-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SNwl78nG/AWKqy7vwzeH2XiHl4YgLy7c0Eltzydm019IOZctQY9KU4+/+gq7l0w7 /tEQiKSs9sI0hJlbcP+jyw== 0000950124-96-002569.txt : 19960612 0000950124-96-002569.hdr.sgml : 19960612 ACCESSION NUMBER: 0000950124-96-002569 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960607 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEMPER NATIONAL TAX FREE INCOME SERIES CENTRAL INDEX KEY: 0000055190 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 362896696 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02353 FILM NUMBER: 96578385 BUSINESS ADDRESS: STREET 1: 120 S LASALLE ST CITY: CHICAGO STATE: IL ZIP: 60603 BUSINESS PHONE: 3127811121 FORMER COMPANY: FORMER CONFORMED NAME: KEMPER MUNICIPAL BOND FUND INC DATE OF NAME CHANGE: 19860529 N-30D 1 NATIONAL TAX FREE INCOME SERS. - SAR 1 KEMPER NATIONAL TAX-FREE INCOME SERIES SEMI-ANNUAL REPORT TO SHAREHOLDERS FOR THE PERIOD ENDED MARCH 31, 1996 OFFERING INVESTORS THE OPPORTUNITY FOR AS HIGH A LEVEL OF CURRENT INTEREST INCOME THAT IS EXEMPT FROM FEDERAL INCOME TAXES AS IS CONSISTENT WITH PRESERVATION OF CAPITAL KEMPER MUNICIPAL BOND FUND KEMPER INTERMEDIATE MUNICIPAL BOND FUND "Kemper Municipal Bond Fund, which was America's first municipal bond fund, celebrates its 20th anniversary this year..." 2 Table of Contents 3 Economic Overview 5 Performance Update 6 Terms to Know 7 Portfolio Statistics 10 Portfolio of Investments 28 Financial Statements 31 Notes to Financial Statements 36 Financial Highlights AT A GLANCE - -------------------------------------------------------------------------------- KEMPER NATIONAL TAX-FREE INCOME FUNDS TOTAL RETURNS - -------------------------------------------------------------------------------- FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1996 (UNADJUSTED FOR ANY SALES CHARGE): [BAR GRAPH] - -------------------------------------------------------------------------------- KEMPER MUNICIPAL BOND FUND CLASS A 3.06% CLASS B 2.62% CLASS C 2.63% LIPPER GENERAL MUNICIPAL DEBT CATEGORY AVERAGE* 2.71% - --------------------------------------------------------------------------------
KEMPER INTERMEDIATE MUNICIPAL BOND FUND [BAR GRAPH] - -------------------------------------------------------------------------------- CLASS A 2.15% CLASS B 1.77% CLASS C 1.70% LIPPER INTERMEDIATE MUNICIPAL DEBT CATEGORY AVERAGE* 2.09% - --------------------------------------------------------------------------------
Returns are historical and do not represent future performance. Returns and net asset value fluctuate. Shares are redeemable at current net asset value, which may be more or less than original cost. *Lipper Analytical Services, Inc. returns and rankings are based upon changes in net asset value with all dividends reinvested and do not include the effect of sales charges and, if they had, results may have been less favorable. Returns and rankings are historical and do not reflect future performance.
- ------------------------------------------------------------------------------- NET ASSET VALUE - ------------------------------------------------------------------------------- AS OF AS OF 3/31/96 9/30/95 - -------------------------------------------------------------------------------- KEMPER MUNICIPAL BOND FUND CLASS A $10.17 $10.15 - -------------------------------------------------------------------------------- KEMPER MUNICIPAL BOND FUND CLASS B $10.15 $10.13 - -------------------------------------------------------------------------------- KEMPER MUNICIPAL BOND FUND CLASS C $10.18 $10.16 - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NET ASSET VALUE - ------------------------------------------------------------------------------- AS OF AS OF 3/31/96 9/30/95 - -------------------------------------------------------------------------------- KEMPER INTERMEDIATE MUNICIPAL BOND FUND CLASS A $10.09 $10.18 - -------------------------------------------------------------------------------- KEMPER INTERMEDIATE MUNICIPAL BOND FUND CLASS B $10.09 $10.18 - -------------------------------------------------------------------------------- KEMPER INTERMEDIATE MUNICIPAL BOND FUND CLASS C $10.09 $10.19 - --------------------------------------------------------------------------------
KEMPER MUNICIPAL BOND FUND LIPPER RANKINGS COMPARED TO ALL OTHER FUNDS IN THE LIPPER GENERAL MUNICIPAL DEBT CATEGORY*
CLASS A CLASS B CLASS C - -------------------------------------------------------------------------------- 1-YEAR #47 OF 228 FUNDS #123 OF 228 FUNDS #121 OF 228 FUNDS - -------------------------------------------------------------------------------- 5-YEAR #16 OF 100 FUNDS N/A N/A - -------------------------------------------------------------------------------- 10-YEAR #7 OF 57 FUNDS N/A N/A - -------------------------------------------------------------------------------- 15-YEAR #8 OF 32 FUNDS N/A N/A - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- KEMPER INTERMEDIATE MUNICIPAL BOND FUND LIPPER RANKINGS - -------------------------------------------------------------------------------- COMPARED TO ALL OTHER FUNDS IN THE LIPPER INTERMEDIATE MUNICIPAL DEBT CATEGORY*
CLASS A CLASS B CLASS C - -------------------------------------------------------------------------------- 1-YEAR #28 OF 135 FUNDS #77 OF 135 FUNDS #66 OF 135 FUNDS - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- DIVIDEND AND YIELD REVIEW - -------------------------------------------------------------------------------- THE FOLLOWING TABLES SHOW PER SHARE DIVIDEND AND YIELD INFORMATION FOR THE FUNDS AS OF MARCH 31, 1996.
MUNICIPAL BOND CLASS A CLASS B CLASS C - -------------------------------------------------------------------------------- SIX-MONTHS INCOME: $0.2734 $0.2267 $0.2294 - -------------------------------------------------------------------------------- MARCH DIVIDEND: $0.0437 $0.0362 $0.0366 - -------------------------------------------------------------------------------- ANNUALIZED DISTRIBUTION RATE+: 5.16% 4.28% 4.31% - -------------------------------------------------------------------------------- SEC YIELD+: 4.60% 3.92% 3.94% - -------------------------------------------------------------------------------- TAX EQUIVALENT YIELD+: 7.31% 6.23% 6.26% - -------------------------------------------------------------------------------- INTERMEDIATE MUNICIPAL BOND CLASS A CLASS B CLASS C - -------------------------------------------------------------------------------- SIX-MONTHS INCOME: $0.2284 $0.1881 $0.1931 - -------------------------------------------------------------------------------- MARCH DIVIDEND: $0.0328 $0.0268 $0.0274 - -------------------------------------------------------------------------------- ANNUALIZED DISTRIBUTION RATE+: 3.90% 3.18% 3.26% - -------------------------------------------------------------------------------- SEC YIELD+: (AFTER EXPENSE WAIVER) 3.72% 3.04% 3.14% - -------------------------------------------------------------------------------- SEC YIELD+: (BEFORE EXPENSE WAIVER) 3.66% 2.98% 3.08% - -------------------------------------------------------------------------------- TAX EQUIVALENT YIELD+: 5.91% 4.83% 4.99% - --------------------------------------------------------------------------------
+Current annualized distribution rate is the latest monthly dividend shown as an annualized percentage of net asset value on March 31, 1996. Distribution rate simply measures the level of dividends and is not a complete measure of performance. The SEC yield is net investment income per share earned over the month ended March 31, 1996 shown as an annualized percentage of the maximum offering price on that date. The SEC yield is computed in accordance with the standardized method prescribed by the Securities and Exchange Commission. Tax equivalent yield is based on the fund's yield and a 37.1% marginal federal income tax rate. Income may be subject to state and local taxes and, for some investors, a portion may be subject to the alternative minimum tax. 3 GENERAL ECONOMIC OVERVIEW [TIMBERS PHOTO] Stephen B. Timbers is president, chief executive and chief investment officer of Zurich Kemper Investments, (ZKI) Inc. ZKI and its affiliates manage approximately $79 billion in assets, including $45 billion in retail mutual funds. Timbers is a graduate of Yale University and holds an M.B.A. from Harvard University. DEAR SHAREHOLDER: The first four months of 1996 have provided a few surprises. As the year began, most of us expected sluggish economic and corporate growth -- which the Federal Reserve Board would address by reducing short-term interest rates. Yet, what we experienced was stronger-than-anticipated economic growth, better corporate earnings and rising interest rates. Although such surprises unsettled the bond market, the stock market followed a spectacular 1995 with a strong first quarter in 1996. In the three-month period ended March 31, 1996, the Standard & Poor's 500 Stock Index* gained 5.37 percent. Where is the economy headed now? Its direction is even less predictable as we draw nearer to the November elections. Half of the country's leading economists are forecasting 3 percent growth while an equal number are looking for no better than 1 percent growth. At Kemper Funds, we suspect that the economy is growing at a subpar rate of 2 percent. Although commodity prices may suggest otherwise, we think inflation is holding at less than 3 percent. We see no reason to expect the Fed to reduce rates to stimulate growth but neither is it likely to raise rates to control growth. In an environment of stable or gently rising rates, we would expect corporate earnings to grow at a rate of about 7 to 8 percent -- that's somewhat higher than we believed likely at the start of the year. Our forecast calls for a generally comfortable environment for investors. But both the economy and the general direction of the markets are due for a reversal. In April, the U.S. economy entered its 61st month of consecutive growth. This is the longest expansion without a single quarter of negative output growth since George Washington was president. Today's bull market started in October 1990, which makes it one of the longest running bull markets in history. By virtue of its length alone, the stock market is vulnerable to a correction. As expected, volatility has returned to the market this year. For example: The stock market's performance on March 8, the date that a surprisingly strong employment report was released, betrayed some level of investor skittishness. But while the Standard & Poor's lost 3.1 percent that day, it quickly regained the ground and moved higher. CONSUMERS AND JOB SECURITY The restructuring of corporate America, which is generally credited for its improved profitability, has been an important influence on the consumer. Economic growth is heavily dependent upon consumer spending which, in turn, is a function of inflation, pay raises and fear of job loss. While the first two have not been a recent concern, fear of losing one's job has dampened consumer confidence. Such anxiety in the workplace was the subject of a recent study by the Council of Economic Advisors. According to that report, more than two-thirds of the new jobs created in the United States in 1994 and 1995 paid better than the average job. The report found that the rate at which jobs were eliminated has risen slightly despite strong economic growth of recent years -- however, it reported that the length of time most workers spent unemployed has declined. The graph below tracks Bureau of Labor Statistics data that show the recent relationship between number of jobs created versus the number of jobs lost. [LINE GRAPH] 12/31/90 -0.06 -0.02 12/31/91 -0.3 0.04 12/31/92 0.12 -0.03 12/31/93 0.3 0.07 12/31/94 0.18 0.07 12/31/95 -0.08 -0.04 3/31/96 0.49 -0.01
3 4 GENERAL ECONOMIC OVERVIEW - -------------------------------------------------------------------------------- ECONOMIC GUIDEPOSTS - -------------------------------------------------------------------------------- Economic activity is a key influence on investment performance and shareholder decision-making. Periods of recession or boom, inflation or deflation, credit expansion or credit crunch have a significant impact on mutual fund performance. The following are some significant guideposts and their investment rationale that may help your investment decision-making. The 10-year Treasury rate and the prime rate are prevailing interest rates. The other data report year-to-year percentage changes. [BAR GRAPH]
Now (3/31/96) 6 Months ago 1 year ago 2 years ago 10-year Treasury rate (1) 6.27 6.04 7.06 6.97 Prime rate(2) 8.25 8.75 9.00 6.45 Inflation rate(3) 2.84 2.81 3.05 2.36 The U.S. dollar(4) 4.53 -1.05 -11.46 2.70 Capital goods orders(5) 6.24 8.53 9.44 20.01 Industrial production(6) 1.32 1.92 3.89 5.17 Employment growth(7) 1.44 1.80 2.60 2.93
1 Falling interest rates in recent years have been a big plus for financial assets. 2 The interest rate that commercial lenders charge their best borrowers. 3 Inflation reduces an investor's real return. In the last five years, inflation has been as high as 6%. The low, moderate inflation of the last few years has meant high real returns. 4 Changes in the exchange value of the dollar impact U.S. exporters and the value of U.S. firms' foreign profits. 5 These influence corporate profits and equity performance. 6 An influence on corporate profits and equity performance. 7 An influence on family income and retail sales. SOURCE: ECONOMICS DEPARTMENT, ZURICH KEMPER INVESTMENTS, INC. Such ebb and flow is to be expected in investing, especially at this point in the cycle. Attempting to "prepare" for a correction is futile, we believe. Those whose caution caused them to excuse themselves from the market early this year, for example, would have forgone the quarter's significant gain. Several opportunities exist today for the careful investor. First, having settled down some from a raucous 1995, the technology sector continues to enjoy the product and market demand that make it the dominant sector of the 1990s. Second, equity investors willing to look overseas may find opportunities in countries whose economies today are at a point where the U.S. economy was in 1995. Our forecast assumes that strength in foreign markets could boost those countries' currencies, which would weaken the value of the dollar. We expect the fixed-income markets to continue to be sensitive to interest rate and inflation news. However, for as long as economic growth is positive and earnings are growing, we believe the high-yield market is one market segment that has significant potential. Finally, we look for political activity to have less and less bearing on the markets' performance. Although they may continue to debate tax reform, federal budget deficit reduction and health care reform, the incumbent legislators are running out of time to take action before the November elections. If there is any suspense by November, it is likely to be in whether the Republicans can retain control of Congress. Their success would make a balanced budget and tax reform likely agenda topics for 1997. With that as an economic backdrop, we encourage you to read the following detailed report of your fund, including an interview with your fund's portfolio management. Thank you for your continued support. We appreciate the opportunity to serve your investment needs. Sincerely, /s/ STEPHEN B. TIMBERS PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER ZURICH KEMPER INVESTMENTS, INC. April 29, 1996 *THE STANDARD & POOR'S 500 STOCK INDEX IS AN UNMANAGED INDEX GENERALLY REPRESENTATIVE OF THE U.S. STOCK MARKET. 4 5 PERFORMANCE UPDATE [MIER PHOTO] CHRIS MIER JOINED ZURICH KEMPER INVESTMENTS, INC. IN 1986 AND IS NOW SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER OF KEMPER MUNICIPAL BOND FUND AND KEMPER INTERMEDIATE MUNICIPAL FUND. MIER RECEIVED A B.A. DEGREE IN ECONOMICS FROM THE UNIVERSITY OF MICHIGAN AND WENT ON TO RECEIVE AN M.M. IN FINANCE FROM THE KELLOGG GRADUATE SCHOOL OF MANAGEMENT AT NORTHWESTERN UNIVERSITY. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT, AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER CONDITIONS. KEMPER NATIONAL TAX-FREE INCOME FUNDS PORTFOLIO MANAGER CHRIS MIER, DISCUSSES THE STRONG TRACK RECORD OF THE INDUSTRY'S FIRST MUNICIPAL BOND FUND -- KEMPER MUNICIPAL BOND FUND AND OFFERS HIS VIEWS ON INTEREST RATES AND THEIR EFFECT ON MUNICIPAL INVESTMENTS. Q. KEMPER'S NATIONAL TAX-FREE FUNDS POSTED STRONG RETURNS FOR THE SIX-MONTH PERIOD, OCTOBER 1, 1995, THROUGH MARCH 31, 1996. WHAT WAS BEHIND THIS PERFORMANCE? A. The investment environment was positive for municipal bonds during most of the period. From October 1995, to January 1996, interest rates fell, there was optimism that a federal budget resolution would occur and inflation remained low. In addition, economic indicators suggested that the economy, while growing, was slowing down somewhat due to severe weather conditions and other factors. All of these factors created a favorable climate for the municipal market, and bond prices appreciated. THE BOND BUYER 25-Bond Revenue Bond Index (RBI) -- a gauge of municipal bond interest rates -- began the period at 6.27 percent on September 28, 1995, and fell to a low of 5.63 percent on January 4, 1996. In January, however, the bond rally began to lose some steam. Data indicated that the economic slowdown may have been related mostly to the impact of severe weather as opposed to any fundamental weakness. Moreover, focus in Washington moved away from addressing the federal budget and deficit reduction proposals toward other issues. As optimism about deficit reduction began to fade, yields began to rise. On March 28, 1996, the RBI had reached a high of 6.15 percent. Q. WOULD YOU EXPLAIN THE DIFFERENCE IN INVESTMENT STRATEGIES BETWEEN THE FUNDS? A. Our investment strategy for the funds is quite similar. Kemper Municipal Bond Fund, which was America's first municipal bond fund, celebrates its 20th anniversary this year. The fund, now one of the largest tax-free income funds in the industry, has outperformed the Lipper Analytical General Municipal Bond Fund category for all standard time periods through March 31, 1996. It was this track record of success that lead to the introduction of Kemper Intermediate Municipal Bond Fund in November 1994. The primary difference between the funds, however, is that the portfolio of Kemper Intermediate Municipal Bond Fund has a shorter average maturity than Kemper Municipal Bond Fund. In the intermediate-term fund, the average maturity of the portfolio will generally be between five and 10 years, while in Kemper Municipal Bond Fund, the average maturity of the portfolio is likely to fall within the 12-22 year range. It's this difference in average maturities that led to a 5 6 PERFORMANCE UPDATE stronger return for Kemper Municipal Bond Fund during the period. As interest rates fall, which is what occurred throughout much of the period, bonds with longer maturities generally have greater price appreciation than shorter-term investments. The opposite would generally be true when interest rates rise. Q. HOW WERE THE FUNDS POSITIONED DURING THE PERIOD? A. At the start of the fiscal year, we continued to believe that interest rates would move lower. To take advantage of the potential decline, we maintained the funds' relatively long durations. Duration is a measurement of a portfolio's sensitivity to interest rates. The longer a fund's duration, the more sensitive it is to interest rate changes. Our longer duration stance generally served the funds well for most of the period. In January, however, we began to shorten durations and the volatility of the funds by making adjustments in the portfolios' bond holdings. Q. WAS SUPPLY A POSITIVE FACTOR FOR THE FUND DURING THE PERIOD? A. Supply picked up during the last few months of 1995 but remained lower than 1994 levels for the year as a whole. In 1996, supply remained higher than comparable months in 1995. Q. WHAT IS YOUR VIEW ON THE LIKELIHOOD OF TAX REFORM AND ITS EFFECT ON THE MUNICIPAL BOND MARKET? A. Talk of tax reform -- including a possible flat tax -- has raised considerable interest in the media and among municipal bond investors. At this writing, however, two important factors regarding these proposals are still unknown: the shape such reform would take, and when it would be implemented. Any tax change is likely to be significantly less radical than proposals being touted recently. This is due to the political realities of getting major legislation passed through Congress. If any specific legislation were to be drafted and presented to Congress in 1997, it would likely be 1998 before the start of any implementation. The municipal market has already discounted the impact of possible tax reform to a certain degree. Municipal bonds offer high tax equivalent yields in relation to those available from Treasuries. If reform fails to materialize or the market overcompensates for the risk of tax reform, we could be presented with advantageous buying opportunities, which would likely help the performance of municipal bonds. Q. WHAT'S YOUR OUTLOOK FOR THE REMAINDER OF 1996? A. Our outlook is cautiously optimistic. We anticipate continued moderate economic growth with inflation remaining under control. Although it is unlikely that we'll see total returns of the magnitude of 1995, this year should provide a reasonably positive environment for bond markets. TERMS TO KNOW DURATION Duration is a measure of the interest rate sensitivity of a fixed-income investment or portfolio. The longer the duration, the greater the interest rate risk. REVENUE BOND INDEX (RBI) The average yield on 25 revenue bonds with 30-year maturities compiled by THE BOND BUYER, a newspaper that covers the municipal bond market. TOTAL RETURN A fund's total return figure measures both the net investment income generated by, and the effect of, any realized and unrealized appreciation or depreciation of the underlying investments in its portfolio for the period. Total return assumes the reinvestment of all dividends and it represents the aggregate percent-age or dollar value change over the period. YIELD A fund's yield is a measure of the net investment income per share earned over a specific one month or 30-day period expressed as a percentage of the maximum offering price of the fund's shares at the end of the period. 6 7 PORTFOLIO STATISTICS KEMPER MUNICIPAL BOND FUND PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------- ON 3/31/96 ON 9/30/95 - --------------------------------------------------------------------------- REVENUE BONDS 83% 85% - --------------------------------------------------------------------------- GENERAL OBLIGATION BONDS 9 9 - --------------------------------------------------------------------------- CASH AND EQUIVALENTS 8 6 - --------------------------------------------------------------------------- 100% 100%
[PIE CHART] [PIE CHART] ON 3/31/96 ON 9/30/95 QUALITY
- --------------------------------------------------------------------------- ON 3/31/96 ON 9/30/95 - --------------------------------------------------------------------------- AAA 52% 48% - --------------------------------------------------------------------------- AA 10 13 - --------------------------------------------------------------------------- A 14 15 - --------------------------------------------------------------------------- BBB 18 20 - --------------------------------------------------------------------------- BB 2 1 - --------------------------------------------------------------------------- NOT RATED 4 3 - --------------------------------------------------------------------------- 100% 100%
[PIE CHART] [PIE CHART] ON 3/31/96 ON 9/30/95 7 8 PORTFOLIO STATISTICS YEARS TO MATURITY
- --------------------------------------------------------------------------- ON 3/31/96 ON 9/30/95 - --------------------------------------------------------------------------- 1-10 YEARS 9% 9% - --------------------------------------------------------------------------- 10-20 YEARS 47 46 - --------------------------------------------------------------------------- 20 + YEARS 44 45 - --------------------------------------------------------------------------- 100% 100%
[PIE CHART] [PIE CHART] ON 3/31/96 ON 9/30/95 AVERAGE MATURITY
- ------------------------------------------------------------------------ ON 3/31/96 ON 9/30/95 - ------------------------------------------------------------------------ AVERAGE MATURITY 17.9 YEARS 18.7 YEARS - ------------------------------------------------------------------------
KEMPER INTERMEDIATE MUNICIPAL BOND FUND PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------- ON 3/31/96 ON 9/30/95 - --------------------------------------------------------------------------- REVENUE BONDS 72% 77% - --------------------------------------------------------------------------- GENERAL OBLIGATION BONDS 21 20 - --------------------------------------------------------------------------- CASH AND EQUIVALENTS 7 3 - --------------------------------------------------------------------------- 100% 100%
[PIE CHART] [PIE CHART] ON 3/31/96 9/30/95 8 9 PORTFOLIO STATISTICS QUALITY
- --------------------------------------------------------------------------- ON 3/31/96 ON 9/30/95 - --------------------------------------------------------------------------- AAA 65% 76% - --------------------------------------------------------------------------- AA 12 9 - --------------------------------------------------------------------------- A 2 2 - --------------------------------------------------------------------------- BBB 19 13 - --------------------------------------------------------------------------- NOT RATED 2 -- - --------------------------------------------------------------------------- 100% 100%
[PIE CHART] [PIE CHART] ON 3/31/96 ON 9/30/95 YEARS TO MATURITY
- --------------------------------------------------------------------------- ON 3/31/96 ON 9/30/95 - --------------------------------------------------------------------------- 1-10 YEARS 59% 73% - --------------------------------------------------------------------------- 10-20 YEARS 40 27 - --------------------------------------------------------------------------- 20 + YEARS 1 -- - --------------------------------------------------------------------------- 100% 100%
[PIE CHART] [PIE CHART] ON 3/31/96 ON 9/30/95 AVERAGE MATURITY
- --------------------------------------------------------------------------- ON 3/31/96 ON 9/30/95 - --------------------------------------------------------------------------- AVERAGE MATURITY 8.9 YEARS 8.6 YEARS - ---------------------------------------------------------------------------
9 10 PORTFOLIO OF INVESTMENTS KEMPER MUNICIPAL BOND FUND PORTFOLIO OF INVESTMENTS AT MARCH 31, 1996 (DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------------- ISSUER PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------- ADVANCE REFUNDED OBLIGATIONS SECURED AS TO PRINCIPAL AND INTEREST BY UNITED STATES GOVERNMENT SECURITIES - 6.5% - ---------------------------------------------------------------------------------------------------------------------- NY, Dormitory Auth., State University Educational Facilities, Rev., 7.25%, to be called 5-15-02 @ 102 $ 3,810 $ 4,407 ------------------------------------------------------------------------------------------- NY, Gen. Oblg., 8.40%, to be called 11-15-01 @ 101.50 27,540 33,178 ------------------------------------------------------------------------------------------- NY, Local Government Assistance Corp., Rev., 7.375% through 7.50% to be called 4-01-01 @ 102 9,675 11,117 ------------------------------------------------------------------------------------------- NY, Municipal Water Finance Auth., Water and Sewer System, Rev., 7.00%, to be called 06-15-01 @ 101 760 853 ------------------------------------------------------------------------------------------- NY, Power Auth., Electrical Rev., 8.00%, to be called 1-01-98 @ 102 10,000 10,864 ------------------------------------------------------------------------------------------- 60,419 PA, Industrial Dev. Auth., Economic Dev. Rev., 7.00%, to be called 7-1-01 @ 102 5,000 5,613 ------------------------------------------------------------------------------------------- PA, Philadelphia: Gas Works Rev., 7.70%, to be called 6-15-01 @ 102 14,850 17,238 Municipal Auth., Criminal Justice Center, Rev., 7.80%: to be called 4-01-98 @ 102 365 393 to be called 4-01-00 @ 102 3,635 4,013 ------------------------------------------------------------------------------------------- 27,257 OH, Clermont County Hospital Facilities, Mercy Health Systems, Rev., 7.50%: to be called 09-01-99 @ 102 7,720 8,639 to be called 09-01-01 @ 100 2,280 2,602 ------------------------------------------------------------------------------------------- OH, Franklin County, Mount Carmel Health Hospital, Rev., 7.25%, to be called 6-01-00 @ 102 5,495 6,174 ------------------------------------------------------------------------------------------- OH, Muskingum County, Franciscan Health Advisory Services, Inc., Rev., 7.50% to be called 03-01-97 @ 102 7,470 7,879 ------------------------------------------------------------------------------------------- 25,294 CO, City and County of Denver, Airport System Rev., 7.50%, to be called 11-15-02 @ 102 5,940 6,991 ------------------------------------------------------------------------------------------- CO, Colorado Springs, County Utility Rev., 6.75%, to be called 11-15-01 @ 102 2,890 3,250 ------------------------------------------------------------------------------------------- CO, Health Facilities Auth., Vail Valley Medical Center, Rev., 8.125%, to be called 6-01-99 @ 102 7,000 7,848 ------------------------------------------------------------------------------------------- CO, Metropolitan Denver Sewerage Disposal, District No. 1, Rev., 6.75%, to be called 10-01-96 @ 101 5,540 5,686 ------------------------------------------------------------------------------------------- 23,775 IN, Hospital Auth. of Marion County, University Heights Hospital, Rev., 8.625%, to be called 10-01-99 @ 102 7,195 8,324 ------------------------------------------------------------------------------------------- IN, Trustees of Purdue University, Purdue University Student Fees, Rev., 6.75%, to be called 7-01-01 @ 102 6,300 7,047 ------------------------------------------------------------------------------------------- 15,371 MO, Health and Educational Facilities Auth., Christian Health Services Dev. Corp., Rev., 6.875%, to be called 2-15-01 @ 102 7,000 7,823 ------------------------------------------------------------------------------------------- MO, St. Louis County, Regional Convention & Sports Complex Auth., Rev., 7.00%, to be called 8-15-03 @ 100 4,380 4,993 ------------------------------------------------------------------------------------------- 12,816
10 11 PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------------------------------------------- MI, Hospital Finance Auth., Henry Ford Health System, Rev., 7.00%, to be called 07-01-00 @ 102 $ 11,000 $ 12,263 ------------------------------------------------------------------------------------------- SC, Charleston County, Charleston Public Facilities Corp., Certificates of Participation, Rev., 6.875% and 7.00%, to be called 06-01-04 @ 102 7,260 8,365 ------------------------------------------------------------------------------------------- SC, Lancaster County Water and Sewer District, Waterworks and Sewer System Improvement, Rev., 6.75%, to be called 5-1-01 @ 102 3,000 3,347 ------------------------------------------------------------------------------------------- 11,712 CA, Riverside County, Riverside Juvenile Facilities Corp., Certificates of Participation, Rev., 8.00%, to be called 10-01-98 @ 102 4,000 4,443 ------------------------------------------------------------------------------------------- CA, San Bernardino County, County Center/Justice Center and Capital Improvements, Rev., 7.60%, to be called 7-01-96 @ 102 6,955 7,167 ------------------------------------------------------------------------------------------- 11,610 NM, Albuquerque Southwest Community Health Services, Rev., 10.125%, to be called 8-1-08 @ 100 4,000 5,221 ------------------------------------------------------------------------------------------- MD, Gaithersburg, First Mortgage Economic Dev., Asbury Methodist Home Incorporated, Rev., 7.85%, to be called 1-01-00 @ 102 4,000 4,542 ------------------------------------------------------------------------------------------- NJ, Essex County Improvement Auth., County Jail and Youth Housing Proj., Lease Rev., 6.90%, to be called 12-01-04 @ 102 2,645 3,062 ------------------------------------------------------------------------------------------- MA, South Essex Sewerage District, Gen. Oblg., 6.75%, to be called 06-01-04 @ 102 2,000 2,282 ------------------------------------------------------------------------------------------- IL, Chicago, Tax Increment Allocation Bonds, Central Station Rev., 8.90%, to be called 1-01-05 @ 100 1,805 2,180 ------------------------------------------------------------------------------------------- KY, Kenton County Airport Board, Greater Cincinnati International Airport, Rev., 8.25%, to be called 3-1-98 @ 102 1,620 1,775 ------------------------------------------------------------------------------------------- FL, Jacksonville Health Facilities Auth., Baptist Medical Center, Rev., 11.50%: to be called 10-01-03 @ 100 10 14 to be called 10-01-04 @ 100 35 50 to be called 10-01-05 @ 100 55 83 ------------------------------------------------------------------------------------------- 147 TX, Austin, Water, Sewer and Electric Rev., 14%: to be called 05-15-99 @ 100 50 63 to be called 05-15-01 @ 100 55 73 ------------------------------------------------------------------------------------------- 136 ------------------------------------------------------------------------------------------- TOTAL ADVANCE REFUNDED OBLIGATIONS 219,861 - ----------------------------------------------------------------------------------------------------------------------
