<PAGE> 1
Vanguard Municipal Bond Fund
STATEMENT OF NET ASSETS FINANCIAL STATEMENTS (unaudited)
- - --------------------------------------------------------------------------------
February 28, 1994
<TABLE>
<CAPTION>
Face Market
Amount Value
MONEY MARKET PORTFOLIO (000) (000)+
- - ---------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET INSTRUMENTS
(98.5%)
- - ---------------------------------------------------------------------------------
<S> <C> <C>
ALABAMA (.9%)
Alabama GO
2.85%, 3/1/94 $ 9,160 $ 9,160
Alabama Special Care Facilities
VRDO 2.4%, 3/2/94 (3) 4,300 4,300
Macintosh IDR VRDO
(Ciba-Geigy)
2.4%, 3/2/94 23,700 23,700
------------
STATE TOTAL 37,160
------------
- - --------------------------------------------------------------------------------
ALASKA (.7%)
North Slope Borough
6.45%, 6/30/94 (1) 2,600 2,630
Valdez Marine Terminal VRDO
2.3%, 3/1/94 12,200 12,200
2.4%, 3/2/94 15,000 15,000
------------
STATE TOTAL 29,830
------------
- - --------------------------------------------------------------------------------
ARIZONA (2.0%)
Arizona Health Facilities Auth.
VRDO 2.6%, 3/3/94 (3) 17,100 17,100
Salt River Project Agricultural
Improvement & Power Dist.
VRDO TOB 2.45%, 3/2/94 26,370 26,370
CP 2.4%, 5/16/94 42,039 42,039
------------
STATE TOTAL 85,509
------------
- - --------------------------------------------------------------------------------
CALIFORNIA (16.8%)
California Higher Education Loan
Auth. Student Loan Rev.
2.55%, 5/1/94* 41,500 41,500
California RAN
3.5%, 6/28/94 150,720 151,015
3.5%, 7/26/94 40,000 40,106
3.75%, 12/21/94 8,000 8,044
California Statewide Communities
Development Auth.
3.25%, 6/30/94 60,000 60,088
Chaffey Joint Union High School
Dist. TRAN
3.25%, 7/1/94 5,000 5,008
Contra Costa County TRAN
3.25%, 7/29/94 33,500 33,551
Desert Sands Unified School Dist.
TRAN 3.25%, 7/6/94 5,000 5,008
Fontana Unified School Dist. TRAN
3.25%, 7/1/94 4,000 4,006
Fresno County TRAN
3.25%, 7/29/94 20,000 20,034
Kern County TRAN
3.25%, 7/5/94 11,250 11,270
Los Angeles County TRAN
3.0%, 6/30/94 43,050 43,079
Los Angeles County Unified School
Dist. TRAN
3.25%, 7/15/94 18,200 18,219
Mountain View-Los Altos Union
High School Dist. TRAN
3.25%, 7/6/94 5,000 5,009
Orange County Sanitation Dist. VRDO
2.2%, 3/1/94 2,000 2,000
Orange County School Dist. TRAN
3.25%, 7/29/94 22,000 22,035
Riverside County Public
Facilities Project VRDO
2.45%, 3/1/94 68,915 68,915
Riverside County TRAN
3.0%, 6/30/94 6,900 6,903
Sacramento County TRAN
3.0%, 7/29/94 25,000 25,022
Saddleback Valley Unified
School Dist. TRAN
3.25%, 6/30/94 5,000 5,008
San Diego County Regional
Transportation Comm. VRDO
2.35%, 3/2/94 (3) 6,900 6,900
Santa Ana Unified School Dist. TRAN
3.25%, 7/29/94 24,000 24,039
Santa Barbara County TRAN
3.25%, 7/29/94 12,800 12,816
Santa Clara County TRAN
3.25%, 7/29/94 25,000 25,050
Southern California Public
Power Auth. VRDO
2.25%, 3/2/94 (2) 15,100 15,100
Univ. of California TOB VRDO
2.4%, 3/3/94 (1) 5,000 5,000
</TABLE>
THE PORTFOLIO LISTINGS BEGIN ON THE FOLLOWING PAGES:
<TABLE>
<S> <C>
MONEY MARKET PORTFOLIO . . . . . . . . . . . . . . . . . 1
SHORT-TERM PORTFOLIO . . . . . . . . . . . . . . . . . . 8
LIMITED-TERM PORTFOLIO . . . . . . . . . . . . . . . . . 14
INTERMEDIATE-TERM PORTFOLIO . . . . . . . . . . . . . . . 21
INSURED LONG-TERM PORTFOLIO . . . . . . . . . . . . . . . 31
LONG-TERM PORTFOLIO . . . . . . . . . . . . . . . . . . . 39
HIGH-YIELD PORTFOLIO . . . . . . . . . . . . . . . . . . 43
</TABLE>
1
<PAGE> 2
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Ventura County Community College
Dist. TRAN
3.25%, 6/30/94 $ 8,000 $ 8,007
Ventura County TRAN
3.0%, 8/1/94 23,500 23,517
Ventura Unified School Dist. TRAN
3.25%, 7/1/94 5,000 5,008
Yorba Linda TRAN
3.5%, 8/11/94 5,600 5,610
------------
STATE TOTAL 706,867
------------
- - --------------------------------------------------------------------------------
COLORADO (.4%)
Colorado State General Fund TRAN
3.25%, 6/27/94 18,000 18,023
------------
- - --------------------------------------------------------------------------------
CONNECTICUT (1.2%)
Connecticut Economic Recovery
VRDO 2.4%, 3/2/94 18,600 18,600
Connecticut Development
Auth. PCR VRDO
(Connecticut Light & Power)
2.35%, 3/2/94 17,000 17,000
Connecticut GO
7.0%, 3/15/94 500 501
Connecticut Transportation
Infrastructure VRDO
2.45%, 3/2/94 14,700 14,700
------------
STATE TOTAL 50,801
------------
- - --------------------------------------------------------------------------------
DELAWARE (4.3%)
Delaware Economic Development
Auth. VRDO
(Hosp. Bill & Collection Service)
2.45%, 3/2/94 176,300 176,300
Delaware GO
4.25%, 3/1/94 4,000 4,000
------------
STATE TOTAL 180,300
------------
- - --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA (1.3%)
District of Columbia VRDO
GO 2.4%, 3/1/94 16,800 16,800
(George Washington Univ.)
2.6%, 3/2/94 38,600 38,600
------------
STATE TOTAL 55,400
------------
- - --------------------------------------------------------------------------------
FLORIDA (5.5%)
Dade County Water & Sewer VRDO
2.3%, 3/2/94 (3) 8,500 8,500
Florida Board of Education TOB VRDO
2.5%, 3/3/94 3,800 3,800
Florida Dept. of Natural Resources Rev.
4.0%, 7/1/94 (4) 6,300 6,331
Florida Dept. of Transportation
TOB VRDO
2.6%, 3/3/94 (3) 14,980 14,980
Gulf Breeze Local Govt. Loan
Program VRDO
2.4%, 3/3/94 (3) 75,545 75,545
Jacksonville Electric Auth. CP
2.3%, 4/12/94 3,500 3,500
Orlando Utilities Comm. Water
& Electric Rev. VRDO
2.4%, 3/3/94 71,050 71,050
Orlando Waste Water Systems CP
2.7%, 5/10/94 6,700 6,700
Sunshine State Govt. Finance
Comm. CP
2.4%, 3/16/94 9,000 9,000
2.3%, 4/7/94 21,500 21,500
Volusia County School Dist.
7.8%, 8/1/94 (3) (Prere.) 7,400 7,702
Volusia County Tourist Development
TOB VRDO 2.6%, 3/3/94 3,320 3,320
------------
STATE TOTAL 231,928
------------
- - --------------------------------------------------------------------------------
GEORGIA (1.6%)
Burke County PCR VRDO
(Oglethorpe Power)
2.65%, 3/3/94 (1) 3,080 3,080
Fulton County Hosp. CP
2.65%, 4/12/94 4,055 4,055
Georgia GO TOB
2.25%, 3/15/94* 12,500 12,500
Georgia Municipal Gas Auth. CP
2.45%, 3/21/94 9,285 9,285
2.3%, 3/24/94 5,800 5,800
Municipal Electric Auth. of Georgia
CP 2.3%, 3/10/94 3,000 3,000
CP 2.65%, 4/21/94 11,600 11,600
CP 2.75%, 6/13/94 10,450 10,450
10.25%, 1/1/95 (Prere.) 4,000 4,327
10.5%, 1/1/95 (Prere.) 1,790 1,940
------------
STATE TOTAL 66,037
------------
- - --------------------------------------------------------------------------------
HAWAII (.5%)
Hawaii GO TOB VRDO
2.45%, 3/2/94 5,000 5,000
TOB 2.5%, 3/3/94 7,500 7,500
2.5%, 3/3/94 10,000 10,000
------------
STATE TOTAL 22,500
------------
- - --------------------------------------------------------------------------------
IDAHO (.2%)
Boise City RAN
2.75%, 3/31/94 9,250 9,251
------------
- - --------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
ILLINOIS (7.3%)
Chicago GO VRDO
2.55%, 3/3/94 $ 51,600 $ 51,600
Cook County GO
4.5%, 11/15/94 (1) 4,185 4,234
Illinois Development Finance
Auth. PCR
(Illinois Power)
VRDO 2.45%, 3/2/94 1,800 1,800
CP 2.3%, 4/12/94 6,770 6,770
Illinois Education Facilities Auth.
VRDO (DePaul Univ.)
2.5%, 3/2/94 18,900 18,900
Illinois Health Facilities Auth. VRDO
2.4%, 3/2/94 6,000 6,000
(Evanston Hosp.)
CP 2.4%, 6/16/94 15,000 15,000
(Franciscan Sisters)
2.4%, 3/2/94 15,100 15,100
(Northwest Community Hosp.)
2.4%, 4/1/94 34,515 34,515
(St. Luke's Medical)
CP 2.45%, 5/16/94 9,440 9,440
(Univ. of Chicago Hosp.)
2.4%, 3/2/94 12,300 12,300
Illinois Housing Development Auth.
VRDO (Center Apartments)
2.5%, 3/2/94 39,500 39,500
Illinois State Certificates
3.25%, 4/15/94 44,605 44,634
3.5%, 6/15/94 17,000 17,031
Illinois Toll Highway Auth. VRDO
2.4%, 3/2/94 (1) 27,700 27,700
------------
STATE TOTAL 304,524
------------
- - --------------------------------------------------------------------------------
INDIANA (.2%)
Indianapolis Local Public
Improvement Notes
2.75%, 7/14/94 10,000 10,016
------------
- - --------------------------------------------------------------------------------
KENTUCKY (.1%)
Ashland City PCR VRDO
(Ashland Oil)
2.2%, 3/3/94 2,000 2,000
------------
- - --------------------------------------------------------------------------------
LOUISIANA (3.8%)
East Baton Rouge PCR
(Exxon)
2.2%, 3/1/94 7,800 7,800
Louisiana GO TOB VRDO
2.45%, 3/2/94 (1) 16,645 16,645
Louisiana Public Facilities Auth.
Hosp. Rev. CP
(Lady of Lakes Regional
Medical Center)
2.45%, 3/17/94 (4) 11,600 11,600
2.55%, 3/21/94 (4) 23,460 23,460
2.6%, 3/24/94 (4) 8,800 8,800
2.75%, 4/18/94 (4) 35,400 35,400
Louisiana Recovery Dist. VRDO
2.3%, 3/1/94 (3) 9,400 9,400
2.4%, 3/1/94 (1) 8,000 8,000
Orleans Levee Dist. VRDO
3.95%, 3/2/94 29,525 29,525
Plaquemines Port Dist.
(Chevron)
3.07%, 9/1/94* 9,080 9,088
------------
STATE TOTAL 159,718
------------
- - --------------------------------------------------------------------------------
MARYLAND (.1%)
Maryland Health & Higher
Education Auth. CP
(John Hopkins Hosp.)
2.85%, 6/7/94 5,000 5,000
------------
- - --------------------------------------------------------------------------------
MASSACHUSETTS (2.6%)
Massachusetts Bay Transit Auth.
3.25%, 9/30/94 9,930 9,951
8.6%, 3/1/95 (Prere.) 5,500 5,984
8.7%, 3/1/95 (Prere.) 4,000 4,356
Massachusetts GO
VRDO 2.25%, 3/1/94 43,000 43,000
TOB VRDO 2.6%, 3/3/94 20,540 20,540
CP 2.45%, 3/16/94 25,000 25,000
------------
STATE TOTAL 108,831
------------
- - --------------------------------------------------------------------------------
MICHIGAN (2.7%)
Michigan Hosp. Finance Auth.
(Daughters of Charity) VRDO
2.5%, 3/2/94 23,300 23,300
Michigan State Housing
Development Auth. VRDO
2.45%, 3/2/94 77,820 77,820
Sisters of Charity Health Care
System VRDO
(St. Joseph Center Project)
2.25%, 3/3/94 (1) 11,500 11,500
------------
STATE TOTAL 112,620
------------
- - --------------------------------------------------------------------------------
MINNESOTA (2.7%)
Becker PCR CP
2.45%, 4/4/94 17,800 17,800
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Minnesota GO
TOB VRDO 2.5%, 3/3/94 $ 17,000 $ 17,000
4.8%, 8/1/94 10,050 10,131
Minnesota Housing Finance Agency
2.5%, 1/12/95* 37,000 37,000
Univ. of Minnesota
CP 2.6%, 6/7/94 7,300 7,300
2.4%, 8/1/94* 22,000 22,000
------------
STATE TOTAL 111,231
------------
- - --------------------------------------------------------------------------------
MISSISSIPPI (.3%)
Jackson County PCR VRDO
(Chevron)
2.3%, 3/1/94 14,100 14,100
------------
- - --------------------------------------------------------------------------------
MISSOURI (1.6%)
Missouri Health & Education Finance
Auth. VRDO
(St. Anthony's Medical Center)
2.55%, 3/1/94 24,320 24,320
Sisters of Mercy Health Care System
VRDO 2.35%, 3/3/94 9,000 9,000
Univ. of Missouri Capital
Project Notes
3.25%, 6/30/94 34,000 34,035
------------
STATE TOTAL 67,355
------------
- - --------------------------------------------------------------------------------
MONTANA (.5%)
Montana TRAN
3.25%, 6/30/94 19,900 19,933
------------
- - --------------------------------------------------------------------------------
NEBRASKA (.1%)
Lancaster County Sisters of Charity
VRDO (St. Elizabeth Hosp.)
2.25%, 3/3/94 (1) 3,700 3,700
------------
- - --------------------------------------------------------------------------------
NEVADA (.7%)
Clark County Airport VRDO
2.3%, 3/2/94 (1) 17,000 17,000
Nevada GO TOB VRDO
2.585%, 3/3/94 9,225 9,225
Nevada State Highway
4.5%, 4/1/94 5,000 5,007
------------
STATE TOTAL 31,232
------------
- - --------------------------------------------------------------------------------
NEW JERSEY (1.0%)
New Jersey TRAN
3.0%, 6/15/94 31,000 31,059
New Jersey Transportation TOB
2.85%, 8/15/94* 10,000 10,000
------------
STATE TOTAL 41,059
------------
- - --------------------------------------------------------------------------------
NEW YORK (2.7%)
New York City RAN
3.25%, 4/15/94 10,000 10,006
3.5%, 4/15/94 23,400 23,421
3.5%, 6/30/94 41,885 41,982
New York City TAN
3.125%, 4/8/94 18,000 18,010
New York City Water
BAN 2.75%, 4/15/94 11,100 11,101
VRDO 2.35%, 3/1/94 (3) 10,000 10,000
------------
STATE TOTAL 114,520
------------
- - --------------------------------------------------------------------------------
NORTH CAROLINA (2.7%)
Charlotte Airport VRDO
2.3%, 3/2/94 (1) 8,000 8,000
Fayetteville GO TOB VRDO
2.6%, 3/3/94 7,260 7,260
North Carolina Eastern Municipal
Power Agency CP
2.5%, 3/8/94 12,935 12,935
North Carolina Eastern
Power Agency
10.25%, 1/1/95 (Prere.) 9,735 10,633
North Carolina Educational
Facilities Auth. VRDO
(Duke Univ.)
2.484%, 3/3/94 12,600 12,600
North Carolina Medical Care
Hosp. Rev. VRDO
(Moses Cone Hosp.)
2.4% 3/3/94 4,500 4,500
North Carolina Public Power
Agency TOB
(Catawba Electric)
2.45%, 3/2/94 (2) 45,000 45,000
Wake County IDR & PCR
(Carolina Power & Light) CP
2.5%, 3/17/94 13,700 13,700
------------
STATE TOTAL 114,628
------------
- - --------------------------------------------------------------------------------
OHIO (1.0%)
Cleveland Water Works TOB VRDO
2.55%, 3/3/94 (1) 5,560 5,560
Ohio GO TOB VRDO
2.55%, 3/3/94 5,080 5,080
Ohio Student Loan VRDO
2.3%, 3/2/94 30,350 30,350
------------
STATE TOTAL 40,990
------------
- - --------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
OKLAHOMA (.7%)
Oklahoma City Industrial & Cultural
Facilities Trust VRDO
(St. Anthony's Hosp.)
2.55%, 3/1/94 $ 14,400 $ 14,400
Oklahoma Water Resource Rev.
2.9%, 4/1/94* 13,685 13,685
------------
STATE TOTAL 28,085
------------
- - --------------------------------------------------------------------------------
OREGON (2.3%)
Oregon Veterans Welfare
Program GO VRDO
2.35%, 3/2/94 56,900 56,900
2.4%, 3/2/94 1,500 1,500
2.5%, 3/2/94 37,300 37,300
------------
STATE TOTAL 95,700
------------
- - --------------------------------------------------------------------------------
PENNSYLVANIA (.3%)
Allegheny County VRDO
(Children's Hosp. of Pittsburgh)
2.4%, 3/3/94 400 400
Pennsylvania TAN
3.25%, 6/30/94 10,000 10,015
Sayre Health Care Facility Auth.
VRDO 2.35%, 3/1/94 (2) 2,900 2,900
------------
STATE TOTAL 13,315
------------
- - --------------------------------------------------------------------------------
RHODE ISLAND (1.3%)
Rhode Island Housing Finance
Corp. VRDO
2.45%, 3/2/94 33,045 33,045
Rhode Island GO TAN
3.25%, 6/30/94 21,000 21,038
------------
STATE TOTAL 54,083
------------
- - --------------------------------------------------------------------------------
SOUTH CAROLINA (1.8%)
Charleston Water Works
& Sewer Rev.
10.375%, 1/1/95 (Prere.) 5,000 5,444
Greenville Hosp. System VRDO
2.3%, 3/3/94 8,500 8,500
Piedmont Municipal Power Agency
9.375%, 1/1/95 (Prere.) 2,675 2,896
9.5%, 1/1/95 (Prere.) 5,995 6,497
10.25%, 1/1/95 (Prere.) 7,000 7,643
10.5%, 1/1/95 (Prere.) 11,900 12,970
11.0%, 1/1/95 (Prere.) 24,495 26,895
York County PCR CP
(Duke Power Co.)
2.6%, 10/18/94 6,000 6,000
------------
STATE TOTAL 76,845
------------
- - --------------------------------------------------------------------------------
TENNESSEE (2.5%)
Knoxville GO
10.25%, 5/1/94 (Prere.) 10,850 11,313
Metropolitan Govt. of Nashville and
Davidson County Health &
Education Facilities CP
(Baptist Hosp.)
2.35%, 4/7/94 8,000 8,000
Metropolitan Govt. of
Nashville and Davidson County
Water & Sewer Rev. TOB
VRDO 2.5%, 3/3/94 (Prere.) 14,892 14,892
9.375%, 1/1/95 (Prere.) 4,000 4,292
Shelby County Health Education &
Housing Facilities
(Methodist Health System)
3.1%, 8/1/94* (1) 9,000 9,000
Tennessee BAN VRDO
2.4%, 3/2/94 44,500 44,500
Tennessee GO TOB VRDO
2.55%, 3/3/94 12,200 12,200
------------
STATE TOTAL 104,197
------------
- - --------------------------------------------------------------------------------
TEXAS (16.3%)
Abilene Health Facility Development
Corp. VRDO
(Hendrick Medical Center)
2.65%, 3/2/94 10,650 10,650
Bexar County VRDO
(Incarnate Word Health Service)
2.5%, 3/2/94 67,900 67,900
Dallas Independent School
Dist. TRAN
3.375%, 8/15/94 25,950 26,005
Dallas Waterworks & Sewer
TOB VRDO 2.45%, 3/2/94 30,000 30,000
CP 2.4%, 5/16/94 5,400 5,400
Gulf Coast Waste Disposal PCR
VRDO (Amoco)
2.25%, 3/1/94 500 500
Harris County Health Facility
Development Corp. VRDO
(Texas Children's Hosp.)
2.45%, 3/2/94 21,000 21,000
Harris County Toll Roads VRDO
2.433%, 3/3/94 72,550 72,550
Hockley County PCR
(Amoco)
2.75%, 3/1/94* 24,000 24,000
Houston VRDO
2.45%, 3/2/94 69,600 69,600
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
North Central Health Facility
Hosp. CP
(Methodist Hosp. of Dallas)
2.5%, 3/7/94 $ 17,000 $ 17,000
2.35%, 4/7/94 9,500 9,500
Plano Health Facility
Development Corp. CP
2.4%, 5/23/94 (1) 13,200 13,200
2.65%, 5/26/94 (1) 20,600 20,600
Red River PCR VRDO
(Southwest Public Service Co.)
2.3%, 3/3/94 28,000 28,000
Richardson Independent School
Dist. TRAN
3.375%, 8/23/94 19,000 19,045
San Antonio GO TOB VRDO
2.5%, 3/3/94 6,000 6,000
Southwest Higher Education
Auth. VRDO
(Southern Methodist Univ.)
2.4%, 3/1/94 14,800 14,800
Tarrant County Health Facility
Development Corp. VRDO
2.6%, 3/3/94 10,800 10,800
Texas A&M Univ. Board of
Regents CP
2.3%, 4/18/94 30,000 30,000
Texas Municipal Power BAN CP
2.6%, 3/1/94 15,600 15,600
2.5%, 3/7/94 10,400 10,400
Texas Public Finance Auth. GO CP
2.6%, 3/7/94 10,000 10,000
2.7%, 8/3/94 4,000 4,000
2.65%, 10/4/94 26,000 26,000
2.5%, 10/27/94 25,000 25,000
Texas TRAN
3.25%, 8/31/94 87,800 88,105
Univ. of Texas Board of
Regents TOB VRDO
2.5%, 3/3/94 10,170 10,170
------------
STATE TOTAL 685,825
------------
- - --------------------------------------------------------------------------------
UTAH (.9%)
Intermountain Power Agency CP
2.4%, 5/10/94 9,750 9,750
2.3%, 5/17/94 12,800 12,800
2.45%, 6/9/94 16,800 16,800
------------
STATE TOTAL 39,350
------------
- - --------------------------------------------------------------------------------
VERMONT (.1%)
Vermont Education & Building
Finance Agency
(Middlebury College)
2.55%, 5/1/94* 3,500 3,500
------------
- - --------------------------------------------------------------------------------
VIRGINIA (2.5%)
Fairfax County GO
8.25%, 4/1/94 4,500 4,521
Fairfax County Industrial
Development Auth. VRDO
(Fairfax Hosp.)
2.5%, 3/2/94 8,000 8,000
Norfolk GO
8.0%, 6/1/94 3,550 3,602
Peninsula Port PCR VRDO
(Shell Oil)
2.25%, 3/1/94 4,700 4,700
Prince William County PCR CP
(Virginia Electric Power)
2.3%, 3/10/94 3,700 3,700
Richmond GO
3.0%, 5/15/94 1,120 1,121
Virginia Housing
Development Auth.
2.95%, 5/12/94* 25,000 25,000
2.5%, 12/15/94* 50,000 50,000
Virginia Public Facilities TOB VRDO
2.6%, 6/1/94 6,020 6,020
------------
STATE TOTAL 106,664
------------
- - --------------------------------------------------------------------------------
WASHINGTON (.8%)
Chelan County Development Corp.
PCR VRDO (Alcoa)
2.5%, 3/1/94 8,300 8,300
Port of Seattle GO VRDO
2.4%, 3/2/94 3,000 3,000
Washington GO TOB VRDO
2.5%, 3/3/94 23,500 23,500
------------
STATE TOTAL 34,800
------------
- - --------------------------------------------------------------------------------
WEST VIRGINIA (.5%)
Kanawah Building Comm. VRDO
(Charleston Medical Inc.)
2.6%, 3/2/94 19,040 19,040
------------
- - --------------------------------------------------------------------------------
WISCONSIN (2.8%)
Milwaukee School Improvement RAN
3.5%, 8/25/94 28,000 28,091
Oak Creek City VRDO
(Wisconsin Electric Power Co.)
2.35%, 3/2/94 33,800 33,800
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Wisconsin GO
TOB VRDO 2.65%, 3/2/94 $ 25,570 $ 25,570
TOB VRDO 2.5%, 3/3/94 15,700 15,700
6.4%, 5/1/94 4,480 4,506
Wisconsin Operating Notes
3.25%, 6/15/94 10,000 10,008
------------
STATE TOTAL 117,675
------------
- - --------------------------------------------------------------------------------
WYOMING (.2%)
Uinta County PCR VRDO
(Chevron)
2.4%, 3/2/94 6,500 6,500
------------
- - --------------------------------------------------------------------------------
TOTAL MUNICIPAL MONEY MARKET
INSTRUMENTS
(Cost $4,140,642) 4,140,642
- - --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.5%)
- - --------------------------------------------------------------------------------
Other Assets--Note B 87,455
Liabilities (22,860)
------------
64,595
- - --------------------------------------------------------------------------------
NET ASSETS (100%)
- - --------------------------------------------------------------------------------
Applicable to 4,205,446,870 outstanding
$.001 par value shares
(authorized 5,000,000,000 shares) $4,205,237
- - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $1.00
================================================================================
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 47.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
AT FEBRUARY 28, 1994,
NET ASSETS CONSISTED OF:
- - --------------------------------------------------------------------------------
Amount Per
(000) Share
------------ ------------
<S> <C> <C>
Paid in Capital $ 4,205,341 $ 1.00
Undistributed Net
Investment Income -- --
Accumulated Net Realized
Losses (104) --
Unrealized Appreciation of
Investments -- --
- - --------------------------------------------------------------------------------
NET ASSETS $ 4,205,237 $ 1.00
- - --------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
Face Market
Amount Value
SHORT-TERM PORTFOLIO (000) (000)+
- - ---------------------------------------------------------------------------------
MUNICIPAL BONDS (98.9%)
- - --------------------------------------------------------------------------------
<S> <C> <C>
ALABAMA (.9%)
Alabama State Public School &
College Auth.
3.7%, 11/1/94 $ 4,700 $ 4,710
Birmingham North Medical Clinic
(Carraway Hosp.)
9.0%, 10/1/95 (Prere.) 8,500 9,372
------------
STATE TOTAL 14,082
------------
- - --------------------------------------------------------------------------------
ALASKA (.3%)
Anchorage Electric Rev.
9.75%, 9/1/95 (Prere.) 3,700 4,105
------------
- - --------------------------------------------------------------------------------
ARIZONA (1.4%)
City of Mesa Utility System
8.5%, 7/1/94 (3) 5,400 5,505
Mesa Unified School Dist.
7.55%, 7/1/94 10,555 10,714
City of Phoenix GO
6.5%, 7/1/95 5,000 5,209
------------
STATE TOTAL 21,428
------------
- - --------------------------------------------------------------------------------
CALIFORNIA (11.2%)
Alameda County Public
Facilities Corp. COP VRDO
6.15%, 9/1/96* 5,000 5,172
California GO
11.0%, 9/1/94 5,350 5,573
California Health Facility Auth. VRDO
2.4%, 2/1/94 11,600 11,600
2.3%, 3/1/94 (1) 1,700 1,700
California RAN
3.5%, 6/28/94 24,500 24,552
Clovis Unified School Dist.
4.2%, 8/1/95 5,800 5,869
Contra Costa Transportation Auth.
Sales Tax Rev.
