PPR Voya Prime Rate Trust

STATEMENT OF ADDITIONAL INFORMATION
January 31, 2014

This Statement of Additional Information ("SAI") is not a prospectus but supplements and should be read in conjunction with the current prospectus, dated January 31, 2014, for the National Portfolio, High Income Municipal Portfolio, California Portfolio and New York Portfolio (the "Fund Portfolios") of AllianceBernstein Municipal Income Fund, Inc. (the "Fund") that offers the Class A, Class B (except for the High Income Municipal Portfolio), Class C and Advisor Class shares of the Fund Portfolios, for the Arizona Portfolio, Massachusetts Portfolio, Michigan Portfolio, Minnesota Portfolio, New Jersey Portfolio, Ohio Portfolio, Pennsylvania Portfolio and Virginia Portfolio (the "Fund II Portfolios") of AllianceBernstein Municipal Income Fund II (the "Fund II") that offers the Class A, Class B and Class C shares of the Fund II Portfolios (the Fund and Fund II are together referred to as the "Funds"; each of the Fund Portfolios and the Fund II Portfolios is referred to as a "Portfolio" and together as the "Portfolios") (the "Prospectus"). Financial statements for the Funds for the year ended October 31, 2013, in the case of the Fund Portfolios, and September 30, 2013, in the case of the Fund II Portfolios, are included in the Funds' annual reports to shareholders and are incorporated into this SAI by reference. Copies of the Funds' Prospectus and the Funds' annual reports may be obtained by contacting AllianceBernstein Investor Services, Inc. ("ABIS") at the address or the "For Literature" telephone number shown above or on the Internet at www.AllianceBernstein.com.

TABLE OF CONTENTS

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DESCRIPTION OF THE PORTFOLIOS..................................................2

INVESTMENT RESTRICTIONS.......................................................85

MANAGEMENT OF THE FUNDS.......................................................86

EXPENSES OF THE FUNDS........................................................121

PURCHASE OF SHARES...........................................................130

REDEMPTION AND REPURCHASE OF SHARES..........................................155

SHAREHOLDER SERVICES.........................................................158

NET ASSET VALUE..............................................................162

DIVIDENDS, DISTRIBUTIONS AND TAXES...........................................165

PORTFOLIO TRANSACTIONS.......................................................172

GENERAL INFORMATION..........................................................175

FINANCIAL STATEMENTS AND REPORT  OF INDEPENDENT REGISTERED
     PUBLIC ACCOUNTING FIRM..................................................209

APPENDIX A: BOND AND COMMERCIAL PAPER RATINGS................................A-1

APPENDIX B:  STATEMENT OF POLICIES AND  PROCEDURES FOR PROXY VOTING..........B-1

DESCRIPTION OF THE PORTFOLIOS

Except as otherwise noted, the Portfolios' investment objectives and policies described below and in the Prospectus are not designated "fundamental policies" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act") and may be changed by the Board of Directors or Board of Trustees of the Funds (each a "Board" and together, the "Boards") with respect to a Portfolio without approval of the shareholders of such Portfolio. However, no Portfolio will change its investment objective without at least 60 days' prior written notice to shareholders. There is no guarantee that the Portfolios will achieve their investment objectives.

Whenever any investment policy or restriction states a percentage of a Portfolio's assets that may be invested in any security or other asset, it is intended that such percentage limitation be determined immediately after and as a result of the Portfolio's acquisition of such securities or other assets. Accordingly, any later increases or decreases in percentage beyond the specified limitation resulting from a change in values or net assets will not be considered a violation of this percentage limitation.

Each State Portfolio may invest in municipal securities issued by governmental entities (for example, U.S. territories) outside the named state if the municipal securities generate interest exempt from federal income tax and personal income tax in the named state. When AllianceBernstein L.P. (the "Adviser") believes that municipal securities of the named state that meet a State Portfolio's quality standards are not available, any State Portfolio may invest up to 20% of its total assets in securities whose interest payments are only federally tax-exempt.

Under current federal income tax law, (1) interest on tax-exempt municipal securities issued after August 7, 1986 which are "specified private activity bonds," and the proportionate share of any exempt-interest dividend paid by a regulated investment company that receives interest from such specified private activity bonds, will be treated as an item of tax preference for purposes of the AMT imposed on individuals and corporations, though for regular federal income tax purposes such interest will remain fully tax-exempt, and (2) interest on all tax-exempt obligations will be included in "adjusted current earnings" of corporations for AMT purposes. Such private activity bonds ("AMT-Subject Bonds"), which include industrial development bonds and bonds issued to finance such projects as airports, housing projects, solid waste disposal facilities, student loan programs and water and sewage projects, have provided, and may continue to provide, somewhat higher yields than other comparable municipal securities.

In most instances, no state, municipality or other governmental unit with taxing power will be obligated with respect to AMT-Subject Bonds. AMT-Subject Bonds are in most cases revenue bonds and do not generally have the pledge of the credit or the taxing power, if any, of the issuer of such bonds. AMT-Subject Bonds are generally limited obligations of the issuer supported by payments from private business entities and not by the full faith and credit of a state or any governmental subdivision. Typically the obligation of the issuer of AMT-Subject bonds is to make payments to bond holders only out of and to the extent of, payments made by the private business entity for whose benefit the AMT-Subject Bonds were issued. Payment of the principal and interest on such revenue bonds depends solely on the ability of the user of the facilities financed by the bonds to meet its financial obligations and the pledge, if any, of real and personal property so financed as security for such payment. It is not possible to provide specific detail on each of these obligations in which assets of the Portfolio may be invested.

The insurance feature is generally described in the Prospectus under "Additional Information about the Portfolios' Risks and Investments--Insured Bonds."

The Portfolios may obtain insurance on their municipal bonds or purchase insured municipal bonds covered by policies issued by monoline insurance companies. Currently, only Assured Guaranty Municipal Corp. ("AGM") is writing policies on newly issued municipal bonds. AGM (formerly, Financial Security Assurance Holdings Ltd.) is an indirect subsidiary of Assured Guaranty Ltd. ("Assured"). Prior to the recent financial crisis, there were several other insurers writing policies on municipal bonds, but the ratings of these insurers have been severely downgraded and, while they are still insuring municipal bonds under policies written prior to the financial crisis, they are no longer writing new policies. These insurers include National Public Finance Guarantee Corporation ("National"), a wholly-owned subsidiary of MBIA Inc. ("MBIA"); Financial Guaranty Insurance Company ("FGIC"); Ambac Assurance Corporation ("Ambac"), a wholly-owned subsidiary of Ambac Financial Group, Inc.; ACA Financial Guaranty Corporation ("ACA"); Radian Asset Assurance, Inc. (formerly, Asset Guaranty Insurance Company) ("Radian"), a wholly-owned subsidiary of Radian Group, Inc.; Syncora Guarantee Inc. ("Syncora") (formerly XL Capital Assurance, Inc.), a wholly-owned subsidiary of Syncora Holdings Ltd. (formerly Security Capital Assurance Ltd.); CIFG Assurance North America, Inc. (formerly, CDC IXIS Financial Guaranty North America, Inc.) ("CIFG NA"); and Berkshire Hathaway Assurance Corporation ("BHAC"), a wholly owned subsidiary of Berkshire Hathaway Inc. As noted above, most of these insurers have been downgraded and it is possible that additional downgrades may occur. Moody's and S&P ratings reflect the respective rating agency's current assessment of the creditworthiness of each insurer and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the ratings may be obtained only from the applicable rating agency. The ratings are not recommendations to buy, sell or hold the municipal bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of either or both ratings may have an adverse effect on the market price of the municipal bonds.

It should be noted that insurance is not a substitute for the basic credit of an issuer, but supplements the existing credit and provides additional security therefore. Moreover, while insurance coverage for the municipal securities held by the Portfolios may reduce credit risk, it does not protect against market fluctuations caused by changes in interest rates and other factors. As a result of declines in the credit quality and associated downgrades of most fund insurers, insurance has less value than it did in the past. The market now values insured municipal securities primarily based on the credit quality of the issuer of the security with little value given to the insurance feature. In purchasing insured municipal securities, the Adviser currently evaluates the risk and return of such securities through its own research.

The primary purpose of investing in a portfolio of a single state's municipal securities is the special tax treatment accorded the state's resident individual investors. However, payment of interest and preservation of principal depends upon the continuing ability of the state's issuers and/or obligors on state, municipal and public authority debt obligations to meet their obligations thereunder. Investors should be aware of certain factors that might affect the financial condition of issuers of municipal securities, consider the greater risk of the concentration of a Portfolio versus the safety that comes with a less concentrated investment portfolio and compare yields available in portfolios of the relevant state's issues with those of more diversified portfolios, including out-of-state issues, before making an investment decision.

Municipal securities in which a Portfolio's assets are invested may include debt obligations of the municipalities and other subdivisions of the relevant state issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, schools, streets and water and sewer works. Other purposes for which municipal securities may be issued include the obtaining of funds to lend to public or private institutions for the construction of facilities such as educational, hospital, housing, and solid waste disposal facilities. The latter, including most AMT-Subject Bonds, are generally payable from private sources which, in varying degrees, may depend on local economic conditions, but are not necessarily affected by the ability of the state and its political subdivisions to pay their debts. It is not practicable to provide specific detail on each of these obligations in which Portfolio assets may be invested. However, all such securities, the payment of which is not a general obligation of an issuer having general taxing power, must satisfy, at the time of an acquisition by the Portfolio, the minimum rating(s) described in the "More Information About the Portfolios and Their Investments" in the Prospectus. See also "Appendix A: Bond and Commercial Paper Ratings" for a description of ratings and rating criteria. Some municipal securities may be rated based on a "moral obligation" contract which allows the municipality to terminate its obligation by deciding not to make an appropriation. Generally, no legal remedy is available against the municipality that is a party to the "moral obligation" contract in the event of such non-appropriation.

The following brief summaries are included for the purpose of providing certain information regarding the economic climate and financial condition of the states of New York, California, Arizona, Massachusetts, Michigan, Minnesota, New Jersey, Ohio, Pennsylvania and Virginia, and are based primarily on information from the Annual Information Statement dated June 19, 2013, as updated on November 26, 2013, with respect to New York, the Comprehensive Annual Financial Report dated June 30, 2012 with respect to Arizona, and Official Statements dated September 2013 with respect to Massachusetts, October 2013 with respect to Pennsylvania, and November 2013 with respect to California, Michigan, Minnesota, New Jersey, Ohio and Virginia in connection with the issuance of certain securities, and other documents and sources, and do not purport to be complete. The Funds have not undertaken to verify independently such information and the Funds assume no responsibility for the accuracy of such information. These summaries do not provide information regarding many securities in which the Portfolios are permitted to invest and in particular do not provide specific information on the issuers or types of municipal securities in which the Portfolios invest or the private business entities whose obligations support the payments on AMT-Subject Bonds in which the Portfolios will invest. Therefore, the general risk factors as to the credit of the state or its political subdivisions discussed herein may not be relevant to the Portfolios. Although revenue obligations of a state or its political subdivisions may be payable from a specific project or source, there can be no assurance that future economic difficulties and the resulting impact on state and local government finances will not adversely affect the market value of a Portfolio or the ability of the respective obligors to make timely payments of principal and interest on such obligations. In addition, a number of factors may adversely affect the ability of the issuers of municipal securities to repay their borrowings that are unrelated to the financial or economic condition of a state, and that, in some cases, are beyond their control. Furthermore, issuers of municipal securities are generally not required to provide ongoing information about their finances and operations to holders of their debt obligations, although a number of cities, counties and other issuers prepare annual reports.

The following is based on information obtained from the Annual Information Statement of the State of New York, dated June 19, 2013, and the Update to the Annual Information Statement dated November 26, 2013.

The Debt Reform Act of 2000 ("Debt Reform Act") implemented statutory initiatives intended to improve the borrowing practices of the State of New York (the "State"). The Debt Reform Act applies to all new State-supported debt issued on and after April 1, 2000 and includes the following provisions: (a) a phased-in cap on new State-supported debt outstanding of 4% of personal income; (b) a phased-in cap on new State-supported debt service costs of 5% of total governmental funds receipts; (c) a limit on the use of debt to capital works and purposes only; and (d) a limit on the maximum term of new State-supported debt to 30 years.

The cap on new State-supported debt outstanding began at 0.75% of personal income in 2000-01 and was fully phased in at 4% of personal income in 2010-11. Similarly, the phased-in cap on new State-supported debt service costs began at 0.75% of total governmental funds receipts and is gradually increasing until it is fully phased in at 5% in 2013-14.

The Debt Reform Act requires the limitations on the issuance of State-supported debt and debt service costs to be calculated by October 31 of each year and reported in the quarterly Financial Plan Update most proximate to October 31st of each year. If the calculations for new State-supported debt outstanding and debt service costs are less than the State-supported debt outstanding and debt service costs permitted under the Debt Reform Act, new State-supported debt may continue to be issued. However, if either the debt outstanding or the debt service cap is met or exceeded, the State, absent a change in law, would be precluded from contracting new State-supported debt until the next annual cap calculation is made and State-supported debt is found to be within the appropriate limitations. The Division of the Budget ("DOB") intends to manage subsequent capital plans and issuance schedules consistent with the limits.

The State was found to be in compliance with the statutory caps for the most recent calculation period (October 2013).

Current projections estimate that debt outstanding and debt service costs will continue to remain below the limits imposed by the Debt Reform Act throughout the next several years. Available cap room, in regards to debt outstanding, is expected to decline from $3.6 billion in 2012-13 to $560 million in 2015-16. The State is continuing to implement measures to address capital spending priorities and debt financing practices.

New York is one of the largest issuers of municipal debt, ranking second among the states, behind California, in the amount of debt outstanding. As of March 31, 2013, total State-related debt outstanding was $56.1 billion, equal to approximately 5.4% of personal income. New York ranks fifth in debt per capita, behind Connecticut, Massachusetts, Hawaii and New Jersey.

For purposes of analyzing the financial condition of the State, debt may be classified as State-supported debt and State-related debt.
State-supported debt includes general obligation debt, to which the full faith and credit of the State has been pledged, and lease-purchase and contractual obligations of public authorities and municipalities, where the State's legal obligation to make payments to those public authorities and municipalities is subject to and paid from annual appropriations made by the Legislature. State-related debt includes State-supported debt, as well as State-guaranteed debt (to which the full faith and credit of the State has been pledged), moral obligation financings and certain contingent-contractual obligation financings, where debt service is expected to be paid from other sources and State appropriations are contingent in that they may be made and used only under certain circumstances.

The State has never defaulted on any of its general obligation indebtedness or its obligations under lease-purchase or contractual obligation financing arrangements and has never been called upon to make any direct payments pursuant to its guarantees.

As of March 31, 2013, the total amount of general obligation debt outstanding was $3.5 billion. The Enacted Budget Capital Plan projects that about $338 million in general obligation bonds will be issued in 2013-14.

Also included in State-supported debt are certain long-term financing mechanisms, lease-purchase and contractual-obligation financings, including certificates of participation ("COPs"), which involve obligations of public authorities or municipalities where debt service is payable by the State, but are not general obligations of the State. Under these financing arrangements, certain public authorities and municipalities have issued obligations to finance certain payments to local governments (see "New York Local Government Assistance Corporation," below), various capital programs, educational and health facilities, prison construction, housing programs and equipment acquisitions, and expect to meet their debt service requirements through the receipt of rental or other contractual payments made by the State.

The State expects to continue to use lease-purchase and contractual-obligation financing arrangements to finance its capital programs, and expects to finance many of these capital programs with State Personal Income Tax ("PIT") Revenue Bonds. Based on current assumptions, DOB anticipates that there will be $30.0 billion of State PIT Revenue Bonds outstanding during fiscal year 2013-14.

In 1990, as part of a State fiscal reform program, legislation was enacted creating the New York Local Government Assistance Corporation (the "LGAC"), a public benefit corporation empowered to issue long-term obligations to fund certain payments to local governments traditionally funded through the State's annual seasonal borrowing. The legislation also dedicated revenues equal to the first one percent of the State sales and use tax to pay debt service on these bonds. The legislation imposed a limitation on the annual seasonal borrowing of the State except in cases where the Governor and the legislative leaders have certified the need for additional borrowing and provided a schedule for eliminating it over time. Any seasonal borrowing is required by law to be eliminated by the fourth fiscal year after the limit was first exceeded. This provision limiting the seasonal borrowing was included as a covenant with LGAC's bondholders in the resolution authorizing such bonds. No such restrictions were placed on the State's ability to issue deficit notes.

As of June 1995, LGAC had issued bonds and notes to provide net proceeds of $4.7 billion, completing the program. The impact of LGAC's borrowing is that the State has been able to meet its cash flow needs throughout the fiscal year without relying on short-term seasonal borrowings.

The fiscal stability of the State is related, in part, to the fiscal stability of its public authorities (the "Authorities"). Authorities, which have responsibility for financing, constructing and/or operating revenue producing public facilities, are not subject to the constitutional restrictions on the incurrence of debt which apply to the State itself and may issue bonds and notes within the amounts, and as otherwise restricted by, their legislative authorizations. The State's access to the public credit markets could be impaired, and the market price of its outstanding debt may be materially adversely affected, if any of its Authorities were to default on their respective obligations, particularly those using State-supported or State-related financing techniques. As of December 31, 2012, there were 19 Authorities that had aggregate outstanding debt of $171 billion, only a portion of which constitutes State-supported or State-related debt.

Moral obligation financing generally involves the issuance of debt by an Authority to finance a revenue-producing project or other activity. The debt is secured by project revenues and includes statutory provisions requiring the State, subject to appropriation by the Legislature, to make up any deficiencies that may occur in the issuer's debt service reserve fund. There has never been a default on any moral obligation debt of any Authority. The State does not intend to increase statutory authorizations for moral obligation bond programs. From 1976 through 1987, the State was called upon to appropriate and make payments totaling $162.8 million to make up deficiencies in the debt service reserve funds of the Housing Finance Agency pursuant to moral obligation provisions. In the same period, the State also expended additional funds to assist the Project Finance Agency, the New York State Urban Development Corporation and other Authorities that had moral obligation debt outstanding. The State has not been called upon to make any payments pursuant to any moral obligations since the 1986-87 fiscal year and no such requirements are anticipated during the 2013-14 fiscal year.

Authorities' operating expenses and debt service costs are generally paid by revenues generated by the projects financed or operated, such as tolls charged for the use of highways, bridges or tunnels, charges for public power, electric and gas utility services, rentals charged for housing units, and charges for occupancy at medical care facilities. In addition, State legislation authorizes several financing techniques for Authorities. Also, there are statutory arrangements providing for State local assistance payments, otherwise payable to localities, to be made under certain circumstances to Authorities. Although the State has no obligation to provide additional assistance to localities whose local assistance payments have been paid to Authorities under these arrangements, if local assistance payments are so diverted, the affected localities could seek additional State assistance. Some Authorities also receive moneys from State appropriations to pay for the operating costs of certain of their programs.

The Metropolitan Transportation Authority (the "MTA"), which receives the bulk of State appropriations to the Authorities, oversees New York City's subway and bus lines by its affiliates, the New York City Transit Authority and the Manhattan and Bronx Surface Transit Operating Authority (collectively, the "TA"). The MTA operates certain commuter rail and bus lines in the New York metropolitan area through the MTA's subsidiaries, the Long Island Rail Road Company, the Metro-North Commuter Railroad Company and the Metropolitan Suburban Bus Authority. In addition, the Staten Island Rapid Transit Operating Authority, an MTA subsidiary, operates a rapid transit line on Staten Island. Through its affiliated agency, the Triborough Bridge and Tunnel Authority (the "TBTA"), the MTA operates certain intrastate toll bridges and tunnels. Because fare revenues are not sufficient to finance the mass transit portion of these operations, the MTA has depended and will continue to depend on operating support from the State, local governments and TBTA, including loans, grants and subsidies. If current revenue projections are not realized and/or operating expenses exceed current projections, the TA or commuter railroads may be required to seek additional State assistance, raise fares or take other actions.

The state ended FY 2013 in balance on a cash basis in the General Fund, and maintained a closing balance of $1.61 billion, consisting of $1.1 billion in the Tax Stabilization Reserve, $175 million in the Rainy Day Reserve, $93 million in the Community Projects Fund, $21 million in the Contingency Reserve, $77 million reserved for potential retroactive labor settlements, and $113 million in an undesignated fund balance. The FY 2013 closing balance was $177 million less than the FY 2012 closing balance, which largely reflects the use of designated resources to address costs associated with retroactive labor agreements.

General Fund receipts, including transfers from other funds, totaled $58.8 billion in FY 2013. Total receipts during FY 2013 were $1.9 million (3.3% higher than in the prior fiscal year). Total tax receipts were $1.5 billion higher than the previous fiscal year, mainly due to growth in PIT collections ($1.0 billion) and business tax collections ($493 million). General Fund miscellaneous receipts also increased, largely due to one-time receipts from a settlement between the Department of Financial Services and Standard Chartered Bank.

General Fund disbursements, including transfers to other funds, totaled $59.0 billion in FY 2013, $2.5 billion (4.4% higher than in the prior fiscal year). This reflects expected growth in various local assistance programs, including education and Medicaid, both of which are subject to an annual cap; increased personal service costs associated with retroactive labor settlements; and increased transfers in support of debt service payments.

The State ended FY 2012 in balance on a cash basis in the General Fund, and maintained a closing balance of $1.79 billion, consisting of $1.1 billion in the Tax Stabilization Reserve, $175 million in the Rainy Day Reserve, $102 million in the Community Projects Fund, $21 million in the Contingency Reserve, $283 million reserved for potential retroactive labor settlements, and $75 million in an undesignated fund balance. The FY 2012 closing balance was $411 million greater than the FY 2011 closing balance, which largely reflects actions to establish designated resources that can be used to address costs associated with potential retroactive labor agreements, and to build the State's general emergency reserve fund balances. The State made a $100 million deposit to the Tax Stabilization Reserve at the close of FY 2012, the first deposit to the State's "rainy day" reserves since FY 2008.

General Fund receipts, including transfers from other funds, totaled $56.9 billion in FY 2012. Total receipts during FY 2012 were $2.5 billion (4.5% higher than in the prior fiscal year). Total tax receipts were $3.1 billion higher than the previous fiscal year, mainly due to growth in PIT collections ($2.4 billion) and business tax collections ($481 million). A decrease in the level of excess balances transferred from other funds partly offset the annual increase in tax receipts.

General Fund disbursements, including transfers to other funds, totaled $56.5 billion in FY 2012, $1.1 billion (2.0%) higher than in the prior fiscal year. Excluding the impact of a $2.1 billion school aid deferral from March 2010 to the statutory deadline of June 2010, annual spending grew by $3.2 billion. Spending growth is largely due to the phase-out of extraordinary Federal aid that temporarily reduced State-share spending in FY 2011. Annual General Fund spending for agency operations in FY 2012 was lower than in FY 2011, consistent with management expectations and continued efforts in managing the workforce and controlling costs.

The State ended FY 2011 in balance on a cash basis in the General Fund. The General Fund ended FY 2011 with a closing balance of $1.38 billion, consisting of $1.0 billion in the Tax Stabilization Reserve, $175 million in the Rainy Day Reserve, $136 million in the Community Projects Fund, $21 million in the Contingency Reserve, and $13 million in an undesignated fund balance. The closing balance was $928 million lower than FY 2010. This reflected the planned use of a fund balance to pay for expenses deferred from FY 2010 into FY 2011.

