--------------------------------------------------------------------------------
LIBERTY TAX-EXEMPT FUND Semiannual Report
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May 31, 2000
[COVER PHOTO]
<PAGE>
President's Message
Dear Shareholder:
You may have noticed that your Fund has a new name. Beginning July 14, the names
of our funds changed to include Liberty. Rest assured, the investment objectives
and strategies employed by the Fund's managers are not affected by this name
change. We believe the new name better reflects that your Fund is part of the
Liberty Funds, a diverse family of funds representing a wide selection of
investment styles and specialized money management. The goal of all Liberty
funds is to help you reach for financial freedom -- however you define it.
Volatility was the watchword for the municipal markets during the past six
months. Early in the period, interest rates were rising. Yields on most bonds
followed suit, and as they rose, bond prices fell. The higher rates and yields
were prompted by the Federal Reserve, which was concerned that robust economic
growth could ignite higher levels of inflation. The Fed attempted to cool the
economy and douse the inflationary sparks by raising key short-term lending
rates by 0.25% in both February and March 2000.
Later, the municipal markets rallied. Although the Fed boosted short-term
interest rates again in May -- this time, by 0.50% -- investors viewed it as a
positive move. Convinced that the central bankers were quite determined to keep
the economy and inflation from overheating, investors took some pressure off
municipal bond yields and prices recovered to some extent.
The Fund's performance was affected by the general market volatility and by an
above-average allocation to high-yield securities. On the following pages, we
discuss this in greater detail and explain why high-yield securities remain a
key element of the Fund's long-term strategy.
As always, we thank you for choosing Liberty Tax-Exempt Fund for your portfolio
and for giving us the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
July 17, 2000
Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
---------------------------
NOT FDIC MAY LOSE VALUE
INSURED NO BANK GUARANTEE
---------------------------
<PAGE>
--------------------------------------------------------------------------------
Highlights
--------------------------------------------------------------------------------
o Rapid economic growth and inflation worries dominated the fixed-income
markets.
The Federal Reserve continued a course of interest rate increases that
began in June 1999. As rates rose, so did yields on most fixed-income
securities. Because bond yields and prices move in opposite directions,
most bonds lost value during the six-months ended May 31, 2000, and the
effect was most pronounced for longer-term bonds and high-yield
securities.
o Increased demand for municipal bonds served to limit impact of rising
rates.
As interest rates and bond yields climbed, investors showed greater
interest in municipal bonds than they had since mid-1998. The increase in
demand helped to keep municipal bond prices from declining as much as they
otherwise might have. Overall, the municipal bond market, as measured by
the Lehman Brothers Municipal Bond Index, generated a total return of
1.02% for the six months.
Six-month cumulative total returns for the period ended 5/31/00(1)
Without With
Sales Sales
Charge Charge
-----------------------------
Class A (0.19)% (4.94)%
-----------------------------
Class B (0.57)% (5.43)%
-----------------------------
Class C (0.50)% (1.47)%
-----------------------------
(1) Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "With sales charge" returns include
the maximum 4.75% sales charge for Class A shares and the maximum contingent
deferred sales charge (CDSC) of 5% and 1% respectively, for Class B and C
shares.
Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Advisor of its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower. Performance for
different share classes will vary based on differences in sales charges and fees
associated with each class.
Net asset value per share
as of 5/31/00
Class A $12.31
-----------------------------
Class B $12.31
-----------------------------
Class C $12.31
-----------------------------
Distributions declared from 11/30/99 to 5/31/00(2)
Class A $0.335
-----------------------------
Class B $0.288
-----------------------------
Class C $0.297
-----------------------------
(2) A portion of the Fund's income may be subject to the alternative minimum
tax. The Fund may at times purchase tax-exempt securities at a discount. Some or
all of this discount may be included in the Fund's ordinary income, and is
taxable when distributed.
1
<PAGE>
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Portfolio Managers' Report
--------------------------------------------------------------------------------
SEC yields on 5/31/00
Class A 5.34%
-----------------------------
Class B 4.57%
-----------------------------
Class C 4.72%
-----------------------------
The 30-day SEC yields reflect the portfolio's earning power, net of expenses,
expressed as an annualized percentage of the public offering price at the end of
the period. If the Advisor or its affiliates had not waived certain Fund
expenses, the SEC yield would have been 4.57% for Class C shares.
Taxable-equivalent SEC yields on 5/31/00
Class A 8.84%
-----------------------------
Class B 7.57%
-----------------------------
Class C 7.81%
-----------------------------
Taxable-equivalent SEC yields are based on the maximum effect 39.6% federal
income tax rate. This tax rate does not reflect the phase out of exemptions or
the reduction of otherwise allowable deductions which occur when Adjusted Gross
Income exceeds certain levels.
For the six months ended May 31, 2000, Liberty Tax-Exempt Fund generated a total
return of negative 0.19 %, based on Class A shares without a sales charges. The
Fund underperformed its peer group.(1) This was due to an above-average
investment in higher-yield bonds, an area that proved problematic. It also
resulted from credit problems for one of the Fund's health care bonds, a revenue
bond for an Alabama health care system. Since that time, one hospital from that
system has been sold and management has been replaced in the other.
Yield spreads continued to widen
Higher interest rates increase the cost of doing business for entities that
borrow funds, and it is generally held that more financially sound entities can
withstand this strain better than those that are financially weaker (i.e., have
lower credit ratings). With the sustained rise in interest rates over the past
year, investors have demanded ever-higher yields from low-rated or
noninvestment-grade bonds, as compensation for the increasing risk. In addition,
the health care industry was negatively impacted by cutbacks in Medicare and
other federally funded programs. Many noninvestment-grade hospital bonds were
affected and the debility carried over to other high-yield issues. The general
outcome was a widening of the difference or "spread" between the yields of high-
and low-quality bonds.
Wider yield spreads translated into additional income from the Fund's high-yield
bonds. However, since bond yields and prices move in opposite directions, it
also meant lower prices for these holdings. Despite the drag on performance,
high-yield bonds continue to be an important part of our approach, for a number
of reasons. First, our high-yield holdings are solid credits that should, in our
opinion, recover nicely once pressure is taken off this segment of the market.
Second, they provide above-average income for shareholders. Third, if interest
rates subside -- as we believe they will -- the yield spread between high- and
lower-quality bonds should narrow. This, in turn, should trigger price gains for
high-yield securities.
Neutral duration took the edge off rising rates
Duration measures a fund's sensitivity to changes in interest rates. The shorter
the duration, the less impact changing interest rates should have on the dollar
value of the portfolio. To mitigate the impact of advancing rates during the
past six months, we shortened the Fund's duration, utilizing short-term,
defensive tactics. For most of the
(1) Lipper, Inc., a widely respected data provider in the industry, calculates
an average total return for mutual funds with similar investment objectives as
the Fund. The total return calculated for the Lipper Municipal Debt Fund
Category was 0.31% for the six months ended May 31, 2000.
2
<PAGE>
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Portfolio Managers' Report (continued)
--------------------------------------------------------------------------------
period, we tried to keep the Fund's duration neutral to its peer group but took
steps to lengthen it toward the end of the period, in line with our longer-term
outlook.
Expecting better conditions in the future
Although the first half of fiscal 2000 has been a difficult period for municipal
bonds, our outlook is quite positive. The Federal Reserve continues to be
proactive in the battle against higher inflation. It appears to us that some of
the issues that most concerned the Fed, such as higher energy prices and
mounting employment costs, have worked their way through the system and no
longer pose major threats. Productivity gains continue, and excess production
capacity worldwide should help to keep prices down. In addition, we have seen
the first signs -- in housing, retail and manufacturing activity reports, and
the pullback in U.S. equity markets -- that the domestic economy may be
weakening.
We expect to see more indications of slowing in the coming months and so have
positioned the Fund for a more favorable long-term environment. We believe that
if the economy loses some of its vigor, interest rates could fall, allowing bond
prices to rally. The gains would be greatest for longer-term securities and
high-yield securities. At this juncture, the Fund is invested primarily in
investment-grade securities that mature in 15 years or longer. Going forward, we
will be looking for an opportune time to increase our commitment to securities
at the long-end of the maturity spectrum and for more opportunities to purchase
high-yield bonds that may benefit from slower growth, lower interest rates and a
stronger bond market.
/s/ William Loring /s/ Brian Hartford
William Loring Brian Hartford
William Loring and Brian Hartford are portfolio co-managers of Liberty
Tax-Exempt Fund and are senior vice presidents of Colonial Management
Associates, Inc., the Advisor.
The Fund involves certain risks, such as credit risks associated with
lower-rated bonds and changes in interest rates. High-yield municipal bond
investing carries increased credit risks.
Quality breakdown as of 5/31/00
AAA 55.1%
------------------------------
AA 8.1%
------------------------------
A 7.8%
------------------------------
BBB 7.4%
------------------------------
BB 1.0%
------------------------------
B 0.2%
------------------------------
Nonrated 19.1%
------------------------------
Cash equivalents 1.3%
------------------------------
Maturity breakdown as of 5/31/00
0-1 year 0.1%
------------------------------
1-3 years 3.7%
------------------------------
3-5 years 1.8%
------------------------------
5-7 years 0.5%
------------------------------
7-10 years 3.9%
------------------------------
10-15 years 18.9%
------------------------------
15-20 years 27.8%
------------------------------
20-25 years 24.1%
------------------------------
25+ years 17.9%
------------------------------
Cash equivalents 1.3%
------------------------------
Quality and maturity breakdowns are calculated as a percentage of total
investments, including short-term obligations. Ratings shown in the Quality
Breakdowns represent the highest rating assigned to a particular bond by one of
the following respected rating agencies: Standard & Poor's Corporation, Moody's
Investors Services, Inc. or Fitch Investors Service, Inc.
Maturity breakdown is based on each security's effective maturity, which
reflects pre-refunding, mandatory puts and other conditions that affect a bond's
maturity.
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to maintain these quality and maturity breakdowns in the future.
3
<PAGE>
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Performance Information
--------------------------------------------------------------------------------
Average Annual Total Returns as of 5/31/00
<TABLE>
<CAPTION>
Share Class A B C
Inception Date 10/1/84 5/5/92 8/1/97
-----------------------------------------------------------------------------------------------
Without With Without With Without With
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Six months (0.19)% (4.94)% (0.57)% (5.43)% (0.50)% (1.47)%
(cumulative)
-----------------------------------------------------------------------------------------------
1 year (4.22) (8.77) (4.93) (9.48) (4.79) (5.70)
-----------------------------------------------------------------------------------------------
5 years 4.00 2.99 3.22 2.90 3.64 3.64
-----------------------------------------------------------------------------------------------
10 years 5.91 5.40 5.28 5.28 5.73 5.73
-----------------------------------------------------------------------------------------------
</TABLE>
Average Annual Total Returns as of 3/31/00
<TABLE>
<CAPTION>
Share Class A B C
-----------------------------------------------------------------------------------------------
Without With Without With Without With
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Six months 0.27% (4.50)% (0.11)% (4.99)% (0.04)% (1.01)%
(cumulative)
-----------------------------------------------------------------------------------------------
1 year (3.23) (7.82) (3.95) (8.55) (3.81) (4.73)
-----------------------------------------------------------------------------------------------
5 years 4.95 3.93 4.16 3.83 4.61 4.61
-----------------------------------------------------------------------------------------------
10 years 6.19 5.68 5.57 5.57 6.02 6.02
-----------------------------------------------------------------------------------------------
</TABLE>
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "with sales charge" returns include
the maximum 4.75% sales charge for Class A shares, the appropriate Class B
contingent deferred sales charge for the holding period after purchase as
follows: through first year-5%, second year-4%, third year-3%, fourth year-3%,
fifth year-2%, sixth year-1%, thereafter-0% and the Class C contingent deferred
sales charge of 1% for the first year only.
Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Advisor of its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower. Performance for
different share classes will vary based on differences in sales charges and fees
associated with each class.
Class B and C share (newer class shares) performance information includes
returns of the Fund's Class A shares (the oldest existing fund class) for
periods prior to the inception dates of the newer class shares. These Class A
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between Class A shares and newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of the class shares would have been lower.
4
<PAGE>
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Investment Portfolio
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds - 96.5% PAR VALUE
--------------------------------------------------------------------------------
EDUCATION - 1.6%
Education - 1.5%
AL Alabama Agricultural &
Mechanical University,
Series 1998,
5.250% 11/1/12 $ 3,710 $ 3,572
AL State University Revenue,
Auburn University,
7.000% 6/1/11 1,000 1,037
MA Health and Educational
Facilities Authority,
Amherst College,
Series E,
6.750% 11/1/15 1,000 1,044
MA State College Building Authority,
Series 1999 A:
(a) 5/1/19 7,710 2,451
(a) 5/1/20 7,750 2,306
MA State Development Finance Agency,
Boston University,
Series 1999 P,
5.450% 5/15/59 3,710 3,091
MA State Industrial Finance Agency,
Tabor Academy,
Series 1998,
5.400% 12/1/28 1,535 1,274
MN Victoria, Holy Family Catholic
High School,
Series 1999 A,
5.850% 9/1/24 2,250 1,989
NY State Dormitory Authority,
New York University,
Series 1998 A,
5.750% 7/1/27 11,490 11,250
PA State Higher Educational
Facilities Authority,
University of Pennsylvania,
Series 1998,
4.500% 7/15/21 1,405 1,112
PR Commonwealth of Puerto Rico,
Ana G. Mendez University System,
Series 1999,
5.375% 2/1/29 1,550 1,314
----------
30,440
----------
Student Loan - 0.2%
LA State Public Facility Authority,
Series A,
6.750% 9/1/06 (b) 1,545 1,607
VT State Student Assistance
Financing Program, Series B,
6.700% 12/15/12 2,000 2,068
----------
3,675
----------
--------------------------------------------------------------------------------
HEALTHCARE - 14.1%
Congregate Care Retirement - 0.3%
NH State Higher Educational
& Health Facilities Authority,
Rivermead at Peterborough,
Series 1998,
5.500% 7/1/13 2,640 2,251
WA Clackamas County Hospital
Facilities Authority,
Willamette View,
Series 1999 A,
7.500% 11/1/29 5,000 4,831
----------
7,082
----------
Health Services - 0.3%
MA State Development Finance
Agency, Boston Biomedical
Research Institute, Series 1999,
5.650% 2/1/19 1,000 860
WI State Health & Educational
Facilities Authority, Marshfield
Clinic, Series 1999,
6.250% 2/15/29 5,600 5,454
----------
6,314
----------
Hospital - 7.4%
AL Alabama Special Care Facilities
Authority, Montgomery Healthcare,
Series 1989,
11.000% 10/1/19 (c) 10,618 531
AR Baxter County, Baxter County
Regional Hospital, Series 1999 B,
5.625% 9/1/28 2,000 1,588
AR Conway Health Facilities Board,
Conway Regional Medical Center:
Series 1999 A:
6.400% 8/1/29 1,725 1,530
Series 1999 B:
6.400% 8/1/29 4,150 3,681
AZ State Health Facilities Authority,
Catholic Healthcare West,
Series 1999 A,
6.625% 7/1/20 7,000 6,755
CA State Health Facilities Financing
Authority, Cedars-Sinai
Medical Center,
Series 1999 A,
6.125% 12/1/30 2,900 2,812
See notes to investment portfolio.
5
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
FL Cape Canaveral Hospital District,
Series 1998,
5.250% 1/1/18 $ 5,545 $ 4,401
FL Orange County Health Facilities
Authority, Orlando Regional
Healthcare System,
Series 1999,
6.000% 10/1/26 6,550 6,131
GA Forsyth County Hospital
Authority, Georgia Baptist
Healthcare System,
Series 1998,
6.000% 10/1/08 1,000 959
IL Health Facility Authority,
Series 1992 B, IFRN (variable rate),
9.061% 5/1/21 4,800 5,136
IL State Development Finance
Authority, Adventist Health
System, Series 1999,
5.500% 11/15/20 12,000 9,626
IN State Health Facilities Financing
Authority, Riverview Hospital
Project, Series 1999,
5.500% 8/1/24 750 597
LA State Public Facilities Authority,
Touro Infirmary, Series 1999,
5.625% 8/15/29 10,790 8,442
MA State Health & Educational
Facilities Authority, South Shore
Hospital, Series 1999 F,
5.750% 7/1/29 10,500 9,039
MD State Health & Educational
Facilities Authority, University
of Maryland Medical System,
6.750% 7/1/30 2,000 1,972
MI Dickinson County HealthCare
System, Series 1999:
5.700% 11/1/18 1,800 1,454
5.800% 11/1/24 2,670 2,053
MI State Hospital Finance Authority,
Memorial Healthcare Center:
Series 1999,
5.750% 11/15/15 500 425
5.875% 11/15/21 260 216
MN Marshall, Weiner Memorial
Medical Center, Series 1999,
6.000% 11/1/28 1,700 1,341
MN Monticello-Big Lake Community
Hospital District,
5.750% 12/1/19 2,000 1,888
MS Medical Center Building Corp.,
University of Mississippi Medical
Center, Series 1998,
5.500% 12/1/23 5,550 5,189
MT State Health Facility Authority,
Hospital Facilities, Series 1994,
IFRN (variable rate)
5.837% 2/15/25 6,000 4,635
NC State Medical Care Commission,
Gaston Health Care, Series 1998,
5.000% 2/15/29 3,785 2,961
NH State Higher Educational &
Health, Series 1998,
5.800% 5/1/18 1,470 1,172
NV Henderson, Catholic Healthcare
West, Series 1999 A,
6.750% 7/1/20 3,200 3,087
NY State Dormitory Authority,
Mount Sinai Health Obligation
Group, Series 2000,
6.500% 7/1/25 2,800 2,815
OH Belmont County, East Ohio
Regional Hospital, Series 1998,
5.700% 1/1/13 1,825 1,524
OH Franklin County, Doctors Ohio
Health Corp., Series 1998 A,
5.600% 12/1/28 12,000 8,501
OH Highland County Joint Township
Hospital District, Series 1999,
6.750% 12/1/29 1,500 1,266
OR Clackamas County Hospital
Facilities Authority, Series 1999,
5.500% 2/15/13 7,405 7,187
TX Bexar County Health Facilities
Development Corp, Baptist
Health System:
6.000% 11/15/11 1,780 1,835
6.000% 11/15/12 1,065 1,096
TX Harris Count Health Facilities
Development Authority,
Series 1999,
6.048% 7/1/19 9,000 7,295
TX Lufkin Health Facilities
Development Corp., Memorial
Health Systems of East Texas,
Series 1998,
5.700% 2/15/28 2,500 1,893
TX Richardson Hospital Authority,
Baylor Richardson Medical
Center, Series 1998,
5.625% 12/1/28 2,000 1,530
See notes to investment portfolio.
6
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
VA Danville Industrial Development
Authority, Danville Regional
Medical Center,
Series 1998,
5.250% 10/1/28 $ 9,500 $ 8,467
VA Fairfax County Industrial
Development Authority,
Inova Health System,
Series 1993 A,
5.000% 8/15/23 14,130 12,119
VA Henrico County Industrial
Development Authority,
Bon Secours Health,
6.000% 8/15/16 5,000 5,125
VA Norfolk Industrial Development
Authority, Sentara Hospital,
Series A,
6.500% 11/1/13 2,500 2,612
VT State Educational & Health
Buildings Authority, Springfield
Hospital, Series A,
7.750% 1/1/13 1,890 2,008
----------
152,894
----------
Intermediate Care Facilities - 0.6%
IL State Development Finance
Authority, Hoosier Care, Inc.,
Series 1999 A,
7.125% 6/1/34 2,450 2,150
IN State Health Facilities Financing
Authority, Hoosier Care, Inc.,
Series 1999 A,
7.125% 6/1/34 10,150 8,907
PA State Economic Development
Financing Authority, Northwestern
Human Services, Inc.,
Series 1998 A,
5.250% 6/1/14 2,000 1,666
----------
12,723
----------
Nursing Home - 5.4%
CA San Diego Industrial Development,
Carmel Health,
8.750% 12/1/16 5,100 5,100
CO State Health Facilities Authority,
American Housing Foundation, Inc.,
Series 1990 A,
10.250% 12/1/20 (c) 2,500 1,894
DE State Economic Development
Authority, Churchman Village Project,
Series A,
10.000% 3/1/21 6,905 7,898
DE Sussex County, Healthcare Facility,
Delaware Health Corp.,
Series 1994 A,
7.600% 1/1/24 14,155 12,651
FL Collier County Industrial
Development
Authority, Beverly Enterprises,
Inc., Series 1991,
10.750% 3/1/03 700 737
FL Gadsden County Industrial
Development Authority, Florida
Properties, Inc., Series 1988 A,
10.450% 10/1/18 5,800 5,818
FL Palm Beach County, Beverly
Enterprises-Florida, Inc.,
Series 1984,
10.000% 6/1/11 2,280 2,348
IA Marion, Kentucky Iowa Corp.
Project, Series 1990,
10.250% 1/1/20 935 935
IA State Finance Authority,
Care Initiatives, Series 1998 B:
5.500% 7/1/08 1,385 1,272
5.750% 7/1/28 4,500 3,431
IN Gary Industrial Economic
Development, West Side Health
Care Center, Series 1987 A,
11.500% 10/1/17 1,885 1,901
IN State Health Facilities Financing
Authority, Metro Health Indiana,
Inc. Project, Series 1998,
6.400% 12/1/33 5,600 4,599
MA State Industrial Finance Agency,
GF/Massachusetts Inc., Series 1994,
8.300% 7/1/23 12,235 12,847
MA State Industrial Finance Agency,
American Health Foundation Inc.,
Series 1989,
10.125% 3/1/19 (c) 3,053 2,168
MN Minneapolis, Walker Methodist
Senior Services Group,
Series 1998 A,
5.875% 11/15/18 1,800 1,478
MN Sartell, Foundation for
Healthcare, Series 1999 A,
6.500% 9/1/16 1,500 1,324
MO St. Louis County Industrial
Development Authority,
Nursing Home, Cardinal Carberry
Health Center, Series 1991,
7.125% 3/20/23 2,000 2,037
See notes to investment portfolio.
