AXP(SM)
Tax-Exempt
Bond Fund
1999 SEMIANNUAL REPORT
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The goal of AXP Tax-Exempt Bond Fund is to provide shareholders with as much
current income exempt from federal income taxes as possible with only modest
risk to the shareholder's investments.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
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Double-barreled Benefit
Most of the public facilities that we take for granted -- schools, water and
sewer systems, highways, government buildings -- are, in effect, largely funded
by loans from citizens. These loans take the form of state and local government
bonds (called "municipals"), which are bought by investors, including Tax-Exempt
Bond Fund. The government gets the funding it needs, while the bond-buyers,
including Fund shareholders, get ongoing interest income. But there's another,
bigger benefit with municipals: Investors pay no federal taxes on the income
they generate and potentially no state taxes.
CONTENTS
From the Chairman.........................3
From the Portfolio Manager................3
Fund Facts................................5
The 10 Largest Holdings...................6
Financial Statements......................7
Notes to Financial Statements............10
Investments in Securities................17
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(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
American Express(R) Funds held shareholder meetings in June 1999. Shareholders
approved all of the proposals advanced by management. Among the proposals were:
o The election of Board members and the selection of KPMG LLP as independent
auditors.
o Change in the Fund name from "IDS" to "AXP."
o A new shareholder service and distribution plan.
o Changes with respect to fundamental investment policies.
No other business was presented at the meeting, which was concluded by a report
to shareholders from the Investment Department of American Express Financial
Corporation.
Thanks to all of you for your effort in reviewing the proxy material and voting
your proxies.
Arne H. Carlson
(picture of) Terry L. Seierstad
Terry L. Seierstad
Portfolio manager
From the Portfolio Manager
Rising interest rates hampered the performance of AXP Tax-Exempt Bond Fund
during the first half of the fiscal year -- December 1998 through May 1999.
While the rate rise had little effect on the Fund's dividend, it did reduce its
net asset value, ultimately resulting in a total return of 0.25% for Class A
shares.
The bond market was coming off a strong rally when the period began. Assured by
remarkably low inflation figures, long-term interest rates had embarked on a
downward path late last spring. That trend was reinforced during the summer and
fall when financial crises in several developing countries prompted central
banks, including the Federal Reserve in the U.S., to cut short-term interest
rates. Along the way, bond prices (which move in the opposite direction of
interest rates) rose accordingly.
But by December, the investment mood had switched from worrying about the
possibility of worldwide recession to fretting about whether economic growth in
the U.S. was actually too strong and would soon spark a fire under inflation.
The result was increased selling pressure in the bond market, which in turn
drove long-term interest rates up and prices down through the end of the period.
RAISING RESERVES
While municipal bonds were less affected than other sectors of the market,
especially U.S. Treasury bonds, they did experience some price erosion. To
counter the trend, I raised the level of cash reserves in the Fund's portfolio,
which provided a bit of a cushion for the net asset value. Late in the period, I
put most of that cash to work by buying bonds, whose yields had risen to
attractive levels. Those purchases centered on AAA-rated and BBB-rated issues.
Probably the biggest benefit the market for municipal bonds enjoyed during the
period was a decrease in the supply of new issues, which reached a near-record
level in 1998 and, consequently, helped hold back bond prices. Still, that
wasn't enough to undo the negative effect of the interest-rate rise.
Looking toward the rest of the fiscal year, I think interest rates could go
either direction, but I doubt that we'll see a substantial move up or down.
Given that outlook, I plan to keep the portfolio's duration (a function of the
average maturity of the holdings that determines the Fund's sensitivity to
interest-rate swings) in the neutral range. Meanwhile, I will continue to focus
on keeping the income level as high as possible within the bounds of investment
prudence.
Terry L. Seierstad
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Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1999 $4.08
Nov. 30, 1998 $4.18
Decrease $0.10
Distributions -- Dec. 1, 1998 - May 31, 1999
From income $0.11
From capital gains $ --
Total distribution $0.11
Total return* +0.25%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1999 $4.08
Nov. 30, 1998 $4.18
Decrease $0.10
Distributions -- Dec. 1, 1998 - May 31, 1999
From income $0.09
From capital gains $ --
Total distribution $0.09
Total return* -0.16%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1999 $4.08
Nov. 30, 1998 $4.18
Decrease $0.10
Distributions -- Dec. 1, 1998 - May 31, 1999
From income $0.11
From capital gains $ --
Total distribution $0.11
Total return* +0.25%**
*The prospectus discusses the effect of sales charges, if any, on the various
classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
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<CAPTION>
The 10 Largest Holdings
Percent Value
(of net assets) (as of May 31, 1999)
San Antonio Texas Water Refunding Revenue Bonds
<S> <C> <C>
6.40% 2007 2.71% $27,046,999
Delaware County Pennsylvania Industrial Development
Authority Pollution Control Refunding Revenue Bonds
Philadelphia Electric Series 1991A
7.38% 2021 2.50 24,976,175
Chicago Illinois Public Building Commission
Building Revenue Bonds Chicago Board of Education
Series 1990A Escrowed to Maturity
6.50% 2018 2.39 23,878,349
New York State Urban Development Capital
Correctional Facilities Revenue Bonds 4th Series 1993
5.38% 2023 2.38 23,797,852
Georgia Municipal Electric Authority Special Obligation
Bonds Project 1 4th Crossover Series 1997X
6.50% 2020 2.29 22,847,498
Eastern North Carolina Municipal Power Agency
Power System Refunding Revenue Bonds Series 1989A
6.50% 2024 2.01 20,054,400
New York State Dormitory Authority State Courts
Facilities Lease Revenue Bonds Series 1993A
5.25% 2021 1.96 19,616,400
King County Washington Unlimited Tax General Obligation
Bonds Issaquah School District 411 Series 1992
6.38% 2008 1.89 18,865,261
Massachusetts Turnpike Authority Metro Highway System
Senior Lien Revenue Bonds Toll Road Series 1997A
5.00% 2037 1.88 18,747,800
Phoenix Arizona Industrial Development Authority
Single Family Mortgage Revenue Capital Appreciation
Bonds Zero Coupon Escrowed to Maturity
6.69% 2014 1.81 18,022,680
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
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The 10 holdings listed here
make up 21.82% of net assets
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<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP Tax-Exempt Bond Fund
May 31, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $885,559,648) $ 992,794,665
Accrued interest receivable 14,939,832
Receivable for investment securities sold 318,577
-------
Total assets 1,008,053,074
-------------
Liabilities
Dividends payable to shareholders 136,058
Disbursement in excess of cash on demand deposit 9,961
Payable for investment securities purchased 9,313,111
Accrued investment management services fee 12,292
Accrued distribution fee 850
Accrued service fee 12,427
Accrued transfer agency fee 1,404
Accrued administrative services fee 1,093
Other accrued expenses 208,319
-------
Total liabilities 9,695,515
---------
Net assets applicable to outstanding capital stock $ 998,357,559
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 2,444,769
Additional paid-in capital 917,094,543
Undistributed net investment income 1,066,436
Accumulated net realized gain (loss) (Note 5) (29,483,206)
Unrealized appreciation (depreciation) on investments 107,235,017
-----------
Total-- representing net assets applicable to outstanding capital stock $ 998,357,559
==============
Net assets applicable to outstanding shares: Class A $ 956,858,511
Class B $ 41,288,612
Class Y $ 210,436
Net asset value per share of outstanding capital stock: Class A shares 234,316,294 $ 4.08
Class B shares 10,109,061 $ 4.08
Class Y shares 51,561 $ 4.08
See accompanying notes to financial statements.
