<PAGE> 1
STATEMENT OF ADDITIONAL INFORMATION
(SAI) SUPPLEMENT MARCH 31, 1997*
IDS Intermediate Tax-Exempt Fund (October 11, 1996) Form No. S-6353 A (10-96)
The SAI has been revised to include:
Financial statements
Statement of assets and liabilities
IDS Intermediate Tax-Exempt Fund
Jan. 31, 1997
Assets
<TABLE>
<CAPTION>
<S> <C>
Investments in securities, at value (Note 1) (Unaudited)
(identified cost $9,918,994) $ 9,937,765
Accrued interest receivable 82,796
Cash in bank on demand deposit 57,787
Other receivables 40,114
Expense receivable from AEFC 326
Organizational cost 105
Total assets $10,118,893
Liabilities
Dividends payable to shareholders 1,586
Payable for investment securities purchased 506,757
Accrued investment management services fee 117
Accrued distribution fee 49
Accrued service fee 46
Accrued transfer agency fee 15
Accrued administrative services fee 10
Other accrued expenses 18,036
Total liabilities 526,616
Net assets applicable to outstanding capital stock $ 9,592,277
Represented by
Capital stock -- $.01 par value (Note 1) $ 19,035
Additional paid-in capital 9,554,111
Undistributed net investment income 360
Unrealized appreciation 18,771
Total -- representing net assets applicable to outstanding capital stock $ 9,592,277
Net assets applicable to outstanding shares: Class A $ 7,189,341
Class B $ 2,401,923
Class Y $ 1,013
Net asset value per share of outstanding capital stock: Class A shares 1,426,642 $ 5.04
Class B shares 476,690 $ 5.04
Class Y shares 201 $ 5.04
</TABLE>
See accompanying notes to financial statements.
* 3/97 Valid until next SAI update
Destroy January 29, 1998
<PAGE> 2
Statement of operations
IDS Intermediate Tax-Exempt Fund
Period ended Jan. 31, 1997
Investment income
<TABLE>
<CAPTION>
<S> <C>
Income: (Unaudited)
Interest $ 43,824
Expenses (Note 2):
Investment management services fee 4,742
Distribution fee -- Class B 1,950
Transfer agency fee 598
Incremental transfer agency fee -- Class B 10
Service fee
Class A 1,389
Class B 455
Administrative services fees and expenses 421
Compensation of officers 64
Custodian fees 1,701
Postage 1,660
Registration fees 17,863
Reports to shareholders 1,011
Audit fees 2,659
Administrative 572
Other 318
Total expenses 35,413
Expenses voluntarily reimbursed by AEFC (Note 2) (23,942)
11,471
Earnings credits on cash balances (Note 2) (300)
Total net expenses 11,171
Investment income -- net 32,653
Unrealized gain -- net
Net change in unrealized appreciation or depreciation 12,205
Net increase in net assets resulting from operations $ 44,858
</TABLE>
See accompanying notes to financial statements.
<PAGE> 3
Statement of changes in net assets
IDS Intermediate Tax-Exempt Fund
Operations and distributions
<TABLE>
<CAPTION>
For the period For the period
from Dec. 1, 1996 from Nov. 13, 1996*
to Jan. 31, 1997 to Nov. 30, 1996
(Unaudited)
<S> <C> <C>
Investment income -- net $ 32,653 $ 936
Net change in unrealized appreciation or depreciation 12,205 6,566
Net increase in net assets resulting from operations 44,858 7,502
Distributions to shareholders from:
Net investment income
Class A (25,783) (787)
Class B (6,504) (148)
Class Y (6) (1)
Total distributions (32,293) (936)
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 6,397,258 1,554,812
Class B shares 2,279,420 450,611
Reinvestment of distributions at net asset value
Class A shares 22,785 474
Class B shares 5,908 103
Class Y shares 6 1
Payments for redemptions
Class A shares (785,187) (16,159)
Class B shares (Note 2) (339,416) (550)
Increase in net assets from share transactions 7,580,774 1,989,372
Total increase in net assets 7,593,339 1,995,938
Net assets at beginning of period 1,998,938 3,000
Net assets at end of period
(including undistributed net investment income of
$360 and $0) $9,592,277 $1,998,938
</TABLE>
* Commencement of operations
See accompanying notes to financial statements.