7
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
OH Ashtabula County First
Mortgage, Village Square
Nursing Center, Inc., 1985,
12.000% 12/1/15 $ 1,190 $ 1,190
OH Montgomery County,
Grafton Oaks Limited Partners,
Series 1986,
9.750% 12/1/16 695 660
PA Cambria County Industrial
Development Authority, Beverly
Enterprises,
10.000% 6/18/12 1,500 1,761
PA Chester County Industrial
Development, Pennsylvania Nursing
Home, Inc., Series 1989,
10.125% 5/1/19 (c) 10,337 7,546
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 8/1/22 9,205 9,769
PA Lackawanna County Industrial
Authority, Greenridge Nursing Center,
10.500% 12/1/10 1,675 1,736
PA Luzerna County Industrial
Development Authority, Millville
Nursing Center,
10.500% 12/1/12 3,450 3,559
PA Washington County Industrial
Development Authority,
Central States, Series 1989,
10.250% 11/1/19 3,285 3,293
PA Wilkins Area Industrial Development
Authority, Oakmont Nursing Center,
Series 1984,
10.000% 7/1/11 950 1,003
TN Metropolitan Government,
Nashville & Davidson Counties
Health & Education Facilities,
Central States, Series 1989
10.250% 11/1/19 745 747
TX Whitehouse Health Facilities
Development Corporation,
Oak Brook Health Care Center,
Series 1989,
10.000% 12/1/19 1,725 1,778
WA Kitsap County Housing Authority,
Martha & Mary Nursing Home,
7.100% 2/20/36 10,000 10,902
----------
112,382
----------
--------------------------------------------------------------------------------
HOUSING - 14.3%
Assisted Living/Senior - 1.2%
DE Kent County, Heritage at Dover,
Series 1999,
7.625% 1/1/30 1,750 1,647
IL State Development Finance
Authority, Care Institute, Inc.,
8.250% 6/1/25 10,000 10,400
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/1/23 2,975 2,655
NC State Medical Care Commission,
DePaul Community Facilities
Project, Series 1999,
7.625% 11/1/29 2,000 1,897
TX Bell County Health Facilities
Development Corp.,
Care Institutions, Inc.,
9.000% 11/1/24 7,585 8,069
----------
24,668
----------
Multi-Family - 8.3%
AZ Mohave County Industrial
Development Authority, Multifamily,
Kingman Station Apartments,
8.125% 10/1/26 2,755 2,800
AZ Phoenix Industrial Development
Authority, Chris Ridge Village Project,
Series 1992:
6.750% 11/1/12 650 667
6.800% 11/1/25 4,250 4,362
CO State Health Facilities Authority,
Birchwood Manor, Series 1991 A,
7.625% 4/1/26 1,835 1,860
DE Quaker Hill Housing Corp.,
Multi-Family Housing,
Quaker Hill Apartments,
Series A,
7.550% 8/1/21 6,225 6,432
FL Broward County Housing Finance
Authority, Chaves Lake Apartment
Project, Series 2000,
7.500% 7/1/40 6,175 6,116
FL Clay County Housing Finance
Authority, Madison Commons
Apartments, Series 2000 A,
7.450% 7/1/40 3,000 2,947
FL Orange County Housing Finance
Authority, Palms at Brentwood
Apartments, Series 1998 K,
6.500% 12/1/34 8,000 6,950
See notes to investment portfolio.
8
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
GA Savannah Housing Authority,
Multi-Family Housing, Plantation
Oaks Apartments Project,
Series 1986,
9.625% 2/1/27 $ 2,825 $ 2,918
IL Carbondale, Mill Street
Apartments, Series 1979,
7.375% 9/1/20 790 803
IL Charleston Non-Profit Corp.,
Cougills Manor Project,
6.875% 7/1/20 1,656 1,660
IL East Moline Housing Finance
Corp., Deerfield Woods
Apartments,
7.500% 8/1/21 2,250 2,288
LA Jefferson Housing Development,
Corp., Multi-Family, Concordia
Project, Series A,
7.700% 8/1/22 2,570 2,661
LA New Orleans Housing Development
Corp., Multi-Family Housing
Mortgage, Southwood Patio,
Series 1990-A,
7.700% 2/1/22 2,375 2,482
MN Dakota County Housing &
Redevelopment Authority,
Series 1999:
6.000% 11/1/09 300 282
6.250% 5/1/29 5,180 4,539
MN Washington County Housing &
Redevelopment Authority, Cottages
of Aspen, Series 1992,
9.250% 6/1/22 1,860 1,923
MN White Bear Lake, Birch Lake
Townhomes Project:
Series 1989 A,
9.750% 7/15/19 2,185 2,226
Series 1989 B,
(a) 7/15/19 (d) 280 112
MO St. Louis Area Housing Finance
Corp., Wellington Arms III,
Series 1979,
7.500% 1/1/21 1,925 1,933
MS Biloxi Urban Renewal, Biloxi
Apartments Project, Series 1985:
9.500% 12/1/05 840 867
9.500% 12/1/10 1,235 1,275
9.500% 12/1/15 1,970 2,034
NC Eastern Carolina Regional Housing
Authority, New River Apartments-
Jacksonville, Series 1994,
8.250% 9/1/14 2,565 2,607
NC Raleigh Housing Authority,
Cedar Point Apartments,
Series 1999 A,
5.875% 5/1/30 5,365 4,802
NE Omaha Housing Development
Corp., Mortgage Notes,
North Omaha Homes,
7.375% 3/1/21 1,305 1,328
NJ State Housing & Mortgage
Finance Agency,
6.950% 11/1/13 3,500 3,661
NY Nyack Housing Assistance Corp.,
Nyack Plaza Apartments,
7.375% 6/1/21 (e) 2,523 2,472
PA Warren County Housing Finance
Corp., Allegheny Manor,
7.500% 2/1/21 1,228 1,259
Resolution Trust Corp., Pass Through
Certificates, Series 1993-A,
9.250% 12/1/16 (e) 61,712 61,893
TN Franklin Industrial Board,
Landings Apartment Project,
Series 1996 B,
8.750% 4/1/27 3,490 3,595
TN Knoxville Community Development,
Corp., Multiple Family Housing,
Maple Oak Apartment Project,
Series 1992,
6.375% 10/15/08 2,510 2,528
TX Galveston Health Facilities Center,
Driftwood Apartments,
8.000% 8/1/23 (e) 1,850 1,843
TX Laredo Housing Development
Corp., Number 1,
7.375% 3/5/21 1,946 1,947
VA Alexandria Redevelopment &
Housing Authority, Courthouse
Commons Apartments:
Series 1990 A,
10.000% 1/1/21 760 692
Series 1990 B,
(a) 1/1/21 (d) 945 841
VA Fairfax County Redevelopment
and Housing Authority, Mt. Vernon
Apartments, Series A,
6.625% 9/20/20 1,500 1,552
See notes to investment portfolio.
9
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
VA Norfolk Redevelopment & Housing
Authority, Multi-Family Housing,
Dockside, Series 1991 A:
7.300% 12/1/16 $ 1,315 $ 1,363
7.375% 12/1/28 1,940 2,012
WA Washington Housing Development
Corporation, Parkview Apartments
Project,
7.500% 4/1/21 1,581 1,620
WI Milwaukee Housing Authority
Mortgage, Windsor Court Project,
Series 1986,
8.700% 8/21/21 1,985 1,992
WY Rock Springs Housing Finance
Corp., Bicentennial Association II,
7.500% 5/1/20 1,070 1,088
----------
159,232
----------
Single Family - 4.9%
AL State Housing Finance Authority,
Series 1990-C,
7.550% 4/1/16 365 374
CA State Housing Finance Authority,
Series 1984 B,
(a) 8/1/16 325 54
CO El Paso County Home Mortgage:
Series 1987 C,
8.300% 9/20/18 485 501
Series 1987 D,
8.150% 9/20/14 174 181
Series 1988 A,
8.375% 3/25/19 803 797
CO Housing Finance Authority,
Single Family Housing, Series A,
7.150% 1/1/14 805 820
CO State Housing Finance Authority:
Series 1991 A,
7.500% 5/1/29 3,675 3,835
Series 1996 B-1,
7.650% 11/1/26 1,920 2,048
Series 1997 A-2,
7.250% 5/1/27 2,735 2,884
Series 1999 B-2,
6.800% 4/1/30 3,000 3,127
Series 1999 C-2,
7.050% 4/1/31 7,000 7,552
Series 2000 B-2,
7.250% 10/1/31 1,000 1,076
FL Brevard County, Housing Finance
Authority, Single Family Mortgage,
Series 1985,
(a) 4/1/17 1,770 327
FL Lee County Housing Finance
Authority, Series 1996 A-1,
7.350% 3/1/27 4,785 5,073
IA Finance Authority Single
Family, Series 1992 B,
6.950% 7/1/24 8,440 8,742
IL Chicago:
Series 1996 B,
7.625% 9/1/27 2,320 2,505
Series 1997 A,
7.250% 9/1/28 3,015 3,195
Series 2000 A,
7.150% 9/1/31 2,000 2,165
IL State Housing Development
Authority:
Series B,
7.250% 8/1/17 1,290 1,314
Series C,
7.500% 8/1/17 5 5
MA State Housing Finance Agency
Series 21,
7.125% 6/1/25 5,855 5,984
MD State Community Development
Administration, Department of
Housing and Community
Development Single Family Program:
1st Series,
7.300% 4/1/17 450 458
3rd Series,
7.250% 4/1/27 960 977
MN State Housing Finance Agency
Single Family Mortgage, Series C,
7.100% 7/1/11 145 149
MO State Housing Development
Commission, Homeownership
Loan Program:
Series C:
6.900% 7/1/18 580 592
7.250% 9/1/26 3,555 3,735
Series 1996 A,
7.200% 9/1/26 5,725 5,904
Series 1996 B,
7.550% 9/1/27 6,000 6,244
Series 1997 C-1,
6.550% 9/1/28 1,105 1,140
Series 1998 B-2,
6.400% 3/1/29 40 40
NE Investment Finance Authority,
Single Family Mortgage,
Series 1990-2, IFRN (variable rate),
10.415% 9/10/30 1,600 1,674
See notes to investment portfolio.