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<CAPTION>
Statement of operations
AXP Tax-Exempt Bond Fund
Six months ended May 31, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Interest $29,804,359
-----------
Expenses (Note 2):
Investment management services fee 2,240,562
Distribution fee-- Class B 143,617
Transfer agency fee 210,446
Incremental transfer agency fee
Class A 23,718
Class B 2,341
Service fee
Class A 834,961
Class B 33,474
Class Y 37
Administrative services fees and expenses 208,666
Compensation of board members 5,793
Custodian fees 27,818
Printing and postage 69,225
Registration fees 17,617
Audit fees 17,500
Other 198
---
Total expenses 3,835,973
Earnings credits on cash balances (Note 2) (23,685)
-------
Total net expenses 3,812,288
---------
Investment income (loss) -- net 25,992,071
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 2,229,509
Financial futures contracts 149,201
-------
Net realized gain (loss) on investments 2,378,710
Net change in unrealized appreciation (depreciation) on investments (26,729,900)
-----------
Net gain (loss) on investments (24,351,190)
-----------
Net increase (decrease) in net assets resulting from operations $ 1,640,881
============
See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
AXP Tax-Exempt Bond Fund
May 31, 1999 Nov. 30, 1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ 25,992,071 $ 50,641,914
Net realized gain (loss) on security transactions 2,378,710 4,029,875
Net change in unrealized appreciation (depreciation) on investments (26,729,900) 14,379,392
----------- ----------
Net increase (decrease) in net assets resulting from operations 1,640,881 69,051,181
--------- ----------
Distributions to shareholders from:
Net investment income
Class A (24,154,961) (49,578,026)
Class B (822,858) (1,248,165)
Class Y (1,920) (547)
Net realized gain
Class A (47,187) --
Class B (1,759) --
------ -----
Total distributions (25,028,685) (50,826,738)
----------- -----------
Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 40,323,973 66,212,026
Class B shares 10,500,523 13,408,510
Class Y shares 199,999 --
Reinvestment of distributions at net asset value
Class A shares 16,979,434 33,468,237
Class B shares 707,134 1,034,720
Class Y shares 1,899 547
Payments for redemptions
Class A shares (61,845,314) (131,187,960)
Class B shares (Note 2) (3,880,923) (4,607,635)
- ---------- ----------
Increase (decrease) in net assets from capital share transactions 2,986,725 (21,671,555)
--------- -----------
Total increase (decrease) in net assets (20,401,079) (3,447,112)
Net assets at beginning of period 1,018,758,638 1,022,205,750
------------- -------------
Net assets at end of period $ 998,357,559 $1,018,758,638
============== ==============
Undistributed net investment income $ 1,066,436 $ 54,104
-------------- --------------
See accompanying notes to financial statements.
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Notes to Financial Statements
AXP Tax-Exempt Bond Fund
(Unaudited as to May 31, 1999)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AXP Tax-Exempt Bond Fund (a series of AXP Tax-Exempt Series, Inc.) is registered
under the Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. AXP Tax-Exempt Series, Inc. has 10 billion
authorized shares of capital stock that can be allocated among the separate
series as designated by the board. The Fund invests primarily in
investment-grade bonds and other debt securities whose interest is exempt from
federal income tax.
The Fund offers Class A, Class B and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The 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.
The Fund's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. 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.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and sell put and call options
and write covered call options on portfolio securities as well as write
cash-secured put options. The risk in writing a call option is that the Fund
gives up the opportunity for 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 being unable to enter into a
closing transaction if a liquid secondary market does not exist. The Fund may
write over-the-counter options where completing the obligation depends 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 when the option transaction expires or closes. 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
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts. Risks of entering into futures contracts and
related options include the possibility of 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
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to shareholders. No provision for income or excise taxes is thus
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred 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.
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.
2. EXPENSES AND SALES CHARGES
The Fund has agreements with American Express Financial Corporation (AEFC) to
manage its portfolio and provide administrative services. Under an 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 a fee 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 service expenses paid by the Fund are office expenses,
consultants' 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 and any
other expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $19.50
o Class B $20.50
o Class Y $17.50
Under terms of a prior agreement that ended Jan. 31, 1999, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $15.50 for
Class A and $16.50 for Class B. Under terms of a prior agreement that ended
March 31, 1999, the Fund paid a transfer agency fee at an annual rate per
shareholder account of $15.50 for Class Y.
