------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
67
Financial Highlights
New York Fund (continued)
CLASS C
---------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $8.08 $8.20 $8.27 $8.29 $8.35
---------------------------------------------------------------------------------------------
Income from Investment Operations:
---------------------------------------------------------------------------------------------
Net investment income 0.25 0.27 0.27 0.26 0.27
---------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.41) (0.13) (0.05) (0.02) (0.04)
---------------------------------------------------------------------------------------------
Total from Investment Operations (0.16) 0.14 0.22 0.24 0.23
---------------------------------------------------------------------------------------------
Less Distributions:
---------------------------------------------------------------------------------------------
Dividends from net investment income (0.24) (0.26) (0.27) (0.26) (0.27)
---------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.04) o (0.02) oo (0.02)
---------------------------------------------------------------------------------------------
Total Distributions (0.28) (0.26) (0.29) (0.26) (0.29)
---------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.64 $8.08 $8.20 $8.27 $8.29
---------------------------------------------------------------------------------------------
Total Return (2.07)% 1.83% 2.68% 2.91% 2.79%
---------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
---------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $4,952 $4,110 $4,905 $4,994 $5,732
---------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.79% 1.75% 1.78% 1.80% 1.78%
---------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.14% 3.32% 3.35% 3.13% 3.28%
---------------------------------------------------------------------------------------------
Portfolio turnover rate 0.38% 16.19% -- 10.47% --
---------------------------------------------------------------------------------------------
CLASS D
---------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
----------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
---------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $8.08 $8.20 $8.27 $8.29 $8.35
---------------------------------------------------------------------------------------------
Income from Investment Operations:
---------------------------------------------------------------------------------------------
Net investment income 0.16 0.27 0.27 0.26 0.27
---------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments -- (0.13) (0.05) (0.02) (0.04)
---------------------------------------------------------------------------------------------
Total from Investment Operations 0.16 0.14 0.22 0.24 0.23
---------------------------------------------------------------------------------------------
Less Distributions:
---------------------------------------------------------------------------------------------
Dividends from net investment income (0.15) (0.26) (0.27) (0.26) (0.27)
---------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.04) o (0.02) oo (0.02)
---------------------------------------------------------------------------------------------
Total Distributions (0.19) (0.26) (0.29) (0.26) (0.29)
---------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.05 $8.08 $8.20 $8.27 $8.29
---------------------------------------------------------------------------------------------
Total Return 2.03% 1.83% 2.68% 2.91% 2.79%
---------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
---------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $1,987 $2,139 $2,442 $2,437
---------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.79%++ 1.75% 1.78% 1.80% 1.78%
---------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.14%++ 3.32% 3.35% 3.13% 3.28%
---------------------------------------------------------------------------------------------
Portfolio turnover rate 0.38%+++ 16.19% -- 10.47% --
---------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
68
Financial Highlights
Ohio Fund
CLASS A
------------------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.82 $7.90 $8.01 $8.10 $8.14
------------------------------------------------------------------------------------------------
Income from Investment Operations:
------------------------------------------------------------------------------------------------
Net investment income 0.28 0.31 0.31 0.32 0.31
------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.37) (0.09) (0.09) (0.07) (0.02)
------------------------------------------------------------------------------------------------
Total from Investment Operations (0.09) 0.22 0.22 0.25 0.29
------------------------------------------------------------------------------------------------
Less Distributions:
------------------------------------------------------------------------------------------------
Dividends from net investment income (0.27) (0.30) (0.31) (0.31) (0.31)
------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.02) -- (0.02) (0.03) (0.02)
------------------------------------------------------------------------------------------------
Total Distributions (0.29) (0.30) (0.33) (0.34) (0.33)
------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.44 $7.82 $7.90 $8.01 $8.10
------------------------------------------------------------------------------------------------
Total Return (1.27)% 2.84% 2.78% 3.09% 3.69%
------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $82,156 $94,031 $100,686 $107,587 $114,544
------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.90% 0.86% 0.87% 0.89% 0.87%
------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.58% 3.95% 3.94% 3.92% 3.88%
------------------------------------------------------------------------------------------------
Portfolio turnover rate 24.32% 8.54% 7.15% 4.57% --
------------------------------------------------------------------------------------------------
CLASS C
------------------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.87 $7.95 $8.06 $8.15 $8.18
------------------------------------------------------------------------------------------------
Income from Investment Operations:
------------------------------------------------------------------------------------------------
Net investment income 0.21 0.24 0.24 0.24 0.24
------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.37) (0.09) (0.09) (0.06) (0.01)
------------------------------------------------------------------------------------------------
Total from Investment Operations (0.16) 0.15 0.15 0.18 0.23
------------------------------------------------------------------------------------------------
Less Distributions:
------------------------------------------------------------------------------------------------
Dividends from net investment income (0.20) (0.23) (0.24) (0.24) (0.24)
------------------------------------------------------------------------------------------------
Dividends from net realized capital gain (0.02) -- (0.02) (0.03) (0.02)
------------------------------------------------------------------------------------------------
Total Distributions (0.22) (0.23) (0.26) (0.27) (0.26)
------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.49 $7.87 $7.95 $8.06 $8.15
------------------------------------------------------------------------------------------------
Total Return (2.14)% 1.90% 1.84% 2.15% 2.87%
------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $1,477 $670 $844 $922 $1,005
------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.80% 1.76% 1.77% 1.79% 1.77%
------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.68% 3.05% 3.04% 3.02% 2.98%
------------------------------------------------------------------------------------------------
Portfolio turnover rate 24.32% 8.54% 7.15% 4.57% --
------------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
69
Financial Highlights
Ohio Fund (continued)
CLASS D
--------------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
-------------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.87 $7.95 $8.06 $8.15 $8.18
--------------------------------------------------------------------------------------------------
Income from Investment Operations:
--------------------------------------------------------------------------------------------------
Net investment income 0.13 0.24 0.24 0.24 0.24
--------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.03 (0.09) (0.09) (0.06) (0.01)
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.16 0.15 0.15 0.18 0.23
--------------------------------------------------------------------------------------------------
Less Distributions:
--------------------------------------------------------------------------------------------------
Dividends from net investment income (0.13) (0.23) (0.24) (0.24) (0.24)
--------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.02) -- (0.02) (0.03) (0.02)
--------------------------------------------------------------------------------------------------
Total Distributions (0.15) (0.23) (0.26) (0.27) (0.26)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.88 $7.87 $7.95 $8.06 $8.15
--------------------------------------------------------------------------------------------------
Total Return 2.08% 1.90% 1.84% 2.15% 2.87%
--------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
--------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $615 $757 $773 $1,012
--------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.79%++ 1.76% 1.77% 1.79% 1.77%
--------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.70%++ 3.05% 3.04% 3.02% 2.98%
--------------------------------------------------------------------------------------------------
Portfolio turnover rate 24.32%+++ 8.54% 7.15% 4.57% --
--------------------------------------------------------------------------------------------------
Oregon Fund
CLASS A