11 12 PORTFOLIO OF INVESTMENTS (DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------------------------------------------- OTHER MUNICIPAL OBLIGATIONS - ---------------------------------------------------------------------------------------------------------------------- NEW YORK - 7.0% - ---------------------------------------------------------------------------------------------------------------------- Dormitory Auth.: City University System: Consolidated, Rev., 5.625%, 2016 $ 7,575 $ 7,214 Special Oblg., 6.00%, 2014 7,000 6,987 State University Educational Facility, Rev., 5.50%, 2013 13,035 12,477 ------------------------------------------------------------------------------------------- Environmental Facilities Corp., State Water Pollution Control, Revolving Fund Rev., 6.875% to 7.25%, 2010 through 2014 18,875 21,086 ------------------------------------------------------------------------------------------- Local Government Assistance Corp., Rev., 5.50%, 2022 13,275 12,316 ------------------------------------------------------------------------------------------- Medical Care Facilities Finance Agcy.: Hospital, Mortgage Rev., 6.75%, 2014 8,000 8,650 Hospital and Nursing Home, Rev., 6.45%, 2009 9,050 9,624 Mental Health Services Facilities Improvement, Rev., 7.75%, 2010 3,935 4,354 ------------------------------------------------------------------------------------------- Metropolitan Transit Auth., Transit Facilities, Rev., 6.25%, 2014 6,000 6,208 ------------------------------------------------------------------------------------------- New York City: Gen. Oblg., 5.75% through 8.40%, 2000 through 2017 82,515 81,104 Industrial Dev. Auth., USTA National Tennis Center Inc. Proj., Civil Facility Rev., 6.50% and 6.60%, 2010 and 2011 6,485 7,053 Municipal Water Finance Auth., Rev., 7.00%, 2015 740 806 ------------------------------------------------------------------------------------------- Port Auth. of New York and New Jersey: LaGuardia Airport Passenger Terminal, Special Obligation, Rev., 9.125%, 2015 3,225 3,581 Rev., 6.50%, 2008 5,390 5,784 ------------------------------------------------------------------------------------------- Triborough Bridge and Tunnel Auth., Rev., 8.125%, 2012 14,000 15,124 ------------------------------------------------------------------------------------------- Urban Dev. Corp.: Correctional Facilities, Rev., 5.25% to 5.50%, 2013 and 2014 25,215 23,569 Sports Facility Assistance Program, Rev., 5.50%, 2016 and 2019 15,840 15,334 State Facilities, Rev., 5.75%, 2011 4,460 4,346 ------------------------------------------------------------------------------------------- 245,617 COLORADO - 6.7% - ---------------------------------------------------------------------------------------------------------------------- Adams County, Gen. Oblg., 6.125%, 2007 4,280 4,541 ------------------------------------------------------------------------------------------- Arapahoe County, Public Highway Auth., Rev., 6.95% and 7.00%, 2020 and 2026 80,700 85,817 ------------------------------------------------------------------------------------------- City of Colorado Springs, Utilities System Improvement, Rev., 6.125%, 2020 3,400 3,449 ------------------------------------------------------------------------------------------- City and County of Denver: Airport System Rev., 5.60% to 8.75%, 2002 through 2025 88,245 94,272 Gen. Oblg., 6.50%, 2010 6,225 6,944 ------------------------------------------------------------------------------------------- Douglas County School District No. 1, Douglas and Elbert Counties, Gen. Oblg., 6.50%, 2016 16,665 17,833 ------------------------------------------------------------------------------------------- Health Facilities Auth.: Covenant Retirement Communities, Inc., Rev., 6.75%, 2015 and 2025 5,900 6,002 ------------------------------------------------------------------------------------------- Housing Finance Auth., Single Family Mortgage Rev., 7.65%, 2022 780 816 ------------------------------------------------------------------------------------------- Metropolitan Wastewater Reclamation District, Gen. Oblg., 6.00%, 2010 11,505 11,781 ------------------------------------------------------------------------------------------- 231,455
12 13 PORTFOLIO OF INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------- ILLINOIS - 6.5% - ---------------------------------------------------------------------------------------------------------------------- Chicago: Board of Education, Gen. Oblg., 6.00% and 6.25%, 2008 through 2020 $ 24,060 $ 25,918 Gas Supply, Peoples Gas, Light and Coke Company, Rev., 8.10%, 2020 8,250 9,132 Gen. Oblg., 5.25% and 5.125%, 2015 and 2025 20,435 18,483 Motor Fuel Tax Rev., 5.375%, 2014 3,000 2,877 O'Hare International Airport: General Rev., 6.00% and 6.375%, 2012 20,000 20,948 International Terminal, Special Rev., 6.75%, 2018 23,350 24,963 Skyway Toll Bridge, Rev., 6.75%, 2014 15,400 15,801 Wastewater Transmission, Rev., 5.375%, 2013 4,270 4,128 ------------------------------------------------------------------------------------------- City of East St. Louis, Illinois Dev. Finance Auth., Debt Restructuring Rev., 7.50%, 2013 3,750 4,027 ------------------------------------------------------------------------------------------- County of Cook, Gen. Oblg., 5.00% to 9.50%, 1996 through 2023 35,230 36,985 ------------------------------------------------------------------------------------------- Dev. Finance Auth., Pollution Control, Commonwealth Edison Company Proj., Rev., 6.75%, 2015 16,780 18,368 ------------------------------------------------------------------------------------------- Freeport, Single Family Mortgage Rev., 7.40%, 2010 1,495 1,499 ------------------------------------------------------------------------------------------- Harvard, Multifamily Housing, Northfield Court, Rev., 8.80%, 2008 3,880 4,124 ------------------------------------------------------------------------------------------- Health Facilities Auth.: Northwestern Medical Faculty Foundation, Inc., Healthcare Facilities Rev., 6.50%, 2015 3,900 4,100 South Suburban Hospital, Rev., 7.00%, 2009 7,750 8,308 ------------------------------------------------------------------------------------------- Housing Dev. Auth., Rev., 6.00%, 2017 3,635 3,635 ------------------------------------------------------------------------------------------- Madison County, Gen. Oblg., 5.85%, 2013 3,500 3,604 ------------------------------------------------------------------------------------------- Sports Facilities Auth., Rev., 7.875%, 2010 2,990 3,292 ------------------------------------------------------------------------------------------- St. Charles, Wessel Court Proj., Multifamily Housing Rev., 7.60%, 2024 3,930 3,991 ------------------------------------------------------------------------------------------- University Park, Governors Gateway Industrial Park, Tax Increment Rev., 8.50%, 2011 2,965 3,196 ------------------------------------------------------------------------------------------- Village of Bloomingdale, Waterworks and Sewerage, Rev., 6.40%, 2016 5,000 5,229 ------------------------------------------------------------------------------------------- 222,608 PENNSYLVANIA - 5.6% - ---------------------------------------------------------------------------------------------------------------------- Armstrong County Hospital Auth., St. Francis Medical Center Proj., Rev., 6.25%, 2013 11,350 11,786 ------------------------------------------------------------------------------------------- Bethlehem Auth., Water Rev., 4.875%, 2014 8,700 7,795 ------------------------------------------------------------------------------------------- City of Pittsburgh, Public Finance Auth., Wastewater Rev., 4.75% and 6.50%, 2016 and 2013 13,335 12,822 ------------------------------------------------------------------------------------------- Columbia County, First Association Proj., First Mortgage Rev., 9.00%, 2014 1,970 2,110 ------------------------------------------------------------------------------------------- Convention Center Auth., Rev., 6.70% and 6.75%, 2014 and 2019 12,525 13,355 ------------------------------------------------------------------------------------------- Delaware County, Industrial Dev. Auth., Rev., 6.35%, 2025 6,750 6,945 ------------------------------------------------------------------------------------------- Higher Education Facility Auth., System of Higher Education, Rev., 5.875%, 2021 7,695 7,769 ------------------------------------------------------------------------------------------- Lehigh County, General Purpose Auth., Lehigh Valley Hospital Inc., Rev., 6.50%, 2010 6,000 6,403 ------------------------------------------------------------------------------------------- McKean County Hospital Auth., Bradford Hospital Proj., Rev., 5.95% to 6.10%, 2008 through 2020 8,300 7,751 -------------------------------------------------------------------------------------------
13 14 PORTFOLIO OF INVESTMENTS (Dollars in thousands)
- ---------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------- Monroeville, Hospital Auth., Forbes Health, Rev., 6.25%, 2015 $ 5,400 $ 5,287 ------------------------------------------------------------------------------------------- Philadelphia: Airport System, Rev., 6.10%, 2025 12,000 12,033 Gas Works Rev., 5.25% to 6.375%, 2014 and 2015 44,855 44,099 Municipal Auth., Lease Rev., 6.125% to 6.30%, 2008 through 2017 8,800 8,793 School District, Gen. Oblg., 5.50%, 2015 and 2018 9,895 9,578 Water & Wastewater, Rev., 5.00% and 5.60%, 2016 and 2018 19,475 18,143 ------------------------------------------------------------------------------------------- Schuylkill County Industrial Dev. Auth., Schuylkill Energy Resources Inc. Proj., Resource Recovery Rev., 6.50%, 2010 15,795 15,933 ------------------------------------------------------------------------------------------- 190,602 TEXAS - 5.6% - ---------------------------------------------------------------------------------------------------------------------- Austin: Airport System Rev., 6.125%, 2025 10,195 10,270 Combined Utility Systems, Rev., 5.50% and 5.75%, 2020 and 2016 22,000 21,404 Water, Sewer and Electric Rev., 11.00% and 14.00%, 1996 and 2001 3,900 4,855 ------------------------------------------------------------------------------------------- Brazos River Auth., Texas Utilities Electric Company Proj., Rev., 8.125%, 2020 4,495 4,947 ------------------------------------------------------------------------------------------- Ector County, Hospital District, Rev., 7.30%, 2012 550 610 ------------------------------------------------------------------------------------------- Georgetown Higher Education Finance Corp., Southwestern University Proj., Rev., 6.25%, 2009 840 871 ------------------------------------------------------------------------------------------- Harris County: Hospital District, Mortgage Rev., 7.40%, 2010 6,940 8,340 Toll Road Unlimited Tax and Subordinate Lien, Rev., 6.75%, 2014 15,000 16,236 ------------------------------------------------------------------------------------------- Housing Agcy., Single Family Mortgage Rev., 7.15%, 2012 1,170 1,222 ------------------------------------------------------------------------------------------- Houston: Higher Education Finance Corp., University of St. Thomas, Rev., 7.25%, 2007 1,445 1,553 Water and Sewer System Rev., 6.375%, 2022 5,125 5,339 ------------------------------------------------------------------------------------------- Lower Neches Valley Auth., Industrial Dev. Corp., Mobil Oil, Rev., 6.40%, 2030 30,870 32,111 ------------------------------------------------------------------------------------------- Matagorda County, Navigation District Number 1: Central Power and Light Company, Pollution Control, Rev., 7.875%, 2016 10,890 11,305 Houston Lighting and Power Company, Pollution Control, Rev., 7.875%, 2016 13,735 14,187 ------------------------------------------------------------------------------------------- Mc Allen, Health Facilities Dev. Corp., Rev., 5.00%, 2015 5,800 5,258 ------------------------------------------------------------------------------------------- Public Finance Auth., Building Rev., 5.125%, 2011 and 2012 6,935 6,591 ------------------------------------------------------------------------------------------- Rio Grande Valley, Health Facilities Dev. Corp., Golden Palms Retirement and Health Center, Rev., 6.40%, 2012 3,700 3,886 ------------------------------------------------------------------------------------------- Sabine River Auth., Texas Utilities Electric Company, Rev., 8.125%, 2020 1,470 1,583 ------------------------------------------------------------------------------------------- State, Gen. Oblg., 7.00%, 2012 11,079 11,084 ------------------------------------------------------------------------------------------- Tarrant County: Water Control and Improvement District Number One, Water Rev., 4.50%, 2011 5,000 4,390 Health Facilities Dev. Corp., Harris Methodist Health System, Rev., 5.125%, 2012 3,500 3,262 ------------------------------------------------------------------------------------------- Titus County Hospital District Improvement, Rev., 6.125%, 2013 6,700 6,447 -------------------------------------------------------------------------------------------
14 15 PORTFOLIO OF INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------- Travis County Housing Finance Corp., Residential Mortgage, Senior Rev., 7.00%, 2011 $ 425 $ 444 ------------------------------------------------------------------------------------------- Turnpike Auth., Dallas North Tollway, Rev., 4.75%, 2011 and 2012 10,000 8,980 ------------------------------------------------------------------------------------------- West Side Calhoun County, Union Carbide Chemicals Proj., Rev., 6.40%, 2023 4,955 4,901 ------------------------------------------------------------------------------------------- 190,075 NEW JERSEY - 5.3% - ---------------------------------------------------------------------------------------------------------------------- Camden County Municipal Utilities Auth., Rev., 8.25%, 2017 15,600 16,942 ------------------------------------------------------------------------------------------- Educational Facilities Auth., University of Medicine and Dentistry, Rev., 5.25%, 2013 and 2014 11,500 11,004 ------------------------------------------------------------------------------------------- Essex County, Property and Equipment Improvement Leasing Program, Rev., 6.50%, 2012 4,050 4,327 ------------------------------------------------------------------------------------------- Health Care Facilities Financing Auth.: Atlantic City Medical Center, Rev., 6.80%, 2011 3,840 4,095 Southern Ocean County Hospital, Rev., 6.125% and 6.25%, 2013 and 2023 7,235 7,085 West Jersey Health System, Rev., 6.125%, 2012 11,000 11,373 ------------------------------------------------------------------------------------------- Jersey City Sewer Auth., Rev., 4.50%, 2019 13,000 10,828 ------------------------------------------------------------------------------------------- Turnpike Auth., Rev., 6.20% to 10.375%, 2003 through 2016 104,245 114,696 ------------------------------------------------------------------------------------------- 180,350 FLORIDA - 4.5% - ---------------------------------------------------------------------------------------------------------------------- Adventist Health System/Sunbelt Obligated Group, Orange County, Health Facilities Auth., Rev., 5.50%, 2015 5,000 4,885 ------------------------------------------------------------------------------------------- Board of Education, Gen. Oblg., 4.75% to 6.40%, 2019 and 2022 32,000 31,874 ------------------------------------------------------------------------------------------- Broward County: Airport System Rev., 7.625%, 2013 2,620 2,832 Waste Energy Company, Rev., 7.95%, 2008 13,305 14,769 ------------------------------------------------------------------------------------------- City of South Miami Health Facilities Auth., Baptist Health Systems Obligated Group, Rev., 5.375%, 2016 18,000 17,329 ------------------------------------------------------------------------------------------- Dade County, Aviation, Rev., 5.75%, 2018 12,500 12,322 ------------------------------------------------------------------------------------------- Greater Orlando Aviation Auth., Rev., 8.375%, 2016 3,065 3,354 ------------------------------------------------------------------------------------------- Hillsborough County Industrial Dev. Auth., Tampa Electric, Rev., 8.00%, 2022 10,000 11,771 ------------------------------------------------------------------------------------------- Jacksonville Health Facilities Auth., Baptist Medical Center, Rev., 11.50%, 2012 85 140 ------------------------------------------------------------------------------------------- Manatee County, Public Utilities, Rev., 4.75%, 2013 5,340 4,742 ------------------------------------------------------------------------------------------- Miami Beach Redev. Agcy., Tax Increment Rev., 5.875%, 2022 1,000 930 ------------------------------------------------------------------------------------------- Palm Beach County, Solid Waste Auth., Rev., 8.75%, 2010 13,755 14,808 ------------------------------------------------------------------------------------------- Pasco County, Solid Waste Disposal and Resource Recovery Rev., 7.80%, 2011 13,730 14,789 ------------------------------------------------------------------------------------------- South Broward Hospital District, Rev., 5.25%, 2021 20,000 18,642 ------------------------------------------------------------------------------------------- 153,187 MASSACHUSETTS - 4.4% - ---------------------------------------------------------------------------------------------------------------------- Bay Transit Auth., General Transportation System, Rev., 5.50% to 6.20%, 2012 through 2016 35,050 36,050 ------------------------------------------------------------------------------------------- Boston Water and Sewer Commission, Rev., 5.25%, 2019 18,000 16,900 ------------------------------------------------------------------------------------------- Municipal Wholesale Electric Company, Power Supply System, Rev., 6.125% to 6.75%, 2011 through 2019 33,945 36,172 ------------------------------------------------------------------------------------------- Port Auth., Rev., 13.00%, 2013 1,500 2,499 ------------------------------------------------------------------------------------------- State, Gen. Oblg., 6.50%, 2011 17,300 18,444 -------------------------------------------------------------------------------------------