The Fund has agreements with American Express Financial Advisors Inc. for
distribution and shareholder 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. Effective July
1, 1999, the Fund will pay a distribution fee at an annual rate up to 0.25% of
the Fund's average daily net assets attributable to Class A shares and up to
1.00% of the Fund's average daily net assets attributable to Class B shares.
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 and 0.10% of the Fund's average daily
net assets attributable to Class Y shares. Effective July 1, 1999, the Fund will
convert the Shareholder Service Agreement with respect to Class A and Class B
shares into the Plan and Agreement of Distribution discussed above.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $716,089 for Class A and $36,122 for Class B for
the six months ended May 31, 1999.
During the six months ended May 31, 1999, the Fund's custodian and transfer
agency fees were reduced by $23,685 as a result of earnings credits from
overnight cash balances.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $173,862,810 and $183,338,158, respectively, for the six
months ended May 31, 1999. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended May 31, 1999
Class A Class B Class Y
Sold 9,707,048 2,527,109 48,438
Issued for reinvested distributions 4,100,842 170,810 463
Redeemed (14,906,326) (936,224) --
----------- --------
Net increase (decrease) (1,098,436) 1,761,695 48,901
Year ended Nov. 30, 1998
Class A Class B Class Y
Sold 15,936,719 3,225,410 --
Issued for reinvested distributions 8,065,228 249,252 130
Redeemed (31,574,929) (1,109,858) --
----------- ----------
Net increase (decrease) (7,572,982) 2,364,804 130
5. CAPITAL LOSS CARRYOVER
For federal income tax purposes, the Fund has a capital loss carryover of
$8,131,600 as of Nov. 30, 1998 that will expire in 2002 if not offset by
subsequent capital gains. It is unlikely the board will authorize a distribution
of any realized capital gains until the available capital loss carryover has
been offset or expires.
6. BANK BORROWINGS
The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund
is permitted to have bank borrowings for temporary or emergency purposes to fund
shareholder redemptions. The Fund must have asset coverage for borrowings not to
exceed the aggregate of 333% of advances equal to or less than five business
days plus 367% of advances over five business days. The agreement, which enables
the Fund to participate with other American Express funds, permits borrowings up
to $200 million, collectively. Interest is charged to each Fund based on its
borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the
Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90
days after such loan is executed. The Fund also pays a commitment fee equal to
its pro rata share of the amount of the credit facility at a rate of 0.05% per
annum. The Fund had no borrowings outstanding during the six months ended May
31, 1999.
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<CAPTION>
7. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended Nov. 30,
Per share income and capital changesa
Class A
1999d 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.18 $4.11 $4.01 $4.06 $3.54
Income from investment operations:
Net investment income (loss) .10 .21 .21 .20 .21
Net gains (losses) (both realized and unrealized) (.09) .07 .10 (.05) .52
Total from investment operations .01 .28 .31 .15 .73
Less distributions:
Dividends from net investment income (.11) (.21) (.21) (.20) (.21)
Net asset value, end of period $4.08 $4.18 $4.11 $4.01 $4.06
Ratios/supplemental data
Net assets, end of period (in millions) $957 $984 $998 $1,067 $1,162
Ratio of expenses to average daily net assetsb .74%e .73% .73% .73% .71%
Ratio of net investment income (loss)
to average daily net assets 5.24%e 4.96% 5.19% 5.15% 5.52%
Portfolio turnover rate
(excluding short-term securities) 18% 18% 19% 62% 54%
Total returnc .25% 6.96% 7.78% 4.01% 21.06%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
c Total return does not reflect payment of a sales charge.
d Six months ended May 31, 1999 (Unaudited).
e Adjusted to an annual basis.
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<CAPTION>
Fiscal period ended Nov. 30,
Per share income and capital changesa
Class B Class Y
1999f 1998 1997 1996 1995b 1999f 1998 1997 1996 1995b
Net asset value, beginning
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
of period $4.18 $4.11 $4.01 $4.06 $3.88 $4.18 $4.11 $4.01 $4.06 $3.88
Income from investment operations:
Net investment income (loss) .09 .18 .18 .17 .14 .11 .21 .21 .21 .16
Net gains (losses) (both
realized and unrealized) (.10) .07 .10 (.05) .18 (.10) .07 .10 (.05) .18
Total from investment
operations (.01) .25 .28 .12 .32 .01 .28 .31 .16 .34
Less distributions:
Dividends from net
investment income (.09) (.18) (.18) (.17) (.14) (.11) (.21) (.21) (.21) (.16)
Net asset value, end
of period $4.08 $4.18 $4.11 $4.01 $4.06 $4.08 $4.18 $4.11 $4.01 $4.06
Ratios/supplemental data
Net assets, end of period
(in millions) $41 $35 $25 $20 $14 $-- $-- $-- $-- $--
Ratio of expenses to
average daily net assetsc 1.50%d 1.48% 1.49% 1.49% 1.52%d .68%d .63% .60% .55% .58%d
Ratio of net investment
income (loss) to average
daily net assets 4.49%d 4.21% 4.43% 4.40% 4.55%d 5.13%d 5.05% 5.34% 5.33% 5.52%d
Portfolio turnover rate
(excluding short-term
securities) 18% 18% 19% 62% 54% 18% 18% 19% 62% 54%
Total returne (.16%) 6.18% 6.94% 3.23% 8.78% .25% 7.06% 7.87% 4.19% 9.43%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was March 20, 1995.
c Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
d Adjusted to an annual basis.
e Total return does not reflect payment of a sales charge.
f Six months ended May 31, 1999 (Unaudited).