--------------------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.68 $7.83 $7.87 $7.91 $7.94
--------------------------------------------------------------------------------------------------
Income from Investment Operations:
--------------------------------------------------------------------------------------------------
Net investment income 0.30 0.31 0.32 0.31 0.32
--------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.33) (0.10) (0.04) (0.03) (0.03)
--------------------------------------------------------------------------------------------------
Total from Investment Operations (0.03) 0.21 0.28 0.28 0.29
--------------------------------------------------------------------------------------------------
Less Distributions:
--------------------------------------------------------------------------------------------------
Dividends from net investment income (0.29) (0.30) (0.31) (0.31) (0.31)
--------------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.01) (0.06) (0.01) (0.01) (0.01)
--------------------------------------------------------------------------------------------------
Total Distributions (0.30) (0.36) (0.32) (0.32) (0.32)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.35 $7.68 $7.83 $7.87 $7.91
--------------------------------------------------------------------------------------------------
Total Return (0.44)% 2.79% 3.75% 3.53% 3.73%
--------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
--------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $42,632 $46,168 $49,862 $53,109 $56,182
--------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.94% 0.90% 0.92% 0.92% 0.91%
--------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.89% 4.00% 4.10% 3.97% 4.00%
--------------------------------------------------------------------------------------------------
Portfolio turnover rate -- 3.27% 16.84% 4.88% 1.92%
--------------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
70
Financial Highlights
Oregon Fund (continued)
CLASS C
----------------------------------------------------------------------------------------------
Year Ended September 30,
--------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.67 $7.82 $7.86 $7.90 $7.93
----------------------------------------------------------------------------------------------
Income from Investment Operations:
----------------------------------------------------------------------------------------------
Net investment income 0.23 0.24 0.25 0.24 0.24
----------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.33) (0.10) (0.04) (0.03) (0.02)
----------------------------------------------------------------------------------------------
Total from Investment Operations (0.10) 0.14 0.21 0.21 0.22
----------------------------------------------------------------------------------------------
Less Distributions:
----------------------------------------------------------------------------------------------
Dividends from net investment income (0.22) (0.23) (0.24) (0.24) (0.24)
----------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.01) (0.06) (0.01) (0.01) (0.01)
----------------------------------------------------------------------------------------------
Total Distributions (0.23) (0.29) (0.25) (0.25) (0.25)
----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.34 $7.67 $7.82 $7.86 $7.90
----------------------------------------------------------------------------------------------
Total Return (1.33)% 1.87% 2.82% 2.60% 2.81%
----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
----------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $2,473 $1,298 $1,314 $1,282 $1,641
----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.84% 1.80% 1.82% 1.82% 1.81%
----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.99% 3.10% 3.20% 3.07% 3.10%
----------------------------------------------------------------------------------------------
Portfolio turnover rate -- 3.27% 16.84% 4.88% 1.92%
----------------------------------------------------------------------------------------------
CLASS D
----------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
---------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.67 $7.82 $7.86 $7.90 $7.93
----------------------------------------------------------------------------------------------
Income from Investment Operations:
----------------------------------------------------------------------------------------------
Net investment income 0.15 0.24 0.25 0.24 0.24
----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.01 (0.10) (0.04) (0.03) (0.02)
----------------------------------------------------------------------------------------------
Total from Investment Operations 0.16 0.14 0.21 0.21 0.22
----------------------------------------------------------------------------------------------
Less Distributions:
----------------------------------------------------------------------------------------------
Dividends from net investment income (0.14) (0.23) (0.24) (0.24) (0.24)
----------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.01) (0.06) (0.01) (0.01) (0.01)
----------------------------------------------------------------------------------------------
Total Distributions (0.15) (0.29) (0.25) (0.25) (0.25)
----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.68 $7.67 $7.82 $7.86 $7.90
----------------------------------------------------------------------------------------------
Total Return 2.18% 1.87% 2.82% 2.60% 2.81%
----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
----------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $1,088 $1,265 $1,442 $1,517
----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.83%++ 1.80% 1.82% 1.82% 1.81%
----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.01%++ 3.10% 3.20% 3.07% 3.10%
----------------------------------------------------------------------------------------------
Portfolio turnover rate -- +++ 3.27% 16.84% 4.88% 1.92%
----------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
71
Financial Highlights
South Carolina Fund
CLASS A
-----------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $8.01 $8.16 $8.19 $8.18 $8.23
-----------------------------------------------------------------------------------------------
Income from Investment Operations:
-----------------------------------------------------------------------------------------------
Net investment income 0.32 0.32 0.32 0.32 0.31
-----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.49) (0.10) (0.03) 0.03 0.05
-----------------------------------------------------------------------------------------------
Total from Investment Operations (0.17) 0.22 0.29 0.35 0.36
-----------------------------------------------------------------------------------------------
Less Distributions:
-----------------------------------------------------------------------------------------------
Dividends from net investment income (0.31) (0.32) (0.32) (0.32) (0.30)
-----------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.02) (0.05) -- (0.02) (0.11)
-----------------------------------------------------------------------------------------------
Total Distributions (0.33) (0.37) (0.32) (0.34) (0.41)
-----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.51 $8.01 $8.16 $8.19 $8.18
-----------------------------------------------------------------------------------------------
Total Return (2.29)% 2.70% 3.62% 4.23% 4.51%
-----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
-----------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $57,619 $62,402 $70,937 $75,442 $76,913
-----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.90% 0.87% 0.88% 0.91% 0.91%
-----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 4.00% 4.03% 4.00% 3.89% 3.77%
-----------------------------------------------------------------------------------------------
Portfolio turnover rate -- 8.67% 9.93% -- --
-----------------------------------------------------------------------------------------------
CLASS C
-----------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------
Per Share Data: 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $8.01 $8.15 $8.19 $8.18 $8.23
-----------------------------------------------------------------------------------------------
Income from Investment Operations:
-----------------------------------------------------------------------------------------------
Net investment income 0.25 0.25 0.25 0.25 0.23
-----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.49) (0.09) (0.04) 0.02 0.06
-----------------------------------------------------------------------------------------------
Total from Investment Operations (0.24) 0.16 0.21 0.27 0.29
-----------------------------------------------------------------------------------------------
Less Distributions:
-----------------------------------------------------------------------------------------------
Dividends from net investment income (0.24) (0.25) (0.25) (0.24) (0.23)
-----------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.02) (0.05) -- (0.02) (0.11)
-----------------------------------------------------------------------------------------------
Total Distributions (0.26) (0.30) (0.25) (0.26) (0.34)
-----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.51 $8.01 $8.15 $8.19 $8.18
-----------------------------------------------------------------------------------------------
Total Return (3.16)% 1.90% 2.57% 3.30% 3.58%
-----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
-----------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $4,721 $3,895 $4,026 $4,939 $5,200
-----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.80% 1.77% 1.78% 1.81% 1.81%
-----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.10% 3.13% 3.10% 2.99% 2.87%
-----------------------------------------------------------------------------------------------
Portfolio turnover rate -- 8.67% 9.93% -- --
-----------------------------------------------------------------------------------------------
--------
See footnotes on page 73.