15 16 PORTFOLIO OF INVESTMENTS (Dollars in thousands)
- ---------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------- Water Restoration Auth., Rev., 4.75% to 5.25%, 2015 through 2023 $ 44,200 $ 39,590 ------------------------------------------------------------------------------------------- 149,655 GEORGIA - 4.1% - ---------------------------------------------------------------------------------------------------------------------- Chatham County School District, Gen. Oblg., 6.15%, 2010 7,300 7,639 ------------------------------------------------------------------------------------------- City of Atlanta, Water and Sewerage, Rev., 4.50% and 4.75%, 2018 and 2023 28,915 24,381 ------------------------------------------------------------------------------------------- Cobb-Marietta Coliseum & Exhibit Hall Auth., Rev., 5.625%, 2026 16,000 15,816 ------------------------------------------------------------------------------------------- Fulton - DeKalb Housing Auth., Rev., 6.55% and 6.60%, 2018 and 2028 24,600 24,680 ------------------------------------------------------------------------------------------- Metropolitan Atlanta Rapid Transit Auth., Sales Tax, Rev., 6.25% and 6.70%, 2020 and 2012 27,875 29,756 ------------------------------------------------------------------------------------------- Municipal Electric Auth.: Power Rev., 4.75% to 8.125%, 2012 through 2019 33,955 33,347 Special Obligation, 6.60%, 2018 3,500 3,873 ------------------------------------------------------------------------------------------- 139,492 MICHIGAN - 3.4% - ---------------------------------------------------------------------------------------------------------------------- Building Auth., Rev., 6.25% and 6.75%, 2020 and 2011 25,750 26,901 ------------------------------------------------------------------------------------------- City of Battle Creek and Calhoun County, Downtown Dev. Auth., Tax Increment, Rev., 7.60%, 2016 3,800 4,164 ------------------------------------------------------------------------------------------- Detroit: Convention Facility, Cobo Hall Expansion Proj., Rev., 5.25%, 2012 22,250 20,583 Gen. Oblg., 5.00% to 6.80%, 2010 through 2015 20,910 20,624 Sewer District, Rev., 5.25%, 2015 1,245 1,176 Water System, Rev., 5.40%, 2011 3,800 3,744 ------------------------------------------------------------------------------------------- Hospital Finance Auth.: Gratiot Community Hospital, Rev., 6.10%, 2007 2,250 2,200 McLaren Oblg. Group, Rev., 4.50%, 2021 28,215 22,734 Sisters of Mercy Health Corp., Rev., 7.50%, 2007 and 2013 9,000 9,609 ------------------------------------------------------------------------------------------- Jackson County Hospital Finance Auth., W.A. Foote Memorial Hospital, Rev., 4.75%, 2015 4,260 3,699 ------------------------------------------------------------------------------------------- 115,434 CALIFORNIA - 3.0% - ---------------------------------------------------------------------------------------------------------------------- Central Valley Financing Auth., Cogeneration Proj., Carson Ice, Rev., 6.00%, 2009 6,000 5,905 ------------------------------------------------------------------------------------------- City of Los Angeles: Department of Water & Power, Electric Plant, Rev., 4.75%, 2012 through 2019 12,725 11,117 ------------------------------------------------------------------------------------------- City of Santa Clara, Sports and Open Space Auth., Certificates of Participation, Rev., 4.75%, 2014 5,000 4,383 ------------------------------------------------------------------------------------------- Duarte, City of Hope National Medical Center, Certificates of Participation, Rev., 6.00% and 6.25%, 2008 and 2023 23,255 22,817 ------------------------------------------------------------------------------------------- Imperial Irrigation District, Certificates of Participation, Electric System Proj., Rev., 6.75%, 2011 3,500 3,803 ------------------------------------------------------------------------------------------- Metropolitan Water District of Southern California, Water Rev., 4.75%, 2021 10,000 8,575 ------------------------------------------------------------------------------------------- Public Works Board, Various Community Colleges, Proj. Rev., 5.625%, 2016 19,220 18,836 ------------------------------------------------------------------------------------------- Redev. Agcy. of the City of San Jose, Merged Area Redev. Proj., Tax Allocation, Rev. 5.00%, 2020 12,700 11,315 ------------------------------------------------------------------------------------------- Regents of University of California, Multiple Purpose Proj., Rev., 4.875% and 4.75% , 2019 and 2015 11,100 9,653 -------------------------------------------------------------------------------------------
16 17 PORTFOLIO OF INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - ----------------------------------------------------------------------------------------------------------------------- Sacremento Municipal Utility District, Electric Rev., 5.50%, 2021 $ 4,250 $ 4,062 ------------------------------------------------------------------------------------------- Southern California Public Power Auth., Rev., 4.875%, 2020 3,000 2,604 ------------------------------------------------------------------------------------------- 103,070 WASHINGTON - 2.6% - ---------------------------------------------------------------------------------------------------------------------- Public Power Supply System: Nuclear Proj. #2, Rev., 7.00%, 2012 57,355 62,523 Nuclear Proj. #3, Rev., 5.375%, 2015 21,410 19,997 ------------------------------------------------------------------------------------------- Snohomish County, Gen. Oblg., 5.70%, 2012 5,140 5,211 ------------------------------------------------------------------------------------------- 87,731 KENTUCKY - 2.6% - ---------------------------------------------------------------------------------------------------------------------- Dev. Finance Auth., Baptist Hospital Inc., Rev., 7.625%, 2011 2,000 2,165 ------------------------------------------------------------------------------------------- Hopkins County, The Trover Clinic Foundation, Rev., 6.625%, 2011 4,000 4,279 ------------------------------------------------------------------------------------------- Kenton County Airport Board, Greater Cincinnati International Airport: Airport Rev., 8.25%, 2015 7,380 7,945 Delta Airlines, Rev., 6.125% and 7.125% 2021 through 2022 54,860 53,673 ------------------------------------------------------------------------------------------- Louisville and Jefferson County Metropolitan Sewer District, Sewer and Drainage System, Rev., 5.20%, 2026 16,405 15,130 ------------------------------------------------------------------------------------------- Trimble County, Louisville Gas & Electric Company, Rev., 7.75%, 2019 1,840 1,957 ------------------------------------------------------------------------------------------- Turnpike Auth., Toll Road, Rev., 8.50%, 2004 2,025 2,088 ------------------------------------------------------------------------------------------- 87,237 MARYLAND - 2.4% - ---------------------------------------------------------------------------------------------------------------------- City of Gaithersburg, First Mortgage Economic Dev., Asbury Methodist Home Incorporated, Rev., 5.50%, 2015 and 2020 15,500 14,033 ------------------------------------------------------------------------------------------- Community Dev. Administration, Department of Housing and Community Dev., Rev., 7.85%, 2029 5,000 5,068 ------------------------------------------------------------------------------------------- Energy Financing Administration, AES Warrior Run Proj., Rev., 7.40%, 2019 24,100 25,069 ------------------------------------------------------------------------------------------- Health & Higher Educational Facilities Auth.: Doctors' Community Hospital Proj., Rev., 5.50% and 5.75%, 2024 and 2013 17,885 15,965 ------------------------------------------------------------------------------------------- Northeast Maryland Waste Disposal Auth., Southwest Resource Recovery Facility, Rev., 7.20%, 2006 1,500 1,710 ------------------------------------------------------------------------------------------- Stadium Auth., Sports Facilities Lease Rev., 7.60%, 2019 17,200 18,899 ------------------------------------------------------------------------------------------- 80,744 MISSOURI - 2.2% - ---------------------------------------------------------------------------------------------------------------------- Clarence Cannon Wholesale Water Commission, Water Rev., 6.00%, 2020 10,000 9,091 ------------------------------------------------------------------------------------------- Health and Education Facilities Auth., St. Louis University, Rev., 4.75%, 2016 4,500 3,892 ------------------------------------------------------------------------------------------- Kansas City Municipal Assistance, Leasehold -H- Roe Bartle, Rev., 5.00%, 2020 12,000 10,785 ------------------------------------------------------------------------------------------- Lake of the Ozarks Community Bridge Corp., Bridge System, Rev., 6.25% and 6.40%, 2016 and 2025 7,800 7,333 ------------------------------------------------------------------------------------------- Sikeston, Electric System, Rev., 5.00% through 6.20%, 2010 through 2022 28,835 27,927 ------------------------------------------------------------------------------------------- St. Louis: Gen. Oblg., 7.90%, 2021 5,000 5,457 Scullin Redev. Proj., Tax Increment Rev., 10.00%, 2010 8,990 10,831 ------------------------------------------------------------------------------------------- 75,316
17 18 PORTFOLIO OF INVESTMENTS (DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------- OHIO - 1.9% - ---------------------------------------------------------------------------------------------------------------------- Building Auth.: Workers Compensation Facility, William Green Building, Rev., 4.75%, 2014 $ 13,230 $ 11,738 ------------------------------------------------------------------------------------------- City of Springdale, Hospital Facilities First Mortgage, Southwestern Ohio Seniors Services, Rev., 6.00%, 2018 1,250 1,186 ------------------------------------------------------------------------------------------- Cleveland: Public Power System Improvement, First Mortgage Rev., 7.00%, 2017 850 901 Water Works System, Rev., 6.50%, 2011 4,630 4,974 ------------------------------------------------------------------------------------------- Cuyahoga County, Merida Health System, Hospital Rev., 6.25%, 2014 and 2024 9,470 9,591 ------------------------------------------------------------------------------------------- Higher Education Facility Commission, Rev., 6.70%, 2003 6,725 7,303 ------------------------------------------------------------------------------------------- Marion County Health Care Facilities and Improvement, United Church Homes Proj., Rev., 6.30% and 6.375%, 2015 and 2010 5,350 5,236 ------------------------------------------------------------------------------------------- Scioto County USHCSO-Portsmouth Proj., Hospital Facilities, Rev., 7.625%, 2015 2,000 2,152 ------------------------------------------------------------------------------------------- Upper Arlington City School District, School Building Improvement, Rev., 5.125%, 2019 7,095 6,555 ------------------------------------------------------------------------------------------- Village of Green Springs, St. Francis Health Care Centre Proj., Health Care Facilities Rev., 7.00% and 7.125%, 2014 and 2025 8,640 8,800 ------------------------------------------------------------------------------------------- Worthington City School District, Gen. Oblg., 6.375%, 2012 6,210 6,612 ------------------------------------------------------------------------------------------- 65,048 INDIANA - 1.8% - ---------------------------------------------------------------------------------------------------------------------- Health Facility Financing Auth.: Community Hospital Proj., Rev., 5.60% and 5.70%, 2014 and 2022 7,765 7,544 Fayette Memorial Hospital, Hospital Rev., 7.20%, 2022 1,800 1,815 ------------------------------------------------------------------------------------------- Indianapolis Airport Auth., Local Public Improvement Bond, Transportation Rev., 6.50% to 6.75%, 2007 through 2014 21,500 23,736 ------------------------------------------------------------------------------------------- Toll Road Financing Auth., Rev., 6.875%, 2012 4,000 4,148 ------------------------------------------------------------------------------------------- Transportation Financing Auth., Highway Rev., 7.25% and 5.75%, 2015 and 2012 7,000 7,767 ------------------------------------------------------------------------------------------- Trustees of Purdue University, Purdue University Student Fees, Rev., 6.75% and 6.70%, 2009 and 2015 14,500 15,947 ------------------------------------------------------------------------------------------- 60,957 ALABAMA - 1.6% - ---------------------------------------------------------------------------------------------------------------------- Birmingham-Jefferson Civic Center Auth., Capital Outlay, Special Tax Rev., 7.40%, 2008 12,000 12,959 ------------------------------------------------------------------------------------------- City of Mobile, Mobile Energy Services, Industrial Dev. Board, Rev., 6.95%, 2020 22,000 23,014 ------------------------------------------------------------------------------------------- Hoover, Gen. Oblg., 4.50%, 2013 8,545 7,386 ------------------------------------------------------------------------------------------- Special Care Facilities Financing Authority of Birmingham Hospital, Daughters of Charity National Health System, Rev., 5.00%, 2025 7,250 6,310 ------------------------------------------------------------------------------------------- University of South Alabama, Hospital and Auxiliary Rev., 4.75%, 2010 4,000 3,658 ------------------------------------------------------------------------------------------- 53,327
