<PAGE> 1
VANGUARD
MUNICIPAL BOND FUND
ANNUAL REPORT 1993
<PAGE> 2
A BRAVE NEW WORLD FOR INVESTING
With the clarity of hindsight, we can now see that the past two decades
composed one of the great cycles in the history of the financial markets, as
reflected in the chart below.
- - During the 1973-1982 decade, the nominal total returns (capital change
plus income) of stocks and bonds averaged only about +6% per year; cash
reserves averaged more than +8% annually. However, high inflation rates,
averaging 8.7% annually, devastated these nominal results. Real returns
(nominal returns less the inflation rate) for each of these three major
asset classes were actually negative.
- - During the 1983-1992 decade, quite the opposite situation prevailed.
Nominal returns for stocks and bonds were close to their highest levels
in history and forged well into double-digit territory. To make a good
investment environment even better, inflation was tame (averaging 3.8%
annually), and real returns were solidly positive.
[EDGAR REFERENCE -- A TALE OF TWO DECADES CHART]
This sharp contrast provides us with perspective for the decade that will end
in the year 2002. Some investors will fear a recurrence of the returns of the
first decade, while others will hope for a recurrence of the second; most will
likely anticipate something in between. Whatever the case, there are two
essential elements involved in considering your investment program in the light
of today's circumstances.
First, the yield of each investment class at the start of a decade has
had an important relationship to its future return. Yields were low when 1973
began, high when 1983 began, and are again low today. In fact, current income
yields are remarkably close to the levels of 20 years ago, as shown in the
following table.
<TABLE>
<CAPTION>
Income Yields (January 1)
-------------------------------------------------
1973 1983 1993 (9/30)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STOCKS 2.7% 4.9% 2.7%
BONDS 5.8 10.7 5.6
RESERVES 3.8 10.5 3.1
- -------------------------------------------------------------------------------------------
</TABLE>
But there is a second important element to consider: inflation. It got
progressively worse during most of the first decade, but got progressively
better in the second.
<TABLE>
<CAPTION>
1973 1981 1993 (9/30)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INFLATION 3.4% 12.4% 2.7%
- -------------------------------------------------------------------------------------------
</TABLE>
Today's low yield levels suggest that more modest nominal returns are in
prospect for the coming decade than in the 1980s; indeed, returns could
gravitate
(Please turn to inside back cover)
THE VANGUARD MUNICIPAL BOND FUND SEEKS TO PROVIDE THE HIGHEST LEVEL OF INCOME
THAT IS EXEMPT FROM FEDERAL INCOME TAXES, AND THAT IS CONSISTENT WITH BOTH
CONSESRVATION OF CAPITAL AND THE INVESTMENT POLICIES OF EACH OF ITS PORTFOLIOS:
MONEY MARKET - SHORT-TERM - LIMITED-TERM - INTERMEDIATE-TERM - INSURED LONG-TERM
- - LONG-TERM - HIGH-YIELD.
<PAGE> 3
CHAIRMAN'S LETTER
Fellow Shareholder:
The cyclical decline in interest rates continued--and indeed
accelerated--during the twelve months ended August 31, 1993, Vanguard Municipal
Bond Fund's 16th fiscal year. Lower yields drove the prices of tax-exempt bonds
higher, with our longer-term Portfolios benefiting more than our shorter-term
Portfolios. As rates fell, interest income was reduced, with the most immediate
impact felt in our Money Market and Short-Term Portfolios.
In this investment environment, each of the seven Vanguard Municipal Bond
Portfolios provided solid returns on an absolute basis, and generally superior
returns relative to those achieved by other comparable mutual funds. The table
below presents each Portfolio's total return, divided into its two components:
income return (reasonably predictable on a year-to-year basis) and capital
return (usually volatile, and may be either positive or negative).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Investment Returns
-----------------------------------------------
Twelve Months Ended August 31, 1993
-----------------------------------------------
Portfolio Income Capital Total
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET +2.5% -- +2.5%
SHORT-TERM +4.0 +0.2% +4.2
LIMITED-TERM +4.7 +2.0 +6.7
- ------------------------------------------------------------------------------------
INTERMEDIATE-TERM +5.8% +5.7% +11.5%
INSURED LONG-TERM +6.4 +6.7 +13.1
LONG-TERM +6.4 +6.7 +13.1
HIGH-YIELD +6.8 +6.3 +13.1
- ------------------------------------------------------------------------------------
</TABLE>
A detailed table showing per share net asset values, income dividends and any
capital gains distributions for the fiscal year, as well as current yields, is
presented at the conclusion of this letter.
[PHOTO - SEE EDGAR APPENDIX]
THE YEAR IN REVIEW
Our 1993 fiscal year was the fifth consecutive year of favorable markets--and
the third consecutive year of "double-digit" returns--for long-term bonds of
all stripes. Lower yields drove up the prices of municipal, corporate, and U.S.
Treasury bonds alike--although Treasuries registered the largest rate declines
and hence the greatest price appreciation. While the decline in short-term
rates was even steeper, the price impact on short-term bonds was greatly
moderated given their maturities.
The consensus holds that the rate decline is based on two primary factors:
(1) a sluggish economy that seems unable to provide the typical post-recession
snapback, which has led to limited demand for credit; and (2) the prospect that
inflation will remain subdued, leading to investor willingness to accept lower
"nominal" yields.
In any event, as shown in the chart on the following page, the five-year
period ended August 31, 1993, has witnessed a remarkably steady decline in
long-term tax-exempt rates, with the yield on high-grade 20-year municipal
bonds falling from 7.6% at the beginning of the period to 5.2% at the end.
For short-term rates, the decline during the same period was more pronounced,
with the yield on high-grade notes falling on balance from 5.7% to 2.5%.
(continued)
1
<PAGE> 4
[TAX-FREE YIELDS CHART - SEE EDGAR APPENDIX]
THE VANGUARD PORTFOLIOS
IN FISCAL 1993
Since each Portfolio is carefully fashioned to parallel the maturity structure
of the sector of the bond market in which it invests, our returns were quite
similar to those of comparable unmanaged indexes. The charts on pages 9-12
illustrate each Portfolio's comparative results over the past decade or since
inception. Indexes, of course, are theoretical constructs that, in effect,
pretend that the costs of fund investing--transaction costs, expenses of fund
administration, portfolio accounting, shareholder account maintenance, and so
on--simply do not exist. In the real world, of course, such costs cannot be
avoided.
Taking this cost factor into account, we believe that the returns of our
Portfolios were satisfactory. Indeed, our returns, on balance, continue to
remain well ahead of those of competitive mutual funds with roughly comparable
maturity and quality standards. The following table compares the twelve-month
total return of each Portfolio with its competitive norm.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Total Return
-------------------------------------------------------
Twelve Months Ended August 31, 1993
-------------------------------------------------------
Vanguard Average
Portfolio Fund Comparable Fund Difference
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET +2.5% +2.1% +0.4%
SHORT-TERM +4.2 +4.4* -0.2
LIMITED-TERM +6.7 +7.1* -0.4
- -----------------------------------------------------------------------------------
INTERMEDIATE-TERM +11.5% +10.3% +1.2%
INSURED LONG-TERM +13.1 +11.9 +1.2
LONG-TERM +13.1 +12.2 +0.9
HIGH-YIELD +13.1 +11.4 +1.7
- -----------------------------------------------------------------------------------
</TABLE>
*Adjusted for average maturity.
One major factor in our performance superiority is our exceptionally low
costs. The expense ratios (operating expenses as a percent of average net
assets) of our Portfolios remain far below those of our competitors, giving us
an important "built-in" advantage. For example, the average long-term municipal
bond fund has an annual expense ratio of 0.84%, compared to 0.20% for
Vanguard's Long-Term Portfolio. Thus, going into each year, we begin with an
expected advantage of around 0.60% (60 "basis points").
I should note that in rising markets some of our natural advantage is
eroded by our decision to carry 8% of total net assets in cash reserves for
each of our longer-term Portfolios. The reserves are designed to provide a
"margin of safety," furnishing some liquidity to handle possible redemptions of
fund shares when markets decline.
The other major factor in our superiority, of course, is our portfolio
management strategies. First, we have tended to maintain slightly longer bond
maturities than most of our competitors, which has a positive impact when
interest rates fall and a negative impact when rates rise. Second, our emphasis
on lower coupon bonds, while designed primarily to help maintain our dividends
when rates decline, added to our gains. One management strategy, however, had a
marginally negative effect on our performance. Our limited use of municipal
bond futures to exploit valuation disparities among various market segments
during fiscal 1993 has yet to bear fruit.
2
<PAGE> 5
I should note that these strategies apply primarily to our longer-term
Portfolios. In our shorter-term Portfolios, it is largely cost that carries the
day. For example, our Money Market Portfolio (designed, but not guaranteed, to
maintain a stable net asset value of $1.00 per share) provided a return of
+2.5% during the fiscal year, compared to an average of +2.1% for other
tax-exempt money market funds. This 40 basis point edge (nearly a 20% income
advantage) is accounted for entirely by our cost advantage of 48 basis points
over comparable competitors. In this lower interest-rate environment, 79 of 129
tax-exempt money market funds--nearly two of every three--now yield 1.99% or
less. It is hard to imagine what attraction such funds could possibly hold for
intelligent investors.
TAXABLE VS. TAX-EXEMPT YIELDS
As I noted earlier, the decline in yields on U.S. Treasury bonds has been
significantly larger than that on tax-exempt bonds. What makes this
juxtaposition so paradoxical is that it comes just as the maximum marginal
federal tax bracket has been raised from 31% to 39.6%--the highest rate since
1986. This should mean that the "spread" between taxable and tax-exempt rates
would widen; the fact is that it has narrowed. The result: tax-exempt income
today provides a singular advantage to investors in high tax brackets. This
table illustrates the difference on a net after-tax basis:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
August 31, 1993
------------------------
20-Year 90-Day
<S> <C> <C>
- ------------------------------------------------------------
U.S. TREASURY BOND
GROSS YIELD 5.7% 3.1%
TAX (39.6%) -2.3 -1.2
----- -----
NET YIELD 3.4% 1.9%
- ------------------------------------------------------------
HIGH-GRADE MUNICIPAL BOND
NET YIELD 5.3% 2.5%
- ------------------------------------------------------------
MUNICIPAL BOND ADVANTAGE +1.9% +0.6%
- ------------------------------------------------------------
</TABLE>
Admittedly, even the highest-quality insured municipal bond cannot quite match
the creditworthiness of a U.S. Treasury bond, and long-term municipal bonds are
usually callable after 10 years, a disadvantage not shared by Treasuries. So,
the yield comparison has a moderate structural bias in favor of municipals. But
the yield differential is hardly "moderate"--it is more like "day and night."
Suffice it to say that the ability of top-tax-bracket investors to earn over
50% more after-tax income with only a marginal sacrifice in quality is unlikely
to persist indefinitely. It is probably fair to say that relative values in
tax-exempt bonds are as great as they have been for two decades.
LOOKING AHEAD
The aggregate assets of all national municipal bond mutual funds now
total some $200 billion, and the funds have become among the largest
buyers and holders of tax-exempt securities. While, like all mutual funds,
municipal bond funds promise "liquidity on demand" to shareholders, it must be
clear that providing this liquidity depends on an orderly liquidation pattern
by investors. With the exception of the industry's experience during 1987's
sharp dip in bond prices, resulting from the upward spike in interest rates in
April and May of that year, the industry's handling of redemptions has been
flawless, and daily liquidity has been maintained without impacting the
marketplace.
And yet, with rates having come down so far and so fast, there is
always the risk of a sharp rebound. When that happens, investors who have
purchased municipal bond funds for the long term should not be concerned.
However, there appears to be an active body of short-term speculators who move
their money from long-term to short-term bonds at the proverbial drop of a hat.
You should know that at Vanguard we do our best to exclude these speculators:
we rigorously limit the frequency of inter-fund exchanges, and do not accept
business from known "market timers." As noted earlier, we also hold a mandatory
8% cash reserves position in each of our longer-term Portfolios to meet a
possible rise in liquidations.
If you are an investor who likes to speculate on interest rate changes, I
urge you to move your assets to one of our many competent competitors. If
3
<PAGE> 6
you are an investor who will respond with fright to any kind of reversal in the
rise of bond prices during the past five years, I urge you to shorten your
maturity profile. If you are a long-term investor--content that your needs for
capital stability (with commensurate income volatility) in our shorter-term
Portfolios and for income stability (with commensurate capital volatility) in
our longer-term Portfolios are being met--I urge you, once again, to "stay the
course."
Sincerely,
/s/ JOHN C. BOGLE
John C. Bogle
Chairman of the Board
September 13,1993
Note: Mutual fund data from Lipper Analytical Services, Inc.
A WORD ABOUT CAPITAL GAINS
DISTRIBUTIONS
You may recall that, during the rising bond markets of each of the past three
years, our longer-term Portfolios realized capital gains mostly in the range of
$.10 to $.20 per share. These amounts must, under Federal tax regulations, be
distributed to shareholders of our Portfolios as taxable capital gains.
I want to emphasize that it is not our objective to realize capital gains;
rather, these gains are a by-product of a number of factors, including, most
importantly: sharply rising municipal bond prices, bonds that are called or
refunded, and limited portfolio strategy shifts to capitalize on the relative
valuations of different market sectors.
While we will not know the exact amount of gain distributions for 1993
until October 31, it will hardly surprise you to know that we have again
realized gains. At the moment, the gains total about $.20 per share for the
Insured Long-Term, Long-Term, and High-Yield Portfolios. The numbers could rise
a bit; they are unlikely to get smaller. Shareholders of record on December 30,
1993, will receive these distributions. Our telephone communications associates
receive regular updates on the figures, and are happy to provide them to you at
any time.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share Twelve-Month SEC
------------------------- ------------------------------------ Current
Average Average August 31, August 31, Income Capital Gains Total Annualized
Portfolio Maturity Quality 1992 1993 Dividends Distributions Return Yield*
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHORTER-TERM
MONEY MARKET . . . . 80 Days MIG 1 $ 1.00 $ 1.00 $0.025 -- +2.5% 2.48%
SHORT-TERM . . . . . 471 Days Aa1 15.64 15.63 0.609 $0.043 +4.2% 3.15%
LIMITED-TERM . . . . 3.1 Years Aa 10.64 10.80 0.485 0.049 +6.7% 3.66%
- --------------------------------------------------------------------------------------------------------------------------------
LONGER-TERM
INTERMEDIATE-TERM . . 8.0 Years Aa2 $12.85 $13.45 $0.710 $0.121 +11.5% 4.68%
INSURED LONG-TERM . . 11.5 Years Aaa 12.28 12.89 0.718 0.203 +13.1% 4.94%
LONG-TERM . . . . . . 12.4 Years Aa3 10.95 11.38 0.640 0.285 +13.1% 5.08%
HIGH-YIELD . . . . . 11.8 Years A2 10.76 11.17 0.669 0.254 +13.1% 5.39%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Yield for Money Market Portfolio is a 7-day yield. All other yields are
30-day yields.
4
<PAGE> 7
AVERAGE ANNUAL TOTAL RETURN
Average Annual Total Returns--The current yields noted in the table in the
Chairman's letter are calculated in accordance with SEC guidelines. The
average annual total returns for the Portfolios (periods ended June 30, 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) + 2.55% + 4.73% + 4.89% +4.89% 0.00%
SHORT-TERM (9/1/77) + 4.54 + 5.99 + 6.09 +5.64 +0.45
LIMITED-TERM (8/31/87) + 7.06 + 7.37 + 7.49* +5.97* +1.52*
INTERMEDIATE-TERM (9/1/77) +11.75 + 9.96 +10.09 +7.51 +2.58
INSURED LONG-TERM (9/30/84) +12.82 +10.79 +11.36* +7.72* +3.64*
LONG-TERM (9/1/77) +13.02 +11.14 +11.14 +8.09 +3.05
HIGH-YIELD (12/27/78) +13.12 +11.40 +11.38 +8.37 +3.01
</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.
5
<PAGE> 8
REPORT FROM THE INVESTMENT ADVISER
DEJA VU REDUX
The fiscal year ended August 31, 1993, provided bond investors with yet another
episode of bountiful total returns. Shareholders in the six non-money market
Portfolios of Vanguard Municipal Bond Fund enjoyed gradually escalating
returns, fully consistent with their escalating average maturities. The Money
Market Portfolio also produced returns fully consistent with its average
maturity (about 80 days); however, by the Portfolio's very nature, it failed to
participate in the capital gains earned by its longer-dated brethren.
The increases in bond prices were a direct consequence of substantial
across-the-board declines in interest rates. U.S. Treasury bonds were affected
most dramatically, with the 30-year U.S. Treasury bond yield falling 1.3% (from
7.4% to 6.1%), resulting in a 15.6% increase in price (excluding income).
Similarly, ten-year Treasury note yields dropped about 1.2% (from 6.6% to
5.4%).
The municipal bond market, taking its cue from Treasury bonds, rallied
strongly, particularly among long-term, high-grade municipal bonds. Their
yields dropped about 0.9%, from 6.1% to 5.2% at the fiscal year end. The
resultant "high-single-digit" to "low-double-digit" total returns for your
Portfolios are detailed in the Chairman s letter. Suffice it to say, it was a
very good year in a very good decade for bonds. If that news sounds vaguely
familiar, it should. We have been fortunate to be able to repeat it for the
last two years.
Both taxable and tax-exempt bond markets are responding to an economic
recovery that is progressing only about one-third as vigorously as in previous
iterations. While this news is not particularly good for job-seekers and
businesses, it s definitely good news for investors in long-term bonds. Their
coupon payments have not been eroded by the kind of inflation typically spawned
during energetic economic rebounds. Moreover, the prevailing economic torpor
has motivated the Federal Reserve Bank policymakers to maintain accommodative
monetary policy. Such easing has its greatest influence over yields in the
"one-year and under" maturity region of the yield curve. Short-term municipal
interest rates, responding to the easy money policies of the Federal Reserve,
started the fiscal year at very low levels and proceeded to drop even lower. A
one-year, high-grade note paid an investor 2.8% in August 1992, and a
comparable note now will pay income of 2.4% over the next 12 months.
Alternatively, a ten-year note will pay 4.6%, a 15-year bond 5.0%, and a
30-year bond 5.2%. Hence, the principal stability of short-term instruments
comes at a fairly steep price. If you want to protect your capital with a high
degree of confidence, you're going to have to sacrifice substantial annual
income return.
The past fiscal year was also noteworthy for the record-breaking amount of
new issuance of municipal bonds. The generalized descent in prices has made
many previously issued notes and bonds economically refundable; that is,
issuers can now borrow new money at "cheap" rates to eventually replace bonds
they issued when interest rates were higher. Virtually all of the increase in
municipal bond supply has consisted of these advance refundings, and that
burgeoning supply goes a long way toward explaining why the municipal market
has failed to keep pace with the rally in taxable bonds.
This unexpectedly extended period of excess supply has certainly had an
impact on some of our activities. For most of our Portfolios, last spring we
implemented to a small degree a strategy designed to exploit the growing
relative "cheapness" of the municipal market compared to Treasury issues. That
strategy has yet to bear fruit. Indeed, we underestimated the magnitude and
persistence of the excess supply and have surrendered some of the extra returns
garnered by our other strategic successes. One of the risks we take with a
value-driven philosophy is that investing in a cheap issue or sector is no
guarantee it won t get "cheaper" once we own it. Having said all that, we
believe that in the long run our strategy is sound, that new issue supply will
eventually stabilize at levels closer to
6
<PAGE> 9
historical norms, and that the municipal market's "extra cheapness" will be
recovered. Consequently, we are staying the course.
FAMILIARITY SHOULD NOT
BREED CONTEMPT
The protracted rally in bond prices over the last decade has been a wonderful
boon to investors. Barring brief perturbations, it is easily the longest-lived
bond bull market in more than 50 years. Most bond funds have earned
double-digit annual rates of total return (including income) for so long that
many investors have come to expect good returns as a matter of course. Such
expectations are naive and dangerous. Interest rates could easily move higher,
thereby producing price declines that could more than offset income returns. A
few years ago, you could buy a 9% long-term municipal bond. With a 9% annual
income stream, interest rates would have to drop only a little (about 0.1%) to
raise prices enough to produce a double-digit return. Today, we are no longer
in a 9% world, but in a 5% world (even less for short- and intermediate-term
bonds). To replicate the returns of yesteryear, the markets and the economy
will have to supply investors with continually improving good news on the
inflation front.
If the good news is not forthcoming, or worse yet, if the markets actually
sour (as opposed to soar), interest rates on long-term bonds would have to rise
only about 0.5% to generate a zero total return for the year. That's a far cry
from the recent past. We are not predicting such an event. We merely note that
neither bull nor bear markets extend themselves indefinitely; the farther a
good bond rally is extended, the more vulnerable it becomes to reduced
prospective rates of return.
STRATEGY RECAP
Over the past several years we have pursued several strategies designed to
provide shareholders with full participation in whatever risk/return segment
their Portfolio selection dictated, while at the same time adding some extra
return "at the margin." Usually such activities entail overweighting specific
characteristics or sectors relative to the market. The following represent our
principal overweights:
Emphasis on high quality
All of the Portfolios carry credit quality ratings somewhat higher than
their competitors and their respective market segments. The differences in
yield among bonds of varying credit quality are quite small right now.
Hence, the incentives for lowering the average qualities of the Portfolios
are quite small. Stated alternatively, our Portfolios carry demonstrably
higher quality at only a small sacrifice in gross yield. Moreover, Vanguard
s expense ratio advantage over competitors is so large that the yield
sacrifice from our quality tilt is all but invisible when net yields are
compared.
Emphasis on call protection
Most of the Portfolios contain appreciably more call-free bonds than the
overall market. Perplexingly, even with a strong bull market, call-free
bonds have not significantly outperformed their callable counterparts over
the last year. Nevertheless, we anticipate being able to extract a lot more
incremental return from this strategy over the next three fiscal years.
Between now and 1996, vast quantities of callable bonds will be "retired."
Their replacements already exist as advance refunding bonds. Hence, relative
supply should shrink. Our strategy has the additional advantage of helping
us assure shareholders an attractive, and more enduring, dividend.
Municipal/Treasury arbitrage
As noted earlier in our letter, we have adopted, at the margin,
strategies to exploit the historical "cheapness" of municipal interest rates
relative to the Treasury market. So far this year, the strategies have not
been productive. They have reduced our generally positive comparisons versus
competitors.
(continued)
7
<PAGE> 10
[ ] Emphasis on added price sensitivity
Over the last several years our Intermediate- and Long-Term
Portfolios have tended to be more sensitive in net asset value per
share to interest rate fluctuations than our competitors. In the bull
market, this clearly has been advantageous, and it is arguably the
main contributor to our historically good relative returns. In the
spring of 1993, we shifted average maturities down somewhat. We
believe such a move is prudent since the prospects for further
significant increases in bond prices appear dimmer than they did a few
years ago.
Collectively, the interplay of these strategies, along with our cost advantage,
has engendered returns over the past year that we would characterize as
"solid." More important, for the past decade, we would characterize our
relative performance as "very good." As always, your Portfolios will be
managed to provide good performance with a high degree of relative
predictability.
Sincerely,
Ian A. MacKinnon, Senior Vice President
Jerome J. Jacobs, Vice President
David E. Hamlin, Assistant Vice President
Christopher M. Ryon, Assistant Vice President
Pamela E. Wisehaupt, Assistant Vice President
Vanguard Fixed Income Group
September 20, 1993
8
<PAGE> 11
CUMULATIVE PERFORMANCE
[MONEY MARKET CHART - SEE EDGAR APPENDIX]
[SHORT-TERM CHART - SEE EDGAR APPENDIX]
9
<PAGE> 12
[LIMITED-TERM CHART - SEE EDGAR APPENDIX]
[INTERMEDIATE-TERM CHART - SEE EDGAR APPENDIX]
10
<PAGE> 13
[INSURED LONG-TERM CHART - SEE EDGAR APPENDIX]
[LONG-TERM CHART - SEE EDGAR APPENDIX]
11
<PAGE> 14
[HIGH-YIELD CHART - SEE EDGAR APPENDIX]
12
<PAGE> 15
<TABLE>
<S> <C>
Vanguard Municipal Bond Fund
STATEMENT OF NET ASSETS FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
August 31, 1993
</TABLE>
<TABLE>
<CAPTION>
Face Market
Amount Value
MONEY MARKET PORTFOLIO (000) (000)+
- ----------------------------------------------------------------
MUNICIPAL MONEY MARKET INSTRUMENTS
(99.2%)
- ----------------------------------------------------------------
<S> <C> <C>
ALABAMA (1.9%)
Alabama GO
2.85%, 3/1/94 $ 9,160 $ 9,174
Alabama Special Care Facilities
VRDO 2.5%, 9/1/93 (3) 4,300 4,300
Chatom PCR CP
(National Rural Utilities)
2.6%, 10/12/93 28,500 28,500
Macintosh IDR VRDO
(Ciba-Geigy)
2.5%, 9/1/93 23,700 23,700
--------------
STATE TOTAL 65,674
--------------
- ----------------------------------------------------------------
ALASKA (.1%)
North Slope
6.45%, 6/30/94 (1) 2,600 2,675
--------------
- ----------------------------------------------------------------
ARIZONA (1.5%)
Arizona Health Facilities Auth.
VRDO 2.65%, 1/1/94 (3) 18,200 18,200
Central Arizona Irrigation &
Drainage Dist. GO
10.5%, 1/1/94 (Prere.) 3,220 3,400
Salt River Project Agricultural
Improvement & Power Dist.
CP 2.6%, 9/14/93 6,200 6,200
TOB 2.65%, 1/4/94 26,370 26,370
--------------
STATE TOTAL 54,170
--------------
- ----------------------------------------------------------------
CALIFORNIA (19.0%)
California PCR
(Pacific Gas & Electric)
CP 2.55%, 9/20/93 10,500 10,500
CP 2.25%, 10/4/93 9,500 9,500
(Southern California Edison)
VRDO 2.4%, 9/1/93 600 600
California RAN
3.5%, 6/28/94 133,300 133,920
California Health Facilities Auth. VRDO
(Catholic Health Care West)
2.05%, 9/1/93 (1) 7,300 7,300
2.35%, 9/1/93 (1) 12,800 12,800
California Higher Education Loan
Auth. Student Loan Revenue
2.55%, 5/1/94* 41,500 41,500
California Statewide Communities
Development Auth.
3.25%, 6/30/94 60,000 60,217
Chaffey Joint Union High School
Dist. TRAN
3.25%, 7/1/94 5,000 5,020
Contra Costa TRAN
3.25%, 7/29/94 33,500 33,612
Contra Costa Transportation Auth.
Sales Tax Revenue VRDO
2.5%, 9/1/93 (3) $ 22,100 $ 22,100
Desert Sands Unified School Dist.
TRAN 3.25%, 7/6/94 5,000 5,018
Fontana Unified School Dist. TRAN
3.25%, 7/1/94 4,000 4,015
Fresno County TRAN
3.25%, 7/29/94 20,000 20,074
Kern County TRAN
3.25%, 7/5/94 11,250 11,299
Los Angeles County TRAN
CP 2.55%, 10/18/93 2,000 2,000
CP 2.65%, 10/18/93 25,000 25,000
3.0%, 6/30/94 21,000 21,089
Los Angeles County Unified School
Dist. TRAN
3.25%, 7/15/94 18,200 18,244
Mountain View-Los Altos Union High
School Dist. TRAN
3.25%, 7/6/94 5,000 5,021
Orange County School Dist. TRAN
3.25%, 7/29/94 22,000 22,076
Sacramento County TRAN
3.0%, 7/29/94 35,000 35,070
Saddleback Valley TRAN
3.25%, 6/30/94 5,000 5,019
San Diego IDR
(San Diego Electric & Gas)
2.7%, 9/1/93* 25,645 25,645
San Diego County Regional
Transportation Commission VRDO
2.4%, 9/1/93 (3) 22,800 22,800
Santa Ana Unified School Dist. TRAN
3.25%, 7/29/94 24,000 24,085
Santa Barbara County TRAN
3.25%, 7/29/94 12,800 12,836
Santa Clara County TRAN
3.25%, 7/29/94 25,000 25,110
Southern California Public Power
Transmission Project Revenue
TRAN 2.3%, 1/1/94 (2) 13,900 13,900
</TABLE>
THE PORTFOLIO LISTINGS BEGIN ON THE FOLLOWING PAGES:
MONEY MARKET PORTFOLIO................................ 1
SHORT-TERM PORTFOLIO.................................. 7
LIMITED-TERM PORTFOLIO................................ 12
INTERMEDIATE-TERM PORTFOLIO........................... 18
INSURED LONG-TERM PORTFOLIO........................... 27
LONG-TERM PORTFOLIO................................... 35
HIGH-YIELD PORTFOLIO.................................. 39
1
<PAGE> 16
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
University of California TOB
2.5%, 11/1/93 (1) $ 5,000 $ 5,000
Ventura County Community College
Dist. TRAN
3.25%, 6/30/94 8,000 8,019
Ventura County TRAN
3.0%, 8/1/94 13,500 13,522
Ventura Unified School Dist. TRAN
3.25%, 7/1/94 5,000 5,020
Yorba Linda TRAN
3.5%, 8/11/94 5,600 5,620
--------------
STATE TOTAL 672,551
--------------
- ----------------------------------------------------------------
COLORADO (.2%)
Denver City & County Special
Obligation (Franciscan Health Care
-- St. Anthony's)
10.625%, 1/1/94 (Prere.) 5,550 5,805
--------------
- ----------------------------------------------------------------
CONNECTICUT (1.2%)
Connecticut Economic Recovery
VRDO 2.5%, 9/1/93 18,600 18,600
6.0%, 12/15/93 5,000 5,048
Connecticut GO
2.4%, 9/15/93 2,000 2,000
7.0%, 3/15/94 500 511
Connecticut Special Obligation VRDO
2.5%, 9/1/93 15,200 15,200
--------------
STATE TOTAL 41,359
--------------
- ----------------------------------------------------------------
DELAWARE (4.7%)
Delaware Economic Development
Auth. VRDO
(Hospital Bill & Collection
Service)
2.5%, 9/1/93 161,600 161,600
Delaware GO
4.25%, 3/1/94 4,000 4,034
--------------
STATE TOTAL 165,634
--------------
- ----------------------------------------------------------------
DISTRICT OF COLUMBIA (.7%)
District of Columbia VRDO
2.4%, 9/1/93 8,000 8,000
(George Washington University)
2.75%, 9/1/93 18,100 18,100
--------------
STATE TOTAL 26,100
--------------
- ----------------------------------------------------------------
FLORIDA (6.0%)
Florida Board of Education TOB
2.65%, 12/1/93 3,800 3,800
Florida Dept. of Transportation TOB
2.7%, 1/2/94 (3) 2,100 2,100
Florida Municipal Loan Council
Pooled Revenue CP
(Florida League Cities)
2.55%, 9/13/93 35,200 35,200
Gulf Breeze Local Government Loan
Program VRDO
2.5%, 9/1/93 (3) $ 73,745 $ 73,745
Lee County Hospital Revenue CP
(Lee Memorial Hospital)
2.6%, 10/18/93 6,000 6,000
Orlando Utilities Commission Water &
Electric Revenue VRDO 2.45%, 9/1/
93 47,850 47,850
Orlando Waste Water System CP
2.6%, 9/14/93 5,400 5,400
Sunshine State Government Finance
Committee CP
2.7%, 9/20/93 5,200 5,200
2.5%, 10/15/93 34,400 34,400
--------------
STATE TOTAL 213,695
--------------
- ----------------------------------------------------------------
GEORGIA (.5%)
Burke County PCR TOB
(Oglethorpe Power)
2.75%, 1/2/94 (1) 3,080 3,080
Georgia GO
7.0%, 11/1/93 7,910 7,969
Private College & University Auth. CP
(Emory University Project)
2.4%, 9/23/93 5,150 5,150
--------------
STATE TOTAL 16,199
--------------
- ----------------------------------------------------------------
HAWAII (.3%)
Hawaii GO TOB
2.65%, 1/1/94 7,500 7,500
2.65%, 2/1/94 5,000 5,000
--------------
STATE TOTAL 12,500
--------------
- ----------------------------------------------------------------
IDAHO (.2%)
Boise City RAN
2.75%, 3/31/94 9,250 9,259
--------------
- ----------------------------------------------------------------
ILLINOIS (8.3%)
Chicago GO CP
2.65%, 9/21/93 20,000 20,000
2.45%, 10/14/93 5,000 5,000
Chicago GO VRDO
2.55%, 9/1/93 53,000 53,000
Illinois Education Facilities Auth.