10
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
NH State Housing Finance Authority,
Single Family Resources Mortgage,
Series 1989 B,
7.700% 7/1/29 $ 1,225 $ 1,246
NM State Mortgage Finance
Authority,
Series 1999 D-2,
6.750% 9/1/29 4,500 4,688
OH State Housing Finance Agency,
Series A2, IFRN (variable rate),
10.517% 3/24/31 3,600 3,753
OK State Housing Finance Agency,
Series 1999 B-1,
6.800% 9/1/16 995 1,034
TX Bexar County Housing Finance Corp.,
GNMA Collateralized Mortgage,
Series 1989 A,
8.200% 4/1/22 2,180 2,226
TX State Department Housing &
Community Affairs, Collateralized
Home Mortgage,
Series 1992-B2, IFRN (variable rate),
8.345% 6/18/23 3,100 3,119
TX State Housing Agency Mortgage,
Single Family, Series A,
7.150% 9/1/12 115 119
UT State Housing Finance Agency,
Single Family Mortgage:
Senior Issue B-1,
7.500% 7/1/16 10 10
Senior Series F-1,
7.400% 7/1/09 45 45
Series 1990 C-2,
7.950% 7/1/10 30 30
UT State Housing Finance Agency
Single Family Mortgage:
Senior A-1,
6.900% 7/1/12 260 264
Senior Issue B-2,
7.000% 7/1/16 135 137
Senior Issue D-2,
7.250% 7/1/11 100 102
Series E-1,
6.950% 7/1/11 445 450
VA State Housing Authority
Commonwealth Mortgage,
Series A,
7.100% 1/1/17 1,000 1,025
WI State Housing & Economic
Development Authority, Series A,
7.000% 9/1/09 985 1,009
WV State Housing Development
Fund, Series 1992 B,
7.200% 11/1/20 6,870 6,991
WY Community Development
Authority, Single Family
Mortgage, Series 1988 G,
7.250% 6/1/21 1,195 1,226
----------
100,946
----------
--------------------------------------------------------------------------------
INDUSTRIAL - 4.4%
Chemicals - 0.6%
IL Southwestern Illinois Development
Authority, Sewer Facilities,
Monsanto Co., Series 1991,
7.300% 7/15/15 3,000 3,173
TN Humphreys County Industrial
Development Board, E.I. du Pont
de Nemours & Co., Series 1994,
6.700% 5/1/24 9,000 9,305
----------
12,478
----------
Food Products - 0.5%
FL Hendry County Industrial
Development Authority,
Savannah Foods & Industries,
Series 1992,
6.400% 3/1/17 1,000 879
MI State Strategic Fund,
Michigan Sugar Co.:
Carollton Project :
Series 1998 B,
6.450% 11/1/25 2,800 2,387
Series 1998 C,
6.550% 11/1/25 3,200 2,760
Sebewaing Project, Series 1998 A,
6.250% 11/1/15 2,250 1,949
PA State Economic Development
Financing Authority, USG Corp.,
Series 1999,
6.000% 6/1/31 2,500 2,214
----------
10,189
----------
Forest Products - 0.7%
GA Wayne County Development
Authority, Solid Waste Disposal,
ITT Royonier, Inc., Series 1990,
8.000% 7/1/15 2,500 2,556
IA Cedar Rapids,
Weyerhaeuser Co. Project,
9.000% 8/1/14 1,000 1,214
LA De Soto Parish, International
Paper Co., Series A,
7.700% 11/1/18 1,250 1,339
See notes to investment portfolio.
11
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
MN International Falls, Boise
Cascade Corp., Series 1999,
6.850% 12/1/29 $ 5,425 $ 5,217
VA Bedford County Industrial
Development Authority,
Nekoosa Packaging Corp.,
Series 1999 A,
6.550% 12/1/25 3,500 3,387
----------
13,713
----------
Manufacturing - 0.5%
CT State Development Authority,
Pfizer, Inc. Project, Series 1994,
7.000% 7/1/25 3,000 3,226
IL Will-Kankakee Regional
Development Authority, Flanders
Corp./Precisionaire Project,
Series 1997,
6.500% 12/15/17 2,840 2,723
MN Brooklyn Park, TL Systems
Corp., Series 1991,
10.000% 9/1/16 305 344
MO State Development Finance
Board, Proctor & Gamble Co.,
Series 1999,
5.200% 3/15/29 2,500 2,179
NV Henderson Public Improvement
Trust, Integrated Coating
Technology Corp., Series 2000,
6.625% 11/1/10 1,921 1,537
VA State Small Business Financing
Authority, Donsung America,
Series 1998 A,
7.250% 11/1/15 (c) (f) 1,607 996
----------
11,005
----------
Metals & Mining - 0.7%
IN State Development Finance
Authority, Inland Steel Co.,
Series 1996,
7.250% 11/1/11 3,750 3,614
NV State Department of Business
& Industry, Wheeling-Pittsburgh
Steel Corp., Series 1999 A,
8.000% 9/1/14 1,350 1,328
PA Bucks County Industrial
Development Revenue,
Jorgensen Steel,
9.000% 6/1/05 2,500 2,523
VA Peninsula Ports Authority,
Ziegler Coal Project,
Series 1997,
6.900% 5/2/22 7,500 6,394
----------
13,859
----------
Oil And Gas - 1.4%
CA Los Angeles Regional Airport
Improvement Corp., Los Angeles
International Airport,
6.800% 1/1/27 1,400 1,413
PA State Economic Development
Financing Authority, Sun Co.,
Inc., Series 1994 A,
7.600% 12/1/24 27,500 28,495
----------
29,908
----------
--------------------------------------------------------------------------------
OTHER - 14.0%
Other - 0.1%
AL Sewer & Utility,
(a) 5/15/06 (g) 89 1
MD Baltimore, Park Charles Project,
Series 1986,
8.000% 1/1/10 1,255 1,295
----------
1,296
----------
Refunded/Escrowed (h) - 13.9%
AK State Housing Financing Corp.,
Series 1992-A,
6.600% 12/1/23 11,750 11,987
AZ Maricopa County Industrial
Development Authority, Advantage
Point, Series 1996 A,
6.625% 7/1/26 2,750 2,905
AZ Pima County Industrial
Development Authority,
8.200% 9/1/21 12,370 15,334
CA Palmdale Community
Redevelopment Agency:
Series D,
8.000% 4/1/16 7,000 8,639
Series 1986 A,
8.000% 3/1/16 3,000 3,700
CA Perris Community Facilities
District, Series 2-90,
8.750% 10/1/21 6,165 8,321
CA Pomona, Series A,
7.600% 5/1/23 10,000 11,878
CA Riverside County,
8.300% 11/1/12 10,000 12,502
CO Mesa County,
(a) 12/1/11 5,905 3,053
See notes to investment portfolio.
12
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
CT State Health & Educational
Facilities Authority, New Britain
Hospital, Series 1991 A,
7.750% 7/1/22 $ 905 $ 970
DC District Columbia Hospital,
Washington Hospital Center
Corp., Series 1990 A,
9.000% 1/1/08 1,375 1,418
DE State Economic Development
Authority, Riverside Hospital,
Series 1992 A,
9.500% 1/1/22 1,110 1,286
FL Clearwater Housing Authority,
Hampton Apartments, Series 1994,
8.250% 5/1/24 3,430 3,859
FL State Mid-Bay Bridge Authority,
Series A,
6.875% 10/1/22 2,000 2,225
IL Health Facility Authority, United
Medical Center-Formerly,
Series 1991:
8.125% 7/1/06 2,315 2,442
8.375% 7/1/12 1,500 1,635
IL State Health Facilities Authority,
Edgewater Medical Center,
Series A,
9.250% 7/1/24 8,200 9,389
IN Purdue University, Student Fee,
Series B,
6.700% 7/1/15 1,100 1,193
IN St. Joseph County Hospital
Authority, South Bend
Memorial Hospital,
9.400% 6/1/10 2,675 3,160
KY Trimble County, Louisville Gas
& Electric Co., Series B,
6.550% 11/1/20 130 137
MA State Health & Educational
Facilities Authority,
Lowell General Hospital,
Series 1991 A,
8.400% 6/1/11 2,500 2,634
MA State Health & Educational
Facilities Authority, Corp. for
Independent Living,
8.100% 7/1/18 1,215 1,337
MA State Industrial Finance Agency:
Belmont Home Care, Series 1995 A,
9.270% 1/1/25 10,230 12,148
Seacoast Nursing Home,
Series 1991,
9.625% 12/1/21 4,945 5,409
MA State Turnpike Authority:
Series A,
5.000% 1/1/20 12,665 11,392
Series 1993 A,
5.125% 1/1/23 3,600 3,233
MA State,
Series 1991 C,
6.750% 8/1/09 10 10
MN Mille Lacs Capital Improvement
Authority, Mille Lacs Band of
Chippewa, Series 1992 A,
9.250% 11/1/12 1,300 1,441
MO Hannibal Industrial
Development Authority,
Regional Healthcare Systems,
Series 1992,
9.500% 3/1/22 4,000 4,392
NC Eastern Municipal Power
Agency, Series 1991 A,
5.000% 1/1/21 4,535 4,082
NC Lincoln County,
Lincoln County Hospital,
9.000% 5/1/07 370 410
NV Reno Hospital, St. Mary's
Regional Medical Center,
Series 1991 A,
6.700% 7/1/21 1,700 1,768
OK Oklahoma City Industrial
& Cultural Facilities Trust,
Hillcrest Health Center,
6.400% 8/1/14 4,320 4,630
PA Convention Center Authority,
Series 1989-A,
6.000% 9/1/19 12,700 12,902
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993 A,
8.250% 5/1/23 1,390 1,508
PA Philadelphia Hospitals & Higher
Educational Facilities Authority,
Presbyterian Medical Center,
Series 1993,
6.500% 12/1/11 5,155 5,492
PA Westmoreland County Municipal
Authority, Special Obligation,
Series 1985,
9.125% 7/1/10 2,915 3,256
See notes to investment portfolio.
13
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
SC Piedmont Municipal Power
Agency: Series 1988,
(a) 1/1/13 $ 18,585 $ 8,641
Series 1993,
5.375% 1/1/25 3,960 3,689
TN Chattanooga Health Education
and Housing Facilities Board,
North Park Hospital Project,
Series 1993,
8.500% 2/1/23 40,320 44,218
TN Shelby County, Health,
Education, & Housing Facilities
Board, Open Arms Development
Center:
Series 1992 A,
9.750% 8/1/19 4,060 5,116
Series 1992 C,
9.750% 8/1/19 4,050 5,103
TX State Research Laboratory
Commission Finance Authority,
Superconducting Super Collider,
Series 1991,
6.950% 12/1/12 10,000 11,188
UT Utah County Pollution
Control, Series 1984 F2,
10.500% 6/15/14 6,900 7,300
WA State Health Care Facilities
Authority, Grays Harbor
Community Hospital, Series 1993:
7.200% 7/1/03 375 380
8.025% 7/1/20 6,380 6,585
WA Tacoma Electric System,
Series 1991 C, IFRN (variable rate),
7.760% 1/2/15 10,000 10,550
WI State Health & Educational
Facilities Authority, St. Luke's
Medical Center Project, Series 1991,
7.100% 8/15/19 2,550 2,667
----------
287,514
----------
--------------------------------------------------------------------------------
OTHER REVENUE - 0.5%
Recreation - 0.2%
AK Anchorage, Ice Rink Revenue,
Series 1998,
6.250% 1/1/12 2,185 2,029
CO Metropolitan Football Stadium
District, Series 1999 A,
(a) 1/1/11 3,650 1,975
----------
4,004
----------
Retail - 0.3%
NJ State Economic Development
Authority, Glimcher Properties
L.P. Project,
6.000% 11/1/28 3,400 2,966
PA Bucks County, Industrial
Development, Hechinger Co.,
Series 1984,
11.375% 11/15/04 (c) 1,950 1,794
PA Philadelphia Authority for
Industrial Development,
Hechinger Co., Series 1983,
11.375% 12/1/04 (c) 2,680 1,474
----------
6,234
----------
--------------------------------------------------------------------------------
RESOURCE RECOVERY - 0.3%
Disposal - 0.2%
IL Development Finance Authority,
Waste Management, Inc.,
Series 1997,
5.050% 1/1/10 2,500 2,100
MA Boston Industrial
Development Finance
Authority, Jet-A-Way, Inc.,
10.500% 1/1/11 1,500 1,572
----------
3,672
----------
Resource Recovery - 0.1%
MA State Industrial Finance
Agency, Ogden Hill Project,
Series 1998 A,
5.400% 12/1/11 3,300 2,953
----------
--------------------------------------------------------------------------------
TAX-BACKED - 22.1%
Local Appropriated - 3.2%
IL Chicago Board Education, General
Obligation Leases Certificates,
Series 1992 A:
6.000% 1/1/20 4,000 4,046
6.250% 1/1/15 (i) 8,400 8,861
IN Beech Grove School Building Corp.,
6.250% 7/5/16 2,265 2,388
IN Crown Point School Building Corp.,
Series 2000:
(a) 1/15/18 (i) 6,300 2,133
(a) 1/15/19 6,500 2,059
NY State Dormitory Authority, Judicial
Facilities, Series 1991 A,
9.500% 4/15/14 905 1,035
See notes to investment portfolio.