18 19 PORTFOLIO OF INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------- NEVADA - 1.3% - ---------------------------------------------------------------------------------------------------------------------- City of Reno, Redev. Agcy., Tax Allocation Rev., 5.65% and 5.75%, 2013 and 2017 $ 7,165 $ 6,517 ------------------------------------------------------------------------------------------- Clark County, Las Vegas MaCarran International Airport, Rev., 6.00% and 5.75%, 2022 and 2023 19,500 19,221 ------------------------------------------------------------------------------------------- Henderson, Healthcare Facilities Rev., 5.00%, 2020 6,915 6,113 ------------------------------------------------------------------------------------------- Humboldt County, Pollution Control, Idaho Power Company, Rev., 8.30%, 2014 9,650 11,356 ------------------------------------------------------------------------------------------- 43,207 NEW MEXICO - 1.2% - ---------------------------------------------------------------------------------------------------------------------- Albuquerque: Health Care, Ltd. Proj., Rev., 9.75%, 2014 1,405 1,528 Southwest Community Health Services, Rev., 10.00%, 2003 990 1,275 ------------------------------------------------------------------------------------------- City of Farmington, Pollution Control, Four Corners Proj., Rev., 5.875%, 2023 29,750 29,587 ------------------------------------------------------------------------------------------- Los Alamos County, Utility System, Rev., 6.10%, 2010 4,400 4,582 ------------------------------------------------------------------------------------------- Socorro Hospital System, Southwest Community Health Services, Rev., 10.00%, 2003 1,500 1,948 ------------------------------------------------------------------------------------------- Truth or Consequences, Nursing Home Improvement, Sierra Health Care, Inc., Rev., 9.75%, 2014 940 1,022 ------------------------------------------------------------------------------------------- 39,942 MINNESOTA - 1.1% - ---------------------------------------------------------------------------------------------------------------------- City of Minneapolis, Housing Redev. Auth., Health Care System, Rev., 4.75%, 2018 17,500 14,993 ------------------------------------------------------------------------------------------- City of St. Louis Park, Methodist Hospital Proj., Rev., 7.25%, 2015 6,650 7,469 ------------------------------------------------------------------------------------------- Housing Finance Agcy., Single Family Mortgage Bonds, Rev., 7.90%, 2019 5,955 6,247 ------------------------------------------------------------------------------------------- South Minnesota Municipal Power, Rev., 4.75%, 2016 10,000 8,758 ------------------------------------------------------------------------------------------- 37,467 ARKANSAS - 1.0% - ---------------------------------------------------------------------------------------------------------------------- North Little Rock, Electric System, Rev., 6.50%, 2010 and 2015 31,830 35,403 ------------------------------------------------------------------------------------------- DISTRICT OF COLUMBIA - 1.0% - ---------------------------------------------------------------------------------------------------------------------- Gen. Oblg., 6.30%, 2010 4,500 4,668 ------------------------------------------------------------------------------------------- Georgetown University, Rev., 8.25%, 2018 11,410 12,399 ------------------------------------------------------------------------------------------- Metropolitan Washington Airports Auth., Airport System Rev., 5.875% and 7.60%, 2015 and 2014 7,000 7,240 ------------------------------------------------------------------------------------------- Redevelopment Land Agcy., Sports Arena Special Tax, Rev., 5.625%, 2010 9,850 9,388 ------------------------------------------------------------------------------------------- 33,695 TENNESSEE - .9% - ---------------------------------------------------------------------------------------------------------------------- Housing Dev. Agcy., Mortgage Finance Program, Rev., 7.05% and 7.125%, 2020 and 2026 25,980 26,702 ------------------------------------------------------------------------------------------- Metropolitan Nashville Airport Auth., Airport Improvement, Rev., 6.60%, 2015 5,250 5,640 ------------------------------------------------------------------------------------------- 32,342
19 20 PORTFOLIO OF INVESTMENTS (DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------- UTAH - .9% - ---------------------------------------------------------------------------------------------------------------------- Davis County Solid Waste Management & Energy Recovery, Special Service District, Rev., 6.125%, 2009 $ 6,200 $ 5,950 ------------------------------------------------------------------------------------------- Housing Finance Agcy., Single Family Mortgage Rev., 8.625%, 2019 915 943 ------------------------------------------------------------------------------------------- Intermountain Power Agcy., Power Supply System, Rev., 5.00% and 7.50%, 2021 22,770 20,961 ------------------------------------------------------------------------------------------- West Valley City, Salt Lake County Excise Tax, Rev., 10.625%, 2004 1,000 1,250 ------------------------------------------------------------------------------------------- 29,104 VIRGINIA - .7% - ---------------------------------------------------------------------------------------------------------------------- Richmond, Gen. Oblg., 5.00%, 2021 5,825 5,233 ------------------------------------------------------------------------------------------- Upper Occoquan Sewer Auth., Regional Sewer Rev., 4.75%, 2029 23,935 20,140 ------------------------------------------------------------------------------------------- 25,373 LOUISIANA - .7% - ---------------------------------------------------------------------------------------------------------------------- Ernest N. Morial - New Orleans Exhibit Hall Auth., Special Tax Rev., 5.50%, 2018 13,000 12,475 ------------------------------------------------------------------------------------------- Parish School Board of the Parish of Jefferson, Sales Tax Rev., 6.25%, 2008 11,000 11,702 ------------------------------------------------------------------------------------------- 24,177 SOUTH CAROLINA - .6% - ---------------------------------------------------------------------------------------------------------------------- Charleston County, Public Facilities Corp., Certificates of Participation, Rev., 6.875% and 7.00%, 2014 and 2019 355 384 ------------------------------------------------------------------------------------------- Darlington County, Carolina Power & Light Company Proj., Pollution Control, Rev., 6.60%, 2010 7,500 8,193 ------------------------------------------------------------------------------------------- Grand Strand, Water and Sewer, Rev., 6.375%, 2012 5,000 5,490 ------------------------------------------------------------------------------------------- Public Service Auth., Rev., 6.25%, 2022 7,000 7,208 ------------------------------------------------------------------------------------------- 21,275 ARIZONA - .6% - ---------------------------------------------------------------------------------------------------------------------- City of Phoenix: Gen. Oblg., 6.375%, 2013 7,400 7,792 User Streets and Highway User, Junior Lien, Rev., 6.25%, 2011 10,000 10,488 ------------------------------------------------------------------------------------------- Cocinino County, Industrial Dev. Auth., Health Care Institution, The Guidance Center, Inc. Proj., Rev., 9.25%, 2011 930 997 ------------------------------------------------------------------------------------------- Health Facilities Auth., Hospital System, Phoenix Baptist Hospital and Medical Center, Inc. and Medical Environments, Inc., Rev., 6.25%, 2011 1,400 1,460 ------------------------------------------------------------------------------------------- 20,737 NEBRASKA - .5% - ---------------------------------------------------------------------------------------------------------------------- Omaha Public Power District Electric System, Rev., 5.50%, 2014 8,150 8,081 ------------------------------------------------------------------------------------------- Public Power District, Electric System, Rev., 5.25%, 2022 3,995 3,715 ------------------------------------------------------------------------------------------- Scotts Bluff County, Hospital Auth., West Medical Proj. Center, Rev., 6.45%, 2004 4,535 4,865 ------------------------------------------------------------------------------------------- 16,661 ALASKA - .5% - ---------------------------------------------------------------------------------------------------------------------- Energy Auth., Bradley Lake Hydroelectric Power, Rev., 7.25%, 2016 4,675 5,092 ------------------------------------------------------------------------------------------- Municipality of Anchorage, Municipal Light and Power, Electric Rev., 6.50%, 2013 through 2015 9,250 10,280 ------------------------------------------------------------------------------------------- North Slope Borough, Gen. Oblg., 13.00%, 1998 635 735 ------------------------------------------------------------------------------------------- 16,107
20 21 PORTFOLIO OF INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------- IOWA - .4% - ---------------------------------------------------------------------------------------------------------------------- Finance Auth.: GNMA Mortgage-Backed Securities Program, Single Family Mortgage Rev., 7.90%, 2022 $ 2,645 $ 2,780 Trinity Regional Hospital Proj., Rev., 7.00%, 2022 12,000 12,365 ------------------------------------------------------------------------------------------- 15,145 NORTH CAROLINA - .4% - ---------------------------------------------------------------------------------------------------------------------- Durham County, 1991 Jail Facilities and Computer Equipment Financing Proj., Rev., 6.625%, 2014 5,500 5,853 ------------------------------------------------------------------------------------------- Eastern Municipal Power Agcy, Power System, Rev., 5.125%, 2012 9,380 8,818 ------------------------------------------------------------------------------------------- 14,671 PUERTO RICO - .4% - ---------------------------------------------------------------------------------------------------------------------- Commonwealth Highway and Transportation Auth., Rev., 6.25%, 2016 11,400 12,325 ------------------------------------------------------------------------------------------- CONNECTICUT - .4% - ---------------------------------------------------------------------------------------------------------------------- Dev. Auth., Pierce Memorial Baptist Home, Rev., 9.25%, 2018 1,140 1,263 ------------------------------------------------------------------------------------------- Resource Recovery Auth., Mid-Connecticut Systems, Rev., 7.30%, 2012 4,790 5,025 ------------------------------------------------------------------------------------------- Transportation Infrastructure Purposes, Special Tax Obligation, Rev., 6.10%, 2012 5,450 5,675 ------------------------------------------------------------------------------------------- 11,963 DELAWARE - .3% - ---------------------------------------------------------------------------------------------------------------------- Economic Dev. Auth., United Water Proj., Rev., 6.20%, 2025 11,000 11,226 ------------------------------------------------------------------------------------------- OKLAHOMA - .2% - ---------------------------------------------------------------------------------------------------------------------- Industries Auth., Integris Health, Health System Rev., 6.00%, 2010 1,420 1,498 ------------------------------------------------------------------------------------------- The Valley View Hospital Auth., Rev., 5.75% and 6.00%, 2006 and 2014 7,040 6,756 ------------------------------------------------------------------------------------------- 8,254 MISSISSIPPI - .2% - ---------------------------------------------------------------------------------------------------------------------- Gulfport Hospital Facilities Auth., Gulfport Memorial Hospital, Improvement, Rev., 6.125%, 2015 6,750 6,941 ------------------------------------------------------------------------------------------- NEW HAMPSHIRE - .2% - ---------------------------------------------------------------------------------------------------------------------- Higher Education and Health Facilities Auth., Havenwood - Heritage Heights Issue, Rev., 7.35% and 7.45%, 2018 and 2025 6,500 6,494 ------------------------------------------------------------------------------------------- OREGON - .1% - ---------------------------------------------------------------------------------------------------------------------- Department of Administrative Services, Certificates of Participation, Rev., 5.25%, 2009 3,250 3,202 ------------------------------------------------------------------------------------------- VIRGIN ISLANDS - .1% - ---------------------------------------------------------------------------------------------------------------------- Public Finance Auth., Rev., 7.25%, 2018 3,000 3,188 ------------------------------------------------------------------------------------------- WISCONSIN - .1% - ---------------------------------------------------------------------------------------------------------------------- Health and Education Facilities Auth., Wausau Hospitals, Inc., Proj., Rev., 6.625%, 2011 3,000 3,184 ------------------------------------------------------------------------------------------- MAINE - .1% - ---------------------------------------------------------------------------------------------------------------------- Health and Higher Education Facilities Auth., Rev., 7.10%, 2014 2,750 3,053 ------------------------------------------------------------------------------------------- WYOMING - .1% - ---------------------------------------------------------------------------------------------------------------------- Community Dev. Auth., Single Family Mortgage Rev., 7.875% and 8.125%, 2017 and 2021 2,170 2,250 -------------------------------------------------------------------------------------------
21 22 PORTFOLIO OF INVESTMENTS (DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------- NORTH DAKOTA - .1% - ---------------------------------------------------------------------------------------------------------------------- Housing Finance Agcy., Single Family Mortgage Program, Rev., 8.05%, 2024 $ 1,125 $ 1,164 ------------------------------------------------------------------------------------------- TOTAL OTHER MUNICIPAL OBLIGATIONS - 85.3% 2,910,456 ------------------------------------------------------------------------------------------- TOTAL INVESTMENTS - 91.8% (Cost: $3,015,041) 3,130,318 ------------------------------------------------------------------------------------------- CASH AND OTHER ASSETS, LESS LIABILITIES - 8.2% 281,358 ------------------------------------------------------------------------------------------- NET ASSETS - 100% $3,411,676 - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------- NOTE TO PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------- Based on the cost of investments of $3,015,041,000 for federal income tax purposes at March 31, 1996, the gross unrealized appreciation was $145,519,000 the aggregate gross unrealized depreciation was $30,242,000 and the net unrealized appreciation of investments was $115,277,000. See accompanying Notes to Financial Statements. 22 23 PORTFOLIO OF INVESTMENTS KEMPER INTERMEDIATE MUNICIPAL BOND FUND PORTFOLIO OF INVESTMENTS AT MARCH 31, 1996 (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------------------- ISSUER PRINCIPAL AMOUNT VALUE - --------------------------------------------------------------------------------------------------------------------- ADVANCE REFUNDED OBLIGATIONS SECURED AS TO PRINCIPAL AND INTEREST BY UNITED STATES GOVERNMENT SECURITIES - 4.0% - --------------------------------------------------------------------------------------------------------------------- NY, Dormitory Auth., State University Educational Facilities, Rev., 7.25%, to be called 5-15-00 @ 102 $ 145 $ 163 ------------------------------------------------------------------------------------------ NY, Local Government Assistance Corp., Rev., 7.00%, to be called 4-01-01 @ 102 100 113 ------------------------------------------------------------------------------------------ 276 VA, Arlington County Industrial Dev. Auth., The Arlington Hospital, Rev., 7.125%, to be called 9-1-01 @ 102 90 103 ------------------------------------------------------------------------------------------ VA, Richmond, Gen. Oblg., 6.875%, 2010, to be called 1-15-00 @ 102 100 110 ------------------------------------------------------------------------------------------ 213 PA, Philadelphia, Gas Works Rev., 7.70%, to be called 6-15-01 @ 102 120 139 ------------------------------------------------------------------------------------------ MA, Bay Transportation Auth., Rev., 7.625%, to be called 3-1-00 @ 102 115 130 ----------------------------------------------------------------------------------------- TOTAL ADVANCE REFUNDED OBLIGATIONS 758 - --------------------------------------------------------------------------------------------------------------------- OTHER MUNICIPAL OBLIGATIONS - --------------------------------------------------------------------------------------------------------------------- MICHIGAN - 12.9% - --------------------------------------------------------------------------------------------------------------------- Detroit: Gen. Oblg., 6.70%, 2010 300 317 Resource Recovery Auth., Rev., 6.25%, 2008 450 482 Water Supply System Rev., 5.40%, 2011 100 99 ------------------------------------------------------------------------------------------ Grand Rapids, Downtown Dev. Auth., Rev., 6.20%, 2004 175 190 ------------------------------------------------------------------------------------------ Macomb County: Chippewa Valley Schools, Gen. Oblg., 7.00%, 2001 350 388 Van Dyke Public Schools, Gen. Oblg., 4.75%, 2006 400 386 ------------------------------------------------------------------------------------------ Oakland County, Birmingham CSO Drainage District, Rev., 5.50%, 2002 25 26 ------------------------------------------------------------------------------------------ State Building Auth., Rev., 6.25% and 6.50%, 2000 and 2004 165 182 ------------------------------------------------------------------------------------------ State Hospital Finance Auth., Gratiot Community Hospital, Rev., 6.10%, 2007 350 342 ------------------------------------------------------------------------------------------ 2,412 PENNSYLVANIA - 10.9% - --------------------------------------------------------------------------------------------------------------------- Allegheny County Hospital Dev. Auth., Magee Women's Hospital, Rev., 6.25%, 2008 300 319 ------------------------------------------------------------------------------------------ Housing Finance Agency, Single Family Mortgage, Rev., 5.70%, 2016 350 340 ------------------------------------------------------------------------------------------ Intergovernmental Cooperation Auth., City of Philadelphia Funding Program, Rev., 6.00%, 2002 285 304 ------------------------------------------------------------------------------------------ McKean County Hospital Auth., Bradford Hospital, Rev., 5.375%, 2003 350 343 ------------------------------------------------------------------------------------------ Philadelphia: Airport Marina, Rev., 5.30%, 2004 200 203 Gas Works Rev., 6.25%, 2008 150 153 Water, Wastewater Rev., 6.25%, 2008 300 329 ------------------------------------------------------------------------------------------ Schuylkill County Industrial Dev., Auth., Schuylkill Energy Resources Inc., Rev., 6.50%, 2010 45 45 ------------------------------------------------------------------------------------------ 2,036