General Fund receipts, including transfers from other funds, totaled $54.4 billion in FY 2011. Total receipts during FY 2011 were $1.9 billion (3.6% higher than in the prior fiscal year). Total tax receipts were $2.5 billion higher, mainly due to the growth in PIT collections, sales taxes, estate taxes, and the real estate transfer tax, resulting from changes to the law as well as the economic recovery. Non-tax revenue was $631 million below the prior year. This was primarily due to the following FY 2010 collections that were not received, or were received in lower amounts, in FY 2011: temporary utility surcharge; Power Authority resources; Energy Research and Development Authority; and fine collections. An increase in the level of excess balances transferred from other funds partly offset the annual decline in miscellaneous receipts.

General Fund disbursements, including transfers to other funds, totaled $55.4 billion in FY 2011. Disbursements in FY 2011 were $3.2 billion (6.1% higher than in the prior fiscal year). Spending growth was affected by the deferral of a $2.06 billion payment to schools from March 2010 to the statutory deadline of June 2010. Adjusting for this anomaly, spending would have been approximately $950 million below FY 2010 levels.

New York is the third most populous state in the nation and has a relatively high level of personal wealth. The State's economy is diverse, with a comparatively large share of the nation's financial activities, information, education and health services employment, and a very small share of the nation's farming and mining activity. The State's location and its air transport facilities and natural harbors have made it an important link in international commerce. Travel and tourism constitute an important part of the economy. Like the rest of the nation, the State has a declining proportion of its workforce engaged in manufacturing, and an increasing proportion engaged in service industries.

The services sector, which includes professional and business services, private education and healthcare, leisure and hospitality services, and other services, is the State's leading economic sector. The services sector accounts for half of all nonagricultural jobs in New York and has a higher proportion of total jobs than does the rest of the nation.

Manufacturing employment continues to decline in importance in New York, as in most other states, and New York's economy is less reliant on this sector than in the past. However, it remains an important sector of the State economy, particularly for the upstate region, as high concentrations of manufacturing industries for transportation equipment, optics and imaging, materials processing, and refrigeration, heating and electrical equipment products are located in the upstate region.

The trade, transportation and utilities sector accounts for the second largest component of nonagricultural jobs in New York but is only the fifth largest, when measured by wage share. This sector accounts for less employment and wages for the State than for the nation.

New York City is the nation's leading center of banking and finance and, as a result, this is a far more important sector in the State than in the nation as a whole. Although this sector accounts for under one-tenth of all nonagricultural jobs in the State, it contributes about one-fifth of total wages.

Farming is an important part of the economy in rural areas, although it constitutes a very minor part of total State output. Principal agricultural products of the State include milk and dairy products, greenhouse and nursery products, fruits, and vegetables. New York ranks among the nation's leaders in the production of these commodities.

Federal, State and local government together comprise the third largest sector in terms of nonagricultural jobs, with the bulk of the employment accounted for by local governments. Public education is the source of nearly one-half of total state and local government employment.

The State is likely to be less affected than the nation as a whole during an economic recession that is concentrated in manufacturing and construction, but likely to be more affected during a recession that is concentrated in the services sector.

In the calendar years 1990 through 1998, the State's rate of economic growth was somewhat slower than that of the nation. In particular, during the 1990-91 recession and post-recession period, the economy of the State, and that of the rest of the Northeast, was more heavily damaged than that of the nation as a whole and was slower to recover. However, the situation subsequently improved. In 1999, for the first time in 13 years, the employment growth rate of the State surpassed the national growth rate and, in 2000, the rates were essentially the same. In 2001, the September 11 terrorist attacks resulted in a slowdown in New York that was more serious than in the nation as a whole. In contrast, the State labor market fared better than that of the nation as a whole during the most recent downturn that began in 2008, though New York experienced a historically large wage decline in 2009. The State unemployment rate was higher than the national rate from 1991 to 2000, but the gap between them has since closed, with the State rate below that of the nation from the start of the national recession through the end of 2011. In 2012, the State unemployment rate was 8.5%, compared to 8.1% for the nation as a whole.

State per capita personal income has historically been significantly higher than the national average, although the ratio has varied substantially. Because New York City is a regional employment center for a multi-state region, State personal income measured on a residence basis understates the relative importance of the State to the national economy and the size of the base to which State taxation applies. In 2012, New York per capita personal income was $52,095, compared to $42,693 for the nation as a whole.

The State economy has performed well in the context of a challenging national and global economic environment. New York's private sector labor market remains strong, continuing to exhibit robust growth in professional and business services, private educational services, and tourism-related leisure and hospitality services. However, New York has not been entirely immune to the national slowdown. Private sector employment growth of 1.4% is projected for the 2013 calendar year, followed by growth of a similar pace for 2014. These growth rates represent marginal downward revisions from mid-2013, but remain above historical averages.

In contrast to recent private labor market trends, public sector employment is expected to continue to decline well into 2014. The ongoing downsizing of both the finance and government sectors has been contributing to unusually weak income growth over the past two years. In advance of Federal tax increases at the start of 2013, a sizable magnitude of wages, dividends, and capital gains was accelerated into the fourth quarter of 2012. Consequently, it is more instructive to view State income growth on a fiscal year basis rather than on a calendar year basis. Weaker growth of 3.8% is now estimated for the State fiscal year in progress, but offsetting that revision is stronger growth in the non-wage components of personal income. On balance, personal income growth of 3.7% is now projected for FY 2014, followed by growth of 4.9% for FY 2015. These projections represent only marginal revisions from the First Quarterly Update Financial Plan forecast.

All of the risks to the U.S. forecast apply to the State forecast as well, although as the nation's financial capital, the volume of financial market activity and equity market volatility pose a particularly large degree of uncertainty for New York. In addition, with Wall Street firms still adjusting their compensation practices in the wake of the passage of financial reform, both the bonus and non-bonus components of employee pay are becoming increasingly difficult to estimate. Securities industry revenues have in the past been a useful predictor of bonus payouts, but that relationship has become much more erratic in recent years.

The fiscal demands on the State may be affected by the fiscal condition of New York City, which relies in part on State aid to balance its budget and meet its cash requirements. It is also possible that the State's finances may be affected by the ability of New York City to market securities successfully in the public credit markets.

Certain localities outside New York City have experienced financial problems and have requested and received additional State assistance during the last several State fiscal years. While a relatively infrequent practice, deficit financing has become more common in recent years. Between 2004 and January 2012, the State Legislature authorized 21 bond issuances to finance local government operating deficits. There were four new or additional deficit financing authorizations during the 2009 and 2010 legislative sessions.

Like the State, local governments must respond to changing political, economic and financial influences over which they have little or no control. Such changes may adversely affect the financial condition of certain local governments. For example, the federal government may reduce (or in some cases eliminate) federal funding of some local programs which, in turn, may require local governments to fund these expenditures from their own resources. The loss of temporary Federal stimulus funding in 2011 also adversely impacted counties and school districts in New York State. The State's cash flow problems have resulted in delays to the payment of State aid, and in some cases, have necessitated borrowing by the localities. Additionally, recent enactment of legislation that caps most local government and school district property tax levies may affect the amount of property tax revenue available for local government and school district purposes. The legislation does not apply to New York City. Changes to sales tax distributions resulting from the 2010 Federal population census may also have a material impact on certain local governments. Ultimately, localities or any of their respective public authorities may suffer serious financial difficulties that could jeopardize local access to the public credit markets, which may adversely affect the marketability of notes and bonds issued by localities within the State. Localities may also face unanticipated problems resulting from certain pending litigation, judicial decisions and long-range economic trends. Other large scale potential problems, such as declining urban populations, increasing expenditures, and the loss of skilled manufacturing jobs, may also adversely affect localities and necessitate State assistance.

The State is a defendant in legal proceedings involving State finances and programs and miscellaneous civil rights, real property, and contract and other tort claims where the monetary claims against the State are deemed to be material, generally in excess of $100 million or involving significant challenges to or impacts on the State's financial policies or practices. These proceedings could affect adversely the financial condition of the State in FY 2014 or thereafter.

Adverse developments in these proceedings or the initiation of new proceedings could affect the ability of the State to maintain a balanced FY 2014 Financial Plan. The State believes that the FY 2014 Enacted Budget includes sufficient reserves for the payment of judgments that may be required during FY 2014. There can be no assurance, however, that adverse decisions in legal proceedings against the State would not exceed the amount of all potential FY 2014 Enacted Budget resources available for the payment of judgments, and could therefore adversely affect the ability of the State to maintain a balanced FY 2014 Enacted Budget.

The following is based on information obtained from an Official Statement, dated November 6, 2013, relating to State of California $300,000,000 General Obligation Bonds (Index Floating Rate Bonds) (the "Official Statement").

Certain California (the "State") constitutional amendments, legislative measures, executive orders, civil actions and voter initiatives could adversely affect the ability of issuers of the State's municipal securities to pay interest and principal on municipal securities.

Article XIII B. The State is subject to an annual appropriations limit (the "Appropriations Limit") imposed by Article XIII B to the State Constitution.

Article XIII B was modified substantially by Propositions 98 and 111 in 1988 and 1990, respectively. (See "Proposition 98" below.) "Appropriations subject to limitation," with respect to the State, are authorizations to spend "proceeds of taxes," which consist of tax revenues, and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed "the cost reasonably borne by the entity in providing the regulation, product or service," but "proceeds of taxes" exclude most State subsidies to local governments, tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on appropriations of funds which are not "proceeds of taxes," such as reasonable user charges or fees, and certain other non-tax funds.

Not included in the Appropriations Limit are appropriations for the debt service costs of bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, appropriations for tax refunds, appropriations of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels, and appropriation of certain special taxes imposed by initiative (e.g., cigarette and tobacco taxes). The Appropriations Limit may also be exceeded in cases of emergency.

The State's yearly Appropriations Limit is based on the limit for the prior year with annual adjustments for changes in California per capita personal income and population and any transfers of financial responsibility for providing services to or from another unit of government.

The Department of Finance projected the Appropriations Limit to be $71.559 billion and $71.703 billion under the Appropriations Limit in Fiscal Years 2012-13 and 2013-14, respectively.

Proposition 98. On November 8, 1988, voters approved Proposition 98, a combined initiative constitutional amendment and statute called the "Classroom Instructional Improvement and Accountability Act." Proposition 98 changed State funding of public education below the university level, and the operation of the State Appropriations Limit, primarily by guaranteeing local schools and community colleges ("K-14 schools") a minimum share of General Fund revenues.

Under Proposition 98 (as modified by Proposition 111 which was enacted on June 5, 1990), K-14 schools are guaranteed the greater of (a) in general, a fixed percentage of General Fund revenues (the "first test"), (b) the amount appropriated to K-14 schools in the prior year, adjusted for changes in the cost of living (measured as in Article XIII B by reference to State per capita personal income) and enrollment (the "second test"), or (c) a third test, which would replace the second test in any year when the percentage growth in per capita General Fund revenues from the prior year plus one half of one percent is less than the percentage growth in State per capita personal income. Under the third test, schools would receive the amount appropriated in the prior year adjusted for changes in enrollment and per capita General Fund revenues, plus an additional small adjustment factor. If the third test is used in any year, the difference between the third test and the second test would become a "credit" to schools which would be the basis of payments in future years when per capita General Fund revenue growth exceeds per capita personal income growth.

The Proposition 98 guarantee is funded from two sources: local property taxes and the General Fund. Any amount not funded by local property taxes is funded by the General Fund. Thus, local property tax collections represent an offset to General Fund costs in a second test or third test year.

The State Treasurer is responsible for the sale of debt obligations of the State and its various authorities and agencies. The State has always paid the principal of and interest on its general obligation bonds, general obligation commercial paper notes, lease-purchase debt and short-term obligations, including revenue anticipation notes and revenue anticipation warrants, when due.

The State Constitution prohibits the creation of general obligation indebtedness of the State unless a bond measure is approved by a majority of the electorate voting at a general election or a direct primary. General obligation bond acts provide that debt service on general obligation bonds shall be appropriated annually from the General Fund and all debt service on general obligation bonds is paid from the General Fund. Under the State Constitution, debt service on general obligation bonds is the second charge to the General Fund after the application of moneys in the General Fund to the support of the public school system and public institutions of higher education. Certain general obligation bond programs receive revenues from sources other than the sale of bonds or the investment of bond proceeds.

As of September 1, 2013, the State had outstanding $79.373 billion aggregate principal amount of long-term general obligation bonds, and unused voter authorizations for the future issuance of $30.980 billion of long-term general obligations bonds, some of which may first be issued as commercial paper notes.

The General Obligation Bond Law permits the State to issue as variable rate indebtedness up to 20% of the aggregate amount of long-term general obligation bonds outstanding. The State had outstanding $3.282 billion of variable rate general obligation bonds, representing about 4.135% of the State's total outstanding general obligation bonds as of September 1, 2013.

In addition to general obligation bonds, the State builds and acquires capital facilities through the use of lease-purchase borrowing. Under these arrangements, the State Public Works Board, another State or local agency or a joint powers authority issues bonds to pay for the construction of facilities such as office buildings, university buildings or correctional institutions. These facilities are leased to a State agency, the California State University, the University of California or the Judicial Council under a long-term lease which provides the source of payment of the debt service on the lease-purchase bonds. In some cases, there is not a separate bond issue, but a trustee directly creates certificates of participation in the State's lease obligation, which are marketed to investors. The State had $11.822 billion General Fund-supported lease-purchase debt outstanding as of September 13, 2013.

As part of its cash management program, the State has regularly issued short-term obligations to meet cash flow needs. The State has issued revenue anticipation notes ("RANs") in all but one fiscal year since the mid-1980s and they have always been paid at maturity. RANs are issued to partially fund timing differences between revenues and expenditures, as the majority of General Fund revenues are received in the last part of the fiscal year. By law, RANs must mature prior to the end of the fiscal year of issuance. If additional external cash flow borrowings are required, the State has issued revenue anticipation warrants ("RAWs"), which can mature in a subsequent fiscal year.

The State entered Fiscal Year 2012-13 in a stronger cash position than it had in some prior years. Timely enactment of the 2012 Budget Act allowed the State to carry out its regular cash management borrowing with RANs early in the year, and without the need for Interim RANs for the first time in three years. The State issued $10 million of RANs on August 23, 2012.

As in previous years, the Legislature enacted a cash management bill which authorizes deferral of certain payments during Fiscal Year 2012-13, including payments to K-12 schools, reimbursements to the federal government for certain social service costs, certain local government social services, transportation payments and Proposition 63 mental health payments (not to exceed $1 billion in the aggregate at one time) and higher education. The applicable deferrals were made in July and October 2012.

The State continued to benefit from $1.7 billion of additional internal borrowable resources in the State Agency Investment Fund ("SAIF") during the first part of the fiscal year. The deposits in the SAIF were returned in late April 2013. The Legislature created a Voluntary Investment Program Fund, which could provide additional short-term cash management borrowing resources, but there are no current plans for use of this Fund.

The State's cash management plan in Fiscal Year 2013-14 consists primarily of internal borrowing from special funds and issuance of RANs in the amount of $5.5 billion. In addition, pursuant to legislation enacted in the last fiscal year, within Fiscal Year 2013-14 a payment of $250 million to the California State University ("CSU") and a payment of $500 million to the University of California are planned to be deferred. Such deferrals are at the discretion of the Director of Finance and shall be repaid in May or June of 2014. The CSU has agreed that in lieu of a payment deferral it will deposit a like amount into a fund in the State Treasury that can be borrowed by the General Fund.

State fiscal officers constantly monitor the State's cash position and if it appears that cash resources may become inadequate, they will consider the use of other cash management techniques as described above, including seeking additional legislation.

The State's fiscal year begins on July 1 and ends on June 30 of the following year. The State's General Fund Budget operates on a legal basis, generally using a modified accrual system of accounting for its General Fund, with revenues credited in the period in which they are measurable and available and expenditures debited in the period in which the corresponding liabilities are incurred.

The annual budget is proposed by the Governor by January 10 of each year for the next fiscal year (the "Governor's Budget"). Under State law, the annual proposed Governor's Budget cannot provide for projected expenditures in excess of projected revenues for the ensuing fiscal year. Following the submission of the Governor's Budget, the Legislature takes up the proposal. As required by the Balanced Budget Amendment ("Proposition 58"), beginning with fiscal year 2004-2005, the Legislature may not pass a budget bill in which General Fund expenditures exceed estimated General Fund revenues and fund balances at the time of the passage and as set forth in the budget bill. Proposition 58 requires the adoption of a balanced budget and restricts future borrowing to cover budget deficits.

Under the State Constitution, money may be drawn from the Treasury only though an appropriation made by law. The primary source of annual expenditure appropriations is the annual Budget Act as approved by the Legislature and signed by the Governor. Pursuant to Proposition 25, enacted on November 2, 2010, the Budget Act must be approved by a majority vote of each House of the Legislature (prior to Proposition 25, a two-thirds majority vote was required). The governor may reduce or eliminate specific line items in the Budget Act or any other appropriations bill without vetoing the entire bill. Such individual line-item vetoes are subject to override by a two-thirds majority vote of each House of the Legislature.

The 2013-14 Budget, including the 2013 Budget Act that was enacted on June 27, 2013, provides a multi-year General Fund plan that is balanced. For the current fiscal year, at the time of budget enactment, it projected a $1.1 billion reserve by year-end, and continues to pay down budgetary debt from past years. For the first time in several years, corrective measures were not necessary to avoid a year-end deficit in the fiscal year just ended. On September 12, 2013, the Governor signed legislation appropriating an additional $315 million during Fiscal Year 2013-14 to the Department of Corrections and Rehabilitation in response to a court-ordered requirement to further reduce the prison population.

General Fund revenues and transfers for Fiscal Year 2013-14 are projected at $97.1 billion, a decrease of $1.1 billion or 1.1% compared with revised estimates for Fiscal Year 2012-13. General Fund expenditures for Fiscal Year 2013-14 are projected at $96.3 billion, an increase of $0.6 billion or 0.6% compared with revised estimates for Fiscal Year 2012-13. It should be noted that revenues, expenditures and reserve estimates are updated following the end of the fiscal year; therefore, these estimates are subject to change.

The 2012-13 Budget closed a projected budget gap of $15.7 billion over the two fiscal years 2011-12 and 2012-13, and projected a $948 million reserve by June 30, 2013, by enacting a total of $16.6 billion in solutions (including a combination of expenditure reductions, additional revenues, and other solutions). General Fund revenues and transfers for Fiscal Year 2012-13 were projected at $95.9 billion, an increase of $9.1 billion compared with Fiscal Year 2011-12. General Fund expenditures for Fiscal Year 2012-13 were projected at $91.3 billion, an increase of $4.3 billion compared to the prior year. General Fund spending outside of Proposition 98 is projected to decline by $1.5 billion, or 2.8%, excluding a required one-time repayment of $2.1 billion the State borrowed from local governments in 2009. In approving the 2012 Budget Act, the Governor exercised his line-item veto power to reduce General Fund expenditures by about $129 million. The 2012 Budget Act also includes special fund expenditures of $39.4 billion and bond fund expenditures of $11.7 billion.

The 2011 Budget Act, enacted on June 30, 2011, projected that the State would end Fiscal Year 2011-12 with a $543 million General Fund reserve. General Fund revenues and transfers for Fiscal Year 2011-12 were projected at $88.5 billion, a reduction of $6.3 billion compared with Fiscal Year 2010-11. General Fund expenditures for Fiscal Year 2011-12 were projected at $85.9 billion - a reduction of $5.5 billion compared to the prior year. These amounts compare to the following figures proposed in the 2011-12 Governor's Budget:
revenues and transfers of $89.7 billion, expenditures of $84.6 billion, and an ending reserve of $955 million. In approving the 2011 Budget Act, the Governor exercised his line-item veto power to reduce General Fund expenditures by about $24 million, mostly in the Judicial Branch ($22.9 million related to parole revocation workload). The 2011 Budget Act also includes special fund expenditures of $34.2 billion and bond fund expenditures of $9.4 billion.

The estimated General Fund revenue reflected a combination of factors, including expiration of temporary taxes and surcharges (which totaled approximately $7.1 billion in Fiscal Year 2010-11) and transfer of about one percent of the State sales tax rate to local governments to fund the realignment described further below. Offsetting these reductions were improved revenue estimates for the remaining State tax sources. Expenditures reflected increases needed to offset the termination of federal stimulus funding (ARRA) which supported about $4.2 billion of General Fund programs in Fiscal Year 2010-11.

The State of California is by far the most populous state in the nation, 50% larger than Texas, the second-ranked state, according to the 2010 U.S. Census. The State's 2012 population of about 37.8 million represented over 12% of the total United States population.

California's economy, the largest among the 50 states and most diverse in the world, has major components in high technology, trade, entertainment, agriculture, manufacturing, government, tourism, construction and services. The relative proportion of the various components of the California economy closely resembles the make-up of the national economy.

The California economy is experiencing a gradual and broadening recovery. Continued growth in the high-technology sector, international trade, and tourism are being supplemented by better residential construction and real estate conditions. Fiscally strapped local governments remain a drag on the recovery.

In 2012, per capita personal income in California averaged $46,477, compared to $43,735 for the nation. The unemployment rate in 2012 was 10.5%, compared to 8.1% for the nation. The trade, transportation and utilities sector represented the largest component (18.9%) of California's non-farm workforce, followed by federal, state and local government (16.5%), professional and business services (15.5%), educational and health services (13.1%) and leisure and hospitality (11.1%).

The State is a party to numerous legal proceedings. Certain of these proceedings have been identified by the State as having a potentially significant fiscal impact upon the State's expenditures or its revenues.

The Arizona Portfolio seeks the highest level of current income exempt from both federal income tax and State of Arizona ("Arizona" or the "State") personal income tax that is available without assuming what the Adviser considers to be undue risk. As a matter of fundamental policy, at least 80% of the Portfolio's net assets will be so invested (except when the Portfolio is in a temporary defensive position), although it is anticipated that under normal circumstances substantially all of the Portfolio's assets will be invested in such Arizona securities. As a matter of fundamental policy, the Arizona Portfolio will invest at least 80% of its net assets in municipal securities the interest on which is exempt from federal income tax.

The following is based on information obtained from the Comprehensive Annual Financial Report of the State of Arizona for the fiscal year ended June 30, 2012, as well as other State publications.

Fueled by multiple consecutive years of substantial tax reductions, Arizona's economy was fast-growing in the 1990s. Personal income taxes were slashed by 31% across the board, and in 2001 the State's corporate income tax was reduced to 6.9% from 7.9%. From 1993 through 1999, the strongest seven-year period of job growth in Arizona history, almost 600,000 private sector jobs were created. According to U.S. Census data, the population of Arizona grew by 40% during the 1990s, second only to Nevada, and is projected to reach 11.17 million by 2050 (a 118% increase from 5.13 million in 2000). Arizona is the second fastest growing state in the United States, and from 1990 to 2006 its population grew at a rate over three times that of the U.S. population. The continuing population growth has been driven by jobs, affordable housing, a warm climate and entrepreneurial flight from more heavily regulated states such as California. It is likely that affordable land and a pervasive pro-development culture will continue to attract employers and job seekers. However, Arizona's population growth peaked at 3.6% in 2005 and 2006. Arizona's estimated population as of December 31, 2012 was 6,482,505.

Arizona's main economic sectors include services, healthcare, trade, and leisure/hospitality. During October 2013, the services sector (including federal, state and local government services) employed approximately 875.4 million people (34.6% of the workforce); the healthcare sector employed approximately 320.8 million people (12.7% of the workforce); the retail trade sector employed approximately 301.6 million people (11.9% of the workforce), and the leisure/hospitality sector employed approximately 274.9 million people (10.9% of the workforce). Many of these jobs are directly related to tourism, an industry that, according to a report prepared for the Arizona Office of Tourism, produced $19.3 billion in direct spending in Arizona in 2012 and added $7.6 million to the State's gross domestic product.

