1998 SEMIANNUAL REPORT
IDS
High Yield
Tax-Exempt
Fund
(icon of) shield with basket of apples enclosed
The goal of IDSHigh Yield
Tax-Exempt Fund, Inc. is to
provide high yield generally
exempt from federal income taxes.
American Express Financial Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
(icon of) shield with basket of apples enclosed
More yield,
less taxes
Most of the time, making money means paying taxes. But investors still can enjoy
income that generally is free from federal taxes by taking advantage of
tax-exempt bonds. High Yield Tax-Exempt Fund strives to provide the maximum
amount of tax-free income by focusing on municipal bonds that pay above-average
interest. However, certain income may be subject to state or local or the
alternative minimum tax. To reduce the investment risk, the Fund holds a large,
widely diversified portfolio of bonds providing protection to shareholders
seeking to avoid the impact of default by an individual bond. The result may be
a superior after-tax return for investors in higher tax brackets.
Contents
From the chairman 3
From the portfolio manager 3
The Portfolio's ten largest holdings 5
Financial statements (Fund) 6
Notes to financial statements (Fund) 9
Financial statements (Portfolio) 19
Notes to financial statements (Portfolio) 22
Investments in securities 28
Board members and officers 67
IDS mutual funds 68
<PAGE>
To our shareholders
From the chairman
If you're an experienced investor, you know that the past few years have
been unusually strong in many financial markets. Perhaps just as
important, history shows that bull markets don't last forever. Though
they're often unpredictable, declines -- whether they're brief or
long-lasting, moderate or substantial -- are always a possibility. We saw
evidence of that last October, when declines in certain Asian markets
spawned a sharp drop in several financial markets worldwide, including the
U.S.
That fact reinforces the need for investors to review periodically their
long-term goals and examine whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
William R. Pearce
(picture of) William R. Pearce
William R. Pearce
Chairman of the board
<PAGE>
From the portfolio manager
A largely favorable environment for municipal bonds prevailed during the
past six months, enabling IDS High Yield Tax-Exempt Fund to enjoy a
productive period. For the first half of the fiscal year -- December 1997
through May 1998 period -- the Fund's Class A shares generated a total
return, which includes net asset value change and dividends, of 3.5%.
Consistent with the Fund's investment objective, dividend payments to
shareholders made up the greatest portion of the return.
The driving force in the bond market early in the period was the financial
turmoil that hit Asia last October. Investors quickly concluded that it
would ultimately result in slower economic growth in the United States
and, thus, a continuance of the low rate of inflation. That potential
scenario sent long-term interest rates lower through early January,
enhancing bond values in the process. (Falling rates boost bond prices,
while rising rates depress them.)
The ensuing months, however, proved to be somewhat less productive, as
investors weighed the possibility that the economy might shrug off the
Asian impact and cruise along at a pace that would lead to a pickup in
inflation. In response, long-term interest rates bobbed up and down in a
narrow range, providing neither sustained help nor harm to bond prices.
Surging supply
As for the municipal market in particular, it was flooded with a huge
supply of bonds, as issuers readily took advantage of an environment that
allowed them to issue securities paying historically low interest rates.
The heavy supply helped limit any increase in bond prices.
The low interest-rate environment also meant a slight decline in the
Fund's dividend, which has been the trend in recent years. Although the
Fund does invest in below-investment-grade municipal bonds (about 20% of
assets during the six months) to enhance its dividend payout, I haven't
lowered the Fund's credit-quality standards to counter the declining-rate
pattern. My reasoning is that a modest increase in the Fund's dividend
wouldn't justify the increased risk inherent in adding more lower-grade
bonds.
The only change to the portfolio worth noting was a moderate lengthening
of its duration early in the period. (Duration determines how sensitive
the Fund's net asset value is to interest-rate fluctuations. A longer
duration increases the sensitivity.) That strategy paid off when rates
came down over the winter.
My near-term outlook for the bond market remains positive, as I expect the
Asian effect to restrain the economy and inflation here at home over the
summer. Later in the year, though, I think the economy could strengthen,
putting some upward pressure on inflation and, consequently, interest
rates.
Kurt Larson
(picture of) Kurt Larson
Kurt Larson
Portfolio manager
<PAGE>
To our shareholders
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1998 $4.67
Nov. 30, 1997 $4.64
Increase $0.03
Distributions
Dec. 1, 1997 - May 31, 1998
From income $0.13
From capital gains $ --
Total distributions $0.13
Total return* +3.5%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1998 $4.67
Nov. 30, 1997 $4.64
Increase $0.03
Distributions
Dec. 1, 1997 - May 31, 1998
From income $0.11
From capital gains $ --
Total distributions $0.11
Total return* +3.2%**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1998 $4.67
Nov. 30, 1997 $4.64
Increase $0.03
Distributions
Dec. 1, 1997 - May 31, 1998
From income $0.13
From capital gains $ --
Total distributions $0.13
Total return* +3.6%**
*The prospectus discusses the effect of sales charges, if any, on the
various classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
<PAGE>
The Portfolio's ten largest holdings
Percent Value
(of Portfolio's net assets) (as of May 31, 1998)
New York City Municipal Water Financial Authority
Water & Sewer System Revenue Bonds Series A
6.25% 2021 .97% $58,523,640
Eastern North Carolina Municipal Power Agency
Power System Refunding Revenue Bonds Series 1991A
5.75% 2019 .92 55,367,950
New Hampshire Industrial Development Authority
Pollution Control Revenue Bonds
State Public Service Series 1991B
7.50% 2021 .91 54,696,119
Northern California Power Agency Geothermal 3
Revenue Bonds
5.00% 2009 .82 49,640,460
Utah Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series 1996C
5.70% 2017 .80 48,360,720
Monroe County Michigan Pollution Control
Revenue Bonds Detroit Edison A.M.T.
7.75% 2019 .72 43,253,455
Puerto Rico Electric Power Agency Revenue Bonds
Series N
6.00% 2010 .68 40,705,600
Washington Public Power Supply System
Nuclear Project 1 Revenue Bonds Series 1990A
6.00% 2017 .67 40,432,333
Texas Alliance Airport Authority Special Facility
Revenue Bonds American Airlines Series 1990 A.M.T.
7.50% 2029 .67 40,356,844
Dormitory Authority New York City University System
Consolidated 2nd General Resource Revenue Bonds Series 1990C
6.00% 2016 .67 40,142,614
Note: Certain of the Portfolio's investment income may be subject to the
Alternative Minimum Tax (A.M.T.). For further detail about these holdings,
please refer to the section entitled "Investments in securities" herein.
The ten holdings listed here make up 7.83% of the Portfolio's net assets
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS High Yield Tax-Exempt Fund, Inc.
May 31, 1998
Assets
(Unaudited)
<S> <C>
Investment in Tax-Free High Yield Portfolio (Note 1) $6,018,029,285
--------------
Liabilities
Dividends payable to shareholders 1,555,737
Accrued distribution fee 4,695
Accrued service fee 28,811
Accrued transfer agency fee 6,561
Accrued administrative services fee 4,938
Other accrued expenses 51,496
------
Total liabilities 1,652,238
---------
Net assets applicable to outstanding capital stock $6,016,377,047
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 12,876,422
Additional paid-in capital 5,514,251,517
Undistributed net investment income 938,991
Accumulated net realized gain (loss) (Note 4) (115,653,593)
Unrealized appreciation (depreciation) on investments 603,963,710
-----------
Total-- representing net assets applicable to outstanding capital stock $6,016,377,047
==============
Net assets applicable to outstanding shares: Class A $5,779,661,091
Class B $ 229,122,341
Class Y $ 7,593,615
Net asset value per share of outstanding capital stock: Class A shares 1,236,976,475 $ 4.67
Class B shares 49,040,217 $ 4.67
Class Y shares 1,625,509 $ 4.67
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
IDS High Yield Tax-Exempt Fund, Inc.
Six months ended May 31, 1998
Investment income
(Unaudited)
Income:
<S> <C>
Interest $188,273,801
------------
Expenses (Note 2):
Expenses allocated from Tax-Free High Yield Portfolio 13,272,921
Distribution fee-- Class B 785,052
Transfer agency fee 1,206,409
Incremental transfer agency fee-- Class B 4,202
Service fee
Class A 4,963,118
Class B 181,955
Class Y 1,977
Administrative services fees and expenses 910,200
Compensation of board members 8,019
Postage 122,114
Registration fees 49,362
Reports to shareholders 7,857
Audit fees 5,750
Other 7,105
-----
Total expenses 21,526,041
Earnings credits on cash balances (Note 2) (381,519)
--------
Total net expenses 21,144,522
----------
Investment income (loss) -- net 167,129,279
-----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 3,865,909
Financial futures contracts (9,698,272)
----------
Net realized gain (loss) on investments (5,832,363)
Net change in unrealized appreciation (depreciation) on investments 46,932,289
----------
Net gain (loss) on investments 41,099,926
----------
Net increase (decrease) in net assets resulting from operations $208,229,205
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS High Yield Tax-Exempt Fund, Inc.
Operations and distributions
May 31, 1998 Nov. 30, 1997
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $ 167,129,279 $ 346,040,291
Net realized gain (loss) on investments (5,832,363) (34,199,942)
Net change in unrealized appreciation (depreciation) on investments 46,932,289 137,305,411
---------- -----------
Net increase (decrease) in net assets resulting from operations 208,229,205 449,145,760
----------- -----------
Distributions to shareholders from:
Net investment income
Class A (161,465,236) (337,662,833)
Class B (5,100,714) (8,167,910)
Class Y (112,749) (311,325)
-------- --------
Total distributions (166,678,699) (346,142,068)
------------ ------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 898,232,626 1,249,451,657
Class B shares 49,205,695 72,253,356
Class Y shares 7,950,043 29,199,158
Reinvestment of distributions at net asset value
Class A shares 111,067,593 231,303,569
Class B shares 4,103,666 6,572,876
Class Y shares 354 687
Payments for redemptions
Class A shares (1,055,065,571) (1,795,576,283)
Class B shares (Note 2) (15,948,972) (30,024,379)
Class Y shares (9,147,566) (41,363,058)
---------- -----------
Increase (decrease) in net assets from capital share transactions (9,602,132) (278,182,417)
---------- ------------
Total increase (decrease) in net assets 31,948,374 (175,178,725)
Net assets at beginning of period 5,984,428,673 6,159,607,398
------------- -------------
Net assets at end of period $6,016,377,047 $5,984,428,673
============== ==============
Undistributed net investment income $ 938,991 $ 488,411
-------------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS High Yield Tax-Exempt Fund, Inc.
(Unaudited as to May 31, 1998)
1
Summary of
significant
accounting policies
The Fund is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. The
Fund has 10 billion authorized shares of capital stock. The Fund offers
Class A, Class B and Class Y shares. Class A shares are sold with a
front-end sales charge. Class B shares may be subject to a contingent
deferred sales charge and such shares automatically convert to Class A
shares during the ninth calendar year of ownership. Class Y shares have no
sales charge and are offered only to qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation and
other rights, and the same terms and conditions, except that the level of
distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative
net assets.
Investment in Tax-Free High Yield Portfolio
Effective May 13, 1996, the Fund began investing all of its assets in the
Tax-Free High Yield Portfolio (the Portfolio), a series of Tax-Free Income
Trust, an open-end investment company that has the same objectives as the
Fund. This was accomplished by transferring the Fund's assets to the
Portfolio in return for a proportionate ownership interest in the
Portfolio. Tax-Free High Yield Portfolio invests primarily in medium- and
lower-quality bonds and notes issued by or on behalf of state and local
governmental units whose interest generally is exempt from federal income
tax. The Portfolio also may invest in derivative instruments and money
market instruments.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value that is
equal to the Fund's proportionate ownership interest in the net assets of
the Portfolio. The percentage of the Portfolio owned by the Fund at May
31, 1998 was 99.99%. Valuation of securities held by the Portfolio is
discussed in Note 1 of the Portfolio's "Notes to financial statements,"
which are included elsewhere in this report.
Use of estimates
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 increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to the shareholders, no provision for
income or excise taxes is required.
Net investment income (loss) and net realized gains (losses) allocated
from the Portfolio may differ for financial statement and tax purposes
primarily because of the deferral of losses on certain futures contracts
and losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year
that the income or realized gains (losses) were recorded by the Fund.
Dividends to shareholders
Dividends from net investment income, declared daily and payable monthly,
are reinvested in additional shares of the Fund at net asset value or
payable in cash. Capital gains, when available, are distributed along with
the last income dividend of the calendar year.
