<PAGE> 1
[PHOTO]
ANNUAL
REPORT
OCTOBER 31, 1998
VANGUARD
MUNICIPAL BOND
FUNDS
VANGUARD TAX-EXEMPT MONEY MARKET FUND
VANGUARD SHORT-TERM TAX-EXEMPT FUND
VANGUARD LIMITED-TERM TAX-EXEMPT FUND
VANGUARD INTERMEDIATE-TERM TAX-EXEMPT FUND
VANGUARD INSURED LONG-TERM TAX-EXEMPT FUND
VANGUARD LONG-TERM TAX-EXEMPT FUND
VANGUARD HIGH-YIELD TAX-EXEMPT FUND
[THE VANGUARD GROUP LOGO]
<PAGE> 2
AT VANGUARD, WE BELIEVE THAT TRADITION MATTERS
Our 8,000 crew members embrace the traditional values on which our success is
built, including integrity, hard work, thrift, teamwork, and fair dealing on
behalf of our clients.
This year, our report cover pays homage to three anniversaries, each of great
significance to The Vanguard Group:
- - The 200th anniversary of the Battle of the Nile, which commenced on August 1,
1798. HMS Vanguard, the victorious British flagship at the Nile, is our
namesake. And its motto-- "Leading the way"--serves as a guiding principle
for our company.
- - The 100th birthday, on July 23, of Walter L. Morgan, founder of Wellington
Fund, the oldest member of what became The Vanguard Group. Mr. Morgan was
friend and mentor to Vanguard founder John C. Bogle, and helped to shape the
standards and business principles that Mr. Bogle laid down for Vanguard at
its beginning nearly 25 years ago: a stress on balanced, diversified
investments; insistence on fair dealing and candor with clients; and a focus
on long-term investing. To our great regret, Mr. Morgan died on September 2.
- - The 70th anniversary, on December 28, of the incorporation of Vanguard
Wellington Fund. It was the nation's first balanced mutual fund, and is one
of only a handful of funds created in the 1920s that are still in operation.
Although Vanguard constantly tackles new challenges, adopts new technology, and
develops new services, we treasure the traditions and values that set us apart
in a crowded, competitive industry. And we salute our shareholders, whose
support and trust we strive to earn each and every day.
[PHOTO]
CONTENTS
A MESSAGE TO
OUR SHAREHOLDERS
1
THE MARKETS IN
PERSPECTIVE
8
REPORT FROM
THE ADVISER
10
FUND PROFILES
12
PERFORMANCE SUMMARIES
20
FINANCIAL STATEMENTS
27
All comparative mutual fund data are
from Lipper Analytical Services, Inc., or
Morningstar unless otherwise noted.
<PAGE> 3
FELLOW SHAREHOLDER,
[PHOTO] [PHOTO]
John J. Brennan John C. Bogle
Chairman & CEO Senior Chairman
Amid a favorable environment for municipal bonds, the Vanguard tax-exempt funds
provided excellent returns during the fiscal year ended October 31, 1998, both
on an absolute basis and relative to competing tax-exempt funds. Returns ranged
from +3.4% for the Tax-Exempt Money Market Fund to +8.2% for the High-Yield
Tax-Exempt Fund. These are outstanding returns for fixed-income funds during a
time of low inflation--particularly since 100% of the income return is free from
federal income taxes. The table below shows each fund's total return (capital
change plus reinvested dividends) for the twelve months, along with a breakdown
of its capital and income components. The table also shows each fund's yield as
of October 31.
Per-share figures for each fund, including net asset values, income
dividends, and any distributions from net realized capital gains, are presented
in the table following this letter. The returns of each fund in comparison with
its index benchmark are shown in the Performance Summaries on pages 20 through
26. With the exception of the Short-Term Tax-Exempt Fund, whose maturity range
is shorter than that of securities represented in its target index, each fund
tracked its index closely--within 0.6 percentage point--during 1998.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
COMPONENTS OF TOTAL RETURNS
FISCAL YEAR ENDED OCTOBER 31, 1998
----------------------------------------------
SEC
TOTAL INCOME CAPITAL ANNUALIZED
TAX-EXEMPT FUND RETURN RETURN RETURN YIELD*
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market** +3.4% +3.4% 0.0% 3.06%
- ----------------------------------------------------------------------
Short-Term +4.5 +4.0 +0.5 3.21
- ----------------------------------------------------------------------
Limited-Term +5.4 +4.4 +1.0 3.53
- ----------------------------------------------------------------------
Intermediate-Term +6.8 +5.1 +1.7 3.93
- ----------------------------------------------------------------------
Insured Long-Term +7.9 +5.5 +2.4 4.33
- ----------------------------------------------------------------------
Long-Term +7.8 +5.4 +2.4 4.46
- ----------------------------------------------------------------------
High-Yield +8.2 +5.6 +2.6 4.53
- ----------------------------------------------------------------------
</TABLE>
* 7-day yield for the Tax-Exempt Money Market Fund; 30-day yield for other
funds.
**An investment in a money market fund 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 per share.
FINANCIAL MARKETS IN REVIEW
Wide and abrupt shifts in investor sentiment buffeted financial markets during
the fiscal year that ended October 31. There was plenty to worry about: the
Asian financial crisis, Russia's debt default, and the $3.6 billion bailout of a
U.S. hedge fund by its creditors, among other developments. Nonetheless, the
U.S. economy grew by more than 3% during the period. This expansion was fueled
by strong consumer spending encouraged by a strong job market (unemployment as
low as 4.3%) and rising wages (up 4% during the year). Inflation also stayed in
check: Consumer prices rose just 1.5%.
Interest rates declined significantly, elevating prices for bonds and
providing support for stock prices. A classic "flight to quality" amid turmoil
in some markets helped drive U.S. Treasury bond yields to historic lows during
the period. The yield on the benchmark 30-year U.S. Treasury bond began the year
at 6.15%, fell to a 31-year low of 4.72% on October 5, then rebounded in the
final weeks of the fiscal year to end at 5.16%. Yields
1
<PAGE> 4
on 3-month Treasury bills declined on balance during the year by 88 basis points
(0.88 percentage point) to 4.32% on October 31. For bonds, of course, lower
yields translate into higher prices. The Lehman Brothers Aggregate Bond Index, a
benchmark for the overall taxable bond market, returned +9.3% during the twelve
months, as a price rise of about 2.5% augmented income of about 6.8%. Long-term
tax-exempt bonds, as measured by the Lehman Municipal Bond Index, returned
+8.0%.
Municipal bonds advanced steadily, though less dramatically and with much
less volatility than their taxable cousins. Yields on high-grade municipal bonds
dropped on balance to 5.13% from 5.40% at the start of the year. For a short
time, long-term municipals even achieved the rare feat of providing tax-exempt
yields that surpassed the fully taxable yields available on comparable Treasury
securities. Yields on high-quality, short-term municipal securities finished the
year at 2.88%, down 87 basis points (0.87 percentage point) from the yields at
the start of fiscal 1998.
The combination of relatively high yields and tax-exempt income made
municipal bonds very attractive to many income-oriented investors during the
period. As of October 31, 1998, the 5.13% yield on 20-year tax-exempt bonds was
equal to a phenomenal 95% of the yield on 20-year (taxable) U.S. Treasury bonds.
For investors in the maximum marginal tax bracket of 39.6%, a 5.13% tax-exempt
yield is equivalent to a yield of 8.49% on taxable bonds. For short-term
municipals, the tax-exempt yield of 2.88% is equivalent to a taxable yield of
4.77% on T-bills.
While bonds generally enjoyed a strong year, the U.S. stock market truly
produced mixed results. Large-capitalization stocks, as measured by the Standard
& Poor's 500 Composite Stock Price Index, gained +22.0%, despite a sharp tumble
in July and August. Smaller and medium-sized stocks as a group fell -3.4%.
FISCAL 1998 PERFORMANCE OVERVIEW
Most of each tax-exempt fund's total return came from income dividends, in
proportion to each fund's target maturity range. The interest-rate declines over
the year also enhanced the net asset values of all six of the funds that are
expected to have variable net asset values. The Tax-Exempt Money Market Fund
maintained its share price of $1, as is expected but not guaranteed.
In comparison with their peers, the seven Vanguard tax-exempt funds had
an excellent year. As illustrated in the table below, six of the funds earned
returns above those of the average comparable tax-exempt fund and one--the
Short-Term Tax-Exempt Fund--matched its average peer.
<TABLE>
<CAPTION>
- ----------------------------------------------------------
TOTAL RETURNS
FISCAL YEAR ENDED OCTOBER 31, 1998
------------------------------------
AVERAGE
VANGUARD COMPETING
TAX-EXEMPT FUND FUND FUND DIFFERENCE
- ----------------------------------------------------------
<S> <C> <C> <C>
Money Market +3.4% +3.0% +0.4%
Short-Term +4.5 +4.5* 0.0
Limited-Term +5.4 +4.9 +0.5
Intermediate-Term +6.8 +6.5 +0.3
Insured Long-Term +7.9 +7.2 +0.7
Long-Term +7.8 +7.1 +0.7
High-Yield +8.2 +7.0 +1.2
- ----------------------------------------------------------
</TABLE>
*Adjusted for maturity differences.
Our success in this side-by-side comparison depends greatly on our low
operating costs. Our funds' expense ratios averaged about 0.20% of net assets
during the fiscal year, well below the 0.71% expense ratio of the average
short-term tax-exempt bond fund and the 1.08% expense ratio of the average
long-term tax-exempt fund. A difference of 0.5 percentage point amounts to $5
for each $1,000 invested in a fund. Because expenses reduce
2
<PAGE> 5
the income passed through to bond fund investors, our cost advantage flows
directly to our shareholders.
Our Fixed Income Group uses this head start to maximum advantage in
carrying out our rigorously defined investment policies, which establish each
fund's maturity range and credit-quality standards. This group's analysts and
managers once again did a superb job.
LONG-TERM PERFORMANCE OVERVIEW
One year is too short a period to allow a meaningful assessment of a fund's
long-term performance. However, all of the Vanguard tax-exempt funds have been
in existence for eleven years or more. The High-Yield Tax-Exempt Fund in
December becomes the fourth to pass its 20th anniversary. The Performance
Summaries later in this report present the long-term results for each of our
funds, including yearly breakdowns of their income and capital returns, as well
as cumulative returns for the period. The Summaries also provide a comparison
with each fund's index benchmark. Few municipal bond funds can outpace these
indexes, which are theoretical constructs and thus incur no operating expenses
or transaction costs. That four of our tax-exempt funds succeeded in doing so
over the decade is no small achievement. The table below presents the returns
over the past ten years for each fund and its average tax-exempt peer with a
comparable target maturity. The table also shows the results for hypothetical
$10,000 investments made in each, assuming the reinvestment of income dividends
and capital gains distributions.
As the table shows, each of our funds has outperformed its peer group
over the decade. This long-term superiority can add up to considerable sums for
our shareholders. For the ten-year period illustrated, we surpassed our peers by
average annual margins ranging from 0.1 percentage point to 1.0 percentage
point, equating to extra returns ranging from about $100 to more than $2,000 (or
from 1% to 20% of the initial investment). During all of this period, the large
cost advantage we have over our peers played a major role, as did the consistent
excellence of our Fixed Income Group's management.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
TOTAL RETURNS
10 YEARS ENDED OCTOBER 31, 1998
--------------------------------------------------------------
FINAL VALUE OF
AVERAGE A $10,000
ANNUAL RATE INITIAL INVESTMENT*
---------------------- ------------------------------------
AVERAGE AVERAGE
VANGUARD COMPETITIVE VANGUARD COMPETITIVE VANGUARD
TAX-EXEMPT FUND FUND FUND FUND FUND ADVANTAGE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Money Market +3.9% +3.5% $14,701 $14,114 $ 587
Short-Term +4.9 +4.8** 16,125 15,989 136
Limited-Term +6.0 +5.4 17,839 16,962 877
Intermediate-Term +7.7 +6.7 20,988 19,195 1,793
Insured Long-Term +8.3 +7.4 22,124 20,398 1,726
Long-Term +8.5 +7.5 22,641 20,597 2,044
High-Yield +8.6 +7.6 22,776 20,745 2,031
- -------------------------------------------------------------------------------------
</TABLE>
*Assuming reinvestment of all income dividends and capital gains
distributions.
** Adjusted for maturity differences.
We emphasize that the past decade is no guide to the future performance
of the Vanguard tax-exempt funds or the financial markets. It would not be wise
to expect the next ten years to match the last ten, when interest rates receded
from levels much higher than those prevailing today. Long-term U.S. Treasury
bonds excelled during the decade, with an +11.3% return--more than double the
current yield on such bonds. Given the fact that municipal bonds provided much
higher yields at the beginning of the decade than at its close (about 7.2%
versus 4.3% for the Insured Long-Term Fund, for example),
3
<PAGE> 6
absolute returns from tax-exempt bonds are very unlikely to be as high in the
next decade as they were in the past one. However, we are confident that our low
costs and sound management will continue to provide our funds with a long-term
edge relative to our peers.
IN SUMMARY
A year ago, noting that the rewards of the financial markets had been amply
demonstrated in recent years, our letter suggested that investors be mindful of
the considerable risks that can be part of investing--whether in bonds or
stocks. The further decline in bond yields and the stock market's volatility
since then have underscored that point. Those same events have reaffirmed our
longstanding belief in the importance of balanced investing--holding stock
funds, bond funds, and reserves in proportions suited to your goals, time
horizon, and tolerance for market fluctuations.
In short, we believe in thoughtfully constructing an investment plan and
sticking with it.
/s/ JOHN C. BOGLE /s/ JOHN J. BRENNAN
John C. Bogle John J. Brennan
Senior Chairman Chairman and
Chief Executive Officer
November 18, 1998
NOTE: You'll observe that we have made minor changes in the names of the
Vanguard Municipal Bond Funds. We added the word "Tax-Exempt" and replaced
"Portfolio" with "Fund" as part of a broader effort to clarify the names in our
fund lineup.
<TABLE>
<CAPTION>
FUND STATISTICS
- -----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE TWELVE MONTHS
---------------------------------- --------------------------------
OCTOBER 31, OCTOBER 31, INCOME CAPITAL
TAX-EXEMPT FUND 1997 1998 DIVIDENDS GAINS*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market $ 1.00 $ 1.00 $0.034 $0.000
Short-Term 15.58 15.65 0.609 0.006
Limited-Term 10.74 10.85 0.460 0.000
Intermediate-Term 13.35 13.52 0.661 0.052
Insured Long-Term 12.51 12.73 0.658 0.081
Long-Term 11.18 11.39 0.580 0.058
High-Yield 10.83 11.06 0.582 0.052
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*Includes long-term and short-term capital gains distributions.
4
<PAGE> 7
NOTICE TO SHAREHOLDERS
At a special meeting on July 24, 1998, shareholders of the Vanguard Municipal
Bond Funds overwhelmingly approved seven proposals. The proposals and voting
results were:
1. REORGANIZATION INTO A DELAWARE BUSINESS TRUST. Based on the funds' assets at
the time of the vote, this change will reduce the amount of state taxes the
funds pay annually by approximately $1,581,000. Approved by 96.05% of the shares
voted, as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------
FOR AGAINST ABSTAIN
---------------------------------------------------------------
<S> <C> <C>
3,854,149,888 79,014,791 79,615,453
---------------------------------------------------------------
</TABLE>
2A. INVESTMENT LIMITATION CHANGES--INTERFUND LENDING PROGRAM. This change
permits the funds to participate in Vanguard's interfund lending program, which
allows funds to loan money to each other if--and only if--it makes good
financial sense to do so on both sides of the transaction. The interfund lending
program won't be an integral part of the funds' investment programs; it is a
contingency arrangement for managing unusual cash flows. Approved as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
FUND FOR AGAINST ABSTAIN APPROVED BY
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Money Market 2,903,657,338 209,400,871 102,138,010 90.31%
---------------------------------------------------------------------------------------------
Short-Term Tax-Exempt 50,563,907 2,073,322 1,430,909 93.52%
---------------------------------------------------------------------------------------------
Limited-Term Tax-Exempt 101,931,717 5,442,385 2,953,080 92.39%
---------------------------------------------------------------------------------------------
Intermediate-Term Tax-Exempt 300,130,662 11,418,003 9,493,573 93.49%
---------------------------------------------------------------------------------------------
Insured Long-Term Tax-Exempt 93,882,111 4,590,583 3,708,403 91.88%
---------------------------------------------------------------------------------------------
Long-Term Tax-Exempt 70,872,742 3,482,603 1,802,956 93.06%
---------------------------------------------------------------------------------------------
High-Yield Tax-Exempt 123,132,180 6,372,096 4,302,679 92.02%
---------------------------------------------------------------------------------------------
</TABLE>
2B. INVESTMENT LIMITATION CHANGES--BORROWING MONEY AND PLEDGING ASSETS. This
change sets standard limits of 15% of net assets on the amount of money Vanguard
funds can borrow from all sources and on the amount of assets that can be
pledged to secure any loans. Approved as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
FUND FOR AGAINST ABSTAIN APPROVED BY
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Money Market 2,867,603,599 245,990,404 101,602,216 89.19%
---------------------------------------------------------------------------------------------
Short-Term Tax-Exempt 48,370,654 4,265,914 1,431,571 89.46%
---------------------------------------------------------------------------------------------
Limited-Term Tax-Exempt 100,140,274 7,113,687 3,073,221 90.77%
---------------------------------------------------------------------------------------------
Intermediate-Term Tax-Exempt 294,854,839 16,225,569 9,961,831 91.84%
---------------------------------------------------------------------------------------------
Insured Long-Term Tax-Exempt 91,666,904 6,630,159 3,884,035 89.71%
---------------------------------------------------------------------------------------------
Long-Term Tax-Exempt 69,710,707 4,535,590 1,912,004 91.53%
---------------------------------------------------------------------------------------------
High-Yield Tax-Exempt 120,350,164 9,017,353 4,439,437 89.94%
---------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
2C. INVESTMENT LIMITATION CHANGES--INVESTMENTS IN SECURITIES OWNED BY
AFFILIATES. This change eliminates the funds' policy of avoiding investments in
securities that are owned in certain amounts by Trustees, officers, and key
advisory personnel. This policy was well-intentioned but wrongly focused and
unnecessary in light of the funds' Code of Ethics and other regulatory
protections against conflicts of interest on the part of fund management.
Approved as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
FUND FOR AGAINST ABSTAIN APPROVED BY
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Money Market 2,875,461,059 223,324,621 116,410,540 89.43%
---------------------------------------------------------------------------------------------
Short-Term Tax-Exempt 49,740,659 2,470,645 1,856,834 92.00%
---------------------------------------------------------------------------------------------
Limited-Term Tax-Exempt 100,412,941 6,951,138 2,963,104 91.01%
---------------------------------------------------------------------------------------------
Intermediate-Term Tax-Exempt 293,117,150 17,876,849 10,048,240 91.30%
---------------------------------------------------------------------------------------------
Insured Long-Term Tax-Exempt 92,589,705 5,602,366 3,989,027 90.61%
---------------------------------------------------------------------------------------------
Long-Term Tax-Exempt 69,989,385 4,141,299 2,027,617 91.90%
---------------------------------------------------------------------------------------------
High-Yield Tax-Exempt 120,359,457 9,177,479 4,270,019 89.95%
---------------------------------------------------------------------------------------------
</TABLE>
2D. INVESTMENT LIMITATION CHANGES--BONDS SECURED BY INTERESTS IN OIL, GAS, OR
MINERAL PROGRAMS. This change amends a policy prohibiting investments in
interests in oil, gas, or other mineral exploration or development programs.
While the funds still cannot invest directly in oil, gas, or mineral programs,
the change clarifies that the funds can invest in bonds and money market
instruments secured by interests in these programs. Approved as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
FUND FOR AGAINST ABSTAIN APPROVED BY
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Money Market 2,858,738,007 234,246,983 122,211,230 88.91%
---------------------------------------------------------------------------------------------
Short-Term Tax-Exempt 48,103,098 4,644,269 1,320,771 88.97%
---------------------------------------------------------------------------------------------
Limited-Term Tax-Exempt 99,828,580 7,221,967 3,276,636 90.48%
---------------------------------------------------------------------------------------------
Intermediate-Term Tax-Exempt 295,564,683 15,218,428 10,259,128 92.06%
---------------------------------------------------------------------------------------------
Insured Long-Term Tax-Exempt 91,581,400 6,591,021 4,008,677 89.63%
---------------------------------------------------------------------------------------------
Long-Term Tax-Exempt 69,647,768 4,439,483 2,071,050 91.45%
---------------------------------------------------------------------------------------------
High-Yield Tax-Exempt 122,284,570 6,781,444 4,740,942 91.39%
---------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
2E. INVESTMENT LIMITATION CHANGES--INVESTING IN COMPANIES FOR CONTROL. This
change eliminates a policy prohibiting "investing in companies for control." The
policy had no relevance to the funds' investment program; its elimination has no
effect on the way your funds operate. Approved as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
FUND FOR AGAINST ABSTAIN APPROVED BY
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Money Market 2,882,051,372 204,456,365 128,688,483 89.64%
---------------------------------------------------------------------------------------------
Short-Term Tax-Exempt 48,289,898 4,456,679 1,321,562 89.31%
---------------------------------------------------------------------------------------------
Limited-Term Tax-Exempt 99,669,954 6,908,102 3,749,127 90.34%
---------------------------------------------------------------------------------------------
Intermediate-Term Tax-Exempt 296,346,890 14,129,971 10,565,377 92.31%
---------------------------------------------------------------------------------------------
Insured Long-Term Tax-Exempt 92,331,960 5,987,648 3,861,490 90.36%
---------------------------------------------------------------------------------------------
Long-Term Tax-Exempt 69,782,243 4,177,861 2,198,197 91.63%
---------------------------------------------------------------------------------------------
High-Yield Tax-Exempt 121,191,737 7,713,013 4,902,205 90.57%
---------------------------------------------------------------------------------------------
</TABLE>
2F. INVESTMENT LIMITATION CHANGES--INVESTMENTS IN A SINGLE STATE. This change
reclassifies the funds' policy on investments in a single state to
"nonfundamental" from "fundamental." The change gives fund managers the
flexibility--without further shareholder approval--to invest more than 25% of
each fund's total assets in securities issued by entities whose principal
activities occur in a single state. Approved as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
FUND FOR AGAINST ABSTAIN APPROVED BY
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Money Market 2,797,210,982 288,966,748 129,018,490 87.00%
---------------------------------------------------------------------------------------------
Short-Term Tax-Exempt 47,435,788 5,264,441 1,367,909 87.73%
---------------------------------------------------------------------------------------------
Limited-Term Tax-Exempt 98,133,920 8,784,918 3,408,345 88.95%
---------------------------------------------------------------------------------------------
Intermediate-Term Tax-Exempt 286,859,050 23,365,874 10,817,315 89.35%
---------------------------------------------------------------------------------------------
Insured Long-Term Tax-Exempt 90,471,209 7,874,934 3,834,955 88.54%
---------------------------------------------------------------------------------------------
Long-Term Tax-Exempt 67,902,276 5,877,923 2,378,103 89.16%
---------------------------------------------------------------------------------------------
High-Yield Tax-Exempt 118,365,161 10,447,152 4,994,642 88.46%
---------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
THE MARKETS IN PERSPECTIVE
YEAR ENDED OCTOBER 31, 1998 [PHOTO]
U.S. financial markets encountered strong turbulence yet produced solid overall
gains during the fiscal year ended October 31. The S&P 500 Index gained 22.0%,
overcoming a sharp six-week setback in July and August. Bond prices rose as
interest rates declined over the course of the year. Overseas, returns varied
widely, with big gains on European bourses and sharp losses in Pacific and most
emerging stock markets.
U.S. STOCK MARKETS
Large-capitalization stocks--especially large growth stocks--overwhelmingly led
the market during the year. While the S&P 500 Index, which is dominated by
large-cap stocks, was rising 22.0%, the rest of the market was down 3.4%, more
than 25 percentage points behind the S&P. Results were even worse--a negative
return of 11.8%--for small-cap stocks, as represented by the Russell 2000 Index.
The Wilshire 5000 Equity Index, a measure of the entire U.S. market, gained
14.9%.
Even large-cap investors endured sharp fluctuations during the year.
After vaulting to a record high on July 17, the S&P 500 fell by 19.2% during the
following six weeks, just shy of the 20% mark generally considered the
"boundary" between a bear market and a mere "correction." However, declines were
certifiably bearish for most smaller stocks. The Russell 2000 Index fell more
than 30% from its peak in April before recovering somewhat during the final two
months of the fiscal year.
The July-August tumble in stock prices reflected a number of factors that
collectively raised the anxiety level for many investors. Among these factors
were deteriorating corporate earnings reports and forecasts, Russia's default on
its debts, and a murkier global economic picture. Asia's economic
troubles--which surfaced in mid-1997--persisted and began to look like a
significant threat to continued expansions in the U.S. and European economies.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AVERAGE ANNUALIZED RETURNS
PERIODS ENDED OCTOBER 31, 1998
------------------------------------
1 YEAR 3 YEARS 5 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
STOCKS
S&P 500 Index 22.0% 26.0% 21.3%
Russell 2000 Index -11.8 10.0 9.4
MSCI EAFE Index 10.0 8.5 7.1
- --------------------------------------------------------------------------------
BONDS
Lehman Aggregate Bond Index 9.3% 8.0% 7.0%
Lehman 10-Year Municipal Bond Index 8.3 7.3 6.5
Salomon Smith Barney 3-Month
U.S. Treasury Bill Index 5.2 5.2 5.1
- --------------------------------------------------------------------------------
OTHER
Consumer Price Index 1.5% 2.2% 2.4%
- --------------------------------------------------------------------------------
</TABLE>
But after steadying during September, stock prices bounced back strongly
in October. Although many of the risk factors remained--for example, securities
analysts continued to trim their estimates of corporate earnings--stock prices
got a lift from falling interest rates, which dropped to levels last seen in the
1960s. (Low inflation and low interest rates help stock prices by raising the
estimated value of future dividends and earnings.)
Three forces clearly shaped the performance of industry sectors within
the overall market. They could be summarized as faith (the buoyant confidence of
consumers), fear (related to the effects of financial troubles abroad), and
fortresses (companies somewhat protected from competition). U.S. consumers
played the role of Atlas during fiscal 1998,
8
<PAGE> 11
propping up the economic world with their strong spending. Feeling flush
because of plentiful jobs (the nation's unemployment rate was as low as 4.3%)
and rising wages, consumers spent a record proportion of their income. Not
surprisingly, then, two big gainers among sectors of the S&P 500 Index were
consumer staples (+26%) and consumer discretionary firms, such as retailers
(+23%).
Fear was a factor in the lagging returns from industry groups that were
perceived by investors to be vulnerable to slowing global growth, falling
commodity prices, and heightened price competition from foreign suppliers. Among
these were exploration and services firms in the "other energy" category (-34%);
chemical, metals, and other materials & processing firms (-3%); and makers of
producer durables such as airplanes and machinery (-0.3%). Conversely, the
utilities sector was the year's top performer (+45%) in part because utilities
are seen as relatively insulated from foreign competition or economic troubles.
Fortresses are companies perceived as relatively safe from competitors because
of patented products, brands, or services. Such companies dominated the
health-care (+41%) and technology (+37%) groups.
U.S. BOND MARKETS
Interest rates declined during the fiscal year, especially for U.S. Treasury
securities, which benefited from greater aversion to risk among investors and
from a slight decrease in supply, thanks to a $70 billion federal budget
surplus. The Federal Reserve Board twice trimmed short-term rates by 0.25
percentage point, first on September 29 and then on October 15. Inflation, the
bane of bond investors, was remarkably tame--consumer prices were up just 1.5%
for the 12 months ended October 31. In this friendly environment, yields on
long-term Treasury bonds fell by roughly 1 to 1.25 percentage points, with the
30-year Treasury bond ending the fiscal year at 5.16%. Lower rates mean higher
prices for bonds, and the Lehman Brothers Long U.S. Treasury Bond Index earned a
return of 16.3%, an astounding margin of nearly 15 percentage points over the
inflation rate.
High-quality corporate bonds and mortgage-backed securities did not rise
in price as far as Treasury securities. Mortgage bonds tend to lag Treasuries
during periods of falling rates because increased refinancing activity by
homeowners results in prepayments of principal to holders of mortgage-backed
securities. The Lehman Aggregate Bond Index, which comprises high-quality
corporate and mortgage-backed bonds, as well as Treasuries, and has an
intermediate-term average maturity, earned 9.3%. Yields on long-term municipal
bonds declined only modestly during the fiscal year, and by October 31 were only
slightly lower than yields on comparable Treasury securities, even though
interest on municipals is exempt from federal income tax.
INTERNATIONAL STOCK MARKETS
Europe's stock markets outshone even the S&P 500 Index, but big declines swept
the markets of Asia and Latin America. As a group, European stocks earned 23.4%
for U.S. investors, reflecting local returns of about 21% and a gain of about 2%
from a slight strengthening of several currencies against the dollar. Reasons
for Europe's bull market included continuing economic growth; increased
corporate restructuring and merger activity; and optimism about the long-term
impact of the euro, a common currency due to be adopted in 1999 by 11 nations.
In Japan, the stock market declined 14.3% in U.S.-dollar terms,
reflecting a severe recession and a shaky banking system. Declines elsewhere in
the Pacific region ranged from about 1% in Hong Kong to more than 60% in
Indonesia and Malaysia. Losses were steep in non-Asian emerging markets, too.
Notable declines in our own hemisphere occurred in Mexico (-20%), Venezuela
(-64%), Brazil (-30%), and Chile (-38%).
9
<PAGE> 12
REPORT FROM THE ADVISER
[PHOTO]
The global capital markets witnessed an unprecedented explosion in volatility
during the fiscal year ended October 31, 1998. Nervous investors reacted to
unfolding international dramas by flocking to the safety of U.S. Treasury bonds.
Given the relative strength of the U.S. economy, there was an understandable
reluctance on the part of the Federal Reserve Board to deviate from its "steady
as she goes" monetary policy; but as prospects of economic collapse in some
parts of the world began to threaten our own expansion, the Fed acted. In the
second half of the year, as domestic export-sensitive sectors slowed and
stock-market volatility increased, the Federal Reserve cut short-term rates
twice, by a total of one-half of 1 percentage point. To date, this action has
helped soothe fears of a global credit crunch and stemmed investors' flight from
riskier assets to Treasuries. That said, we will have to wait and see whether in
fact the worst is over for the global financial markets.
Although yields on municipal bonds declined in sympathy with those on
Treasuries, the muni yields fell nowhere near as much. During the fiscal year,
the yield of the benchmark 30-year Treasury bond declined 1 full percentage
point (from about 6.2% to 5.2%). The yield of a similar-maturity, AAA-rated
tax-exempt bond declined only three-tenths of 1 percentage point (from about
5.2% to 4.9%).
For the 12 months, the seven Vanguard Municipal Bond Funds provided
returns commensurate with the relative tax-exempt dividend income produced by
each. As market interest rates generally declined during the period, the six
funds whose net asset value varies received the additional benefit of a slight
appreciation in the market value of their holdings. Details of each fund's
return are given in the Message to Shareholders, beginning on page 1.
The failure of tax-exempt bond yields to fall as swiftly as their
Treasury brethren has provided an unusual opportunity for taxable investors to
benefit on an after-tax basis. By the fiscal year-end, the yield on a typical
high-quality, long-maturity municipal bond was equal to 95.4% of the yield on a
comparable Treasury security. In fact, yields on AAA-rated insured municipal
bonds recently were slightly higher than yields of similar-maturity Treasury
bonds, an event last seen 12 years ago. For investors in the maximum federal tax
bracket (39.6%), high-grade municipal bonds offer an additional 3.2% of
after-tax yield.
Aside from the international flight to quality and liquidity, the primary
source of the unusual value in tax-exempt bonds is a recent glut of new issues.
Indeed, municipal authorities could be said to have embarked on a bond-issuance
spree. There were two main reasons for this. First, municipalities seized the
opportunity to refinance older, higher-coupon debt. Second, as municipalities
collected plentiful tax revenues, they felt more comfortable initiating major
capital projects funded with tax-exempt
10
<PAGE> 13
bonds. Altogether, tax-exempt issuance during the fiscal year was up 28.7% from
the previous year, producing $275 billion in new bonds. In the past, periods of
relatively high after-tax yields on municipal bonds have tended to revert to
normal levels within short order. However, given the global economic
uncertainties and the beneficial effect they have on prices of Treasury bonds,
it's unclear when municipal bonds will revert to their historical relationships.
In the meantime, municipal bonds are a "steal."
During the course of the year, our funds' high credit quality played a
key role in their performance in relation to competitors. As we have noted in
previous reports, all of the Vanguard Municipal Bond Funds maintain a
disciplined tilt toward high credit quality. Year after year, the funds' low
expenses have allowed shareholders to reap the benefits of attractive net yields
while simultaneously enjoying our emphasis on high credit quality. We "stayed
the course" even in the face of tightening quality spreads (a stance we
discussed six months ago in the funds' semiannual report) as other investors
reached for the higher yields offered by speculative credits. By mid-year, it
was clear that the municipal market was not appropriately compensating
additional credit risk. With the recent bankruptcy of a major hospital group in
Pennsylvania, the tide began to turn, and yield spreads are widening across
various tiers of credit quality. Many tax-exempt investors are reexamining
credit risk and reducing exposure to lower-quality issues. Again, with the
Vanguard Municipal Bond Funds' emphasis on high credit quality, our shareholders
should sleep comfortably.
Over time, the simple combination of low expenses and an emphasis on
credit quality has provided shareholders with attractive risk/return
combinations. These two attributes represent our core values, and we believe
they can provide a sustainable edge over competitors' municipal bond funds. As
always, we will endeavor to combine professional portfolio management with low
expenses to "make it so."
Ian A. MacKinnon, Managing Director
Christopher M. Ryon, Principal
Pamela Wisehaupt Tynan, Principal
Reid O. Smith, Principal
Vanguard Fixed Income Group
November 12, 1998
INVESTMENT PHILOSOPHY
Each fund holds a diversified group of municipal bonds designed to produce a
high level of current, tax-exempt income consistent with each fund's maturity
and quality mandates. In managing the fund, Vanguard Fixed Income Group follows
a disciplined investment policy, meeting well-defined standards for credit
quality and keeping each fund within its stated maturity range, while seeking to
exceed, with reasonable consistency over the long term, average returns achieved
by comparable funds.
11
<PAGE> 14
FUND PROFILE
TAX-EXEMPT MONEY MARKET FUND
This Profile provides a snapshot of the fund's characteristics as of October 31,
1998. Key elements of this Profile are defined on page 13.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- --------------------------------------------------
<S> <C>
Yield 3.1%
Average Maturity 54 days
Average Quality MIG-1
Expense Ratio 0.20%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- --------------------------------------------------
<S> <C>
MIG-1/SP-1 66.0%
A-1/P-1 32.8
AAA/AA 1.2
A 0.0
- --------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
LARGEST STATE CONCENTRATIONS (% OF TOTAL NET ASSETS)
- ---------------------------------------------------
<S> <C>
Texas 12.3%
Florida 7.8
Illinois 7.2
California 7.0
Ohio 6.2
Utah 4.3
Wisconsin 4.2
New York 3.9
North Carolina 3.4
Georgia 3.3
- ---------------------------------------------------
Top Ten 59.6%
</TABLE>
12
<PAGE> 15
AVERAGE COUPON. The average interest rate paid on the securities held by a fund.
It is expressed as a percentage of face value.
AVERAGE DURATION. An estimate of how much a bond fund's share price will
fluctuate in response to a change in interest rates. To see how the price could
shift, multiply the fund's duration by the change in rates. If interest rates
rise by 1 percentage point, the share price of a fund with an average duration
of five years would decline by about 5%. If rates decrease by a percentage
point, the fund's share price would rise by 5%.
AVERAGE MATURITY. The average length of time until bonds held by a fund reach
maturity (or are called) and are repaid. In general, the longer the average
maturity, the more a fund's share price will fluctuate in response to changes in
market interest rates.
AVERAGE QUALITY. An indicator of credit risk, this figure is the average of the
ratings assigned to a fund's securities holdings by credit-rating agencies. The
agencies make their judgment after appraising an issuer's ability to meet its
obligations. Quality is graded on a scale, with Aaa or AAA indicating the most
creditworthy bond issuers and A-1 or MIG-1 indicating the most creditworthy
issuers of money market securities.
BETA. A measure of the magnitude of a fund's past share-price fluctuations in
relation to the ups and downs of the overall market (or appropriate market
index). The market (or index) is assigned a beta of 1.00, so a fund with a beta
of 1.20 would have seen its share price rise or fall by 12% when the overall
market rose or fell by 10%.
CASH RESERVES. The percentage of a fund's net assets invested in "cash
equivalents"--highly liquid, short-term, interest-bearing securities. This
figure does not include cash invested in futures contracts to simulate bond
investment.
DISTRIBUTION BY CREDIT QUALITY. This breakdown of a fund's securities by credit
rating can help in gauging the risk that returns could be affected by defaults
or other credit problems.
DISTRIBUTION BY MATURITY. An indicator of interest-rate risk. In general, the
higher the concentration of longer-maturity issues, the more a fund's share
price will fluctuate in response to changes in interest rates.
EXPENSE RATIO. The percentage of a fund's average net assets used to pay its
annual administrative and advisory expenses. These expenses directly reduce
returns to investors.
INVESTMENT FOCUS. This grid indicates the focus of a fund in terms of two
attributes: average maturity (short, medium, or long) and average credit quality
(high, medium, or low).
LARGEST STATE CONCENTRATIONS. An indicator of diversification. The less
concentrated a fund's holdings of bonds, the less the fund will be hurt by any
financial problems in a single state or region.
NUMBER OF ISSUES. An indicator of diversification. The more separate issues a
fund holds, the less susceptible it is to a price decline stemming from the
problems of a particular issue.
R-SQUARED. A measure of how much of a fund's past returns can be explained by
the returns from the overall market (or its benchmark index). If a fund's total
return were precisely synchronized with the overall market's return, its
R-squared would be 1.00. If a fund's returns bore no relationship to the
market's returns, its R-squared would be 0.
YIELD. A snapshot of a fund's interest income. The yield, expressed as a
percentage of the fund's net asset value, is based on income earned over the
past 30 days (7 days for money market funds) and is annualized, or projected
forward for the coming year.
YIELD TO MATURITY. The rate of return an investor would receive if the
securities held by a fund were held to their maturity dates.
13
<PAGE> 16
FUND PROFILE
SHORT-TERM TAX-EXEMPT FUND
This Profile provides a snapshot of the fund's characteristics as of October 31,
1998, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 13.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- ----------------------------------------------------------
SHORT-TERM LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
Number of Issues 227 46,802
Yield 3.2% 4.4%
Yield to Maturity 3.3% --
Average Coupon 5.4% 5.5%
Average Maturity 444 days 13.5 years
Average Quality AA+ AA+
Average Duration 1.1 years 7.3 years
Expense Ratio 0.20% --
Cash Reserves 0.4% --
</TABLE>
*Lehman Municipal Bond Index.
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
SHORT-TERM LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.74 1.00
Beta 0.15 1.00
</TABLE>
*Lehman Municipal Bond Index.
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
Under 1 Year 56.7%
1-3 Years 34.0
3-5 Years 9.3
Over 5 Years 0.0
- -------------------------------------------------------
Total 100.0%
</TABLE>
INVESTMENT FOCUS
- -------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
AAA 64.9%
AA 27.5
A 5.7
BBB 1.1
BB 0.8
B 0.0
Not Rated 0.0
- -------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
LARGEST STATE CONCENTRATIONS (% OF TOTAL NET ASSETS)
- -------------------------------------------------------
<S> <C>
California 14.2%
New York 12.1
Texas 10.6
Massachusetts 8.8
Pennsylvania 7.4
Florida 5.5
Ohio 3.4
Illinois 2.9
District of Columbia 2.8
Alaska 2.5
- -------------------------------------------------------
Top Ten 70.2%
</TABLE>
14
<PAGE> 17
FUND PROFILE
LIMITED-TERM TAX-EXEMPT FUND
This Profile provides a snapshot of the fund's characteristics as of October 31,
1998, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 13.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- ----------------------------------------------------------
LIMITED-TERM LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
Number of Issues 313 46,802
Yield 3.5% 4.4%
Yield to Maturity 3.7% --
Average Coupon 5.8% 5.5%
Average Maturity 3.3 years 13.5 years
Average Quality AA+ AA+
Average Duration 2.9 years 7.3 years
Expense Ratio 0.21% --
Cash Reserves 0.9% --
</TABLE>
*Lehman Municipal Bond Index.
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
LIMITED-TERM LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.87 1.00
Beta 0.41 1.00
</TABLE>
*Lehman Municipal Bond Index.
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
Under 1 Year 7.6%
1-3 Years 36.3
3-5 Years 32.7
Over 5 Years 23.4
- -------------------------------------------------------
Total 100.0%
</TABLE>
INVESTMENT FOCUS
- ----------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
AAA 64.0%
AA 28.6
A 4.2
BBB 2.3
BB 0.9
B 0.0
Not Rated 0.0
- -------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
LARGEST STATE CONCENTRATIONS (% OF TOTAL NET ASSETS)
- -------------------------------------------------------
<S> <C>
New York 19.1%
Pennsylvania 7.7
Texas 7.6
Michigan 7.3
Illinois 5.3
Massachusetts 4.9
California 4.5
Florida 4.2
Washington 3.9
Connecticut 2.6
- -------------------------------------------------------
Top Ten 67.1%
</TABLE>
15
<PAGE> 18
FUND PROFILE
INTERMEDIATE-TERM TAX-EXEMPT FUND
This Profile provides a snapshot of the fund's characteristics as of October 31,
1998, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 13.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- ----------------------------------------------------------
INTERMEDIATE-TERM LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
Number of Issues 864 46,802
Yield 3.9% 4.4%
Yield to Maturity 4.1% --
Average Coupon 5.7% 5.5%
Average Maturity 6.4 years 13.5 years
Average Quality AA+ AA+
Average Duration 5.0 years 7.3 years
Expense Ratio 0.21% --
Cash Reserves 1.1% --
</TABLE>
*Lehman Municipal Bond Index.
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
INTERMEDIATE-TERM LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.95 1.00
Beta 0.78 1.00
</TABLE>
*Lehman Municipal Bond Index.
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
Under 1 Year 5.2%
1-5 Years 25.8
5-10 Years 48.0
10-20 Years 20.4
20-30 Years 0.6
Over 30 Years 0.0
- -------------------------------------------------------
Total 100.0%
</TABLE>
INVESTMENT FOCUS
- ----------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
AAA 65.6%
AA 24.2
A 8.2
BBB 2.0
BB 0.0
B 0.0
Not Rated 0.0
- -------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
LARGEST STATE CONCENTRATIONS (% OF TOTAL NET ASSETS)
- -------------------------------------------------------
<S> <C>
New York 14.4%
California 9.1
Pennsylvania 8.0
Texas 8.0
Massachusetts 7.5
New Jersey 4.9
Florida 4.8
Nevada 4.1
Illinois 3.8
Michigan 3.6
- -------------------------------------------------------
Top Ten 68.2%
</TABLE>
16
<PAGE> 19
FUND PROFILE
INSURED LONG-TERM TAX-EXEMPT FUND
This Profile provides a snapshot of the fund's characteristics as of October 31,
1998, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 13.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- ----------------------------------------------------------
INSURED LONG-TERM LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
Number of Issues 242 46,802
Yield 4.3% 4.4%
Yield to Maturity 4.5% --
Average Coupon 5.6% 5.5%
Average Maturity 10.6 years 13.5 years
Average Quality AAA AA+
Average Duration 7.2 years 7.3 years
Expense Ratio 0.20% --
Cash Reserves 0.9% --
</TABLE>
*Lehman Municipal Bond Index.
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
INSURED LONG-TERM LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.97 1.00
Beta 1.16 1.00
</TABLE>
*Lehman Municipal Bond Index.
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
Under 1 Year 4.9%
1-5 Years 14.2
5-10 Years 25.2
10-20 Years 38.4
20-30 Years 15.9
Over 30 Years 1.4
- -------------------------------------------------------
Total 100.0%
</TABLE>
INVESTMENT FOCUS
- ----------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
AAA 98.7%
AA 1.3
A 0.0
BBB 0.0
BB 0.0
B 0.0
Not Rated 0.0
- -------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
LARGEST STATE CONCENTRATIONS (% OF TOTAL NET ASSETS)
- -------------------------------------------------------
<S> <C>
California 8.9%
Florida 8.4
Pennsylvania 8.2
Massachusetts 6.4
Texas 5.6
Colorado 5.1
Ohio 4.6
New Jersey 4.4
Michigan 4.3
Illinois 4.1
- -------------------------------------------------------
Top Ten 60.0%
</TABLE>
17
<PAGE> 20
FUND PROFILE
LONG-TERM TAX-EXEMPT FUND
This Profile provides a snapshot of the fund's characteristics as of October 31,
1998, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 13.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- ----------------------------------------------------------
LONG-TERM LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
Number of Issues 165 46,802
Yield 4.5% 4.4%
Yield to Maturity 4.6% --
Average Coupon 5.8% 5.5%
Average Maturity 10.5 years 13.5 years
Average Quality AA+ AA+
Average Duration 7.3 years 7.3 years
Expense Ratio 0.21% --
Cash Reserves 1.2% --
*Lehman Municipal Bond Index.
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
LONG-TERM LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.98 1.00
Beta 1.12 1.00
*Lehman Municipal Bond Index.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
Under 1 Year 4.8%
1-5 Years 11.8
5-10 Years 23.9
10-20 Years 43.0
20-30 Years 16.5
Over 30 Years 0.0
- -------------------------------------------------------
Total 100.0%
</TABLE>
INVESTMENT FOCUS
- ----------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
AAA 61.7%
AA 22.0
A 12.4
BBB 3.2
BB 0.0
B 0.0
Not Rated 0.7
- -------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
LARGEST STATE CONCENTRATIONS (% OF TOTAL NET ASSETS)
- -------------------------------------------------------
<S> <C>
California 11.6%
Pennsylvania 11.6
New York 11.4
Texas 11.1
Massachusetts 9.3
Florida 5.6
Nevada 4.8
Illinois 4.5
Washington 3.6
Georgia 3.4
- -------------------------------------------------------
Top Ten 76.9%
</TABLE>
18
<PAGE> 21
FUND PROFILE
HIGH-YIELD TAX-EXEMPT FUND
This Profile provides a snapshot of the fund's characteristics as of October 31,
1998, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 13.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- ----------------------------------------------------------
HIGH-YIELD LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
Number of Issues 267 46,802
Yield 4.5% 4.4%
Yield to Maturity 4.7% --
Average Coupon 5.6% 5.5%
Average Maturity 10.7 years 13.5 years
Average Quality A+ AA+
Average Duration 7.4 years 7.3 years
Expense Ratio 0.20% --
Cash Reserves 0.1% --
*Lehman Municipal Bond Index.