VRDO 2.4%, 3/2/94 (3) 1,200 1,200
5.8%, 3/1/95 3,730 3,827
Irvine Ranch Water Dist. VRDO
2.2%, 3/1/94 600 600
Kern County TRAN
3.25%, 7/5/94 20,000 20,026
Kern County VRDO
2.35%, 3/1/94 6,100 6,100
Los Angeles COP
5.1%, 12/1/94 5,315 5,370
5.5%, 12/1/96 3,400 3,516
Los Angeles County TRAN
3.0%, 6/30/94 10,000 10,005
Los Angeles Water & Power
9.0%, 11/15/97 5,855 6,803
Northern California Power Agency
9.75%, 7/1/95 (Prere.) 9,000 9,916
Oakland Redevelopment
Agency COP
9.25%, 8/1/95 (Prere.) 3,695 4,058
Orange County VRDO
2.2%, 3/1/94 9,000 9,000
2.3%, 3/1/94 2,000 2,000
MSR Public Power Agency
(San Juan Project)
9.25%, 7/1/95 (Prere.) 7,660 8,390
Riverside VRDO
2.45%, 3/1/94 1,250 1,250
San Diego County VRDO
2.35%, 3/1/94 (3) 3,000 3,000
Santa Clara VRDO (El Camino Hosp.
Dist.-Valley Medical)
2.4%, 3/1/94 3,100 3,100
Southern California Public Power Auth.
(Palo Verde Project)
11.5%, 7/1/94 (Prere.) 6,345 6,721
9.25%, 7/1/95 (2) (Prere.) 9,405 10,346
------------
STATE TOTAL 169,694
------------
- - --------------------------------------------------------------------------------
COLORADO (1.9%)
Colorado Health Auth.
(Sisters of Charity Health System)
5.7%, 5/15/95 2,300 2,363
Jefferson County School Dist.
8.5%, 12/15/95 (Prere.) 5,000 5,428
Municipal Subdist. of Northern
Colorado
9.0%, 12/1/95 (Prere.) 3,000 3,305
9.25%, 12/1/95 (Prere.) 2,420 2,676
Platte River Power Auth.
2.6%, 6/1/94 14,745 14,731
------------
STATE TOTAL 28,503
------------
- - --------------------------------------------------------------------------------
CONNECTICUT (2.5%)
Connecticut Clean Water Fund
10.0%, 7/1/94 2,420 2,476
Connecticut Development Auth. PCR
2.35%, 3/1/94 13,900 13,900
Connecticut Economic Recovery
Notes GO
5.4%, 6/15/95 5,455 5,602
Connecticut GO
4.5%, 5/15/94 6,585 6,608
Connecticut Special Tax
4.25%, 9/1/95 5,630 5,715
8.6%, 10/15/95 (Prere.) 3,075 3,377
------------
STATE TOTAL 37,678
------------
- - --------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
DELAWARE (2.1%)
Delaware Economic Development
Auth. VRDO
(Hosp. Bill & Collection Service)
2.45%, 3/1/94 $ 28,700 $ 28,700
New Castle County GO
7.5%, 10/15/94 2,500 2,562
------------
STATE TOTAL 31,262
------------
- - --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA (1.2%)
District of Columbia GO
5.3%, 6/1/94 (1) 7,505 7,546
5.5%, 6/1/95 (3) 4,705 4,817
5.6%, 6/1/96 (3) 5,000 5,181
District of Columbia VRDO
(George Washington Univ.)
2.6%, 3/1/94 1,000 1,000
------------
STATE TOTAL 18,544
------------
- - --------------------------------------------------------------------------------
FLORIDA (7.4%)
Broward County COP
5.4%, 7/1/94 (1) 5,000 5,041
Dade County Water & Sewer
4.5%, 10/1/98 (3) 4,000 4,043
Gulf Breeze Local Gov't.
2.4%, 3/1/94 (3) 13,200 13,200
Hillsborough County Aviation Auth.
(Tampa Airport)
3.5%, 10/1/95 (3) 4,980 5,004
City of Homestead Special Insurance
Assessment Rev.
3.3%, 9/1/94 (1) 7,685 7,675
Jacksonville Electric Auth. Rev.
7.5%, 10/1/95 (Prere.) 9,090 9,765
(St. John's River Project)
10.0%, 10/1/94 (Prere.) 3,000 3,173
10.25%, 10/1/95 (Prere.) 5,000 5,608
4.25%, 10/1/96 10,050 10,180
Orlando Utility Comm. Water
& Electric Rev.
VRDO 2.4%, 3/1/94 4,845 4,845
10.5%, 10/1/94 (Prere.) 14,410 15,422
8.5%, 10/1/95 (Prere.) 13,980 15,308
4.4%, 10/1/96 3,255 3,308
Pinellas County Capital Improvement
5.0%, 10/1/94 9,960 10,067
------------
STATE TOTAL 112,639
------------
- - --------------------------------------------------------------------------------
GEORGIA (2.0%)
Fulton County Building Auth.
9.0%, 1/1/95 (Prere.) 3,925 4,180
Georgia GO
7.7%, 7/1/94 7,070 7,183
7.7%, 4/1/95 4,000 4,190
7.0%, 11/1/95 4,725 5,012
Gwinnett County Water & Sewer Auth.
8.75%, 8/1/96 (Prere.) 6,000 6,786
Metropolitan Atlanta Rapid
Transit Auth.
8.5%, 7/1/95 (Prere.) 3,000 3,254
------------
STATE TOTAL 30,605
------------
- - --------------------------------------------------------------------------------
HAWAII (3.0%)
Hawaii GO
7.0%, 11/1/94 4,325 4,437
5.0%, 11/1/96 12,870 13,268
5.0%, 11/1/97 10,000 10,335
Honolulu City & County GO
3.6%, 10/1/95 14,000 14,053
9.0%, 3/1/96 3,000 3,296
------------
STATE TOTAL 45,389
------------
- - --------------------------------------------------------------------------------
ILLINOIS (4.3%)
Chicago Public Building Comm.
4.5%. 12/1/98 (1) 8,000 8,057
Chicago Sanitation Dist.
7.85%, 1/1/98 5,600 6,398
Chicago School Finance Auth. GO
4.5%, 6/1/94 (3) 3,925 3,942
4.4%, 6/1/98 (1) 6,755 6,749
Illinois GO
5.5%, 6/1/94 8,385 8,438
Illinois Metropolitan Fair &
Exposition Auth.
10.375%, 6/1/95 (Prere.) 17,105 19,041
Illinois Sales Tax
9.375%, 6/15/95 (Prere.) 4,325 4,751
Illinois Toll Highway Auth. VRDO
2.4%, 7/1/94 (1) 6,900 6,900
------------
STATE TOTAL 64,276
------------
- - --------------------------------------------------------------------------------
INDIANA (.7%)
Indiana State Univ. Student
Fee Bonds
9.4%, 8/1/95 (Prere.) 3,500 3,816
Indiana Toll Road Auth.
9.0%, 7/1/95 (Prere.) 4,000 4,365
Indiana Transportation Finance Auth.
3.0%, 6/1/94 (2) 3,000 3,001
------------
STATE TOTAL 11,182
------------
- - --------------------------------------------------------------------------------
IOWA (.1%)
Iowa School Corp. Certificates
3.6%, 12/30/94 (3) 1,800 1,809
------------
- - --------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
KANSAS (.2%)
Kansas City Utility System
4.45%, 9/1/94 (2) $ 2,500 $ 2,520
------------
- - --------------------------------------------------------------------------------
KENTUCKY (2.2%)
Ashland City PCR VRDO
(Ashland Oil)
2.2%, 3/1/94 6,200 6,200
Kentucky Property & Buildings
3.7%, 9/1/94 8,370 8,398
4.0%, 9/1/95 6,420 6,482
Kentucky Turnpike Auth.
10.75%, 7/1/94 (Prere.) 7,000 7,397
9.2%, 7/1/95 (Prere.) 4,850 5,352
------------
STATE TOTAL 33,829
------------
- - --------------------------------------------------------------------------------
LOUISIANA (1.4%)
Jefferson Parish Sales Tax
5.9%, 12/1/95 (3) 4,175 4,349
Louisiana GO VRDO
2.45%, 8/1/94 (1) 7,000 7,000
Louisiana Recovery Dist. Sales Tax
5.5%, 7/1/97 10,000 10,338
------------
STATE TOTAL 21,687
------------
- - --------------------------------------------------------------------------------
MAINE (.7%)
Maine Municipal Bond Bank
3.875%, 11/1/96 10,000 10,008
------------
- - --------------------------------------------------------------------------------
MARYLAND (1.7%)
Maryland State Transportation Auth.
3.625%, 6/15/95 11,185 11,252
9.0%, 7/1/95 (Prere.) 13,450 14,682
------------
STATE TOTAL 25,934
------------
- - --------------------------------------------------------------------------------
MASSACHUSETTS (4.9%)
Massachusetts Consolidated
Loan GO VRDO
2.4%, 5/1/94 (1) 19,400 19,400
Massachusetts GO
3.55%, 9/1/94 12,300 12,331
4.05%, 9/1/95 12,000 12,114
5.7%, 8/1/96 8,000 8,328
Massachusetts Health & Educational
Facilities Auth.
9.375%, 7/1/95 (Prere.) 8,900 9,841
Massachusetts Municipal Wholesale
Electric
6.0%, 7/1/97 2,355 2,464
Massachusetts Water Resources Auth.
BAN
4.125%, 10/15/95 10,000 10,118
------------
STATE TOTAL 74,596
------------
- - --------------------------------------------------------------------------------
MINNESOTA (.4%)
Southern Minnesota Municipal
Power Agency
4.7%, 1/1/97 (2) 6,640 6,744
------------
- - --------------------------------------------------------------------------------
MISSISSIPPI (.1%)
Jackson County VRDO
(Chevron)
2.3%, 3/1/94 1,100 1,100
------------
- - --------------------------------------------------------------------------------
MISSOURI
Sisters of Mercy
Health System VRDO
2.35%, 3/1/94 200 200
------------
- - --------------------------------------------------------------------------------
NEBRASKA (.1%)
Nebraska Public Power Dist.
Electric System Rev.
4.8%, 1/1/96 2,000 2,033
------------
- - --------------------------------------------------------------------------------
NEVADA (1.5%)
Clark County Airport
VRDO 2.3%, 7/1/94 (1) 13,500 13,500
13.25%, 7/1/97 (Prere.) 3,015 3,866
Clark County School Dist.
3.3%, 7/1/95 (2) 4,600 4,601
------------
STATE TOTAL 21,967
------------
- - --------------------------------------------------------------------------------
NEW JERSEY (1.2%)
New Jersey Health Care Facility Auth.
4.625%, 7/1/94 2,190 2,198
5.125%, 7/1/95 1,805 1,827
New Jersey Transportation Trust Fund
3.5%, 6/15/95 5,000 5,014
New Jersey Turnpike Auth.
VRDO 2.25%, 7/1/94 (3) 1,900 1,900
4.8%, 1/1/96 7,000 7,118
------------
STATE TOTAL 18,057
------------
- - --------------------------------------------------------------------------------
NEW YORK (6.0%)
Metropolitan Transportation Auth.
8.5%, 7/1/96 (Prere.) 3,000 3,374
New York City GO
6.7%, 2/1/95 11,240 11,525
4.9%, 8/15/95 23,170 23,463
6.8%, 2/1/97 12,975 13,706
New York City RAN
3.5%, 6/30/94 500 501
New York City Water
Finance Auth. VRDO
2.2%, 3/1/94 4,400 4,400
New York City Water BAN
2.75%, 4/15/94 11,400 11,400
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
New York State Dormitory Auth.
(City Univ.)
4.9%, 7/1/96 $ 5,205 $ 5,281
5.25%, 7/1/97 2,780 2,851
New York State GO
6.625%, 8/1/95 5,000 5,222
New York State Urban Development
6.75%, 1/1/96 3,135 3,265
Triborough Bridge & Tunnel Auth.
5.5%, 1/1/97 5,000 5,199
------------
STATE TOTAL 90,187
------------
- - --------------------------------------------------------------------------------
NORTH CAROLINA (4.0%)
Charlotte Airport VRDO
2.3%, 7/1/94 (1) 17,600 17,600
North Carolina Eastern Power Agency
10.0%, 1/1/95 (Prere.) 6,350 6,827
10.2%, 1/1/95 (Prere.) 5,000 5,423
10.625%, 1/1/95 (Prere.) 3,735 4,064
North Carolina Medical Care VRDO
2.45%, 3/1/94 13,000 13,000
North Carolina Municipal Power
Agency (Catawba Electric)
4.5%, 1/1/96 2,000 2,020
9.0%, 1/1/96 (Prere.) 5,845 6,495
Wake County PCR
(Carolina Power & Light)
5.9%, 7/1/94* 5,000 5,013
------------
STATE TOTAL 60,442
------------
- - --------------------------------------------------------------------------------
OHIO (4.7%)
Columbus Electric VRDO
1.9%, 3/1/94 900 900
Columbus Refunding Limited Tax
3.9%, 7/1/97 4,850 4,859
Columbus Sewer System Rev. VRDO
2.4%, 3/3/94 1,800 1,800
Cuyahoga County Hospital
Improvement VRDO
(St. Luke's Hospital)
2.5%, 3/1/94 11,210 11,210
Ohio Higher Education Facility VRDO
2.5%, 5/1/94 (2) 4,100 4,100
Ohio Public Facilities Comm.
5.3%, 12/1/95 6,000 6,189
5.3%, 12/1/96 5,000 5,202
(Lease Fee)
4.1%, 12/1/95 9,830 9,961
Ohio Student Loan VRDO
2.3%, 4/1/94 3,600 3,600
Ohio Water Development Auth.
VRDO 2.4%, 3/1/94 600 600
4.4%, 12/1/95 5,000 5,091
4.6%, 6/1/96 6,800 6,913
Univ. of Cincinnati BAN
3.02%, 9/1/94 10,200 10,208
------------
STATE TOTAL 70,633
------------
- - --------------------------------------------------------------------------------
OKLAHOMA (.7%)
Grand River Dam Auth.
4.9%, 6/1/98 10,000 10,184
------------
- - --------------------------------------------------------------------------------
OREGON (.7%)
Oregon Veterans Welfare
Program VRDO
2.4%, 3/1/94 10,900 10,900
------------
- - --------------------------------------------------------------------------------
PENNSYLVANIA (2.2%)
Northumberland County
Commonwealth Lease Rev.
5.75%, 10/15/95 (1) 3,480 3,602
Pennsylvania Turnpike Comm.
7.875%, 12/1/96 (Prere.) 7,640 8,583
Philadelphia Hosp. & Higher
Education Facility Auth.
(Children's Hosp.)
VRDO 2.3%, 3/1/94 1,400 1,400
(Albert Einstein Medical Center)
9.75%, 4/1/95 3,460 3,758
Philadelphia Water &
Wastewater Rev.
4.0%, 6/15/95 11,700 11,764
Sayre Health Care Facility Auth.
VRDO 2.35%, 3/1/94 (2) 4,700 4,700
------------
STATE TOTAL 33,807
------------
- - --------------------------------------------------------------------------------
PUERTO RICO (.1%)
Puerto Rico Govt. Development
Bank VRDO
2.25%, 3/1/94 1,700 1,700
------------
- - --------------------------------------------------------------------------------
RHODE ISLAND (.4%)
Rhode Island Student Loan Auth.
5.4%, 12/1/95 6,000 6,179
------------
- - --------------------------------------------------------------------------------
SOUTH CAROLINA (2.8%)
Charleston Water & Sewer
10.375%, 1/1/95 (Prere.) 5,000 5,430
Piedmont Municipal Power Agency
TOB 2.5%, 7/1/94 (Prere.) 10,903 10,903
10.25%, 1/1/95 (Prere.) 4,405 4,779
10.5%, 1/1/95 (Prere.) 4,000 4,348
7.75%, 1/1/96 (Prere.) 3,700 4,012
9.7%, 1/1/96 (Prere.) 4,500 5,096
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
South Carolina Public Service Auth.
(Santee Cooper)
9.5%, 7/1/95 (Prere.) $ 6,500 $ 7,198
------------
STATE TOTAL 41,766
------------
- - --------------------------------------------------------------------------------
TENNESSEE (1.0%)
Metropolitan Govt. of Nashville
& Davidson County
9.375%, 1/1/95 (Prere.) 4,580 4,892
8.75%, 1/1/96 (Prere.) 5,000 5,533
Tennessee GO BAN VRDO
2.4%, 3/1/94 4,700 4,700
------------
STATE TOTAL 15,125
------------
- - --------------------------------------------------------------------------------
TEXAS (12.3%)
Austin Combined Utility
System Rev.
5.0%, 11/15/95 (2) 3,840 3,939
10.25%, 11/15/95 (Prere.) 24,395 27,546
Dallas-Fort Worth Regional Airport
3.4%, 11/1/95 (1) 15,555 15,577
Dallas Waterworks & Sewer
6.5%, 4/1/95 5,000 5,162
El Paso Health Facilities VRDO
(Providence Memorial Hosp.)
2.3%, 3/1/94 10,000 10,000
Harris County Toll Road Rev.
9.25%, 2/1/95 (Prere.) 16,130 17,444
9.875%, 2/1/95 (Prere.) 6,100 6,631
Houston GO
7.5%, 3/1/95 3,185 3,313
Houston VRDO
2.45%, 4/1/94 6,400 6,400
Houston Water & Sewer System
5.25%, 12/1/94 (3) 4,525 4,602
9.375%, 12/1/95 (3) (Prere.) 9,320 10,413
8.1%, 12/1/96 (Prere.) 10,000 11,293
Sam Rayburn Municipal
Power Agency
9.25%, 9/1/95 (Prere.) 37,000 40,778
San Antonio GO
8.875%, 8/1/95 (Prere.) 2,500 2,684
Texas GO
9.0%, 12/1/94 6,850 7,137
Texas Municipal Power Agency
5.0%, 9/1/96 5,000 5,121
Texas TRAN
3.25%, 8/31/94 8,000 8,018
------------
STATE TOTAL 186,058
------------
- - --------------------------------------------------------------------------------
UTAH (3.0%)
Intermountain Power Agency
7.0%, 7/1/95 (Prere.) 5,000 5,231
8.9%, 7/1/95 4,000 4,360
9.0%, 7/1/95 6,000 6,430
9.2%, 7/1/95 (Prere.) 9,375 10,211
9.5%, 7/1/95 (Prere.) 5,000 5,489
9.625%, 7/1/95 (Prere.) 5,650 6,239
10.25%, 7/1/95 (Prere.) 6,225 6,894
------------
STATE TOTAL 44,854
------------
- - --------------------------------------------------------------------------------
VERMONT (1.0%)
Vermont GO RAN CP
2.3%, 5/17/94 15,000 14,989
------------
- - --------------------------------------------------------------------------------
VIRGINIA (.9%)
Fairfax County
7.3%, 10/1/95 (Prere.) 4,495 4,839
Virginia Public School Auth.
3.25%, 1/1/95 5,000 5,014
7.3%, 1/1/97 (Prere.) 3,345 3,695
------------
STATE TOTAL 13,548
------------
- - --------------------------------------------------------------------------------
WASHINGTON (4.6%)
King County GO
5.5%, 12/1/95 5,600 5,793
Seattle Municipal Sewer
9.75%, 7/1/95 (Prere.) 4,000 4,404
Washington GO
8.5%, 3/1/94 2,985 2,985
8.1%, 9/1/95 5,000 5,344
3.35%, 10/1/95 2,000 2,005
9.3%, 5/1/96 (Prere) 5,000 5,564
7.6%, 9/1/96 (Prere.) 4,325 4,712
8.0%, 9/1/96 (Prere.) 21,695 23,849
7.0%, 10/1/96 6,405 6,901
Washington Motor Vehicle Fuel
3.25%, 9/1/94 2,000 1,998
8.0%, 9/1/96 (Prere.) 5,000 5,497
------------
STATE TOTAL 69,052
------------
- - --------------------------------------------------------------------------------
WISCONSIN (.5%)
City of Milwaukee GO
5.0%, 6/1/96 7,710 7,893
------------
- - --------------------------------------------------------------------------------
WYOMING (.6%)
Lincoln County PCR VRDO
2.3%, 3/1/94 2,000 2,000
Platte County PCR
3.6%, 1/1/96 3,000 2,980
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Uinta County PCR VRDO
2.4%, 3/1/94 $ 3,600 $ 3,600
------------
STATE TOTAL 8,580
------------
- - --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,490,107) 1,495,768
- - --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.1%)
Other Assets--Note B 29,607
Liabilities (13,022)
------------
16,585
- - --------------------------------------------------------------------------------
NET ASSETS (100%)
- - --------------------------------------------------------------------------------
Applicable to 97,230,709 outstanding
$.001 par value shares
(authorized 250,000,000 shares) $ 1,512,353
- - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $15.55
================================================================================
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 47.
- - -------------------------------------------------------------------------------
AT FEBRUARY 28, 1994,
NET ASSETS CONSISTED OF:
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount Per
(000) Share
------------- ---------
<S> <C> <C>
Paid in Capital $1,506,379 $15.49
Undistributed Net
Investment Income -- --
Accumulated Net Realized
Gains 313 --
Unrealized Appreciation of
Investments--Note D 5,661 .06
- - --------------------------------------------------------------------------------
NET ASSETS $1,512,353 $15.55
- - --------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
Face Market
Amount Value
LIMITED-TERM PORTFOLIO (000) (000)+
- - ---------------------------------------------------------------------------------
MUNICIPAL BONDS (98.3%)
- - ---------------------------------------------------------------------------------
<S> <C> <C>
ALABAMA (.2%)
Alabama GO
5.35%, 9/1/96 $ 3,480 $ 3,615
------------
- - --------------------------------------------------------------------------------
ALASKA (.3%)
North Slope Borough GO
0.0%, 6/30/95 (1) 5,000 4,746
0.0%, 6/30/97 (1) 1,000 866
------------
STATE TOTAL 5,612
------------
- - --------------------------------------------------------------------------------
ARIZONA (1.6%)
City of Mesa Utility System
6.1%, 7/1/96 (3) 4,000 4,197
Deer Valley School Dist.
7.85%, 7/1/94 (3) 3,000 3,049
Maricopa County GO
6.0%, 7/1/97 (2) 10,000 10,562
Phoenix GO
8.1%, 7/1/94 (Prere.) 3,900 4,047
5.2%, 7/1/96 6,830 7,047
Salt River Project Agricultural
Improvement & Power Dist.
5.8%, 1/1/96 2,000 2,066
------------
STATE TOTAL 30,968
------------
- - --------------------------------------------------------------------------------
CALIFORNIA (4.1%)
Alameda County Public Facilities
Corp. COP
6.15%, 9/1/96* 10,000 10,344
California GO
8.9%, 3/1/97 3,000 3,392
California Univ. Rev.
10.0%, 9/1/01 (2) 9,540 12,552
Clovis Unified School Dist.
4.5%, 8/1/96 11,250 11,417
Contra Costa Transportation
Auth. Sales Tax Rev.
6.0%, 3/1/96 4,165 4,331
6.0%, 3/1/97 2,580 2,713
Kern County Public Facility
2.35%, 3/1/94 1,100 1,100
Los Angeles City COP
5.25%, 12/1/95 7,775 7,978
6.0%, 5/1/96 3,000 3,096
5.5%, 12/1/96 5,000 5,171
Los Angeles County
Transportation VRDO
2.25%, 7/1/94 (3) 400 400
Sacramento County Administration
Center & Courthouse VRDO
2.35%, 3/1/94 1,500 1,500
San Bernardino County
Transportation Auth.
3.75%, 3/1/97 (1) 4,280 4,255
San Jose Redevelopment Agency
5.5%, 8/1/00 (1) 9,000 9,380
------------
STATE TOTAL 77,629
------------
- - --------------------------------------------------------------------------------
COLORADO (1.1%)
Colorado Health Auth.
(Rocky Mountain Hosp.)
5.5%, 2/1/96 4,000 4,001
(Sisters of Charity Health System)
5.75%, 5/15/96 2,400 2,495
Colorado Springs Utilities
10.5%, 11/15/97 (Prere.) 3,000 3,654
Municipal Subdist. of
Northern Colorado
9.25%, 12/1/95 (Prere.) 6,025 6,662
Platte River Power Auth.
3.5%, 6/1/95 4,990 5,004
------------
STATE TOTAL 21,816
------------
- - --------------------------------------------------------------------------------
CONNECTICUT (3.3%)
Connecticut Development
Auth. PCR VRDO
(Connecticut Light & Power)
2.35%, 3/1/94 5,000 5,000
Connecticut GO
5.25%, 6/15/94 5,440 5,481
5.65%, 11/15/98 3,715 3,935
Connecticut Special Assessment
Unemployment Compensation
4.0%, 5/15/96 10,175 10,217
4.0%, 11/15/96 20,295 20,398
Connecticut Special Tax Obligation
4.8%, 9/1/97 6,350 6,517
4.0%, 10/1/99 11,000 10,762
------------
STATE TOTAL 62,310
------------
- - --------------------------------------------------------------------------------
DELAWARE (1.8%)
Delaware Economic Development
Auth. VRDO
2.45%, 3/1/94 29,300 29,300
Delaware Transportation Auth.
7.75%, 7/1/98 (Prere.) 4,000 4,587
------------
STATE TOTAL 33,887
------------
- - --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA (.4%)
District of Columbia GO
9.25%, 6/1/95 (Prere.) 4,000 4,360
6.0%, 6/1/97 (1) 3,250 3,429
------------
STATE TOTAL 7,789
------------
- - --------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
FLORIDA (7.6%)
Broward County
7.875%, 7/1/96 (Prere.) $ 10,200 $ 11,301
Dade County Aviation Rev.
4.3%, 10/1/96 2,500 2,529
Dade County School Dist.
6.8%, 7/1/96 3,150 3,350
Dade County Solid Waste System
8.8%, 10/1/94 3,000 3,089
Dade County Water & Sewer
4.75%, 10/1/99 (3) 10,000 10,122
Florida COP
5.75%, 5/15/95 2,500 2,553
Florida Board of Education GO
8.4%, 6/1/95 (Prere.) 17,000 18,354
Florida Dept. of General Services
6.1%, 7/1/97 (2) 6,900 7,344
Florida Municipal Power Agency
3.9%, 10/1/95 (3) 1,595 1,614
4.2%, 10/1/96 (3) 2,055 2,082
4.4%, 10/1/97 (3) 2,230 2,265
Florida School Board Association
6.5%, 7/1/94 (2) 7,000 7,086
Hillsborough County Aviation Auth.
(Tampa Airport)
3.9%, 10/1/96 (3) 7,155 7,192
City of Homestead Special
Insurance Assessment Rev.
4.2%, 9/1/96 (1) 6,190 6,244
4.4%, 3/1/97 (1) 7,200 7,262
Jacksonville Electric Auth. Rev.
7.5%, 10/1/95 (Prere.) 15,500 16,651
6.6%, 10/1/96 4,600 4,914
Jacksonville Transportation Auth.
9.0%, 1/1/98 (Prere.) 3,780 4,468
Orlando Utility Comm. Water &
Electric Rev.
VRDO 2.4%, 3/1/94 1,200 1,200
4.0%, 10/1/95 4,750 4,807
Palm Beach Solid Waste Auth.
8.0%, 7/1/98 4,000 4,537
Port Everglade Port Facilities Rev.
7.0%, 9/1/97 (4) 2,600 2,846
City of Sunrise Public Service
8.0%, 10/1/97 (2) 3,780 4,113
Tampa Utilities
8.0%, 10/1/97 (Prere.) 7,700 8,837
------------
STATE TOTAL 144,760
------------
- - --------------------------------------------------------------------------------
GEORGIA (2.8%)
Atlantic Water & Sewer Rev.
6.0%, 1/1/96 4,390 4,554
6.0%, 1/1/97 4,655 4,887
6.0%, 1/1/98 4,935 5,218
Georgia GO
7.0%, 11/1/94 8,470 8,695
7.4%, 8/1/97 4,265 4,729
7.0%, 11/1/97 5,000 5,511
Gwinnett County Water & Sewer Auth.
8.75%, 8/1/96 (Prere.) 14,250 16,118
Monroe County Development Auth.
(Oglethorpe Power)
5.1%, 1/1/97 3,880 3,966
------------
STATE TOTAL 53,678
------------
- - --------------------------------------------------------------------------------
HAWAII (3.9%)
Hawaii GO
6.1%, 11/1/94 (Prere.) 5,345 5,516
3.85%, 2/1/96 16,500 16,554
4.6%, 1/1/97 5,500 5,590
5.5%, 2/1/97 10,000 10,401
5.0%, 11/1/97 11,130 11,502
4.5%, 1/1/98 5,000 5,049
5.5%, 10/1/98 3,650 3,834
Hawaii Airport System Rev.