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<CAPTION>
Investments in Securities
AXP Tax-Exempt Bond Fund
May 31, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Municipal bonds (96.5%)
Name of issuer Coupon Principal Value(a)
and title of issue(c) rate amount
Alaska (0.6%)
North Slope Borough General Obligation Bonds
Zero Coupon Series 1994B (CGIC Insured)
<S> <C> <C> <C>
06-30-04 7.05% $3,000,000(b) $2,413,590
06-30-05 7.15 3,000,000(b) 2,297,490
State Housing Finance Veterans Mortgage
Corporation Collateralized Bonds Series 1990
(GNMA/FNMA Insured)
12-01-30 7.50 1,140,000 1,191,699
Total 5,902,779
Arizona (4.3%)
Maricopa County Industrial Development Authority
Multi-family Housing Revenue Bonds Series 1996A
07-01-26 6.63 2,500,000 2,902,250
Phoenix Industrial Development Authority
Refunding Revenue Bonds Christian Care
Apartments
01-01-16 6.25 2,000,000 2,080,680
Phoenix Industrial Development Authority
Single Family Mortgage Revenue Capital
Appreciation Bonds Zero Coupon
Escrowed to Maturity
12-01-14 6.69 39,000,000(b) 18,022,680
Phoenix Junior Lien Street & Highway User
Refunding Revenue Bonds Series 1992
07-01-11 6.25 10,350,000 11,156,369
Tucson Street & Highway User Pre-refunded
Revenue Bonds Series 1991B
07-01-10 6.25 8,250,000 8,578,185
Total 42,740,164
California (8.0%)
Anaheim Public Finance Authority Capital
Appreciation Improvement Revenue Bonds
Zero Coupon Series 1997C (FSA Insured)
09-01-17 5.72 9,195,000(b) 3,563,246
Bakersfield Certificates of Participation
Zero Coupon Escrowed to Maturity
04-15-21 5.25 10,500,000(b) 3,142,545
Foothill/Eastern Transportation Corridor Agency
Toll Road Revenue Bonds Series 1995A
01-01-35 5.00 12,000,000 11,190,240
Los Angeles County Pre-refunded Certificates of
Participation
05-01-15 6.71 3,600,000 3,851,388
Los Angeles International Airport Regional Airports
Improvement Corporation Refunding Revenue
Bonds Delta Airlines
11-01-25 6.35 5,000,000 5,367,800
Orange County Certificates of Participation Civic
Center Facility Capital Appreciation Refunding
Bonds Zero Coupon (AMBAC Insured)
12-01-18 6.97 13,795,000(b) 4,981,512
Sacramento Cogeneration Authority Pre-refunded
Revenue Bonds Procter & Gamble Series 1995
07-01-14 6.50 5,000,000 5,695,650
San Jose Redevelopment Agency Merged Area
Redevelopment Tax Allocation Bonds Series 1993
(MBIA Insured)
08-01-24 4.75 9,000,000 8,327,430
Southern California Public Power Authority Revenue
Bonds Mead Adelanto Series 1994A
(AMBAC Insured)
07-01-20 4.88 6,590,000 6,252,592
State Public Works Board California Community
Colleges Lease Pre-refunded Revenue Bonds
Series 1994B
03-01-19 7.00 3,900,000 4,481,334
State Public Works Board University of California
Lease Refunding Revenue Bonds Series 1993A
(AMBAC Insured)
06-01-14 5.50 7,275,000 7,791,089
06-01-23 5.00 6,000,000 5,764,980
Ukiah Unified School District Mendocino County
Certificates of Participation Series 1993
09-01-10 6.00 3,790,000 4,043,665
West Covina Redevelopment Agency Community
Facilities District Special Tax Refunding Bonds
Series 1996
09-01-17 6.00 5,000,000 5,434,900
Total 79,888,371
Colorado (2.6%)
Arapahoe County Public Highway Authority Capital
Improvement Trust Fund E-470 Highway
Pre-refunded Revenue Bonds
08-31-26 7.00 5,685,000 6,687,208
Castle Rock Ranch Public Facility Improvement
Revenue Bonds Series 1996
12-01-11 6.38 5,750,000 6,337,708
Edgewater Redevelopment Authority Tax Increment
Refunding Revenue Bonds Edgewater
Redevelopment Series 1999
12-01-08 5.50 4,000,000 3,904,640
State Health Facilities Authority Hospital
Improvement Refunding Revenue Bonds
Parkview Episcopal Medical Center Series 1995
09-01-16 6.00 4,000,000 4,141,640
State Health Facilities Authority Retirement Facilities
Revenue Bonds Liberty Heights Zero Coupon
Escrowed to Maturity
07-15-22 5.54 4,925,000(b) 1,354,326
Trailmark Metropolitan District Limited General
Obligation Bonds Series 1999A
12-01-18 5.80 3,500,000 3,467,730
Total 25,893,252
Connecticut (0.9%)
State General Obligation Bonds Series 1992A
03-15-06 6.40 8,000,000 8,645,520
Delaware (0.2%)
University of Delaware Revenue Bonds Series 1989
11-01-14 6.00 2,000,000 2,022,540
District of Columbia (2.6%)
District General Obligation Bonds Zero Coupon
Series 1994B (MBIA Insured)
06-01-13 6.63 23,945,000(b) 11,729,458
06-01-14 6.64 26,415,000(b) 12,206,900
District Unlimited Tax General Obligation
Refunding Bonds Series 1998B (MBIA Insured)
06-01-17 6.00 2,000,000 2,202,940
Total 26,139,298
Florida (3.3%)
Duvall County Housing Authority Single Family
Mortgage Refunding Revenue Bonds Series 1991
(FGIC Insured)
07-01-24 7.35 3,370,000 3,548,307
Hillsborough County Industrial Development
Authority Health Facilities Revenue Bonds
University Community Hospital Series 1999A
08-15-23 5.63 1,000,000 988,830
Jacksonville Excise Tax Refunding Revenue Bonds
Series 1992 (AMBAC Insured)
10-01-08 6.50 5,000,000 5,477,950
Lee County Industrial Development Authority Health
Care Facilities Refunding Revenue Bonds Alliance