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
HIGH-YIELD LEHMAN
TAX-EXEMPT INDEX*
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.96 1.00
Beta 1.00 1.00
*Lehman Municipal Bond Index.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
Under 1 Year 2.5%
1-5 Years 13.8
5-10 Years 26.9
10-20 Years 38.7
20-30 Years 16.9
Over 30 Years 1.2
- -------------------------------------------------------
Total 100.0%
</TABLE>
INVESTMENT FOCUS
- ----------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
AAA 45.2%
AA 11.1
A 17.0
BBB 17.4
BB 1.7
B 0.0
Not Rated 7.6
- -------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
LARGEST STATE CONCENTRATIONS (% OF TOTAL NET ASSETS)
- -------------------------------------------------------
<S> <C>
Pennsylvania 10.1%
Texas 9.8
New York 9.4
California 7.5
Massachusetts 7.2
Michigan 6.1
Florida 3.7
Illinois 3.5
Ohio 3.1
Georgia 2.9
- -------------------------------------------------------
Top Ten 63.3%
</TABLE>
19
<PAGE> 22
PERFORMANCE SUMMARY
TAX-EXEMPT MONEY MARKET FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note that annual
returns can fluctuate widely. An investment in a money market fund 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 per share.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: JUNE 10, 1980-OCTOBER 31, 1998
- ---------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND AVERAGE
FUND*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
1980 0.0% 1.3% 1.3% 0.1%
1981 0.0 6.4 6.4 6.2
1982 0.0 7.4 7.4 7.8
1983 0.0 5.1 5.1 4.8
1984 0.0 5.8 5.8 5.4
1985 0.0 5.4 5.4 5.0
1986 0.0 4.9 4.9 4.6
1987 0.0 4.4 4.4 3.9
1988 0.0 5.0 5.0 4.7
1989 0.0 6.3 6.3 5.9
1990 0.0 5.9 5.9 5.5
1991 0.0 4.8 4.8 4.5
1992 0.0 3.3 3.3 2.8
1993 0.0 2.5 2.5 2.0
1994 0.0 2.5 2.5 2.1
1995 0.0 3.7 3.7 3.3
1996 0.0 3.4 3.4 3.0
1997 0.0 3.5 3.5 3.0
1998 0.0 3.4 3.4 3.0
- ---------------------------------------------------------
SEC 7-Day Annualized Yield: 3.06%
- ---------------------------------------------------------
</TABLE>
*Average Tax-Exempt Money Market Fund.
See Financial Highlights table on page 36 for dividend information for the past
five years.
CUMULATIVE PERFORMANCE: OCTOBER 31, 1988-OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Tax-Exempt Average Tax-Exempt
Date Money Market Fund Money Market Fund
<S> <C> <C>
1988 10 10000 10000
1989 01 10146 10134
1989 04 10305 10287
1989 07 10470 10444
1989 10 10628 10590
1990 01 10785 10738
1990 04 10936 10879
1990 07 11092 11025
1990 10 11252 11176
1991 01 11409 11325
1991 04 11542 11443
1991 07 11668 11555
1991 10 11796 11674
1992 01 11913 11779
1992 04 12009 11859
1992 07 12099 11936
1992 10 12182 12004
1993 01 12261 12073
1993 04 12333 12126
1993 07 12405 12182
1993 10 12482 12242
1994 01 12555 12303
1994 04 12625 12356
1994 07 12703 12422
1994 10 12799 12502
1995 01 12913 12602
1995 04 13033 12703
1995 07 13156 12809
1995 10 13276 12913
1996 01 13397 13020
1996 04 13505 13108
1996 07 13617 13201
1996 10 13732 13299
1997 01 13849 13400
1997 04 13963 13493
1997 07 14089 13599
1997 10 14213 13703
1998 01 14340 13814
1998 04 14457 13911
1998 07 14582 14015
1998 10 14701 14114
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998
----------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Money Market Fund 3.44% 3.33% 3.93% $14,701
Average Tax-Exempt Money Market Fund 3.00 2.89 3.51 14,114
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1998*
- -------------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION -------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money Market Fund 6/10/1980 3.47% 3.31% 0.00% 3.95% 3.95%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
20
<PAGE> 23
PERFORMANCE SUMMARY
SHORT-TERM TAX-EXEMPT FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note, too, that both
share price and return can fluctuate widely, so an investment in the fund could
lose money.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: OCTOBER 31, 1978-OCTOBER 31, 1998
- ------------------------------------------------------
SHORT-TERM TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ------------------------------------------------------
<S> <C> <C> <C> <C>
1979 -0.7% 4.4% 3.7% N/A
1980 0.9 5.3 6.2 N/A
1981 0.1 6.7 6.8 N/A
1982 2.4 8.3 10.7 N/A
1983 -0.5 6.1 5.6 N/A
1984 -0.1 6.5 6.4 N/A
1985 0.7 6.5 7.2 N/A
1986 1.6 6.1 7.7 11.0%
1987 -2.2 5.0 2.8 3.2
1988 1.6 5.4 7.0 5.9
1989 0.3 6.0 6.3 6.2
1990 0.4 6.1 6.5 7.0
1991 1.2 5.7 6.9 9.4
1992 0.8 4.5 5.3 7.8
1993 0.3 3.9 4.2 6.6
1994 -1.3 3.5 2.2 1.4
1995 1.2 4.1 5.3 8.0
1996 -0.1 4.0 3.9 4.5
1997 0.0 4.0 4.0 5.5
1998 0.5 4.0 4.5 5.7
- ------------------------------------------------------
</TABLE>
*Lehman 3 Year Municipal Bond Index.
See Financial Highlights table on page 37 for dividend and capital gains
information for the past five years.
<TABLE>
<CAPTION>
CUMULATIVE PERFORMANCE: OCTOBER 31, 1988-OCTOBER 31, 1998
- ------------------------------------------------------------------------------------------------
Short-Term Average-Short Term Lehman 3 Year
Date Tax-Exempt Fund Tax-Exempt Fund Municipal Bond Index
<S> <C> <C> <C>
1988 10 10000 10000 10000
1989 01 10116 10134 10114
1989 04 10210 10287 10144
1989 07 10492 10444 10519
1989 10 10626 10590 10620
1990 01 10805 10738 10809
1990 04 10922 10879 10887
1990 07 11156 11025 11214
1990 10 11317 11176 11362
1991 01 11565 11461 11705
1991 04 11749 11685 11931
1991 07 11896 11735 12114
1991 10 12095 11952 12425
1992 01 12339 12258 12803
1992 04 12422 12377 12874
1992 07 12685 12589 13397
1992 10 12741 12646 13392
1993 01 12930 12893 13669
1993 04 13066 13077 13922
1993 07 13128 13051 14056
1993 10 13271 13188 14279
1994 01 13416 13462 14527
1994 04 13383 13391 14301
1994 07 13499 13406 14492
1994 10 13563 13431 14473
1995 01 13678 13641 14629
1995 04 13899 13877 14968
1995 07 14128 14018 15395
1995 10 14278 14160 15631
1996 01 14477 14487 15920
1996 04 14522 14507 15905
1996 07 14672 14531 16103
1996 10 14834 14688 16336
1997 01 14973 14989 16567
1997 04 15067 15069 16637
1997 07 15290 15172 17071
1997 10 15433 15299 17232
1998 01 15614 15640 17515
1998 04 15713 15727 17558
1998 07 15900 15765 17844
1998 10 16125 15989 18216
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998
----------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Tax-Exempt Fund 4.49% 3.97% 4.89% $16,125
Average Short-Term Tax-Exempt Fund* 4.51 3.93 4.81 15,989
Lehman 3 Year Municipal Bond Index 5.71 4.99 6.18 18,216
- ------------------------------------------------------------------------------------------------
</TABLE>
*Adjusted for maturity differences.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1998*
- -------------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION -------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Short-Term Tax-Exempt Fund 9/1/1977 4.37% 3.93% 0.33% 4.58% 4.91%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
21
<PAGE> 24
PERFORMANCE SUMMARY
LIMITED-TERM TAX-EXEMPT FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note, too, that both
share price and return can fluctuate widely, so an investment in the fund could
lose money.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: AUGUST 31, 1987-OCTOBER 31, 1998
- --------------------------------------------------------------
LIMITED-TERM TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
1987 -0.6% 1.0% 0.4% -0.2%
1988 2.2 6.3 8.5 5.9
1989 0.0 6.5 6.5 6.2
1990 0.7 6.5 7.2 7.0
1991 2.8 6.1 8.9 9.4
1992 1.7 5.3 7.0 7.8
1993 2.4 4.6 7.0 6.6
1994 -3.1 4.2 1.1 1.4
1995 2.5 4.7 7.2 8.0
1996 -0.2 4.6 4.4 4.5
1997 0.5 4.5 5.0 5.5
1998 1.0 4.4 5.4 5.7
- --------------------------------------------------------------
</TABLE>
*Lehman 3 Year Municipal Bond Index.
See Financial Highlights table on page 37
for dividend and capital gains information for the past five years.
CUMULATIVE PERFORMANCE: OCTOBER 31, 1988-OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Limited-Term Average Limited-Term Lehman 3 Year Municipal
Date Tax-Exempt Fund Tax-Exempt Fund Tax-Exempt Fund
<S> <C> <C> <C>
1988 10 10000 10000 10000
1989 01 10121 10121 10114
1989 04 10199 10186 10144
1989 07 10543 10472 10519
1989 10 10651 10601 10620
1990 01 10854 10772 10809
1990 04 10939 10854 10887
1990 07 11265 11122 11214
1990 10 11422 11267 11362
1991 01 11741 11534 11705
1991 04 11971 11726 11931
1991 07 12142 11884 12114
1991 10 12443 12139 12425
1992 01 12769 12427 12803
1992 04 12831 12523 12874
1992 07 13287 12915 13397
1992 10 13309 12931 13392
1993 01 13629 13256 13669
1993 04 13857 13509 13922
1993 07 13970 13601 14056
1993 10 14239 13891 14279
1994 01 14470 14056 14527
1994 04 14262 13837 14301
1994 07 14428 13941 14492
1994 10 14393 13959 14473
1995 01 14528 14049 14629
1995 04 14887 14360 14968
1995 07 15229 14621 15395
1995 10 15434 14845 15631
1996 01 15741 15071 15920
1996 04 15680 15075 15905
1996 07 15874 15194 16103
1996 10 16110 15415 16336
1997 01 16307 15567 16567
1997 04 16335 15680 16637
1997 07 16768 16003 17071
1997 10 16921 16165 17232
1998 01 17200 16376 17515
1998 04 17219 16468 17558
1998 07 17504 16640 17844
1998 10 17839 16962 18216
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998
--------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Limited-Term Tax-Exempt Fund 5.42% 4.61% 5.96% $17,839
Average Limited-Term Tax-Exempt Fund 4.93 4.08 5.43 16,962
Lehman 3 Year Municipal Bond Index 5.71 4.99 6.18 18,216
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1998*
- -------------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION -------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Limited-Term Tax-Exempt Fund 8/31/1987 5.43% 4.55% 0.83% 5.17% 6.00%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
22
<PAGE> 25
PERFORMANCE SUMMARY
INTERMEDIATE-TERM TAX-EXEMPT FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note, too, that both
share price and return can fluctuate widely, so an investment in the fund could
lose money.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: OCTOBER 31, 1978-OCTOBER 31, 1998
- ----------------------------------------------------------------
INTERMEDIATE-TERM TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
1979 -9.5% 4.8% -4.7% N/A
1980 -11.6 5.9 -5.7 N/A
1981 -18.4 7.4 -11.0 N/A
1982 15.4 11.3 26.7 N/A
1983 0.3 8.4 8.7 N/A
1984 -1.7 8.9 7.2 N/A
1985 7.2 9.4 16.6 N/A
1986 10.8 8.5 19.3 19.8
1987 -7.9 6.6 -1.3 -0.4
1988 6.4 7.5 13.9 10.5
1989 0.3 7.2 7.5 6.3
1990 0.3 7.0 7.3 8.0
1991 5.6 7.0 12.6 11.2
1992 1.2 6.0 7.2 8.2
1993 8.4 5.9 14.3 12.0
1994 -6.5 5.0 -1.5 -1.9
1995 6.3 5.8 12.1 12.3
1996 -0.3 5.2 4.9 4.7
1997 1.3 5.3 6.6 7.4
1998 1.7 5.1 6.8 7.4
</TABLE>
*Lehman 7 Year Municipal Bond Index.
See Financial Highlights table on page 38 for dividend and capital gains
information for the past five years.
CUMULATIVE PERFORMANCE: OCTOBER 31, 1988-OCTOBER 31, 1998
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate-Term Average Intermediate-Term Lehman 7 Year Municipal
Date Tax-Exempt Fund Tax-Exempt Fund Bond Fund
<S> <C> <C> <C>
1988 10 10000 10000 10000
1989 01 10210 10127 10115
1989 04 10331 10204 10128
1989 07 10769 10582 10609
1989 10 10753 10607 10630
1990 01 10981 10800 10900
1990 04 10993 10827 10904
1990 07 11530 11234 11351
1990 10 11543 11298 11480
1991 01 12014 11662 11893
1991 04 12318 11902 12144
1991 07 12547 12082 12321
1991 10 12993 12443 12763
1992 01 13272 12764 13108
1992 04 13402 12844 13182
1992 07 14258 13533 13933
1992 10 13933 13354 13809
1993 01 14613 13867 14336
1993 04 15104 14253 14672
1993 07 15375 14503 14987
1993 10 15924 14976 15461
1994 01 16264 15286 15771
1994 04 15690 14625 15128
1994 07 15983 14848 15390
1994 10 15690 14604 15169
1995 01 16115 14881 15458
1995 04 16648 15390 16012
1995 07 17168 15804 16632
1995 10 17590 16197 17039
1996 01 18108 16607 17489
1996 04 17816 16367 17226
1996 07 18102 16577 17475
1996 10 18446 16900 17831
1997 01 18716 17117 18142
1997 04 18763 17180 18147
1997 07 19542 17893 18979
1997 10 19655 18018 19156
1998 01 20158 18457 19668
1998 04 20069 18405 19570
1998 07 20488 18717 19978
1998 10 20988 19195 20572
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998
--------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Intermediate-Term Tax-Exempt Fund 6.78% 5.68% 7.70% $20,988
Average Intermediate-Term Tax-Exempt Fund 6.53 5.09 6.74 19,195
Lehman 7 Year Municipal Bond Index 7.39 5.88 7.48 20,572
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1998*
- --------------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION --------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Intermediate-Term Tax-Exempt Fund 9/1/1977 6.95% 5.69% 1.88% 5.97% 7.85%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
23
<PAGE> 26
PERFORMANCE SUMMARY
INSURED LONG-TERM TAX-EXEMPT FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note, too, that both
share price and return can fluctuate widely, so an investment in the fund could
lose money.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: SEPTEMBER 30, 1984-OCTOBER 31, 1998
- -----------------------------------------------------------------
INSURED LONG-TERM TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
1984 -1.6% 0.8% -0.8% 1.3%
1985 6.7 9.7 16.4 18.7
1986 14.3 9.2 23.5 22.6
1987 -9.2 6.9 -2.3 -0.8
1988 7.9 8.2 16.1 14.6
1989 1.3 7.5 8.8 8.1
1990 -0.8 7.2 6.4 7.4
1991 6.0 7.2 13.2 12.2
1992 0.2 6.5 6.7 8.4
1993 10.7 6.4 17.1 14.1
1994 -10.8 5.2 -5.6 -4.3
1995 9.5 6.4 15.9 14.8
1996 0.7 5.6 6.3 5.7
1997 1.9 5.7 7.6 8.5
1998 2.4 5.5 7.9 8.0
- -----------------------------------------------------------------
</TABLE>
*Lehman Municipal Bond Index.
See Financial Highlights table on page 38 for dividend and capital gains
information for the past five years.
CUMULATIVE PERFORMANCE: OCTOBER 31, 1988-OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Insured Long-Term Average Insured Long-Term Lehman Municipal
Date Tax-Exempt Fund Tax-Exempt Fund Bond Fund
<S> <C> <C> <C>
1988 10 10000 10000 10000
1989 01 10306 10213 10217
1989 04 10468 10356 10315
1989 07 10958 10787 10818
1989 10 10883 10778 10810
1990 01 11000 10890 11037
1990 04 10950 10898 11059
1990 07 11639 11423 11567
1990 10 11579 11405 11613
1991 01 12153 11861 12057
1991 04 12385 12123 12329
1991 07 12583 12345 12578
1991 10 13112 12765 13025
1992 01 13405 13059 13372
1992 04 13530 13187 13501
1992 07 14618 14063 14305
1992 10 13996 13675 14118
1993 01 14845 14320 14686
1993 04 15494 14880 15209
1993 07 15727 15168 15570
1993 10 16389 15715 16105
1994 01 16790 16039 16486
1994 04 15699 14995 15537
1994 07 16141 15296 15866
1994 10 15475 14725 15409
1995 01 16242 15267 15905
1995 04 16896 15941 16576
1995 07 17361 16290 17117
1995 10 17938 16881 17697
1996 01 18713 17498 18299
1996 04 18140 16958 17894
1996 07 18561 17275 18247
1996 10 19063 17722 18705
1997 01 19299 17858 19002
1997 04 19371 17933 19080
1997 07 20461 18924 20117
1997 10 20507 19029 20293
1998 01 21198 19583 20923
1998 04 21014 19450 20855
1998 07 21533 19845 21322
1998 10 22124 20398 21921
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998
--------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insured Long-Term Tax-Exempt Fund 7.88% 6.18% 8.26% $22,124
Average Insured Long-Term Tax-Exempt Fund 7.19 5.35 7.39 20,398
Lehman Municipal Bond Index 8.02 6.36 8.16 21,921
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1998*
- -------------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION -------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Insured Long-Term Tax-Exempt Fund 9/30/1984 8.58% 6.24% 2.18% 6.37% 8.55%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
24
<PAGE> 27
PERFORMANCE SUMMARY
LONG-TERM TAX-EXEMPT FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note, too, that both
share price and return can fluctuate widely, so an investment in the fund could
lose money.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: OCTOBER 31, 1978-OCTOBER 31, 1998
- ------------------------------------------------------------
LONG-TERM TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
1979 -9.4% 5.7% -3.7% N/A
1980 -19.2 6.5 -12.7 N/A
1981 -21.4 8.4 -13.0 -11.4
1982 19.0 13.3 32.3 31.6
1983 1.8 9.5 11.3 4.4
1984 -3.3 9.6 6.3 7.6
1985 8.3 10.1 18.4 18.7
1986 14.5 9.3 23.8 22.6
1987 -11.0 6.9 -4.1 -0.8
1988 9.0 8.3 17.3 14.6
1989 1.2 7.6 8.8 8.1
1990 -1.1 7.2 6.1 7.4
1991 6.7 7.6 14.3 12.2
1992 0.8 6.7 7.5 8.4
1993 10.5 6.4 16.9 14.1
1994 -10.7 5.2 -5.5 -4.3
1995 9.5 6.5 16.0 14.8
1996 1.1 5.6 6.7 5.7
1997 2.6 5.6 8.2 8.5
1998 2.4 5.4 7.8 8.0
- ------------------------------------------------------------
</TABLE>
*Lehman Municipal Bond Index.
See Financial Highlights table on page 39 for dividend and capital gains
information for the past five years.
CUMULATIVE PERFORMANCE: OCTOBER 31, 1988-OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term Average General-Term Lehman Municipal
Date Tax-Exempt Fund Tax-Exempt Fund Bond Fund
<S> <C> <C> <C>
1988 10 10000 10000 10000
1989 01 10253 10207 10217
1989 04 10401 10350 10315
1989 07 10927 10787 10818
1989 10 10879 10773 10810
1990 01 11013 10891 11037
1990 04 10927 10853 11059
1990 07 11638 11416 11567
1990 10 11542 11360 11613
1991 01 12175 11815 12057
1991 04 12442 12074 12329
1991 07 12676 12319 12578
1991 10 13197 12751 13025
1992 01 13533 13055 13372
1992 04 13679 13190 13501
1992 07 14801 14088 14305
1992 10 14193 13688 14118
1993 01 15019 14357 14686
1993 04 15735 14890 15209
1993 07 15943 15225 15570
1993 10 16597 15803 16105
1994 01 16978 16126 16486
1994 04 15941 15051 15537
1994 07 16371 15349 15866
1994 10 15682 14877 15409
1995 01 16408 15350 15905
1995 04 17080 15934 16576
1995 07 17620 16339 17117
1995 10 18189 16919 17697
1996 01 18984 17504 18299
1996 04 18477 16999 17894
1996 07 18924 17303 18247
1996 10 19410 17784 18705
1997 01 19662 17992 19002
1997 04 19779 18041 19080
1997 07 20898 19047 20117
1997 10 21007 19228 20293
1998 01 21715 19813 20923
1998 04 21564 19668 20855
1998 07 22082 20068 21322
1998 10 22641 20597 21921
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998
--------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-Term Tax-Exempt Fund 7.78% 6.41% 8.51% $22,641
Average General Tax-Exempt Fund 7.12 5.44 7.49 20,597
Lehman Municipal Bond Index 8.02 6.36 8.16 21,921
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1998*
- --------------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION --------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Long-Term Tax-Exempt Fund 9/1/1977 8.65% 6.47% 2.40% 6.43% 8.83%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
25
<PAGE> 28
PERFORMANCE SUMMARY
HIGH-YIELD TAX-EXEMPT FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note, too, that both
share price and return can fluctuate widely, so an investment in the fund could
lose money.
TOTAL INVESTMENT RETURNS: DECEMBER 27, 1978-OCTOBER 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------
HIGH-YIELD TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1979 -6.8% 5.2% -1.6% N/A
1980 -15.3 7.1 -8.2 N/A
1981 -19.4 9.0 -10.4 -11.4%
1982 16.1 13.7 29.8 31.6
1983 2.4 9.8 12.2 4.4
1984 -2.6 10.0 7.4 7.6
1985 8.5 10.4 18.9 18.7
1986 14.7 9.6 24.3 22.6
1987 -11.7 7.0 -4.7 -0.8
1988 10.1 8.7 18.8 14.6
1989 1.1 7.7 8.8 8.1
1990 -1.9 7.5 5.6 7.4
1991 7.2 8.0 15.2 12.2
1992 0.6 7.1 7.7 8.4
1993 10.0 6.8 16.8 14.1
1994 -10.5 5.5 -5.0 -4.3
1995 9.0 6.8 15.8 14.8
1996 0.3 5.7 6.0 5.7
1997 2.5 5.9 8.4 8.5
1998 2.6 5.6 8.2 8.0
- -----------------------------------------------------------
</TABLE>
*Lehman Municipal Bond Index.
See Financial Highlights table on page 39 for dividend and capital gains
information for the past five years.
CUMULATIVE PERFORMANCE: OCTOBER 31, 1988-OCTOBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
High-Yield Average High-Yield Lehman Municipal
Date Tax-Exempt Fund Tax-Exempt Fund Bond Index
<S> <C> <C> <C>
1988 10 10000 10000 10000
1989 01 10268 10210 10217
1989 04 10460 10414 10315
1989 07 10977 10837 10818
1989 10 10884 10841 10810
1990 01 11017 10961 11037
1990 04 10929 10967 11059
1990 07 11652 11447 11567
1990 10 11490 11385 11613
1991 01 12056 11660 12057
1991 04 12382 11971 12329
1991 07 12671 12273 12578
1991 10 13240 12633 13025
1992 01 13550 12906 13372
1992 04 13732 13123 13501
1992 07 14845 13905 14305
1992 10 14259 13582 14118
1993 01 15095 14160 14686
1993 04 15781 14659 15209
1993 07 16020 15017 15570
1993 10 16655 15493 16105
1994 01 17022 15807 16486
1994 04 16103 14967 15537
1994 07 16487 15284 15866
1994 10 15817 14884 15409
1995 01 16503 15274 15905
1995 04 17204 15874 16576
1995 07 17749 16309 17117
1995 10 18323 16777 17697
1996 01 18952 17338 18299
1996 04 18502 16971 17894
1996 07 18945 17293 18247
1996 10 19429 17740 18705
1997 01 19707 18019 19002
1997 04 19790 18203 19080
1997 07 20869 19109 20117
1997 10 21052 19386 20293
1998 01 21759 19992 20923
1998 04 21677 20039 20855
1998 07 22209 20419 21322
1998 10 22776 20745 21921
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998
--------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High-Yield Tax-Exempt Fund 8.19% 6.46% 8.58% $22,776
Average High-Yield Tax-Exempt Fund 7.01 6.01 7.57 20,745
Lehman Municipal Bond Index 8.02 6.36 8.16 21,921
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1998*
- --------------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION ---------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
High-Yield Tax-Exempt Fund 12/27/1978 8.77% 6.52% 2.17% 6.68% 8.85%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
26
<PAGE> 29
FINANCIAL STATEMENTS
OCTOBER 31, 1998
The Statements of Net Assets, integral parts of the Financial Statements for
each of the Vanguard Municipal Bond Funds, and the Report of Independent
Accountants are included as an insert to this report.
STATEMENT OF OPERATIONS
This Statement shows interest earned by each fund during the reporting period,
and details the operating expenses charged to the fund. These expenses directly
reduce the amount of investment income available to pay to shareholders as
tax-exempt income dividends. This Statement also shows any Net Gain (Loss)
realized on the sale of investments, and the increase or decrease in the
Unrealized Appreciation (Depreciation) on investments during the period. If a
fund invested in futures contracts during the period, the results of these
investments are shown separately.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT SHORT-TERM LIMITED-TERM INTERMEDIATE-TERM
MONEY MARKET TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
FUND FUND FUND FUND
---------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1998
---------------------------------------------------------------------
(000) (000) (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Interest $204,885 $63,608 $95,063 $369,801
---------------------------------------------------------------------
Total Income 204,885 63,608 95,063 369,801
---------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 735 200 272 927
Management and Administrative 8,074 2,175 3,281 11,486
Marketing and Distribution 1,870 511 606 1,748
Taxes (other than income taxes) 317 86 118 401
Custodian Fees 82 21 26 80
Auditing Fees 9 7 7 10
Shareholders' Reports 152 56 72 270
Annual Meeting and Proxy Costs 20 7 10 36
Trustees' Fees and Expenses 9 3 4 12
---------------------------------------------------------------------
Total Expenses 11,268 3,066 4,396 14,970
Expenses Paid Indirectly--Note C (82) (41) (246) (895)
---------------------------------------------------------------------
Net Expenses 11,186 3,025 4,150 14,075
- -------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 193,699 60,583 90,913 355,726
- -------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold 29 627 2,687 45,755
Futures Contracts -- -- (2,108) (25,488)
- -------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN 29 627 579 20,267
- -------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION)
Investment Securities -- 6,658 26,401 117,220
Futures Contracts -- -- (4,094) (18,231)
- -------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) -- 6,658 22,307 98,989
- -------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $193,728 $67,868 $113,799 $474,982
=========================================================================================================================
</TABLE>
27
<PAGE> 30
STATEMENT OF OPERATIONS (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
INSURED LONG-TERM LONG-TERM HIGH-YIELD
TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
FUND FUND FUND
--------------------------------------------------------
YEAR ENDED OCTOBER 31, 1998
--------------------------------------------------------
(000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Interest $115,118 $73,185 $135,822
--------------------------------------------------------
Total Income 115,118 73,185 135,822
--------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 275 175 316
Management and Administrative 3,333 2,194 3,846
Marketing and Distribution 428 294 560
Taxes (other than income taxes) 118 76 137
Custodian Fees 26 18 30
Auditing Fees 7 7 8
Shareholders' Reports 87 57 104
Annual Meeting and Proxy Costs 12 7 13
Trustees' Fees and Expenses 4 2 4
--------------------------------------------------------
Total Expenses 4,290 2,830 5,018
Expenses Paid Indirectly--Note C (140) (154) (186)
--------------------------------------------------------
Net Expenses 4,150 2,676 4,832
- --------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 110,968 70,509 130,990
- --------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold 20,345 19,752 30,560
Futures Contracts (15,468) (6,305) (22,052)
- --------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN 4,877 13,447 8,508
- --------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities 43,053 20,377 50,207
Futures Contracts 3,548 (2,361) 4,094
- --------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 46,601 18,016 54,301
- --------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $162,446 $101,972 $193,799
==========================================================================================================================
</TABLE>
28
<PAGE> 31
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how each fund's total net assets changed during the three
most recent reporting periods. The Operations section summarizes information
detailed in the Statement of Operations. Because the fund distributes its income
to shareholders each day, the amounts of Distributions--Net Investment Income
generally equal the net income earned as shown under the Operations section. The
amounts of Distributions--Realized Capital Gain may not match the capital gains
shown in the Operations section, because distributions are determined on a tax
basis and may be made in a period different from the one in which the gains were
realized on the financial statements. The Capital Share Transactions section
shows the amount shareholders invested in the fund, either by purchasing shares
or by reinvesting distributions, and the amounts redeemed. The corresponding
numbers of Shares Issued and Redeemed are shown at the end of the Statement.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
-----------------------------------------------
YEAR YEAR
ENDED SEP. 1 TO ENDED
OCT. 31, 1998 OCT. 31, 1997 AUG. 31, 1997
(000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income $ 193,699 $ 31,525 $ 171,389
Realized Net Gain (Loss) 29 -- 132
Change in Unrealized Appreciation (Depreciation) -- -- --
------------------------------------------
Net Increase in Net Assets Resulting from Operations 193,728 31,525 171,521
------------------------------------------
DISTRIBUTIONS
Net Investment Income (193,699) (31,525) (171,389)
Realized Capital Gain -- -- --
------------------------------------------
Total Distributions (193,699) (31,525) (171,389)
------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 6,814,946 943,194 5,660,032
Issued in Lieu of Cash Distributions 181,732 29,510 159,979
Redeemed (6,131,356) (937,706) (5,099,054)
------------------------------------------
Net Increase from Capital Share Transactions 865,322 34,998 720,957
- --------------------------------------------------------------------------------------------------------------------------
Total Increase 865,351 34,998 721,089
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 5,380,410 5,345,412 4,624,323
------------------------------------------
End of Period $6,245,761 $5,380,410 $5,345,412
==========================================================================================================================
(1)Shares Issued (Redeemed)
Issued 6,814,946 943,194 5,660,032
Issued in Lieu of Cash Distributions 181,732 29,510 159,979
Redeemed (6,131,356) (937,706) (5,099,054)
------------------------------------------
Net Increase in Shares Outstanding 865,322 34,998 720,957
==========================================================================================================================
</TABLE>
29
<PAGE> 32
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
SHORT-TERM TAX-EXEMPT FUND
-----------------------------------------------
YEAR YEAR
ENDED SEP. 1 TO ENDED
OCT. 31, 1998 OCT. 31, 1997 AUG. 31, 1997
(000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income $ 60,583 $ 9,806 $ 56,997
Realized Net Gain (Loss) 627 7 592
Change in Unrealized Appreciation (Depreciation) 6,658 1,397 2,384
------------------------------------------------
Net Increase in Net Assets Resulting from Operations 67,868 11,210 59,973
DISTRIBUTIONS
Net Investment Income (60,583) (9,806) (56,997)
Realized Capital Gain (585) -- (392)
------------------------------------------------
Total Distributions (61,168) (9,806) (57,389)
------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 947,896 135,146 732,007
Issued in Lieu of Cash Distributions 51,299 8,197 48,457
Redeemed (836,797) (123,916) (775,966)
------------------------------------------------
Net Increase from Capital Share Transactions 162,398 19,427 4,498
- --------------------------------------------------------------------------------------------------------------------------
Total Increase 169,098 20,831 7,082
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 1,484,565 1,463,734 1,456,652
------------------------------------------------
End of Period $1,653,663 $1,484,565 $1,463,734
==========================================================================================================================
(1)Shares Issued (Redeemed)
Issued 60,783 8,675 47,037
Issued in Lieu of Cash Distributions 3,290 526 3,113
Redeemed (53,669) (7,954) (49,869)
------------------------------------------------
Net Increase in Shares Outstanding 10,404 1,247 281
==========================================================================================================================
</TABLE>
30
<PAGE> 33
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
LIMITED-TERM TAX-EXEMPT FUND
------------------------------------------------
YEAR YEAR
ENDED SEP. 1 TO ENDED
OCT. 31, 1998 OCT. 31, 1997 AUG. 31, 1997
(000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
OPERATIONS
<S> <C> <C> <C>
Net Investment Income $ 90,913 $ 14,144 $ 81,063
Realized Net Gain (Loss) 579 287 2,381
Change in Unrealized Appreciation (Depreciation) 22,307 5,443 12,454
------------------------------------------
Net Increase in Net Assets Resulting from Operations 113,799 19,874 95,898
------------------------------------------
DISTRIBUTIONS
Net Investment Income (90,913) (14,144) (81,063)
Realized Capital Gain -- -- --
------------------------------------------
Total Distributions (90,913) (14,144) (81,063)
------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 927,565 122,679 672,438
Issued in Lieu of Cash Distributions 71,458 11,012 63,785
Redeemed (643,738) (106,518) (582,527)
------------------------------------------
Net Increase from Capital Share Transactions 355,285 27,173 153,696
- --------------------------------------------------------------------------------------------------------------------------
Total Increase 378,171 32,903 168,531
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 1,962,009 1,929,106 1,760,575
------------------------------------------
End of Period $2,340,180 $1,962,009 $1,929,106
==========================================================================================================================
(1)Shares Issued (Redeemed)
Issued 86,051 11,434 62,932
Issued in Lieu of Cash Distributions 6,626 1,025 5,970
Redeemed (59,721) (9,927) (54,564)
------------------------------------------
Net Increase in Shares Outstanding 32,956 2,532 14,338
==========================================================================================================================
</TABLE>
31
<PAGE> 34
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE-TERM TAX-EXEMPT FUND
---------------------------------------------
YEAR YEAR
ENDED SEP. 1 TO ENDED
OCT. 31, 1998 OCT. 31, 1997 AUG. 31, 1997
(000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
OPERATIONS
<S> <C> <C> <C>
Net Investment Income $ 355,726 $ 56,099 $ 317,782
Realized Net Gain (Loss) 20,267 (11,995) 5,163
Change in Unrealized Appreciation (Depreciation) 98,989 36,886 116,742
------------------------------------------
Net Increase in Net Assets Resulting from Operations 474,982 80,990 439,687
------------------------------------------
DISTRIBUTIONS
Net Investment Income (355,726) (56,099) (317,782)
Realized Capital Gain (26,386) -- (1,435)
------------------------------------------
Total Distributions (382,112) (56,099) (319,217)
------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 1,986,864 245,741 1,549,834
Issued in Lieu of Cash Distributions 286,110 41,585 236,107
Redeemed (1,362,906) (199,759) (1,175,502)
------------------------------------------
Net Increase from Capital Share Transactions 910,068 87,567 610,439
- --------------------------------------------------------------------------------------------------------------------------
Total Increase 1,002,938 112,458 730,909
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 6,770,139 6,657,681 5,926,772
------------------------------------------
End of Period $7,773,077 $6,770,139 $6,657,681
==========================================================================================================================
(1)Shares Issued (Redeemed)
Issued 147,963 18,412 117,359
Issued in Lieu of Cash Distributions 21,322 3,113 17,869
Redeemed (101,633) (14,978) (89,141)
------------------------------------------
Net Increase in Shares Outstanding 67,652 6,547 46,087
==========================================================================================================================
</TABLE>
32
<PAGE> 35
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
INSURED LONG-TERM TAX-EXEMPT FUND
---------------------------------------------
YEAR YEAR
ENDED SEP. 1 TO ENDED
OCT. 31, 1998 OCT. 31, 1997 AUG. 31, 1997
(000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income $ 110,968 $ 18,058 $ 107,858
Realized Net Gain (Loss) 4,877 (7,340) 7,738
Change in Unrealized Appreciation (Depreciation) 46,601 16,157 54,683
------------------------------------------
Net Increase in Net Assets Resulting from Operations 162,446 26,875 170,279
------------------------------------------
DISTRIBUTIONS
Net Investment Income (110,968) (18,058) (107,858)
Realized Capital Gain (13,338) -- (11,310)
------------------------------------------
Total Distributions (124,306) (18,058) (119,168)
------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 358,616 43,498 265,675
Issued in Lieu of Cash Distributions 80,270 11,314 76,210
Redeemed (285,010) (44,567) (305,317)
------------------------------------------
Net Increase from Capital Share Transactions 153,876 10,245 36,568
- --------------------------------------------------------------------------------------------------------------------------
Total Increase 192,016 19,062 87,679
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 2,043,119 2,024,057 1,936,378
------------------------------------------
End of Period $2,235,135 $2,043,119 $2,024,057
==========================================================================================================================
(1)Shares Issued (Redeemed)
Issued 28,400 3,481 21,609
Issued in Lieu of Cash Distributions 6,361 904 6,179
Redeemed (22,594) (3,568) (24,797)
------------------------------------------
Net Increase in Shares Outstanding 12,167 817 2,991
==========================================================================================================================
</TABLE>
33
<PAGE> 36
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
LONG-TERM TAX-EXEMPT FUND
--------------------------------------------------
YEAR YEAR
ENDED SEP. 1 TO ENDED
OCT. 31, 1998 OCT. 31, 1997 AUG. 31, 1997
(000) (000) (000)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income $ 70,509 $ 10,889 $ 62,323
Realized Net Gain (Loss) 13,447 (2,185) 2,874
Change in Unrealized Appreciation (Depreciation) 18,016 10,593 39,777
--------------------------------------------------
Net Increase in Net Assets Resulting from Operations 101,972 19,297 104,974
--------------------------------------------------
DISTRIBUTIONS
Net Investment Income (70,509) (10,889) (62,323)
Realized Capital Gain (6,527) -- (2,409)
--------------------------------------------------
Total Distributions (77,036) (10,889) (64,732)
--------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 380,652 39,661 221,419
Issued in Lieu of Cash Distributions 52,583 7,317 44,013
Redeemed (198,533) (27,954) (194,173)
--------------------------------------------------
Net Increase from Capital Share Transactions 234,702 19,024 71,259
- -------------------------------------------------------------------------------------------------------------------------------
Total Increase 259,638 27,432 111,501
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 1,249,137 1,221,705 1,110,204
--------------------------------------------------
End of Period $1,508,775 $1,249,137 $1,221,705
===============================================================================================================================
(1)Shares Issued (Redeemed)
Issued 33,634 3,557 20,226
Issued in Lieu of Cash Distributions 4,653 654 4,015
Redeemed (17,574) (2,508) (17,737)
--------------------------------------------------
Net Increase in Shares Outstanding 20,713 1,703 6,504
===============================================================================================================================
</TABLE>
34
<PAGE> 37
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
HIGH-YIELD TAX-EXEMPT FUND
--------------------------------------------------
YEAR YEAR
ENDED SEP. 1 TO ENDED
OCT. 31, 1998 OCT. 31, 1997 AUG. 31, 1997
(000) (000) (000)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income $ 130,990 $ 22,607 $ 115,522
Realized Net Gain (Loss) 8,508 (5,213) 9,925
Change in Unrealized Appreciation (Depreciation) 54,301 18,403 63,383
--------------------------------------------------
Net Increase in Net Assets Resulting from Operations 193,799 35,797 188,830
--------------------------------------------------
DISTRIBUTIONS
Net Investment Income (130,990) (22,607) (115,522)
Realized Capital Gain (10,865) -- --
--------------------------------------------------
Total Distributions (141,855) (22,607) (115,522)
--------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 739,666 101,099 480,518
Issued in Lieu of Cash Distributions 97,798 14,591 77,020
Redeemed (440,631) (65,952) (422,965)
--------------------------------------------------
Net Increase from Capital Share Transactions 396,833 49,738 134,573
- -------------------------------------------------------------------------------------------------------------------------------
Total Increase 448,777 62,928 207,881
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 2,255,572 2,192,644 1,984,763
--------------------------------------------------
End of Period $2,704,349 $ 2,255,572 $2,192,644
===============================================================================================================================
(1)Shares Issued (Redeemed)
Issued 67,558 9,278 45,326
Issued in Lieu of Cash Distributions 8,924 1,347 7,255
Redeemed (40,243) (6,106) (39,946)
--------------------------------------------------
Net Increase in Shares Outstanding 36,239 4,519 12,635
===============================================================================================================================
</TABLE>
35
<PAGE> 38
FINANCIAL HIGHLIGHTS
This table summarizes each fund's investment results and distributions to
shareholders on a per-share basis. It also presents the fund's Total Return and
shows net investment income and expenses as percentages of average net assets.
These data will help you assess: the variability of the fund's net income and
total returns from year to year; the relative contributions of net income and
capital gains to the fund's total return; how much it costs to operate the fund;
and the extent to which the fund tends to distribute capital gains.
The table also shows the Portfolio Turnover Rate, a measure of trading
activity. A turnover rate of 100% means that the average security is held in
the fund for one year. Money market funds are not required to report a
Portfolio Turnover Rate.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
YEAR ENDED AUGUST 31,
FOR A SHARE OUTSTANDING YEAR ENDED SEP. 1 TO ------------------------------------------
THROUGHOUT EACH PERIOD OCT. 31, 1998 OCT. 31, 1997 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .034 .006 .034 .034 .036 .024
Net Realized and Unrealized Gain (Loss)
on Investments -- -- -- -- -- --
--------------------------------------------------------------------------
Total from Investment Operations .034 .006 .034 .034 .036 .024
--------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.034) (.006) (.034) (.034) (.036) (.024)
Distributions from Realized Capital Gains -- -- -- -- -- --
--------------------------------------------------------------------------
Total Distributions (.034) (.006) (.034) (.034) (.036) (.024)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
============================================================================================================================
TOTAL RETURN 3.44% 0.59% 3.47% 3.48% 3.63% 2.43%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $6,246 $5,380 $5,345 $4,624 $4,166 $4,164
Ratio of Total Expenses to
Average Net Assets 0.20% 0.18%* 0.19% 0.20% 0.22% 0.20%
Ratio of Net Investment Income to
Average Net Assets 3.37% 3.53%* 3.41% 3.42% 3.56% 2.41%
============================================================================================================================
</TABLE>
*Annualized.
36
<PAGE> 39
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM TAX-EXEMPT FUND
YEAR ENDED AUGUST 31,
FOR A SHARE OUTSTANDING YEAR ENDED SEP. 1 TO ----------------------------------------
THROUGHOUT EACH PERIOD OCT. 31, 1998 OCT. 31, 1997 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $15.58 $15.57 $15.54 $15.59 $15.46 $15.63
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .609 .103 .610 .609 .600 .534
Net Realized and Unrealized Gain (Loss)
on Investments .076 .010 .034 (.050) .131 (.150)
-------------------------------------------------------------------------
Total from Investment Operations .685 .113 .644 .559 .731 .384
-------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.609) (.103) (.610) (.609) (.600) (.534)
Distributions from Realized Capital Gains (.006) -- (.004) -- (.001) (.020)
-------------------------------------------------------------------------
Total Distributions (.615) (.103) (.614) (.609) (.601) (.554)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $15.65 $15.58 $15.57 $15.54 $15.59 $15.46
==============================================================================================================================
TOTAL RETURN 4.49% 0.73% 4.22% 3.64% 4.83% 2.49%
==============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,654 $1,485 $1,464 $1,457 $1,442 $1,561
Ratio of Total Expenses to
Average Net Assets 0.20% 0.18%* 0.19% 0.20% 0.22% 0.20%
Ratio of Net Investment Income to
Average Net Assets 3.90% 3.96%* 3.91% 3.90% 3.88% 3.42%
Portfolio Turnover Rate 36% 4% 34% 33% 32% 27%
==============================================================================================================================
*Annualized.
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
LIMITED-TERM TAX-EXEMPT FUND
YEAR ENDED AUGUST 31,
FOR A SHARE OUTSTANDING YEAR ENDED SEP. 1 TO -------------------------------------------
THROUGHOUT EACH PERIOD OCT. 31, 1998 OCT. 31, 1997 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.74 $10.71 $10.62 $10.71 $10.57 $10.80
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .460 .078 .476 .483 .476 .454
Net Realized and Unrealized Gain (Loss)
on Investments .110 .030 .090 (.090) .140 (.208)
------------------------------------------------------------------
Total from Investment Operations .570 .108 .566 .393 .616 .246
------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.460) (.078) (.476) (.483) (.476) (.454)
Distributions from Realized Capital Gains -- -- -- -- -- (.022)
------------------------------------------------------------------
Total Distributions (.460) (.078) (.476) (.483) (.476) (.476)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.85 $10.74 $10.71 $10.62 $10.71 $10.57
==========================================================================================================================
TOTAL RETURN 5.42% 1.01% 5.44% 3.73% 5.99% 2.31%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $2,340 $1,962 $1,929 $1,761 $1,669 $1,814
Ratio of Total Expenses to
Average Net Assets 0.21% 0.18%* 0.19% 0.21% 0.22% 0.20%
Ratio of Net Investment Income to
Average Net Assets 4.27% 4.34%* 4.46% 4.51% 4.51% 4.24%
Portfolio Turnover Rate 35% 2% 28% 27% 35% 21%
==========================================================================================================================
</TABLE>
*Annualized.
37
<PAGE> 40
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
- -------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE-TERM TAX-EXEMPT FUND
YEAR ENDED AUGUST 31,
FOR A SHARE OUTSTANDING YEAR ENDED SEP. 1 TO -------------------------------------------
THROUGHOUT EACH PERIOD OCT. 31, 1998 OCT. 31, 1997 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.35 $13.30 $13.04 $13.14 $13.02 $13.45
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .661 .111 .669 .671 .686 .683
Net Realized and Unrealized Gain (Loss)
on Investments .222 .050 .263 (.091) .278 (.354)
----------------------------------------------------------------------
Total from Investment Operations .883 .161 .932 .580 .964 .329
----------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.661) (.111) (.669) (.671) (.686) (.683)
Distributions from Realized Capital Gains (.052) -- (.003) (.009) (.158) (.076)
----------------------------------------------------------------------
Total Distributions (.713) (.111) (.672) (.680) (.844) (.759)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.52 $13.35 $13.30 $13.04 $13.14 $13.02
=========================================================================================================================
TOTAL RETURN 6.78% 1.21% 7.31% 4.47% 7.82% 2.49%
=========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $7,773 $6,770 $6,658 $5,927 $5,448 $5,068
Ratio of Total Expenses to
Average Net Assets 0.21% 0.18%* 0.19% 0.20% 0.22% 0.20%
Ratio of Net Investment Income to
Average Net Assets 4.93% 4.99%* 5.07% 5.09% 5.35% 5.15%
Portfolio Turnover Rate 14% 1% 15% 14% 12% 18%
=========================================================================================================================
</TABLE>
*Annualized.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
INSURED LONG-TERM TAX-EXEMPT FUND
YEAR ENDED AUGUST 31,
FOR A SHARE OUTSTANDING YEAR ENDED SEP. 1 TO ----------------------------------------
THROUGHOUT EACH PERIOD OCT. 31, 1998 OCT. 31, 1997 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.51 $ 12.45 $ 12.14 $ 12.12 $ 11.98 $ 12.89
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .658 .111 .674 .670 .684 .699
Net Realized and Unrealized Gain (Loss)
on Investments .301 .060 .382 .020 .313 (.734)
----------------------------------------------------------------------
Total from Investment Operations .959 .171 1.056 .690 .997 (.035)
----------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.658) (.111) (.674) (.670) (.684) (.699)
Distributions from Realized Capital Gains (.081) -- (.072) -- (.173) (.176)
----------------------------------------------------------------------
Total Distributions (.739) (.111) (.746) (.670) (.8 7) (.875)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.73 $ 12.51 $ 12.45 $ 12.14 $ 12.12 $ 11.98
==========================================================================================================================
TOTAL RETURN 7.88% 1.37% 8.93% 5.77% 8.88% -0.32%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $ 2,235 $ 2,043 $ 2,024 $ 1,936 $ 1,935 $ 1,938
Ratio of Total Expenses to
Average Net Assets 0.20% 0.18%* 0.19% 0.20% 0.22% 0.20%
Ratio of Net Investment Income to
Average Net Assets 5.22% 5.32%* 5.47% 5.46% 5.82% 5.62%
Portfolio Turnover Rate 16% 1% 18% 18% 7% 16%
==========================================================================================================================
</TABLE>
*Annualized.