14
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
PA Philadelphia Municipal Authority,
Series B,
6.400% 11/15/16 $ 39,190 $ 40,731
TX Houston Independent School
District Public Facilities Corp.:
Series 1998 A,
(a) 9/15/14 3,885 1,649
Series 1998 B:
(a) 9/15/14 6,790 2,914
(a) 9/15/15 2,000 793
----------
66,609
----------
Local General Obligations - 7.8%
AK North Slope Borough:
Series A,
(a) 6/30/08 11,400 7,226
Series 1996 B,
(a) 6/30/07 45,000 30,305
Series 1998 A,
(a) 6/30/09 6,500 3,877
Series 1999 B,
(a) 6/30/10 10,000 5,608
CA Benicia Unified School District,
Series 1997 A,
(a) 8/1/21 5,955 1,656
CA Golden West School Financing
Authority, Series 1999 A:
(a) 8/1/13 3,260 1,559
(a) 8/1/14 4,810 2,146
CA Murrieta Valley Unified School
District, Series 1998 A,
(a) 9/1/11 2,195 1,197
CO Douglas County School District
No. RE-1, Series 1996,
7.000% 12/15/12 3,000 3,398
CO El Paso County School District
No. 11, Series 1996:
7.100% 12/1/16 2,105 2,415
7.125% 12/1/20 7,350 8,461
CO Larimer, Weld & Boulder Counties
School District, Series 1996,
(a) 12/15/10 4,000 2,185
HI Honolulu City & County,
Wastewater System Revenue,
Series 1998,
4.500% 7/1/28 6,000 4,583
IL Champaign County, Series 1999,
8.250% 1/1/23 1,420 1,788
IL Chicago Board of Education:
Series 1998 B-1,
(a) 12/1/10 3,905 2,129
Series 1998 B-1,
(a) 12/1/13 13,400 5,977
Series 1999 A,
5.250% 12/1/17 5,000 4,679
Series 1999 A,
5.500% 12/1/26 7,000 6,556
Series 1999 A,
(a) 12/1/09 8,635 5,011
IL Coles & Cumberland Counties
Unified School District, Series 2000,
(a) 12/1/12 3,030 1,459
IL Du Page County Community
High School District No. 99,
Series 1998:
(a) 12/1/10 2,245 1,224
(a) 12/1/11 1,280 654
IL Lake & McHenry Counties
United School District,
Series 1998:
(a) 2/1/09 2,355 1,434
(a) 2/1/10 2,060 1,179
IL Lake County School District
No. 56,
9.000% 1/1/17 10,440 13,846
IL Will County Forest Preservation
District, Series 1999,
(a) 12/1/16 9,000 3,313
MA Boston,
Series 1998 C,
4.250% 11/1/18 5,290 4,137
MA Lowell,
8.400% 1/15/09 1,000 1,042
NY New York City,
Series 1997 A,
7.000% 8/1/06 5,000 5,395
NY Yonkers,
Series 1999 A,
4.500% 12/1/17 2,000 1,646
PA Erie School District, Series 1998:
(a) 9/1/12 5,780 2,825
(a) 9/1/15 1,500 600
PA Westmoreland County,
Series 2000 A,
(a) 6/1/13 3,000 1,400
TX Austin Independent School
District, Series 1998,
(a) 8/1/14 4,000 1,710
See notes to investment portfolio.
15
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
TX Frisco Independent School
District, Series 1998 A,
4.500% 8/15/29 $ 1,490 $ 1,135
TX Grapevine-Colleyville
Independent School District,
Series 1994,
(a) 8/15/13 6,010 2,771
TX Houston Independent School
District, Series 1999 A:
4.750% 2/15/22 5,000 4,125
4.750% 2/15/26 2,000 1,623
TX Hurst Euless Bedford
Independent School District,
Series 1994,
6.500% 8/15/24 6,355 6,588
WA King & Snohomish Counties
School District No. 417,
Series 1998 B:
(a) 6/15/14 1,800 780
(a) 6/15/16 3,315 1,255
----------
160,896
----------
Special Non-Property Tax - 3.9%
CA San Mateo County Transportation
District, Series 1998 A,
4.500% 6/1/17 8,000 6,747
IL Metropolitan Pier and Exposition
Authority, McCormick Place
Expansion Project,
(a) 6/15/14 4,330 1,886
IL State Development Finance
Authority, City of Marion Project,
Series 1991,
9.625% 9/15/21 5,520 4,140
MN Red Lake Band of Chippewa
Indians, Series 1998,
6.250% 8/1/13 2,100 1,914
NJ State Transportation Trust Fund
Authority, Series B,
7.000% 6/15/12 27,000 30,429
NY Metropolitan Transportation
Authority, Series, 1998 A,
4.500% 4/1/18 4,000 3,268
NY State Local Government
Assistance Corp.: Series E,
5.250% 4/1/16 15,060 14,313
Series 1995 A,
6.000% 4/1/24 3,500 3,443
PA Convention Center Authority,
Series A,
6.750% 9/1/19 5,000 5,297
WA Central Puget Sound Regional
Transportation Authority,
Series 1998,
4.750% 2/1/28 5,000 4,012
WI State,
Series 1999,
5.250% 12/15/27 6,500 5,863
----------
81,312
----------
Special Property Tax - 0.5%
CA Capistrano Unified School District,
Ladera Community Facilities District
No.98-2, Series 1999,
5.750% 9/1/29 4,000 3,455
CA Riverside County Public
Financing Authority,
Redevelopment Projects,
Series A,
5.500% 10/1/22 1,200 1,029
CA Santa Margarita Water District,
Series 1999,
6.250% 9/1/29 4,200 3,906
FL Heritage Palms Community
Development District, Series 1999,
6.250% 11/1/04 1,350 1,338
----------
9,728
----------
State Appropriated - 5.2%
NY State University Educational
Facilities, State University of
New York, Series 1990-A,
7.500% 5/15/13 8,000 9,282
NY State Dormitory Authority,
City University,
Series 1990 C,
7.500% 7/1/10 19,875 22,099
NY State Dormitory Authority:
Series 1993 A:
6.000% 7/1/20 13,350 13,365
6.000% 7/1/20 6,140 6,270
NY State Dormitory Authority,
State University Facilities,
Series A,
5.875% 5/15/17 28,240 28,772
NY State Dormitory Authority,
State University Educational
Facilities, Series 1998 B,
4.500% 5/15/20 24,010 18,955
NY State Urban Development Corp.,
University Facilities Grants,
5.500% 1/1/15 5,265 5,081
See notes to investment portfolio.
16
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
WV State Building Commission,
Series 1998 A,
5.375% 7/1/21 $ 3,215 $ 2,998
----------
106,820
----------
State General Obligations - 1.5%
CA State,
Series 1998,
4.500% 12/1/24 5,250 4,155
FL State Board of Education:
Series 1998 A,
4.500% 6/1/21 3,000 2,376
Series 1998 C,
4.500% 6/1/18 7,430 6,093
Series 1998 D,
4.500% 6/1/24 10,000 7,767
MA Massachusetts Bay Transportation
Authority, Series 1998,
4.750% 3/1/21 4,865 4,037
MA State College Building
Authority Project, Series A,
7.500% 5/1/11 1,500 1,746
NV State,
Series A,
6.800% 7/1/12 60 63
PR Commonwealth of Puerto Rico,
Series B,
6.500% 7/1/15 2,650 2,919
TX State Public Finance Authority,
Series 1997,
(a) 10/1/13 4,000 1,852
----------
31,008
----------
--------------------------------------------------------------------------------
TRANSPORTATION - 8.5%
Air Transportation - 0.2%
NJ State Economic Development
Authority, Continental Airlines, Inc.,
Series 1999,
6.250% 9/15/19 5,400 4,853
Airport - 3.6%
CO Denver City & County Airport:
Series A:
8.500% 11/15/23 4,570 4,721
8.750% 11/15/23 4,030 4,277
Series B:
7.250% 11/15/23 4,375 4,567
7.250% 11/15/23 5,075 5,371
Series C,
6.500% 11/15/12 10,625 11,385
HI State, Airport System Revenue,
Series 1991,
6.900% 7/1/12 4,250 4,665
IL Chicago O'Hare International
Airport, United Airlines, Inc.,
Series 1999 A,
5.350% 9/1/16 4,100 3,388
MA State Port Authority,
Series 1999:
6.966% 7/1/29 2,500 2,289
7.416% 7/1/29 (e) 1,500 1,443
NC Charlotte,
Series 1999,
7.400% 6/15/22 (e) 1,000 963
NY Niagara Frontier Transportation
Authority, Series 1999 A,
5.625% 4/1/29 5,250 4,880
TX Dallas-Fort Worth Regional
Airport, Series A,
7.375% 11/1/11 6,000 6,507
VA Capital Region Airport
Commission, Series B,
8.125% 7/1/14 17,200 19,301
----------
73,757
----------
Toll Facilities - 3.9%
CA San Joaquin Hills Transportation
Corridor Agency, Series A,
(a) 1/15/14 14,450 6,658
CO State Public Highway Authority,
Arapahoe County, E470:
Series B,
(a) 9/1/11 17,685 9,084
Series 1997 B,
(a) 9/1/22 5,200 1,256
Series 2000 B:
(a) 9/1/18 14,000 4,529
(a) 9/1/19 11,600 3,508
MA State Turnpike Authority:
Series C:
(a) 1/1/18 4,700 1,642
(a) 1/1/20 15,000 4,598
Series 1997 C,
(a) 1/1/22 7,000 1,886
NJ State Turnpike Authority:
Series 1991 C,
6.500% 1/1/16 16,000 17,357
Series C,
6.500% 1/1/16 8,500 9,221
See notes to investment portfolio.