72
Financial Highlights
South Carolina Fund (continued)
CLASS D
----------------------------------------------------------------------------------------------
10/1/07
to Year Ended September 30,
---------------------------
Per Share Data: 5/16/08+ 2007 2006 2005 2004
----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $8.01 $8.15 $8.19 $8.18 $8.23
----------------------------------------------------------------------------------------------
Income from Investment Operations:
----------------------------------------------------------------------------------------------
Net investment income 0.16 0.25 0.25 0.25 0.23
----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.03) (0.09) (0.04) 0.02 0.06
----------------------------------------------------------------------------------------------
Total from Investment Operations 0.13 0.16 0.21 0.27 0.29
----------------------------------------------------------------------------------------------
Less Distributions:
----------------------------------------------------------------------------------------------
Dividends from net investment income (0.16) (0.25) (0.25) (0.24) (0.23)
----------------------------------------------------------------------------------------------
Distributions from net realized capital gain (0.02) (0.05) -- (0.02) (0.11)
----------------------------------------------------------------------------------------------
Total Distributions (0.18) (0.30) (0.25) (0.26) (0.34)
----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.96 $8.01 $8.15 $8.19 $8.18
----------------------------------------------------------------------------------------------
Total Return 1.53% 1.90% 2.57% 3.30% 3.58%
----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
----------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) -- $1,868 $2,050 $2,515 $3,035
----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.81%++ 1.77% 1.78% 1.81% 1.81%
----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.12%++ 3.13% 3.10% 2.99% 2.87%
----------------------------------------------------------------------------------------------
Portfolio turnover rate -- +++ 8.67% 9.93% -- --
----------------------------------------------------------------------------------------------
--------
+ Date of conversion to Class C shares.
++ Annualized.
+++ Computed at the Fund level for the year ended September 30, 2008.
+ Capital gain of $0.003 per share was paid.
++ Capital gain of $0.004 per share was paid.
* Capital gain of $0.001 per share was paid.
o Capital gain of $0.003 per share was paid.
oo Capital gain of $0.002 per share was paid.
See Notes to Financial Statements.
73
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders, Xxxxxxxx Municipal Fund Series, Inc.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Xxxxxxxx Municipal Fund Series,
Inc. (the "Funds") comprising the National, Colorado, Georgia, Louisiana,
Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio, Oregon,
and South Carolina Funds as of September 30, 2008, and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Funds are not required to have, nor were we engaged to
perform, an audit of their internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Funds' internal control over financial reporting. Accordingly, we express no
such opinion. 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, as
well as evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of September 30, 2008, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios constituting the Xxxxxxxx Municipal Fund Series, Inc. as of
September 30, 2008, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for the respective stated periods, in
conformity with accounting principles generally accepted in the United States
of America.
DELOITTE & TOUCHE LLP
New York, New York
November 26, 2008
74
Matters Relating to the Directors' Consideration of the Approval of the
Investment Management Services Agreement
In the discussion below, the term "Fund" refers to Xxxxxxxx Municipal Fund
Series, Inc. and the term "Series" refers to the National Fund, the Colorado
Fund, the Georgia Fund, the Louisiana Fund, the Maryland Fund, the
Massachusetts Fund, the Michigan Fund, the Minnesota Fund, the Missouri Fund,
the New York Fund, the Ohio Fund, the Oregon Fund and the South Carolina Fund.
Background
On July 7, 2008 RiverSource Investments, LLC ("RiverSource"), a wholly owned
subsidiary of Ameriprise Financial, Inc. ("Ameriprise"), entered into a stock
purchase agreement with the stockholders of J. & X. Xxxxxxxx & Co. Incorporated
("Xxxxxxxx") under which RiverSource would acquire all of the outstanding
capital stock of Xxxxxxxx (the "Transaction"). The consummation of the
Transaction results in the automatic termination of the Fund's management
agreement with Xxxxxxxx relating to each Series (the "Xxxxxxxx Management
Agreement"). In anticipation of the termination of the Xxxxxxxx Management
Agreement, at a meeting held on July 29, 2008, the directors of the Fund, of
which each Series is a separate series, unanimously approved an investment
management agreement with RiverSource in respect of each Series (the "Proposed
Advisory Agreement"). At the special meeting of stockholders of the Fund held
on November 3, 2008, the stockholders of each Series approved the Proposed
Advisory Agreement in respect of such Series. The Transaction closed on
November 7, 2008 and upon the closing, RiverSource became the investment
advisor to each Series.
Board Considerations
Prior to their approval of the Proposed Advisory Agreement, the directors
requested and evaluated extensive materials from, and were provided materials
and information about the Transaction and matters related to the proposed
approvals by, Xxxxxxxx, RiverSource and Ameriprise.
In consultation with experienced counsel, who advised on the legal standards
for consideration by the directors, the directors reviewed the Proposed
Advisory Agreement with RiverSource. The independent directors also discussed
the proposed approvals with counsel in private sessions.
At their meetings on June 12, 2008, July 17, 2008 and July 29, 2008, the
directors discussed the Transaction with Xxxxxxxx, and the Transaction and
RiverSource's plans and intentions regarding the Fund (and each Series) with
representatives of Ameriprise and RiverSource.
The directors considered all factors they believed relevant, including the
specific matters discussed below. In their deliberations, the directors did not
identify any particular information that was all-important or controlling, and
directors may have attributed different weights to the various factors. The
directors determined that the selection of RiverSource to advise the Fund (and
each Series), and the overall arrangements between the Fund (and each Series)
and RiverSource as provided in the Proposed Advisory Agreement, including the
proposed advisory fee and the related administration arrangements between the
Fund (and each Series) and Ameriprise, were fair and reasonable in light of the
services to be performed, expenses incurred and such other matters as the
directors considered relevant. The material factors and conclusions that formed
the basis for the directors' determination included, in addition, the factors
discussed in further detail below:
(i) the reputation, financial strength and resources of RiverSource, and its
parent, Ameriprise;
(ii)the capabilities of RiverSource with respect to compliance and its
regulatory histories;
(iii)an assessment of RiverSource's compliance system by the Fund's Chief
Compliance Officer;
(iv)that the portfolio management team for each Series would not change as a
result of the Transaction;
(v) that RiverSource and Ameriprise assured the directors that following the
Transaction there will not be any diminution in the nature, quality and
extent of services provided to the Fund (and each Series) or its
stockholders;
(vi)that within the past year the directors had performed a full annual review
of the Xxxxxxxx Management Agreement, as required by the Investment
Company Act of 1940 ("1940 Act"), for the Fund (and each Series) and had
determined that they were satisfied with the nature, extent and quality of
services provided thereunder and that the management fee rate for each
Series was satisfactory;
75
Matters Relating to the Directors' Consideration of the Approval of the
Investment Management Services Agreement
(vii)the potential benefits to the Fund (and each Series) of the combination of
RiverSource and Xxxxxxxx, including: greater resources to attract and
retain high quality investment personnel; greater depth and breadth of
investment management capabilities; a continued high level of service to
the Fund (and each Series); and the potential for realization of economies
of scale over time since the Fund (and each Series) will be part of a much
larger fund complex;
(viii)the fact that each Series' total advisory and administrative fees would
not increase by virtue of the Proposed Advisory Agreement, but would
remain the same;
(ix)that RiverSource, and not the Fund or Series, would bear the costs of
obtaining all approvals of the Proposed Advisory Agreement;
(x) the qualifications of the personnel of RiverSource and Ameriprise that
would provide advisory and administrative services to the Fund (and each
Series);
(xi)the terms and conditions of the Proposed Advisory Agreement, including the
directors' review of differences from the Xxxxxxxx Management Agreement;
(xii)that RiverSource and Ameriprise have agreed to refrain from imposing or
seeking to impose, for a period of two years after the closing of the
Transaction, any "unfair burden" (within the meaning of Section 15(f) of
1940 Act) on the Fund and each Series; and
(xiii)that certain members of RiverSource's management have a significant
amount of experience integrating other fund families.