38
<PAGE> 41
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
LONG-TERM TAX-EXEMPT FUND
YEAR ENDED AUGUST 31,
FOR A SHARE OUTSTANDING YEAR ENDED SEP. 1 TO ----------------------------------------
THROUGHOUT EACH PERIOD OCT. 31, 1998 OCT. 31, 1997 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.18 $11.11 $10.73 $10.68 $10.58 $11.38
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .580 .098 .588 .591 .608 .609
Net Realized and Unrealized Gain (Loss)
on Investments .268 .070 .403 .050 .256 (.595)
---------------------------------------------------------------------
Total from Investment Operations .848 .168 .991 .641 .864 .014
--------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.580) (.098) (.588) (.591) (.608) (.609)
Distributions from Realized Capital Gains (.058) -- (.023) -- (.156) (.205)
--------------------------------------------------------------------
Total Distributions (.638) (.098) (.611) (.591) (.764) (.814)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.39 $11.18 $11.11 $10.73 $10.68 $10.58
==========================================================================================================================
TOTAL RETURN 7.78% 1.52% 9.46% 6.08% 8.74% 0.08%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,509 $1,249 $1,222 $1,110 $1,054 $1,001
Ratio of Total Expenses to
Average Net Assets 0.21% 0.18%* 0.19% 0.20% 0.23% 0.20%
Ratio of Net Investment Income to
Average Net Assets 5.13% 5.28%* 5.37% 5.45% 5.87% 5.56%
Portfolio Turnover Rate 18% 1% 9% 26% 35% 45%
==========================================================================================================================
</TABLE>
*Annualized.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
HIGH-YIELD TAX-EXEMPT FUND
YEAR ENDED AUGUST 31,
FOR A SHARE OUTSTANDING YEAR ENDED SEP. 1 TO ----------------------------------------
THROUGHOUT EACH PERIOD OCT. 31, 1998 OCT. 31, 1997 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.83 $ 10.76 $ 10.39 $ 10.43 $ 10.39 $ 11.17
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .582 .106 .589 .594 .625 .626
Net Realized and Unrealized Gain (Loss)
on Investments .282 .070 .370 (.040) .213 (.566)
-------------------------------------------------------------------
Total from Investment Operations .864 .176 .959 .554 .838 .060
-------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.582) (.106) (.589) (.594) (.625) (.626)
Distributions from Realized Capital Gains (.052) -- -- -- (.173) (.214)
-------------------------------------------------------------------
Total Distributions (.634) (.106) (.589) (.594) (.798) (.840)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.06 $ 10.83 $ 10.76 $ 10.39 $ 10.43 $ 10.39
==========================================================================================================================
TOTAL RETURN 8.19% 1.63% 9.45% 5.39% 8.69% 0.52%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $ 2,704 $ 2,256 $ 2,193 $ 1,985 $ 1,865 $1,781
Ratio of Total Expenses to
Average Net Assets 0.20% 0.19%* 0.19% 0.20% 0.22% 0.20%
Ratio of Net Investment Income to
Average Net Assets 5.28% 6.08%* 5.56% 5.66% 6.15% 5.83%
Portfolio Turnover Rate 24% 3% 27% 19% 33% 50%
==========================================================================================================================
</TABLE>
*Annualized.
39
<PAGE> 42
NOTES TO FINANCIAL STATEMENTS
Vanguard Municipal Bond Funds comprises the Tax-Exempt Money Market, Short-Term
Tax-Exempt, Limited-Term Tax-Exempt, Intermediate-Term Tax-Exempt, Insured
Long-Term Tax-Exempt, Long-Term Tax-Exempt, and High-Yield Tax-Exempt Funds,
each of which is registered under the Investment Company Act of 1940 as a
diversified open-end investment company, or mutual fund. Each fund invests in
debt instruments of many municipal issuers; the issuers' abilities to meet their
obligations may be affected by economic and political developments in a specific
state or region. Effective in 1997, each fund's fiscal year changed from August
31 to October 31.
A. The following significant accounting policies conform to generally accepted
accounting principles for mutual funds. The funds consistently follow such
policies in preparing their financial statements.
1. SECURITY VALUATION: Tax-Exempt Money Market Fund: Investment securities
are valued at amortized cost, which approximates market value. Other funds:
Bonds, and temporary cash investments acquired over 60 days to maturity, are
valued using the latest bid prices or using valuations based on a matrix system
(which considers such factors as security prices, yields, maturities, and
ratings), both as furnished by independent pricing services. Other temporary
cash investments are valued at amortized cost, which approximates market value.
2. FEDERAL INCOME TAXES: Each 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 fund, except the Tax-Exempt Money Market Fund,
may use Municipal Bond Index, U.S. Treasury Bond, and U.S. Treasury Note futures
contracts to a limited extent, with the objectives of enhancing returns,
managing interest-rate risk, maintaining liquidity, diversifying credit risk,
and minimizing transaction costs. The funds may purchase or sell futures
contracts instead of bonds to take advantage of pricing differentials between
the futures contracts and the underlying bonds. The funds may also seek to take
advantage of price differences among bond market sectors by simultaneously
buying futures (or bonds) of one market sector and selling futures (or bonds) of
another sector. Futures contracts may also be used to simulate a fully invested
position in the underlying bonds while maintaining a cash balance for liquidity.
The primary risks associated with the use of futures contracts are imperfect
correlation between changes in market values of bonds held by the funds and the
prices of futures contracts, and the possibility of an illiquid market.
Futures contracts are valued based upon their quoted daily settlement
prices. The aggregate principal amounts of the contracts are not recorded in the
financial statements. Fluctuations in the values of futures contracts are
recorded in the Statement of Net Assets as an asset (liability) and in the
Statement of Operations as unrealized appreciation (depreciation) until the
contracts are closed, when they are recorded as realized futures gains (losses).
4. DISTRIBUTIONS: Distributions from net investment income are declared
daily and paid on the first business day of the following month. Annual
distributions from realized capital gains, if any, are recorded on the
ex-dividend date.
5. OTHER: Security transactions are accounted for on the date securities
are bought or sold. Costs used to determine realized gains (losses) on the sale
of investment securities are those of the 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 furnishes at cost investment advisory, corporate
management, administrative, marketing, and distribution services. The costs of
such services are allocated to each fund under methods approved by the Board of
Trustees. Each fund has committed to provide up to
40
<PAGE> 43
0.40% of its net assets in capital contributions to Vanguard. At October 31,
1998, the funds had contributed capital to Vanguard (included in Other Assets)
of:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
CAPITAL CONTRIBUTION PERCENT PERCENT OF
TO VANGUARD OF FUND VANGUARD'S
TAX-EXEMPT FUND (000) NET ASSETS CAPITALIZATION
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market $1,190 0.02% 1.7%
Short-Term 322 0.02 0.5
Limited-Term 455 0.02 0.6
Intermediate-Term 1,505 0.02 2.1
Insured Long-Term 441 0.02 0.6
Long-Term 294 0.02 0.4
High-Yield 532 0.02 0.8
----------------------------------------------------------------------------------------
</TABLE>
The funds' Trustees and officers are also Directors and officers of Vanguard.
C. The funds' investment adviser may direct new issue purchases, subject to
obtaining the best price and execution, to underwriters who have agreed to
rebate or credit to the funds part of the underwriting fees generated. Such
rebates or credits are used solely to reduce the funds' administrative expenses.
The funds' custodian bank has also agreed to reduce its fees when the funds
maintain cash on deposit in the non-interest-bearing custody account. For the
year ended October 31, 1998, directed brokerage and custodian fee offset
arrangements reduced expenses by:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
EXPENSE REDUCTION
(000) TOTAL EXPENSE
---------------------------- REDUCTION AS A
DIRECTED CUSTODIAN PERCENTAGE OF
TAX-EXEMPT FUND BROKERAGE FEES AVERAGE NET ASSETS
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market -- $82 --
Short-Term $ 20 21 --
Limited-Term 220 26 0.01%
Intermediate-Term 815 80 0.01
Insured Long-Term 114 26 0.01
Long-Term 136 18 0.01
High-Yield 156 30 0.01
----------------------------------------------------------------------------------------
</TABLE>
D. During the year ended October 31, 1998, purchases and sales of investment
securities other than temporary cash investments were:
<TABLE>
-----------------------------------------------------------------------------
(000)
------------------------------
TAX-EXEMPT FUND PURCHASES SALES
-----------------------------------------------------------------------------
<S> <C> <C>
Short-Term $ 766,937 $ 443,095
Limited-Term 1,065,742 721,018
Intermediate-Term 2,224,674 957,630
Insured Long-Term 450,613 338,595
Long-Term 498,761 233,458
High-Yield 1,000,581 585,067
-----------------------------------------------------------------------------
</TABLE>
41
<PAGE> 44
NOTES TO FINANCIAL STATEMENTS (continued)
E. 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. For federal income tax purposes, at October
31, 1998, the funds had the following capital gains available for distribution,
or capital losses available to offset future capital gains:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
CAPITAL LOSS
------------------------------
CAPITAL GAINS EXPIRATION
AVAILABLE FOR FISCAL YEAR(S)
DISTRIBUTION AMOUNT ENDING
TAX-EXEMPT FUND (000) (000) OCTOBER 31
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market -- $ (612) 2002-2005
Short-Term $ 581 -- --
Limited-Term -- (2,672) 2004-2006
Intermediate-Term 20,522 -- --
Insured Long-Term 12,275 -- --
Long-Term 15,504 -- --
High-Yield 17,883 -- --
--------------------------------------------------------------------------------------
</TABLE>
The Insured Long-Term, Long-Term, and High-Yield Tax-Exempt Funds used capital
loss carryforwards of $1,861,000, $635,000, and $3,074,000, respectively, to
offset taxable capital gains realized during the year ended October 31, 1998,
reducing the amount of capital gains that would otherwise be available to
distribute to shareholders.
F. At October 31, 1998, net unrealized appreciation of investment securities for
financial reporting and federal income tax purposes was:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
(000)
--------------------------------------------------------
NET
APPRECIATED DEPRECIATED UNREALIZED
TAX-EXEMPT FUND SECURITIES SECURITIES APPRECIATION
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term $ 13,694 $ (25) $ 13,669
Limited-Term 51,539 (101) 51,438
Intermediate-Term 475,750 (681) 475,069
Insured Long-Term 234,893 (260) 234,633
Long-Term 129,981 (724) 129,257
High-Yield 227,879 (30,960) 196,919
--------------------------------------------------------------------------------------
</TABLE>
42
<PAGE> 45
At October 31, 1998, the aggregate settlement value of open futures
contracts expiring in December 1998 and the related unrealized appreciation
(depreciation) were:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
(000)
----------------------------------
NUMBER OF AGGREGATE UNREALIZED
LONG (SHORT) SETTLEMENT APPRECIATION
TAX-EXEMPT FUND/FUTURES CONTRACT CONTRACTS VALUE (DEPRECIATION)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Limited-Term/
5-Year U.S. Treasury Note (1,200) $137,569 (4,351)
Intermediate-Term/
U.S. Treasury Note (6,477) 779,264 (24,498)
Insured Long-Term/
U.S. Treasury Bond (1,191) 153,528 (384)
U.S. Treasury Note (395) 47,523 125
Long-Term/
U.S. Treasury Bond (890) 114,727 (2,378)
U.S. Treasury Note (250) 30,078 88
High-Yield/
U.S. Treasury Bond (1,516) 195,422 (3,994)
U.S. Treasury Note (500) 60,156 176
-----------------------------------------------------------------------------------------------
</TABLE>
Net unrealized appreciation (depreciation) on open futures contracts is required
to be treated as realized gain (loss) for tax purposes.
43
<PAGE> 46
TRUSTEES AND OFFICERS
JOHN C. BOGLE
Founder, Senior Chairman of the Board, and Director/Trustee of The Vanguard
Group, Inc., and each of the investment companies in The Vanguard Group.
JOHN J. BRENNAN
Chairman of the Board, Chief Executive Officer, and Director/Trustee of The
Vanguard Group, Inc., and each of the investment companies in The Vanguard
Group.
BARBARA BARNES HAUPTFUHRER
Director of The Great Atlantic and Pacific Tea Co., IKON Office Solutions, Inc.,
Raytheon Co., Knight-Ridder, Inc., Massachusetts Mutual Life Insurance Co., and
Ladies Professional Golf Association; Trustee Emerita of Wellesley College.
JOANN HEFFERNAN HEISEN
Vice President, Chief Information Officer, and a member of the Executive
Committee of Johnson & Johnson; Director of Johnson & JohnsonoMerck Consumer
Pharmaceuticals Co., Women First HealthCare, Inc., Recording for the Blind and
Dyslexic, The Medical Center at Princeton, and Women's Research and Education
Institute.
BURTON G. MALKIEL
Chemical Bank Chairman's Professor of Economics, Princeton University; Director
of Prudential Insurance Co. of America, Banco Bilbao Gestinova, Baker Fentress &
Co., The Jeffrey Co., and Southern New England Telecommunications Co.
ALFRED M. RANKIN, JR.
Chairman, President, and Chief Executive Officer of NACCO Industries, Inc.;
Director of NACCO Industries, The BFGoodrich Co., and The Standard Products Co.
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 Co., Procter & Gamble Co.,
NACCO Industries, and Newfield Exploration Co.
JAMES O. WELCH, JR.
Retired Chairman of Nabisco Brands, Inc.; retired Vice Chairman and Director of
RJR Nabisco; Director of TECO Energy, Inc., and Kmart Corp.
J. LAWRENCE WILSON
Chairman and Chief Executive Officer of Rohm & Haas Co.; Director of Cummins
Engine Co. and The Mead Corp.; Trustee of Vanderbilt University.
OTHER FUND OFFICERS
RAYMOND J. KLAPINSKY
Secretary; Managing Director and Secretary of The Vanguard Group, Inc.;
Secretary of each of the investment companies in The Vanguard Group.
THOMAS J. HIGGINS
Treasurer; Principal of The Vanguard Group, Inc.; Treasurer of each of the
investment companies in The Vanguard Group.
KAREN E. WEST
Controller; Principal of The Vanguard Group, Inc.; Controller of each of the
investment companies in The Vanguard Group.
OTHER VANGUARD OFFICERS
R. GREGORY BARTON
Managing Director, Legal Department.
ROBERT A. DISTEFANO
Managing Director, Information Technology.
JAMES H. GATELY
Managing Director, Individual Investor Group.
KATHLEEN C. GUBANICH
Managing Director, Human Resources.
IAN A. MACKINNON
Managing Director, Fixed Income Group.
F. WILLIAM MCNABB, III
Managing Director, Institutional Investor Group.
MICHAEL S. MILLER
Managing Director, Planning and Development.
RALPH K. PACKARD
Managing Director and Chief Financial Officer.
GEORGE U. SAUTER
Managing Director, Core Management Group.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc. Frank Russell Company is
the owner of trademarks and copyrights relating to the Russell Indexes.
"Wilshire 4500" and "Wilshire 5000" are trademarks of Wilshire Associates.
<PAGE> 47
VANGUARD MILESTONES
[ARTWORK]
The Vanguard Group is
named for HMS Vanguard,
Admiral Horatio Nelson's flagship
at the Battle of the Nile on
August 1, 1798. Our founder,
John C. Bogle, chose the name
after reading Nelson's inspiring
tribute to his fleet: "Nothing could
withstand the squadron . . .
with the judgment of the captains,
together with their valour, and that
of the officers and men of every
description, it was absolutely irresistible."
[ARTWORK]
Walter L. Morgan, founder of
Wellington Fund, the nation's
first balanced mutual fund
and forerunner of today's family
of some 100 Vanguard funds,
celebrated his 100th birthday on
July 23, 1998. Mr. Morgan,
a true investment pioneer, died
six weeks later on September 2.
[ARTWORK]
Wellington Fund,
The Vanguard Group's oldest fund,
was incorporated by Mr. Morgan
70 years ago, on December 28, 1928.
The fund was named after
the Duke of Wellington,
whose forces defeated
Napoleon Bonaparte at the
Battle of Waterloo in 1815.
Post Office Box 2600
Valley Forge, Pennsylvania 19482
FUND INFORMATION
1-800-662-7447
INDIVIDUAL ACCOUNT SERVICES
1-800-662-2739
INSTITUTIONAL INVESTOR SERVICES
1-800-523-1036
www.vanguard.com
[email protected]
All Vanguard funds are offered by prospectus only. Prospectuses contain more
complete information on advisory fees, distribution charges, and other expenses
and should be read carefully before you invest or send money. Prospectuses can
be obtained directly from The Vanguard Group.
Q950-12/22/1998
(C) 1998 Vanguard Marketing Corporation, Distributor. All rights reserved.
VANGUARD
MUNICIPAL BOND
FUNDS
VANGUARD TAX-EXEMPT MONEY MARKET FUND
VANGUARD SHORT-TERM TAX-EXEMPT FUND
VANGUARD LIMITED-TERM TAX-EXEMPT FUND
VANGUARD INTERMEDIATE-TERM TAX-EXEMPT FUND
VANGUARD INSURED LONG-TERM TAX-EXEMPT FUND
VANGUARD LONG-TERM TAX-EXEMPT FUND
VANGUARD HIGH-YIELD TAX-EXEMPT FUND
<PAGE> 48
VANGUARD MUNICIPAL BOND FUNDS
FINANCIAL STATEMENTS
OCTOBER 31, 1998 [PHOTO]
The Statement of Net Assets should be read in conjunction with the Statement of
Operations, Statement of Changes in Net Assets, Financial Highlights, and Notes
to Financial Statements, all of which appear in the accompanying report.
STATEMENT OF NET ASSETS
This Statement provides a detailed list of each fund's municipal bond holdings
by state, including each security's market value on the last day of the
reporting period and information on credit enhancements such as insurance or
letters of credit. Other assets are added to, and liabilities are subtracted
from, the value of Total Municipal Bonds to calculate the fund's Net Assets.
Finally, Net Assets are divided by the outstanding shares of the fund to arrive
at its share price, or Net Asset Value (NAV) Per Share.
At the end of the Statement of Net Assets of each fund, you will find a
table displaying the composition of the fund's net assets on both a dollar and
per-share basis. Undistributed Net Investment Income is usually zero because the
fund distributes its net income to shareholders as a dividend each day. Any
realized gains must be distributed annually, so the bulk of net assets consists
of Paid in Capital (money invested by shareholders). The balance shown for
Accumulated Net Realized Gains usually approximates the amount available to
distribute to shareholders as taxable capital gains as of the statement date,
but may differ because certain investments or transactions may be treated
differently for financial statement and tax purposes. Any Accumulated Net
Realized Losses, and any cumulative excess of distributions over net realized
gains, will appear as negative balances. Unrealized Appreciation (Depreciation)
is the difference between the value of the fund's investments and their cost,
and reflects the gains (losses) that would be realized if the fund were to sell
all of its investments at their statement-date values.
<TABLE>
<CAPTION>
- ---------------------------------------------------------
CONTENTS
<S> <C>
Tax-Exempt Money Market Fund.......................... 1
Short-Term Tax-Exempt Fund............................ 10
Limited-Term Tax-Exempt Fund.......................... 16
Intermediate-Term Tax-Exempt Fund..................... 24
Insured Long-Term Tax-Exempt Fund..................... 41
Long-Term Tax-Exempt Fund............................. 48
High-Yield Tax-Exempt Fund............................ 53
Key to Abbreviations.................................. 61
Report of Independent Accountants..................... 62
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (99.4%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA (3.1%)
Alabama Special Care Fac. Finance Auth. of the
City of Montgomery Hosp. Rev. VRDO 3.15% 11/4/1998 (3) $ 19,200 $ 19,200
Birmingham AL GO VRDO 3.00% 11/4/1998 (2) LOC 30,500 30,500
Birmingham AL GO VRDO 3.10% 11/5/1998 LOC 21,200 21,200
Birmingham AL GO VRDO 3.125% 11/4/1998 LOC 28,900 28,900
Huntsville AL Health Care Auth. VRDO 3.05% 11/4/1998 (1) 38,300 38,300
Mobile AL IDR VRDO (Kimberly-Clark Tissue Co. Project) 3.15% 11/4/1998 33,550 33,550
Mobile AL Port City Clinic Board (Infirmary Health System Inc.) 3.40% 12/8/1998 (2) 24,000 24,000
----------
195,650
----------
ALASKA (3.2%)
Alaska Housing Finance Corp. VRDO 3.10% 11/4/1998 47,400 47,400
Alaska Housing Finance Corp. VRDO 3.15% 11/4/1998 85,400 85,400
Alaska Housing Finance Corp. TOB VRDO 3.30% 11/5/1998 7,210 7,210
Anchorage AK Electric Util. Rev. VRDO (Muni. Light & Power) 3.10% 11/4/1998 LOC 17,500 17,500
</TABLE>
1
<PAGE> 49
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Valdez AK Marine Terminal VRDO (Exxon Pipeline Project) 3.70% 11/3/1998 $ 13,800 $ 13,800
Valdez AK Marine Terminal VRDO
(Mobil Alaska Pipeline Co. Project) 3.15% 11/4/1998 28,350 28,350
----------
199,660
----------
ARIZONA (1.1%)
Arizona Health Fac. Auth. VRDO (Samaritan Health Services) 3.05% 11/5/1998 (3) 17,415 17,415
Arizona State Transp. Board Department of Transp. Rev.
(Maricopa County Regional) 4.50% 7/1/1999 17,600 17,704
Maricopa County AZ PCR VRDO (Arizona Public Service Co.) 3.70% 11/3/1998 LOC 2,000 2,000
Scottsdale AZ IDA Hosp. Rev. VRDO
(Scottsdale Memorial Health Systems) 3.05% 11/4/1998 (2) 30,000 30,000
----------
67,119
----------
ARKANSAS (0.5%)
Arkansas Dev. Finance Auth. Health Care Fac. VRDO
(Sisters of Mercy) 3.10% 11/5/1998 10,700 10,700
Univ. of Arkansas Board of Trustees Rev. VRDO 3.20% 11/4/1998 (1) 20,000 20,000
----------
30,700
----------
CALIFORNIA (7.0%)
California Financial Auth. PCR VRDO (Pacific Gas & Electric) 3.60% 11/3/1998 LOC 10,700 10,700
California Higher Educ. Loan Auth. Student Loan Rev. PUT 3.65% 7/1/1999 LOC 10,000 10,000
California Higher Educ. Loan Auth. Student Loan Rev. PUT 3.80% 5/1/1999 LOC 59,800 59,800
California Higher Educ. Loan Auth. Student Loan Rev. VRDO 3.15% 11/4/1998 LOC 38,550 38,550
Los Angeles City CA TRAN 4.00% 6/30/1999 55,000 55,156
Los Angeles County CA Schools Pooled Finance Program Trust
TOB VRDO 3.40% 11/4/1998 77,745 77,745
Sacramento County CA Board of Educ. TOB VRDO 3.40% 11/4/1998 65,700 65,700
San Bernardino County CA TRAN 4.50% 9/30/1999 16,500 16,678
San Diego CA Unified School Dist. TRAN 4.50% 10/1/1999 35,000 35,327
San Diego County CA TRAN 4.50% 9/30/1999 56,500 57,109
Santa Clara CA Unified School Dist. TRAN 4.25% 10/1/1999 9,000 9,078
----------
435,843
----------
COLORADO (2.5%)
Colorado TRAN 4.00% 6/25/1999 45,000 45,121
Denver CO City, County Airport Rev. VRDO 3.15% 11/5/1998 LOC 21,000 21,000
El Paso County CO School Dist. TAN 4.00% 6/30/1999 21,500 21,585
Jefferson County CO School Dist. TAN 4.00% 6/30/1999 35,000 35,193
Jefferson County CO TOB VRDO 3.30% 11/5/1998 8,995 8,995
Regional Transp. Dist. of Colorado COP VRDO
(Transit Vehicles Project) 3.20% 11/5/1998 LOC 24,480 24,480
----------
156,374
----------
FLORIDA (7.8%)
Dade County FL Sales Tax Rev. 5.00% 10/1/1999 7,195 7,296
Dade County FL School Dist. 7.375% 7/1/1999 (Prere.) 19,600 20,449
Dade County FL Water & Sewer System Rev. TOB VRDO 3.20% 11/5/1998 (3) 24,000 24,000
Dade County FL Water & Sewer System Rev. VRDO 3.05% 11/4/1998 (3) 72,050 72,050
Florida Dept. of Environmental Protection Preservation 2000 TOB VRDO 3.30% 11/5/1998 (3) 17,930 17,930
Florida Hosp. Assn. Loan Program VRDO (Capital Projects Auth.) 3.25% 11/4/1998 (4) 86,800 86,800
Florida Inland Protection Finance Corp. Special Obligation Rev. 4.25% 7/1/1999 15,225 15,309
Gulf Breeze FL Local Govt. Loan Program VRDO 3.10% 11/5/1998 (3) 37,235 37,235
Hillsborough County FL IDA PCR Rev. VRDO
(Tampa Electric Co. Project) 3.70% 11/3/1998 8,500 8,500
Jacksonville FL PCR CP (Florida Power & Light Co. Project) 3.55% 11/13/1998 9,700 9,700
Jacksonville FL PCR VRDO (Florida Power & Light Co. Project) 3.70% 11/3/1998 15,590 15,590
Lee County FL Hosp. Board CP (Lee Memorial Hosp. Project) 3.05% 3/8/1999 7,000 7,000
Lee County FL Hosp. Board CP (Lee Memorial Hosp. Project) 3.15% 2/19/1999 29,500 29,500
Lee County FL Hosp. Board CP (Lee Memorial Hosp. Project) 3.65% 12/14/1998 50,800 50,800
Orange County FL Health Fac. Auth. VRDO
(Adventist Health System/Sunbelt) 3.10% 11/5/1998 LOC 44,500 44,500
St. Lucie County FL PCR CP (Florida Power & Light Co.) 3.60% 12/18/1998 5,000 5,000
Sunshine State FL Govt. Fin. Comm. CP 3.25% 2/16/1999 (2) 35,200 35,200
----------
486,859
----------
</TABLE>
2
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GEORGIA (3.3%)
Burke County GA Dev. Auth. PCR VRDO (Georgia Power Co.) 3.65% 11/3/1998 $ 9,300 $ 9,300
Burke County GA Dev. Auth. PCR VRDO (Georgia Power Co.) 3.70% 11/3/1998 9,000 9,000
Burke County GA Dev. Auth. PCR VRDO
(Georgia Power Co. Plant Vogtle Project) 3.70% 11/3/1998 6,500 6,500
Burke County GA Dev. Auth. PCR VRDO (Oglethorpe Power Corp.) 3.05% 11/4/1998 (3) 32,220 32,220
Burke County GA Dev. Auth. PCR VRDO (Oglethorpe Power Corp.) 3.05% 11/4/1998 (3) 17,450 17,450
Fulco GA Hosp. Auth. RAN Certificates VRDO
(Shepherd Center Project) 3.10% 11/4/1998 LOC 7,300 7,300
Fulton County GA Water & Sewerage TOB VRDO 3.30% 11/5/1998 (4) 6,010 6,010
Georgia GO 7.20% 3/1/1999 9,650 9,763
Macon-Bibb County GA Hosp. Auth Rev. VRDO
(Medical Center of Central Georgia) 3.15% 11/4/1998 LOC 5,000 5,000
Muni. Electric Auth. of Georgia CP (Subordinate Bonds Project) 3.40% 11/2/1998 LOC 6,000 6,000
Muni. Electric Auth. of Georgia CP (Subordinate Bonds Project) 3.55% 11/13/1998 LOC 25,000 25,000
Muni. Electric Auth. of Georgia VRDO (Sublien Bonds Project) 3.25% 11/4/1998 LOC 4,600 4,600
Muni. Gas Auth. of Georgia Rev. VRDO 3.05% 11/4/1998 LOC 13,300 13,300
Muni. Gas Auth. of Georgia Rev. VRDO (Agency Project) 3.25% 11/4/1998 LOC 54,100 54,100
----------
205,543
----------
HAWAII (0.4%)
Hawaii GO 5.00% 11/1/1998 16,000 16,000
Hawaii GO TOB VRDO 3.30% 11/5/1998 (1) 4,260 4,260
Hawaii Highway Rev. TOB VRDO 3.30% 11/5/1998 (3) 6,835 6,835
----------
27,095
----------
IDAHO (0.7%)
Idaho TAN 4.50% 6/30/1999 40,000 40,231
----------
ILLINOIS (7.2%)
Bi-State Dev. Agency of the Missouri-Illinois Metro. Dist. VRDO
(St. Clair County Metrolink Extension) 3.00% 11/5/1998 (1) 80,000 80,000
Chicago IL Park Dist. TAN 4.30% 9/17/1999 15,000 15,095
Chicago IL VRDO (Midway Airport Series) 3.85% 11/3/1998 (1) 42,800 42,800
Cook County IL GO TOB VRDO 3.30% 11/5/1998 (3) 4,995 4,995
Cook County IL GO TOB VRDO (Captital Improvement Series) 3.30% 11/5/1998 (3) 10,605 10,605
Illinois Dev. Finance Auth. PCR VRDO (Illinois Power Co. Project) 3.15% 11/4/1998 LOC 13,900 13,900
Illinois Dev. Finance Auth. VRDO (Provena Health) 3.10% 11/4/1998 (1) 40,000 40,000
Illinois Dev. Finance Auth. VRDO (Provena Health) 3.70% 11/3/1998 (1) 8,300 8,300
Illinois Educ. Fac. VRDO (DePaul Univ.) 3.10% 11/4/1998 LOC 33,000 33,000
Illinois Health Fac. Auth. PUT (Evanston Hosp. Corp.) 3.55% 8/16/1999 21,000 21,000
Illinois Health Fac. Auth. VRDO (Hosp. Sisters Service) 3.20% 11/4/1998 (1) 23,500 23,500
Illinois Health Fac. Auth. VRDO (Pooled Finance) 3.10% 11/4/1998 LOC 10,500 10,500
Illinois Health Fac. Auth. VRDO (Univ. of Chicago Hosp.
and Health Systems) 3.70% 11/3/1998 (1) 26,500 26,500
Illinois Health Fac. Auth. VRDO (Univ. of Chicago Hosp. Project) 3.05% 11/4/1998 (1) 21,000 21,000
Illinois Toll Highway Auth. Rev. VRDO 3.05% 11/4/1998 (1) LOC 85,600 85,600
Schaumburg IL VRDO 3.15% 11/4/1998 10,800 10,800
----------
447,595
----------
INDIANA (2.8%)
Delaware County IN Hosp. Auth. VRDO (Cardinal Health Systems) 3.10% 11/4/1998 (2) 40,000 40,000
Indiana Educ. Fac. Auth. VRDO (Univ. of Notre Dame du Lac Project) 3.05% 11/5/1998 13,100 13,100
Indiana Health Fac. Finance Auth. Hosp. Rev. VRDO
(Charity Obligated Group - Daughters of Charity
National Health Systems) 3.05% 11/4/1998 37,200 37,200
Indiana Health Fac. Finance Auth. Hosp. Rev. VRDO
(Clarian Health Partners) 3.15% 11/4/1998 58,500 58,500
Indiana Muni. Power Agency VRDO 3.10% 11/4/1998 LOC 10,000 10,000
Purdue Univ. Student Fee Bonds VRDO 3.10% 11/4/1998 3,300 3,300
St. Joseph County IN VRDO
(Univ. of Notre Dame du Lac Project) 3.05% 11/5/1998 14,000 14,000
----------
176,100
----------
</TABLE>
3
<PAGE> 51
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IOWA (0.3%)
Iowa Finance Auth. VRDO (Wheaton Franciscan Services Inc.) 3.20% 11/4/1998 (1) $ 10,000 $ 10,000
Iowa State School Cash Anticipation Program 4.25% 1/28/1999 (4) 10,000 10,016
----------
20,016
----------
KANSAS (0.3%)
Wichita KS Temporary Notes 4.00% 2/25/1999 20,700 20,726
----------
KENTUCKY (1.8%)
Kentucky Econ. Dev. Finance Auth. Hosp. Rev. VRDO
(Baptist Healthcare System Obligation Group) 3.05% 11/4/1998 LOC 83,750 83,750
Kentucky Econ. Dev. Finance Auth. Hosp. Rev. VRDO
(Health Alliance of Greater Cincinnati) 3.20% 11/4/1998 (1) 30,300 30,300
----------
114,050
----------
LOUISIANA (0.6%)
Louisiana Public Fac. Auth. Rev. CP (Sisters of Charity) 3.00% 2/18/1999 4,100 4,100
Louisiana Public Fac. Auth. Rev. VRDO (Sisters of Charity) 3.20% 11/4/1998 34,300 34,300
----------
38,400
----------
MAINE (0.2%)
Maine Health & Higher Educ. Fac. Auth. VRDO (Bowdoin College) 3.15% 11/4/1998 LOC 13,300 13,300
----------
MARYLAND (1.9%)
Frederick County MD Consolidated Public Improvement VRDO 3.10% 11/4/1998 59,600 59,600
Maryland GO TOB VRDO 3.30% 11/5/1998 5,000 5,000
Maryland Health & Higher Educ. Fac. Auth. Hosp. Rev. VRDO
(Charity Obligated Group-Daughters of Charity
National Health Systems) 3.05% 11/4/1998 29,100 29,100
Maryland Health & Higher Educ. Fac. Auth. Hops. Rev. TOB VRDO
(Johns Hopkins Univ.) 3.35% 11/5/1998 5,035 5,035
Washington MD Suburban Sanitation Dist. VRDO 3.10% 11/4/1998 20,000 20,000
----------
118,735
----------
MASSACHUSETTS (1.4%)
Massachusetts Bay Transp. Auth. Notes 4.25% 2/26/1999 25,000 25,051
Massachusetts GO 5.50% 7/1/1999 10,050 10,170
Massachusetts Turnpike Auth. BAN 5.00% 6/1/1999 (ETM) 34,050 34,315
Sudbury MA BAN 4.00% 8/11/1999 15,300 15,345
----------
84,881
----------
MICHIGAN (2.8%)
Detroit MI City School Dist. State School Aid TRAN 4.50% 7/1/1999 30,000 30,164
Grand Rapids MI Sanitary Sewer System
Improvement and Refunding TOB VRDO 3.30% 11/5/1998 (3) 5,260 5,260
Michigan Hosp. Finance Auth. Rev. VRDO (Charity Obligated Group-
Daughters of Charity National Health Systems) 3.05% 11/4/1998 16,795 16,795
Michigan Housing Dev. Auth. Rental Rev. VRDO 3.05% 11/4/1998 LOC 42,100 42,100
Michigan Muni. Bond Auth. Notes 4.25% 8/27/1999 35,000 35,186
Oakland County MI Econ. Dev. Corp. VRDO (Cranbrook Educ. Comm.) 3.15% 11/5/1998 6,500 6,500
Royal Oak MI Finance Auth. Hosp. Rev. VRDO
(William Beaumont Hosp.) 3.70% 11/3/1998 3,400 3,400
Univ. of Michigan Hosp. Rev. VRDO 3.75% 11/3/1998 11,545 11,545
Univ. of Michigan Hosp. Rev. VRDO (Medical Service Plan) 3.75% 11/3/1998 24,450 24,450
----------
175,400
----------
MINNESOTA (0.1%)
Canby MN Community Hosp. Dist. #1 Yellow Medicine County VRDO
(Sioux Valley Hosp. & Health Systems) 3.20% 11/6/1998 3,805 3,805
----------
MISSISSIPPI (0.1%)
Mississippi GO 5.00% 11/1/1998 3,730 3,730
----------
</TABLE>
4
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSOURI (3.1%)
Kansas City MO School Dist. Building Corp. 10.50% 2/1/1999 (3) $ 7,545 $ 7,671
Missouri Environmental Improvement & Energy Resources Auth.
PCR CP (Union Electric Co.) 3.00% 2/11/1999 LOC 4,600 4,600
Missouri Environmental Improvement & Energy Resources Auth.
PCR CP (Union Electric Co.) 3.65% 3/12/1999 LOC 11,655 11,655
Missouri Health & Educ. Fac. Auth. VRDO
(Sisters of Mercy Health Care System) 3.10% 11/4/1998 40,800 40,800
Missouri Health & Educ. Fac. Auth. VRDO
(Sisters of Mercy Health Care System) 3.10% 11/5/1998 66,700 66,700
Missouri Health & Educ. Fac. Auth. VRDO (Washington Univ.) 3.70% 11/3/1998 32,400 32,400
Missouri Health & Educ. Finance Auth. VRDO
(St. Anthony's Medical Center) 3.10% 11/4/1998 32,200 32,200
----------
196,026
----------
NEVADA (2.1%)
Clark County NV Airport Improvement Rev. VRDO
(McCarran International Airport) 3.05% 11/4/1998 LOC 17,710 17,710
Clark County NV Airport System Refunding Rev. VRDO
(McCarran International Airport) 3.05% 11/4/1998 (1) 8,693 8,693
Clark County NV Airport System Refunding Rev. VRDO
(McCarran International Airport) 3.25% 11/4/1998 (1) 21,000 21,000
Las Vegas NV Valley Water Dist. CP 2.95% 3/18/1999 LOC 13,000 13,000
Las Vegas NV Valley Water Dist. CP 3.00% 2/10/1999 LOC 25,000 25,000
Las Vegas NV Valley Water Dist. CP 3.20% 2/23/1999 LOC 5,000 5,000
Las Vegas NV Valley Water Dist. CP 3.35% 11/2/1998 LOC 42,500 42,500
----------
132,903
NEW HAMPSHIRE (0.4%)
New Hampshire Higher Educ. & Health Fac. Auth. VRDO
(St. Paul's School) 3.10% 11/5/1998 LOC 25,000 25,000
----------
NEW MEXICO (1.5%)
Hurley NM PCR VRDO
(Kennecott Sante Fe Corp. Project British Petroleum) 3.70% 11/3/1998 31,200 31,200
New Mexico Finance Auth. Adminstrative Fee Rev. VRDO
(Trims Project) 3.20% 11/4/1998 LOC 4,200 4,200
New Mexico Highway Comm. VRDO 3.05% 11/4/1998 (4) 19,100 19,100
New Mexico TRAN 4.25% 6/30/1999 39,000 39,163
----------
93,663
----------
NEW YORK (3.9%)
New York City NY Custodial Receipt TOB VRDO 3.35% 11/5/1998 (3) 4,000 4,000
New York City NY Muni. Water Finance Auth. CP 3.10% 1/21/1999 LOC 18,700 18,700
New York City NY Muni. Water Finance Auth. CP 3.30% 1/21/1999 LOC 15,000 15,000
New York City NY Muni. Water Finance Auth. CP 3.35% 1/21/1999 LOC 79,300 79,300
New York City NY Muni. Water Finance Auth. CP 3.60% 11/5/1998 LOC 8,000 8,000
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 3.70% 11/3/1998 (3) 37,630 37,630
New York Medical Care Fac. Fin. Agency TOB VRDO 3.30% 11/5/1998 (3) 5,920 5,920
New York Metro. Transp. Auth. TOB VRDO 3.30% 11/5/1998 (3) 5,700 5,700
New York State Dormitory Auth. Rev. TOB VRDO (City Univ.) 3.30% 11/5/1998 (1) 19,995 19,995
New York State Environmental Fac. Corp. TOB VRDO
(New York City Muni. Water Financial Auth. Project) 3.30% 11/5/1998 (1) 11,180 11,180
New York State Environmental Fac. PCR TOB VRDO 3.30% 11/5/1998 (1) 10,670 10,670
New York State Local Govt. Assistance Corp. TOB VRDO 3.30% 11/5/1998 (2) 9,070 9,070
New York State Power Auth. CP 3.40% 11/2/1998 9,500 9,500
New York State Urban Dev. Corp. Capital Fac. Rev. TOB VRDO 3.30% 11/5/1998 (4) 7,995 7,995
----------
242,660
----------
NORTH CAROLINA (3.4%)
Charlotte NC Airport Refunding Rev. VRDO 3.05% 11/4/1998 (1) 22,210 22,210
Mecklenburg County NC GO 4.20% 2/1/1999 5,000 5,008
</TABLE>
5
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mecklenburg County NC VRDO 3.05% 11/5/1998 21,800 21,800
North Carolina Educ. Fac. Finance Auth. VRDO
(Bowman Gray School of Medicine Project) 3.15% 11/4/1998 LOC 11,000 11,000
North Carolina Educ. Fac. Finance Auth. VRDO (Duke Univ.) 3.05% 11/5/1998 36,700 36,700
North Carolina Medical Care Comm. Hosp. Rev. VRDO
(Duke Univ. Hosp. Project) 3.05% 11/5/1998 22,900 22,900
North Carolina Medical Care Comm. Hosp. Rev. VRDO
(Moses H. Cone Memorial Hosp. Project) 3.25% 11/5/1998 19,500 19,500
North Carolina Medical Care Comm. Hosp. Rev. VRDO
(North Carolina Baptist Hosp. Project) 3.00% 11/5/1998 41,000 41,000
Wake County NC Industrial Fac. & Pollution Control Finance Auth.
VRDO (Carolina Power & Light) 3.15% 11/4/1998 LOC 24,700 24,700
Winston-Salem NC COP VRDO 3.05% 11/5/1998 8,850 8,850
----------
213,668
----------
OHIO (6.2%)
Cincinnati OH Student Loan Funding Corp. Student Loan Rev. VRDO 3.10% 11/4/1998 LOC 11,225 11,225
Clermont County OH Hosp. Rev. VRDO (Mercy Health Systems) 3.10% 11/4/1998 86,100 86,100
Cuyahoga County OH Hosp. Rev. Refunding VRDO
(Cleveland Clinic Health System Obligated Group) 3.15% 11/4/1998 30,000 30,000
Cuyahoga County OH Hosp. Rev. VRDO
(Cleveland Clinic Foundation) 3.10% 11/4/1998 LOC 30,830 30,830
Cuyahoga County OH Hosp. Rev. VRDO
(Cleveland Clinic Foundation) 3.15% 11/4/1998 43,000 43,000
Cuyahoga County OH Hosp. Rev. VRDO
(Cleveland Clinic Foundation) 3.15% 11/4/1998 15,300 15,300
Franklin County OH Hosp. Rev. VRDO (U.S. Health Corp.) 3.10% 11/5/1998 LOC 12,360 12,360
Hamilton County OH Hosp. Fac. Rev. VRDO
(Health Alliance of Greater Cincinnati) 3.10% 11/4/1998 (1) 77,550 77,550
Lorain County OH Hosp. Fac. Rev. VRDO
(Catholic Healthcare Partners) 3.10% 11/4/1998 10,000 10,000
Montgomery County OH VRDO (Catholic Health Intiatives) 3.00% 11/4/1998 37,800 37,800
Ohio Air Quality Dev. Auth. PCR (Duquesne Light Co.) 3.65% 7/1/1999 LOC 10,500 10,500
Ohio Air Quality Dev. Auth. VRDO (Cincinnati Gas & Electric
Co. Project) 3.65% 11/3/1998 LOC 8,100 8,100
Ohio Air Quality Dev. Auth. VRDO (Cincinnati Gas & Electric
Co. Project) 3.70% 11/3/1998 LOC 7,100 7,100
Ohio School Dist. Cash Flow Borrowing Program COP TAN 4.05% 6/30/1999 10,000 10,029
----------
389,894
----------
OKLAHOMA (0.9%)
Garfield County OK IDA PCR VRDO
(Oklahoma Gas & Electric Co. Project) 3.20% 11/4/1998 40,300 40,300
Oklahoma Student Loan Auth. VRDO 3.15% 11/4/1998 (1) 8,000 8,000
Oklahoma Turnpike Auth. TOB VRDO 3.35% 11/5/1998 (3) 4,495 4,495
----------
52,795
----------
OREGON (1.4%)
Oregon Health Housing Educ. & Cultural Fac. Auth. VRDO
(Peacehealth) 3.10% 11/5/1998 LOC 15,085 15,085
Oregon Veterans Welfare Program VRDO 3.15% 11/4/1998 LOC 33,900 33,900
Oregon Veterans Welfare Program VRDO 3.30% 11/4/1998 LOC 40,195 40,195
----------
89,180
----------
PENNSYLVANIA (1.5%)
Delaware County PA IDA PCR CP (PECO) 3.00% 3/1/1999 LOC 16,600 16,600
Lehigh County PA General Purpose Auth. Hosp. Rev. VRDO
(Lehigh Valley Hosp.) 3.60% 11/3/1998 11,000 11,000
Pennsylvania Higher Educ. Fac. Auth. Rev. VRDO
(Carnegie Mellon Univ.) 3.70% 11/3/1998 7,950 7,950
Philadelphia PA Hosp. & Higher Educ. Fac. Auth. VRDO
(Children's Hosp. Project) 3.70% 11/3/1998 3,760 3,760
Philadelphia PA School Dist. TRAN 4.25% 6/30/1999 LOC 28,000 28,111
Sayre PA Health Care Fac. Auth. VRDO
(VHA of Pennsylvania, Pooled Capital Asset Financial Program) 3.25% 11/4/1998 (2) 22,535 22,535
Washington County PA Higher Educ. VRDO
(Pooled Equipment Lease Program) 3.20% 11/4/1998 LOC 4,000 4,000
----------
93,956
----------
</TABLE>
6
<PAGE> 54
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOUTH DAKOTA (0.2%)
South Dakota Health & Educ. Fac. Auth. VRDO
(Sioux Valley Hospitals & Health System) 3.20% 11/6/1998 $ 10,430 $ 10,430
----------
TENNESSEE (2.1%)
Metro. Govt. of Nashville & Davidson County TN Health &
Educ. PUT (Vanderbilt Univ.) 3.75% 1/15/1999 7,000 7,000
Metro. Govt. of Nashville & Davidson County TN TOB VRDO
(Vanderbilt Univ.) 3.30% 11/5/1998 4,450 4,450
Metro. Govt. of Nashville TN Airport Auth. Improvement
Refunding VRDO 3.25% 11/4/1998 (3) LOC 36,600 36,600
Shelby County TN BAN CP 3.20% 2/19/1999 5,000 5,000
Shelby County TN BAN CP 3.40% 12/7/1998 10,000 10,000
Shelby County TN CP 3.45% 12/17/1998 5,000 5,000
Shelby County TN CP 3.50% 12/17/1998 14,500 14,500
Shelby County TN TAN CP 3.55% 12/10/1998 11,000 11,000
Shelby County TN TAN CP 3.60% 12/9/1998 24,500 24,500
Tennessee GO 5.00% 5/1/1999 10,070 10,129
----------
128,179
----------
TEXAS (12.3%)
Austin TX (Travis & Williamson Counties) Combined Util. Systems CP 3.40% 12/8/1998 LOC 5,000 5,000
Austin TX (Travis & Williamson Counties) Combined Util. Systems CP 3.55% 2/23/1999 LOC 5,908 5,908
Gulf Coast TX Waste Disposal Auth. PCR VRDO (Amoco Oil Project) 3.70% 11/3/1998 6,300 6,300
Gulf Coast TX Waste Disposal Auth. PCR VRDO (Exxon Project) 3.70% 11/3/1998 9,247 9,247
Harris County TX GO CP 3.40% 12/8/1998 8,386 8,386
Harris County TX Health Fac. Dev. Corp. CP (Sisters of Charity) 3.00% 2/11/1999 4,000 4,000
Harris County TX Health Fac. Dev. Corp. CP (Sisters of Charity) 3.40% 12/7/1998 7,400 7,400
Harris County TX Health Fac. Dev. Corp. Hosp. Rev. VRDO
(Methodist Hosp.) 3.70% 11/3/1998 20,700 20,700
Harris County TX Health Fac. Dev. Corp. Medical Fac. VRDO
(Baylor College of Medicine) 3.25% 11/4/1998 31,000 31,000
Harris County TX Health Fac. Dev. Corp. VRDO (Sisters of Charity) 3.20% 11/4/1998 39,900 39,900
Harris County TX Health Fac. Dev. Corp. VRDO
(St. Lukes Episcopal Hosp.) 3.65% 11/3/1998 149,780 149,780
Harris County TX Health Fac. Dev. Corp. VRDO
(Texas Children's Hosp.) 3.25% 11/4/1998 32,400 32,400
Harris County TX IDA VRDO (Shell Oil Co. Project) 3.70% 11/3/1998 10,200 10,200
Harris County TX TAN 4.25% 2/26/1999 102,000 102,225
Harris County TX Toll Road VRDO 3.10% 11/4/1998 2,900 2,900
Harris County TX Toll Road VRDO 3.15% 11/4/1998 31,700 31,700
Houston TX GO CP 3.45% 12/11/1998 4,500 4,500
Houston TX Water & Sewer System Rev. 5.80% 12/1/1998 (2) 4,650 4,658
Katy TX Independent School Dist. VRDO 3.15% 11/5/1998 24,100 24,100
Midland TX Independent School Dist. VRDO 3.15% 11/5/1998 14,600 14,600
North Central TX Health Fac. Dev. Corp. VRDO
(Presbyterian Medical Center) 3.65% 11/3/1998 (1) 20,305 20,305
North Harris TX Montgomery Community College Dist. VRDO 3.15% 11/5/1998 (3) 16,215 16,215
Pasadena TX Independent School Dist. VRDO 3.15% 11/5/1998 19,100 19,100
Plano TX Independent School Dist. 3.65% 3/4/1999 19,460 19,460
Red River TX Auth. PCR VRDO (Southwest Public Service) 3.25% 11/5/1998 (2) 20,000 20,000
Richardson TX Independent School Dist. VRDO 3.15% 11/5/1998 4,900 4,900
San Antonio TX Electric & Gas System Rev. 7.00% 2/1/1999 (Prere.) 3,105 3,176
Southwest Higher Educ. Auth. TX VRDO (Southern Methodist Univ.) 3.70% 11/3/1998 LOC 11,200 11,200
Texas TOB VRDO 3.95% 11/3/1998 20,000 20,000
Texas TRAN 4.50% 8/31/1999 120,000 121,041
----------
770,301
----------
UTAH (4.3%)
Emery County UT PCR VRDO (PacifiCorp Project) 3.05% 11/4/1998 LOC 35,500 35,500
Intermountain Power Agency of Utah Power Supply Rev. TOB VRDO 3.30% 11/5/1998 (1) 6,495 6,495
Intermountain Power Agency of Utah TOB VRDO 3.20% 11/5/1998 (1) 37,600 37,600
</TABLE>
7
<PAGE> 55
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salt Lake City UT Rev. VRDO (Pooled Hosp. Finance Program) 3.15% 11/4/1998 $ 43,500 $ 43,500
Utah GO 4.40% 7/1/1999 4,700 4,724
Utah Highway GO CP 3.30% 2/25/1999 8,300 8,300
Utah Highway GO CP 3.40% 12/16/1998 20,000 20,000
Utah Highway GO CP 3.55% 11/10/1998 5,000 5,000
Utah Highway GO CP 3.55% 12/16/1998 30,000 30,000
Utah Highway GO CP 3.55% 12/18/1998 26,000 26,000
Utah Transit Auth. Sales Tax and Transp. VRDO
(Salt Lake County Light Rail Transit "TRAX" Program) 3.00% 11/5/1998 50,800 50,800
----------
267,919
----------
VIRGINIA (0.4%)
Fairfax County VA IDA Rev. VRDO (Fairfax Hosp. System) 3.10% 11/4/1998 25,350 25,350
----------
WASHINGTON (2.0%)
King County WA TAN 4.00% 6/1/1999 15,000 15,051
Seattle WA Muni. Light & Power VRDO 3.05% 11/4/1998 5,000 5,000
Seattle WA Muni. Light & Power VRDO 3.15% 11/4/1998 30,700 30,700
Seattle WA Water System Rev. VRDO 3.15% 11/4/1998 LOC 19,800 19,800
Snohomish County WA Public Util. Dist. Generation System Rev.