17
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
NY Triborough Bridge &
Tunnel Authority:
6.125% 1/1/21 $ 5,000 $ 5,163
Series 1992 Y,
6.125% 1/1/21 8,500 8,777
OK State Turnpike Authority,
Series 1998 A,
5.250% 1/1/12 2,450 2,404
VA Richmond Metropolitan Authority,
Series 1998,
5.250% 7/15/22 4,400 4,014
----------
80,098
----------
Transportation - 0.8%
CA San Francisco Bay Area Rapid Transit District,
6.820% 7/1/26 5,000 4,387
MN Blaine, Consolidated Freightways, Inc.,
Series 1998,
5.150% 1/1/04 1,000 970
NY New York City Transportation
Authority, Series 1999 A,
5.250% 1/1/29 10,250 9,065
OH Toledo-Lucas County Port
Authority, CSX Transportation,
Inc., Series 1992,
6.450% 12/15/21 1,950 1,864
----------
16,286
----------
--------------------------------------------------------------------------------
UTILITY - 17.3%
Independent Power Producer - 1.3%
NY Port Authority of New York
& New Jersey, KIAC Partners,
Series 1996 IV:
6.750% 10/1/19 7,300 7,300
6.750% 10/1/11 1,500 1,526
NY Suffolk County Industrial
Development Agency, Nissequogue
Cogen Partners, Series 1998,
5.500% 1/1/23 6,800 5,610
PA Economic Development Finance
Authority, Colver Project, Series D,
7.150% 12/1/18 10,000 10,077
PR Commonwealth of Puerto Rico
Industrial, Educational, Medical
& Environmental Cogeneration
Facilities, AES Project,
Series 2000,
6.625% 6/1/26 2,800 2,816
----------
27,329
----------
Investor Owned - 6.2%
AZ Pima County Industrial
Development Authority,
Tucson Electric Power Co.:
Series A,
6.100% 9/1/25 2,000 1,710
Series 1988 A,
7.250% 7/15/10 9,255 9,731
CT State Development Authority,
Connecticut Light & Power Co.,
Series 1993 A,
5.850% 9/1/28 3,875 3,357
FL Pinellas County, Florida
Power Corp.,
7.200% 12/1/14 1,000 1,040
HI State Department Budget
and Finance, Hawaiian Electric Co.:
Series 1990 C,
7.375% 12/1/20 5,965 6,149
Series 1993 B, IFRN (variable rate),
5.925% 12/15/23 10,000 8,000
IL Development Financial Authority,
Pollution Control, Series 1991,
7.250% 6/1/11 5,625 5,763
IL State Development Finance
Authority, Commonwealth
Edison Co. Project, Series D,
6.750% 3/1/15 3,400 3,592
IN Petersburg, Indiana Power
& Light Co., Series B,
5.400% 8/1/17 5,000 4,782
LA De Soto Parish, Southwestern
Electric Power Co., Series 1992,
7.600% 1/1/19 6,000 6,360
MS State Business Finance Corp.,
Systems Energy Resources Project,
Series 1998,
5.875% 4/1/22 12,000 10,095
MS State Business Finance Corp.,
Systems Energy Resources, Inc.,
Series 1999,
5.900% 5/1/22 2,500 2,122
NJ Cape May County Industrial
Pollution Control Financing
Authority, Atlantic City Electric Co.
Series 1994 A,
7.200% 11/1/29 5,000 5,381
NV Clark County, Nevada Power Co.,
Series 1992 A,
6.700% 6/1/22 15,895 16,265
See notes to investment portfolio.
18
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
NV Humboldt County Pollution
Control, Idaho Power Co. Project,
8.300% 12/1/14 $ 1,875 $ 2,060
NY State Energy Research &
Development Authority,
Brooklyn Union Gas Co.,
Series 1993 B, IFRN (variable rate),
7.869% 4/1/20 13,000 13,293
NY State Energy Research &
Development Authority,
Consolidated Edison Co.,
Series 1994 A,
7.125% 12/1/29 5,000 5,332
NY State Energy Research &
Development Authority,
Long Island Lighting Co.,
Series 1991 A,
7.150% 12/1/20 2,945 3,060
TX Brazos River Authority,
Houston Light & Power Co.,
Series A,
6.700% 3/1/17 (i) 13,015 13,525
TX Matagorda County,
Houston Light & Power Co.,
6.700% 3/1/27 7,200 7,474
----------
129,091
----------
Joint Power Authority - 5.6%
GA Municipal Electric
Authority Power:
Series Z,
5.500% 1/1/20 26,100 25,160
Series 1993 C,
5.700% 1/1/19 20,000 19,706
Series 1993 Z,
5.500% 1/1/20 6,000 5,784
MA State Municipal Wholesale
Electric Co., Series 1994 A,
IFRN (variable rate),
5.207% 7/1/16 22,900 18,120
NC Eastern Municipal Power Agency,
Series 1999 D,
6.700% 1/1/19 1,500 1,492
NC State Municipal Power Agency,
Catawba No. 1:
Series 1992,
(a) 1/1/09 10,000 6,122
Series 1998 A,
5.500% 1/1/15 4,500 4,394
NE American Public Energy Agency,
Public Gas Agency-Western Project,
Series 1999 A,
5.250% 6/1/11 3,540 3,372
SC Piedmont Municipal Power
Agency: Series 1988,
(a) 1/1/13 25,870 12,250
Series 1993,
5.375% 1/1/25 11,805 10,834
TX State Municipal Power Agency,
(a) 9/1/08 4,500 2,844
WI Public Power, Inc., Series 1993 B,
5.440% 7/1/14 5,400 5,144
----------
115,222
----------
Municipal Electric - 1.4%
FL Orlando Utilities Commission,
Series 1993-B, IFRN (variable rate),
6.227% 10/6/13 5,000 4,913
LA De Soto Parish, Southwestern
Electric Power Co.,
7.600% 1/1/19 5,000 5,319
NC University of North Carolina
at Chapel Hill,
(a) 8/1/14 3,000 1,318
NY Long Island Power Authority,
Series 2000 A,
(a) 6/1/20 2,500 737
SD Heartland Consumers Power
District, Series 1992,
6.000% 1/1/17 5,600 5,742
TN Metropolitan Government,
Nashville & Davidson Counties,
Series 1996 A,
(a) 5/15/09 5,250 3,185
WA Chelan County Public Utilities
District Number 001 Consolidate,
Series 1989 A, Division I,
7.750% 7/1/21 4,500 4,611
WA Chelan County Public Utilities
District No. 1, Columbia River
Rock Hydroelectric,
(a) 6/1/09 5,000 3,007
----------
28,832
----------
Water & Sewer - 2.7%
CA Castaic Lake Water Agency,
Series 1999 A,
(a) 8/1/24 9,445 2,144
ID State Water Resource Board, Boise
Water Corporation Series 1991,
7.250% 12/1/21 6,000 6,254
See notes to investment portfolio.
19
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Municipal Bonds (continued) PAR VALUE
--------------------------------------------------------------------------------
LA Public Facility Belmont Water
Authority,
9.000% 3/15/24 (c) (j) $ 1,350 $ 1,148
MA State Water Pollution
Abatement Trust, Series 1999 A,
6.000% 8/1/17 10,000 10,325
MA State Water Resources Authority,
Series 1998 B,
4.500% 8/1/22 24,000 18,972
MS Five Lakes Utility District,
8.250% 7/15/24 760 608
NJ State Economic Development
Authority, American Water Co.,
Series 1994 A,
6.875% 11/1/34 10,590 11,256
NY New York City Municipal
Water Finance Authority
Series 1999,
6.420% 7/16/25 7,000 5,830
----------
56,537
----------
TOTAL MUNICIPAL BONDS
(cost of $2,065,709) 1,995,559
----------
Preferred Stocks - 0.6% SHARES
--------------------------------------------------------------------------------
HOUSING - 0.6%
Multi-Family
Charter Mac Equity Issue Trust, (e) 4,000 3,760
MuniMae Equity Issue Trust, (k) 8,000 8,000
----------
TOTAL PREFERRED
(cost of $12,000) 11,760
----------
Options - 0.2% CONTRACTS
--------------------------------------------------------------------------------
September 2000 Treasury Bond Put,
Strike price 92, Expiration 08/19/00 118,400 1,850
September 2000 Treasury Bond Call,
Strike price 96, Expiration 09/19/00 114,000 908
September 2000 Treasury Bond Call,
Strike price 98, Expiration 09/19/00 235,100 1,286
----------
TOTAL OPTIONS
(cost of $5,411) 4,044
----------
TOTAL INVESTMENTS
(cost of $2,083,120) (l) 2,011,363
----------
Short-Term Obligations - 1.2% PAR VALUE
--------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (m)
CO State Educational & Cultural
Facilities Authority,
National Cable Television Center,
Series 1999,
4.250% 10/1/06 $ 900 $ 900
CO State Housing Finance
Authority, Windridge
Apartments, Series 1998,
4.100% 2/15/28 300 300
IA Ottumwa,
Ottumwa Regional Health Center,
Inc., Series 1998,
4.250% 10/1/06 1,375 1,375
IA State Finance Authority,
Diocese of Sioux City,
Series 1999,
4.250% 3/1/19 2,125 2,125
IA State Higher Education Loan
Authority, American Institute
of Business, Series 1998,
4.350% 11/1/13 755 755
IA State Higher Education Loan
Authority, St. Ambrose University,
Series 1999,
4.350% 10/1/09 3,300 3,300
IA State Higher Education Loan
Authority, Briar Cliff College,
Series 1999,
4.250% 6/1/19 430 430
IA Woodbury County,
Siouxland Medical Educational
Foundation, Series 1996,
4.300% 11/1/16 1,200 1,200
ID State Health Facilities Authority,
St. Lukes Regional Medical Facility,
Series 1995,
4.400% 5/1/22 1,030 1,030
IL State Development Finance
Authority, Council for Jewish Elderly,
Series 1995,
4.300% 3/1/15 400 400
IL State Educational Facilities
Authority,
4.200% 12/1/25 1,020 1,020
IN Allen County,
Golden Years Homestead, Inc.,
Series 1996,
4.250% 8/1/21 1,000 1,000
See notes to investment portfolio.
20
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands)
Short-Term Obligations (continued) PAR VALUE
--------------------------------------------------------------------------------
IN Portage,
Pedcor Investments, Series B,
4.400% 8/1/30 $ 370 $ 370
IN State Hospital Equipment
Finance Authority, Series A,
4.250% 12/1/15 400 400
LA State Public Facility Authority,
Kenner Hotel L.P.,
Series 1985,
4.450% 12/1/15 1,300 1,300
MN Minneapolis:
Series 1996,
4.100% 12/1/06 4,500 4,500
Series 1999,
4.100% 12/1/18 900 900
NY New York City Municipal Water
Finance Authority,
Series 1995 A,
4.450% 6/15/25 600 600
NY New York City,
4.450% 10/1/20 500 500
NY State Energy Research &
Development Authority, Niagara
Mohawk Power Corp., Series B,
4.500% 7/1/27 600 600
SD Lower Brule Sioux Tribe,
Series 1999,
4.250% 12/1/11 500 500
TX Gulf Coast Waste Disposal
Authority, Amoco Corp.,
Series 1994,
4.550% 6/1/24 1,400 1,400
TX Tarrant County Housing Finance
Corp., Sierra Springs Apartments,
Series 1999,
4.250% 2/15/27 800 800
----------
25,705
----------
Other Assets & Liabilities, Net - 1.5% 29,906
--------------------------------------------------------------------------------
NET ASSETS - 100% $2,066,974
==========
Notes to Investment Portfolio:
--------------------------------------------------------------------------------
(a) Zero coupon bonds.
(b) This is a restricted security which was acquired on December 3, 1992 at a
cost of $1,545. This security represents 0.1% of the Fund's net assets at
May 31, 2000.
(c) This issuer is in default of certain debt covenants. Income is not being
accrued.
(d) Accrued interest accumulates in the value of the security and is payable
at redemption. The value of this security represents fair value as
determined under procedures approved by the Trustees.
(e) This security is exempt from registration under Rule 144A of the
Securities Act of 1933. This security may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At May 31,
2000, the value of this security amounted to $72,374 or 3.5% of net
assets.
(f) This is a restricted security which was acquired on December 1, 1998 at a
cost of $1,607. This security represents 0.0% of the Fund's net assets at
May 31, 2000.
(g) The value of this security represents fair value as determined in good
faith under the direction of the Trustees.