<PAGE> 4
Notes to financial statements
IDS Intermediate Tax-Exempt Fund
(Unaudited as to Jan. 31, 1997)
________________________________________________________
1. Summary of significant accounting policies
IDS Intermediate Tax-Exempt Fund (a series of IDS Tax-Exempt Bond Fund, Inc.) is
registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. IDS Tax-Exempt Bond Fund,
Inc. has 10 billion authorized shares of capital stock that can be allocated
among the separate series as designated by the board. On Nov. 12, 1996, American
Express Financial Corporation (AEFC) invested $3,000 in the Fund which
represented 200 shares for Class A, Class B and Class Y, respectively.
The Fund invests primarily in investment-grade bonds and other debt securities
issued by or on behalf of state or local governmental units whose interest is
exempt from federal income tax. The Fund offers Class A, Class B and Class Y
shares. Class A shares are sold with a front-end sales charge. Class B shares
may be subject to a contingent deferred sales charge and such shares
automatically convert to Class A after eight years. Class Y shares have no sales
charge and are offered only to qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation and other
rights, and the same terms and conditions, except that the level of distribution
fee, transfer agency fee and service fee (class specific expenses) differs among
classes. Income, expenses (other than class specific expenses) and realized and
unrealized gains or losses on investments are allocated to each class of shares
based upon its relative net assets.
Significant accounting policies followed by the Fund are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Determination of fair
value involves, among other things, reference to market indexes, matrixes and
data from independent brokers. Short-term securities maturing in more than 60
days from the valuation date are valued at the market price or approximate
market value based on current interest rates; those maturing in 60 days or less
are valued at amortized cost.
<PAGE> 5
Option transactions
In order to produce incremental earnings, protect gains, and facilitate buying
and selling of securities for investment purposes, the Fund may buy or sell put
and call options and write covered call options on portfolio securities and may
write cash-secured put options. The risk in writing a call option is that the
Fund gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist. The Fund also
may write over-the-counter options where the completion of the obligation is
dependent upon the credit standing of the other party.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss upon expiration or closing of the option transaction.
When options on debt securities or futures are exercised, the Fund will realize
a gain or loss. When other options are exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Fund may buy and sell financial futures contracts. Risks of entering into
futures contracts and related options include the possibility that there
may be an illiquid market and that a change in the value of the contract or
option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the deferral of losses
on certain futures contracts and losses deferred due to "wash sale"
transactions. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
<PAGE> 6
Dividends to shareholders
Dividends from net investment income, declared daily and payable monthly, are
reinvested in additional shares of the Fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last income
dividend of the calendar year.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Interest income, including level-yield amortization of premium and
discount, is accrued daily.
At Jan. 31, 1997, AEFC owned 201 Class Y shares.
________________________________________________________
2. Expenses and sales charges
The Fund entered into agreements with AEFC for managing its portfolio, providing
administrative services and serving as transfer agent. Under its Investment
Management Services Agreement, AEFC determines which securities will be
purchased, held or sold. The management fee is a percentage of the Fund's
average daily net assets in reducing percentages from 0.45% to 0.35% annually.
Under an Administrative Services Agreement, the Fund pays AEFC for
administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.04% to 0.02% annually.
Additional administrative services paid by the Fund are office expenses,
consultant's fees and compensation of officers and employees. Under this
agreement, the Fund also pays taxes, audit and certain legal fees, registration
fees for shares, compensation of board members, corporate filing fees,
organizational expenses, and any other expenses properly payable by the Fund
approved by the board.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. The Fund pays AEFC an annual fee per shareholder account for this
service as follows:
o Class A $15.50
o Class B $16.50
o Class Y $15.50
The Fund entered into agreements with American Express Financial Advisors Inc.
for distribution and shareholder servicing-related services. Under a Plan and
Agreement of Distribution, the Fund pays a distribution fee at an annual rate of
0.75% of the Fund's average daily net assets attributable to Class B shares for
distribution-related services.
Under a Shareholder Service Agreement, the Fund pays a fee for service provided
to shareholders by financial advisors and other servicing agents. The fee is
calculated at a rate of 0.175% of the Fund's average daily net assets
attributable to Class A and Class B shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $128,644 for Class A for the period ended Jan. 31,
1997.