2
Expenses and
sales charges
In addition to the expenses allocated from the Portfolio, the Fund accrues
its own expenses as follows:
Effective March 20, 1995, the Fund entered into an agreement with American
Express Financial Corporation (AEFC) for providing administrative
services. Under its Administrative Services Agreement, the Fund pays AEFC
a fee for administration and accounting services at a percentage of the
Fund's average daily net assets in reducing percentages from 0.04% to
0.02% annually. Additional administrative service expenses paid by the
Fund are office expenses, consultants' fees and compensation of officers
and employees. Under this agreement, the Fund also pays taxes, audit and
certain legal fees, registration fees for shares, compensation of board
members, corporate filing fees, organizational expenses and any other
expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client
Service Corporation (AECSC) maintains shareholder accounts and records.
The Fund pays AECSC an annual fee per shareholder account for this service
as follows:
o Class A $15.50
o Class B $16.50
o Class Y $15.50
Also effective March 20, 1995, the Fund entered into agreements with
American Express Financial Advisors Inc. for distribution and shareholder
servicing-related services. Under a Plan and Agreement of Distribution,
the Fund pays a distribution fee at an annual rate of 0.75% of the Fund's
average daily net assets attributable to Class B shares for
distribution-related services.
Under a Shareholder Service Agreement, the Fund pays a fee for service
provided to shareholders by financial advisors and other servicing agents.
The fee is calculated at a rate of 0.175% of the Fund's average daily net
assets attributable to Class A and Class B shares and 0.10% of the Fund's
average daily net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $5,237,520 for Class A and $155,937 for
Class B for the six months ended May 31, 1998.
During the six months ended May 31, 1998, the Fund's transfer agency fees
were reduced by $381,519 as a result of earnings credits from overnight
cash balances.
3
Capital share
transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended May 31, 1998
Class A Class B Class Y
Sold 192,490,430 10,534,615 1,717,595
Issued for reinvested 23,803,891 879,689 76
distributions
Redeemed (225,778,245) (3,414,099) (1,953,064)
Net increase (decrease) (9,483,924) 8,000,205 (235,393)
Year ended Nov. 30, 1997
Class A Class B Class Y
Sold 273,106,758 15,867,346 6,431,214
Issued for reinvested 50,812,160 1,442,620 151
distributions
Redeemed (393,208,181) (6,596,087) (9,080,510)
Net increase (decrease) (69,289,263) 10,713,879 (2,649,145)
4
Capital loss
carryover
For federal income tax purposes, the Fund has a capital loss carryover of
$47,336,011 at Nov. 30, 1997, that will expire in 2002 through 2005 if not
offset by subsequent capital gains. It is unlikely the board will
authorize a distribution of any net realized capital gains until the
available capital loss carryover has been offset or expires.
<PAGE>
<TABLE>
<CAPTION>
5
Financial
highlights
The tables below show certain important financial information for
evaluating the Fund's results.
Fiscal period ended Nov. 30,
Per share income and capital changes(a)
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998(c) 1997 1996 1995 1994 1993 1992 1991(b) 1990 1989 1988
Net asset value, $4.64 $4.56 $4.66 $4.18 $4.76 $4.65 $4.55 $4.44 $4.57 $4.42 $4.34
beginning of period
Income from investment operations:
Net investment income .13 .27 .27 .28 .30 .30 .31 .30 .34 .34 .34
(loss)
Net gains (losses) .03 .08 (.10) .48 (.56) .13 .12 .11 (.12) .15 .08
(both realized
and unrealized)
Total from investment .16 .35 .17 .76 (.26) .43 .43 .41 .22 .49 .42
operations
Less distributions:
Dividends from net (.13) (.27) (.27) (.28) (.30) (.30) (.32) (.30) (.34) (.34) (.34)
investment income
Distributions from -- -- -- -- (.02) (.02) (.01) -- (.01) -- --
realized gains
Total distributions (.13) (.27) (.27) (.28) (.32) (.32) (.33) (.30) (.35) (.34) (.34)
Net asset value, $4.67 $4.64 $4.56 $4.66 $4.18 $4.76 $4.65 $4.55 $4.44 $4.57 $4.42
end of period
Ratios/supplemental data
Class A
1998(c) 1997 1996 1995 1994 1993 1992 1991(b) 1990 1989 1988
Net assets, end of $5,780 $5,785 $6,001 $6,316 $5,769 $6,733 $6,036 $5,291 $4,750 $4,594 $4,070
period (in millions)
Ratio of expenses to .70%e .70% .70% .68% .59% .61% .62% .60%e .60% .60% .59%
average daily net assetsd
Ratio of net income (loss) 5.64%e 5.85% 6.02% 6.31% 6.50% 6.32% 6.86% 7.26%e 7.62% 7.50% 7.66%
to average daily net assets
Portfolio turnover rate 10% 4% 9% 14% 17% 10% 12% 10% 22% 7% 13%
(excluding short-term
securities)
Total returnf 3.5% 7.9% 4.0% 18.6% (5.8%) 9.6% 9.7% 10.1%e 5.5% 11.7% 11.2%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b The Fund's fiscal year-ended was changed from Dec. 31 to Nov. 30, effective
1991.
c Six months ended May 31, 1998 (Unaudited).
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
e Adjusted to an annual basis.
f Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended Nov. 30,
Per share income and capital changes(a)
Class B Class Y
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998(c) 1997 1996 1995(b) 1998(c) 1997 1996 1995(b)
Net asset value, $4.64 $4.56 $4.66 $4.46 $4.64 $4.56 $4.66 $4.46
beginning of period
Income from investment operations:
Net investment income .11 .23 .24 .19 .13 .27 .28 .22
(loss)
Net gains (losses) (both .03 .08 (.10) .20 .03 .08 (.10) .20
realized and unrealized)
Total from investment .14 .31 .14 .39 .16 .35 .18 .42
operations
Less distributions:
Dividends from net (.11) (.23) (.24) (.19) (.13) (.27) (.28) (.22)
investment income
Net asset value, $4.67 $4.64 $4.56 $4.66 $4.67 $4.64 $4.56 $4.66
end of period
Ratios/supplemental data
Class B Class Y
1998(c) 1997 1996 1995(b) 1998(c) 1997 1996 1995(b)
Net assets, end of $229 $190 $138 $71 $8 $9 $21 $25
period (in millions)
Ratio of expenses to 1.45%e 1.46% 1.46% 1.48%e .62%e .61% .53% .54%e
average daily net assetsd
Ratio of net income (loss) 4.89%e 5.06% 5.29% 5.36%e 5.73%e 5.88% 6.15% 6.32%e
to average daily net assets
Portfolio turnover rate 10% 4% 9% 14% 10% 4% 9% 14%
(excluding short-term
securities)
Total returnf 3.2% 7.1% 3.2% 8.9% 3.6% 8.0% 4.2% 9.5%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was March 20, 1995.
c Six months ended May 31, 1998 (Unaudited).
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
e Adjusted to an annual basis.
f Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
Tax-Free High Yield Portfolio
May 31, 1998
Assets
(Unaudited)
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $5,317,152,635) $5,920,410,537
Accrued interest receivable 107,821,397
Receivable for investment securities sold 856,500
-------
Total assets 6,029,088,434
-------------
Liabilities
Disbursements in excess of cash on demand deposit 541,872
Payable for investment securities purchased 9,625,349
Accrued investment management services fee 72,493
Other accrued expenses 5,914
-----
Total liabilities 10,245,628
----------
Net assets $6,018,842,806
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of operations
Tax-Free High Yield Portfolio
Six months ended May 31, 1998
Investment income
(Unaudited)
Income:
<S> <C>
Interest $188,296,000
------------
Expenses (Note 2):
Investment management services fee 13,137,760
Compensation of board members 13,605
Custodian fees 77,660
Audit fees 17,500
Other 29,793
------
Total expenses 13,276,318
Earnings credits on cash balances (Note 2) (1,650)
------
Total net expenses 13,274,668
----------
Investment income (loss) -- net 175,021,332
-----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 3,864,218
Financial futures contracts (9,699,531)
----------
Net realized gain (loss) on investments (5,835,313)
Net change in unrealized appreciation (depreciation) on investments 46,940,629
----------
Net gain (loss) on investments 41,105,316
----------
Net increase (decrease) in net assets resulting from operations $216,126,648
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Tax-Free High Yield Portfolio
Operations
May 31, 1998 Nov. 30, 1997
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $175,021,332 $361,599,248
Net realized gain (loss) on investments (5,835,313) (34,205,753)
Net change in unrealized appreciation (depreciation) on investments 46,940,629 137,325,053
---------- -----------
Net increase (decrease) in net assets resulting from operations 216,126,648 464,718,548
Net contributions (withdrawals) from partners (185,683,337) (640,111,208)
------------ ------------
Total increase (decrease) in net assets 30,443,311 (175,392,660)
Net assets at beginning of period 5,988,399,495 6,163,792,155
------------- -------------
Net assets at end of period $6,018,842,806 $5,988,399,495
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Tax-Free High Yield Portfolio
(Unaudited as to May 31, 1998)
1
Summary of
significant
accounting policies
Tax-Free High Yield Portfolio (the Portfolio) is a series of Tax-Free
Income Trust (the Trust) and is registered under the Investment Company
Act of 1940 (as amended) as a diversified, open-end management investment
company. Tax-Free High Yield Portfolio invests primarily in medium- and
lower-quality bonds and notes issued by or on behalf of state and local
governmental units whose interest generally is exempt from federal income
tax. The Declaration of Trust permits the Trustees to issue
non-transferable interests in the Portfolio.
Significant accounting policies followed by the Portfolio are summarized
below:
Use of estimates
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 increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities
traded on national securities exchanges or included in national market
systems are valued at the last quoted sales price. Debt securities are
generally traded in the over-the-counter market and are valued at a price
deemed best to reflect fair value as quoted by dealers who make markets in
these securities or by an independent pricing service. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current
interest rates; those maturing in 60 days or less are valued at amortized
cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate
buying and selling of securities for investment purposes, the Portfolio
may buy and sell put and call options and write covered call options on
portfolio securities and may write cash-secured put options. The risk in
writing a call option is that the Portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing
a put option is that the Portfolio may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an
option is that the Portfolio pays a premium whether or not the option is
exercised. The Portfolio also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not
exist. The Portfolio may write over-the-counter options where the
completion of the obligation is dependent upon the credit standing of the
other party.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The
Portfolio will realize a gain or loss upon expiration or closing of the
option transaction. When options on debt securities or futures are
exercised, the Portfolio will realize a gain or loss. When other options
are exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a
purchased put or call option is adjusted by the amount of premium received
or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Portfolio may buy and sell financial futures contracts. Risks of
entering into futures contracts and related options include the
possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the
value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to
deposit either cash or securities in an amount (initial margin) equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Portfolio each day. The variation
margin payments are equal to the daily changes in the contract value and
are recorded as unrealized gains and losses. The Portfolio recognizes a
realized gain or loss when the contract is closed or expires.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the
Portfolio on a forward-commitment or when-issued basis can take place one
month or more after the transaction date. During this period, such
securities are subject to market fluctuations and they may affect the
Portfolio's net assets the same as owned securities. The Portfolio
designates cash or liquid high-grade short-term debt securities at least
equal to the amount of its commitment. As of May 31, 1998, the Portfolio
had entered into outstanding when-issued or forward-commitments of
$9,625,349.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership
and each investor in the Portfolio is treated as the owner of its
proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Portfolio. Accordingly, as a
"pass-through" entity, the Portfolio does not pay any income dividends or
capital gain distributions.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Interest income, including level-yield amortization of
premium and discount, is accrued daily.
2
Fees and
expenses
The Trust, on behalf of the Portfolio, has entered into an Investment
Management Services Agreement with AEFC for managing its portfolio. Under
this agreement, AEFC determines which securities will be purchased, held
or sold. The management fee is a percentage of the Portfolio's average
daily net assets in reducing percentages from 0.49% to 0.36% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain
legal fees, fidelity bond premiums, registration fees for units, office
expenses, consultants' fees, compensation of trustees, corporate filing
fees and any other expenses properly payable by the Trust or Portfolio and
approved by the board.
During the six months ended May 31, 1998, the Portfolio's custodian fees
were reduced by $1,650 as a result of earnings credits from overnight cash
balances.
Pursuant to a Placement Agency Agreement, American Express Financial
Advisors Inc. acts as placement agent of the units of the Trust.
3
Securities
transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $609,724,412 and $594,989,412,
respectively, for the six months ended May 31, 1998. For the same period,
the portfolio turnover rate was 10%. Realized gains and losses are
determined on an identified cost basis.
4
Interest rate
futures contracts
At May 31, 1998, investments in securities included securities valued at
$43,472,635 that were pledged as collateral to cover initial margin
deposits on 200 open purchase contracts. The market value of the open
purchase contracts at May 31, 1998, was $24,812,500 with a net unrealized
gain of $751,938. See "Summary of significant accounting policies."