In October 2013, total non-farm employment increased by 1.7% over October 2012; the number of private sector jobs increased by 2.2%, while government jobs decreased by -0.5%. Education and health services reported the largest gain (3.0%); trade, transportation and utilities gained 1.9%; financial activities gained 4.9%, the largest gain since June 2006; and professional and business services gained 2.3%.

The seasonally adjusted unemployment rate in Arizona during the second quarter of 2013 was 7.9% (0.4% above the national average), compared to 7.4% during the second quarter of 2012 and 9.5% during the second quarter of 2013.

Geographically, Arizona is the nation's sixth largest state (113,635 square miles). The State is divided into fifteen counties. Two of these counties, Maricopa County (including Phoenix) and Pima County (including Tucson), are more urban in nature and account for 75% of total population and 80% of total wage and salary employment in Arizona, based on 2008 estimates.

Per capita income levels in Arizona have traditionally lagged behind the United States average. However, Arizona's increase in per capita personal income was second in the nation in 1994 and led the nation in 1995. The diversification of Arizona's economy, and its robust performance during the 1990s, led to these increases in per capita income, although Arizona still lags behind, and is expected to continue to lag behind, the United States average per capita income. With per capita personal income of $35,979 in 2012, compared to $42,693 nationwide, Arizona ranked 32nd nationwide (compared to 40th in 2011).

The Finance Division of the Arizona Department of Administration is responsible for preparing and updating financial statements and reports. The State's financial statements are prepared in accordance with generally accepted governmental accounting principles.

While general obligation bonds are often issued by local governments, the State of Arizona is constitutionally prohibited from issuing general obligation debt. The State relies on pay-as-you-go capital outlays, revenue bonds, grant anticipation notes ("GANs") and lease purchase transactions to finance capital projects. Each such project is individually rated based on its specific creditworthiness.

GANs are an innovative financing mechanism secured by revenues received from the Federal Highway Administration under a grant agreement and certain other Federal-Aid revenues. The State issued GANs to help pay for the costs of acquiring right-of-way for design and construction of certain controlled-access highways within Maricopa County. Lease purchase transactions are funded by certificates of participation ("COPs"). The State has used COPs primarily to construct prisons and to purchase and construct other buildings for State government operations. Additionally, the State has issued COPs to finance new school facilities approved by voters under Proposition 301. As of June 30, 2012, there were $5.536 billion in revenue bonds, $335 million in GANs and $3.424 billion in COPs outstanding.

Arizona's Constitution provides that the State may contract debts not to exceed $350,000. This, as a practical matter, precludes the use of general revenue bonds for State projects. Additionally, certain other issuers have the statutory power to issue obligations payable from other sources of revenue which affect the whole or large portions of the State. The debts are not considered debts of the State because they are secured solely by separate revenue sources. For example, the Arizona Department of Transportation may issue debt for highways that is paid from revenues generated from, among other sources, State gasoline taxes. The three public universities in Arizona may issue debt for university building projects payable from tuition and other fees. The Arizona Power Authority and the University Medical Center may also issue debt.

Arizona's Constitution also restricts the debt of certain of the State's political subdivisions. No county, city, town, school district, or other municipal corporation of the State may for any purpose become indebted in any manner in an amount exceeding 6% of the taxable property in such county, city, town, school district, or other municipal corporation without the assent of a majority of the qualified electors thereof voting at an election provided by law to be held for that purpose; provided, however, that (a) under no circumstances may any county or school district of the State become indebted in an amount exceeding 15% (or 30% in the case of a unified school district) of such taxable property and (b) any incorporated city or town of the State with such assent may be allowed to become indebted up to a 20% additional amount for (i) supplying such city or town with water, artificial light, or sewers, when the works for supplying such water, light, or sewers are or shall be owned and controlled by the municipality, (ii) the acquisition and development by the incorporated city or town of land or interests therein for open space preserves, parks, playgrounds and recreational facilities, and (iii) the construction, reconstruction, improvement or acquisition of streets, highways or bridges or interests in land for rights-of-way for streets, highways or bridges. Irrigation, power, electrical, agricultural improvement, drainage, flood control and tax levying public improvement districts are, however, exempt from the restrictions on debt set forth in Arizona's constitution and may issue obligations for limited purposes, payable from a variety of revenue sources.

Arizona's local governmental entities are subject to certain other limitations on their ability to assess taxes and levies which could affect their ability to meet their financial obligations. Subject to certain exceptions, the maximum amount of property taxes levied by any Arizona county, city, town or community college district for its operations and maintenance expenditures cannot exceed the amount levied in a preceding year by more than 2%. Certain taxes are specifically exempt from this limit, including taxes levied for debt service payments.

Arizona is required by law to maintain a balanced budget. To achieve this objective, the State has, in the past, utilized a combination of spending reductions and tax increases. For the 1990-91 budget, the Arizona Legislature increased taxes by over $250 million, which led to a citizen's referendum designed to repeal the tax increase until the voters could consider the measure at a general election. After an unsuccessful court challenge, the tax increase went into effect. In 1992, Arizona voters adopted Proposition 108, an initiative and amendment to the State's Constitution that requires a two-thirds vote by the Legislature and signature by the Governor for any net increase in State revenues, including the imposition of a new tax, an increase in a tax rate or rates and a reduction or elimination of a tax deduction. If the Governor vetoes the measure, then the legislation will not become effective unless it is approved by an affirmative vote of three-fourths of the members of each house of the Legislature. This makes any future tax increase more difficult to achieve. The conservative nature of Arizona's Legislature means that tax increases are less likely. From 1992 through 1996, the State adopted substantial tax relief, including the 20% individual income tax reduction described above. In 1996, the Legislature reduced property taxes by $200 million, in part by repealing the State tax levy of $.47 per $100 assessed valuation. Additional tax relief initiatives were enacted in 1999 and 2001.

Arizona accounts for its revenues and expenditures within various funds. The largest fund supporting the operation of State government is the General Fund, which accounts for the majority of receipts from sales and income taxes. The General Fund ended the June 30, 2012 fiscal year with a total fund balance deficit of $79.7 million, compared to the previous year's total fund balance deficit of $703.2 million.

The State's Enterprise Funds are comprised of governmental and quasi-governmental agencies that provide goods and services to the public on a charge-for-service basis. One of the largest Enterprise Funds is the Lottery Fund. The Lottery Fund ended the June 30, 2012 fiscal year with net assets of $10.0 million and generated $247.1 million of operating revenues during that period, compared to $5.6 million and $551.8 million, respectively, in the June 30, 2011 fiscal year.

The State has a variety of claims pending against it that arose during the normal course of its activities. Management believes, based on advice of legal counsel, that losses, if any, resulting from settlement of these claims will not have a material effect on the financial position of the State.

The Massachusetts Portfolio seeks the highest level of current income exempt from both federal income tax and Commonwealth of Massachusetts ("Massachusetts" or the "Commonwealth") personal income tax that is available without assuming what the Adviser considers to be undue risk. As a matter of fundamental policy, at least 80% of the Portfolio's net assets will be so invested (except when the Portfolio is in a temporary defensive position), although it is anticipated that under normal circumstances substantially all of the Portfolio's assets will be invested in such Massachusetts securities. As a matter of fundamental policy, the Massachusetts Portfolio will invest at least 80% of its net assets in municipal securities the interest on which is exempt from federal income tax.

The following was obtained from an Official Statement, dated September 18, 2013, relating to $800,000,000 General Obligation Revenue Anticipation Notes, Series A, B and C, and The Commonwealth of Massachusetts Information Statement dated September 9, 2013.

Massachusetts is a densely populated state with a well-educated population, comparatively high income levels, low rates of unemployment, and a relatively diversified economy. While the total population of Massachusetts has remained fairly stable in the last 25 years, the next 25 years are expected to bring about a continued change in the age distribution of the population. The share of the 65 and over age group, and especially the 85 and over age group, will continue to grow. Income levels in Massachusetts since 1980 have grown significantly more than the national average, and a variety of measures of income show that Massachusetts residents have significantly higher rates of annual income than the national average. These high levels of income have been accompanied by a significantly lower poverty rate and, with the exception of the recession of the early 1990s and a seventeen-month period between 2006 and 2007, considerably lower unemployment rates in Massachusetts than in the United States since 1980. In June 2013, the Massachusetts unemployment rate was 7.0%, 0.6% below the national rate.

Average per capita personal income for Massachusetts residents was $54,687 in 2012, as compared to the national average of $42,693. While per capita personal income is, on a relative scale, higher in Massachusetts than in the United States as a whole, this is offset to some extent by the higher cost of living in Massachusetts.

The Massachusetts services sector, with 49.5% of the non-agricultural work force in 2011-2012, is the largest sector in the Massachusetts economy. Government employment represents 13.5% of total non-agricultural employment in Massachusetts. After significant declines in 2002 and 2003, total non-agricultural employment in Massachusetts increased 0.5% in 2005 and continued to increase every year through 2008. After a 0.6% increase in 2011, employment grew 2.0% in 2012, still 2.0% below the last peak in 2001. The comparable growth rate for the nation in 2012 was up 1.7% from 2011 and up 1.4% from 2001. The latest seasonally adjusted estimate (3.3 million for June 2013) is about 65,400 below the peak month in 2001 (3.4 million in February 2001) and about 15,300 more than the last peak in April 2008 (3.3 million). In 2004, manufacturing employment declined 3.5% from 2003, a much smaller decline than the annual declines in the previous two years (10.2% in 2002 and 7.0% in 2003). After a steep decline of 9.5% in 2009, the decline in 2010 was 2.2%, followed by a slight uptick of 0.2% in 2011, and another drop of 1.8% in 2012.

Under its Constitution, the Commonwealth may borrow money (a) for defense or in anticipation of receipts from taxes or other sources, any such loan to be paid out of the revenue of the year in which the loan is made, or (b) by a two-thirds vote of the members of each house of the Legislature present and voting thereon. Legislation enacted in December 1989 imposes a limit on the amount of outstanding "direct" bonds of the Commonwealth. The limit was set at $6.8 billion in fiscal year 1991 and provided that the limit for each subsequent fiscal year was to be 105% of the previous fiscal year's limit. As most recently amended, the law sets a statutory limit on direct debt during fiscal 2014 of approximately $18.82 billion.

The Commonwealth is authorized to issue three types of direct debt
- general obligation debt, special obligation debt and federal grant anticipation debt.

Certain independent authorities and agencies within the Commonwealth are statutorily authorized to issue bonds and notes for which the Commonwealth is either directly, in whole or in part, or indirectly liable. The Commonwealth's liabilities with respect to these bonds and notes are classified as either (a) Commonwealth-supported debt, (b) Commonwealth-guaranteed debt or
(c) indirect obligations.

The fiscal 2012 budget was enacted by the Legislature on July 1, 2011 and approved by the Governor on July 11, 2011. A $1.250 billion interim budget for the first ten days of fiscal 2012 had been enacted by the Legislature and approved by the Governor on June 27, 2011. Total spending in the final fiscal 2012 budget approved by the Governor amounted to approximately $30.598 billion. The budget assumed tax revenues of $20.615 billion, reflecting the fiscal 2012 consensus tax estimate of $20.525 billion, which was adjusted for the impact of revenue initiatives enacted as part of the budget. The fiscal 2012 budget authorized a $200 million withdrawal from the Stabilization Fund, the use of fiscal 2012 interest earnings on the Stabilization Fund and an additional $103.7 million in savings achieved by suspending the statutorily required deposit into the Stabilization Fund of 0.5% of total tax revenue. The fiscal 2012 budget projections assumed a transfer of $185 million from the Stabilization Fund rather than the authorized $200 million. On that assumption the Stabilization Fund was projected to have $884.9 million balance at the end of fiscal 2012.

Fiscal 2012 ended on June 30, 2012, but, as is customary, the Executive Office of Administration & Finance and the State Comptroller continue to work to close out the fiscal year with supplemental funding requests. After accounting for all supplemental appropriations and updated revenue and spending projections, the Executive Office for Administration and Finance expects fiscal 2012 to end in balance without requiring any unbudgeted withdrawals from the Stabilization Fund. In fact, this projection assumes a net deposit to the Stabilization Fund in fiscal 2012 of $159.9 million, due to $375 million in one-time tax settlements in excess of $10 million being deposited to the Stabilization Fund. These deposits are partially offset by the budgeted $200 million withdrawal of Stabilization Fund reserves to support the operating budget. After accounting for these changes, the Stabilization Fund is projected to have a balance of $1.539 billion at the end of fiscal 2012.

The fiscal 2013 budget was enacted by the legislature on June 28, 2012 and approved by the Governor on July 8, 2012. A $1.250 billion interim budget for the first ten days of fiscal 2013 had been enacted by the Legislature and approved by the Governor on June 26, 2012. Total spending in the fiscal 2013 budget approved by the Governor amounted to approximately $32.508 billion, after accounting for $31.7 million in veto overrides. Spending contemplated by the fiscal 2013 budget was approximately $1.225 billion, or 3.93%, greater than fiscal 2012 estimated spending levels at the time of the signing of the budget.

The fiscal 2013 budget relied on $616 million in one-time resources to support recurring spending, down from the fiscal 2012 assumption of $669 million. Among the one-time resources assumed as part of the fiscal 2013 budget was a $350 million withdrawal from the Stabilization Fund, the use of fiscal 2013 interest earnings on the Stabilization Fund and an additional $110.1 million in savings achieved by suspending the statutorily required deposit into the Stabilization Fund of 0.5% of total tax revenue.

On October 15, 2012, the Secretary for Administration and Finance certified that projected operating revenues remained sufficient to support projected expenses for fiscal 2013. He noted that while tax receipts, at the time of the certification, were $95 million below budgeted estimates, it was premature to conclude that tax revenues would end the year below the budgeted estimate or to estimate the extent of any such shortfall that might occur. The Secretary also noted, however, that there were a number of risks to tax revenues meeting the budgeted estimate for the fiscal year, including slower-than-projected economic growth, a potential automatic reduction in the state's income tax rate and the potential failure of the federal government to address the so-called "fiscal cliff." Accordingly, the Secretary announced the immediate implementation of spending and hiring controls and launched contingency planning measures.

On December 4, 2012, the Governor filed legislation containing proposed solutions to the projected $540 million tax revenue shortfall, including $225 million in spending reductions across executive branch agencies.

The fiscal 2014 budget was enacted by the Legislature on July 1, 2013 and approved by the Governor on July 12, 2013 with certain line item vetoes. The fiscal 2014 budget relies on $696 million in one-time resources to support recurring spending, down from the fiscal 2013 assumption of $920 million. A $4.075 billion interim budget for the first 30 days of fiscal 2014 had been enacted by the Legislature and approved by the Governor on June 21, 2013. Total spending in the fiscal 2014 budget approved by the Governor amounts to approximately $33.667 billion, after accounting for $435.4 million in vetoes and accompanying fiscal 2014 legislation proposed by the Governor that included $40.0 million in supplemental appropriations. The fiscal 2014 budget is approximately $1.132 billion, or 3.5% greater than fiscal 2013 estimated spending.

There are pending in courts within the Commonwealth and in the Supreme Court of the United States various suits in which the Commonwealth is a party. In the opinion of the Attorney General, no litigation is pending or, to her knowledge, threatened that is likely to result, either individually or in the aggregate, in final judgments against the Commonwealth that would affect materially its financial condition.

The Michigan Portfolio seeks the highest level of current income exempt from both federal income tax and State of Michigan ("Michigan" or the "State") personal income tax that is available without assuming what the Adviser considers to be undue risk. As a matter of fundamental policy, at least 80% of the Portfolio's net assets will be so invested (except when the Portfolio is in a temporary defensive position), although it is anticipated that under normal circumstances substantially all of the Portfolio's assets will be invested in such Michigan securities. As a matter of fundamental policy, the Michigan Portfolio will invest at least 80% of its net assets in municipal securities the interest on which is exempt from federal income tax.

The following is based on information obtained from an Official Statement, dated November 6, 2013, relating to $30,000,000 State of Michigan General Obligation Environmental Program Refunding Bonds, Series 2013A.

In recent years, Michigan's economy has been diversifying, although manufacturing is still an important component of the State's economy. In 2012, total manufacturing employment averaged 536,900, compared to 509,700 in 2011. Michigan's average unemployment rate in 2012 was 9.1%, down from 10.4% in 2011.

Legislation requires that the administration and legislative fiscal agencies prepare two economic forecasts and revenue estimates each year. These are presented to a Consensus Revenue Estimating Conference in January and May of each year. In addition, any one of the three conference principals may call a special revenue conference at any time during the year. The May 2013 conference was held on May 15, 2013. The May 2013 forecast is summarized below.

The State's U.S. economic forecast projects the U.S. economy to grow 1.9% in 2013, followed by 2.7% growth in 2014 and 2.9% growth in 2015. Light vehicle sales will rise to 15.3 million units in 2013 and then rise to 15.6 million units in 2014 and 15.9 million units in 2015.

The U.S. Consumer Price Index (CPI) is projected to increase 1.7% in 2013, 1.9% in 2014 and 0.2% in 2015. Ninety-day T-bill rates are expected to average 0.1% in 2013 and 0.2% in 2014 and 2015.

Total Michigan wage and salary employment is projected to increase 1.3% in 2013 and 1.2% in 2014 and 2015. The State's unemployment rate is projected to fall to 8.6% in 2013, 8.1% in 2014 and 7.7% in 2015.

Michigan personal income is expected to rise 2.5% in 2013, 4.0% in 2014 and 4.2% in 2015. Prices, as measured by the Detroit CPI, are forecast to increase 1.7% in 2013, 1.6% in 2014 and 1.8% in 2015. Consequently, real (inflation adjusted) State personal income is projected to increase 0.7% in 2013 before rising 2.2% in 2014 and 2015.

As amended in 1978, Michigan's Constitution limits the amount of total State revenues that may be raised from taxes and other sources. State revenues (excluding federal aid and revenues used for payment of principal and interest on general obligation bonds) in any fiscal year are limited to a specified percentage of Michigan personal income in the prior calendar year or an average of the prior three calendar years, whichever is greater. The percentage is based upon the ratio of the 1978-79 fiscal year revenues to total 1977 Michigan personal income. If revenues in any fiscal year exceed the revenue limitation by one percent or more, the entire amount exceeding the limitation must be rebated in the following fiscal year's personal income tax or single business tax. Any excesses of less than one percent may be transferred into Michigan's Counter Cyclical Budget and Economic Stabilization Fund ("BSF"), Michigan's "Rainy Day Fund." Michigan may raise taxes in excess of the limit in emergency situations when deemed necessary by the Governor and two-thirds of the members of each house of the Legislature.

The State Constitution provides that the proportion of State spending paid to all units of local government to total State spending may not be reduced below the proportion in effect in the 1978-79 fiscal year. The State originally determined that proportion to be 41.6%. The proportion has since been recalculated and is now 48.97%. If such spending does not meet the required level in a given year, an additional appropriation for local government units is required by the "following fiscal year," which means the year following the determination of the shortfall, according to an opinion issued by the State's Attorney General. Spending for local units met this requirement for fiscal years 1993-94 through 2011-2012.

The State Constitution also requires the State to finance any new or expanded activity of local governments mandated by State law. Any expenditures required by this provision would be counted as State spending for local units of government for purposes of determining compliance with the provision cited above.

Michigan finances its operations through its General Fund and special revenue funds. The Michigan Constitution provides that proposed expenditures from, and revenues of, any fund must be in balance and that any prior year's surplus or deficit in any fund must be included in the succeeding year's budget for that fund.

Total revenue and other sources of funds for general governmental operations for Fiscal Year 2011-12 were $9,672.2 million and were projected to be $9,799.1 million for Fiscal Year 2012-13.

Expenditures and other uses of funds for governmental operations in Fiscal Year 2011-12 were $8,693.0 million, of which $1,229.8 million supported K-12 and higher education and $3,655.3 million supported health services. Expenditures and other uses of funds for governmental operations in Fiscal Year 2012-13 were projected to be $9,146.3 million, of which $1,561.5 million supported K-12 and higher education and $3,816.4 million supported health services.

The BSF was established in 1977 to serve as the State's "savings" account. Calculated on an accrual basis, the unreserved ending balance of the BSF was $2.2 million on September 30, 2008, $2.2 million on September 30, 2009, $2.2 million on September 30, 2010. During fiscal year 2011, the BSF was reclassified and accounted for as a subfund of the General Fund where its committed balance was $2.2 million on September 30, 2011, and $365.1 million on September 30, 3012. An additional $140.0 million was deposited into the BSF in Fiscal Year 2012-13 and the enacted budget for Fiscal Year 2013-14 appropriates $75.0 million into the BSF.

The Michigan Constitution limits Michigan general obligation debt to
(i) short-term debt for State operating purposes which must be repaid in the same fiscal year in which it is issued and which cannot exceed 15% of the undedicated revenues received by Michigan during the preceding fiscal year, (ii) short-and long-term debt unlimited in amount for the purpose of making loans to school districts and (iii) long-term debt for voter-approved purposes.

The amount of debt incurred by the State for the purpose of making loans to school districts is recommended by the State Treasurer, who certifies the amounts necessary for loans to school districts for the ensuing two calendar years. The bonds may be issued in whatever amount is required without voter approval. All other general obligation bonds issued by the State must be approved as to amount, purpose and method of repayment by a two-thirds vote of each house of the Legislature and by a majority vote of the public at a general election. There is no limitation as to number or size of such general obligation issues.

The Governor's Fiscal Year 2011-12 Executive Budget was submitted to the Legislature on February 17, 2011 and signed by the Governor on June 21, 2011. Revenues for Fiscal Year 2011-12 for the Executive Budget were estimated at the January 14, 2011 Consensus Revenue Estimating Conference. These estimates were revised at the regularly scheduled Consensus Revenue Estimating Conference held on May 16, 2011. The legislature enacted a balanced budget on May 26, 2011. Actual revenues for Fiscal Year 2011-12 will vary from the current estimates.

General Purpose revenue generated from enacted ongoing sources and estimated at the Consensus Revenue Estimating Conference is estimated to be $7,650.8 million. After factoring in revenue items not included in the revenue estimates, including the impact of the recently enacted personal income tax and business tax reforms, certain transfers, other revenue adjustments, and the beginning balance, total available General Fund - General Purpose resources are forecast to be $8,703.5 million.

Income tax collections will total an estimated $6,797.5 million including $559 million in new revenue from the recently enacted changes. The General Fund - General Purpose portion of net income tax collections will equal an estimated $4,697.7 million for Fiscal Year 2011-12.

The Michigan business tax, which has been eliminated for most businesses effective January 1, 2012, will generate an estimated $604.5 million in fiscal year 2011-12. The Michigan business tax will be replaced by a corporate income tax (effective January 1, 2012) and this new tax is expected to generate $460.2 million in Fiscal Year 2011-12. All of the Michigan business tax and corporate income tax revenue generated in Fiscal Year 2011-12 will go to the General Fund.

The Governor's Fiscal Year 2012-13 Executive Budget was submitted to the Legislature on February 9, 2012 and signed by the Governor in June 2012. Revenues for Fiscal Year 2012-13 for the Executive Budget were estimated at the January 13, 2012 Consensus Revenue Estimating Conference, and these estimates were revised at the May 16, 2012 conference. Actual revenues for Fiscal Year 2012-13 will vary from the current estimates.

General Purpose revenue generated from enacted ongoing sources and estimated at the Consensus Revenue Estimating Conference is estimated to be $8,969.9 million. After factoring in revenue items not included in the revenue estimates, including certain transfers, tax changes enacted subsequent to the revenue conference, other revenue adjustments, and the beginning balance, total available General Fund - General Purpose resources are forecast to be $9,137.0 million.