(h) The Trust has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
the principal and interest.
(i) These securities, or a portion thereof, with a total market value of
$57,937, are being used to collateralize the open futures contracts
indicated below.
(j) This is a restricted security which was acquired on March 22, 1994 at a
cost of $1,350. This security represents 0.1% of the Fund's net assets at
May 31, 2000.
(k) This is a restricted security which was acquired on May 30, 2000 at a cost
of $8,000. This security represents 0.4% of the Fund's net assets at May
31, 2000.
(l) Cost for federal income tax purposes is the same.
(m) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as May 31, 2000.
Long futures contracts open at May 31, 2000:
Par value Unrealized
covered by Expiration appreciation
Type contracts month at 5/31/00
--------------- -------------- ------------ ---------------
Treasury Bond 56,000 September $ 508
---------------
Acronym Name
------- --------------------------
IFRN Inverse Floating Rate Note
See notes to financial statements.
21
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets & Liabilities
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
(In thousands except for per share amounts and footnotes)
Assets
Investments at value (cost $2,083,120) $2,011,363
Short-term obligations 25,705
----------
2,037,068
Receivable for:
Interest $39,989
Investments sold 10,327
Variation margin on futures 543
Fund shares sold 160
Other 260 51,279
------- ----------
Total Assets 2,088,347
Liabilities
Payable for:
Investments purchased 12,165
Fund shares repurchased 3,923
Distributions 3,411
Accrued:
Management fee 911
Bookkeeping fee 52
Transfer agent fee 335
Deferred Trustees fees 49
Other 527
-------
Total Liabilities 21,373
----------
Net Assets $2,066,974
==========
Net asset value & redemption price per share -
Class A ($1,827,949/148,468) $ 12.31 (a)
==========
Maximum offering price per share -
Class A ($12.31/0.9525) $ 12.92 (b)
==========
Net asset value & offering price per share -
Class B ($234,216/19,025) $ 12.31 (a)
==========
Net asset value & offering price per share -
Class C ($4,809/391) $ 12.31 (a)
==========
Composition of Net Assets
Capital paid in $2,191,034
Overdistributed net investment income (1,904)
Accumulated net realized loss (50,907)
Net unrealized appreciation (depreciation) on:
Investments (71,757)
Open futures contracts 508
----------
$2,066,974
==========
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
--------------------------------------------------------------------------------
Statement of Operations
--------------------------------------------------------------------------------
For the Six Months Ended May 31, 2000 (Unaudited)
(In thousands)
Investment Income
Interest $ 71,246
Expenses
Management fee $ 5,726
Service fee 2,699
Distribution fee - Class B 961
Distribution fee - Class C 19
Transfer agent 1,789
Bookkeeping fee 318
Registration fee 30
Audit fee 11
Trustees fee 61
Custodian fee (a)
Reports to shareholders 27
Legal fee 70
Other 122
--------
11,833
Fees waived by the Distributor - Class C (4) 11,829
-------- --------
Net Investment Income 59,417
--------
Net Realized & Unrealized Gain (Loss)
on Portfolio Positions
Net realized loss on:
Investments (20,247)
Closed futures contracts (1,624)
--------
Net Realized Loss (21,871)
Net change in unrealized appreciation /depreciation
during the period on:
Investments (42,893)
Open futures contracts 508
--------
Net Change in Unrealized
Appreciation/Depreciation (42,385)
--------
Net Loss (64,256)
--------
Decrease in Net Assets from Operations $ (4,839)
========
(a) Rounds to less than one.
See notes to financial statements.
22
<PAGE>
--------------------------------------------------------------------------------
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
(In thousands)
(Unaudited)
Six months Year
ended ended
May 31, November 30,
----------------------------
Increase (Decrease) in Net Assets 2000 1999
--------------------------------------------------------------------------------
Operations:
Net investment income $ 59,417 $ 131,317
Net realized loss (21,871) (17,682)
Net change in unrealized
appreciation/depreciation (42,385) (214,317)
---------- ----------
Net Decrease from Operations (4,839) (100,682)
Distributions:
From net investment income - Class A (51,278) (115,905)
In excess of net investment income
- Class A -- (2,857)
From net realized gains - Class A -- (30,692)
In excess of net realized gains - Class A -- (9,502)
From net investment income - Class B (5,872) (13,967)
In excess of net investment income
- Class B -- (344)
From net realized gains - Class B -- (4,419)
In excess of net realized gains - Class B -- (1,368)
From net investment income - Class C (120) (193)
In excess of net investment income
- Class C -- (5)
From net realized gains - Class C -- (22)
In excess of net realized gains - Class C -- (7)
---------- ----------
(62,109) (279,963)
---------- ----------
Fund Share Transactions:
Receipts for shares sold - Class A 246,680 647,353
Value of distributions reinvested - Class A 27,998 94,482
Cost of shares repurchased - Class A (425,952) (933,598)
---------- ----------
(151,274) (191,763)
---------- ----------
Receipts for shares sold - Class B 3,135 17,692
Value of distributions reinvested - Class B 3,127 12,150
Cost of shares repurchased - Class B (43,893) (69,705)
---------- ----------
(37,631) (39,863)
---------- ----------
Receipts for shares sold - Class C 933 4,600
Value of distributions reinvested - Class C 105 195
Cost of shares repurchased - Class C (707) (1,225)
---------- ----------
331 3,570
---------- ----------
Net Decrease from Fund
Share Transactions (188,574) (228,056)
---------- ----------
Total Decrease (250,683) (508,019)
Net Assets
Beginning of period 2,317,657 2,825,676
---------- ----------
End of period (net of overdistributed
income of $1,904 and $4,051,
respectively) $2,066,974 $2,317,657
========== ==========
Number of Fund Shares
Sold - Class A 19,854 48,014
Issued for distributions reinvested - Class A 2,251 6,984
Repurchased - Class A (34,173) (69,593)
---------- ----------
(12,068) (14,595)
---------- ----------
Sold - Class B 252 1,311
Issued for distributions reinvested - Class B 251 896
Repurchased - Class B (3,523) (5,242)
---------- ----------
(3,020) (3,035)
---------- ----------
Sold - Class C 75 335
Issued for distributions reinvested - Class C 8 15
Repurchased - Class C (56) (92)
---------- ----------
27 258
---------- ----------
See notes to financial statements.
23
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
Note 1. Interim Financial Statements
In the opinion of management of Liberty Tax-Exempt Fund (formerly Colonial
Tax-Exempt Fund) (the Fund), a series of Liberty Trust IV, the accompanying
financial statements contain all normal and recurring adjustments necessary for
the fair presentation of the financial position of the Fund at May 31, 2000, and
the results of its operations, the changes in its net assets and the financial
highlights for the six months then ended.
Note 2. Accounting Policies
Organization
The Fund is a diversified portfolio of a Massachusetts business trust,
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Fund's investment objective is to seek as
high a level of after-tax total return as is consistent with prudent risk, by
pursuing current income exempt from federal income tax and opportunities for
long-term appreciation from a portfolio primarily invested in investment-grade
municipal bonds. The Fund may issue an unlimited number of shares. The Fund
offers three classes of shares: Class A, Class B and Class C. Class A shares are
sold with a front-end sales charge. A 1.00% contingent deferred sales charge is
assessed on redemptions made within eighteen months on an original purchase of
$1 million to $5 million. Class B shares are subject to an annual distribution
fee and a contingent deferred sales charge. Effective February 1, 2000, Class B
shares will convert to Class A shares as follows:
Converts to
Original purchase Class A shares
-------------------------------- --------------
Less than $250,000 8 years
$250,000 to less than $500,000 4 years
$500,000 to less than $1,000,000 3 years
Class C shares are subject to a contingent deferred sales charge on redemptions
made within one year after purchase and an annual distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are consistently followed by the Fund in
the preparation of its financial statements.
Security valuation and transactions
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
When management deems it appropriate, an over-the-counter or exchange bid
quotation is used.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
Determination of class net asset values and financial highlights
All income, expenses (other than Class B and Class C distribution fees), and
realized and unrealized gains (losses), are allocated to each class
proportionately on a daily basis for purposes of determining the net asset value
of each class.
Class B and Class C per share data and ratios are calculated by adjusting the
expense and net investment income per share data and ratios for the Fund for the
entire period by the distribution fees for Class B and Class C shares only.
Federal income taxes
Consistent with the Fund's policy to qualify as a regulated investment company
and to distribute all of its taxable and tax-exempt income, no federal income
tax has been accrued.
Interest income, debt discount and premium
Interest income is recorded on the accrual basis. Original issue discount is
accreted to interest income over the life of a security with a corresponding
increase in the cost basis; market discount is not accreted. Premium is
amortized against interest income with a corresponding decrease in the cost
basis.
24
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
Distributions to shareholders
The Fund declares and records distributions daily and pays monthly.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
Note 3. Fees and Compensation Paid to Affiliates
Management fee
Colonial Management Associates, Inc. (the Advisor) is the investment Advisor of
the Fund and furnishes accounting and other services and office facilities for a
monthly fee based on each Fund's pro-rata portion of the combined average net
assets of the Fund, Liberty Tax-Exempt Insured Fund and Liberty High Yield
Municipal Fund as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $1 billion 0.60%
Next $2 billion 0.55%
Next $1 billion 0.50%
Over $4 billion 0.45%
The management fee applicable to the Fund was reduced by 0.05% annually of the
average net assets of the Fund between $2 billion and $3 billion.
In addition, a further reduction was made based on the following schedule:
Cumulative Annualized
Effective Date Reduction
--------------- ---------------------
January 1, 1996 0.01%
April 1, 1996 0.02%
July 1, 1996 0.03%
October 1, 1996 0.04%
Bookkeeping fee
The Advisor provides bookkeeping and pricing services for $27,000 per year plus
a percentage of the Fund's average net assets as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $50 million No Charge
Next $950 million 0.035%
Next $1 billion 0.025%
Next $1 billion 0.015%
Over $3 billion 0.001%
Transfer agent fee
Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of the Advisor,
provides shareholder services for a monthly fee equal to 0.13% annually of the
Fund's average net assets and receives reimbursement for certain out-of-pocket
expenses.
Effective January 1, 2000, the Transfer Agent Fee was changed to a fee comprised
of 0.07% annually of average net assets plus charges based on the number of
shareholder accounts and transactions.
Underwriting discounts, service and distribution fees
Liberty Funds Distributor, Inc. (the Distributor), a subsidiary of the Advisor,
is the Fund's principal underwriter. During the six months ended May 31, 2000,
the Fund has been advised that the Distributor retained net underwriting
discounts of $1,808,542 on sales of the Fund's Class A shares and received
contingent deferred sales charges (CDSC) of $832, $335,271 and $3,361, on Class
A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee to
the Distributor equal to 0.25% annually of the Fund's net assets as of the 20th
of each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% annually of the average net assets attributable to
Class B and Class C shares only. The Distributor has voluntarily agreed to waive
a portion of the Class C share distribution fee so that it will not exceed 0.60%
annually.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
Other
The Fund pays no compensation to its officers, all of whom are employees of the
Advisor.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
The Fund has an agreement with its custodian bank under which $26,134 of
custodian fees were reduced by balance credits applied during the six months
ended May 31, 2000. The Fund could have invested a portion of the assets
utilized in connection with the expense offset arrangements in an income
producing asset if it had not entered into such agreements.