Nature, Extent and Quality of Services Provided
In considering the nature, extent and quality of the services to be provided
under the Proposed Advisory Agreement, the directors considered, among other
things, the expected impact of the Transaction on the operations of the Fund
and each Series, the information provided by RiverSource with respect to the
nature, extent and quality of services to be provided by it and its compliance
programs and compliance records, and presentations provided on the quality of
RiverSource's investment research capabilities and the other resources it and
Ameriprise have indicated that they would dedicate to performing services for
the Fund and each Series.
The directors noted the professional experience and qualifications of the
current portfolio management team of each Series and other senior personnel of
RiverSource. The directors considered a report by the Fund's Chief Compliance
Officer, assessing RiverSource's compliance system, which was followed by a
private session with the Fund's Chief Compliance Officer. They also discussed
RiverSource's compliance system with the Chief Compliance Officer for the
RiverSource funds. The directors also considered RiverSource's presentation on
the selection of brokers and dealers for portfolio transactions and noted that
they receive regular reports concerning such selection and that RiverSource
would provide similar reports in the future. As administrative services
(provided under each Xxxxxxxx Management Agreement) would be provided to the
Fund (and each Series) by Ameriprise at no additional cost under a new
administrative services agreement rather than pursuant to the Proposed Advisory
Agreement, the directors considered Ameriprise's capability to provide such
administrative services as well as RiverSource's and Ameriprise's role in
coordinating the activities of the Fund's and Series' other service providers.
The directors noted that Ameriprise intended to continue Xxxxxxxx'x practice of
sub-contracting administrative services provided by Xxxxxxxx for the Fund and
each Series to State Street Bank and Trust Company for the foreseeable future.
The directors concluded that, overall, they were satisfied with assurances from
RiverSource and Ameriprise as to the expected nature, extent and quality of the
services to be provided to the Fund (and each Series) under the Proposed
Advisory Agreement and the new administrative services agreement.
Costs of Services Provided and Profitability
In considering the costs of services to be provided by RiverSource under the
Proposed Advisory Agreement, the directors considered, among other things, the
projected pre-tax, pre-distribution expense profitability of RiverSource's
proposed relationship with the Series and discussed the assumptions of
RiverSource and the limitations of the information provided. The directors
noted that RiverSource had undertaken to provide profitability information in
connection with future contract continuances. The directors also considered
RiverSource's financial condition based on information provided by it.
76
Matters Relating to the Directors' Consideration of the Approval of the
Investment Management Services Agreement
The directors noted that the proposed fees under the Proposed Advisory
Agreement in respect of a Series were the same as provided under the Xxxxxxxx
Management Agreement. The directors recognized that it is difficult to make
comparisons of profitability from fund advisory contracts because comparative
information is not generally publicly available and is affected by numerous
factors. In reviewing the projected profitability information, the directors
considered the effect of fall-out benefits on RiverSource's expenses. The
directors concluded that they were satisfied that RiverSource's estimated
future profitability from its relationship with each Series was not excessive.
Fall-Out Benefits
The directors considered that broker dealer affiliates of RiverSource,
including a broker-dealer affiliate of Xxxxxxxx (which will become an affiliate
of RiverSource following the Transaction) will receive 12b-1 fees from each
Series in respect of shares held in certain accounts, and that such Series'
distributor (which will also become a subsidiary of RiverSource following the
closing of the Transaction) retains a portion of the 12b-1 fees from the Series
and receives a portion of the sales charges on sales or redemptions of certain
classes of shares of the Series. The directors recognized that RiverSource's
profitability would be somewhat lower without these benefits. The directors
noted that RiverSource may derive reputational and other benefits from its
association with each Series.
Investment Results
The directors receive and review detailed performance information on each
Series at each regular Board meeting during the year in addition to the
information received for the meeting regarding approval of the Proposed
Advisory Agreement. The directors noted that each Series' current portfolio
management team would continue to advise that Series after the Transaction.
The directors reviewed performance information on each Series covering a wide
range of periods, including the first six months of the calendar year, the
preceding seven calendar years and annualized rolling periods ranging from one
to ten years ending June 30, 2008. For most of these periods the directors
reviewed information comparing each Series to other funds with similar
investment objectives as determined by Xxxxxx, with one or more selected
securities indices, to a group of competitor funds selected by Xxxxxxxx and,
where applicable, similar RiverSource funds. The directors also reviewed
information about portfolio turnover rates of each Series compared to other
investment companies with similar investment objectives, including, where
applicable, RiverSource funds.
The directors recognized that it is not possible to predict what effect, if
any, consummation of the Transaction would have on the future performance of
the Series.
Xxxxxxxx explained that its decision to defensively position the Series'
portfolios in anticipation of rising interest rates contributed to the recent
improvement in performance, although it noted that such position had hurt the
Series' performance in the past.
The following factors specific to individual Series also were noted and
considered by the directors in deciding to approve the Proposed Advisory
Agreement:
National Fund. The directors reviewed information showing the performance of
the Series compared to the Lipper General Municipal Debt Funds Average and the
Xxxxxx Brothers Municipal Bond Index, as well as performance relative to the
other funds in the Lipper General Municipal Debt Funds Average and to a group
of competitor funds selected by Xxxxxxxx. The directors noted that the Series'
performance ranked above the Lipper median for the one-, three- and five-year
periods presented. The directors also noted that while the Series' results had
from time to time exceeded certain of its benchmarks, the Series' results were
generally below its benchmarks by varying degrees for the periods shown. The
directors further noted that the Series' results had shown recent improvement
and were above each of its benchmarks for the first six months of 2008. Taking
into account these comparisons and the other factors considered, the directors
concluded that the National Fund's investment results were satisfactory.