Income tax collections will total an estimated $7,907.5 million, including $1,249.5 million in new revenue from the recently enacted changes. The General Fund - General Purpose portion of net income tax collections will equal an estimated $5,576.4 million for Fiscal Year 2012-13.

The Michigan business tax, which was repealed for most businesses effective January 1, 2012, will pay out more in refunds than will be collected in revenue in Fiscal Year 2012-13 and, as a result, net collections are estimated at a negative $552.4 million. The new corporate income tax is expected to generate $838.9 million in Fiscal Year 2012-13. All of the loss in Michigan business tax revenue in Fiscal Year 2012-13 will impact the General Fund, and all of the revenue generated by the new corporate income tax will go to the General Fund.

The Governor's Fiscal Year 2013-14 Executive Budget was submitted to the Legislature on February 7, 2013 and signed by the Governor in June 2013. Revenues for Fiscal Year 2013-14 for the Executive Budget were initially estimated at the January 11, 2013 Consensus Revenue Estimating Conference and these estimates were revised at the May 15, 2013 conference. Actual revenues for Fiscal Year 2013-14 will vary from the current estimates.

General Purpose revenue generated from enacted ongoing sources and estimated at the Consensus Revenue Estimating Conference is estimated to be $9,446.1 million. After factoring in revenue items not included in the revenue estimates, including certain transfers, other revenue adjustments, and the beginning balance, total available General Fund - General Purpose resources are forecast to be $9,686.1 million.

Income tax collections will total an estimated $8,268.9 million. The General Fund - General Purpose portion of net income tax collections will equal an estimated $5,914.1 million for Fiscal Year 2013-14.

The Michigan business tax, which was repealed for most businesses effective January 1, 2012, will once again pay out more in refunds than will be collected in revenue in Fiscal Year 2013-14 and as a result, net collections are estimated at a negative $550.0 million. The new corporate income tax is expected to generate $957.0 million in Fiscal Year 2013-14.

The State is party to various legal proceedings seeking damages or injunctive or other relief. In addition to routine litigation, certain of these proceedings could, if unfavorably resolved from the point of view of the State, substantially affect State programs or finances. The State is also a party to various legal proceedings which, if resolved in the State's favor, would result in contingency gains to the State's General Fund balance, but without material effect upon the Fund's balance. The ultimate dispositions and consequences of all of these proceedings are not presently determinable.

The Minnesota Portfolio seeks the highest level of current income exempt from both federal income tax and State of Minnesota ("Minnesota" or the "State") personal income tax that is available without assuming what the Adviser considers to be undue risk. As a matter of fundamental policy, at least 80% of the Portfolio's net assets will be so invested (except when the Portfolio is in a temporary defensive position), although it is anticipated that under normal circumstances substantially all of the Portfolio's assets will be invested in such Minnesota securities. As a matter of fundamental policy, the Minnesota Portfolio will invest at least 80% of its net assets in municipal securities the interest on which is exempt from federal income tax.

The following is based on information obtained from an Official Statement, dated November 6, 2013, relating to $769,760,000 State of Minnesota General Obligation State Bonds, consisting of $283,820,000 General Obligation State Various Purpose Bonds, Series 2013D, $112,000,000 General Obligation State Trunk Highway Bonds, Series 2013E, and $373,940,000 General Obligation State Various Purpose Refunding Bonds, Series 2013F.

Minnesota's population grew by 12.4% from 1990 to 2000, about the same as the United States as a whole during that period. During the period 2000-2010 the population in Minnesota grew by 7.2%, compared to 9.5% nationally. Minnesota population is currently forecast to grow at an annual compounded rate of 0.79% through 2030, compared to 0.87% nationally.

In 2012, the structure of Minnesota's economy paralleled the structure of the United States economy as a whole. State employment in fourteen major sectors was distributed in approximately the same proportions as national employment. In all sectors except one (education and health services), the share of total State employment was within two percentage points of national employment share.

In the period 1990 to 2000, overall employment growth in Minnesota increased by 25.70%, exceeding the nation, whose growth increased by 20.45%. Manufacturing has been a strong sector, with Minnesota employment growth outperforming that of the United States in the 1990-2000 and 2000-2010 periods. In the durable goods industries, the State's employment in 2012 was highly concentrated in computers and electronics, fabricated metal products, and machinery categories. Of particular importance is the computers and electronics category in which 23.5% of the State's durable goods employment was concentrated in 2012, as compared to 14.7% for the United States as a whole.

The importance of the State's rich resource base for overall employment is apparent in the employment mix in non-durable goods industries. In 2012, 39.9% of Minnesota's non-durable goods employment was concentrated in food manufacturing, compared to 33.0% for the United States as a whole. Food manufacturing relies heavily on renewable resources in the State. Over half of the State's acreage is devoted to agricultural purposes. Printing and publishing is also relatively more important in the State than in the United States as a whole.

Mining is currently a less significant factor in the State economy than it once was. Mining employment, primarily in the iron ore or taconite industry, and logging dropped from 8.4 thousand employed in 1990 to 6.0 thousand employed in 2010. However, Minnesota retains vast quantities of taconite as well as copper, nickel, cobalt, and peat which may be utilized in the future.

Since 1990, State per capita personal income has usually been within nine percentage points of national per capita personal income and has generally remained above the national average. In 2012, Minnesota per capita personal income was estimated to be 108.3% of its U.S. counterpart. In level of personal income, Minnesota ranked seventh in 1990 and fourth in 2010 among 12 states in the North Central Region. During the period 1990 to 2000, Minnesota ranked first in growth of personal income and sixth during the period 2000 to 2010 among the 12 states in the North Central Region. Over the period 1990 to 2000, Minnesota non-agricultural employment grew 25.7% while the entire North Central Region grew 18.7%. During the 2000-2010 period, Minnesota non-agricultural employment declined by 1.6%, while regional non-agricultural employment declined by 6.9%.

In 2008, Minnesota's unemployment rate averaged 5.4%, compared to the national average of 5.8%. In 2009, Minnesota's unemployment rate averaged 8.0%, compared to the national average of 9.3%. In 2010, Minnesota's unemployment rate averaged 7.4%, compared to the national average of 9.6%. In 2011, Minnesota's unemployment rate averaged 6.5%, compared with the national average of 9.0%. In 2012, Minnesota's unemployment rate averaged 5.7%, compared with the national average of 8.1%.

Minnesota operates on a biennial budget basis. Prior to each fiscal year of a biennium, the Department of Finance allots a portion of the applicable biennial appropriation to each State agency or other entity for which an appropriation has been made. Supplemental appropriation and changes in revenue measures are sometimes adopted by the Legislature during the biennium. An agency or entity may not expend moneys in excess of its allotment. The State's principal sources of non-dedicated revenues are taxes of various types. The Accounting General Fund receives no unrestricted federal grants. The only federal funds deposited into the Accounting General Fund are to reimburse the State for expenditures on behalf of federal programs.

Prior to 1995, Minnesota law established a Budget Reserve and Cash Flow Account in the General Fund which served two functions. In 1995, the Minnesota legislature separated the Budget Reserve and Cash Flow Account into two separate accounts, the Cash Flow Account and the Budget Reserve Account, each having a different function.

The Cash Flow Account was established in the General Fund for the purpose of providing sufficient cash balances to cover monthly revenue and expenditure imbalances. The use of funds from the Cash Flow Account is governed by statute. The Legislature established the Cash Flow Account at $350 million for the Current Biennium (July 1, 2013 - June 30, 2015).

The Budget Reserve Account was established in the General Fund for the purpose of reserving funds to cushion the State from an economic downturn. The use of funds from the Budget Reserve Account is governed by statute. The Budget Reserve Account balance was set for the Current Biennium at $656 million.

The February 2013 forecast updated General Fund revenues and expenditures projected for the Previous Biennium. Forecast revenues were expected to be $35.161 billion, up $217 million (0.6%) from November's estimates after adjusting for 2013 legislative action to conform to federal law changes. In the absence of the conformity changes, an additional $19 million in revenue would have been reported for fiscal 2013. Forecast spending is expected to be $35.159 billion, $63 million below previous projections. These changes, coupled with a $15 million reduction in the projected Stadium Reserve, yielded a forecast balance of $295 million.

After the November 2012 forecast, total General Fund reserves were $944 million: $350 million in the Cash Flow Account and $644 million in the Budget Reserve. Current law requires any forecast balance be first allocating in restoring reserves to a statutory maximum of $653 million - $9 million was allocated for this purpose. Additionally, a residual $4 million forecast balance was added to the Budge Reserve after a required school shift repayment, increasing the Budget Reserve to $656 million. The Biennium will end with $1.006 billion in General Fund reserves and an estimated $1 million in the Stadium Reserve Account.

The November 2012 forecast provided the first official forecast for the Current Biennium, as well as revenue and expenditure planning estimates for the Next Biennium. In November 2012, a shortfall of just under $1.1 billion was projected for the Current Biennium. Revisions in the February 2013 forecast reduced the projected budget shortfall to $627 million. General Fund revenues for the Current Biennium were forecasted to be $36.116 billion, $955 million (2.7%) higher than estimates for the Previous Biennium. Projected current law spending was expected to be $36.744 billion, $1.302 billion (3.7%) higher than the Previous Biennium.

The reserve amounts for the Current Biennium are unchanged from levels in the Previous Biennium. Total General Fund reserves were $1.006 billion: $350 million in the Cash Flow Account and $656 million in the Budget Reserve. The projected reserve balance in the Stadium Reserve Account was zero. Similar to the Previous Biennium, the forecast reduction in lawfully gambling revenues for the Next Biennium reflects a slower than expected implementation of electronic gaming options and reduced estimates for daily revenue per gaming device. This has reduced amounts previously projected for the reserve.

There are now pending against the State certain legal actions which could, if determined adversely to the State, have a material adverse effect in excess of $15 million on the State's expenditures and revenues during the Current Biennium.

The New Jersey Portfolio seeks the highest level of current income exempt from both federal income tax and State of New Jersey ("New Jersey" or the "State") personal income tax that is available without assuming what the Adviser considers to be undue risk. As a matter of fundamental policy, at least 80% of the Portfolio's net assets will be so invested (except when the Portfolio is in a temporary defensive position). The Fund will invest at least 80% of its net assets in securities the interest on which is exempt from New Jersey personal income tax (i.e., New Jersey municipal securities). In addition, during periods when the Adviser believes that New Jersey municipal securities that meet the Portfolio's standards are not available, the Portfolio may invest a portion of its assets in securities whose interest payments are only federally tax-exempt. However, it is anticipated that under normal circumstances substantially all of the Portfolio's total assets will be invested in New Jersey municipal securities. As a matter of fundamental policy, the New Jersey Portfolio will invest at least 80% of its net assets in municipal securities the interest on which is exempt from federal income tax.

The following is based on information obtained from an Official Statement, dated November 14, 2013, relating to $47,620,000 State Building Revenue Bond Anticipation Notes, 2013 Series.

New Jersey is the eleventh largest state in population and the fifth smallest in land area. With an average of 1,196 persons per square mile, per the 2010 Census, it is the most densely populated of all the states. Between 1980 and 1990 the annual population growth rate was 0.49% and between 1990 and 2000 the growth rate accelerated to 0.85%. While this rate of growth compared favorably with other Middle Atlantic States, it was less than the national rate of increase. The growth rate decreased to 0.44% between 2000 and 2010. Furthermore, New Jersey is located at the center of the megalopolis that extends from Boston to Washington, and that includes over one-fifth of the country's population. The extensive facilities of the Port Authority of New York and New Jersey, the Delaware River Port Authority and the South Jersey Port Corporation across the Delaware River from Philadelphia augment the air, land and water transportation complex which has influenced much of the State's economy. This central location in the northeastern corridor, the transportation and port facilities and proximity to New York City make the State an attractive location for corporate headquarters and international business offices. A number of Fortune Magazine's top 500 companies maintain headquarters or major facilities in New Jersey, and many foreign-owned firms have located facilities in the State.

The State's economic base is diversified, consisting of a variety of manufacturing, construction and service industries, supplemented by rural areas with selective commercial agriculture. Since 1978, casino gambling in Atlantic City has been an important State tourist attraction.

According to the United States Commerce Department, Bureau of Economic Analysis, New Jersey's real gross domestic product ("GDP") rose 1.3% from 2011 to 2012, adjusted for inflation, compared to the national increase in GDP of 2.5%. The State's increase in GDP ranked thirty-sixth among the 50 states.

The housing sector is recovering. Nearly 18,000 building permits were granted in 2012, an increase of approximately 39% from 2011. The housing activity is anticipated to continue, as reduced prices, low mortgage rates, and higher rental costs have increased the attractiveness of homeownership. However, the significant number of housing properties still in the judicial foreclosure process may temper the recovery in the housing sector.

New Jersey payroll employment in June 2013 was 3.97 million, which was 1.9% higher than in June 2012. The unemployment rate as of June 2013 was 8.7%, compared to 9.6% in June 2012. According to the Bureau of Economic Analysis, the growth rate for New Jersey's personal income increased at a rate of 1.2% over the four-quarter period ending in the first quarter of 2013 and was lower than the 2.8% increase for the nation as a whole for the same period.

The State Constitution provides, in part, that no money shall be drawn from the State Treasury but for appropriations made by law and that no law appropriating money for any State purpose shall be enacted if the appropriations contained therein, together with all prior appropriations made for the same fiscal period, shall exceed the total amount of the revenue on hand and anticipated to be available to meet such appropriations during such fiscal period, as certified by the Governor.

The State Constitution further provides, in part, that the State Legislature shall not, in any manner, create in any fiscal year a debt or liability of the State, which, together with any previous debts or liabilities, shall exceed at any time one percent of the total appropriations for such year, unless the same shall be authorized by a law for some single object or work distinctly specified therein. No such law shall take effect until it shall have been submitted to the people at a general election and approved by a majority of the legally qualified voters voting thereon; provided however, no such voter approval is required for any such law authorizing the creation of a debt for a refinancing of all or any portion of the outstanding debts or liabilities of the State, so long as such refinancing shall produce a debt service savings.

The Debt Limitation Clause was amended by the voters on November 4, 2008. The amendment provides that the State Legislature is prohibited from enacting any law that creates or authorizes the creation of a debt or liability of an autonomous State corporate entity, which debt or liability has a pledge of an annual appropriation as the means to pay the principal of and interest on such debt or liability, unless a law authorizing the creation of that debt or liability for some single object or work distinctly specified therein shall have been submitted to the people and approved by a majority of the legally qualified voters of the State voting thereon at a general election.

The State's governmental funds reported June 30, 2012 combined ending fund balances of $6.9 billion, a decrease of $1.4 billion from the prior fiscal year.

During the fiscal year ended June 30, 2012, the State's long-term debt obligations for governmental activities totaled $71.1 billion, a 9.3% increase over the prior fiscal year. During Fiscal Year 2012, the State issued $3.4 billion in bonds. New money issuances represented $1.3 billion, primarily for transportation system improvements, while $2.1 billion represented five refunding transactions that provided the State with $156.9 million in net present value savings. During Fiscal Year 2012, the State paid $3.7 billion in debt service on its long-term debt obligations. Non-bonded portions of the State's long-term debt totaled $32.3 billion. This amount represents a $5.3 billion increase from the prior fiscal year and is mainly attributable to increases in net pension obligations.

The State has entered into a number of leases and contracts, some of which are described below, with several governmental authorities to secure the financing of various State projects. Under the agreements, the State has agreed to make payments equal to the debt services on, and other costs related to, the obligations sold to finance the projects.

Legislation enacted in 1992 by the State authorizes the New Jersey Sports and Exposition Authority ("NJSEA") to issue bonds for various purposes, related to sports and entertainment facilities, payable from State appropriations. Pursuant to this legislation, the NJSEA and the State Treasurer have entered into an agreement (the "NJSEA State Contract") pursuant to which the NJSEA will undertake certain projects, including the refunding of certain outstanding bonds of the NJSEA, and the State Treasurer will credit to the NJSEA amounts from the General Fund sufficient to pay debt service and other costs related to the bonds. The payment of all amounts under the NJSEA State Contract is subject to and dependent upon appropriations being made by the State Legislature. As of June 30, 2013 there were approximately $486,830,000 aggregate principal amount of NJSEA bonds outstanding, the debt service on which is payable from amounts credited to the NJSEA Fund pursuant to the State Contract.

In July 1984, the State created the New Jersey Transportation Trust Fund Authority (the "TTFA"), an instrumentality of the State organized and existing under the New Jersey Transportation Trust Fund Authority Act of 1984, as amended (the "TTFA Act") for the purpose of funding a portion of the State's share of the cost of improvements to the State's transportation system. Pursuant to the TTFA Act, as amended in June 2012, the principal amount of the TTFA's bonds, notes or other obligations which may be issued in any fiscal year generally may not exceed $1,247,000,000 for the fiscal year beginning July 1, 2012, $849,200,000 for the fiscal year beginning July 1, 2013, $735,300,000 for the fiscal year beginning July 1, 2014, and $626,800,000 for the fiscal year beginning July 1, 2015, except that if the permitted amount of debt, or any portion thereof, is not incurred in a fiscal year, it may be issued in a subsequent fiscal year. These bonds are special obligations of the TTFA payable from the payments made by the State pursuant to a contract between the TTFA, the State Treasurer and the Commissioner of Transportation. As of June 30, 2013, there were approximately $13,429,810,716 aggregate principal amount of TTFA issues outstanding. To the extent these notes are not paid by the State Treasurer, these notes are payable by the TTFA pursuant to a Standby Deficiency Agreement entered into by the TTFA and the Trustee for the notes. The Standby Deficiency Agreement was issued on a parity with all bonds issued by the TTFA.

Pursuant to legislation, the New Jersey Economic Development Authority (the "NJEDA") has been authorized to issue bonds for various purposes, including Economic Recovery Bonds, State Pension Funding Bonds and Market Transition Facility Bonds. The Economic Recovery Bonds have been issued pursuant to legislation enacted in 1992 to finance various economic development purposes. Pursuant to that legislation, NJEDA and the State Treasurer have entered into an agreement (the "ERF Contract") through which NJEDA has agreed to undertake the financing of certain projects and the State Treasurer has agreed to credit to the Economic Recovery Fund from the General Fund amounts equivalent to payments due to the State under an agreement with the port Authority of New York and New Jersey. The payment of all amounts under the ERF Contract is subject to and dependent upon appropriations being made by the State Legislature. As of June 30, 2013, there were approximately $139,937,727 aggregate principal amount of Economic Recovery Fund Bonds outstanding.

Legislation enacted in June 1997 authorizes the NJEDA to issue bonds to pay a portion of the State's unfunded accrued pension liability for the State's retirement systems (the "Unfunded Accrued Pension Liability"), which, together with amounts derived from the revaluation of pension assets pursuant to companion legislation enacted at the same time, will be sufficient to fully fund the Unfunded Accrued Pension Liability. The Unfunded Accrued Pension Liability represents pension benefits earned in prior years which, pursuant to standard actuarial practices, are not yet fully funded. As of June 30, 2013, there were approximately $2,378,939,686 aggregate principal amount of State Pension Funding Bonds outstanding. The EDA and the State Treasurer have entered into an agreement that provides for the payment to the EDA of monies sufficient to pay debt service on the bonds. Such payments are subject to and dependent upon appropriations being made by the State Legislature.

The authorizing legislation for certain State entities provides for specific budgetary procedures with respect to certain obligations issued by such entities. Pursuant to such legislation, a designated official is required to certify any deficiency in a debt service reserve fund maintained to meet payments of principal of and interest on the obligations, and a State appropriation in the amount of the deficiency is to be made. However, the State legislature is not legally bound to make such an appropriation. Bonds issued pursuant to authorizing legislation of this type are sometimes referred to as "moral obligation" bonds. There is no statutory limitation on the amount of "moral obligation" bonds which may be issued by eligible State entities. "Moral obligation" bonded indebtedness issued by State entities as of June 30, 2013 stood at an aggregate principal amount of $2,778,765,000. Of this total, $21,135,000 was issued by the New Jersey Housing and Mortgage Finance Agency. This Agency has never had a deficiency in a debt service reserve fund that required the State to appropriate funds to meet its "moral obligation," and it is anticipated to earn sufficient revenues to cover debt service on its bonds. The Higher Education Assistance Authority and the South Jersey Port Corporation issued moral obligation indebtedness in aggregate principal amounts of $2,486,155,000 and $271,475,000, respectively. It is anticipated that the Higher Education Assistance Authority's revenues will be sufficient to cover debt service on its bonds. However, the State has periodically provided the South Jersey Port Corporation with funds to cover all debt service and property tax requirements, when earned revenues are anticipated to be insufficient to cover these obligations.

At any given time, there are various numbers of claims and cases pending against the State, State agencies and employees, seeking recovery of monetary damages that are primarily paid out of the fund created pursuant to the New Jersey Tort Claims Act. The State does not formally estimate its reserve representing potential exposure for these claims and cases. The State is unable to estimate its exposure for these claims and cases.

The Ohio Portfolio seeks the highest level of income exempt from both federal income tax and State of Ohio ("Ohio" or the "State") personal income tax that is available without assuming what the Adviser considers to be undue risk. As a matter of fundamental policy, at least 80% of the Portfolio's net assets will be so invested (except when the Portfolio is in a temporary defensive position), although it is anticipated that under normal circumstances substantially all of the Portfolio's assets will be invested in such Ohio securities. As a matter of fundamental policy, the Ohio Portfolio will invest at least 80% of its net assets in municipal securities the interest on which is exempt from federal income tax. Shares of the Ohio Portfolio are available only to Ohio residents.

The following is based on information obtained from an Official Statement, dated November 13, 2013, relating to $85,000,000 State of Ohio General Obligation Bonds.

Ohio's 2010 decennial census population of 11,536,504 indicated a 1.6% population growth since 2000 and ranked Ohio seventh among the states in population.

Although manufacturing (including auto-related manufacturing) in Ohio remains an important part of the State's economy, the greatest growth in Ohio's economy in recent years has been in the non-manufacturing sectors. In 2011, Ohio ranked eighth in the nation with approximately $490.3 billion in gross state product and was fifth in manufacturing with an approximate value of $81.4 billion and sixth in durable goods with an approximate value of $43.5 billion. As a percentage of Ohio's 2011 gross state product, manufacturing was responsible for 16.6%, with 21.1% attributable to the goods-producing sectors and 33.7% to business services sectors, including finance, insurance and real estate. Ohio is the ninth largest exporting state, with 2011 merchandise exports totaling $46.4 billion. The State's three leading export industries are machinery, motor vehicles, and aircraft/spacecraft, which together accounted for 51.0% of the value of Ohio's merchandise exports in 2011.

Payroll employment in Ohio, in the diversifying employment base, decreased in 2001 through 2003, increased in 2004 through 2006, decreased in 2007 through 2010 and increased in 2011 and 2012. Growth in recent years has been concentrated among non-manufacturing industries, with manufacturing employment tapering off since its 1969 peak. The non-manufacturing sector employs approximately 87% of all non-agricultural payroll workers in Ohio.

With 13.6 million acres (of a total land area of 26.4 million acres) in farmland and an estimated 73,700 individual farms, agriculture and related agricultural sectors combined is an important segment of Ohio's economy. Ohio's 2011 crop production value of $6.5 billion represented 3.1% of total U.S. crop production value. In 2011, Ohio's agricultural sector total output (consisting of crops, livestock, poultry and dairy, and services and forestry) reached $11.0 billion with agricultural exports (primarily soybeans, feed grains and wheat, and their related products) estimated at a value of $5.0 billion.