AEFC has agreed to waive certain fees and to absorb certain other of the Fund's
expenses until Nov. 30, 1997. Under this agreement, the Fund's total expenses
will not exceed 0.90% for Class A, 1.66% for Class B and 0.73% for Class Y of
the Fund's average daily net assets.
________________________________________________________
3. Securities transactions
Cost of purchases of securities (other than short-term obligations) aggregated
$8,307,710 for the period ended Jan. 31, 1997. Realized gains and losses are
determined on an identified cost basis.
<PAGE> 7
________________________________________________________
4. Capital share transactions
<TABLE>
<CAPTION>
Transactions in shares of capital stock for the periods indicated are as follows:
Period ended Jan. 31, 1997
Class A Class B Class Y
_____________________________________________________________________________________________
<S> <C> <C> <C>
Sold 1,271,860 453,346 --
Issued for reinvested 4,530 1,175 1
distributions
Redeemed (156,145) (67,576) --
______________________________________________________________________________________________
Net increase 1,120,245 386,945 1
______________________________________________________________________________________________
Period ended Nov. 30, 1996*
Class A Class B Class Y
_______________________________________________________________________________________________
Sold 309,309 89,635 --
Issued for reinvested 94 20 --
distributions
Redeemed (3,206) (110) --
_______________________________________________________________________________________________
Net increase 306,197 89,545 --
_______________________________________________________________________________________________
</TABLE>
* Inception date was Nov. 13, 1996.
______________________________________________________________________________
5. Financial highlights
The table below shows certain important financial
information for evaluating the Fund's results.
<PAGE> 8
Investments in securities
<TABLE>
<CAPTION>
IDS Intermediate Tax-Exempt Fund (Percentages represent value of
Jan. 31, 1997 (Unaudited) investments compared to net assets)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Municipal bonds (96.3%)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Name of issuer and title of issue (b,c) Coupon Maturity Principal Value(a)
rate year amount
- --------------------------------------------------------------------------------------------------------
Alaska (1.0%)
Ancorage Light & Power Senior Lien
Electric Utilities Refunding Revenue Bonds
Series 1996C (AMBAC Insured) 4.10% 1999 $100,000 $ 99,551
- --------------------------------------------------------------------------------------------------------
Arizona (2.7%)
Phoenix Water System Refunding Revenue Bonds
Series 1993 4.40 1999 75,000 75,339
Salt River Agricultural Improvement & Power
District Electric Refunding Revenue Bonds
Series 1993C 4.25 2001 70,000 69,649
State Health Facility Authority Hospital
Refunding Revenue Bonds Samaritan Health Systems
Series A (MBIA Insured) 5.10 2002 25,000 25,542
State Transportation Board Highway Sales Tax
Refunding Revenue Bonds
Series 1993 4.25 1998 85,000 85,579
-------------
Total 256,109
- --------------------------------------------------------------------------------------------------------
Arkansas (0.4%)
State Finance Authority Revolving Loan
Refunding Revenue Bonds Series 1993B
(MBIA Insured) 4.80 2004 40,000 40,169
- --------------------------------------------------------------------------------------------------------
Colorado (2.5%)
Arvada Urban Renewal Authority
Tax Allocation Refunding Revenue Bonds
Series 1997A (MBIA Insured) 5.25 2002 200,000 206,726
Denver City & County School District #1 Facility
Certificate of Participation
Series 1996 (AMBAC Insured) 5.00 2005 30,000 30,298
-------------
Total 237,024
Connecticut (1.4%)
State Unlimited General Obligation Bonds
Series 1995A 5.00 2000 130,000 132,588
- --------------------------------------------------------------------------------------------------------
Florida (1.7%)
State Ports Financing Commission
Port District Revenue Bonds
Series 1996 (MBIA Insured) A.M.T 4.60 2003 100,000 98,945
State Unlimited General Obligation Bonds
Series 1991 5.40 1998 65,000 66,051
-----------
Total 164,996
- --------------------------------------------------------------------------------------------------------
Georgia (2.9%)
Clarke County Hospital Authority