Colorado Fund. The directors reviewed information showing the performance of
the Series compared to the Lipper Colorado Municipal Debt Funds Average and the
Xxxxxx Brothers Municipal Bond Index, as well as performance relative to the
other funds in the Lipper Colorado Municipal Debt Funds Average and to a group
of competitor funds selected by Xxxxxxxx. The directors noted that the Series'
performance ranked above the Lipper median for each of the periods presented.
The directors also noted that the Series' results had varyingly exceeded or
underperformed its benchmarks for the periods shown, and had shown recent
improvement and were above each of the benchmarks for 2007 and the first six
months of 2008. Taking into account these comparisons and the other factors
considered, the directors concluded that the Colorado Fund's investment results
were satisfactory.
77
Matters Relating to the Directors' Consideration of the Approval of the
Investment Management Services Agreement
Georgia Fund. The directors reviewed information showing the performance of the
Series compared to the Lipper Georgia Municipal Debt Funds Average and the
Xxxxxx Brothers Municipal Bond Index, as well as performance relative to the
other funds in the Lipper Georgia Municipal Debt Funds Average and to a group
of competitor funds selected by Xxxxxxxx. The directors noted that the Series'
results were above its competitor average and Lipper benchmark for 2007 and the
first six months of 2008 and that the Series' performance ranked above the
Lipper median for the one- and three-year periods presented. The directors also
noted that while the Series' results had from time to time exceeded certain
benchmarks, the Series' results were generally below its benchmarks by varying
degrees for the other periods shown. Taking into account these comparisons and
the other factors considered, the directors concluded that the Georgia Fund's
investment results were satisfactory.
Louisiana Fund. The directors reviewed information showing the performance of
the Series compared to the Lipper Other States Municipal Debt Funds Average and
the Xxxxxx Brothers Municipal Bond Index, as well as performance relative to
the other funds in the Lipper Other States Municipal Debt Funds Average and to
a group of competitor funds selected by Xxxxxxxx. The directors noted that the
Series' results were above its Lipper and competitor benchmarks for the first
six months of 2008 and each of its benchmarks for 2007, and that the Series was
above the Lipper median in the three-year, five-year and ten-year periods
presented. The directors also noted that while the Series' results had from
time to time exceeded certain benchmarks, the Series' results were generally
below its benchmarks by varying degrees for the other periods shown. Taking
into account these comparisons and the other factors considered, the directors
concluded that the Louisiana Fund's investment results were satisfactory.
Maryland Fund. The directors reviewed information showing the performance of
the Series compared to the Lipper Maryland Municipal Debt Funds Average and the
Xxxxxx Brothers Municipal Bond Index, as well as performance relative to the
other funds in the Lipper Maryland Municipal Debt Funds Average and to a group
of competitor funds selected by Xxxxxxxx. The directors noted that the Series'
performance ranked above the Lipper median for each of the periods presented.
The directors also noted that the Series' results had varyingly exceeded or
underperformed the Series' other benchmarks for the periods shown, and were
above each of its benchmarks for the first six months of 2008. Based upon their
review, the directors concluded that the Maryland Fund's relative investment
performance over time had been satisfactory.
Massachusetts Fund. The directors reviewed information showing the performance
of the Series compared to the Lipper Massachusetts Municipal Debt Funds Average
and the Xxxxxx Brothers Municipal Bond Index, as well as performance relative
to the other funds in the Lipper Massachusetts Municipal Debt Funds Average and
to a group of competitor funds selected by Xxxxxxxx. The directors noted that
the Series' performance ranked above the Lipper median for each of the periods
presented. The directors also noted that the Series' results had varyingly
exceeded or underperformed the Series' benchmarks for the periods shown, and
had shown recent improvement and were above each of the benchmarks for 2007 and
the first six months of 2008. Taking into account these comparisons and the
other factors considered, the directors concluded that the Massachusetts Fund's
investment results were satisfactory.
Michigan Fund. The directors reviewed information showing the performance of
the Series compared to the Lipper Michigan Municipal Debt Funds Average and the
Xxxxxx Brothers Municipal Bond Index, as well as performance relative to the
other funds in the Lipper Michigan Municipal Debt Funds Average and to a group
of competitor funds selected by Xxxxxxxx. The directors noted that the Series'
performance ranked above the Lipper median for the one-, three- and ten-year
periods presented, respectively. The directors also noted that the Series'
results had varyingly exceeded or underperformed the Series' benchmarks for the
periods shown, and had shown some recent improvement and were above each of its
benchmarks for the first six months of 2008, and above its Lipper and
competitor benchmarks for 2007. Taking into account these comparisons and the
other factors considered, the directors concluded that the Michigan Fund's
investment results were satisfactory.
Minnesota Fund. The directors reviewed information showing the performance of
the Series compared to the Lipper Minnesota Municipal Debt Funds Average and
the Xxxxxx Brothers Municipal Fund Index, as well as performance relative to
the other funds in the Lipper Minnesota Municipal Debt Funds Average and to a
group of competitor funds selected by Xxxxxxxx. The directors noted that the
Series' results had varying exceeded or underperformed the Series' benchmarks
for the periods shown, and had shown some recent improvement and were above
each of its benchmarks for the first six months of 2008, and above its Lipper
and competitor benchmarks for 2007. Taking into account these comparisons and
the other factors considered, the directors concluded that the Minnesota Fund's
investment results were satisfactory.
Missouri Fund. The directors reviewed information showing the performance of
the Series compared to the Lipper Missouri Municipal Debt Funds Average and the
Xxxxxx Brothers Municipal Fund Index, as well as performance relative to the
other funds in the Lipper Missouri Municipal Debt Funds Average and to a group
of competitor funds selected by Xxxxxxxx. The directors
78
Matters Relating to the Directors' Consideration of the Approval of the
Investment Management Services Agreement
noted that the Series' results had shown recent improvement and were above its
competitor average and Lipper benchmark for the first six months of 2008 and
that the Series' performance ranked above the Lipper median for the one-,
three- and ten-year periods presented. The directors also noted that while the
Series' results had from time to time exceeded certain benchmarks, the Series'
results were generally below its benchmarks by varying degrees for the periods
shown. Taking into account these comparisons and the other factors considered,
the directors concluded that the Missouri Fund's investment results were
satisfactory.
New York Fund. The directors reviewed information showing the performance of
the Series compared to the Lipper New York Municipal Debt Funds Average and the
Xxxxxx Brothers Municipal Bond Index, as well as performance relative to the
other funds in the Lipper New York Municipal Debt Funds Average and to a group
of competitor funds selected by Xxxxxxxx. The directors noted that the Series'
performance ranked above the Lipper median for each of the periods presented.
The directors also noted that the Series' results showed recent improvement and
were above each of its benchmarks for 2007 and the first six months of 2008,
although the results were varyingly above and below its other benchmarks for
the other periods presented. Taking into account these comparisons and the
other factors considered, the directors concluded that the New York Fund's
investment results were satisfactory.