Consistent with the constitutional provision that no appropriation may be made for a period longer than two years, the State operates on the basis of a fiscal biennium for its appropriations and expenditures. The Constitution requires the General Assembly to provide for raising revenue, sufficient to defray the expenses of the State, for each year, and also a sufficient sum to pay the principal and interest as they become due on the State debt. The State is effectively precluded by law from ending a fiscal year or a biennium in a deficit position. State borrowing to meet casual deficits or failures in revenues or to meet expenses not otherwise provided for is limited by the Constitution to $750,000.

The Revised Code provides that if the Governor ascertains that the available revenue receipts and balances for the General Revenue Fund ("GRF") or other funds for the then current fiscal year will in all probability be less than the appropriations for that year, he shall issue such orders to State agencies as will prevent their expenditures and incurred obligations from exceeding those revenue receipts and balances. The Governor implemented this directive in the 2008-2009 Biennium as had been done several times in prior fiscal years.

Most State operations are financed through the GRF. Personal income and sales-use taxes are the major GRF sources. The GRF fund balance for Fiscal Year ended June 30, 2013 was $1.11 billion. The State also has maintained a "rainy day" fund, the Budget Stabilization Fund ("BSF"), which under current law and until used (as occurred in the 2008-09 Biennium) may carry a balance of up to 5% of the GRF revenue for the preceding fiscal year. The BSF had a balance of $1.48 billion at the end of Fiscal Year 2013.

At present the State itself does not levy ad valorem taxes on real or tangible personal property. Those taxes are levied by political subdivisions and local taxing districts. The Constitution has, since 1934, limited the amount of the aggregate levy of ad valorem property taxes, without a vote of the electors or municipal charter provision, to 1% of true value in money, and statutes limit the amount of the aggregate levy without a vote or charter provision to 10 mills per $1 of assessed valuation - commonly referred to in the context of Ohio local government finance as the "ten-mill limitation".

The Constitution directs or restricts the use of certain revenues. Highway fees and excises, including gasoline taxes, are limited in use to highway-related purposes. Not less than 50% of the receipts from State income taxes and estate taxes must be returned to the originating political subdivisions and school districts. State lottery net profits are allocated to elementary, secondary, vocational and special education program purposes including, as provided for in the recently passed constitutional amendment, application to debt service on obligations issued to finance capital facilities for a system of common schools.

Under the State's current biennial appropriations Act, State personal income tax rates, applying generally to federal adjusted gross income, are being reduced 10% over a three-year period (8.5% in calendar year 2013, an additional 0.5% in calendar year 2014, and an additional 1.0% in calendar year 2015). The indexing of the State income tax brackets and the personal exemption are suspended for tax years 2013 through 2015 until these rate reductions are fully implemented. That legislation also established a deduction for pass-through entity business income of 50% of annual adjusted gross income up to $250,000.

Municipalities and school districts may also levy certain income taxes. Any municipal rate (applying generally to wages and salaries, and net business income) over 1%, and any school district income tax (applying generally to the State income tax base for individuals and estates), requires voter approval. Most cities and villages levy a municipal income tax. The highest municipal rate in 2011 was 3%. A school district income tax is currently approved in 184 districts. Effective July 1, 2005, there may also be proposed for voter approval municipal income taxes to be shared with school districts, but these taxes may not be levied on non-residents.

Since 1970 the ratio of Ohio to U.S. aggregate personal income has declined, with Ohio's ranking moving from fifth among the states in 1970 to seventh in 1990, moving to between seventh and eighth in 1994 through 2003, and eighth since 2004. This movement in significant measure reflects "catching up" by several other states and a trend in Ohio toward more service sector employment.

Consistent with State law, the Governor's Executive Budget for the 2012-13 biennium was released in March 2011 and introduced in the General Assembly. After extended hearings and review, the 2012-13 biennial appropriations Act was passed by the General Assembly and signed (with selective vetoes) by the Governor on June 30, 2011. To address the use of non-recurring funding sources in the prior 2010-11 biennium, the Act included targeted spending cuts across most State agencies and major new Medicaid reform and cost containment measures. Reflecting certain tax law changes and a conservative underlying economic forecast, that Act provided for total GRF biennial appropriations of approximately $55.78 billion (an 11% increase from the 2010-11 GRF biennial expenditures) and total GRF biennial revenue of approximately $56.07 billion (a 6% increase from 2010-11 GRF biennial revenues).

The State ended Fiscal year 2013 with GRF cash and fund balances of $2.64 billion and $2.28 billion, respectively. Of that ending GRF fund balance the State deposited $995.9 million into the BSF, increasing its balance to $1.48 billion, which is the statutorily designated 5% of Fiscal Year 2013 GRF revenues.

Consistent with State law, the Governor's Executive Budget for the 2014-15 biennium was released in February 2013 and introduced in the General Assembly. After extended hearings and review, the 2014-15 biennial appropriations Act was passed by the General Assembly and signed (with selective vetoes) by the Governor on June 30, 2013. Reflecting a stated focus on job creation and continued spending restraint, and based on a conservative economic forecast, that Act provides for total GRF biennial appropriations of approximately $62.0 billion (a 15.1% increase from the 2012-13 GRF biennial expenditures) and total GRF biennial revenue (not including $963.2 million carry-forward from the 2012-13 biennium) of approximately $61.1 billion (a 7.7% increase from 2012-13 GRF biennial revenues).

The Executive Budget, the GRF appropriations Act and the separate appropriations acts for the biennium included all necessary debt service and lease rental payments related to State obligations.

OBM is currently projecting a positive GRF fund balance at the end of Fiscal Year 2014. As noted above, the State is effectively precluded by its Constitution from ending a Fiscal Year or a biennium in a "deficit" position.

Ohio has a mixture of urban and rural population, with approximately three-quarters urban. There are 932 incorporated cities and villages (municipalities with populations under 5,000) in the State. Five cities have populations of over 100,000 and 16 over 50,000.

A 1979 act established procedures for identifying and assisting those few cities and villages experiencing defined "fiscal emergencies". A commission composed of State and local officials, and private sector members experienced in business and finance appointed by the Governor, is to monitor the fiscal affairs of a municipality facing substantial financial problems. That act requires the municipality to develop, subject to approval and monitoring by its commission, a financial plan to eliminate deficits and cure any defaults and otherwise remedy fiscal emergency conditions, and to take other actions required under its financial plan. It also provides enhanced protection for the municipality's bonds and notes and, subject to the act's stated standards and controls, permits the State to purchase limited amounts of the municipality's short-term obligations (used only once, in 1980).

The fiscal emergency legislation was amended in 1996 to extend its application to counties and townships. In 2011, the fiscal emergency legislation was further amended to establish a "fiscal caution" category. There are currently 21 local governments in fiscal emergency status, two in fiscal watch status, and eight in fiscal caution status.

The State of Ohio is a party to various legal proceedings seeking damages or injunctive relief and generally incidental to its operations. The ultimate disposition of these proceedings is not presently determinable, but in the opinion of the Ohio Attorney General will not have a material adverse effect on payment of State obligations.

The Pennsylvania Portfolio seeks the highest level of current income exempt from both federal income tax and Commonwealth of Pennsylvania ("Pennsylvania" or the "Commonwealth") personal income tax that is available without assuming what the Adviser considers to be undue risk. As a matter of fundamental policy, at least 80% of the Portfolio's net assets will be so invested (except when the Portfolio is in a temporary defensive position), although it is anticipated that under normal circumstances substantially all of the Portfolio's assets will be invested in such Pennsylvania securities. As a matter of fundamental policy, the Pennsylvania Portfolio will invest at least 80% of its net assets in municipal securities the interest on which is exempt from federal income tax. Shares of the Pennsylvania Portfolio are available only to Pennsylvania residents.

The following was obtained from an Official Statement, dated October 22, 2013, relating to the issuance of $750,000,000 Commonwealth of Pennsylvania General Obligation Bonds, Second Series of 2013.

The Commonwealth of Pennsylvania is one of the most populous states, ranking sixth behind California, Texas, New York, Florida and Illinois. Pennsylvania is an established state with a diversified economy. Pennsylvania had been historically identified as a heavy industrial state. That reputation has changed over the last thirty years as the coal, steel and railroad industries declined and the Commonwealth's business environment readjusted to reflect a more diversified economic base. This economic readjustment was a direct result of a long-term shift in jobs, investment, and workers away from the northeast part of the nation. Currently, the major sources of growth in Pennsylvania are in the service sector, including trade, medical and health services, education and financial institutions.

Pennsylvania's agricultural industries remain an important component of the Commonwealth's economic structure, accounting for more than $5.4 billion in crop and livestock products annually. Agribusiness and food related industries reached record export sales, exceeding $1.3 billion in economic activity in 2012. Over 63,000 farms form the backbone of the State's agricultural economy. Farmland in Pennsylvania includes over four million acres of harvested cropland and three million acres of pasture and farm woodlands - nearly one-third of the Commonwealth's total land area. Agricultural diversity in the Commonwealth is demonstrated by the fact that Pennsylvania ranks among the top ten states in the production of a number of agricultural products.

Pennsylvania's extensive public and private forests provide a vast source of material for the lumber, furniture and paper products industries. The forestry and related industries account for 1.5% of employment with economic activity of nearly $5 billion in domestic and international trade. Additionally, the Commonwealth derives a good water supply from underground sources, abundant rainfall and a large number of rivers, streams and lakes. Other natural resources include major deposits of coal, petroleum and natural gas. Annually, about 66 million tons of anthracite and bituminous coal, 1,310 billion cubic feet of natural gas and about 2.2 million barrels of oil are extracted from Pennsylvania. Pennsylvania is one of the top 10 producing states in the country for aggregate/crushed stone. The value of non-coal mineral production in Pennsylvania is approximately $1 billion annually.

Pennsylvania is a Mid-Atlantic state within easy reach of the populous eastern seaboard and, as such, is a gateway to the Midwest. The Commonwealth's strategic geographic position is enhanced by a comprehensive transportation grid. The Commonwealth's water systems afford the unique feature of triple port coverage, a deep water port at Philadelphia, a Great Lakes port at Erie and an inland water port at Pittsburgh. Pennsylvania is easily accessible for inter and intra state trade and commerce.

The Commonwealth is highly urbanized. Of the Commonwealth's 2012 mid-year population estimate, 79% resided in the 15 Metropolitan Statistical Areas ("MSAs") of the Commonwealth. The largest MSAs in the Commonwealth are those which include the cities of Philadelphia and Pittsburgh, which together contain almost 44% of the State's total population. The population of Pennsylvania, 12.7 million people in 2012, according to U.S. Bureau of the Census, represents a population growing more slowly than the nation with a higher portion than the nation or the region comprised of persons between 45 or over.

Non-agricultural employment in Pennsylvania over the ten years ending in 2012 increased at an annual rate of 0.02%. This rate compares to a 0.03% rate for the Mid-Atlantic Region and 0.03% for the nation during the same period.

Non-manufacturing employment in Pennsylvania has increased in recent years to 90.2% of total employment in 2012. Consequently, manufacturing employment constitutes a diminished share of total employment within the Commonwealth. Manufacturing, contributing 9.8% of 2012 non-agricultural employment, has fallen behind both the services sector, the trade sector and the government sector as the fourth largest single source of employment within the Commonwealth. In 2012, the services sector accounted for 48.8% of all non-agricultural employment, the trade sector accounted for 14.9%, and the government sector accounted for 12.5%.

Within the manufacturing sector of Pennsylvania's economy, which now accounts for about one-tenth of total non-agricultural employment in Pennsylvania, the fabricated metals industries employed the largest number of workers. Employment in the fabricated materials industries was 14.4% of Pennsylvania manufacturing employment but only 1.4% of total Pennsylvania non-agricultural employment in 2012.

Pennsylvania's annual average unemployment rate has been equivalent to the national average throughout the 2000s. Slower economic growth caused the unemployment rate in the Commonwealth to rise to 8.4% in 2012, compared to the 4.4% annual unemployment rate in 2007. As of August 2013, the most recent month for which data are available, the seasonally adjusted unemployment rate for the Commonwealth was 7.7%.

Personal income in the Commonwealth for 2012 was $556.7 billion, an increase of 3.3% over the previous year. During the same period, national personal income increased at a rate of 4.2%. Based on the 2012 personal income estimates, per capita income for 2012 was at $43,616 in the Commonwealth compared to per capita income in the United States of $42,693.

The Commonwealth's 2012 average hourly wage rate of $18.26 for manufacturing and production workers compared to the national average of $19.77 for 2011.

The Commonwealth utilizes the fund method of accounting. The General Fund, the Commonwealth's largest fund, receives all tax revenues, non-tax revenues and federal grants and entitlements that are not specified by law to be deposited elsewhere. The majority of the Commonwealth's operating and administrative expenses are payable from the General Fund. Debt service on all obligations, except that issued for highway purposes or for the benefit of other special revenue funds, is payable from the General Fund.

Financial information for the General Fund is maintained on a budgetary basis of accounting. The Commonwealth also prepares annual financial statements in accordance with generally accepted accounting principles ("GAAP").

Financial Results for Recent Fiscal Years (Budgetary Basis)

Fiscal 2013. The subdued level of economic recovery from the most recent national recession continued to impact the Commonwealth's revenue receipts during Fiscal Year 2013. General Fund revenues of the Commonwealth were above the certified estimate by $56.9 million or 0.2% during Fiscal Year 2013. Final Commonwealth General Fund revenues for the fiscal year totaled $28,646.9 million. Total Fiscal Year 2013 revenues, net of reserves for tax refunds and including public health and human services assessments, totaled $27,258.2 million. Total expenditures, net of appropriation lapses and including public health and human services assessments and expenditures from additional sources, were $27,717.3 million, resulting in a preliminary operating balance for Fiscal Year 2014 of $320.347 million. However, after accounting for a positive Fiscal Year 2013 beginning balance of $672.581 million, the Commonwealth ended Fiscal Year 2013 with an unappropriated surplus balance of $540.918 million, which was the third straight year of securing a significant year-end unappropriated balance.

General Fund revenues increased $968.9 million, or 3.5%, during Fiscal Year 2013 when measured on a year-over-year basis as compared to Fiscal Year 2012. Tax revenue collections grew $918.6 million, or 3.4%, on a year-over-year basis from Fiscal Year 2012 to Fiscal Year 2013 while non-tax revenue collections increased $50.3 million, or 9.5%, primarily from an increase in escheats from Fiscal Year 2012 to Fiscal Year 2013. Corporate tax receipts were $226.0 million higher than Fiscal Year 2012 levels.

Fiscal 2012. The subdued level of the economic recovery from the most recent national recession continued to affect the Commonwealth's revenue receipts during Fiscal Year 2012. General Fund revenues of the Commonwealth were below the certified estimate by $162.8 million or 0.6% during Fiscal Year 2012. Final Commonwealth General Fund revenues for the fiscal year totaled $27,680.0 million. Total Fiscal Year 2012 revenues, net of reserves for tax refunds and including public health and human services assessments, totaled $27,101.3 million. Total expenditures, net of appropriation lapses and including public health and human services assessments and expenditures from additional sources, were $27,534.4 million, resulting in a preliminary operating balance for Fiscal Year 2012 of -$433.3 million. However, after accounting for a positive fiscal year 2012 beginning balance of $1,072.8 million, the Commonwealth ended Fiscal Year 2012 with an unappropriated surplus balance of $659.0 million, which was the second largest (following the $1,072.8 million ending balance from Fiscal Year 2011) such unappropriated ending balance since prior to the last recession.

General Fund revenues increased $180.8 million or 0.7% during Fiscal Year 2012 when measured on a year-over-year basis as compared to Fiscal Year 2011. Tax revenue collections grew $687.8 million or 2.6% on a year-over-year basis from Fiscal Year 2011 to Fiscal Year 2012 while non-tax revenue collections declined $507.2 million or 48.9%, primarily from a reduction in balance transfers from Fiscal Year 2011 to Fiscal Year 2012. Corporate tax receipts were $91.2 million lower than Fiscal Year 2011 levels. Year-over-year growth in corporate taxes was -3.1% during Fiscal Year 2012 as corporate net income tax collections decreased 5.1% and capital stock and franchise tax receipts increase 2.2% while collections from the gross receipts tax increased 8.6% on a year-over-year basis. Personal income taxes were $364.8 million above Fiscal Year 2011 actual collection and the year-over-year growth in personal income tax receipts was 3.5%. Personal income tax collections attributable to withholding increased by 3.5% or $282.9 million during Fiscal Year 2012 and tax collections from the non-withholding portion of the personal income tax increased 3.4% or $81.9 million on a year-over-year basis.

Fiscal 2011. While unemployment rates remained at elevated levels within Pennsylvania, the Commonwealth's revenues and receipts benefitted from the moderate uptick in the national economy experienced during a portion of fiscal year 2011. General Fund revenues of the Commonwealth were above the certified estimate by $785.5 million or 2.9% during fiscal year 2011, the first time since fiscal year 2008. Final Commonwealth General Fund revenues for the fiscal year totaled $27,497.2 million. Total fiscal year 2011 revenues, net of reserves for tax refunds and including public health and human services assessments, totaled $26,983.8 million. Total expenditures, net of appropriation lapses and including public health and human services assessments and expenditures from additional sources (federal ARRA funding), were $25,616.8 million, resulting in a preliminary operating balance for fiscal year 2011 of $1,367.0 million. However, after accounting for a negative fiscal year 2010 beginning balance of $294.2 million, the Commonwealth ended fiscal year 2011 with an unappropriated surplus balance of $1,072.8 million, which was the largest such unappropriated ending balance since at least 1949, the earliest period for which such records are available. Additionally, the $1,072.8 million unappropriated ending balance during fiscal year 2011 was the largest such balance as a percent of the Commonwealth budget since at least fiscal year 1975.

Revenues available to the Commonwealth, net of reserves for tax refunds and transfers from the Budget Stabilization Reserve Fund but including public health and human service assessments, decreased $184.8 million or 0.7% during fiscal year 2011. Public health and human service assessments decreased $8.8 million during fiscal year 2011 to $636.6 million.

General Fund revenues decreased $150.9 million or 0.5% during fiscal year 2011 when measured on a year-over-year basis as compared to fiscal year 2010. However, this decline is due primarily to the use of the Budget Stabilization Reserve Fund and other such one-time balance transfers utilized during the 2010 fiscal year. Tax revenue collections grew $1,550.7 million or 6.2% on a year-over-year basis from fiscal year 2010 to fiscal year 2011 while non-tax revenue collections declined $1,701.6 million or 62.1%. Corporate tax receipts were $398.6 million above fiscal year 2010 levels.

Fiscal 2013. GAAP basis information for Fiscal Year 2013 is not available at this time.

Fiscal 2012. At June 30, 2012, the General Fund reported a fund balance of $1,260.0 million, a decrease of $361.0 million (22.3%) from the reported $1,621.0 million balance at June 30, 2011. On a net basis, total assets increased by $261.0 million to $10,839.0 million. Liabilities increased by $622 million to $9,840.0 million. The negative change in fund balance for the General Fund for Fiscal Year 2012 of $361.0 million represents a decline from the net amount of changes in the fund balance of $1,336.0 million, which occurred during Fiscal Year 2011.

General Fund tax revenues increased overall by $693 million (2.68%) during the Fiscal Year ended June 30, 2012. This overall increase is attributable to all tax types except the Corporation taxes and Cigarette taxes, which decreased by $154 million and $23 million when compared to the Fiscal Year ended June 30, 2011.

Total General Fund expenditures decreased by 2.9% during the Fiscal Year ended June 30, 2012, by nearly $1.5 billion.

Fiscal 2011. The General Fund balance at June 30, 2011, was $1,503.5 million, a $157.9 million (9.5%) decrease from the June 30, 2010 General Fund balance. Over the five fiscal years 2007 through 2011, revenues and other sources averaged an annual 1.9% increase. Expenditures and other uses during the same period averaged a 2.0% annual increase.

Overall, total revenues decreased by $770 million during the fiscal year ended June 30, 2011; this represents a 13% decrease from the prior fiscal year. The most significant factor was an $859 million decrease in intergovernmental revenues, where Fiscal Year 2011 payments received from the Pennsylvania Turnpike Commission (PTC) under Act 44 of 2007 decreased by $300 million. Federal revenues (and transportation expenditures) decreased by $191 million due to Fiscal Year 2011 elimination of previously reported Federal pass-through grant amounts to political subdivisions. In addition, Federal revenues (and transportation expenditures) decreased by the return of $176 million in Federal revenues received on projects that did not result in construction and were subsequently converted to state-only projects during Fiscal Year 2011. Partially offsetting the intergovernmental revenues decrease were increases in tax revenues and licenses and fees.

Overall, total expenditures decreased by $477 million during the fiscal year ended June 30, 2011; this represents a 9% decrease from the prior fiscal year. The combination of year-over-year changes in capital outlay ($46 million increase) and transportation ($533 million decrease) expenditures accounted for nearly all of the decrease in expenditures.

The enacted Fiscal Year 2014 budget provides appropriations and executive authorizations, net of lapses and other reductions, totaling $28,375.869 million of Commonwealth funds against estimated revenues, net of tax refunds and including public health and human services assessments. The $534.969 million negative difference between estimated revenues and budgeted appropriations is to be mitigated by the drawdown of the $540.918 million ending balance from Fiscal Year 2013 and an estimated modest lapse of $1.5 million from prior-year legislative lapses. General Fund appropriations are anticipated to increase by $658.576 million, or 2.4% on a year-over-year basis, during Fiscal Year 2014.

General Fund revenues from all sources are estimated to increase $443.954 million, or 1.6%, on a year-over-year basis during Fiscal Year 2014 after factoring in planned tax refunds expenditures. The enacted budget does not include any tax increases, but does implement several tax changes intended to catalyze positive economic growth and therefore increased state revenue proposed in the Governor's Executive Budget.

The current Fiscal Year 2014 General Fund budget aims to keep spending in line with available resources without raising taxes in Pennsylvania. Administrative spending of the Commonwealth was again reduced and included the proposed elimination of more than 900 positions. There are approximately 3,000 fewer Commonwealth employees than there were three years ago.

Philadelphia is the largest city in the Commonwealth with an estimated population of 1,526,006 according to the 2010 U.S. Census.

The Pennsylvania Intergovernmental Cooperation Authority ("PICA") was created by Commonwealth legislation in 1991 to assist Philadelphia in remedying its fiscal emergencies. PICA is designed to provide assistance through the issuance of funding debt and to make factual findings and recommendations to Philadelphia concerning its budgetary and fiscal affairs. This financial assistance has included the refunding of certain city general obligation bonds, funding of capital projects and the liquidation of the cumulative general fund balance deficit of Philadelphia as of June 30, 1992, of $224.9 million. At this time, Philadelphia is operating under a five-year fiscal plan approved by PICA on September 17, 2013.

No further bonds are to be issued by PICA for the purpose of financing a capital project or deficit as the authority for such bond sales expired December 31, 1994. PICA's authority to issue debt for the purpose of financing a cash flow deficit expired on December 31, 1995. Its ability to refund existing outstanding debt is unrestricted. PICA had $409.3 million in special tax revenue bonds outstanding as of June 30, 2013. Neither the taxing power nor the credit of the Commonwealth is pledged to pay debt service on PICA's bonds.

The Constitution permits the Commonwealth to incur the following types of debt: (i) debt to suppress insurrection or rehabilitate areas affected by disaster, (ii) electorate approved debt, (iii) debt for capital projects subject to an aggregate debt limit of 1.75 times the annual average tax revenues of the preceding five fiscal years, and (iv) tax anticipation notes payable in the fiscal year of issuance. All debt except tax anticipation notes must be amortized in substantial and regular amounts. Debt service on Commonwealth general obligation debt is paid from appropriations out of the General Fund except for highway purposes, which is paid from Motor Vehicle Fund appropriations.