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
Tax-Free High Yield Portfolio
May 31, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Municipal bonds (96.0%)
Name of issuer and Coupon Principal Value(a)
title of issue (b,c,i) rate amount
Alabama (0.3%)
Baldwin County Eastern Shore Health Care Authority
Hospital Revenue Bonds Thomas Hospital Series 1991
<S> <C> <C> <C>
04-01-16 8.50% $4,765,000 $5,394,981
Camden Industrial Development Board Solid Waste Disposal
Revenue Bonds MacMillan Bloedel Series 1991A A.M.T.
04-01-19 7.75 8,500,000 9,137,415
Mobile Industrial Development Board Solid Waste
Refunding Revenue Bonds
Mobile Energy Services
01-01-20 6.95 11,250,000 6,975,000
Total 21,507,396
Alaska (0.2%)
Industrial Development & Exploration Authority
Electric Power Revenue Bonds
Upper Lynn Canal Regional Power
Series 1997 A.M.T.
01-01-18 5.80 830,000 832,656
01-01-32 5.875 1,800,000 1,806,048
North Slope Borough General Obligation Bonds
Zero Coupon Series 1994B (CGIC Insured)
06-30-04 7.05 7,000,000(e) 5,342,330
06-30-05 7.15 7,000,000(e) 5,075,070
Total 13,056,104
Arizona (1.0%)
Chandler Industrial Development Authority
Beverly Enterprises Series 1994
09-01-08 7.625 2,750,000 2,883,787
Maricopa County Hospital System Revenue Bonds
Samaritan Health Services Series 1981
01-01-08 12.00 255,000 402,334
Maricopa County Industrial Development Authority
Multi-family Housing Revenue Bonds Series B
07-01-26 7.375 2,320,000 2,815,714
Maricopa County Industrial Development Authority
Senior Living Facilities Revenue Bonds Series 1997A
04-01-27 7.875 15,000,000 16,379,550
Maricopa County Pollution Control Refunding
Revenue Bonds Palo Verde Public Service
08-15-23 6.375 3,500,000 3,696,980
Navajo Industrial Development Authority Revenue Bonds
Stone Container Corporation Series 1997 A.M.T.
06-01-27 7.20 3,000,000 3,356,490
Phoenix Civic Improvement Waste Water System
Lease Refunding Revenue Bonds
07-01-18 5.00 5,000,000 4,949,750
Phoenix Industrial Development Authority
Refunding Revenue Bonds Christian Care Apartments
01-01-26 6.50 9,525,000 10,223,945
Pima County Industrial Development Authority
Multi-family Housing Revenue Bonds
Las Villas De Kino Apartments Series 1997 A.M.T.
08-01-29 6.90 7,000,000 7,102,480
Pima County Industrial Development Authority
Revenue Bonds LaPosada Park Centre Series 1996A
05-15-27 7.00 5,750,000 6,135,365
Scottsdale Industrial Development Authority
Beverly Enterprises Series 1994
09-01-08 7.625 3,035,000 3,182,653
Total 61,129,048
Arkansas (0.1%)
Pope County Solid Waste Disposal Revenue Bonds
Arkansas Power & Light Series 1991 A.M.T.
01-01-21 8.00 3,250,000 3,557,060
California (8.8%)
ABAG Financial Authority for Nonprofit Corporations
International Schools Certificate of Participation
Series 1996
05-01-26 7.375 8,000,000 8,337,360
Anaheim Public Financing Authority Lease
Capital Appreciation Revenue Bonds
Zero Coupon (FSA Insured)
09-01-26 5.08 4,430,000(e) 1,018,501
09-01-27 5.08 17,860,000(e) 3,895,802
09-01-28 5.08 8,835,000(e) 1,828,403
Community Development Authority Health Facilities
Unihealth America Certificate of Participation
Series 1993 Inverse Floater (AMBAC Insured)
10-01-11 7.16 22,400,000(d) 26,488,000
East Bay Municipal Utility District Water Revenue Bonds
Series 1993 Inverse Floater (MBIA Insured)
06-01-08 6.17 15,500,000(d) 16,740,000
Foothill/Eastern Transportation Corridor Agency
Toll Road Revenue Bonds Series 1995A
01-01-35 5.00 41,070,000 38,959,413
Fresno Health Facility Refunding Revenue Bonds
Holy Cross Health System (MBIA Insured)
12-01-13 5.625 3,000,000 3,177,690
Irwindale Redevelopment Agency Subordinate Lien
Tax Allocation Bonds
12-01-26 7.05 5,750,000 6,410,388
Lake Elsinore Public Financing Authority
Local Agency Revenue Bonds Series 1997F
09-01-20 7.10 12,000,000 12,919,440
Los Angeles County Certificate of Participation
05-01-15 6.71 20,000,000 21,830,000
Los Angeles International Airport Regional Airports
Improvement Corporation Refunding
Revenue Bonds Delta Airlines
11-01-25 6.35 13,000,000 14,227,330
Los Angeles International Airport Regional Airports
Improvement Corporation Refunding Revenue Bonds
United Airlines Series 1984
11-15-21 8.80 11,650,000 12,965,751
Los Angeles Water & Power Electric Plant
Refunding Revenue Bonds Series 1992
02-01-20 6.375 10,000,000 10,818,500
Millbrae Residential Facility Revenue Bonds
Magnolia of Millbrae Series 1997A A.M.T.
09-01-27 7.375 2,500,000 2,584,225
Modesto Santa Clara Redding Public Power Bonds
San Juan Series C (AMBAC Insured)
07-01-21 5.50 4,500,000 4,501,080
Northern California Power Agency Geothermal 3
Revenue Bonds
07-01-09 5.00 49,635,000 49,640,460
Novato Community Facility District 1 Vintage Oaks
Public Improvement Special Tax Refunding Bonds
08-01-21 7.25 5,000,000 5,476,850
Oceanside Certificate of Participation Refunding Bonds
Oceanside Civic Center (MBIA Insured)
08-01-19 5.25 7,000,000 7,004,480
Orange County Special Tax Community Facilities Bonds
Aliso Veijo District 88-1 Series 1992A
08-15-18 7.35 6,000,000 6,862,860
Pleasanton Joint Powers Financing Authority Reassessment
Revenue Bonds Series 1993A
09-02-12 6.15 4,460,000 4,784,420
Regional Airports Improvement Facilities Sublease Revenue Bonds Continental
Airlines Los Angeles International Airport Series 1988 A.M.T.
08-01-08 9.00 3,900,000 4,005,027
08-01-17 9.00 8,200,000 8,414,594
Sacramento Cogeneration Authority Revenue Bonds
Procter & Gamble Series 1995
07-01-14 6.50 3,800,000 4,170,918
07-01-21 6.50 8,000,000 8,740,800
Sacramento Municipal Utility District Electric
Refunding Revenue Bonds Series 1993D
Inverse Floater (FSA Insured)
11-15-05 6.47 15,800,000(d) 17,755,250
11-15-06 6.67 16,400,000(d) 18,429,500
Sacramento Municipal Utility District Electric
Refunding Revenue Bonds Series 1993D
Inverse Floater (MBIA Insured)
11-15-15 7.12 15,000,000(d) 16,162,500
Sacramento Power Authority Cogeneration
Revenue Bonds Campbell Soup Series 1995
07-01-22 6.00 25,000,000 26,312,750
San Joaquin Hills Orange County Transportation
Corridor Agency Senior Lien Toll Road Revenue Bonds
01-01-32 6.75 14,785,000 16,673,488
San Joaquin Hills Transportation Corridor Agency
Capital Appreciation Toll Road Refunding Revenue Bonds
Zero Coupon Series 1997A (MBIA Insured)
01-15-24 5.62 9,000,000(e) 2,375,280
01-15-25 5.03 69,375,000(e) 17,373,581
01-15-26 5.51 30,000,000(e) 7,128,300
01-15-27 5.51 6,670,000(e) 1,503,685
01-15-28 5.05 13,880,000(e) 2,968,654
01-15-32 5.41 27,000,000(e) 4,680,180
01-15-36 5.42 88,415,000(e) 12,405,509
San Joaquin Hills Transportation Corridor Agency
Senior Lien Toll Road Revenue Bonds
Zero Coupon Escrowed to Maturity
01-01-17 5.35 34,860,000(e) 13,570,998
San Jose Redevelopment Agency Merged Area Tax
Allocation Bonds Series 1993 Inverse Floater
(MBIA Insured)
08-01-14 6.96 33,600,000(d) 35,322,000
Sierra Unified School District Fresno County
Certificate of Participation Capital Funding
Refunding Bonds Series 1993
03-01-18 6.125 6,470,000 6,759,209
South Tahoe Joint Powers Financing Authority
Refunding Revenue Bonds South Tahoe Area 1
Series 1995B
10-01-28 6.00 9,900,000 10,323,027
Southern California Public Power Authority
Power Revenue Bonds Palo Verde
Series 1993 Inverse Floater (FGIC Insured)
07-01-17 6.62 20,000,000(d) 21,300,000
Ukiah Unified School District
Mendocino County Certificate of Participation
Series 1993
09-01-10 6.00 5,000,000 5,248,900
University of California Refunding Revenue Bonds
Multiple Purpose Project (AMBAC Insured)
09-01-16 5.25 6,000,000 6,053,520
Total 528,148,623
Colorado (6.8%)
Arapahoe County Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
04-01-09 8.00 4,000,000 4,547,320
Arapahoe County Public Highway Authority Capital
Improvement Trust Fund E-470 Highway
Revenue Bonds
08-31-26 7.00 22,000,000 26,226,640
Aurora Centretech Metropolitan District
Arapahoe County Series 1987B
12-01-23 6.00 5,699,785 5,722,983
Bowles Metropolitan District General Obligation Bonds
Series 1995
12-01-15 7.75 16,000,000 16,987,680
Briargate Public Building Authority
Landowner Assessment Lien Bonds Series 1985A
12-15-00 10.25 4,209,130(l) 3,577,761
Castle Rock Ranch Public Facility Improvement
Revenue Bonds Series 1996
12-01-17 6.25 10,000,000 11,586,900
Colorado Health Facility Authority Hospital Improvement
Refunding Revenue Bonds
Parkview Episcopal Medical Center Series 1995
09-01-25 6.125 7,000,000 7,406,980
Colorado Health Facility Authority Revenue Bonds
Liberty Heights Zero Coupon Escrowed to Maturity
07-15-22 7.50 81,465,000(e) 22,417,539
Colorado Springs Hospital Revenue Bonds
Memorial Hospital Series 1990
12-15-10 7.875 5,000,000 5,460,650
Colorado Springs Stetson Hills Public Building Authority
Landowner Assessment Lien Bonds Series 1988A
05-15-08 9.75 2,869,110(l) 86,073
Colorado Springs Utilities System
Pre-refunded Revenue Bonds Series 1991C
11-15-15 6.50 1,505,000 1,651,707
11-15-21 6.75 13,335,000 14,741,576
Colorado Springs Utilities System
Un-refunded Balance Revenue Bonds Series 1991A
11-15-15 6.50 24,895,000 27,009,332
11-15-21 6.75 16,665,000 18,156,518
Dawson Ridge Metropolitan District
Refunding Revenue Bonds
Zero Coupon Series B Escrowed to Maturity
10-01-22 5.21 40,000,000(e) 10,429,600
Denver City & County Airports Systems Revenue Bonds
Series 1991A A.M.T.
11-15-23 8.75 10,000,000(h) 11,491,400
Denver City & County Airports Systems Revenue Bonds
Series 1991D A.M.T.
11-15-21 7.75 8,650,000 9,651,411
Denver City & County Airport Systems Revenue Bonds
Series 1992A
11-15-25 7.25 20,975,000 23,937,719
Denver City & County Airport Systems Revenue Bonds
Series 1992B A.M.T.
11-15-23 7.25 20,500,000 22,756,845
Denver City & County Airport Systems Revenue Bonds
Series 1994A
11-15-12 7.50 5,000,000 5,756,700
Denver City & County Airport Systems Revenue Bonds
Series 1994A A.M.T.
11-15-23 7.50 19,340,000 22,343,502
Denver City & County GVR Metropolitan District
General Obligation Refunding Bonds Series 1991
12-01-06 8.00 1,385,000 1,704,603
Denver City & County GVR Metropolitan District
General Obligation Refunding Bonds Series 1995B
12-01-06 11.00 730,000 715,006
Denver Special Facility Airport Revenue Bonds
United Air Lines Series A A.M.T.
10-01-32 6.875 25,400,000 27,577,288
Denver Urban Renewal Authority Tax Increment
Revenue Bonds Downtown Denver Redevelopment
Adams Mark Hotel Series 1989 A.M.T.