Ohio Fund. The directors reviewed information showing the performance of the
Series compared to the Lipper Ohio Municipal Debt Funds Average and the Xxxxxx
Brothers Municipal Bond Index, as well as performance relative to the other
funds in the Lipper Ohio Municipal Debt Funds Average and to a group of
competitor funds selected by Xxxxxxxx. The directors noted that the Series'
performance ranked above the Lipper median for each of the periods presented.
The directors noted that the Series' results had shown recent improvement and
were above its Lipper and competitor benchmarks for 2007, and were above each
of its benchmarks for the first six months of 2008, although the results were
varyingly above and below its other benchmarks for the periods presented.
Taking into account these comparisons and the other factors considered, the
directors concluded that the Ohio Fund's investment results were satisfactory.
Oregon Fund. The directors reviewed information showing the performance of the
Series compared to the Lipper Oregon Municipal Debt Funds Average and the
Xxxxxx Brothers Municipal Bond Index, as well as performance relative to the
other funds in the Lipper Oregon Municipal Debt Funds Average and to a group of
competitor funds selected by Xxxxxxxx. The directors noted that the Series'
performance ranked above the Lipper median for each of the periods presented.
The directors noted that the Series' results had shown recent improvement and
were above its Lipper and competitor benchmarks for 2007, and were above each
of its benchmarks for the first six months of 2008, although the results were
varyingly above or below its other benchmarks for the other periods presented.
Taking into account these comparisons and the other factors considered, the
directors concluded that the Oregon Fund's investment results were satisfactory.
South Carolina Fund. The directors reviewed information showing the performance
of the Series compared to the Lipper Other States Municipal Debt Funds Average
and the Xxxxxx Brothers Municipal Bond Index, as well as performance relative
to the other funds in the Lipper Other States Municipal Debt Funds Average and
to a group of competitor funds selected by Xxxxxxxx. The directors noted that
the Series' performance ranked above the Lipper median for each of the periods
presented. The directors noted that the Series' results had shown recent
improvement and were above its Lipper and competitor benchmarks for 2007, and
were above each of its benchmarks for the first six months of 2008, although
the results were varyingly above or below its other benchmarks for other
periods presented. Taking into account these comparisons and the other factors
considered, the directors concluded that the South Carolina Fund's investment
results were satisfactory.
Management Fees and Other Expenses
The directors considered the proposed advisory fee rate to be paid by each
Series to RiverSource, which is the same as the management fee rate currently
paid by each Series. In addition to the materials provided by Xxxxxxxx,
RiverSource provided information regarding the fees for each of the RiverSource
funds and managed accounts. The directors noted that for National Fund,
Minnesota Fund and New York Fund, the effective advisory fee rate for a
RiverSource fund in the same Lipper peer group was lower than the proposed
advisory fee rate for the corresponding Series. The directors recognized that
it is difficult to make comparisons of advisory and management fees because
there are variations in the services that are included in the fees paid by
other funds.
The directors compared each Series' proposed advisory fee rate to the funds in
the applicable Lipper category or a subset thereof having net assets in a range
that more closely corresponded to the net assets of the Series (a Series' "peer
group"). In considering
79
Matters Relating to the Directors' Consideration of the Approval of the
Investment Management Services Agreement
the proposed advisory fee rates, the directors noted that each Series' current
management fee rate covers administrative services provided by Xxxxxxxx,
whereas the Proposed Advisory Agreement does not include such services, but
that Ameriprise will provide such services to each Series pursuant to separate
administrative services agreements initially without a fee. The directors
further considered that the administrative fees, since they are not included in
an advisory agreement, could be increased without stockholder approval,
although RiverSource noted that, at the time, it did not have an intention to
seek an increase, and that any such administrative fee increase would require
board approval. The directors also noted RiverSource's and Ameriprise's
covenants in the Transaction's stock purchase agreement regarding compliance
with Section 15(f) of the 1940 Act.
The directors also reviewed each Series' total expense ratio as compared to the
fees and expenses of funds within its peer group. In considering the expense
ratios of each Series, the directors noted that each Series has elected to have
shareholder services provided at cost by SDC. SDC provides services exclusively
to the Xxxxxxxx Group of Funds, and the directors believed that the arrangement
with SDC has provided each Series and their shareholders with a consistently
high level of service. The directors noted that RiverSource had previously
indicated that no changes to the arrangements with SDC were being proposed at
the time by RiverSource.
The directors noted that they had concluded in their most recent continuance
considerations regarding the Xxxxxxxx Management Agreement that the management
fee and total expense ratio for each Series were at an acceptable level in
light of the quality of services provided to each Series and in comparison to
the Series' peer group; that the advisory fee would not be increased and would
stay the same for each Series; that the total expense ratio had been slightly
reduced since the time of the most recent consideration approval for each
Series; and that RiverSource had represented that the overall expenses for the
Series were not expected to be adversely affected by the Transaction. On that
basis the directors concluded that the total expense ratio and proposed
advisory fee for each Series anticipated to result from the proposed
arrangements with RiverSource was acceptable.
Economies of Scale
The directors noted that the management fee schedules for the Series do not
contain breakpoints that reduce the fee rate on assets above specified levels.
The directors recognized that there is no direct relationship between the
economies of scale realized by funds and those realized by their investment
advisers as assets increase. The directors do not believe that there is a
uniform methodology for establishing breakpoints that give effect to
fund-specific economies of scale with respect to services provided by fund
advisers. The directors also observed that in the investment company industry
as a whole, as well as among funds similar to the Series, there is no
uniformity or pattern in the fees and asset levels at which breakpoints (if
any) apply, and that the advisory agreements for many competitor funds do not
have breakpoints at all. The directors noted that RiverSource had indicated
that no changes to the Series' breakpoint arrangements were proposed to be made
at the time. Having taken these factors into account, the directors concluded
that the absence of breakpoints in each Series' fee rate schedule was
acceptable under the Series' circumstances. The directors also recognized that
the Series may benefit from certain economies of scale over time from becoming
a part of the larger RiverSource fund complex, based on potential future
synergies of operations.