9.5%, 1/1/94 (Prere.) 3,925 4,090
VRDO (DePaul University)
2.7%, 9/1/93 18,900 18,900
Illinois Health Facilities Auth.
VRDO
2.5%, 9/1/93 6,000 6,000
(Franciscan Sisters)
2.5%, 9/1/93 15,100 15,100
(Northwest Community Hospital)
2.5%, 10/1/93 34,645 34,645
</TABLE>
2
<PAGE> 17
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
(University of Chicago Hospital)
2.5%, 9/1/93 $ 12,300 $ 12,300
Illinois Health Facilities Auth. CP
(Evanston Hospital)
2.55%, 10/28/93 18,500 18,500
Illinois Housing Development Auth.
VRDO (Center Apartments)
2.55%, 9/1/93 39,000 39,000
Illinois State Certificates
3.25%, 4/15/94 32,605 32,708
Illinois Toll Highway Auth. VRDO
2.5%, 1/1/94 (1) 33,400 33,400
--------------
STATE TOTAL 292,643
--------------
- ----------------------------------------------------------------
INDIANA (.9%)
Indiana Health Facilities Auth. VRDO
(Daughters of Charity System)
2.5%, 9/1/93 15,000 15,000
Mount Vernon PCR
(Southern Indiana Gas & Electric)
2.7%, 5/1/94* 11,235 11,242
Petersburg PCR CP
(Indianapolis Power & Light)
2.65%, 9/24/93 6,000 6,000
--------------
STATE TOTAL 32,242
--------------
- ----------------------------------------------------------------
IOWA (1.7%)
Iowa School Corp. Certificates
4.1%, 12/30/93 (5) 11,170 11,219
4.2%, 2/1/94 (5) 47,200 47,427
--------------
STATE TOTAL 58,646
--------------
- ----------------------------------------------------------------
KENTUCKY (.3%)
Ashland City PCR VRDO
(Ashland Oil)
2.2%, 9/1/93 5,000 5,000
Kentucky Turnpike Auth.
10.125%, 1/1/94 (Prere.) 5,450 5,747
--------------
STATE TOTAL 10,747
--------------
- ----------------------------------------------------------------
LOUISIANA (4.0%)
Jefferson Sales Tax
5.5%, 12/1/93 (3) 5,720 5,763
Louisiana GO TOB
2.65%, 2/1/94 (1) 16,645 16,645
Louisiana Public Facilities Auth.
Hospital Revenue CP
(Lady of the Lake Medical Ctr.)
2.6%, 9/10/93 (4) 10,100 10,100
2.4%, 9/14/93 (4) 23,400 23,400
2.7%, 9/15/93 (4) 7,700 7,700
2.75%, 9/15/93 (4) 8,800 8,800
2.6%, 10/8/93 (4) 7,800 7,800
2.6%, 10/12/93 (4) 22,460 22,460
Louisiana Recovery Dist. VRDO
2.5%, 9/1/93 (1) $ 3,200 $ 3,200
2.5%, 9/1/93 (3) 6,800 6,800
Orleans Levee Dist. VRDO
3.95%, 9/1/93 30,225 30,225
--------------
STATE TOTAL 142,893
--------------
- ----------------------------------------------------------------
MARYLAND (.2%)
Prince George County GO
2.75%, 12/17/93 7,000 7,007
--------------
- ----------------------------------------------------------------
MASSACHUSETTS (1.2%)
Massachusetts GO
TOB 2.65%, 11/1/93 (1) 19,400 19,400
3.0%, 11/18/93 23,000 23,031
--------------
STATE TOTAL 42,431
--------------
- ----------------------------------------------------------------
MICHIGAN (2.2%)
Michigan Hospital Finance Auth.
(Daughters of Charity) VRDO
2.5%, 9/1/93 23,500 23,500
Michigan State Housing Development
Auth. VRDO
2.55%, 9/1/93 42,000 42,000
Sisters of Charity Health Care
Systems VRDO
(St. Joseph Center Project)
2.3%, 9/1/93 (1) 11,500 11,500
--------------
STATE TOTAL 77,000
--------------
- ----------------------------------------------------------------
MINNESOTA (1.3%)
Minnesota GO TOB
2.65%, 2/1/94 17,000 17,000
Northern Municipal Power Agency
Electric System Revenue
9.0%, 1/1/94 (2) (Prere.) 3,450 3,590
9.25%, 1/1/94 (Prere.) 2,925 3,047
Rochester Health Care Facility
Revenue CP
(Mayo Foundation Medical Center)
2.5%, 9/13/93 4,000 4,000
St. Paul Independent School Dist.
Certificates
2.85%, 2/28/94 7,000 6,999
Southern Minnesota Municipal Power
Agency
10.0%, 1/1/94 (Prere.) 9,470 9,984
--------------
STATE TOTAL 44,620
--------------
- ----------------------------------------------------------------
</TABLE>
3
<PAGE> 18
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
MISSISSIPPI (.1%)
Jackson County PCR VRDO (Chevron)
2.25%, 9/1/93 $ 700 $ 700
2.35%, 9/1/93 2,700 2,700
--------------
STATE TOTAL 3,400
--------------
- ----------------------------------------------------------------
MISSOURI (2.8%)
Independence Water Utility Revenue
CP
2.7%, 9/15/93 3,000 3,000
2.75%, 9/15/93 16,300 16,300
2.7%, 9/24/93 5,000 5,000
Missouri Environmental Improvement
Auth. PCR CP
(Union Electric)
2.5%, 9/21/93 1,500 1,500
2.5%, 9/23/93 5,000 5,000
Missouri Health & Education Finance
Auth. VRDO
(St. Anthony's Medical Center)
2.4%, 9/1/93 25,200 25,200
Sisters of Mercy Health Care System
VRDO 2.4%, 9/1/93 9,000 9,000
University of Missouri Capital
Project Notes 3.25%, 6/30/94 34,000 34,087
--------------
STATE TOTAL 99,087
--------------
- ----------------------------------------------------------------
NEBRASKA (.2%)
Lancaster County Sisters of Charity
VRDO (St. Elizabeth Hospital)
2.3%, 9/1/93 (1) 3,700 3,700
Omaha Public Power Dist.
2.5%, 2/1/94 4,560 4,560
--------------
STATE TOTAL 8,260
--------------
- ----------------------------------------------------------------
NEVADA (2.6%)
Clark County Airport VRDO
2.4%, 1/1/94 (1) 83,500 83,500
Nevada GO TOB
2.6%, 11/1/93 9,225 9,225
--------------
STATE TOTAL 92,725
--------------
- ----------------------------------------------------------------
NEW JERSEY (.6%)
New Jersey GO TOB
2.8%, 2/15/94* 22,600 22,600
--------------
- ----------------------------------------------------------------
NEW YORK (.6%)
Nassau County BAN
3.75%, 11/15/93 10,000 10,025
New York State Medical Care Facility
10.25%, 2/15/94 (ETM) 9,000 9,529
--------------
STATE TOTAL 19,554
--------------
- ----------------------------------------------------------------
NORTH CAROLINA (3.2%)
Charlotte Airport VRDO
2.4%, 1/1/94 (1) $ 38,800 $ 38,800
North Carolina Eastern Municipal
Power Agency CP
2.55%, 9/9/93 9,844 9,844
North Carolina Educational
Facilities Auth. VRDO
(Duke University)
2.4%, 9/1/93 3,000 3,000
North Carolina Municipal Power
Agency
10.0%, 1/1/94 (Prere.) 7,000 7,377
North Carolina Public Power Agency
TOB
(Catawba Electric)
2.65%, 1/1/94 (2) 45,000 45,000
University of North Carolina CP
(Chapel Hill)
2.5%, 9/1/93 9,050 9,050
--------------
STATE TOTAL 113,071
--------------
- ----------------------------------------------------------------
OHIO (1.3%)
Montgomery County BAN
2.75%, 4/28/94 8,030 8,043
Ohio PCR CP
(Duquesne Light)
2.45%, 9/29/93 10,000 10,000
Ohio Student Loan VRDO
2.55%, 10/1/93 24,950 24,950
University of Cincinnati COP
2.7%, 6/1/94 (1) 2,600 2,600
--------------
STATE TOTAL 45,593
--------------
- ----------------------------------------------------------------
OKLAHOMA (1.1%)
Grand River Dam Auth. TOB
2.7%, 12/1/93 (4) 10,000 10,000
Oklahoma City Industrial & Cultural
Facilities Trust VRDO
(St. Anthony's Hospital)
2.4%, 9/1/93 14,400 14,400
Oklahoma Water Resource Revenue
2.4%, 10/1/93* 13,710 13,710
--------------
STATE TOTAL 38,110
--------------
- ----------------------------------------------------------------
OREGON (2.3%)
Oregon Veterans Welfare Program VRDO
2.45%, 9/1/93 14,900 14,900
2.5%, 9/1/93 67,900 67,900
--------------
STATE TOTAL 82,800
--------------
- ----------------------------------------------------------------
</TABLE>
4
<PAGE> 19
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
PENNSYLVANIA (2.4%)
Delaware County Industrial
Development Auth. VRDO
(United Parcel Service)
2.5%, 9/1/93 $ 7,600 $ 7,600
Delaware County PCR CP
(Philadelphia Electric)
2.6%, 10/14/93 (3) 23,100 23,100
Sayre Health Care Facility Auth.
VRDO 2.45%, 9/1/93 (2) 54,545 54,545
--------------
STATE TOTAL 85,245
--------------
- ----------------------------------------------------------------
RHODE ISLAND (.6%)
Rhode Island GO TAN
3.25%, 6/30/94 21,000 21,093
--------------
- ----------------------------------------------------------------
SOUTH CAROLINA (.9%)
Greenville Hospital System VRDO
2.45%, 9/1/93 16,500 16,500
South Carolina GO
8.1%, 9/1/93 2,000 2,000
South Carolina Housing Finance &
Development Auth.
3.2%, 12/1/93* 6,000 6,000
York County PCR CP
(Duke Power)
2.5%, 10/14/93 6,500 6,500
--------------
STATE TOTAL 31,000
--------------
- ----------------------------------------------------------------
TENNESSEE (2.2%)
Knoxville GO
10.25%, 5/1/94 (Prere.) 10,850 11,715
Metropolitan Government of Nashville
and Davidson County Health &
Education Facilities CP
(Baptist Hospital)
2.55%, 9/16/93 10,600 10,600
2.65%, 9/24/93 10,000 10,000
Metropolitan Government of Nashville
and Davidson County Water & Sewer
Revenue TOB
2.75%, 1/1/94 (Prere.) 14,892 14,892
Shelby County Health Education &
Housing Facilities
(Methodist Health System)
3.1%, 8/1/94* (1) 9,000 9,000
Tennessee BAN VRDO
2.45%, 9/1/93 23,300 23,300
--------------
STATE TOTAL 79,507
--------------
- ----------------------------------------------------------------
TEXAS (14.4%)
Abilene Health Facility Development
Corp. VRDO
(Hendrick Medical Center)
2.7%, 9/1/93 10,650 10,650
Bexar County VRDO
(Incarnate Word Health Service)
2.7%, 9/1/93 $ 63,100 $ 63,100
Dallas Independent School Dist. TRAN
3.375%, 8/15/94 25,950 26,064
Dallas Waterworks & Sewer TOB
2.65%, 10/1/93 30,000 30,000
Gulf Coast Waste Disposal PCR VRDO
(Amoco)
2.4%, 9/1/93 9,500 9,500
Harris County Health Facility
Development Corp. VRDO
(Texas Children's Hospital)
2.55%, 9/1/93 21,300 21,300
Harris County Toll Roads VRDO
2.5%, 11/1/93 107,200 107,200
Hockley County PCR (Amoco)
2.3%, 11/1/93* 4,500 4,500
2.75%, 3/1/94* 24,000 24,000
Houston City VRDO
2.5%, 10/1/93 76,000 76,000
Lower Colorado River Auth.
11.375%, 1/1/94 (Prere.) 12,540 13,273
North Central Texas Hospital
Facility Development Corp. CP
(Methodist Hospital -- Dallas)
2.65%, 9/24/93 4,000 4,000
Plano Health Facility Development
Corp. CP
(Children's Presbyterian Health
Care Center)
2.55%, 10/14/93 (1) 20,600 20,600
Red River PCR VRDO
(Southwest Public Service Co.)
2.4%, 9/1/93 28,000 28,000
Richardson Independent School
Dist. TRAN
3.375%, 8/23/94 19,000 19,091
San Antonio Electric & Gas
CP 2.6%, 10/18/93 15,000 15,000
8.0%, 2/1/94 (Prere.) 9,500 9,842
San Antonio Improvement & Refunding
9.0%, 12/15/93 (Prere.) 2,000 2,036
Southwest Higher Education
Auth. VRDO
(Southern Methodist University)
2.35%, 9/1/93 2,400 2,400
Tarrant County Health Facility
Development Corp. VRDO
2.6%, 9/1/93 11,600 11,600
</TABLE>
5
<PAGE> 20
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
University of Texas Board of Regents
TOB
2.65%, 1/1/94 $ 10,170 $ 10,170
--------------
STATE TOTAL 508,326
--------------
- ----------------------------------------------------------------
UTAH (2.0%)
Intermountain Power Agency
CP 2.5%, 9/28/93 5,000 5,000
TOB 2.75%, 1/1/94 (Prere.) 16,341 16,341
10.75%, 1/1/94 (Prere.) 5,000 5,281
11.0%, 1/1/94 (Prere.) 34,910 36,904
11.375%, 1/1/94 8,330 8,816
--------------
STATE TOTAL 72,342
--------------
- ----------------------------------------------------------------
VERMONT (.6%)
Vermont Education & Building Finance
Agency
(Middlebury College)
3.05%, 11/1/93* 5,725 5,725
2.55%, 5/1/94* 3,500 3,500
Vermont GO RAN CP
2.55%, 9/16/93 11,800 11,800
--------------
STATE TOTAL 21,025
--------------
- ----------------------------------------------------------------
VIRGINIA (1.2%)
Fairfax County GO
7.4%, 11/1/93 2,315 2,333
Fairfax County Industrial
Development Auth. VRDO (Fairfax
Hospital)
2.5%, 9/1/93 8,100 8,100
Richmond GO
3.0%, 1/15/94 4,980 4,987
3.0%, 5/15/94 1,120 1,124
Virginia Housing
Development Auth.
2.95%, 5/12/94* 25,000 25,000
--------------
STATE TOTAL 41,544
--------------
- ----------------------------------------------------------------
WASHINGTON (1.0%)
Chelan County Development Corp.
PCR VRDO (Alcoa)
2.35%, 9/1/93 8,300 8,300
Port of Seattle GO VRDO
2.5%, 9/1/93 3,200 3,200
Snohomish County Public
Utility Dist.
11.375%, 1/1/94 (Prere.) 8,150 8,625
11.5%, 1/1/94 (Prere.) 7,750 8,207
11.625%, 1/1/94 (Prere.) 7,945 8,417
--------------
STATE TOTAL 36,749
--------------
- ----------------------------------------------------------------
WEST VIRGINIA (.6%)
Kanawah Building Commission VRDO
(Charleston Medical Inc.)
2.6%, 9/1/93 $ 19,540 $ 19,540
--------------
- ----------------------------------------------------------------
WISCONSIN (2.1%)
Oak Creek City VRDO
(Wisconsin Electric Power Co.)
2.5%, 9/1/93 33,800 33,800
Wisconsin GO
TOB 2.65%, 11/1/93 25,570 25,570
6.4%, 5/1/94 4,480 4,582
Wisconsin Operating Notes
3.25%, 6/15/94 10,000 10,021
--------------
STATE TOTAL 73,973
--------------
- ----------------------------------------------------------------
TOTAL MUNICIPAL MONEY MARKET
INSTRUMENTS
(Cost $3,509,394) 3,509,394
- ----------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.8%)
- ----------------------------------------------------------------
Other Assets -- Note C 80,212
Liabilities (51,777)
--------------
28,435
- ----------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------
Applicable to 3,537,979,633 outstanding
$.001 par value shares
(authorized 5,000,000,000 shares) $3,537,829
- ----------------------------------------------------------------
NET ASSET VALUE PER SHARE $1.00
================================================================
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 43.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
AT AUGUST 31, 1993, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------
Amount Per
(000) Share
------------ ----
<S> <C> <C>
Paid in Capital -- Note E $3,537,874 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized
Losses -- Note E (45) --
Unrealized Appreciation of
Investments -- --
- -----------------------------------------------------------------
NET ASSETS $3,537,829 $1.00
=================================================================
</TABLE>
6
<PAGE> 21
<TABLE>
<CAPTION>
Face Market
Amount Value
SHORT-TERM PORTFOLIO (000) (000)+
- ----------------------------------------------------------------
MUNICIPAL BONDS (102.2%)
- ----------------------------------------------------------------
<S> <C> <C>
ALABAMA (1.1%)
Alabama State Public School &
College Auth.
3.7%, 11/1/94 $ 4,700 $ 4,742
Birmingham North Medical Clinic
(Carraway Hospital)
9.0%, 10/1/95 (Prere.) 8,500 9,608
--------------
STATE TOTAL 14,350
--------------
- ----------------------------------------------------------------
ALASKA (.3%)
Anchorage Electric Revenue
9.75%, 9/1/95 (Prere.) 3,700 4,220
--------------
- ----------------------------------------------------------------
ARIZONA (1.6%)
City of Mesa Utility System
8.5%, 7/1/94 (3) 5,400 5,644
Mesa Unified School Dist.
7.55%, 7/1/94 10,555 10,942
Phoenix GO 6.5%, 7/1/95 5,000 5,273
--------------
STATE TOTAL 21,859
--------------
- ----------------------------------------------------------------
CALIFORNIA (15.4%)
Alameda County Public
Facilities Corp. COP
6.15%, 9/1/96* 5,000 5,194
Anaheim Public Improvement
COP VRDO
2.3%, 2/1/94 6,000 6,000
California GO 11.0%, 9/1/94 5,350 5,770
California RAN
3.5%, 6/28/94 25,000 25,151
California Housing Finance
Agency VRDO
2.35%, 9/1/93 6,415 6,415
California Revenue Anticipation
Warrants
2.2%, 12/23/93 14,800 14,770
Clovis Unified School Dist.
4.2%, 8/1/95 5,800 5,907
Contra Costa Transportation Auth.
Sales Tax Revenue
VRDO 2.5%, 9/1/93 (3) 1,300 1,300
5.8%, 3/1/95 3,730 3,855
Irvine Assessment Dist. VRDO
2.4%, 9/1/93 100 100
Irvine Ranch Water Dist. VRDO
2.45%, 9/1/93 2,200 2,200
Kern County TRAN
3.25%, 7/5/94 20,000 20,065
Kern County VRDO
2.35%, 9/1/93 2,900 2,900
Los Angeles COP
5.1%, 12/1/94 $ 5,315 $ 5,435
5.5%, 12/1/96 3,400 3,547
Los Angeles County TRAN
3.0%, 6/30/94 25,000 25,046
Metropolitan Water Dist. of Southern
California CP
2.4%, 9/16/93 8,000 8,000
Oakland Redevelopment
Agency COP
9.25%, 8/1/95 (Prere.) 3,695 4,170
Riverside VRDO
2.3%, 9/1/93 17,900 17,900
Riverside County TRAN
3.0%, 6/30/94 16,900 16,924
Santa Clara VRDO (El Camino Hospital
Dist.-Valley Medical)
2.25%, 9/1/93 17,700 17,700
Southern California Public Power
Auth. (Palo Verde Project)
11.5%, 7/1/94 (Prere.) 6,345 6,985
--------------
STATE TOTAL 205,334
--------------
- ----------------------------------------------------------------
COLORADO (2.2%)
Colorado Health Auth.
(Sisters of Charity Health System)
5.7%, 5/15/95 (1) 2,300 2,385
Jefferson County School Dist.
8.5%, 12/15/95 (Prere.) 5,000 5,558
Municipal Subdist. of Northern
Colorado
9.0%, 12/1/95 (Prere.) 3,000 3,388
9.25%, 12/1/95 (Prere.) 2,420 2,746
Platte River Power Auth.
2.6%, 6/1/94 14,745 14,708
--------------
STATE TOTAL 28,785
--------------
- ----------------------------------------------------------------
CONNECTICUT (2.3%)
Connecticut Clean Water Fund
10.0%, 1/1/94 2,395 2,456
10.0%, 7/1/94 2,420 2,558
Connecticut Economic Recovery Notes
GO
5.4%, 6/15/95 5,455 5,632
Connecticut GO
4.5%, 5/15/94 6,585 6,666
Connecticut Special Tax
8.6%, 10/15/95 (Prere.) 3,075 3,457
</TABLE>
7
<PAGE> 22
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Connecticut Transportation
Infrastructure
6.15%, 12/1/93 $ 4,020 $ 4,060
4.25%, 9/1/95 5,630 5,720
--------------
STATE TOTAL 30,549
--------------
- ----------------------------------------------------------------
DELAWARE (2.1%)
Delaware Economic Development Auth.
VRDO
(Hospital Bill & Collection
Service)
2.5%, 9/1/93 25,200 25,200
New Castle County GO
7.5%, 10/15/94 2,500 2,627
--------------
STATE TOTAL 27,827
--------------
- ----------------------------------------------------------------
DISTRICT OF COLUMBIA (1.4%)
District of Columbia GO
5.3%, 6/1/94 (1) 7,505 7,632
5.5%, 6/1/95 (3) 4,705 4,861
5.6%, 6/1/96 (3) 5,000 5,233
District of Columbia VRDO
(George Washington University)
2.75%, 9/1/93 1,100 1,100
--------------
STATE TOTAL 18,826
--------------
- ----------------------------------------------------------------
FLORIDA (7.8%)
Broward County COP
5.4%, 7/1/94 (1) 5,000 5,099
Florida COP
5.2%, 11/15/93 8,255 8,292
Hillsborough County Aviation Auth.
(Tampa Airport)
3.5%, 10/1/95 (3) 4,980 4,990
City of Homestead Special Insurance
Assessment Revenue
3.3%, 9/1/94 (1) 7,685 7,713
Jacksonville Electric Auth. Revenue
7.5%, 10/1/95 (Prere.) 5,090 5,576
(St. John's River Project)
9.25%, 10/1/93 (Prere.) 7,000 7,177
10.0%, 10/1/94 (Prere.) 3,000 3,286
10.25%, 10/1/95 (Prere.) 5,000 5,776
Orlando Utility Commission Water &
Electric Revenue
VRDO 2.45%, 9/1/93 10,500 10,500
10.5%, 10/1/94 (Prere.) 14,410 15,998
8.5%, 10/1/95 (Prere.) 13,980 15,665
4.4%, 10/1/96 3,255 3,329
Pinellas County Capital Improvement
5.0%, 10/1/94 $ 9,960 $ 10,172
--------------
STATE TOTAL 103,573
--------------
- ----------------------------------------------------------------
GEORGIA (2.2%)
Fulton County Building Auth.
9.0%, 1/1/95 (Prere.) 3,925 4,290
Georgia GO
7.7%, 7/1/94 7,070 7,351
7.7%, 4/1/95 4,000 4,267
7.0%, 11/1/95 4,725 5,095
Gwinnett County Water & Sewer Auth.
8.75%, 8/1/96 (Prere.) 4,000 4,631
Metropolitan Atlanta Rapid
Transit Auth.
8.5%, 7/1/95 (Prere.) 3,000 3,327
--------------
STATE TOTAL 28,961
--------------
- ----------------------------------------------------------------
HAWAII (2.9%)
Hawaii GO
5.0%, 11/1/93 7,095 7,124
6.0%, 11/1/93 9,000 9,052
7.0%, 11/1/94 4,325 4,526
Honolulu City & County GO
3.6%, 10/1/95 14,000 14,055
9.0%, 3/1/96 3,000 3,366
--------------
STATE TOTAL 38,123
--------------
- ----------------------------------------------------------------
ILLINOIS (2.3%)
Chicago School Finance
Auth. GO
4.5%, 6/1/94 (3) 3,925 3,971
Illinois GO
2.55%, 10/12/93 5,000 5,000
5.5%, 6/1/94 8,385 8,539
3.5%, 6/15/94 7,000 7,035
Illinois Metropolitan Fair &
Exposition Auth.
10.375%, 6/1/95 (Prere.) 5,000 5,729
Illinois Toll Highway Auth. VRDO
2.5%, 1/1/94 (1) 500 500
--------------
STATE TOTAL 30,774
--------------
- ----------------------------------------------------------------
INDIANA (.9%)
Indiana State University Student
Fee Bonds
9.4%, 8/1/95 (Prere.) 3,500 3,919
Indiana Toll Road Auth.
9.0%, 7/1/95 (Prere.) 4,000 4,470
</TABLE>
8
<PAGE> 23
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Indiana Transportation Finance Auth.
3.0%, 6/1/94 (2) $ 3,000 $ 3,007
--------------
STATE TOTAL 11,396
--------------
- ----------------------------------------------------------------
IOWA (1.1%)
Iowa School Corp. Certificates
4.2%, 2/1/94 15,000 15,092
--------------
- ----------------------------------------------------------------
KANSAS (.2%)
Kansas City Utility System
4.45%, 9/1/94 (2) 2,500 2,537
--------------
- ----------------------------------------------------------------
KENTUCKY (3.1%)
Ashland City PCR VRDO
(Ashland Oil)
2.2%, 9/1/93 5,300 5,300
Kentucky Development
Finance Auth.
(St. Elizabeth's Hospital)
6.0%, 11/1/93 (3) 2,000 2,011
Kentucky Property & Buildings
3.7%, 9/1/94 8,370 8,419
4.0%, 9/1/95 6,420 6,493
Kentucky Turnpike Auth.
10.125%, 1/1/94 (Prere.) 5,000 5,269
10.75%, 7/1/94 (Prere.) 7,000 7,657
9.2%, 7/1/95 (Prere.) 4,850 5,482
--------------
STATE TOTAL 40,631
--------------
- ----------------------------------------------------------------
LOUISIANA (1.1%)
Jefferson Parish Sales Tax
5.9%, 12/1/95 (3) 4,175 4,393
Louisiana Recovery Dist. Sales Tax
5.5%, 7/1/97 10,000 10,401
--------------
STATE TOTAL 14,794
--------------
- ----------------------------------------------------------------
MAINE (.8%)
Maine Municipal Bond Bank
3.875%, 11/1/96 10,000 10,060
--------------
- ----------------------------------------------------------------
MARYLAND (1.1%)
Maryland State Transportation Auth.
9.0%, 7/1/95 (Prere.) 13,450 15,042
--------------
- ----------------------------------------------------------------
MASSACHUSETTS (3.2%)
Massachusetts GO
3.55%, 9/1/94 12,300 12,365
4.05%, 9/1/95 12,000 12,126
5.7%, 8/1/96 8,000 8,416
Massachusetts Water Resources Auth.
BAN
4.125%, 10/15/95 $10,000 $ 10,108
--------------
STATE TOTAL 43,015
--------------
- ----------------------------------------------------------------
MICHIGAN (1.2%)
Michigan State Housing Development
Auth.
2.55%, 9/1/93 15,500 15,500
--------------
- ----------------------------------------------------------------
MINNESOTA (.5%)
Southern Minnesota Municipal
Power Agency
4.7%, 1/1/97 (2) 6,640 6,800
--------------
- ----------------------------------------------------------------
MISSOURI (.3%)
Missouri Board of Public Buildings
5.0%, 12/1/93 4,470 4,496
Sisters of Mercy
Health System VRDO
2.4%, 9/1/93 200 200
--------------
STATE TOTAL 4,696
--------------
- ----------------------------------------------------------------
NEBRASKA (.2%)
Nebraska Public Power Dist. Electric
System Revenue
4.8%, 1/1/96 2,000 2,046
--------------
- ----------------------------------------------------------------
NEVADA (.3%)
Clark County School Dist.