09-01-15 8.00 16,285,000 18,318,019
09-01-16 8.00 1,785,000 2,007,839
09-01-17 8.00 1,930,000 2,170,941
Denver Urban Renewal Authority Tax Increment
Revenue Bonds South Broadway Montgomery Ward
Urban Renewal Series 1992
05-01-16 8.50 13,730,000 15,358,515
Denver West Metropolitan District
General Obligation Bonds Series 1996
06-01-16 6.50 2,560,000 2,771,763
Denver West Metropolitan District General Obligation
Refunding Improvement Bonds Series 1995
12-01-14 7.00 4,230,000 4,676,984
Hotchkiss Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
09-01-09 8.00 1,500,000 1,708,380
Housing Finance Authority Single Family Program
Senior Bonds Series 1991B (FGIC Insured)
08-01-11 7.25 2,540,000 2,689,479
02-01-18 7.30 2,300,000 2,432,296
Lowry Economic Redevelopment Authority
Revenue Bonds Series 1996
12-01-10 7.50 19,000,000 20,120,430
Lowry Economic Redevelopment Authority
Revenue Bonds Series 1998A
12-01-10 7.00 3,600,000 3,597,012
Saddle Rock Metropolitan District Limited Tax
General Obligation Bonds Series 1997
12-01-16 7.625 5,590,000 5,892,978
Superior Metropolitan District 2 Limited Tax
General Obligation Refunding Bonds
MDC Holdings Series 1994B
12-01-98 7.50 945,000 957,115
12-01-13 8.25 2,580,000 2,884,440
12-01-13 8.50 12,000,000 13,471,560
Thornton Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
09-01-09 8.00 4,500,000(h) 5,115,735
Westminster Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
04-01-09 8.00 3,500,000 3,986,220
Total 410,103,439
District of Columbia (0.7%)
General Obligation Refunding Bonds Series 1994A
(MBIA Insured)
06-01-10 6.00 27,875,000 30,822,781
06-01-11 6.10 7,580,000 8,421,380
Housing Finance Agency Multi-family Mortgage
Revenue Bonds Temple Courts Section 8
Series 1985 (FHA Insured)
02-01-22 12.00 1,310,000 1,542,800
Total 40,786,961
Florida (4.1%)
Arbor Greene Community Development District
Special Assessment Revenue Bonds Series 1996
05-01-18 7.60 5,000,000 5,401,450
Charlotte County Development Authority 1st Mortgage
Refunding Revenue Bonds
Royal Palm Retirement Centre Series 1991
03-01-14 9.50 3,945,000 4,289,596
Crossings at Fleming Island Community Development
District Special Assessment Bonds Series 1995
05-01-16 8.25 10,015,000 11,071,382
Crossings at Fleming Island Community Development
District Utility Revenue Bonds Series 1994
10-01-19 7.375 13,535,000 14,334,106
Department of Transportation Turnpike Revenue Bonds
Series 1991A (AMBAC Insured)
07-01-20 6.25 20,000,000 21,294,600
Gateway Centre Development District Pinellas County
Special Assessment Revenue Bonds Series 1988
01-01-09 9.125 1,350,000 1,395,387
Grand Haven Community Development District
Special Assessment Bonds Flagler County Series 1997A
05-01-02 6.30 5,000,000 5,129,400
Grand Haven Community Development District
Special Assessment Revenue Bonds
Series 1997B
05-01-19 6.90 1,000,000 1,032,440
Heritage Harbor Community Development District
Special Assessment Revenue Bonds
Series 1997B
05-01-03 6.00 1,250,000 1,241,962
Heritage Isles Community Development District
Special Assessment Revenue Bonds
Series 1998A
05-01-05 5.75 1,650,000 1,635,084
Hillsborough County Utility Refunding Revenue Bonds
Series 1991A
08-01-14 7.00 24,000,000 26,053,572
Hillsborough County Utility Refunding Revenue Bonds
Series 1991A (MBIA Insured)
08-01-16 6.50 24,760,000 26,774,721
Lakewood Ranch Community Development District 1
Manatec County Benefit Special Assessment Bonds
Series 1998
05-01-17 7.30 4,000,000 3,999,640
Lakewood Ranch Community Development District 1
Special Assessment Bonds Series 1994
05-01-14 8.25 4,335,000 4,733,386
Lee County Industrial Development Authority
Industrial Development Revenue Bonds Gulf Utility
Series 1988A A.M.T.
10-01-18 9.625 5,545,000 5,804,728
Lee County Industrial Development Authority
Industrial Development Revenue Bonds Gulf Utility
Series 1988B A.M.T.
10-01-20 9.50 3,915,000 4,368,474
Miami Health Facility Authorization Revenue Bonds
Inverse Floater (AMBAC Insured)
08-15-15 6.67 3,500,000(d) 3,574,375
North Springs Improvement Special Assessment
District Revenue Bonds Heron Bay Series 1997
05-01-19 7.00 3,000,000 3,136,320
North Springs Improvement Special Assessment
District Revenue Bonds Parkland Isles Series 1997B
05-01-05 6.25 3,000,000 3,056,070
Palm Beach County Health Facilities Authority Hospital
Revenue Bonds Good Samaritan Health Series 1993
10-01-22 6.30 3,750,000 4,227,562
Plantation Health Facility Authority
Nursing Home Refunding Revenue Bonds
Covenant Retirement Communities Obligation Group
Series 1998
12-01-22 5.125 1,500,000 1,472,280
Polk County Industrial Development Authority 1st Mortgage
Refunding Revenue Bonds Spring Haven II
12-01-14 8.75 6,115,000 6,775,909
Port Everglades Port Authority Revenue Bonds Junior Lien
09-01-16 5.00 18,635,000 18,567,355
Riverwood Community Development District
Charlotte County Special Assessment Revenue Bonds
Zero Coupon Series 1992A-B
05-01-12 8.50 5,820,000(f,l) 6,258,596
Sumter County Industrial Development Authority Industrial Development Revenue
Bonds Little Sumter Utility Company Series 1997 A.M.T.
10-01-27 7.25 4,200,000 4,268,964
Sumter County Industrial Development Authority Industrial Development Water &
Sewer Revenue Bonds Little Sumter Utility Company Series 1998 A.M.T.
10-01-27 6.75 2,950,000 2,955,811
Sumter County Village Community Development
District 1 Capital Improvement Revenue Bonds
Series 1992
05-01-12 8.40 1,150,000 1,239,321
Sunrise Utility System Refunding & Improvement
Revenue Bonds
10-01-18 10.75 5,000,000 5,738,050
Tampa Health Systems Revenue Bonds
Catholic Health East Obligation Group
Series 1998A-2 (AMBAC Insured)
11-15-28 4.875 26,330,000 25,028,245
Village Center Community Development District
Sub Recreational Revenue Bonds
Series 1998C
01-01-19 7.375 2,670,000 2,684,178
Village Center Community District Recreational
Revenue Bonds Series 1996B
01-01-17 8.25 2,785,000 3,032,364
Village Community Development District 2
Special Assessment District Revenue Bonds
Series 1996
05-01-17 7.625 5,725,000 6,132,620
Volusia County Industrial Development Authority
1st Mortgage Refunding Revenue Bonds Series 1996
11-01-26 7.625 10,925,000 12,125,330
Total 248,833,278
Georgia (2.2%)
Atlanta Special Purpose Facility Revenue Bonds
Delta Air Lines Series 1989B A.M.T.
12-01-18 7.90 13,500,000 14,369,535
12-01-19 6.25 8,685,000 8,787,222
Colquitt County Development Authority Revenue Bonds
Zero Coupon Escrowed to Maturity
12-01-21 6.87 46,350,000(e) 13,338,139
Effingham County Pollution Control Revenue Bonds
Fort Howard Series 1988
10-01-05 7.90 19,850,000 21,209,130
Fulco Hospital Authority Revenue Anticipation Certificate
Georgia Baptist Health Care Systems Series 1992A
09-01-22 6.375 20,300,000 22,376,284
George L. Smith II World Congress Center Authority
Miscellaneous Revenue Bonds Dome Stadium
Series 2000 (MBIA Insured) A.M.T.
07-01-20 5.50 8,000,000(k) 7,868,560
Municipal Electric Authority Power Refunding Bonds
Series 1989R
01-01-14 6.00 9,130,000 9,203,497
Municipal Electric Authority Power Revenue Bonds
Series L
01-01-20 5.00 1,150,000 1,110,199
Rockdale County Development Authority Solid Waste
Disposal Revenue Bonds Visy Paper Series 1993 A.M.T.
01-01-26 7.50 10,000,000 10,867,200
Savannah Economic Development Authority
1st Mortgage Revenue Bonds Zero Coupon Series 1991A
12-01-21 5.40 13,755,000(e) 3,958,276
Savannah Economic Development Authority
Revenue Bonds Zero Coupon Escrowed to Maturity
12-01-21 6.87 64,220,000(e) 18,480,589
Total 131,568,631
Hawaii (0.4%)
City & County of Honolulu Refunding & Improvement
General Obligation Bonds Series 1993B Inverse Floater
09-07-06 6.47 10,000,000(d) 11,150,000
09-11-08 6.77 10,000,000(d) 11,450,000
Total 22,600,000
Idaho (--%)
State Building Authority Lease
Revenue Bonds Series 1998A (MBIA Insured)
09-01-25 4.75 1,250,000 1,177,100
Illinois (7.8%)
Bradley Kankakee County Tax Increment
Refunding Revenue Bonds Series 1993
12-01-12 8.40 5,800,000 6,590,308
Broadview Cook County Senior Lien Tax Increment
Revenue Bonds Series 1993
07-01-13 8.25 11,705,000 13,328,718
Chicago General Obligation Bonds Series 1991
(AMBAC Insured)
01-01-16 6.00 6,170,000 6,668,289
Chicago General Obligation Bonds Series 1994A
(AMBAC Insured)
01-01-22 5.875 17,850,000 19,217,667
Chicago General Obligation Refunding Bonds
Series 1995A (AMBAC Insured)
01-01-18 5.50 20,000,000 21,213,000
Chicago O'Hare International Airport General Airport
Refunding Revenue Bonds Series 1993A
01-01-16 5.00 14,450,000 14,249,867
Chicago O'Hare International Airport General Airport
Revenue Bonds Series 1990A A.M.T.
01-01-16 7.50 21,000,000 22,416,240
01-01-18 6.00 29,000,000 29,787,350
Chicago O'Hare International Airport
Special Revenue Facility Bonds Delta Airlines
Series 1992
05-01-18 6.45 10,000,000 10,581,300
Chicago O'Hare International Airport
Special Revenue Facility Bonds United Airlines
Series C
05-01-18 8.20 22,285,000 23,648,396
Chicago O'Hare International Airport Terminal
Special Revenue Bonds A.M.T.
01-01-17 7.50 32,250,000 34,285,942
Chicago O'Hare International Airport Terminal
Special Revenue Bonds (FGIC Insured) A.M.T.
