Notes to Financial Statements (Unaudited) CALIFORNIA INCOME
During the six months ended February 28, 1999, the Fund entered into financial
futures contracts. Details of open contracts at February 28, 1999 are as
For federal income tax purposes, the Series has a capital loss carryforward at
August 31, 1998 of approximately $2,756,900 of which $1,781,200 expires in 2003
and $975,700 expires in 2004. Accordingly, no capital gains distributions are
expected to be paid to shareholders until net gains have been realized in excess
of such amount.
For federal income tax purposes, the Series will elect to treat net capital
losses of $32,200 incurred in the ten month period ending August 31, 1998 as
having been incurred in the current fiscal year.
Note 5. Capital
The Series offers Class A, Class B, Class C and Class Z shares. Class A shares
are sold with a front-end sales charge of up to 3%. Class B shares are sold with
a contingent deferred sales charge which declines from 5% to zero depending on
the period of time the shares are held. Class C shares are sold with front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. Prior to November 2, 1998, Class C shares were sold with a contingent
deferred sales charge of 1% during the first year. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately seven
years after purchase. A special exchange privilege is also available for
shareholders who qualify to purchase Class A shares at net asset value.
The Fund has authorized an unlimited number of shares of beneficial interest for
each class at $.01 par value per share.
Transactions in shares of beneficial interest for the six months ended February
28, 1999 and fiscal year ended August 31, 1998 were as follows:
Value at Unrealized
Number of Expiration February 28,