3.3%, 7/1/95 (2) 4,600 4,588
--------------
- ----------------------------------------------------------------
NEW JERSEY (2.8%)
New Jersey Sports & Exposition Auth.
VRDO 2.4%, 9/1/93 (1) 24,600 24,600
New Jersey Transportation Trust Fund
3.5%, 6/15/95 5,000 5,018
New Jersey Turnpike Auth.
VRDO 2.3%, 1/1/94 (3) 400 400
4.8%, 1/1/96 7,000 7,165
--------------
STATE TOTAL 37,183
--------------
- ----------------------------------------------------------------
NEW YORK (7.0%)
Municipal Assistance Corp. for
New York City
4.25%, 1/15/94 15,175 15,269
Nassau County GO
6.0%, 11/15/93 (3) 5,000 4,999
Nassau County BAN
3.75%, 11/15/93 3,600 3,610
Nassau County RAN
3.2%, 10/26/93 9,000 9,011
</TABLE>
9
<PAGE> 24
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
New York City GO
6.7%, 2/1/95 $11,240 $ 11,683
6.8%, 2/1/97 12,975 13,925
New York City Water BAN
2.75%, 4/15/94 15,200 15,202
New York State Dormitory Auth.
(City University)
4.9%, 7/1/96 5,205 5,315
5.25%, 7/1/97 2,780 2,861
New York State GO
6.625%, 8/1/95 5,000 5,289
Triborough Bridge & Tunnel Auth.
5.5%, 1/1/97 5,000 5,259
--------------
STATE TOTAL 92,423
--------------
- ----------------------------------------------------------------
NORTH CAROLINA (1.3%)
North Carolina Eastern Power Agency
10.0%, 1/1/95 (Prere.) 6,350 7,035
CP 2.5%, 9/27/93 3,000 3,000
North Carolina Municipal Power
Agency (Catawba Electric)
4.5%, 1/1/96 2,000 2,033
Wake County PCR
(Carolina Power & Light)
5.9%, 7/1/94* 5,000 5,012
--------------
STATE TOTAL 17,080
--------------
- ----------------------------------------------------------------
NORTH DAKOTA (1.0%)
Oliver County PCR
(Square Butte Electric)
3.735%, 9/1/93 13,245 13,261
--------------
- ----------------------------------------------------------------
OHIO (6.4%)
Columbus Refunding Limited Tax
3.9%, 7/1/97 4,850 4,869
Cuyahoga County Hospital Improvement
VRDO
(St. Luke's Hospital)
2.55%, 9/1/93 4,600 4,600
Ohio Air Quality Development Auth.
PCR CP
(Cincinnati Gas & Electric)
2.45%, 9/13/93 5,000 5,000
2.7%, 9/20/93 10,800 10,800
Ohio Public Facilities Commission
5.3%, 12/1/93 10,000 10,068
5.3%, 12/1/95 6,000 6,229
5.3%, 12/1/96 5,000 5,213
(Lease Fee)
4.1%, 12/1/95 9,830 9,975
Ohio Water Development Auth.
4.4%, 12/1/95 $ 5,000 $ 5,104
4.6%, 6/1/96 6,800 6,960
University of Cincinnati BAN
3.02%, 9/1/94 16,500 16,535
--------------
STATE TOTAL 85,353
--------------
- ----------------------------------------------------------------
OREGON (1.6%)
Oregon GO
10.0%, 9/1/93 7,500 7,500
Oregon Veterans Welfare Program VRDO
2.5%, 9/1/93 13,300 13,300
--------------
STATE TOTAL 20,800
--------------
- ----------------------------------------------------------------
PENNSYLVANIA (2.7%)
Northumberland County Commonwealth
Lease Revenue
5.75%, 10/15/95 (1) 3,480 3,650
Pennsylvania Turnpike Commission
7.875%, 12/1/96 (Prere.) 7,640 8,758
Philadelphia School Dist. GO
3.0%, 7/1/94 (2) 12,000 12,004
Philadelphia Water & Wastewater
Revenue
4.0%, 6/15/95 11,700 11,766
--------------
STATE TOTAL 36,178
--------------
- ----------------------------------------------------------------
RHODE ISLAND (.5%)
Rhode Island Student Loan Auth.
5.4%, 12/1/95 6,000 6,223
--------------
- ----------------------------------------------------------------
SOUTH CAROLINA (2.5%)
Charleston Water & Sewer
10.375%, 1/1/95 (Prere.) 5,000 5,602
Piedmont Municipal Power Agency
10.5%, 1/1/95 (Prere.) 4,000 4,488
11.0%, 1/1/95 (Prere.) 10,620 11,983
7.75%, 1/1/96 (Prere.) 3,700 4,098
South Carolina Public Service Auth.
(Santee Cooper)
9.5%, 7/1/95 (Prere.) 6,500 7,382
--------------
STATE TOTAL 33,353
--------------
- ----------------------------------------------------------------
TENNESSEE (1.8%)
Metropolitan Government of Nashville
& Davidson County
9.5%, 10/1/93 (ETM) 8,200 8,251
9.375%, 1/1/95 (Prere.) 8,580 9,420
8.75%, 1/1/96 (Prere.) 5,000 5,672
Tennessee GO BAN VRDO
2.45%, 9/1/93 1,100 1,100
--------------
STATE TOTAL 24,443
--------------
- ----------------------------------------------------------------
</TABLE>
10
<PAGE> 25
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
TEXAS (11.5%)
Austin Combined Utility System
Revenue
5.0%, 11/15/95 (2) $ 3,840 $ 3,960
10.25%, 11/15/95 (Prere.) 6,985 8,122
Dallas-Fort Worth Regional Airport
3.4%, 11/1/95 (1) 15,555 15,548
Dallas Waterworks & Sewer
6.5%, 4/1/95 5,000 5,232
El Paso Health Facilities VRDO
(Providence Memorial Hospital)
2.5%, 9/1/93 5,000 5,000
Gulf Coast Waste Disposal Auth.
PCR VRDO (Amoco Oil)
2.4%, 9/1/93 5,000 5,000
Harris County Toll Road Revenue
9.25%, 2/1/95 (Prere.) 16,130 17,914
9.875%, 2/1/95 (Prere.) 6,100 6,827
Houston GO
7.5%, 3/1/95 3,185 3,385
Houston Water & Sewer System
5.25%, 12/1/94 (3) 4,525 4,646
8.1%, 12/1/96 (Prere.) 10,000 11,532
Sam Rayburn Municipal Power Agency
9.25%, 9/1/95 (Prere.) 37,000 41,843
San Antonio GO
8.875%, 8/1/95 (Prere.) 2,500 2,752
Texas GO
9.0%, 12/1/94 6,850 7,357
Texas Municipal Power Agency
5.0%, 9/1/96 5,000 5,159
Texas Public Finance Auth. GO
7.375%, 10/1/93 4,300 4,317
Texas University System
3.5%, 10/1/93 4,400 4,404
--------------
STATE TOTAL 152,998
--------------
- ----------------------------------------------------------------
UTAH (2.8%)
Intermountain Power Agency
7.0%, 7/1/95 (Prere.) 5,000 5,319
9.0%, 7/1/95 6,000 6,571
9.2%, 7/1/95 (Prere.) 9,375 10,465
9.5%, 7/1/95 (Prere.) 5,000 5,631
9.625%, 7/1/95 (Prere.) 5,650 6,402
10.25%, 7/1/95 (Prere.) 2,500 2,849
--------------
STATE TOTAL 37,237
--------------
- ----------------------------------------------------------------
VIRGINIA (.4%)
Virginia Public School Auth.
3.25%, 1/1/95 5,000 4,998
--------------
- ----------------------------------------------------------------
WASHINGTON (1.4%)
King County GO
5.5%, 12/1/95 $ 5,600 $ 5,833
Washington GO
8.5%, 3/1/94 2,985 3,062
8.1%, 9/1/95 5,000 5,436
3.35%, 10/1/95 2,000 2,003
Washington Motor Vehicle Fuel
3.25%, 9/1/94 2,000 2,009
--------------
STATE TOTAL 18,343
--------------
- ----------------------------------------------------------------
WISCONSIN (2.9%)
City of Milwaukee GO
5.0%, 6/1/96 7,710 7,963
Milwaukee County GO
6.0%, 12/1/93 2,425 2,445
Milwaukee School Improvement RAN
3.5%, 8/25/94 28,000 28,172
--------------
STATE TOTAL 38,580
--------------
- ----------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,346,489) 1,358,031
- ----------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-2.2%)
- ----------------------------------------------------------------
Other Assets -- Note C 25,785
Liabilities (54,911)
--------------
(29,126)
- ----------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------
Applicable to 85,016,696 outstanding
$.001 par value shares
(authorized 250,000,000 shares) $1,328,905
- ----------------------------------------------------------------
NET ASSET VALUE PER SHARE $15.63
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 43.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
AT AUGUST 31, 1993, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------
Amount Per
(000) Share
------------ -------
<S> <C> <C>
Paid in Capital -- Note E $1,315,583 $15.47
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains --
Note A 1,780 .02
Unrealized Appreciation of
Investments 11,542 .14
- -----------------------------------------------------------------
NET ASSETS $1,328,905 $15.63
- -----------------------------------------------------------------
- -----------------------------------------------------------------
</TABLE>
11
<PAGE> 26
<TABLE>
<CAPTION>
Face Market
Amount Value
LIMITED-TERM PORTFOLIO (000) (000)+
- ----------------------------------------------------------------
MUNICIPAL BONDS (100.2%)
- ----------------------------------------------------------------
<S> <C> <C>
ALABAMA (.2%)
Alabama GO
5.35%, 9/1/96 $ 3,480 $ 3,642
--------------
- ----------------------------------------------------------------
ALASKA (.3%)
North Slope Borough GO
0.0%, 6/30/95 (1) 5,000 4,657
0.0%, 6/30/97 (1) 1,000 850
--------------
STATE TOTAL 5,507
--------------
- ----------------------------------------------------------------
ARIZONA (1.9%)
City of Mesa Utility System
6.1%, 7/1/96 (3) 4,000 4,257
Deer Valley School Dist.
7.85%, 7/1/94 (3) 3,000 3,119
Maricopa County GO
6.0%, 7/1/97 (2) 10,000 10,696
Phoenix GO
8.1%, 7/1/94 (Prere.) 3,900 4,144
5.2%, 7/1/96 6,830 7,123
Salt River Project Agricultural
Improvement & Power Dist.
5.8%, 1/1/96 2,000 2,092
--------------
STATE TOTAL 31,431
--------------
- ----------------------------------------------------------------
CALIFORNIA (6.2%)
Alameda County Public Facilities
Corp. COP
6.15%, 9/1/96* 10,000 10,389
California GO
8.9%, 3/1/97 3,000 3,461
California RAN
3.5%, 6/28/94 3,200 3,219
California Health Facilities
Finance Auth.
(Catholic Health Care West) VRDO
2.35%, 9/1/93 9,000 9,000
Clovis Unified School Dist.
4.5%, 8/1/96 11,250 11,572
Contra Costa Transportation
Auth. Sales Tax Revenue
VRDO 2.5%, 9/1/93 (3) 300 300
6.0%, 3/1/96 4,165 4,389
6.0%, 3/1/97 2,580 2,749
Los Angeles City COP
5.25%, 12/1/95 7,775 8,021
6.0%, 5/1/96 3,000 3,117
5.5%, 12/1/96 5,000 5,217
Los Angeles County TRAN
3.0%, 6/30/94 20,000 20,037
Orange County VRDO
2.6%, 9/1/93 $ 7,200 $ 7,200
Riverside County VRDO
2.3%, 9/1/93 7,000 7,000
Sacramento County Administration
Center & Courthouse VRDO
2.35%, 9/1/93 1,500 1,500
San Bernardino County Transportation
Auth.
3.75%, 3/1/97 4,280 4,262
--------------
STATE TOTAL 101,433
--------------
- ----------------------------------------------------------------
COLORADO (1.8%)
Colorado Health Auth.
(Rocky Mountain Hospital)
5.5%, 2/1/96 4,000 4,016
(Sisters of Charity Health System)
5.75%, 5/15/96 (1) 2,400 2,526
Colorado Springs Utilities
10.5%, 11/15/97 (Prere.) 3,000 3,758
Colorado State General Fund TRAN
3.25%, 6/27/94 6,600 6,617
Municipal Subdist. of
Northern Colorado
9.25%, 12/1/95 (Prere.) 6,025 6,838
Platte River Power Auth.
3.5%, 6/1/95 4,990 4,995
--------------
STATE TOTAL 28,750
--------------
- ----------------------------------------------------------------
CONNECTICUT (2.9%)
Connecticut GO
5.65%, 11/15/98 3,715 3,988
Connecticut Economic Recovery Notes
5.25%, 6/15/94 5,440 5,544
Connecticut Special Assessment
Unemployment Compensation
4.0%, 5/15/96 10,175 10,247
4.0%, 11/15/96 20,295 20,464
Connecticut Special Tax Obligation
4.8%, 9/1/97 6,350 6,550
--------------
STATE TOTAL 46,793
--------------
- ----------------------------------------------------------------
DISTRICT OF COLUMBIA (.5%)
District of Columbia GO
9.25%, 6/1/95 (Prere.) 4,000 4,469
6.0%, 6/1/97 (1) 3,250 3,462
--------------
STATE TOTAL 7,931
--------------
- ----------------------------------------------------------------
FLORIDA (7.6%)
Dade County Aviation Revenue
4.3%, 10/1/96 2,500 2,541
</TABLE>
12
<PAGE> 27
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Dade County School Dist.
6.8%, 7/1/96 $ 3,150 $ 3,396
Dade County Solid Waste System
8.8%, 10/1/94 3,000 3,172
Florida COP
5.75%, 5/15/95 2,500 2,557
Florida Board of Education GO
8.4%, 6/1/95 (Prere.) 17,000 18,754
Florida Dept. of General Services
6.1%, 7/1/97 (2) 6,900 7,425
Florida Dept. of Transportation TOB
2.7%, 1/2/94 (3) 2,200 2,200
Florida Municipal Power Agency
3.9%, 10/1/95 (3) 1,595 1,614
4.2%, 10/1/96 (3) 2,055 2,091
4.4%, 10/1/97 (3) 2,230 2,273
Florida School Board Association
6.5%, 7/1/94 (2) 7,000 7,222
Hillsborough County Aviation Auth.
(Tampa Airport)
3.9%, 10/1/96 (3) 7,155 7,210
City of Homestead Special
Insurance Assessment Revenue
4.2%, 9/1/96 (1) 6,190 6,277
4.4%, 3/1/97 (1) 7,200 7,298
Jacksonville Electric Auth. Revenue
7.5%, 10/1/95 (Prere.) 15,500 16,980
6.6%, 10/1/96 4,600 4,984
(St. John's River Project)
9.25%, 10/1/93 (Prere.) 500 513
Orlando Utility Commission Water &
Electric Revenue
CP 2.2%, 9/8/93 5,205 5,205
4.0%, 10/1/95 4,750 4,814
Port Everglade Port Facilities
Revenue
7.0%, 9/1/97 (4) 2,600 2,881
City of Sunrise Public Service
8.0%, 10/1/97 (2) 4,555 4,942
Tampa Utilities
8.0%, 10/1/97 (Prere.) 7,700 9,022
--------------
STATE TOTAL 123,371
--------------
- ----------------------------------------------------------------
GEORGIA (2.5%)
Georgia GO
7.0%, 11/1/94 8,470 8,881
7.4%, 8/1/97 4,265 4,820
7.0%, 11/1/97 5,000 5,613
Gwinnett County Water & Sewer Auth.
8.75%, 8/1/96 (Prere.) 14,250 16,499
Monroe County Development Auth.
(Oglethorpe Power)
5.1%, 1/1/97 $ 3,880 $ 4,004
--------------
STATE TOTAL 39,817
--------------
- ----------------------------------------------------------------
HAWAII (3.0%)
Hawaii GO
3.85%, 2/1/96 16,500 16,617
4.6%, 1/1/97 5,500 5,629
6.1%, 11/1/97 5,345 5,620
4.5%, 1/1/98 5,000 5,076
5.5%, 10/1/98 3,650 3,874
Hawaii Airport System Revenue
4.5%, 7/1/95 (1) 1,690 1,722
4.85%, 7/1/96 (1) 1,765 1,820
5.1%, 7/1/97 (1) 1,855 1,931
Honolulu City & County GO
4.6%, 10/1/99 6,500 6,610
--------------
STATE TOTAL 48,899
--------------
- ----------------------------------------------------------------
ILLINOIS (5.5%)
Chicago Park Dist. GO
9.7%, 1/1/96 3,000 3,370
Chicago School Finance Auth.
5.2%, 6/1/96 (3) 3,450 3,577
4.5%, 6/1/99 (3) 10,000 10,126
Chicago Waste Water Transmission
3.85%, 1/1/96 (3) 5,000 5,015
Chicago Water Capital Improvement
4.7%, 12/1/99 7,710 7,877
4.9%, 12/1/01 9,290 9,595
Chicago Water Revenue
4.7%, 11/1/97 (2) 3,250 3,335
Cook County GO
7.9%, 11/1/93 3,425 3,458
4.75%, 11/15/97 (3) 5,000 5,142
5.0%, 11/15/98 (3) 5,220 5,384
Illinois Sales Tax Revenue
6.9%, 6/15/97 2,000 2,208
7.6%, 6/15/97 (Prere.) 3,200 3,670
7.7%, 6/15/97 (Prere.) 3,200 3,681
7.8%, 6/15/97 (Prere.) 3,200 3,693
Illinois State Certificates
3.5%, 6/15/94 10,000 10,051
Metropolitan Water Recovery Dist. of
Chicago
7.25%, 1/1/96 5,200 5,625
6.8%, 1/1/97 3,400 3,701
--------------
STATE TOTAL 89,508
--------------
- ----------------------------------------------------------------
</TABLE>
13
<PAGE> 28
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
INDIANA (1.3%)
City of Rockport PCR
(Indiana & Michigan Electric Co.)
6.75%, 8/1/95* $11,500 $ 11,867
Indiana Toll Finance Auth.
9.0%, 7/1/95 (Prere.) 8,210 9,174
--------------
STATE TOTAL 21,041
--------------
- ----------------------------------------------------------------
KANSAS (.2%)
Kansas City Utility System
5.8%, 3/1/96 (2) 3,155 3,323
--------------
- ----------------------------------------------------------------
KENTUCKY (.9%)
Kentucky Development Finance Auth.
Hospital Revenue
(St. Elizabeth's Hospital)
6.1%, 11/1/96 (3) 3,105 3,327
Kentucky Turnpike Auth.
9.2%, 7/1/95 (Prere.) 7,050 7,969
4.3%, 7/1/97 (2) 3,150 3,197
--------------
STATE TOTAL 14,493
--------------
- ----------------------------------------------------------------
LOUISIANA (.7%)
Louisiana GO
9.3%, 5/1/95 (Prere.) 3,000 3,347
Louisiana Recovery Dist. Sales Tax
7.625%, 7/1/96 2,250 2,434
5.5%, 7/1/97 6,000 6,241
--------------
STATE TOTAL 12,022
--------------
- ----------------------------------------------------------------
MAINE (.6%)
Maine Municipal Bond Bank
4.125%, 11/1/97 10,000 10,070
--------------
- ----------------------------------------------------------------
MARYLAND (.2%)
Washington Suburban Sanitation Dist.
7.1%, 12/1/97 (Prere.) 2,405 2,743
--------------
- ----------------------------------------------------------------
MASSACHUSETTS (4.9%)
Massachusetts GO
7.25%, 6/1/96 10,850 11,870
4.4%, 9/1/96 7,300 7,442
5.8%, 8/1/97 7,000 7,429
7.0%, 7/1/98 10,000 11,065
6.0%, 8/1/98 3,000 3,211
5.1%, 9/1/99 7,000 7,248
Massachusetts Health & Higher
Education Facilities Auth.
(Milton Medical Center)
11.0%, 7/1/94 (Prere.) 5,000 5,431
Massachusetts Water Resources Auth.
4.125%, 10/15/95 14,000 14,151
5.8%, 7/15/97 7,145 7,570
Massachusetts Wholesale Electric
Power Supply System
13.0%, 1/1/95 (Prere.) $ 2,945 $ 3,399
--------------
STATE TOTAL 78,816
--------------
- ----------------------------------------------------------------
MINNESOTA (1.4%)
Minnesota GO
4.5%, 8/1/96 2,500 2,566
4.8%, 8/1/98 6,020 6,208
Southern Minnesota Municipal
Power Agency
9.5%, 1/1/96 (Prere.) 11,725 13,492
--------------
STATE TOTAL 22,266
--------------
- ----------------------------------------------------------------
MISSOURI (.7%)
Missouri Higher Education
Loan Auth.
5.15%, 2/15/98 11,365 11,823
--------------
- ----------------------------------------------------------------
NEBRASKA (.8%)
Nebraska Public Power Dist.
4.3%, 1/1/96 5,000 5,063
3.9%, 1/1/97 4,890 4,881
Omaha Public Power Dist.
4.35%, 2/1/98 2,400 2,422
--------------
STATE TOTAL 12,366
--------------
- ----------------------------------------------------------------
NEVADA (.5%)
Nevada GO
9.7%, 5/1/97 6,275 7,464
--------------
- ----------------------------------------------------------------
NEW JERSEY (5.4%)
Camden County GO
4.65%, 6/1/97 (1) 3,565 3,674
New Jersey Economic
Development Auth.
(Union Camp)
9.125%, 12/1/93 1,320 1,340
New Jersey GO
5.8%, 8/1/95 6,000 6,278
New Jersey Highway Auth.
10.0%, 1/1/95 (Prere.) 4,150 4,596
New Jersery Transportation
Trust Fund
3.8%, 6/15/96 17,695 17,797
4.1%, 6/15/97 15,000 15,125
4.4%, 6/15/99 10,000 10,065
New Jersey Turnpike Auth.
5.2%, 1/1/98 15,000 15,558
6.0%, 1/1/98 8,000 8,548
</TABLE>
14
<PAGE> 29
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Rutgers State University
8.125%, 5/1/97 (Prere.) $ 4,750 $ 5,533
--------------
STATE TOTAL 88,514
--------------
- ----------------------------------------------------------------
NEW YORK (5.0%)
Erie County
10.0%, 2/1/96 (3) 4,530 5,168
10.0%, 2/1/97 (3) 4,325 5,128
Municipal Assistance Corp. for
New York City
4.25%, 1/15/94 8,000 8,050
9.0%, 7/1/95 (Prere.) 6,000 6,723
6.8%, 7/1/96 6,000 6,509
New York City GO
5.5%, 8/1/98 15,000 15,572
New York State GO
6.625%, 8/1/94 4,805 4,974
New York State Dormitory Auth.
(City University)
5.5%, 7/1/98 6,300 6,505
New York State Housing Finance
Agency
8.875%, 11/1/95 (Prere.) 12,500 14,180
New York State Local Government
Assistance Corp.
4.1%, 4/1/95 2,400 2,423
4.5%, 4/1/96 2,000 2,037
Suffolk County Public Improvement
8.5%, 7/15/94 (3) 4,000 4,201
--------------
STATE TOTAL 81,470
--------------
- ----------------------------------------------------------------
NORTH CAROLINA (.7%)
North Carolina Eastern Power Agency
10.1%, 1/1/95 (Prere.) 6,500 7,260
North Carolina Municipal Power
Agency (Catawba Electric)
5.1%, 1/1/98 3,980 4,095
--------------
STATE TOTAL 11,355
--------------
- ----------------------------------------------------------------
OHIO (4.4%)
Cleveland Water Works
7.75%, 1/1/97 (Prere.) 5,000 5,707
Columbus Library Revenue
4.6%, 10/1/96 2,500 2,577
Columbus Sewer Improvement
9.0%, 9/15/96 5,065 5,816
Ohio Building Auth.
9.75%, 3/1/95 (Prere.) 5,000 5,613
7.0%, 9/1/00 4,000 4,450
Ohio Higher Education Facilities
5.875%, 12/1/96 6,650 7,074
Ohio Public Facilities Commission
5.3%, 12/1/93 $ 8,385 $ 8,442
4.4%, 12/1/96 7,000 7,146
6.5%, 12/1/97 2,950 3,219
Ohio Water Development Auth.
4.6%, 12/1/96 5,000 5,138
4.9%, 6/1/97 4,085 4,219
4.9%, 12/1/97 3,455 3,582
4.95%, 6/1/98 (1) 4,000 4,117
(Mead Corp.) VRDO
2.5%, 9/1/93 2,800 2,800
(Timpkin Co.) VRDO
2.35%, 9/1/93 1,900 1,900
--------------
STATE TOTAL 71,800
--------------
- ----------------------------------------------------------------
OKLAHOMA (2.1%)
Grand River Dam Auth.
6.3%, 6/1/97 3,450 3,728
4.9%, 6/1/98 27,500 28,129
Oklahoma City GO
10.0%, 8/1/96 2,465 2,882
--------------
STATE TOTAL 34,739
--------------
- ----------------------------------------------------------------
PENNSYLVANIA (6.2%)
Erie County Prison Auth.
5.65%, 11/1/95 (1) 3,125 3,274
Northumberland County Auth.
Commonwealth Lease Revenue
6.0%, 10/15/96 (1) 4,960 5,304
Pennsylvania COP
4.75%, 7/1/96 (2) 10,000 10,266
Pennsylvania Housing Finance Agency
6.6%, 7/1/96 3,230 3,372
Pennsylvania GO
6.0%, 9/15/96 4,550 4,849
6.0%, 11/1/96 (1) 5,000 5,345
8.3%, 4/15/97 3,800 4,193
5.0%, 7/1/97 3,930 4,078
6.0%, 9/15/97 5,885 6,336
5.4%, 11/15/97 4,000 4,226
5.4%, 7/1/00 4,000 4,234
Pennsylvania Industrial
Development Auth.
6.0%, 7/1/94 5,000 5,101
Pennsylvania Intergovernmental
Cooperation Auth.
5.2%, 6/15/96 (3) 5,650 5,862
5.4%, 6/15/97 (3) 4,000 4,205
Philadelphia School Dist. GO
4.7%, 7/1/99 (1) 14,000 14,242
</TABLE>
15
<PAGE> 30
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Philadelphia Water & Wastewater
Revenue
4.25%, 6/15/96 $15,000 $ 15,117
--------------
STATE TOTAL 100,004
--------------
- ----------------------------------------------------------------
PUERTO RICO (.8%)
Puerto Rico Government
Development Bank VRDO
2.15%, 9/1/93 100 100
Puerto Rico Telephone Auth.
4.8%, 1/1/01 13,000 13,063
--------------
STATE TOTAL 13,163
--------------
- ----------------------------------------------------------------
RHODE ISLAND (1.2%)
Rhode Island GO
6.0%, 5/15/97 9,215 9,863
Rhode Island Student Loan Auth.
5.4%, 12/1/95 10,000 10,372
--------------
STATE TOTAL 20,235
--------------
- ----------------------------------------------------------------
SOUTH CAROLINA (2.7%)
Charleston Water Works & Sewer
7.5%, 1/1/96 (Prere.) 12,700 14,053
Piedmont Municipal Power Agency
10.875%, 1/1/95 (Prere.) 8,735 9,842
9.7%, 1/1/96 (Prere.) 7,875 9,169
4.9%, 1/1/97 3,350 3,430
South Carolina Public Service Auth.
9.2%, 7/1/95 (Prere.) 6,100 6,895
--------------
State Total 43,389
--------------
- ----------------------------------------------------------------
TENNESSEE (.4%)
Metropolitan Government of Nashville
& Davidson County
10.5%, 12/1/97 (Prere.) 5,750 7,217
--------------
- ----------------------------------------------------------------
TEXAS (17.8%)
Anderson County
(Coffield Prison Farm Project)
8.0%, 3/15/97 (2) 4,135 4,665
Austin Combined Utility System
6.8%, 11/15/95 3,000 3,203
10.25%, 11/15/95 (Prere.) 12,805 14,890
4.0%, 11/15/96 7,820 7,890
11.0%, 11/15/96 3,830 4,648
9.75%, 5/15/97(1) 4,000 4,772
14.25%, 5/15/97 (Prere.) 7,090 9,580
Corpus Christi Utility System
6.2%, 7/15/96 (3) 2,965 3,159
6.3%, 7/15/97 (3) 2,460 2,659
Dallas-Fort Worth
Regional Airport
3.75%, 11/1/96 (1) $ 4,000 $ 4,009
4.0%, 11/1/97 (1) 9,000 9,023
4.3%, 11/1/98 (1) 9,375 9,405
Dallas Waterworks & Sewer System
6.75%, 4/1/96 11,250 12,087
6.9%, 4/1/97 2,000 2,195
5.9%, 10/1/97 7,265 7,800
Fort Worth Water & Sewer
5.2%, 2/15/96 3,000 3,098
5.4%, 2/15/97 4,000 4,171
Harris County Flood Control Dist. GO
5.6%, 10/1/97 5,000 5,302
Harris County Road Refunding GO
8.6%, 10/1/95 2,000 2,200
5.5%, 10/1/96 23,690 24,900
5.6%, 10/1/97 10,000 10,605
Houston GO
3.4%, 3/1/95 5,000 4,998
3.9%, 3/1/96 2,415 2,429
Houston Public Improvement
5.25%, 3/1/98 5,000 5,211
Houston Water and Sewer System
4.65%, 12/1/96 11,315 11,554
5.5%, 12/1/96 (2) 15,540 16,339
4.9%, 12/1/97 5,000 5,129
5.7%, 12/1/97 (2) 7,000 7,455
San Antonio GO
8.875%, 8/1/95 (Prere.) 4,000 4,403
San Antonio Electric & Gas Revenue
6.75%, 2/1/97 2,000 2,172
Texas A&M University Revenue
6.9%, 8/15/97 5,425 6,005
Texas Municipal Power Agency
5.0%, 9/1/96 8,585 8,857
14.25%, 3/1/97 (Prere.) 3,000 4,000
14.625%, 3/1/97 (Prere.) 5,115 6,882
6.4%, 9/1/98 3,000 3,282
Texas Public Finance Auth.