11-01-25 7.875 17,750,000 19,284,665
Chicago Ridge Special Service Area 1 Unlimited
Ad Valorem Tax Bonds Series 1990
12-01-08 9.00 2,700,000 2,957,121
Chicago Wastewater Transmission Revenue Bonds
Series 1994 (MBIA Insured)
01-01-24 6.375 22,500,000 25,562,700
Cook County Bedford Park Senior Lien Tax Increment
Revenue Bonds
01-01-06 7.00 1,090,000 1,173,178
01-01-12 7.375 1,700,000 1,845,367
Cook County Bedford Park Senior Lien Tax Increment
Revenue Bonds Mark IV Series 1992
03-01-12 9.75 1,710,000 2,039,927
Development Finance Authority Lifecare Revenue Bonds
Presbyterian Homes Series 1996B
09-01-31 6.40 6,700,000 7,440,685
Development Finance Authority Pollution Control
Refunding Revenue Bonds Central Illinois
Public Service 2nd Series 1993B
06-01-28 5.90 2,500,000 2,613,875
Development Finance Authority Pollution Control
Refunding Revenue Bonds Commonwealth Edison
Series 1994
01-15-09 5.70 2,000,000 2,174,420
01-15-14 5.85 4,500,000 4,949,235
Development Finance Authority Pollution Control
Refunding Revenue Bonds
Illinois Power Series 1991A
07-01-21 7.375 19,250,000 22,364,073
Development Finance Authority Retirement Housing
Revenue Bonds Zero Coupon Escrowed to Maturity
04-15-20 7.75 68,000,000(e) 20,881,440
DuPage County Tax Increment Revenue Bonds
Series 1997
01-01-17 7.875 4,690,000 5,247,500
Educational Facilities Authority Refunding Revenue Bonds
Lewis University Series 1996
10-01-26 6.125 8,780,000 9,200,474
Educational Facilities Authority Refunding Revenue Bonds
Loyola University of Chicago Series 1993
Inverse Floater (FGIC Insured)
07-01-12 5.75 11,000,000(d) 12,141,250
Granite City Madison County Hospital
Refunding Revenue Bonds St. Elizabeth Medical Center
Series 1989A
06-01-08 8.125 3,120,000 3,260,650
Health Facilities Authority Refunding Revenue Bonds
Edwards Hospital Series 1993A
02-15-19 6.00 6,350,000 6,595,237
Health Facilities Authority Refunding Revenue Bonds
Masonic Medical Center Series 1993
10-01-19 5.50 2,000,000 2,033,620
Health Facilities Authority Refunding Revenue Bonds
Morris Hospital
12-01-23 6.125 3,005,000 3,172,078
Health Facilities Authority Refunding Revenue Bonds
University of Chicago Series 1993 Inverse Floater
(MBIA Insured)
08-15-14 7.47 10,000,000(d) 10,937,500
Health Facilities Authority Revenue Bonds
Sarah Bush Lincoln Health Center Series 1992
05-15-12 7.25 2,000,000 2,258,280
05-15-22 7.25 2,000,000 2,258,280
Health Facilities Authority Revenue Bonds
Sarah Bush Lincoln Health Center Series 1996B
02-15-22 5.75 2,915,000 2,989,741
Health Facility Authority Revenue Bonds
South Suburban Hospital Series 1992
02-15-09 7.00 4,000,000 4,564,810
02-15-18 7.00 5,000,000 5,834,272
Hodgkins General Obligation Tax Increment Bonds
Series 1991
12-01-09 9.50 12,200,000 14,394,928
Hodgkins General Tax Increment Bonds
Series 1995A
12-01-13 7.625 9,000,000 9,996,390
Huntley Special Tax Bonds
Series 1998
02-01-25 6.75 2,450,000 2,470,360
Lakemoor Special Tax Revenue Bonds
Series 1997
03-01-27 7.80 9,000,000 9,695,880
Lansing Tax Increment Refunding Revenue Bonds
Landings Redevelopment Area Limited Sales
Tax Pledge Series 1992
12-01-08 7.00 10,000,000 11,145,800
Marion General Obligation Hospital Alternate
Revenue Source Bonds Series 1991
12-01-16 7.50 3,800,000 4,279,826
Metropolitan Pier & Exposition Authority
Dedicated State Tax Refunding Revenue Bonds
McCormick Place Zero Coupon (FGIC Insured)
06-15-19 6.37 6,000,000(e) 1,999,680
Metropolitan Pier & Exposition Authority
Dedicated State Tax Refunding Revenue Bonds
McCormick Place Zero Coupon (MBIA Insured)
06-15-17 6.61 11,210,000(e) 4,154,987
Metropolitan Pier & Exposition Authority
Sales Tax & Miscellaneous Tax Revenue
Capital Appreciation Refunding Bonds
Zero Coupon Series 1996A (MBIA Insured)
12-15-22 6.05 16,225,000(e) 4,489,295
Municipal Electric Agency Power Supply Refunding
Revenue Bonds Series 1998 (FSA Insured)
02-01-21 5.00 9,000,000 8,703,090
Regional Transportation Authority General
Obligation Bonds Counties of Cook, DuPage, Kane, Lake,
McHenry & Will Series 1992A (AMBAC Insured)
06-01-22 6.125 7,200,000 7,582,968
State Development Finance Authority Regency Park
Retirement Housing Revenue Bonds Zero Coupon
Series 1991B Escrowed to Maturity
07-15-25 5.49 10,000,000(e) 2,294,900
Tinley Park Cook & Will Counties Limited Sales Tax
Revenue Bonds Series 1988
11-01-99 10.25 895,000(l) 322,200
Tinley Park Cook & Will Counties Unlimited Ad Valorem
Tax Bonds of Special Service
12-01-98 10.65 75,000 72,000
12-01-99 10.65 80,000 75,200
12-01-00 10.65 90,000 83,700
12-01-01 10.65 100,000 92,000
12-01-02 10.65 110,000 101,200
12-01-03 10.65 120,000 110,400
12-01-04 10.65 135,000 124,200
12-01-05 10.65 150,000 138,000
12-01-06 10.65 165,000 151,800
12-01-07 10.65 185,000 170,200
Total 468,416,459
Indiana (2.4%)
Brazil 1st Mortgage Revenue Bonds Hoosier Care II
Series 1990
06-01-20 10.375 4,095,000 4,406,425
Carmel Retirement Rental Housing Refunding
Revenue Bonds Beverly Enterprises Series 1992
12-01-08 8.75 6,785,000 7,693,511
Development Finance Authority Environmental
Improvement Refunding Revenue Bonds USX Corporation
Series 1996
07-15-30 6.25 2,000,000 2,152,720
East Chicago Elementary School Building Lake County
1st Mortgage Refunding Bonds Series 1996
01-05-16 6.25 8,000,000 9,049,920
Hanover 1st Mortgage Revenue Bonds Hoosier Care II
Series 1990
06-01-20 10.375 6,710,000 7,220,295
Health Facility Authority Hospital Revenue Bonds
Community Hospital of Anderson Series 1993
01-01-23 6.00 10,000,000 10,322,800
Health Facility Authority Hospital Revenue Bonds
Union Hospital Series 1993 (MBIA Insured)
09-01-18 5.125 10,000,000 9,820,000
Health Facility Finance Authority Hospital Revenue Bonds
Hancock Memorial Series 1996
08-15-17 6.125 2,295,000 2,429,625
La Porte County Hospital Authority Hospital Refunding
Revenue Bonds La Porte Hospital Series 1993
03-01-12 6.25 5,070,000 5,372,476
03-01-23 6.00 2,990,000 3,121,052
Marion County Hospital Authority Hospital Facilities
Refunding Revenue Bonds
Methodist Hospital Series 1989 (MBIA Insured)
09-01-08 6.50 15,555,000 17,122,166
09-01-13 6.50 4,115,000 4,542,425
Municipal Power Agency Power Supply System
Refunding Revenue Bonds
01-01-18 5.75 6,470,000 6,480,546
Rockport Pollution Control Refunding Revenue Bonds
Indiana Michigan Electric Series B
03-01-16 7.60 5,500,000 5,979,325
St. Joseph County Hospital Authority
Health Systems Revenue Bonds
Memorial Health System
Series 1998A (MBIA Insured)
08-15-28 4.625 30,000,000 27,005,400
St. Joseph County Hospital Facility Revenue Bonds
Memorial Hospital of South Bend
06-01-10 9.40 1,850,000 2,389,405
Vincennes Economic Development
Revenue Bonds Southwest Indiana
Regional Youth Village Facility Series 1993
01-01-24 8.50 16,575,000 17,828,070
Total 142,936,161
Iowa (0.7%)
Iowa City Refunding Revenue Bonds Mercy Hospital
Series 1986
07-01-12 6.00 6,300,000 6,304,851
Keokuk Hospital Facilities Refunding Revenue Bonds
Keokuk Area Hospital Series 1991
12-01-21 7.625 5,350,000 5,799,132
Muscatine Electric Refunding Revenue Bonds Series 1986
01-01-05 6.00 10,845,000 10,861,051
01-01-06 6.00 11,330,000 11,346,768
01-01-07 5.00 2,250,000 2,250,293
01-01-08 5.00 5,100,000 5,100,408
Total 41,662,503
Kentucky (0.9%)
Development Finance Authority Hospital Facility
Revenue Bonds St. Luke Hospital Series 1989B
10-01-19 6.00 22,695,000 23,546,516
Development Finance Authority Medical Center
Refunding Revenue Improvement Bonds Ashland Hospital
Series 1987
08-01-11 9.75 1,515,000 1,559,026
Economic Development Finance Authority Hospital
Refunding Revenue & Improvement Bonds
Appalachian Regional Hospital Series 1997
10-01-22 5.875 5,000,000 5,126,100
Muhlenberg County Hospital
Refunding Revenue Bonds
Muhlenberg Community Hospital Series 1996
07-01-10 6.75 9,565,000 10,059,989
Turnpike Authority Economic Road Development
Refunding Revenue Bonds Series 1993 Inverse Floater
(AMBAC Insured)
06-06-12 7.18 15,000,000(d) 16,500,000
Total 56,791,631
Louisiana (2.6%)
Calcasieu Parish Industrial Development Pollution Control
Refunding Revenue Bonds Gulf State Utilities
Series 1992
10-01-12 6.75 10,500,000 11,286,240
Energy & Power Authority Refunding Revenue Bonds
Rodemacher Unit 2 Series 1991 (FGIC Insured)
01-01-13 6.00 28,000,000 29,139,320
Hodge Village Combined Utility System Revenue Bonds
Stone Container Series 1990 A.M.T.
03-01-10 9.00 23,000,000 24,716,260
New Orleans Audubon Park Commission Aquarium
Revenue Bonds Series 1992A
04-01-12 8.00 7,100,000 8,165,071
Public Facilities Authority Revenue Bonds
Glen Retirement Systems Series 1995
12-01-15 6.50 1,000,000 1,074,020
12-01-25 6.70 1,500,000 1,627,500
Public Facilities Authority Revenue Bonds
Windsor Multi-family Housing Foundation
Series 1996A
01-01-26 6.25 9,570,000(l) 7,177,500
Southern Louisiana Port Commission Terminal
Refunding Revenue Bonds Gatx Terminal Series 1993
03-01-23 7.00 13,180,000 14,439,349
St. Charles Parish Pollution Control Revenue Bonds
Louisiana Power & Light 2nd Series 1984
12-01-14 8.00 29,155,000 31,441,335
St. Charles Parish Pollution Control Revenue Bonds
Louisiana Power & Light Series 1991 A.M.T.
06-01-21 7.50 20,700,000 22,662,153
West Feliciana Parish Demand Pollution Control
Revenue Bonds Gulf State Utilities Series 1985B
05-01-15 9.00 6,000,000 6,624,360
Total 158,353,108
Maine (0.1%)
Finance Authority Multi-family Housing Revenue
Obligation Securities Huntington Common
Series 1997A
09-01-27 7.50 5,000,000 5,172,000
Maryland (0.7%)
Frederick County Economic Refunding Revenue Bonds
Alumax Series 1992
04-01-17 7.25 9,880,000 10,724,641
Harford County Industrial Development Revenue Bonds
Dorsey
04-16-05 8.00 484,000 486,691
Prince George's County Hospital Revenue Bonds
Dimensions Health Series 1992
07-01-17 7.25 11,400,000 12,913,350
07-01-22 7.00 7,000,000 7,864,010
State Transportation Authority Facility Capital Appreciation
Revenue Bonds Zero Coupon Series 1992 (FGIC Insured)
07-01-10 6.33 3,000,000(e) 1,710,870
07-01-11 6.33 6,700,000(e) 3,601,183
State Transportation Authority Facility Revenue Bonds
Zero Coupon Series 1992 (FGIC Insured)
07-01-12 6.35 5,000,000(e) 2,527,950
Total 39,828,695
Massachusetts (3.2%)
Bay Transportation Authority Refunding Revenue Bonds
Series 1994A (MBIA Insured)
03-01-12 6.00 8,000,000 8,612,400
03-01-21 4.75 5,000,000 4,733,350
Health & Educational Facilities Authority Revenue Bonds
Berkshire Health Systems Series C
10-01-11 5.90 2,000,000 2,079,900
10-01-20 6.00 4,000,000 4,185,200
Health & Educational Facilities Authority Revenue Bonds
Beverly Hospital Inverse Floater (MBIA Insured)
06-18-20 7.12 8,000,000(d) 8,880,000
Health & Educational Facilities Authority Revenue Bonds
Charlton Memorial Hospital Series 1991B
07-01-13 7.25 6,455,000 7,160,854
Health & Educational Facilities Authority Revenue Bonds
Holyoke Hospital Series B
07-01-15 6.50 500,000 532,765
Industrial Finance Agency Pollution Control Refunding
Revenue Bonds Eastern Edison Series 1993
08-01-08 5.875 4,250,000 4,415,708
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS Series 1991A
07-01-15 9.00 18,885,000 21,182,360
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS Series 1991B A.M.T.
07-01-15 9.25 24,800,000 27,816,920
Municipal Wholesale Electric Power Supply System
Pre-refunded Revenue Bonds Series 1992B
07-01-17 6.75 10,130,000 11,302,244
Municipal Wholesale Electric Power Supply System
Revenue Bonds Series 1993A Inverse Floater
(AMBAC Insured)
07-01-18 6.87 6,500,000(d) 6,727,500
State Industrial Finance Agency Assisted Living
Facility Revenue Bonds Marina Bay LLC
Series 1997 A.M.T.
12-01-27 7.50 2,000,000 2,030,780
State Industrial Finance Agency Assisted Living Facility
Revenue Bonds Newton Group Properties LLC
Series 1997 A.M.T.