4.5%, 7/1/95 (1) 1,690 1,716
4.85%, 7/1/96 (1) 1,765 1,805
5.1%, 7/1/97 (1) 1,855 1,913
7.5%, 7/1/97 3,890 4,300
Honolulu City & County GO
4.6%, 10/1/99 6,500 6,548
------------
STATE TOTAL 74,728
------------
- - --------------------------------------------------------------------------------
ILLINOIS (4.5%)
Chicago Park Dist. GO
9.7%, 1/1/96 3,000 3,294
Chicago School Finance Auth.
5.2%, 6/1/96 (3) 3,450 3,544
4.5%, 6/1/99 (3) 10,000 9,999
Chicago Waste Water Transmission
3.85%, 1/1/96 (3) 5,000 5,005
Chicago Water Capital Improvement
4.7%, 12/1/99 7,710 7,760
7.0%, 1/1/01 6,450 7,269
4.9%, 12/1/01 9,290 9,439
Chicago Water Rev.
4.7%, 11/1/97 (2) 3,250 3,315
Cook County GO
4.75%, 11/15/97 (3) 5,000 5,109
5.0%, 11/15/98 (3) 5,220 5,358
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
Illinois Sales Tax Rev.
6.9%, 6/15/97 $ 2,000 $ 2,166
7.6%, 6/15/97 (Prere.) 3,200 3,600
7.7%, 6/15/97 (Prere.) 3,200 3,610
7.8%, 6/15/97 (Prere.) 3,200 3,619
Illinois Toll Highway Auth. VRDO
2.4%, 7/1/94 (1) 2,500 2,500
Metropolitan Water Recovery Dist.
of Chicago
7.25%, 1/1/96 5,200 5,518
6.8%, 1/1/97 3,400 3,652
------------
STATE TOTAL 84,757
------------
- - --------------------------------------------------------------------------------
INDIANA (1.1%)
City of Rockport PCR
(Indiana & Michigan Electric Co.)
6.75%, 8/1/95* 11,500 11,785
Indiana Toll Finance Auth.
9.0%, 7/1/95 (Prere.) 8,210 8,959
------------
STATE TOTAL 20,744
------------
- - --------------------------------------------------------------------------------
KANSAS (.2%)
Kansas City Utility System
5.8%, 3/1/96 (2) 3,155 3,279
------------
- - --------------------------------------------------------------------------------
KENTUCKY (1.1%)
City of Ashland PCR VRDO
(Ashland Oil)
2.2%, 3/1/94 2,400 2,400
Kentucky Development Finance
Auth. Hosp. Rev.
6.1%, 11/1/96 (3) 3,105 3,278
Kentucky Turnpike Auth.
9.2%, 7/1/95 (Prere.) 7,050 7,779
4.3%, 7/1/97 (2) 3,150 3,177
Louisville Univ.
7.25%, 11/1/96 (Prere.) 4,000 4,454
------------
STATE TOTAL 21,088
------------
- - --------------------------------------------------------------------------------
LOUISIANA (.6%)
Louisiana GO
9.3%, 5/1/95 (Prere.) 3,000 3,258
Louisiana Recovery Dist. Sales Tax
7.625%, 7/1/96 2,250 2,397
5.5%, 7/1/97 6,000 6,203
------------
STATE TOTAL 11,858
------------
- - --------------------------------------------------------------------------------
MAINE (.5%)
Maine Municipal Bond Bank
4.125%, 11/1/97 10,000 10,011
------------
- - --------------------------------------------------------------------------------
MARYLAND (.9%)
Maryland GO
9.0%, 9/1/98 10,000 11,948
Washington Suburban Sanitation Dist.
7.1%, 12/1/97 (Prere.) 2,405 2,697
5.0%, 6/1/98 3,000 3,089
------------
STATE TOTAL 17,734
------------
- - --------------------------------------------------------------------------------
MASSACHUSETTS (5.1%)
Massachusetts GO
7.25%, 6/1/96 10,850 11,661
4.4%, 9/1/96 7,300 7,395
5.8%, 8/1/97 7,000 7,363
7.0%, 3/1/98 5,695 6,249
7.0%, 7/1/98 10,000 10,963
6.0%, 8/1/98 3,000 3,188
5.1%, 9/1/99 7,000 7,165
Massachusetts Health & Higher
Education Facilities Auth.
(Milton Medical Center)
11.0%, 7/1/94 (Prere.) 5,000 5,238
Massachusetts Water Resources Auth.
BAN 4.125%, 10/15/95 14,000 14,164
BAN 4.3%, 10/15/96 7,000 7,085
5.8%, 7/15/97 7,145 7,490
7.3%, 4/1/00 (Prere.) 5,000 5,789
Massachusetts Wholesale Electric
Power Supply System
13.0%, 1/1/95 (Prere.) 2,935 3,238
------------
STATE TOTAL 96,988
------------
- - --------------------------------------------------------------------------------
MICHIGAN (1.2%)
Detroit GO
5.6%, 5/1/00 (2) 8,040 8,410
5.7%, 5/1/01 (2) 8,485 8,927
Michigan State Housing
Development Auth. VRDO
2.45%, 3/1/94 5,400 5,400
------------
STATE TOTAL 22,737
------------
- - --------------------------------------------------------------------------------
MINNESOTA (1.2%)
Minnesota GO
4.5%, 8/1/96 2,500 2,546
4.8%, 8/1/98 6,020 6,164
Southern Minnesota Municipal
Power Agency
9.5%, 1/1/96 (Prere.) 11,725 13,127
------------
STATE TOTAL 21,837
------------
- - --------------------------------------------------------------------------------
MISSOURI (.6%)
Missouri Higher Education
Loan Auth.
5.15%, 2/15/98 11,365 11,772
------------
- - --------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
NEBRASKA (.7%)
Nebraska Public Power Dist.
4.3%, 1/1/96 $ 5,000 $ 5,044
3.9%, 1/1/97 4,890 4,875
Omaha Public Power Dist.
4.35%, 2/1/98 2,400 2,415
------------
STATE TOTAL 12,334
------------
- - --------------------------------------------------------------------------------
NEVADA (.4%)
Nevada GO
9.7%, 5/1/97 6,275 7,286
------------
- - --------------------------------------------------------------------------------
NEW JERSEY (5.4%)
Camden County GO
4.65%, 6/1/97 (1) 3,565 3,631
New Jersey GO
5.8%, 8/1/95 6,000 6,211
New Jersey Health Care Facility Auth.
5.4%, 7/1/96 2,170 2,207
5.75%, 7/1/97 2,670 2,745
New Jersey State TRAN
3.0%, 6/15/94 10,000 10,014
New Jersey Transportation
Trust Fund
3.8%, 6/15/96 17,695 17,702
4.1%, 6/15/97 15,000 15,031
4.4%, 6/15/99 10,000 9,934
New Jersey Turnpike Auth.
VRDO 2.25%, 7/1/94 (3) 5,500 5,500
5.2%, 1/1/98 15,000 15,456
6.0%, 1/1/98 8,000 8,456
Rutgers State Univ.
8.125%, 5/1/97 (Prere.) 4,750 5,399
------------
STATE TOTAL 102,286
------------
- - --------------------------------------------------------------------------------
NEW YORK (7.8%)
Erie County
10.0%, 2/1/96 (3) 4,530 5,039
10.0%, 2/1/97 (3) 4,325 5,016
Municipal Assistance Corp. for
New York City
9.0%, 7/1/95 (Prere.) 6,000 6,553
6.8%, 7/1/96 6,000 6,403
New York City GO
5.6%, 8/15/97 19,170 19,736
5.5%, 8/1/98 15,000 15,524
6.1%, 8/1/00 15,000 15,713
New York City RAN
3.5%, 4/15/94 4,000 4,004
3.5%, 6/30/94 5,200 5,211
New York City Water Finance
Auth. VRDO
2.2%, 3/1/94 (3) 1,100 1,100
New York Medical Care Facilities
5.0%, 2/15/01 2,445 2,422
5.0%, 8/15/01 6,760 6,696
New York State Certificates
4.5%, 2/1/98 4,985 4,927
4.7%, 2/1/99 4,580 4,518
New York State GO
6.625%, 8/1/94 4,805 4,881
New York State Dormitory Auth.
(City Univ.)
5.5%, 7/1/98 6,300 6,515
New York State Housing Finance
Agency
8.875%, 11/1/95 (Prere.) 12,500 13,821
8.0%, 11/1/98 (Prere.) 3,745 4,406
New York State Local Govt.
Assistance Corp.
4.1%, 4/1/95 2,400 2,419
4.5%, 4/1/96 2,000 2,024
Suffolk County Public Improvement
8.5%, 7/15/94 (3) 4,000 4,089
Triborough Bridge & Tunnel
7.875%, 1/1/98 (Prere.) 6,000 6,853
------------
STATE TOTAL 147,870
------------
- - --------------------------------------------------------------------------------
NORTH CAROLINA (.6%)
North Carolina Eastern Power Agency
10.1%, 1/1/95 (Prere.) 6,500 7,044
North Carolina Municipal Power
Agency (Catawba Electric)
5.1%, 1/1/98 3,980 4,070
------------
STATE TOTAL 11,114
------------
- - --------------------------------------------------------------------------------
OHIO (3.1%)
Cleveland Water Works
7.75%, 1/1/97 (Prere.) 5,000 5,584
Columbus Library Rev.
4.6%, 10/1/96 2,500 2,555
Columbus Sewer Improvement
9.0%, 9/15/96 5,065 5,704
County of Cuyahoga Hosp.
Improvement VRDO
2.5%, 3/1/94 1,800 1,800
Ohio Building Auth.
9.75%, 3/1/95 (Prere.) 5,000 5,455
7.0%, 9/1/00 4,000 4,342
Ohio Higher Education Facilities
5.875%, 12/1/96 6,650 6,986
Ohio Public Facilities Comm.
4.4%, 12/1/96 7,000 7,103
6.5%, 12/1/97 2,950 3,187
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Ohio Water Development Auth.
4.6%, 12/1/96 $ 5,000 $ 5,101
4.9%, 6/1/97 4,085 4,185
4.9%, 12/1/97 3,455 3,551
4.95%, 6/1/98 (1) 4,000 4,091
------------
STATE TOTAL 59,644
------------
- - --------------------------------------------------------------------------------
OKLAHOMA (1.3%)
Grand River Dam Auth.
6.3%, 6/1/97 3,450 3,673
4.9%, 6/1/98 17,500 17,822
Oklahoma City GO
10.0%, 8/1/96 2,465 2,803
------------
STATE TOTAL 24,298
------------
- - --------------------------------------------------------------------------------
OREGON (.2%)
Oregon GO VRDO
2.5%, 3/1/94 4,200 4,200
------------
- - --------------------------------------------------------------------------------
PENNSYLVANIA (5.9%)
Erie County Prison Auth.
5.65%, 11/1/95 (1) 3,125 3,232
Northumberland County Auth.
Commonwealth Lease Rev.
6.0%, 10/15/96 (1) 4,960 5,229
Pennsylvania COP
4.75%, 7/1/96 (2) 10,000 10,195
Pennsylvania Housing Finance Agency
6.6%, 7/1/96 3,230 3,365
Pennsylvania GO
6.0%, 9/15/96 4,550 4,782
6.0%, 11/1/96 (1) 5,000 5,277
8.3%, 4/15/97 3,800 4,118
5.0%, 7/1/97 3,930 4,042
6.0%, 9/15/97 5,885 6,247
5.4%, 11/15/97 4,000 4,179
5.4%, 7/1/00 4,000 4,163
Pennsylvania Industrial
Development Auth.
6.0%, 7/1/94 5,000 5,042
Pennsylvania Intergovernmental
Cooperation Auth.
5.2%, 6/15/96 (3) 5,650 5,807
5.4%, 6/15/97 (3) 4,000 4,160
Pennsylvania State TAN
3.25%, 6/30/94 5,200 5,207
Philadelphia Municipal Lease
5.25%, 7/15/98 6,390 6,365
Philadelphia School Dist. GO
4.7%, 7/1/99 (1) 14,000 14,085
Philadelphia Water & Wastewater Rev.
4.25%, 6/15/96 15,000 15,071
Sayre Health Care Facility
Auth. VRDO
2.35%, 3/1/94 (2) 900 900
------------
STATE TOTAL 111,466
------------
- - --------------------------------------------------------------------------------
PUERTO RICO (.7%)
Puerto Rico Telephone Auth.
4.8%, 1/1/01 13,000 12,932
------------
- - --------------------------------------------------------------------------------
RHODE ISLAND (1.1%)
Rhode Island GO
6.0%, 5/15/97 9,215 9,728
Rhode Island Student Loan Auth.
5.4%, 12/1/95 10,000 10,298
------------
STATE TOTAL 20,026
------------
- - --------------------------------------------------------------------------------
SOUTH CAROLINA (2.3%)
Charleston Water Works & Sewer
7.5%, 1/1/96 (Prere.) 12,700 13,771
Piedmont Municipal Power Agency
10.875%, 1/1/95 (Prere.) 8,735 9,522
9.7%, 1/1/96 (Prere.) 7,875 8,918
4.9%, 1/1/97 3,350 3,414
South Carolina Public Service Auth.
(Santee Cooper)
9.2%, 7/1/95 (Prere.) 7,180 7,923
------------
STATE TOTAL 43,548
------------
- - --------------------------------------------------------------------------------
TENNESSEE (.4%)
Metropolitan Govt. of Nashville
& Davidson County
10.5%, 12/1/97 (Prere.) 5,750 7,017
------------
- - --------------------------------------------------------------------------------
TEXAS (16.2%)
Anderson County
(Coffield Prison Farm Project)
8.0%, 3/15/97 (2) 4,135 4,587
Austin Combined Utility System
6.8%, 11/15/95 3,000 3,164
4.0%, 11/15/96 7,820 7,840
11.0%, 11/15/96 3,830 4,487
9.75%, 5/15/97(1) 4,000 4,658
14.25%, 5/15/97 (Prere.) 7,090 9,218
11.125%, 11/15/99 (Prere.) 4,000 5,307
Corpus Christi Utility System
6.2%, 7/15/96 (3) 2,965 3,116
6.3%, 7/15/97 (3) 2,460 2,623
Dallas-Fort Worth
Regional Airport
3.75%, 11/1/96 (1) 4,000 3,994
4.0%, 11/1/97 (1) 9,000 8,981
4.3%, 11/1/98 (1) 9,375 9,367
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Dallas Waterworks & Sewer System
6.75%, 4/1/96 $ 11,250 $ 11,878
6.9%, 4/1/97 2,000 2,156
5.9%, 10/1/97 7,265 7,680
Fort Worth Water & Sewer
5.2%, 2/15/96 3,000 3,072
5.4%, 2/15/97 4,000 4,138
Harris County Flood Control Dist. GO
5.6%, 10/1/97 5,000 5,238
5.5%, 10/1/00 3,000 3,187
Harris County Road Refunding GO
8.6%, 10/1/95 2,000 2,157
5.5%, 10/1/96 23,690 24,603
5.6%, 10/1/97 10,000 10,475
5.5%, 10/1/00 2,645 2,810
Houston GO
3.4%, 3/1/95 5,000 5,021
3.9%, 3/1/96 2,415 2,423
Houston Public Improvement
5.25%, 3/1/98 5,000 5,169
Houston Water and Sewer System
4.65%, 12/1/96 11,315 11,490
5.5%, 12/1/96 (2) 15,540 16,179
8.2%, 12/1/96 (Prere.) 6,000 6,791
4.9%, 12/1/97 5,000 5,105
5.7%, 12/1/97 (2) 7,000 7,371
San Antonio GO
8.875%, 8/1/95 (Prere.) 4,000 4,294
San Antonio Electric & Gas Rev.
6.75%, 2/1/97 2,000 2,140
Texas A&M Univ. Rev.
6.9%, 8/15/97 5,425 5,905
Texas Municipal Power Agency
5.0%, 9/1/96 8,585 8,792
14.25%, 3/1/97 (Prere.) 5,250 6,749
14.625%, 3/1/97 (Prere.) 5,115 6,629
6.4%, 9/1/98 (3) 3,000 3,240
Texas Public Finance Auth.
9.0%, 10/1/95 4,675 5,078
6.2%, 2/1/96 (1) 6,000 6,249
Texas GO
7.375%, 10/1/94 4,150 4,253
6.75%, 8/1/95 (ETM) 7,895 8,244
7.5%, 10/1/96 5,300 5,773
4.625%, 10/1/97 2,700 2,756
7.5%, 10/1/97 3,300 3,671
7.5%, 10/1/98 11,700 13,218
Texas TRAN
3.25%, 8/31/94 15,400 15,434
------------
STATE TOTAL 306,710
------------
- - --------------------------------------------------------------------------------
UTAH (1.8%)
Intermountain Power Agency
4.6%, 7/1/95 5,000 5,082
8.75%, 7/1/95 (Prere.) 3,885 4,227
8.875%, 7/1/95 (Prere.) 10,000 10,849
3.9%, 7/1/96 7,000 7,017
Utah GO
4.9%, 7/1/97 7,300 7,517
------------
STATE TOTAL 34,692
------------
- - --------------------------------------------------------------------------------
VIRGINIA (1.2%)
Southeast Public Service Auth.
10.5%, 7/1/95 (Prere.) 12,890 14,320
Virginia Public School Auth.
4.0%, 1/1/97 2,500 2,505
4.25%, 1/1/98 5,250 5,259
------------
STATE TOTAL 22,084
------------
- - --------------------------------------------------------------------------------
WASHINGTON (2.0%)
King County GO
5.5%, 12/1/96 6,000 6,240
Washington GO
4.5%, 9/1/95 8,000 8,145
8.0%, 9/1/96 (Prere.) 5,105 5,612
3.8%, 10/1/96 6,000 6,016
7.0%, 10/1/97 5,720 6,163
5.3%, 9/1/99 5,000 5,183
------------
STATE TOTAL 37,359
------------
- - --------------------------------------------------------------------------------
WEST VIRGINIA (.1%)
Cabell Board of Education
8.0%, 5/1/97 (1) 2,120 2,357
------------
- - --------------------------------------------------------------------------------
WISCONSIN (2.6%)
Wisconsin GO
7.0%, 8/1/95 10,130 10,649
7.2%, 5/1/98 (Prere.) 4,000 4,435
4.125%, 11/1/98 33,625 33,574
------------
STATE TOTAL 48,658
------------
- - --------------------------------------------------------------------------------
WYOMING (.4%)
Platte County PCR
4.2%, 1/1/99 3,370 3,309
4.4%, 1/1/00 3,945 3,883
------------
STATE TOTAL 7,192
------------
- - --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,839,686) 1,862,670
================================================================================
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
Market
Value
(000)+
- - ---------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.7%)
- - ---------------------------------------------------------------------------------
<S> <C>
Other Assets--Note B $ 46,350
Liabilities (13,839)
------------
32,511
- - --------------------------------------------------------------------------------
NET ASSETS (100%)
- - --------------------------------------------------------------------------------
Applicable to 177,056,769 outstanding
$.001 par value shares
(authorized 250,000,000 shares) $1,895,181
- - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $10.70
================================================================================
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 47.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
AT FEBRUARY 28, 1994, NET ASSETS
CONSISTED OF:
- - --------------------------------------------------------------------------------
Amount Per
(000) Share
---------- ------
<S> <C> <C>
Paid in Capital $1,872,714 $10.57
Undistributed Net Investment Income -- --
Overdistributed Net Realized Gains (490) --
Unrealized Appreciation ofInvestments 22,957 .13
- - --------------------------------------------------------------------------------
NET ASSETS $1,895,181 $10.70
- - --------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
Face Market
Amount Value
INTERMEDIATE-TERM PORTFOLIO (000) (000)+
- - ---------------------------------------------------------------------------------
MUNICIPAL BONDS (98.0%)
- - ---------------------------------------------------------------------------------
<S> <C> <C>
ALABAMA (.3%)
Columbia Industrial Development
Power Co.
10.875%, 11/1/14 $ 9,000 $ 9,656
Macintosh IDR VRDO
(Ciba-Geigy)
2.4%, 3/1/94 1,300 1,300
Univ. of Southern Alabama Hosp.
7.0%, 5/15/04 (2) 3,250 3,667
------------
STATE TOTAL 14,623
------------
- - --------------------------------------------------------------------------------
ALASKA (.6%)
Anchorage Electric Rev.
8.0%, 12/1/11 (1) 5,395 6,904
North Slope Borough GO
0.00%, 6/30/96 (1) 4,500 4,089
7.125%, 7/1/98 (1) 7,710 8,509
7.15%, 7/1/99 (1) 5,670 6,310
Valdez VRDO
2.3%, 3/1/94 5,300 5,300
------------
STATE TOTAL 31,112
------------
- - --------------------------------------------------------------------------------
ARIZONA (2.0%)
Arizona Transportation Board
8.75%, 7/1/03 10,000 12,727
6.35%, 7/1/05 10,660 11,805
6.45%, 7/1/06 2,250 2,504
6.6%, 7/1/08 8,250 9,263
Maricopa County
(Samaritan Health Service)
7.15%, 12/1/04 (1) 9,900 11,854
7.15%, 12/1/05 (1) 6,080 7,273
Maricopa County Unified
School Dist. GO
5.2%, 7/1/06 9,380 9,312
Phoenix Highway Rev.
9.25%, 7/1/07 4,000 5,474
Salt River Project Agricultural
Improvement & Power Dist.
6.0%, 1/1/07 3,515 3,749
Tucson Unified School Dist.
7.5%, 7/1/06 (3) 8,840 10,674
7.5%, 7/1/07 (3) 9,125 11,027
7.5%, 7/1/08 (3) 8,060 9,779
------------
STATE TOTAL 105,441
------------
- - --------------------------------------------------------------------------------
CALIFORNIA (8.3%)
California Public Works Board
(State Prison)
5.25%, 12/1/04 (1) 25,000 25,223
7.0%, 9/1/00 (Prere.) 7,400 8,523
(Univ. of California)
6.1%, 12/1/05 (2) 6,515 6,987
6.2%, 12/1/06 (2) 3,320 3,640
California RAN
3.5%, 7/26/94 10,000 10,027
3.75%, 12/21/94 15,000 15,075
Clovis Unified School Dist. GO
0.00%, 8/1/00 7,000 5,062
0.00%, 8/1/01 11,180 7,605
Corona COP
10.0%, 11/1/02 (Prere.) 6,000 8,273
Long Beach Financing Auth.
6.0%, 11/1/07 (2) 3,070 3,327
Long Beach Harbor
7.1%, 5/15/99 2,900 3,229
7.15%, 5/15/00 10,000 11,300
7.2%, 5/15/01 2,000 2,288
Los Angeles COP
7.5%, 6/1/98 (Prere.) 3,950 4,504
7.6%, 6/1/98 (Prere.) 3,995 4,570
Los Angeles County Transportation
Auth. Sales Tax
8.0%, 7/1/01 (2) 6,365 7,599
8.0%, 7/1/02 (2) 3,915 4,725
Los Angeles County Transportation
Comm. Sales Tax
6.5%, 7/1/01 (Prere.) 6,700 7,559
6.7%, 7/1/01 (Prere.) 5,500 6,273
6.5%, 7/1/10 51,070 57,410
Los Angeles County Sanitation Dist.
Finance Auth.
5.0%, 10/1/02 3,460 3,493
5.1%, 10/1/04 8,100 8,113
Los Angeles Water & Power
9.0%, 11/15/00 11,955 14,768
Metropolitan Water Dist. of
Southern California
7.75%, 7/1/01 (Prere.) 18,085 21,799
Northern California Power Agency
(Geothermal Project)
6.75%, 7/1/01 19,530 20,808
(Hydroelectric Project)
6.1%, 7/1/05 (1) 5,575 6,045
6.2%, 7/1/06 (1) 5,940 6,567
6.25%, 7/1/07 (1) 6,685 7,394
Oakland Redevelopment Agency
5.75%, 2/1/04 (2) 1,535 1,622
5.9%, 2/1/05 (2) 4,870 5,193
6.0%, 2/1/07 (2) 3,360 3,617
Orange County Apartment
Development Rev. CP
3.1%, 3/14/94 19,820 19,820
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Poway Redevelopment Agency
(Paguay Project)
7.125%, 12/15/04 (3) $ 4,840 $ 5,698
Riverside County VRDO
2.45%, 3/1/94 6,300 6,300
Sacramento Municipal Utility Dist.
Electric Rev.
6.6%, 2/1/97 4,000 4,255
San Bernardino COP
6.75%, 8/1/10 11,385 12,638
San Diego County Regional
Transportation Auth. Sales Tax
7.0%, 4/1/01 (Prere.) 3,220 3,741
7.0%, 4/1/06 1,780 1,997
San Diego County Water Rev. COP
5.4%, 5/1/03 5,000 5,168
5.5%, 5/1/04 5,000 5,153
5.5%, 5/1/05 4,245 4,359
Santa Clara VRDO
(Camino Hosp.)
2.4%, 3/1/94 5,700 5,700
Southern California Public
Power Auth.
6.75%, 7/1/99 6,190 6,746
Southern California Rapid
Transit Dist.
5.7%, 9/1/04 (2) 14,040 14,812
Univ. of California Rev.
10.0%, 9/1/02 (2) 10,000 13,414
10.0%, 9/1/03 (2) 3,790 5,165
12.0%, 9/1/03 (2) 14,275 21,651
------------
STATE TOTAL 439,235
------------
- - --------------------------------------------------------------------------------
COLORADO (.6%)
Colorado Health Auth.
(Sisters of Charity Health System)
8.5%, 5/15/04 (1) 17,500 22,860
Denver City & County School Dist.
6.95%, 12/15/00 (3) 9,250 10,365
------------
STATE TOTAL 33,225
------------
- - --------------------------------------------------------------------------------
CONNECTICUT (3.5%)
Connecticut GO
5.95%, 11/15/00 5,000 5,377
5.3%, 11/15/06 10,875 10,988
5.4%, 11/15/07 24,010 24,299
Connecticut Power & Light
PCR VRDO
2.35%, 3/1/94 18,700 18,700
Connecticut Resource
Recovery Auth.
(Bridgeport Resco)
8.4%, 1/1/99 4,950 5,402
Connecticut Special Tax Obligation
7.75%, 6/1/00 11,300 13,155
7.125%, 6/1/01 (Prere.) 5,365 6,202
5.125%, 9/1/05 11,575 11,570
5.9%, 9/1/05 14,095 14,991
5.25%, 9/1/06 42,550 42,695
6.0%, 9/1/06 15,700 16,755
7.125%, 6/1/10 12,000 14,191
------------
STATE TOTAL 184,325
------------
- - --------------------------------------------------------------------------------
DELAWARE (.9%)
Delaware Economic Development
Auth. VRDO
(Hosp. Bill & Collection Service)
2.45%, 3/1/94 20,000 20,000
Delaware Transportation Auth.
10.3%, 7/1/95 (Prere.) 2,975 3,296
7.3%, 7/1/00 (Prere.) 5,000 5,807
5.625%, 7/1/06 (1) 11,420 11,794
5.8%, 7/1/08 7,545 7,745
------------
STATE TOTAL 48,642
------------
- - --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA (1.7%)
District of Columbia GO
2.4%, 3/1/94 8,300 8,300
5.3%, 6/1/94 (3) 18,455 18,549
7.75%, 6/1/97 (6) (Prere.) 5,000 5,620
7.5%, 6/1/99 (2) (Prere.) 17,875 20,660
8.0%, 6/1/05 18,420 20,382
6.3%, 6/1/08 (1) 15,000 16,088
------------
STATE TOTAL 89,599
------------
- - --------------------------------------------------------------------------------
FLORIDA (4.3%)
Broward County School Dist. GO
5.3%, 2/15/04 3,295 3,361
5.4%, 2/15/05 9,000 9,217
5.5%, 2/15/06 10,080 10,322
Dade County Solid Waste System
7.0%, 10/1/01 6,240 6,632
Dade County Water & Sewer
Rev. VRDO
2.3%, 4/6/94 (3) 4,700 4,700
Florida Board of Education VRDO
2.5%, 6/1/94 17,000 17,000
Florida Dept. of General Services
6.25%, 7/1/06 5,600 6,030
Florida Municipal Power Agency
5.5%, 10/1/06 (3) 6,055 6,196
Florida School Board Association
6.9%, 7/1/99 (2) 12,450 13,735
7.0%, 7/1/00 (2) 13,820 15,561
Hillsborough County
School Dist. GO
7.1%, 8/15/03 23,665 26,936
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
City of Homestead Special Insurance
Assessment Rev.
4.6%, 3/1/98 (1) $11,380 $11,488
4.75%, 3/1/99 (1) 5,000 5,038
4.9%, 3/1/00 (1) 8,000 8,087
5.125%, 3/1/02 (1) 14,000 14,206
5.125%, 9/1/02 (1) 5,910 6,001
Orlando Utilities Comm. Water
& Electric Rev.