Retirement Community Series 1999C
11-15-29 5.50 4,000,000 3,873,640
St. John's River Waste Management District Land
Acquisition Pre-refunded Revenue Bonds
Series 1989 (AMBAC Insured)
07-01-09 6.00 7,000,000 7,016,870
State Board of Education Administration Capital
Outlay Public Education Pre-refunded Bonds
Series 1991C
06-01-08 6.50 5,025,000 5,446,145
06-01-09 6.50 6,200,000 6,719,622
Total 33,071,364
Georgia (3.4%)
Atlanta Water & Wastewater Refunding Revenue
Bonds Series 1999A (FGIC Insured)
11-01-38 5.00 10,000,000 9,411,400
Municipal Electric Authority Special Obligation
Bonds Project 1 4th Crossover Series 1997X
(Secondary MBIA Insured)
01-01-20 6.50 19,550,000 22,847,498
Richmond County Development Authority Revenue
Bonds Zero Coupon Escrowed to Maturity
12-01-21 5.74 7,880,000(b) 2,161,642
Total 34,420,540
Hawaii (0.6%)
Honolulu City & County Pre-refunded General
Obligation Bonds Series 1992A
03-01-06 6.30 5,880,000 6,355,810
Idaho (0.4%)
State Health Facilities Authority Revenue Bonds
Bannock Regional Medical Center Series 1995
05-01-17 6.38 1,450,000 1,541,611
05-01-25 6.13 2,250,000 2,346,413
Total 3,888,024
Illinois (9.2%)
Alton Madison County Hospital Facilities Refunding
Revenue Bonds St. Anthony's Health Center
Series 1996
09-01-10 6.00 2,975,000 3,059,758
09-01-14 6.00 1,765,000 1,824,304
Chicago Board of Education General Obligation
Capital Appreciation School Improvement Bonds
Zero Coupon Series 1999A (FGIC Insured)
12-01-15 5.08 10,000,000(b) 4,196,300
Chicago O'Hare International Airport Special Facility
Revenue Bonds United Airlines Series 1999A
09-01-16 5.35 2,600,000 2,553,824
Chicago Public Building Commission Building
Revenue Bonds Chicago Board of Education
Series 1990A Escrowed to Maturity (MBIA Insured)
01-01-18 6.50 23,500,000 23,878,349
Cook & Will Counties Township High School
District 206 Capital Appreciation Bonds
Zero Coupon Series 1994C (AMBAC Insured)
12-01-10 6.55 2,605,000(b) 1,478,963
Cook County School District 170 Chicago Heights
Pre-refunded Capital Appreciation Bonds
Zero Coupon Series 1994C (AMBAC Insured)
12-01-09 6.50 2,155,000(b) 1,323,967
12-01-10 6.55 2,155,000(b) 1,249,878
Cook County Unlimited Tax General Obligation
Bonds Series 1989
11-01-09 6.50 5,800,000 5,877,140
Metropolitan Pier & Exposition Authority
Dedicated State Tax Capital Appreciation
Refunding Revenue Bonds McCormick Place
Expansion Zero Coupon Series 1993A
(FGIC Insured)
06-15-10 6.64 11,000,000(b) 6,388,360
06-15-16 6.80 9,000,000(b) 3,671,190
06-15-21 6.54 5,000,000(b) 1,533,550
Metropolitan Pier & Exposition Authority
Dedicated State Tax Capital Appreciation
Refunding Revenue Bonds McCormick Place
Expansion Zero Coupon Series 1994
(MBIA Insured)
06-15-20 5.70 3,070,000(b) 996,123
State Development Finance Authority Pollution
Control Refunding Revenue Bonds Illinois Power
Series 1991A
07-01-21 7.38 10,000,000 11,491,800
State Development Finance Authority Regency Park
Retirement Housing Revenue Bonds Zero Coupon
Series 1991B Escrowed to Maturity
07-15-25 6.50 10,000,000(b) 2,144,500
State Development Finance Authority Retirement
Housing Revenue Bonds Zero Coupon
Escrowed to Maturity
04-15-20 7.75 13,745,000(b) 4,016,152
State Educational Facilities Authority Pre-refunded
Revenue Bonds Columbia College
12-01-17 6.88 1,930,000 2,175,477
State Educational Facilities Authority Revenue Bonds
Columbia College
12-01-18 6.13 3,015,000 3,075,662
State Educational Facilities Authority Revenue Bonds
Lewis University Series 1996
10-01-16 6.10 2,005,000 2,063,747
State Educational Facilities Authority Unrefunded
Revenue Bonds Columbia College
12-01-17 6.88 830,000 900,384
State Health Facilities Authority Refunding Revenue
Bonds Edwards Hospital Series 1993A
02-15-19 6.00 3,055,000 3,127,434
State Health Facilities Authority Refunding Revenue
Bonds Masonic Medical Center Series 1993
10-01-19 5.50 5,000,000 4,874,200
Total 91,901,062
Indiana (1.6%)
Seymour Economic Development Revenue Bonds
Union Camp Series 1992
07-01-12 6.25 2,870,000 3,226,196
State Transportation Finance Authority Highway
Revenue Bonds Series 1990A
06-01-15 7.25 10,000,000 12,307,200
Total 15,533,396
Iowa (0.3%)
State Finance Authority Single Family
Mortgage-backed Securities Program Bonds
Series 1991A
07-01-16 7.25 2,715,000 2,842,225
Kentucky (0.8%)
Muhlenberg County Hospital Refunding Revenue
Bonds Muhlenberg Community Hospital
Series 1996
07-01-10 6.75 3,820,000 3,965,122
Owensboro Electric Light & Power Refunding
Revenue Bonds Zero Coupon Series 1991B
(AMBAC Insured)
01-01-15 6.65 9,125,000(b) 4,104,699
Total 8,069,821
Louisiana (2.2%)
Bastrop Industrial Development Board Pollution
Control Refunding Revenue Bonds International
Paper Series 1992A
03-01-07 6.90 6,875,000 7,385,125
New Orleans Capital Appreciation General Obligation
Refunding Revenue Bonds Zero Coupon
(AMBAC Insured)
09-01-12 6.63 6,250,000(b) 3,213,875
New Orleans Home Mortgage Authority Special
Obligation Refunding Bonds Series 1992
Escrowed to Maturity