09-01-27 8.00 4,300,000 4,480,127
State Water Authority
Water & Sewer General Revenue Bonds
Series 1998A (FSA Insured)
08-01-27 4.75 12,000,000 11,193,000
Water Resource Authority General
Refunding Revenue Bonds Series 1992B
11-01-15 5.50 22,175,000 22,569,493
Water Resource Authority General Revenue Bonds
Series 1993B-95B (MBIA Insured)
12-01-25 5.00 9,000,000 8,776,710
Water Resource Authority General Revenue Bonds
Series B (MBIA Insured)
03-01-22 5.00 10,000,000 9,741,500
Water Resource Authority General Revenue Bonds
Series 1992A
07-15-19 6.50 3,500,000 4,144,140
Water Resource Authority General Revenue Bonds
Series 1998A (FSA Insured)
08-01-37 4.75 24,500,000 22,585,325
Total 193,150,276
Michigan (4.0%)
Brandon School District Counties of Oakland & Lapeer
Unlimited Tax General Obligation Refunding Bonds
Series 1998 (AMBAC Insured)
05-01-22 5.00 2,675,000 2,612,860
05-01-26 5.00 1,700,000 1,657,466
Crawford County Economic Development Corporation
Environmental Improvement Revenue Bonds
Weyerhaeuser Series 1991A
07-15-07 7.125 10,800,000 12,476,268
Detroit Unlimited Tax General Obligation Bonds
Series 1993
04-01-14 6.35 5,725,000 6,223,189
Detroit Unlimited Tax General Obligation Bonds
Series 1995A
04-01-15 6.80 1,375,000 1,591,054
Grosse Ile Township School District Unlimited Tax
General Obligation Refunding Bonds
Series 1998 (FGIC Insured)
05-01-22 5.00 2,300,000 2,246,571
Lincoln Consolidated School District Unlimited Tax
General Obligation Refunding Bonds (FGIC Insured)
05-01-18 5.85 6,455,000 6,822,935
Midland County Economic Development Corporation Pollution Control Limited
Obligation Refunding Revenue Bonds Midland Cogeneration Series 1990 A.M.T.
07-23-09 9.50 35,200,000 38,528,160
Midland County Economic Development Corporation
Pollution Control Limited Obligation Refunding Revenue
Bonds Midland Cogeneration Series 1990C
07-23-09 8.50 18,900,000 20,345,283
Monroe County Pollution Control
Revenue Bonds Detroit Edison A.M.T.
12-01-19 7.75 40,250,000(h) 43,253,455
State Hospital Finance Authority
Hospital Pre-refunded Revenue Bonds
McLaren Obligated Group Series 1991A
09-15-21 7.50 7,500,000 8,416,350
State Hospital Finance Authority
Hospital Refunding Revenue Bonds
Sinai Hospital of Greater Detroit Series 1995
01-01-26 6.70 3,000,000 3,335,670
State Hospital Finance Authority
Refunding Revenue Bonds Detroit Medical Center
Series 1993A
08-15-18 6.50 10,000,000 10,897,000
State Hospital Finance Authority
Refunding Revenue Bonds
Sinai Hospital of Greater Detroit Series 1995
01-01-16 6.625 2,750,000 3,054,067
State Hospital Finance Authority Revenue Bonds
Central Michigan Community Hospital
10-01-27 6.25 2,095,000 2,209,848
State Job Development Authority Pollution Control
Revenue Bonds Chrysler
11-01-99 5.70 4,350,000 4,450,050
Strategic Fund Environmental Improvement Limited
Obligation Refunding Revenue Bonds
Crown Paper Company Series 1997B
08-01-12 6.25 1,100,000 1,134,243
Strategic Fund Limited Obligation Refunding
Revenue Bonds Detroit Edison
Series 1995AA (MBIA Insured)
09-01-25 6.40 12,000,000 13,475,400
Strategic Fund Limited Obligation Refunding Revenue Bonds Great Lakes Pulp &
Fibre Zero Coupon Series 1994 A.M.T.
12-01-27 10.25 21,509,600(e) 20,649,216
Strategic Fund Limited Tax Obligation
Refunding Revenue Bonds Ford Motor
Series 1991A
02-01-06 7.10 16,400,000 19,218,176
Troy City Downtown Development Authority
Revenue Bonds Oakland County
Series 1995A (Asset Guaranty)
11-01-18 6.375 1,000,000 1,110,060
Van Buren Township Tax Increment Revenue Bonds
Series 1994
10-01-16 8.40 3,990,000 4,586,505
Wayne County Special Airport Facilities
Refunding Revenue Bonds Northwest Airlines Series 1995
12-01-15 6.75 11,295,000 12,438,280
Total 240,732,106
Minnesota (3.9%)
Becker Solid Waste Disposal Facility
Revenue Bonds Liberty Paper Series 1994B A.M.T.
08-01-15 9.00% $17,800,000 $19,035,854
Bloomington Health Care Facility Revenue Bonds
Friendship Village of Bloomington Series 1992
04-01-02 8.50 3,060,000 3,307,585
Brainerd Economic Development Authority
Health Care Facility Revenue Bonds
Benedictine Health System St. Joseph Medical Center
02-15-20 8.375 4,670,000 5,095,157
Duluth Economic Development Authority
Health Care Facility Pre-refunded Revenue Bonds
Benedictine Health System St. Mary's Medical Center
Series 1990
02-15-20 8.375 8,300,000 9,055,632
Duluth Housing & Redevelopment Authority
1st Mortgage Revenue Bonds
Lakeshore Lutheran Home
07-01-00 8.00 110,000 110,229
07-01-09 8.25 750,000 751,710
Fergus Falls Health Care Facilities Revenue Bonds
LRHC Long-Term Care Facility Series 1995
12-01-25 6.50 1,530,000 1,666,124
International Falls Solid Waste Disposal
Revenue Bonds Boise Cascade
Series 1990 A.M.T.
01-01-15 7.75 10,000,000 10,503,900
Little Canada Multi-family Housing Revenue Bonds
Housing Alternative Development Company
Series 1997A
12-01-27 6.25 1,755,000 1,762,476
Mahtomedi Multi-family Housing
Revenue Bonds Briarcliff A.M.T.
06-01-36 7.35 1,995,000 2,073,703
Maplewood Elder Care Facility Revenue Bonds
Care Institute Series 1994
01-01-24 7.75 8,000,000 8,840,400
Maplewood Multi-family Housing Refunding Revenue Bonds Carefree Cottages of
Maplewood III Series 1995 A.M.T.
11-01-32 7.20 4,980,000 5,103,305
Mille Lacs Capital Improvement Authority Infrastructure
Revenue Bonds Series 1992A
11-01-12 9.25 4,455,000 5,471,453
Minneapolis Housing & Healthcare Facility Revenue Bonds
Augustana Chapel View Homes Incorporated Series 1997
06-01-27 6.75 2,640,000 2,764,397
Richfield Multi-family Housing
Refunding Revenue Bonds
Village Shores Apartments Series 1996
08-01-31 7.625 4,970,000 5,140,620
Robbinsdale Multi-family Housing Revenue Bonds
Copperfield Hill Series 1996A
12-01-31 7.35 3,500,000 3,569,195
Southern Minnesota Municipal Power Agency
Power Supply System Refunding Revenue Bonds
Series 1992
01-01-18 5.75 32,210,000 33,294,833
Southern Minnesota Municipal Power Agency
Power Supply System Refunding Revenue Bonds
Zero Coupon Series 1994A (MBIA Insured)
01-01-21 6.72 13,500,000(e) 4,252,365
Southern Minnesota Municipal Power Agency
Power Supply System Revenue Bonds
Zero Coupon Series 1994A (MBIA Insured)
01-01-23 6.75 27,500,000(e) 7,812,475
01-01-25 6.75 27,500,000(e) 7,045,225
01-01-26 6.75 27,500,000(e) 6,671,775
01-01-27 6.75 12,450,000(e) 2,869,351
Southern Minnesota Municipal Power Agency
Power Supply System Revenue Bonds
Zero Coupon Series 1994A (MBIA Insured)
01-01-22 6.73 17,500,000(e) 5,235,125
01-01-24 6.75 19,960,000(e) 5,385,008
St. Louis Park Health Care Facilities
Pre-refunded Revenue Bonds
Park Nicollet Medical Center Series 1990A
01-01-20 9.25 6,000,000 6,596,700
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group Series 1993
Inverse Floater (AMBAC Insured)
07-01-05 4.73 10,200,000(d) 10,467,750
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group Series 1993B
Inverse Floater (AMBAC Insured)
07-01-13 5.73 18,000,000(d) 18,270,000
St. Louis Park Multi-family Housing
Refunding Revenue Bonds
Park Boulevard Towers Series 1996A
04-01-31 7.00 11,540,000 11,936,284
St. Paul Housing & Redevelopment Authority
Health Care Facility Revenue Bonds Lynblomsten
Multi-family Rental Housing Series 1993B
11-01-24 7.00 2,780,000 2,822,117
St. Paul Housing & Redevelopment Authority
Health Care Facility Revenue Bonds
Lyngblomsten Care Center Series 1993A
11-01-06 7.125 1,800,000 1,930,500
11-01-17 7.125 2,735,000 2,932,194
St. Paul Port Authority Redevelopment Multi-family
Refunding Revenue Bonds Burlington Apartments
Series A (GNMA Insured)
05-01-31 5.75 14,355,000 14,681,002
St. Paul Port Authority Redevelopment Multi-family
Subordinate Refunding Revenue Bonds
Burlington Apartments Series A
02-01-31 8.625 3,770,000 3,829,792
Vadnais Heights Multi-family Housing
Refunding Revenue Bonds Cottages of Vadnais Heights
Series 1995 A.M.T.
12-01-31 7.00 1,980,000 2,028,074
Washington County Housing & Redevelopment
Authority Refunding Revenue Bonds
Woodbury Multi-family Housing Series 1996
12-01-23 6.95 4,905,000 5,029,832
Total 237,342,142
Mississippi (0.7%)
Claiborne County Pollution Control Refunding Revenue Bonds
System Energy Resources Series 1995
05-01-25 7.30 4,000,000 4,227,640
Claiborne County Pollution Control Revenue Bonds
Middle South Energy
12-01-13 9.50 1,500,000 1,578,645
Harrison County Waste Water Management District
Refunding Bonds Series 1986
02-01-15 5.00 4,250,000 4,322,038
Jackson Industrial Development Revenue Bonds Dorsey
04-16-05 8.00 422,000 426,186
Lowndes County Solid Waste Disposal Pollution Control
Refunding Revenue Bonds Weyerhaeuser Series 1989
Inverse Floater
04-01-22 8.00 4,000,000(d) 4,801,800
Lowndes County Solid Waste Disposal Pollution Control Revenue Bonds
Weyerhaeuser Series 1989 A.M.T.
12-01-05 7.875 12,250,000 13,186,758
Medical Center Educational Building
Hospital Refunding Revenue Bonds
University of Mississippi Medical Center
Series 1998B (AMBAC Insured)
12-01-23 5.50 14,000,000 14,876,960
Total 43,420,027
Missouri (0.7%)
Regional Convention & Sports Complex Authority Bonds
St. Louis Sponsor Series 1991B
08-15-21 7.00 5,810,000 6,575,410
Sikeston Electric System Refunding Revenue Bonds
Series 1992 (MBIA Insured)
06-01-02 5.80 4,165,000 4,420,939
St. Louis Industrial Development Authority
Refunding Revenue Bonds Kiel Center
Multi-purpose Arena Series 1992 A.M.T.
12-01-24 7.875 15,400,000 16,755,508
St. Louis Regional Convention & Sports Complex Authority
Refunding Revenue Bonds Series 1991C
08-15-21 7.90 2,575,000 3,021,788
St. Louis Regional Convention & Sports Complex Authority
Revenue Bonds Series 1991C
08-15-21 7.90 125,000 139,495
State Enviornment & Improvement Energy Resources
Authority Pollution Control Revenue Bonds Chrysler
10-01-99 5.70 9,250,000 9,395,410
Total 40,308,550
Nebraska (--%)
Omaha Public Power District Electric System
Revenue Bonds Series 1986A
02-01-15 6.00 1,370,000 1,511,480
Nevada (0.8%)
Clark County Collateralized Pollution Control Revenue Bonds
Nevada Power A.M.T.
10-01-09 7.80 11,850,000 12,509,097
Clark County Industrial Development Revenue Bonds
Nevada Power Series 1990 A.M.T.