VRDO 2.4%, 3/1/94 8,700 8,700
5.7%, 10/1/04 5,000 5,232
5.75%, 10/1/05 10,250 10,745
5.8%, 10/1/06 5,940 6,216
5.8%, 10/1/07 12,000 12,611
5.9%, 10/1/08 17,000 17,955
Port Everglades Port Facilities Rev.
6.9%, 9/1/98 (3) 2,000 2,208
------------
STATE TOTAL 228,177
------------
- - --------------------------------------------------------------------------------
GEORGIA (4.0%)
Burke County PCR
(Oglethorpe Power Corp.)
4.35%, 1/1/01 6,080 5,963
4.5%, 1/1/02 7,375 7,246
4.6%, 1/1/03 9,955 9,770
4.7%, 1/1/04 13,160 12,905
Fulton County School Dist.
6.375%, 5/1/10 15,000 16,580
Georgia GO
7.4%, 8/1/96 7,930 8,598
7.7%, 4/1/99 5,000 5,738
6.5%, 12/1/99 11,670 12,910
6.5%, 8/1/01 3,230 3,619
7.0%, 11/1/05 15,670 18,461
7.0%, 11/1/06 16,780 19,710
6.3%, 3/1/07 15,000 16,651
7.4%, 8/1/07 11,200 13,571
7.0%, 11/1/07 17,960 21,074
Monroe County Development Auth.
(Oglethorpe Power Corp.)
6.65%, 1/1/08 9,220 10,162
Municipal Electric Power Auth.
of Georgia
8.0%, 1/1/02 9,505 10,910
8.1%, 1/1/03 2,320 2,671
6.3%, 1/1/05 12,775 13,883
------------
STATE TOTAL 210,422
------------
- - --------------------------------------------------------------------------------
HAWAII (3.5%)
Hawaii GO
VRDO 2.5%, 4/1/94 15,000 15,000
5.0%, 11/1/98 21,000 21,660
5.0%, 11/1/99 20,000 20,495
5.0%, 2/1/04 10,000 9,961
5.0%, 2/1/05 11,650 11,650
5.125%, 2/1/06 11,605 11,619
6.3%, 3/1/06 5,555 6,116
6.4%, 3/1/07 5,555 6,174
Hawaii Airport System Rev.
5.85%, 7/1/02 (1) 7,830 8,361
5.95%, 7/1/03 (1) 2,590 2,782
6.05%, 7/1/04 (1) 3,145 3,394
6.15%, 7/1/05 (1) 10,735 11,667
Honolulu City & County GO
5.75%, 1/1/06 8,825 9,313
6.0%, 1/1/08 5,000 5,340
8.0%, 10/1/09 30,560 38,748
6.3%, 3/1/10 4,830 5,163
------------
STATE TOTAL 187,443
------------
- - --------------------------------------------------------------------------------
ILLINOIS (6.0%)
Chicago Metropolitan
Sanitation Dist.
8.75%, 1/1/00 (Prere.) 2,980 3,604
Chicago Public Building
Comm. Rev.
9.0%, 1/1/96 1,150 1,245
7.5%, 1/1/02 (1) 2,500 2,901
7.6%, 1/1/03 (1) 2,500 2,953
7.75%, 1/1/06 (3) 5,000 5,785
7.7%, 1/1/08 (1) 4,000 4,469
Chicago School Finance Auth.
4.4%, 6/1/98 (1) 10,000 9,992
6.0%, 6/1/01 8,305 8,883
4.9%, 6/1/02 (3) 10,000 10,053
6.1%, 6/1/02 (3) 11,945 12,874
5.0%, 6/1/03 (3) 25,190 25,318
5.1%, 6/1/04 (3) 26,155 26,277
Chicago Water Reclamation Dist.
5.9%, 12/1/06 4,450 4,691
5.95%, 12/1/07 7,200 7,595
5.5%, 12/1/08 5,300 5,321
6.0%, 12/1/08 9,900 10,436
6.05%, 12/1/09 3,000 3,159
Chicago Water Rev.
5.5%, 11/1/03 (2) 5,000 5,186
Cook County GO
4.375%, 11/15/99 (1) 6,565 6,511
4.6%, 11/15/00 (1) 5,360 5,341
6.6%, 11/1/03 (2) 4,785 5,310
6.75%, 11/1/05 (2) 3,000 3,417
5.75%, 11/15/03 (3) 5,000 5,270
5.8%, 11/15/04 10,000 10,563
</TABLE>
23
<PAGE> 24
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Illinois Health Facility Auth.
(Lutheran General Health Systems)
7.25%, 4/1/99 (Prere.) $ 1,945 $ 2,166
7.25%, 4/1/00 10,490 11,722
Illinois Regional Transportation Auth.
9.0%, 6/1/05 (2) 5,220 6,958
9.0%, 6/1/08 (2) 6,840 9,282
9.0%, 6/1/09 (2) 4,255 5,828
Illinois Sales Tax Rev.
5.75%, 6/15/06 5,000 5,196
6.5%, 6/15/13 5,000 5,570
Illinois Toll Highway Auth. VRDO
2.4%, 7/1/94 (1) 1,200 1,200
Joliet Gas Supply Rev.
3.0%, 10/1/94* 9,750 9,756
Metropolitan Pier & Exposition Auth.
5.6%, 6/15/01 10,235 10,759
7.25%, 6/15/05 15,000 17,516
6.5%, 6/1/06 11,885 13,022
6.75%, 6/1/10 25,000 28,011
------------
STATE TOTAL 314,140
------------
- - --------------------------------------------------------------------------------
INDIANA (1.3%)
East Chicago School Building Corp.
11.75%, 2/1/99 (Prere.) 5,000 6,531
Indiana Municipal Power Agency
5.875%, 1/1/10 (1) 4,500 4,701
Indiana State Office Building
6.65%, 7/1/01 4,500 4,969
6.7%, 7/1/02 5,290 5,841
Indiana University Student
Fee Bonds
6.8%, 8/1/04 25,000 27,680
7.0%, 8/1/06 5,845 6,426
Marion County Hosp. Auth.
(Daughters of Charity)
9.75%, 11/1/00 4,700 5,203
Petersburg PCR
10.625%, 12/1/14 5,300 5,708
------------
STATE TOTAL 67,059
------------
- - --------------------------------------------------------------------------------
KENTUCKY (1.8%)
Kentucky Development
Finance Auth.
(St. Elizabeth Medical Center)
6.625%, 11/1/04 (3) 20,025 22,039
(Sisters of Charity)
6.6%, 11/1/06 5,000 5,505
Kentucky Higher Education Auth.
9.75%, 6/1/94 2,140 2,178
Kentucky Property &
Buildings Rev.
5.5%, 9/1/03 8,000 8,294
5.6%, 9/1/04 3,000 3,118
5.7%, 9/1/05 7,350 7,651
6.875%, 8/1/06 10,400 11,887
Kentucky Turnpike Auth.
5.2%, 7/1/03 (2) 8,750 8,905
5.5%, 7/1/08 (2) 8,850 9,034
Kentucky Turnpike Auth. Resource
Recovery Road Rev.
13.125%, 7/1/97 (Prere.) 820 1,048
13.125%, 1/1/98 (Prere.) 30 39
8.0%, 7/1/03 14,750 16,716
------------
STATE TOTAL 96,414
------------
- - --------------------------------------------------------------------------------
LOUISIANA (2.1%)
Jefferson Parish Sales Tax
6.75%, 12/1/06 (3) 11,000 12,301
Louisiana Gas & Fuel Tax Rev.
7.2%, 11/15/99 9,500 10,507
7.25%, 11/15/00 5,250 5,870
7.25%, 11/15/04 11,000 12,294
Louisiana GO
8.75%, 9/1/00 (4) 8,830 10,699
8.75%, 9/1/01 (4) 9,445 11,564
6.3%, 5/1/04 (1) 4,750 5,166
5.3%, 8/1/04 (1) 14,140 14,435
5.5%, 8/1/06 (1) 4,030 4,143
Louisiana Public Facilities Auth.
(Unemployment Compensation
Funding)
7.6%, 9/1/94 (Prere.) 2,310 2,402
7.4%, 9/1/97 10,000 10,383
Louisiana Recovery Dist.
Sales Tax
7.375%, 7/1/96 (2) 4,000 4,250
New Orleans Public Improvement
7.7%, 10/1/99 (6) 2,395 2,727
7.75%, 10/1/00 (6) 5,510 6,295
------------
STATE TOTAL 113,036
------------
- - --------------------------------------------------------------------------------
MAINE (.4%)
Maine Health and Higher Education
10.1%, 7/1/01 (Prere.) 4,550 6,093
Maine Municipal Bond Bank
4.9%, 11/1/02 13,000 12,972
------------
STATE TOTAL 19,065
------------
- - --------------------------------------------------------------------------------
MASSACHUSETTS (6.2%)
Boston Water & Sewer Comm.
5.75%, 11/1/13 6,325 6,528
Massachusetts GO
6.9%, 6/1/00 (2) 2,500 2,793
7.0%, 6/1/02 (2) 5,000 5,559
6.5%, 5/1/04 (3) 4,000 4,205
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
7.5%, 6/1/04 $ 3,975 $ 4,743
5.1%, 2/1/05 25,000 24,854
6.5%, 8/1/05 3,840 4,311
6.5%, 8/1/08 9,400 10,317
Massachusetts Bay Transit Auth.
7.25%, 3/1/03 (3) 16,000 18,077
5.3%, 3/1/04 32,380 32,781
Massachusetts Dedicated Income
Tax VRDO
2.25%, 3/1/94 3,000 3,000
Massachusetts Industrial Finance
Agency (Refusetech Inc. Project)
6.15%, 7/1/02 5,040 5,222
6.3%, 7/1/05 21,500 22,059
Massachusetts Industrial Finance Auth.
Rev. (BioMed Research Corp.)
7.1%, 8/1/99 25,395 28,205
Massachusetts Tax Exempt CP
2.35%, 3/3/94 10,000 10,000
Massachusetts Turnpike Auth.
4.7%, 1/1/03 5,000 4,904
4.75%, 1/1/04 2,500 2,438
Massachusetts Water Resources Auth.
5.25%, 3/1/07 5,000 4,908
5.5%, 11/1/07 32,860 32,936
5.25%, 3/1/09 7,175 6,929
6.5%, 7/15/10 30,220 33,211
5.25%, 3/1/13 20,000 19,030
6.5%, 7/15/19 37,515 41,351
------------
STATE TOTAL 328,361
------------
- - --------------------------------------------------------------------------------
MICHIGAN (1.7%)
Detroit GO
5.8%, 5/1/02 (2) 8,970 9,495
5.9%, 5/1/03 (2) 9,490 10,097
Michigan Municipal Bond Auth.
0.0%, 12/1/99 (3) 6,000 4,574
0.0%, 12/1/00 (3) 5,590 4,041
0.0%, 12/1/01 (3) 9,630 6,585
Michigan Public Power Agency
5.3%, 1/1/05 13,075 13,235
5.375%, 1/1/06 13,790 13,941
5.5%, 1/1/07 14,545 14,757
5.5%, 1/1/08 9,360 9,435
Michigan State Building Auth.
(Univ. of Michigan Adult
General Hosp.)
6.5%, 10/1/03 (2) 3,000 3,308
Michigan State Housing Development
Auth. VRDO
2.45%, 3/1/94 2,000 2,000
------------
STATE TOTAL 91,468
------------
- - --------------------------------------------------------------------------------
MINNESOTA (.4%)
Minnesota GO
4.7%, 8/1/97 16,315 16,698
4.9%, 8/1/98 3,810 3,915
------------
STATE TOTAL 20,613
------------
- - --------------------------------------------------------------------------------
MISSISSIPPI (.1%)
Jackson County PCR VRDO
(Chevron)
2.3%, 3/1/94 5,600 5,600
------------
- - --------------------------------------------------------------------------------
MISSOURI (1.0%)
Missouri Housing
Development Comm.
9.8%, 8/1/97 510 529
New Madrid Electric Rev.
5.75%, 6/1/03 34,205 34,284
St. Louis County Rockwood School
Dist. GO
8.5%, 2/1/01 8,000 9,715
8.5%, 2/1/02 7,250 8,936
------------
STATE TOTAL 53,464
------------
- - --------------------------------------------------------------------------------
NEBRASKA (.6%)
Consumers Public Power Dist.
Electric Revenue
5.1%, 1/1/03 16,445 16,541
Nebraska Public Power Dist.
5.6%, 7/1/03 13,175 13,758
------------
STATE TOTAL 30,299
------------
- - --------------------------------------------------------------------------------
NEVADA (2.4%)
Clark County Airport VRDO
2.3%, 7/1/94 (1) 16,700 16,700
Clark County GO
4.8%, 7/1/00 (1) 6,305 6,349
4.8%, 7/1/01 (1) 7,440 7,453
7.5%, 6/1/06 (2) 3,575 4,317
7.5%, 6/1/07 (2) 9,550 11,542
8.0%, 6/1/08 (2) 9,875 12,416
7.5%, 6/1/09 (2) 6,825 8,309
Clark County School Dist. GO
7.4%, 3/1/00 10,000 11,111
9.75%, 6/1/01 (1) 11,100 14,385
5.375%, 5/1/06 (3) 3,740 3,785
5.375%, 5/1/07 (3) 9,195 9,229
5.375%, 5/1/08 (3) 9,170 9,169
Nevada GO
6.0%, 5/1/05 10,450 11,062
Reno Hosp. Rev. CP
(St. Mary's Hosp.)
9.4%, 7/1/99 (1) (ETM) 2,505 2,734
------------
STATE TOTAL 128,561
------------
- - --------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 26
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
NEW JERSEY (4.4%)
Camden County Municipal
Utilities Auth.
0.0%, 9/1/99 (3) $ 12,545 $ 9,702
0.0%, 9/1/00 (3) 18,500 13,603
0.0%, 9/1/02 (3) 18,545 12,284
0.0%, 9/1/03 (3) 18,545 11,639
New Jersey Health Care
6.0%, 7/1/98 2,820 2,924
6.2%, 7/1/99 3,080 3,214
6.4%, 7/1/00 3,295 3,477
New Jersey Sports & Exposition Auth.
VRDO 2.3%, 3/1/94 (1) 1,000 1,000
6.2%, 3/1/03 5,000 5,423
6.5%, 3/1/06 4,725 5,150
6.5%, 3/1/07 3,500 3,796
New Jersey Transportation
Trust Fund
3.5%, 6/15/95 12,000 12,033
New Jersey Turnpike Auth.
5.9%, 1/1/03 4,700 5,013
5.9%, 1/1/04 19,030 20,059
6.0%, 1/1/05 22,220 23,786
4.75%, 1/1/06 (ETM) 38,395 38,395
6.5%, 1/1/09 50,000 55,888
Rutgers State Univ. GO
6.4%, 5/1/13 4,675 5,235
------------
STATE TOTAL 232,621
------------
- - --------------------------------------------------------------------------------
NEW YORK (9.5%)
Erie County Water Auth. VRDO
2.15%, 6/1/94 (2) 3,300 3,300
Metropolitan Transportation Auth.
6.1%, 7/1/02 (Prere.) 4,300 4,754
6.25%, 7/1/02 (3) (Prere.) 5,000 5,557
5.4%, 7/1/03 16,040 16,031
5.625%, 7/1/05 11,485 11,499
5.75%, 7/1/06 12,320 12,436
6.1%, 7/1/07 (1) 3,625 3,928
6.1%, 7/1/08 (1) 7,200 7,849
New York City GO
8.0%, 8/1/99 5,175 5,908
6.0%, 8/15/99 13,070 13,627
7.0%, 8/15/99 (3) 15,000 16,788
7.0%, 8/1/00 5,650 6,159
6.15%, 8/15/00 14,670 15,412
8.0%, 11/1/00 (2) 4,420 5,019
6.3%, 8/15/01 10,000 10,573
6.1%, 8/1/02 10,000 10,396
6.25%, 8/1/03 14,000 15,094
6.375%, 8/1/04 20,000 20,881
8.125%, 11/1/04 (3) 11,155 12,696
7.0%, 2/1/05 5,000 5,556
New York City Finance Auth.
Water and Sewer Rev.
VRDO 2.2%, 3/1/94 (3) 5,300 5,300
6.0%, 6/15/10 4,000 4,165
New York Medical Care Facilities
6.0%, 8/15/02 13,140 13,702
6.0%, 8/15/03 18,340 18,991
New York State Certificates
4.5%, 8/1/98 4,490 4,436
4.7%, 8/1/99 2,490 2,456
New York State Dormitory Auth.
(City Univ.)
7.0%, 7/1/01 10,000 11,347
6.25%, 7/1/03 4,250 4,502
6.35%, 7/1/04 2,500 2,647
6.45%, 7/1/05 1,500 1,603
(New York Univ.)
6.375%, 7/1/07 (3) 27,000 29,527
(State Univ.)
7.1%, 5/15/00 6,050 6,688
7.25%, 5/15/00 (Prere.) 2,000 2,320
7.0%, 5/15/01 18,285 19,981
New York State Local Govt.
Assistance Corp.
4.25%, 4/1/00 2,500 2,443
4.375%, 4/1/01 3,000 2,926
New York State Urban
Development Corp.
6.3%, 1/1/03 14,340 15,114
6.4%, 1/1/04 24,930 26,288
Onondaga County PCR
(Anheuser Busch)
6.625%, 8/1/06 10,000 11,060
Suffolk County Water Auth.
6.8%, 8/17/10 10,660 12,613
Triborough Bridge & Tunnel Auth.
0.0%, 1/1/03 19,185 11,562
5.8%, 1/1/06 6,000 6,320
6.6%, 1/1/10 59,325 67,105
6.0%, 1/1/12 12,000 12,846
------------
STATE TOTAL 499,405
------------
- - --------------------------------------------------------------------------------
NORTH CAROLINA (1.6%)
Charlotte Airport VRDO
2.3%, 7/1/94 (1) 2,000 2,000
North Carolina Eastern Municipal
Power Agency
10.625%, 1/1/95 (Prere.) 9,600 10,445
9.4%, 1/1/95 (Prere.) 2,000 2,154
9.6%, 1/1/95 (Prere.) 3,025 3,263
</TABLE>
26
<PAGE> 27
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
North Carolina Educational
Facilities Auth. VRDO
(Duke Univ.)
2.45%, 3/1/94 $ 4,100 $ 4,100
North Carolina Municipal Power
Agency
9.5%, 1/1/95 (Prere.) 7,000 7,552
(Catawba Electric)
7.0%, 1/1/00 (Prere.) 6,040 6,847
6.0%, 1/1/04 7,000 7,421
6.0%, 1/1/05 28,750 30,391
7.25%, 1/1/07 10,410 12,165
------------
STATE TOTAL 86,338
------------
- - --------------------------------------------------------------------------------
OHIO (2.3%)
Cleveland GO
5.2%, 9/1/06 (2) 7,000 7,103
Cleveland School Dist.
8.125%, 12/1/98 (ETM) 3,385 3,839
9.0%, 12/1/98 (Prere.) 4,000 4,858
Cleveland Water Works
6.25%, 1/1/05 (2) 4,455 4,808
Hamilton County BAN
3.25%, 4/14/95 9,880 9,884
Ohio Building Auth.
(State Correctional Facilities)
7.2%, 8/1/00 10,000 11,428
7.25%, 8/1/01 7,500 8,589
7.3%, 8/1/02 10,000 11,476
6.5%, 10/1/02 3,790 4,186
7.35%, 8/1/03 4,945 5,686
5.7%, 10/1/03 3,305 3,467
6.5%, 10/1/03 5,500 6,062
5.7%, 10/1/04 2,725 2,846
6.5%, 10/1/04 2,500 2,740
5.8%, 10/1/06 4,360 4,546
5.9%, 10/1/07 2,500 2,614
(State Data Center)
5.7%, 10/1/04 2,895 3,024
5.75%, 10/1/05 3,070 3,207
Ohio Higher Education Facilities
VRDO 2.5%, 5/1/94 (2) 1,200 1,200
5.9%, 12/1/05 8,175 8,611
Ohio Public Facilities Comm.
5.5%, 12/1/06 5,465 5,554
Ohio Student Loan VRDO
2.3%, 4/1/94 2,700 2,700
------------
STATE TOTAL 118,428
------------
- - --------------------------------------------------------------------------------
OKLAHOMA (2.3%)
Grand River Dam Auth.
Electric Rev.
VRDO TOB 2.55%, 6/1/94 (4) 10,000 10,000
8.0%, 6/1/02 21,000 25,107
5.7%, 6/1/05 20,000 20,973
5.75%, 6/1/06 19,350 20,286
5.875%, 6/1/07 14,500 15,314
Oklahoma City GO
10.0%, 8/1/94 7,405 7,619
Oklahoma Industries Auth.
(St. Anthony's Hosp.)
7.5%, 10/1/03 (1) 5,470 5,873
Tulsa County Industrial Auth.
(St. Francis Hosp.)
5.15%, 12/15/03* 8,715 8,748
Tulsa Metropolitan Utilities Auth.
Water & Sewer Rev.
7.0%, 2/1/03 8,465 9,770
------------
STATE TOTAL 123,690
------------
- - --------------------------------------------------------------------------------
OREGON (.3%)
Oregon Veterans Welfare
Program GO VRDO
2.4%, 3/1/94 2,500 2,500
2.5%, 3/1/94 13,300 13,300
------------
STATE TOTAL 15,800
------------
- - --------------------------------------------------------------------------------
PENNSYLVANIA (6.7%)
Allegheny County GO
7.45%, 2/15/98 2,000 2,220
7.6%, 11/1/98 (Prere.) 2,000 2,275
Erie County Prison Auth.
Commonwealth Lease Rev.
6.75%, 11/1/01 (1) (Prere.) 5,295 5,958
Northumberland County
Commonwealth Lease Rev.
6.7%, 10/15/01 (1) (Prere.) 7,005 7,894
7.75%, 10/15/01 (1) (Prere.) 6,000 7,157
Pennsylvania COP
4.8%, 7/1/01 (2) 20,000 20,023
4.9%, 7/1/02 (2) 13,665 13,673
5.0%, 7/1/03 (2) 6,555 6,555
Pennsylvania GO
6.2%, 11/15/04 12,480 13,472
5.0%, 4/15/05 24,290 24,063
6.5%, 11/1/06 4,260 4,618
5.0%, 4/15/07 7,950 7,741
6.5%, 11/1/07 14,900 16,075
5.0%, 4/15/08 14,250 13,745
7.1%, 11/1/08 6,700 7,569
</TABLE>
27
<PAGE> 28
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania Higher Educational
Facilities Auth.
9.0%, 6/15/94 (2) $ 2,395 $ 2,436
Pennsylvania Industrial
Development Auth.
6.5%, 7/1/98 9,850 10,487
6.6%, 1/1/99 5,065 5,394
6.6%, 7/1/99 10,355 11,087
6.7%, 1/1/00 7,420 7,989
6.7%, 7/1/00 9,080 9,827
6.8%, 1/1/01 5,000 5,434
6.8%, 7/1/01 5,480 5,984
Pennsylvania Intergovernmental
Cooperation Auth.
5.75%, 6/15/99 (3) 17,000 17,925
4.7%, 6/15/01 (3) 3,410 3,372
4.8%, 6/15/02 (3) 6,275 6,194
Pennsylvania Public School
Building Auth.
10.375%, 11/1/94 (Prere.) 1,320 1,371
Pennsylvania Turnpike Comm.
7.625%, 12/1/99 (Prere.) 5,000 5,869
Philadelphia Gas Works
CP 2.4%, 4/7/94 10,000 10,000
9.125%, 3/15/95 (Prere.) 5,230 5,659
Philadelphia GO
4.6%, 5/15/99 (3) 4,345 4,349
Philadelphia Hosp. & Higher Education
10.0%, 4/1/95 (Prere.) 5,075 5,526
Philadelphia Municipal Lease Rev.
6.0%, 7/15/03 5,065 4,962
Philadelphia School Dist. GO
6.7%, 7/1/99 (2) 9,000 9,836
0.0%, 7/1/00 (2) 15,500 11,431
5.2%, 7/1/03 (2) 7,500 7,593
Philadelphia Water & Wastewater Rev.
4.75%, 6/15/98 11,540 11,651
Philadelphia Water & Sewer Rev.
8.9%, 10/1/95 (Prere.) 10,000 10,986
6.875%, 10/1/06 (1) 15,455 17,111
Sayre Health Care VRDO
2.35%, 3/1/94 (2) 2,700 2,700
Schuylkill Redevelopment Auth.
6.95%, 6/1/01 (3) (Prere.) 3,995 4,599
------------
STATE TOTAL 352,810
------------
- - --------------------------------------------------------------------------------
PUERTO RICO (.2%)
Puerto Rico Telephone Auth.
5.4%, 1/1/08 9,550 9,738
------------
- - --------------------------------------------------------------------------------
RHODE ISLAND (.6%)
Rhode Island Depositors Economic
Protection Corp.
6.55%, 8/1/10 (1) 26,850 30,183
------------
- - --------------------------------------------------------------------------------
SOUTH CAROLINA (.5%)
Charleston Water Works & Sewer
9.625%, 1/1/96 (Prere.) 4,000 4,487
Piedmont Municipal Power Agency
2.5%, 7/1/94 (Prere.) 12,185 12,185
10.875%, 1/1/95 (Prere.) 3,900 4,251
5.4%, 1/1/07 (1) 3,200 3,232
South Carolina GO
6.5%, 2/1/96 3,000 3,154
Sumter County
(Tuomey Hospital)
9.375%, 10/1/94 790 815
------------
STATE TOTAL 28,124
------------
- - --------------------------------------------------------------------------------
SOUTH DAKOTA (.1%)
South Dakota Health & Education
Auth. Rev.
7.5%, 7/1/04 (1) 5,845 6,609
------------
- - --------------------------------------------------------------------------------
TENNESSEE (.1%)
Tennessee GO BAN VRDO
2.4%, 3/1/94 2,700 2,700
------------
- - --------------------------------------------------------------------------------
TEXAS (9.6%)
Anderson County Rev.
(Coffield Prison Farm Project)
5.5%, 3/15/04 (2) 5,715 5,875
5.5%, 3/15/05 (2) 5,590 5,714
5.5%, 3/15/06 (2) 6,985 7,099
Austin Combined Utility System
5.125%, 11/15/02 9,500 9,576
5.2%, 11/15/03 3,360 3,383
7.25%, 11/15/03 6,000 6,763
5.3%, 5/15/04 5,770 5,810
5.3%, 11/15/04 5,735 5,776
6.0%, 11/15/04 (1) 11,000 11,846
6.0%, 11/15/05 (1) 10,000 10,709
5.8%, 11/15/06 5,255 5,446
6.0%, 11/15/06 (1) 23,265 25,227
Bell County Health Facilities
Development Corp.
(Scott & White Hosp.)
7.625%, 9/1/03 8,340 9,276
Board of Regents CP
(Texas A&M Univ.)
2.65%, 5/26/94 6,000 6,000
Corpus Christi GO
7.5%, 11/1/97 (2) 1,865 2,046
7.5%, 11/1/98 (2) 1,155 1,288
</TABLE>
28
<PAGE> 29
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Dallas-Fort Worth Regional Airport
8.75%, 11/1/03 $ 4,890 $ 5,642
Dallas Independent School Dist.
5.3%, 8/15/02 3,000 3,087
Harris County
5.6%, 10/1/01 7,310 7,822
Harris County Toll Road
6.3%, 8/15/04 (3) 5,310 5,824
Harris County Flood Control
5.6%, 10/1/01 8,900 9,331
Houston GO
7.3%, 3/1/98 (3) (Prere.) 3,000 3,332
5.9%, 3/1/03 5,000 5,311
5.0%, 3/1/04 6,265 6,245
5.0%, 3/1/05 10,000 9,908
5.1%, 3/1/06 12,200 12,092
7.0%, 3/1/08 37,405 43,193
Houston Housing Finance Corp. VRDO
2.7%, 6/1/94 (4) 4,675 4,675
Houston Water & Sewer
System Rev.
7.0%, 12/1/01 (2) 3,220 3,656
7.0%, 12/1/02 (2) 4,125 4,710
7.6%, 12/1/02 (6) 4,010 4,429
7.0%, 12/1/03 (2) 8,120 9,301
5.8%, 12/1/04 (1) 8,160 8,593
San Antonio Electric & Gas
10.75%, 2/1/95 (Prere.) 5,000 5,426
5.5%, 2/1/04 19,545 20,028
5.8%, 2/1/06 8,000 8,379
San Antonio Water Rev.