23 24 PORTFOLIO OF INVESTMENTS (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - --------------------------------------------------------------------------------------------------------------------- TEXAS - 8.0% - --------------------------------------------------------------------------------------------------------------------- Austin Airport System, Prior Lien, Rev., 6.10%, 2011 $400 $415 ------------------------------------------------------------------------------------------ Fort Worth, Water and Sewer Rev., 5.90%, 2001 80 85 ------------------------------------------------------------------------------------------ Houston Higher Education Finance Corp., University of St. Thomas, Rev., 7.25%, 2007 100 107 ------------------------------------------------------------------------------------------ Public Finance Auth., Building Rev., 5.875%, 2002 210 223 ------------------------------------------------------------------------------------------ San Antonio, Water Rev., 6.00%, 2001 255 271 ------------------------------------------------------------------------------------------ Travis County Health Facilities Dev. Corp., Daughters of Charity National Health System, Hospital Rev., 5.25%, 2011 350 330 ------------------------------------------------------------------------------------------ Trinity River Auth., Ten Mile Creek System, Rev., 5.50%, 2002 70 73 ------------------------------------------------------------------------------------------ 1,504 ILLINOIS - 5.0% - --------------------------------------------------------------------------------------------------------------------- Health Facilities Auth., Franciscan Sisters Health Care Corp. Proj., Rev., 6.25%, 2002 350 378 ------------------------------------------------------------------------------------------ McHenry and Lake County School District Number 15, Certificate of Participation, Rev., 6.125%, 2003 85 92 ------------------------------------------------------------------------------------------ Public Building Commission of Chicago, Rev., 5.25%, 2004 450 460 ------------------------------------------------------------------------------------------ 930 FLORIDA - 4.9% - --------------------------------------------------------------------------------------------------------------------- Broward County School District, Gen., Oblg., 6.00%, 2004 70 75 ------------------------------------------------------------------------------------------ Department of Natural Resources, Preservation 2000, Rev., 6.20%, 1999 80 85 ------------------------------------------------------------------------------------------ Hillsborough County Aviation Auth., Tampa International Airport, Rev., 6.90%, 2011 5 5 ------------------------------------------------------------------------------------------ Lake County Resource Recovery, Industrial Dev. Rev., 5.65%, 2005 200 196 ------------------------------------------------------------------------------------------ Miami Beach, Redevelopment Agency Tax, Incremental Rev., 5.625%, 2009 250 245 ------------------------------------------------------------------------------------------ North Broward Hospital District, Rev., 6.125%, 2003 285 308 ------------------------------------------------------------------------------------------ 914 NEW YORK - 4.8% - --------------------------------------------------------------------------------------------------------------------- Dormitory Auth: City University Construction, Rev., 5.40%, 2002 100 103 College and University Education Loan, Rev., 5.70%, 2007 250 256 ------------------------------------------------------------------------------------------ New York City: Gen. Oblg., 5.75% and 6.50%, 2003 and 2002 200 207 Industrial Dev. Auth., USTA National Tennis Center Inc. Proj., Rev., 6.10%, 2004 200 217 ------------------------------------------------------------------------------------------ Niagara Falls, Water Treatment Plant, Rev., 6.40%, 2004 100 110 ------------------------------------------------------------------------------------------ 893 NEVADA - 4.0% - --------------------------------------------------------------------------------------------------------------------- Clark County, Motor Vehicle Fuel Tax Rev., 5.625%, 2002 70 73 ------------------------------------------------------------------------------------------ State, Gen. Oblg., 5.90%, 2001 250 265 ------------------------------------------------------------------------------------------ Washoe County, Gen. Oblg., 5.20%, 2003 400 410 ------------------------------------------------------------------------------------------ 748 KENTUCKY - 3.5% - --------------------------------------------------------------------------------------------------------------------- Lexington-Fayette Urban County, University of Kentucky Alumni Association, Commonwealth Library Proj., Rev., 6.50%, 2009 300 328 ------------------------------------------------------------------------------------------ Turnpike Auth. Economic Dev. Road Revitalization, Rev., 5.30%, 2004 255 263 ------------------------------------------------------------------------------------------ University of Kentucky, Consolidated Educational Building, Rev., 6.00%, 1999 70 73 ------------------------------------------------------------------------------------------ 664
24 25 PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - --------------------------------------------------------------------------------------------------------------------- NEW HAMPSHIRE - 3.2% - --------------------------------------------------------------------------------------------------------------------- Higher Education and Health Facilities Authority, Havenwood-Heritage Heights Issue, Rev., 7.10%, 2006 $ 250 $ 250 ------------------------------------------------------------------------------------------ Manchester, Public Improvement, Gen. Oblg., 5.25%, 2009 350 346 ------------------------------------------------------------------------------------------ 596 CALIFORNIA - 3.0% - --------------------------------------------------------------------------------------------------------------------- Fresno, Water System, Water Remediation Proj., Rev., 7.50%, 2004 160 188 ------------------------------------------------------------------------------------------ Sacramento Cogeneration Auth., Procter & Gamble Proj., Rev., 7.00%, 2004 200 215 ------------------------------------------------------------------------------------------ State, Gen. Oblg., 6.10%, 2001 150 161 ------------------------------------------------------------------------------------------ 564 INDIANA - 2.9% - --------------------------------------------------------------------------------------------------------------------- Educational Facilities Auth., University of Evansville Proj., Rev., 5.65%, 2011 225 215 ------------------------------------------------------------------------------------------ Johnson County Hospital Association, Rev., 6.50%, 2002 300 328 ------------------------------------------------------------------------------------------ 543 OHIO - 2.6% - --------------------------------------------------------------------------------------------------------------------- Cleveland Water Works Systems, Rev., 6.125%, 2003 450 485 ------------------------------------------------------------------------------------------ Water Dev. Auth., Pure Water Improvement Proj., Rev., 5.75%, 2003 5 5 ------------------------------------------------------------------------------------------ 490 NEW JERSEY - 2.6% - --------------------------------------------------------------------------------------------------------------------- Middlesex County Utility Auth., Solid Waste System, Rev., 6.10%, 2001 300 323 ------------------------------------------------------------------------------------------ State Transit System, Rev., 6.00%, 2001 150 160 ------------------------------------------------------------------------------------------ 483 ALASKA - 2.0% - --------------------------------------------------------------------------------------------------------------------- Anchorage, Gen. Oblg., 5.40%, 2010 375 373 ------------------------------------------------------------------------------------------ MASSACHUSETTS - 1.9% - --------------------------------------------------------------------------------------------------------------------- Bay Transit Auth., Rev., 6.50%, 2004 5 6 ------------------------------------------------------------------------------------------ Commonwealth, Gen. Oblg., 7.00%, 2007 275 303 ------------------------------------------------------------------------------------------ Water Pollution Abatement Trust, SESD Loan Program, Rev., 6.20%, 2010 45 48 ------------------------------------------------------------------------------------------ 357 OKLAHOMA - 1.9% - --------------------------------------------------------------------------------------------------------------------- Muskogee County, Gen. Oblg., 6.00%, 2001 10 11 ------------------------------------------------------------------------------------------ Valley View Hospital Auth., Hospital Rev., 5.75%, 2006 350 339 ------------------------------------------------------------------------------------------ 350 LOUISIANA - 1.8% - --------------------------------------------------------------------------------------------------------------------- State, Gen. Oblg., 7.00%, 2001 300 333 ------------------------------------------------------------------------------------------
25 26 PORTFOLIO OF INVESTMENTS (DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE ARKANSAS - 1.7% - --------------------------------------------------------------------------------------------------------------------- North Little Rock, Electric System, Rev., 6.00% and 6.15%, 2001 and 2003 $ 295 $ 320 ------------------------------------------------------------------------------------------ COLORADO - 1.7% - --------------------------------------------------------------------------------------------------------------------- Arapahoe County, Capital Improvement, Highway Rev., 6.90%, 2015 300 319 ------------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA - 1.5% - --------------------------------------------------------------------------------------------------------------------- Redevelopment Land Agency, Sports Arena Special Tax, Rev., 5.625%, 2010 300 286 ------------------------------------------------------------------------------------------ MAINE - 1.5% - --------------------------------------------------------------------------------------------------------------------- Health and Higher Education Facilities Auth., Rev., 6.30% and 6.50%, 2004 and 2006 260 284 ------------------------------------------------------------------------------------------ PUERTO RICO - 1.3% - --------------------------------------------------------------------------------------------------------------------- Bank and Finance Agency, Affordable Housing, Single Family Mortgage Rev., 5.90%, 2010 250 251 ------------------------------------------------------------------------------------------ MISSISSIPPI - 1.1% - --------------------------------------------------------------------------------------------------------------------- Hattiesburg, Water and Sewer System, Rev., 4.85%, 2003 200 199 ------------------------------------------------------------------------------------------ ARIZONA - .9% - --------------------------------------------------------------------------------------------------------------------- State University Board of Regents, Rev., 6.50%, 2001 85 93 ------------------------------------------------------------------------------------------ Transportation Board, Highway Rev., 6.10%, 2002 70 76 ------------------------------------------------------------------------------------------ 169 HAWAII - .9% - --------------------------------------------------------------------------------------------------------------------- State, Gen. Oblg., 7.25%, 2000 145 161 ------------------------------------------------------------------------------------------ GEORGIA - .8% - --------------------------------------------------------------------------------------------------------------------- Atlanta International Airport, Rev., 6.50%, 2013 70 74 ------------------------------------------------------------------------------------------ Municipal Electric Power Authority, Rev., 6.00%, 2000 70 74 ------------------------------------------------------------------------------------------ 148 MARYLAND - .4% - --------------------------------------------------------------------------------------------------------------------- Howard County, Consolidated Public Improvement, Gen. Oblg., 6.90%, 1999 70 75 ------------------------------------------------------------------------------------------ WASHINGTON - .4% - --------------------------------------------------------------------------------------------------------------------- Tacoma, Electric System, Rev., 5.80%, 2004 70 74 ------------------------------------------------------------------------------------------ NEBRASKA - .3% - --------------------------------------------------------------------------------------------------------------------- Public Power District, Nuclear Facility, Rev., 5.70%, 2004 50 52 ------------------------------------------------------------------------------------------
26 27 PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE CONNECTICUT - .03% - --------------------------------------------------------------------------------------------------------------------- State, Gen. Oblg., 5.95%, 2000 $ 5 $ 5 ----------------------------------------------------------------------------------------- TOTAL OTHER MUNICIPAL OBLIGATIONS - 88.3% 16,533 ----------------------------------------------------------------------------------------- TOTAL INVESTMENTS - 92.3% (Cost: $16,686) 17,291 ----------------------------------------------------------------------------------------- CASH AND OTHER ASSETS, LESS LIABILITIES - 7.7% 1,435 ----------------------------------------------------------------------------------------- NET ASSETS - 100% $18,726 --------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- NOTE TO PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Based on the cost of investments of $16,686,000 for federal income tax purposes at March 31, 1996, the aggregate gross unrealized appreciation was $656,000, the aggregate gross unrealized depreciation was $51,000, and the net unrealized appreciation of investments was $605,000. See accompanying Notes to Financial Statements. 27 28 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES March 31, 1996 (IN THOUSANDS)