06-01-20 7.80 5,000,000 5,362,550
Clark County Passenger Facility Charge Airport
Refunding Revenue Bonds
Las Vegas McCarran Intl Airport
Series 1998 (MBIA Insured)
07-01-22 4.75 10,000,000 9,437,900
Las Vegas Redevelopment Agency Tax Increment
Subordinate Lien Revenue Bonds Series 1994A
06-15-10 6.00 2,000,000 2,102,000
06-15-14 6.10 2,750,000 2,876,665
Las Vegas Special Improvement District 707
Local Improvement Bonds
Summerlin Area Series 1996
06-01-16 7.10 6,000,000 6,229,680
Washoe County Hospital Revenue Bonds
Washoe Medical Center Series 1993A
06-01-15 6.00 7,250,000 7,612,935
Total 46,130,827
New Hampshire (2.0%)
Business Financial Authority Pollution Control
Refunding Revenue Bonds United Illuminating
Series 1993A
10-01-33 5.875 13,200,000 13,445,784
Business Financial Authority Pollution Control &
Solid Waste Disposal Refunding Revenue Bonds
Crown Paper Company Series 1996
01-01-22 7.75 4,255,000 4,940,055
Industrial Development Authority Pollution Control
Revenue Bonds State Public Service Series 1991B
05-01-21 7.50 51,485,000 54,696,119
Industrial Development Authority Pollution Control Revenue Bonds State Public
Service Series 1991C A.M.T.
05-01-21 7.65 25,000,000 26,693,500
Industrial Development Authority Pollution Control
Revenue Bonds United Illuminating Series 1989A A.M.T.
12-01-14 8.00 8,000,000 8,530,800
State Higher Education & Health Facility Authority Hospital
Revenue Bonds Hitchcock Clinic Series 1994
(MBIA Insured)
07-01-24 6.00 13,000,000 13,937,950
Total 122,244,208
New Jersey (0.2%)
Health Care Facility Finance Authority Revenue Bonds
St. Peter Medical Center Series 1994F (MBIA Insured)
07-01-16 5.00 10,000,000 9,835,900
Health Care Facility Finance Authority Revenue Bonds
Zurbrugg Memorial Hospital Series C
07-01-12 8.50 3,500,000 3,578,085
Total 13,413,985
New Mexico (1.5%)
Albuquerque Health Care System Revenue Bonds
Lovelace Medical Fund
03-01-11 10.25 55,000 55,829
Bernalillo County Muti-family Housing Revenue Bonds
Series 1997D
04-01-27 7.70 9,985,000 10,256,492
Farmington Pollution Control Refunding Revenue Bonds
Series 1996A-B
12-01-16 6.30 10,000,000 10,760,100
Farmington Pollution Control Refunding Revenue Bonds
Series 1997A
10-01-20 6.95 4,000,000 4,520,440
Farmington Pollution Control Refunding Revenue Bonds
State Public Service San Juan Series 1994A
08-15-23 6.40 30,650,000 32,438,734
Farmington Power Refunding Revenue Bonds
Generating Division
01-01-13 9.875 5,000,000 6,639,600
Las Vegas Hospital Facility Refunding Revenue Bonds
Northeastern Regional Hospital Series 1987
08-01-13 9.625 5,525,000 5,641,080
Lordsberg Pollution Control Refunding Revenue Bonds
Phelps Dodge
04-01-13 6.50 20,000,000 21,887,200
Total 92,199,475
New York (9.4%)
Battery Park City Authority Refunding Revenue Bonds
Series 1993A
11-01-10 5.50 9,940,000 10,414,039
Dormitory Authority New York City
University System Consolidated 2nd Generation
Resource Revenue Bonds Series 1994A
07-01-18 5.75 5,500,000 5,924,160
Dormitory Authority New York City University System
Consolidated 2nd Generation Resource Revenue Bonds
Series 1990C
07-01-16 6.00 39,465,000 40,142,614
07-01-17 5.00 20,820,000 20,147,514
Dormitory Authority New York City University System
Consolidated 2nd Generation Resource Revenue Bonds
Series 1990D
07-01-09 7.00 5,000,000 5,769,650
Dormitory Authority New York Court Facility Lease
Revenue Bonds Series 1993A
05-15-16 5.375 11,000,000 11,085,470
Dormitory Authority New York State
Memorial Sloan-Kettering Cancer Center
Series 1998 (MBIA Insured)
07-01-20 5.75 7,500,000 8,236,050
07-01-23 5.50 7,700,000 8,304,296
Dormitory Authority New York State University Education
Facility Revenue Bonds Series 1993A
05-15-13 5.50 24,530,000 26,077,352
Long Island Power Authority
Revenue Bonds Series A
12-01-26 5.25 8,445,000 8,334,286
12-01-29 5.50 7,500,000 7,575,375
Metropolitan Transportation Authority
Transportation Facility Revenue Bonds
Series 1998A (MBIA Insured)
07-01-24 4.75 12,850,000 12,133,844
NewYork & New Jersey Port Authority Special Obligation Revenue Bonds KIAC
Partners Series 4 A.M.T.
10-01-19 6.75 3,500,000 3,849,755
New York City General Obligation Bonds Series 1992B
02-01-00 7.40 30,000,000 31,575,000
New York City General Obligation Bonds Series 1996F-G
02-01-19 5.75 5,500,000 5,718,735
02-01-20 5.75 2,325,000 2,415,675
New York City General Obligation Bonds
Series 1998H
08-01-22 5.00 30,000,000 28,739,700
New York City Industrial Development Agency
Special Facility Revenue Bonds American Airlines
Series 1990 A.M.T.
07-01-20 8.00 16,130,000 16,778,749
New York City Municipal Water Finance Authority
Water & Sewer System Refunding Revenue Bonds
Series 1998D (MBIA Insured)
06-15-25 4.75 8,000,000 7,535,520
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds Series B
06-15-17 5.00 6,255,000 6,194,201
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds
Series 1994B Inverse Floater (MBIA Insured)
06-15-09 6.58 15,500,000(d) 16,526,875
New York City Municipal Water Financial Authority
Water & Sewer System Revenue Bonds Series A
06-15-21 6.25 55,500,000 58,523,640
New York City Pre-refunded Unlimited General
Obligation Bonds Series 1994B-1
08-15-16 7.00 2,945,000 3,419,469
New York City Transitional Finance Authority
Future Tax Secured Sales Tax Revenue Bonds
Series 1998B
11-15-27 4.50 15,000,000 13,467,000
New York City Un-refunded Balance Unlimited
General Obligation Bonds Series 1994B-1
08-15-16 7.00 13,555,000 15,690,455
New York City Unlimited Tax General
Obligation Bonds Series 1996G
02-01-17 5.75 20,000,000 20,857,200
New York City Unlimited Tax General
Obligation Bonds Series 1998F
08-01-23 5.00 7,235,000 6,924,980
New York City Unlimited Tax General
Obligation Bonds Series 1998G
08-01-22 5.00 10,000,000 9,579,900
North Hempstead Nassau County New York
Various Purpose Bonds
Series 1998A (FGIC Insured)
01-15-23 4.75 3,100,000 2,927,857
Port Authority Special Project Bonds La Guardia
Airport Passenger Terminal Continental &
Eastern Airlines A.M.T.
12-01-06 9.00 2,645,000 2,958,300
Port Authority Special Project Bonds La Guardia
Airport Passenger Terminal Continental &
Eastern Airlines Series 2 A.M.T.
12-01-10 9.00 8,800,000 9,842,360
12-01-15 9.125 17,500,000 19,622,750
State Dormitory Authority State University Education Facility
Pre-refunded Revenue Bonds Series 1990A
05-15-12 7.70 10,000,000 10,895,900
State Housing Finance Agency Service Contract Obligation
Revenue Bonds Series 1995A
03-15-25 6.50 12,475,000 13,804,211
State Housing Finance Agency State University Construction
Refunding Bonds Series 1986A
05-01-13 6.50 3,500,000 4,099,060
State Local Government Assistance
Sales Tax Refunding Revenue Bonds
Series 1997B (MBIA Insured)
04-01-20 4.875 7,000,000 6,748,840
04-01-21 5.00 28,575,000 27,963,781
State Medical Facilities Finance Agency Mental Health Services
Improvement Refunding Revenue Bonds Series 1993D
08-15-23 5.25 15,000,000 14,853,900
State Medical Facilities Finance Agency Mental Health Services
Improvement Refunding Revenue Bonds Series 1993F
02-15-19 5.25 5,790,000 5,731,868
State Urban Development Correctional Capital
Facilities Refunding Revenue Bonds Series 1993A
01-01-21 5.25 12,110,000 11,936,100
State Urban Development Correctional Facility
Refunding Revenue Bonds Series A
01-01-16 5.50 2,750,000 2,782,148
State Urban Development Correctional Facility
Revenue Bonds Series 6
01-01-25 5.375 9,000,000 9,022,950
State Urban Development Correctional
Facility Services Contract Lease Revenue Bonds
Series 1998A (FSA Insured)
01-01-28 5.00 10,000,000 9,743,300
Total 564,874,829
North Carolina (3.7%)
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1986A
01-01-17 5.00 6,500,000 6,480,883
01-01-18 4.00 8,675,000 7,678,590
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1988A
01-01-26 6.00 1,940,000 2,220,369
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1989A
01-01-10 7.50 29,160,000 36,011,923
01-01-11 5.50 37,800,000 37,858,590
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1991A
01-01-19 5.75 55,000,000 55,367,950
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1993B
01-01-12 6.25 24,655,000 26,129,616
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1994B
01-01-07 7.25 5,000,000 5,817,300
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series B
01-01-09 6.125 10,000,000 10,872,800
Eastern Municipal Power Agency Power System
Revenue Bonds Series 1993D
01-01-13 5.875 2,300,000 2,375,210
Municipal Power Agency 1 Catawba Electric
Revenue Bonds Series 1993
Inverse Floater (MBIA Insured)
01-01-12 6.72 7,400,000(d) 7,918,000
01-01-20 6.92 15,000,000(d) 15,712,500
Offiss Incorporated Recreational Facilities
Gross Revenue Bonds Smoky Mountain Golf Course
Series 1994-96
03-01-19 8.38 8,295,000(l) 7,864,655
Total 222,308,386
North Dakota (0.3%)
Fargo Hospital Refunding Revenue & Improvement Bonds
Dakota Hospital Series 1992
11-15-12 6.875 3,000,000 3,366,630
11-15-22 7.00 4,250,000 4,788,900
Ward County Health Care Facilities
Refunding Revenue Bonds Series 1996B
07-01-21 6.25 4,000,000 4,272,040
Ward County Health Care Facilities
Refunding Revenue Bonds Trinity Group Series 1996A
07-01-26 6.25 6,110,000 6,525,541
Total 18,953,111
Ohio (3.1%)
Air Quality Development Authority Pollution Control
Refunding Revenue Bonds Cleveland Electric
Company Series 1997B
08-01-20 6.00 10,000,000 10,420,800
Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Ohio Edison Series A
05-15-29 5.95 13,300,000 13,763,771
Air Quality Development Authority Pollution Control
Revenue Bonds Ohio Edison Series 1989A
07-01-23 7.625 6,750,000 7,069,275
Bellefontaine Hospital Facility
Refunding Revenue Bonds
Mary Rutan Health Association of Logan County Series 1993
12-01-13 6.00 5,330,000 5,561,908
Butler County Hospital Facility Improvement
Refunding Revenue Bonds
Fort Hamilton-Hughes Memorial Center Series 1991
01-01-10 7.50 9,800,000 10,632,902
Carroll Water & Sewer District Unlimited Tax
General Obligation Bonds
12-01-10 6.25 2,000,000 1,993,300
Carroll Water & Sewer District
Water System Improvement Unlimited Tax
General Obligation Bonds
12-01-10 6.25 8,340,000 8,772,846
Cleveland Parking Facilities Improvement
Revenue Bonds Series 1992
09-15-22 8.10 15,000,000 17,520,000
Coshocton County Solid Waste Disposal
Refunding Revenue Bonds
Stone Container Series 1992
08-01-13 7.875 17,500,000 19,398,750
Cuyahoga County Health Care Facilities
Refunding Revenue Bonds
Judson Retirement Community Series 1996A
11-15-13 7.25 2,080,000 2,272,795
11-15-18 7.25 4,130,000 4,512,810
Erie County Hospital Improvement Refunding
Revenue Bonds Firelands Community Hospital Series 1992
01-01-15 6.75 6,540,000 7,115,585
Lorain County Independent Living & Hospital Facilities
Refunding Revenue Bonds
Elyria United Methodist Series 1996C
06-01-22 6.875 3,100,000 3,412,139
Marion County Health Care Facilities Improvement
Refunding Revenue Bonds United Church Homes
Series 1993
11-15-10 6.375 2,000,000 2,117,140
Marion County Health Care Facilities
Refunding & Improvement Revenue Bonds
United Church Homes Series 1993
11-15-15 6.30 1,800,000 1,897,236
Montgomery County Health Facilities
Refunding Revenue Bonds
Friendship Village Dayton Series 1990A
02-01-16 9.25 9,025,000 9,941,038
State Department of Administrative Services
Certificates of Participation
Rickenbacker Port Authority
Series 1997 (AMBAC Insured)
06-15-17 5.00 1,300,000 1,288,937
State Water Development Authority Collateralized Pollution Control
Revenue Bonds Cleveland Electric Series 1989 A.M.T.