6.3%, 5/15/04 (3) 3,955 4,331
6.4%, 5/15/05 (3) 5,250 5,757
Texas GO
VRDO 2.5%, 4/1/94 (Prere.) 9,350 9,350
6.0%, 10/1/06 6,000 6,439
8.0%, 10/1/07 50,000 63,746
Texas Municipal Power Agency
6.0%, 9/1/02 (1) (Prere.) 9,270 10,136
6.1%, 9/1/07 (1) 12,500 13,722
6.1%, 9/1/08 (1) 27,840 30,430
6.1%, 9/1/09 (1) 5,000 5,469
Texas Public Finance Auth.
Building Rev.
6.6%, 2/1/00 (1) 5,000 5,470
6.75%, 2/1/02 (1) 5,000 5,519
6.8%, 2/1/03 (1) 5,000 5,497
Texas Water Resource Finance Auth.
7.5%, 8/15/01 3,995 4,437
Univ. of Texas Rev.
7.0%, 8/15/07 20,750 23,422
Univ. of Texas Permanent
Univ. Fund
5.9%, 7/1/02 5,000 5,353
6.4%, 7/1/02 5,000 5,517
------------
STATE TOTAL 507,413
------------
- - --------------------------------------------------------------------------------
UTAH (.2%)
Intermountain Power Agency
5.375%, 7/1/07 7,000 6,996
Utah GO
6.0%, 7/1/96 5,000 5,251
------------
STATE TOTAL 12,247
------------
- - --------------------------------------------------------------------------------
VIRGINIA (.4%)
Fairfax County Water Rev.
7.25%, 1/1/00 (Prere.) 6,450 7,422
Louisa PCR CP
2.55%, 4/11/94 4,000 4,000
Southeast Public Service Auth.
10.5%, 7/1/95 (Prere.) 8,000 8,887
------------
STATE TOTAL 20,309
------------
- - --------------------------------------------------------------------------------
WASHINGTON (3.4%)
King County GO
6.0%, 12/1/04 5,000 5,325
6.1%, 12/1/05 5,000 5,334
Seattle Water System
4.9%, 12/1/02 5,890 5,923
5.0%, 12/1/03 2,000 2,011
5.1%, 12/1/04 4,000 4,019
5.2%, 12/1/05 2,320 2,338
Spokane County School Dist.
6.0%, 12/1/03 5,000 5,362
Tacoma Electric System Rev.
5.7%, 1/1/03 (2) 6,845 7,159
Washington GO
7.2%, 9/1/98 (Prere.) 2,365 2,641
4.3%, 10/1/98 13,720 13,765
7.0%, 10/1/98 3,900 4,329
7.1%, 9/1/99 7,500 8,275
7.0%, 10/1/99 7,555 8,444
5.75%, 9/1/02 4,600 4,876
5.6%, 9/1/04 5,000 5,191
6.1%, 6/1/06 9,495 10,262
6.125%, 6/1/07 10,110 10,816
5.75%, 9/1/07 19,950 20,691
6.2%, 6/1/08 10,765 11,557
5.75%, 9/1/08 4,000 4,123
6.25%, 6/1/09 11,465 12,307
6.25%, 6/1/10 7,450 7,995
6.25%, 2/1/11 6,680 7,227
</TABLE>
29
<PAGE> 30
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Washington State
Health Care Auth.
(Empire Health Spokane)
8.0%, 11/1/97 (1) (Prere.) $ 9,200 $ 10,577
------------
STATE TOTAL 180,547
------------
- - --------------------------------------------------------------------------------
WISCONSIN (1.8%)
Wisconsin GO
4.25%, 11/1/99 4,000 3,966
5.9%, 5/1/02 5,000 5,357
5.5%, 11/1/05 12,325 12,820
6.2%, 5/1/06 20,990 22,943
6.25%, 5/1/07 22,970 25,156
6.25%, 5/1/08 24,365 26,598
------------
STATE TOTAL 96,840
------------
- - --------------------------------------------------------------------------------
WYOMING (.3%)
Lincoln VRDO
2.2%, 3/1/94 7,000 7,000
Platte County PCR
4.5%, 1/1/01 2,250 2,212
4.6%, 1/1/02 2,430 2,386
Sublette County VRDO
2.3%, 3/1/94 3,600 3,600
Uinta County PCR VRDO
2.4%, 3/1/94 2,900 2,900
------------
STATE TOTAL 18,098
------------
- - --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $4,884,154) 5,182,224
- - --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (2.0%)
- - --------------------------------------------------------------------------------
Other Assets--Note B 145,147
Liabilities (41,800)
------------
103,347
- - --------------------------------------------------------------------------------
NET ASSETS (100%)
- - --------------------------------------------------------------------------------
Applicable to 398,608,594 outstanding
$.001 par value shares
(authorized 450,000,000 shares) $5,285,571
- - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $13.26
================================================================================
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 47.
- - --------------------------------------------------------------------------------
AT FEBRUARY 28, 1994, NET ASSETS
CONSISTED OF:
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount Per
(000) Share
---------- ------
<S> <C> <C>
Paid in Capital $5,003,965 $12.55
Undistributed Net Investment Income -- --
Overdistributed Net Realized Gains--Note A (30,039) (.07)
Unrealized Appreciation of
Investments--Note D 311,645 .78
- - --------------------------------------------------------------------------------
NET ASSETS $5,285,571 $13.26
- - --------------------------------------------------------------------------------
</TABLE>
30
<PAGE> 31
<TABLE>
<CAPTION>
Face Market
Amount Value
INSURED LONG-TERM PORTFOLIO (000) (000)+
- - --------------------------------------------------------------------------------
MUNICIPAL BONDS (100.0%)
- - --------------------------------------------------------------------------------
<S> <C> <C>
ALABAMA (1.1%)
Alabama Housing Finance Auth.
9.0%, 4/1/12 (1) $ 595 $ 623
Birmingham Medical Center
(Special Care Medical Center)
7.25%, 7/1/15 (1) 6,715 7,278
Medical Clinic Board of Bessemer
(Bessemer-Carraway Hosp.)
7.25%, 4/1/15 (1) 5,000 5,613
Tuscaloosa City GO
6.75%, 7/1/20 (2) 1,900 2,061
Wilsonville PCR
(S.E. Electric Generating)
6.75%, 2/1/15 (1) 5,900 6,465
------------
STATE TOTAL 22,040
------------
- - --------------------------------------------------------------------------------
ALASKA (1.3%)
Anchorage Electric Rev.
8.0%, 12/1/09 (1) 2,565 3,263
8.0%, 12/1/10 (1) 2,960 3,778
Municipality of Anchorage GO
7.625%, 8/1/96 (3) (Prere.) 3,000 3,317
7.2%, 6/1/17 (2) 11,000 12,212
North Slope Borough GO
9.85%, 6/30/97 (2) (ETM) 3,000 3,534
10.0%, 6/30/04 (2) (ETM) 850 1,170
------------
STATE TOTAL 27,274
------------
- - --------------------------------------------------------------------------------
ARIZONA (.7%)
Maricopa County
(Samaritan Health Service)
7.0%, 12/1/16 (1) 8,650 10,234
Salt River Agricultural
Improvement & Power Dist.
6.0%, 1/1/09 4,750 5,023
------------
STATE TOTAL 15,257
------------
- - --------------------------------------------------------------------------------
ARKANSAS (.4%)
North Little Rock Electric System
6.5%, 7/1/10 (1) 3,500 3,931
6.5%, 7/1/15 (1) 4,500 5,042
------------
STATE TOTAL 8,973
------------
- - --------------------------------------------------------------------------------
California (13.3%)
California Finance Auth. PCR VRDO
(Southern California Edison)
2.3%, 3/1/94 700 700
California Health Facilities Finance
Auth. (Adventist Health System)
6.75%, 3/1/11 (1) 12,000 13,118
California Housing Finance Agency
8.625%, 8/1/15 (1) 4,575 4,666
California RAW
3.5%, 7/26/94 40,000 40,110
Culver City
Redevelopment Auth.
7.1%, 11/1/99 (2) (Prere.) 4,610 5,281
7.1%, 11/1/10 (2) 390 436
Fresno COP
(City Hall Project)
6.375%, 8/1/10 (2) 10,500 11,251
Long Beach Finance Auth.
6.0%, 11/1/09 (2) 3,735 3,994
Los Angeles County TRAN
3.0%, 6/30/94 4,750 4,752
Modesto Irrigation Dist.
Finance Auth.
(Woodland Project)
6.5%, 10/1/22 (2) 20,225 22,804
Modesto Santa Clara Redding Public
Power Agency
6.125%, 7/1/13 (2) 7,000 7,516
6.75%, 7/1/20 (1) 13,000 15,025
Northern California Power Agency
(Hydroelectric Project)
5.5%, 7/1/23 (1) 23,200 22,444
(Combustion Turbine Project)
6.0%, 8/15/10 (1) 3,500 3,586
Oakland Redevelopment Agency
(Central Dist. Project)
6.0%, 2/1/08 (2) 5,585 5,978
5.5%, 2/1/14 (2) 6,300 6,277
Orange County Sanitation Dist. COP
VRDO 2.2%, 3/1/94 400 400
Palmdale Single Family
Mortgage Rev.
9.875%, 4/1/08 (3) 79 110
Pasadena Electric Works Rev.
5.375%, 8/1/12 9,000 8,870
Pittsburg Redevelopment Agency
5.5%, 8/1/07 (3) 3,000 3,064
5.5%, 8/1/15 (3) 5,000 4,883
Riverside County Transportation Comm.
5.75%, 6/1/07 (2) 3,495 3,684
5.75%, 6/1/08 (2) 1,750 1,831
Sacramento Municipal Utility Dist.
5.75%, 8/15/13 (1) 12,360 12,442
San Jose Merged Area
Redevelopment Project Rev.
7.5%, 8/1/96 (3) (Prere.) 1,440 1,588
7.5%, 8/1/96 (1) (Prere.) 2,700 2,977
San Jose Tax Redevelopment
6.0%, 8/1/10 (1) 8,105 8,653
</TABLE>
31
<PAGE> 32
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Santa Clara Redevelopment Agency
(Bayshore North)
7.0%, 7/1/10 (2) $ 3,000 $ 3,534
Santa Clara VRDO
(El Camino Hosp. Dist.)
2.4%, 3/1/94 2,500 2,500
Santa Rosa Waste Water Recovery
6.0%, 9/1/15 (3) 5,000 5,313
South County Waste Water Auth.
(Gilroy)
5.5%, 8/1/22 (3) 8,000 7,743
(Morgan Hill)
5.5%, 8/1/22 (3) 7,000 6,775
Southern California Public
Power Auth.
5.0%, 7/1/15 (2) 2,605 2,357
Southern California Rapid
Transit Dist.
5.75%, 9/1/05 (2) 9,250 9,777
5.8%, 9/1/06 (2) 6,975 7,436
5.9%, 9/1/07 (2) 3,155 3,374
Transmission Agency of Northern
California
5.25%, 5/1/08 (1) 4,000 4,000
Ukiah Electric Rev.
6.25%, 6/1/18 (1) 6,330 6,872
------------
STATE TOTAL 276,121
------------
- - --------------------------------------------------------------------------------
COLORADO (1.0%)
Colorado Health Auth.
(Boulder Community Hosp.)
7.3%, 10/1/14 (1) 5,000 5,641
(Sisters of Charity Health System)
6.0%, 5/15/13 (1) 12,500 12,972
Denver County Health Facilities
(St. Anthony's Hosp.)
7.7%, 5/1/07 (1) 2,800 3,165
------------
STATE TOTAL 21,778
------------
- - --------------------------------------------------------------------------------
CONNECTICUT (1.0%)
Connecticut Economic Recovery GO
5.25%, 6/15/94 11,720 11,808
Connecticut Development Auth. PCR
VRDO (Connecticut Light & Power)
2.35%, 3/1/94 6,000 6,000
South Central Connecticut Regional
Water Auth.
5.75%, 8/1/12 (3) 3,100 3,160
------------
STATE TOTAL 20,968
------------
- - --------------------------------------------------------------------------------
DELAWARE (1.6%)
Delaware Economic
Development Auth.
(Delmarva Power and Light)
7.3%, 9/1/15 (3) 4,000 4,538
(Hosp. Bill & Collection Service)
VRDO 2.45%, 3/1/94 3,100 3,100
Delaware Health Facilities Auth.
(Delaware Medical Center)
7.0%, 10/1/15 (1) 6,000 6,682
Dover Electric Rev.
6.1%, 7/1/11 (3) 2,000 2,120
5.75%, 7/1/15 (3) 5,225 5,250
Wilmington GO
6.25%, 4/1/12 (3) 3,050 3,396
5.0%, 7/1/22 (3) 8,700 7,950
------------
STATE TOTAL 33,036
------------
- - --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA (.2%)
District of Columbia VRDO
2.4%, 3/1/94 700 700
District of Columbia Housing
Finance Agency
10.25%, 11/1/09 (3) 1,455 1,507
Washington Metropolitan
Transportation
6.0%, 7/1/10 (3) 1,000 1,067
5.25%, 7/1/14 (3) 1,000 954
------------
STATE TOTAL 4,228
------------
- - --------------------------------------------------------------------------------
FLORIDA (7.9%)
Coral Springs Improvement Dist. GO
6.0%, 6/1/10 (1) 3,000 3,213
Davie Water & Sewer Rev.
6.375%, 10/1/12 (2) 2,620 2,917
Daytona Beach Water & Sewer Rev.
5.75%, 11/15/10 (2) 2,790 2,871
Florida Housing Finance Agency
9.125%, 12/15/16 (3) 30 31
Florida Municipal Power Agency
(St. Lucie Project)
5.5%, 10/1/12 (3) 4,070 4,051
(Stanton Project)
5.0%, 10/1/19 (1) 8,100 7,371
Gulf Breeze Local Govt.
Loan Program VRDO
2.4%, 3/1/94 (3) 1,300 1,300
City of Homestead
5.25%, 3/1/03 2,000 2,036
Indian River County Water & Sewer
5.25%, 9/1/18 (3) 3,200 3,027
</TABLE>
32
<PAGE> 33
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
City of Jacksonville Guaranteed
Entitlement Rev.
5.5%, 10/1/12 (2) $ 4,900 $ 4,816
Lee County Gas Tax
5.5%, 10/1/09 (1) 2,000 2,007
Orange County Tourist Development
6.25%, 10/1/13 (2) 8,000 8,536
Orange and Orlando County
Expressway
8.25%, 7/1/13 (3) 9,695 12,942
8.25%, 7/1/15 (3) 8,360 11,187
8.25%, 7/1/16 (3) 12,295 16,553
Palm Beach Criminal Justice
5.375%, 6/1/06 (3) 3,925 4,026
7.2%, 6/1/14 (3) 16,300 19,680
7.2%, 6/1/15 (3) 4,000 4,846
Palm Beach Solid Waste Auth.
7.4%, 12/1/05 (6) 750 845
St. Lucie County Utilities System
6.0%, 10/1/20 (3) 2,350 2,523
Seacoast Utility Auth.
5.5%, 3/1/13 (3) 4,000 3,967
5.0%, 3/1/19 (3) 9,450 8,633
5.5%, 3/1/19 (3) 2,000 1,976
Tampa Utilities Rev.
6.75%, 10/1/10 (2) 9,330 10,799
6.75%, 10/1/11 (2) 9,965 11,542
6.75%, 10/1/12 (2) 10,635 12,306
------------
STATE TOTAL 164,001
------------
- - --------------------------------------------------------------------------------
GEORGIA (1.7%)
Burke County Development
Auth. VRDO
(Oglethorpe Power)
2.3%, 3/2/94 (3) 11,000 11,000
DeKalb County Housing Auth.
10.125%, 1/1/05 (1) 115 121
Georgia GO TOB
2.5%, 7/1/94 10,000 10,000
Georgia Municipal Electric Auth.
10.5%, 1/1/95 (Prere.) 3,000 3,232
Henry County School Dist. GO
6.45%, 8/1/11 (1) 4,000 4,482
Private Colleges & Universities
Auth. (Mercer Univ.)
6.5%, 11/1/15 (1) 5,000 5,621
------------
STATE TOTAL 34,456
------------
- - --------------------------------------------------------------------------------
HAWAII (1.4%)
Hawaii Airport System Rev.
6.35%, 7/1/07 (1) 8,000 8,854
Hawaii GO
5.5%, 5/1/08 (3) 2,000 2,041
5.55%, 5/1/09 (3) 1,000 1,020
5.55%, 5/1/10 (3) 2,500 2,543
Honolulu City & County GO
8.0%, 10/1/10 11,000 14,037
Univ. of Hawaii
5.65%, 10/1/12 (2) 1,000 1,012
------------
STATE TOTAL 29,507
------------
- - --------------------------------------------------------------------------------
IDAHO
Idaho Health Facilities Auth.
(St. Joseph Regional Medical Center)
5.25%, 7/1/16 (1) 1,000 946
------------
- - --------------------------------------------------------------------------------
ILLINOIS (4.5%)
Chicago Board of Education GO
6.25%, 1/1/11 (1) 7,000 7,611
Chicago Public Building Comm.
7.0%, 1/1/20 (1) (ETM) 21,500 26,090
Chicago Waste Water Transmission
6.5%, 1/1/08 (3) 1,315 1,456
Cook County GO
7.25%, 11/1/07 (1) 6,000 7,134
Cook County Single Family
Mortgage
9.3%, 12/1/05 (1) 220 237
Illinois Development Finance Auth.
PCR (Illinois Power Co.)
7.4%, 12/1/24 (1) 14,000 15,634
Illinois Regional Transit Auth.
Cook, Du Page and Kane Counties
7.2%, 11/1/20 (2) 24,000 29,092
Southern Illinois Univ.
10.25%, 4/1/95 (Prere.) 3,000 3,274
Will County Community Unit
School Dist. (Romeoville)
7.1%, 12/1/09 (2) 1,750 2,057
7.1%, 12/1/10 (2) 1,615 1,913
------------
STATE TOTAL 94,498
------------
- - --------------------------------------------------------------------------------
INDIANA (1.4%)
Indiana Municipal Bond Bank
9.75%, 8/1/09 (2) (ETM) 5,500 6,121
Indiana Municipal Power Agency
6.125%, 1/1/13 (1) 13,250 14,196
Marion County Hosp. Auth.
(Community Hosp.)
9.0%, 5/1/08 (1) 1,500 1,619
Merrillville School Building Corp.
6.65%, 7/1/06 (1) 5,500 6,225
------------
STATE TOTAL 28,161
------------
- - --------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 34
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
IOWA
Davenport Single Family Mortgage
9.0%, 6/1/17 (3) $ 375 $ 394
------------
- - --------------------------------------------------------------------------------
KANSAS (.1%)
Kansas Highway Refunding Rev.
9.0%, 7/1/97 (1) (ETM) 1,200 1,384
------------
- - --------------------------------------------------------------------------------
KENTUCKY (1.5%)
Boone County PCR
(Cincinnati Gas & Electric)
5.5%, 1/1/24 (1) 2,000 1,937
Combined Counties of Kentucky
Residential Mortgage
9.375%, 12/1/16 (3) 965 1,008
Kentucky Development Finance
Auth. Hosp. Facilities
(St. Elizabeth's Medical Center)
6.0%, 11/1/10 (3) 23,885 24,668
Kentucky Housing Corp.
8.875%, 7/1/19 (6) 705 737
Kentucky Turnpike Economic
Development
5.5%, 7/1/09 (2) 3,630 3,686
------------
STATE TOTAL 32,036
------------
- - --------------------------------------------------------------------------------
LOUISIANA (2.0%)
Jefferson Parish Sales Tax Rev.
6.75%, 12/1/06 (3) 8,500 9,505
New Orleans GO
0.0%, 9/1/10 (2) 8,500 3,302
0.0%, 9/1/11 (2) 10,475 3,810
0.0%, 9/1/13 (2) 9,000 2,868
6.0%, 9/1/21 (2) 22,250 22,490
------------
STATE TOTAL 41,975
------------
- - --------------------------------------------------------------------------------
MAINE (.4%)
Maine Health & Higher Education
Facilities Auth.
(Eastern Maine Medical Center)
6.375%, 10/1/21 (3) 8,000 8,412
------------
- - --------------------------------------------------------------------------------
MARYLAND (.7%)
Maryland Health & Education
Facilities Auth.
(Univ. of Maryland Medical System)
7.0%, 7/1/22 (3) 12,025 14,719
------------
- - --------------------------------------------------------------------------------
MASSACHUSETTS (8.3%)
Boston GO
6.5%, 7/1/12 (2) 4,750 5,239
Boston Water & Sewer Comm.
7.25%, 11/1/06 (6) 2,500 2,770
6.0%, 11/1/08 (6) 5,030 5,151
5.25%, 11/1/11 (3) 5,000 4,816
Lawrence GO
6.25%, 2/15/09 (2) 4,000 4,341
4.75%, 2/15/14 (2) 1,500 1,354
Massachusetts GO TOB
VRDO 2.4%, 5/1/94 (1) 700 700
7.0%, 7/1/09 (3) 32,250 37,620
6.0%, 8/1/09 (3) 3,125 3,340
6.0%, 8/1/10 (2) 3,255 3,473
Massachusetts Health and
Education Facilities
(Boston College)
6.75%, 7/1/11 (3) 6,595 7,276
(Cape Cod Health System)
5.25%, 11/15/21 (7) 2,500 2,285
(Falmouth Hosp.)
5.5%, 7/1/08 (1) 1,425 1,444
(Lahey Clinic)
7.85%, 7/1/03 (1) 3,360 4,033
5.25%, 7/1/10 (1) 14,120 13,786
(Massachusetts General Hosp.)
6.25%, 7/1/12 (2) 19,650 21,337
(Univ. Hosp.)
10.625%, 7/1/94 (Prere.) 3,000 3,139
Massachusetts Housing
Finance Agency
5.55%, 10/1/05 (2) 5,230 5,294
5.95%, 10/1/08 (2) 27,485 28,156
8.875%, 7/1/18 (1) 7,935 8,520
Massachusetts Municipal Wholesale
Electric Power
13.625%, 1/1/95 (Prere.) 3,595 4,019
5.1%, 7/1/07 (2) 4,000 3,905
------------
STATE TOTAL 171,998
------------
- - --------------------------------------------------------------------------------
MICHIGAN (3.7%)
Detroit Sewer System Rev.
5.45%, 7/1/07 (3) 6,850 6,919
5.55%, 7/1/08 (3) 7,100 7,225
Michigan Strategic Fund
(Detroit Edison)
7.0%, 7/15/08 (1) 18,375 21,428
Monroe County Economic
Development Corp.
(Detroit Edison)
6.95%, 9/1/22 (3) 25,000 29,577
St. Clair Economic Development
Corp. PCR (Detroit Edison)
6.4%, 8/1/24 (2) 8,000 8,699
Troy School Dist.
6.25%, 5/1/00 (2) (Prere.) 2,100 2,310
------------
STATE TOTAL 76,158
------------
- - --------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 35
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
MINNESOTA (.6%)
Dakota County Housing &
Redevelopment Auth.
9.375%, 5/1/18 (3) $ 75 $ 79
Southern Minnesota Municipal
Power Agency
11.0%, 1/1/95 (Prere.) 2,000 2,182
5.5%, 1/1/15 (2) 10,000 9,847
Western Minnesota Municipal
Power Agency
9.75%, 1/1/16 (1) (ETM) 845 1,315
------------
STATE TOTAL 13,423
------------
- - --------------------------------------------------------------------------------
MISSISSIPPI (.4%)
Jackson Water & Sewer System
5.2%, 9/1/07 (1) 2,000 1,966
5.4%, 9/1/09 (1) 4,000 3,987
4.5%, 9/1/10 (1) 1,500 1,342
------------
STATE TOTAL 7,295
------------
- - --------------------------------------------------------------------------------
MISSOURI (.5%)
Greene County Single Family
Mortgage Rev.
9.375%, 12/1/06 (2) 160 170
Missouri Health & Education
Facilities Auth.
(Cox Medical Center)
5.25%, 6/1/15 (1) 10,000 9,627
St. Louis County Single Family
Mortgage Rev.
9.25%, 10/1/16 (2) 1,230 1,314
------------
STATE TOTAL 11,111
------------
- - --------------------------------------------------------------------------------
MONTANA (.1%)
Forsyth PCR
(Montana Power Co.)
6.125%, 5/1/23 (2) 1,500 1,545
------------
- - --------------------------------------------------------------------------------
NEBRASKA (.1%)
Nebraska Investment Finance Auth.
9.1%, 11/15/06 (3) 1,933 2,029
------------
- - --------------------------------------------------------------------------------
NEVADA (1.9%)
Clark County GO
6.5%, 6/1/17 (2) 5,000 5,546
Clark County School Dist. GO
7.0%, 6/1/11 (1) 20,750 24,444
Reno Hosp. Rev.
(St. Mary's Hosp.)
9.875%, 7/1/12 (1) 3,000 3,293
Washoe County GO
7.125%, 7/15/96 (3) (Prere.) 4,900 5,354
------------
STATE TOTAL 38,637
------------
- - --------------------------------------------------------------------------------
NEW JERSEY (4.7%)
Atlantic County COP
7.4%, 3/1/12 (3) 4,335 5,340
Hoboken-Union City-Weehawken Sewage Auth.
6.25%, 8/1/14 (1) 10,185 11,221
6.25%, 8/1/15 (1) 10,820 11,949
New Brunswick Housing & Urban
Development
5.75%, 7/1/24 (1) 5,000 5,054
New Jersey Sports &
Exposition Auth.
VRDO 2.3%, 3/1/94 (1) 2,500 2,500
6.5%, 3/1/13 (1) 18,795 21,354
New Jersey Turnpike Auth.
6.5%, 1/1/13 (1) 30,000 34,061
6.5%, 1/1/16 (1) 5,000 5,672
------------
STATE TOTAL 97,151
------------
- - --------------------------------------------------------------------------------
NEW MEXICO (.4%)
Albuquerque Hosp. System
(Presbyterian Health)
6.375%, 8/1/07 (1) 4,000 4,377
Farmington Utility Systems Rev.
5.75%, 5/15/13 (3) 3,000 3,065
New Mexico Mortgage
Finance Agency
9.0%, 7/1/12 (3) 70 75
------------
STATE TOTAL 7,517
------------
- - --------------------------------------------------------------------------------
NEW YORK (5.9%)
New York City GO
6.625%, 8/1/15 (2) 5,000 5,458
New York City RAN
3.5%, 6/30/94 26,900 26,958
New York City Trust for Cultural
Resources VRDO
(Carnegie Hall)
2.2%, 3/1/94 400 400
New York City Water Finance Auth.
VRDO
2.2%, 3/1/94 (3) 11,000 11,000
7.0%, 6/15/09 (2) 3,750 4,249
New York State Local Govt.
Assistance Corp.
5.375%, 4/1/14 9,900 9,506
6.0%, 4/1/14 6,885 7,283
5.25%, 4/1/16 9,250 8,831
New York State Medical Care Agency
(Mental Health Services)
5.25%, 2/15/21 (4) 11,000 10,423
</TABLE>
35
<PAGE> 36
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
New York State Urban
Development Corp.
(Correctional Facilities)
6.5%, 1/1/10 (4) $ 24,595 $ 27,560
Triborough Bridge & Tunnel Auth.
6.0%, 1/1/14 4,500 4,604
6.0%, 1/1/15 (2) 1,275 1,326
5.0%, 1/1/17 6,000 5,481
------------
STATE TOTAL 123,079
------------
- - --------------------------------------------------------------------------------
NORTH CAROLINA (.4%)
Charlotte Convention Center
5.25%, 12/1/20 (2) 4,250 3,994
Concord Utility System Rev.
6.0%, 12/1/10 (1) 500 527
North Carolina Municipal Power
Agency (Catawba Electric)
6.0%, 1/1/10 (1) 4,000 4,275
------------
STATE TOTAL 8,796
------------
- - --------------------------------------------------------------------------------
NORTH DAKOTA (.5%)
Bismarck Medical Center
7.5%, 5/1/13 (6) 10,000 11,228
------------
- - --------------------------------------------------------------------------------
OHIO (3.8%)
Akron Bath Copley Joint Township
Hosp. Dist. (Akron General)
6.0%, 1/1/22 (2) 3,100 3,152
Clermont County Mercy Health
System
5.6%, 9/1/07 (2) 4,340 4,421
Cleveland Airport System Rev.