01-15-11 6.25 9,000,000 10,101,960
State Public Facilities Authority Revenue Bonds
Centenary College Series 1997
02-01-17 5.90 1,000,000 1,027,350
Total 21,728,310
Maryland (2.7%)
State Community Development Administration
Department of Housing & Community
Development Single Family Program Bonds
1st Series 1991
04-01-17 7.30 10,500,000 10,974,285
State Health & Higher Education Facilities
Authority Revenue Bonds Anne Arundel
Medical Center (AMBAC Insured)
07-01-23 5.00 7,000,000 6,771,240
State Health & Higher Education Facilities
Authority Revenue Bonds Frederick Memorial
Hospital Series 1993 (FGIC Insured)
07-01-28 5.00 10,000,000 9,614,400
Total 27,359,925
Massachusetts (4.3%)
Municipal Wholesale Electric Power Supply System
Pre-refunded Revenue Bonds Series 1992B
07-01-17 6.75 10,000,000 11,018,100
State Health & Educational Facilities Authority
Pre-refunded Revenue Bonds Melrose-Wakefield
Hospital Series 1992B
07-01-16 6.38 1,430,000 1,559,658
State Health & Educational Facilities Authority
Refunding Revenue Bonds Caritas Christi Obligated
Group Series 1999A
07-01-15 5.70 3,000,000 3,007,380
State Health & Educational Facilities Authority
Revenue Bonds Valley Regional Health System
Series 1994C (Connie Lee Insured)
07-01-18 5.75 3,500,000 3,627,470
State Turnpike Authority Metro Highway System
Senior Lien Revenue Bonds Toll Road Series 1997A
(MBIA Insured)
01-01-37 5.00 20,000,000 18,747,800
State Water Resource Authority General Revenue
Bonds Series D (MBIA Insured)
08-01-24 5.00 4,785,000 4,579,963
Total 42,540,371
Michigan (2.6%)
Battle Creek Calhoun County Downtown
Development Authority Pre-refunded Bonds
Series 1994
05-01-22 7.65 3,750,000 4,368,375
Detroit Downtown Development Authority
Development Area Project 1 Junior Lien
Tax Increment Refunding Bonds Series 1996D
07-01-25 6.50 6,000,000 6,852,240
Detroit Water Supply System Refunding Revenue
Bonds Series 1992 (FGIC Insured)
07-01-07 6.25 2,000,000 2,157,040
State Hospital Finance Authority Refunding Revenue
Bonds Central Michigan Community Hospital
10-01-16 6.25 2,225,000 2,367,155
State Hospital Finance Authority Refunding Revenue
Bonds Greater Detroit Sinai Hospital Series 1995
01-01-16 6.63 2,000,000 2,059,840
State Hospital Finance Authority Refunding Revenue
Bonds Presbyterian Villages Obligated Group
Series 1995
01-01-15 6.40 1,000,000 1,053,210
01-01-25 6.50 1,000,000 1,056,470
State Hospital Finance Authority Refunding Revenue
Bonds Presbyterian Villages Obligated Group
Series 1997
01-01-15 6.38 400,000 422,436
State Strategic Fund Limited Tax Obligation
Refunding Revenue Bonds Ford Motor Series 1991A
02-01-06 7.10 5,000,000 5,751,000
Total 26,087,766
Minnesota (2.9%)
Minneapolis & St. Paul Housing & Redevelopment
Authority Health Care System Series 1990A
(MBIA Insured)
08-15-05 7.40 4,500,000 4,795,965
Rochester Health Care Facilities Revenue Bonds
Mayo Foundation Series 1992A
11-15-19 4.95 15,000,000 14,332,649
St. Paul Housing & Redevelopment Authority Health
Care Facilities Revenue Bonds Regions Hospital
Series 1998
05-15-28 5.30 4,125,000 3,886,699
State Housing Finance Agency Single Family
Mortgage Revenue Bonds Series 1988E
02-01-14 7.65 3,750,000 3,829,388
Washington County Housing & Redevelopment
Authority Refunding Revenue Bonds Woodbury
Multi-family Housing Series 1996
12-01-23 6.95 2,440,000 2,508,247
Total 29,352,948
Mississippi (0.3%)
State Hospital Refunding Revenue Bonds University
of Mississippi Medical Center Educational Building
Series 1998B (AMBAC Insured)
12-01-23 5.50 3,000,000 3,115,380
Missouri (1.0%)
St. Louis Regional Convention & Sports Complex
Authority Pre-refunded Revenue Bonds
Series 1991C
08-15-21 7.90 8,500,000 9,751,307
Nevada (0.5%)
Clark County Special Improvement District 108
Local Improvement Bonds Summerline
Series 1997
02-01-12 6.50 4,440,000 4,580,038
New Hampshire (0.1%)
State Higher Education & Health Facilities Authority
College Revenue Bonds New Hampshire College
Series 1997
01-01-27 6.38 1,000,000 1,033,610
New Jersey (1.7%)
State Turnpike Authority Revenue Bonds
Series 1991C
01-01-05 6.50 16,000,000 16,820,320
New York (10.9%)
Metropolitan Transportation Authority State
Dedicated Tax Fund Revenue Bonds Series 1999A
(FSA Insured)
04-01-29 5.00 6,170,000 5,893,646
New York City Municipal Water Finance Authority
Water & Sewer System Refunding Revenue Bonds
Series 1999B (FSA Insured)
06-15-29 5.00 5,500,000 5,245,240
New York City Pre-refunded Unlimited General
Obligation Bonds Series 1992B
10-01-17 6.75 10,525,000 11,597,813
New York City Pre-refunded Unlimited General
Obligation Bonds Series 1994B-1
08-15-16 7.00 8,850,000 10,123,692
New York City Unrefunded Unlimited General
Obligation Bonds Series 1992B
10-01-17 6.75 625,000 678,444
State Dormitory Authority New York City University
System Consolidated 2nd Generation Resource
Revenue Bonds Series 1994A
07-01-18 5.75 5,500,000 5,856,235
State Dormitory Authority State Courts Facilities
Lease Revenue Bonds Series 1993A
05-15-21 5.25 20,000,000 19,616,400