80
Proxy Results
Shareholders of Xxxxxxxx Municipal Fund Series, Inc. voted on two proposals at
a Special Meeting of Stockholders held on November 3, 2008. Shareholders voted
in favor of each of the proposals. The description of each proposal and number
of shares voted are as follows:
Proposal 1
To consider and vote upon the proposed Investment Management Services Agreement
with RiverSource Investments, LLC:
For Against Abstain
----------------------------------------------------------
National Fund 3,949,193.410 168,939.981 191,921.889
----------------------------------------------------------
Colorado Fund 2,307,183.218 74,460.280 111,881.185
----------------------------------------------------------
Georgia Fund 1,759,668.806 102,339.030 56,248.933
----------------------------------------------------------
Louisiana Fund 1,584,734.856 77,772.171 21,240.291
----------------------------------------------------------
Maryland Fund 2,173,920.400 138,737.808 113,714.724
----------------------------------------------------------
Massachusetts Fund 4,218,981.488 142,851.594 236,713.024
----------------------------------------------------------
Michigan Fund 5,307,115.961 248,378.351 171,114.848
----------------------------------------------------------
Minnesota Fund 4,528,296.858 202,128.542 263,760.017
----------------------------------------------------------
Missouri Fund 1,855,211.205 236,056.712 197,082.660
----------------------------------------------------------
New York Fund 4,164,301.516 143,314.155 168,747.113
----------------------------------------------------------
Ohio Fund 6,312,816.812 351,650.652 312,008.272
----------------------------------------------------------
Oregon Fund 3,370,905.354 138,522.236 244,330.982
----------------------------------------------------------
South Carolina Fund 4,694,983.636 195,724.117 130,633.598
----------------------------------------------------------
Proposal 2
To elect ten directors to the Board:
For Withheld
--------------------------------------------
Xxxxxxxx Xxxxx 57,869,409 2,697,944
--------------------------------------------
Xxxx X. Xxxxxxx 57,670,617 2,896,736
--------------------------------------------
Xxxxxx X. Xxxxxxx 57,817,258 2,750,095
--------------------------------------------
Xxxxxxxx X. Xxxxx 57,913,069 2,654,284
--------------------------------------------
Xxxx X. Xxxxx 57,698,726 2,868,626
--------------------------------------------
Xxxxxxx Xxxxxxx 57,708,972 2,858,380
--------------------------------------------
Xxxxxxx X. Xxxxx, Xx. 57,881,841 2,685,512
--------------------------------------------
Xxxxxxxxx Xxxxx Xxxxxx 57,898,819 2,668,534
--------------------------------------------
Xxxxxx Xxxxxxx-Xxxxx 57,891,282 2,676,070
--------------------------------------------
Xxxxxxx X. Xxxxxxxx 57,878,318 2,689,035
--------------------------------------------
81
Directors and Officers
Shareholders elect a Board of Directors that oversees the Funds' operations. In
connection with the acquisition of the Funds' prior investment manager, X. & X.
Xxxxxxxx & Co. Incorporated, by RiverSource Investments, LLC, shareholders of
the Funds voted at a Special Meeting of Shareholders held on November 3, 2008
to elect 10 members to the Funds' Board. Messrs. Xxxxx and Xxxxxx served on the
Funds' Board prior to the acquisition and will continue to do so.
Each member of the Board oversees 163 portfolios in the fund complex managed by
RiverSource Investments, which includes 59 Xxxxxxxx Funds and 104 RiverSource
Funds. The address of each Director is 000 X. Xxxxxxxxx Xxx., Xxxxxxxxxxx, XX
00000.
Independent Directors
Principal Occupation(s) During Past
Name, (Age), Position(s) Five Years,
held with Funds Directorships and Other Information
------------------------------------------------------------------------------
Xxxxxxxx Xxxxx (54)/1,2,6,7/ Attorney. Formerly, Chief Justice,
..Director: From November 7, 2008 Minnesota Supreme Court, 1998-2006.
------------------------------------------------------------------------------
Xxxx X. Xxxxxxx (73)/1,2,3,5,6/ Formerly, Chairman, RiverSource
..Director: From November 7, 2008 Funds, 1999-2006; Governor of
Minnesota.
------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxx (53)/4,6,7/ President, Springboard -- Partners in
..Director: From November 7, 2008 Cross Cultural Leadership (consulting
company).
------------------------------------------------------------------------------
Xxxxxxxx X. Xxxxx (57)/1,3,6/ Trustee Professor of Economics and
..Director: From November 7, 2008 Management, Bentley College.
Formerly, Xxxx, XxXxxxxx Graduate
School of Business, Bentley College.
------------------------------------------------------------------------------
Xxxx X. Xxxxx (73)/1,2,6,7/ Attorney and Consultant.
..Director: From November 7, 2008
------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx, CFA (72)/4,6,7/ Director, American Progressive
..Director: From November 7, 2008 Insurance. Formerly, Managing
Director, Xxxxxxx Asset Management.
------------------------------------------------------------------------------
Xxxxxxx X. Xxxxx, Xx. (69)/1,2,3,4,6/ President Emeritus and Professor of
..Director and Chairman of the Board: Economics, Carleton College;
From November 7, 2008 Director, Valmont Industries, Inc.
(manufactures irrigation systems).
------------------------------------------------------------------------------
Xxxx X. Xxxxx (64)/4,6,7/ Retired President and Chief Executive
..Director: December 2006 to Date Officer, and former Director, Great
Western Financial Corporation
(bank holding company) and its
principal subsidiary, Great Western
Bank (a federal savings bank).
------------------------------------------------------------------------------
Xxxxxxxxx Xxxxx Xxxxxx (55)/2,3,4,5,6/ Director, Enterprise Asset
..Director: From November 7, 2008 Management, Inc. (private real estate
and asset management company).
------------------------------------------------------------------------------
Xxxxx X. Xxxxxx (66)/3,4,6/ Counsel, Xxxxx & Xxxxxx, P.C. (law
..Director: 2000 to Date firm); Director, Vibration Control
Technologies, LLC (auto vibration
technology); Lead Outside Director,
Digital Ally Inc. (digital imaging)
and Infinity, Inc. (oil and gas
exploration and production); Director
and Chairman, Highland Park Michigan
Economic Development Corp.; and
Chair-man, Detroit Public Schools
Foundation; Director, OGE Energy
Corp. (energy and energy services
provider). Formerly, Chairman and
Chief Executive Officer, Q Standards
Worldwide, Inc. (library of technical
standards); Director, Xxxx-XxXxx
Corporation (diversified energy and
chemical company); Trustee, New York
University Law Center Foundation; and
Vice Chairman, Detroit Medical Center
and Detroit Economic Growth Corp.
------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx-Xxxxx (64)/3,4,5,6/ Chief Executive Officer and Director,
..Director: From November 7, 2008 RiboNovix, Inc. since 2003
(biotechnology); Director, Idera
Pharmaceut-ical, Inc.
(biotechnology); Healthways, Inc.
(health management programs).
Formerly, President, Forester Biotech.
------------------------------------------------------------------------------
--------
See footnotes on page 83.
82
Directors and Officers
Interested Director*
Principal Occupation(s) During Past
Name, (Age), Position(s) Five Years,
held with Funds, Address Directorships and Other Information
---------------------------------------------------------------------
Xxxxxxx X. Xxxxxxxx (47)*/6/ President -- US Asset Management and
..Director and Vice President: Chief Investment Advisor, Ameriprise
FromNovember 7, 2008 Financial, Inc. and Presi-dent,
Chairman of the Board, and Chief
Investment Officer, RiverSource
Investments, LLC; Director,
Presi-dent and Chief Executive
Officer, Ameriprise Certificate
Company; and Chairman of the Board,
Chief Executive Officer, and
President, RiverSource Distributors,
Inc. Formerly, Senior Vice President
-- Chief Investment Officer,
Ameriprise Financial, Inc.; and
Chairman of the Board and Chief
Investment Officer, RiverSource
Investments, LLC, 2001-2005.