0.0%, 1/1/05 (1) 3,975 2,301
0.0%, 1/1/06 (1) 3,475 1,891
7.25%, 1/1/20 (1) 50 56
Cleveland City GO
5.3%, 9/1/07 (2) 3,500 3,554
Cleveland Water Works Rev.
6.25%, 1/1/15 (2) 2,500 2,651
5.5%, 1/1/21 (1) 1,000 1,007
Columbus City School Dist. GO
7.0%, 12/1/00 (3) (Prere.) 1,500 1,724
Franklin Convention Center Rev.
7.0%, 12/1/00 (1) (Prere.) 3,025 3,493
0.0%, 12/1/06 (1) 4,355 2,261
Franklin Hosp. Facility Auth.
(Riverside Hosp.)
7.25%, 5/15/20 (1) 2,050 2,318
Hamilton County
(Children's Hosp.)
5.2%, 5/15/09 (1) 2,500 2,469
Lucas County GO
6.95%, 12/1/11 (1) 900 1,008
Northeast Ohio Regional
Sewer Dist.
6.5%, 11/15/16 (2) 5,750 6,171
Ohio Air Quality PCR
(Ohio Edison)
7.45%, 3/1/16 (3) 9,500 10,736
7.1%, 6/1/18 (3) 6,500 7,246
Ohio Building Auth.
(Transportation Facilities)
7.0%, 9/1/07 (1) 1,420 1,595
Ohio GO
7.625%, 8/1/09 4,345 5,374
Ohio Higher Education Facilities
Auth. (Case Western Reserve)
6.5%, 10/1/20 500 562
(Univ. of Dayton)
6.6%, 12/1/17 (3) 1,200 1,323
Ohio Water Development Auth.
7.0%, 12/1/09 (2) (ETM) 1,500 1,795
Olentangy School Dist. GO
6.35%, 12/1/17 (1) 500 535
Reynoldsburg School Dist. GO
6.55%, 12/1/17 (3) 2,000 2,181
Summit Limited Tax GO
6.9%, 8/1/12 (2) 2,750 3,069
Trumbull County Hosp.
Improvement
(Trumbull Memorial Hosp.)
6.25%, 11/15/12 (3) 2,500 2,666
Univ. of Toledo
5.75%, 12/1/12 (3) 1,000 1,015
Wilmington School Dist. GO
6.3%, 12/1/14 (3) 1,500 1,613
------------
STATE TOTAL 78,187
------------
- - --------------------------------------------------------------------------------
OKLAHOMA (.3%)
Grand River Dam Auth.
5.75%, 6/1/06 (4) 5,800 6,145
Oklahoma Housing Finance Agency
10.4%, 9/1/08 (1) 205 214
------------
STATE TOTAL 6,359
------------
- - --------------------------------------------------------------------------------
OREGON
Oregon Veterans Welfare
Program GO VRDO
2.5%, 3/1/94 200 200
------------
- - --------------------------------------------------------------------------------
PENNSYLVANIA (7.9%)
Allegheny County Hosp. Auth.
(Presbyterian Hosp.)
VRDO 2.35%, 3/1/94 400 400
7.125%, 7/1/19 (1) 12,500 13,948
</TABLE>
36
<PAGE> 37
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Allegheny County Sanitary Auth.
5.5%, 12/1/16 (3) $ 10,000 $ 9,746
Armstrong County Hosp. Auth.
6.25%, 6/1/13 (2) 18,400 19,380
Delaware River Joint Toll Bridge
Comm.
6.0%, 7/1/18 (3) 10,500 10,790
Lehigh County General Purpose
Auth.
6.5%, 7/1/10 (1) 6,655 7,283
Pennsylvania Convention Center
Auth.
6.7%, 9/1/16 (3) 9,970 11,405
6.0%, 9/1/19 (3) 10,000 10,539
Pennsylvania Turnpike Comm.
6.0%, 6/1/15 (1) 1,000 1,028
5.5%, 12/1/17 (3) 10,470 10,145
5.5%, 12/1/19 (3) 25,000 24,195
Philadelphia Gas Works
6.0%, 5/15/12 (2) 3,000 3,106
Philadelphia Water & Wastewater Rev.
7.0%, 6/15/10 (3) 15,000 17,650
7.0%, 6/15/11 (3) 16,500 19,442
Pittsburgh Water & Sewer System Rev.
7.25%, 9/1/14 (3) (ETM) 5,000 5,964
------------
STATE TOTAL 165,021
------------
- - --------------------------------------------------------------------------------
PUERTO RICO (.1%)
Puerto Rico Public Building Auth.
0.0%, 7/1/01 (3) 4,150 2,950
------------
- - --------------------------------------------------------------------------------
RHODE ISLAND (.7%)
Rhode Island Building Auth.
6.0%, 2/1/01 (2) (Prere.) 3,445 3,711
6.0%, 2/1/11 (2) 3,805 3,900
Rhode Island Convention Auth.
5.25%, 5/15/15 (1) 3,000 2,842
Rhode Island Depositors Economic
Project
5.8%, 8/1/11 (1) 1,250 1,296
5.8%, 8/1/12 (1) 2,000 2,066
------------
STATE TOTAL 13,815
------------
- - --------------------------------------------------------------------------------
SOUTH CAROLINA (3.4%)
North Charleston Sewer Dist.
6.375%, 7/1/12 (1) 2,750 3,039
Piedmont Municipal Power Agency
5.0%, 1/1/18 (3) 23,500 21,339
6.75%, 1/1/19 (3) 10,600 12,208
6.75%, 1/1/20 (3) 23,515 27,147
5.0%, 1/1/22 (3) 8,000 7,212
------------
STATE TOTAL 70,945
------------
- - --------------------------------------------------------------------------------
SOUTH DAKOTA (1.0%)
Heartland Consumer Power Dist.
7.625%, 1/1/16 (1) 7,000 7,756
South Dakota Health &
Educational Facilities Auth.
(McKennan Hosp.)
7.625%, 7/1/14 (1) 11,500 13,069
------------
STATE TOTAL 20,825
------------
- - --------------------------------------------------------------------------------
TENNESSEE (1.0%)
Bristol Health & Education
Facilities Auth.
(Bristol Memorial Hosp.)
6.75%, 9/1/10 (3) 11,700 13,467
Knox County Health, Education
& Housing Facility
(Fort Sanders Hosp.)
8.0%, 1/1/08 (1) 3,000 3,426
Tennessee Housing
Development Agency
7.125%, 7/1/17 (1) 3,000 3,135
------------
STATE TOTAL 20,028
------------
- - --------------------------------------------------------------------------------
TEXAS (9.1%)
Austin Combined Utilities
System Rev.
5.75%, 11/15/16 (2) 36,000 36,069
Colorado River Municipal
Water Dist.
6.0%, 1/1/16 (2) 13,955 14,133
Corpus Christi Utilities
System Rev.
7.0%, 7/15/10 (3) 7,500 8,406
Denton County Housing
Finance Corp.
10.0%, 9/1/05 (1) 180 190
Houston Public Improvement
7.0%, 3/1/08 16,000 18,476
Houston Water Conveyance System
6.125%, 12/15/09 (2) 2,000 2,155
6.8%, 12/15/10 (2) 5,490 6,331
6.8%, 12/15/11 (2) 5,455 6,321
6.25%, 12/15/12 (2) 8,340 9,107
7.5%, 12/15/12 (2) 1,000 1,238
7.5%, 12/15/13 (2) 1,100 1,361
Houston Water & Sewer Rev.
7.0%, 12/1/20 (1) 12,280 13,826
Lower Colorado River Auth.
5.625%, 1/1/15 (4) (Prere.) 3,055 3,121
5.625%, 1/1/17 (4) 21,530 21,188
San Antonio Electric & Gas System
0.0%, 2/1/06 (3) 18,000 9,480
0.0%, 2/1/07 (3) 15,000 7,383
</TABLE>
37
<PAGE> 38
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
San Antonio Sewer Rev.
8.0%, 5/1/95 (Prere.) $ 4,000 $ 4,285
San Antonio Water System
5.5%, 5/15/18 (1) 7,000 6,790
Southeast Texas Housing
Finance Corp.
9.2%, 12/1/10 (3) 290 309
Texas Municipal Power Agency
6.1%, 9/1/09 (1) 18,000 19,690
------------
STATE TOTAL 189,859
------------
- - --------------------------------------------------------------------------------
VIRGINIA (.5%)
Chesapeake Hosp. Auth.
(Chesapeake General Hosp.)
5.3%, 7/1/08 (1) 2,250 2,256
5.5%, 7/1/12 (1) 2,000 1,993
Henry County Public Service Auth.
6.25%, 11/15/19 (3) 1,500 1,564
Prince William County Service Auth.
6.0%, 7/1/29 (3) 4,500 4,563
------------
STATE TOTAL 10,376
------------
- - --------------------------------------------------------------------------------
WASHINGTON (1.3%)
Snohomish County Mukilteo
School Dist.
5.6%, 12/1/08 (3) 6,960 7,178
5.65%, 12/1/09 (3) 9,160 9,509
5.65%, 12/1/10 (3) 3,950 4,069
5.7%, 12/1/11 (3) 5,000 5,164
Washington Health Care Facilities
Auth. (General Hosp. of Everett)
9.0%, 1/1/11 (3) 1,700 1,845
------------
STATE TOTAL 27,765
------------
- - --------------------------------------------------------------------------------
WEST VIRGINIA (.9%)
Berkeley Brooke Fayette Counties
Single Family Mortgage
9.1%, 8/1/11 (3) 780 803
West Virginia State Building Comm.
7.0%, 7/1/11 (1) 7,325 8,542
7.0%, 7/1/12 (1) 7,840 9,187
------------
STATE TOTAL 18,532
------------
- - --------------------------------------------------------------------------------
WISCONSIN (.3%)
Wisconsin Health Facilities Auth.
(Columbia Hosp.)
9.5%, 6/1/95 (6) (Prere.) 2,000 2,186
(St. Luke's Medical Center)
7.1%, 8/15/11 (1) 4,000 4,480
------------
STATE TOTAL 6,666
------------
- - --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,910,249) 2,081,659
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Market
Value
(000)+
- - --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES
- - --------------------------------------------------------------------------------
<S> <C>
Other Assets--Note B $ 49,854
Liabilities (48,942)
------------
912
- - --------------------------------------------------------------------------------
NET ASSETS (100%)
- - --------------------------------------------------------------------------------
Applicable to 166,930,373 outstanding
$.001 par value shares
(authorized 250,000,000 shares) $2,082,571
- - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $12.48
================================================================================
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 47.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
AT FEBRUARY 28, 1994, NET ASSETS CONSISTED OF:
- - --------------------------------------------------------------------------------
Amount Per
(000) Share
---------- ------
<S> <C> <C>
Paid in Capital $1,912,320 $11.46
Undistributed Net
Investment Income -- --
Overdistributed Net
Realized Gains--Note A (6,976) (.04)
Unrealized Appreciation of
Investments--Note D 177,227 1.06
- - --------------------------------------------------------------------------------
NET ASSETS $2,082,571 $12.48
- - --------------------------------------------------------------------------------
</TABLE>
38
<PAGE> 39
<TABLE>
<CAPTION>
Face Market
Amount Value
LONG-TERM PORTFOLIO (000) (000)+
- - --------------------------------------------------------------------------------
MUNICIPAL BONDS (100.1%)
- - --------------------------------------------------------------------------------
<S> <C> <C>
ARIZONA (2.6%)
Board of Regents
(Univ. of Arizona)
5.9%, 6/1/07 $ 2,500 $ 2,651
5.9%, 6/1/08 4,490 4,693
6.0%, 6/1/09 4,770 5,034
6.0%, 6/1/10 5,075 5,339
6.0%, 6/1/11 5,400 5,685
Salt River Project Agricultural
Improvement & Power Dist.
9.75%, 1/1/95 (Prere.) 3,790 4,060
------------
STATE TOTAL 27,462
------------
- - --------------------------------------------------------------------------------
CALIFORNIA (9.1%)
Anaheim Public Improvement
Corp. COP VRDO
2.25%, 8/1/94 700 700
California GO
6.25%, 9/1/12 5,000 5,377
Irvine Ranch Water Dist. VRDO
2.25%, 3/1/94 6,200 6,200
Los Angeles County COP
6.5%, 3/1/10 21,815 22,982
Orange County Sanitation
Dist. VRDO
2.2%, 3/1/94 3,700 3,700
Riverside VRDO
2.45%, 3/1/94 500 500
San Bernardino COP
6.875%, 8/1/24 (ETM) 18,000 21,882
5.0%, 8/1/26 15,045 12,426
4.75%, 8/1/28 10,425 8,211
Southern California Public
Power Auth. VRDO
(Transmission Project)
2.25%, 7/1/94 14,100 14,100
------------
STATE TOTAL 96,078
------------
- - --------------------------------------------------------------------------------
CONNECTICUT (.3%)
Connecticut Economic Recovery Notes
5.25%, 12/15/94 3,090 3,144
------------
- - --------------------------------------------------------------------------------
DELAWARE (.1%)
Delaware Economic
Development Auth. IDR
(Cargill)
10.35%, 12/1/99 1,350 1,466
------------
- - --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA (2.2%)
District of Columbia GO
VRDO 2.4%, 3/1/94 2,100 2,100
7.75%, 6/1/96 (Prere.) 11,970 13,184
6.75%, 6/1/05 (2) 7,540 8,386
------------
STATE TOTAL 23,670
------------
- - --------------------------------------------------------------------------------
FLORIDA (2.6%)
Gulf Breeze Local Govt. Loan
Program VRDO
2.4%, 3/1/94 (3) 1,600 1,600
Orlando Utilities Comm.
6.75%, 10/1/17 22,000 25,480
------------
STATE TOTAL 27,080
------------
- - --------------------------------------------------------------------------------
GEORGIA (8.6%)
College Park GO (Civic Center)
7.0%, 9/1/10 11,500 13,220
Gwinnett County School Dist. GO
6.4%, 2/1/06 10,450 11,593
6.4%, 2/1/07 11,345 12,602
6.4%, 2/1/08 12,310 13,682
Metropolitan Atlanta Rapid
Transit Auth.
6.25%, 7/1/18 12,170 13,044
6.25%, 7/1/20 (2) 23,275 25,344
Municipal Electric Auth. of Georgia
6.6%, 1/1/18 1,000 1,112
------------
STATE TOTAL 90,597
------------
- - --------------------------------------------------------------------------------
HAWAII (1.2%)
Hawaii GO
6.4%, 3/1/09 5,555 6,164
6.4%, 3/1/10 5,555 6,177
------------
STATE TOTAL 12,341
------------
- - --------------------------------------------------------------------------------
ILLINOIS (5.6%)
Chicago Metropolitan Water
Capital Improvement
7.0%, 1/1/11 20,000 23,025
Chicago Public Building Comm.
7.0%, 1/1/20 (1) (ETM) 6,000 7,281
Illinois Development Finance
Auth. PCR
(Illinois Power Co.)
VRDO 2.45%, 3/2/94 3,700 3,700
7.4%, 12/1/24 (1) 8,150 9,101
Illinois Toll Highway Auth.
6.375%, 1/1/15 8,750 9,128
Metropolitan Pier &
Exposition Auth.
6.75%, 6/1/10 (1) 6,000 6,848
------------
STATE TOTAL 59,083
------------
- - --------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 40
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
INDIANA (1.2%)
Indiana Health Facilities Finance Auth.
(Ancilla System, Inc.)
5.75%, 7/1/15(1) $ 4,470 $ 4,448
Indiana State Office
Building Comm.
6.9%, 7/1/11 6,875 7,775
------------
STATE TOTAL 12,223
------------
- - --------------------------------------------------------------------------------
KENTUCKY (.1%)
Jefferson County Capital Project Corp.
9.375%, 8/15/95 (Prere.) 1,000 1,109
------------
- - --------------------------------------------------------------------------------
LOUISIANA (2.8%)
De Soto Parish PCR
(Southwestern Electric Power)
7.6%, 1/1/19 24,300 28,357
Jefferson Parish Single Family
Mortgage Rev.
9.375%, 11/1/07 (3) 1,490 1,546
------------
STATE TOTAL 29,903
------------
- - --------------------------------------------------------------------------------
MASSACHUSETTS (6.5%)
Massachusetts GO
6.5%, 8/1/11 5,460 5,861
5.75%, 5/1/12 7,500 7,551
Massachusetts Housing Finance Agency
6.125%, 11/15/08 3,500 3,650
9.125%, 12/1/20 4,390 4,764
6.375%, 4/1/21 7,000 7,125
Massachusetts Water Resources Auth.
6.5%, 7/15/19 32,000 35,272
5.5%, 7/15/22 5,000 4,726
------------
STATE TOTAL 68,949
------------
- - --------------------------------------------------------------------------------
MICHIGAN (1.5%)
Michigan Hosp. Finance Auth.
(Detroit Medical Center)
6.25%, 8/15/13 3,000 3,081
6.5%, 8/15/18 5,000 5,243
Michigan Housing Development Auth.
6.3%, 4/1/04 7,500 7,830
------------
STATE TOTAL 16,154
------------
- - --------------------------------------------------------------------------------
MISSISSIPPI (2.2%)
Claiborne County PCR
(Middle South Energy)
9.875%, 12/1/14 10,000 12,120
Jackson County VRDO
(Chevron)
2.3%, 3/1/94 11,000 11,000
------------
STATE TOTAL 23,120
------------
- - --------------------------------------------------------------------------------
NEVADA (.5%)
Clark County Airport VRDO
2.3%, 7/1/94 (1) 4,800 4,800
------------
- - --------------------------------------------------------------------------------
NEW JERSEY (4.8%)
New Jersey Health Care
Facilities Auth.
(Atlantic City Medical Center)
6.8%, 7/1/05 4,500 4,931
New Jersey Sports &
Exposition Auth.
6.5%, 3/1/13 10,000 11,259
New Jersey TRAN
3.0%, 6/15/94 16,000 16,010
New Jersey Turnpike Auth.
6.5%, 1/1/16 16,195 18,193
------------
STATE TOTAL 50,393
------------
- - --------------------------------------------------------------------------------
NEW YORK (15.5%)
New York City GO
6.375%, 8/1/04 5,000 5,220
7.1%, 2/1/09 (1) 5,000 5,706
7.1%, 2/1/10 (1) 7,500 8,522
5.75%, 8/15/11 10,000 9,685
5.75%, 8/15/13 5,000 4,824
New York City Municipal Water
Finance Auth.
5.375%, 6/15/07 20,000 19,951
6.0%, 6/15/09 10,000 10,427
5.5%, 6/15/19 9,525 9,172
New York City RAN
3.5%, 6/30/94 8,300 8,318
New York Medical Care Facilities
5.25%, 8/15/07 23,420 22,417
New York State Dormitory Auth.
(State Univ.)
7.5%, 5/15/11 18,900 22,644
5.25%, 5/15/21 7,875 7,235
New York State Local Govt.
Assistance Corp.
5.0%, 4/1/23 13,750 12,318
New York State Urban
Development Corp.
5.75%, 1/1/13 6,525 6,443
Triborough Bridge & Tunnel Auth.
General Purpose Rev.
6.125%, 1/1/21 10,000 10,811
------------
STATE TOTAL 163,693
------------
- - --------------------------------------------------------------------------------
</TABLE>
40
<PAGE> 41
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
NORTH CAROLINA (2.6%)
Charlotte Airport VRDO
2.3%, 7/1/94 (1) $ 7,700 $ 7,700
North Carolina Eastern Municipal
Power Agency
7.5%, 1/1/09 (Prere.) 4,935 6,107
7.5%, 1/1/10 4,580 5,411
6.5%, 1/1/18 (ETM) 4,625 5,248
6.5%, 1/1/18 2,375 2,569
------------
STATE TOTAL 27,035
------------
- - --------------------------------------------------------------------------------
OHIO
Cuyahoga County Hosp.
Improvement VRDO
(St. Luke's Hosp.)
2.5%, 3/1/94 100 100
Scioto County VRDO
(Norfolk Southern Corp.)
2.4%, 3/2/94 300 300
------------
STATE TOTAL 400
------------
- - --------------------------------------------------------------------------------
OREGON (.1%)
Oregon Veterans Welfare Program
VRDO
2.5%, 3/1/94 1,100 1,100
------------
- - --------------------------------------------------------------------------------
PENNSYLVANIA (6.0%)
Delaware County Industrial
Development Auth. VRDO
(United Parcel Service)
2.3%, 3/1/94 800 800
Pennsylvania COP
5.4%, 7/1/08 (2) 15,000 15,125
Pennsylvania GO
6.375%, 9/15/12 13,500 14,381
Pennsylvania Higher Education
Facilities Auth.
(Drexel Univ.)
7.7%, 11/1/95 (1) (Prere.) 3,340 3,627
7.7%, 5/1/12 (1) 2,660 2,872
Pennsylvania Housing Finance Agency
7.5%, 7/1/06 3,890 4,120
Pennsylvania TAN
3.25%, 6/30/94 2,400 2,403
Philadelphia Water & Wastewater
7.0%, 6/15/11 (3) 16,600 19,560
Radnor Township School Auth.
9.875%, 9/15/00 (ETM) 595 702
Sayre Health Care Facility
Auth. VRDO
2.35%, 3/1/94 400 400
------------
STATE TOTAL 63,990
------------
- - --------------------------------------------------------------------------------
PUERTO RICO (.2%)
Puerto Rico Telephone Auth.
5.5%, 1/1/13 1,000 1,010
5.5%, 1/1/22 1,460 1,454
------------
STATE TOTAL 2,464
------------
- - --------------------------------------------------------------------------------
SOUTH CAROLINA (3.8%)
Greenville Hosp. System VRDO
2.3%, 3/1/94 8,000 8,000
Piedmont Municipal Power Agency
10.25%, 1/1/95 (Prere.) 5,000 5,425
6.15%, 1/1/07 (1) 4,040 4,360
6.2%, 1/1/08 (1) 3,000 3,235
6.25%, 1/1/09 (1) 3,000 3,248
6.5%, 1/1/15 (3) 14,245 15,959
------------
STATE TOTAL 40,227
------------
- - --------------------------------------------------------------------------------
TEXAS (9.1%)
Harris County Toll Road
5.375%, 8/15/20 (3) 26,000 24,681
Houston Public Improvement
7.0%, 3/1/08 15,000 17,321
Texas City IDR (Arco)
7.375%, 10/1/20 17,000 20,632
Texas GO
5.5%, 4/1/20 15,000 14,340
Texas Water Development Board
6.5%, 7/15/10 17,425 19,633
------------
STATE TOTAL 96,607
------------
- - --------------------------------------------------------------------------------
WASHINGTON (5.1%)
Snohomish County Public Utility Dist.
5.5%, 1/1/20 (3) 8,210 7,839
Washington Dept. of Ecology COP
5.0%, 4/1/16 27,820 24,907
Washington GO
6.375%, 2/1/14 13,000 13,755
6.75%, 2/1/15 3,450 3,977
5.5%, 5/1/18 4,000 3,890
------------
STATE TOTAL 54,368
------------
- - --------------------------------------------------------------------------------
WEST VIRGINIA (1.0%)
West Virginia State
Building Comm.
7.0%, 7/1/14 (1) 8,975 10,549
------------
- - --------------------------------------------------------------------------------
WISCONSIN (4.2%)
Wisconsin Clean Water Rev.
6.875%, 6/1/11 20,500 23,663
Wisconsin GO
6.25%, 5/1/09 19,555 21,260
------------
STATE TOTAL 44,923
------------
- - --------------------------------------------------------------------------------
</TABLE>
41
<PAGE> 42
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
WYOMING (.6%)
Wyoming Community Development
Auth. Mortgage Rev.
6.0%, 6/1/23 $ 6,000 $ 5,918
------------
- - --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $984,905) 1,058,846
- - --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-.1%)
- - --------------------------------------------------------------------------------
Other Assets--Note B 40,631
Liabilities (41,772)
------------
(1,141)
- - --------------------------------------------------------------------------------
NET ASSETS (100%)
- - --------------------------------------------------------------------------------
Applicable to 96,173,470 outstanding
$.001 par value shares
(authorized 250,000,000 shares) $1,057,705
- - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $11.00
================================================================================
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 47.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
AT FEBRUARY 28, 1994, NET ASSETS CONSISTED OF:
- - --------------------------------------------------------------------------------
Amount Per
(000) Share
---------- ------
<S> <C> <C>
Paid in Capital $ 981,846 $10.21
Undistributed Net Investment
Income -- --
Overdistributed Net Realized
Gains--Note A (2,621) (.03)
Unrealized Appreciation of
Investments--Note D 78,480 .82
- - --------------------------------------------------------------------------------
NET ASSETS $1,057,705 $11.00
- - --------------------------------------------------------------------------------
</TABLE>
42
<PAGE> 43
<TABLE>
<CAPTION>
Face Market
Amount Value
HIGH-YIELD PORTFOLIO (000) (000)+
- - --------------------------------------------------------------------------------
MUNICIPAL BONDS (100.8%)
- - --------------------------------------------------------------------------------
<S> <C> <C>
ARIZONA (2.0%)
Board of Regents
(Univ. of Arizona)
6.2%, 6/1/16 $ 28,660 $ 31,059
Pima County Industrial
Development Auth.
(La Cholla Project)
8.5%, 7/1/20 6,650 6,451
------------
STATE TOTAL 37,510
------------
- - --------------------------------------------------------------------------------
ARKANSAS (.5%)
North Little Rock Electric System
6.5%, 7/1/15 (1) 7,450 8,348
------------
- - --------------------------------------------------------------------------------
CALIFORNIA (13.6%)
California Health Facility
Auth. VRDO
2.35%, 3/1/94 11,100 11,100
California RAN
3.5%, 7/26/94 30,000 30,082
Irvine Ranch Water Dist. VRDO
2.2%, 3/1/94 3,400 3,400
2.25%, 3/1/94 2,300 2,300
Los Angeles County Metropolitan
Transportation Auth.
5.625%, 7/1/18 (3) 25,000 24,655
Los Angeles County TRAN
3.0%, 6/30/94 13,200 13,206
Los Angeles County
Wastewater System
5.7%, 6/1/20 (1) 8,130 8,074
Metropolitan Water Dist. of
Southern California
6.625%, 7/1/12 3,000 3,293
Orange County Apartment
Development CP
3.1%, 3/14/94 22,400 22,400
Orange County Sanitation
Dist. VRDO
2.2%, 3/1/94 22,600 22,600
Orange County VRDO
(Irvine Co.)
2.3%, 3/1/94 9,700 9,700
Riverside County VRDO
2.45%, 3/1/94 1,400 1,400
San Bernardino COP
5.5%, 8/1/19 11,400 10,439
7.0%, 8/1/20 12,180 13,454
5.5%, 8/1/24 14,295 12,825
6.875%, 8/1/24 (ETM) 25,220 30,658
Southern California Public
Power Auth.
5.375%, 1/1/10 (1) 6,000 5,933
6.0%, 7/1/18 10,000 10,329
5.5%, 7/1/20 19,250 19,320
------------
STATE TOTAL 255,168
------------
- - --------------------------------------------------------------------------------
COLORADO (.7%)
Colorado Health Facilities Auth.
(St. Luke's Healthcare)
8.5%, 2/15/21 10,950 12,567
------------
- - --------------------------------------------------------------------------------
CONNECTICUT (.9%)
Connecticut Development Auth.
PCR 2.35%, 3/1/94 3,800 3,800
(AHF/Hartford Project)
10.0%, 1/1/22 11,500 12,168
------------
STATE TOTAL 15,968
------------
- - --------------------------------------------------------------------------------
DELAWARE (.3%)
Delaware Economic Development
Auth. VRDO
(Hosp. Bill & Collection Service)
2.45%, 3/1/94 5,800 5,800
------------
- - --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA (.4%)
District of Columbia GO VRDO
2.4%, 3/1/94 6,200 6,200
District of Columbia Hosp. Rev.
(Washington Hosp.)
8.75%, 1/1/01 (Prere.) 1,500 1,850
------------
STATE TOTAL 8,050
------------
- - --------------------------------------------------------------------------------
FLORIDA (3.6%)
Cape Coral Health Facilities Auth.
(Cape Coral Medical Center)
7.5%, 11/15/21 20,000 22,141
Dade County Water &
Sewer Rev. VRDO
2.3%, 4/6/94 11,800 11,800
Orlando Utilities Comm.
BAN VRDO 2.4%, 3/1/94 1,600 1,600
6.75%, 10/1/17 6,200 7,181
Palm Beach Health Facilities
(Good Samaritan Hosp.)
6.3%, 10/1/22 10,000 10,374
Seminole County Water
& Sewer Rev.