25
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
May 31, 2000 (Unaudited)
Note 4. Portfolio Information
Investment activity
During the six months ended May 31, 2000, purchases and sales of investments,
other than short-term obligations, were $956,878,750 and $1,243,860,547
respectively.
Unrealized appreciation (depreciation) at May 31, 2000, based on cost of
investments for both financial statements and federal income tax purposes was
approximately:
Gross unrealized appreciation $41,114,000
Gross unrealized depreciation (112,871,000)
------------
Net unrealized depreciation $(71,757,000)
============
Capital Loss Carryforwards
At November 30, 1999 capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
Year of Capital loss
expiration carryforward
---------- --------------
2007 $ 29,459,700
Other
The Fund has greater than 10% of its net assets at May 31, 2000 invested in New
York.
There are certain risks arising from geographic concentration in any state.
Certain revenue or tax related events in a state may impair the ability of
certain issuers of municipal securities to pay principal and interest on their
obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
The Fund may purchase or sell municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these instruments
to hedge against the effects of changes in the value of portfolio securities due
to anticipated changes in interest rates and/or market conditions, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the Fund and not for trading
purposes. The use of futures contracts and options involves certain risks, which
include (1) imperfect correlation between the price movement of the instruments
and the underlying securities, (2) inability to close out positions due to
different trading hours or the temporary absence of a liquid market for either
the instrument or the underlying securities or (3) an inaccurate prediction by
the Advisor of the future direction of interest rates. Any of these risks may
involve amounts exceeding the amount recognized in the Fund's Statement of
Assets and Liabilities at any given time.
Note 5. Line of Credit
The Fund may borrow up to 33 1/3% of its net assets under a line
of credit for temporary or emergency purposes. Any borrowings bear interest at
one of the following options determined at the inception of the loan: (1)
federal funds rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR
offshore loan rate plus 1/2 of 1%. There were no borrowings under the line of
credit during the six months ended May 31, 2000.
26
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months ended May 31, 2000
-----------------------------------------------
Class A Class B Class C
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value - Beginning of Period $ 12.670 $ 12.670 $ 12.670
---------- ---------- ----------
Income from Investment Operations:
Net investment income 0.346 0.299 0.308(a)
Net realized and unrealized loss (0.371) (0.371) (0.371)
---------- ---------- ----------
Total from Investment Operations (0.025) (0.072) (0.063)
---------- ---------- ----------
Less Distributions Declared to Shareholders:
From net investment income (0.335) (0.288) (0.297)
---------- ---------- ----------
Net Asset Value - End of Period $ 12.310 $ 12.310 $ 12.310
---------- ---------- ----------
Total return (b)(c) (0.19%) (0.57%) (0.50%)(d)
========== ========== ==========
Ratios to Average Net Assets:
Expenses (e)(f) 1.00% 1.75% 1.60%(a)
Net investment income (e)(f) 5.56% 4.81% 4.96%(a)
Portfolio turnover 5% 5% 5%
Net assets at end of period (in millions) $ 1,828 $ 234 $ 5
</TABLE>
(a) Net of fees waived by the Distributor which amounted to $0.009 per share
and 0.15% (annualized).
(b) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(c) Not annualized.
(d) Had the Distributor not waived a portion of expenses, total return would
have been reduced.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(f) Annualized.
<TABLE>
<CAPTION>
Year ended November 30, 1999
--------------------------------------------------
Class A Class B Class C
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value - Beginning of Period $ 14.110 $ 14.110 $ 14.110
---------- ---------- ----------
Income from Investment Operations:
Net investment income 0.680 0.579 0.599(a)
Net realized and unrealized loss (1.197) (1.197) (1.197)
---------- ---------- ----------
Total from Investment Operations (0.517) (0.618) (0.598)
---------- ---------- ----------
Less Distributions Declared to Shareholders:
From net investment income (0.675) (0.577) (0.596)
In excess of net investment income (0.017) (0.014) (0.015)
From net realized gains (0.176) (0.176) (0.176)
In excess of net realized gains (0.055) (0.055) (0.055)
---------- ---------- ----------
Total Distributions Declared to Shareholders (0.923) (0.822) (0.842)
---------- ---------- ----------
Net asset value - End of period $ 12.670 $ 12.670 $ 12.670
========== ========== ==========
Total return (b) (3.87%) (4.59%) (4.45%)(c)
========== ========== ==========
Ratios to Average Net Assets:
Expenses (d) 0.99% 1.74% 1.59%(a)
Net investment income (d) 5.09% 4.34% 4.49%(a)
Portfolio turnover 37% 37% 37%
Net assets at end of period (in millions) $ 2,034 $ 279 $ 5
</TABLE>
(a) Net of fees waived by the Distributor which amounted to $0.020 per share
and 0.15%.
(b) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(c) Had the Distributor not waived a portion of expenses, total return would
have been reduced.
(d) The benefits derived from custody credits and directed brokerage
arrangements had an impact of 0.01%.
27
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended November 30, 1998
--------------------------------------------------
Class A Class B Class C
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value - Beginning of Period $ 13.750 $ 13.750 $ 13.750
---------- ---------- ----------
Income from Investment Operations:
Net investment income 0.713 0.605 0.627(a)
Net realized and unrealized gain 0.391 0.391 0.391
---------- ---------- ----------
Total from Investment Operations 1.104 0.996 1.018
---------- ---------- ----------
Less Distributions Declared to Shareholders:
From net investment income (0.726) (0.621) (0.642)
In excess of net investment income (0.018) (0.015) (0.016)
---------- ---------- ----------
Total Distributions Declared to Shareholders (0.744) (0.636) (0.658)
---------- ---------- ----------
Net Asset Value - End of Period $ 14.110 $ 14.110 $ 14.110
---------- ---------- ----------
Total return (b) 8.22% 7.40% 7.56%(c)
========== ========== ==========
Ratios to Average Net Assets:
Operating expenses (d) 0.95% 1.70% 1.55%(a)
Interest expense (e) (e) (e)
Total expenses (d) 0.95% 1.70% 1.55%(a)
Net investment income (d) 5.08% 4.33% 4.48%(a)
Portfolio turnover 26% 26% 26%
Net assets at end of period (in millions) $ 2,470 $ 354 $ 1
</TABLE>
(a) Net of fees waived by the Distributor which amounted to $0.021 per share
and 0.15%.
(b) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(c) Had the Distributor not waived a portion of expenses, total return would
have been reduced.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(e) Rounds to less than 0.00%.
28
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended November 30, 1997
----------------------------------------------------
Class A Class B Class C(a)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value - Beginning of Period $ 13.550 $ 13.550 $ 13.860
---------- ---------- ----------
Income from Investment Operations:
Net investment income 0.743 0.642 0.218
Net realized and unrealized gain (loss) 0.194 0.194 (0.114)(b)
---------- ---------- ----------
Total from Investment Operations 0.937 0.836 0.104
---------- ---------- ----------
Less Distributions Declared to Shareholders:
From net investment income (0.737) (0.636) (0.214)
In excess of net investment income -- -- --
---------- ---------- ----------
Total Distributions Declared to Shareholders (0.737) (0.636) (0.214)
---------- ---------- ----------
Net Asset Value - End of Period $ 13.750 $ 13.750 $ 13.750
---------- ---------- ----------
Total return (c) 7.16% 6.37% 0.77%(d)
========== ========== ==========
Ratios to Average Net Assets:
Expenses (e) 0.98% 1.73% 1.59%(f)
Net investment income (e) 5.45% 4.70% 4.76%(f)
Portfolio turnover 39% 39% 39%
Net assets at end of period (in millions) $ 2,551 $ 380 $ (g)
</TABLE>
(a) Class C shares were initially offered on August 1, 1997. Per share date
reflects activity from that date.
(b) The amount shown for a share outstanding does not correspond with the
aggregate net gain on investments for the period due to the timing of
sales and repurchases of Fund shares in relation to fluctuating market
values of the investments of the Fund.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Not annualized.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(f) Annualized.
(g) Rounds to less than one million.
29
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended November 30
------------------------------------------------------------------------
1996 1995
------------------------------------------------------------------------
Class A Class B Class A Class B
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value - Beginning of Period $ 13.720 $ 13.720 $ 12.180 $ 12.180
---------- ---------- ---------- ----------
Income from Investment Operations
Net investment income 0.756 0.656 0.771 0.673
Net realized and unrealized gain (loss) (0.171) (0.171) 1.535 1.535
---------- ---------- ---------- ----------
Total from Investment Operations 0.585 0.485 2.306 2.208
---------- ---------- ---------- ----------
Less Distributions Declared to Shareholders
From net investment income (0.755) (0.655) (0.766) (0.668)
---------- ---------- ---------- ----------
Net Asset Value, End of Period $ 13.550 $ 13.550 $ 13.720 $ 13.720
========== ========== ========== ==========
Total return (a) 4.47% 3.70% 19.35% 18.47%
========== ========== ========== ==========
Ratios to Average Net Assets
Expenses 0.99%(b) 1.74%(b) 1.01%(b) 1.76%(b)
Net investment income 5.61%(b) 4.86%(b) 5.82%(b) 5.07%(b)
Portfolio turnover 40% 40% 41% 41%
Net assets at end of period (in millions) $ 2,818 $ 427 $ 3,111 $ 469
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
30
<PAGE>
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Trustees & Transfer Agent
--------------------------------------------------------------------------------
Tom Bleasdale
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
John V. Carberry
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
Lora S. Collins
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
James E. Grinnell
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
Richard W. Lowry
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
Salvatore Macera
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
William E. Mayer
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
James L. Moody, Jr.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director
Hannaford Bros. Co.)
John J. Neuhauser
Academic Vice President and Dean of Faculties, Boston College (former Dean,
Boston College School of Management)
Thomas E. Stitzel
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
Anne-Lee Verville
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
--------------------------------------------------------------------------------
Important Information About This Report
The Transfer Agent for Liberty Tax-Exempt Fund is:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
800-345-6611
The Fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call 800-426-3750 and additional reports will
be sent to you.
This report has been prepared for shareholders of Liberty Tax-Exempt Fund. This
report may also be used as sales literature when preceded or accompanied by the
current prospectus, which provides details of sales charges, investment
objectives and operating policies of the Fund and with the most recent copy of
the Liberty Funds Distributor, Inc. Performance Update.
Semiannual Report:
Liberty Tax-Exempt Fund
<PAGE>
Liberty offers the independent thinking and collective strength of six financial
specialists. Our distinguished product line helps financial advisors and their
clients build diversified investment portfolios for long-term financial goals.
LIBERTY
--------
FUNDS
ALL-STAR Institutional money management approach for individual investors.
COLONIAL Fixed income and value style equity investing.
CRABBE A contrarian approach to fixed income and equity investing.
HUSON
NEWPORT A leader in international investing.(SM)
STEIN ROE Solutions for growth and income investing.
ADVISOR
[LOGO] KEYPORT A leading provider of innovative annuity products.
Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
Before you invest, consult your financial advisor.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
--------------------------------------------------------------------------------
LIBERTY TAX-EXEMPT FUND Semiannual Report
--------------------------------------------------------------------------------
[LOGO] LIBERTY
--------
FUNDS
ALL-STAR * COLONIAL * CRABBE HUSON * NEWPORT * STEIN ROE ADVISOR
753-03/835B-0600 (7/00) 00/1185