Net outstanding general obligation debt totaled $10,860.3 million at June 30, 2013, a net increase of $132.8 million from June 30, 2012. Over the 10-year period ending June 30, 2013, total outstanding general obligation debt increased at an annual rate of 4.8%. Within the most recent 5-year period, outstanding general obligation debt has increased at an annual rate of 5.8%.

Certain State-created organizations have statutory authorization to issue debt for which State appropriations to pay debt service thereon are not required. The debt of these organizations is funded by assets of, or revenues derived from the various projects financed and is not a statutory or moral obligation of the Commonwealth. However, some of these organizations are indirectly dependent upon Commonwealth operating appropriations. In addition, the Commonwealth may choose to take action to financially assist these organizations.

In 1978, the General Assembly approved a limited waiver of sovereign immunity. Damages for any loss are limited to $250,000 for each person and $1,000,000 for each accident. The Supreme Court of Pennsylvania has held that this limitation is constitutional. Approximately 3,150 suits against the Commonwealth remain open. Tort claim payments for the departments and agencies, other than the Department of Transportation, are paid from departmental and agency operating and program appropriations. Tort claim payments for the Department of Transportation are paid from an appropriation from the Motor License Fund. The Motor License Fund tort claim appropriation for Fiscal Year 2013 is $20.0 million.

The Virginia Portfolio seeks the highest level of current income exempt from both federal income tax and Commonwealth of Virginia ("Virginia" or the "Commonwealth") personal income tax that is available without assuming what the Adviser considers to be undue risk. As a matter of fundamental policy at least 80% of the Portfolio's net assets will be so invested (except when the Portfolio is in a temporary defensive position), although it is anticipated that under normal circumstances substantially all of the Portfolio's assets will be invested in such Virginia securities. As a matter of fundamental policy, the Virginia Portfolio will invest at least 80% of its net assets in municipal securities the interest on which is exempt from federal income tax. Shares of the Virginia Portfolio are available only to Virginia residents.

The following is based on information obtained from an Official Statement, dated November 5, 2013, relating to Virginia Public School Authority $45,075,000 School Financing Bonds (1997 Resolution) Series 2013B.

The Commonwealth's 2012 estimated population of 8,185,867 was 2.6% of the United States' total. Among the 50 states, it ranked twelfth in population. With 39,594 square miles of land area, its 2012 population density was 206.7 persons per square mile, compared with 88.7 persons per square mile for the United States.

The Commonwealth is divided into five distinct regions -- a coastal plain cut into peninsulas by four large tidal rivers, a piedmont plateau of rolling farms and woodlands, the Blue Ridge Mountains, the fertile Shenandoah Valley and the Appalachian plateau extending over the southwest corner of the Commonwealth. Approximately one-third of all land in Virginia is used for farming and other agricultural services. This variety of terrain, the location of the Commonwealth on the Atlantic Seaboard at the southern extremity of the northeast population corridor and its close proximity to the nation's capital have had a significant influence on the development of the present economic structure of the Commonwealth.

The largest metropolitan area is the Northern Virginia portion of the Washington, D.C. metropolitan area. This is the fastest growing metropolitan area in the Commonwealth and had a 2012 population of 5,860,342 (including Washington's and Maryland's population of 1,876,614). Northern Virginia has long been characterized by the large number of people employed in both civilian and military work with the federal government. However, it is also one of the nation's leading high-technology centers for computer software and telecommunications.

According to the U.S. Department of Commerce, Virginians received over $385 billion in personal income in 2012. In 2012, Virginia had per capita income of $47,082, ranking seventh among the states and greater than the national average of $42,693. From 2003 to 2012, the Commonwealth's 3.4% average annual rate of growth in per capita income was more than the national growth rate of 3.2%. Much of Virginia's per capita income gain in these years has been due to the continued strength of the manufacturing sectors, rapid growth of high-technology industries, basic business services, corporate headquarters and regional offices and the attainment of parity with the nation in labor force participation rates.

Employment in the Information Services sector decreased by 17.8% from 2008 to 2012, which may in part be due to intense telecommunications competition. The Professional and Business Services sector, however, gained 3.2% over the same period. From 2008 to 2012, employment in the Financial Activities sector decreased by 0.3%. The Private Education and Health sector employment level increased by 8.8% from 2008 to 2012. The Leisure and Hospitality sector employment level increased by 2.3% over the same period.

The Retail Trade sector decreased by 0.9% from 2008 to 2012. The Wholesale Trade sector decreased by 15.4% from 2007 to 2012.

With Northern Virginia and Hampton Roads, the home of the nation's largest concentration of military installations, the federal government has a greater impact on the Commonwealth relative to its size than all states except Alaska and Hawaii. In 2012, federal government civilian employment in the Commonwealth averaged approximately 174,100, for an 8.9% gain between 2008 and 2012.

State government employment averaged 158,100 in the Commonwealth for 2012, for a 2.7% increase between 2008 and 2012. Approximately 50% of state government employment is related to general government administration and 50% is related to higher education.

Manufacturing employment dropped 12.3% between 2008 and 2012.

The Commonwealth typically has one of the lowest unemployment rates in the nation, due in large part to the diversity of the Commonwealth's economy. During 2012, an average of 5.9% of the Commonwealth's population was unemployed, compared to 8.1% for the nation.

The Governor is required by statute to present a bill detailing his budget (the "Budget Bill") for the next biennium and a narrative summary of the bill to the General Assembly by December 20th in the year immediately prior to each even-year session. Under constitutional provisions, the Governor retains the right, in his review of legislative action on the Budget Bill, to suggest alterations to or to veto appropriations made by the General Assembly. After enactment, the Budget Bill becomes law (the "Appropriation Act").

In the odd-year sessions of the General Assembly, amendments are considered to the Appropriation Act enacted in the previous year. The Governor submits a Budget Bill by December 20th that includes his proposed amendments. The Appropriation Act enacted in the odd-year session is effective upon passage by the General Assembly, whereas the regular biennial Appropriation Act is effective July 1, the beginning of the biennium.

On December 18, 2009, then Governor Timothy M. Kaine presented the Budget Bill for the 2010-2012 biennium (House Bill 30/Senate Bill 30) (the "2010 Budget Bill").

The 2010 General Assembly convened on January 13, 2010 and on January 16, 2010 Robert F. McDonnell was sworn in as the 71st Governor of Virginia. With the Commonwealth facing a budget shortfall of $4.2 billion, House Bill 30/Senate Bill 30 as introduced by former Governor Kaine was debated and amended.

On March 14, 2010 the General Assembly adjourned. House Bill 30/Senate Bill 30 as approved by the General Assembly was transmitted to the Governor for review. Highlights of the General Assembly's spending action for the 2010-2012 biennium included: depositing $50 million into the Revenue Stabilization Fund in Fiscal Year 2012; providing $29.5 million to unfreeze the Local Composite Index (LCI) in Fiscal Year 2011; providing $174.1 over the biennium to those school divisions whose LCI is increasing; restoring $115.6 million to school divisions for Virginia Public School Authority technology grants; restoring $36.1 million in Medicaid waiver provider rates over the biennium; and providing $43.8 million towards Governor McDonnell's economic development promotion package.

Budget reductions over the biennium included: $250 million over the biennium in targeted K-12; $360.2 million over the biennium in health and human resources mitigated by the receipt of enhanced Federal Medical Assistance Percentage (FMAP) funds; and $120 million in across the board reductions in aid to localities.

On April 13, 2010, Governor McDonnell offered 96 amendments to House Bill 30/Senate Bill 30 to be considered at the reconvened session of the General Assembly on April 21, 2010. These amendments addressed three overarching themes:
economic development and job creation; the provision of critical services; and technical amendments. The spending amendments totaled $42.1 million and were offset by amendments that would result in $51.0 million in savings or additional revenue over the biennium.

The 2010 General Assembly reconvened on April 21, 2010 and on May 17, 2010, the 2010 Budget Bill was approved by Governor McDonnell and enacted as the 2010-12 Appropriation Act.

On December 17, 2010, Governor McDonnell presented his proposed amendments to Chapter 874, the 2010 Virginia Acts of Assembly (the "2011 Budget Bill") affecting the remainder of the 2010-2012 biennium. The Governor addressed unfunded liabilities and core services focusing on four top priorities:
Government Reform, Economic Development, Transportation, and Higher Education.

The revised revenue forecast added $133.9 million in total net revenue for Fiscal Year 2011 and $149.1 million in Fiscal Year 2012, for a total of $283 million over the biennium. Although the revised revenue forecast went up slightly, the Governor called for $191.6 million in cuts, savings, and reprioritization across state government. Utilizing the work of the Government Reform and Restructuring Commission, the Governor identified savings from multiple sources, including: $24 million in reduced interest on bonds for college buildings; $1.4 million by reducing consultants in the tax department; and additional savings from reducing administrative expenses in the offices of the Governor, Lieutenant Governor, and Attorney General.

The 2011 Budget Bill included the following initiatives: $25 million for a technology and research fund to leverage private and federal research dollars to develop commercialized products resulting from research; $3 million to support non-credit courses in the Virginia Community College System to strengthen workforce development efforts; and amendments to seek new money to recapitalize the Virginia Small Business Financing Authority, enhance tourism and marketing activities, and revitalize and redevelop rural and urban areas.

The 2011 Budget Bill was considered by the 2011 General Assembly, which convened on January 12, 2011, and adjourned on February 26, 2011. The 2011 Budget Bill, as amended by the General Assembly, was submitted to the Governor for his approval. The Governor returned the amended bill to the General Assembly with 86 amendments for consideration at its one-day reconvened session held April 6, 2011. The General Assembly upheld all but 20 of the Governor's amendments. On May 2, 2011, the Governor vetoed one item and signed the bill. The 2011 Budget Bill became law on May 2, 2011, as Chapter 890 of the 2011 Virginia Acts of Assembly (the "2011 Appropriation Act").

On December 19, 2011. Governor McDonnell presented the Budget Bill for the 2012-14 biennium that began July 1, 2012. The proposed 2012 Budget Bill was considered by the 2012 Session of the Virginia General Assembly, which convened on January 11, 2012. The General Assembly adjourned on March 10, 2012, without adopting a biennial budget and immediately convened in a special session to consider the reintroduced 2012 Budget Bill. On April 18, 2012, the General Assembly approved the 2012 Budget Bill and sent it to the Governor for signature. On May 4, 2012, the Governor offered 99 amendments, the most significant of which addressed two overarching themes: job creation and K-12 education. Other amendments were technical in nature.

The General Assembly reconvened on May 14, 2012 and rejected 24 of the Governor's proposed amendments. On June 11, 2012, Governor McDonnell vetoed one item, ruled a second item unconstitutional, and signed the 2012 Budget Bill into law.

The 2012-14 Appropriation Act became effective July 1, 2012, and honors the priorities Governor McDonnell set in the introduced budget. It prioritizes spending on the core functions of government; reduces the unfunded liabilities in the Virginia Retirement System; provides $33.7 million in new funding for economic development and private sector job creation; furnishes $30 million in Fiscal Year 2013 in new mental health funding; and directs $880.9 million in new funding to K-12 and higher educations systems. The 2012-14 Appropriation Act also provides additional deposits into the Revenue Stabilization Fund of $132.7 million in 2013 and $166.4 million as a preliminary appropriation for 2014.

On December 17, 2012, Governor McDonnell presented his proposed amendments to the 2012-14 Appropriation Act. In these amendments, the Governor addressed increased liquidity to guard against future economic uncertainty and the potential impact of federal spending reductions; increased support for instructional spending in public education; continued investments in higher education; improvements in funding availability for transportation; and improvements in support of localities.

The Governor called for spending reductions through a combination of targeted savings, reduction plans, and other appropriation reductions. The Governor asked agencies to submit reduction plans equating to 4% of their general fund budgets. These plans produced a total of $58.8 million in savings. In addition, targeted reductions in Medicaid and Direct Aid to Public Education totaled $33.9 million.

The 2013 amendments to the 2012 Appropriation Act became effective May 3, 2013.

The Commonwealth, its officials and employees are named as defendants in legal proceedings which occur in the normal course of governmental operations, some involving substantial amounts. It is not possible at the present time to estimate the ultimate outcome or liability, if any, of the Commonwealth with respect to these lawsuits. However, any ultimate liability resulting from these suits is not expected to have a material adverse effect on the financial condition of the Commonwealth.

AXA and its subsidiaries                          64.0%
AllianceBernstein Holding, L.P.                   34.5
Unaffiliated holders                               1.5
                                              ------------
                                                 100.0%
                                              ============

Portfolio                       Share Class                       Expense Cap
---------                       -----------                       -----------
National Portfolio              Class A                           0.80%
                                Class B                           1.50%
                                Class C                           1.50%
                                Advisor Class                     0.50%

California Portfolio            Class A                           0.80%
                                Class B                           1.50%
                                Class C                           1.50%
                                Advisor Class                     0.50%

New York Portfolio              Class A                           0.80%
                                Class B                           1.50%
                                Class C                           1.50%
                                Advisor Class                     0.50%

Arizona Portfolio               Class A                           0.78%
                                Class B                           1.48%
                                Class C                           1.48%

Massachusetts Portfolio         Class A                           0.82%
                                Class B                           1.52%
                                Class C                           1.52%

Michigan Portfolio              Class A                           0.90%
                                Class B                           1.60%
                                Class C                           1.60%

Minnesota Portfolio             Class A                           0.90%
                                Class B                           1.60%
                                Class C                           1.60%

New Jersey Portfolio            Class A                           0.87%
                                Class B                           1.57%
                                Class C                           1.57%

Ohio Portfolio                  Class A                           0.85%
                                Class B                           1.55%
                                Class C                           1.55%

Pennsylvania Portfolio          Class A                           0.90%
                                Class B                           1.60%
                                Class C                           1.60%

Virginia Portfolio              Class A                           0.80%
                                Class B                           1.50%
                                Class C                           1.50%

High Income Portfolio           Class A                           0.80%
                                Class C                           1.50%
                                Advisor Class                     1.50%

                                                      Amounts waived
                                                      or Reimbursed under
                                                      Fee Waiver and/or Expense
Portfolio                       Advisory Fees         Reimbursement Agreement
---------                       -------------         -----------------------

National
2013                            $4,969,075              $686,403
2012                             4,436,262             1,010,697
2011                             3,902,370             1,039,593

High Income
2013                            $6,795,042            $1,165,235
2012                             4,446,659              $819,490
2011                             2,293,656               635,742

New York
2013                            $3,079,269              $376,624
2012                             2,950,562               623,409
2011                             2,680,820               721,844

California
2013                            $2,926,874              $340,448
2012                             3,006,543               586,798
2011                             2,981,311               661,662

Arizona
2013                              $771,761              $248,835
2012                               775,700               278,827
2011                               803,098               307,606

Massachusetts
2013                            $1,377,687              $187,162
2012                             1,304,587               175,351
2011                             1,202,320               196,478

Michigan
2013                              $424,385              $109,710
2012                               446,583                41,343
2011                               448,365                76,958

Minnesota
2013                              $477,490              $124,739
2012                               498,371               124,242
2011                               514,127               144,485

New Jersey
2013                              $724,660              $123,839
2012                               703,419               137,654
2011                               710,652               152,544

Ohio
2013                              $739,082              $174,581
2012                               712,317               175,924
2011                               710,865               176,601

Pennsylvania
2013                              $580,841              $117,372
2012                               595,901                53,557
2011                               583,709                73,408

Virginia
2013                            $1,329,722              $327,068
2012                             1,252,456               467,827
2011                             1,102,338               464,802

                                                                OTHER
                                                  PORTFOLIOS    PUBLIC
                                                  IN            COMPANY
                               PRINCIPAL          ALLIANCE-     DIRECTORSHIPS
                               OCCUPATION(S)      BERNSTEIN     HELD BY
                               DURING PAST        FUND COMPLEX  DIRECTOR
NAME, ADDRESS,*                FIVE YEARS         OVERSEEN      IN THE PAST
AGE (YEAR AND ELECTED**)       OR LONGER          BY DIRECTOR   FIVE YEARS
------------------------       --------------     ------------- -------------

INDEPENDENT DIRECTORS

Chairman of the Board

Marshall C. Turner, Jr., # ^   Private Investor   100           Xilinx, Inc.
72                             since prior to                   (programmable
(2005)                         2009.  Former CEO                logic semi
                               of Dupont                        conductors)
                               Photomasks, Inc.                 and SunEdison
                               (components of                   Inc. (semi-
                               semi0conductor                   conductor
                               manufacturing),                  substrates,
                               2003-2006, and                   solar materials
                               interim CEO                      and solar power
                               1999-2000.                       plants) since
                               Interim CEO of                   prior to 2009
                               MEMC Electronic
                               Materials, Inc.
                               (semi-conductor
                               and solar cell
                               substrates) from
                               November 2008
                               until March 2009.
                               He has extensive
                               operating and
                               early-stage
                               investment
                               experience,
                               including prior
                               service as a
                               general partner of
                               three institutional
                               venture capital
                               partnerships,
                               and serves on the
                               boards of three
                               education and
                               science- related
                               non-profit
                               organizations.  He
                               has served as a
                               director of one
                               AllianceBernstein
                               fund since 1992,
                               and director or
                               trustee of
                               multiple
                               AllianceBernstein
                               funds since
                               2005.  He is
                               Chairman of the
                               AllianceBernstein
                               Funds since
                               January 2014.

John H. Dobkin, #              Independent        100           None
71                             Consultant
(1998)                         since prior to
                               2009. Formerly,
                               President of
                               Save Venice, Inc.
                               (preservation
                               organization)
                               from 2001-2002;
                               Senior Advisor
                               from June 1999-
                               June 2000 and
                               President of
                               Historic Hudson
                               Valley (historic
                               preservation)
                               from December
                               1989-May 1999.
                               Previously,
                               Director of the
                               National Academy
                               of Design. He has
                               served as a
                               director or
                               trustee of
                               various
                               AllianceBernstein
                               Funds since 1992.

Michael J. Downey, #           Private Investor   100           Asia Pacific
70                             since prior to                   Fund, Inc.
(2005)                         2009.  Formerly                  since prior to
                               managing partner                 2009, Prospect
                               of Lexington                     Acquisition
                               Capital, LLC                     Corp. (financial
                               (investment                      services) from
                               advisory firm)                   2007 until 2009
                               from December 1997               and The Merger
                               until December                   Fund since prior
                               2003.  From 1987                 to 2009 until
                               until 1993,                      2013
                               Chairman and CEO
                               of Prudential
                               Mutual Fund
                               Management,
                               director of the
                               Prudential
                               mutual funds,
                               and member of
                               the Executive
                               Committee of
                               Prudential
                               Securities Inc.
                               He has served
                               as a director
                               or trustee of the
                               AllianceBernstein
                               Funds since 2005
                               and is a director
                               and chairman of
                               one other
                               registered
                               investment company.

William H. Foulk, Jr., #, ##   Investment         100           None
81                             Adviser and an
(1998)                         Independent
                               Consultant
                               since prior to
                               2009. Previously,
                               he was Senior
                               Manager of
                               Barrett
                               Associates,
                               Inc., a
                               registered
                               investment
                               adviser.  He
                               was formerly
                               Deputy
                               Comptroller and
                               Chief Investment
                               Officer of the
                               State of New
                               York and, prior
                               thereto, Chief
                               Investment
                               Officer of the
                               New York Bank
                               for Savings. He
                               has served as a
                               director or
                               trustee of
                               various
                               AllianceBernstein
                               Funds since
                               1983 and has
                               been Chairman of
                               the Independent
                               Directors
                               Committee of the
                               AllianceBernstein
                               Funds since 2003.
                               He served as
                               Chairman of such
                               funds from 2003
                               through December
                               2013.

D. James Guzy, #               Chairman of the    100           PLX Technology
77                             Board of PLX                     (semi-
(2005)                         Technology                       conductors)
                               (semi-conductors)                since prior to
                               and of SRC                       2009 and Cirrus
                               Computers Inc.,                  Logic
                               with which he                    Corporation
                               has been                         (semi-
                               associated                       conductors)
                               since prior to                   since prior to
                               2009. He was a                   2009 and until
                               director of                      July 2011
                               Intel Corporation
                               (semi-conductors)
                               from 1969 until
                               2008, and served
                               as Chairman of
                               the Finance
                               Committee of such
                               company for
                               several years
                               until May 2008.
                               He has served as
                               a director or
                               trustee of one
                               or more of the
                               AllianceBernstein
                               Funds since 1982.

Nancy P. Jacklin, #            Professorial       100           None
65                             Lecturer at the
(2006)                         Johns Hopkins
                               School of Advanced
                               International
                               Studies since
                               2008. Formerly,
                               U.S. Executive
                               Director of the
                               International
                               Monetary Fund
                               (December
                               2002-May 2006);
                               Partner,
                               Clifford Chance
                               (1992-2002);
                               Sector Counsel,
                               International
                               Banking and
                               Finance, and
                               Associate
                               General Counsel,
                               Citicorp
                               (1985-1992);
                               Assistant
                               General Counsel
                               (International),
                               Federal Reserve
                               Board of
                               Governors
                               (1982-1985);
                               and Attorney
                               Advisor, U.S.
                               Department of
                               the Treasury
                               (1973-1982).
                               Member of the
                               Bar of the
                               District of
                               Columbia and of
                               New York; and
                               member of the
                               Council on
                               Foreign
                               Relations. She
                               has served as a
                               director or
                               trustee of the
                               AllianceBernstein
                               Funds since
                               2006.


Greenbacker
Renewable Energy
 Company LLC
(renewable
energy and
energy
efficiency
projects) from
August 2013 to
January 2014

Garry L. Moody, #              Independent        100           Greenbacker
61                             Consultant.                      Renewable Energy
(2008)                         Formerly, Partner,               Company LLC
                               Deloitte & Touche                (renewable
                               LLP (1995-2008)                  energy and
                               where he held a                  energy
                               number of senior                 efficiency
                               positions,                       projects) from
                               including Vice                   August 2013 to
                               Chairman, and                    January 2014
                               U.S. and Global
                               Investment
                               Management
                               Practice Managing
                               Partner;
                               President,
                               Fidelity
                               Accounting and
                               Custody Services
                               Company
                               (1993-1995);
                               and Partner,
                               Ernst & Young
                               LLP (1975-1993),
                               where he served
                               as the National
                               Director of
                               Mutual Fund Tax
                               Services and
                               Managing
                               Partner of its
                               Chicago Office
                               Tax department.
                               He is a member
                               of both the
                               Governing
                               Council of the
                               Independent
                               Directors
                               Council (IDC),
                               an organization
                               of independent
                               directors of
                               mutual funds,
                               and the Trustee
                               Advisory Board
                               of BoardIQ, a
                               biweekly
                               publication
                               focused on
                               issues and news
                               affecting
                               directors of
                               mutual funds.
                               He has served
                               as a director
                               or trustee, and
                               as Chairman of
                               the Audit
                               Committee, of the
                               AllianceBernstein
                               Funds since
                               2008.

Earl D. Weiner, #              Of Counsel, and    100           None
74                             Partner prior to
(2007)                         January 2007, of
                               the law firm
                               Sullivan &
                               Cromwell LLP
                               and member of ABA
                               Federal Regulation
                               of Securities
                               Committee Task
                               Force to draft
                               editions of the
                               Fund Director's
                               Guidebook. He
                               has served as
                               director or
                               trustee of the
                               AllianceBernstein
                               Funds since 2007
                               and is Chairman
                               of the Governance
                               and Nominating
                               Committees of the
                               Funds.