6.0%, 10/1/19 (1) 8,500 9,007
Tarpon Springs Health Facility Auth.
(Tarpon Springs Hosp.)
8.75%, 5/1/12 4,000 4,447
------------
STATE TOTAL 66,550
------------
- - --------------------------------------------------------------------------------
</TABLE>
43
<PAGE> 44
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
GEORGIA (1.8%)
Cartersville Water &
Wastewater Facilities
(Anheuser-Busch)
7.4%, 11/1/10 $ 5,000 $ 5,967
Georgia Housing & Finance Auth.
VRDO 2.55%, 3/2/94 7,800 7,800
Municipal Electric Auth. of Georgia
6.6%, 1/1/18 5,000 5,554
Savannah Hosp. Auth.
(Candler Hosp.)
7.0%, 1/1/23 13,000 13,664
------------
STATE TOTAL 32,985
------------
- - --------------------------------------------------------------------------------
ILLINOIS (2.8%)
Chicago Public Building Comm.
7.0%, 1/1/15 (1) (ETM) 9,000 10,737
7.0%, 1/1/20 (1) (ETM) 10,000 12,135
Illinois Development Finance Auth.
PCR (Illinois Power Co.)
7.4%, 12/1/24 (1) 10,000 11,167
Illinois Development Finance Auth.
(Regency Park Project)
10.25%, 4/15/19 6,500 4,875
10.625%, 4/15/20 6,000 4,500
Illinois Health Facilities Auth.
Certificate of Beneficial Interest
(Adventist Living Centers)** 770 169
Illinois Health Facilities Auth.
(United Medical Center)
8.125%, 7/1/01 (Prere.) 3,235 3,926
8.375%, 7/1/01 (Prere.) 3,250 4,063
Loves Park First Mortgage
(Hoosier Care)
9.75%, 8/1/19 1,570 1,715
------------
STATE TOTAL 53,287
------------
- - --------------------------------------------------------------------------------
INDIANA (3.7%)
Indiana Health Facilities Finance Auth.
(Ancilla System Inc.)
7.375%, 7/1/23 11,400 13,130
Indiana State Office
Building Comm.
6.9%, 7/1/11 25,660 29,021
Indianapolis Local Public
Improvement Bond Bank
6.75%, 2/1/14 21,500 24,166
6.75%, 2/1/20 2,500 2,667
------------
STATE TOTAL 68,984
------------
- - --------------------------------------------------------------------------------
KENTUCKY (1.6%)
Kentucky Property &
Buildings Comm.
5.8%, 9/1/06 3,500 3,642
5.9%, 9/1/07 3,500 3,645
5.75%, 10/1/11 22,000 22,119
------------
STATE TOTAL 29,406
------------
- - --------------------------------------------------------------------------------
LOUISIANA (.7%)
West Feliciana Parish PCR
(Gulf States Utilities)
10.625%, 5/1/14 3,740 4,009
12.0%, 5/1/14 4,500 4,918
9.0%, 5/1/15 4,000 4,833
------------
STATE TOTAL 13,760
------------
- - --------------------------------------------------------------------------------
MASSACHUSETTS (9.4%)
Massachusetts GO
VRDO 2.25%, 3/1/94 10,000 10,000
5.25%, 2/1/08 35,575 34,885
6.0%, 6/1/11 14,750 15,043
Massachusetts Housing Finance
Agency
6.3%, 10/1/13 8,750 8,889
6.25%, 11/15/14 12,395 12,854
6.375%, 4/1/21 12,000 12,214
Massachusetts Industrial
Finance Agency
(Refusetech Inc. Project)
6.3%, 7/1/05 12,500 12,825
Massachusetts Water Resources Auth.
6.5%, 7/15/19 43,700 48,168
5.5%, 7/15/22 22,420 21,190
------------
STATE TOTAL 176,068
------------
- - --------------------------------------------------------------------------------
MICHIGAN (4.0%)
Michigan Public Power Agency
5.5%, 1/1/13 46,595 45,628
Michigan Housing Development
Auth. VRDO
2.45%, 3/1/94 8,000 8,000
Michigan Trunk Line
5.5%, 10/1/21 21,520 20,465
------------
STATE TOTAL 74,093
------------
- - --------------------------------------------------------------------------------
MINNESOTA (.3%)
Washington County Housing &
Redevelopment Auth.
(Woodland Park Project)
0.0%, 5/1/20 35,070 1,807
9.75%, 5/1/20 5,000 4,750
------------
STATE TOTAL 6,557
------------
- - --------------------------------------------------------------------------------
</TABLE>
44
<PAGE> 45
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
MISSISSIPPI (1.8%)
Claiborne County PCR
(Middle South Energy)
9.875%, 12/1/14 $ 21,000 $ 25,452
12.5%, 6/15/15 2,000 2,262
9.5%, 4/1/16 5,000 5,612
------------
STATE TOTAL 33,326
------------
- - --------------------------------------------------------------------------------
NEVADA (.6%)
Humbolt County PCR
(Idaho Power Co.)
8.3%, 12/1/14 9,100 10,978
------------
- - --------------------------------------------------------------------------------
NEW HAMPSHIRE (.3%)
New Hampshire Health & Higher
Education
(Catholic Medical Center)
6.0%, 7/1/17 6,580 6,332
------------
- - --------------------------------------------------------------------------------
NEW JERSEY (4.6%)
New Jersey Sports & Exposition Auth.
6.5%, 3/1/13 15,000 16,888
New Jersey Transportation Trust Fund
3.5%, 6/15/95 20,000 20,054
New Jersey Turnpike Auth.
6.5%, 1/1/16 44,340 49,811
------------
STATE TOTAL 86,753
------------
- - --------------------------------------------------------------------------------
NEW MEXICO (.9%)
Chaves County Hosp. Rev.
(Eastern Medical Center)
7.25%, 12/1/22 15,980 16,997
------------
- - --------------------------------------------------------------------------------
NEW YORK (15.9%)
Glencove Industrial Development Auth.
(Regency at Glencove Project)
9.5%, 7/1/12 10,000 10,480
Metropolitan Transit Auth.
7.375%, 7/1/08 22,870 26,771
5.75%, 7/1/15 5,500 5,446
Nassau County GO TOB VRDO
2.4%, 6/15/94 3,500 3,500
New York City GO
6.375%, 8/1/05 18,500 19,241
6.375%, 8/1/06 4,000 4,187
5.75%, 8/15/08 15,000 14,676
6.0%, 5/15/09 7,245 7,208
5.5%, 10/1/09 7,430 7,040
5.75%, 8/15/10 15,000 14,553
New York City Municipal
Water Auth.
5.375%, 6/15/07 17,690 17,647
6.0%, 6/15/17 9,825 9,952
5.5%, 6/15/19 8,500 8,185
New York Medical Care Facilities
5.25%, 2/15/07 8,700 8,329
5.25%, 2/15/08 11,875 11,343
5.375%, 2/15/14 20,000 18,732
New York State Dormitory Auth.
(City Univ.)
6.375%, 7/1/08 3,150 3,349
7.5%, 7/1/10 5,500 6,549
(State Univ.)
7.5%, 5/15/13 10,250 12,386
New York State Housing
Finance Agency
5.625%, 3/15/09 10,435 10,294
New York State Local Govt.
Assistance Corp.
7.0%, 4/1/10 8,550 9,582
5.625%, 4/1/13 6,000 5,927
6.875%, 4/1/19 23,215 25,849
5.0%, 4/1/23 10,000 8,959
Triborough Bridge & Tunnel Auth.
(General Purpose Rev.)
6.2%, 1/1/07 (3) 9,000 9,699
5.0%, 1/1/17 3,000 2,741
(Convention Center Project)
7.25%, 1/1/10 13,500 15,570
------------
STATE TOTAL 298,195
------------
- - --------------------------------------------------------------------------------
NORTH CAROLINA (2.0%)
Charlotte-Mecklenburg Hosp. Auth.
5.75%, 1/1/12 3,500 3,595
Haywood County PCR VRDO
(Champion International)
3.84%, 12/1/94* 7,600 7,600
North Carolina Eastern Municipal
Power Agency
5.0%, 1/1/17 (ETM) 6,500 6,064
6.5%, 1/1/18 3,335 3,607
6.5%, 1/1/18 (ETM) 6,665 7,563
5.0%, 1/1/20 (ETM) 10,385 9,591
------------
STATE TOTAL 38,020
------------
- - --------------------------------------------------------------------------------
OHIO (.7%)
Cuyahoga Hosp. Improvement
Board VRDO
(St. Lukes Hosp.)
2.5%, 3/1/94 1,500 1,500
Erie County IDR
(Scott Paper)
8.1%, 12/15/09 1,000 1,017
Lucas County Hosp. Facility
(Flower Memorial Hosp.)
8.125%, 12/1/11 8,900 10,285
------------
STATE TOTAL 12,802
------------
- - --------------------------------------------------------------------------------
</TABLE>
45
<PAGE> 46
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
PENNSYLVANIA (12.2%)
Langhorne Higher Education
& Health Auth.
(Lower Bucks Hosp.)
7.3%, 7/1/12 $ 4,500 $ 4,900
7.35%, 7/1/22 2,500 2,730
Montgomery County Higher
Education & Health Auth.
(Brittney Point Project)
8.5%, 1/1/22 5,000 5,428
Pennsylvania COP
5.4%, 7/1/09 (2) 25,000 24,946
Pennsylvania Economic
Development Financing Auth.
6.5%, 1/1/13 8,500 8,381
6.6%, 1/1/19 6,500 6,382
Pennsylvania Housing
Finance Agency
7.6%, 7/1/13 10,000 10,956
Pennsylvania Intergovernmental
Cooperative Auth.
5.25%, 6/15/06 (3) 18,310 18,389
Pennsylvania Turnpike Comm.
5.5%, 12/1/17 17,735 17,096
Philadelphia Gas Works Rev.
7.7%, 6/15/01 (Prere.) 1,255 1,497
6.375%, 7/1/26 26,715 27,395
Philadelphia Hosp. & Higher
Education Facilities
(Childrens Seashore Hosp.)
7.0%, 8/15/12 3,540 3,806
7.0%, 8/15/17 1,000 1,064
7.0%, 8/15/22 500 532
(Graduate Hosp.)
7.25%, 7/1/10 15,000 16,305
Philadelphia Municipal Auth.
6.125%, 7/15/08 4,000 3,883
6.25%, 7/15/13 2,785 2,691
8.625%, 11/15/16 1,600 1,712
6.3%, 7/15/17 1,750 1,676
Philadelphia Water &
Sewer Rev.
9.1%, 10/1/95 (Prere.) 6,250 6,886
9.1%, 12/1/95 (Prere.) 9,650 10,711
Philadelphia Water &
Wastewater Rev.
7.0%, 6/15/10 (3) 20,000 23,533
7.0%, 6/15/11 (3) 4,900 5,774
5.5%, 6/15/14 (5) 5,650 5,515
Scranton--Lackawanna Health &
Welfare (Moses Taylor Hosp.)
8.5%, 7/1/20 14,375 16,246
------------
STATE TOTAL 228,434
------------
- - --------------------------------------------------------------------------------
PUERTO RICO (.5%)
Puerto Rico Telephone Auth.
5.4%, 1/1/08 9,550 9,738
------------
- - --------------------------------------------------------------------------------
Rhode Island (.3%)
Convention Center Auth.
5.75%, 5/15/20 (2) 5,000 4,953
------------
- - --------------------------------------------------------------------------------
South Carolina (2.3%)
Piedmont Municipal Power
Agency Rev.
6.25%, 1/1/21 (3) 6,640 7,225
South Carolina Public Service Auth.
5.5%, 7/1/21 (1) 37,450 36,214
------------
STATE TOTAL 43,439
------------
- - --------------------------------------------------------------------------------
TEXAS (9.0%)
Austin Combined Utility System
6.0%, 11/15/13 14,505 15,015
Austin Water, Sewer &
Electric Rev.
14.0%, 11/15/01 200 304
Brazos River Auth. PCR
(Texas Utilities)
9.875%, 10/1/17 (3) 20,000 23,721
Harris County Hosp. Dist.
7.4%, 2/15/10 (2) 17,500 21,297
Harris County Toll Road
5.3%, 8/15/13 (2) 8,485 8,127
5.375%, 8/15/20 (2) 16,000 15,189
Houston Public Improvement
7.0%, 3/1/08 22,000 25,405
San Antonio Water Rev.
6.4%, 5/15/07 (3) 5,000 5,455
Texas GO
5.5%, 4/1/20 40,050 38,287
Univ. of Texas
6.5%, 7/1/11 14,285 15,381
------------
STATE TOTAL 168,181
------------
- - --------------------------------------------------------------------------------
VIRGINIA (.5%)
Alexandria Redevelopment &
Housing Auth.
(Portals West Project)
9.5%, 7/15/20 4,740 3,176
</TABLE>
46
<PAGE> 47
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Chesterfield County Mortgage Rev.
(Brandermill Woods Project)
10.25%, 7/1/15 $ 8,000 $ 6,640
------------
STATE TOTAL 9,816
------------
- - --------------------------------------------------------------------------------
WASHINGTON (1.9%)
Snohomish County Public Utility Dist.
5.5%, 1/1/20 (3) 37,000 35,329
------------
- - --------------------------------------------------------------------------------
WEST VIRGINIA (.5%)
West Virginia State Building Comm.
7.0%, 7/1/13 (1) 8,390 9,821
------------
- - --------------------------------------------------------------------------------
WISCONSIN (.5%)
Wisconsin GO
6.25%, 5/1/10 9,460 10,298
------------
- - --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,790,449) 1,888,513
------------
- - --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-.8%)
- - --------------------------------------------------------------------------------
Other Assets--Note B 65,027
Liabilities (79,175)
------------
(14,148)
- - --------------------------------------------------------------------------------
NET ASSETS (100%)
- - --------------------------------------------------------------------------------
Applicable to 173,739,472 outstanding
$.001 par value shares
(authorized 250,000,000 shares) $1,874,365
- - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $10.79
================================================================================
</TABLE>
+See Note A to Financial Statements.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
AT FEBRUARY 28, 1994, NET ASSETS CONSISTED OF:
- - --------------------------------------------------------------------------------
Amount Per
(000) Share
---------- ------
<S> <C> <C>
Paid in Capital $1,757,991 $10.12
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains--Note A 10,584 .06
Unrealized Appreciation of
Investments--Note D 105,790 .61
- - --------------------------------------------------------------------------------
NET ASSETS $1,874,365 $10.79
- - --------------------------------------------------------------------------------
</TABLE>
BAN = Bond Anticipation Note
COP = Certificate of Participation
CP = Commercial Paper
GO = General Obligation
IDR = Industrial Development Revenue
PCR = Pollution Control Revenue
RAN = Revenue Anticipation Note
RAW = Revenue Anticipation Warrant
TAN = Tax Anticipation Note
TOB = Tender Option Bond
TRAN = Tax Revenue Anticipation Note
VRDO = Variable Rate Demand Obligation
(ETM) = Escrowed to Maturity
(Prere.) = Prerefunded
(1) MBIA (Municipal Bond Insurance Association)
(2) AMBAC (AMBAC Indemnity Corporation)
(3) FGIC (Financial Guaranty Insurance Company)
(4) FSA (Financial Security Assurance)
(5) CGI (Capital Guaranty Insurance)
(6) BIGI (Bond Investors Guaranty Insurance)
(7) Connie Lee Inc.
*Put Option Obligation
**Non-Income Producing Security
47
<PAGE> 48
CHAIRMAN'S LETTER
- - --------------------------------------------------------------------------------
FELLOW SHAREHOLDER:
The six months ended February 28, the first half of the 1994 fiscal year for
Vanguard Municipal Bond Fund, witnessed something we haven't seen much of since
1987: rising interest rates. As a result, the prices of municipal bonds of all
maturities (except for short-term notes) moved marginally lower.
This environment, of course, impacted each of the Fund's seven Portfolios,
with the declines in net asset values reflected in the table on page 2. (The
value of our Money Market Portfolio, as you would expect, remained constant, at
$1.00 per share.) While fluctuating asset values are part and parcel of bond
investing, the Vanguard Portfolios, virtually across the board, remained fully
competitive with--and in most cases exceeded-- the returns achieved by other
municipal bond mutual funds with comparable maturity structures. What is more,
our Portfolios remain virtually peerless in the field with respect to their
investment quality, as shown in the second column of the table.
The basic benchmark for the bond market is the long-term U.S. Treasury
bond. During the past six months, its yield rose from 5.7% at the start of the
period to 6.3% at its conclusion. This yield change engendered a decline of
almost -7% in the Treasury bond's price. I'm happy to report that the
tax-exempt bond market fared a good bit better, with the yield on long-term
high-grade municipal bonds rising from 5.2% to 5.5%, reflected in a price
decline of about -4%.
When all was said and done, the dip in the prices of long-term municipal
bonds during the past six months simply reflected a retracement of their rise
during the prior six-month period. As a result (after adjustment for net
capital gains distributions on December 30, 1993), the net asset values of each
of our "variable" net asset value Portfolios were within 0.3% to 1.0% of their
values one year ago, on February 28, 1993.
The relative strength in the municipal bond market was a
manifestation--predictable, I think-- of the market situation we described to
you in our Annual Report for fiscal 1993. Pointing to the fact that "relative
values in tax-exempt bonds are as great as they have been for two decades," we
concluded that "the ability of top-tax-bracket investors to earn over 50% more
after-tax income. . . is unlikely to persist indefinitely."
The bond market's performance during the past six months nicely reflects
how fortuitous that prediction was. But the tax-exempt advantage, while
narrowed, still remains. When I wrote to you six months ago, the 20-year U.S.
Treasury bond provided an after-tax yield of 3.4% (for investors in the highest
marginal tax bracket), compared to 5.3% for the most comparable municipal
bond--a "spread" of +1.9% for the tax-exempt bond. On February 28, 1994, the
respective figures were 3.8% and 5.5%--a favorable spread of +1.7%.
The weakness in the tax-exempt bond market has, sadly but all too
typically, resulted in higher liquidations of the shares of municipal bond
funds, often engendered by "market timers" who seem to believe that they can
predict the future course of interest rates with pinpoint accuracy. I should
tell you two things: (1) liquidations in the Vanguard Municipal Bond Fund have
remained modest; and (2) as a matter of policy, we retain a short-term reserve
position equal to at least 8% of each Portfolio's net assets against the
possibility that, despite all of our importunings, a large number of
shareholders avail themselves of the redemption privilege. In any event, I urge
you to own the Vanguard Portfolio (or combination of Portfolios) that meets
your longer-term risk-reward objectives and, then, to "stay the course."
Sincerely,
/S/ JOHN C. BOGLE
- - ---------------------
John C. Bogle
Chairman of the Board
March 23, 1994
1
<PAGE> 49
<TABLE>
<CAPTION>
PORTFOLIO SUMMARY
- - ------------------------------------------------------------------------------
Net Asset Value
Per Share
------------------------------
Average Average February August February
Portfolio Maturity Quality 28, 1993 31, 1993 28, 1994
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHORTER-TERM
MONEY MARKET . . . . 66 DAYS MIG 1 $ 1.00 $ 1.00 $ 1.00
SHORT-TERM . . . . . 455 DAYS Aa1 15.71 15.63 15.55
LIMITED-TERM . . . . 2.9 YEARS Aa 10.83 10.80 10.70
- - --------------------------------------------------------------------------------
LONGER-TERM
INTERMEDIATE-TERM . . 6.7 YEARS Aa $13.37 $13.45 $13.26
INSURED LONG-TERM . . 12.0 YEARS Aaa 12.75 12.89 12.48
LONG-TERM . . . . . . 12.4 YEARS Aa3 11.26 11.38 11.00
HIGH-YIELD . . . . . 11.2 YEARS A1 11.06 11.17 10.79
</TABLE>
<TABLE>
<CAPTION>
SEC
Total Return Current
12-Month 12-Month ------------------ Annualized
Portfolio Capital Gains Dividends 6 Months 12 Months Yield*
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHORTER-TERM
MONEY MARKET . . . . -- $.024 +1.2% +2.4% 2.40%
SHORT-TERM . . . . . $.020 .560 +1.3 +2.7 2.90
LIMITED-TERM . . . . .022 .464 +1.4 +3.3 3.55
- - --------------------------------------------------------------------------------
LONGER-TERM
INTERMEDIATE-TERM . . $.076 $.692 +1.7% +5.0% 4.52%
INSURED LONG-TERM . . .176 .707 +0.9 +4.9 4.99
LONG-TERM . . . . . . .205 .617 +1.1 +5.1 5.07
HIGH-YIELD . . . . . .214 .645 +1.3 +5.4 5.35
</TABLE>
*Yield for Money Market Portfolio is a 7-day yield. All others are 30-day
yields.
AVERAGE ANNUAL TOTAL RETURNS--THE CURRENT YIELDS NOTED IN THE TABLE ABOVE ARE
CALCULATED IN ACCORDANCE WITH SEC GUIDELINES. THE AVERAGE ANNUAL TOTAL RETURNS
FOR THE PORTFOLIOS (PERIODS ENDED DECEMBER 31, 1993) ARE AS FOLLOWS:
<TABLE>
<CAPTION>
TOTAL RETURN 10-YEAR RETURN
---------------------------- -----------------
PORTFOLIO (INCEPTION DATE) 1 YEAR 5 YEARS 10 YEARS INCOME CAPITAL
- - ------------------------------ -------- ------- -------- ------ -------
<S> <C> <C> <C> <C> <C>
MONEY MARKET (6/10/80) + 2.41% + 4.42% + 4.76% +4.76% 0.00%
SHORT-TERM (9/1/77) + 3.82 + 5.87 + 6.02 +5.53 +0.49
LIMITED-TERM (8/31/87) + 6.31 + 7.45 + 7.33* +5.84* +1.49*
INTERMEDIATE-TERM (9/1/77) +11.55 + 9.94 +10.37 +7.36 +3.01
INSURED LONG-TERM (9/30/84) +13.09 +10.46 +11.27* +7.62* +3.65*
LONG-TERM (9/1/77) +13.45 +10.89 +11.28 +7.91 +3.37
HIGH-YIELD (12/27/78) +12.66 +10.81 +11.57 +8.18 +3.39
</TABLE>
THESE DATA REPRESENT PAST PERFORMANCE. THE INVESTMENT RETURN AND PRINCIPAL
VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT INVESTORS' SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. AN INVESTMENT IN THE MONEY
MARKET PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT, AND
THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
*Performance figures since inception.
2
<PAGE> 50
REPORT FROM THE INVESTMENT ADVISER
* THE FAT LADY SANG
All good things must come to an end, and certainly the protracted bull market
in bonds is no exception to the rule. For most of the 1980s and 1990s, market
participants have enjoyed generally declining interest rates that have buoyed
bond prices and rewarded those investors willing to take extra risk by
extending their holdings "out along the yield curve." One severe reversal
interrupted the "party" in 1987, when interest rates spiked sharply higher
setting off a panic among many bond mutual fund investors. Otherwise, benign
markets have ruled the day.
A milder version of the spike (a blip?) in interest rates occurred at the
end of our most recent semi-annual reporting period, specifically during
February 1994. At that time, the Federal Reserve Open Market Committee signaled
its concern over potentially worsening inflation by incrementally tightening
monetary policy. It was the first such move toward monetary restraint in five
years, and the unit of magnitude (of tightening) chosen was the smallest amount
the Fed could have effected--i.e., 1/4 of 1% in the Federal Funds Rate.
The markets "were not amused." Investors realized that the Federal Reserve
would never confine its efforts to slow economic growth to a mere 25 basis
points. Such a diminutive move would have negligible impact, if any, on either
aggregate demand or inflation. So, participants perceived the February 4
tightening as the first of (what likely will turn out to be) many such moves.
Hence, intermediate- and long-term bonds began to reflect, via falling prices,
expectations of continued rising short-term interest rates. This may not be the
end of the extended rally in bond prices but it is certainly beginning to look
that way.
In the immortal (if "politically incorrect") words of Yogi Berra, "It's
not over 'til the fat lady sings," and we suspect we've just heard,
metaphorically speaking, a fairly loud and tearful aria. Obviously, only time
will tell. But the "$64,000 question" confronting investors today is, "How bad
will it get, and how long will it last?" We believe that the worst is probably
already behind us, but such forecasts are at best uncertain.
* SIX-MONTH REVIEW
Interest rates began the fiscal period benefiting from a continuation of the
favorable historical market conditions. A garden-variety Aa-rated (Moody's)
long-term bond provided investors with a reasonably generous 5.6% yield to
maturity. As the bond market rallied in price over the subsequent two months,
yields dropped to the 5.2% level. This would prove to be the lowest point in
municipal yields since the 1970s, and arguably the low point in the current
"cycle."
In October 1993, tax-exempt interest rates began to move irregularly
higher. From a low of 5.2% on October 14, 1993, rates "popped" about 4/10 of 1%
higher, to 5.6%, within the space of one month. Thereafter, rates fluctuated
within a fairly narrow range until February 1994, when the Federal Reserve
initiated its program of restraint. Among money market and short-term
securities, yields fluctuated within a fairly narrow range, except for the end
of the year, when technical factors caused temporarily volatile changes.
Vanguard investors may remember our last annual letter to shareholders, in
which we cited the voluminous amount of supply of new issues that had come to
market in 1993. That "bloat" continued into the new fiscal year. By virtually
any standard, calendar 1993 smashed all previous records for new bond issuance.
Were it not for the extremely favorable market conditions, led by U.S.
Treasury notes and bonds, such a glut of new bonds surely would have prompted a
sizable back-up in interest rates. As it turned out, the bulge in municipal
supply merely slowed the market's price appreciation.
* YOUR PORTFOLIOS
Given the recent adversity in the market, it would be unreasonable to expect
returns to emulate the "bounty" produced during previous reporting periods.
Indeed, the returns earned so far this fiscal year are at best "modest" by
historical standards. The "rising tide" that lifted all returns in the distant
past apparently has ebbed in 1994. Details of the Portfolios' returns are given
in the Chairman's letter.
(continued)
3
<PAGE> 51
In general, it's fair to say that each Portfolio produced total returns
consistent with its risk profile (i.e., the "falling tide" lowered all "ships"
proportionately rather than equally). On the positive side, during 1993 and
again in 1994, we took steps to shorten moderately the price sensitivity of
each Portfolio. Consequently, our Portfolios have responded less to rising
interest rates than they did to falling interest rates. So, we can offer
shareholders some consolation. During these tougher times, the Portfolios are
better structured to withstand adversity, and in so doing ought to sacrifice
relatively less in net asset value. Over time, this strategy, if successful,
should manifest itself in gradual additions to our Portfolios' relative
performance leadership. In the meantime, we will continue to pursue our other
long-term strategies. In a nutshell, they are:
* Identify and overweight sectors with improving credit fundamentals
and, alternatively, avoid the "barkers." Such activities include
sectors as disparate as hospital bonds and state-specific bonds.
* Exploit the continued affordability of purchasing call protection.
Our intermediate- and longer-term portfolios have been purged over
time of holdings that suffer from vulnerability to early redemption.
These securities may be trading at a substantial premium over par or
have a dwindling number of years of call protection remaining
(new-issue bonds typically start with 10 years).
* Exploit the very positive "slope" of the yield curve, especially
among money market, short-term, and intermediate-term fixed-income
securities. Securities of ascending maturity offer increasing levels
of yield. The incremental increase is particularly large among the
securities starting under one year to maturity and extending out to
ten years. Extra yield, other things being equal, provides a steady
and attractive stream of income to investors.
* Manage the average quality of the Portfolios. The yield differential
among bonds of varying quality fluctuates in sympathy with the
business cycle (simplistically, municipal bonds' credit quality tends
to thrive when the economy does well). When economic times get tough,
opportunities arise to judiciously lower the average quality of the
Portfolios at "friendly" increments in yield. Conversely, when the
economy is doing well there are very few incentives to dip into
"lower-investment-grade" territory. That's where we are today.
* Identify and exploit those times when municipal bond prices get out
of synch with other broad fixed-income markets. We are currently in
such a period and have been since early last year. Municipal
securities, given marginal tax rates, are extraordinarily attractive.
As always, we also will manage your Portfolios with an eye toward minimizing
realized capital gains, which are taxable. After a protracted interval of
sharply rising bond prices, this endeavor at best is difficult to achieve.
Indeed, if redemptions occur, the realization of capital gains is all but
unavoidable. Nevertheless, we intend to remain vigilant and look for
opportunities to reduce or eliminate tax liabilities. Obviously, we will
continue to manage your money as if it were our own. Not surprisingly, some of
it is.