TOB VRDO 3.30% 11/5/1998 (1) 4,995 4,995
Washington GO VRDO 3.00% 11/4/1998 21,600 21,600
Washington GO VRDO 3.08% 11/4/1998 17,100 17,100
Washington Health Care Fac. Auth. Rev. VRDO
(Virginia Mason Medical Center) 3.65% 11/3/1998 (1) 6,370 6,370
Washington Motor Vehicle Fuel Tax GO 5.30% 9/1/1999 5,000 5,066
----------
125,682
----------
WEST VIRGINIA (0.4%)
Putnam WV Solid Waste Disposal Rev. VRDO
(Toyota Manufacturing Corp.) 3.15% 11/4/1998 27,400 27,400
----------
WISCONSIN (4.2%)
Milwaukee WI Ind. Dev. VRDO (Wisconsin Electric
Power Co. Project) 3.05% 11/5/1998 10,000 10,000
Oak Creek City WI VRDO (Wisconsin Electric Power Co. Project) 3.15% 11/4/1998 47,100 47,100
Univ. of Wisconsin Hosp. & Clinics Auth. Rev. VRDO
(Univ. of Wisconsin Hosp.) 3.10% 11/4/1998 (1) 16,500 16,500
Village of Pleasant Prairie WI PCR VRDO
(Wisconsin Electric Power Co. Project) 3.05% 11/5/1998 23,500 23,500
Wisconsin CP 3.45% 12/17/1998 4,018 4,018
Wisconsin GO 4.125% 11/1/1998 33,625 33,625
Wisconsin Health & Educ. Fac. Auth. Hosp. Rev. VRDO
(Charity Obligated Group-Daughters of Charity
National Health Systems) 3.05% 11/4/1998 15,000 15,000
Wisconsin Health & Educ. Fac. Auth. VRDO (Wausau Hosp.) 3.10% 11/4/1998 (2) 20,000 20,000
Wisconsin Health & Educ. Fac. Auth. VRDO
(Wheaton Franciscan Services) 3.20% 11/5/1998 LOC 23,700 23,700
Wisconsin Operating Notes TRAN 4.50% 6/15/1999 40,400 40,630
Wisconsin State Dept. of Transp. Rev. CP 3.40% 12/1/1998 LOC 15,852 15,852
Wisconsin State Dept. of Transp. Rev. CP 3.40% 12/8/1998 LOC 9,947 9,947
----------
259,872
----------
WYOMING
Lincoln County WY PCR VRDO (Exxon Project) 3.70% 11/3/1998 2,000 2,000
----------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $6,208,690) 6,208,690
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 56
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
(000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS AND LIABILITIES (0.6%)
- -------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B $ 59,436
Liabilities (22,365)
----------
37,071
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- -------------------------------------------------------------------------------------------------------------------------
Applicable to 6,246,354,709 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $6,245,761
=========================================================================================================================
NET ASSET VALUE PER SHARE $1.00
=========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
For key to abbreviations and other references, see page 61.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AT OCTOBER 31, 1998, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $6,246,369 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized Losses--Note E (608) --
Unrealized Appreciation -- --
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS $6,245,761 $1.00
=========================================================================================================================
</TABLE>
9
<PAGE> 57
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
SHORT-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (99.6%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALASKA (2.5%)
Alaska Housing Finance Corp. VRDO 3.15% 11/4/1998 $27,100 $ 27,100
North Slope Borough AK GO 0.00% 1/1/2002 (1) 7,650 6,766
North Slope Borough AK GO 7.15% 7/1/1999 (1) 5,670 5,831
Valdez AK Marine Terminal VRDO (Exxon Pipeline Project) 3.70% 11/3/1998 1,100 1,100
----------
40,797
----------
ARIZONA (0.9%)
Maricopa County AZ School Dist. 0.00% 7/1/1999 (3) 7,530 7,374
Salt River AZ Agricultural Refunding (Salt River Project) 5.50% 1/1/2000 7,375 7,557
----------
14,931
----------
CALIFORNIA (14.2%)
California Dept. of Water (Central Valley Project) 8.75% 12/1/2000 4,540 5,032
California Higher Educ. Loan Auth. Student Loan Rev. VRDO 3.15% 11/4/1998 LOC 500 500
Kern County CA TRAN 4.25% 10/1/1999 20,000 20,231
Livermore Valley CA Joint Unified School Dist. TRAN 4.50% 12/30/1998 8,000 8,020
Los Angeles County CA Public Works Finance Auth. 6.00% 9/1/1999 (1) 21,080 21,633
Los Angeles County CA Public Works Finance Auth.
(Regional Park & Open Space Dist.) 5.00% 10/1/1999 23,335 23,788
Mount Diablo CA Unified School Dist. TRAN 4.75% 1/28/1999 13,800 13,863
Riverside County CA TRAN 4.50% 9/30/1999 25,000 25,343
San Bernardino County CA TRAN 4.50% 9/30/1999 9,000 9,133
San Diego City CA TAN 4.50% 9/30/1999 26,000 26,397
San Juan CA Unified School Dist. TRAN 4.25% 12/30/1998 25,000 25,036
Santa Barbara County CA TRAN 4.50% 10/1/1999 30,000 30,413
Santa Clara County CA TRAN 4.50% 10/1/1999 25,000 25,383
----------
234,772
----------
COLORADO (1.4%)
Jefferson County CO School Dist. GO 5.00% 12/15/1998 (1) 6,235 6,250
Jefferson County CO School Dist. GO 5.00% 12/15/2001 (3) 5,800 6,041
Jefferson County CO School Dist. GO 5.00% 12/15/2002 (3) 4,500 4,725
Platte River Power Auth. Rev. CO 5.00% 6/1/2000 (1) 5,000 5,121
----------
22,137
----------
CONNECTICUT (1.9%)
Connecticut GO 5.65% 11/15/1998 2,500 2,503
Connecticut Special Assessment Unemployment Compensation 5.50% 5/15/2000 (2) 17,500 18,066
Connecticut Special Tax Obligation Rev. (Transp. Infrastructure) 4.00% 10/1/1999 11,000 11,112
----------
31,681
----------
DISTRICT OF COLUMBIA (2.8%)
District of Columbia GO 0.00% 6/1/1999 (1) 5,000 4,908
District of Columbia GO 0.00% 6/1/2000 (1) 6,900 6,514
District of Columbia GO 5.50% 6/1/1999 10,610 10,740
District of Columbia GO 5.50% 6/1/1999 (ETM) 1,490 1,511
District of Columbia GO 5.90% 6/1/2000 (1) 9,860 10,216
District of Columbia GO 5.90% 6/1/2000 (1)(ETM) 245 254
District of Columbia GO 6.00% 6/1/2001 (1) 7,920 8,352
District of Columbia GO 6.00% 6/1/2001 (1)(ETM) 195 206
District of Columbia GO 7.10% 6/1/2000 (4) 3,535 3,725
District of Columbia GO 7.10% 6/1/2000 (4)(ETM) 85 90
----------
46,516
----------
FLORIDA (5.5%)
Dade County FL Sales Tax Rev. 6.00% 10/1/2001 (2) 2,500 2,665
Dade County FL School Dist. GO 7.00% 8/1/1999 (3) 8,300 8,555
Florida Muni. Power Agency VRDO (Stanton Project) 3.00% 11/4/1998 (1) 16,795 16,795
Florida State Board of Educ. Public Educ. Capital Outlay Refunding 5.00% 6/1/2000 15,455 15,839
Florida State Department Transp. Rev. (Right-of-Way) 6.40% 7/1/1999 2,765 2,831
Florida State Turnpike Auth. Rev. 7.50% 7/1/1999 (Prere.) 9,750 10,237
Jacksonville FL Electric Auth. Rev. (St. John River) 5.00% 10/1/2002 11,910 12,456
Osceola County FL Capital Improvement Rev. 4.50% 9/1/2000 (1) 5,000 5,099
</TABLE>
10
<PAGE> 58
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tampa FL Health System Rev. (Catholic Health East) 4.50% 11/15/1999 (1) $ 5,355 $ 5,431
Tampa FL Health System Rev. (Catholic Health East) 5.00% 11/15/2001 (1) 4,035 4,190
Tampa FL Rev. (Allegany Health System-St. Joseph) 7.125% 12/1/1999 (Prere.) 2,500 2,654
Tampa-Hillsborough County FL Expressway Auth. Rev. 6.50% 7/1/1999 (2) 3,215 3,293
----------
90,045
----------
GEORGIA (2.4%)
Burke County GA Dev. Auth. PCR VRDO (Georgia Power Co. ) 3.65% 11/3/1998 1,930 1,930
Georgia GO 6.80% 8/1/2000 2,230 2,359
Georgia GO 7.00% 11/1/1999 7,500 7,792
Georgia GO 7.25% 7/1/1999 3,000 3,087
Georgia GO 7.40% 8/1/2000 5,000 5,338
Georgia GO 7.50% 4/1/2001 5,500 6,005
Georgia GO 7.70% 4/1/1999 5,000 5,102
Muni. Gas Auth. of GA Rev. VRDO (Agency Project) 3.25% 11/4/1998 LOC 2,800 2,800
Muni. Gas Auth. of GA Rev. VRDO (Agency Project) 3.25% 11/4/1998 LOC 4,900 4,900
----------
39,313
----------
HAWAII (1.7%)
Hawaii GO 5.00% 11/1/1999 20,000 20,364
Hawaii Highway Rev. 5.00% 7/1/2002 (3) 3,530 3,677
Honolulu HI City & County GO 4.70% 10/1/2000 4,500 4,598
----------
28,639
----------
ILLINOIS (2.9%)
Chicago IL GO 7.50% 1/1/1999 (Prere.) 5,000 5,136
Chicago IL Metro. Water Reclamation Dist. 6.40% 1/1/2000 5,000 5,170
Chicago IL Metro. Water Reclamation Dist. 6.80% 1/1/2000 (Prere.) 5,200 5,501
Chicago IL Metro. Water Reclamation Dist. 7.25% 1/1/1999 (Prere.) 3,490 3,514
Chicago IL Public Building Comm. 4.50% 12/1/1998 (1) 8,000 8,010
Chicago IL Public Building Comm. 7.75% 1/1/1999 (3) 5,000 5,139
Illinois Educ. Fac. Auth. (Northwestern Univ.) 4.75% 12/1/2000 10,000 10,260
Illinois Toll Highway Auth. Rev. VRDO 3.05% 11/4/1998 (1) LOC 4,540 4,540
----------
47,270
----------
INDIANA (0.6%)
Hammond IN PCR VRDO (Amoco Co. Project) 3.70% 11/3/1998 885 885
Indiana Health Fac. Hosp. Rev. VRDO
(Charity Obligated Group-Daughters of Charity
National Health Systems) 3.05% 11/4/1998 1,600 1,600
Indianapolis IN Airport Auth. Rev. 4.50% 7/1/2000 (3) 3,500 3,550
Merrillville IN Multiple School Building Corp. Rev. 7.50% 7/15/2000 (Prere.) 4,000 4,341
----------
10,376
----------
KANSAS (0.3%)
Merriam KS Hosp. Rev. (Shawnee Medical Center Project) 7.25% 9/1/2001 (Prere.) 3,580 3,983
----------
LOUISIANA (0.2%)
Louisiana GO 5.00% 4/15/2002 (2) 3,400 3,538
----------
MARYLAND (0.3%)
Maryland Health & Higher Educ. Fac. (Francis Scott Key) 7.00% 7/1/2000 (Prere.) 4,000 4,306
----------
MASSACHUSETTS (8.8%)
Massachusetts Bay Transp. Auth. 7.00% 3/1/2001 (Prere.) 6,000 6,564
Massachusetts Bay Transp. Auth. 7.10% 3/1/1999 (3)(Prere.) 7,800 8,061
Massachusetts Bay Transp. Auth. 7.625% 3/1/2000 (Prere.) 5,550 5,957
Massachusetts Consolidated Loan GO 7.50% 2/1/1999 (3)(Prere.) 6,400 6,535
Massachusetts GO 5.50% 7/1/1999 10,000 10,177
Massachusetts GO 6.50% 8/1/2001 (Prere.) 3,115 3,407
Massachusetts GO 7.00% 6/1/1999 (Prere.) 10,000 10,433
Massachusetts GO 7.25% 3/1/2000 (3)(Prere.) 3,910 4,178
Massachusetts GO 9.25% 7/1/2000 10,000 10,934
Massachusetts Health & Educ. Fac. Auth. Rev. PUT
(Fairview Extended Care) 4.55% 7/14/2002 (1) 3,400 3,460
</TABLE>
11
<PAGE> 59
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
SHORT-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts State Housing Finance Agency
(Construction Loan Notes) 4.10% 3/1/2002 (4) $ 11,500 $ 11,553
Massachusetts Turnpike Auth. BAN 5.00% 6/1/1999 1,485 1,501
Massachusetts Turnpike Auth. BAN 5.00% 6/1/1999 (ETM) 5,515 5,582
Massachusetts Water Resources Auth. Rev. 6.50% 12/1/2001 (Prere.) 4,300 4,737
Massachusetts Water Resources Auth. Rev. 7.00% 4/1/2000 (Prere.) 10,485 11,197
Massachusetts Water Resources Auth. Rev. 7.30% 4/1/2000 (Prere.) 5,000 5,360
Massachusetts Water Resources Auth. Rev. 7.50% 4/1/2000 (Prere.) 15,850 17,033
Massachusetts Water Resources Auth. Rev. 7.625% 4/1/2000 (Prere.) 17,645 18,992
----------
145,661
----------
MICHIGAN (2.2%)
Greater Detroit MI Resource Recovery Auth. 5.00% 12/13/1999 (2) 12,000 12,239
Michigan Building Auth. Rev. (Fac. Program) 5.00% 10/1/2000 (2) 4,000 4,117
Michigan Hosp. Finance Auth. Rev. (McLaren Obligated Group) 7.50% 9/15/2001 (Prere.) 5,750 6,454
Michigan Trunk Line 5.50% 11/15/1998 13,720 13,733
----------
36,543
----------
MINNESOTA (1.4%)
Minnesota GO 4.625% 8/1/2000 10,385 10,610
Minnesota GO 6.00% 8/1/1999 5,730 5,864
Minnesota GO 6.40% 8/1/2000 6,700 7,044
----------
23,518
----------
MISSISSIPPI (0.4%)
Jackson County MS Port Fac. Rev. VRDO (Chevron) 3.70% 11/3/1998 3,600 3,600
Mississippi GO 5.00% 8/1/2001 2,495 2,588
----------
6,188
----------
MISSOURI (1.8%)
Missouri Health & Educ. Fac. Auth. VRDO
(Sisters of Mercy Health Care System) 3.10% 11/4/1998 12,700 12,700
Missouri Health & Educ. Fac. Auth. VRDO
(Sisters of Mercy Health Care System) 3.10% 11/5/1998 4,600 4,600
Missouri Health & Educ. Fac. Auth. VRDO (Washington Univ.) 3.70% 11/3/1998 3,500 3,500
St. Louis County MO Rockwood School Dist. GO Refunding 8.50% 2/1/2001 8,000 8,839
----------
29,639
----------
MONTANA (0.6%)
Forsyth MT PCR PUT (Portland General Electric Co.) 4.60% 5/1/2003 10,000 10,142
----------
NEBRASKA (0.6%)
Nebraska Public Power Dist. Rev. 5.00% 1/1/2002 (1) 5,000 5,188
Nebraska Public Power Dist. Rev. 5.00% 1/1/2003 (1) 5,000 5,223
----------
10,411
----------
NEVADA (2.0%)
Clark County NV Airport Improvement Rev. VRDO
(McCarran International Airport) 3.05% 11/4/1998 LOC 2,670 2,670
Clark County NV Airport Improvement Rev. VRDO
(McCarran International Airport) 3.05% 11/4/1998 (1) 19,200 19,200
Clark County NV Improvement and Refunding 6.00% 10/1/2001 4,845 5,160
Clark County NV School Dist. GO (Computer Equipment) 7.50% 6/15/2000 (3) 6,000 6,377
----------
33,407
----------
NEW JERSEY (1.0%)
New Jersey Econ. Dev. Auth. Market Transition Fac. 5.125% 7/1/2000 (1) 2,710 2,784
New Jersey Health Care Fac. Finance Auth. Rev.
(Community Medical Center, Kimball Medical Center,
Kensington Manor Care Center Obligated Group) 4.50% 7/1/2001 4,835 4,937
New Jersey Sports & Exposition Auth. Rev. VRDO 2.75% 11/5/1998 (1) 300 300
New Jersey Transit Corp. 5.25% 9/1/2001 5,000 5,180
New Jersey Turnpike Auth. VRDO 2.85% 11/4/1998 (3) LOC 3,200 3,200
----------
16,401
----------
NEW MEXICO (0.4%)
New Mexico GO 5.50% 9/1/2000 6,350 6,585
----------
</TABLE>
12
<PAGE> 60
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK (12.1%)
Long Island Power Auth. NY Electric System Rev. 5.00% 4/1/2002 ++ $ 8,000 $ 8,279
Long Island Power Auth. NY Electric System Rev. 5.00% 4/1/2003 ++ 8,500 8,841
Muni. Assistance Corp. for New York City NY 5.00% 7/1/1999 9,500 9,640
Muni. Assistance Corp. for New York City NY 5.00% 7/1/2001 10,000 10,353
Muni. Assistance Corp. for New York City NY 5.25% 7/1/2001 5,110 5,323
Nassau County NY General Improvement 4.50% 9/1/1999 (3) 14,025 14,208
Nassau County NY General Improvement 4.90% 3/1/2001 (3) 11,060 11,376
Nassau County NY General Improvement 5.125% 11/1/1999 (3) 7,525 7,681
New York City NY GO 5.25% 8/1/1999 7,805 7,936
New York City NY GO 5.25% 8/1/1999 (ETM) 2,070 2,106
New York City NY GO 7.50% 2/1/2002 (Prere.) 7,860 8,836
New York City NY GO VRDO 2.95% 11/4/1998 LOC 3,500 3,500
New York City NY GO VRDO 3.70% 11/3/1998 LOC 5,200 5,200
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 3.70% 11/3/1998 (3) 2,700 2,700
New York Medical Care Fac. (St. Luke's) 7.45% 2/15/2000 (1)(Prere.) 5,000 5,348
New York Medical Care Fac. Finance Agency Rev. 7.80% 2/15/1999 (Prere.) 5,000 5,169
New York State Dormitory Auth. Rev. (Brookdale Hosp.) 5.00% 2/15/2001 4,335 4,451
New York State Dormitory Auth. Rev. (City Univ.) 7.625% 7/1/2000 (Prere.) 23,600 25,641
New York State Dormitory Auth. Rev. (Interfaith Medical Center) 5.25% 2/15/2002 2,565 2,671
New York State Dormitory Auth. Rev. (Jamaica Hosp.) 5.00% 2/15/2001 2,725 2,798
New York State Dormitory Auth. Rev. (State Univ.) 7.25% 5/15/2000 (Prere.) 2,070 2,228
New York State Dormitory Auth. Rev. (State Univ.) 7.70% 5/15/2000 (Prere.) 4,000 4,331
New York State Dormitory Auth. Rev. (Wycoff Heights) 5.00% 2/15/2001 2,605 2,675
New York State Hosp. Finance Agency (Service Contract) 7.80% 3/15/2001 (Prere.) 15,000 16,698
New York State Local Govt. Assistance Corp. 7.50% 4/1/2001 (Prere.) 10,000 11,079
New York State Local Govt. Assistance Corp. VRDO 2.95% 11/4/1998 LOC 1,800 1,800
New York State Thruway Auth. Service Contract Rev.
(Highway Bridge) 5.10% 4/1/1999 5,085 5,131
New York Urban Dev. Corp. (Correction Fac.) 7.75% 1/1/2000 (Prere.) 3,900 4,169
----------
200,168
----------
NORTH CAROLINA (0.4%)
North Carolina Eastern Muni. Power Agency 7.25% 1/1/1999 (Prere.) 3,000 3,081
North Carolina Medical Care Comm. Hosp. Rev. VRDO
(Duke Univ. Hosp. Project) 3.05% 11/5/1998 3,000 3,000
----------
6,081
----------
OHIO (3.4%)
Cincinnati OH School Dist. TAN 5.50% 12/1/2000 (2) 4,300 4,478
Cincinnati OH Student Loan Funding Corp. Student Loan Rev. VRDO 3.10% 11/4/1998 LOC 4,000 4,000
Clermont County OH Hosp. Rev. VRDO (Mercy Health Systems) 3.10% 11/4/1998 2,300 2,300
Cuyahoga County OH Hosp. Rev. (Meridia Health System) 7.25% 8/15/2000 (Prere.) 4,980 5,402
Cuyahoga County OH Hosp. Rev. VRDO (Cleveland Clinic Foundation) 3.10% 11/4/1998 LOC 8,870 8,870
Hamilton County OH Hosp. Fac. Rev. VRDO (Bethesda Hosp.) 3.00% 11/5/1998 LOC 200 200
Hancock County OH BAN 4.50% 12/1/1998 5,865 5,871
Ohio Building Auth. Correctional Fac. 6.50% 10/1/2001 4,000 4,315
Ohio Public Fac. Higher Educ. Rev. 4.75% 5/1/1999 16,600 16,761
Ohio State Univ. General Receipts VRDO 3.00% 11/5/1998 4,180 4,180
----------
56,377
----------
OKLAHOMA (1.6%)
Garfield County OK IDA PCR VRDO
(Oklahoma Gas & Electric Co. Project) 3.20% 11/4/1998 1,900 1,900
Oklahoma Ind. Auth. Health System Rev. VRDO
(Obligated Group Baptist Medical Center, South Oklahoma City
Hosp., Baptist Rural Health) 3.25% 11/4/1998 24,625 24,625
----------
26,525
----------
OREGON (0.3%)
Oregon Health, Housing, Educ., & Cultural Fac. Auth.
College Housing Project PUT (Portland State Univ.) 5.00% 5/1/2003 (LOC) 5,240 5,412
----------
</TABLE>
13
<PAGE> 61
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
SHORT-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PENNSYLVANIA (7.4%)
Berks County PA GO 7.25% 11/15/2000 (3)(Prere.) $ 6,700 $ 7,323
Emmaus PA General Auth. Local Govt. Rev. VRDO 3.10% 11/4/1998 3,600 3,600
Geisinger PA Auth. Health System Rev. VRDO 3.70% 11/3/1998 3,900 3,900
Montgomery County PA GO 5.00% 7/15/1999 2,775 2,817
Pennsylvania GO 4.75% 6/15/1999 (1) 10,500 10,625
Pennsylvania GO 5.00% 10/15/1999 3,490 3,556
Pennsylvania GO 5.25% 11/15/2000 (3) 7,500 7,769
Pennsylvania Higher Educ. Fac. Auth. Health Services Rev.
(Allegheny/Delaware Valley) 4.60% 11/15/1999 (1) 4,830 4,837
Pennsylvania Intergovernmental Cooperation Auth. Rev. 5.75% 6/15/2000 6,675 6,917
Pennsylvania Intergovernmental Cooperation Auth. Rev. 6.00% 6/15/2002 (3) 7,000 7,533
Philadelphia PA GO 5.75% 11/15/1998 (3) 6,655 6,662
Philadelphia PA GO 6.00% 11/15/1999 (3) 10,000 10,290
Philadelphia PA Muni. Auth. Rev. 8.625% 11/15/2001 (Prere.) 15,500 17,991
Philadelphia PA School Dist. GO 6.70% 7/1/1999 (1) 5,145 5,274
Philadelphia PA Water & Sewer Rev. 6.90% 10/1/1999 (Prere.) 20,000 21,092
Pittsburgh PA GO 5.00% 9/1/2000 (2) 2,250 2,312
----------
122,498
----------
PUERTO RICO (0.6%)
Puerto Rico GO 5.50% 7/1/1999 10,000 10,170
----------
TENNESSEE (0.5%)
Metro. Govt. of Nashville & Davidson County TN 6.15% 5/15/2002 (Prere.) 8,050 8,846
----------
TEXAS (10.6%)
Austin TX Combined Util. System Rev. 7.60% 11/15/1999 (1) 2,300 2,404
Austin TX Combined Util. System Rev. 7.60% 11/15/1999 (1)(Prere.) 2,700 2,825
Austin TX Combined Util. System Rev. 11.125% 11/15/1999 (Prere.) 4,000 4,327
Austin TX GO 6.00% 9/1/1999 (Prere.) 6,200 6,355
Dallas TX GO 7.50% 2/15/1999 3,050 3,090
Garland TX Independent School Dist. GO 7.00% 2/15/1999 5,000 5,059
Gulf Coast TX Waste Disposal Auth. PCR VRDO (Amoco Oil Project) 3.70% 11/3/1998 960 960
Gulf Coast TX Waste Disposal Auth. PCR VRDO (Exxon Project) 3.70% 11/3/1998 3,590 3,590
Harris County TX Health Fac. Dev. Corp. Hosp. Rev.
(Hermann Memorial Hosp. System Project) 4.25% 6/1/1999 (4) 4,600 4,635
Harris County TX Health Fac. Dev. Corp. Hosp. Rev.
(Hermann Memorial Hosp. System Project) 5.00% 6/1/2000 (4) 4,095 4,188
Harris County TX Health Fac. Dev. Corp. Hosp. Rev.
(Hermann Memorial Hosp. System Project) 5.00% 6/1/2001 (4) 1,500 1,548
Harris County TX Health Fac. Dev. Corp. Hosp. Rev. VRDO
(St. Lukes Episcopal Hosp.) 3.65% 11/3/1998 19,700 19,700
Harris County TX IDA VRDO (Shell Oil Co. Project) 3.70% 11/3/1998 17,000 17,000
Harris County TX Toll Road VRDO 3.10% 11/4/1998 22,730 22,730
Harris County TX Toll Road VRDO 3.15% 11/4/1998 8,500 8,500
Houston TX Hotel Occupancy Rev. 6.00% 7/1/1999 (4) 4,000 4,081
Houston TX Independent School Dist. 5.00% 7/15/1999 6,700 6,801
Lower Colorado River Auth. TX Rev. 5.00% 1/1/1999 3,180 3,191
North Central TX Health Fac. Dev. Corp. VRDO
(Presbyterian Medical Center) 3.65% 11/3/1998 (1) 3,900 3,900
Round Rock TX Independent School Dist. 6.50% 8/1/2002 1,745 1,911
San Antonio TX Independent School Dist. 7.00% 8/15/1999 6,350 6,552
Texas GO 5.375% 10/1/2000 5,000 5,182
Texas National Research Lab Comm. (Super Conductors) 7.125% 4/1/2000 (Prere.) 15,930 17,039
Texas TOB VRDO 3.95% 11/3/1998 5,500 5,500
Travis County TX GO 5.00% 3/1/2002 6,090 6,348
Univ. of Texas Board of Regents Rev. 7.00% 8/15/2001 (Prere.) 6,700 7,418
----------
174,834
----------
UTAH (0.3%)
Intermountain Power Agency UT 7.00% 7/1/1999 (Prere.) 5,100 5,338
----------
</TABLE>
14
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VIRGINIA (0.7%)
Fairfax County VA IDA Health Care Rev.
(Inova Health System Project) 4.25% 8/15/1999 $ 2,705 $ 2,731
Virginia Public School Auth. GO 5.00% 8/1/1999 6,215 6,314
Virginia Public School Auth. GO 5.30% 8/1/2000 2,370 2,447
----------
11,492
----------
WASHINGTON (2.3%)
King County WA GO 6.70% 1/1/1999 8,585 8,638
King County WA GO 6.70% 1/1/1999 (ETM) 415 418
Snohomish County WA Public Util. Dist. Rev. 5.00% 1/1/2000 (3) 3,000 3,054
Snohomish County WA Public Util. Dist. Rev. 9.75% 1/1/1999 (3) 5,315 5,374
Spokane WA Regional Solid Waste Management System
Rev. Refunding 6.25% 1/1/2003 7,945 8,628
Washington GO 5.50% 7/1/1999 5,000 5,088
Washington GO 7.75% 12/1/1998 (Prere.) 2,500 2,510
Washington Health Care Fac. Auth. Rev. VRDO
(Virginia Mason Medical Center) 3.65% 11/3/1998 (1) 4,900 4,900
----------
38,610
----------
WEST VIRGINIA (0.3%)
West Virginia Water Dev. Auth. 7.70% 11/1/2000 (Prere.) 4,960 5,456
----------
WISCONSIN (1.1%)
Milwaukee WI Metro. Sewer Dist. 7.00% 9/1/2001 5,000 5,447
Racine WI Water Works Rev. BAN 4.25% 2/15/2001 4,000 4,004
Wisconsin Clean Water Rev. 6.30% 6/1/2000 3,000 3,132
Wisconsin GO 5.00% 5/1/1999 5,305 5,363
----------
17,946
----------
WYOMING (1.2%)
Lincoln County WY PCR VRDO (Exxon Project) 3.70% 11/3/1998 20,200 20,200
----------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $1,633,083) 1,646,752
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (0.4%)
- -------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 28,142
Liabilities (21,231)
----------
6,911
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- -------------------------------------------------------------------------------------------------------------------------
Applicable to 105,660,932 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $1,653,663
=========================================================================================================================
NET ASSET VALUE PER SHARE $15.65
=========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
For key to abbreviations and other references, see page 61.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AT OCTOBER 31, 1998, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $1,639,413 $15.51
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains--Note E 581 .01
Unrealized Appreciation--Note F 13,669 .13
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,653,663 $15.65
=========================================================================================================================
</TABLE>
15
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
LIMITED-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (99.1%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA (0.7%)
Huntsville AL Health Care Fac. Auth. 4.65% 6/1/2005 (1) $16,500 $ 16,942
----------
ALASKA (1.1%)
Anchorage AK GO 4.70% 8/1/2001 (1) 5,000 5,137
North Slope Borough AK GO 7.25% 6/30/2000 (3)+ 20,000 21,208
----------
26,345
----------
ARIZONA (2.4%)
Arizona Transp. Board Excise Tax Rev.
(Maricopa County Regional Area Road) 5.00% 7/1/2004 15,165 15,997
Arizona Transp. Board Excise Tax Rev.
(Maricopa County Regional Area Road) 6.00% 7/1/2002 (2) 15,185 16,367
Arizona Transp. Board Highway Rev. 6.00% 7/1/2000 4,500 4,690
Maricopa County AZ School Dist. GO 0.00% 7/1/1999 (3) 8,000 7,834
Phoenix AZ Civic Improvement Corp. Waste Water System 6.125% 7/1/2003 (Prere.) 10,000 11,162
----------
56,050
----------
CALIFORNIA (4.5%)
California Dept. of Water (Central Valley Project) 8.25% 12/1/2001 4,790 5,445
California Dept. of Water (Central Valley Project) 8.25% 12/1/2002 5,060 5,940
California Dept. of Water (Central Valley Project) 8.25% 12/1/2005 5,685 7,199
California GO 7.50% 11/1/2003 (3) 6,000 7,030
California GO 9.00% 6/1/2000 5,000 5,433
California GO 10.50% 10/1/2000 3,000 3,393
California PCR VRDO (Pacific Gas & Electric) 3.65% 11/3/1998 1,700 1,700
California Public Works Board Lease Rev.
(Univ. of California Project) 5.50% 9/1/2004 (2) 3,790 4,128
California Public Works Board Lease Rev.
(Univ. of California Project) 5.50% 9/1/2005 (2) 3,900 4,278
Los Angeles CA Dept. of Water & Power Waterworks Rev. 9.00% 5/15/2002 + 9,135 10,743
Los Angeles CA Dept. of Water & Power Waterworks Rev. 9.00% 5/15/2003 5,355 6,518
Los Angeles County CA Public Works Auth. 5.00% 10/1/2004 3,640 3,873
Los Angeles County CA Public Works Auth. 6.00% 10/1/2003 13,010 14,356
San Joaquin Hills CA Transp. Corridor Agency Toll Road Rev. 0.00% 1/15/2000 (1) 2,000 1,917
San Joaquin Hills CA Transp. Corridor Agency Toll Road Rev. 0.00% 1/15/2001 (1) 10,000 9,232
Univ. of California Rev. (Multiple Purpose Dist. Project) 10.00% 9/1/2000 (2) 7,755 8,666
Univ. of California Rev. (Multiple Purpose Dist. Project) 10.00% 9/1/2001 (2) 5,500 6,450
----------
106,301
----------
CONNECTICUT (2.6%)
Connecticut GO 5.30% 3/15/2004 10,000 10,723
Connecticut GO 5.50% 11/1/2001 13,630 14,401
Connecticut GO 6.25% 11/15/2002 (Prere.) 5,300 5,906
Connecticut GO 9.875% 3/1/2001 6,750 7,697
Connecticut Special Assessment Second Injury Fund Rev. 5.00% 1/1/2001 4,230 4,363
Connecticut Special Assessment Unemployment Compensation 5.50% 5/15/2001 (2) 13,455 14,105
Connecticut Special Tax Obligation Rev. (Transp. Infrastructure) 6.25% 10/1/2002 (3) 4,000 4,381
----------
61,576
----------
DELAWARE (0.4%)
Delaware GO 5.00% 1/1/2002 5,085 5,292
Delaware GO 5.00% 4/1/2002 3,000 3,130
----------
8,422
----------
DISTRICT OF COLUMBIA (2.2%)
District of Columbia GO 4.90% 6/1/2000 20,000 20,294
District of Columbia GO 5.00% 6/1/2002 (1) 5,710 5,925
District of Columbia GO 5.00% 6/1/2003 (1) 5,995 6,250
District of Columbia GO 5.00% 6/1/2005 (1) 6,000 6,288
District of Columbia GO 5.50% 6/1/1999 10,605 10,735
District of Columbia GO 5.50% 6/1/1999 (ETM) 1,500 1,521
----------
51,013
----------
FLORIDA (4.2%)
Dade County FL School Dist. GO 5.00% 2/15/2001 (1) 4,525 4,668
Florida Board of Educ. Rev. (Capital Outlay) 5.00% 6/1/2002 10,535 11,016
</TABLE>
16
<PAGE> 64
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida Board of Educ. Rev. (Capital Outlay) 6.50% 6/1/2002 $ 4,505 $ 4,933
Florida Board of Educ. Rev. (Capital Outlay) 6.50% 6/1/2004 5,565 6,303
Florida Dept. of General Services Rev.
(Dept. of Environmental Protection Preservation-2000) 6.00% 7/1/2004 (2) 10,815 11,965
Florida Inland Protection Financing Corp. 5.00% 7/1/2003 (4) 5,000 5,256
Florida School Board Assn. Rev. (Orange County) 7.00% 7/1/2000 (2) 13,820 14,622
Florida Turnpike Auth. Rev. 9.50% 7/1/1999 (2) 4,000 4,176
Hillsborough County FL School Dist. 6.95% 8/15/1999 (1) 5,425 5,597
Lakeland FL Electric & Water Rev. 6.25% 10/1/2002 (3) 5,000 5,457
Lee County FL School Board 6.00% 8/1/2002 (4) 2,750 2,970
Orange County FL Health Fac. Auth. Rev. 6.00% 10/1/2004 (1) 3,975 4,401
Tampa FL Health System Rev. (Catholic Health East) 5.00% 11/15/2002 (1) 8,035 8,402
Tampa FL Health System Rev. (Catholic Health East) 5.25% 11/15/2003 (1) 2,500 2,655
Tampa FL Hillsborough County Expressway Auth. Rev. 6.50% 7/1/2003 (2) 4,770 5,329
----------
97,750
----------
GEORGIA (2.3%)
Burke County GA PCR VRDO
(Georgia Power Co. Plant Vogtle Project) 3.70% 11/3/1998 2,500 2,500
Cobb County GA School Dist. 5.00% 2/1/2000 8,040 8,202
Georgia GO 5.75% 3/1/2002 5,600 5,976
Georgia GO 7.20% 3/1/2002 3,000 3,332
Georgia GO 7.25% 7/1/2002 5,620 6,308
Georgia GO 7.25% 9/1/2002 8,160 9,200
Georgia GO 7.40% 8/1/2002 12,360 13,963
Metro. Atlanta GA Rapid Transp. Auth. 6.35% 7/1/2004 3,560 3,844
----------
53,325
----------
HAWAII (2.3%)
Hawaii GO 5.00% 9/1/1999 5,000 5,084
Hawaii GO 5.25% 4/1/2004 5,300 5,630
Hawaii GO 5.50% 4/1/2004 11,920 12,807
Hawaii GO 7.75% 2/1/2002 9,600 10,738
Honolulu HI City & County GO 4.60% 10/1/1999 6,500 6,596
Honolulu HI City & County GO 5.25% 11/1/2003 (3) 13,135 13,958
----------
54,813
----------
ILLINOIS (5.3%)
Chicago IL GO 6.25% 10/31/2002 (1) 4,250 4,636
Chicago IL Metro. Water Reclamation Dist. 4.70% 12/1/1999 7,710 7,841
Chicago IL School Finance Auth. GO 5.00% 6/1/2003 (3) 25,190 26,335
Illinois Dev. Finance Auth. PCR PUT (Commonwealth Edison) 4.40% 12/1/2006 (2) 19,000 19,336
Illinois Dev. Finance Auth. Rev. (Provena Health) 5.50% 5/15/2004 (1) 4,740 5,068
Illinois Dev. Finance Auth. Rev. (Provena Health) 5.50% 5/15/2005 (1) 2,500 2,686
Illinois Dev. Finance Auth. Rev. (Provena Health) 5.50% 5/15/2006 (1) 2,000 2,158
Illinois Educ. Fac. Auth. Rev. PUT (Univ. of Chicago) 4.40% 7/1/2004 8,750 8,957
Illinois GO 6.40% 8/1/2001 5,365 5,598
Illinois Health Fac. Auth. Rev. (Hosp. Sisters Services) 5.00% 6/1/2003 (1) 2,895 3,020
Illinois Health Fac. Auth. Rev. (Hosp. Sisters Services) 5.00% 6/1/2004 (1) 3,080 3,223
Illinois Health Fac. Auth. Rev. (Hosp. Sisters Services) 5.00% 6/1/2006 (1) 4,400 4,618
Illinois Health Fac. Auth. Rev. (Hosp. Sisters Services) 5.25% 6/1/2007 (1) 5,270 5,626
Illinois Health Fac. Auth. Rev. PUT (Edgewater Medical Center) 4.70% 7/1/2004 LOC 11,245 11,424
Illinois Sales Tax Rev. 7.20% 6/15/1999 (Prere.) 7,600 7,950
Metro. Pier & Exposition Auth. IL Dedicated State Tax Rev. 6.50% 6/15/2003 (Prere.) 4,140 4,677
----------
123,153
----------
INDIANA (1.1%)
Indianapolis IN Airport Auth. Rev. 5.00% 7/1/2004 (3) 14,535 15,183
Richmond IN Hosp. Auth. Rev. PUT
(Reid Hosp. and Health Care Services) 4.35% 1/1/2002 10,000 10,061
----------
25,244
----------
KANSAS (0.7%)
Burlington KS Environmental Rev. Refunding PUT (Kansas City Power
& Light Co. Project) 4.35% 9/1/2001 15,810 15,922
----------
</TABLE>
17
<PAGE> 65
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
LIMITED-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KENTUCKY (0.5%)
Kentucky Property & Building Comm. Rev. 6.00% 11/1/2002 $ 2,000 $ 2,167
Kentucky Property & Building Comm. Rev. 6.75% 11/1/1999 9,500 9,843
----------
12,010
----------
LOUISIANA (2.6%)
Jefferson Parish LA Sales Tax Dist. Special Sales Tax Rev. 5.50% 12/1/2004 (4) 5,145 5,570
Jefferson Parish LA Sales Tax Dist. Special Sales Tax Rev. 5.50% 12/1/2005 (4) 3,790 4,130
Louisiana GO 5.50% 4/15/2002 (4) 6,160 6,510
Louisiana GO 6.00% 8/1/2000 (3) 5,000 5,212
Louisiana GO 6.00% 8/1/2001 (3) 19,325 20,498
Louisiana Public Fac. Auth. Hosp. Rev. (Franciscan Missionaries) 5.50% 7/1/2005 (4) 5,865 6,332
New Orleans LA GO 6.50% 10/1/2001 (2) 10,655 11,476
----------
59,728
----------
MAINE (0.2%)
Maine Health & Higher Educ. (Sebasticook Hosp.) 10.10% 7/1/2001 (Prere.) 4,300 5,078
----------
MARYLAND (0.2%)
Maryland Dept. of Transp. 6.70% 8/15/1999 (Prere.) 5,000 5,232
----------
MASSACHUSETTS (4.9%)
Massachusetts Bay Transit Auth. 5.00% 3/1/2003 5,000 5,244
Massachusetts Consolidated Loan GO 7.00% 12/1/2000 (Prere.) 5,000 5,353
Massachusetts Educ. Finance Auth. Educ. Loan Rev. 4.40% 12/1/2005 2,345 2,359
Massachusetts Educ. Finance Auth. Educ. Loan Rev. 4.50% 12/1/2006 2,835 2,856
Massachusetts Educ. Finance Auth. Educ. Loan Rev. 4.55% 12/1/2007 3,815 3,846
Massachusetts GO 5.00% 4/1/2004 9,500 10,001
Massachusetts GO 6.25% 7/1/2002 12,500 13,579
Massachusetts GO 6.875% 7/1/2001 (Prere.) 17,400 19,156
Massachusetts GO 7.50% 12/1/2000 (Prere.) 24,750 27,202
Massachusetts GO 9.25% 7/1/2000 10,000 10,934
Massachusetts Health & Educ. Fac. Auth. Rev. PUT
(Fairview Extended Care) 4.55% 7/14/2002 (1) 3,500 3,562
Massachusetts Water Resources Auth. 6.875% 12/1/2001 (Prere.) 9,945 11,062
----------
115,154
----------
MICHIGAN (7.3%)
Detroit MI GO 5.60% 5/1/2000 (2) 7,040 7,261
Detroit MI GO 5.70% 5/1/2001 (2) 5,000 5,246
Greater Detroit MI Resource Recovery Auth. 5.00% 12/13/2000 (2) 6,290 6,485
Greater Detroit MI Resource Recovery Auth. 5.50% 12/13/2001 (2) 5,000 5,270
Greater Detroit MI Resource Recovery Auth. 5.50% 12/13/2003 (2) 17,995 19,345
Greater Detroit MI Resource Recovery Auth. 5.50% 12/13/2004 (2) 12,990 14,060
Michigan Building Auth. Rev. 5.25% 10/15/2003 13,890 14,792
Michigan Building Auth. Rev. 5.25% 10/15/2004 19,885 21,289
Michigan Building Auth. Rev. 6.20% 10/1/2002 5,450 5,915
Michigan Building Auth. Rev. 6.30% 10/1/2003 (4) 7,800 8,471
Michigan Building Auth. Rev. 6.50% 10/1/2004 6,500 7,371
Michigan GO (Environmental Protection Program) 6.00% 11/1/2002 4,845 5,264
Michigan GO (Recreation Program) 6.00% 11/1/2000 11,910 12,508
Michigan GO (Recreation Program) 6.00% 11/1/2001 5,910 6,319
Michigan Hosp. Finance Auth. (Genesys Regional Medical) 5.25% 10/1/2003 2,500 2,606
Michigan Hosp. Finance Auth. (Genesys Regional Medical) 5.50% 10/1/2005 6,655 7,071
Royal Oak MI Hosp. Financial Auth. (William Beaumont Hosp.) 6.75% 1/1/2001 (Prere.) 12,450 13,494
Wayne Charter County MI Airport Rev. (Detroit Met Wayne County) 5.25% 12/1/2006 (1) 6,620 7,116
----------
169,883
----------
MINNESOTA (0.6%)
Minneapolis MN Community Dev. Agency Tax Increment Rev.
(Capital Appreciation) 0.00% 9/1/2003 5,875 4,876
Minnesota GO 6.00% 8/1/2004 5,000 5,558
Minnesota Public Fac. Water Rev. PCR 5.00% 3/1/2002 2,620 2,731
----------
13,165
----------
</TABLE>
18
<PAGE> 66
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSISSIPPI
Jackson County MS Port Fac. Rev. VRDO (Chevron USA Inc. Project) 3.70% 11/3/1998 $ 400 $ 400
----------
MONTANA (0.4%)
Forsyth MT PCR PUT (Portland General Electric Co.) 4.60% 5/1/2003 10,000 10,142
----------
NEBRASKA (0.2%)
Omaha NE Public Power Dist. Electric Rev. 5.00% 2/1/2001 4,250 4,381
----------
NEVADA (1.3%)
Clark County NV Passenger Fac. Charge Rev.
(McCarran International Airport) 6.25% 7/1/2004 (1) 8,240 9,189
Clark County NV Passenger Fac. Charge Rev.