---------------------------------------------------------------------
--------
* Xx. Xxxxxxxx is considered an "interested person" of the Funds, as defined in
the Investment Company Act of 1940, as amended, by virtue of his position
with Ameriprise Financial, Inc. and its affiliates.
Member: 1Board Governance Committee 5Executive Committee
2Compliance Committee 6Investment Review Committee
3Contracts Committee 7Joint Audit Committee
4Distribution Committee
Officers of the Funds
The Board appoints officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Xx. Xxxxxxxx, who is a Director and Vice
President of the Funds, the Funds' other officers are:
Name, (Age), Position(s) Principal Occupation(s) During Past
held with Funds, Address Five Years
------------------------------------------------------------------------------
Xxxxxxx X. Xxxxxxxx (42) Director and Senior Vice President --
..President: From November 7, 2008 Asset Management, Products and
..172 Ameriprise Financial Center Marketing, RiverSource Invest-ments,
Minneapolis, MN 55474 LLC; Director and Vice President --
Asset Management, Products and
Marketing, RiverSource Dis-tributors,
Inc. Formerly, Managing Director and
Global Head of Product, Xxxxxx
Xxxxxxx Investment Management,
2004-2006; President, Touchstone
Investments, 2002-2004.
------------------------------------------------------------------------------
Xxxxxxxx X. Xxxxxx (44) Executive Vice President -- Equity
..Vice President: From November 7, 2008 and Fixed Income, Ameriprise
..172 Ameriprise Financial Center Financial, Inc. and RiverSource
Minneapolis, MN 55474 Invest-ments, LLC; Vice President --
Investments, Ameriprise Certificate
Company. Formerly, Senior Vice
Presi-dent -- Fixed Income,
Ameriprise Financial, Inc., 2002-2006
and RiverSource Investments, LLC,
2004-2006.
------------------------------------------------------------------------------
Xxx X. Xxxxxxx (42) Vice President -- Asset Management
..Vice President: From November 7, 2008 and Trust Company Services,
..5228 Ameriprise Financial Center RiverSource Investments, LLC.
Minneapolis, MN 55474 For-xxxxx, Vice President --
Operations and Compliance,
RiverSource Investments, LLC,
2004-2006; Director of Product
Development -- Mutual Funds,
Ameriprise Financial, Inc., 2001-2004.
------------------------------------------------------------------------------
Xxxxx X. Xxxxxxx (49) Vice President and Chief Counsel --
..Vice President, General Counsel and Asset Management, Ameriprise
Secretary: From November 7, 2008 Financial, Inc.; Chief Counsel,
..5228 Ameriprise Financial Center RiverSource Distributors, Inc. and
Minneapolis, MN 55474 Chief Legal Officer and Assistant
Secretary, RiverSource Investments,
LLC; Vice President, General Counsel,
and Secretary, Ameriprise Certificate
Company. Formerly, Vice President --
Asset Management Compliance,
Ameriprise Financial, Inc.,
2004-2005; Senior Vice President and
Chief Compliance Officer, USBancorp
Asset Management, 2002-2004.
------------------------------------------------------------------------------
Xxxxxxxx X. Xxxxx (52) Treasurer of each of the investment
..Treasurer:2000 to Date companies of the Xxxxxxxx Group of
..000Xxxx Xxxxxx Xxx Xxxx, XX 00000 Funds since 2000; and Treasurer,
Xxxxxxxx Data Corp. since 2000.
Formerly, Senior Vice President, J. &
X. Xxxxxxxx & Co. Incorporated and
Vice President of each of the
investment companies of the Xxxxxxxx
Group of Funds, 1992-2008.
------------------------------------------------------------------------------
83
Directors and Officers
Officers of the Funds (continued)
Name, (Age), Position(s) Principal Occupation(s) During Past
held with Funds, Address Five Years
--------------------------------------------------------------------------------
Xxxxxxx X.X. Xxxxxxxx (56) Chief Compliance Officer, RiverSource
..Chief Compliance Officer: 2004 to Date Investments, LLC (J. & X. Xxxxxxxx &
..Money Laundering Prevention Officer Co. Incorporated prior to November 7,
and Identity Theft Prevention Officer: 2008), of each of the investment
From November 7, 2008 companies of the Xxxxxxxx Group of
..000 Xxxx Xxxxxx Xxx Xxxx, XX 00000 Funds since 2004; Money Laundering
Prevention Officer and Identity Theft
Prevention Officer, RiverSource
Investments, LLC for each of the
investment companies of the Xxxxxxxx
Group of Funds since November 7,
2008. Formerly, Managing Director, J.
& X. Xxxxxxxx & Co. Incorporated and
Vice President of each of the
investment companies of the Xxxxxxxx
Group of Funds, 2004-2008.
--------------------------------------------------------------------------------
The Funds' Statement of Additional Information (SAI) includes additional
information about Fund directors and is available, without charge, upon
request. You may call toll-free (000) 000-0000 in the US or call collect (212)
000-0000 outside the US to request a copy of the SAI, to request other
information about the Funds, or to make shareholder inquiries.
84
Additional Fund Information
Quarterly Schedule of Investments
A complete schedule of portfolio holdings owned by the Funds will be filed with
the SEC for the first and third quarters of each fiscal year on Form N-Q, and
will be available to shareholders (i) without charge, upon request, by calling
toll-free (000) 000-0000 in the US or collect (000) 000-0000 outside the US or
(ii) on the SEC's website at xxx.xxx.xxx./1/ In addition, the Form N-Q may be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330. Certain of the information contained on the Funds' Form
N-Q is also made available to shareholders on Xxxxxxxx'x website at
xxx.xxxxxxxx.xxx./1 /
Proxy Voting
A description of the policies and procedures used by the Funds to determine how
to vote proxies relating to portfolio securities, as well as information
regarding how the Funds voted proxies relating to portfolio securities during
the 12-month period ended June 30 of each year, will be available (i) without
charge, upon request, by calling toll-free (000) 000-0000 in the US or collect
(000) 000-0000 outside the US and (ii) on the SEC's website at xxx.xxx.xxx./1/
Information for each new 12-month period ending June 30 will be available no
later than August 31 of that year.
--------
/1/ These website references are inactive textual references and information
contained in or otherwise accessible through these websites does not form a
part of this report or the Funds' prospectus or statements of additional
information.
85
[GRAPHIC]
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Capital Stock of each
Fund of Seligman Municipal Fund Series, Inc., which contains information about
the sales charges, management fee, and other costs. Please read the prospectus
carefully before investing or sending money.
TEA2 9/08