INTERESTED DIRECTOR

Robert M. Keith, +             Senior Vice        100           None
1345 Avenue of the Americas    President of
New York, NY  10105            the Adviser++
53                             and head of
(2010)                         AllianceBernstein
                               Investments,
                               Inc. ("ABI")++
                               since July
                               2008; Director
                               of ABI and
                               President of the
                               AllianceBernstein
                               Mutual Funds.
                               Previously, he
                               served as
                               Executive Managing
                               Director of ABI
                               from December
                               2006 to June
                               2008.  Prior to
                               joining ABI in
                               2006, Executive
                               Managing Director
                               of Bernstein
                               Global Wealth
                               Management, and
                               prior thereto,
                               Senior Managing
                               Director and
                               Global Head of
                               Client Service
                               and Sales of
                               the Adviser's
                               institutional
                               investment
                               management
                               business since
                               2004.  Prior
                               thereto, he was
                               Managing Director
                               and Head of North
                               American Client
                               Service and Sales
                               in the Adviser's
                               institutional
                               investment
                               management
                               business, with
                               which he had
                               been associated
                               since prior to
                               2004.


--------

                                        Dollar Range of Equity Securities in the Portfolios
                                                      As of December 31, 2013
                                                     ------------------------

                             NATIONAL              HIGH INCOME          NEW YORK        CALIFORNIA
                             PORTFOLIO             PORTFOLIO            PORTFOLIO       PORTFOLIO
                             ---------             ---------            ---------       ---------
John H. Dobkin               None                  None                 None            None
Michael J. Downey            None                  None                 None            None
William H. Foulk, Jr.        None                  None                 None            None
D. James Guzy                None                  None                 None            None
Nancy P. Jacklin             $50,001-$100,000      None                 None            None
Robert M. Keith              None                  None                 None            None
Garry L. Moody               None                  None                 None            None
Marshall C. Turner, Jr.      None                  None                 None            None
Earl D. Weiner               None                  $10,001-$50,000      None            None

                             ARIZONA               MASSACHUSETTS        MICHIGAN        MINNESOTA
                             PORTFOLIO             PORTFOLIO            PORTFOLIO       PORTFOLIO
                             ---------             ---------            ---------       ---------

John H. Dobkin               None                  None                 None            None
Michael J. Downey            None                  None                 None            None
William H. Foulk, Jr.        None                  None                 None            None
D. James Guzy                None                  None                 None            None
Nancy P. Jacklin             None                  None                 None            None
Robert M. Keith              None                  None                 None            None
Garry L. Moody               None                  None                 None            None
Marshall C. Turner, Jr.      None                  None                 None            None
Earl D. Weiner               None                  None                 None            None


                             NEW JERSEY            OHIO                 PENNSYLVANIA    VIRGINIA
                             PORTFOLIO             PORTFOLIO            PORTFOLIO       PORTFOLIO
                             ---------             ---------            ---------       ---------


John H. Dobkin               None                  None                 None            None
Michael J. Downey            None                  None                 None            None
William H. Foulk, Jr.        None                  None                 None            None
D. James Guzy                None                  None                 None            None
Nancy P. Jacklin             None                  None                 None            None
Robert M. Keith              None                  None                 None            None
Garry L. Moody               None                  None                 None            None
Marshall C. Turner, Jr.      None                  None                 None            None
Earl D. Weiner               None                  None                 None            None

John H. Dobkin                            Over $100,000
Michael J. Downey                         Over $100,000
William H. Foulk, Jr.                     Over $100,000
D. James Guzy                             Over $100,000
Nancy P. Jacklin                          Over $100,000
Robert M. Keith                               None
Garry L. Moody                            Over $100,000
Marshall C. Turner, Jr.                   Over $100,000
Earl D. Weiner                            Over $100,000

NAME, ADDRESS*                  POSITION(S)          PRINCIPAL OCCUPATION
AND AGE                         HELD WITH FUND       DURING PAST 5 YEARS
---------------                 ---------------      -------------------------

Robert M. Keith,                President and        See biography above.
53                              Chief Executive
                                Officer

Philip L. Kirstein,             Senior Vice          Senior Vice President
68                              Independent          President and and
                                Compliance           Independent Compliance
                                Officer              Officer of the Funds in the
                                                     AllianceBernstein Fund
                                                     Complex, with which he
                                                     has been associated
                                                     since October 2004.
                                                     Prior thereto, he was Of
                                                     Counsel to Kirkpatrick &
                                                     Lockhart, LLP from
                                                     October 2003 to October
                                                     2004, and General
                                                     Counsel of Merrill Lynch
                                                     Investment Managers,
                                                     L.P. since prior to
                                                     March 2003.

Douglas J. Peebles,             Senior Vice Senior   Vice President of
48                                                   President the Adviser,**
                                                     with which he has been
                                                     associated since prior
                                                     to 2009.

Robert B. (Guy) Davidson III,   Senior Vice          Senior Vice President of
52                              President            the Adviser,** with
                                                     which he has been
                                                     associated since prior
                                                     to 2009.

Michael G. Brooks,              Vice President       Senior Vice President of
65                                                   the Adviser,** with
                                                     which he has been
                                                     associated since prior
                                                     to 2009.

Fred S. Cohen,                  Vice President       Senior Vice President of
55                                                   the Adviser,** with
                                                     which he has been
                                                     associated since prior
                                                     to 2009.

Wayne D. Godlin,                Vice President       Senior Vice President of
52                                                   the Adviser,** with
                                                     which he has been
                                                     associated since
                                                     December 2009.  Prior
                                                     thereto, he was an
                                                     investment manager and a
                                                     Managing Director of Van
                                                     Kampen Asset Management
                                                     with which he had been
                                                     associated since prior
                                                     to 2009.

Terrance T. Hults,              Vice President       Senior Vice President of
47                                                   the Adviser,** with
                                                     which he has been
                                                     associated since prior
                                                     to 2009.

Emilie D. Wrapp,                Secretary            Senior Vice President,
58                                                   Assistant General
                                                     Counsel and Assistant
                                                     Secretary of ABI,** with
                                                     which she has been
                                                     associated since prior
                                                     to 2009.

Joseph J. Mantineo,             Treasurer and        Senior Vice President of
54                              Chief Financial      ABIS,** with which he
                                Officer              has been associated
                                                     since prior to 2009.

Vincent S. Noto                 Chief Compliance     Chief Compliance Officer
49                              Officer              of the AllianceBernstein
                                                     Funds, and Vice
                                                     President of ABIS,** with
                                                     which he has been
                                                     associated since prior
                                                     to 2009.

Phyllis J. Clarke,              Controller           Vice President of the
53                                                   ABIS,** with which she
                                                     has been associated
                                                     since prior to 2009.


--------

                                        Aggregate             Aggregate
Name of Director                        Compensation          Compensation
of the Fund                             From the Fund I       from the Fund II
-----------                             ----------------      -----------------

John H. Dobkin                           $  6,488             $  6,492
Michael J. Downey                        $  6,488             $  6,492
William H. Foulk, Jr.                    $ 12,112             $ 12,120
D. James Guzy                            $  6,488             $  6,492
Nancy P. Jacklin                         $  6,488             $  6,492
Robert M. Keith                          $      0             $      0
Garry L. Moody                           $  7,320             $  7,322
Marshall C. Turner, Jr.                  $  6,488             $  6,492
Earl D. Weiner                           $  6,936             $  6,944


                                                               Total
                                              Total            Number of
                                              Number of        Investment
                                              Investment       Portfolios
                                              Companies in     within the
                                              the Alliance-    Alliance-
                            Total             Bernstein        Bernstein
                            Compensation      Fund Complex,    Fund Complex,
                            from the          Including the    Including the
                            Alliance-         Fund, as to      Fund, as to
                            Bernstein         which the        which the
                            Fund Complex,     Director is      Director is
Name of Director            Including         a Director       a Director
or Fund                     the Funds         or Trustee       or Trustee
----------------            ------------      ------------     --------------

John H. Dobkin              $262,000          31               100
Michael J. Downey           $262,000          31               100
William H. Foulk, Jr.       $487,000          31               100
D. James Guzy               $262,000          31               100
Nancy P. Jacklin            $262,000          31               100
Robert M. Keith             $      0          31               100
Garry L. Moody              $297,000          31               100
Marshall C. Turner, Jr.     $262,000          31               100
Earl D. Weiner              $280,000          31               100

Michael G. Brooks                                             None
Fred S. Cohen                                                 None
Robert B. (Guy) Davidson, III                                 None
Wayne D. Godlin                                               None
Terrance T. Hults                                       $10,001-$50,000

                               NEW YORK PORTFOLIO
                              -------------------

Michael G. Brooks                                             None
Fred S. Cohen                                                 None
Robert B. (Guy) Davidson, III                                 None
Wayne D. Godlin                                               None
Terrance T. Hults                                       $10,001-$50,000

                                                                    Total
                                                      Number of     Assets of
                            Total        Total        Registered    Registered
                            Number of    Assets of    Investment    Investment
                            Registered   Registered   Companies     Companies
                            Investment   Investment   Managed with  Managed with
                            Companies    Companies    Performance-  Performance-
Portfolio Manager           Managed      Managed      based Fees    based Fees
-----------------           --------     --------     -----------   -----------

Michael Brooks                32       $16,414,000,000     None          None
Fred S. Cohen                 32       $16,414,000,000     None          None
Robert B. (Guy) Davidson III  32       $16,414,000,000     None          None
Wayne D. Godlin               32       $16,414,000,000     None          None
Terrance T. Hults             32       $16,414,000,000     None          None

                                                                    Total
                                                      Number of     Assets of
                            Total        Total        Registered    Registered
                            Number of    Assets of    Investment    Investment
                            Registered   Registered   Companies     Companies
                            Investment   Investment   Managed with  Managed with
                            Companies    Companies    Performance-  Performance-
Portfolio Manager           Managed      Managed      based Fees    based Fees
-----------------           --------     --------     -----------   -----------

Michael Brooks                  32     $16,177,000,000    None          None
Robert B. (Guy) Davidson III    32     $16,177,000,000    None          None
Wayne D. Godlin                 32     $16,177,000,000    None          None
Terrance T. Hults               32     $16,177,000,000    None          None


- California Portfolio

                                                                    Total
                                                      Number of     Assets of
                            Total         Total       Registered    Registered
                            Number of     Assets of   Investment    Investment
                            Registered    Registered  Companies     Companies
                            Investment    Investment  Managed with  Managed with
                            Companies     Companies   Performance-  Performance-
Portfolio Manager           Managed       Managed     based Fees    based Fees
-----------------           --------      --------    -----------   -----------

Michael Brooks                32       $16,788,000,000   None          None
Fred S. Cohen                 32       $16,788,000,000   None          None
Robert B. (Guy) Davidson III  32       $16,788,000,000   None          None
Wayne D. Godlin               32       $16,788,000,000   None          None
Terrance T. Hults             32       $16,788,000,000   None          None


- New York Portfolio

                                                                    Total
                                                      Number of     Assets of
                            Total         Total       Registered    Registered
                            Number of     Assets of   Investment    Investment
                            Registered    Registered  Companies     Companies
                            Investment    Investment  Managed with  Managed with
                            Companies     Companies   Performance-  Performance-
Portfolio Manager           Managed       Managed     based Fees    based Fees
-----------------           --------      --------    -----------   -----------

Michael Brooks                32       $16,809,000,000   None         None
Fred S. Cohen                 32       $16,809,000,000   None         None
Robert B. (Guy) Davidson III  32       $16,809,000,000   None         None
Wayne D. Godlin               32       $16,809,000,000   None         None
Terrance T. Hults             32       $16,809,000,000   None         None

                                                                    Total
                                                      Number        Assets
                            Total        Total        of Other      of Other
                            Number       Assets       Pooled        Pooled
                            of Other     of Other     Investment    Investment
                            Pooled       Pooled       Vehicles      Vehicles
                            Investment   Investment   Managed with  Managed with
                            Vehicles     Vehicles     Performance-  Performance-
Portfolio Manager           Managed      Managed      based Fees    based Fees
-----------------           -------      -------      ----------    ----------

Michael Brooks                 5        $345,000,000     None          None
Robert B. (Guy) Davidson III   5        $345,000,000     None          None
Wayne D. Godlin                5        $345,000,000     None          None
Terrance T. Hults              5        $345,000,000     None          None

                                                     Number
                             Total     Total         of Other      Total Assets
                             Number    Assets        Accounts      of Other
                             of Other  of Other      Managed with  Accounts with
                             Accounts  Accounts      Performance-  Performance-
Portfolio Manager            Managed   Managed       based Fees    based Fees
-----------------            -------   -------       ----------    ----------

Michael Brooks                 1,624  $11,645,000,000    2          $338,000,000
Robert B. (Guy) Davidson III   1,624  $11,645,000,000    2          $338,000,000
Wayne D. Godlin                1,624  $11,645,000,000    2          $338,000,000
Terrance T. Hults              1,624  $11,645,000,000    2          $338,000,000

--------

                                                                    Total
                                                      Number        Assets
                             Total       Total        of Other      of Other
                             Number      Assets       Pooled        Pooled
                             of Other    of Other     Investment    Investment
                             Pooled      Pooled       Vehicles      Vehicles
                             Investment  Investment   Managed with  Managed with
                             Vehicles    Vehicles     Performance-  Performance-
Portfolio Manager            Managed     Managed      based Fees    based Fees
-----------------            -------     -------      ----------    ----------

Michael Brooks                   5       $345,000,000    None            None
Fred S. Cohen                    5       $345,000,000    None            None
Robert B. (Guy) Davidson III     5       $345,000,000    None            None
Wayne D. Godlin                  5       $345,000,000    None            None
Terrance T. Hults                5       $345,000,000    None            None

                                                     Number
                             Total     Total         of Other      Total Assets
                             Number    Assets        Accounts      of Other
                             of Other  of Other      Managed with  Accounts with
                             Accounts  Accounts      Performance-  Performance-
Portfolio Manager            Managed   Managed       based Fees    based Fees
-----------------            -------   -------       ----------    ----------

Michael Brooks                 1,624  $11,645,000,000    2         $338,000,000
Fred S. Cohen                  1,624  $11,645,000,000    2         $338,000,000
Robert B. (Guy) Davidson III   1,624  $11,645,000,000    2         $338,000,000
Wayne D. Godlin                1,624  $11,645,000,000    2         $338,000,000
Terrance T. Hults              1,624  $11,645,000,000    2         $338,000,000


--------

                                                                    Total
                                                       Number of    Assets of
                            Total        Total         Registered   Registered
                            Number of    Assets of     Investment   Investment
                            Registered   Registered    Companies    Companies
                            Investment   Investment    Managed with Managed with
                            Companies    Companies     Performance- Performance-
Portfolio Manager           Managed      Managed       based Fees   based Fees
-----------------           --------     --------      -----------  -----------

Michael Brooks                 32      $17,253,000,000     None        None
Fred S. Cohen                  32      $17,253,000,000     None        None
Robert B. (Guy) Davidson III   32      $17,253,000,000     None        None
Wayne D. Godlin                32      $17,253,000,000     None        None
Terrance T. Hults              32      $17,253,000,000     None        None


- Massachusetts Portfolio

                                                                    Total
                                                      Number of     Assets of
                            Total       Total         Registered    Registered
                            Number of   Assets of     Investment    Investment
                            Registered  Registered    Companies     Companies
                            Investment  Investment    Managed with  Managed with
                            Companies   Companies     Performance-  Performance-
Portfolio Manager           Managed     Managed       based Fees    based Fees
-----------------           --------    --------      -----------   -----------

Michael Brooks                  32     $17,133,000,000    None          None
Fred S. Cohen                   32     $17,133,000,000    None          None
Robert B. (Guy) Davidson III    32     $17,133,000,000    None          None
Wayne D. Godlin                 32     $17,133,000,000    None          None
Terrance T. Hults               32     $17,133,000,000    None          None


- Michigan Portfolio

                                                                    Total
                                                      Number of     Assets of
                            Total         Total       Registered    Registered
                            Number of     Assets of   Investment    Investment
                            Registered    Registered  Companies     Companies
                            Investment    Investment  Managed with  Managed with
                            Companies     Companies   Performance-  Performance-
Portfolio Manager           Managed       Managed     based Fees    based Fees
-----------------           --------      --------    -----------   -----------

Michael Brooks                32       $17,330,000,000   None          None
Fred S. Cohen                 32       $17,330,000,000   None          None
Robert B. (Guy) Davidson III  32       $17,330,000,000   None          None
Wayne D. Godlin               32       $17,330,000,000   None          None
Terrance T. Hults             32       $17,330,000,000   None          None


- Minnesota Portfolio

                                                                    Total
                                                      Number of     Assets of
                            Total         Total       Registered    Registered
                            Number of     Assets of   Investment    Investment
                            Registered    Registered  Companies     Companies
                            Investment    Investment  Managed with  Managed with
                            Companies     Companies   Performance-  Performance-
Portfolio Manager           Managed       Managed     based Fees    based Fees
-----------------           --------      --------    -----------   -----------

Michael Brooks                32       $17,310,000,000   None          None
Fred S. Cohen                 32       $17,310,000,000   None          None
Robert B. (Guy) Davidson III  32       $17,310,000,000   None          None
Wayne D. Godlin               32       $17,310,000,000   None          None
Terrance T. Hults             32       $17,310,000,000   None          None


- New Jersey Portfolio

                                                                    Total
                                                      Number of     Assets of
                            Total        Total        Registered    Registered
                            Number of    Assets of    Investment    Investment
                            Registered   Registered   Companies     Companies
                            Investment   Investment   Managed with  Managed with
                            Companies    Companies    Performance-  Performance-
Portfolio Manager           Managed      Managed      based Fees    based Fees
-----------------           --------     --------     -----------   -----------

Michael Brooks                32       $17,255,000,000   None          None
Fred S. Cohen                 32       $17,255,000,000   None          None
Robert B. (Guy) Davidson III  32       $17,255,000,000   None          None
Wayne D. Godlin               32       $17,255,000,000   None          None
Terrance T. Hults             32       $17,255,000,000   None          None


- Ohio Portfolio

                                                                    Total
                                                      Number of     Assets of
                            Total        Total        Registered    Registered
                            Number of    Assets of    Investment    Investment
                            Registered   Registered   Companies     Companies
                            Investment   Investment   Managed with  Managed with
                            Companies    Companies    Performance-  Performance-
Portfolio Manager           Managed      Managed      based Fees    based Fees
-----------------           --------     --------     -----------   -----------

Michael Brooks                 32      $17,259,000,000    None          None
Fred S. Cohen                  32      $17,259,000,000    None          None
Robert B. (Guy) Davidson III   32      $17,259,000,000    None          None
Wayne D. Godlin                32      $17,259,000,000    None          None
Terrance T. Hults              32      $17,259,000,000    None          None


- Pennsylvania Portfolio

                                                                    Total
                                                      Number of     Assets of
                            Total         Total       Registered    Registered
                            Number of     Assets of   Investment    Investment
                            Registered    Registered  Companies     Companies
                            Investment    Investment  Managed with  Managed with
                            Companies     Companies   Performance-  Performance-
Portfolio Manager           Managed       Managed     based Fees    based Fees
-----------------           --------      --------    -----------   -----------

Michael Brooks                32       $17,289,000,000   None           None
Fred S. Cohen                 32       $17,289,000,000   None           None
Robert B. (Guy) Davidson III  32       $17,289,000,000   None           None
Wayne D. Godlin               32       $17,289,000,000   None           None
Terrance T. Hults             32       $17,289,000,000   None           None


- Virginia Portfolio

                                                                    Total
                                                      Number of     Assets of
                            Total         Total       Registered    Registered
                            Number of     Assets of   Investment    Investment
                            Registered    Registered  Companies     Companies
                            Investment    Investment  Managed with  Managed with
                            Companies     Companies   Performance-  Performance-
Portfolio Manager           Managed       Managed     based Fees    based Fees
-----------------           --------      --------    -----------   -----------

Michael Brooks                 32      $17,155,000,000   None          None
Fred S. Cohen                  32      $17,155,000,000   None          None
Robert B. (Guy) Davidson III   32      $17,155,000,000   None          None
Wayne D. Godlin                32      $17,155,000,000   None          None
Terrance T. Hults              32      $17,155,000,000   None          None

                                                                    Total
                                                     Number         Assets
                            Total       Total        of Other       of Other
                            Number      Assets       Pooled         Pooled
                            of Other    of Other     Investment     Investment
                            Pooled      Pooled       Vehicles       Vehicles
                            Investment  Investment   Managed with   Managed with
                            Vehicles    Vehicles     Performance-   Performance-
Portfolio Manager           Managed     Managed      based Fees     based Fees
-----------------           -------     -------      ----------     ----------

Michael Brooks                 5       $317,000,000      None          None
Fred S. Cohen                  5       $317,000,000      None          None
Robert B. (Guy) Davidson III   5       $317,000,000      None          None
Wayne D. Godlin                5       $317,000,000      None          None
Terrance T. Hults              5       $317,000,000      None          None


- All Portfolios of Fund II

                                                     Number
                             Total       Total       of Other      Total Assets
                             Number      Assets      Accounts      of Other
                             of Other    of Other    Managed with  Accounts with
                             Accounts    Accounts    Performance-  Performance-
Portfolio Manager            Managed     Managed     based Fees    based Fees
-----------------            -------     -------     ----------    ----------

Michael Brooks                1,629   $11,731,000,000   3          $336,000,000
Fred S. Cohen                 1,629   $11,731,000,000   3          $336,000,000
Robert B. (Guy) Davidson III  1,629   $11,731,000,000   3          $336,000,000
Wayne D. Godlin               1,629   $11,731,000,000   3          $336,000,000
Terrance T. Hults             1,629   $11,731,000,000   3          $336,000,000


--------

                                                  Percentage Per Annum
                     Distribution Services        of the Aggregate
                     Fees for Expenditures        Average Daily Net Assets
Portfolio            Payable to ABI               Attributable to Class A Shares
---------            ----------------------       ------------------------------

National                $2,222,387                      0.30%
High Income             $1,969,256                      0.30%
New York                $1,660,318                      0.30%
California              $1,528,241                      0.30%
Arizona                 $  406,205                      0.30%
Massachusetts           $  695,733                      0.30%
Michigan                $  200,230                      0.30%
Minnesota               $  251,794                      0.30%
New Jersey              $  368,505                      0.30%
Ohio                    $  358,503                      0.30%
Pennsylvania            $  300,972                      0.30%
Virginia                $  668,751                      0.30%

Category                  National      High Income   New York     California    Arizona     Massachusetts     Michigan
of Expense                Portfolio     Portfolio     Portfolio    Portfolio     Portfolio   Portfolio         Portfolio
----------                ---------     ---------     ---------    ---------     ---------   ---------         ---------
Advertising/
Marketing                 $    7,740    $    6,895    $    5,786   $    5,343    $  1,521    $    2,591        $     757

Printing and Mailing
of Prospectuses and
Semi-Annual and
Annual Reports to
Other Than Current
Shareholders              $      466    $      391    $      360   $      308    $    201    $      340        $     110

Compensation to
Underwriters              $  309,558    $  273,407    $  231,893   $  213,134    $ 56,576    $   96,944        $  27,923

Compensation to
Dealers                   $2,524,910    $3,059,499    $1,885,637   $1,655,569    $430,314    $  800,313        $ 212,004

Compensation to Sales
Personnel                 $  139,459    $  304,827    $  136,495   $   43,335    $ 13,475    $   40,851        $   9,423

Interest, Carrying or
Other Financing
Charges                   $        0    $        0    $        0   $        0    $      0    $        0        $       0
Other (Includes
Personnel Costs of
Those Home Office
Employees Involved in
the Distribution
Effort and the
Travel-related
Expenses Incurred by
the Marketing
Personnel Conducting
Seminars)                 $  322,126    $  284,922    $  240,868   $  221,523    $ 59,280    $  101,565        $  29,225

Totals                    $3,304,259    $3,929,941    $2,501,039   $2,139,212    $561,367    $1,042,604        $ 279,442