State Dormitory Authority State Department of
Health Refunding Revenue Bonds
07-01-20 5.50 3,060,000 3,092,008
State Medical Care Facilities Finance Agency Mental
Health Services Facilities Improvement Refunding
Revenue Bonds Series 1993F
02-15-14 5.38 7,510,000 7,576,689
State Mortgage Agency Homeowner Mortgage
Revenue Bonds Series 1991TT
04-01-15 7.50 15,945,000 16,849,400
State Urban Development Capital Correctional
Facilities Revenue Bonds 4th Series 1993
01-01-23 5.38 23,815,000 23,797,852
Total 110,327,419
North Carolina (4.1%)
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1989A
01-01-24 6.50 20,000,000 20,054,400
Eastern Municipal Power Agency Power System
Revenue Bonds Series 1993D
01-01-16 5.60 6,500,000 6,416,735
Eastern Municipal Power Agency Power System
Revenue Bonds Series 1993G
12-01-16 5.75 12,750,000 12,766,830
State Medical Care Community Hospital Refunding
Revenue Bonds Pitt County Memorial Hospital
Series 1998A (MBIA Insured)
12-01-28 4.75 1,850,000 1,678,579
Total 40,916,544
North Dakota (0.5%)
Ward County Health Care Facilities Refunding
Revenue Bonds Trinity Obligated Group
Series 1996B
07-01-21 6.25 4,365,000 4,593,246
Ohio (1.3%)
Akron Bath Copley Joint Township Hospital District
Revenue Bonds Summa Hospital Series 1998A
11-15-24 5.38 2,755,000 2,589,672
Carroll Water & Sewer District Unlimited Tax
General Obligation Bonds
12-01-10 6.25 950,000 995,857
Columbus Sewerage System Refunding Revenue
Bonds Series 1992
06-01-05 6.30 3,500,000 3,781,225
State Water & Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995
08-01-25 7.70 300,000 339,009
State Water & Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Ohio Edison Series 1993A
05-15-29 5.95 5,000,000 5,097,500
Total 12,803,263
Oklahoma (0.4%)
Stillwater Medical Center Authority Hospital
Revenue Bonds Series 1997B
05-15-12 6.35 1,000,000 1,054,700
Valley View Hospital Authority Refunding Revenue
Bonds Series 1996
08-15-14 6.00 2,695,000 2,781,294
Total 3,835,994
Pennsylvania (3.5%)
Delaware County Industrial Development Authority
Pollution Control Refunding Revenue Bonds
Philadelphia Electric Series 1991A
04-01-21 7.38 23,540,000 24,976,175
Delaware County Industrial Development Authority
Pollution Control Refunding Revenue Bonds
Series 1997A
07-01-13 6.10 4,000,000 4,109,640
Philadelphia Hospital & Higher Education Facilities
Authority Hospital Revenue Bonds
Friends Hospital Series 1993
05-01-11 6.20 2,500,000 2,574,875
Philadelphia School District General Obligation
Bonds Series 1998 (MBIA Insured)
04-01-27 4.75 3,965,000 3,638,403
Total 35,299,093
Rhode Island (0.2%)
Providence Special Tax Increment Obligation Bonds
Series 1996D
06-01-16 6.65 1,500,000 1,623,360
South Carolina (0.9%)
Horry County Hospital Refunding Revenue Bonds
Conway Hospital Series 1992
07-01-12 6.75 3,665,000 3,954,278
Piedmont Municipal Power Agency Electric
Refunding Revenue Bonds Series 1998A
(MBIAInsured)
01-01-25 4.75 5,000,000 4,571,200
Total 8,525,478
Tennessee (0.2%)
Nashville & Davidson Counties Health & Education
Facilities Board Revenue Bonds Zero Coupon
Escrowed to Maturity
06-01-21 5.71 7,500,000(b) 2,153,850
Texas (9.6%)
Austin Utility System Capital Appreciation
Refunding Revenue Bonds Zero Coupon
(AMBAC Insured)
11-15-10 6.51 5,055,000(b) 2,892,319
Austin Utility System Capital Appreciation Refunding
Revenue Bonds Zero Coupon Series 1992A
(MBIA Insured)
11-15-10 6.61 16,000,000(b) 9,154,720
Austin Utility System Combined Utility
Refunding Revenue Bonds Series 1992
(AMBAC Insured)
11-15-06 6.25 10,500,000 11,411,505
Harris County Cypress-Fairbanks Independent
School District Unlimited Tax Schoolhouse Bonds
Series 1990 (FGIC Insured)
08-01-08 6.50 1,500,000 1,554,045
Harris County Health Facilities Development
Hermann Hospital Revenue Bonds (MBIA Insured)
10-01-24 6.38 8,820,000 9,826,274
Houston Independent School District Refunding
Revenue Bonds Series 1999A (Permanent School
Fund Guarantee)
02-15-26 4.75 10,000,000 9,204,700
Houston Water & Sewer System Junior Lien
Refunding Revenue Bonds Zero Coupon
Series 1991C (AMBAC Insured)
12-01-08 6.60 8,000,000(b) 5,129,120
Municipal Power Agency Capital Appreciation
Refunding Revenue Bonds Zero Coupon
(AMBAC Insured)
09-01-09 6.90 18,000,000(b) 11,053,980
Northwest Independent School District Unlimited
Tax General Obligation Capital Appreciation
Refunding Revenue Bonds Zero Coupon
Series 1997 (Permanent School Fund Guarantee)
08-15-17 6.23 3,000,000(b) 1,053,300
San Antonio Water Refunding Revenue Bonds
(FGIC Insured)
05-15-07 6.40 25,000,000 27,046,999
State Coastal Water Authority Water Conveyance
System Refunding Revenue Bonds Series 1991
Escrowed to Maturity (AMBAC Insured)
12-15-17 6.25 5,000,000 5,300,850
State Public Property Financial Corporation Lease
Revenue Bonds Mental Health Mental Retardation
Series 1996
09-01-16 6.20 2,340,000 2,436,806
Total 96,064,618
Virginia (0.7%)
Augusta County Industrial Development Authority
Refunding Revenue Bonds Augusta Hospital
Series 1993 (AMBAC Insured)