Hospital Revenue Certificates
Series 1996 (MBIA Insured) 5.00 2001 150,000 152,605
Dalton Development Authority
Revenue Certificates
Series 1996 (MBIA Insured) 4.63 2004 125,000 (d) 123,394
-------------
Total 275,999
- --------------------------------------------------------------------------------------------------------
<PAGE> 9
Illinois (6.5%)
Chicago Unlimited General Obligation Project &
Refunding Bonds Series 1996B (FGIC Insured) 5.00 2000 130,000 132,144
North Chicago Unlimited General Obligation
Refunding Bonds Series 1996 (FGIC Insured) 4.60 2001 200,000 201,776
State Educational Facilities Authority Revenue Bonds
Lewis University Series 1996 5.10 2003 140,000 137,773
State Health Facilities Authority Hospital
Refunding Revenue Bonds Series 1996A 5.00 2003 125,000 124,515
State Health Facilities Authority Hospital
Riverside Health Systems Refunding Revenue Bonds
Series 1996A (MBIA Insured) 5.00 2004 25,000 25,094
-------------
Total 621,302
- --------------------------------------------------------------------------------------------------------
Indiana (4.6%)
Purdue University Certificate of Participation
Series 1996 5.75 2006 150,000 157,326
State Bank Revenue Bonds
Series B 5.00 1999 160,000 162,462
State Transportation Finance Authority Airport
Facility Lease Refunding Revenue Bonds
Series 1996A (AMBAC Insured) 4.50 2003 125,000 123,219
-------------
Total 443,007
- --------------------------------------------------------------------------------------------------------
Kansas (2.1%)
State Development Finance Authority
Health Facilities Revenue Hays Medical Center
Series B (MBIA Insured) 5.00 2000 200,000 204,554
- --------------------------------------------------------------------------------------------------------
Louisiana (2.2%)
State Unlimited Tax General Obligation
Refunding Bonds Series 1996A 6.00 2002 200,000 213,670
- --------------------------------------------------------------------------------------------------------
Maine (1.1%)
State Technical College System
Certificate of Participation
Series 1997 (MBIA Insured) 4.80 2002 100,000 100,561
- --------------------------------------------------------------------------------------------------------
Michigan (1.3%)
Detroit Sewer Disposal Refunding Revenue Bonds
Series 1993A (FGIC Insured) 5.25 2005 25,000 25,631
State Trunk Line Fuel Sales Tax
Refunding Revenue Bonds Series 1992B-1 5.10 1999 100,000 102,420
-------------
Total 128,051
- --------------------------------------------------------------------------------------------------------
Minnesota (1.6%)
State Unlimited General Obligation Refunding Bonds
Series 1993 4.80 1998 150,000 152,145
- --------------------------------------------------------------------------------------------------------
Mississippi (3.1%)
Jackson Airport Authority Revenue Bonds
(AMBAC Insured) 6.25 2001-2 280,000 297,770
- --------------------------------------------------------------------------------------------------------
Missouri (2.4%)
Kansas City Water Revenue Bonds
Series 1996B 5.75 1999 100,000 104,229
State Health & Educational Facility Authority
Hospital Revenue Bonds Series 1993A 4.50 2002 125,000 123,834
-------------
Total 228,063
- --------------------------------------------------------------------------------------------------------
Nevada (1.1%)
Washoe County Limited General Obligation
Refunding Bonds Series 1993B (AMBAC Insured) 4.80 2000 100,000 101,475
- --------------------------------------------------------------------------------------------------------
New Hampshire (1.0%)
State Business Finance Authority Resource
Recovery Revenue Bonds (MBIA Insured) 4.65 2001 100,000 100,115
- --------------------------------------------------------------------------------------------------------
<PAGE> 10
New York (10.9%)
New York City Individual Development Agency
Civilian Facilities Revenue Bonds Young Men's
Christian Association Greater New York Project 5.00 2002 300,000 297,867
New York City Unlimited General Obligation Bonds
Series 1996E 5.10 2002 20,000 19,953
New York City Unlimited General Obligation Bonds
Series 1997G 5.00 2000-2 300,000 299,284
State Dormitory Authority Federal Housing
Authority Insured Hospital Revenue Bonds
Series 1996 (AMBAC Insured) 5.00 2001 125,000 126,990
State Environmental Facilities Corporation
Special Obligation Lease Refunding Revenue Bonds
Series 1996 (AMBAC Insured) 4.60 2001 200,000 200,968
State Urban Development Corporation Lease Revenue Bonds