INTERMEDIATE MUNICIPAL MUNICIPAL FUND FUND - --------------------------------------------------------------------------------------- ASSETS - --------------------------------------------------------------------------------------- Investments, at value (Cost: $3,015,041 and $16,686) $3,130,318 17,291 - --------------------------------------------------------------------------------------- Cash 262,125 1,173 - --------------------------------------------------------------------------------------- Receivable for: Fund shares sold 290 10 - --------------------------------------------------------------------------------------- Investments sold 35,201 -- - --------------------------------------------------------------------------------------- Interest 53,238 295 - --------------------------------------------------------------------------------------- TOTAL ASSETS 3,481,172 18,769 - --------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------- LIABILITIES AND NET ASSETS - --------------------------------------------------------------------------------------- Payable for: Dividends 3,381 12 - --------------------------------------------------------------------------------------- Fund shares redeemed 1,966 5 - --------------------------------------------------------------------------------------- Investments purchased 62,076 8 - --------------------------------------------------------------------------------------- Management fee 1,187 7 - --------------------------------------------------------------------------------------- Administrative services fee 429 3 - --------------------------------------------------------------------------------------- Distribution services fee 24 3 - --------------------------------------------------------------------------------------- Custodian and transfer agent fees and related expenses 320 3 - --------------------------------------------------------------------------------------- Trustees' fees and other 113 2 - --------------------------------------------------------------------------------------- Total liabilities 69,496 43 - --------------------------------------------------------------------------------------- NET ASSETS $3,411,676 18,726 - --------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------- ANALYSIS OF NET ASSETS - --------------------------------------------------------------------------------------- Paid-in capital $3,255,238 18,096 - --------------------------------------------------------------------------------------- Accumulated net realized gain on investments 41,161 25 - --------------------------------------------------------------------------------------- Net unrealized appreciation on investments 115,277 605 - --------------------------------------------------------------------------------------- NET ASSETS APPLICABLE TO SHARES OUTSTANDING $3,411,676 18,726 - --------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------- THE PRICING OF SHARES - --------------------------------------------------------------------------------------- CLASS A SHARES Net assets applicable to shares outstanding $3,372,867 14,078 - --------------------------------------------------------------------------------------- Shares outstanding, no par value 331,626 1,395 - --------------------------------------------------------------------------------------- Net asset value and redemption price per share (net assets / shares outstanding) $10.17 10.09 - --------------------------------------------------------------------------------------- Maximum offering price per share (net asset value, plus 4.71%/2.83% of net asset value or 4.50%/2.75% of offering price) $10.65 10.38 - --------------------------------------------------------------------------------------- CLASS B SHARES Net assets applicable to shares outstanding $35,981 3,851 - --------------------------------------------------------------------------------------- Shares outstanding, no par value 3,546 382 - --------------------------------------------------------------------------------------- Net asset value and redemption price (subject to contingent deferred sales charge) per share (net assets / shares outstanding) $10.15 10.09 - --------------------------------------------------------------------------------------- CLASS C SHARES Net assets applicable to shares outstanding $2,828 797 - --------------------------------------------------------------------------------------- Shares outstanding, no par value 278 79 - --------------------------------------------------------------------------------------- Net asset value and redemption price per share (net assets / shares outstanding) $10.18 10.09 - ---------------------------------------------------------------------------------------
See accompanying Notes to Financial Statements. 28 29 FINANCIAL STATEMENTS STATEMENT OF OPERATIONS Six months ended March 31, 1996 (IN THOUSANDS)
INTERMEDIATE MUNICIPAL MUNICIPAL FUND FUND - ------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME - ------------------------------------------------------------------------------------------------------ Interest income $104,811 469 - ------------------------------------------------------------------------------------------------------ Expenses: Management fee 7,324 48 - ------------------------------------------------------------------------------------------------------ Administration services fee 2,666 20 - ------------------------------------------------------------------------------------------------------ Distribution services fee 146 16 - ------------------------------------------------------------------------------------------------------ Custodian and transfer agent fees and related expenses 1,351 12 - ------------------------------------------------------------------------------------------------------ Professional fees 46 3 - ------------------------------------------------------------------------------------------------------ Reports to shareholders 141 3 - ------------------------------------------------------------------------------------------------------ Registration fees 7 2 - ------------------------------------------------------------------------------------------------------ Trustees' fees and other 154 8 - ------------------------------------------------------------------------------------------------------ Total expenses before expense waiver 11,835 112 - ------------------------------------------------------------------------------------------------------ Less expenses waived and absorbed by investment manager -- 17 - ------------------------------------------------------------------------------------------------------ Total expenses after expense waiver 11,835 95 - ------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME 92,976 374 - ------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on sales of investments (including options purchased) 63,887 52 - ----------------------------------------------------------------------------------------------------- Net realized gain (loss) from futures transactions 1,429 (3) - ----------------------------------------------------------------------------------------------------- Net realized gain 65,316 49 - ----------------------------------------------------------------------------------------------------- Change in net unrealized appreciation on investments (47,477) (106) - ----------------------------------------------------------------------------------------------------- Net gain (loss) on investments 17,839 (57) - ----------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 110,815 317 - -----------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Statements. 29 30 FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS (IN THOUSANDS)
MUNICIPAL FUND INTERMEDIATE MUNICIPAL FUND SIX MONTHS SIX MONTHS NOVEMBER 1, ENDED YEAR ENDED ENDED 1994 TO MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------- OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY ------------------------------------------------------------------------------------------------------ Net investment income $ 92,976 199,128 374 509 - ------------------------------------------------------------------------------------------------------- Net realized gain (loss) 65,316 (5,853) 49 110 - ------------------------------------------------------------------------------------------------------- Change in net unrealized appreciation (47,477) 178,553 (106) 711 - ------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 110,815 371,828 317 1,330 - ------------------------------------------------------------------------------------------------------- Distribution from net investment income (92,976) (199,128) (374) (509) - ------------------------------------------------------------------------------------------------------- Distribution from net realized gain on investments (8,498) (12,759) (134) -- - ------------------------------------------------------------------------------------------------------- Total dividends to shareholders (101,474) (211,887) (508) (509) - ------------------------------------------------------------------------------------------------------- Net increase (decrease) from capital share transactions (108,313) (366,290) 2,748 15,248 - ------------------------------------------------------------------------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (98,972) (206,349) 2,557 16,069 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- NET ASSETS - ------------------------------------------------------------------------------------------------------- Beginning of period 3,510,648 3,716,997 16,169 100 - ------------------------------------------------------------------------------------------------------- END OF PERIOD $3,411,676 3,510,648 18,726 16,169 =======================================================================================================
30 31 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1 DESCRIPTION OF THE FUNDS The Kemper National Tax-Free Income Series (the Trust) is an open-end, management investment company comprised of Kemper Municipal Bond Fund (Municipal Fund) and Kemper Intermediate Municipal Bond Fund (Intermediate Municipal Fund). The Intermediate Municipal Fund began offering shares on November 1, 1994. The Trust is organized as a business trust under the laws of Massachusetts. The Funds offer four classes of shares. Class A shares are sold to investors subject to an initial sales charge. Class B shares are sold without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions. Class B shares automatically convert to Class A shares six years after issuance. Class C shares are sold without an initial sales charge but are subject to higher ongoing expenses than Class A shares and, for shares sold on or after April 1, 1996, a contingent deferred sales charge payable upon certain redemptions within one year of purchase. Class C shares do not convert into another class. Class I shares (none sold at March 31, 1996) are offered to a limited group of investors, are not subject to initial or contingent deferred sales charges and have lower ongoing expenses than other classes. Differences in class expenses will result in the payment of different per share income dividends by class. Each share of a Fund represents an identical interest in the investments of the Fund and has the same rights. - -------------------------------------------------------------------------------- 2 SIGNIFICANT ACCOUNTING POLICIES INVESTMENT VALUATION. Investments are stated at value. Fixed income securities are valued by using market quotations, or independent pricing services that use prices provided by market makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics. Exchange traded options are valued at the last sale price unless there is no sale price, in which event prices provided by market makers are used. Over-the-counter traded options are valued based upon prices provided by market makers. Financial futures and options thereon are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Other securities and assets are valued at fair value as determined in good faith by the Board of Trustees. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis and includes premium and original discount amortization on fixed income securities. Realized gains and losses from investment transactions are reported on an identified cost basis. EXPENSES. Expenses arising in connection with a specific Fund are allocated to that Fund. Other Trust expenses are allocated between the Funds in proportion to their relative net assets. FUND SHARE VALUATION. Fund shares are sold and redeemed on a continuous basis at net asset value (plus an initial sales charge on most sales of Class A Shares). Proceeds payable on redemption of Class B and Class C shares 31 32 NOTES TO FINANCIAL STATEMENTS will be reduced by the amount of any applicable contingent deferred sales charge. On each day the New York Stock Exchange is open for trading, the net asset value per share is determined as of the earlier of 3:00 p.m. Chicago time or the close of the Exchange. The net asset value per share is determined separately for each class by dividing the Fund's net assets attributable to that class by the number of shares of the class outstanding. FEDERAL INCOME TAXES. Each Fund has complied with the special provisions of the Internal Revenue Code available to investment companies for the six months ended March 31, 1996. DIVIDENDS TO SHAREHOLDERS. Each Fund declares and records a daily dividend equal to its net investment income for that day, to holders of shares for which payment has been received. Income dividends are distributed monthly. Net realized capital gains, if any, will be distributed at least annually. Dividends are determined in accordance with income tax principles which may treat certain transactions differently than generally accepted accounting principles. - -------------------------------------------------------------------------------- 3 TRANSACTIONS WITH AFFILIATES MANAGEMENT AGREEMENT. The Trust has a management agreement with Zurich Kemper Investments, Inc. (ZKI) (formerly known as Kemper Financial Services, Inc.). The Municipal Fund pays a fee at an annual rate of .45% of the first $250 million of average daily net assets declining to .32% of average daily net assets in excess of $12.5 billion. The Municipal Fund paid a management fee of $7,324,000 for the six months ended March 31, 1996. The Intermediate Municipal Fund pays a management fee at an annual rate of .55% of the first $250 million of average daily net assets declining to .40% of average daily net assets in excess of $12.5 billion. The management fee for the Intermediate Municipal Fund was waived and absorbed by ZKI until April 30, 1995. Thereafter the management fee is being gradually reinstated. For the six months ended March 31, 1996, the Intermediate Municipal Fund paid a management fee of $31,000 after the waiver. UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT. The Trust has an underwriting and distribution services agreement with Kemper Distributors, Inc. (KDI). Underwriting commissions paid in connection with the distribution of the Trust's Class A shares are as follows:
COMMISSIONS ALLOWED BY KDI COMMISSIONS ------------------------------ RETAINED BY KDI TO ALL FIRMS TO AFFILIATES --------------- ------------ ------------- Six months ended March 31, 1996 $ 200,000 1,095,000 93,000
For services under the distribution services agreement, the Trust pays KDI a fee of .75% of average daily net assets of Class B and Class C shares. Pursuant to the agreement, KDI enters into related selling group agreements with various firms at various rates for sales of Class B and Class C shares of each Fund. In addition, KDI receives any contingent deferred sales charges (CDSC) from redemptions of Class B and Class C shares. Distribution fees and commissions paid in connection with the 32 33 NOTES TO FINANCIAL STATEMENTS sale of the Trust's Class B and Class C shares and the CDSC received in connection with the redemption of Class B shares are as follows:
COMMISSIONS AND DISTRIBUTION DISTRIBUTION FEES FEES PAID BY KDI AND CDSC ------------------------------ RECEIVED BY KDI TO ALL FIRMS TO AFFILIATES --------------- ------------ ------------- Six months ended March 31, 1996 $ 204,000 436,000 36,000
ADMINISTRATIVE SERVICES AGREEMENT. The Trust has an administrative services agreement with KDI. For providing information and administrative services to shareholders, each Fund pays KDI a fee at an annual rate of up to .25% of average daily net assets of each class. KDI in turn has various arrangements with financial services firms that provide these services and pays these firms based on assets of each Fund accounts the firms service. Administrative services fees (ASF) paid are as follows:
ASF PAID BY KDI ASF PAID BY ------------------------------ THE TRUST TO KDI TO ALL FIRMS TO AFFILIATES ---------------- ------------ ------------- Six months ended March 31, 1996 $2,686,000 2,694,000 132,000
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a services agreement with the Trust's transfer agent, Kemper Service Company (KSvC) is the shareholder service agent of the Trust. Under the agreement, KSvC received shareholder services fees of $942,000 for the six months ended March 31, 1996. OFFICERS AND TRUSTEES. Certain officers or trustees of the Trust are also officers or directors of ZKI. During the six months ended March 31, 1996, the Trust made no direct payments to its officers and incurred trustees' fees of $28,000 to independent trustees. - -------------------------------------------------------------------------------- 4 INVESTMENT TRANSACTIONS For the six months ended March 31, 1996, investment transactions (excluding short-term instruments) are as follows (in thousands):
INTERMEDIATE MUNICIPAL FUND MUNICIPAL FUND ----------------------------------------------------------------------- Purchases $1,938,066 5,458 Proceeds from sales 2,124,708 3,621