                          Minnesota     New Jersey    Ohio         Pennsylvania  Virginia
Category of Expense       Portfolio     Portfolio     Portfolio    Portfolio     Portfolio
-------------------       ---------     ---------     ---------    ---------     ---------
Advertising/ Marketing    $    937      $  1,362      $  1,340     $  1,124      $  2,504

Printing and Mailing
of Prospectuses and
Semi-Annual and Annual
Reports to Other Than

Current Shareholders      $    123      $    174      $    174     $    150      $    337

Compensation to
Underwriters              $ 35,044      $ 51,314      $ 49,883     $ 41,903      $ 93,272

Compensation to
Dealers                   $290,699      $409,675      $406,481     $303,327      $706,662

Compensation to Sales
Personnel                 $ 12,772      $ 19,855      $ 18,640     $ 13,008      $ 31,487

Interest, Carrying or
Other Financing
Charges                   $      0      $      0      $      0     $      0      $      0

Other (Includes
Personnel Costs of
Those Home Office
Employees Involved in
the Distribution
Effort and the
Travel-related
Expenses Incurred by
the Marketing
Personnel Conducting
Seminars)                 $ 36,742      $ 53,799      $ 52,299     $ 43,937      $ 97,631

Totals                    $376,317      $536,179      $528,817     $403,449      $931,893

                                                  Percentage Per Annum
                     Distribution Services        of the Aggregate
                     Fees for Expenditures        Average Daily Net Assets
Portfolio            Payable to ABI               Attributable to Class B Shares
---------            ----------------------       ------------------------------

National                $ 43,703                         1.00%
New York                $ 78,753                         1.00%
California              $ 14,152                         1.00%
Arizona                 $ 15,370                         1.00%
Massachusetts           $ 18,032                         1.00%
Michigan                $  7,288                         1.00%
Minnesota               $  1,797                         1.00%
New Jersey              $ 15,192                         1.00%
Ohio                    $ 13,303                         1.00%
Pennsylvania            $ 13,676                         1.00%
Virginia                $ 17,918                         1.00%

                          National      New York      California   Arizona       Massachusetts
Category of Expense       Portfolio     Portfolio     Portfolio    Portfolio     Portfolio
-------------------       ----------    ----------    ----------   ----------    ----------
Advertising/ Marketing    $    47       $    85       $   15       $    18       $   21

Printing and Mailing
of Prospectuses and
Semi-Annual and Annual
Reports to Other Than
Current Shareholders      $     4       $     5       $    2       $     4       $    3

Compensation to
Underwriters              $ 1,848       $ 3,336       $  597       $   650       $  759

Compensation to
Dealers                   $16,072       $32,330       $4,434       $ 4,062       $5,614

Compensation to Sales
Personnel                 $   148       $   306       $   12       $    10       $    7

Interest, Carrying or
Other Financing
Charges                   $     0       $     0       $    0       $     0       $    0

Other (Includes
Personnel Costs of
Those Home Office
Employees Involved in
the Distribution
Effort and the
Travel-related
Expenses Incurred by
the Marketing
Personnel Conducting

Seminars)                 $ 1,914       $ 3,447       $  617       $   671       $  791

Totals                    $20,033       $39,509       $5,677       $ 5,415       $7,195

                          Michigan      Minnesota     New Jersey   Ohio          Pennsylvania  Virginia
Category of Expense       Portfolio     Portfolio     Portfolio    Portfolio     Portfolio     Portfolio
-------------------       ---------     ---------     ---------    ---------     ---------     ---------
Advertising/ Marketing    $    9        $  0          $   18       $   16        $   16        $   20

Printing and Mailing
of Prospectuses and
Semi-Annual and Annual
Reports to Other Than
Current Shareholders      $    1        $  0          $    4       $    4        $    3        $    3

Compensation to
Underwriters              $  310        $ 76          $  642       $  561        $  576        $  747

Compensation to
Dealers                   $2,500        $553          $4,959       $4,191        $4,508        $5,626

Compensation to Sales
Personnel                 $   14        $  0          $   15       $    7        $   15        $   18

Interest, Carrying or
Other Financing
Charges                   $    0        $  0          $    0       $    0        $    0        $    0

Other (Includes
Personnel Costs of
Those Home Office
Employees Involved in
the Distribution
Effort and the
Travel-related
Expenses Incurred by
the Marketing
Personnel Conducting

Seminars)                 $  320        $ 76          $  668       $  584        $  601        $  785

Totals                    $3,154        $705          $6,306       $5,363        $5,719        $7,199

                                                  Percentage Per Annum
                     Distribution Services        of the Aggregate
                     Fees for Expenditures        Average Daily Net Assets
Portfolio            Payable to ABI               Attributable to Class C Shares
---------            ----------------------       ------------------------------

National                $1,672,834                        1.00%
High Income             $2,347,815                        1.00%
New York                $1,006,294                        1.00%
California              $1,013,868                        1.00%
Arizona                 $  345,638                        1.00%
Massachusetts           $  724,386                        1.00%
Michigan                $  268,357                        1.00%
Minnesota               $  219,980                        1.00%
New Jersey              $  366,814                        1.00%
Ohio                    $  434,089                        1.00%
Pennsylvania            $  273,840                        1.00%
Virginia                $  707,850                        1.00%

Category                  National      High Income   New York     California    Arizona     Massachusetts
of Expense                Portfolio     Portfolio     Portfolio    Portfolio     Portfolio   Portfolio
----------                ---------     ---------     ---------    ---------     ---------   --------------
Advertising/ Marketing    $    1,755    $    2,444    $    1,062   $    1,068    $    385    $     807

Printing and Mailing
of Prospectuses and
Semi-Annual and Annual
Reports to Other Than
Current Shareholders      $      107    $      136    $       68   $       64    $     51    $     103

Compensation to
Underwriters              $   70,012    $   97,790    $   42,182   $   42,536    $ 14,426    $  30,224

Compensation to
Dealers                   $1,584,178    $2,125,913    $  925,030   $1,034,160    $334,774    $ 721,511

Compensation to Sales
Personnel                 $   20,278    $   77,194    $   17,654   $    5,488    $  4,365    $  12,091

Interest, Carrying or
Other Financing
Charges                   $        0    $        0    $        0   $        0    $      0    $       0

Other (Includes
Personnel Costs of
Those Home Office
Employees Involved in
the Distribution
Effort and the
Travel-related
Expenses Incurred by
the Marketing
Personnel Conducting

Seminars)                 $   72,775    $  101,883    $   43,812   $   44,137    $ 15,131    $  31,712

Totals                    $1,749,105    $2,405,360    $1,029,808   $1,127,453    $369,132    $ 796,448

                          Michigan      Minnesota     New Jersey   Ohio          Pennsylvania  Virginia
Category of Expense       Portfolio     Portfolio     Portfolio    Portfolio     Portfolio     Portfolio
-------------------       ---------     ---------     ---------    ---------     ---------     ---------
Advertising/ Marketing    $    303      $    244      $    410     $    484      $    308      $    796

Printing and Mailing
of Prospectuses and
Semi-Annual and Annual
Reports to Other Than
Current Shareholders      $     40      $     33      $     54     $     64      $     40      $    108

Compensation to
Underwriters              $ 11,210      $  9,180      $ 15,309     $ 18,145      $ 11,444      $ 29,595

Compensation to
Dealers                   $310,126      $213,537      $373,873     $421,697      $285,734      $693,053

Compensation to Sales
Personnel                 $  2,703      $  3,203      $  4,876     $  4,037      $  2,700      $  7,112

Interest, Carrying or
Other Financing
Charges                   $      0      $      0      $      0     $      0      $      0      $      0

Other (Includes
Personnel Costs of
Those Home Office
Employees Involved in
the Distribution
Effort and the
Travel-related
Expenses Incurred by
the Marketing
Personnel Conducting
Seminars)                 $ 11,751      $  9,632      $ 16,066     $ 19,014      $ 11,992      $ 30,997

Totals                    $336,133      $235,829      $410,588     $463,441      $312,218      $761,661

                                National      High Income    New York    California     Arizona      Massachusetts
Class                           Portfolio     Portfolio      Portfolio   Portfolio      Portfolio    Portfolio
-----                           ---------     ---------      ---------   ---------      ---------    ---------
Class B                         $     0       $     0        $     0     $       0      $     0      $      0
(% of the net assets of               0%            0%             0%            0%           0%            0%
Class B)

Class C                         $76,271       $57,545        $23,514     $ 113,585      $23,496      $ 72,063
(% of the net assets of
Class C)                            .05%          .03%           .03%          .13%         .08%          .11%

                                Michigan      Minnesota      New Jersey   Ohio          Pennsylvania   Virginia
Class                           Portfolio     Portfolio      Portfolio    Portfolio     Portfolio      Portfolio
-----                           ---------     ---------      ---------    ---------     ---------      ---------
Class B                         $     0       $     0        $     0      $     0       $     0        $     0
(% of the net assets of               0%            0%             0%           0%            0%             0%
Class B)

Class C                         $67,777       $15,850        $43,773      $29,351       $38,377        $53,813
(% of the net assets of
Class C)                            .31%          .08%           .13%         .08%          .16%           .09%

                                       Amounts ABI          Amounts ABI           Amounts ABI
                                       Received In          Received In           Received In
Fiscal Year Ended                      CDSCs From           CDSCs From            CDSCs From
September 30         Portfolio         Class A Shares       Class B Shares        Class C Shares
------------         ----------        ---------------      ---------------       ---------------
2013                 National          $ 109,591            $    663              $  9,553
2012                                      23,011               1,199                 8,018
2011                                      45,242               4,930                21,815


2013                 High Income       $ 153,166                 N/A              $ 87,962
2012                                      18,873                 N/A                23,228
2011                                      73,190                 N/A                63,414


2013                 California        $   2,646            $     95              $  7,777
2012                                         981                 389                 5,025
2011                                      13,557               4,245                 3,560


2013                 New York          $  62,284            $  1,632              $ 30,401
2012                                      14,409                 871                 9,108
2011                                      60,193               5,347                23,006


2013                 Minnesota         $   2,270            $      0              $  7,984
2012                                           0                   0                 2,157
2011                                         158                 190                 6,606


2013                 New Jersey        $      63            $     59              $  2,473
2012                                         196                 566                   773
2011                                       1,000               1,728                 4,855


2013                 Ohio              $       0            $      0              $  4,420
2012                                           0                  17                 3,061
2011                                       7,819               2,234                 3,805


2013                 Pennsylvania      $   9,305            $     54              $  4,706
2012                                           0                   0                   438
2011                                       2,163                 742                 1,405


2013                 Michigan          $       0            $     22              $  3,063
2012                                           0                 279                 2,394
2011                                         601               4,798                 2,146



2013                 Massachusetts     $  25,337            $      1              $ 14,094
2012                                           0                 130                 8,047
2011                                      19,001                 334                18,427


2013                 Virginia          $  31,492            $    138              $  9,759
2012                                           0                 278                 2,902
2011                                      21,682               1,148                 5,589


2013                 Arizona           $       0            $    538              $  3,477
2012                                       5,250                 924                 1,659
2011                                       4,490               1,153                 5,057

                                  Sales Charge
                                  -------------

                                                                  Discount or
                                                                 Commission to
                                                  As % of      Dealers or Agents
Amount of                     As % of Net       the Public       of up to % of
Purchase                    Amount Invested   Offering Price     Offering Price
--------                    ---------------   --------------     --------------

Up to $100,000                    3.09%          3.00%              3.00%
$100,000 up to $250,000           2.04           2.00               2.00
$250,000 up to $500,000           1.01           1.00               1.00
$500,000 and above                0.00           0.00               0.00

                                       Contingent Deferred Sales
                                       Charge for the Portfolios
Year Since Purchase            as a % of Dollar Amount Subject to Charge
-------------------            -----------------------------------------

First                                         3.00%
Second                                        2.00%
Third                                         1.00%
Fourth                                         None

                                                 NO. OF SHARES       % OF
NAME AND ADDRESS                                 OF CLASS            CLASS
----------------                                ---------           ------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                           5,606,288          8.56%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          5,946,600          9.07%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                5,224,630          7.97%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                3,939,306          6.01%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                           5,756,883          8.79%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                             9,370,428         14.30%

CLASS B SHARES:
--------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                              44,090         13.96%

LPL Financial
FBO Customer Accounts
Attn: Mutual Fund Operations
P.O. Box 509046
San Diego, CA 92150-9046                                29,897          9.47%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                             34,722         11.00%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                   38,777         12.28%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                              56,234         17.81%

CLASS C SHARES:
--------------

First Clearing, LLC
Special Custody Acct for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                           1,684,330         11.55%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          4,175,706         28.65%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                1,473,189         10.11%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                           1,335,280          9.16%

Raymond James
Omnibus For Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102                          835,090          5.73%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                             1,139,421          7.82%

ADVISOR CLASS SHARES:
--------------------

Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905                         1,971,819         11.79%

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                           1,825,586         10.92%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          3,070,475         18.36%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                2,800,606         16.75%

Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102                        5,518,923         33.00%

For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          6,496,130         11.26%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                9,047,655         15.69%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                           5,971,521         10.35%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                            14,621,225         25.35%

CLASS C SHARES:
--------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                           4,072,088         20.00%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          4,762,263         23.39%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                4,805,671         23.60%

Pershing LLC
P.O. Box 2052
Jersey City, NJ  07303-2052                          1,087,105          5.34%

Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102                        1,271,396          6.24%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                             1,623,547          7.97%

ADVISOR CLASS SHARES:
--------------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                           4,456,599         10.96%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          8,832,524         21.71%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                5,692,873         14.00%

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                             7,531,144         15.74%

LPL Financial
FBO Customer Accounts
Attn: Mutual Fund Operations
P.O. Box 509046
San Diego, CA 92150-9046                             2,992,657          6.25%

MLPF&S for the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL  32246-6484                         2,607,343          5.45%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ  07311                               2,574,268          5.38%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                7,400,002         15.47%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                          10,377,559         21.69%

CLASS B SHARES:
--------------

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                               124,319         21.86%

LPL Financial
FBO Customer Accounts
Attn: Mutual Fund Operations
P.O. Box 509046
San Diego, CA 92150-9046                                33,334          5.86%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                             81,073         14.25%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                   42,948          7.55%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                              64,348         11.31%

Vitzeslav R. Rafaelov &
Yori Rafaelov JTWROS
242 East 7th Street
Brooklyn, NY  11218-2611                                37,969          6.68%

CLASS C SHARES:
--------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                             682,766          8.22%

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                             1,917,053         23.08%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          1,134,384         13.66%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  518,779          6.25%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ  07310                                 441,631          5.32%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                           2,196,951         26.45%

ADVISOR CLASS SHARES:
--------------------

First Clearing, LLC
Special Custody Acct for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                             223,204         13.34%

LPL Financial
FBO Customer Accounts
Attn: Mutual Fund Operations
P.O. Box 509046
San Diego, CA 92150-9046                               189,917         11.35%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                            415,413         24.84%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  331,782         19.84%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             398,207         23.81%

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                           6,697,299         15.69%

MLPF&S
For the Sole Benefit of its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          6,071,956         14.23%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                5,559,407         13.03%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                           4,079,611          9.56%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                             2,604,382          6.10%

CLASS B SHARES:
---------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                              11,167         11.90%

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                                22,431         23.89%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                              5,596          5.96%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                   28,426         30.28%

Raymond James
Omnibus For Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102                            6,079          6.48%

CLASS C SHARES:
--------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                             877,147         10.90%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          2,307.554         28.67%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                1,464,755         18.20%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             801,287          9.95%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                               530,107          6.59%

ADVISOR CLASS SHARES:
---------------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                             589,673         17.33%

LPL Financial
FBO Customer Accounts
Attn: Mutual Fund Operations
P.O. Box 509046
San Diego, CA 92150-9046                               265,522          7.80%

MLPF&S
For the Sole Benefit of its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                            843,331         24.79%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                1,379,065         40.53%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             218,662          6.43%

Edward D. Jones & Co.
For the Benefit of Customers
12555 Manchester Road
Saint Louis, MO  63131-3729                            629,578          5.75%

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                           1,790,214         16.35%

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                             2,407,039         21.98%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          1,277,458         11.67%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  644,029          5.88%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                           1,002,946          9.16%

CLASS B SHARES:
---------------

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                                44,936         62.55%

RBC Capital Markets LLC
Mutual Fund Omnibus Processing
Omnibus
Attn: Mutual Fund Ops Manager
510 Marquette Avenue S.
Minneapolis, MN  55402-1110                              5,197          7.23%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                               3,783          5.27%

CLASS C SHARES:
---------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                            452,785         16.12%

JPMorgan Clearing Corp. Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                               354,268         12.61%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                            398,545         14.19%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  349,560         12.44%

Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102                          169,802          6.04%

RBC Capital Markets LLC
Mutual Fund Omnibus Processing
Omnibus
Attn: Mutual Fund OPS Manager
510 Marquette Ave. S
Minneapolis, MN  55402-1110                            150,250          5.35%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ  07086-6761                              140,726          5.01%

For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          2,413,991         13.19%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                1,331,396          7.27%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                5,909,964         32.28%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                           1,638,887          8.95%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ  07086-6761                            1,154,215          6.31%

For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                             46,911         36.27%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                   16,385         12.67%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                   21,171         16.37%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                              19,595         15.15%

Tariq J Hashmi &
Lubna Hashmi JTWROS
47 Pineridge Dr.
Westfield, MA 01085-4544                                 8,415          6.51%

For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          1,078,918         18.50%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  354,210          6.08%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                1,081,169         18.54%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             874,370         15.00%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                               378,429          6.49%

Edward D. Jones & Co.
For the Benefit of Customers
12555 Manchester Rd.
Saint Louis, MO  63131-3729                            285,268          5.83%

First Clearing, LLC
Special Custody Account for the Exclusive Benefit
of Customer
2801 Market St.
Saint Louis, MO  63103-2523                            474,336          9.70%

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                               642,853         13.14%

LPL Financial
FBO Customer Accounts
Attn: Mutual Fund Operations
P.O. Box 509046
San Diego, CA 92150-9046                               268,556          5.49%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                            405,734          8.29%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  337,903          6.91%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             496,508         10.15%

CLASS B SHARES:
--------------

Cheryle A. Diehl and Alton V. Obrecht as
TTEES of the Obrecht Fam. Tr.
U/A DTD 4-27-09
17618 E. Kirkwood Drive
Clinton Twp., MI  48038-1209                             2,782          6.18%

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                                 3,084          6.84%

Leslie W. Neinas TTEE
Linda C. Luke TTEE
einas Fam. Rev. Liv. Tr.
UA DTD 11/05/2004
47762 N. Shore Dr.
Belleville, MI 48111-2231                               16,555         36.75%

Michael B. Maxwell &
Ruth A. Maxwell
JTWROS TOD/DE
2273 Tamara Rd., NW
Kalkaska, MI 49646-8941                                  4,885         10.84%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                              3,317          7.36%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                               4,488          9.96%

CLASS C SHARES:
--------------

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                               209,229          9.39%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                            316,566         14.21%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ  07311                                 121,808          5.47%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ  07310                                 113,468          5.09%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             153,230          6.88%

Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102                          293,699         13.18%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                               152,380          6.84%

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                            641,110          8.99%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                           1,359,202         19.06%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
4999 Washington Boulevard, 4th Floor
Jersey City, NJ  07310                                 416,862          5.85%

Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102                          375,013          5.26%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                               567,570          7.96%

CLASS B SHARES:
--------------

Charles Schwab & Co.
For the Exclusive Benefit
of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905                             3,120         24.58%

Judith Jorgensen
7314 Landau Drive
Bloomington, MN  55438-2308                                797          6.28%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                                937          7.38%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                    5,787         45.58%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                               1,179          9.29%

CLASS C SHARES:
--------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                            322,086         17.13%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                            121,948          6.48%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             283,896         15.10%

RBC Capital Markets LLC
Mutual Fund Omnibus Processing
Omnibus
Attn: Mutual Fund Ops Manager
510 Marquette Ave. S
Minneapolis, MN 55402-1110                             172,309          9.16%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ  07086-6761                              204,565         10.88%

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                          1,230,252         10.39%

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                               596,848          5.04%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          1,233,243         10.41%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                1,590,877         13.43%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                2,245,221         18.96%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             967,496          8.17%

CLASS B SHARES:
---------------

Charles Schwab & Co.
For the Exclusive Benefit
of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905                            14,284         13.94%

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523                               9,179          8.96%

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                                14,257         13.91%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                             22,276         21.74%

Patricia Barrett
131 East Magnolia Ave.
Maywood, NJ 07607-1945                                  12,239         11.94%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                              12,586         12.28%

CLASS C SHARES:
--------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                            798,267         23.21%

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                               389,144         11.32%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                            945,265         27.49%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  263,888          7.67%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                  193,174          5.62%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             222,480          6.47%

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                          1,548,157         14.67%

JPMorgan Clearing Corp Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Dept.
Brooklyn, NY  11245-0001                               838,069          7.94%

LPL Financial
FBO Customer Accounts
Attn: Mutual Fund Operations
P.O. Box 509046
San Diego, CA  92150-9046                              736,837          6.98%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                            882,001          8.36%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  728,776          6.90%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                  874,989          8.29%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                           1,536,123         14.55%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ  07086-6761                              606,709          5.75%

CLASS B SHARES:
--------------

JPMorgan Clearing Corp. Omni Account
For the Exclusive Benefit of Customers
3 Chase Metrotech Center
3rd Floor Mutual Fund Center
Brooklyn, NY  11245-0001                                14,495         17.53%

LPL Financial
FBO Customer Accounts
Attn: Mutual Fund Operations
P.O. Box 509046
San Diego, CA 92150-9046                                18,842         22.79%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                             17,099         20.68%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                   13,688         16.55%

CLASS C SHARES:
---------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                            463,794         11.97%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                            684,661         17.68%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  219,227          5.66%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                  285,261          7.36%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             394,906         10.20%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                               635,149         16.40%

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                            967,648         11.09%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  723,272          8.29%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                1,709,544         19.60%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                             692,446          7.94%

CLASS B SHARES:
--------------

Arthur L. Altemose Jr. TTEE
Margaret B. Altemose TTEE
Altemose Living Trust
UA DTD 07/20/1998
1500 Princeton Avenue
Williamsport, PA  17701-1307                             5,747          6.45%

Glenn A. Salisbury &
Diana K. Salisbury JTWROS
910 Spring Circle
Mechanicsburg, PA  17055-4054                            6,209          6.96%

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                             11,512         12.91%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                              8,497          9.53%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                               8,712          9.77%

CLASS C SHARES:
--------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                            733,169         31.16%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                            444,295         18.89%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  205,485          8.73%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761                               128,773          5.47%

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                          2,402,892         13.79%

LPL Financial
FBO Customer Accounts
Attn: Mutual Fund Operations
P.O. Box 509046
San Diego, CA 92150-9046                             1,423,879          8.17%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          3,492,351         20.04%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                1,344,992          7.72%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                1,072,526          6.16%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                           1,017,350          5.84%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ  07086-6761                            1,047,644          6.01%

CLASS B SHARES:
--------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                             32,230         27.18%

LPL Financial
FBO Customer Accounts
Attn: Mutual Fund Operations
P.O. Box 509046
San Diego, CA 92150-9046                                13,569         11.44%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                             18,713         15.78%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                   29,304         24.71%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                               8,090          6.82%

CLASS C SHARES:
--------------

First Clearing, LLC
Special Custody Acct. for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO  63103-2523                          1,051,310         18.95%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr., East
2nd Floor
Jacksonville, FL 32246-6484                          1,705,171         30.74%

Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311                                  601,589         10.85%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Boulevard, 4th Floor
Jersey City, NJ 07310                                  322,017          5.81%