Sincerely,
I. A. MacKinnon, Senior Vice President
J. J. Jacobs, Vice President
P. E. Wisehaupt, Assistant Vice President
D. E. Hamlin, Assistant Vice President
C. M. Ryon, Assistant Vice President
Vanguard Fixed Income Group
March 18, 1994
4
<PAGE> 52
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
MONEY MARKET SHORT-TERM LIMITED-TERM
PORTFOLIO PORTFOLIO PORTFOLIO
- - -----------------------------------------------------------------------------------------------------
Six Months Ended February 28, 1994
(000)
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Interest . . . . . . . . . . . . . . . . . $48,375 $25,893 $39,353
- - -----------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . 48,375 25,893 39,353
- - -----------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services . . . . . . . 177 66 81
Management and Administrative . . . . . . 2,761 989 1,261
Marketing and Distribution . . . . . . . . 548 204 227
Taxes (other than income taxes)--Note A . . 145 55 68
Auditing Fees . . . . . . . . . . . . . . . 5 4 4
Shareholders' Reports . . . . . . . . . . . 34 45 59
Annual Meeting and Proxy Costs . . . . . . . 5 3 5
Directors' Fees and Expenses . . . . . . . . 11 4 5
- - -----------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . 3,686 1,370 1,710
- - -----------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . 44,689 24,523 37,643
- - -----------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold . . . . . . . . . (59) 369 496
Futures Contracts . . . . . . . . . . . . . -- -- --
- - -----------------------------------------------------------------------------------------------------
Realized Net Gain (Loss) . . . . . . (59) 369 496
- - -----------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION)
Investment Securities . . . . . . . . . . . -- (5,881) (14,516)
Futures Contracts . . . . . . . . . . . . . -- -- (27)
- - -----------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation
(Depreciation) . . . . . . . . . . -- (5,881) (14,543)
- - -----------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations . . . . $44,630 $19,011 $23,596
- - -----------------------------------------------------------------------------------------------------
</TABLE>
The Statement of Net Assets, an integral part of the financial statements for
each of the Vanguard Municipal Bond Fund Portfolios, is included as an insert
to this Report.
5
<PAGE> 53
STATEMENT OF OPERATIONS (continued)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSURED
INTERMEDIATE-TERM LONG-TERM LONG-TERM HIGH-YIELD
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- - -------------------------------------------------------------------------------------------------------------------------
Six Months Ended February 28, 1994
(000)
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Interest . . . . . . . . . . . . . . . . . $136,146 $61,208 $30,988 $56,687
- - -------------------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . 136,146 61,208 30,988 56,687
- - -------------------------------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services . . . . . . . 244 107 55 94
Management and Administrative . . . . . . 3,760 1,582 811 1,386
Marketing and Distribution . . . . . . . . 582 224 110 203
Taxes (other than income taxes)--Note A . . 199 85 43 74
Auditing Fees . . . . . . . . . . . . . . . 6 4 4 4
Shareholders' Reports . . . . . . . . . . . 172 64 34 68
Annual Meeting and Proxy Costs . . . . . . . 14 4 1 4
Directors' Fees and Expenses . . . . . . . . 15 6 3 6
- - -------------------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . 4,992 2,076 1,061 1,839
- - -------------------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . 131,154 59,132 29,927 54,848
- - -------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold . . . . . . . . . 4,963 20,109 22,530 40,256
Futures Contracts . . . . . . . . . . . . . (9,602) (7,462) (4,505) (6,883)
- - -------------------------------------------------------------------------------------------------------------------------
Realized Net Gain (Loss) . . . . . . (4,639) 12,647 18,025 33,373
- - -------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION)
Investment Securities . . . . . . . . . . . (79,423) (70,571) (46,500) (81,566)
Futures Contracts . . . . . . . . . . . . . 34,736 17,550 11,515 18,521
- - -------------------------------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation
(Depreciation) . . . . . . . . . . (44,687) (53,021) (34,985) (63,045)
- - -------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations . . . . $ 81,828 $18,758 $12,967 $25,176
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 54
STATEMENT OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET SHORT-TERM
PORTFOLIO PORTFOLIO
- - -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED Year Ended SIX MONTHS ENDED Year Ended
FEBRUARY 28, 1994 August 31, 1993 FEBRUARY 28, 1994 August 31, 1993
(000) (000) (000) (000)
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . $ 44,689 $ 82,052 $ 24,523 $ 45,282
Realized Net Gain (Loss) . . . . . . . . . . (59) (46) 369 2,134
Change in Unrealized Appreciation
(Depreciation) . . . . . . . . . . . . . . -- -- (5,881) 444
- - -------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations . . . . 44,630 82,006 19,011 47,860
- - -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . (44,689) (82,052) (24,523) (45,282)
Realized Net Gain . . . . . . . . . . . . . -- -- (1,836) (3,073)
- - -------------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . (44,689) (82,052) (26,359) (48,355)
- - -------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued --Regular . . . . . . . . . . . . 2,295,958 3,675,705 470,351 717,818
--In Lieu of Cash
Distributions . . . . . . . . 40,713 74,650 21,545 39,773
--Exchange . . . . . . . . . . . . 895,854 1,295,556 200,014 285,873
Redeemed --Regular . . . . . . . . . . . . (1,974,312) (3,305,334) (330,243) (460,866)
--Exchange . . . . . . . . . . . . (590,746) (1,367,784) (170,871) (314,312)
- - -------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) from Capital
Share Transactions . . . . . . . . 667,467 372,793 190,796 268,286
- - -------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) . . . . . 667,408 372,747 183,448 267,791
- - -------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . 3,537,829 3,165,082 1,328,905 1,061,114
- - -------------------------------------------------------------------------------------------------------------------------
End of Period . . . . . . . . . . . . . . . $4,205,237 $3,537,829 $1,512,353 $1,328,905
=========================================================================================================================
(1) Distributions Per Share
Net Investment Income . . . . . . . . . $ .012 $ .025 $ .267 $ .609
Realized Net Gain . . . . . . . . . . . -- -- $ .020 $ .043
- - -------------------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . 3,191,812 4,971,261 42,909 64,169
Issued in Lieu of Cash Distributions . . 40,713 74,650 1,380 2,543
Redeemed . . . . . . . . . . . . . . . . (2,565,058) (4,673,118) (32,075) (49,559)
- - -------------------------------------------------------------------------------------------------------------------------
667,467 372,793 12,214 17,153
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 55
STATEMENT OF CHANGES IN NET ASSETS (continued)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED-TERM INTERMEDIATE-TERM
PORTFOLIO PORTFOLIO
- - -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED Year Ended SIX MONTHS ENDED Year Ended
FEBRUARY 28, 1994 August 31, 1993 FEBRUARY 28, 1994 August 31, 1993
(000) (000) (000) (000)
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . $ 37,643 $ 55,575 $ 131,154 $ 213,123
Realized Net Gain (Loss) . . . . . . . . . . 496 3,804 (4,639) 13,461
Change in Unrealized Appreciation
(Depreciation) . . . . . . . . . . . . . . (14,543) 20,118 (44,687) 205,764
- - -------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations . . . . 23,596 79,497 81,828 432,348
- - -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . (37,643) (55,575) (131,154) (213,123)
Realized Net Gain . . . . . . . . . . . . . (3,611) (4,543) (29,272) (30,946)
- - -------------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . (41,254) (60,118) (160,426) (244,069)
- - -------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued --Regular . . . . . . . . . . . . 432,072 778,572 697,925 1,602,893
--In Lieu of Cash
Distributions . . . . . . . . 32,676 48,253 124,971 191,081
--Exchange . . . . . . . . . . . . 239,322 513,897 379,237 951,810
Redeemed --Regular . . . . . . . . . . . . (199,469) (289,711) (362,234) (529,240)
--Exchange . . . . . . . . . . . . (216, 801) (318,003) (421,107) (561,729)
- - -------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) from Capital
Share Transactions . . . . . . . . 287,800 733,008 418,792 1,654,815
- - -------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) . . . . . 270,142 752,387 340,194 1,843,094
- - -------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . 1,625,039 872,652 4,945,377 3,102,283
- - -------------------------------------------------------------------------------------------------------------------------
End of Period . . . . . . . . . . . . . . . $1,895,181 $1,625,039 $5,285,571 $4,945,377
=========================================================================================================================
(1) Distributions Per Share . . . . . . . .
Net Investment Income . . . . . . . . . $ .229 $ .485 $ .341 $ .710
Realized Net Gain . . . . . . . . . . . $ .022 $ .049 $ .076 $ .121
- - -------------------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . 62,107 120,587 79,661 195,262
Issued in Lieu of Cash Distributions . . 3,025 4,504 9,265 14,645
Redeemed . . . . . . . . . . . . . . . . (38,519) (56,687) (58,088) (83,536)
- - -------------------------------------------------------------------------------------------------------------------------
26,613 68,404 30,838 126,371
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 56
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSURED LONG-TERM LONG-TERM HIGH-YIELD
PORTFOLIO PORTFOLIO PORTFOLIO
- - -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED Year Ended ENDED Year Ended ENDED Year Ended
FEBRUARY 28, August 31, FEBRUARY 28, August 31, FEBRUARY 28, August 31,
1994 1993 1994 1993 1994 1993
(000) (000) (000) (000) (000) (000)
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . $ 59,132 $ 118,583 $ 29,927 $ 60,501 $ 54,848 $ 104,869
Realized Net Gain (Loss) . . . . . . . . . . 12,647 24,073 18,025 11,304 33,373 23,484
Change in Unrealized
Appreciation (Depreciation) . . . . . . . (53,021) 112,357 (34,985) 57,729 (63,045) 84,289
- - -----------------------------------------------------------------------------------------------------------------------------
Net Increase in Net
Assets Resulting from
Operations. . . . . . . . . . . . . . 18,758 255,013 12,967 129,534 25,176 212,642
- - -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . (59,132) (118,583) (29,927) (60,501) (54,848) (104,869)
Realized Net Gain . . . . . . . . . . . . . (29,332) (32,418) (19,676) (25,424) (36,102) (36,892)
- - -----------------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . (88,464) (151,001) (49,603) (85,925) (90,950) (141,761)
- - -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued --Regular . . . . . . . . . . . . . 129,211 385,337 65,245 203,654 180,790 446,238
--In Lieu of Cash
Distributions . . . . . . . . . 62,415 106,732 37,027 64,397 68,182 106,880
--Exchange. . . . . . . . . . . . . 57,316 202,107 55,111 192,302 114,963 363,804
Redeemed --Regular . . . . . . . . . . . . . (111,605) (224,040) (72,537) (117,709) (138,945) (213,810)
--Exchange. . . . . . . . . . . . . (179,307) (327,085) (121,082) (217,918) (215,611) (348,358)
- - -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease)
from Capital Share
Transactions . . . . . . . . . . . . (41,970) 143,051 (36,236) 124,726 9,379 354,754
- - -----------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) . . . . . . . (111,676) 247,063 (72,872) 168,335 (56,395) 425,635
- - -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . 2,194,247 1,947,184 1,130,577 962,242 1,930,760 1,505,125
- - -----------------------------------------------------------------------------------------------------------------------------
End of Period . . . . . . . . . . . . . . . $2,082,571 $2,194,247 $1,057,705 $1,130,577 $1,874,365 $1,930,760
=============================================================================================================================
(1) Distributions Per Share
Net Investment Income . . . . . . . . . $ .351 $ .718 $ .307 $ .640 $ .317 $ .669
Realized Net Gain . . . . . . . . . . . $ .176 $ .203 $ .205 $ .285 $ .214 $ .254
- - -----------------------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . 14,494 47,371 10,584 36,086 26,629 75,005
Issued in Lieu of Cash
Distributions . . . . . . . . . . . . 4,871 8,660 3,267 5,925 6,175 9,977
Redeemed . . . . . . . . . . . . . . . . (22,668) (44,426) (17,055) (30,510) (31,944) (52,029)
- - -----------------------------------------------------------------------------------------------------------------------------
(3,303) 11,605 (3,204) 11,501 860 32,953
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 57
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
- - -----------------------------------------------------------------------------------------------------------------------------
For a Share Outstanding Throughout SIX MONTHS ENDED Year Ended August 31,
Each Period FEBRUARY 28, 1994 ----------------------------------------------------------
1993 1992 1991 1990 1989
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INVESTMENT OPERATIONS ----- ----- ----- ----- ----- -----
Net Investment Income . . . . . . . . . . . .012 .025 .035 .050 .057 .060
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . -- -- -- -- -- --
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS . .012 .025 .035 .050 .057 .060
- - -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . (.012) (.025) (.035) (.050) (.057) (.060)
Distributions from Realized Capital Gains . . -- -- -- -- -- --
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS . . . . . . . . (.012) (.025) (.035) (.050) (.057) (.060)
- - -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . +1.17% +2.51% +3.54% +5.08% +5.90% +6.18%
- - -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . $4,205 $3,538 $3,165 $2,709 $2,488 $2,109
Ratio of Expenses to Average Net Assets . . . . .19%* .20% .23% .25% .25% .27%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . 2.35%* 2.48% 3.45% 4.94% 5.72% 5.99%
Portfolio Turnover Rate . . . . . . . . . . . . N/A N/A N/A N/A N/A N/A
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM PORTFOLIO
- - -----------------------------------------------------------------------------------------------------------------------------
For a Share Outstanding Throughout SIX MONTHS ENDED Year Ended August 31,
Each Period FEBRUARY 28, 1994 ---------------------------------------------------------
1993 1992 1991 1990 1989
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $15.63 $15.64 $15.53 $15.35 $15.30 $15.21
----- ----- ----- ----- ----- -----
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . .267 .609 .720 .861 .906 .880
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . (.060) .033 .171 .180 .050 .090
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS . . . .207 .642 .891 1.041 .956 .970
- - -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . (.267) (.609) (.720) (.861) (.906) (.880)
Distributions from Realized Capital Gains . . (.020) (.043) (.061) -- -- --
TOTAL DISTRIBUTIONS . . . . . . . . . . (.287) (.652) (.781) (.861) (.906) (.880)
- - -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $15.55 $15.63 $15.64 $15.53 $15.35 $15.30
=============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . +1.33% +4.18% +5.87% +6.96% +6.42% +6.56%
- - -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . $1,512 $1,329 $1,061 $841 $751 $700
Ratio of Expenses to Average Net Assets . . . . .19%* .20% .23% .25% .25% .27%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . 3.45%* 3.88% 4.58% 5.55% 5.90% 5.77%
Portfolio Turnover Rate . . . . . . . . . . . . 32%* 46% 60% 104% 78% 54%
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Annualized.
10
<PAGE> 58
<TABLE>
<CAPTION>
LIMITED-TERM PORTFOLIO
- - -----------------------------------------------------------------------------------------------------------------------------
For a Share Outstanding Throughout SIX MONTHS ENDED Year Ended August 31,
Each Period FEBRUARY 28, 1994 ---------------------------------------------------------
1993 1992 1991 1990 1989
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $10.80 $10.64 $10.43 $10.17 $10.14 $10.10
INVESTMENT OPERATIONS ------ ------ ------ ------ ------ ------
Net Investment Income . . . . . . . . . . . .229 .485 .541 .614 .643 .638
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . (.078) .209 .271 .265 .041 .046
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . . . .151 .694 .812 .879 .684 .684
- - -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . (.229) (.485) (.541) (.614) (.643) (.638)
Distributions from Realized Capital Gains . . (.022) (.049) (.061) (.005) (.011) (.006)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . . . (.251) (.534) (.602) (.619) (.654) (.644)
- - -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $10.70 $10.80 $10.64 $10.43 $10.17 $10.14
=============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . +1.39% +6.68% +8.01% +8.88% +6.93% +6.98%
- - -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . $1,895 $1,625 $873 $420 $245 $166
Ratio of Expenses to Average Net Assets . . . . .19%* .20% .23% .25% .25% .27%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . 4.27%* 4.50% 5.08% 5.91% 6.31% 6.33%
Portfolio Turnover Rate . . . . . . . . . . . . 11%* 20% 37% 57% 55% 88%
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM PORTFOLIO
- - -----------------------------------------------------------------------------------------------------------------------------
For a Share Outstanding Throughout SIX MONTHS ENDED Year Ended August 31,
Each Period FEBRUARY 28, 1994 ---------------------------------------------------------
1993 1992 1991 1990 1989
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $13.45 $12.85 $12.41 $11.90 $12.08 $11.71
INVESTMENT OPERATIONS ------ ------ ------ ------ ------ ------
Net Investment Income . . . . . . . . . . . .341 .710 .747 .791 .822 .839
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . (.114) .721 .516 .605 (.114) .370
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . .227 1.431 1.263 1.396 .708 1.209
- - -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . (.341) (.710) (.747) (.791) (.822) (.839)
Distributions from Realized Capital Gains . . (.076) (.121) (.076) (.095) (.066) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . (.417) (.831) (.823) (.886) (.888) (.839)
- - -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $13.26 $13.45 $12.85 $12.41 $11.90 $12.08
=============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . +1.67% +11.54% +10.52% +12.15% +6.05% +10.63%
- - -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . $5,286 $4,945 $3,102 $2,006 $1,259 $1,005
Ratio of Expenses to Average Net Assets . . . . .19%* .20% .23% .25% .25% .27%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . 5.09%* 5.41% 5.91% 6.49% 6.83% 7.03%
Portfolio Turnover Rate . . . . . . . . . . . . 10%* 15% 32% 27% 54% 56%
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Annualized.
11
<PAGE> 59
FINANCIAL HIGHLIGHTS (continued)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSURED LONG-TERM PORTFOLIO
- - -----------------------------------------------------------------------------------------------------------------------------
For a Share Outstanding Throughout SIX MONTHS ENDED Year Ended August 31,
Each Period FEBRUARY 28, 1994 ---------------------------------------------------------
1993 1992 1991 1990 1989
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $12.89 $12.28 $11.74 $11.25 $11.67 $11.14
INVESTMENT OPERATIONS ------ ------ ------ ------ ------ ------
Net Investment Income . . . . . . . . . . . .351 .718 .768 .775 .805 .833
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . (.234) .813 .616 .615 (.267) .530
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . .117 1.531 1.384 1.390 .538 1.363
- - -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . (.351) (.718) (.768) (.775) (.805) (.833)
Distributions from Realized Capital Gains . . (.176) (.203) (.076) (.125) (.153) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . (.527) (.921) (.844) (.900) (.958) (.833)
- - -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $12.48 $12.89 $12.28 $11.74 $11.25 $11.67
=============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . +.87% +13.06% +12.22% +12.79% +4.74% +12.57%
- - -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . $2,083 $2,194 $1,947 $1,551 $1,122 $934
Ratio of Expenses to Average Net Assets . . . . .19%* .20% .23% .25% .25% .27%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . 5.50%* 5.77% 6.34% 6.77% 6.99% 7.24%
Portfolio Turnover Rate . . . . . . . . . . . . 12%* 30% 42% 33% 47% 36%
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LONG-TERM PORTFOLIO
- - -----------------------------------------------------------------------------------------------------------------------------
For a Share Outstanding Throughout SIX MONTHS ENDED Year Ended August 31,
Each Period FEBRUARY 28, 1994 ---------------------------------------------------------
1993 1992 1991 1990 1989
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $11.38 $10.95 $10.58 $10.13 $10.53 $10.04
INVESTMENT OPERATIONS ------ ------ ------ ------ ------ ------
Net Investment Income . . . . . . . . . . . .307 .640 .711 .722 .732 .760
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . (.175) .715 .561 .626 (.233) .490
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . .132 1.355 1.272 1.348 .499 1.250
- - -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . (.307) (.640) (.711) (.722) (.732) (.760)
Distributions from Realized Capital Gains . . (.205) (.285) (.191) (.176) (.167) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . (.512) (.925) (.902) (.898) (.899) (.760)
- - -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $11.00 $11.38 $10.95 $10.58 $10.13 $10.53
=============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . +1.11% +13.09% +12.60% +13.86% +4.88% +12.79%
- - -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . $1,058 $1,131 $962 $798 $683 $626
Ratio of Expenses to Average Net Assets . . . . .19%* .20% .23% .25% .25% .27%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . 5.44%* 5.81% 6.52% 7.09% 7.04% 7.33%
Portfolio Turnover Rate . . . . . . . . . . . . 33%* 36% 63% 62% 110% 99%
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Annualized.
12
<PAGE> 60
<TABLE>
<CAPTION>
HIGH-YIELD PORTFOLIO
- - -----------------------------------------------------------------------------------------------------------------------------
For a Share Outstanding Throughout SIX MONTHS ENDED Year Ended August 31,
Each Period FEBRUARY 28, 1994 -----------------------------------------------------------
1993 1992 1991 1990 1989
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $11.17 $10.76 $10.32 $9.90 $10.27 $9.73
INVESTMENT OPERATIONS ------ ------ ------ ------ ------ ------
Net Investment Income . . . . . . . . . . . .317 .669 .723 .732 .739 .752
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . (.166) .664 .546 .560 (.259) .540
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . .151 1.333 1.269 1.292 .480 1.292
- - -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . (.317) (.669) (.723) (.732) (.739) (.752)
Distributions from Realized Capital Gains . . (.214) (.254) (.106) (.140) (.111) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . (.531) (.923) (.829) (.872) (.850) (.752)
- - -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $10.79 $11.17 $10.76 $10.32 $9.90 $10.27
=============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . +1.32% +13.08% +12.81% +13.66% +4.82% +13.64%
- - -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . $1,874 $1,931 $1,505 $1,215 $962 $865
Ratio of Expenses to Average Net Assets . . . . .19%* .20% .23% .25% .25% .27%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . 5.76%* 6.15% 6.83% 7.34% 7.30% 7.43%
Portfolio Turnover Rate . . . . . . . . . . . . 39%* 34% 64% 58% 82% 80%
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Annualized.
13
<PAGE> 61
NOTES TO FINANCIAL STATEMENTS
Vanguard Municipal Bond Fund is registered under the Investment Company Act of
1940 as a diversified open-end investment company and consists of the Money
Market, Short-Term, Limited-Term, Intermediate-Term, Insured Long-Term,
Long-Term and High-Yield Portfolios. Each Portfolio invests in debt
instruments of municipal issuers; although each Portfolio maintains a
diversified schedule of investments, the issuers' abilities to meet their
obligations may be affected by economic and political developments in a
specific state or region.
* A. The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such
policies are consistently followed by the Fund in the preparation of financial
statements.
1. SECURITY VALUATION: Money Market Portfolio: investment securities are
stated at amortized cost which approximates market value. Other
Portfolios: municipal bonds are valued utilizing primarily the latest bid
prices or, if bid prices are not available, on the basis of valuations
based on a matrix system (which considers such factors as security prices,
yields, maturities and ratings), both as furnished by an independent
pricing service.
2. FEDERAL INCOME TAXES: Each Portfolio of the Fund intends to continue to
qualify as a regulated investment company and distribute all of its
income. Accordingly, no provision for Federal income taxes is required in
the financial statements.
3. FUTURES CONTRACTS: Each Portfolio of the Fund, except the Money Market
Portfolio, may utilize futures contracts to a limited extent. The primary
risks associated with the use of futures contracts are imperfect
correlation between the change in market value of the bonds held by a
Portfolio and the prices of futures contracts, and the possibility of an
illiquid market. Futures contracts are valued based upon their quoted
daily settlement prices. Fluctuations in the value of futures contracts
are recorded as unrealized appreciation (depreciation) until terminated at
which time realized gains (losses) are recognized.
Unrealized appreciation (depreciation) related to open futures contracts
is required to be treated as realized gain (loss) for Federal income tax
purposes.
4. DISTRIBUTIONS: Distributions from net investment income are declared on a
daily basis payable on the first business day of the following month.
Annual distributions from realized gains, if any, are recorded on the
ex-dividend date. Capital gains distributions are determined on a tax
basis and may differ from realized capital gains for financial reporting
purposes due to differences in the timing of realization of gains.
5. OTHER: Security transactions are accounted for on the date the securities
are purchased or sold. Costs used in determining realized gains and losses
on sales of investment securities are those of specific securities sold.
Premiums and original issue discounts are amortized and accreted,
respectively, to interest income over the lives of the respective
securities.
* B. The Vanguard Group, Inc. furnishes at cost investment advisory, corporate
management, administrative, marketing and distribution services. The costs of
such services are allocated to the Fund under methods approved by the Board of
Directors. The Fund has contributed capital aggregating $2,852,000 to Vanguard
(included in Other Assets), representing 14.3% of Vanguard's capitalization.
The Fund's officers and directors are also officers and directors of Vanguard.
14
<PAGE> 62
* C. During the six months ended February 28, 1994, purchases and sales of
investment securities other than temporary cash investments were:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------
(000)
-----------------------------
Portfolio Purchases Sales
- - ------------------------------------------------------------
<S> <C> <C>
SHORT-TERM $328,271 $172,449
LIMITED-TERM 330,221 90,671
INTERMEDIATE-TERM 635,319 243,602
INSURED LONG-TERM 122,135 225,738
LONG-TERM 171,212 265,908
HIGH-YIELD 353,472 448,152
- - ------------------------------------------------------------
</TABLE>
* D. At February 28, 1994, unrealized appreciation of investment securities for
financial reporting and Federal income tax purposes was:
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------
(000)
---------------------------------------------------
Net
Appreciated Depreciated Unrealized
Portfolio Securities Securities Appreciation
- - -----------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM $ 7,365 $ (1,704) $ 5,661
LIMITED-TERM 26,218 (3,234) 22,984
INTERMEDIATE-TERM 306,755 (8,685) 298,070
INSURED LONG-TERM 173,412 (2,002) 171,410
LONG-TERM 77,726 (3,785) 73,941
HIGH-YIELD 111,235 (13,171) 98,064
- - -----------------------------------------------------------------------------
</TABLE>
At February 28, 1994, the aggregate settlement value of short positions in U.S.
Treasury Bond, U.S. Treasury Note, 2 Year U.S. Treasury Note, and Municipal
Bond Index futures contracts expiring through June 1994, the related unrealized
appreciation (depreciation), and the market value of securities deposited as
initial margin for those contracts were:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------
(000)
-----------------------------------------------------
Market Value of
Aggregate Unrealized Securities
Settlement Appreciation Deposited as
Portfolio Value (Depreciation) Initial Margin
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
LIMITED-TERM $ 42,000 $ (27) $ 1,023
INTERMEDIATE-TERM 776,554 13,575 10,152
INSURED LONG-TERM 325,465 5,817 5,266
LONG-TERM 199,217 4,539 3,031
HIGH-YIELD 339,024 7,726 5,459
- - ---------------------------------------------------------------------------
</TABLE>
15
<PAGE> 63
THE VANGUARD FAMILY OF FUNDS
<TABLE>
<S> <C>
MONEY MARKET FUNDS VANGUARD
Vanguard Money Market Reserves MUNCIPAL BOND FUND
TAX-EXEMPT MONEY MARKET FUNDS
Vanguard Municipal Bond Fund-Money Market Portfolio
Vanguard State Tax-Free Funds (CA, NJ, OH, PA)
TAX-EXEMPT INCOME FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds (CA, FL, NJ, NY, OH, PA) [PHOTO]
FIXED INCOME FUNDS
Vanguard Admiral Funds
Vanguard Bond Index Fund
Vanguard Fixed Income Securities Fund
Vanguard Preferred Stock Fund
BALANCED FUNDS
Vanguard Asset Allocation Fund
Vanguard Balanced Index Fund
Vanguard STAR Fund
Vanguard/Wellesley Income Fund
Vanguard/Wellington Fund
SEMI-ANNUAL REPORT
EQUITY FUNDS FEBRUARY 28, 1994
GROWTH AND INCOME FUNDS
Vanguard Convertible Securities Fund
Vanguard Equity Income Fund
Vanguard Index Trust
Vanguard Quantitative Portfolios
Vanguard/Trustees' Equity Fund-U.S. Portfolio
Vanguard/Windsor Fund
Vanguard/Windsor II
GROWTH FUNDS
Vanguard/Morgan Growth Fund
Vanguard/PRIMECAP Fund
Vanguard U.S. Growth Portfolio
AGGRESSIVE GROWTH FUNDS
Vanguard Explorer Fund
Vanguard Specialized Portfolios
INTERNATIONAL FUNDS
Vanguard International Equity Index Fund
Vanguard International Growth Portfolio
Vanguard/Trustees' Equity Fund-International Portfolio
The Vanguard Group * Vanguard Financial Center Valley Forge, PA 19482
New Account Information: 1-(800) 662-7447 Shareholder Account Services: 1-(800)
662-2739
This Report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus. All Funds in the
Vanguard Family are offered by prospectus only.
Q952-02/94
</TABLE>