09-01-21 5.13 3,600,000 3,495,024
Fairfax County Water Authority Refunding Revenue
Bonds Series 1997
04-01-21 5.00 3,750,000 3,690,975
Total 7,185,999
Washington (5.5%)
King County Housing Authority Pooled Housing
Refunding Revenue Bonds Series 1995A
03-01-26 6.80 2,500,000 2,662,150
King County Refunding Revenue Bonds Public
Hospital District 1 Valley Medical Center
09-01-20 5.75 3,000,000 3,214,500
King County Unlimited Tax General Obligation
Bonds Auburn School District 408 Series 1992A
12-01-06 6.38 8,000,000 8,965,680
King County Unlimited Tax General Obligation
Bonds Issaquah School District 411 Series 1992
12-01-08 6.38 16,675,000 18,865,261
Spokane County School District 356 Unlimited
General Obligation Bonds Series 1998B
Zero Coupon (FGIC Insured)
12-01-15 5.08 10,330,000(b) 4,405,125
State Public Power Supply System Nuclear Power
Project 1 Pre-refunded Revenue Bonds
Series 1989A
07-01-17 6.00 12,130,000 12,158,627
State Public Power Supply System Nuclear Power
Project 3 Capital Appreciation Refunding
Revenue Bonds Zero Coupon Series 1989B
(MBIA Insured)
07-01-13 6.61 10,360,000(b) 5,053,297
Total 55,324,640
West Virginia (1.0%)
State School Building Authority Capital Improvement
Pre-refunded Revenue Bonds Series 1990B
(MBIA Insured)
07-01-20 6.00 9,730,000 10,006,916
Wisconsin (0.2%)
State Health & Educational Facilities Authority
Revenue Bonds Divine Savior Hospital
06-01-28 5.70 2,140,000 2,086,671
Wyoming (0.3%)
State Community Development Authority Single
Family Mortgage Bonds Series 1991B
(Federally Insured or Guaranteed Mortgage Loan)
06-01-31 7.40 2,555,000 2,613,433
Total municipal bonds
(Cost: $855,809,648) $963,044,665
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Municipal notes (3.0%)
Issuer(d,e) Effective Amount Value(a)
yield payable at
maturity
Burke County Georgia Development Authority
Pollution Control Revenue Notes (Georgia Power)
2nd Series 1994 V.R.
<S> <C> <C> <C>
07-01-24 3.40% $3,300,000 $3,300,000
Cohasset Minnesota Revenue Notes (Minnesota
Power & Light) Series 1997A V.R.D.N.
06-01-20 3.30 1,100,000 1,100,000
Harris County Texas Health Facilities Development
Hospital Revenue Notes (Methodist Hospital) V.R.
12-01-25 3.40 1,100,000 1,100,000
Illinois Health Facilities Authority Revenue Notes
(Northwestern Memorial Hospital) V.R.
08-15-25 3.35 3,400,000 3,400,000
Lincoln County Wyoming Pollution Control Revenue
Notes (Exxon) V.R.
08-01-15 3.35 1,200,000 1,200,000
11-01-24 3.40 3,200,000 3,200,000
Long Island New York Power Authority Electric
System Revenue Notes 6th Series 1998 V.R.
05-01-33 3.20 7,700,000 7,700,000
Moffat County Colorado Pollution Control Revenue
Notes (Pacificorp) V.R.
05-01-13 3.30 800,000 800,000
New York City General Obligation Notes
Series 1995B-5 V.R.
08-15-22 3.30 200,000 200,000
New York City Series 1994B2-B5 V.R.
08-15-11 3.30 300,000 300,000
Putnam County Georgia Development Authority
Pollution Control Revenue Notes (Georgia Power)
2nd Series 1997 V.R.
09-01-29 3.40 1,300,000 1,300,000
Regents of the University of Michigan Hospital
Revenue Notes Series 1992A V.R.
12-01-19 3.30 300,000 300,000
Regents of the University of Michigan Hospital
Revenue Notes Series 1995A V.R.
12-01-27 3.30 900,000 900,000
Roanoke Virginia Hospital Revenue Notes Carilion
Health System Series 1995A V.R.
07-01-19 3.40 2,200,000 2,200,000
Sublette County Wyoming Notes (Exxon)
Series 1984 V.R.
11-01-14 3.35 2,750,000 2,750,000
Total municipal notes
(Cost: $29,750,000) $29,750,000
Total investments in securities
(Cost: $885,559,648)(f) $992,794,665
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(c) The following abbreviations may be used in portfolio descriptions to
identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N.-- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B.-- Variable Rate Demand Bond
V.R.D.N.-- Variable Rate Demand Note
(e) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parentheses, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies to
reflect current market conditions; rate shown is the effective rate on May 31,
1999.
(f) At May 31, 1999, the cost of securities for federal income tax purposes was
approximately $885,560,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $108,486,000
Unrealized depreciation (1,251,000)
----------
Net unrealized appreciation $107,235,000
<PAGE>
Quick telephone reference
AMERICAN EXPRESS FINANCIAL ADVISORS TELEPHONE TRANSACTION SERVICE
Sales and exchanges, dividend payments or reinvestments and automatic payment
arrangements: 800-437-3133
AMERICAN EXPRESS CLIENT SERVICE CORPORATION
Fund performance, fund prices, account values, recent account transactions and
account inquiries: 800-862-7919
TTY SERVICE
For the hearing impaired: 800-846-4852
TICKER SYMBOL
Class A: INTAX Class B: ITEBX Class Y: N/A
S-6315 M (7/99)
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 85
SPENCER, IA
AXP Tax-Exempt Bond Fund
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN EXPRESS Financial Advisors