9.0%, 10/1/95 4,675 5,188
6.2%, 2/1/96 (1) 6,000 6,333
Texas GO
7.375%, 10/1/94 4,150 4,346
6.75%, 8/1/95 (ETM) 7,895 8,386
7.5%, 10/1/96 5,300 5,883
4.625%, 10/1/97 2,700 2,784
7.5%, 10/1/97 3,300 3,738
7.5%, 10/1/98 11,700 13,444
--------------
STATE TOTAL 289,079
--------------
- ----------------------------------------------------------------
</TABLE>
16
<PAGE> 31
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
UTAH (2.2%)
Intermountain Power Agency
4.6%, 7/1/95 $ 5,000 $ 5,097
8.75%, 7/1/95 (Prere.) 3,885 4,324
8.875%, 7/1/95 (Prere.) 10,000 11,105
3.9%, 7/1/96 7,000 7,043
Utah GO
4.9%, 7/1/97 7,300 7,591
--------------
STATE TOTAL 35,160
--------------
- ----------------------------------------------------------------
VERMONT (.6%)
Vermont GO CP
2.2%, 10/4/93 9,000 8,986
--------------
- ----------------------------------------------------------------
VIRGINIA (1.4%)
Southeast Public Service Auth.
10.5%, 7/1/95 (Prere.) 12,890 14,754
Virginia Public School Auth.
4.0%, 1/1/97 2,500 2,512
4.25%, 1/1/98 5,250 5,277
--------------
STATE TOTAL 22,543
--------------
- ----------------------------------------------------------------
WASHINGTON (1.6%)
King County GO
5.5%, 12/1/96 6,000 6,301
Washington GO
4.5%, 9/1/95 8,000 8,180
3.8%, 10/1/96 6,000 6,038
5.3%, 9/1/99 5,000 5,262
--------------
STATE TOTAL 25,781
--------------
- ----------------------------------------------------------------
WEST VIRGINIA (.1%)
Cabell Board of Education
8.0%, 5/1/97 (1) 2,120 2,394
--------------
- ----------------------------------------------------------------
WISCONSIN (3.0%)
Wisconsin GO
7.0%, 8/1/95 $ 10,130 $ 10,803
7.2%, 5/1/98 (Prere.) 4,000 4,543
4.125%, 11/1/98 33,625 33,771
--------------
STATE TOTAL 49,117
--------------
- ----------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,590,955) 1,628,455
- ----------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-.2%)
- ----------------------------------------------------------------
Other Assets -- Note C 40,602
Liabilities (44,018)
--------------
(3,416)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------
Applicable to 150,444,204 outstanding
$.001 par value shares
(authorized 250,000,000 shares) $1,625,039
- ----------------------------------------------------------------
NET ASSET VALUE PER SHARE $10.80
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 43.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
AT AUGUST 31, 1993, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------
Amount Per
(000) Share
------------ ----
<S> <C> <C>
Paid in Capital $1,584,914 $10.53
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains 2,625 .02
Unrealized Appreciation of
Investments 37,500 .25
- ----------------------------------------------------------------
NET ASSETS $1,625,039 $10.80
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
17
<PAGE> 32
<TABLE>
<CAPTION>
Face Market
Amount Value
INTERMEDIATE-TERM PORTFOLIO (000) (000)+
- ----------------------------------------------------------------
MUNICIPAL BONDS (99.2%)
- ----------------------------------------------------------------
<S> <C> <C>
ALABAMA (.1%)
Macintosh IDR
VRDO (Ciba-Geigy)
2.5%, 9/1/93 $ 1,300 $ 1,300
University of Southern
Alabama Hospital
7.0%, 5/15/04 (2) 3,250 3,690
--------------
STATE TOTAL 4,990
--------------
- ----------------------------------------------------------------
ALASKA (.5%)
Alaska State Housing Finance Corp.
9.9%, 12/1/97 60 62
Anchorage Electric Revenue
8.0%, 12/1/11 (1) 5,395 7,153
North Slope Borough GO
0.00%, 6/30/96 (1) 4,500 4,012
7.125%, 7/1/98 (1) 7,710 8,580
7.15%, 7/1/99 (1) 5,670 6,399
--------------
STATE TOTAL 26,206
--------------
- ----------------------------------------------------------------
ARIZONA (2.3%)
Arizona Transportation Board
8.75%, 7/1/03 10,000 12,884
6.35%, 7/1/05 10,660 11,669
6.45%, 7/1/06 2,250 2,464
6.6%, 7/1/08 8,250 9,006
Maricopa County PCR CP
(Southern California Edison)
2.6%, 9/14/93 8,330 8,330
Maricopa County
(Samaritan Health Service)
7.15%, 12/1/04 (1) 9,900 11,865
7.15%, 12/1/05 (1) 6,080 7,297
Maricopa County Unified School Dist.
5.2%, 7/1/06 9,380 9,562
Phoenix Highway Revenue
9.25%, 7/1/07 4,000 5,525
Salt River Project Agricultural
Improvement & Power Dist.
6.0%, 1/1/07 3,515 3,814
Tucson Unified School Dist.
7.5%, 7/1/06 (3) 8,840 10,914
7.5%, 7/1/07 (3) 9,125 11,330
7.5%, 7/1/08 (3) 8,060 10,065
--------------
STATE TOTAL 114,725
--------------
- ----------------------------------------------------------------
CALIFORNIA (7.8%)
California Public Works Board
6.1%, 12/1/05 (2) 6,515 7,117
6.2%, 12/1/06 (2) 3,320 3,683
California RAN
3.5%, 6/28/94 $ 4,500 $ 4,527
Clovis Unified School Dist.
0.00%, 8/1/00 7,000 4,971
0.00%, 8/1/01 11,180 7,499
Irvine VRDO
2.4%, 9/1/93 300 300
Long Beach Financing Auth.
6.0%, 11/1/07 (2) 3,070 3,362
Long Beach Harbor
7.1%, 5/15/99 2,900 3,299
7.15%, 5/15/00 10,000 11,531
7.2%, 5/15/01 2,000 2,330
Los Angeles COP
7.5%, 6/1/98 (Prere.) 3,950 4,602
7.6%, 6/1/98 (Prere.) 3,995 4,672
Los Angeles County TRAN
TOB 2.49%, 6/30/94 51,228 51,228
3.0%, 6/30/94 5,000 5,009
Los Angeles County Transportation
Commission Sales Tax
2.3%, 1/1/94 VRDO 9,100 9,100
6.5%, 7/1/01 (Prere.) 6,700 7,704
6.7%, 7/1/01 (Prere.) 5,500 6,400
6.5%, 7/1/10 51,070 58,889
Los Angeles County Sanitation Dist.
Finance Auth.
5.0%, 10/1/02 3,460 3,549
5.1%, 10/1/04 8,100 8,279
Metropolitan Water Dist. of
Southern California
7.75%, 7/1/01 (Prere.) 18,085 22,317
Northern California Power Agency
(Geothermal Project)
6.75%, 7/1/01 19,530 20,718
(Hydroelectric Project)
6.1%, 7/1/05 (1) 5,575 6,112
6.2%, 7/1/06 (1) 5,940 6,603
6.25%, 7/1/07 (1) 6,685 7,476
Oakland Redevelopment Agency
5.75%, 2/1/04 (2) 1,535 1,645
5.9%, 2/1/05 (2) 4,870 5,269
6.0%, 2/1/07 (2) 3,360 3,668
Orange County Apartment Development
Revenue CP
3.2%, 10/12/93 9,000 9,000
Poway Redevelopment Agency (Paguay
Project)
7.125%, 12/15/04 (3) 4,840 5,811
Riverside County VRDO
2.3%, 9/1/93 9,800 9,800
</TABLE>
18
<PAGE> 33
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Sacramento Municipal Utility Dist.
Electric Revenue
6.6%, 2/1/97 $ 4,000 $ 4,308
8.3%, 11/15/97 5,000 5,155
San Bernardino COP
6.75%, 8/1/10 11,385 12,482
San Diego County Regional
Transportation Auth. Sales Tax
7.0%, 4/1/01 (Prere.) 3,220 3,796
7.0%, 4/1/06 1,780 2,010
San Diego County Water Revenue COP
5.4%, 5/1/03 5,000 5,225
5.5%, 5/1/04 5,000 5,251
5.5%, 5/1/05 4,245 4,442
Southern California Public
Power Auth.
6.75%, 7/1/99 6,190 6,837
Southern California Rapid
Transit Dist.
5.7%, 9/1/04 (2) 14,040 15,036
Ventura County TRAN
3.0%, 8/1/94 15,000 15,017
--------------
STATE TOTAL 386,029
--------------
- ----------------------------------------------------------------
COLORADO (1.0%)
Colorado Health Auth.
(Sisters of Charity Health System)
8.5%, 5/15/04 (1) 17,500 22,886
Denver City & County School Dist.
6.95%, 12/15/00 (3) 9,250 10,570
Garfield County PCR (Unocal)
7.25%, 11/1/97 13,500 13,796
--------------
STATE TOTAL 47,252
--------------
- ----------------------------------------------------------------
CONNECTICUT (3.3%)
Connecticut GO
5.3%, 11/15/06 10,875 11,280
5.4%, 11/15/07 24,010 24,922
Connecticut Resource Recovery Auth.
(Bridgeport Resco)
8.4%, 1/1/99 4,950 5,506
Connecticut Special Tax Obligation
7.75%, 6/1/00 11,300 13,294
5.125%, 9/1/05 11,575 11,777
5.9%, 9/1/05 14,095 15,256
5.25%, 9/1/06 42,550 43,424
6.0%, 9/1/06 15,700 17,078
7.125%, 6/1/01 (Prere.) 5,365 6,346
7.125%, 6/1/10 12,000 14,667
--------------
STATE TOTAL 163,550
--------------
- ----------------------------------------------------------------
DELAWARE (1.9%)
Delaware Economic Development Auth.
VRDO
(Hospital Bill & Collection
Service)
2.5%, 9/1/93 $63,800 $ 63,800
Delaware Transportation Auth.
10.3%, 7/1/95 (Prere.) 2,975 3,392
7.3%, 7/1/00 (Prere.) 5,000 5,935
5.625%, 7/1/06 (1) 11,420 12,010
5.8%, 7/1/08 7,545 7,858
--------------
STATE TOTAL 92,995
--------------
- ----------------------------------------------------------------
DISTRICT OF COLUMBIA (1.7%)
District of Columbia GO
5.3%, 6/1/94 (3) 18,455 18,767
7.5%, 6/1/99 (2) (Prere.) 17,875 21,150
7.75%, 6/1/02 (6) 5,000 5,734
8.0%, 6/1/05 (Prere.) 18,420 20,778
6.3%, 6/1/08 (1) 15,000 16,280
--------------
STATE TOTAL 82,709
--------------
- ----------------------------------------------------------------
FLORIDA (4.3%)
Broward County School Dist. GO
5.3%, 2/15/04 3,295 3,424
5.4%, 2/15/05 9,000 9,382
5.5%, 2/15/06 10,080 10,515
Dade County Solid Waste System
7.0%, 10/1/01 6,240 6,699
Florida Board of Education TOB
2.65%, 12/1/93 17,000 17,000
Florida Dept. of General Services
6.25%, 7/1/06 5,600 6,131
Florida Municipal Power Agency
5.5%, 10/1/06 (3) 6,055 6,347
Florida School Board Association
6.9%, 7/1/99 (2) 6,950 7,692
7.0%, 7/1/00 (2) 13,820 15,589
Hillsborough County School Dist. GO
7.1%, 8/15/03 23,665 27,389
City of Homestead Special Insurance
Assessment Revenue
4.6%, 3/1/98 (1) 11,380 11,546
4.75%, 3/1/99 (1) 5,000 5,087
4.9%, 3/1/00 (1) 8,000 8,160
5.125%, 3/1/02 (1) 14,000 14,363
5.125%, 9/1/02 (1) 5,910 6,062
Orlando Utilities Commission Water &
Electric Revenue
2.45%, 9/1/93 VRDO 2,400 2,400
5.7%, 10/1/04 5,000 5,339
5.75%, 10/1/05 10,250 10,960
5.8%, 10/1/06 5,940 6,351
</TABLE>
19
<PAGE> 34
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
5.8%, 10/1/07 $12,000 $ 12,898
5.9%, 10/1/08 17,000 18,362
Port Everglades Port Facilities
Revenue
6.9%, 9/1/98 (3) 2,000 2,241
--------------
STATE TOTAL 213,937
--------------
- ----------------------------------------------------------------
GEORGIA (3.8%)
Fulton County Hospital Auth. CP
(St. Joseph's Hospital)
2.55%, 10/12/93 13,000 13,001
Fulton County School Dist.
6.375%, 5/1/10 15,000 16,893
Georgia GO
7.4%, 8/1/96 7,930 8,771
4.375%, 7/1/00 20,000 20,276
7.0%, 11/1/05 15,670 18,898
7.0%, 11/1/06 16,780 20,351
6.3%, 3/1/07 15,000 16,977
7.4%, 8/1/07 11,200 13,744
7.0%, 11/1/07 17,960 21,882
Monroe County Development Auth.
(Oglethorpe Power Corp.)
6.65%, 1/1/08 9,220 10,458
Municipal Electric Power Auth.
of Georgia
8.0%, 1/1/02 9,505 11,008
8.1%, 1/1/03 2,320 2,675
6.3%, 1/1/05 12,775 14,081
--------------
STATE TOTAL 189,015
--------------
- ----------------------------------------------------------------
HAWAII (3.5%)
Hawaii GO
TOB 2.65%, 10/1/93 25,000 25,000
5.0%, 2/1/04 10,000 10,269
5.0%, 2/1/05 11,650 11,894
5.125%, 2/1/06 11,605 11,882
6.3%, 3/1/06 5,555 6,144
6.4%, 3/1/07 5,555 6,207
6.4%, 3/1/08 5,555 6,228
Hawaii Airport System Revenue
5.85%, 7/1/02 (1) 7,830 8,504
5.95%, 7/1/03 (1) 2,590 2,823
6.05%, 7/1/04 (1) 3,145 3,454
6.15%, 7/1/05 (1) 10,735 11,851
Honolulu City & County GO
5.75%, 1/1/06 8,825 9,378
6.0%, 1/1/08 5,000 5,379
6.0%, 1/1/09 8,815 9,553
8.0%, 10/1/09 $30,560 $ 40,486
6.3%, 3/1/10 4,830 5,203
--------------
STATE TOTAL 174,255
--------------
- ----------------------------------------------------------------
ILLINOIS (5.8%)
Chicago Metropolitan Sanitation
Dist.
8.75%, 1/1/00 (Prere.) 2,980 3,697
Chicago Public Building
Commission Revenue
9.0%, 1/1/96 1,150 1,270
7.5%, 1/1/02 (1) 2,500 2,894
7.6%, 1/1/03 (1) 2,500 2,900
7.75%, 1/1/06 (3) 5,000 5,960
7.7%, 1/1/08 (1) 4,000 4,569
Chicago School Finance Auth.
6.0%, 6/1/01 (3) 8,305 8,971
4.9%, 6/1/02 (3) 10,000 10,213
6.1%, 6/1/02 (3) 11,945 12,972
5.0%, 6/1/03 (3) 25,190 25,734
5.1%, 6/1/04 (3) 26,155 26,806
Chicago Water Reclamation Dist.
5.9%, 12/1/06 4,450 4,807
5.95%, 12/1/07 7,200 7,783
5.5%, 12/1/08 5,300 5,460
6.0%, 12/1/08 9,900 10,693
6.05%, 12/1/09 3,000 3,253
Cook County GO
4.375%, 11/15/99 (1) 6,565 6,577
4.6%, 11/15/00 (1) 5,360 5,402
4.7%, 11/15/01 (1) 5,090 5,128
6.6%, 11/1/03 (2) 4,785 5,374
5.75%, 11/15/03 5,000 5,346
5.8%, 11/15/04 10,000 10,653
6.75%, 11/1/05 (2) 3,000 3,478
Illinois Health Facility Auth.
(Lutheran General Health Systems)
7.25%, 4/1/99 (Prere.) 1,945 2,237
7.25%, 4/1/00 10,490 11,583
Illinois Regional Transportation Auth.
9.0%, 6/1/05 (2) 5,220 7,069
9.0%, 6/1/08 (2) 6,840 9,554
9.0%, 6/1/09 (2) 4,255 5,990
Illinois Sales Tax Revenue
5.75%, 6/15/06 5,000 5,341
6.5%, 6/15/13 5,000 5,743
Metropolitan Pier & Exposition Auth.
7.25%, 6/15/05 15,000 17,611
6.5%, 6/1/06 11,885 13,124
6.75%, 6/1/10 25,000 28,868
--------------
STATE TOTAL 287,060
--------------
- ----------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
INDIANA (1.3%)
East Chicago School Building Corp.
11.75%, 2/1/99 (Prere.) $ 5,000 $ 6,667
Indiana Municipal Power Agency
5.875%, 1/1/10 (1) 4,500 4,790
Indiana State Office Building
6.65%, 7/1/01 4,500 5,016
6.7%, 7/1/02 5,290 5,880
Indiana University Student
Fee Bonds
6.8%, 8/1/04 25,000 27,599
7.0%, 8/1/06 5,845 6,441
Marion County Hospital Auth.
(Daughters of Charity)
9.75%, 11/1/00 4,800 5,436
--------------
STATE TOTAL 61,829
--------------
- ----------------------------------------------------------------
IOWA (.4%)
Iowa School Corp. Certificates
4.2%, 2/1/94 20,000 20,123
--------------
- ----------------------------------------------------------------
KENTUCKY (2.0%)
Kentucky Development
Finance Auth.
(St. Elizabeth Medical Center)
6.625%, 11/1/04 (3) 20,025 22,327
(Sisters of Charity)
6.6%, 11/1/06 5,000 5,537
Kentucky Higher Education Auth.
9.75%, 6/1/94 2,140 2,247
Kentucky Property &
Buildings Revenue
5.5%, 9/1/03 8,000 8,350
5.6%, 9/1/04 3,000 3,143
5.7%, 9/1/05 7,350 7,718
6.875%, 8/1/06 10,400 11,577
Kentucky Turnpike Auth.
5.2%, 7/1/03 (2) 8,750 9,077
5.5%, 7/1/08 (2) 8,850 9,191
Kentucky Turnpike Auth. Resource
Recovery Road Revenue
13.125%, 1/1/94 (Prere.) 75 79
13.125%, 7/1/97 (Prere.) 820 1,085
13.125%, 1/1/98 (Prere.) 30 41
8.0%, 7/1/03 14,750 16,954
--------------
STATE TOTAL 97,326
--------------
- ----------------------------------------------------------------
LOUISIANA (2.4%)
Jefferson Parish Sales Tax
6.75%, 12/1/06 (3) 11,000 12,551
Louisiana Gas & Fuel Tax Revenue
7.2%, 11/15/99 9,500 10,656
7.25%, 11/15/00 5,250 5,944
7.25%, 11/15/04 11,000 12,697
Louisiana GO
8.75%, 9/1/00 (4) $ 8,830 $ 10,773
8.75%, 9/1/01 (4) 9,445 11,751
6.3%, 5/1/04 (1) 4,750 5,238
5.3%, 8/1/04 (1) 14,140 14,710
5.5%, 8/1/06 (1) 4,030 4,185
Louisiana Public Facilities Auth.
(Unemployment Compensation
Funding)
7.40%, 9/1/97 10,000 10,409
7.6%, 9/1/98 5,000 5,191
Louisiana Recovery Dist.
Sales Tax
7.375%, 7/1/96 (2) 4,000 4,316
New Orleans Public Improvement
7.7%, 10/1/99 (6) 2,395 2,775
7.75%, 10/1/00 (6) 5,510 6,397
--------------
STATE TOTAL 117,593
--------------
- ----------------------------------------------------------------
MAINE (.3%)
Maine Municipal Bond Bank
4.9%, 11/1/02 13,000 13,152
--------------
- ----------------------------------------------------------------
MARYLAND
Maryland Department of
Transportation Revenue
9.0%, 12/1/98 1,000 1,035
--------------
- ----------------------------------------------------------------
MASSACHUSETTS (6.2%)
Boston Water & Sewer Commission
5.75%, 11/1/13 6,325 6,699
Massachusetts GO
6.9%, 6/1/00 (2) 2,500 2,845
7.0%, 6/1/02 (2) 5,000 5,639
6.5%, 5/1/04 (3) 4,000 4,243
5.1%, 2/1/05 25,000 25,171
6.5%, 8/1/05 3,840 4,386
6.5%, 8/1/08 9,400 10,501
Massachusetts Bay Transit Auth.
7.25%, 3/1/03 (3) 16,000 18,572
5.3%, 3/1/04 32,380 33,219
Massachusetts Industrial Finance
Agency (Refusetech Inc. Project)
6.15%, 7/1/02 5,040 5,299
6.3%, 7/1/05 12,000 12,708
Massachusetts Industrial Finance Auth.
Revenue (BioMed Research Corp.)
7.1%, 8/1/99 25,395 28,357
Massachusetts Turnpike Auth.
4.7%, 1/1/03 5,000 4,940
4.75%, 1/1/04 2,500 2,464
</TABLE>
21
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<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Massachusetts Water Resources Auth.
5.25%, 3/1/07 $ 5,000 $ 5,009
5.5%, 11/1/07 32,860 33,573
5.25%, 3/1/09 7,175 7,100
6.5%, 7/15/10 30,220 34,338
5.25%, 3/1/13 20,000 19,267
6.5%, 7/15/19 37,515 42,999
--------------
STATE TOTAL 307,329
--------------
- ----------------------------------------------------------------
MICHIGAN (2.1%)
Michigan Municipal Bond Auth.
0.0%, 12/1/99 (3) 6,000 4,496
0.0%, 12/1/00 (3) 5,590 3,958
0.0%, 12/1/01 (3) 9,630 6,428
Michigan Public Power Agency
5.3%, 1/1/05 13,075 13,479
5.375%, 1/1/06 13,790 14,196
5.5%, 1/1/07 14,545 15,015
5.5%, 1/1/08 9,360 9,589
Michigan State Building Auth.
(University of Michigan Adult
General Hospital)
6.5%, 10/1/03 (2) 3,000 3,347
Michigan State Housing Development
Auth. VRDO
2.55%, 9/1/93 32,500 32,500
--------------
STATE TOTAL 103,008
--------------
- ----------------------------------------------------------------
MINNESOTA (.5%)
Minnesota GO
4.7%, 8/1/97 16,315 16,844
4.9%, 8/1/98 3,810 3,946
Regents of University
of Minnesota CP
2.4%, 9/16/93 6,100 6,100
--------------
STATE TOTAL 26,890
--------------
- ----------------------------------------------------------------
MISSISSIPPI (.4%)
Mississippi GO
5.7%, 11/15/06 4,000 4,260
5.8%, 11/15/07 4,000 4,276
5.9%, 11/15/08 9,000 9,665
--------------
STATE TOTAL 18,201
--------------
- ----------------------------------------------------------------
MISSOURI (1.2%)
Missouri Housing
Development Commission
9.8%, 8/1/97 785 818
New Madrid Electric Revenue
5.75%, 6/1/03 37,190 37,319
St. Louis County Rockwood School
Dist. GO
8.5%, 2/1/01 $ 8,000 $ 9,907
8.5%, 2/1/02 7,250 9,106
--------------
STATE TOTAL 57,150
--------------
- ----------------------------------------------------------------
NEBRASKA (.6%)
Consumers Public Power Dist.
Electric Revenue
5.1%, 1/1/03 17,760 17,852
Nebraska Public Power Dist.
5.6%, 7/1/03 13,175 13,918
--------------
STATE TOTAL 31,770
--------------
- ----------------------------------------------------------------
NEVADA (2.3%)
Clark County GO
4.8%, 7/1/00 (1) 6,305 6,433
4.8%, 7/1/01 (1) 7,440 7,551
7.5%, 6/1/06 (2) 3,575 4,398
7.5%, 6/1/07 (2) 9,550 11,815
8.0%, 6/1/08 (2) 9,875 12,788
7.5%, 6/1/09 (2) 6,825 8,540
Clark County School Dist. GO
7.4%, 3/1/00 10,000 11,281
9.75%, 6/1/01 (1) 11,100 14,679
5.375%, 5/1/06 (3) 3,740 3,829
5.375%, 5/1/07 (3) 9,195 9,382
5.375%, 5/1/08 (3) 9,170 9,324
Nevada GO
6.0%, 5/1/05 10,450 11,214
Reno Hospital Revenue
(St. Mary's Hospital)
9.4%, 7/1/99 (1) (ETM) 2,505 2,812
--------------
STATE TOTAL 114,046
--------------
- ----------------------------------------------------------------
NEW JERSEY (4.5%)
0.0%, 9/1/99 (3) 12,545 9,605
0.0%, 9/1/00 (3) 18,500 13,447
0.0%, 9/1/02 (3) 18,545 12,069
0.0%, 9/1/03 (3) 18,545 11,373
New Jersey Sports & Exposition Auth.
6.5%, 3/1/06 4,725 5,197
6.5%, 3/1/07 3,500 3,827
New Jersey Transportation
Trust Fund
3.5%, 6/15/95 12,000 12,043
New Jersey Turnpike Auth.
5.9%, 1/1/03 4,700 5,056
5.9%, 1/1/04 19,030 20,334
6.0%, 1/1/05 22,220 24,363
4.75%, 1/1/06 (ETM) 40,695 40,768
6.5%, 1/1/09 50,000 56,977
</TABLE>
22
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<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Rutgers State University GO
6.4%, 5/1/13 $ 4,675 $ 5,367
--------------
STATE TOTAL 220,426
--------------
- ----------------------------------------------------------------
NEW YORK (8.5%)
Metropolitan Transportation Auth.
5.4%, 7/1/03 16,040 16,098
6.1%, 7/1/03 (3) 4,300 4,734
6.25%, 7/1/04 (3) 5,000 5,548
5.625%, 7/1/05 11,485 11,725
5.75%, 7/1/06 12,320 12,719
6.1%, 7/1/07 (1) 3,625 4,019
6.1%, 7/1/08 (1) 7,200 7,974
Municipal Assistance Corp. for
New York City
4.25%, 1/15/94 23,335 23,480
New York City GO
8.0%, 8/1/99 5,175 5,990
7.0%, 8/15/99 (3) 15,000 17,029
7.0%, 8/1/00 5,650 6,223
8.0%, 11/1/00 (2) 4,420 5,125
6.25%, 8/1/03 14,000 15,206
6.375%, 8/1/04 20,000 21,499
8.125%, 11/1/04 (3) 11,155 13,022
7.0%, 2/1/05 5,000 5,551
New York City Finance Auth.
Water and Sewer Revenue
6.0%, 6/15/10 4,000 4,212
New York City Water BAN
2.75%, 4/15/94 23,550 23,554
New York City RAN
3.5%, 4/15/94 15,000 15,072
New York State Dormitory Auth.
(City University)
7.0%, 7/1/01 10,000 11,556
6.25%, 7/1/03 4,250 4,547
6.35%, 7/1/04 2,500 2,704
6.45%, 7/1/05 1,500 1,641
(New York University)
6.375%, 7/1/07 (3) 27,000 29,397
(State University)
7.1%, 5/15/00 6,050 6,764
7.0%, 5/15/01 18,285 20,191
7.25%, 5/15/04 2,000 2,363
Onondaga County PCR
(Anheuser Busch)
6.625%, 8/1/06 10,000 11,328
Suffolk County Water Auth.
6.8%, 8/17/10 10,660 12,405
Triborough Bridge & Tunnel Auth.
0.0%, 1/1/03 19,185 11,531
5.8%, 1/1/06 6,000 6,455
6.6%, 1/1/10 $59,325 $ 68,599
6.0%, 1/1/12 12,000 13,065
--------------
STATE TOTAL 421,326
--------------
- ----------------------------------------------------------------
NORTH CAROLINA (1.6%)
North Carolina Eastern Municipal
Power Agency
10.625%, 1/1/95 (Prere.) 9,600 10,786
9.4%, 1/1/97 (Prere.) 2,000 2,213
9.6%, 1/1/98 (Prere.) 3,025 3,355
North Carolina Educational
Facilities Auth. VRDO
(Duke University)
2.4%, 9/1/93 4,100 4,100
North Carolina Municipal Power
Agency (Catawba Electric)
7.0%, 1/1/00 (Prere.) 6,040 6,966
6.0%, 1/1/04 7,000 7,501
6.0%, 1/1/05 28,750 30,800
7.25%, 1/1/07 10,410 12,376
-------------
STATE TOTAL 78,097
--------------
- ----------------------------------------------------------------
OHIO (2.4%)
Cleveland GO
5.2%, 9/1/06 (2) 7,000 7,160
Cleveland School Dist.
8.125%, 12/1/98 (ETM) 3,590 4,093
9.0%, 12/1/98 (Prere.) 4,000 4,990
Cleveland Water Works
6.25%, 1/1/05 (2) 4,455 4,883
Cuyahoga County Hospital Improvement
VRDO
(St. Luke's Hospital)
2.55%, 9/1/93 7,000 7,000
Ohio Air Quality Development Auth.
VRDO (Mead Corp.)
2.5%, 9/1/93 3,900 3,900
Ohio Building Auth.
(State Correctional Facilities)
7.2%, 8/1/00 10,000 11,548
7.25%, 8/1/01 7,500 8,621
7.3%, 8/1/02 10,000 11,442
6.5%, 10/1/02 3,790 4,224
7.35%, 8/1/03 4,945 5,723
5.7%, 10/1/03 3,305 3,500
6.5%, 10/1/03 5,500 6,101
5.7%, 10/1/04 2,725 2,883
6.5%, 10/1/04 2,500 2,761
5.8%, 10/1/06 4,360 4,623
5.9%, 10/1/07 2,500 2,655
(State Data Center)
5.7%, 10/1/04 2,895 3,063
5.75%, 10/1/05 3,070 3,251
</TABLE>
23
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<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Ohio Higher Education Facilities
5.9%, 12/1/05 $ 8,175 $ 8,745
Ohio Public Facilities Commission
5.5%, 12/1/06 5,465 5,630
Ohio Water Quality Development Auth.
VRDO (Mead Corp.)