(McCarran International Airport) 6.25% 7/1/2005 (1) 4,310 4,840
Clark County NV School Dist. GO 9.75% 6/1/2001 (1) 10,000 11,471
Clark County NV School Dist. GO (Computer Equipment) 7.00% 6/15/1999 (3) 4,000 4,102
----------
29,602
----------
NEW JERSEY (1.1%)
New Jersey Transp. Trust Fund Auth. 6.00% 6/15/2000 12,655 13,163
New Jersey Turnpike Auth. 5.60% 1/1/2000 (2) 4,000 4,099
Passaic County NJ Util. Solid Waste Disposal Rev. 0.00% 3/1/2000 (1) 4,220 4,023
Passaic Valley NJ Sewer System Rev. 5.70% 12/1/2003 (2) 3,980 4,321
----------
25,606
----------
NEW MEXICO (0.6%)
New Mexico GO 5.50% 9/1/2001 4,475 4,704
New Mexico Severance Tax Rev. 5.00% 7/1/2002 9,600 10,014
----------
14,718
----------
NEW YORK (19.1%)
Hempstead Town NY IDA Resource Recovery (American Fuel Co.) 4.40% 12/1/2001 (1) 6,810 6,954
Long Island NY Power Auth. Electric System Rev. 5.00% 4/1/2008 (1) ++ 7,430 7,835
Long Island NY Power Auth. Electric System Rev. 5.25% 12/1/2004 (2) 15,000 16,012
Long Island NY Power Auth. Electric System Rev. 5.25% 12/1/2005 (2) 17,000 18,223
Long Island NY Power Auth. Electric System Rev. 5.50% 12/1/2006 (2) 8,000 8,752
Muni. Assistance Corp. for New York City NY 5.00% 7/1/2000 4,330 4,442
Muni. Assistance Corp. for New York City NY 5.00% 7/1/2003 7,200 7,560
Muni. Assistance Corp. for New York City NY 5.50% 7/1/2000 42,940 44,397
Muni. Assistance Corp. for New York City NY 5.50% 7/1/2002 5,500 5,833
Muni. Assistance Corp. for New York City NY 6.00% 7/1/2000 (2) 10,000 10,420
Muni. Assistance Corp. for New York City NY 6.00% 7/1/2005 10,370 11,547
New York City NY Cultural Resource Center (Museum of Modern Art) 5.00% 1/1/2000 (2) 7,250 7,387
New York City NY GO 5.00% 8/1/2003 (1) 4,400 4,614
New York City NY GO 5.25% 8/1/1999 7,800 7,931
New York City NY GO 5.25% 8/1/1999 (ETM) 2,075 2,111
New York City NY GO 7.50% 2/1/2002 (Prere.) 4,615 5,208
New York City NY GO 7.50% 8/1/2002 (Prere.) 4,440 5,082
New York City NY GO 7.625% 2/1/2002 (Prere.) 12,790 14,483
New York City NY GO 7.70% 2/1/2002 (Prere.) 3,350 3,801
New York City NY IDA (USTA National Tennis Center Project) 7.75% 11/15/2000 (4) 3,125 3,385
New York City NY IDA (USTA National Tennis Center Project) 7.75% 11/15/2001 (4) 4,380 4,885
New York City NY IDA (USTA National Tennis Center Project) 7.75% 11/15/2002 (4) 3,100 3,552
New York City NY Muni. Water Finance Auth. Water & Sewer
System Rev. VRDO 3.70% 11/3/1998 (3) 4,900 4,900
New York State COP 4.70% 2/1/1999 4,580 4,599
New York State Dormitory Auth. Rev. (Bronx/Lebanon) 5.00% 2/15/2002 5,000 5,168
New York State Dormitory Auth. Rev. (Brookdale Hosp.) 5.00% 2/15/2002 5,445 5,628
New York State Dormitory Auth. Rev. (Brookdale Hosp.) 5.50% 2/15/2004 6,040 6,438
New York State Dormitory Auth. Rev. (City Univ.) 7.625% 7/1/2000 (Prere.) 6,200 6,736
New York State Dormitory Auth. Rev. (City Univ.) 7.875% 7/1/2000 (Prere.) 15,725 17,148
New York State Dormitory Auth. Rev. (City Univ.) 9.00% 7/1/2000 (3) 15,515 16,888
</TABLE>
19
<PAGE> 67
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
LIMITED-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York State Dormitory Auth. Rev. (Dept. of Health) 7.70% 7/1/2000 (Prere.) $ 6,790 $ 7,386
New York State Dormitory Auth. Rev. (North General Hosp.) 5.00% 2/15/2002 4,710 4,868
New York State Dormitory Auth. Rev. (North General Hosp.) 5.50% 2/15/2003 4,945 5,235
New York State Dormitory Auth. Rev. (Presbyterian Hosp.) 5.50% 2/15/2002 (2) 4,000 4,211
New York State Dormitory Auth. Rev. (Presbyterian Hosp.) 5.50% 2/15/2003 (2) 8,620 9,160
New York State Dormitory Auth. Rev. (Presbyterian Hosp.) 5.50% 2/15/2004 (2) 4,500 4,812
New York State Dormitory Auth. Rev. (State Univ.) 7.70% 5/15/2000 (Prere.) 6,500 7,038
New York State Dormitory Auth. Rev. (Univ. of Rochester) 5.00% 7/1/2003 (1) 3,210 3,370
New York State Environmental Fac.
(Clean Water & Drinking Revolving Funds) 5.00% 6/15/2003 4,285 4,489
New York State Environmental Fac.
(Clean Water & Drinking Revolving Funds) 5.00% 6/15/2004 4,000 4,206
New York State Environmental Fac. (Riverbank State Park) 7.375% 4/1/2002 (Prere.) 6,800 7,713
New York State Environmental Fac. PCR
(New York City Water Finance Auth.) 5.50% 6/15/2003 (1) 3,000 3,210
New York State Housing Finance Agency Rev.
(Nursing Home & Health Care Project) 4.40% 11/1/2004 (1) 9,140 9,319
New York State Housing Finance Agency Rev.
(Nursing Home & Health Care Project) 4.50% 11/1/2005 (1) 7,555 7,733
New York State Housing Finance Agency Rev.
(Nursing Home & Health Care Project) 4.60% 11/1/2006 (1) 4,500 4,634
New York State Housing Finance Agency Rev. 8.00% 11/1/2000 (Prere.) 4,140 4,579
New York State Local Govt. Assistance Corp. 6.25% 4/1/2002 (Prere.) 10,000 10,991
New York State Local Govt. Assistance Corp. 7.00% 4/1/2001 (Prere.) 14,550 15,957
New York State Medical Care Fac. Finance Agency Rev. 7.875% 8/15/2000 (Prere.) 8,000 8,761
New York State Thruway Auth. (Highway & Bridge Trust Fund) 5.00% 4/1/2003 (3) 4,350 4,551
New York State Thruway Auth. (Highway & Bridge Trust Fund) 5.25% 4/1/2002 (3) 10,000 10,483
New York State Thruway Auth. (Highway & Bridge Trust Fund) 6.00% 4/1/2002 (1) 11,965 12,829
New York State Urban Dev. Corp. (Correctional Fac.) 7.50% 1/1/2001 (Prere.) 7,100 7,807
Suffolk County NY Water Auth. Water System Rev. 5.25% 6/1/2004 (2)(Prere.) 10,000 10,677
----------
445,938
----------
OHIO (2.4%)
Butler County OH Transp. Improvement Dist. 5.00% 4/1/2003 (4) 3,000 3,150
Cleveland OH School Dist. RAN 5.00% 6/1/2001 (2) 6,000 6,204
Cleveland OH Water Works Rev. 6.25% 1/1/2002 (2)(Prere.) 4,245 4,647
Franklin County OH PUT (U.S. Health Corp.) 4.50% 6/1/2000 LOC 10,000 10,136
Ohio Air Quality Dev. Auth. VRDO (Cincinnati Gas & Electric) 3.70% 11/3/1998 LOC 5,900 5,900
Ohio Public Fac. Comm. Higher Educ. Fac. 5.00% 11/1/1999 6,370 6,493
Ohio Public Fac. Comm. Higher Educ. Fac. 5.50% 12/1/1999 7,685 7,882
Ohio Water Dev. Auth. PCR PUT (Cleveland Electric) 4.60% 10/1/2003 12,255 12,175
----------
56,587
----------
OKLAHOMA (0.6%)
Tulsa County OK Criminal Justice Auth. Sales Tax Rev. 5.25% 3/1/2001 (2) 6,525 6,754
Tulsa County OK Criminal Justice Auth. Sales Tax Rev. 5.25% 9/1/2001 (2) 6,960 7,249
----------
14,003
----------
PENNSYLVANIA (7.7%)
Delaware County PA IDA Rev. (Resource Recovery Fac.) 5.50% 1/1/1999 5,000 5,012
Lehigh County PA General Purpose Auth. Hosp. Rev. VRDO
(Lehigh Valley Hosp.) 3.60% 11/3/1998 (2) 3,900 3,900
Pennsylvania Convention Center Auth. Refunding Rev. 5.75% 9/1/1999 4,475 4,519
Pennsylvania GO 5.00% 5/1/2000 2,710 2,773
Pennsylvania GO 5.00% 3/1/2003 6,250 6,555
Pennsylvania GO 5.25% 11/15/2001 (3) 10,000 10,474
Pennsylvania GO 5.375% 11/15/2003 (3) 2,000 2,144
Pennsylvania GO 5.40% 7/1/2000 4,000 4,128
Pennsylvania Higher Educ. Fac. Health Services
(Allegheny/Delaware Valley) 5.00% 11/15/2002 (1) 7,990 8,060
Pennsylvania Intergovernmental Cooperation Auth. 6.00% 6/15/2001 (3) 10,000 10,589
Pennsylvania Intergovernmental Cooperation Auth.
(Philadelphia Funding Program) 6.80% 6/15/2002 (Prere.) 5,050 5,578
</TABLE>
20
<PAGE> 68
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania Turnpike Comm. Rev. 5.60% 12/1/2005 (3) $ 6,575 $ 7,103
Pennsylvania Turnpike Comm. Rev. 7.50% 12/1/1999 (Prere.) 15,000 15,993
Philadelphia PA Gas Works 7.00% 7/1/2002 (8) 4,035 4,469
Philadelphia PA GO 6.00% 11/15/1999 (3) 8,505 8,752
Philadelphia PA GO 6.00% 11/15/2000 (3) 13,000 13,636
Philadelphia PA Hosp. Auth. Health Rev. (Jefferson Health System) 5.00% 5/15/2002 (2) 2,905 3,019
Philadelphia PA Hosp. Auth. Health Rev. (Jefferson Health System) 5.00% 5/15/2004 (2) 4,990 5,228
Philadelphia PA Hosp. Auth. Health Rev. (Jefferson Health System) 5.50% 5/15/2003 (2) 1,425 1,518
Philadelphia PA Industrial Dev. Airport Rev.
(Philadelphia Airport System Project) 4.50% 7/1/2002 (3) 2,205 2,252
Philadelphia PA Industrial Dev. Airport Rev.
(Philadelphia Airport System Project) 5.25% 6/15/2001 (3) 4,590 4,770
Philadelphia PA School Dist. GO 4.70% 7/1/1999 (2) 14,000 14,166
Philadelphia PA Water & Sewer Rev. 6.90% 10/1/1999 (Prere.) 24,150 25,469
Philadelphia PA Water & Waste Water Rev. 6.25% 8/1/2002 (1) 5,450 5,914
Pittsburgh PA GO 5.00% 3/1/2003 (1) 5,000 5,231
----------
181,252
----------
PUERTO RICO (1.2%)
Puerto Rico Electric Power Auth. Rev. 5.00% 7/1/2003 (4) 6,000 6,329
Puerto Rico Electric Power Auth. Rev. 5.00% 7/1/2004 (1) 4,995 5,295
Puerto Rico Electric Power Auth. Rev. 5.00% 7/1/2004 (4) 5,285 5,603
Puerto Rico GO 5.50% 7/1/1999 10,000 10,170
----------
27,397
----------
RHODE ISLAND (1.0%)
Rhode Island GO 6.00% 8/1/2003 (1) 9,665 10,577
Rhode Island GO 6.00% 8/1/2004 (1) 11,345 12,549
----------
23,126
----------
SOUTH CAROLINA (0.8%)
South Carolina Capital Improvement GO 5.00% 8/1/2004 4,950 5,257
South Carolina GO 5.10% 2/1/2004 3,940 4,166
South Carolina Transp. Infrastructure Rev. 5.00% 10/1/2007 (1) 9,445 10,074
----------
19,497
----------
TENNESSEE (0.2%)
Memphis TN Refunding GO 5.00% 10/1/2003 4,750 5,008
----------
TEXAS (7.6%)
Austin TX Util. System 9.50% 5/15/2000 (Prere.) 5,705 6,217
Austin TX Util. System 10.00% 5/15/2000 (Prere.) 5,000 5,485
El Paso County TX Hosp. Dist. GO 0.00% 8/15/2000 (1) 2,260 2,118
El Paso County TX Hosp. Dist. GO 0.00% 8/15/2001 (1) 2,260 2,034
El Paso County TX Hosp. Dist. GO 0.00% 8/15/2002 (1) 2,260 1,951
El Paso County TX Hosp. Dist. GO 0.00% 8/15/2003 (1) 2,260 1,868
Fort Worth TX Water & Sewer Rev. 5.90% 2/15/2001 2,900 3,047
Harris County TX Flood Control Dist. GO 5.50% 10/1/2000 3,000 3,115
Harris County TX GO 5.50% 10/1/2000 2,645 2,747
Harris County TX Health Fac. Dev. Corp. (Memorial Hosp.) 5.00% 6/1/2000 (1) 3,025 3,092
Harris County TX Health Fac. Dev. Corp. (Memorial Hosp.) 5.00% 6/1/2001 (1) 5,835 6,020
Harris County TX Toll Road Refunding GO 6.50% 8/15/2002 (2)(Prere.) 5,220 5,825
Houston TX GO 5.00% 3/1/2003 20,000 20,942
Houston TX GO 5.50% 3/1/2004 8,620 9,265
Houston TX GO 5.90% 3/1/2003 3,475 3,700
Houston TX Hotel Occupancy Tax Rev. 6.00% 7/1/2000 (4) 4,250 4,420
Houston TX Hotel Occupancy Tax Rev. 6.00% 7/1/2001 (4) 4,000 4,232
Houston TX Hotel Occupancy Tax Rev. 6.00% 7/1/2002 (4) 2,250 2,417
Houston TX Independent School Dist. 6.40% 8/15/2001 (Prere.) 4,095 4,396
Houston TX Water & Sewer System Rev. 0.00% 12/1/2000 (2) 6,130 5,689
Houston TX Water & Sewer System Rev. 5.40% 12/1/2000 8,000 8,300
Lewisville TX Independent School Dist. 6.55% 5/15/2003 (ETM) 5,000 5,594
Lower Colorado River Auth. TX 5.50% 1/1/2001 17,730 18,418
Plano TX Independent School Dist. GO 6.00% 2/15/2003 4,510 4,897
</TABLE>
21
<PAGE> 69
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
LIMITED-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
San Antonio TX Electric & Gas Rev. 7.00% 2/1/2000 $ 1,695 $ 1,735
San Antonio TX GO 5.40% 8/1/2004 7,495 7,881
San Antonio TX Independent School Dist. 6.00% 8/14/2004 4,165 4,610
Texas Muni. Power Agency Rev. 5.80% 9/1/2003 (1) 6,750 7,332
Texas Public Finance Auth. Refunding 5.50% 10/1/2006 4,000 4,392
Texas Water Dev. Financial Assistance Refunding GO 5.00% 8/1/2004 4,735 4,963
Texas Water Dev. Financial Assistance Refunding GO 5.00% 8/1/2005 3,405 3,552
Univ. of Texas Permanent Univ. Fund 6.50% 7/1/2001 (Prere.) 4,285 4,676
Univ. of Texas Permanent Univ. Fund 9.50% 7/1/2000 3,545 3,890
----------
178,820
----------
UTAH (0.2%)
Utah Water Finance Agency Rev. 4.70% 10/1/2001 (1) 5,000 5,143
----------
VIRGINIA (1.5%)
Virginia Port Auth. Rev. 4.75% 7/1/2004 8,210 8,545
Virginia Public School Auth. GO 5.00% 8/1/2000 6,345 6,519
Virginia Public School Auth. GO 5.00% 8/1/2002 12,415 12,997
Virginia Public School Auth. GO 5.00% 8/1/2003 6,200 6,534
----------
34,595
----------
WASHINGTON (3.9%)
King County WA School Dist. 6.30% 12/1/2003 5,375 5,906
Port Seattle WA Passenger Fac. Charge Rev. 5.00% 12/1/2003 (2) 3,000 3,137
Spokane WA Regional Solid Waste Management System Rev. 6.25% 1/1/2004 (2) 8,440 9,277
Spokane WA Regional Solid Waste Management System Rev. 6.25% 1/1/2005 (2) 8,975 9,965
Spokane WA Regional Solid Waste Management System Rev. 6.25% 1/1/2007 (2) 5,150 5,889
Washington GO 6.10% 9/1/2000 5,000 5,236
Washington GO 6.30% 9/1/2002 4,700 5,067
Washington GO 6.50% 7/1/2002 5,035 5,511
Washington GO 6.75% 6/1/2001 (Prere.) 20,000 21,542
Washington GO 7.00% 10/1/1999 7,555 7,827
Washington GO 7.00% 8/1/2002 4,000 4,451
Washington Health Care Fac. Auth. (Sisters of Providence) 6.00% 10/1/2000 (2) 3,030 3,168
Washington Health Care Fac. Auth. (Sisters of Providence) 6.00% 10/1/2001 (2) 4,735 5,034
----------
92,010
----------
WEST VIRGINIA (0.4%)
Wisconsin Building Comm. Lottery Rev. 5.50% 7/1/1999 (1) 2,500 2,544
Wisconsin Building Comm. Lottery Rev. 5.50% 7/1/2000 (1) 5,500 5,680
----------
8,224
----------
WISCONSIN (2.4%)
Wisconsin GO 5.00% 5/1/2004 10,895 11,483
Wisconsin GO 5.80% 5/1/2001 4,000 4,212
Wisconsin GO 6.00% 5/1/2003 14,055 15,336
Wisconsin Public Power System Rev. 7.30% 7/1/2000 (3)(Prere.) 4,000 4,324
Wisconsin Public Power System Rev. 7.40% 7/1/2000 (2)(Prere.) 19,500 21,108
----------
56,463
----------
WYOMING (0.4%)
Lincoln County WY PCR VRDO (Exxon Project) 3.70% 11/3/1998 1,500 1,500
Platte County WY PCR (Basin Electric Power Corp.) 4.20% 1/1/1999 3,370 3,377
Platte County WY PCR (Basin Electric Power Corp.) 4.40% 1/1/2000 3,945 3,990
----------
8,867
----------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $2,267,447) 2,318,885
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 70
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
(000)
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (0.9%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Other Assets--Note B $ 45,355
Liabilities (24,060)
------------
21,295
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- -------------------------------------------------------------------------------------------------------------------------
Applicable to 215,635,381 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $2,340,180
=========================================================================================================================
NET ASSET VALUE PER SHARE $10.85
=========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
+Securities with an aggregate value of $2,448,000 have been segregated as
initial margin for open futures contracts. For key to abbreviations and other
references, see page 61.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AT OCTOBER 31, 1998, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $2,294,957 $10.64
Undistributed Net Investment Income -- --
Accumulated Net Realized Losses--Note E (1,864) (.01)
Unrealized Appreciation (Depreciation)--Note F
Investment Securities 51,438 .24
Futures Contracts (4,351) (.02)
=========================================================================================================================
NET ASSETS $2,340,180 $10.85
=========================================================================================================================
</TABLE>
23
<PAGE> 71
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (98.9%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA (0.6%)
Birmingham AL GO VRDO 3.00% 11/4/1998 (2) LOC $ 9,700 $ 9,700
Huntsville AL Health Care Fac. Auth. 4.65% 6/1/2005 (1) 22,000 22,589
Huntsville AL Health Care Fac. Auth. VRDO 3.05% 11/4/1998 (1) 7,200 7,200
Univ. of Southern Alabama Hosp. Rev. 7.00% 5/15/2004 (2) 3,250 3,421
----------
42,910
----------
ALASKA (0.1%)
Alaska Housing Finance Corp. VRDO 3.10% 11/4/1998 1,000 1,000
Anchorage AK Electric Util. Rev. 8.00% 12/1/2011 (1) 5,395 7,266
----------
8,266
----------
ARIZONA (1.5%)
Arizona Transp. Board Excise Tax Rev. 6.00% 7/1/2005 (2) 18,885 21,134
Arizona Transp. Board Highway Rev. 8.75% 7/1/2003 10,000 12,095
Maricopa County AZ COP 6.00% 6/1/2004 5,275 5,490
Maricopa County AZ GO 6.25% 7/1/2002 (3) 5,100 5,546
Maricopa County AZ PCR VRDO (Arizona Public Service Palo Verde) 3.70% 11/3/1998 LOC 3,000 3,000
Maricopa County AZ (Samaritan Health Service) 7.15% 12/1/2004 (1) 9,900 11,529
Maricopa County AZ (Samaritan Health Service) 7.15% 12/1/2005 (1) 6,080 6,975
Mesa AZ GO 5.70% 7/1/2008 (1) 5,600 6,127
Phoenix AZ Civic Improvement Corp. Airport Rev. 5.25% 7/1/2009 (4) 4,795 5,198
Phoenix AZ Civic Improvement Corp. Airport Rev. 5.25% 7/1/2010 (4) 2,500 2,690
Phoenix AZ Civic Improvement Corp. Airport Rev. 5.25% 7/1/2011 (4) 3,000 3,206
Phoenix AZ Civic Improvement Corp. Water System 5.95% 7/1/2006 (Prere.) 6,600 7,429
Phoenix AZ Highway Rev. GO 9.25% 7/1/2007 4,000 5,455
Tucson AZ Unified School Dist. 7.50% 7/1/2006 (3) 8,840 10,836
Tucson AZ Unified School Dist. 7.50% 7/1/2007 (3) 8,000 9,970
----------
116,680
----------
CALIFORNIA (9.1%)
Anaheim CA Public Finance Auth. Rev. 6.00% 9/1/2008 (4) 2,000 2,307
Anaheim CA Public Finance Auth. Rev. 6.00% 9/1/2009 (4) 2,000 2,324
California Dept. of Water (Central Valley Project) 8.25% 12/1/2003 5,000 6,040
California Dept. of Water (Central Valley Project) 8.25% 12/1/2004 5,545 6,867
California Financial Auth. PCR VRDO (Pacific Gas & Electric) 3.60% 11/3/1998 LOC 2,200 2,200
California GO 5.70% 8/1/2007 17,500 19,340
California GO 5.75% 8/1/2008 (3) 15,000 16,657
California GO 6.75% 6/1/2004 13,165 15,095
California GO 7.00% 10/1/2005 (1) 5,000 5,935
California GO 7.10% 6/1/2005 12,495 14,780
California GO 11.00% 3/1/2006 13,185 18,970
California Health Fac. Finance Auth. (Catholic Healthcare West) 6.25% 7/1/2004 (1) 4,515 5,062
California Health Fac. Finance Auth. (Catholic Healthcare West) 6.25% 7/1/2005 (1) 5,875 6,660
California Health Fac. Finance Auth. (Catholic Healthcare West) 6.25% 7/1/2006 (1) 5,000 5,733
California Health Fac. Finance Auth. (Catholic Healthcare West) 6.25% 7/1/2007 (1) 5,290 6,101
California Health Fac. Finance Auth. (Sisters of Providence) 6.00% 10/1/2002 3,865 4,198
California Health Fac. Finance Auth. (Sisters of Providence) 6.00% 10/1/2003 4,095 4,513
California Health Fac. Finance Auth. (Sisters of Providence) 6.00% 10/1/2004 4,340 4,842
California Higher Educ. Loan Auth. Student Loan Rev. VRDO 3.15% 11/4/1998 LOC 500 500
California Public Works Board (Community College Project) 5.625% 3/1/2016 (2) 20,000 21,556
California Public Works Board (Dept. of Corrections) 5.375% 11/1/2011 6,500 6,938
California Public Works Board (Dept. of Corrections) 5.375% 11/1/2012 7,990 8,475
California Public Works Board (Dept. of Corrections) 5.50% 1/1/2015 (1) 10,000 10,643
California Public Works Board (Dept. of Corrections) 6.00% 1/1/2008 (2) 14,865 16,865
California Public Works Board (State Archives) 5.375% 12/1/2009 4,555 4,929
California Public Works Board (State Archives) 5.375% 12/1/2010 6,635 7,124
California Public Works Board (State Archives) 5.375% 12/1/2012 7,895 8,377
California Public Works Board (Univ. of California) 6.10% 12/1/2005 (2) 6,515 7,215
California Public Works Board (Univ. of California) 6.20% 12/1/2006 (2) 3,320 3,689
California Public Works Board (Various Univ. Projects) 5.375% 12/1/2019 (2) 8,900 9,297
California State Dept. of Veteran Affairs 5.45% 12/1/2019 15,000 15,546
</TABLE>
24
<PAGE> 72
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California Statewide Community Dev. Auth. PUT (Irvine) 4.90% 5/15/2008 $25,000 $ 25,535
Clovis CA Unified School Dist. GO 0.00% 8/1/2000 7,000 6,572
Clovis CA Unified School Dist. GO 0.00% 8/1/2001 11,180 10,088
Contra Costa CA COP (Merrithew Memorial Hosp. Project) 5.50% 11/1/2011 (1) 5,660 6,177
Fresno CA Sewer Rev. 6.25% 9/1/2014 (2) 12,000 14,224
Irvine CA Assessment Dist. VRDO (Oak Creek) 3.55% 11/3/1998 LOC 4,400 4,400
Irvine CA Ranch Water Dist. VRDO 3.50% 11/3/1998 LOC 1,100 1,100
Irvine CA Unified School Dist. GO 5.50% 11/1/2013 (2) 4,565 4,974
Long Beach CA Harbor Rev. 7.10% 5/15/1999 2,900 2,967
Los Angeles County CA Transp. Comm. Sales Tax Rev. 6.50% 7/1/2010 (4) 51,070 61,500
Los Angeles County CA Transp. Auth. Sales Tax. Rev. 8.00% 7/1/2001 (2) 6,365 7,082
Los Angeles County CA Transp. Auth. Sales Tax Rev. 8.00% 7/1/2002 (2) 3,915 4,496
Metro. Water Dist. of Southern California 7.75% 7/1/2001 (Prere.) 9,380 10,566
Northern California Power Agency (Hydroelectric Project) 6.10% 7/1/2005 (1) 5,575 6,299
Northern California Power Agency (Hydroelectric Project) 6.20% 7/1/2006 (1) 5,940 6,825
Northern California Power Agency (Hydroelectric Project) 6.25% 7/1/2007 (1) 6,685 7,772
Oakland CA Redev. Agency (Central Dist. Project) 5.75% 2/1/2004 (2) 1,535 1,680
Oakland CA Redev. Agency (Central Dist. Project) 5.90% 2/1/2005 (2) 4,870 5,423
Orange County CA Local Transp. Auth. Sales Tax Rev. 5.50% 2/15/2009 (1) 5,000 5,547
Orange County CA Local Transp. Auth. Sales Tax Rev. 5.50% 2/15/2010 (1) 10,035 11,141
Orange County CA Sanitation Dist. VRDO. 3.55% 11/3/1998 (3) 15,000 15,000
San Bernardino CA Medical Center COP 5.50% 8/1/2004 (1) 7,150 7,757
San Bernardino CA Medical Center COP 5.50% 8/1/2005 (1) 10,000 10,916
San Bernardino CA Medical Center COP 5.50% 8/1/2006 (1) 8,500 9,342
San Bernardino CA Medical Center COP 6.75% 8/1/2010 11,385 12,575
San Bernardino CA Medical Center COP 7.00% 8/1/2008 (1) 9,045 11,095
San Bernardino CA Medical Center COP 7.00% 8/1/2009 (1) 9,705 12,103
San Bernardino CA Medical Center COP 7.00% 8/1/2010 (1) 10,525 13,213
San Diego CA Unified School Dist. TRAN 4.50% 10/1/1999 35,000 35,482
San Diego County CA Regional Transp. Auth. Sales Tax Rev. 7.00% 4/1/2001 (Prere.) 3,220 3,543
San Diego County CA Regional Transp. Auth. Sales Tax Rev. 7.00% 4/1/2006 1,780 2,045
San Diego County CA Water Rev. COP 5.40% 5/1/2003 5,000 5,363
San Diego County CA Water Rev. COP 5.50% 5/1/2005 4,245 4,647
San Joaquin Hills CA Toll Rev. 0.00% 1/15/2004 25,000 20,392
San Joaquin Hills CA Toll Rev. 0.00% 1/15/2005 25,000 19,539
San Joaquin Hills CA Toll Rev. 0.00% 1/15/2006 16,000 11,933
Santa Margarita/Dana Point CA Water Dist. Rev. 5.50% 8/1/2011 (2) 4,785 5,214
Santa Margarita/Dana Point CA Water Dist. Rev. 5.50% 8/1/2012 (2) 3,315 3,595
South Orange County CA Public Finance Auth. 7.00% 9/1/2006 (1) 500 598
Southern California Public Power Auth. 6.75% 7/1/1999 6,190 6,349
Southern California Rapid Transit Dist. Rev. 5.70% 9/1/2004 (2) 14,040 15,462
Univ. of California Rev. (Multi Purpose Project) 10.00% 9/1/2003 (2) 3,790 4,830
----------
704,139
----------
COLORADO (0.9%)
Colorado Health Fac. Auth. Rev.
(Sisters of Charity Health System Inc.) 5.25% 12/1/2009 (1) 2,965 3,166
Colorado Health Fac. Auth. Rev.
(Sisters of Charity Health System Inc.) 5.25% 12/1/2010 (1) 1,740 1,844
Colorado Health Fac. Auth. Rev.
(Sisters of Charity Health System Inc.) 5.25% 12/1/2011 (1) 3,415 3,590
Colorado Health Fac. Auth. Rev.
(Sisters of Charity Health System Inc.) 5.25% 12/1/2012 (1) 2,250 2,346
Colorado Health Fac. Auth. Rev.
(Sisters of Charity Health System Inc.) 8.50% 5/15/2004 (1) 17,500 21,379
Denver CO City & County School Dist. 6.95% 12/15/1999 (3)(Prere.) 4,390 4,619
Denver CO City & County School Dist. 6.95% 12/15/2000 (3) 4,860 5,093
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2011 (1) 8,000 4,429
E-470 Public Highway Auth. CO Rev. 4.80% 9/1/2009 (1) 6,095 6,362
E-470 Public Highway Auth. CO Rev. 4.90% 9/1/2010 (1) 5,000 5,214
E-470 Public Highway Auth. CO Rev. 5.00% 9/1/2011 (1) 7,250 7,564
E-470 Public Highway Auth. CO Rev. 5.00% 9/1/2017 7,500 7,531
----------
73,137
----------
CONNECTICUT (2.1%)
Connecticut GO 5.00% 12/1/2010 10,000 10,566
Connecticut GO 5.30% 11/15/2006 16,940 18,238
</TABLE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Connecticut GO 5.40% 11/15/2007 $ 24,010 $ 25,890
Connecticut GO 6.00% 5/15/2003 5,000 5,478
Connecticut GO 6.00% 10/1/2004 5,660 6,311
Connecticut GO 7.00% 3/15/2003 5,000 5,656
Connecticut Resource Recovery Auth. (Bridgeport Resco) 8.40% 1/1/1999 4,950 4,990
Connecticut Special Tax Obligation Rev. (Transp. Infrastructure) 5.125% 9/1/2005 11,575 12,370
Connecticut Special Tax Obligation Rev. (Transp. Infrastructure) 5.25% 9/1/2006 42,550 45,607
Connecticut Special Tax Obligation Rev. (Transp. Infrastructure) 7.125% 6/1/2010 12,000 14,985
Connecticut Special Tax Obligation Rev. (Transp. Infrastructure) 7.75% 6/1/2000 11,300 12,048
----------
162,139
----------
DELAWARE (0.3%)
Delaware Transp. Auth. Rev. 5.625% 7/1/2006 (1) 11,420 12,236
Delaware Transp. Auth. Rev. 5.80% 7/1/2008 4,950 5,356
Delaware Transp. Auth. Rev. 5.80% 7/1/2008 (Prere.) 2,595 2,827
----------
20,419
----------
DISTRICT OF COLUMBIA (1.9%)
District of Columbia GO 5.20% 6/1/2008 (2) 4,390 4,669
District of Columbia GO 5.30% 6/1/2009 (2) 4,600 4,919
District of Columbia GO 5.375% 6/1/2011 5,255 5,579
District of Columbia GO 5.50% 6/1/2006 (4) 6,205 6,728
District of Columbia GO 5.50% 6/1/2013 5,750 6,115
District of Columbia GO 5.75% 6/1/2003 (2)(Prere.) 190 208
District of Columbia GO 5.75% 6/1/2007 (2) 4,860 5,273
District of Columbia GO 5.75% 6/1/2010 (1) 23,590 26,139
District of Columbia GO 5.80% 6/1/2004 (3) 12,045 13,070
District of Columbia GO 5.80% 6/1/2004 (3)(ETM) 955 1,042
District of Columbia GO 6.00% 6/1/2004 (1)(Prere.) 8,890 9,919
District of Columbia GO 6.10% 6/1/2004 (1)(Prere.) 7,000 7,845
District of Columbia GO 6.30% 6/1/2002 (1)(Prere.) 15,120 16,661
District of Columbia GO 6.30% 6/1/2005 (1) 4,880 5,336
District of Columbia GO 7.50% 6/1/1999 (2)(Prere.) 17,875 18,696
District of Columbia Hosp. Rev. (Medlantic Health Group) 6.00% 8/15/2007 (1) 2,985 3,355
District of Columbia Hosp. Rev. (Medlantic Health Group) 6.00% 8/15/2008 (1) 3,160 3,583
District of Columbia Hosp. Rev. (Medlantic Health Group) 6.00% 8/15/2010 (1) 2,555 2,913
District of Columbia Hosp. Rev. (Medlantic Health Group) 6.00% 8/15/2012 (1) 2,995 3,439
----------
145,489
----------
FLORIDA (4.8%)
Broward County FL School Board COP 5.75% 7/1/2003 (2) 9,000 9,748
Broward County FL School Board COP 5.75% 7/1/2004 (2) 9,515 10,407
Broward County FL School Board COP 5.75% 7/1/2005 (2) 5,445 6,011
Broward County FL School Dist. GO 5.40% 2/15/2005 5,000 5,370
Broward County FL School Dist. GO 5.50% 2/15/2006 10,080 10,836
Dade County FL Sales Tax Rev. 6.00% 10/1/2002 (2) 5,000 5,423
Dade County FL School Board COP 5.25% 8/1/2009 (2) 11,320 12,237
Dade County FL School Board COP 5.25% 8/1/2010 (2) 12,140 13,030
Dade County FL School Board COP 5.375% 5/1/2010 (2) 4,775 5,117
Dade County FL School Dist. GO 6.25% 2/15/2004 (1) 5,520 6,146
Florida Board of Educ. (Capital Outlay Rev.) 0.00% 6/1/2000 (Prere.) 15,000 4,952
Florida Board of Educ. (Capital Outlay Rev.) 4.90% 6/1/2008 6,905 7,248
Florida Board of Educ. (Capital Outlay Rev.) 5.00% 6/1/2009 3,620 3,799
Florida Board of Educ. (Capital Outlay Rev.) 5.25% 6/1/2005 4,815 5,178
Florida Board of Educ. (Capital Outlay Rev.) 5.25% 1/1/2009 15,065 16,310
Florida Board of Educ. (Capital Outlay Rev.) 5.25% 1/1/2010 15,775 16,944
Florida Board of Educ. (Capital Outlay Rev.) 5.50% 6/1/2004 5,095 5,519
Florida Board of Educ. (Capital Outlay Rev.) 6.50% 6/1/2005 5,000 5,733
Florida Board of Educ. (Lottery Rev.) 5.25% 7/1/2009 9,785 10,634
Florida Board of Educ. (Lottery Rev.) 5.25% 7/1/2010 10,300 11,102
Florida Board of Educ. (Lottery Rev.) 5.25% 7/1/2011 10,840 11,589
Florida Board of Educ. (Lottery Rev.) 5.25% 7/1/2012 11,410 12,108
Florida Dept. of General Services Rev.
(Dept. of Environmental Protection Preservation-2000) 5.00% 7/1/2011 (2) 6,575 6,846
</TABLE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida Dept. of General Services Rev.
(Dept. of Environmental Protection Preservation-2000) 5.125% 7/1/2009 (2) $ 5,325 $ 5,682
Florida Dept. of General Services Rev.
(Dept. of Environmental Protection Preservation-2000) 5.625% 7/1/2008 (2) 5,000 5,451
Florida Dept. of General Services Rev.
(Dept. of Environmental Protection Preservation-2000) 6.00% 7/1/2006 (2) 18,560 20,977
Florida School Board Assn. Rev. (Orange County) 6.90% 7/1/1999 (2) 12,450 12,780
Florida Turnpike Auth. Rev. 5.25% 7/1/2009 (3) 6,000 6,521
Florida Turnpike Auth. Rev. 5.25% 7/1/2010 (3) 6,000 6,467
Florida Turnpike Auth. Rev. 5.25% 7/1/2011 (3) 7,185 7,681
Florida Turnpike Auth. Rev. 5.25% 7/1/2012 (3) 7,560 8,023
Florida Turnpike Auth. Rev. 5.25% 7/1/2013 (3) 7,755 8,169
Hillsborough County FL School Dist. GO 7.10% 8/15/2003 23,665 25,621
Lakeland FL Electric & Water Rev. 6.25% 10/1/2003 (3) 6,465 7,160
Lakeland FL Electric & Water Rev. 6.50% 10/1/2006 (3) 5,300 6,176
Lee County FL School Board 6.00% 8/1/2005 (4) 4,175 4,675
Palm Beach County FL School Board 6.00% 8/1/2005 (2) 6,115 6,855
Palm Beach County FL School Board 6.00% 8/1/2006 (2) 6,480 7,332
Palm Beach County FL Solid Waste Auth. Rev. 5.25% 10/1/2003 (2) 7,760 8,264
Palm Beach County FL Solid Waste Auth. Rev. 5.25% 10/1/2003 (2)(ETM) 1,240 1,322
Palm Beach County FL Solid Waste Auth. Rev. 5.50% 10/1/2006 (2) 13,910 15,314
Tampa FL Rev. (Catholic Health System) 5.25% 11/15/2011 (1) 3,000 3,182
----------
369,939
----------
GEORGIA (2.6%)
DeKalb County GA GO 5.60% 1/1/2005 3,040 3,243
Fulton County GA School Dist. GO 6.375% 5/1/2010 15,000 17,801
Georgia GO 6.30% 4/1/2002 3,820 4,147
Georgia GO 6.30% 3/1/2007 15,000 17,424
Georgia GO 6.50% 8/1/2001 3,230 3,481
Georgia GO 6.50% 12/1/2003 5,000 5,639
Georgia GO 6.50% 7/1/2005 5,000 5,754
Georgia GO 6.75% 9/1/2010 8,000 9,828
Georgia GO 6.80% 8/1/2002 8,000 8,880
Georgia GO 7.00% 11/1/2004 5,000 5,837
Georgia GO 7.00% 11/1/2005 15,670 18,580
Georgia GO 7.00% 11/1/2006 16,780 20,211
Georgia GO 7.00% 11/1/2007 17,960 21,939
Georgia GO 7.10% 9/1/2009 3,400 4,261
Georgia GO 7.25% 9/1/2005 3,630 4,343
Georgia GO 7.25% 9/1/2006 7,860 9,567
Georgia GO 7.40% 8/1/2007 11,200 13,947
Georgia Muni. Electric Power Auth. Rev. 6.30% 1/1/2005 12,775 14,300
Monroe County GA Dev. Auth. (Oglethorpe Power Corp.) 6.65% 1/1/2008 9,220 10,733
----------
199,915
----------
HAWAII (1.9%)
Hawaii Airport System Rev. 5.40% 7/1/2002 (1) 7,855 8,290
Hawaii Airport System Rev. 5.85% 7/1/2002 (1) 7,830 8,383
Hawaii Airport System Rev. 5.95% 7/1/2003 (1) 2,590 2,819
Hawaii Airport System Rev. 6.05% 7/1/2004 (1) 3,145 3,475
Hawaii Airport System Rev. 6.15% 7/1/2005 (1) 10,735 11,887
Hawaii Airport System Rev. 6.25% 7/1/2006 5,000 5,558
Hawaii GO 5.00% 2/1/2004 10,000 10,469
Hawaii GO 5.00% 2/1/2005 6,650 6,942
Hawaii GO 5.125% 2/1/2006 11,605 12,148
Hawaii GO 5.50% 7/1/2001 6,500 6,798
Hawaii GO 6.40% 3/1/2007 5,555 6,390
Honolulu HI City & County GO 5.50% 11/1/2008 (3) 7,130 7,844
Honolulu HI City & County GO 5.75% 1/1/2006 8,825 9,704
Honolulu HI City & County GO 6.00% 1/1/2008 5,000 5,630
Honolulu HI City & County GO 6.30% 3/1/2010 4,830 5,303
Honolulu HI City & County GO 8.00% 10/1/2009 30,560 39,923
----------
151,563
----------
</TABLE>
27
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ILLINOIS (3.8%)
Chicago IL Metro. Sanitation Dist. 8.75% 1/1/2000 (Prere.) $ 2,980 $ 3,161
Chicago IL Metro. Water Reclamation Dist. 5.85% 12/1/2003 6,355 6,946
Chicago IL Metro. Water Reclamation Dist. 5.90% 12/1/2006 4,450 5,016
Chicago IL Metro. Water Reclamation Dist. 6.00% 12/1/2008 9,900 11,309
Chicago IL Metro. Water Reclamation Dist. 6.05% 12/1/2009 3,000 3,450
Chicago IL Metro. Water Reclamation Dist. 6.10% 12/1/2006 5,300 5,967
Chicago IL Metro. Water Reclamation Dist. 6.25% 12/1/2005 (Prere.) 15,000 17,054
Chicago IL School Finance Auth. 5.20% 6/1/2005 (3) 3,000 3,188
Chicago IL School Finance Auth. 5.375% 6/1/2008 (3) 9,500 10,065
Chicago IL School Finance Auth. 6.00% 6/1/2001 (3) 8,305 8,773
Chicago IL School Finance Auth. 6.10% 6/1/2002 (3) 11,945 12,855
Chicago IL Water Rev. 5.50% 11/1/2003 (2) 5,000 5,367
Cook County IL GO 5.75% 11/15/2003 (3) 5,000 5,432
Cook County IL GO 5.80% 11/15/2004 10,000 10,986
Cook County IL GO 6.60% 11/1/2003 (2) 4,785 5,274
Cook County IL GO 6.75% 11/1/2001 (2) 3,000 3,319
Illinois Dev. Finance Auth. PCR PUT (Commonwealth Edison) 4.40% 12/1/2006 (2) 45,400 46,203
Illinois GO 6.25% 10/1/2005 6,000 6,598
Illinois Health Fac. Auth. (Lutheran General Health Systems) 7.25% 4/1/1999 (Prere.) 745 763
Illinois Health Fac. Auth. (Lutheran General Health Systems) 7.25% 4/1/2000 3,995 4,114
Illinois Health Fac. Auth. Rev. (Sisters Services Inc.) 5.25% 6/1/2008 4,000 4,263
Illinois Health Fac. Auth. Rev. (Sisters Services Inc.) 5.25% 6/1/2009 4,695 5,001
Illinois Health Fac. Auth. Rev. (Sisters Services Inc.) 5.25% 6/1/2010 5,000 5,298
Illinois Health Fac. Auth. Rev. (Sisters Services Inc.) 5.25% 6/1/2011 4,000 4,206
Illinois Health Fac. Auth. Rev. (Sisters Services Inc.) 5.25% 6/1/2012 4,280 4,465
Illinois Health Fac. Auth. VRDO (Univ. of Chicago Hosp. Project) 3.05% 11/4/1998 (1) 700 700
Illinois Metro. Pier & Exposition Auth. Rev. 6.50% 6/1/2006 (2) 11,885 13,753
Illinois Metro. Pier & Exposition Auth. Rev. 6.75% 6/1/2010 (2) 25,000 30,110
Illinois Metro. Pier & Exposition Auth. Rev. 7.25% 6/15/2005 (2) 12,895 15,189
Illinois Metro. Pier & Exposition Auth. Rev. 7.25% 6/15/2005 (2)(ETM) 2,105 2,500
Illinois Regional Transp. Auth. 9.00% 6/1/2005 (2) 5,220 6,697
Illinois Regional Transp. Auth. 9.00% 6/1/2008 (2) 6,840 9,344
Illinois Regional Transp. Auth. 9.00% 6/1/2009 (2) 4,255 5,906
Illinois Sales Tax Rev. 6.50% 6/15/2013 5,000 5,953
Illinois Toll Highway Auth. Rev. VRDO 3.05% 11/4/1998 (1) LOC 6,700 6,700
----------
295,925
----------
INDIANA (0.8%)
East Chicago IN School Building Corp. 11.75% 2/1/1999 (Prere.) 4,625 4,712
Hammond IN PCR VRDO (Amoco Co. Project) 3.70% 11/3/1998 1,000 1,000
Indiana Health Fac. Finance Auth. Hosp. Rev. VRDO
(Charity Obligated Group-Daughters of Charity
National Health System) 3.05% 11/4/1998 3,700 3,700
Indiana Muni. Power Agency 5.875% 1/1/2010 (1) 4,500 5,093
Indiana Office Building Comm. Rev. 6.65% 7/1/2001 4,500 4,784
Indiana Office Building Comm. Rev. 6.70% 7/1/2002 5,290 5,642
Indiana Univ. Student Fee Bonds 6.80% 8/1/2004 25,000 27,151
Indiana Univ. Student Fee Bonds 7.00% 8/1/2006 5,845 6,304
----------
58,386
----------
KENTUCKY (0.8%)
Kentucky Dev. Finance Auth. (Sisters of Charity) 6.60% 11/1/2006 5,000 5,505
Kentucky Dev. Finance Auth. (St. Elizabeth Medical Center) 6.625% 11/1/2004 (3) 20,025 21,805
Kentucky Property & Buildings Comm. Rev. 5.25% 11/1/2008 2,500 2,687
Kentucky Property & Buildings Comm. Rev. 5.50% 9/1/2003 8,000 8,584
Kentucky Property & Buildings Comm. Rev. 5.60% 9/1/2004 3,000 3,228
Kentucky Property & Buildings Comm. Rev. 5.70% 9/1/2005 7,350 7,914
Kentucky Property & Buildings Comm. Rev. 6.875% 8/1/2006 10,400 11,476
----------
61,199
----------
LOUISIANA (1.8%)
East Baton Rouge Parish LA PCR VRDO (Exxon Project) 3.70% 11/3/1998 2,700 2,700
Jefferson Parish LA Sales Tax Rev. 6.75% 12/1/2002 (3)(Prere.) 3,400 3,787
</TABLE>
28
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jefferson Parish LA Sales Tax Rev. 6.75% 12/1/2006 (3) $ 7,600 $ 8,402
Louisiana Gas & Fuel Tax Rev. 7.20% 11/15/1999 9,500 9,883
Louisiana Gas & Fuel Tax Rev. 7.25% 11/15/2000 5,250 5,544
Louisiana Gas & Fuel Tax Rev. 7.25% 11/15/2004 11,000 11,636
Louisiana GO 5.25% 4/15/2011 (4) 11,395 12,104
Louisiana GO 5.50% 4/15/2003 (3) 4,445 4,744
Louisiana GO 6.00% 4/15/2004 (3) 7,210 7,926
Louisiana GO 6.25% 4/15/2005 (3) 6,455 7,263
Louisiana GO 6.75% 5/15/2002 (1) 7,680 8,431
Louisiana GO 7.00% 9/1/2000 (Prere.) 11,540 12,479
Louisiana GO 7.00% 8/1/2004 (1) 5,810 6,694
Louisiana GO 7.75% 8/1/2006 (1) 10,970 13,568
Louisiana GO 8.75% 9/1/2000 (4) 8,830 9,654
Louisiana GO 8.75% 9/1/2001 (4) 9,445 10,504
Louisiana Public Fac. Auth. (Franciscan Missionaries) 5.375% 7/1/2011 4,990 5,317
----------
140,636
----------
MAINE
Maine Muni. Bond Bank 4.90% 11/1/2002 2,500 2,609
----------
MARYLAND (0.1%)
Maryland GO 5.00% 10/15/1999 LOC 8,520 8,683
----------
MASSACHUSETTS (7.5%)
Boston MA GO 5.25% 4/1/2010 (3) 5,670 6,052
Boston MA GO 5.25% 4/1/2011 (3) 5,925 6,277
Boston MA GO 5.25% 4/1/2012 (3) 6,195 6,519
Boston MA Water & Sewer Comm. 5.75% 11/1/2013 6,325 7,049
Chelsea MA GO 5.50% 6/15/2008 (2) 5,735 6,296
Chelsea MA GO 5.50% 6/15/2009 (2) 5,490 6,037
Chelsea MA GO 5.50% 6/15/2011 (2) 5,000 5,444
Chelsea MA GO 5.50% 6/15/2012 (2) 5,000 5,419
Massachusetts Bay Transp. Auth. 7.25% 3/1/2003 (3) 16,000 17,071
Massachusetts GO 5.00% 11/1/2009 5,000 5,260
Massachusetts GO 5.10% 2/1/2005 25,000 26,497
Massachusetts GO 5.125% 11/1/2013 11,000 11,387
Massachusetts GO 5.25% 4/1/2010 12,930 13,866
Massachusetts GO 5.25% 4/1/2011 13,605 14,481
Massachusetts GO 5.25% 4/1/2012 14,320 15,140
Massachusetts GO 5.25% 6/1/2014 (3) 18,000 18,800
Massachusetts GO 5.50% 2/1/2011 17,575 18,814
Massachusetts GO 5.50% 2/1/2011 (1) 10,000 10,705
Massachusetts GO 5.50% 7/1/2013 5,360 5,881
Massachusetts GO 5.70% 2/1/2008 (1) 6,805 7,425
Massachusetts GO 6.25% 7/1/2002 10,000 10,863
Massachusetts GO 6.50% 8/1/2002 (Prere.) 3,840 4,283
Massachusetts GO 6.90% 6/1/2000 (2) 2,500 2,604
Massachusetts GO 7.00% 6/1/1999 (Prere.) 3,000 3,130
Massachusetts GO 7.00% 6/1/1999 (2)(Prere.) 5,000 5,217
Massachusetts GO 7.50% 6/1/2004 3,975 4,564
Massachusetts Grant Anticipation Notes 5.25% 6/15/2010 23,675 25,416
Massachusetts Grant Anticipation Notes 5.25% 12/15/2010 26,275 28,207
Massachusetts Grant Anticipation Notes 5.25% 6/15/2011 15,000 15,989
Massachusetts Grant Anticipation Notes 5.25% 12/15/2011 15,000 15,989
Massachusetts Health & Educ. Fac. Auth. (Boston Medical Center) 5.25% 7/1/2009 (1) 4,215 4,532
Massachusetts Health & Educ. Fac. Auth. (Boston Medical Center) 5.25% 7/1/2010 (1) 4,440 4,745
Massachusetts Health & Educ. Fac. Auth. (Boston Medical Center) 5.25% 7/1/2011 (1) 4,670 4,953
Massachusetts Health & Educ. Fac. Auth. (Boston Medical Center) 5.25% 7/1/2012 (1) 2,000 2,105
Massachusetts Health & Educ. Fac. Auth. (Harvard Pilgrim Health) 5.25% 7/1/2009 (4) 6,375 6,855
Massachusetts Health & Educ. Fac. Auth. (Harvard Pilgrim Health) 5.25% 7/1/2010 (4) 5,970 6,381
Massachusetts Health & Educ. Fac. Auth. (Harvard Pilgrim Health) 5.25% 7/1/2011 (4) 3,530 3,744
</TABLE>
29
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts Health & Educ. Fac. Auth. (Harvard Pilgrim Health) 5.25% 7/1/2012 (4) $ 6,310 $ 6,642
Massachusetts Health & Educ. Fac. Auth. (Partners Healthcare System) 5.25% 7/1/2003 (4) 4,055 4,295
Massachusetts Health & Educ. Fac. Auth. VRDO (Harvard Univ.) 3.00% 11/5/1998 1,400 1,400
Massachusetts Ind. Finance Agency (Refusetech Inc. Project) 6.15% 7/1/2002 5,040 5,282
Massachusetts Ind. Finance Agency (Refusetech Inc. Project) 6.30% 7/1/2005 21,500 23,227
Massachusetts Ind. Finance Auth. Rev. (BioMed Research Corp.) 0.00% 8/1/2004 10,000 7,896
Massachusetts Ind. Finance Auth. Rev. (BioMed Research Corp.) 7.10% 8/1/1999 6,485 6,677
Massachusetts Turnpike Auth. BAN 5.00% 6/1/1999 (ETM) 1,410 1,425
Massachusetts Turnpike Auth. Rev. 4.75% 1/1/2004 2,500 2,601
Massachusetts Water Pollution Abatement Trust 5.25% 8/1/2009 6,425 6,928
Massachusetts Water Pollution Abatement Trust 5.25% 8/1/2011 7,305 7,769
Massachusetts Water Pollution Abatement Trust 5.25% 8/1/2012 2,375 2,508
Massachusetts Water Resources Auth. Rev. 5.25% 3/1/2007 5,000 5,291
Massachusetts Water Resources Auth. Rev. 5.25% 3/1/2009 7,175 7,521
Massachusetts Water Resources Auth. Rev. 5.50% 11/1/2007 32,860 34,988
Massachusetts Water Resources Auth. Rev. 6.50% 7/15/2010 30,220 35,763
Massachusetts Water Resources Auth. Rev. 6.50% 7/15/2019 37,515 45,112
Massachusetts Water Resources Auth. Rev. 7.25% 4/1/2001 9,800 10,463
----------
579,785
----------
MICHIGAN (3.6%)
Detroit MI GO 5.80% 5/1/2002 (2) 8,970 9,567
Detroit MI GO 5.90% 5/1/2003 (2) 9,490 10,285
Detroit MI Sewer System Rev. 5.25% 7/1/2015 (1) 4,000 4,120
Greater Detroit MI Resource Recovery Auth. 5.50% 12/13/2004 (2) 7,505 8,123
Greater Detroit MI Resource Recovery Auth. 6.25% 12/13/2005 (2) 12,905 14,637
Greater Detroit MI Resource Recovery Auth. 6.25% 12/13/2006 (2) 17,475 20,021
Greater Detroit MI Resource Recovery Auth. 6.25% 12/13/2007 (2) 11,070 12,755
Greater Detroit MI Resource Recovery Auth. 6.25% 12/13/2008 5,625 6,542
Michigan Building Auth. Rev. 4.75% 10/15/2013 15,000 15,032
Michigan Building Auth. Rev. 5.375% 10/15/2010 5,880 6,340
Michigan Building Auth. Rev. 5.50% 10/15/2008 17,525 19,332
Michigan Building Auth. Rev. 6.00% 10/1/2009 (2) 8,735 9,246
Michigan Building Auth. Rev. 6.50% 10/1/2003 (2) 3,000 3,275
Michigan Hosp. Finance Auth. Rev. (Genesys Regional Medical Center) 5.30% 10/1/2011 10,840 11,164
Michigan Hosp. Finance Auth. Rev. (Genesys Regional Medical Center) 5.375% 10/1/2013 4,000 4,098
Michigan Hosp. Finance Auth. Rev. (Genesys Regional Medical Center) 5.50% 10/1/2006 3,340 3,563
Michigan Hosp. Finance Auth. Rev. (Genesys Regional Medical Center) 5.50% 10/1/2007 3,910 4,183
Michigan Muni. Bond Auth. Local Govt. Loan Auth. 0.00% 12/1/1999 (3) 6,000 5,802
Michigan Muni. Bond Auth. Local Govt. Loan Auth. 0.00% 12/1/2000 (3) 5,590 5,192
Michigan Muni. Bond Auth. Local Govt. Loan Auth. 0.00% 12/1/2001 (3) 9,630 8,595
Michigan Public Power Agency 5.30% 1/1/2005 13,075 13,927
Michigan Public Power Agency 5.375% 1/1/2006 13,790 14,695
Michigan Public Power Agency 5.50% 1/1/2007 14,545 15,563
Michigan Public Power Agency 5.50% 1/1/2008 9,360 9,952
Wayne Charter County MI Airport Rev. 5.25% 12/1/2010 (1) 12,000 12,759
Wayne Charter County MI Airport Rev. 5.25% 12/1/2011 (1) 10,845 11,441
Wayne Charter County MI Airport Rev. 5.25% 12/1/2012 (1) 15,770 16,503
----------
276,712
----------
MINNESOTA (0.7%)
Minnesota GO 5.00% 6/1/2010 8,485 8,961
Minnesota GO 5.00% 6/1/2011 8,675 9,092
Minnesota GO 5.00% 6/1/2012 3,255 3,388
Minnesota GO 5.125% 11/1/2009 8,275 8,802
Western Minnesota Muni. Power Agency 5.375% 1/1/2008 (2) 5,645 6,154
Western Minnesota Muni. Power Agency 5.50% 1/1/2010 (2) 14,045 15,272
----------
51,669
----------
MISSISSIPPI (0.3%)
Mississippi GO 5.125% 12/1/2011 6,100 6,377
Mississippi GO 5.25% 5/1/2008 5,805 6,166
</TABLE>
30
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mississippi GO 6.50% 5/1/2003 $ 4,285 $ 4,767
Mississippi GO 7.00% 5/1/2005 4,840 5,658
----------
22,968
----------
MISSOURI (0.1%)
St. Louis County MO Rockwood School Dist. GO 8.50% 2/1/2002 5,940 6,805
----------
MONTANA (0.3%)
Forsyth MT PCR PUT (Portland General Electric Co.) 4.60% 5/1/2003 10,000 10,142
Montana Health Fac. Auth. Rev. (Sisters of Charity Health System) 5.25% 12/1/2009 (1) 3,330 3,576
Montana Health Fac. Auth. Rev. (Sisters of Charity Health System) 5.25% 12/1/2010 (1) 2,445 2,606
Montana Health Fac. Auth. Rev. (Sisters of Charity Health System) 5.25% 12/1/2011 (1) 4,980 5,266
Montana Health Fac. Auth. Rev. (Sisters of Charity Health System) 5.25% 12/1/2012 (1) 2,725 2,858
----------
24,448
----------
NEBRASKA (0.7%)
Nebraska Public Power Dist. Rev. 5.25% 1/1/2010 (1) 26,500 28,299
Nebraska Public Power Dist. Rev. 5.25% 1/1/2011 (1) 10,000 10,609
Nebraska Public Power Dist. Rev. 5.60% 7/1/2003 13,175 14,134
----------
53,042
----------
NEVADA (4.1%)
Clark County NV Airport System Refunding Rev. VRDO
(McCarran International Airport) 3.05% 11/4/1998 (1) 1,000 1,000
Clark County NV Airport System Rev. 5.25% 7/1/2012 (1) 4,225 4,458
Clark County NV Airport System Rev. 5.375% 7/1/2010 (1) 8,470 9,142
Clark County NV GO 5.50% 6/1/2012 (3) 6,365 6,845
Clark County NV GO 5.60% 6/1/2013 (3) 7,175 7,753
Clark County NV GO 5.625% 6/1/2014 (3) 7,450 8,028
Clark County NV GO 7.50% 6/1/2006 (2) 3,575 4,351
Clark County NV GO 7.50% 6/1/2007 (2) 9,550 11,813
Clark County NV GO 7.50% 6/1/2009 (2) 6,825 8,673
Clark County NV GO 8.00% 6/1/2008 (2) 9,875 12,738
Clark County NV Passenger Fac. Rev.