Series 1996-7 5.00 2004 70,000 68,873
State Urban Development Correctional Facility
Sub Lein Revenue Bonds Series 1996 5.25 2002 30,000 30,794
-------------
Total 1,044,729
- --------------------------------------------------------------------------------------------------------
North Carolina (1.4%)
State Medical Care Community Hospital Revenue Bonds
Duke University Hospital
Series 1996C 4.75 2004 30,000 29,669
Union City Unlimited General Obligation Bonds
Series 1996B (MBIA Insured) 5.25 2001 100,000 103,294
-------------
Total 132,963
- --------------------------------------------------------------------------------------------------------
North Dakota (1.0%)
Ward County Health Care Facility Revenue Bonds
Series 1996A 5.40 2003 100,000 99,035
- --------------------------------------------------------------------------------------------------------
Ohio (4.4%)
Cleveland Cuyahoga County Port Authority
Refunding Revenue Bonds
Sub Rock & Roll Hall of Fame 5.10 2002 300,000 298,485
University of Cincinnati Certificate of Participation
Series 1996 (MBIA Insured) 4.55 2004 125,000 123,125
-------------
Total 421,610
- --------------------------------------------------------------------------------------------------------
Oklahoma (2.9%)
Enid Municipal Authority Sales Tax & Utility
Refunding Revenue Bonds
Series 1996 (AMBAC Insured) 4.50 2000 250,000 250,695
Norman Hospital Authority Refunding Revenue Bonds
Series 1996A (MBIA Insured) 5.00 2004 30,000 30,244
-------------
Total 280,939
- --------------------------------------------------------------------------------------------------------
Oregon (0.6%)
Health Sciences University College Revenue Bonds
Series 1995A (MBIA Insured) 4.38 2002 60,000 59,343
- --------------------------------------------------------------------------------------------------------
Pennsylvania (4.0%)
Commonwealth of Pennsylvania Unlimited General
Obligation Bonds 3rd Series 1993 4.50 2000 150,000 150,684
Cumberland County Municipal Authority
Nursing Home Revenue Bonds
Series 1996 5.35 2003 125,000 124,355
Philadelphia Independent Development
Authority Lease Revenue Bonds Series 1996A
(MBIA Insured) 4.45 2001 70,000 69,764
Philadelphia Intergovernmental Cooperation Authority
Special Tax Revenue Bonds
Series 1992 6.00 2002 40,000 42,734
-------------
Total 387,537
- --------------------------------------------------------------------------------------------------------
Rhode Island (2.1%)
State Refunding Certificate of Participation
Series 1997 (MBIA Insured) 4.70 2002 200,000 199,772
- --------------------------------------------------------------------------------------------------------
South Carolina (0.7%)
Pickens County School District Unlimited
General Obligation Bonds Series 1996A
(FGIC Insured) 4.90 2006 70,000 69,995
- -------------------------------------------------------------------------------------------------------
South Dakota (1.6%)
Sioux Falls Sales Tax Revenue Bonds
Series 1996A (AMBAC Insured) 5.00 2004 150,000 152,602
- --------------------------------------------------------------------------------------------------------
<PAGE> 11
Tennessee (0.3%)
Memphis Unlimited General Obligation Bonds
Series 1992 4.80 1998 25,000 25,266
- --------------------------------------------------------------------------------------------------------
Texas (9.3%)
Arlington Independent School District Unlimited
General Obligation Refunding & Improvement Bonds
Series 1995 Permanent School Fund Guarantee 6.50 2004 25,000 27,575
Austin Utility System Refunding Revenue Bonds
Series 1993 5.00 1999 300,000 304,971
Houston Water & Sewer System Revenue Jr. Lien
Refunding Bonds Series 1992C (MBIA Insured) 5.10 1999 100,000 102,509
Houston Water & Sewer System Refunding Revenue Bonds
Series 1992B 5.25 1999 250,000 256,593
Hutto Independent School District Unlimited Tax
School Building & Refunding Bonds
Series 1997 Permanent School Fund Guarantee 4.40 2000 100,000 100,167
North Municipal Water District Solid Waste
Disposal Systems Revenue Bonds Series 1996
(AMBAC Insured) 4.90 2004 35,000 35,285
Trinity River Authority Wastewater System
Refunding Revenue Bonds Series A 5.10 2001 25,000 25,626
University of Texas Permanent Fund College
Refunding Revenue Bonds Series 1996 4.50 1999 40,000 40,464
-------------
Total 893,190
- --------------------------------------------------------------------------------------------------------
Utah (4.2%)