2.5%, 9/1/93 1,500 1,500
--------------
STATE TOTAL 118,296
--------------
- ----------------------------------------------------------------
OKLAHOMA (2.2%)
Grand River Dam Auth. Electric
Revenue
8.0%, 6/1/02 21,000 25,352
5.7%, 6/1/05 20,000 21,231
5.75%, 6/1/06 19,350 20,350
5.875%, 6/1/07 14,500 15,540
Oklahoma City GO
10.0%, 8/1/94 7,405 7,868
Oklahoma Industries Auth.
(St. Anthony's Hospital)
7.5%, 10/1/03 (1) 5,470 6,004
Tulsa Metropolitan Utilities Auth.
Water & Sewer Revenue
7.0%, 2/1/03 8,465 9,982
--------------
STATE TOTAL 106,327
--------------
- ----------------------------------------------------------------
OREGON (.1%)
Oregon Veterans Welfare
Program VRDO
2.5%, 9/1/93 6,600 6,600
--------------
- ----------------------------------------------------------------
PENNSYLVANIA (6.5%)
Allegheny County GO
7.45%, 2/15/98 2,000 2,231
7.6%, 11/1/98 2,000 2,326
Erie County Prison Auth.
Commonwealth Lease Revenue
6.75%, 11/1/01 (1) (Prere.) 5,295 6,066
Northumberland County Commonwealth
Lease Revenue
6.7%, 10/15/01 (1) (Prere.) 7,005 8,059
7.75%, 10/15/01 (1) (Prere.) 6,000 7,332
Pennsylvania COP
4.8%, 7/1/01 (2) 20,000 20,233
4.9%, 7/1/02 (2) 13,665 13,820
5.0%, 7/1/03 (2) 6,555 6,631
Pennsylvania GO
6.2%, 11/15/04 12,480 13,663
5.0%, 4/15/05 24,290 24,523
6.5%, 11/1/06 4,260 4,687
5.0%, 4/15/07 7,950 7,903
6.5%, 11/1/07 14,900 16,311
5.0%, 4/15/08 $14,250 $ 14,031
7.1%, 11/1/08 6,700 7,558
Pennsylvania Higher Educational
Facilities Auth.
9.0%, 6/15/94 (2) 2,395 2,506
Pennsylvania Industrial
Development Auth.
6.5%, 7/1/98 9,850 10,503
6.6%, 1/1/99 5,065 5,435
6.6%, 7/1/99 10,355 11,173
6.7%, 1/1/00 7,420 8,047
6.7%, 7/1/00 9,080 9,898
6.8%, 1/1/01 5,000 5,479
6.8%, 7/1/01 5,480 6,034
Pennsylvania Intergovernmental
Cooperation Auth.
5.75%, 6/15/99 (3) 17,000 18,259
4.7%, 6/15/01 (3) 3,410 3,456
4.8%, 6/15/02 (3) 6,275 6,364
Pennsylvania Public School
Building Auth.
10.375%, 11/1/94 (Prere.) 1,320 1,374
Philadelphia GO
4.6%, 5/15/99 (3) 4,345 4,393
Philadelphia School Dist.
6.7%, 7/1/99 (2) 9,000 9,966
0.0%, 7/1/00 (2) 15,500 11,276
5.2%, 7/1/03 (2) 7,500 7,709
Philadelphia Water & Wastewater
Revenue
4.75%, 6/15/98 11,540 11,657
Philadelphia Water & Sewer Revenue
8.9%, 10/1/00 (Prere.) 10,000 11,251
6.875%, 10/1/06 (1) 15,455 17,395
Schuylkill Redevelopment Auth.
6.95%, 6/1/01 (3) (Prere.) 3,995 4,694
--------------
STATE TOTAL 322,243
--------------
- ----------------------------------------------------------------
PUERTO RICO (.2%)
Puerto Rico Telephone Auth.
5.4%, 1/1/08 9,550 9,752
--------------
- ----------------------------------------------------------------
RHODE ISLAND (.6%)
Rhode Island Depositors Economic
Protection Corp.
6.55%, 8/1/10 (1) 26,850 30,665
--------------
- ----------------------------------------------------------------
SOUTH CAROLINA (.3%)
Charleston Water Works & Sewer
9.625%, 1/1/96 (Prere.) 4,000 4,614
Piedmont Municipal Power Agency
10.875%, 1/1/95 (Prere.) 3,900 4,394
5.4%, 1/1/07 (1) 3,200 3,284
</TABLE>
24
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<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
South Carolina GO
6.5%, 2/1/96 $ 3,000 $ 3,209
Sumter County (Tuomey Hospital)
9.375%, 10/1/94 1,500 1,617
--------------
STATE TOTAL 17,118
--------------
- ----------------------------------------------------------------
SOUTH DAKOTA (.1%)
South Dakota Health & Education
Auth. Revenue
7.5%, 7/1/04 (1) 5,845 6,865
--------------
- ----------------------------------------------------------------
TENNESSEE
Tennessee GO VRDO
2.45%, 9/1/93 800 800
--------------
- ----------------------------------------------------------------
TEXAS (9.8%)
Anderson County Revenue
(Coffield Prison Farm Project)
5.5%, 3/15/04 (2) 5,715 5,934
5.5%, 3/15/05 (2) 5,590 5,774
5.5%, 3/15/06 (2) 6,985 7,178
Austin Combined Utility System
5.125%, 11/15/02 9,500 9,734
5.20%, 11/15/03 3,360 3,434
7.25%, 11/15/03 6,000 6,856
5.30%, 5/15/04 5,770 5,912
5.30%, 11/15/04 5,735 5,881
6.0%, 11/15/04 (1) 10,000 10,958
6.0%, 11/15/05 (1) 10,000 10,894
5.8%, 11/15/06 5,255 5,553
6.0%, 11/15/06 (1) 23,265 25,257
Bell County Health Facilities
Development Corp.
(Scott & White Hospital)
7.625%, 9/1/03 8,340 9,334
Corpus Christi GO
7.5%, 11/1/97 (2) (Prere.) 1,865 2,066
7.5%, 11/1/98 (2) 1,155 1,313
Dallas-Fort Worth Regional Airport
8.75%, 11/1/03 4,890 5,701
Dallas Waterworks & Sewer System
4.7%, 4/1/02 8,000 8,056
Houston GO
7.3%, 3/1/98 (3) (Prere.) 3,000 3,408
5.0%, 3/1/04 6,265 6,341
5.0%, 3/1/05 10,000 10,053
5.1%, 3/1/06 12,200 12,282
7.0%, 3/1/08 37,405 44,328
Houston Housing Finance Corp. TOB
2.8%, 12/1/93 5,000 5,000
Houston Water & Sewer
System Revenue
7.0%, 12/1/01 (2) 3,220 3,719
7.0%, 12/1/02 (2) $ 4,125 $ 4,783
7.6%, 12/1/02 (6) 4,010 4,484
7.0%, 12/1/03 (2) 8,120 9,416
5.8%, 12/1/04 (1) 8,160 8,738
San Antonio Electric & Gas
10.75%, 2/1/95 (Prere.) 5,000 5,607
5.5%, 2/1/04 19,545 20,345
5.8%, 2/1/06 8,000 8,487
San Antonio Water Revenue
6.3%, 5/15/04 (3) 3,955 4,395
6.4%, 5/15/05 (3) 5,250 5,831
Texas GO
TOB 2.6%, 10/1/93 (Prere.) 9,350 9,350
6.0%, 10/1/06 6,000 6,523
8.0%, 10/1/07 50,000 65,331
Texas Municipal Power Agency
6.0%, 9/1/02 (1) (Prere.) 9,270 10,290
6.1%, 9/1/07 (1) 12,500 13,687
6.1%, 9/1/08 (1) 27,840 30,336
6.1%, 9/1/09 (1) 5,000 5,462
Texas Public Finance Auth.
Building Revenue
6.6%, 2/1/00 (1) 5,000 5,565
6.75%, 2/1/02 (1) 5,000 5,599
6.8%, 2/1/03 (1) 5,000 5,562
Texas Water Resource Finance Auth.
7.5%, 8/15/01 3,995 4,519
University of Texas Revenue
7.0%, 8/15/07 20,750 23,638
University of Texas Permanent
University Fund
5.9%, 7/1/02 5,000 5,444
6.4%, 7/1/02 5,000 5,608
--------------
STATE TOTAL 483,966
--------------
- ----------------------------------------------------------------
UTAH (.8%)
Intermountain Power Agency
4.7%, 7/1/02 16,400 16,446
4.8%, 7/1/03 10,000 10,007
5.375%, 7/1/07 7,000 7,144
Utah GO
6.0%, 7/1/96 5,000 5,326
--------------
STATE TOTAL 38,923
--------------
- ----------------------------------------------------------------
VIRGINIA (.2%)
Southeast Public Service Auth.
10.5%, 7/1/95 (Prere.) 8,000 9,157
--------------
- ----------------------------------------------------------------
WASHINGTON (3.1%)
King County GO
6.0%, 12/1/04 5,000 5,429
6.1%, 12/1/05 5,000 5,431
</TABLE>
25
<PAGE> 40
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Seattle Water System
4.9%, 12/1/02 $ 5,890 $ 6,021
5.0%, 12/1/03 2,000 2,045
5.1%, 12/1/04 4,000 4,103
5.2%, 12/1/05 2,320 2,384
Snohomish County Utility Dist. #1
Electric Revenue
10.0%, 1/1/94 (ETM) 1,065 1,091
Washington GO
7.2%, 9/1/98 (Prere.) 2,365 2,693
4.3%, 10/1/98 13,720 13,819
7.1%, 9/1/99 7,500 8,447
5.6%, 9/1/04 5,000 5,299
6.1%, 6/1/06 9,495 10,386
6.125%, 6/1/07 10,110 11,051
5.75%, 9/1/07 19,950 21,154
6.2%, 6/1/08 10,765 11,793
5.75%, 9/1/08 4,000 4,219
6.25%, 6/1/09 11,465 12,643
6.25%, 6/1/10 7,450 8,211
6.25%, 2/1/11 6,680 7,387
Washington State
Health Care Auth.
(Empire Health Spokane)
8.0%, 7/1/97 (1) (Prere.) 9,200 10,805
--------------
STATE TOTAL 154,411
--------------
- ----------------------------------------------------------------
WISCONSIN (2.6%)
Wisconsin GO
4.25%, 11/1/99 14,000 14,067
9.15%, 1/1/00 2,435 2,615
5.5%, 11/1/05 12,325 12,984
6.2%, 5/1/06 20,990 23,289
5.6%, 11/1/06 10,000 10,603
6.25%, 5/1/07 22,970 25,545
5.7%, 11/1/07 13,000 13,901
6.25%, 5/1/08 24,365 27,018
--------------
STATE TOTAL 130,022
--------------
- ----------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $4,529,676) 4,907,169
- ----------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.8%)
- ----------------------------------------------------------------
Other Assets -- Note C $ 96,844
Liabilities (58,636)
--------------
38,208
- ----------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------
Applicable to 367,770,795 outstanding
$.001 par value shares
(authorized 400,000,000 shares) $4,945,377
- ----------------------------------------------------------------
NET ASSET VALUE PER SHARE $13.45
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 43.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
AT AUGUST 31, 1993, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------
Amount Per
(000) Share
------------ ----
<S> <C> <C>
Paid in Capital -- Note E $4,585,173 $12.47
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains --
Note A 3,872 .01
Unrealized Appreciation of
Investments 356,332 .97
- -----------------------------------------------------------------
NET ASSETS $4,945,377 $13.45
- -----------------------------------------------------------------
- -----------------------------------------------------------------
</TABLE>
26
<PAGE> 41
<TABLE>
<CAPTION>
Face Market
Amount Value
INSURED LONG-TERM PORTFOLIO (000) (000)+
- ----------------------------------------------------------------
MUNICIPAL BONDS (99.9%)
- ----------------------------------------------------------------
<S> <C> <C>
ALABAMA (1.5%)
Alabama Housing Finance Auth.
9.0%, 4/1/12 (1) $ 1,875 $ 1,961
Birmingham Medical Center
(Special Care Medical Center)
7.25%, 7/1/15 (1) 6,715 7,471
Houston County Health Care
(S.E. Alabama Medical Center)
7.25%, 10/1/19 (1) (Prere.) 8,000 9,422
Medical Clinic Board of Bessemer
(Bessemer-Carraway Hospital)
7.25%, 4/1/15 (1) 5,000 5,734
Tuscaloosa City GO
6.75%, 7/1/20 (2) 1,900 2,102
Wilsonville PCR
(S.E. Electric Generating)
6.75%, 2/1/15 (1) 5,900 6,541
--------------
STATE TOTAL 33,231
--------------
- ----------------------------------------------------------------
ALASKA (1.3%)
Anchorage Electric Revenue
8.0%, 12/1/09 (1) 2,565 3,371
8.0%, 12/1/10 (1) 2,960 3,908
Municipality of Anchorage GO
7.625%, 8/1/96 (3) (Prere.) 3,000 3,381
7.2%, 6/1/17 (2) 11,000 12,532
North Slope Borough GO
9.85%, 6/30/97 (2) (ETM) 3,000 3,630
10.0%, 6/30/04 (2) (ETM) 850 1,196
--------------
STATE TOTAL 28,018
--------------
- ----------------------------------------------------------------
ARIZONA (.7%)
Maricopa County
(Samaritan Health Service)
7.0%, 12/1/16 (1) 8,650 10,502
Salt River Agricultural
Improvement & Power Dist.
6.0%, 1/1/09 4,750 5,163
--------------
STATE TOTAL 15,665
--------------
- ----------------------------------------------------------------
ARKANSAS (.4%)
North Little Rock Electric System
6.5%, 7/1/10 (1) 3,500 4,031
6.5%, 7/1/15 (1) 4,500 5,232
--------------
STATE TOTAL 9,263
--------------
- ----------------------------------------------------------------
CALIFORNIA (15.1%)
Brea Public Finance Auth.
5.5%, 8/1/17 (1) 10,000 10,017
California Health Facilities Finance
Auth. (Adventist Health System)
6.75%, 3/1/11 (1) $12,000 $ 13,417
(Daughters of Charity Health
System) VRDO
2.4%, 9/1/93 1,400 1,400
California Housing Finance Agency
8.625%, 8/1/15 (1) 5,545 5,941
Contra Costa Transportation Auth.
Sales Tax Revenue VRDO
2.5%, 9/1/93 (3) 200 200
Culver City
Redevelopment Auth.
7.1%, 11/1/10 (2) 5,000 5,763
Fresno COP
(City Hall Project)
6.375%, 8/1/10 (2) 10,500 11,404
Glendale Redevelopment Agency Tax
Allocation Bonds
7.1%, 12/1/98 (2) (Prere.) 15,000 17,430
Irvine Ranch Water Dist. VRDO
2.45%, 9/1/93 200 200
Long Beach Finance Auth.
6.0%, 11/1/09 (2) 3,735 4,091
Los Angeles County Metropolitan
Transportation Auth.
5.0%, 7/1/21 (3) 12,000 11,312
Los Angeles County TRAN
3.0%, 6/30/94 40,000 40,074
Modesto Irrigation Dist.
Finance Auth.
(Woodland Project)
6.5%, 10/1/22 (2) 20,225 23,769
Modesto Santa Clara Redding Public
Power Agency
6.125%, 7/1/13 (2) 7,000 7,776
6.75%, 7/1/20 (1) 13,000 15,660
Northern California Power Agency
(Hydroelectric Project)
5.5%, 7/1/23 (1) 23,200 23,230
(Combustion Turbine Project)
6.0%, 8/15/10 (1) 3,500 3,653
Oakland Redevelopment Agency
(Central District Project)
6.0%, 2/1/08 (2) 5,585 6,093
5.5%, 2/1/14 (2) 6,300 6,479
Orange County VRDO
2.6%, 9/1/93 4,000 4,000
Orange County Sanitation Dist. COP
VRDO 2.4%, 9/1/93 900 900
Orange County Water Dist. COP
2.4%, 9/1/93 800 800
</TABLE>
27
<PAGE> 42
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Palmdale Single Family
Mortgage Revenue
9.875%, 4/1/08 (3) $ 79 $ 83
Pasadena Electric Works Revenue
5.375%, 8/1/12 9,000 9,092
Pittsburg Redevelopment Agency
5.5%, 8/1/07 (3) 3,000 3,097
5.5%, 8/1/15 (3) 5,000 5,008
Riverside County VRDO
2.3%, 9/1/93 400 400
Riverside County Transportation
Commission
5.75%, 6/1/07 (2) 3,495 3,735
5.75%, 6/1/08 (2) 1,750 1,867
Sacramento Municipal Utility Dist.
5.75%, 8/15/13 (1) 12,360 12,655
6.75%, 9/1/19 (1) 17,000 19,207
San Jose Merged Area Redevelopment
Project Revenue
7.5%, 8/1/04 (3) 1,440 1,617
7.5%, 8/1/09 (1) 2,700 3,020
Santa Clara Redevelopment Agency
7.0%, 7/1/10 (2) 3,000 3,623
Santa Rosa Waste Water Recovery
6.0%, 9/1/15 (3) 5,000 5,513
South County Waste Water Auth.
5.5%, 8/1/22 (3) 15,000 15,043
Southern California Public Power Auth.
5.0%, 7/1/15 (2) 2,605 2,472
Southern California Rapid Transit Dist.
5.75%, 9/1/05 (2) 9,250 9,922
5.8%, 9/1/06 (2) 6,975 7,497
5.9%, 9/1/07 (2) 3,155 3,422
Transmission Agency of Northern
California
5.25%, 5/1/08 (1) 4,000 4,065
Ukiah Electric Revenue
6.25%, 6/1/18 (1) 6,330 7,134
--------------
STATE TOTAL 332,081
--------------
- ----------------------------------------------------------------
COLORADO (1.0%)
Colorado Health Auth.
(Boulder Community Hospital)
7.3%, 10/1/14 (1) 5,000 5,721
(Sisters of Charity Health System)
6.0%, 5/15/13 (1) 12,500 13,188
Denver County Health Facilities
(St. Anthony's Hospital)
7.7%, 5/1/07 (1) 2,800 3,235
--------------
STATE TOTAL 22,144
--------------
- ----------------------------------------------------------------
CONNECTICUT (.6%)
Connecticut Economic Recovery GO
5.25%, 6/15/94 $11,720 $ 11,944
South Central Connecticut Regional
Water Auth.
5.75%, 8/1/12 (3) 2,000 2,095
--------------
STATE TOTAL 14,039
--------------
- ----------------------------------------------------------------
DELAWARE (1.6%)
Delaware Economic
Development Auth.
(Delmarva Power and Light)
7.3%, 9/1/15 (3) 4,000 4,670
VRDO (Hospital Bill & Collection
Service) 2.5%, 9/1/93 12,200 12,200
Delaware Health Facilities Auth.
(Delaware Medical Center)
7.0%, 10/1/15 (1) 6,000 6,844
Dover Electric Revenue
6.1%, 7/1/11 (3) 2,000 2,169
5.75%, 7/1/15 (3) 5,225 5,400
Wilmington GO
6.25%, 4/1/12 (3) 3,050 3,320
--------------
STATE TOTAL 34,603
--------------
- ----------------------------------------------------------------
DISTRICT OF COLUMBIA (.2%)
District of Columbia VRDO
2.4%, 9/1/93 1,900 1,900
District of Columbia Housing
Finance Agency
10.25%, 11/1/09 (3) 1,455 1,513
--------------
State Total 3,413
--------------
- ----------------------------------------------------------------
FLORIDA (8.4%)
Coral Springs Improvement Dist. GO
6.0%, 6/1/10 (1) 3,000 3,292
Davie Water & Sewer Revenue
6.375%, 10/1/12 (2) 2,620 3,000
Daytona Beach Water & Sewer
Revenue
5.75%, 11/15/10 (2) 2,790 2,921
Florida Housing Finance Agency
9.125%, 12/15/16 (3) 1,000 1,060
Florida Municipal Power Agency
(St. Lucie Project)
5.5%, 10/1/12 (3) 4,070 4,117
(Stanton Project)
5.0%, 10/1/19 (1) 8,100 7,692
Hillsborough County Industrial
Development Auth. PCR VRDO
(Tampa Electric Co.)
2.3%, 9/1/93 100 100
</TABLE>
28
<PAGE> 43
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
City of Homestead
5.25%, 3/1/03 $ 2,000 $ 2,062
Indian River County Water & Sewer
5.25%, 9/1/18 (3) 3,200 3,145
City of Jacksonville Guaranteed
Entitlement Revenue
5.5%, 10/1/12 (2) 4,900 4,973
Lee County Gas Tax
5.5%, 10/1/09 (1) 2,000 2,030
Orange County Tourist Development
6.25%, 10/1/13 (2) 8,000 8,745
Orange and Orlando County Expressway
8.25%, 7/1/13 (3) 9,695 13,371
8.25%, 7/1/15 (3) 8,360 11,623
8.25%, 7/1/16 (3) 12,295 17,209
Orlando Utilities Commission
2.45%, 9/1/93 VRDO 1,400 1,400
5.0%, 10/1/23 15,000 14,112
Palm Beach Criminal Justice
5.375%, 6/1/06 (3) 3,925 4,058
7.2%, 6/1/14 (3) 16,300 20,358
7.2%, 6/1/15 (3) 4,000 5,022
Palm Beach Solid Waste Auth.
7.4%, 12/1/05 (6) 750 850
St. Lucie County Utilities System
6.0%, 10/1/20 (3) 2,350 2,589
Seacoast Utility Auth.
5.5%, 3/1/13 (3) 4,000 4,041
5.0%, 3/1/19 (3) 9,450 8,980
5.5%, 3/1/19 (3) 2,000 2,064
Tampa Utilities Revenue
6.75%, 10/1/10 (2) 9,330 11,041
6.75%, 10/1/11 (2) 9,965 11,859
6.75%, 10/1/12 (2) 10,635 12,657
--------------
STATE TOTAL 184,371
--------------
- ----------------------------------------------------------------
GEORGIA (1.1%)
DeKalb County Housing Auth.
10.125%, 1/1/05 (1) 265 278
Georgia GO TOB
2.55%, 1/1/94 10,000 10,000
Georgia Municipal Electric Auth.
10.5%, 1/1/95 (Prere.) 3,000 3,337
Henry County School Dist. GO
6.45%, 8/1/11 (1) 4,000 4,608
Private Colleges & Universities
Auth. (Mercer University)
6.5%, 11/1/15 (1) 5,000 5,820
--------------
STATE TOTAL 24,043
--------------
- ----------------------------------------------------------------
HAWAII (1.9%)
Hawaii Airport System Revenue
6.35%, 7/1/07 (1) $ 8,000 $ 9,009
Hawaii GO
5.5%, 5/1/08 (3) 2,000 2,096
5.55%, 5/1/09 (3) 1,000 1,050
5.55%, 5/1/10 (3) 2,500 2,631
Honolulu City & County GO
8.0%, 10/1/10 19,000 25,284
University of Hawaii
5.65%, 10/1/12 (2) 1,000 1,043
--------------
STATE TOTAL 41,113
--------------
- ----------------------------------------------------------------
ILLINOIS (4.9%)
Chicago Board of Education GO
6.25%, 1/1/11 (1) 7,000 7,781
Chicago Public Building Commission
7.0%, 1/1/20 (1) (ETM) 21,500 26,619
Chicago Waste Water Transmission
6.5%, 1/1/08 (3) 11,315 12,750
Cook County GO
7.25%, 11/1/07 (1) 6,000 7,222
Cook County Single Family
Mortgage
9.3%, 12/1/05 (1) 420 450
Illinois Development Finance Auth.
PCR (Illinois Power Co.)
7.4%, 12/1/24 (1) 14,000 15,402
Illinois Regional Transit Auth.
Cook, Du Page and Kane Counties
7.2%, 11/1/20 (2) 23,000 28,958
Southern Illinois University
10.25%, 4/1/95 (Prere.) 3,000 3,377
Will County Community Unit
School Dist. (Romeoville)
7.1%, 12/1/09 (2) 1,750 2,127
7.1%, 12/1/10 (2) 1,615 1,968
--------------
STATE TOTAL 106,654
--------------
- ----------------------------------------------------------------
INDIANA (1.3%)
Indiana Municipal Bond Bank
9.75%, 8/1/09 (2) (ETM) 5,500 6,259
Indiana Municipal Power Agency
6.125%, 1/1/13 (1) 13,250 14,578
Marion County Hospital Auth.
(Community Hospital)
9.0%, 5/1/08 (1) 1,500 1,659
Merrillville School Building Corp.
6.65%, 7/1/06 (1) 5,500 6,223
--------------
STATE TOTAL 28,719
--------------
- ----------------------------------------------------------------
</TABLE>
29
<PAGE> 44
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
IOWA (.9%)
Davenport Single Family Mortgage
9.0%, 6/1/17 (3) $ 500 $ 530
Iowa School Corp. Certificates
4.2%, 2/1/94 (5) 20,000 20,123
--------------
STATE TOTAL 20,653
--------------
- ----------------------------------------------------------------
KANSAS (.1%)
Kansas Highway Refunding Revenue
9.0%, 7/1/97 (1) (ETM) 1,200 1,416
--------------
- ----------------------------------------------------------------
KENTUCKY (1.5%)
Ashland City PCR VRDO
(Ashland Oil)
2.2%, 9/1/93 300 300
Combined Counties of Kentucky
Residential Mortgage
9.375%, 12/1/16 (3) 1,355 1,454
Kentucky Development Finance
Auth. Hospital Facilities
(St. Elizabeth's Medical Center)
6.0%, 11/1/10 (3) 23,885 25,012
Kentucky Housing Corp.
8.875%, 7/1/19 (6) 1,465 1,593
Kentucky Turnpike Economic
Development
5.5%, 7/1/09 (2) 3,630 3,750
--------------
STATE TOTAL 32,109
--------------
- ----------------------------------------------------------------
LOUISIANA (2.0%)
Jefferson Parish Sales Tax Revenue
6.75%, 12/1/06 (3) 8,500 9,698
New Orleans GO
0.0%, 9/1/10 (2) 8,500 3,346
0.0%, 9/1/11 (2) 10,475 3,889
0.0%, 9/1/13 (2) 9,000 2,965
6.0%, 9/1/21 (2) 22,250 23,137
--------------
STATE TOTAL 43,035
--------------
- ----------------------------------------------------------------
MAINE (.4%)
Maine Health & Higher Education
Facilities Auth.
(Eastern Maine Medical Center)
6.375%, 10/1/21 (3) 8,000 8,616
--------------
- ----------------------------------------------------------------
MARYLAND (.7%)
Maryland Health & Education
Facilities Auth. (University
of Maryland Medical System)
7.0%, 7/1/22 (3) 12,025 15,112
--------------
- ----------------------------------------------------------------
MASSACHUSETTS (7.7%)
Boston GO 6.5%, 7/1/12 (2) 4,750 5,275
Boston Water & Sewer Commission
7.25%, 11/1/06 (6) $ 2,500 $ 2,820
6.0%, 11/1/08 (6) 5,030 5,249
5.25%, 11/1/11 (3) 5,000 5,000
Massachusetts GO
TOB 2.65%, 11/1/93 (1) 700 700
7.0%, 7/1/09 (3) 32,250 38,750
6.0%, 8/1/09 (3) 3,125 3,411
6.0%, 8/1/10 (2) 3,255 3,557
Massachusetts Health and Education
Facilities
(Boston College)
6.75%, 7/1/11 (3) 6,595 7,374
(Cape Cod Health System)
5.25%, 11/15/21 (7) 2,500 2,442
(Falmouth Hospital)
5.5%, 7/1/08 (1) 1,425 1,472
(Lahey Clinic)
7.85%, 7/1/03 (1) 3,360 4,073
5.25%, 7/1/10 (1) 14,120 13,964
(Massachusetts General Hospital)
6.25%, 7/1/12 (2) 19,650 21,930
(University Hospital)
10.625%, 7/1/94 (Prere.) 3,000 3,249
Massachusetts Housing
Finance Agency
5.55%, 10/1/05 (2) 5,230 5,379
5.95%, 10/1/08 (2) 27,485 28,557
8.875%, 7/1/18 (1) 8,000 8,694
Massachusetts Municipal Wholesale
Electric Power
13.625%, 1/1/95 (Prere.) 3,595 4,189
5.1%, 7/1/07 (2) 4,000 3,972
--------------
STATE TOTAL 170,057
--------------
- ----------------------------------------------------------------
MICHIGAN (3.6%)
Detroit Sewer System Revenue
5.45%, 7/1/07 (3) 6,850 7,045
5.55%, 7/1/08 (3) 7,100 7,355
Michigan Strategic Fund
(Detroit Edison)
7.0%, 7/15/08 (1) 18,375 21,875
Monroe County Economic Development
Corp.
(Detroit Edison)
6.95%, 9/1/22 (3) 25,000 30,752
St. Clair Economic Development Corp.
PCR (Detroit Edison)
6.4%, 8/1/24 (2) 8,000 8,955
Troy School Dist.
6.25%, 5/1/10 (2) 2,100 2,251
--------------
STATE TOTAL 78,233
--------------
- ----------------------------------------------------------------
</TABLE>
30
<PAGE> 45
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
MINNESOTA (.6%)
Dakota County Housing &
Redevelopment Auth.
9.375%, 5/1/18 (3) $ 100 $ 111
Southern Minnesota Municipal
Power Agency
11.0%, 1/1/95 (Prere.) 2,000 2,257
5.5%, 1/1/15 (2) 10,000 10,159
Western Minnesota Municipal
Power Agency
9.75%, 1/1/16 (1) (ETM) 845 1,331
--------------
STATE TOTAL 13,858
--------------
- ----------------------------------------------------------------
MISSISSIPPI (.5%)
Jackson Water & Sewer System
5.2%, 9/1/07 (1) 2,000 2,005
5.4%, 9/1/09 (1) 4,000 4,078
4.5%, 9/1/10 (1) 1,500 1,389
Mississippi GO 5.9%, 11/15/09 4,000 4,317
--------------
STATE TOTAL 11,789
--------------
- ----------------------------------------------------------------
MISSOURI (.5%)
Greene County Single Family Mortgage
Revenue
9.375%, 12/1/06 (2) 340 363
Missouri Health & Education
Facilities Auth.