33 34 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 5 CAPITAL SHARE TRANSACTIONS The following tables summarize the activity in capital shares of the Funds (in thousands): --------------------------------------------------- MUNICIPAL FUND ---------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MARCH 31, 1996 SEPTEMBER 30, 1995 ----------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------- SHARES SOLD ------------------------------------------------------------------------------- Class A 11,272 $ 117,124 22,333 $ 219,677 ------------------------------------------------------------------------------- Class B 1,225 12,660 3,144 30,627 ------------------------------------------------------------------------------- Class C 159 1,653 122 1,214 ------------------------------------------------------------------------------- SHARES ISSUED IN REINVESTMENT OF DIVIDENDS ------------------------------------------------------------------------------- Class A 6,090 63,155 13,788 134,811 ------------------------------------------------------------------------------- Class B 60 618 89 878 ------------------------------------------------------------------------------- Class C 5 49 4 39 ------------------------------------------------------------------------------- SHARES REDEEMED ------------------------------------------------------------------------------- Class A (28,059) (291,276) (76,431) (744,574) ------------------------------------------------------------------------------- Class B (1,141) (11,844) (861) (8,415) ------------------------------------------------------------------------------- Class C (44) (452) (56) (547) ------------------------------------------------------------------------------- CONVERSION OF SHARES ------------------------------------------------------------------------------- Class A 26 276 68 666 ------------------------------------------------------------------------------- Class B (27) (276) (68) (666) ------------------------------------------------------------------------------- NET DECREASE FROM CAPITAL SHARE TRANSACTIONS $(108,313) $(366,290) -------------------------------------------------------------------------------
--------------------------------------------------- INTERMEDIATE MUNICIPAL FUND ---------------------------------------------------
SIX MONTHS ENDED NOVEMBER 1, 1994 TO MARCH 31, 1996 SEPTEMBER 30, 1995 ------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------- SHARES SOLD ------------------------------------------------------------------------------- Class A 229 $2,350 1,703 $16,599 ------------------------------------------------------------------------------- Class B 131 1,340 313 3,046 ------------------------------------------------------------------------------- Class C 20 204 66 673 ------------------------------------------------------------------------------- SHARES ISSUED IN REINVESTMENT OF DIVIDENDS ------------------------------------------------------------------------------- Class A 28 294 32 320 ------------------------------------------------------------------------------- Class B 5 55 5 51 ------------------------------------------------------------------------------- Class C 2 16 2 16 ------------------------------------------------------------------------------- SHARES REDEEMED ------------------------------------------------------------------------------- Class A (120) (1,234) (481) (4,817) ------------------------------------------------------------------------------- Class B (15) (161) (61) (610) ------------------------------------------------------------------------------- Class C (12) (116) (3) (30) ------------------------------------------------------------------------------- NET INCREASE FROM CAPITAL SHARE TRANSACTIONS $2,748 $15,248 ===============================================================================
34 35 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 6 FINANCIAL FUTURES CONTRACTS The Funds have entered into exchange traded financial futures contracts in order to help protect themselves from anticipated market conditions and, as such, bear the risk that arises from owning these contracts. At the time the Funds enter into a futures contract, they are required to segregate liquid assets with their custodian. Subsequently, gain or loss is recognized and payments are made on a daily basis between the Funds and the broker as the market price of the futures contract fluctuates. At March 31, 1996 the market values of assets segregated by the Funds were $442,258,000 for the Municipal Fund and $1,672,000 for the Intermediate Municipal Fund for the following financial futures contracts (in thousands):
FACE EXPIRATION GAIN (LOSS) AT TYPE AMOUNT POSITION DATE 3/31/96 --------------- -------- -------- ---------- -------------- Municipal Fund U.S. Municipal $432,351 Short June $5,646 Bond Securities Intermediate Municipal Fund U.S. Municipal $ 1,630 Short June $ (3) Bond Securities
35 36 FINANCIAL HIGHLIGHTS
------------------------------------------------------------- CLASS A ------------------------------------------------------------- - -------------------------------------------- SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, MUNICIPAL FUND MARCH 31, 1996 1995 1994 1993 1992 - ---------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ---------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.15 9.69 10.95 10.29 10.05 - ---------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income .27 .55 .55 .61 .65 - ---------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) .05 .50 (.92) .82 .35 - ---------------------------------------------------------------------------------------------------------- Total from investment operations .32 1.05 (.37) 1.43 1.00 - ---------------------------------------------------------------------------------------------------------- Less dividends: Distribution from net investment income .27 .55 .56 .62 .63 - ---------------------------------------------------------------------------------------------------------- Distribution from net realized gain .03 .04 .33 .15 .13 - ---------------------------------------------------------------------------------------------------------- Total dividends .30 .59 .89 .77 .76 - ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.17 10.15 9.69 10.95 10.29 - ---------------------------------------------------------------------------------------------------------- TOTAL RETURN (NOT ANNUALIZED) 3.06% 11.15 (3.67) 14.50 10.36 - -------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS (ANNUALIZED) - -------------------------------------------------------------------------------------------------------- Expenses .65% .66 .60 .47 .48 - ---------------------------------------------------------------------------------------------------------- Net investment income 5.27 5.63 5.42 5.78 6.44 - ----------------------------------------------------------------------------------------------------------
------------------------------------------------------------- CLASS B ------------------------------------------------------------- YEAR ENDED MAY 31, 1994 TO SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, MARCH 31, 1996 1995 1994 - -------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - -------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.13 9.67 9.95 - -------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income .23 .46 .14 - -------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) .05 .50 (.26) - -------------------------------------------------------------------------------------------------------- Total from investment operations .28 .96 (.12) - -------------------------------------------------------------------------------------------------------- Less dividends: Distribution from net investment income .23 .46 .16 - -------------------------------------------------------------------------------------------------------- Distribution from net realized gain .03 .04 -- - -------------------------------------------------------------------------------------------------------- Total dividends .26 .50 .16 - -------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.15 10.13 9.67 - -------------------------------------------------------------------------------------------------------- TOTAL RETURN (NOT ANNUALIZED) 2.62% 10.17 (1.24) - -------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS (ANNUALIZED) - -------------------------------------------------------------------------------------------------------- Expenses 1.54% 1.55 1.56 - -------------------------------------------------------------------------------------------------------- Net investment income 4.38 4.74 4.55 - --------------------------------------------------------------------------------------------------------
36 37 FINANCIAL HIGHLIGHTS
----------------------------------------------------------- CLASS C ----------------------------------------------------------- YEAR ENDED MAY 31, 1994 TO SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, MARCH 31, 1996 1995 1994 - -------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - -------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.16 9.69 9.95 - -------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income .23 .47 .16 - -------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) .05 .51 (.26) - -------------------------------------------------------------------------------------------------------- Total from investment operations .28 .98 (.10) - -------------------------------------------------------------------------------------------------------- Less dividends: Distribution from net investment income .23 .47 .16 - -------------------------------------------------------------------------------------------------------- Distribution from net realized gain .03 .04 -- - -------------------------------------------------------------------------------------------------------- Total dividends .26 .51 .16 - -------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.18 10.16 9.69 - -------------------------------------------------------------------------------------------------------- TOTAL RETURN (NOT ANNUALIZED) 2.63% 10.32 (1.03) - -------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS (ANNUALIZED) - -------------------------------------------------------------------------------------------------------- Expenses 1.50% 1.51 1.53 - -------------------------------------------------------------------------------------------------------- Net investment income 4.42 4.78 4.56 - -------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA FOR ALL CLASSES - -------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30, 1996 1995 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (in thousands) $3,411,676 3,510,648 3,716,997 4,072,626 3,154,972 - ------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (annualized) 112% 86 50 52 32 - ------------------------------------------------------------------------------------------------------------------------
--------------------------- --------------------------- ----------- CLASS A CLASS B CLASS C --------------------------- --------------------------- ----------- SIX MONTHS NOVEMBER 1, SIX MONTHS NOVEMBER 1, SIX MONTHS ENDED 1994 TO ENDED 1994 TO ENDED - ---------------------------------------- MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, INTERMEDIATE MUNICIPAL FUND 1996 1995 1996 1995 1996 - -------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.18 9.50 10.18 9.50 10.19 - -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income .23 .45 .19 .36 .19 - -------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) (.01) .68 (.01) .68 (.02) - -------------------------------------------------------------------------------------------------------------------- Total from investment operations .22 1.13 .18 1.04 .17 - -------------------------------------------------------------------------------------------------------------------- Less dividends: Distribution from net investment income .23 .45 .19 .36 .19 - -------------------------------------------------------------------------------------------------------------------- Distribution from net realized gain .08 -- .08 -- .08 - -------------------------------------------------------------------------------------------------------------------- Total dividends .31 .45 .27 .36 .27 - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.09 10.18 10.09 10.18 10.09 - -------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (NOT ANNUALIZED) 2.15% 12.08 1.77 11.13 1.70 - -------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS (A) (ANNUALIZED) - -------------------------------------------------------------------------------------------------------------------- Expenses absorbed by the Fund .89% .55 1.67 1.42 1.57 - -------------------------------------------------------------------------------------------------------------------- Net investment income 4.43 5.00 3.65 4.13 3.75 - -------------------------------------------------------------------------------------------------------------------- OTHER RATIOS TO AVERAGE NET ASSETS (A) (ANNUALIZED) - -------------------------------------------------------------------------------------------------------------------- Expenses 1.09% 1.05 1.87 1.92 1.77 - -------------------------------------------------------------------------------------------------------------------- Net investment income 4.23 4.50 3.45 3.63 3.55 - -------------------------------------------------------------------------------------------------------------------- ---------- CLASS C ---------- NOVEMBER 1, 1994 TO - ----------------------------------------- SEPTEMBER 30, INTERMEDIATE MUNICIPAL FUND 1995 - ------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - -------------------------------------------------------- Net asset value, beginning of period 9.50 - -------------------------------------------------------- Income from investment operations: Net investment income .38 - -------------------------------------------------------- Net realized and unrealized gain (loss) .69 - -------------------------------------------------------- Total from investment operations 1.07 - -------------------------------------------------------- Less dividends: Distribution from net investment income .38 - -------------------------------------------------------- Distribution from net realized gain -- - -------------------------------------------------------- Total dividends .38 - -------------------------------------------------------- Net asset value, end of period 10.19 - -------------------------------------------------------- TOTAL RETURN (NOT ANNUALIZED) 11.43 - -------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS (A) (ANNUALIZED) - -------------------------------------------------------- Expenses absorbed by the Fund 1.28 - -------------------------------------------------------- Net investment income 4.27 - -------------------------------------------------------- OTHER RATIOS TO AVERAGE NET ASSETS (A) (ANNUALIZED) - -------------------------------------------------------- Expenses 1.78 - -------------------------------------------------------- Net investment income 3.77 - --------------------------------------------------------
37 38 FINANCIAL HIGHLIGHTS - ---------------------------------------- INTERMEDIATE MUNICIPAL FUND (CONTINUED) - ----------------------------------------
- ---------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA FOR ALL CLASSES - ---------------------------------------------------------------------------------------------------------------------- SIX MONTHS NOVEMBER 1, ENDED TO MARCH 31, SEPTEMBER 30, 1996 1995 - ---------------------------------------------------------------------------------------------------------------------- Net assets at end of period (in thousands) $ 18,726 16,169 - ---------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (annualized) 43% 60% ======================================================================================================================
NOTES: (a) KFS agreed to waive the management fee of the Intermediate Municipal Fund from its inception, November 1, 1994, through April 30, 1995. Thereafter, the management fee is being gradually reinstated. "Other ratios to average net assets" are computed without the undertaking to waive the management fee. Total return does not reflect the effect of any sales charges. 38 39 NOTES 39 40 TRUSTEES AND OFFICERS TRUSTEES OFFICERS STEPHEN B. TIMBERS J. PATRICK BEIMFORD, JR. JEROME L. DUFFY President and Trustee Vice President Treasurer DAVID W. BELIN CHRISTOPHER J. MIER ELIZABETH C. WERTH Trustee Vice President Assistant Secretary LEWIS A. BURNHAM JOHN E. NEAL Trustee Vice President DONALD L. DUNAWAY JOHN E. PETERS Trustee Vice President ROBERT B. HOFFMAN PHILIP J. COLLORA Trustee Vice President and Secretary DONALD R. JONES CHARLES F. CUSTER Trustee Vice President and Assistant Secretary DOMINIQUE P. MORAX Trustee SHIRLEY D. PETERSON Trustee WILLIAM P. SOMMERS Trustee - -------------------------------------------------------------------------------- LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ 222 North LaSalle Street Chicago, IL 60601 - -------------------------------------------------------------------------------- SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY P.O. Box 419557 Kansas City, MO 64141 1-800-621-1048 - -------------------------------------------------------------------------------- CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY 127 West 10th Street Kansas City, MO 64105 - -------------------------------------------------------------------------------- INVESTMENT MANAGER ZURICH KEMPER INVESTMENTS, INC. PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC. 120 S. LaSalle Street Chicago, IL 60603 http://www.kemper.com [RECYCLE LOGO] Printed on recycled paper. This report is not to be distributed unless preceded or accompanied by a Kemper Tax-Free Income Funds prospectus. KNTIS - 3 (5/96) KEMPER LOGO 1014630 Printed in the U.S.A. -----END PRIVACY-ENHANCED MESSAGE-----