(McCarran International Airport) 5.375% 7/1/2010 (1) 6,435 6,945
Clark County NV Passenger Fac. Rev.
(McCarran International Airport) 5.375% 7/1/2011 (1) 9,445 10,140
Clark County NV Passenger Fac. Rev.
(McCarran International Airport) 5.375% 7/1/2012 (1) 8,295 8,852
Clark County NV School Dist. GO 5.375% 5/1/2006 (3) 3,740 3,970
Clark County NV School Dist. GO 5.375% 5/1/2007 (3) 9,195 9,745
Clark County NV School Dist. GO 5.375% 5/1/2008 (3) 9,170 9,665
Clark County NV School Dist. GO 5.50% 6/15/2010 (3) 16,325 17,750
Clark County NV School Dist. GO 5.60% 6/15/2009 (3) 9,640 10,519
Clark County NV School Dist. GO 5.625% 6/15/2013 (3) 10,000 10,872
Clark County NV School Dist. GO 5.70% 6/15/2009 (1) 10,825 11,786
Clark County NV School Dist. GO 5.875% 6/15/2013 (1) 9,275 10,355
Clark County NV School Dist. GO 5.875% 6/15/2014 (1) 14,485 16,172
Clark County NV School Dist. GO 5.90% 6/15/2012 (3) 10,000 11,276
Clark County NV School Dist. GO 6.50% 6/15/2006 (3) 13,865 16,083
Clark County NV School Dist. GO 7.25% 6/15/2002 (1) 3,995 4,456
Clark County NV School Dist. GO 9.75% 6/1/2000 (1) 4,580 5,015
Nevada GO 5.25% 5/15/2009 15,775 16,925
Nevada GO 5.25% 5/15/2010 8,555 9,110
Nevada GO 5.25% 5/15/2011 16,455 17,390
Nevada GO 5.25% 5/15/2012 17,300 18,160
Nevada GO 6.00% 5/1/2005 10,450 11,089
Washoe County NV Hosp. Medical Center 6.00% 6/1/2009 (2) 6,310 6,967
----------
318,043
----------
NEW JERSEY (4.9%)
Camden County NJ Muni. Util. Auth. 0.00% 9/1/1999 (3) 12,545 12,205
Camden County NJ Muni. Util. Auth. 0.00% 9/1/2000 (3) 18,500 17,277
</TABLE>
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FACE MARKET
MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Camden County NJ Muni. Util. Auth. 0.00% 9/1/2002 (3) $ 18,545 $ 15,925
Camden County NJ Muni. Util. Auth. 0.00% 9/1/2003 (3) 18,545 15,233
Essex County NJ Solid Waste Util. Auth. 5.50% 4/1/2011 (4) 3,000 3,252
New Jersey Econ. Dev. Auth. Market Transition Fac. 5.70% 7/1/2005 (1) 6,330 6,958
New Jersey Econ. Dev. Auth. Market Transition Fac. 5.80% 7/1/2007 (1) 17,800 19,618
New Jersey Econ. Dev. Auth. Market Transition Fac. 5.80% 7/1/2008 (1) 4,000 4,408
New Jersey Econ. Dev. Auth. Market Transition Fac. 5.875% 7/1/2011 (1) 6,000 6,619
New Jersey Econ. Dev. Auth. Market Transition Fac. 7.00% 7/1/2003 (1) 26,195 29,665
New Jersey Health Care Fac. Finance Auth. Rev.
(Union Hosp./Mega Care) 6.20% 7/1/1999 3,080 3,120
New Jersey Health Care Fac. Finance Auth. Rev.
(Union Hosp./Mega Care) 6.40% 7/1/2000 3,295 3,396
New Jersey Sports & Exposition Auth. 6.50% 3/1/2006 4,725 5,186
New Jersey Sports & Exposition Auth. 6.50% 3/1/2007 3,500 3,847
New Jersey Transp. Trust Fund Auth. 5.30% 12/15/2001 5,000 5,248
New Jersey Transp. Trust Fund Auth. 5.50% 6/15/2011 (1) 4,250 4,585
New Jersey Transp. Trust Fund Auth. 6.00% 12/15/2004 (1) 4,000 4,454
New Jersey Transp. Trust Fund Auth. 6.00% 6/15/2008 34,660 39,497
New Jersey Transp. Trust Fund Auth. 6.00% 6/15/2009 37,000 42,147
New Jersey Turnpike Auth. 4.75% 1/1/2006 (ETM) 17,530 17,962
New Jersey Turnpike Auth. 5.60% 1/1/2000 (2) 5,000 5,124
New Jersey Turnpike Auth. 5.90% 1/1/2003 (2) 4,700 5,074
New Jersey Turnpike Auth. 5.90% 1/1/2004 (2) 19,030 20,472
New Jersey Turnpike Auth. 6.00% 1/1/2005 (2) 22,220 23,983
New Jersey Turnpike Auth. 6.50% 1/1/2009 (2) 50,000 58,845
Rutgers State Univ. NJ GO 6.40% 5/1/2013 4,675 5,575
----------
379,675
----------
NEW YORK (14.4%)
Long Island NY Power Auth. Electric System Rev. 5.125% 4/1/2012 (1)++ 25,195 26,268
Long Island NY Power Auth. Electric System Rev. 5.50% 12/1/2008 (2) 5,000 5,491
Long Island NY Power Auth. Electric System Rev. 5.50% 12/1/2009 (2) 20,000 21,987
Long Island NY Power Auth. Electric System Rev. 5.50% 12/1/2010 (2) 15,000 16,474
Long Island NY Power Auth. Electric System Rev. 5.50% 12/1/2011 (2)+ 25,000 27,425
Long Island NY Power Auth. Electric System Rev. 5.50% 12/1/2012 (4) 22,500 24,778
Long Island NY Power Auth. Electric System Rev. 5.50% 12/1/2013 (4) 15,000 16,474
Metro. NY Transp. Auth. 5.00% 7/1/2011 16,625 17,308
Metro. NY Transp. Auth. 5.00% 7/1/2012 8,730 9,014
Metro. NY Transp. Auth. 5.00% 7/1/2013 (1) 18,000 18,433
Metro. NY Transp. Auth. 5.20% 7/1/2005 5,760 6,147
Metro. NY Transp. Auth. 5.40% 7/1/2003 10,560 11,183
Metro. NY Transp. Auth 5.50% 4/1/2015 (1) 4,500 4,775
Metro. NY Transp. Auth. 5.70% 7/1/2017 (1) 9,000 9,718
Metro. NY Transp. Auth. 6.10% 7/1/2007 (1) 3,625 4,129
Metro. NY Transp. Auth. 6.10% 7/1/2008 (1) 7,200 8,247
Metro. NY Transp. Auth. 7.50% 7/1/2000 (Prere.) 4,350 4,718
Metro. NY Transp. Auth. Dedicated Tax Fund 5.25% 4/1/2013 11,755 12,336
Muni. Assistance Corp. for New York City NY 5.20% 7/1/2007 (2) 4,500 4,812
Muni. Assistance Corp. for New York City NY 5.25% 7/1/2001 4,000 4,166
Muni. Assistance Corp. for New York City NY 5.50% 7/1/2000 5,000 5,170
Muni. Assistance Corp. for New York City NY 5.50% 7/1/2001 4,500 4,716
Muni. Assistance Corp. for New York City NY 5.50% 7/1/2002 10,000 10,605
Muni. Assistance Corp. for New York City NY 6.00% 7/1/2004 4,200 4,636
Muni. Assistance Corp. for New York City NY 6.00% 7/1/2006 13,500 15,182
Muni. Assistance Corp. for New York City NY 6.00% 7/1/2008 10,000 11,418
Muni. Assistance Corp. for New York City NY 6.25% 7/1/2005 5,000 5,640
Muni. Assistance Corp. for New York City NY VRDO 2.70% 11/4/1998 900 900
Nassau County NY GO 5.00% 9/1/2011 (3) 7,550 7,907
Nassau County NY GO 5.00% 9/1/2012 (3) 6,720 6,975
Nassau County NY GO 5.00% 9/1/2013 (3) 5,730 5,895
New York City NY GO 5.60% 8/1/2005 10,380 11,213
New York City NY GO 5.70% 8/1/2007 9,800 10,754
</TABLE>
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<TABLE>
<CAPTION>
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FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York City NY GO 5.75% 2/15/2005 (Prere.) $ 1,200 $ 1,326
New York City NY GO 5.75% 2/15/2007 7,750 8,400
New York City NY GO 5.875% 8/15/2012 (3) 7,000 7,725
New York City NY GO 5.90% 8/1/2009 6,125 6,754
New York City NY GO 5.90% 8/1/2010 4,750 5,219
New York City NY GO 6.00% 8/15/1999 12,290 12,576
New York City NY GO 6.00% 8/15/1999 (ETM) 780 799
New York City NY GO 6.00% 8/1/2011 5,600 6,188
New York City NY GO 6.00% 8/1/2012 4,000 4,404
New York City NY GO 6.10% 8/1/2002 4,000 4,303
New York City NY GO 6.15% 8/15/2000 3,170 3,312
New York City NY GO 6.375% 8/1/2004 3,985 4,346
New York City NY GO 7.00% 2/1/1999 (Prere.) 300 305
New York City NY GO 7.00% 8/15/1999 (3) 5,550 5,725
New York City NY GO 7.00% 8/15/1999 (4)(ETM) 9,450 9,750
New York City NY GO 7.00% 8/1/2000 40 41
New York City NY GO 7.00% 2/1/2002 (Prere.) 4,385 4,884
New York City NY GO 7.00% 2/1/2005 615 679
New York City NY GO 7.00% 8/1/2005 6,500 7,539
New York City NY GO 7.10% 8/15/2004 (Prere.) 10,000 11,705
New York City NY GO 8.00% 8/1/1999 515 534
New York City NY GO 8.00% 8/1/1999 (ETM) 4,660 4,835
New York City NY GO 8.00% 11/1/2000 (2) 2,175 2,245
New York City NY GO 8.00% 8/1/2001 (Prere.) 3,185 3,592
New York City NY GO 8.00% 8/15/2001 (Prere.) 3,090 3,489
New York City NY GO 8.00% 4/1/2006 (2) 5,955 7,397
New York City NY IDA (USTA National Tennis Center Project) 6.375% 11/15/2007 (4) 6,200 7,074
New York City NY IDA (USTA National Tennis Center Project) 6.40% 11/15/2008 (4) 4,105 4,689
New York City NY IDA (USTA National Tennis Center Project) 6.50% 11/15/2009 6,745 7,740
New York City NY IDA (USTA National Tennis Center Project) 6.50% 11/15/2010 (4) 3,500 3,986
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.30% 6/15/2006 27,665 29,465
New York City NY Transitional Financial Auth. Rev. 5.00% 11/15/2009 5,000 5,274
New York City NY Transitional Financial Auth. Rev. 5.00% 11/15/2010 6,375 6,682
New York City NY Transitional Financial Auth. Rev. 5.50% 11/15/2008 2,000 2,196
New York State Dormitory Auth. Rev. (City Univ.) 5.50% 7/1/2016 16,000 16,946
New York State Dormitory Auth. Rev. (City Univ.) 6.25% 7/1/2003 4,250 4,629
New York State Dormitory Auth. Rev. (City Univ.) 6.25% 7/1/2004 6,570 7,320
New York State Dormitory Auth. Rev. (City Univ.) 6.35% 7/1/2004 2,500 2,765
New York State Dormitory Auth. Rev. (City Univ.) 6.45% 7/1/2005 1,500 1,684
New York State Dormitory Auth. Rev. (City Univ.) 7.00% 7/1/2001 8,090 8,766
New York State Dormitory Auth. Rev. (City Univ.) 7.00% 7/1/2001 (ETM) 1,910 2,074
New York State Dormitory Auth. Rev. (Jewish Medical Center) 5.25% 7/1/2009 (1) 10,775 11,538
New York State Dormitory Auth. Rev. (Jewish Medical Center) 5.25% 7/1/2010 (1) 5,910 6,287
New York State Dormitory Auth. Rev. (Jewish Medical Center) 5.25% 7/1/2011 (1) 9,170 9,683
New York State Dormitory Auth. Rev. (New York Univ.) 6.375% 7/1/2007 (3) 27,000 29,272
New York State Dormitory Auth. Rev. (Second Hosp.) 5.00% 2/15/2010 (4) 4,500 4,697
New York State Dormitory Auth. Rev. (Second Hosp.) 5.10% 2/1/2011 (4) 6,285 6,565
New York State Dormitory Auth. Rev. (Second Hosp.) 5.10% 2/15/2011 (2) 10,040 10,487
New York State Dormitory Auth. Rev. (State Univ.) 5.80% 5/15/2005 5,400 5,912
New York State Dormitory Auth. Rev. (State Univ.) 5.90% 5/15/2006 2,000 2,195
New York State Dormitory Auth. Rev. (State Univ.) 6.00% 7/1/2003 (2) 4,000 4,366
New York State Dormitory Auth. Rev. (State Univ.) 6.00% 7/1/2004 (2) 4,000 4,415
New York State Dormitory Auth. Rev. (State Univ.) 6.10% 5/15/2008 2,000 2,244
New York State Dormitory Auth. Rev. (State Univ.) 7.00% 5/15/1999 (Prere.) 18,285 19,046
New York State Dormitory Auth. Rev. (State Univ.) 7.10% 5/15/2000 6,050 6,372
New York State Dormitory Auth. Rev. (Univ. of Rochester) 5.75% 7/1/2014 (1) 9,725 10,616
New York State Environmental Fac. Corp. Clean Water 5.25% 6/15/2009 11,470 12,361
New York State Environmental Fac. Corp. Clean Water 5.25% 6/15/2010 9,245 9,909
New York State Environmental Fac. Corp. Clean Water 5.25% 6/15/2011 9,885 10,523
New York State Environmental Fac. Corp. Clean Water 5.25% 6/15/2012 8,375 8,855
</TABLE>
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<TABLE>
<CAPTION>
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FACE MARKET
MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York State Environmental Fac. Corp. PCR 5.50% 6/15/2008 $ 13,185 $ 14,486
New York State GO 6.00% 10/1/2003 4,800 5,254
New York State GO 6.00% 10/1/2004 9,195 10,171
New York State GO 7.80% 11/15/1999 5,000 5,239
New York State Local Govt. Assistance Corp. 5.00% 4/1/2012 10,000 10,382
New York State Local Govt. Assistance Corp. 5.00% 4/1/2013 5,000 5,145
New York State Local Govt. Assistance Corp. 5.125% 4/1/2010 31,400 33,249
New York State Medical Care Fac. Finance Agency Rev. 5.375% 2/15/2014 (4) 4,460 4,694
New York State Medical Care Fac. Finance Agency Rev. 6.00% 8/15/2002 (1) 5,350 5,762
New York State Thruway Auth. (Highway & Bridge Trust Fund) 5.25% 4/1/2009 (3) 4,510 4,855
New York State Thruway Auth. (Highway & Bridge Trust Fund) 5.25% 4/1/2010 (3) 9,800 10,494
New York State Thruway Auth. (Highway & Bridge Trust Fund) 5.25% 4/1/2011 (2) 5,000 5,309
New York State Thruway Auth. (Highway & Bridge Trust Fund) 5.25% 4/1/2011 (3) 4,000 4,254
New York State Thruway Auth. (Highway & Bridge Trust Fund) 5.25% 4/1/2012 (3) 6,220 6,571
New York State Thruway Auth. (Highway & Bridge Trust Fund) 5.25% 4/1/2013 (3) 5,435 5,704
New York State Thruway Auth. (Highway & Bridge Trust Fund) 5.30% 4/1/2008 (1) 7,740 8,310
New York State Thruway Auth. (Highway & Bridge Trust Fund) 5.40% 4/1/2007 (1) 9,215 9,989
New York State Thruway Auth. (Highway & Bridge Trust Fund) 6.25% 4/1/2006 (3) 10,000 11,363
New York State Thruway Auth. (Service Contract) 5.375% 4/1/2009 16,500 17,932
New York State Thruway Auth. (Service Contract) 5.375% 4/1/2012 (1) 16,520 17,623
New York State Thruway Auth. (Service Contract) 5.75% 4/1/2013 (1)(Prere.) 14,000 15,488
New York State Urban Dev. Corp. (Correctional Fac.) 6.40% 1/1/2004 9,685 10,710
Onondaga County NY PCR (Anheuser-Busch Cos., Inc. Project) 6.625% 8/1/2006 10,000 11,548
Suffolk County NY Water Auth. 6.80% 6/1/2012 10,660 12,918
Triborough Bridge & Tunnel NY Auth. Rev. 0.00% 1/1/2003 19,185 16,231
Triborough Bridge & Tunnel NY Auth. Rev. 5.25% 1/1/2010 (4) 6,000 6,417
Triborough Bridge & Tunnel NY Auth. Rev. 5.50% 1/1/2006 (4) 1,000 1,087
Triborough Bridge & Tunnel NY Auth. Rev. 6.00% 1/1/2012 12,000 13,799
Triborough Bridge & Tunnel NY Auth. Rev. 6.60% 1/1/2010 55,325 66,296
----------
1,120,879
----------
NORTH CAROLINA (0.7%)
North Carolina Muni. Power Agency (Catawba Electric) 6.00% 1/1/2004 (2) 7,000 7,665
North Carolina Muni. Power Agency (Catawba Electric) 6.00% 1/1/2005 (2) 28,750 31,400
North Carolina Muni. Power Agency (Catawba Electric) 7.00% 1/1/2000 (Prere.) 6,040 6,403
North Carolina Muni. Power Agency (Catawba Electric) 7.25% 1/1/2007 5,000 6,037
North Carolina Muni. Power Agency (Catawba Electric) 7.25% 1/1/2007 (1) 5,410 6,532
----------
58,037
----------
OHIO (3.3%)
Cleveland OH GO 5.50% 8/1/2008 (1) 6,295 6,944
Cleveland OH School Dist. 8.125% 12/1/1998 (ETM) 785 788
Cleveland OH School Dist. 9.00% 12/1/1998 (Prere.)+ 4,000 4,100
Cleveland OH Water Works 5.25% 1/1/2009 (4) 5,110 5,519
Cleveland OH Water Works 5.25% 1/1/2010 (4) 7,000 7,508
Cleveland OH Water Works 5.25% 1/1/2011 (4) 5,745 6,117
Cleveland OH Water Works 5.25% 1/1/2012 (4) 10,695 11,305
Cleveland OH Water Works 6.00% 1/1/2002 (1) 11,190 11,959
Cleveland OH Water Works 6.00% 1/1/2003 (1) 2,105 2,284
Cleveland OH Water Works 6.00% 1/1/2004 (1) 6,855 7,523
Cleveland OH Water Works 6.00% 1/1/2005 (1) 4,545 5,045
Cleveland OH Water Works 6.00% 1/1/2006 (1) 2,100 2,357
Cleveland OH Water Works 6.25% 1/1/2005 (2) 4,910 5,344
Franklin County OH Hosp. Rev. 5.75% 5/15/2012 (2) 5,000 5,411
Hamilton County OH Hosp. Fac. Rev. VRDO
(Health Alliance of Greater Cincinnati) 3.10% 11/4/1998 (1) 10,900 10,900
Lorain County OH Hosp. Rev. (Catholic Healthcare Partners) 5.625% 9/1/2013 (1) 3,000 3,263
Ohio Building Auth. (Adult Correctional Building) 5.75% 4/1/2008 5,375 6,011
Ohio Building Auth. (Adult Correctional Building) 5.75% 4/1/2009 (2) 5,485 6,109
Ohio Building Auth. (Adult Correctional Building) 5.90% 10/1/2009 (1) 4,435 4,906
Ohio Building Auth. (Adult Correctional Building) 6.00% 10/1/2007 (2) 3,710 4,229
Ohio Building Auth. (Data Center) 5.70% 10/1/2004 2,895 3,166
</TABLE>
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<TABLE>
<CAPTION>
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FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio Building Auth. (Data Center) 5.75% 10/1/2005 $ 3,070 $ 3,396
Ohio Building Auth. (Highway Safety Building) 5.375% 10/1/2009 (2) 4,605 4,994
Ohio Building Auth. (Highway Safety Building) 5.75% 10/1/2008 (2) 5,055 5,653
Ohio Building Auth. (Highway Safety Building) 6.00% 4/1/2007 (2) 4,640 5,259
Ohio Building Auth. (State Correctional Fac.) 5.70% 10/1/2003 3,305 3,583
Ohio Building Auth. (State Correctional Fac.) 5.70% 10/1/2004 2,725 2,980
Ohio Building Auth. (State Correctional Fac.) 5.80% 10/1/2006 4,360 4,879
Ohio Building Auth. (State Correctional Fac.) 5.90% 10/1/2007 2,500 2,833
Ohio Building Auth. (State Correctional Fac.) 6.50% 10/1/2002 3,790 4,145
Ohio Building Auth. (State Correctional Fac.) 6.50% 10/1/2002 (1) 5,350 5,890
Ohio Building Auth. (State Correctional Fac.) 6.50% 10/1/2003 5,500 6,008
Ohio Building Auth. (State Correctional Fac.) 6.50% 10/1/2003 (1) 5,710 6,393
Ohio Building Auth. (State Correctional Fac.) 6.50% 10/1/2004 2,500 2,731
Ohio Building Auth. (State Correctional Fac.) 7.20% 8/1/1999 (Prere.) 10,000 10,511
Ohio Building Auth. (State Correctional Fac.) 7.25% 8/1/1999 (Prere.) 7,500 7,886
Ohio Building Auth. (State Correctional Fac.) 7.30% 8/1/1999 (Prere.) 10,000 10,518
Ohio Building Auth. (State Correctional Fac.) 7.35% 8/1/1999 (Prere.) 4,945 5,203
Ohio Higher Educ. Fac. 5.90% 12/1/2005 8,175 8,766
Ohio Public Fac. Comm. Higher Educ. Fac. 5.00% 12/1/2009 5,190 5,469
Ohio Public Fac. Comm. Higher Educ. Fac. 5.25% 5/1/2010 (2) 5,950 6,244
Ohio Public Fac. Comm. Higher Educ. Fac. 5.50% 12/1/2006 5,465 5,794
Ohio Turnpike Comm. Rev. 5.50% 2/15/2010 (1) 4,435 4,821
Ohio Water Dev. Auth. 5.00% 12/1/1998 2,275 2,279
Ohio Water Dev. Auth. 6.00% 12/1/2008 (2) 6,000 6,572
----------
253,595
----------
OKLAHOMA (1.4%)
Grand River Dam Auth. OK 5.70% 6/1/2005 (4) 20,000 21,987
Grand River Dam Auth. OK 5.75% 6/1/2006 (4) 19,350 21,519
Grand River Dam Auth. OK 5.875% 6/1/2007 (1) 14,500 16,380
Grand River Dam Auth. OK 6.25% 6/1/2011 (2) 7,600 8,939
Grand River Dam Auth. OK 8.00% 6/1/2002 21,000 23,930
Tulsa County OK Ind. Dev. PUT (St. Francis Hosp.) 5.15% 12/15/2003 8,715 9,117
Tulsa OK Metro. Util. Auth. 7.00% 2/1/2003 8,465 9,226
----------
111,098
----------
OREGON (0.4%)
Portland OR Sewer System Rev. 5.00% 6/1/2010 18,980 19,897
Portland OR Sewer System Rev. 5.00% 6/1/2012 (3) 13,580 14,049
----------
33,946
----------
PENNSYLVANIA (8.0%)
Allegheny County PA GO 7.60% 11/1/1998 (Prere.) 2,000 2,000
Berks County PA GO 7.25% 11/15/2000 (3)(Prere.) 10,000 10,930
Delaware County PA IDA Resource Recovery Rev. (Browning Ferris) 6.00% 1/1/2009 5,355 5,751
Delaware County PA IDA Resource Recovery Rev. (Browning Ferris) 6.10% 1/1/2007 7,955 8,657
Erie County PA Prison Auth. Commonwealth Lease Rev. 6.75% 11/1/2001 (1)(Prere.) 5,295 5,765
Lackawana County PA GO 5.375% 9/15/2016 (2) 7,050 7,329
Lehigh County PA General Purpose Auth. Hosp. Rev. VRDO
(Lehigh Valley Hosp.) 3.60% 11/3/1998 (2) 3,000 3,000
Northumberland County PA Commonwealth Lease Rev. 6.70% 10/15/2001 (1)(Prere.) 7,005 7,609
Northumberland County PA Commonwealth Lease Rev. 7.75% 10/15/2001 (1)(Prere.) 6,000 6,689
Pennsbury PA School Dist. GO 5.50% 8/15/2014 (3) 6,000 6,398
Pennsylvania COP 4.80% 7/1/2001 (2) 20,000 20,400
Pennsylvania COP 4.90% 7/1/2002 (2) 13,665 14,014
Pennsylvania COP 5.00% 7/1/2003 (2) 4,555 4,692
Pennsylvania Convention Center Auth. 6.25% 9/1/2004 15,200 16,346
Pennsylvania Convention Center Auth. 6.70% 9/1/2014 (1) 4,000 4,575
Pennsylvania GO 5.00% 4/15/2005 24,290 25,568
Pennsylvania GO 5.00% 4/15/2007 7,950 8,335
Pennsylvania GO 5.00% 4/15/2008 9,250 9,667
Pennsylvania GO 5.00% 3/1/2011 11,525 12,042
Pennsylvania GO 5.125% 9/15/2009 (2) 20,000 21,403
</TABLE>
35
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania GO 5.375% 5/15/2013 (3) $ 3,515 $ 3,724
Pennsylvania GO 5.50% 5/1/2013 (3) 8,025 8,549
Pennsylvania GO 5.90% 11/15/2001 1,500 1,598
Pennsylvania GO 6.20% 11/15/2004 12,480 13,573
Pennsylvania GO 6.50% 11/1/2006 4,260 4,666
Pennsylvania GO 7.10% 11/1/2008 6,700 7,065
Pennsylvania GO 10.00% 4/15/2002 (2) 10,160 12,200
Pennsylvania Higher Educ. Fac. Auth. (Allegheny/Delaware Valley) 5.00% 11/15/2003 (1) 7,380 7,426
Pennsylvania Higher Educ. Fac. Auth. (Allegheny/Delaware Valley) 5.00% 11/15/2004 (1) 9,295 9,314
Pennsylvania Higher Educ. Fac. Auth. (Allegheny/Delaware Valley) 5.00% 11/15/2005 (1) 7,690 7,700
Pennsylvania Higher Educ. Fac. Auth. (Allegheny/Delaware Valley) 5.00% 11/15/2006 (2) 3,250 3,253
Pennsylvania Higher Educ. Fac. Auth. VRDO (Carnegie Mellon Univ.) 3.70% 11/3/1998 1,200 1,200
Pennsylvania IDA 6.60% 1/1/1999 5,065 5,095
Pennsylvania IDA 6.60% 7/1/1999 10,355 10,607
Pennsylvania IDA 6.70% 1/1/2000 7,420 7,698
Pennsylvania IDA 6.70% 7/1/2000 9,080 9,556
Pennsylvania IDA 6.80% 1/1/2001 5,000 5,332
Pennsylvania IDA 6.80% 7/1/2001 5,480 5,920
Pennsylvania Intergovernmental Cooperation Auth. 5.45% 6/15/2008 (3) 18,095 19,005
Pennsylvania Intergovernmental Cooperation Auth. 5.75% 6/15/1999 (3) 17,000 17,299
Pennsylvania Intergovernmental Cooperation Auth. 6.00% 6/15/2002 (3) 28,500 30,668
Pennsylvania Turnpike Comm. Oil Franchise Tax Rev. 5.25% 12/1/2009 (2) 12,850 13,917
Pennsylvania Turnpike Comm. Oil Franchise Tax Rev. 5.25% 12/1/2010 (2) 6,025 6,477
Pennsylvania Turnpike Comm. Oil Franchise Tax Rev. 5.25% 12/1/2011 (2) 11,000 11,742
Pennsylvania Turnpike Comm. Oil Franchise Tax Rev. 5.25% 12/1/2012 (2) 5,000 5,300
Philadelphia PA Airport Rev. (Philadelphia Airport Systems) 5.75% 6/15/2011 (3) 4,695 5,192
Philadelphia PA Airport Rev. (Philadelphia Airport Systems) 6.00% 6/15/2003 (3) 5,530 6,020
Philadelphia PA Gas Works Rev. 5.25% 7/1/2010 10,180 10,781
Philadelphia PA Gas Works Rev. 5.50% 7/1/2009 10,820 11,757
Philadelphia PA GO 4.60% 5/15/1999 (3) 4,345 4,385
Philadelphia PA GO 6.00% 11/15/2000 (3) 11,995 12,581
Philadelphia PA Muni. Lease Rev. 6.00% 7/15/2003 5,065 5,280
Philadelphia PA Parking Auth. 5.25% 9/1/2010 (2) 4,875 5,175
Philadelphia PA School Dist. GO 0.00% 7/1/2000 (2) 15,500 14,589
Philadelphia PA School Dist. GO 5.375% 7/1/2005 (1) 7,500 8,066
Philadelphia PA School Dist. GO 6.25% 9/1/2005 (2) 5,000 5,641
Philadelphia PA School Dist. GO 6.25% 9/1/2006 (2) 2,000 2,281
Philadelphia PA School Dist. GO 6.25% 9/1/2008 (2) 4,000 4,617
Philadelphia PA School Dist. GO 6.25% 9/1/2009 (2) 2,080 2,411
Philadelphia PA School Dist. GO 6.70% 7/1/1999 (2) 9,000 9,224
Philadelphia PA Water & Sewer Auth. Rev. 6.875% 10/1/2006 (1) 15,455 16,269
Philadelphia PA Water & Waste Water Rev. 5.25% 8/1/2009 (2) 6,460 6,926
Philadelphia PA Water & Waste Water Rev. 5.50% 6/15/2006 (1) 12,750 13,891
Philadelphia PA Water & Waste Water Rev. 6.25% 8/1/2007 (1) 5,000 5,732
Pittsburgh PA GO 5.125% 3/1/2009 (3) 10,000 10,466
Pittsburgh PA GO 5.20% 3/1/2010 (3) 22,000 22,988
Pittsburgh PA Water & Sewer Auth. Rev. 5.60% 9/1/2018 (3) 6,000 6,565
Schuylkill PA Redev. Auth. 6.95% 6/1/2001 (3) 3,995 4,374
----------
625,265
----------
PUERTO RICO (1.3%)
Puerto Rico Electric Power Auth. Rev. 5.00% 7/1/2009 (1) 2,500 2,673
Puerto Rico Electric Power Auth. Rev. 5.00% 7/1/2009 (4) 10,280 10,990
Puerto Rico Electric Power Auth. Rev. 5.00% 7/1/2010 (1) 9,645 10,268
Puerto Rico Electric Power Auth. Rev. 5.00% 7/1/2010 (4) 7,000 7,452
Puerto Rico Electric Power Auth. Rev. 5.00% 7/1/2011 (1) 5,000 5,276
Puerto Rico Electric Power Auth. Rev. 5.00% 7/1/2011 (4) 7,500 7,914
Puerto Rico Electric Power Auth. Rev. 5.125% 7/1/2013 (4) 11,955 12,538
Puerto Rico Electric Power Auth. Rev. 5.25% 7/1/2009 (1) 7,235 7,863
Puerto Rico Electric Power Auth. Rev. 5.50% 7/1/2008 (1) 5,000 5,558
Puerto Rico Electric Power Auth. Rev. 6.50% 7/1/2005 (1) 20,525 23,605
Puerto Rico Telephone Auth. Rev. 5.40% 1/1/2008 9,550 10,089
----------
104,226
----------
</TABLE>
36
<PAGE> 84
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RHODE ISLAND (0.5%)
Rhode Island Consolidated Capital Dev. Loan GO 6.00% 8/1/2005 (1) $ 4,000 $ 4,472
Rhode Island Consolidated Capital Dev. Loan GO 6.00% 8/1/2006 (1) 5,000 5,646
Rhode Island Depositors Econ. Protection Corp. 6.55% 8/1/2010 (1) 26,850 32,238
----------
42,356
----------
SOUTH CAROLINA (0.2%)
Piedmont SC Muni. Power Agency Rev. 5.40% 1/1/2007 (1) 1,800 1,945
Piedmont SC Muni. Power Agency Rev. 5.40% 1/1/2007 (1)(ETM) 1,400 1,529
Piedmont SC Muni. Power Agency Rev. VRDO 3.10% 11/4/1998 (1) 100 100
South Carolina Transp. Interstructure Bank 5.00% 10/1/2010 (1) 13,465 14,183
----------
17,757
----------
SOUTH DAKOTA (0.1%)
South Dakota Building Auth. Lease Rev. 5.25% 12/1/2010 (2) 4,800 5,097
South Dakota Health & Educ. Fac. Auth. Rev. (McKennan Hosp.) 7.50% 7/1/2004 (1) 5,845 6,136
----------
11,233
----------
TENNESSEE (0.3%)
Shelby County TN GO 5.00% 3/1/2014 11,230 11,439
Shelby County TN GO 5.625% 4/1/2012 5,000 5,383
Shelby County TN (Methodist Health Systems) 6.25% 8/1/2006 4,915 5,607
----------
22,429
----------
TEXAS (8.0%)
Anderson County TX Rev. (Coffield Prison Farm Project) 5.50% 3/15/2004 (2) 5,715 6,100
Anderson County TX Rev. (Coffield Prison Farm Project) 5.50% 3/15/2005 (2) 5,590 5,967
Anderson County TX Rev. (Coffield Prison Farm Project) 5.50% 3/15/2006 (2) 6,985 7,456
Austin TX Combined Util. System Rev. 5.20% 11/15/2003 (1) 3,360 3,564
Austin TX Combined Util. System Rev. 5.30% 5/15/2004 (1) 5,770 6,151
Austin TX Combined Util. System Rev. 5.75% 11/15/2003 (4) 7,500 8,154
Austin TX Combined Util. System Rev. 5.80% 11/15/2006 (1) 5,255 5,869
Austin TX Combined Util. System Rev. 7.25% 11/15/2003 5,605 5,726
Austin TX Combined Util. System Rev. 7.25% 11/15/2003 (ETM) 395 455
Austin TX Independent School Dist. 5.75% 8/1/2012 5,000 5,532
Bell County TX Health Fac. Dev. Corp. (Scott & White Hosp.) 7.625% 9/1/2003 8,340 8,531
Birdville TX Independent School Dist. 5.75% 2/15/2003 4,990 5,370
Corpus Christi TX GO 7.50% 11/1/1998 (2) 1,865 1,865
Dallas TX Civic Center Refunding & Improvement 4.60% 8/15/2009 (1) 12,000 12,266
Dallas TX Civic Center Refunding & Improvement 4.70% 8/15/2010 (1) 11,000 11,248
Dallas TX Civic Center Refunding & Improvement 4.80% 8/15/2011 (1) 12,635 12,908
Dallas TX Civic Center Refunding & Improvement 4.90% 8/15/2012 (1) 13,240 13,530
Dallas TX Independent School Dist. 5.30% 8/15/2008 5,000 5,313
Dallas TX Independent School Dist. 5.40% 8/15/2009 10,440 11,104
Dallas TX Independent School Dist. 5.50% 8/15/2010 24,210 25,801
Dallas TX Independent School Dist. 5.60% 8/15/2003 (Prere.) 2,220 2,392
Dallas TX Independent School Dist. 5.60% 8/15/2004 5,780 6,197
Dallas TX Independent School Dist. 5.70% 8/15/2003 (Prere.) 1,230 1,331
Dallas TX Independent School Dist. 5.70% 8/15/2006 3,520 3,770
Harris County TX Health Fac. Dev. Corp. (Memorial Hosp.) 6.00% 6/1/2008 6,080 6,839
Harris County TX Health Fac. Dev. Corp. (Memorial Hosp.) 6.00% 6/1/2010 (1) 1,500 1,706
Harris County TX Toll Road 6.30% 8/15/2002 (3)(Prere.) 4,470 4,956
Harris County TX Toll Road 6.30% 8/15/2004 (3) 840 925
Houston TX Airport System Rev. 6.00% 7/1/2011 (3) 4,200 4,703
Houston TX Airport System Rev. 6.00% 7/1/2012 (3) 4,460 4,971
Houston TX GO 4.80% 3/1/2009 5,820 6,037
Houston TX GO 5.00% 3/1/2004 6,265 6,522
Houston TX GO 5.00% 3/1/2010 7,245 7,569
Houston TX GO 5.00% 3/1/2011 4,535 4,703
Houston TX GO 5.10% 3/1/2006 12,200 12,689
Houston TX GO 5.80% 3/1/2002 5,080 5,410
Houston TX GO 7.00% 3/1/2008 48,405 58,738
Houston TX Hotel Occupancy Tax Rev. 5.25% 7/1/2007 6,585 7,012
Houston TX Housing Finance Corp. TOB VRDO 3.28% 11/5/1998 (4) 10,625 10,625
Houston TX Water & Sewer System Rev. 0.00% 12/1/2000 (2) 6,130 5,689
</TABLE>
37
<PAGE> 85
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Houston TX Water & Sewer System Rev. 5.375% 12/1/2010 (4) $ 5,000 $ 5,351
Houston TX Water & Sewer System Rev. 5.75% 12/1/2015 (1) 3,315 3,512
Houston TX Water & Sewer System Rev. 7.00% 12/1/2001 (2) 3,220 3,527
Houston TX Water & Sewer System Rev. 7.00% 12/1/2002 (2) 4,125 4,617
Houston TX Water & Sewer System Rev. 7.00% 12/1/2003 (2) 3,100 3,538
Lower Colorado River Auth. TX Rev. 5.00% 1/1/2010 (4) 6,885 7,215
North Texas Health Fac. Dev. 5.75% 2/15/2010 (1) 4,115 4,573
San Antonio TX Electric & Gas System Rev. 5.25% 2/1/2009 12,225 13,110
San Antonio TX Electric & Gas System Rev. 5.25% 2/1/2010 14,500 15,445
San Antonio TX Electric & Gas System Rev. 5.50% 2/1/2002 1,845 1,963
San Antonio TX Electric & Gas System Rev. 5.50% 2/1/2004 2,700 2,854
San Antonio TX Electric & Gas System Rev. 5.60% 2/1/2014 15,000 16,150
San Antonio TX Electric & Gas System Rev. 5.80% 2/1/2006 8,000 8,773
Tarrant County TX Health Resources 5.75% 2/15/2013 (1)+ 7,670 8,425
Tarrant County TX Water Control & Improvement Dist. 4.50% 3/1/2011 (3) 5,000 4,990
Texas GO 5.00% 8/1/2008 5,000 5,177
Texas GO 5.00% 8/1/2009 5,000 5,155
Texas GO 5.25% 8/1/2010 6,565 7,019
Texas GO 5.25% 8/1/2012 3,600 3,794
Texas GO 8.00% 10/1/2007 50,000 64,486
Texas Public Finance Auth. Building Rev. 6.60% 2/1/2000 (1) 5,000 5,193
Texas Public Finance Auth. Building Rev. 6.75% 2/1/2002 (1) 5,000 5,322
Texas Public Finance Auth. Building Rev. 6.80% 2/1/2003 (1) 5,000 5,322
Texas Public Finance Auth. Rev. 5.75% 10/1/2009 5,000 5,471
Texas Public Finance Auth. Rev. 5.75% 10/1/2010 8,625 9,437
Texas Public Finance Auth. Rev. GO 4.90% 10/1/2010 32,235 33,516
Texas Turnpike Auth. Rev. 5.50% 1/1/2015 (3) 13,000 13,906
Texas Water Resource Finance Auth. 7.50% 8/15/2001 3,485 3,570
Univ. of Texas Permanent Univ. Fund 6.40% 7/1/2002 5,000 5,444
Univ. of Texas Refunding Finance System Rev. 7.00% 8/15/2007 14,050 15,480
----------
618,029
----------
UTAH (1.1%)
Intermountain Power Agency UT Power Supply Rev. 5.25% 7/1/2009 41,240 44,269
Intermountain Power Agency UT Power Supply Rev. 5.25% 7/1/2012 20,550 21,541
Intermountain Power Agency UT Power Supply Rev. 5.25% 7/1/2015 (1) 11,000 11,344
Jordon UT School Dist. 5.75% 6/15/2005 4,235 4,678
Salt Lake County UT Building Auth. Lease Rev. 5.90% 10/1/2006 (1) 4,000 4,413
----------
86,245
----------
VIRGINIA (0.8%)
Chesapeake Bay Bridge & Tunnel VA 5.40% 7/1/2005 (3) 6,090 6,599
Fairfax County VA GO 5.25% 6/1/2014 7,200 7,518
Fairfax County VA GO 7.25% 6/1/2000 5,805 6,150
Fairfax County VA IDA Rev. VRDO (Fairfax Hosp. System) 3.10% 11/4/1998 LOC 400 400
Virginia Beach VA Refunding & Public Improvement 5.25% 8/1/2009 4,000 4,335
Virginia Beach VA Refunding & Public Improvement 5.25% 8/1/2010 9,690 10,424
Virginia Beach VA Refunding & Public Improvement 5.25% 8/1/2011 5,000 5,338
Virginia Beach VA Refunding & Public Improvement 5.25% 8/1/2012 3,000 3,181
Virginia Beach VA Refunding & Public Improvement 5.25% 8/1/2013 1,750 1,843
Virginia Public School Auth. 5.00% 8/1/2005 4,360 4,631
Virginia Public School Auth. 5.00% 8/1/2011 3,380 3,534
Virginia Public School Auth. 5.25% 8/1/2008 4,540 4,931
Virginia Public School Auth. 5.40% 6/1/2009 5,750 6,207
----------
65,091
----------
WASHINGTON (2.9%)
King County WA GO 6.00% 12/1/2004 5,000 5,434
King County WA GO 6.10% 12/1/2005 5,000 5,453
King County WA School Dist. 5.50% 12/1/2016 (3) 5,635 5,939
Port of Seattle WA GO 5.50% 10/1/2017 (3) 5,290 5,584
Seattle WA GO 5.60% 1/15/2009 5,020 5,429
Seattle WA Power & Light Rev. 5.00% 7/1/2011 5,715 5,945
</TABLE>
38
<PAGE> 86
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Seattle WA Power & Light Rev. 5.10% 5/1/2005 $10,575 $ 11,235
Seattle WA Water System Rev. 5.00% 12/1/2003 2,000 2,106
Seattle WA Water System Rev. 5.10% 12/1/2004 4,000 4,249
Seattle WA Water System Rev. 5.20% 12/1/2005 2,320 2,473
Spokane WA Regional Solid Waste Management System 6.50% 1/1/2008 3,500 4,027
Spokane WA Regional Solid Waste Management System 6.50% 1/1/2009 3,000 3,480
Tacoma WA Electric System Rev. 5.50% 1/1/2012 (2) 5,500 5,743
Tacoma WA Electric System Rev. 5.70% 1/1/2003 (2) 6,845 7,344
Washington GO 5.00% 7/1/2011 12,870 13,336
Washington GO 5.50% 7/1/2002 5,000 5,306
Washington GO 5.60% 9/1/2004 5,000 5,437
Washington GO 5.75% 9/1/2007 19,950 22,478
Washington GO 5.75% 9/1/2008 4,000 4,495
Washington GO 5.75% 5/1/2009 5,000 5,400
Washington GO 6.00% 7/1/2003 5,200 5,683
Washington GO 6.00% 7/1/2004 3,115 3,441
Washington GO 6.10% 6/1/2006 9,495 10,742
Washington GO 6.25% 6/1/2009 11,465 13,371
Washington GO 6.25% 9/1/2009 21,550 22,951
Washington GO 6.25% 2/1/2011 6,680 7,806
Washington Health Care Fac. Auth. (Sisters of Providence) 6.00% 10/1/2002 (2) 5,105 5,508
Washington Health Care Fac. Auth. (Sisters of Providence) 6.00% 10/1/2003 (2) 5,270 5,756
Washington Health Care Fac. Auth. (Sisters of Providence) 6.00% 10/1/2004 (2) 5,515 6,082
Washington Health Care Fac. Auth. (Sisters of Providence) 6.00% 10/1/2005 (2) 4,830 5,375
Washington Health Care Fac. Auth. (Sisters of Providence) 6.00% 10/1/2006 (2) 6,055 6,804
Washington Health Care Fac. Auth. VRDO
(Virginia Mason Medical Center) 3.65% 11/3/1998 (1) 400 400
----------
224,812
----------
WEST VIRGINIA (0.1%)
West Virginia Building Comm. Rev. 5.25% 7/1/2008 (1) 1,000 1,079
West Virginia School Building Auth. Rev. 5.30% 7/1/2009 (2) 8,000 8,678
----------
9,757
----------
WISCONSIN (0.1%)
Wisconsin GO 4.25% 11/1/1999 4,000 4,049
Wisconsin GO 5.20% 5/1/2010 4,150 4,368
----------
8,417
----------
WYOMING
Platte County WY PCR 4.60% 1/1/2002 2,430 2,489
----------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $7,215,773) 7,690,842
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.1%)
- -------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 139,826
Liabilities (57,591)
----------
82,235
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- -------------------------------------------------------------------------------------------------------------------------
Applicable to 574,912,289 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $7,773,077
=========================================================================================================================
NET ASSET VALUE PER SHARE $13.52
=========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
+Securities with an aggregate value of $10,689,000 have been segregated as
initial margin for open futures contracts. For key to abbreviations and other
references, see page 61.