(Cox Medical Center)
5.25%, 6/1/15 (1) 10,000 9,884
St. Louis County Single Family
Mortgage Revenue
9.25%, 10/1/16 (2) 1,520 1,684
--------------
STATE TOTAL 11,931
--------------
- ----------------------------------------------------------------
MONTANA (.1%)
Forsyth PCR
(Montana Power Co.)
6.125%, 5/1/23 (2) 1,500 1,594
--------------
- ----------------------------------------------------------------
NEBRASKA (.1%)
Nebraska Investment Finance Auth.
9.1%, 11/15/06 (3) 2,918 3,093
--------------
- ----------------------------------------------------------------
NEVADA (1.8%)
Clark County GO
6.5%, 6/1/17 (2) 5,000 5,775
Clark County School Dist. GO
7.0%, 6/1/11 (1) 20,750 25,179
Reno Hospital Revenue
(St. Marys Hospital)
9.875%, 7/1/12 (1) 3,000 3,393
Washoe County GO
7.125%, 7/15/96 (3) (Prere.) $ 4,900 $ 5,448
--------------
STATE TOTAL 39,795
--------------
- ----------------------------------------------------------------
NEW HAMPSHIRE (.3%)
New Hampshire Higher Education and
Health Facilities Auth.
(University System of
New Hampshire)
7.625%, 7/1/99 (1) (Prere.) 5,000 5,962
--------------
- ----------------------------------------------------------------
NEW JERSEY (4.6%)
Atlantic County COP
7.4%, 3/1/12 (3) 4,335 5,544
Hoboken-Union City-Weehawken Sewage
Auth.
6.25%, 8/1/14 (1) 10,185 11,737
6.25%, 8/1/15 (1) 10,820 12,497
Monmouth County Improvement Auth.
VRDO
2.4%, 9/1/93 3,300 3,300
New Brunswick Housing & Urban
Development
5.75%, 7/1/24 (1) 5,000 5,251
New Jersey Sports &
Exposition Auth.
6.5%, 3/1/13 (1) 18,795 22,099
New Jersey Turnpike Auth.
6.5%, 1/1/13 (1) 30,000 35,081
6.5%, 1/1/16 (1) 5,000 5,860
--------------
STATE TOTAL 101,369
--------------
- ----------------------------------------------------------------
NEW MEXICO (.4%)
Albuquerque Hospital System
(Presbyterian Health)
6.375%, 8/1/07 (1) 4,000 4,443
Farmington Utility Systems Revenue
5.75%, 5/15/13 (3) 3,000 3,104
New Mexico Mortgage
Finance Agency
9.0%, 7/1/12 (3) 210 224
--------------
STATE TOTAL 7,771
--------------
- ----------------------------------------------------------------
NEW YORK (1.0%)
New York City GO
6.625%, 8/1/15 (2) 5,000 5,596
New York City Municipal Water Auth.
7.0%, 6/15/09 (2) 3,750 4,322
Triborough Bridge & Tunnel Auth.
6.0%, 1/1/14 4,500 4,713
6.0%, 1/1/15 (2) 1,275 1,362
5.0%, 1/1/17 6,000 5,745
--------------
STATE TOTAL 21,738
--------------
- ----------------------------------------------------------------
</TABLE>
31
<PAGE> 46
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
NORTH CAROLINA (.7%)
Charlotte Convention Center
5.25%, 12/1/20 (2) $ 4,250 $ 4,147
Concord Utility System Revenue
6.0%, 12/1/10 (1) 500 538
North Carolina Municipal Power
Agency (Catawba Electric)
6.0%, 1/1/10 (1) 4,000 4,340
7.625%, 1/1/14 (2) 5,545 6,328
--------------
STATE TOTAL 15,353
--------------
- ----------------------------------------------------------------
NORTH DAKOTA (.5%)
Bismark Medical Center
7.5%, 5/1/13 (6) 10,000 11,624
--------------
- ----------------------------------------------------------------
OHIO (4.5%)
Akron Bath Copley Joint Township
Hospital Dist. (Akron General)
6.0%, 1/1/22 (2) 3,100 3,244
Clermont County Mercy Health System
5.6%, 9/1/07 (2) 4,340 4,497
Cleveland Airport System Revenue
0.0%, 1/1/05 (1) 3,975 2,207
0.0%, 1/1/06 (1) 3,475 1,814
7.25%, 1/1/20 (1) 50 57
Cleveland City GO
5.3%, 9/1/07 (2) 3,500 3,591
7.0%, 10/1/01 (1) (Prere.) 8,430 9,939
Cleveland Water Works Revenue
6.25%, 1/1/15 (2) 2,500 2,712
5.5%, 1/1/21 (1) 1,000 1,033
Columbus City School Dist. GO
7.0%, 12/1/00 (3) (Prere.) 1,500 1,762
Franklin Convention Center Revenue
7.0%, 12/1/00 (1) (Prere.) 3,025 3,569
0.0%, 12/1/06 (1) 4,355 2,200
Franklin Hospital Facility Auth.
(Riverside Hospital)
7.25%, 5/15/20 (1) 2,050 2,375
Hamilton County
(Childrens Hospital)
5.2%, 5/15/09 (1) 2,500 2,500
Hamilton County Sewer System
5.4%, 12/1/08 (3) 5,700 5,898
Lucas County GO
6.95%, 12/1/11 (1) 900 1,031
Northeast Ohio Regional
Sewer Dist.
6.5%, 11/15/16 (2) 5,750 6,334
Ohio Air Quality PCR
(Ohio Edison)
7.45%, 3/1/16 (3) 9,500 11,078
7.1%, 6/1/18 (3) 6,500 7,480
Ohio Building Auth.
(Transportation Facilities)
7.0%, 9/1/07 (1) $ 1,420 $ 1,630
Ohio GO
7.625%, 8/1/09 4,345 5,471
Ohio Higher Education Facilities Auth.
(Case Western Reserve)
6.5%, 10/1/20 500 587
(University of Dayton)
6.6%, 12/1/17 (3) 1,200 1,351
Ohio Public Facilities Commission
8.1%, 11/1/93 3,000 3,030
Ohio Water Development Auth.
7.0%, 12/1/09 (2) (ETM) 1,500 1,775
Olentangy School Dist. GO
6.35%, 12/1/17 (1) 500 545
Reynoldsburg School District GO
6.55%, 12/1/17 (3) 2,000 2,257
Summit Limited Tax GO
6.9%, 8/1/12 (2) 2,750 3,133
Trumbull County Hospital Improvement
(Trumbull Memorial Hospital)
6.25%, 11/15/12 (3) 2,500 2,701
University of Toledo
5.75%, 12/1/12 (3) 1,000 1,041
Wilmington School Dist. GO
6.3%, 12/1/14 (3) 1,500 1,633
--------------
STATE TOTAL 98,475
--------------
- ----------------------------------------------------------------
OKLAHOMA (.3%)
Grand River Dam Auth.
5.75%, 6/1/06 (4) 5,800 6,139
Oklahoma Housing Finance Agency
10.25%, 7/1/01 (2) 420 436
10.4%, 9/1/08 (1) 220 228
--------------
STATE TOTAL 6,803
--------------
- ----------------------------------------------------------------
PENNSYLVANIA (8.0%)
Allegheny County Hospital Auth.
(Presbyterian Hospital)
7.125%, 7/1/19 (1) 12,500 14,303
Allegheny County Sanitary Auth.
5.5%, 12/1/16 (3) 10,000 10,032
Armstrong County Hospital Auth.
6.25%, 6/1/13 (2) 18,400 19,863
Delaware River Joint Toll Bridge
Commission
6.0%, 7/1/18 (3) 10,500 11,111
Lehigh County General Purpose Auth.
6.5%, 7/1/10 (1) 6,655 7,401
</TABLE>
32
<PAGE> 47
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Pennsylvania Convention Center Auth.
6.7%, 9/1/16 (3) $ 9,970 $ 11,813
6.0%, 9/1/19 (3) 10,000 10,952
Pennsylvania Turnpike Commission
6.0%, 6/1/15 (1) 1,000 1,066
5.5%, 12/1/17 (3) 10,470 10,483
5.5%, 12/1/19 (3) 25,000 25,030
Philadelphia Gas Works
6.0%, 5/15/12 (2) 3,000 3,160
Philadelphia Water & Wastewater
Revenue
7.0%, 6/15/10 (3) 15,000 17,903
7.0%, 6/15/11 (3) 16,500 19,725
Pittsburgh Water & Sewer System
Revenue
7.25%, 9/1/14 (3) (ETM) 5,000 6,153
6.0%, 9/1/16 (3) 6,000 6,291
--------------
STATE TOTAL 175,286
--------------
- ----------------------------------------------------------------
PUERTO RICO (.1%)
Puerto Rico Public Building Auth.
0.0%, 7/1/01 (3) 4,150 2,880
--------------
- ----------------------------------------------------------------
RHODE ISLAND (.6%)
Rhode Island Building Auth.
6.0%, 2/1/01 (2) (Prere.) 3,445 3,772
6.0%, 2/1/11 (2) 3,805 3,960
Rhode Island Convention Auth.
5.25%, 5/15/15 (1) 3,000 2,920
Rhode Island Depositors Economic
Project
5.8%, 8/1/11 (1) 1,250 1,320
5.8%, 8/1/12 (1) 2,000 2,116
--------------
STATE TOTAL 14,088
--------------
- ----------------------------------------------------------------
SOUTH CAROLINA (3.9%)
Anderson County
(Anderson Memorial Hospital)
7.5%, 2/1/18 (1) 8,000 9,093
Greenville Hospital Facility Revenue
7.8%, 5/1/98 (3) (Prere.) 3,000 3,540
North Charleston Sewer Dist.
6.375%, 7/1/12 (1) 2,750 3,149
Piedmont Municipal Power Agency
5.0%, 1/1/18 (3) 23,500 22,294
6.75%, 1/1/19 (3) 10,600 12,695
6.75%, 1/1/20 (3) 23,515 28,285
5.0%, 1/1/22 (3) 8,000 7,538
--------------
State Total 86,594
--------------
- ----------------------------------------------------------------
SOUTH DAKOTA (1.0%)
Heartland Consumer Power Dist.
7.625%, 1/1/16 (1) 7,000 7,874
South Dakota Health &
Educational Facilities Auth.
(McKennan Hospital)
7.625%, 7/1/14 (1) $11,500 $ 13,399
--------------
STATE TOTAL 21,273
--------------
- ----------------------------------------------------------------
TENNESSEE (.9%)
Bristol Health & Education
Facilities
Auth. (Bristol Memorial Hospital)
6.75%, 9/1/10 (3) 11,700 13,439
Knox County Health, Education &
Housing Facility
(Fort Sanders Hospital)
8.0%, 1/1/08 (1) 3,000 3,462
Tennessee Housing
Development Agency
7.125%, 7/1/17 (1) 3,000 3,210
--------------
STATE TOTAL 20,111
--------------
- ----------------------------------------------------------------
TEXAS (8.9%)
Austin Combined Utilities
System Revenue
5.75%, 11/15/16 (2) 36,000 36,823
Colorado River Municipal
Water Dist.
6.0%, 1/1/01 (2) (Prere.) 13,955 15,195
Corpus Christi Utilities
System Revenue
7.0%, 7/15/10 (3) 7,500 8,597
Denton County Housing
Finance Corp.
10.0%, 9/1/05 (1) 395 421
Houston Public Improvement
7.0%, 3/1/08 16,000 18,961
Houston Water Conveyance System
6.125%, 12/15/09 (2) 2,000 2,199
6.8%, 12/15/10 (2) 5,490 6,469
6.8%, 12/15/11 (2) 5,455 6,434
6.25%, 12/15/12 (2) 4,340 4,828
7.5%, 12/15/12 (2) 1,000 1,262
7.5%, 12/15/13 (2) 1,100 1,386
Houston Water & Sewer Revenue
7.0%, 12/1/20 (1) 12,280 14,123
Lower Colorado River Auth.
5.625%, 1/1/17 (4) 24,585 24,939
San Antonio Electric & Gas System
0.0%, 2/1/06 (3) 18,000 9,221
0.0%, 2/1/07 (3) 15,000 7,196
San Antonio Sewer Revenue
8.0%, 5/1/95 (Prere.) 4,000 4,380
San Antonio Water System
5.5%, 5/15/18 (1) 7,000 7,014
</TABLE>
33
<PAGE> 48
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Southeast Texas Housing
Finance Corp.
9.2%, 12/1/10 (3) $ 540 $ 580
Texas Municipal Power Agency
6.1%, 9/1/09 (1) 18,000 19,663
Texas Turnpike North Dallas Tollway
7.125%, 1/1/15 (2) 5,000 5,715
--------------
STATE TOTAL 195,406
--------------
- ----------------------------------------------------------------
VIRGINIA (.5%)
Chesapeake Hospital Auth.
(Chesapeake General Hospital)
5.3%, 7/1/08 (1) 2,250 2,288
5.5%, 7/1/12 (1) 2,000 2,031
Henry County Public Service Auth.
6.25%, 11/15/19 (3) 1,500 1,616
Prince William County Service Auth.
6.0%, 7/1/29 (3) 4,500 4,699
--------------
STATE TOTAL 10,634
--------------
- ----------------------------------------------------------------
WASHINGTON (1.3%)
Snohomish County Mukilteo
School Dist.
5.6%, 12/1/08 (3) 6,960 7,235
5.65%, 12/1/09 (3) 9,160 9,566
5.65%, 12/1/10 (3) 3,950 4,137
5.7%, 12/1/11 (3) 5,000 5,274
Washington Health Care Facilities Auth.
(General Hospital of Everett)
9.0%, 1/1/11 (3) 1,700 1,896
--------------
STATE TOTAL 28,108
--------------
- ----------------------------------------------------------------
WEST VIRGINIA (1.4%)
Berkeley Brooke Fayette Counties
Single Family Mortgage
9.1%, 8/1/11 (3) 975 1,012
West Virginia Parkways Economic
Development Auth.
7.125%, 7/1/99 (3) (Prere.) 9,000 10,465
West Virginia State Building Commission
7.0%, 7/1/11 (1) 7,325 8,778
7.0%, 7/1/12 (1) 7,840 9,383
--------------
STATE TOTAL 29,638
--------------
- ----------------------------------------------------------------
WISCONSIN (.5%)
Wisconsin Health Facilities Auth.
(Columbia Hospital)
9.5%, 6/1/95 (6) (Prere.) $ 2,000 $ 2,243
(St. Luke's Medical Center)
7.1%, 8/15/11 (1) 4,000 4,532
7.4%, 8/15/19 (1) 3,000 3,428
--------------
STATE TOTAL 10,203
--------------
- ----------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,949,983) 2,191,964
- ----------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.1%)
- ----------------------------------------------------------------
Other Assets -- Note C 46,863
Liabilities (44,580)
--------------
2,283
- ----------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------
Applicable to 170,232,741 outstanding
$.001 par value shares
(authorized 250,000,000 shares) $2,194,247
- ----------------------------------------------------------------
NET ASSET VALUE PER SHARE $12.89
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 43.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
AT AUGUST 31, 1993, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------
Amount Per
(000) Share
------------ ----
<S> <C> <C>
Paid in Capital -- Note E $1,954,290 $11.48
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains --
Note A 9,709 .06
Unrealized Appreciation of
Investments 230,248 1.35
- ----------------------------------------------------------------
NET ASSETS $2,194,247 $12.89
- ----------------------------------------------------------------
</TABLE>
34
<PAGE> 49
<TABLE>
<CAPTION>
Face Market
Amount Value
LONG-TERM PORTFOLIO (000) (000)+
- ----------------------------------------------------------------
MUNICIPAL BONDS (99.1%)
- ----------------------------------------------------------------
<S> <C> <C>
ARIZONA (2.5%)
Board of Regents
(University of Arizona)
5.9%, 6/1/07 $ 2,500 $ 2,708
5.9%, 6/1/08 4,490 4,796
6.0%, 6/1/09 4,770 5,269
6.0%, 6/1/10 5,075 5,615
6.0%, 6/1/11 5,400 5,976
Salt River Project Agricultural
Improvement & Power Dist.
9.75%, 1/1/95 (Prere.) 3,790 4,180
--------------
STATE TOTAL 28,544
--------------
- ----------------------------------------------------------------
CALIFORNIA (5.3%)
California GO
6.25%, 9/1/12 5,000 5,420
Contra Costa County Home
Mortgage Revenue
9.25%, 11/1/10 (3) 110 119
Los Angeles County COP
6.5%, 3/1/10 21,815 23,204
Los Angeles County TRAN
3.0%, 6/30/94 5,000 5,009
Los Angeles County Transportation
Commission VRDO
2.3%, 1/1/94 3,200 3,200
Orange County Sanitation Dist. VRDO
2.4%, 9/1/93 1,300 1,300
San Bernardino COP
6.875%, 8/1/24 18,000 21,475
Southern California Public
Power Auth. VRDO
(Transmission Project)
2.3%, 1/1/94 200 200
--------------
STATE TOTAL 59,927
--------------
- ----------------------------------------------------------------
CONNECTICUT (.3%)
Connecticut Economic Recovery Notes
5.25%, 12/15/94 3,090 3,188
--------------
- ----------------------------------------------------------------
DELAWARE (.3%)
Delaware Economic
Development Auth. IDR
(Cargill)
10.35%, 12/1/99 1,350 1,510
(Hospital Bill &
Collection Service) VRDO
2.5%, 9/1/93 1,600 1,600
--------------
STATE TOTAL 3,110
--------------
- ----------------------------------------------------------------
DISTRICT OF COLUMBIA (1.9%)
District of Columbia GO
7.75%, 6/1/96 (Prere.) $11,970 $ 13,430
6.75%, 6/1/05 (2) 7,540 8,432
--------------
STATE TOTAL 21,862
--------------
- ----------------------------------------------------------------
FLORIDA (2.5%)
Gainesville Utilities System Revenue
10.25%, 10/1/93 (Prere.) 1,250 1,288
Gulf Breeze Local Government Loan
Program VRDO
2.5%, 9/1/93 (3) 1,100 1,100
Orlando Utilities Commission
6.75%, 10/1/17 22,000 25,842
--------------
STATE TOTAL 28,230
--------------
- ----------------------------------------------------------------
GEORGIA (11.4%)
College Park (Civic Center) GO
7.0%, 9/1/10 11,500 13,644
Fulton County School Dist. GO
6.375%, 5/1/11 8,490 9,538
6.375%, 5/1/12 8,420 9,473
Gwinnett County School Dist. GO
6.4%, 2/1/06 10,450 11,874
6.4%, 2/1/07 11,345 12,848
6.4%, 2/1/08 12,310 14,010
Metropolitan Atlanta Rapid
Transit Auth.
6.25%, 7/1/18 12,170 13,539
6.25%, 7/1/20 (2) 23,275 26,239
Municipal Electric Auth.
of Georgia
6.5%, 1/1/12 14,130 15,905
6.6%, 1/1/18 1,000 1,154
--------------
STATE TOTAL 128,224
--------------
- ----------------------------------------------------------------
HAWAII (1.1%)
Hawaii GO
6.4%, 3/1/09 5,555 6,284
6.4%, 3/1/10 5,555 6,287
--------------
STATE TOTAL 12,571
--------------
- ----------------------------------------------------------------
ILLINOIS (5.2%)
Chicago Metropolitan Water
Capital Improvement
7.0%, 1/1/11 20,000 23,949
Chicago Public Building Commission
7.0%, 1/1/20 (1) (ETM) 6,000 7,429
Illinois Development Finance
Auth. PCR (Illinois Power Co.)
7.4%, 12/1/24 (1) 8,150 8,966
</TABLE>
35
<PAGE> 50
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Illinois Educational Facility Auth.
(University of Chicago)
9.50%, 1/1/94 (Prere.) $ 1,075 $ 1,120
Illinois Housing Development Auth.
VRDO (Center Apartments)
2.55%, 9/1/93 800 800
Illinois Toll Highway Auth.
6.375%, 1/1/15 8,750 9,427
Metropolitan Pier &
Exposition Auth.
6.75%, 6/1/10 (1) 6,000 7,023
--------------
STATE TOTAL 58,714
--------------
- ----------------------------------------------------------------
INDIANA (1.1%)
Indiana Health Facilities Finance
Auth. (Ancilla System, Inc.)
5.75%, 7/1/15(1) 4,470 4,534
Indiana State Office
Building Commission
6.9%, 7/1/11 6,875 7,959
--------------
STATE TOTAL 12,493
--------------
- ----------------------------------------------------------------
IOWA (.7%)
Iowa School Corp. Certificates
4.2%, 2/1/94 (5) 7,800 7,848
--------------
- ----------------------------------------------------------------
KENTUCKY (.1%)
Jefferson County Capital Project Corp.
9.375%, 8/15/95 (Prere.) 1,000 1,138
--------------
- ----------------------------------------------------------------
LOUISIANA (2.8%)
De Soto Parish PCR
(Southwestern Electric Power)
7.6%, 1/1/19 24,300 29,230
Jefferson Parish Single Family
Mortgage Revenue
9.375%, 11/1/07 (3) 2,725 2,875
--------------
STATE TOTAL 32,105
--------------
- ----------------------------------------------------------------
MASSACHUSETTS (7.2%)
Massachusetts GO
5.25%, 2/15/08 10,575 10,543
6.5%, 8/1/11 5,460 5,973
5.75%, 5/1/12 7,500 7,772
Massachusetts Housing Finance Agency
6.125%, 11/15/08 3,500 3,644
9.125%, 12/1/20 4,390 4,775
6.375%, 4/1/21 7,000 7,348
Massachusetts Water Resources Auth.
6.5%, 7/15/19 $32,000 $ 36,677
5.5%, 7/15/22 5,000 4,893
--------------
STATE TOTAL 81,625
--------------
- ----------------------------------------------------------------
MICHIGAN (2.5%)
Michigan Hospital Finance Auth.
(Detroit Medical Center)
6.25%, 8/15/13 5,000 5,285
6.5%, 8/15/18 5,000 5,375
Michigan Public Power Agency
5.5%, 1/1/13 17,345 17,431
--------------
STATE TOTAL 28,091
--------------
- ----------------------------------------------------------------
MINNESOTA (.8%)
Southern Minnesota Municipal
Power Agency
5.0%, 1/1/17 10,000 9,422
--------------
- ----------------------------------------------------------------
MONTANA (1.1%)
Forsythe PCR
(Montana Power Co.)
6.125%, 5/1/23 12,000 12,295
--------------
- ----------------------------------------------------------------
NEW JERSEY (5.4%)
Monmouth County Improvement Auth.
VRDO
2.4%, 9/1/93 1,300 1,300
New Jersey Health Care
Facilities Auth.
(Atlantic City Medical Center)
6.8%, 7/1/05 4,500 4,964
New Jersey Sports &
Exposition Auth.
6.5%, 3/1/13 10,000 11,527
New Jersey Turnpike Auth.
VRDO 2.3%, 1/1/94 1,900 1,900
6.5%, 1/1/16 36,195 41,631
--------------
STATE TOTAL 61,322
--------------
- ----------------------------------------------------------------
NEW YORK (9.0%)
New York City GO
6.1%, 8/1/02 15,000 15,880
6.375%, 8/1/04 5,000 5,375
7.1%, 2/1/09 (1) 5,000 5,805
7.1%, 2/1/10 (1) 7,500 8,715
New York State Dormitory Auth.
(State University)
7.5%, 5/15/11 18,900 23,238
New York State Local Government
Assistance Corp.
7.0%, 4/1/01 (Prere.) 5,000 5,902
7.0%, 4/1/16 22,420 25,391
</TABLE>
36
<PAGE> 51
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
Triborough Bridge & Tunnel Auth.
General Purpose Revenue
6.125%, 1/1/21 $10,000 $ 11,136
--------------
STATE TOTAL 101,442
--------------
- ----------------------------------------------------------------
NORTH CAROLINA (1.8%)
North Carolina Eastern Municipal
Power Agency
7.5%, 1/1/10 (ETM) 4,935 6,206
7.5%, 1/1/10 4,580 5,542
6.5%, 1/1/18 (ETM) 4,625 5,449
6.5%, 1/1/18 2,375 2,640
--------------
STATE TOTAL 19,837
--------------
- ----------------------------------------------------------------
OHIO (.7%)
Cuyahoga County Hospital Improvement
VRDO
(St. Luke's Hospital)
2.55%, 9/1/93 2,600 2,600
Cuyahoga County Limited Tax GO
2.2%, 10/1/93 4,900 4,896
--------------
STATE TOTAL 7,496
--------------
- ----------------------------------------------------------------
OKLAHOMA (.7%)
Tulsa Industrial Auth.
(Tulsa Regional Medical Center)
7.625%, 6/1/17 6,995 7,844
--------------
- ----------------------------------------------------------------
OREGON (1.1%)
Oregon Veterans Welfare Program VRDO
2.5%, 9/1/93 12,800 12,800
--------------
- ----------------------------------------------------------------
PENNSYLVANIA (10.8%)
Harristown Development Corp.
6.3%, 2/1/16 (ETM) 11,520 11,870
Pennsylvania COP
5.4%, 7/1/08 (2) 15,000 15,341
Pennsylvania GO
6.375%, 9/15/12 13,500 14,567
Pennsylvania Higher Education
Facilities Auth.
(Carnegie Mellon) VRDO
2.5%, 9/1/93 200 200
(Drexel University)
7.7%, 11/1/95 (1) (Prere.) 3,340 3,701
7.7%, 5/1/12 (1) 2,660 2,939
Pennsylvania Housing Finance Agency
7.5%, 7/1/06 3,890 4,327
Pennsylvania Intergovernmental
Cooperation Auth.
6.625%, 6/15/02 (Prere.) 15,140 17,182
Pennsylvania Turnpike Commission
5.5%, 12/1/17 $31,800 $ 31,859
Philadelphia Water & Wastewater
7.0%, 6/15/11 (3) 16,600 19,844
Radnor Township School Auth.
9.875%, 9/15/00 (ETM) 650 768
--------------
STATE TOTAL 122,598
--------------
- ----------------------------------------------------------------
PUERTO RICO (.2%)
Puerto Rico Telephone Auth.
5.5%, 1/1/13 1,000 1,021
5.5%, 1/1/22 1,460 1,480
--------------
STATE TOTAL 2,501
--------------
- ----------------------------------------------------------------
SOUTH CAROLINA (3.6%)
Piedmont Municipal Power Agency
10.25%, 1/1/95 (Prere.) 5,000 5,594
6.15%, 1/1/07 4,040 4,446
6.2%, 1/1/08 3,000 3,316
6.25%, 1/1/09 3,000 3,330
6.5%, 1/1/15 (3) 14,245 16,492
South Carolina Public Service Auth.
5.5%, 7/1/21 (1) 7,950 7,938
--------------
STATE TOTAL 41,116
--------------
- ----------------------------------------------------------------
TEXAS (7.2%)
Houston Public Improvement
7.0%, 3/1/08 15,000 17,776
San Antonio Electric & Gas Revenue
5.0%, 2/1/17 8,000 7,527
Texas City IDR (Arco)
7.375%, 10/1/20 17,000 21,152
Texas GO
5.5%, 4/1/20 15,000 14,916
Texas Water Development Board
6.5%, 7/15/10 17,425 20,076
--------------
STATE TOTAL 81,447
--------------
- ----------------------------------------------------------------
WASHINGTON (6.2%)
Snohomish County Public Utility Dist.
5.5%, 1/1/20 (3) 19,210 19,076
Washington Dept. of Ecology COP
5.0%, 4/1/16 27,820 26,411
Washington GO
6.375%, 2/1/14 15,000 16,169
6.75%, 2/1/15 3,450 4,071
5.5%, 5/1/18 4,000 4,016
--------------
STATE TOTAL 69,743
--------------
- ----------------------------------------------------------------
</TABLE>
37
<PAGE> 52
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------
<S> <C> <C>
WEST VIRGINIA (1.0%)
West Virginia State
Building Commission
7.0%, 7/1/14 (1) $ 8,975 $ 10,782
--------------
- ----------------------------------------------------------------
WISCONSIN (4.1%)
Wisconsin Clean Water Revenue
6.875%, 6/1/11 20,500 24,367
Wisconsin GO 6.25%, 5/1/09 19,555 22,027
--------------
STATE TOTAL 46,394
--------------
- ----------------------------------------------------------------
WYOMING (.5%)
Wyoming Community Development
Auth. Mortgage Revenue
6.0%, 6/1/23 6,000 6,090
--------------
- ----------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,000,357) 1,120,799
- ----------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.9%)
- ----------------------------------------------------------------
Other Assets -- Note C 22,382
Liabilities (12,604)
--------------
9,778
- ----------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------
Applicable to 99,367,967 outstanding
$.001 par value shares
(authorized 250,000,000 shares) $1,130,577
- ----------------------------------------------------------------
NET ASSET VALUE PER SHARE $11.38
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
+See Note A to Financial Statements.
For explanations of abbreviations and other references, see page 43.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
AT AUGUST 31, 1993, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------
Amount Per
(000) Share
------------ ----
<S> <C> <C>
Paid in Capital -- Note E $1,018,082 $10.25
Undistributed Net Investment Income -- --
Accumulated Net Realized
Losses -- Note A (970) (.01)
Unrealized Appreciation of
Investments 113,465 1.14
- -----------------------------------------------------------------
NET ASSETS $1,130,577 $11.38
- -----------------------------------------------------------------
- -----------------------------------------------------------------
</TABLE>
38
<PAGE> 53
<TABLE>
<CAPTION>
Face Market
Amount Value
HIGH-YIELD PORTFOLIO (000) (000)+
- -----------------------------------------------------------------
MUNICIPAL BONDS (99.1%)
- -----------------------------------------------------------------
<S> <C> <C>
ARIZONA (2.4%)
Board of Regents
(University of Arizona)
6.2%, 6/1/16 $28,660 $ 32,537
Pima County Industrial
Development Auth.
(La Cholla Project)
10.0%, 7/1/20 1,650 1,634
10.5%, 7/1/20 5,000 5,050
Salt River Project Agricultural
Improvement & Power Dist.