St. George Excise Tax Revenue Bonds
Series 1996 (AMBAC Insured) 4.05 1998 250,000 250,557
Salt Lake City School District Unlimited General
Obligation Bonds Series 1995A 5.25 2001 150,000 154,712
-------------
Total 405,269
- --------------------------------------------------------------------------------------------------------
Virginia (3.2%)
Chesapeake Individual Development Authority
Public Facility Lease Revenue Bonds
Series 1996 (MBIA Insured) 4.80 2003 100,000 100,754
State College Building Authority Educational
Facilities Revenue 21st Century College Program 5.00 1998 200,000 203,234
-------------
Total 303,988
- --------------------------------------------------------------------------------------------------------
Washington (3.4%)
State Public Power Supply System Nuclear Project #3
Refunding Revenue Bonds Series 1993B 5.15 2002 300,000 303,519
State Unlimited General Obligation Bonds
Series 1995C 5.50 1997 25,000 25,201
-------------
Total 328,720
- --------------------------------------------------------------------------------------------------------
West Virginia (1.1%)
State Facility Authority Community Building
SeriesA (MBIA Insured) 5.00 2002 100,000 101,559
- --------------------------------------------------------------------------------------------------------
Wisconsin (5.6%)
Mequon Bond Anticipation Note
Series 1996 4.10 1998 150,000 149,766
State Health and Educational Facilities Authority
Revenue Bonds
Series 1996 (MBIA Insured) 4.75 2004 150,000 148,830
State Health and Educational Facilities Authority
Revenue Bonds Meriter Hospital Series 1996 4.45 1998 100,000 100,222
State Health and Educational Facilities Authority
Revenue Bonds Meriter Hospital Series 1996 4.65 1999 100,000 100,336
State Unlimited General Obligation Bonds
Series 1996F 4.50 2002 35,000 34,945
-------------
Total 534,099
- --------------------------------------------------------------------------------------------------------
Total municipal bonds
(Cost: $9,218,994) $9,237,765
- --------------------------------------------------------------------------------------------------------
<PAGE> 12
- -------------------------------------------------------------------------------------------------------
</TABLE>
Short-term securities (7.3%)
<TABLE>
<CAPTION>
Issuer (d) Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Municipal notes
Port Arthur Naval District of Jefferson Pollution
Control Revenue Bonds 3.70% $400,000 $ 400,000
Washington University Health & Education
Facility Authority Series A 3.70 300,000 300,000
- --------------------------------------------------------------------------------------------------------
Total short-term securities $ 700,000
(Cost: $700,000)
- --------------------------------------------------------------------------------------------------------
Total investment in securities
(Cost: $9,918,994) (f) $9,937,765
- --------------------------------------------------------------------------------------------------------
</TABLE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b)Investments in bonds, by rating category as a percentage of total bonds,
are as follows:
(Unaudited)
Rating 1-31-97 11-30-96
AAA 55% 36%
AA 19 29
A 10 30
BBB 11 3
BB and below 5 2
Non-rated -- --
- -------------------------------------------------------------------------------
Total 100% 100%
- -------------------------------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
FGIC -- Financial Guarantee Insurance Corporation
MBIA -- Municipal Bond Investors Assurance
(d) Interest rate varies to reflect current market conditions: rates shown are
the effective rates on Jan. 31, 1997.
(e) The Portfolio is entitled to receive principal amount from issuer or
corporate guarantor, if indicated in parenthesis, after a day or week's notice.
The maturity date disclosed represents the final maturity. The following
abbreviation is used in the portfolio descriptions:
A.M.T. - Alternative Minimum Tax - As of Jan. 31, 1997, the value of securities
subject to alternative minimum tax represented 1.0% of net assests.
(f) At Jan. 31, 1997, the cost of securities for federal income tax purposes
was approximately $9,919,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $29,000
Unrealized depreciation (10,000)
- ------------------------------------------------------------------------------
Net unrealized appreciation $19,000
- ------------------------------------------------------------------------------