39
<PAGE> 87
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
INTERMEDIATE-TERM TAX-EXEMPT FUND (000) SHARE
- -------------------------------------------------------------------------------------------------------------------------
AT OCTOBER 31, 1998, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $7,354,870 $12.79
Undistributed Net Investment Income -- --
Overdistributed Net Realized Gains--Note E (32,364) (.06)
Unrealized Appreciation (Depreciation)--Note F
Investment Securities 475,069 .83
Futures Contracts (24,498) (.04)
=========================================================================================================================
NET ASSETS $7,773,077 $13.52
=========================================================================================================================
</TABLE>
40
<PAGE> 88
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
INSURED LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (99.1%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA (1.3%)
Birmingham AL Medical Center (Special Care Medical Center) 7.25% 7/1/2015 (1) $ 6,715 $ 6,737
Medical Clinic Board of Bessemer AL (Bessemer Carraway Hosp.) 7.25% 4/1/2015 (1) 5,000 5,326
Medical Clinic Board of Montgomery AL (Jackson Hosp.) 6.00% 3/1/2026 (2) 12,000 13,334
Mobile AL Water & Sewer Comm. 5.50% 1/1/2010 (3) 4,000 4,335
----------
29,732
----------
ALASKA (1.1%)
Alaska Housing Finance Corp. VRDO 3.15% 11/4/1998 6,600 6,600
Anchorage AK Electric Rev. 8.00% 12/1/2009 (1) 2,565 3,395
Anchorage AK Electric Rev. 8.00% 12/1/2010 (1) 2,960 3,954
Anchorage AK Water GO 7.20% 6/1/2017 (2) 11,000 11,353
----------
25,302
----------
ARIZONA (0.5%)
Maricopa County AZ (Samaritan Health Service) 7.00% 12/1/2016 (1) 8,650 10,957
----------
ARKANSAS (0.4%)
North Little Rock AR Electric System Rev. 6.50% 7/1/2010 (1) 3,500 4,176
North Little Rock AR Electric System Rev. 6.50% 7/1/2015 (1) 4,500 5,399
----------
9,575
----------
CALIFORNIA (8.9%)
California Health Fac. Finance Auth. (Adventist Health Sytem) 6.75% 3/1/2011 (1) 12,000 12,978
California Health Fac. Finance Auth. (Pomona Valley Hosp.) 5.75% 7/1/2015 8,205 8,996
California Housing Finance Agency 8.625% 8/1/2015 (1) 2,550 2,676
Irvine CA Assessment Dist. VRDO (Oak Creek) 3.55% 11/3/1998 LOC 3,800 3,800
Los Angeles CA Unified School Dist. GO 5.375% 7/1/2016 (3) 5,000 5,268
MSR California Public Power Agency (San Juan Project) 6.125% 7/1/2013 (2) 7,000 8,228
MSR California Public Power Agency (San Juan Project) 6.75% 7/1/2020 (1) 13,000 15,864
Modesto CA Irrigation Dist. Finance Auth. (Woodland Project) 6.50% 10/1/2022 (2) 20,225 24,819
Northern California Power Agency (Combustion Turbine Project) 6.00% 8/15/2010 (1) 3,500 3,580
Oakland CA Redev. Agency (Central Dist. Project) 5.50% 2/1/2014 (2) 6,300 6,909
Orange County CA Sanitation Dist. VRDO 3.55% 11/3/1998 LOC 5,600 5,600
Port of Oakland CA Rev. 5.40% 11/1/2017 (1) 25,575 26,955
Sacramento CA Muni. Util. Dist. 5.75% 8/15/2013 (1) 12,360 13,216
Sacramento CA Muni. Util. Dist. 6.50% 9/1/2013 (1) 8,895 10,826
San Jose CA Tax Redev. 6.00% 8/1/2010 (1) 8,105 9,430
Santa Clara CA Redev. Agency (Bayshore North Project) 7.00% 7/1/2010 (2) 3,000 3,718
Santa Clara CA Valley Water Dist. COP 6.00% 2/1/2024 (3) 5,000 5,510
Santa Rosa CA Waste Water Rev. 6.00% 9/1/2015 (3) 5,000 5,744
South County CA Waste Water Auth. (Gilroy) 5.50% 8/1/2022 (3) 8,000 8,301
South County CA Waste Water Auth. (Morgan Hill) 5.50% 8/1/2022 (3) 7,000 7,329
Southern California Public Power Auth. (Palo Verde) 5.00% 7/1/2015 (2) 2,605 2,608
Ukiah CA Electric Rev. 6.25% 6/1/2018 (1) 6,330 7,451
----------
199,806
----------
COLORADO (5.1%)
Colorado Health Fac. Auth. (Sisters of Charity Health System Inc.) 6.00% 5/15/2013 (1) 4,525 4,786
Denver CO Health Fac. (St. Anthony's Hosp.) 7.70% 5/1/2007 (1) 2,800 2,894
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2004 (1) 13,750 10,875
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2005 (1) 17,200 12,980
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2007 (1) 12,250 8,441
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2008 (1) 14,355 9,392
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2009 (1) 16,500 10,231
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2015 (1) 5,795 2,536
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2017 (1) 17,295 6,735
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2019 (1) 33,000 11,509
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2024 (1) 40,000 10,761
Northern Colorado Water Conservation Dist. Rev. 6.50% 12/1/2012 (2) 20,575 23,868
----------
115,008
----------
</TABLE>
41
<PAGE> 89
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
INSURED LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONNECTICUT (0.3%)
Connecticut Special Obligation Transp. Infrastructure Rev. 5.625% 10/1/2014 (3) $ 3,000 $ 3,239
South Central CT Regional Water Auth. Water System Rev. 5.75% 8/1/2012 (3) 3,100 3,370
----------
6,609
----------
DELAWARE (0.8%)
Delaware Econ. Dev. Auth. (Delmarva Power & Light) 7.30% 9/1/2015 (3) 4,000 4,239
Delaware Health Fac. Auth. (Delaware Medical Center) 7.00% 10/1/2015 (1) 6,000 6,892
Dover DE Electric Rev. 5.75% 7/1/2015 (3) 5,225 5,547
Dover DE Electric Rev. 6.10% 7/1/2011 (3) 2,000 2,177
----------
18,855
----------
DISTRICT OF COLUMBIA (0.5%)
District of Columbia Rev. (Howard Univ.) 5.75% 10/1/2017 (1) 10,030 10,775
----------
FLORIDA (8.4%)
Broward County FL Airport System Rev. 5.25% 10/1/2010 (1) 11,365 12,114
Broward County FL Airport System Rev. 5.25% 10/1/2011 (1) 13,275 14,040
Coral Springs FL Improvement Dist. Water & Sewer GO 6.00% 6/1/2010 (1) 3,000 3,376
Dade County FL Water & Sewer Rev. VRDO 3.05% 11/4/1998 (3) 10,100 10,100
Davie FL Water & Sewer Rev. 6.375% 10/1/2012 (2) 2,620 3,130
Orange and Orlando County FL Expressway Auth. 8.25% 7/1/2013 (3) 9,695 13,480
Orange and Orlando County FL Expressway Auth. 8.25% 7/1/2015 (3) 8,360 11,718
Orange and Orlando County FL Expressway Auth. 8.25% 7/1/2016 (3)+ 12,295 17,332
Orange County FL Health Auth. Hosp. (Adventist for Sunbelt Group) 6.25% 11/15/2010 (2) 4,000 4,516
Palm Beach FL Criminal Justice 7.20% 6/1/2014 (3) 16,300 20,888
Palm Beach FL Criminal Justice 7.20% 6/1/2015 (3) 4,000 5,131
Sarasota County FL Public Hosp. (Sarasota Memorial Hosp.) 5.75% 10/1/2017 (1) 28,850 31,124
Seacoast FL Util. Auth. Water & Sewer Rev. 5.50% 3/1/2019 (3) 2,000 2,169
St. Lucie County FL Util. System Rev. 6.00% 10/1/2020 (3)(ETM) 2,350 2,676
Tampa FL Util. Rev. 6.75% 10/1/2010 (2) 9,330 11,424
Tampa FL Util. Rev. 6.75% 10/1/2011 (2) 9,965 12,265
Tampa FL Util. Rev. 6.75% 10/1/2012 (2) 10,635 13,140
----------
188,623
----------
GEORGIA (3.4%)
Atlanta GA Water & Sewer Rev. 5.25% 1/1/2027 (3) 19,800 20,110
Burke County GA Dev. Auth. PCR VRDO (Georgia Power Co.) 3.65% 11/3/1998 500 500
George L. Smith GA World Congress Center Auth. Rev.
(Domed Stadium Project) 5.50% 7/1/2020 (1)++ 24,740 24,679
George L. Smith GA World Congress Center Auth. Rev.
(Domed Statium Project) 5.70% 7/1/2013 (1)++ 5,000 5,163
George L. Smith GA World Congress Center Auth. Rev.
(Domed Stadium Project) 5.75% 7/1/2014 (1)++ 5,000 5,158
George L. Smith GA World Congress Center Auth. Rev.
(Domed Stadium Project) 5.75% 7/1/2015 (1)++ 3,680 3,761
Georgia Muni. Gas Auth. Rev. VRDO 3.05% 11/4/1998 LOC 600 600
Henry County GA School Dist. GO 6.45% 8/1/2011 (1) 4,000 4,789
Muni. Electric Auth. of Georgia 5.375% 1/1/2019 6,500 6,702
Private Colleges & Univ. Auth. of GA (Mercer Univ. Project) 6.50% 11/1/2015 (1) 5,000 6,026
----------
77,488
----------
HAWAII (1.7%)
Hawaii Airport System Rev. 6.35% 7/1/2007 (1) 8,000 8,926
Hawaii Dept. of Budget & Finance (Hawaii Electric Co. Inc.) 5.65% 10/1/2027 (1) 9,750 10,410
Hawaii Highway Rev. 5.25% 7/1/2011 1,650 1,734
Hawaii Highway Rev. 5.25% 7/1/2012 1,500 1,565
Honolulu HI City & County GO 8.00% 10/1/2010 11,000 14,509
----------
37,144
----------
ILLINOIS (4.1%)
Chicago IL Board of Educ. GO 6.25% 1/1/2011 (1) 7,000 8,159
Chicago IL Public Building Comm. 7.00% 1/1/2020 (1)(ETM) 21,500 27,439
Cook County IL GO 7.25% 11/1/2007 (1) 6,000 7,358
</TABLE>
42
<PAGE> 90
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois Dev. Finance Auth. PCR (Illinois Power Co. Project) 7.40% 12/1/2024 (1) $14,000 $ 16,435
Illinois Regional Transit Auth. GO
(Cook, DuPage, and Kane Counties) 7.20% 11/1/2020 (2) 24,000 31,266
----------
90,657
----------
INDIANA (0.7%)
Indiana Muni. Power Agency 6.125% 1/1/2013 (1) 13,250 15,366
----------
KANSAS (1.2%)
Kansas Dev. Finance Auth. Rev. (Sisters of Charity) 5.00% 12/1/2025 (1) 13,500 13,263
Kansas Health System Dev. Auth. (St. Luke Mission) 5.375% 11/15/2016 (1) 9,300 9,617
Kansas Health System Dev. Auth. (St. Luke Mission) 5.375% 11/15/2021 (1) 3,000 3,071
----------
25,951
----------
KENTUCKY (2.3%)
Jefferson County KY Health System Rev. (Jewish Hosp.) 5.75% 1/1/2026 (2) 11,000 11,750
Kentucky Dev. Finance Auth. Hosp. Fac. Rev.
(St. Elizabeth's Medical Center) 6.00% 11/1/2010 (3) 23,885 25,271
Kentucky Econ. Dev. Finance Auth. Hosp. Rev. VRDO
(Baptist Healthcare System Obligation Group) 3.05% 11/4/1998 LOC 6,200 6,200
Kentucky Educ. Dev. Auth. Medical Center Rev. (Ashland Hosp.) 5.00% 2/1/2018 (4) 2,000 1,993
Kentucky Educ. Dev. Auth. Medical Center Rev. (Ashland Hosp.) 5.00% 2/1/2028 (4) 7,185 7,033
----------
52,247
----------
LOUISIANA (2.8%)
Jefferson Parish LA Sales Tax Rev. 5.00% 12/1/2022 (4) 10,000 9,862
Jefferson Parish LA Sales Tax Rev. 6.75% 12/1/2006 (3) 5,865 6,484
New Orleans LA GO 0.00% 9/1/2010 (2) 8,500 4,899
New Orleans LA GO 0.00% 9/1/2011 (2) 10,475 5,691
New Orleans LA GO 0.00% 9/1/2013 (2) 9,000 4,332
New Orleans LA GO 6.00% 9/1/2021 (2) 22,250 23,325
Ouachita Parish LA Hosp. Service (Glenwood Medical Center) 5.70% 5/15/2016 (4) 4,900 5,294
Ouachita Parish LA Hosp. Service (Glenwood Medical Center) 5.75% 5/15/2021 (4) 3,200 3,432
----------
63,319
----------
MAINE (0.4%)
Maine Health & Higher Educ. Fac. Auth.
(Eastern Maine Medical System) 6.375% 10/1/2021 (3) 8,000 8,749
----------
MARYLAND (2.3%)
Maryland Health & Educ. Fac. Auth.
(Univ. of Maryland Medical System) 7.00% 7/1/2022 (3) 12,025 15,439
Maryland Health & Higher Educ. Fac. Auth. Rev.
(Johns Hopkins Medicine) 5.00% 7/1/2029 (1) 15,000 14,859
Maryland Health & Higher Educ. Fac. Auth. Rev.
(Upper Chesapeake Hosp.) 5.125% 1/1/2038 11,000 10,880
Maryland Health & Higher Educ. Fac. Auth. Rev.
(Upper Chesapeake Hosp.) 5.375% 1/1/2028 7,500 7,673
Maryland Health & Higher Educ. Fac. Auth. Rev.
(Upper Chesapeake Hosp.) 5.50% 1/1/2020 (4) 2,000 2,087
----------
50,938
----------
MASSACHUSETTS (6.4%)
Boston MA GO 6.50% 7/1/2012 (2) 4,750 5,289
Boston MA Water & Sewer Comm. Rev. 7.25% 11/1/2006 (5) 2,500 2,500
Massachusetts Consolidated Loan GO 7.00% 7/1/2009 (3) 32,250 39,792
Massachusetts Health & Educ. Fac. Auth. (Boston College) 6.75% 7/1/2011 (3) 6,595 7,205
Massachusetts Health & Educ. Fac. Auth. (Falmouth Hosp.) 5.50% 7/1/2008 (1) 1,425 1,519
Massachusetts Health & Educ. Fac. Auth. (Harvard Pilgrim Health) 5.00% 7/1/2028 (4) 30,000 29,318
Massachusetts Health & Educ. Fac. Auth. (Lahey Clinic) 7.85% 7/1/2003 (1) 3,360 3,921
Massachusetts Health & Educ. Fac. Auth.
(Massachusetts General Hosp.) 6.25% 7/1/2012 (2) 19,650 22,779
Massachusetts Housing Finance Agency Rev. 5.95% 10/1/2008 (2) 27,485 29,402
Massachusetts Turnpike Auth. BAN 5.00% 6/1/1999 2,340 2,365
----------
144,090
----------
</TABLE>
43
<PAGE> 91
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
INSURED LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MICHIGAN (4.3%)
Detroit MI Sewer System Rev. 5.00% 7/1/2027 $ 5,500 $ 5,377
Detroit MI Sewer System Rev. 5.45% 7/1/2007 (3) 6,850 7,524
Michigan Hosp. Finance Auth. Rev. (Mercy Health) 5.375% 8/15/2026 (2) 5,000 5,108
Michigan Strategic Fund (Detroit Edison) 7.00% 7/15/2008 (1) 18,375 22,424
Michigan Trunk Line Rev. 5.625% 11/1/2026 (3) 10,000 11,147
Monroe County MI Econ. Dev. Corp. (Detroit Edison) 6.95% 9/1/2022 (3) 25,000 31,950
St. Clair MI Econ. Dev. Corp. (Detroit Edison) 6.40% 8/1/2024 (2) 8,000 9,081
Univ. of Michigan Hosp. Rev. VRDO 3.75% 11/3/1998 2,600 2,600
----------
95,211
----------
MINNESOTA (0.5%)
Southern Minnesota Muni. Power Agency Supply System Rev. 5.50% 1/1/2015 (2) 6,120 6,376
Southern Minnesota Muni. Power Agency Supply System Rev. 5.50% 1/1/2015 (2)(Prere.) 3,880 4,189
----------
10,565
----------
MISSOURI (0.3%)
Missouri Health & Educ. Fac. Auth. (Lester Cox Medical Center) 5.25% 6/1/2015 (1) 5,000 5,243
Missouri Health & Educ. Fac. Auth. VRDO (Washington Univ.) 3.70% 11/3/1998 1,000 1,000
----------
6,243
----------
NEBRASKA (2.5%)
Nebraska Public Power Dist. Rev. 0.00% 1/1/2006 (1) 24,465 18,148
Nebraska Public Power Dist. Rev. 0.00% 1/1/2007 (1) 24,485 17,352
Nebraska Public Power Dist. Rev. 0.00% 1/1/2008 (1) 15,000 10,100
Nebraska Public Power Dist. Rev. 5.25% 1/1/2011 (1) 10,000 10,609
----------
56,209
----------
NEVADA (0.3%)
Clark County NV GO 6.50% 6/1/2017 (2) 5,000 6,003
----------
NEW HAMPSHIRE (0.4%)
New Hampshire Higher Educ. (Hitchcock Clinic) 6.00% 7/1/2015 (1) 7,560 8,183
----------
NEW JERSEY (4.4%)
Atlantic County NJ Public Fac. COP 7.40% 3/1/2012 (3) 4,335 5,586
Hoboken-Union City-Weehawken NJ Sewerage Auth. 6.25% 8/1/2014 (1) 10,185 12,002
Hoboken-Union City-Weehawken NJ Sewerage Auth. 6.25% 8/1/2015 (1) 10,820 12,721
New Jersey Health Care Fac. Finance Auth.
(St. Clare's-Riverside Medical Center) 5.75% 7/1/2014 (1) 3,000 3,272
New Jersey Sports & Exposition Auth. 6.50% 3/1/2013 (1) 18,795 22,622
New Jersey Turnpike Auth. 6.50% 1/1/2013 (1) 30,000 35,884
New Jersey Turnpike Auth. 6.50% 1/1/2016 (1) 5,000 5,999
----------
98,086
----------
NEW MEXICO (0.6%)
Albuquerque NM Hosp. System (Presbyterian Health) 6.375% 8/1/2007 (1) 4,000 4,411
Farmington NM Util. System Rev. 5.75% 5/15/2013 (3) 2,505 2,692
Farmington NM Util. System Rev. 5.75% 5/15/2013 (3)(ETM) 495 558
Univ. of New Mexico Rev. 5.375% 6/1/2026 (1) 5,000 5,158
----------
12,819
----------
NEW YORK (3.4%)
Metro. NY Transit Auth. Rev. 6.00% 4/1/2020 (1) 18,000 20,686
New York City NY Muni. Water & Sewer System Rev. 7.00% 6/15/2009 (2) 1,845 2,013
New York State Housing Finance Agency Auth. Rev.
(Nursing Home & Health Care) 4.70% 11/1/2008 7,200 7,414
New York State Housing Finance Agency Auth. Rev.
(Nursing Home & Health Care) 4.80% 11/1/2009 13,920 14,377
New York State Housing Finance Agency Auth. Rev.
(Nursing Home & Healthcare) 4.90% 11/1/2010 4,620 4,773
New York State Medical Care Fac. Finance Agency
(Mental Health Improvement) 6.00% 8/15/2015 (1) 5,000 5,459
Suffolk County NY Water Auth. 5.75% 6/1/2013 (2) 7,345 7,905
</TABLE>
44
<PAGE> 92
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Triborough Bridge & Tunnel Auth. of NY Rev. 6.00% 1/1/2014 $ 4,500 $ 4,730
Triborough Bridge & Tunnel Auth. of NY Rev. 6.00% 1/1/2015 (2) 260 279
Triborough Bridge & Tunnel Auth. of NY Rev. VRDO 3.50% 11/4/1998 (3) 8,300 8,300
----------
75,936
----------
NORTH CAROLINA (1.1%)
North Carolina Higher Educ. VRDO (Duke Univ.) 3.05% 11/5/1998 1,940 1,940
North Carolina Medical Care Rev. (Wake County Hosp.) 5.25% 10/1/2017 (1) 14,250 14,558
North Carolina Muni. Power Agency (Catawba Electric) 6.00% 1/1/2010 (1) 6,750 7,701
----------
24,199
----------
NORTH DAKOTA (1.0%)
Bismark ND Medical Center 7.50% 5/1/2013 (5) 10,000 10,405
Mercer County ND PCR (Basin Electric Power) 6.05% 1/1/2019 (2) 10,000 11,041
----------
21,446
----------
OHIO (4.6%)
Cleveland OH Public Power System Rev. 7.00% 11/15/2016 (1) 5,000 5,818
Cleveland OH School Dist. Board of Educ. GO 5.875% 12/1/2011 (3) 4,720 5,131
Cleveland OH Water Works Improvement Rev. 6.25% 1/1/2002 (2)(Prere.) 2,405 2,633
Cleveland OH Water Works Improvement Rev. 6.25% 1/1/2015 (2) 95 103
Cuyahoga County OH Hosp. Refunding & Improvement (Univ. Hosp.) 5.625% 1/15/2021 (1) 11,480 12,090
Franklin County OH Convention Center Rev. 0.00% 12/1/2006 (1) 4,355 3,119
Greater Cleveland OH Regional Transp. Auth. GO 5.65% 12/1/2016 (3) 5,000 5,366
Northeast Ohio Regional Sewer Dist. Waste
Water Improvement Rev. 6.50% 11/15/2001 (2)(Prere.) 5,750 6,279
Ohio Air Quality Dev. Auth. PCR (Ohio Edison Project) 7.10% 6/1/2018 (3) 6,500 6,942
Ohio Air Quality Dev. Auth. PCR (Ohio Edison Project) 7.45% 3/1/2016 (3) 9,500 10,119
Ohio Air Quality Dev. Auth. VRDO (Cincinnati Gas & Electric) 3.70% 11/3/1998 LOC 2,900 2,900
Ohio GO 7.625% 8/1/2009 4,345 5,612
Ohio Water Dev. Auth. PCR Water Control Loan Fund Rev. 5.125% 6/1/2019 (1) 18,000 18,128
Ohio Water Dev. Auth. PCR Water Control Loan Fund Rev. 5.50% 12/1/2010 (1) 3,575 3,908
Ohio Water Dev. Auth. PCR Water Control Loan Fund Rev. 5.50% 6/1/2012 (1) 3,175 3,443
Ohio Water Dev. Auth. PCR Water Control Loan Fund Rev. 5.50% 6/1/2013 (1) 3,420 3,685
Ohio Water Dev. Auth. PCR Water Control Loan Fund Rev. 5.50% 6/1/2014 (1) 7,475 8,013
----------
103,289
----------
OREGON (1.2%)
Oregon Health, Housing, Educ. & Culture Fac. (Lewis & Clark College) 6.00% 10/1/2013 (1) 2,250 2,498
Oregon Health Sciences Univ. Rev. 5.25% 7/1/2025 (1) 8,000 8,072
Portland OR Sewer System Rev. 5.50% 6/1/2017 (1) 15,000 15,738
----------
26,308
----------
PENNSYLVANIA (8.2%)
Allegheny County PA Hosp. Auth. (Presbyterian Hosp.) 7.125% 7/1/1999 (1)(Prere.) 12,500 13,092
Allegheny County PA Sanitary Auth. 5.50% 12/1/2016 (3) 10,000 10,376
Allegheny County PA Sanitary Auth. 6.00% 12/1/2019 (1) 20,000 22,579
Armstrong County PA Hosp. Auth. Rev. 6.25% 6/1/2013 (2) 18,400 20,024
Delaware Valley PA Regional Finance Auth. Local Govt. Rev. 5.50% 8/1/2028 10,000 10,934
Lehigh County PA General Purpose Auth. (Lehigh Valley Hosp.) 6.50% 7/1/2010 (1) 6,655 7,407
Pennsylvania Convention Center Auth. Rev. 6.00% 9/1/2019 (3)(ETM) 10,000 11,511
Pennsylvania Convention Center Auth. Rev. 6.70% 9/1/2016 (3)(ETM) 9,970 12,198
Pennsylvania Higher Educ. Fac. Health Services Rev.
(Allegheny/Delaware Valley) 5.875% 11/15/2016 (1) 20,000 20,262
Pennsylvania Turnpike Comm. Rev. 6.00% 6/1/2015 (1) 1,000 1,070
Philadelphia PA Gas Works Rev. 6.00% 5/15/2012 (2) 3,000 3,172
Philadelphia PA Water & Waste Water Rev. 7.00% 6/15/2010 (3) 15,000 18,503
Philadelphia PA Water & Waste Water Rev. 7.00% 6/15/2011 (3) 16,500 20,493
Pittsburgh PA Water & Sewer System Rev. 7.25% 9/1/2014 (3)(ETM) 5,000 6,220
Sharon PA Regional Health System Auth. Rev. 5.00% 12/1/2028 (1) 5,420 5,288
----------
183,129
----------
PUERTO RICO (0.1%)
Puerto Rico Public Building Auth. 0.00% 7/1/2001 (3) 4,150 3,772
----------
</TABLE>
45
<PAGE> 93
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
INSURED LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RHODE ISLAND (0.2%)
Rhode Island Public Building Auth. 6.00% 2/1/2011 (2) $ 3,805 $ 4,002
----------
SOUTH CAROLINA (2.9%)
Piedmont SC Muni. Power Agency Rev. 5.00% 1/1/2018 (3) 9,000 8,988
Piedmont SC Muni. Power Agency Rev. 6.75% 1/1/2019 (3) 10,600 13,000
Piedmont SC Muni. Power Agency Rev. 6.75% 1/1/2020 (3) 23,515 28,956
Public Service Auth. Rev. of South Carolina 6.25% 1/1/2022 (2) 13,000 14,706
----------
65,650
----------
SOUTH DAKOTA (0.6%)
South Dakota Health & Educ. Fac. Auth. Rev. (McKennan Hosp.) 7.625% 1/1/2008 (1)(Prere.) 10,065 12,529
South Dakota Health & Educ. Fac. Auth. Rev. (McKennan Hosp.) 7.625% 7/1/2014 (1) 1,435 1,508
----------
14,037
----------
TENNESSEE (1.5%)
Jackson TN Hosp. Rev. (Madison County General Hosp.) 5.00% 4/1/2028 14,000 13,787
Knox County TN Health, Educ. & Housing Fac. (Fort Sander Hosp.) 8.00% 1/1/2008 (1) 210 214
Nashville & Davidson County TN Health & Educ. Fac.
(Meharry Medical College) 6.00% 12/1/2012 (2) 3,405 3,941
Tennessee Health, Educ. & Housing Fac. (Methodist Health System) 5.50% 8/1/2012 (1) 2,500 2,670
Tennessee Housing Dev. Agency 7.125% 7/1/2017 (1) 2,665 2,778
Tennessee School Board Auth. Higher Educ. Fac. 5.50% 5/1/2022 (4) 9,000 9,523
----------
32,913
----------
TEXAS (5.6%)
Austin TX Combined Util. System Rev. 5.75% 11/15/2016 (2) 10,000 10,632
Corpus Christi TX Util. System Rev. 7.00% 7/15/2010 (3) 7,500 8,043
Houston TX Water & Sewer System Rev. 0.00% 12/1/2012 (2) 26,000 13,440
Houston TX Water & Sewer System Rev. 7.00% 12/1/2020 (1) 12,280 13,377
Houston TX Water Conveyance System 6.25% 12/15/2012 (2) 8,340 9,719
Houston TX Water Conveyance System 6.80% 12/15/2010 (2) 5,490 6,654
Houston TX Water Conveyance System 6.80% 12/15/2011 (2) 8,910 10,845
Lower Colorado River Auth. Rev. of Texas 5.625% 1/1/2015 (4)(Prere.) 3,055 3,376
Northeast Hosp. Auth. (Northeast Medical Center) 5.625% 5/15/2017 (4) 7,425 7,883
Northeast Hosp. Auth. (Northeast Medical Center) 5.625% 5/15/2022 (4) 7,110 7,506
Northeast Hosp. Auth. (Northeast Medical Center) 6.00% 5/15/2009 (4) 3,945 4,462
Northeast Hosp. Auth. (Northeast Medical Center) 6.00% 5/15/2010 (4) 2,000 2,266
San Antonio TX Electric & Gas System Rev. 0.00% 2/1/2006 (3) 16,500 12,197
San Antonio TX Electric & Gas System Rev. 0.00% 2/1/2007 (3) 15,000 10,593
Texas Turnpike Auth. Dallas Northway Rev.
(President George Bush Turnpike) 0.00% 1/1/2010 (2) 6,000 3,626
----------
124,619
----------
VIRGINIA (0.7%)
Henry County VA Public Service Auth. 6.25% 11/15/2019 (3) 1,500 1,614
Norfolk VA Water Dev. 5.90% 11/1/2025 (1) 12,150 13,280
----------
14,894
----------
WASHINGTON (0.5%)
Snohomish County WA Mukilteo School Dist. 5.65% 12/1/2010 (3) 3,950 4,436
Snohomish County WA Mukilteo School Dist. 5.70% 12/1/2011 (3) 5,000 5,636
----------
10,072
----------
WEST VIRGINIA (1.2%)
West Virginia Hosp. Finance Auth. Rev. (Charleston Medical Center) 5.75% 9/1/2013 (1) 8,000 8,705
West Virginia State Building Comm. Rev. (Jail & Correctional Fac.) 7.00% 7/1/2011 (1) 7,325 9,135
West Virginia State Building Comm. Rev. (Jail & Correctional Fac.) 7.00% 7/1/2012 (1) 7,840 9,815
----------
27,655
----------
</TABLE>
46
<PAGE> 94
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WISCONSIN (0.4%)
Wisconsin Health & Educ. Fac. Auth. Hosp. Rev.
(St. Luke's Medical Center) 7.10% 8/15/2011 (1) $ 4,000 $ 4,436
Wisconsin Health & Educ. Fac. Auth. Hosp. Rev. VRDO
(Charity Obligated Group-Daughters of Charity National
Health System) 3.05% 11/4/1998 5,000 5,000
----------
9,436
----------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $1,981,234) 2,215,867
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (0.9%)
- -------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 67,749
Liabilities (48,481)
----------
19,268
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- -------------------------------------------------------------------------------------------------------------------------
Applicable to 175,515,483 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $2,235,135
=========================================================================================================================
NET ASSET VALUE PER SHARE $12.73
=========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
+Securities with a value of $7,049,000 have been segregated as initial margin
for open futures contracts.
For key to abbreviations and other references, see page 61.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AT OCTOBER 31, 1998, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $2,027,921 $11.55
Undistributed Net Investment Income -- --
Overdistributed Net Realized Gains--Note E (27,160) (.15)
Unrealized Appreciation (Depreciation)--Note F
Investment Securities 234,633 1.33
Futures Contracts (259) --
=========================================================================================================================
NET ASSETS $2,235,135 $12.73
=========================================================================================================================
</TABLE>
47
<PAGE> 95
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (98.8%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARIZONA (0.6%)
Scottsdale AZ IDA (Memorial Hosp.) 6.00% 9/1/2012 (2) $ 4,000 $ 4,478
Scottsdale AZ IDA (Memorial Hosp.) 6.125% 9/1/2017 (2) 4,700 5,318
----------
9,796
----------
CALIFORNIA (11.6%)
Anaheim CA Public Finance Auth. 6.00% 9/1/2013 (4) 7,000 8,144
Anaheim CA Public Finance Auth. 6.00% 9/1/2014 (4) 2,500 2,893
California GO 6.25% 9/1/2012 5,000 5,945
California Health Fac. Finance Auth. VRDO (St. Francis Hosp.) 2.75% 11/4/1998 (1) 1,100 1,100
California PCR VRDO (Pacific Gas & Electric) 3.60% 11/3/1998 LOC 4,600 4,600
California PCR VRDO (Pacific Gas & Electric) 3.65% 11/3/1998 1,000 1,000
California Public Works Rev. (Community College Project) 5.625% 3/1/2016 (2) 11,370 12,255
California Public Works Rev. (Dept. of Corrections) 5.25% 1/1/2021 (2) 5,000 5,098
California Public Works Rev. (Dept. of Corrections) 5.625% 11/1/2016 (1) 16,675 18,047
California State Dept. of Veteran Affairs 5.45% 12/1/2019 8,000 8,291
California Statewide Community Dev. Auth. PUT (Irvine Apartments) 5.10% 5/15/2025 7,000 7,178
Fresno CA Sewer Rev. 6.25% 9/1/2010 (2) 6,395 7,594
Irvine CA Assessment Dist. VRDO (Oak Creek) 3.55% 11/3/1998 LOC 2,100 2,100
Los Angeles County CA COP (Capital Fac. Project) 6.50% 3/1/2010 21,815 23,123
Los Angeles County CA Public Works Rev. 5.50% 10/1/2011 5,000 5,471
Los Angeles County CA Public Works Rev. 5.50% 10/1/2012 6,750 7,344
Orange County CA Water Dist. VRDO 3.45% 11/3/1998 LOC 5,000 5,000
San Bernardino CA Medical Center COP 5.50% 8/1/2019 (1) 11,400 11,941
San Bernardino CA Medical Center COP 5.50% 8/1/2024 (1) 14,295 14,973
San Bernardino County CA COP (Capital Fac. Project) 6.875% 8/1/2024 (ETM) 18,000 22,936
----------
175,033
----------
COLORADO (1.0%)
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2016 (1) 10,185 4,206
E-470 Public Highway Auth. CO Rev. 5.00% 9/1/2015 (1) 11,645 11,810
----------
16,016
----------
DISTRICT OF COLUMBIA (1.5%)
District of Columbia GO 5.40% 6/1/2012 (2) 5,000 5,291
District of Columbia GO 6.00% 6/1/2011 (1) 8,990 10,201
District of Columbia GO 6.75% 6/1/2000 (2)(Prere.) 6,100 6,521
District of Columbia GO 6.75% 6/1/2005 (2) 40 43
----------
22,056
----------
FLORIDA (5.6%)
Dade County FL Water & Sewer Rev. VRDO 3.05% 11/4/1998 (3) 10,900 10,900
Florida State Turnpike Auth. Rev. 5.00% 7/1/2019 10,320 10,336
Gulf Breeze FL Local Govt. Loan Program VRDO 3.10% 11/5/1998 (3) 2,800 2,800
Orange County FL School Master Lease COP 5.375% 8/1/2017 (1) 5,000 5,202
Orange County FL School Master Lease COP 5.375% 8/1/2022 (1) 20,285 20,976
Sunrise FL Util. System Rev. 5.50% 10/1/2018 (2) 12,000 12,989
Tampa Bay FL Water Util. System Rev. 5.00% 10/1/2021 13,860 13,822
Tampa-Hillsborough County FL Expressway Auth. Rev. 5.00% 7/1/2022 (2) 7,575 7,554
----------
84,579
----------
GEORGIA (3.4%)
Burke County GA Dev. Auth. PCR VRDO (Georgia Power Co.) 3.70% 11/3/1998 5,900 5,900
College Park GA IDA GO (Civic Center) 7.00% 9/1/2010 11,500 13,871
Georgia Muni. Gas Auth. Rev. VRDO 3.05% 11/4/1998 LOC 2,000 2,000
Metro. Atlanta GA Rapid Transit Auth. Rev. 5.10% 7/1/2017 (1) 14,510 14,736
Metro. Atlanta GA Rapid Transit Auth. Rev. 6.25% 7/1/2018 12,170 14,155
----------
50,662
----------
ILLINOIS (4.5%)
Chicago IL Metro. Water Capital Improvement Rev. 7.00% 1/1/2011 20,000 24,581
Chicago IL Public Building Comm. 7.00% 1/1/2020 (1)(ETM) 6,000 7,657
Illinois Dev. Finance Auth. (Provena Health) 5.125% 5/15/2023 (1) 7,450 7,322
Illinois Dev. Finance Auth. PCR (Illinois Power Co. Project) 7.40% 12/1/2024 (1) 8,150 9,568
Illinois Dev. Finance Auth. PCR VRDO (Illinois Power Co. Project) 3.10% 11/4/1998 LOC 3,800 3,800
</TABLE>
48
<PAGE> 96
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois Metro. Pier & Exposition Auth. Rev. 6.75% 6/1/2010 (1) $ 6,000 $ 7,324
Illinois Toll Highway Auth. Rev. VRDO 3.05% 11/4/1998 (1) LOC 2,460 2,460
Joliet IL Regional Port. Dist. Marine Terminal VRDO (Exxon Project) 3.70% 11/3/1998 4,600 4,600
----------
67,312
----------
INDIANA (1.7%)
Indiana Health Fac. Finance Auth. Rev. (Ancilla System, Inc.) 5.75% 7/1/2015 (1) 4,470 4,701
Indiana State Office Building Comm. Rev. (Capitol Complex) 6.90% 7/1/2011 16,875 20,512
----------
25,213
----------
LOUISIANA (1.8%)
De Soto Parish LA PCR (Southwestern Electric Power Co.) 7.60% 1/1/2019 24,300 27,646
----------
MASSACHUSETTS (9.3%)
Massachusetts Bay Transp. Auth. 7.00% 3/1/2021 15,000 19,129
Massachusetts GO 5.75% 5/1/2012 7,500 8,133
Massachusetts GO 6.00% 6/1/2011 3,500 3,706
Massachusetts GO 6.50% 8/1/2011 2,345 2,543
Massachusetts Health & Educ. Fac. Rev. (Boston Medical Center) 5.00% 7/1/2019 (1) 3,500 3,486
Massachusetts Health & Educ. Fac. Rev. (Harvard Pilgrim Health) 5.00% 7/1/2018 (4) 20,000 19,974
Massachusetts Housing Finance Agency 6.125% 11/15/2008 3,500 3,718
Massachusetts Turnpike Auth. BAN 5.00% 6/1/1999 1,490 1,506
Massachusetts Turnpike Auth. Rev. (Metro. Highway Systems) 5.125% 1/1/2023 (1) 17,000 16,964
Massachusetts Turnpike Auth. Rev. (Metro. Highway Systems) 5.25% 1/1/2029 (1) 12,500 12,686
Massachusetts Water Resources Auth. Rev. 5.50% 11/1/2016 (3) 5,000 5,282
Massachusetts Water Resources Auth. Rev. 5.50% 7/15/2022 5,000 5,312
Massachusetts Water Resources Auth. Rev. 6.50% 7/15/2019 + 32,000 38,480
----------
140,919
----------
MICHIGAN (2.7%)
Detroit MI GO 6.375% 4/1/2007 4,500 5,016
Grand Rapids MI Tax Increment Rev. (Downtown Project) 6.875% 6/1/2024 (1) 7,500 8,608
Michigan State Hosp. Finance Auth. Rev.
(Genesys Regional Medical Center) 5.50% 10/1/2018 7,000 7,026
Michigan State Hosp. Finance Auth. Rev.
(Genesys Regional Medical Center) 5.50% 10/1/2027 5,000 5,020
Wayne Charter County MI Airport Rev. 5.25% 12/1/2018 (1) 15,005 15,205
----------
40,875
----------
MISSISSIPPI (0.7%)
Claiborne County MS PCR (Middle South Energy) 9.875% 12/1/2014 10,000 10,341
----------
NEVADA (4.8%)
Clark County NV Building Auth. 5.25% 6/15/2016 (3) 7,000 7,213
Clark County NV Passenger Fac. Rev. 5.375% 7/1/2014 (1) 14,780 15,606
Humboldt County NV PCR (Idaho Power Co.) 8.30% 12/1/2014 9,100 10,811
Nevada GO 5.00% 5/15/2018 14,170 14,170
Nevada GO 5.00% 5/15/2022 5,520 5,445
Nevada GO 5.25% 5/15/2016 6,570 6,764
Nevada GO 5.25% 9/15/2027 12,760 12,931
----------
72,940
----------
NEW JERSEY (2.7%)
New Jersey Health Care Fac. Auth. Rev.