5.0%, 1/1/25 7,000 6,509
--------------
STATE TOTAL 45,730
--------------
- ----------------------------------------------------------------
ARKANSAS (.4%)
North Little Rock Electric System
6.5%, 7/1/15 (1) 7,450 8,662
--------------
- ----------------------------------------------------------------
CALIFORNIA (7.7%)
Irvine Ranch Water Dist. VRDO
2.4%, 9/1/93 1,200 1,200
Los Angeles County Metropolitan
Transportation Auth.
5.625%, 7/1/18 (3) 25,000 25,397
5.75%, 7/1/18 5,000 5,091
Los Angeles County Unified School
Dist. TRAN
3.25%, 7/15/94 4,900 4,914
Los Angeles County Wastewater System
5.7%, 6/1/20 (1) 18,130 18,549
Metropolitan Water Dist. of
Southern California
6.625%, 7/1/12 5,000 5,513
Orange County Apartment Development
CP
3.2%, 10/12/93 19,680 19,680
Orange County VRDO
(Irvine Co.)
2.6%, 9/1/93 7,300 7,300
Riverside County VRDO
2.3%, 9/1/93 1,800 1,800
San Bernardino COP
6.875%, 8/1/24 25,220 30,088
Southern California Public Power
Auth.
6.0%, 7/1/18 10,000 10,173
5.5%, 7/1/20 19,250 18,878
--------------
STATE TOTAL 148,583
--------------
- ----------------------------------------------------------------
COLORADO (1.2%)
Colorado Health Facilities Auth.
(Rocky Mountain Hospital)
6.625%, 2/1/13 $ 5,000 $ 5,118
6.625%, 2/1/22 5,000 5,098
(St. Luke's Healthcare)
8.5%, 2/15/21 10,950 12,666
--------------
STATE TOTAL 22,882
--------------
- ----------------------------------------------------------------
CONNECTICUT (.6%)
Connecticut Development Auth.
(AHF/Hartford Project)
10.0%, 1/1/22 11,500 12,476
--------------
- ----------------------------------------------------------------
DELAWARE (.2%)
Delaware Economic Development
Auth. VRDO
(Hospital Bill & Collection
Service)
2.5%, 9/1/93 4,500 4,500
--------------
- ----------------------------------------------------------------
DISTRICT OF COLUMBIA (.2%)
District of Columbia VRDO
2.4%, 9/1/93 1,000 1,000
District of Columbia Hospital
Revenue (Washington Hospital)
8.75%, 1/1/01 (Prere.) 1,500 1,887
--------------
STATE TOTAL 2,887
--------------
- ----------------------------------------------------------------
FLORIDA (4.2%)
Cape Coral Health Facilities Auth.
(Cape Coral Medical Center)
7.5%, 11/15/21 22,500 25,402
Gulf Breeze Local Government Loan
Program VRDO
2.5%, 9/1/93 (3) 1,700 1,700
Orlando Utilities Commission
6.75%, 10/1/17 6,200 7,283
Palm Beach Health Facilities
(Good Samaritan Hospital)
6.3%, 10/1/22 10,000 10,509
Port Everglades Port Facilities
Revenue
5.0%, 9/1/16 23,000 21,368
Seminole County Water & Sewer
Revenue
6.0%, 10/1/19 (1) 8,500 9,348
Tarpon Springs Health Facility Auth.
(Tarpon Springs Hospital)
8.75%, 5/1/12 4,000 4,551
--------------
STATE TOTAL 80,161
--------------
- ----------------------------------------------------------------
</TABLE>
39
<PAGE> 54
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- -----------------------------------------------------------------
<S> <C> <C>
GEORGIA (3.7%)
Cartersville Water & Wastewater
Facilities
(Anheuser-Busch)
7.4%, 11/1/10 $ 5,000 $ 6,103
Fulton County School Dist. GO
6.375%, 5/1/13 8,345 9,377
6.375%, 5/1/14 7,270 8,175
6.375%, 5/1/15 7,200 8,099
6.375%, 5/1/16 7,125 8,016
Georgia Housing & Finance Auth.
VRDO 2.75%, 9/1/93 9,700 9,700
Municipal Electric Auth. of Georgia
6.6%, 1/1/18 5,000 5,777
Savannah Hospital Auth.
(Candler Hospital)
7.0%, 1/1/23 15,250 16,129
--------------
STATE TOTAL 71,376
--------------
- ----------------------------------------------------------------
ILLINOIS (2.7%)
Chicago Public Building Commission
7.0%, 1/1/15 (1) (ETM) 9,000 10,902
7.0%, 1/1/20 (1) (ETM) 10,000 12,381
Illinois Development Finance Auth.
PCR (Illinois Power Co.)
7.4%, 12/1/24 (1) 10,000 11,001
Illinois Development Finance Auth.
(Regency Park Project)
10.25%, 4/15/19 6,500 3,900
10.625%, 4/15/20 6,000 3,600
Illinois Health Facilities Auth.
Certificate of Beneficial Interest
(Adventist Living Centers)** 770 139
Illinois Health Facilities Auth.
(United Medical Center)
8.125%, 7/1/06 3,235 3,757
8.375%, 7/1/12 3,250 3,864
Loves Park First Mortgage
(Hoosier Care)
9.75%, 8/1/19 1,570 1,637
--------------
STATE TOTAL 51,181
--------------
- ----------------------------------------------------------------
INDIANA (3.7%)
Indiana Health Facilities Finance Auth.
(Ancilla System Inc.)
7.375%, 7/1/23 11,400 13,262
Indiana State Office Building
Commission
6.9%, 7/1/11 25,660 29,706
Indianapolis Local Public
Improvement Bond Bank
6.75%, 2/1/14 21,500 25,033
6.75%, 2/1/20 $ 2,500 $ 2,736
--------------
STATE TOTAL 70,737
--------------
- ----------------------------------------------------------------
IOWA (1.0%)
Iowa School Corp. Certificates
4.2%, 2/1/94 (5) 20,000 20,123
--------------
- ----------------------------------------------------------------
KENTUCKY (1.8%)
Kentucky Property & Buildings
Commission
5.8%, 9/1/06 3,500 3,680
5.9%, 9/1/07 3,500 3,688
5.75%, 10/1/11 26,000 26,691
--------------
STATE TOTAL 34,059
--------------
- ----------------------------------------------------------------
LOUISIANA (.7%)
West Feliciana Parish PCR
(Gulf States Utilities)
10.625%, 5/1/14 3,740 4,189
12.0%, 5/1/14 4,500 5,077
9.0%, 5/1/15 4,000 4,851
--------------
STATE TOTAL 14,117
--------------
- ----------------------------------------------------------------
MASSACHUSETTS (8.3%)
Massachusetts GO
525%, 2/15/08 25,000 24,924
6.0%, 6/1/11 14,750 15,341
Massachusetts Housing Finance Agency
6.3%, 10/1/13 8,750 9,190
6.25%, 11/15/14 12,395 12,911
6.375%, 4/1/21 12,000 12,596
Massachusetts Industrial
Finance Agency
(New England Memorial Hospital)
8.875%, 7/1/98 (Prere.) 5,530 6,767
(Refusetech Inc. Project)
6.3%, 7/1/05 12,500 13,237
Massachusetts Water Resources Auth.
6.5%, 7/15/19 43,700 50,088
5.5%, 7/15/22 14,170 13,868
--------------
STATE TOTAL 158,922
--------------
- ----------------------------------------------------------------
MICHIGAN (1.5%)
Michigan Public Power Agency
5.5%, 1/1/13 29,250 29,394
--------------
- ----------------------------------------------------------------
MINNESOTA (.3%)
Washington County Housing &
Redevelopment Auth.
(Woodland Park Project)
0.0%, 5/1/20 35,070 1,817
</TABLE>
40
<PAGE> 55
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- -----------------------------------------------------------------
<S> <C> <C>
9.75%, 5/1/20 $ 5,000 $ 4,750
--------------
STATE TOTAL 6,567
--------------
- ----------------------------------------------------------------
MISSISSIPPI (1.8%)
Clayborne County PCR
(Middle South Energy)
9.875%, 12/1/14 21,000 26,070
12.5%, 6/15/15 2,000 2,341
9.5%, 4/1/16 5,000 5,720
--------------
STATE TOTAL 34,131
--------------
- ----------------------------------------------------------------
MONTANA (.8%)
Forsyth PCR
(Montana Power Co.)
6.125%, 5/1/23 15,000 15,369
--------------
- ----------------------------------------------------------------
NEVADA (.6%)
Humbolt County PCR
(Idaho Power Co.)
8.3%, 12/1/14 9,100 11,126
--------------
- ----------------------------------------------------------------
NEW HAMPSHIRE (.3%)
New Hampshire Health & Higher
Education
(Catholic Medical Center)
6.0%, 7/1/17 6,580 6,579
--------------
- ----------------------------------------------------------------
NEW JERSEY (5.2%)
New Jersey Sports & Exposition Auth.
6.5%, 3/1/13 15,000 17,291
3.5%, 6/15/95 20,000 20,072
New Jersey Turnpike Auth.
VRDO 2.3%, 1/1/94 (3) 900 900
6.5%, 1/1/16 54,340 62,501
--------------
STATE TOTAL 100,764
--------------
- ----------------------------------------------------------------
NEW MEXICO (.9%)
Chaves County Hospital Revenue
(Eastern Medical Center)
7.25%, 12/1/22 15,980 17,553
--------------
- ----------------------------------------------------------------
NEW YORK (9.0%)
Glencove Industrial Development Auth.
(Regency at Glencove Project)
9.5%, 7/1/12 10,000 10,679
Metropolitan Transit Auth.
7.375%, 7/1/08 22,870 27,203
Nassau County GO TOB
2.5%, 12/1/93 (1) 3,500 3,500
New York City GO
6.375%, 8/1/05 $18,500 $ 19,614
6.375%, 8/1/06 4,000 4,226
New York City Municipal
Water Auth.
6.0%, 6/15/09 10,000 10,576
New York City RAN
3.5%, 4/15/94 5,600 5,627
New York State Dormitory Auth.
(City University)
6.375%, 7/1/08 3,150 3,391
7.5%, 7/1/10 5,500 6,738
(State University)
7.5%, 5/15/13 10,250 12,768
New York State Local Government
Assistance Corp.
7.375%, 4/1/01 (Prere.) 4,000 4,817
7.0%, 4/1/10 8,550 9,683
6.875%, 4/1/19 23,215 26,368
Triborough Bridge & Tunnel Auth.
(General Purpose Revenue)
6.2%, 1/1/07 (3) 9,000 9,766
5.0%, 1/1/17 3,000 2,872
(Convention Center Project)
7.25%, 1/1/10 13,500 15,959
--------------
STATE TOTAL 173,787
--------------
- ----------------------------------------------------------------
NORTH CAROLINA (2.8%)
Charlotte-Mecklenburg Hospital Auth.
5.75%, 1/1/12 3,500 3,596
Eastern Band of Cherokee Indians
of North Carolina Revenue
(Carolina Mirror Co.)
10.25%, 9/1/09 2,845 2,639
Haywood County PCR
(Champion International)
3.84%, 12/1/06* 7,600 7,600
North Carolina Eastern Municipal
Power Agency
5.0%, 1/1/17 (ETM) 6,500 6,351
6.5%, 1/1/18 3,335 3,707
6.5%, 1/1/18 (ETM) 6,665 7,853
5.0%, 1/1/20 (ETM) 10,385 10,112
North Carolina Medical Care
Hospital Revenue
(Duke University Hospital) VRDO
2.4%, 9/1/93 2,200 2,200
North Carolina Municipal Power
Agency (Catawba Electric)
5.75%, 1/1/15 10,025 10,154
--------------
STATE TOTAL 54,212
--------------
- ----------------------------------------------------------------
</TABLE>
41
<PAGE> 56
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- -----------------------------------------------------------------
<S> <C> <C>
OHIO (.6%)
Columbus Sewer System VRDO
2.5%, 9/2/93 $ 1,100 $ 1,100
Erie County IDR (Scott Paper)
8.1%, 12/15/09 1,000 1,023
Lucas County Hospital Facility
(Flower Memorial Hospital)
8.125%, 12/1/11 8,900 10,371
--------------
STATE TOTAL 12,494
--------------
- ----------------------------------------------------------------
OREGON (.1%)
Oregon Veterans Welfare Program VRDO
2.5%, 9/1/93 2,300 2,300
--------------
- ----------------------------------------------------------------
PENNSYLVANIA (13.7%)
Beaver County Industrial Development
Auth. PCR
(Toledo Edison)
12.25%, 9/15/15 2,000 2,348
Emmaus General Auth. Local
Government VRDO
2.5%, 9/1/93 4,700 4,700
Harristown Development Corp.
6.3%, 2/1/16 (ETM) 24,225 24,962
Langhorne Higher Education & Health
Auth.
(Lower Bucks Hospital)
7.3%, 7/1/12 4,500 5,002
7.35%, 7/1/22 2,500 2,787
Montgomery County Higher Education &
Health Auth.
(Brittney Point Project)
8.5%, 1/1/22 5,000 5,469
Montgomery County Industrial
Development Auth. IDR
(Hechingers)
10.5%, 3/1/03 500 522
Pennsylvania COP
5.4%, 7/1/09 (2) 25,000 25,325
Pennsylvania Housing
Finance Agency
7.6%, 7/1/13 10,000 11,265
Pennsylvania Turnpike
Commission
5.5%, 12/1/17 46,935 47,022
Philadelphia Gas Works Revenue
7.7%, 6/15/01 (Prere.) 2,745 3,361
7.7%, 6/15/11 1,255 1,428
6.375%, 7/1/26 26,715 28,202
Philadelphia Hospital & Higher
Education Facilities
(Childrens Seashore Hospital)
7.0%, 8/15/12 3,540 3,860
7.0%, 8/15/17 $ 1,000 $ 1,090
7.0%, 8/15/22 500 545
(Graduate Hospital)
7.25%, 7/1/10 15,000 16,426
Philadelphia Municipal Auth.
8.625%, 11/15/01 (Prere.) 10,400 13,236
8.625%, 11/15/16 1,600 1,736
Philadelphia Water &
Sewer Revenue
9.1%, 10/1/95 (Prere.) 6,250 7,057
9.1%, 12/1/95 (Prere.) 9,650 10,975
Philadelphia Water & Wastewater
Revenue
7.0%, 6/15/10 (3) 20,000 23,871
7.0%, 6/15/11 (3) 4,900 5,858
Scranton -- Lackawanna Health &
Welfare (Moses Taylor Hospital)
8.5%, 7/1/20 14,375 16,501
--------------
STATE TOTAL 263,548
--------------
- ----------------------------------------------------------------
PUERTO RICO (1.0%)
Puerto Rico Electric Power Auth.
5.0%, 7/1/12 10,535 10,052
Puerto Rico Telephone Auth.
5.4%, 1/1/08 9,550 9,752
--------------
STATE TOTAL 19,804
--------------
- ----------------------------------------------------------------
SOUTH CAROLINA (5.2%)
Charleston Water & Sewer Auth.
5.0%, 1/1/16 13,800 13,226
Piedmont Municipal Power
Agency Revenue
9.375%, 1/1/95 (Prere.) 2,675 2,963
9.5%, 1/1/95 (Prere.) 5,995 6,649
6.25%, 1/1/21 (3) 6,640 7,493
6.0%, 1/1/24 5,000 5,040
5.0%, 1/1/25 7,000 6,548
South Carolina Public Service Auth.
5.5%, 7/1/21 (1) 58,000 57,913
--------------
STATE TOTAL 99,832
--------------
- ----------------------------------------------------------------
TEXAS (12.5%)
Austin Combined Utility System
6.0%, 11/15/13 14,505 15,603
Austin Water, Sewer & Electric
Revenue
14.0%, 11/15/01 200 316
Brazos River Auth. PCR
(Texas Utilities)
9.875%, 10/1/17 (3) 25,000 30,482
Harris County Hospital Dist.
7.4%, 2/15/10 (2) 17,500 21,633
</TABLE>
42
<PAGE> 57
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- -----------------------------------------------------------------
<S> <C> <C>
Houston Public Improvement
7.0%, 3/1/08 $22,000 $ 26,072
Houston Water & Sewer System
6.375%, 12/1/14 14,000 15,151
5.0%, 12/1/18 30,500 28,547
San Antonio Electric & Gas Revenue
5.0%, 2/1/16 12,000 11,425
San Antonio Water Revenue
6.4%, 5/15/07 (3) 5,000 5,546
Texas GO 5.5%, 4/1/20 34,050 33,859
Texas Turnpike Auth.
6.0%, 1/1/20 36,195 36,728
University of Texas
6.5%, 7/1/11 14,285 15,657
--------------
STATE TOTAL 241,019
--------------
- ----------------------------------------------------------------
UTAH (.6%)
Intermountain Power Agency
5.0%, 7/1/16 7,500 7,052
5.0%, 7/1/21 4,450 4,117
--------------
STATE TOTAL 11,169
--------------
- ----------------------------------------------------------------
VIRGINIA (.6%)
Alexandria Redevelopment & Housing
Auth.
(Portals West Project)
9.5%, 7/15/20 4,740 3,318
Chesterfield County Mortgage Revenue
(Brandesmill Woods Project)
10.25%, 7/1/15 8,000 8,382
--------------
STATE TOTAL 11,700
--------------
- ----------------------------------------------------------------
WASHINGTON (1.8%)
Snohomish County Public Utility Dist.
5.5%, 1/1/20 (3) 36,000 35,749
--------------
- ----------------------------------------------------------------
WEST VIRGINIA (.5%)
West Virginia State Building Commission
7.0%, 7/1/13 (1) 8,390 10,034
--------------
- ----------------------------------------------------------------
WISCONSIN (.5%)
Wisconsin GO 6.25%, 5/1/10 9,460 10,524
--------------
- ----------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,734,421) 1,914,051
- ----------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.9%)
- ----------------------------------------------------------------
Other Assets -- Note C $ 32,311
Liabilities (15,602)
--------------
16,709
- ----------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------
Applicable to 172,879,603 outstanding
$.001 par value shares
(authorized 250,000,000 shares) $1,930,760
- ----------------------------------------------------------------
NET ASSET VALUE PER SHARE $11.17
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
+See Note A to Financial Statements.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
AT AUGUST 31, 1993, NET ASSETS CONSISTED OF:
- -----------------------------------------------------------------
Amount Per
(000) Share
------------ ----
<S> <C> <C>
Paid in Capital -- Note E $1,748,612 $10.11
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains --
Note A 13,313 .08
Unrealized Appreciation of
Investments 168,835 .98
- -----------------------------------------------------------------
NET ASSETS $1,930,760 $11.17
=================================================================
</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
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 Obligations
**Non-Income Producing Security
43
<PAGE> 58
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
VANGUARD MUNICIPAL BOND FUND
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights appearing in the Vanguard Municipal Bond Fund 1993 Annual Report
present fairly, in all material respects, the financial position of the Money
Market, Short-Term, Intermediate-Term, Limited-Term, Long-Term, High-Yield and
Insured Long-Term Portfolios (constituting the Vanguard Municipal Bond Fund,
hereafter referred to as "the Fund") at August 31, 1993, the results of each
of their operations, the changes in each of their net assets and the financial
highlights for each of the respective periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at August 31, 1993 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Thirty South Seventeenth Street
Philadelphia, PA 19103
September 27, 1993
44
<PAGE> 59
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
MARKET SHORT-TERM LIMITED-TERM
PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended August 31, 1993
(000)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Interest............................................................. $88,617 $47,591 $58,003
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income................................................... 88,617 47,591 58,003
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group -- Note B
Investment Advisory Services....................................... 310 107 106
Management and Administration...................................... 4,655 1,662 1,814
Marketing and Distribution......................................... 1,203 387 346
Taxes (other than income taxes) -- Note A............................ 276 99 98
Auditing Fees........................................................ 10 8 8
Shareholders' Reports................................................ 83 35 44
Annual Meeting and Proxy Costs....................................... 17 7 8
Directors' Fees and Expenses......................................... 11 4 4
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses................................................. 6,565 2,309 2,428
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income........................................ 82,052 45,282 55,575
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) -- Note C
Investment Securities Sold........................................... (46) 2,134 3,002
Futures Contracts.................................................... -- -- 802
- -----------------------------------------------------------------------------------------------------------------------------------
Realized Net Gain (Loss)..................................... (46) 2,134 3,804
- -----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) -- Notes C and D
Investment Securities................................................ -- 444 20,118
Futures Contracts.................................................... -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation (Depreciation)............. -- 444 20,118
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations................................................. $82,006 $47,860 $79,497
===================================================================================================================================
</TABLE>
The Statements of Net Assets, integral parts of the financial statements for
each of the Vanguard Municipal Bond Fund Portfolios, and the Report of
Independent Accountants are included as an insert to this Report.
13
<PAGE> 60
STATEMENT OF OPERATIONS (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSURED
INTERMEDIATE- LONG-TERM LONG-TERM HIGH-YIELD
TERM PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended August 31, 1993
(000)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Interest...................................................... $220,884 $122,658 $ 62,566 $108,246
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income............................................ 220,884 122,658 62,566 108,246
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group -- Note B
Investment Advisory Services................................ 346 192 97 156
Management and Administration............................... 5,898 3,106 1,587 2,578
Marketing and Distribution.................................. 1,009 517 243 413
Taxes (other than income taxes) -- Note A..................... 321 166 88 141
Auditing Fees................................................. 12 9 8 9
Shareholders' Reports......................................... 136 65 32 62
Annual Meeting and Proxy Costs................................ 26 13 7 12
Directors' Fees and Expenses.................................. 13 7 3 6
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses.......................................... 7,761 4,075 2,065 3,377
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income................................. 213,123 118,583 60,501 104,869
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) -- Note C
Investment Securities Sold.................................... 31,302 39,833 22,468 36,810
Futures Contracts............................................. (17,841) (15,760) (11,164) (13,326)
- -----------------------------------------------------------------------------------------------------------------------------------
Realized Net Gain (Loss).............................. 13,461 24,073 11,304 23,484
- -----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) -- Notes C and D
Investment Securities......................................... 227,451 126,437 66,394 96,637
Futures Contracts............................................. (21,687) (14,080) (8,665) (12,348)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation (Depreciation)...... 205,764 112,357 57,729 84,289
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations.......................................... $432,348 $255,013 $129,534 $212,642
==================================================================================================================================
</TABLE>
14
<PAGE> 61
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET
PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
YEAR Year
ENDED Ended
AUGUST 31, August 31,
1993 1992
(000) (000)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income............................................... $ 82,052 $ 102,809
Realized Net Gain (Loss)............................................ (46) 12
Change in Unrealized Appreciation
(Depreciation).................................................... -- --
- ----------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations.................................................... 82,006 102,821
- ----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income............................................... (82,052) (102,809)
Realized Net Gain................................................... -- --
- ----------------------------------------------------------------------------------------------------------
Total Distributions............................................. (82,052) (102,809)
- ----------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued -- Regular................................................. 3,675,705 3,022,093
-- In Lieu of Cash Distributions........................... 74,650 94,107
-- Exchange................................................ 1,295,556 947,029
Redeemed -- Regular................................................. (3,305,334) (2,667,600)
-- Exchange................................................ (1,367,784) (939,169)
- ----------------------------------------------------------------------------------------------------------
Net Increase from Capital Share
Transactions.................................................. 372,793 456,460
- ----------------------------------------------------------------------------------------------------------
Total Increase.................................................. 372,747 456,472
- ----------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year................................................... 3,165,082 2,708,610
- ----------------------------------------------------------------------------------------------------------
End of Year......................................................... $3,537,829 $3,165,082
==========================================================================================================
(1) Distributions Per Share
Net Investment Income........................................... 2.5 cents 3.5 cents
Realized Net Gain.............................................. -- --
- ----------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued.......................................................... 4,971,261 3,969,122
Issued in Lieu of Cash Distributions............................ 74,650 94,107
Redeemed........................................................ (4,673,118) (3,606,769)
- ----------------------------------------------------------------------------------------------------------
372,793 456,460
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM
PORTFOLIO
- -----------------------------------------------------------------------------------------------------
YEAR Year
ENDED Ended
AUGUST 31, August 31,
1993 1992
(000) (000)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income............................................... $ 45,282 $ 41,985
Realized Net Gain (Loss)............................................ 2,134 3,496
Change in Unrealized Appreciation
(Depreciation).................................................... 444 5,427
- -----------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations.................................................... 47,860 50,908
- -----------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income............................................... (45,282) (41,985)
Realized Net Gain................................................... (3,073) (3,372)
- -----------------------------------------------------------------------------------------------------
Total Distributions............................................. (48,355) (45,357)
- -----------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued -- Regular................................................. 717,818 500,464
-- In Lieu of Cash Distributions........................... 39,773 38,246
-- Exchange................................................ 285,873 219,527
Redeemed -- Regular................................................. (460,866) (329,059)
-- Exchange................................................ (314,312) (214,277)
- -----------------------------------------------------------------------------------------------------
Net Increase from Capital Share
Transactions.................................................. 268,286 214,901
- -----------------------------------------------------------------------------------------------------
Total Increase.................................................. 267,791 220,452
- -----------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year................................................... 1,061,114 840,662
- -----------------------------------------------------------------------------------------------------
End of Year......................................................... $1,328,905 $1,061,114
=====================================================================================================
(1) Distributions Per Share
Net Investment Income........................................... 60.9cent 72.0cent
Realized Net Gain.............................................. 4.3cent 6.1cent
- -----------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued.......................................................... 64,169 46,139
Issued in Lieu of Cash Distributions............................ 2,543 2,454
Redeemed........................................................ (49,559) (34,845)
- -----------------------------------------------------------------------------------------------------
17,153 13,748
=====================================================================================================
</TABLE>
15
<PAGE> 62
STATEMENT OF CHANGES IN NET ASSETS (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED-TERM
PORTFOLIO
- -----------------------------------------------------------------------------------------------------------
YEAR Year
ENDED Ended
AUGUST 31, August 31,
1993 1992
(000) (000)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income................................................ $ 55,575 $ 32,017
Realized Net Gain (Loss)............................................. 3,804 3,877
Change in Unrealized Appreciation
(Depreciation)..................................................... 20,118 11,074
- -----------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations..................................................... 79,497 46,968
- -----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income................................................ (55,575) (32,017)
Realized Net Gain.................................................... (4,543) (2,981)
- -----------------------------------------------------------------------------------------------------------
Total Distributions.............................................. (60,118) (34,998)
- -----------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued -- Regular.................................................. 778,572 427,133
-- In Lieu of Cash Distributions............................ 48,253 27,957
-- Exchange................................................. 513,897 313,016
Redeemed -- Regular.................................................. (289,711) (130,646)
-- Exchange................................................. (318,003) (196,998)
- -----------------------------------------------------------------------------------------------------------
Net Increase from Capital Share
Transactions................................................... 733,008 440,462
- -----------------------------------------------------------------------------------------------------------
Total Increase................................................... 752,387 452,432
- -----------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year.................................................... 872,652 420,220
- -----------------------------------------------------------------------------------------------------------
End of Year.......................................................... $1,625,039 $872,652
===========================================================================================================
(1) Distributions Per Share
Net Investment Income............................................ 48.5cent 54.1cent
Realized Net Gain................................................ 4.9cent 6.1cent
- -----------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued........................................................... 120,587 70,170
Issued in Lieu of Cash Distributions............................. 4,504 2,655
Redeemed......................................................... (56,687) (31,068)
- -----------------------------------------------------------------------------------------------------------
68,404 41,757
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE-
TERM PORTFOLIO
- ------------------------------------------------------------------------------------------------------
YEAR Year
ENDED Ended
AUGUST 31, August 31,
1993 1992
(000) (000)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income................................................ $ 213,123 $ 150,726
Realized Net Gain (Loss)............................................. 13,461 21,833
Change in Unrealized Appreciation
(Depreciation)..................................................... 205,764 81,350
- ------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations..................................................... 432,348 253,909
- ------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income................................................ (213,123) (150,726)
Realized Net Gain.................................................... (30,946) (13,965)
- ------------------------------------------------------------------------------------------------------
Total Distributions.............................................. (244,069) (164,691)
- ------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued -- Regular.................................................. 1,602,893 1,050,642
-- In Lieu of Cash Distributions............................ 191,081 127,470
-- Exchange................................................. 951,810 556,676
Redeemed -- Regular.................................................. (529,240) (325,101)
-- Exchange................................................. (561,729) (402,179)
- ------------------------------------------------------------------------------------------------------
Net Increase from Capital Share
Transactions................................................... 1,654,815 1,007,508
- ------------------------------------------------------------------------------------------------------
Total Increase................................................... 1,843,094 1,096,726
- ------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year.................................................... 3,102,283 2,005,557
- ------------------------------------------------------------------------------------------------------
End of Year.......................................................... $4,945,377 $3,102,283
======================================================================================================
(1) Distributions Per Share
Net Investment Income............................................ 71.0cent 74.7cent
Realized Net Gain................................................ 12.1cent 7.6cent
- ------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued........................................................... 195,262 127,394
Issued in Lieu of Cash Distributions............................. 14,645 10,118
Redeemed......................................................... (83,536) (57,742)
- ------------------------------------------------------------------------------------------------------
126,371 79,770
======================================================================================================
</TABLE>
16
<PAGE> 63
<TABLE>
<CAPTION>
INSURED
LONG-TERM LONG-TERM
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------
YEAR Year YEAR Year
ENDED Ended ENDED Ended
AUGUST 31, August 31, AUGUST 31, August 31,
1993 1992 1993 1992
(000) (000) (000) (000)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income.......................... $ 118,583 $ 110,852 $ 60,501 $ 57,912
Realized Net Gain (Loss)....................... 24,073 20,122 11,304 14,717
Change in Unrealized Appreciation
(Depreciation)............................... 112,357 68,693 57,729 31,847
- --------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations............................... 255,013 199,667 129,534 104,476
- --------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income.......................... (118,583) (110,852) (60,501) (57,912)
Realized Net Gain.............................. (32,418) (10,511) (25,424) (15,160)
- --------------------------------------------------------------------------------------------------------------
Total Distributions........................ (151,001) (121,363) (85,925) (73,072)
- --------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued -- Regular............................ 385,337 475,450 203,654 193,932
-- In Lieu of Cash Distributions...... 106,732 84,596 64,397 54,707
-- Exchange........................... 202,107 179,402 192,302 128,616
Redeemed -- Regular............................ (224,040) (170,696) (117,709) (92,997)
-- Exchange........................... (327,085) (251,118) (217,918) (151,383)
- --------------------------------------------------------------------------------------------------------------
Net Increase from Capital Share
Transactions............................. 143,051 317,634 124,726 132,875
- --------------------------------------------------------------------------------------------------------------
Total Increase............................. 247,063 395,938 168,335 164,279
- --------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year.............................. 1,947,184 1,551,246 962,242 797,963
- --------------------------------------------------------------------------------------------------------------
End of Year.................................... $2,194,247 $1,947,184 $1,130,577 $ 962,242
==============================================================================================================
(1) Distributions Per Share
Net Investment Income...................... 71.8cent 76.8cent 64.0cent 71.1cent
Realized Net Gain.......................... 20.3cent 7.6cent 28.5cent 19.1cent
- --------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued..................................... 47,371 54,613 36,086 30,124
Issued in Lieu of Cash Distributions....... 8,660 7,062 5,925 5,136
Redeemed................................... (44,426) (35,132) (30,510) (22,816)
- --------------------------------------------------------------------------------------------------------------
11,605 26,543 11,501 12,444
==============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
HIGH-YIELD
PORTFOLIO
- ------------------------------------------------------------------------------
YEAR Year
ENDED Ended
AUGUST 31, August 31,
1993 1992
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income.......................... $ 104,869 $ 93,309
Realized Net Gain (Loss)....................... 23,484 29,237
Change in Unrealized Appreciation
(Depreciation)............................... 84,289 41,310
- ------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations............................... 212,642 163,856
- ------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income.......................... (104,869) (93,309)
Realized Net Gain.............................. (36,892) (12,999)
- ------------------------------------------------------------------------------
Total Distributions........................ (141,761) (106,308)
- ------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued -- Regular............................ 446,238 356,667
-- In Lieu of Cash Distributions...... 106,880 78,146
-- Exchange........................... 363,804 236,864
Reedemed -- Regular............................ (213,810) (178,123)
-- Exchange........................... (348,358) (260,926)
- ------------------------------------------------------------------------------
Net Increase from Capital Share
Transactions............................. 354,754 232,628
- ------------------------------------------------------------------------------
Total Increase............................. 425,635 290,176
- ------------------------------------------------------------------------------
NET ASSETS
Beginning of Year.............................. 1,505,125 1,214,949
- ------------------------------------------------------------------------------
End of Year.................................... $1,930,760 $1,505,125
==============================================================================
(1) Distributions Per Share
Net Investment Income...................... 66.9cent 72.3cent
Realized Net Gain.......................... 25.4cent 10.6cent
- ------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued..................................... 75,005 56,503
Issued in Lieu of Cash Distributions....... 9,977 7,449
Redeemed................................... (52,029) (41,725)
- ------------------------------------------------------------------------------
32,953 22,227
==============================================================================
</TABLE>
17
<PAGE> 64
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------
Year Ended August 31,
--------------------------------------------------------
For a Share Outstanding Throughout Each Year 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR............................. $1.00 $1.00 $1.00 $1.00
---- ---- ---- ----
INVESTMENT OPERATIONS
Net Investment Income........................................ .025 .035 .050 .057
Net Realized and Unrealized Gain (Loss) on Investments....... -- -- -- --
---- ---- ---- ----
TOTAL FROM INVESTMENT OPERATIONS......................... .025 .035 .050 .057
- ----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income......................... (.025) (.035) (.050) (.057)
Distributions from Realized Net Gain......................... -- -- -- --
---- ---- ---- ----
TOTAL DISTRIBUTIONS...................................... (.025) (.035) (.050) (.057)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR................................... $1.00 $1.00 $1.00 $1.00
============================================================================================================================
TOTAL RETURN................................................... +2.51% +3.54% +5.08% +5.90%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)............................. $3,538 $3,165 $2,709 $2,488
Ratio of Expenses to Average Net Assets........................ .20% .23% .25% .25%
Ratio of Net Investment Income to Average Net Assets........... 2.48% 3.45% 4.94% 5.72%
Portfolio Turnover Rate........................................ N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------
Year Ended August 31,
---------------------
For a Share Outstanding Throughout Each Year 1989
- --------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF YEAR............................. $1.00
----
INVESTMENT OPERATIONS
Net Investment Income........................................ .060
Net Realized and Unrealized Gain (Loss) on Investments....... --
----
TOTAL FROM INVESTMENT OPERATIONS......................... .060
- --------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income......................... (.060)
Distributions from Realized Net Gain......................... --
----
TOTAL DISTRIBUTIONS...................................... (.060)
- --------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR................................... $1.00
==========================================================================
TOTAL RETURN................................................... +6.18%
- --------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)............................. $2,109
Ratio of Expenses to Average Net Assets........................ .27%
Ratio of Net Investment Income to Average Net Assets........... 5.99%
Portfolio Turnover Rate........................................ N/A
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM PORTFOLIO
-----------------------------------------------------
Year Ended August 31,
-----------------------------------------------------
For a Share Outstanding Throughout Each Year 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR............................. $15.64 $15.53 $15.35 $15.30
-------- --------- --------- ---------
INVESTMENT OPERATIONS
Net Investment Income........................................ .609 .720 .861 .906
Net Realized and Unrealized Gain (Loss) on Investments....... .033 .171 .180 .050
-------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS......................... .642 .891 1.041 .956
- ----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income......................... (.609) (.720) (.861) (.906)
Distributions from Realized Net Gain......................... (.043) (.061) -- --
-------- --------- --------- ---------
TOTAL DISTRIBUTIONS...................................... (.652) (.781) (.861) (.906)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR................................... $15.63 $15.64 $15.53 $15.35
============================================================================================================================
TOTAL RETURN................................................... +4.18% +5.87% +6.96% +6.42%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)............................. $1,329 $1,061 $841 $751
Ratio of Expenses to Average Net Assets........................ .20% .23% .25% .25%
Ratio of Net Investment Income to Average Net Assets........... 3.88% 4.58% 5.55% 5.90%
Portfolio Turnover Rate........................................ 46% 60% 104% 78%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM PORTFOLIO
---------------------
Year Ended August 31,
---------------------
For a Share Outstanding Throughout Each Year 1989
- -------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF YEAR.......................... $15.21
---------
INVESTMENT OPERATIONS
Net Investment Income..................................... .880
Net Realized and Unrealized Gain (Loss) on Investments.... .090
---------
TOTAL FROM INVESTMENT OPERATIONS...................... .970
- --------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income...................... (.880)
Distributions from Realized Net Gain...................... --
---------
TOTAL DISTRIBUTIONS................................... (.880)
- --------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR................................ $15.30
==========================================================================
TOTAL RETURN................................................ +6.56%
- --------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions).......................... $700
Ratio of Expenses to Average Net Assets..................... .27%
Ratio of Net Investment Income to Average Net Assets........ 5.77%
Portfolio Turnover Rate..................................... 54%
- --------------------------------------------------------------------------
</TABLE>
18
<PAGE> 65
<TABLE>
<CAPTION>
LIMITED-TERM PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended August 31,
-----------------------------------------------------------
For a Share Outstanding Throughout Each Year 1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR......................... $10.64 $10.43 $10.17 $10.14
--------- ----------- ----------- -----------
INVESTMENT OPERATIONS
Net Investment Income.................................... .485 .541 .614 .643
Net Realized and Unrealized Gain (Loss) on Investments... .209 .271 .265 .041
--------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS..................... .694 .812 .879 .684
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income..................... (.485) (.541) (.614) (.643)
Distributions from Realized Net Gain..................... (.049) (.061) (.005) (.011)
--------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS.................................. (.534) (.602) (.619) (.654)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR............................... $10.80 $10.64 $10.43 $10.17
===============================================================================================================================
TOTAL RETURN............................................... +6.68% +8.01% +8.88% +6.93%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)......................... $1,625 $873 $420 $245
Ratio of Expenses to Average Net Assets.................... .20% .23% .25% .25%
Ratio of Net Investment Income to Average Net Assets....... 4.50% 5.08% 5.91% 6.31%
Portfolio Turnover Rate.................................... 20% 37% 57% 55%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LIMITED-TERM PORTFOLIO
----------------------
Year Ended August 31,
----------------------
For a Share Outstanding Throughout Each Year 1989
- ------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF YEAR......................... $10.10
-----------
INVESTMENT OPERATIONS
Net Investment Income.................................... .638
Net Realized and Unrealized Gain (Loss) on Investments... .046
-----------
TOTAL FROM INVESTMENT OPERATIONS..................... .684
- ------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income..................... (.638)
Distributions from Realized Net Gain..................... (.006)
-----------
TOTAL DISTRIBUTIONS.................................. (.644)
- ------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR............................... $10.14
========================================================================
TOTAL RETURN............................................... +6.98%
- ------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)......................... $166
Ratio of Expenses to Average Net Assets.................... .27%
Ratio of Net Investment Income to Average Net Assets....... 6.33%
Portfolio Turnover Rate.................................... 88%
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------
For a Share Outstanding Throughout Each Year 1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR......................... $12.85 $12.41 $11.90 $12.08
--------- ----------- ----------- -----------
INVESTMENT OPERATIONS
Net Investment Income.................................... .710 .747 .791 .822
Net Realized and Unrealized Gain (Loss) on Investments... .721 .516 .605 (.114)
--------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS..................... 1.431 1.263 1.396 .708
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income..................... (.710) (.747) (.791) (.822)
Distributions from Realized Net Gain..................... (.121) (.076) (.095) (.066)
--------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS.................................. (.831) (.823) (.886) (.888)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR............................... $13.45 $12.85 $12.41 $11.90
===============================================================================================================================
TOTAL RETURN............................................... +11.54% +10.52% +12.15% +6.05%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)......................... $4,945 $3,102 $2,006 $1,259
Ratio of Expenses to Average Net Assets.................... .20% .23% .25% .25%
Ratio of Net Investment Income to Average Net Assets....... 5.41% 5.91% 6.49% 6.83%
Portfolio Turnover Rate.................................... 15% 32% 27% 54%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM PORTFOLIO
---------------------------
Year Ended August 31,
---------------------
For a Share Outstanding Throughout Each Year 1989
- ------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF YEAR......................... $11.71
-----------
INVESTMENT OPERATIONS
Net Investment Income.................................... .839
Net Realized and Unrealized Gain (Loss) on Investments... .370
-----------
TOTAL FROM INVESTMENT OPERATIONS..................... 1.209
- ------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income..................... (.839)
Distributions from Realized Net Gain..................... --
-----------
TOTAL DISTRIBUTIONS.................................. (.839)
- ------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR............................... $12.08
========================================================================
TOTAL RETURN............................................... +10.63%
- ------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)......................... $1,005
Ratio of Expenses to Average Net Assets.................... .27%
Ratio of Net Investment Income to Average Net Assets....... 7.03%
Portfolio Turnover Rate.................................... 56%
- ------------------------------------------------------------------------
</TABLE>
19
<PAGE> 66
FINANCIAL HIGHLIGHTS (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSURED LONG-TERM PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended August 31,
------------------------------------------------------------------
For a Share Outstanding Throughout Each Year 1993 1992 1991 1990
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR......................... $12.28 $11.74 $11.25 $11.67
--------- ----------- ----------- -----------
INVESTMENT OPERATIONS
Net Investment Income.................................... .718 .768 .775 .805
Net Realized and Unrealized Gain (Loss) on Investments... .813 .616 .615 (.267)
--------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS..................... 1.531 1.384 1.390 .538
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income..................... (.718) (.768) (.775) (.805)
Distributions from Realized Net Gain..................... (.203) (.076) (.125) (.153)
--------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS.................................. (.921) (.844) (.900) (.958)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR............................... $12.89 $12.28 $11.74 $11.25
===============================================================================================================================
TOTAL RETURN............................................... +13.06% +12.22% +12.79% +4.74%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)......................... $2,194 $1,947 $1,551 $1,122
Ratio of Expenses to Average Net Assets.................... .20% .23% .25% .25%
Ratio of Net Investment Income to Average Net Assets....... 5.77% 6.34% 6.77% 6.99%
Portfolio Turnover Rate.................................... 30% 42% 33% 47%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INSURED LONG-TERM PORTFOLIO
- --------------------------------------------------------------------------------------
Year Ended August 31,
---------------------------
For a Share Outstanding Throughout Each Year 1989
- ------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF YEAR......................... $11.14
-----------
INVESTMENT OPERATIONS
Net Investment Income.................................... .833
Net Realized and Unrealized Gain (Loss) on Investments... .530
-----------
TOTAL FROM INVESTMENT OPERATIONS..................... 1.363
- ------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income..................... (.833)
Distributions from Realized Net Gain..................... --
-----------
TOTAL DISTRIBUTIONS.................................. (.833)
- ------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR............................... $11.67
========================================================================
TOTAL RETURN............................................... +12.57%
- ------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)......................... $934
Ratio of Expenses to Average Net Assets.................... .27%
Ratio of Net Investment Income to Average Net Assets....... 7.24%
Portfolio Turnover Rate.................................... 36%
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LONG-TERM PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended August 31,
----------------------
For a Share Outstanding Throughout Each Year 1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR......................... $10.95 $10.58 $10.13 $10.53
---- ----------- ----------- -----------
INVESTMENT OPERATIONS
Net Investment Income.................................... .640 .711 .722 .732
Net Realized and Unrealized Gain (Loss) on Investments... .715 .561 .626 (.233)
---- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS..................... 1.355 1.272 1.348 .499
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income..................... (.640) (.711) (.722) (.732)
Distributions from Realized Net Gain..................... (.285) (.191) (.176) (.167)
---- ----------- ----------- -----------
TOTAL DISTRIBUTIONS.................................. (.925) (.902) (.898) (.899)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR............................... $11.38 $10.95 $10.58 $10.13
===============================================================================================================================
TOTAL RETURN............................................... +13.09% +12.60% +13.86% +4.88%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)......................... $1,131 $962 $798 $683
Ratio of Expenses to Average Net Assets.................... .20% .23% .25% .25%
Ratio of Net Investment Income to Average Net Assets....... 5.81% 6.52% 7.09% 7.04%
Portfolio Turnover Rate.................................... 36% 63% 62% 110%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LONG-TERM PORTFOLIO
- ----------------------------------------------------------------------------------
Year Ended August 31,
----------------------
<S> <C>
For a Share Outstanding Throughout Each Year 1989
- ------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR......................... $10.04
-----------
INVESTMENT OPERATIONS
Net Investment Income.................................... .760
Net Realized and Unrealized Gain (Loss) on Investments... .490
-----------
TOTAL FROM INVESTMENT OPERATIONS..................... 1.250
- ------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income..................... (.760)
Distributions from Realized Net Gain..................... --
-----------
TOTAL DISTRIBUTIONS.................................. (.760)
- ------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR............................... $10.53
========================================================================
TOTAL RETURN............................................... +12.79%
- ------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)......................... $626
Ratio of Expenses to Average Net Assets.................... .27%
Ratio of Net Investment Income to Average Net Assets....... 7.33%
Portfolio Turnover Rate.................................... 99%
- ------------------------------------------------------------------------
</TABLE>
20
<PAGE> 67
<TABLE>
<CAPTION>
HIGH-YIELD PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------------
For a Share Outstanding Throughout Each Year 1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR......................... $10.76 $10.32 $ 9.90 $10.27
---- ----------- ----------- -----------
INVESTMENT OPERATIONS
Net Investment Income.................................... .669 .723 .732 .739
Net Realized and Unrealized Gain (Loss) on Investments... .664 .546 .560 (.259)
---- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS..................... 1.333 1.269 1.292 .480
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income..................... (.669) (.723) (.732) (.739)
Distributions from Realized Net Gain..................... (.254) (.106) (.140) (.111)
---- ----------- ----------- -----------
TOTAL DISTRIBUTIONS.................................. (.923) (.829) (.872) (.850)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR............................... $11.17 $10.76 $10.32 $ 9.90
===============================================================================================================================
TOTAL RETURN............................................... +13.08% +12.81% +13.66% +4.82%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)......................... $1,931 $1,505 $1,215 $962
Ratio of Expenses to Average Net Assets.................... .20% .23% .25% .25%
Ratio of Net Investment Income to Average Net Assets....... 6.15% 6.83% 7.34% 7.30%
Portfolio Turnover Rate.................................... 34% 64% 58% 82%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
HIGH-YIELD PORTFOLIO
- --------------------------------------------------------------------------------
Year Ended August 31,
---------------------
For a Share Outstanding Throughout Each Year 1989
- ------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF YEAR......................... $ 9.73
-----------
INVESTMENT OPERATIONS
Net Investment Income.................................... .752
Net Realized and Unrealized Gain (Loss) on Investments... .540
-----------
TOTAL FROM INVESTMENT OPERATIONS..................... 1.292
- ------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income..................... (.752)
Distributions from Realized Net Gain..................... --
-----------
TOTAL DISTRIBUTIONS.................................. (.752)
- ------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR............................... $10.27
========================================================================
TOTAL RETURN............................................... +13.64%
- ------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions)......................... $865
Ratio of Expenses to Average Net Assets.................... .27%
Ratio of Net Investment Income to Average Net Assets....... 7.43%
Portfolio Turnover Rate.................................... 80%
- ------------------------------------------------------------------------
</TABLE>
21
<PAGE> 68
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
extend. 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 $2,820,000 to
Vanguard (included in Other Assets), representing 14.1% of
Vanguard's capitalization. The Fund's officers and directors are
also officers and directors of Vanguard.
C. During the year ended August 31, 1993, purchases and sales of
investment securities other than temporary cash investments were:
<TABLE>
<CAPTION>
- ---------------------------------------------
(000)
------------------------
Portfolio Purchases Sales
- ---------------------------------------------
<S> <C> <C>
SHORT-TERM $ 599,136 $412,134
LIMITED-TERM 977,913 230,248
INTERMEDIATE-TERM 2,008,948 554,750
INSURED LONG-TERM 732,075 566,729
LONG-TERM 433,277 349,815
HIGH-YIELD 884,224 542,617
- ---------------------------------------------
</TABLE>
22
<PAGE> 69
At August 31, 1993, 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 $ 11,717 $ (175) $ 11,542
LIMITED-TERM 37,519 (19) 37,500
INTERMEDIATE-TERM 377,608 (155) 377,493
INSURED LONG-TERM 241,988 (7) 241,981
LONG-TERM 120,445 (3) 120,442
HIGH-YIELD 185,354 (5,724) 179,630
- -------------------------------------------------------------
</TABLE>
D. At August 31, 1993, the aggregate settlement value of open
U.S. Treasury Bond, U.S. Treasury Note, and long-term Municipal
Bond Index futures contracts expiring through December 1993, the
related unrealized depreciation, and the market value of
securities deposited as initial margin for those contracts were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------
(000)
-----------------------------------------
Market Value of
Aggregate Securities
Settlement Unrealized Deposited as
Portfolio Value Depreciation Initial Margin
- -------------------------------------------------------------
<S> <C> <C> <C>
INTERMEDIATE-TERM $569,059 $(21,161) $7,407
INSURED LONG-TERM 280,416 (11,733) 4,199
LONG-TERM 196,955 (6,977) 3,171
HIGH-YIELD 305,773 (10,795) 4,040
- -------------------------------------------------------------
</TABLE>
E. Effective in 1993, generally accepted accounting principles
require that differences between undistributed net investment
income or accumulated net realized gains/losses for financial
reporting and tax purposes, if permanent, be reclassified to/from
paid in capital. In connection with the adoption of this
accounting method, the following prior years' permanent book/tax
differences in accumulated net realized gains/losses have been
reclassified:
<TABLE>
<CAPTION>
- -----------------------------------------------
Increase (Decrease)
Paid in Capital
Portfolio (000)
- -----------------------------------------------
<S> <C>
MONEY-MARKET $ (93)
SHORT-TERM 1,542
INTERMEDIATE-TERM (159)
INSURED LONG-YIELD 49
LONG-TERM (1,130)
HIGH-YIELD (51)
- -----------------------------------------------
</TABLE>
These reclassifications have no effect on net assets or net asset
values per share.
23
<PAGE> 70
DIRECTORS AND OFFICERS
JOHN C. BOGLE, Chairman and Chief Executive Officer
Chairman and Director of The Vanguard Group, Inc.,
and of each of the investment companies in The
Vanguard Group.
JOHN J. BRENNAN, President
President and Director of The Vanguard Group, Inc., and of each of the
investment companies in The Vanguard Group.
ROBERT E. CAWTHORN, Chairman and Chief Executive Officer of Rhone-Poulenc Rorer
Inc.; Director of Sun Company, Inc. and Immune Response Corporation; Trustee of
the Universal Health Realty Income Trust.
BARBARA BARNES HAUPTFUHRER, Director of The Great Atlantic and Pacific Tea
Company, Alco Standard Corp., Raytheon Company, Knight-Ridder, Inc., and
Massachusetts Mutual Life Insurance Co.
BURTON G. MALKIEL, Chemical Bank Chairman s Professor of Economics, Princeton
University; Director of Prudential Insurance Co. of America, Amdahl
Corporation, Baker Fentress & Co., and The Southern New England Telephone
Company.
ALFRED M. RANKIN, JR., President and Chief Executive Officer of NACCO
Industries, Inc.; Director of NACCO Industries, The BFGoodrich Company, and The
Standard Products Company.
JOHN C. SAWHILL, President and Chief Executive Officer of The Nature
Conservancy; formerly, Director and Senior Partner of McKinsey & Co. and
President of New York University; Director of Pacific Gas and Electric Company
and NACCO Industries.
JAMES O. WELCH, JR., Retired Chairman of Nabisco Brands, Inc.; retired Vice
Chairman and Director of RJR Nabisco; Director of TECO Energy, Inc.
J. LAWRENCE WILSON, Chairman and Director of Rohm & Haas Company; Director of
Cummins Engine Company and Vanderbilt University; Trustee of the Culver
Educational Foundation.
OTHER FUND OFFICERS
RICHARD F. HYLAND, Treasurer;Treasurer of The Vanguard Group,
Inc., and of each of the investment companies in the Vanguard
Group.
RAYMOND J. KLAPINSKY, Secretary; Senior Vice President and
Secretary of the Vanguard Group, Inc.; Secretary of each of the
investment companies in the Vanguard Group.
KAREN E. WEST, Controller; Vice President of The Vanguard Group,
Inc.; Controller of each of the investment companies in The
Vanguard Group.
OTHER VANGUARD GROUP OFFICERS
JEREMY G. DUFFIELD
Senior Vice President
Planning & Development
JAMES H. GATELY
Senior Vice President
Institutional
IAN A. MACKINNON
Senior Vice President
Fixed Income Group
VINCENT S. MCCORMACK
Senior Vice President
Operations
RALPH K. PACKARD
Senior Vice President
Chief Financial Officer
24
<PAGE> 71
(Continued from inside front cover)
toward those of the 1970s. However, the current level of inflation suggests
that future real returns may prove to be satisfactory. Looking forward, the
main risks to the investor are two: (1) that yields on financial assets will
rise sharply, reducing the prices of stocks and bonds alike; and (2) that
inflation, presently at moderate levels, will accelerate.
SOME COURSES OF ACTION
What, if any, present action should be taken by investors to deal with these
two major risks? Should your allocation of assets among stock funds, bond
funds, and money market funds be adjusted? Here are some reasonable courses of
action to consider:
- - For long-term investors who have built a substantial balanced portfolio
of stock, bond, and money market funds, stay the course. Even if
withdrawing from the stock market proves to be justified, the next
decision--when to return--will one day be required. "Being right twice"
is no mean challenge.
- - For long-term investors gradually accumulating assets for, say,
retirement, stay your present course. Continue to invest regularly. By
doing so, you buy more shares of a mutual fund when its price falls, and
fewer shares when its price rises, virtually assuring a reasonable
average cost.
- - For risk-averse investors who are highly confident that stock prices are
"too high," make only marginal--not "all or nothing"--changes in your
portfolio balance. Given the perils of predicting the future, any changes
should be limited to, say, 15 percentage points. That is, if your normal
portfolio allocation is 60% in stock funds, it might be reduced to 45%;
if 85%, to 70%.
- - For investors who simply must have more income, never lose sight of the
added principal risk involved in shifting from money market funds to bond
funds. Long-term bond funds provide a generous and durable income stream,
but their prices are highly volatile. Short-term and intermediate-term
bond funds offer a "middle way" of increasing income with more modest
risk to principal.
- - For investors who are tempted to find an "easy way" to higher returns,
never forget that risk and reward go hand in hand. Precipitously
replacing certificates of deposit with broad-based common stock funds
verges on the irrational. Funds investing in other securities
markets--emerging nations, international stocks and bonds, and small U.S.
companies--carry their own special risks. Generally, limit such
alternative investments to, say, 20% of your total portfolio.
For all investors, be prepared for sharp interim swings in stock and bond
prices. The central tenet of investing is "prices fluctuate," and sensible
long-term investors simply must take such fluctuations in their stride.
Successful investing is as much a function of your own discipline and
equanimity as it is of the returns available in the securities markets.
THREE ESSENTIAL PRINCIPLES
As we confront the brave new world of investing that may well lie ahead in the
coming decade--and it is important to think in decade-length terms--we would
underscore three caveats:
1. Have "rational expectations" for future returns. At prices prevailing
today, it seems highly unlikely that the returns enjoyed by investors in
the past decade will be repeated in the coming decade.
2. Maintain a balanced portfolio consisting of stock, bond, and money market
funds. Each asset class has its own risk and reward characteristics. By
allocating your resources among the three asset classes according to your
own requirements, you can build a portfolio providing appropriate
elements of capital appreciation, capital conservation, and current
income.
3. In balancing risk against reward, be sure to consider cost. Many mutual
funds carry hefty sales charges or high expense ratios, or both. Other
factors held equal, expenses reduce returns, dollar for dollar. Put
another way, high-cost funds must select investments with higher
prospective gross returns--which entail higher risks--to match the net
returns earned by low-cost funds.
This brief Annual Report essay can provide only an elementary look at the
challenges investors face today. History can give us perspective, but it cannot
give us performance. Famed British economist Lord Keynes had it right when he
said, "the inevitable never happens. It is the unexpected always."
<PAGE> 72
THE VANGUARD FAMILY OF FUNDS
AGGRESSIVE GROWTH FUNDS
Vanguard Explorer Fund
Vanguard Small Capitalization Stock Fund
Vanguard Specialized Portfolios
GROWTH FUNDS
Vanguard International Equity Index Fund
Vanguard International Growth Portfolio
Vanguard/Morgan Growth Fund
Vanguard/PRIMECAP Fund
Vanguard U.S. Growth Portfolio
GROWTH AND INCOME FUNDS
Vanguard Convertible Securities Fund
Vanguard Equity Income Fund
Vanguard Index Trust
Vanguard Quantitative Portfolios
Vanguard/Trustees Equity Fund
Vanguard/Windsor Fund
Vanguard/Windsor II
BALANCED FUNDS
Vanguard Asset Allocation Fund
Vanguard Balanced Index Fund
Vanguard STAR Fund
Vanguard/Wellington Fund
INCOME FUNDS
Vanguard Admiral Funds
Vanguard Bond Index Fund
Vanguard Fixed Income Securities Fund
Vanguard Preferred Stock Fund
Vanguard/Wellesley Income Fund
TAX-FREE INCOME FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds
(CA, FL, NJ, NY, OH, PA)
MONEY MARKET FUND
Vanguard Money Market Reserves
[VANGUARD LOGO]
Vanguard Financial Center * Valley Forge, Pennsylvania 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.
Q950-08/93
<PAGE> 73
EDGAR Appendix
This appendix describes components of the printed version of this
report that do not translate into a format acceptable to the EDGAR system.
The cover of the printed version of this report features the flags of
The United States of America and Vanguard flying from a halyard.
A bar chart called "A Tale of Two Decades" appears on the inside front
cover. This chart illustrates Average Annual Total Return, in nominal and real
terms, of Stocks, Bonds and Reserves (U.S. Treasury bills) for the two decades
since 1973.
A running head featuring the Vanguard flag logo appears at the top of
pages one through 24 and pages one through 24 of the Statement of Net Assets.
A photograph of John C. Bogle appears at the upper-right of page one.
A line chart representing Short-Term versus Long-Term return rates for
20-year Prime Municipal Bonds against 90-day MIG 1 Notes appears in the upper
left-hand corner of page 2.
Line charts illustrating cumulative performance of the Vanguard Money
Market Portfolio and the Vanguard Short-Term Portfolio compared to (i) the
VMBF money market and (ii) the Average Short-Term Municipal Fund for the Fiscal
Years 1984 through 1993 appear on page 9.
Line charts illustrating cumulative performance of the Vanguard
Limited-Term Portfolio compared to (i) the VMBF-Limited-Term, (ii) Average
Short-Term Municipal Fund and (iii) Lehman Municipal Bond Fund for the fiscal
years 1988 through 1993 appear on page 10.
Line charts illustrating cumulative performance of the Vanguard
Intermediate-Term Portfolio compared to (i) the VMBF-Limited-Term, (ii) Average
Short-Term Municipal Fund and (iii) Lehman Municipal Bond Fund for the fiscal
years 1984 through 1993 appear on page 10.
Line charts illustrating cumulative performance of the Vanguard Insured
Long-Term Portfolio compared to (i) the VMBF-Insured Long-Term, (ii) the Average
Insured Long-Term Municipal Fund and (iii) Lehman Municipal Bond Fund for the
fiscal years 1985 through 1993 appear on page 11.
Line charts illustrating cumulative performance of the Vanguard
Long-Term Portfolio compared to (i) the VMBF-Long-Term (ii) Average General
Municipal Fund and (iii) Lehman Municipal Bond Fund for the fiscal years 1984
through 1993 appear on page 11.
Line charts illustrating cumulative performance of the Vanguard
High-Yield Portfolio compared to (i) the VMBF-High-Yield Fund, (ii) the Average
High-Yield Municipal Fund and (iii) the Lehman Municipal Bond Fund for the
fiscal years 1984 through 1993 appear on page 12.