(Atlantic City Medical Center) 6.80% 7/1/2005 3,500 3,876
New Jersey Sports & Exposition Auth. Rev. 6.50% 3/1/2013 10,000 12,013
New Jersey Sports & Exposition Auth. Rev. 6.50% 3/1/2019 20,000 21,896
New Jersey Sports & Exposition Auth. Rev. VRDO 2.75% 11/5/1998 (1) 2,400 2,400
----------
40,185
----------
NEW YORK (11.4%)
Babylon NY Waste Water Fac. GO 9.00% 8/1/2008 (3) 4,900 6,704
Babylon NY Waste Water Fac. GO 9.00% 8/1/2009 (3) 2,800 3,891
Babylon NY Waste Water Fac. GO 9.00% 8/1/2010 (3) 4,900 6,900
Long Island NY Power Auth. Electric System Rev. 5.125% 12/1/2022 (4) 25,155 25,208
</TABLE>
49
<PAGE> 97
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Metro. NY Transit Auth. Dedicated Petroleum Tax 5.25% 4/1/2026 (1) $ 4,675 $ 4,776
Metro. NY Transit Auth. Dedicated Petroleum Tax 6.00% 4/1/2020 (1) 13,665 15,704
Metro. NY Transit Auth. Rev. 5.70% 7/1/2017 (1) 8,320 8,983
New York City NY GO 7.10% 2/1/2010 (1) 1,075 1,191
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 7.00% 6/15/2001 (Prere.) 2,520 2,752
New York City NY Transitional Finance Auth. Rev. 5.00% 5/1/2017 5,000 5,024
New York City NY Trust for Cultural Resources VRDO
(Solomon R. Guggenheim Foundation) 3.60% 11/3/1998 500 500
New York Local Govt. Assistance Corp. Rev. 5.375% 4/1/2012 5,275 5,601
New York Local Govt. Assistance Corp. Rev. 5.40% 4/1/2013 13,125 13,887
New York Local Govt. Assistance Corp. Rev. 5.40% 4/1/2015 5,700 5,979
New York Medical Care Fac. Auth. Rev. 6.875% 2/15/2002 (7)(Prere.) 640 713
New York Medical Care Fac. Auth. Rev. 6.875% 2/15/2032 (7) 4,360 4,784
New York State Dormitory Auth. Rev. (State Univ.) 5.00% 5/15/2014 10,000 10,073
New York State Dormitory Auth. Rev. (State Univ.) 7.50% 5/15/2011 18,900 23,524
Triborough Bridge & Tunnel Auth. Rev. NY 5.00% 1/1/2015 (4) 10,000 10,097
Triborough Bridge & Tunnel Auth. Rev. NY (General Purpose Rev.) 5.20% 1/1/2022 3,400 3,445
Triborough Bridge & Tunnel Auth. Rev. NY (General Purpose Rev.) 6.125% 1/1/2021 10,000 11,689
----------
171,425
----------
NORTH CAROLINA (1.3%)
North Carolina Eastern Muni. Power Agency Rev. 6.50% 1/1/2018 (ETM) 4,625 5,590
North Carolina Eastern Muni. Power Agency Rev. 7.50% 1/1/2009 (Prere.) 4,935 6,283
North Carolina Medical Care Rev. (Wake County Hosp.) 5.25% 10/1/2017 (1) 7,100 7,254
----------
19,127
----------
OHIO (0.6%)
Franklin County OH Hosp. Rev. (Children's Hosp.) 5.75% 11/1/2020 2,945 3,121
Franklin County OH Hosp. Rev. VRDO (U.S. Health Corp.) 3.10% 11/5/1998 LOC 5,500 5,500
Ohio Air Quality Dev. Auth. VRDO (Cincinnati Electric & Gas) 3.70% 11/3/1998 LOC 1,100 1,100
----------
9,721
----------
OKLAHOMA (0.4%)
Tulsa OK Metro. Util. Auth. Rev. 5.75% 9/1/2019 (1) 5,525 5,962
----------
OREGON (0.7%)
Portland OR Sewer System Rev. 5.50% 6/1/2017 (1) 10,090 10,587
----------
PENNSYLVANIA (11.6%)
Allegheny County PA Hosp. Dev. Auth. VRDO
(Children's Hosp. Pittsburgh) 3.05% 11/5/1998 (1) 2,050 2,050
Allegheny County PA Sanitary Auth. 5.375% 12/1/2024 9,500 9,857
Allegheny County PA Sanitary Auth. 6.00% 12/1/2019 (1) 10,000 11,290
Delaware County PA IDA Resource Recovery (Browning Ferris) 6.10% 7/1/2013 10,000 10,680
Delaware Valley PA Regional Finance Auth. Local Govt. Rev. 5.50% 8/1/2028 15,000 16,400
Pennsylvania GO 6.375% 9/15/2009 11,000 11,980
Pennsylvania GO 6.375% 9/15/2010 8,820 9,591
Pennsylvania GO 6.375% 9/15/2011 5,975 6,509
Pennsylvania GO 6.375% 9/15/2012 13,500 14,706
Pennsylvania Housing Finance Agency Residential Dev. Rev. 7.50% 7/1/2006 3,890 4,179
Pennsylvania Turnpike Comm. Oil Franchise Tax Rev. 5.00% 12/1/2023 (2) 15,685 15,475
Philadelphia PA Hosp. & Higher Educ. Fac. Auth.
(Jefferson Health System) 5.125% 5/15/2018 (2) 10,000 10,013
Philadelphia PA Hosp. & Higher Educ. Fac. Auth. VRDO
(Children's Hosp.) 3.70% 11/3/1998 1,500 1,500
Philadelphia PA Water & Waste Water Rev. 7.00% 6/15/2010 (3) 20,000 24,671
Pittsburgh PA GO 5.25% 9/1/2016 8,195 8,423
Pittsburgh PA School Dist. 5.50% 9/1/2014 (1) 4,715 5,042
Pittsburgh PA Water & Sewer Auth. Rev. 6.50% 9/1/2013 (3) 10,000 12,050
Radnor Township PA School Auth. 9.875% 9/15/2000 (ETM) 200 205
----------
174,621
----------
</TABLE>
50
<PAGE> 98
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PUERTO RICO (1.0%)
Puerto Rico Electric Power Auth. Rev. 5.25% 7/1/2014 (1) $ 2,580 $ 2,718
Puerto Rico Electric Power Auth. Rev. 5.25% 7/1/2014 (4) 2,000 2,107
Puerto Rico Highway & Transp. Rev. 5.00% 7/1/2016 (4) 10,605 10,808
----------
15,633
----------
SOUTH CAROLINA (1.1%)
Piedmont SC Muni. Power Agency Rev. 6.50% 1/1/2015 (3) 12,210 14,617
Piedmont SC Muni. Power Agency Rev. 6.50% 1/1/2015 (3)(ETM) 2,035 2,452
----------
17,069
----------
TEXAS (11.1%)
Austin TX Independent School Dist. 0.00% 8/1/2013 ++ 7,325 3,617
Bexar County TX Health Fac. Dev. Corp. (Baptist Health System) 5.375% 11/15/2022 (1) 5,000 5,119
Brazos County TX Health Dev. Franciscan Service Corp. 5.375% 1/1/2022 (1) 5,750 5,883
Houston TX Hotel Occupancy Tax Rev. 5.50% 7/1/2011 (4) 21,760 23,099
Houston TX Independent School Dist. 0.00% 9/15/2012 6,150 3,189
Houston TX Water & Sewer System Rev. 0.00% 12/1/2012 (2) 20,500 10,597
Houston TX Water & Sewer System Rev. 6.375% 12/1/2001 (2)(Prere.) 360 395
Houston TX Water & Sewer System Rev. 6.375% 12/1/2017 (2) 5,640 6,118
North East TX Independent School Dist. 5.00% 2/1/2016 6,425 6,467
Round Rock TX Independent School Dist. 0.00% 8/15/2011 (1) 5,000 2,774
San Antonio TX Electric & Gas System Rev. 5.00% 2/1/2017 14,135 14,084
Texas City TX IDA (Arco Pipeline Project) 7.375% 10/1/2020 17,000 22,202
Texas Turnpike Auth. Dallas Northway Rev.
(President George Bush Turnpike) 5.25% 1/1/2023 (3) 19,300 19,607
Texas Water Dev. Board Rev. 5.125% 7/15/2018 10,000 10,003
Texas Water Dev. Board Rev. 5.25% 7/15/2017 7,000 7,128
Texas Water Dev. Board Rev. 6.50% 7/15/2010 17,425 20,868
Texas Water Dev. Board Rev. 7.05% 8/1/2025 5,655 6,486
----------
167,636
----------
UTAH (1.0%)
Intermountain Power Agency UT Power Supply Rev. 5.00% 7/1/2020 11,545 11,394
Intermountain Power Agency UT Power Supply Rev. 5.75% 7/1/2019 (1) 3,000 3,249
----------
14,643
----------
VIRGINIA (0.4%)
Richmond VA Metro. Expressway Auth. Rev. 6.375% 7/15/2016 (3) 5,400 5,994
----------
WASHINGTON (3.6%)
Chelan County WA Public Util. Dist. (Rock Island Hydro Project) 0.00% 6/1/2017 (1) 11,685 4,566
Chelan County WA Public Util. Dist. (Rock Island Hydro Project) 0.00% 6/1/2018 10,000 3,694
Washington Department of Ecology COP
(State Office Building Project) 5.00% 4/1/2016 27,820 27,627
Washington GO 5.00% 7/1/2022 9,750 9,577
Washington GO 5.50% 5/1/2018 4,000 4,320
Washington GO 6.75% 2/1/2015 3,450 4,225
----------
54,009
----------
WEST VIRGINIA (0.7%)
West Virginia State Building Comm. Rev. 7.00% 7/1/2014 (1) 8,975 11,280
----------
WISCONSIN (1.7%)
Wisconsin Clean Water Rev. 6.875% 6/1/2011 20,500 25,250
----------
WYOMING (0.3%)
Lincoln County WY PCR VRDO (Exxon Project) 3.70% 11/3/1998 4,300 4,300
----------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $1,361,573) 1,490,830
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE> 99
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
LONG-TERM TAX-EXEMPT FUND (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS AND LIABILITIES (1.2%)
- -------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B $ 27,616
Liabilities (9,671)
----------
17,945
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- -------------------------------------------------------------------------------------------------------------------------
Applicable to 132,414,924 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $1,508,775
=========================================================================================================================
NET ASSET VALUE PER SHARE $11.39
=========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
+Securities with a value of $2,646,000 have been segregated as initial margin
for open futures contracts.
For key to abbreviations and other references, see page 61.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AT OCTOBER 31, 1998, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $1,383,988 $10.45
Undistributed Net Investment Income -- --
Overdistributed Net Realized Gains--Note E (2,180) (.02)
Unrealized Appreciation (Depreciation)--Note F
Investment Securities 129,257 .98
Futures Contracts (2,290) (.02)
=========================================================================================================================
NET ASSETS $1,508,775 $11.39
=========================================================================================================================
</TABLE>
52
<PAGE> 100
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
HIGH-YIELD TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (99.9%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA (0.8%)
Alabama Special Care Fac. (Baptist Health System) 5.875% 11/15/2026 (1) $ 5,000 $ 5,151
McIntosh AL IDR (Environmental Improvement) 5.375% 6/1/2028 15,000 15,291
----------
20,442
----------
ALASKA (0.4%)
Alaska Housing Finance Corp. VRDO 3.15% 11/4/1998 6,100 6,100
North Slope Borough AK GO 7.50% 6/30/2001 (4) 3,000 3,288
----------
9,388
----------
ARIZONA (1.6%)
Board of Regents Rev. (Univ. of Arizona) 6.20% 6/1/2016 26,660 31,016
Maricopa County AZ PCR VRDO (Arizona Public Service Palo Verde) 3.70% 11/3/1998 LOC 3,800 3,800
Pima County AZ IDA Multi Family Mortgage (La Cholla Project) 8.50% 7/1/2020 + 6,650 7,214
----------
42,030
----------
ARKANSAS (0.3%)
North Little Rock AR Electric System Rev. 6.50% 7/1/2015 (1) 3,450 4,140
Pulaski County AR Health Fac. Board Rev. (Catholic Health) 5.00% 12/1/2028 2,500 2,462
----------
6,602
----------
CALIFORNIA (7.5%)
California Educ. Fac. Auth. (Univ. of Southern California) 5.70% 10/1/2015 6,000 6,592
California Statewide Community Dev. Auth. PUT (Irvine Apartments) 5.10% 5/15/2025 13,000 13,331
California Statewide Community Dev. Auth. PUT (Irvine Apartments) 5.25% 5/15/2025 10,000 10,245
California Veterans GO 5.20% 12/1/2010 22,000 22,730
California Veterans GO 5.25% 12/1/2011 38,000 39,257
Sacramento CA Finance Auth. Lease Rev. 5.40% 11/1/2020 12,565 13,197
San Bernardino County CA COP (Capital Fac. Project) 6.875% 8/1/2024 (ETM) 25,220 32,136
San Bernardino County CA COP (Medical Center Funding) 7.00% 8/1/2020 12,180 15,558
San Joaquin Hills CA Transp. Agency Rev. 0.00% 1/15/2007 (1) 3,500 2,488
San Joaquin Hills CA Transp. Agency Rev. 0.00% 1/15/2009 (1) 4,095 2,639
San Joaquin Hills CA Transp. Agency Rev. 0.00% 1/15/2016 22,500 16,111
San Joaquin Hills CA Transp. Agency Rev. 0.00% 1/15/2017 20,000 14,262
Southern California Public Power Auth. Rev. 6.00% 7/1/2018 3,985 4,077
Univ. of California Hosp. (Medical Center) 6.00% 7/1/2026 (2) 10,260 11,363
----------
203,986
----------
COLORADO (2.8%)
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2003 (1) 8,200 6,784
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2006 (1) 22,000 15,872
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2007 (1) 12,500 8,613
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2008 (1) 14,000 9,160
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2009 (1) 16,195 10,041
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2010 (1) 7,185 4,214
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2012 (1) 26,795 14,014
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2013 (1) 5,000 2,459
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2014 (1) 5,000 2,316
E-470 Public Highway Auth. CO Rev. 0.00% 9/1/2015 (1) 5,000 2,188
----------
75,661
----------
CONNECTICUT (0.7%)
Connecticut Dev. Auth. PCR (Connecticut Power & Light) 5.85% 9/1/2028 18,475 18,546
----------
DISTRICT OF COLUMBIA (2.7%)
District of Columbia GO 5.75% 6/1/2010 (1) 15,000 16,621
District of Columbia GO 6.00% 6/1/2012 (1) 7,000 7,944
Metro. Washington D.C. Airport Auth. Rev. 5.50% 10/1/2009 (3) 6,795 7,382
Metro. Washington D.C. Airport Auth. Rev. 5.50% 10/1/2010 (3) 7,270 7,859
Metro. Washington D.C. Airport Auth. Rev. 5.50% 10/1/2024 (1) 10,630 10,915
Metro. Washington D.C. Airport Auth. Rev. 5.70% 10/1/2007 (1) 12,900 14,078
Metro. Washington D.C. Airport Auth. Rev. 5.875% 10/1/2015 (1) 8,400 9,046
----------
73,845
----------
</TABLE>
53
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
HIGH-YIELD TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLORIDA (3.7%)
Citrus County FL PCR (Florida Power Corp.) 6.35% 2/1/2022 $ 6,500 $ 7,070
Collier County FL Master Lease Project COP 5.00% 2/15/2016 (4) 5,550 5,606
Dade County FL Aviation Rev. (Miami International Airport) 5.75% 10/1/2004 (4) 11,850 12,926
Dade County FL Aviation Rev. (Miami International Airport) 5.75% 10/1/2005 (4) 7,490 8,223
Dade County FL IDA Exempt Fac. Rev. VRDO
(Florida Power and Light) 3.70% 11/3/1998 3,100 3,100
Hillsborough County FL Aviation Auth. Rev. (Tampa Airport) 5.25% 10/1/2003 (2) 2,000 2,122
Orange County FL School Master Lease COP 6.00% 8/1/2008 (1) 11,580 13,223
Orange County FL School Master Lease COP 6.00% 8/1/2009 (1) 12,255 14,101
Orange County FL School Master Lease COP 6.00% 8/1/2010 (1) 12,825 14,858
Orlando FL Util. Comm. Rev. 6.75% 10/1/2017 2,200 2,696
Palm Beach County FL Solid Waste Auth. Rev. 6.00% 10/1/2007 (2) 10,850 12,412
Tarpon Springs FL Health Fac. Auth. Rev. (Tarpon Springs Hosp.) 8.75% 5/1/2012 4,000 4,091
----------
100,428
----------
GEORGIA (2.9%)
Cartersville GA Water & Waste Water Fac.
(Anheuser-Busch Cos., Inc.) 7.40% 11/1/2010 5,000 6,281
Dalton County GA Dev. Auth. (Hamilton Health Care System) 5.50% 8/15/2017 (1) 5,000 5,378
Dalton County GA Dev. Auth. (Hamilton Health Care System) 5.50% 8/15/2026 (1) 12,000 12,971
Effingham County GA Dev. Auth. Solid Waste Disposal Rev.
(Fort James Project) 5.625% 7/1/2018 31,050 31,179
Georgia Muni. Electric Auth. Rev. 6.60% 1/1/2018 (1) 5,000 6,020
Georgia Muni. Gas Auth. Rev. VRDO 3.05% 11/4/1998 LOC 1,100 1,100
Savannah GA Hosp. Auth. Rev. (Candler Hosp.) 7.00% 1/1/2003 (Prere.) 13,000 14,730
----------
77,659
----------
HAWAII (1.5%)
Hawaii Dept. of Budget & Finance (Hawaiian Electric Co.) 4.95% 4/1/2012 15,000 15,506
Hawaii GO 6.25% 3/1/2007 (3) 5,000 5,722
Hawaii Harbor Capital Improvement Rev. 5.50% 7/1/2027 (1) 18,500 19,133
----------
40,361
----------
ILLINOIS (3.5%)
Chicago IL Public Building Comm. 7.00% 1/1/2015 (1)(ETM) 10,000 11,876
Chicago IL Public Building Comm. 7.00% 1/1/2020 (1)(ETM) 10,000 12,762
Cook County IL GO 6.60% 11/15/2002 (1)(Prere.) 12,000 13,503
Illinois Dev. Finance Auth. PCR (Illinois Power Co. Project) 7.40% 12/1/2024 (1) 20,000 23,479
Illinois Dev. Finance Auth. Rev. (Regency Park Project) 10.25% 4/15/2019 - 6,500 5,265
Illinois Dev. Finance Auth. Rev. (Regency Park Project) 10.625% 4/15/2020 - 6,000 4,860
Illinois Health Fac. Auth. Certificate of Beneficial Interest
(Adventist Living Centers) -- -- - 770 0
Illinois Health Fac. Auth. Rev. (Centegra Health System) 5.10% 9/1/2011 3,105 3,177
Illinois Health Fac. Auth. Rev. (Centegra Health System) 5.25% 9/1/2018 3,500 3,478
Illinois Health Fac. Auth. Rev. (Centegra Health System) 5.25% 9/1/2024 7,500 7,333
Illinois Health Fac. Auth. Rev. (United Medical Center) 8.125% 7/1/2003 (Prere.) 2,360 2,661
Illinois Toll Highway Auth. Rev. 6.30% 1/1/2011 5,000 5,790
Loves Park IL First Mortgage Rev. (Hoosier Care) 9.75% 8/1/2019 1,490 1,567
----------
95,751
----------
INDIANA (2.7%)
Indiana Health Fac. Finance Auth. Rev. (Ancilla System, Inc.) 7.375% 7/1/2023 19,400 24,776
Indiana State Office Building Comm. Rev. (Capitol Complex) 6.90% 7/1/2011 + 15,660 19,036
Indianapolis IN Local Public Improvement Bond Bank 6.75% 2/1/2014 21,500 25,959
Indianapolis IN Local Public Improvement Bond Bank 6.75% 2/1/2020 2,500 2,767
----------
72,538
----------
IOWA (0.4%)
Des Moines IA Rev. (Des Moines General Hosp.) 8.25% 11/15/2011 9,620 11,225
----------
KENTUCKY (0.5%)
Jefferson County KY (Jewish Hosp. Health) 5.65% 1/1/2017 (2) 8,000 8,510
Jefferson County KY (Jewish Hosp. Health) 5.70% 1/1/2021 (2) 2,000 2,125
Kentucky Property & Buildings Comm. Rev. 5.80% 9/1/2006 3,100 3,359
----------
13,994
----------
</TABLE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOUISIANA (1.4%)
Iberia Parish LA Hosp. Services Dist. 8.00% 5/26/2016 $ 6,250 $ 6,680
Louisiana GO 5.25% 4/15/2010 (4) 10,610 11,346
Louisiana Health Educ. Auth. (Lambeth House Project) 8.75% 10/1/2006 (Prere.) 12,295 16,252
West Feliciana Parish LA PCR (Gulf States Util.) 9.00% 5/1/2015 4,000 4,359
----------
38,637
----------
MARYLAND (0.4%)
Hagerstown MD Energy Financing Administration
Solid Waste Disp. Rev. (Hagerstown Fiber Project) 9.00% 10/15/2016 - 17,500 3,850
Maryland Health & Higher Educ. Fac. Auth. Rev.
(Upper Chesapeake Hosp.) 5.125% 1/1/2033 6,600 6,573
----------
10,423
----------
MASSACHUSETTS (7.2%)
Massachusetts Consolidated Loan GO 5.75% 5/1/2012 (2) 5,000 5,425
Massachusetts GO 6.00% 6/1/2011 14,750 15,620
Massachusetts Industrial Finance Agency (Refusetech Inc. Project) 6.30% 7/1/2005 34,500 37,272
Massachusetts Industrial Finance Agency Solid Waste Disp.
(Massachusetts Recycling Assoc.) 9.00% 8/1/2016 - 17,000 6,375
Massachusetts State Grant Anticipation Notes 5.25% 6/15/2012 20,000 21,168
Massachusetts Turnpike Auth. BAN 5.00% 6/1/1999 2,335 2,360
Massachusetts Water Resources Auth. Rev. 5.00% 8/1/2024 31,000 30,556
Massachusetts Water Resources Auth. Rev. 5.50% 7/15/2022 22,420 23,820
Massachusetts Water Resources Auth. Rev. 6.50% 7/15/2019 43,700 52,549
----------
195,145
----------
MICHIGAN (6.1%)
Detroit MI GO 6.25% 4/1/2005 13,000 14,378
Detroit MI GO 6.375% 4/1/2006 8,635 9,650
Dickinson County MI Memorial Hosp. System Rev. 7.625% 11/1/2005 1,065 1,186
Dickinson County MI Memorial Hosp. System Rev. 8.00% 11/1/2014 5,700 6,495
Flint MI Hosp. Building Auth. (Hurley Medical Center) 5.25% 7/1/2016 4,000 3,981
Michigan Hosp. Finance Auth. Rev. (Genesys Health System) 5.50% 10/1/2027 28,250 28,364
Michigan Hosp. Finance Auth. Rev. (Genesys Health System) 7.50% 10/1/2005 (Prere.) 6,620 7,995
Michigan Hosp. Finance Auth. Rev. (Genesys Health System) 8.10% 10/1/2005 (Prere.) 5,000 6,294
Michigan Hosp. Finance Auth. Rev. (Genesys Health System) 8.125% 10/1/2005 (Prere.) 15,000 18,904
Michigan Hosp. Finance Auth. Rev. (McLaren Health Care Corp.) 5.00% 6/1/2028 22,000 21,050
Michigan Housing Dev. Auth. Rev. 6.30% 4/1/2004 6,500 7,013
Michigan Public Power Agency Rev. (Belle River Project) 5.50% 1/1/2013 27,000 28,070
Michigan State Building Auth. (Facilities Program) 5.50% 10/15/2005 9,585 10,444
----------
163,824
----------
MINNESOTA (1.1%)
Rochester MN Health Care Fac. Rev. (Mayo Foundation) 5.375% 11/15/2018 12,000 12,401
Rochester MN Health Care Fac. Rev. (Mayo Foundation) 5.50% 11/15/2027 10,000 10,416
Washington County MN Housing & Redev. Auth. Rev.
(Woodland Park Project) 0.00% 5/1/2020 35,070 2,398
Washington County MN Housing & Redev. Auth. Rev.
(Woodland Park Project) 9.75% 5/1/2020 5,000 4,750
----------
29,965
----------
MISSISSIPPI (0.8%)
Claiborne County MS PCR (Middle South Energy) 9.875% 12/1/2014 21,000 21,715
----------
MISSOURI (1.6%)
Missouri Health & Educ. Fac. Auth. (SSM Health Care) 5.00% 6/1/2022 (1) 28,000 27,467
Missouri Health & Educ. Fac. Auth.
(St. Luke Mission Health System) 5.375% 11/15/2016 (1) 8,000 8,273
Missouri Health & Educ. Fac. Auth. VRDO
(Sisters of Mercy Health Care System) 3.10% 11/4/1998 6,800 6,800
----------
42,540
----------
MONTANA (0.6%)
Montana Health Fac. Auth. (Sisters of Charity) 5.00% 12/1/2024 (1) 17,000 16,756
----------
</TABLE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
HIGH-YIELD TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEBRASKA (1.3%)
Nebraska Public Power Dist. Rev. 5.00% 1/1/2028 (1) $35,000 $ 34,838
----------
NEW HAMPSHIRE (0.2%)
New Hampshire Health & Higher Educ. Rev.
(Catholic Medical Center) 6.00% 7/1/2017 6,580 6,653
----------
NEW JERSEY (2.1%)
New Jersey Econ. Dev. Auth. Market Transition Fac. 5.875% 7/1/2011 (1) 8,000 8,826
New Jersey Econ. Dev. Auth. Rev.
(Kapkowski Road Landfill-DST Project Elizabeth) 6.375% 4/1/2018 2,250 2,219
New Jersey Econ. Dev. Auth. Rev.
(Kapkowski Road Landfill-DST Project Elizabeth) 6.375% 4/1/2031 13,000 12,782
New Jersey Sports & Exposition Auth. Rev. 6.50% 3/1/2013 15,000 18,019
New Jersey Transp. Trust 6.00% 6/15/2011 (1) 10,000 11,368
Union County NJ PCR Finance Auth. VRDO (Exxon Project) 3.25% 11/3/1998 2,600 2,600
----------
55,814
----------
NEW YORK (9.4%)
Long Island Power Auth. NY Electric System Rev. 0.00% 12/1/2006 (4) 6,705 4,746
Long Island Power Auth. NY Electric System Rev. 5.25% 12/1/2026 20,720 21,043
Metro. NY Transit Auth. Rev. 6.00% 4/1/2020 (1) 18,000 20,686
Metro. NY Transit Auth. Rev. 7.375% 7/1/2008 22,870 27,273
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.50% 6/15/2020 25,000 25,549
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 3.70% 11/3/1998 (3) 5,538 5,538
New York City NY VRDO 3.70% 11/3/1998 (1) 8,200 8,200
New York State Dormitory Auth. Rev. (City Univ.) 6.375% 7/1/2002 (Prere.) 1,810 2,000
New York State Dormitory Auth. Rev. (City Univ.) 6.375% 7/1/2008 1,340 1,463
New York State Dormitory Auth. Rev. (City Univ.) 7.50% 7/1/2010 5,500 6,774
New York State Dormitory Auth. Rev. (State Univ.) 5.375% 5/15/2007 (2) 2,100 2,285
New York State Dormitory Auth. Rev. (State Univ.) 7.50% 5/15/2013 11,500 14,779
New York State Housing Finance Agency Auth. Rev.
(Nursing Home & Healthcare) 4.90% 11/1/2010 10,000 10,330
New York State Housing Finance Agency Auth. Rev.
(Nursing Home & Healthcare) 5.00% 11/1/2011 9,000 9,316
New York State Housing Finance Agency Auth. Rev.
(Nursing Home & Healthcare) 5.10% 11/1/2012 11,040 11,435
New York State Local Govt. Assistance Corp. Rev. 6.00% 4/1/2016 6,400 7,030
New York State Local Govt. Assistance Corp. Rev. 6.50% 4/1/2001 (Prere.) 16,110 17,478
New York State Local Govt. Assistance Corp. Rev. 7.00% 4/1/2001 (Prere.) 6,320 6,931
Niagara Falls NY COP (High School Fac.) 5.875% 6/15/2019 9,000 9,524
Port Auth. of New York & New Jersey Special Obligation Rev.
(JFK International Airport) 5.75% 12/1/2022 (1) 8,455 8,982
Port Auth. of New York & New Jersey Special Obligation Rev.
(JFK International Airport) 6.25% 12/1/2008 (1) 4,000 4,622
Triborough Bridge & Tunnel Auth. NY Rev.
(Convention Center Project) 7.25% 1/1/2010 13,500 16,243
Triborough Bridge & Tunnel Auth. NY Rev. (General Purpose Rev.) 5.50% 1/1/2017 10,000 10,829
Triborough Bridge & Tunnel Auth. NY Rev. VRDO 3.50% 11/4/1998 (3) 1,400 1,400
----------
254,456
----------
NORTH CAROLINA (1.5%)
New Hanover County NC Hosp. Rev. (Regional Medical Center) 5.75% 10/1/2016 (2) 12,500 13,510
North Carolina Eastern Muni. Power Agency Rev. 5.00% 1/1/2020 (ETM) 10,385 10,603
North Carolina Eastern Muni. Power Agency Rev. 6.50% 1/1/2018 (ETM) 6,665 8,055
North Carolina Medical Care Community Hosp. Rev.
(Gaston Health Care) 5.00% 2/15/2029 9,785 9,372
----------
41,540
----------
OHIO (3.1%)
Butler County OH Transp. Improvement Dist. Rev. 5.125% 4/1/2017 (4) 5,000 5,089
Butler County OH Transp. Improvement Dist. Rev. 5.50% 4/1/2009 (4) 3,000 3,310
</TABLE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cincinnati OH Student Loan Funding Corp. Student Loan Rev. VRDO 3.10% 11/4/1998 LOC $ 600 $ 600
Lucas County OH Hosp. Fac. Rev. (Flower Memorial Hosp.) 8.125% 12/1/2001 (Prere.) 8,900 10,192
Montgomery County OH Hosp. Fac. Rev. (Grandview Hosp.) 5.20% 12/1/2006 (9) 5,000 5,325
Montgomery County OH Hosp. Fac. Rev. (Grandview Hosp.) 5.25% 12/1/2004 (9) 2,250 2,389
Montgomery County OH Hosp. Fac. Rev. (Grandview Hosp.) 5.35% 12/1/2008 (9) 4,615 4,957
Montgomery County OH Hosp. Fac. Rev. (Grandview Hosp.) 5.375% 12/1/2005 (9) 2,400 2,573
Montgomery County OH Hosp. Fac. Rev. (Grandview Hosp.) 5.40% 12/1/2009 (9) 3,850 4,150
Montgomery County OH Hosp. Fac. Rev. (Grandview Hosp.) 5.75% 12/1/2007 (9) 3,300 3,649
Ohio Air Quality Dev. Auth. VRDO (Cincinnati Gas & Electric) 3.70% 11/3/1998 LOC 900 900
Ohio Water Dev. Auth. Pollution Control Fac. Rev.
(Cleveland Electric) 4.40% 10/1/2030 23,255 23,195
Parma OH Hosp. Improvement Rev. (Parma Community
General Hosp.) 5.35% 11/1/2018 2,500 2,500
Parma OH Hosp. Improvement Rev. (Parma Community
General Hosp.) 5.375% 11/1/2029 4,000 4,026
Scioto County OH Marine Terminal Fac. (Norfolk Southern
Corp. Project) 5.30% 8/15/2013 12,000 12,089
----------
84,944
----------
OKLAHOMA (0.5%)
Jackson County OK Memorial Hosp. Auth. Rev. (Jackson Memorial) 6.75% 8/1/2004 4,135 4,334
Jackson County OK Memorial Hosp. Auth. Rev. (Jackson Memorial) 7.30% 8/1/2015 4,000 4,356
Norman OK Regional Hosp. Auth. 5.625% 9/1/2016 (1) 4,510 4,795
----------
13,485
----------
OREGON (1.1%)
Oregon State Department Administrative Services 5.70% 5/1/2016 (2) 4,290 4,648
Port Auth. of Portland OR Airport Rev. 5.625% 7/1/2026 (3) 9,000 9,433
Portland OR Sewer System Rev. 5.50% 6/1/2017 (1) 15,000 15,738
----------
29,819
----------
PENNSYLVANIA (10.1%)
Allegheny County PA Airport Rev. (Pittsburgh International Airport) 5.75% 1/1/2011 (1) 6,000 6,702
Allegheny County PA Sanitary Auth. 6.00% 12/1/2019 (1) 14,630 16,517
Delaware County PA Hosp. Auth. (Crozer Chester Medical Center) 5.125% 12/1/2013 3,400 3,384
Delaware County PA Hosp. Auth. (Crozer Chester Medical Center) 5.30% 12/1/2027 5,000 4,920
Delaware County PA IDA Resource Recovery (Browning Ferris) 6.10% 7/1/2013 25,500 27,234
Delaware Valley PA Regional Finance Auth. Local Govt. Rev. 5.50% 8/1/2028 30,000 32,801
Geisinger Health System Auth. Rev. 5.50% 8/15/2023 27,700 29,736
Langhorne PA Higher Educ. & Health Auth. Rev.
(Lower Bucks Hosp.) 7.30% 7/1/2012 4,500 4,784
Langhorne PA Higher Educ. & Health Auth. Rev.
(Lower Bucks Hosp.) 7.35% 7/1/2022 13,200 14,055
Lehigh County PA General Purpose Auth. Hosp. Rev. VRDO
(Lehigh Valley Hosp.) 3.60% 11/3/1998 (2) 800 800
Montgomery County PA Higher Educ. & Health Auth. Rev.
(Brittany Point Project) 8.50% 1/1/2003 (Prere.) 5,000 5,947
Pennsylvania Convention Center Auth. Rev. 6.60% 9/1/2009 (4) 2,500 2,866
Pennsylvania Convention Center Auth. Rev. 6.70% 9/1/2014 (4) 3,500 4,003
Pennsylvania Convention Center Auth. Rev. 6.75% 9/1/2019 (4) 3,695 4,236
Pennsylvania Econ. Dev. Auth. Rev. (Colver Project) 7.05% 12/1/2010 2,500 2,774
Pennsylvania Econ. Dev. Auth. Rev. (Colver Project) 7.125% 12/1/2015 14,000 15,564
Pennsylvania Housing Finance Agency Rev. 7.60% 7/1/2013 10,000 10,755
Philadelphia PA Hosp. & Higher Educ. Fac. Auth. Rev.
(Children's Seashore Hosp.) 7.00% 8/15/2012 3,540 3,887
Philadelphia PA Hosp. & Higher Educ. Fac. Auth. Rev.
(Children's Seashore Hosp.) 7.00% 8/15/2017 1,000 1,092
Philadelphia PA Hosp. & Higher Educ. Fac. Auth. Rev.
(Children's Seashore Hosp.) 7.00% 8/15/2022 500 551
Philadelphia PA Hosp. & Higher Educ. Fac. Auth. Rev.
(Methodist Hosp.) 7.75% 7/1/2004 (Prere.) 12,130 14,484
Philadelphia PA Hosp. & Higher Educ. Fac. Auth. Rev.
(Roxborough Memorial Hosp.) 7.25% 3/1/2024 9,645 10,228
</TABLE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
HIGH-YIELD TAX-EXEMPT FUND COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Philadelphia PA Muni. Auth. Rev. 6.125% 7/15/2008 $ 4,000 $ 4,288
Philadelphia PA Muni. Auth. Rev. 6.25% 7/15/2013 5,785 6,186
Philadelphia PA Muni. Auth. Rev. 6.30% 7/15/2017 1,750 1,873
Philadelphia PA Muni. Auth. Rev. 8.625% 11/15/2016 1,145 1,269
Philadelphia PA Water & Waste Water Rev. 7.00% 6/15/2011 (3) 21,500 26,703
Scranton-Lackawanna PA Health & Welfare (Moses Taylor Hosp.) 8.50% 7/1/2001 (Prere.) 14,375 16,401
----------
274,040
----------
PUERTO RICO (0.2%)
Puerto Rico Electric Power Auth. Rev. 5.25% 7/1/2016 (4) 5,000 5,226
----------
RHODE ISLAND (0.4%)
Rhode Island Convention Center Auth. Rev. 5.75% 5/15/2020 (2) 5,000 5,328
Rhode Island Public Building Auth. 5.25% 2/1/2010 (2) 5,000 5,219
----------
10,547
----------
SOUTH CAROLINA (0.3%)
Piedmont SC Muni. Power Agency Rev. 6.25% 1/1/2021 (3) 6,640 7,803
----------
TENNESSEE (1.1%)
Metro. Govt. of Nashville and Davidson County TN Electric Rev. 5.20% 5/15/2023 20,000 20,294
Springfield TN Health & Educ. Fac. Board Hosp. Rev.
(Northcrest Medical Center) 4.90% 8/1/2008 4,010 4,022
Springfield TN Health & Educ. Fac. Board Hosp. Rev.
(Northcrest Medical Center) 5.25% 8/1/2013 6,000 6,016
----------
30,332
----------
TEXAS (9.8%)
Austin TX Airport System Rev. 6.125% 11/15/2025 (1) 38,000 41,858
Austin TX Airport System Rev. 6.45% 11/15/2020 17,040 19,187
Austin TX Water, Sewer & Electric Rev. 14.00% 11/15/2001 180 206
Fort Worth TX CP 3.25% 3/12/1999 10,000 10,009
Harris County TX Health Fac. Dev. Corp. Rev. VRDO
(St. Luke's Episcopal Hosp.) 3.65% 11/3/1998 600 600
Harris County TX Hosp. Dist. Rev. 7.40% 2/15/2010 (2) 17,500 21,258
Harris County TX Improvement GO 0.00% 10/1/2013 (1) 9,630 4,718
Hidalgo County TX Health Mission Hosp. 6.875% 8/15/2026 7,880 8,723
Houston TX Water & Sewer System Rev. 0.00% 12/1/2004 (2) 12,590 9,858
Houston TX Water & Sewer System Rev. 0.00% 12/1/2011 (2) 24,810 13,578
Houston TX Water & Sewer System Rev. 6.375% 12/1/2017 (2) 4,530 4,914
Odessa TX Junior College Dist. Rev. 8.125% 6/1/2005 (Prere.) 10,000 12,428
Port Arthur TX Navigation Dist. PCR VRDO (Texaco Inc.) 3.70% 11/3/1998 1,400 1,400
San Antonio TX Electric & Gas System Rev. 5.00% 2/1/2017 3,500 3,487
Texas GO 5.50% 4/1/2002 (Prere.) 40,050 43,037
Texas Muni. Power Agency BAN CP 3.65% 11/2/1998 5,000 5,000
Texas Muni. Power Agency Rev. 0.00% 9/1/2006 6,205 4,477
Texas Turnpike Auth. Dallas Northway Rev.
(President George Bush Turnpike) 0.00% 1/1/2011 (2) 7,000 3,996
Texas Turnpike Auth. Rev. 5.50% 1/1/2015 (3) 14,605 15,623
Travis County TX Health Fac. (Charity Obligated Group) 5.125% 11/1/2024 20,000 19,759
Travis County TX Health Fac. (Charity Obligated Group) 5.375% 11/1/2028 15,500 15,851
Tyler TX Health Fac. Dev. Corp. (Mother Frances Hosp.) 5.30% 7/1/2007 1,125 1,148
Tyler TX Health Fac. Dev. Corp. (Mother Frances Hosp.) 5.40% 7/1/2008 1,250 1,277
Tyler TX Health Fac. Dev. Corp. (Mother Frances Hosp.) 5.50% 7/1/2009 1,000 1,022
Tyler TX Health Fac. Dev. Corp. (Mother Frances Hosp.) 5.625% 7/1/2013 1,680 1,695
----------
265,109
----------
UTAH (1.0%)
Intermountain Power Agency UT Power Supply Rev. 5.70% 7/1/2017 (1) 12,000 12,852
Intermountain Power Agency UT Power Supply Rev. 5.75% 7/1/2019 (1) 13,000 14,077
----------
26,929
----------
VIRGIN ISLANDS (1.0%)
Virgin Islands Public Finance Auth. Rev. 5.20% 10/1/2009 3,065 3,179
Virgin Islands Public Finance Auth. Rev. 5.50% 10/1/2007 6,530 6,980
</TABLE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Virgin Islands Public Finance Auth. Rev. 5.75% 10/1/2013 $11,000 $ 11,364
Virgin Islands Public Finance Auth. Rev. 6.00% 10/1/2008 4,915 5,197
Virgin Islands Water & Power Auth. Electric System 5.30% 7/1/2021 1,000 1,005
----------
27,725
----------
VIRGINIA (2.8%)
Alexandria VA Redev. & Housing Auth. Rev. (Portals West Project) 9.50% 7/15/2020 - 9,680 6,098
Chesterfield County VA Mortgage Rev.
(Brandermill Woods Project) 0.00% 7/1/2017 2,600 276
Chesterfield County VA Mortgage Rev.
(Brandermill Woods Project) 0.00% 7/1/2018 2,600 248
Chesterfield County VA Mortgage Rev.
(Brandermill Woods Project) 0.00% 7/1/2019 2,600 223
Chesterfield County VA Mortgage Rev.
(Brandermill Woods Project) 0.00% 7/1/2020 2,600 200
Chesterfield County VA Mortgage Rev.
(Brandermill Woods Project) 0.00% 7/1/2021 2,600 180
Chesterfield County VA Mortgage Rev.
(Brandermill Woods Project) 10.25% 7/1/2015 - 8,000 5,940
Chesterfield County VA Mortgage Rev.
(Brandermill Woods Project) 10.625% 7/1/2016 - 10,400 7,955
Lynchburg VA IDA Healthcare Facs. Rev. (Centra Health) 5.20% 1/1/2018 4,400 4,429
Lynchburg VA IDA Healthcare Facs. Rev. (Centra Health) 5.20% 1/1/2023 7,000 7,000
Pocahontas Parkway Assoc. VA Route 895
Connector Toll Road Rev. 5.00% 8/15/2010 (3) 6,100 6,078
Pocahontas Parkway Assoc. VA Route 895
Connector Toll Road Rev. 5.00% 8/15/2011 3,900 3,849
Pocahontas Parkway Assoc. VA Route 895
Connector Toll Road Rev. 5.25% 7/1/2009 6,000 6,128
Pocahontas Parkway Assoc. VA Route 895
Connector Toll Road Rev. 5.50% 8/15/2028 28,000 28,022
----------
76,626
----------
WASHINGTON (2.1%)
Chelan County WA Public Util. Dist. (Rock Island Hydro Project) 0.00% 6/1/2010 (1) 19,550 11,530
Chelan County WA Public Util. Dist. (Rock Island Hydro Project) 0.00% 6/1/2011 (1) 11,400 6,345
Chelan County WA Public Util. Dist. (Rock Island Hydro Project) 0.00% 6/1/2012 (1) 19,650 10,329
Chelan County WA Public Util. Dist. (Rock Island Hydro Project) 0.00% 6/1/2017 (1) 11,000 4,298
Port Auth. of Seattle WA GO 5.75% 5/1/2014 15,600 16,675
Spokane WA Downtown Parking Rev. (River Park Square Project) 5.60% 8/1/2019 6,000 6,035
----------
55,212
----------
WEST VIRGINIA (0.4%)
West Virginia State Building Comm. Rev. (Jail & Correction Fac.) 7.00% 7/1/2013 8,390 10,531
----------
WYOMING (0.3%)
Lincoln County WY PCR VRDO (Exxon Project) 3.70% 11/3/1998 7,250 7,250
----------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $2,503,421) 2,700,340
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (0.1%)
- -------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 46,319
Liabilities (42,310)
----------
4,009
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- -------------------------------------------------------------------------------------------------------------------------
Applicable to 244,497,959 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $2,704,349
=========================================================================================================================
NET ASSET VALUE PER SHARE $11.06
=========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
+Securities with an aggregate value of $5,979,000 have been segregated as
initial margin for open futures contracts. For key to abbreviations and other
references, see page 61.
59
<PAGE> 107
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
HIGH-YIELD TAX-EXEMPT FUND (000) SHARE
- -------------------------------------------------------------------------------------------------------------------------
AT OCTOBER 31, 1998, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $2,524,351 $10.32
Undistributed Net Investment Income -- --
Overdistributed Net Realized Gains--Note E (13,103) (.05)
Unrealized Appreciation (Depreciation)--Note F
Investment Securities 196,919 .81
Futures Contracts (3,818) (.02)
=========================================================================================================================
NET ASSETS $2,704,349 $11.06
=========================================================================================================================
</TABLE>
60
<PAGE> 108
KEY TO ABBREVIATIONS
BAN--Bond Anticipation Note.
COP--Certificate of Participation.
CP--Commercial Paper.
GO--General Obligation Bond.
IDA--Industrial Development Authority Bond.
IDR--Industrial Development Revenue Bond.
PCR--Pollution Control Revenue Bond.
PUT--Put Option Obligation.
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.
- Non-Income-Producing Security--Interest Payments in Default.
- -- Only partial interest was paid on the last interest payment date.
++ Security purchased on a when-issued or delayed delivery basis for which the
Fund has not taken delivery as of October 31, 1998.
Scheduled principal and interest payments are guaranteed by:
(1) MBIA (Municipal Bond Insurance Association).
(2) AMBAC (Ambac Assurance Corporation).
(3) FGIC (Financial Guaranty Insurance Company).
(4) FSA (Financial Security Assurance).
(5) BIGI (Bond Investors Guaranty Insurance).
(6) Connie Lee Inc.
(7) FHA (Federal Housing Authority).
(8) CapMAC (Capital Markets Assurance Corporation).
(9) American Capital Access Financial Guaranty Corporation.
The insurance does not guarantee the market value of the municipal bonds.
LOC--Scheduled principal and interest payments are guaranteed by bank letter of
credit.
61
<PAGE> 109
REPORT OF INDEPENDENT
ACCOUNTANTS
To the Shareholders and
Board of Trustees of
Vanguard Municipal Bond Funds [PHOTO]
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 Annual Report to Shareholders present fairly, in all
material respects, the financial position of Tax-Exempt Money Market Fund,
Short-Term Tax-Exempt Fund, Limited-Term Tax-Exempt Fund, Intermediate-Term
Tax-Exempt Fund, Insured Long-Term Tax-Exempt Fund, Long-Term Tax-Exempt Fund
and High-Yield Tax-Exempt Fund (separate portfolios of Vanguard Municipal Bond
Funds, hereafter referred to as the "Fund") at October 31, 1998, the results of
each of their operations for the year then ended and the changes in each of
their net assets and the financial highlights for each of the periods indicated,
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 October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
November 30, 1998
62
<PAGE> 110
SPECIAL 1998 TAX INFORMATION (UNAUDITED) FOR VANGUARD MUNICIPAL BOND FUNDS
This information for the fiscal year ended October 31, 1998, is included
pursuant to provisions of the Internal Revenue Code.
The capital gain dividends (from net long-term capital gains), and the
portion thereof designated as a 20% rate gain distribution, distributed to
shareholders in December 1997 were:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
TOTAL
CAPITAL GAIN 20% RATE GAIN
TAX-EXEMPT FUNDS DIVIDENDS DISTRIBUTIONS
------------------------------------------------------------------------
<S> <C> <C>
Short-Term $ 146,000 $ 146,000
Intermediate-Term 18,893,000 4,304,000
Insured Long-Term 8,371,000 4,080,000
Long-Term 4,802,000 1,433,000
High-Yield 10,865,000 6,517,000
------------------------------------------------------------------------
</TABLE>
Each fund designates 100% of its income dividends as exempt-interest
dividends.
63
<PAGE> 111
F950-12/22/1998