10-01-23 8.00% $10,000,000 $10,335,600
State Water Development Authority Collateralized Pollution Control
Revenue Bonds Toledo Edison Series 1989 A.M.T.
10-01-23 8.00 8,500,000 8,943,615
State Water Development Authority
Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995
08-01-25 7.70 13,000,000 14,926,210
State Water Development Authority Pollution Control
Refunding Revenue Bonds Toledo Edison
Series 1994A A.M.T.
10-01-23 8.00 10,000,000 11,509,900
Water Development Authority Pollution Control
Revenue Bonds Ohio Edison A.M.T.
10-01-23 8.10 10,000,000 10,652,800
Total 184,059,357
Oklahoma (1.1%)
Grand River Dam Authority Refunding Revenue Bonds
Series 1987
06-01-12 5.00 10,105,000 10,105,707
Hinton Economic Development Authority
Certificate of Participation Dominion Leasing
Series 1990A
07-01-15 9.75 19,090,000 23,025,213
Hinton Economic Development Authority
Certificate of Participation Series 1994
07-01-15 8.75 11,675,000 13,228,592
Jackson County Hospital Authority
Refunding Revenue Bonds
Jackson County Memorial Hospital Series 1994
08-01-15 7.30 6,580,000 7,147,328
Midwest City Memorial Hospital Authority Hospital
Revenue Bonds Series 1992
04-01-22 7.375 7,815,000 8,815,945
Stillwater Medical Center Authority
Hospital Revenue Bonds Series 1997B
05-15-19 6.50 1,750,000 1,887,340
Total 64,210,125
Oregon (0.5%)
State Health Housing Educational & Cultural Facilities
Authority Revenue Bonds Oregon Baptist Retirement
Homes-Weidler Retirement Center Series 1995
11-15-26 8.00 7,720,000 8,661,995
Western Generation Agency Revenue Bonds
Wauna Cogeneration Series 1994A
01-01-21 7.125 13,600,000 14,767,968
Western Generation Agency Revenue Bonds
Wauna Cogeneration Series 1994B A.M.T.
01-01-16 7.40 9,000,000 9,898,650
Total 33,328,613
Pennsylvania (4.1%)
Allegheny County Industrial Development Authority
Environment Improvement Revenue Bonds
USX Corporation Series 1994A
12-01-20 6.70 6,000,000 6,632,520
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995
05-01-25 7.625 7,500,000 8,551,800
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995A
07-15-25 7.75 21,150,000 24,454,899
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding Revenue Bonds
Toledo Edison Series 1995A
05-01-20 7.75 14,000,000 16,252,600
Beaver County Industrial Development Authority
Pollution Control Revenue Bonds Ohio Edison
09-01-24 7.75 34,650,000 36,541,197
Beaver County Industrial Development Authority
Pollution Control Revenue Bonds
Toledo Edison-Beaver Valley Series 1995
05-01-20 7.625 11,700,000 13,370,058
Butler County Industrial Development Authority Health Care
Refunding Revenue Bonds Pittsburgh Lifetime Care
Community Sherwood Oaks Series 1993
06-01-11 5.75 2,000,000 2,097,360
06-01-16 5.75 3,000,000 3,095,850
Convention Center Authority Refunding Revenue Bonds
Philadelphia Series 1994A
09-01-19 6.75 5,300,000 5,924,976
Delaware County Authority 1st Mortgage Revenue Bonds
Riddle Village Series 1996
06-01-26 7.00 10,000,000 10,489,200
Delaware County Authority 1st Mortgage Revenue Bonds
Whitehorse Village Continuing Care Series 1989
07-01-09 9.70 1,000,000 1,089,980
07-01-19 9.70 10,000,000 10,899,800
Delaware County Industrial Development Authority
Pollution Control Refunding Revenue Bonds
Philadelphia Electric Series A
04-01-21 7.375 900,000 975,726
Harrisburg Dauphin County General Obligation Bonds
Zero Coupon Series 1997F (AMBAC Insured)
09-15-20 5.50 3,000,000(e) 951,000
09-15-21 5.52 1,000,000(e) 300,330
09-15-22 5.52 1,000,000(e) 285,080
Montgomery County Higher Education & Health Authority
Retirement Community Revenue Bonds G.D.L. Farms
Series A
01-01-20 9.50 3,000,000 3,304,020
Philadelphia Gas Works Revenue Bonds Series 13
06-15-21 7.70 4,150,000 4,654,391
Philadelphia Hospital & Higher Education Facility
Authority Hospital Revenue Bonds
Albert Einstein Medical Center
04-01-11 7.625 15,545,000 16,243,281
Philadelphia Municipal Authority Lease
Refunding Revenue Bonds Series 1993D
07-15-13 6.25 2,500,000 2,662,050
07-15-17 6.30 1,550,000 1,652,486
Philadelphia Water & Sewer Revenue Bonds Series 16
08-01-10 7.50 13,200,000 14,778,588
08-01-18 7.00 14,000,000 15,221,220
Philadelphia Water & Wastewater Revenue Bonds
Series 1993 (CGIC Insured)
06-15-15 5.50 11,000,000 11,250,800
State Department of General Services Certificate of
Participation Series 1994A (AMBAC Insured)
07-01-15 5.00 25,000,000 24,604,000
Wilkins Industrial Development Authority Revenue Bonds
Retirement Community Longwood at Oakmont
Series 1991A
01-01-21 10.00 8,495,000 9,922,330
Total 246,205,542
Puerto Rico (1.0%)
Commonwealth of Puerto Rico Public Improvement
General Obligation Refunding Revenue Bonds
Series 1998
07-01-23 4.50 13,200,000 11,895,576
Electric Power Agency Revenue Bonds Series N
07-01-10 6.00 40,000,000 40,705,600
Electric Power Agency Revenue Bonds Series O
07-01-10 6.00 5,305,000 5,398,580
Total 57,999,756
South Carolina (1.0%)
Cherokee County Spring City Industrial Development
Revenue Bonds Knitting Cluett Peabody
09-01-09 7.40 5,200,000 6,260,748
Piedmont Municipal Power Agency Electric
Refunding Revenue Bonds Series 1986B
01-01-24 5.75 7,550,000 7,550,226
Public Service Authority Electric System Expansion
Revenue Bonds Santee Cooper Series 1991D
07-01-31 6.625 14,975,000 16,650,104
Public Service Authority Electric System Revenue Bonds
Santee Cooper Series 1991B
07-01-31 6.00 8,000,000 8,453,120
Public Service Authority Electric System Revenue Bonds
Santee Cooper Series 1993A Inverse Floater
(MBIA Insured)
06-28-13 6.94 17,700,000(d) 18,894,750
Total 57,808,948
South Dakota (0.5%)
Heartland Consumers Power District Electric System
Refunding Revenue Bonds Series 1986
01-01-10 6.00 10,205,000 11,171,515
Sioux Falls Multi-family Housing Revenue Bonds
Series 1996A
12-01-34 7.50 12,200,000 13,212,478
State Lease Revenue Trust Certificates Series 1993
(CGIC Insured)
09-01-17 6.70 7,260,000 8,726,375
Total 33,110,368
Tennessee (0.4%)
Nashville & Davidson Counties Health & Education
Facilities Board Revenue Bonds
Zero Coupon Escrowed to Maturity
06-01-21 5.38 29,109,000(e) 8,544,074
Nashville & Davidson Counties Health & Education
Facilities 1st Mortgage Revenue Bonds
Blakeford at Green Hills CCRC
07-01-24 9.25 12,230,000 15,577,718
Total 24,121,792
Texas (6.8%)
Alliance Airport Authority Special Facility Revenue Bonds
American Airlines Series 1990 A.M.T.
12-01-29 7.50 37,400,000 40,356,844
Austin Combined Utility Systems Refunding Revenue Bonds
Series 1985
05-15-10 10.75 10,000,000 11,263,700
05-15-15 10.75 2,000,000 2,252,740
Austin Combined Utility Systems Refunding Revenue Bonds
Series 1986
11-15-13 5.00 20,000,000 19,914,400
Board of Regents of the University System General
Refunding Revenue Bonds Series 1986
08-15-07 6.50 2,565,000 2,880,905
Brazos River Authority Collateralized Pollution Control
Revenue Bonds Texas Utility Electric
Series 1989A A.M.T.
01-01-19 8.25 14,000,000 14,582,260
Brazos River Authority Collateralized Pollution Control
Revenue Bonds Texas Utility Electric
Series 1990A A.M.T.
02-01-20 8.125 13,205,000 14,201,185
Brazos River Authority Collateralized Pollution Control
Revenue Bonds Texas Utility Electric
Series 1991A A.M.T.
03-01-21 7.875 24,450,000 26,857,347
Castlewood Municipal Utility District Water &
Sewer Systems Unlimited Tax & Refunding Revenue Bonds
Series 1997
04-01-14 6.75 2,860,000 3,007,176
Colony Municipal Utility District 1 Denton County
Series 1980
08-01-07 9.25 1,000,000 1,362,060
Cypress Hill Municipal Utility District 1
General Obligation Bonds
09-01-22 5.30 2,045,000(k) 2,004,611
Dallas & Fort Worth International Airport Special Facility
Revenue Bonds American Airlines Series 1990 A.M.T.
11-01-25 7.50 26,200,000 28,243,338
Dallas & Fort Worth International Airport Special Facility
Revenue Bonds Delta Air Lines Series 1991 A.M.T.
11-01-26 7.125 13,500,000 14,411,115
Dallas Civic Center Miscellaneous Refunding Revenue
& Improvement Bonds Series 1998 (MBIA Insured)
08-15-23 4.875 29,850,000 28,655,403
Denison Hospital Authority Hospital Revenue Bonds
Texoma Medical Center Series 1994
08-15-24 7.10 3,950,000 4,418,944
Harris County Health Facilities Hospital Revenue Bonds
Memorial Hospital Series 1992
06-01-15 7.125 16,000,000 17,934,880
Harris County Industrial Development Marine Terminal
Refunding Revenue Bonds GATX Terminal Series 1992
02-01-22 6.95 15,000,000 16,291,800
Hidalgo County Health Services Corporation
Hospital Revenue Bonds Mission Hospital
Series 1996
08-15-26 6.875 7,880,000 8,665,321
Interstate Municipal Utility District
Unlimited Tax Bonds Harris County Series 1996
09-01-21 6.75 3,020,000 3,267,459
Karnes County Public Facility Lease Revenue Bonds
03-01-15 9.20 15,645,000 16,763,930
Kings Manor Municipal Utility District
Waterworks & Sewer Systems Combination
Unlimited Tax & Revenue Bonds Series 1995
03-01-18 6.875 2,470,000 2,710,899
Lower Colorado River Authority Combined Utility
Junior Lien Revenue Bonds 7th Supplement
Series 1998 (FSA Insured)
01-01-28 4.75 10,500,000 9,850,050
Midland County Hospital District Revenue Bonds Series 1992
06-01-16 7.50 3,025,000 3,413,924
Mineral Wells Independent School Districts Palo Pinto &
Parker Counties Unlimited Tax General Obligation School
Building & Refunding Bonds Series 1998
Permanent School Fund Guarantee
02-15-22 4.75 5,430,000 5,112,888
02-15-28 4.75 8,345,000 7,791,309
Municipal Power Agency Refunding Revenue Bonds
(MBIA Insured)
09-01-09 5.25 8,000,000 8,502,960
Municipal Power Agency Revenue Bonds
09-01-13 5.50 7,410,000 7,416,299
Plano Collin & Denton Counties Limited Tax General
Obligation Bonds Series 1986
03-01-06 6.00 1,600,000 1,609,088
Rio Grande City Consolidated Independent School District
Public Facilities Lease Revenue Bonds Series 1995
07-15-10 6.75 4,000,000 4,382,840
Sabine River Authority Collateralized Pollution Control
Revenue Bonds Texas Utilities Electric Series 1990A A.M.T.
02-01-20 8.125 30,500,000 32,800,920
San Antonio Electric & Gas Systems
Refunding Revenue Bonds Series 1989B
02-01-16 5.00 11,000,000 10,809,260
San Antonio Electric & Gas Systems
Revenue Bonds Series 1987
02-01-14 5.00 8,680,000 8,632,781
State Public Finance Authority Unlimited Tax
General Obligation Refunding Bonds
Zero Coupon Series 1998
10-01-13 5.23 4,000,000(e) 1,895,080
10-01-14 5.28 6,000,000(e) 2,622,540
Uvalde Consolidated Independent School District
General Obligation Bonds
Permanent School Fund Guarantee
08-01-22 4.50 5,100,000 4,624,629
West Side Calhoun County Navigation District
Solid Waste Disposal Revenue Bonds
Union Carbide Chemical & Plastics Series 1991 A.M.T.
03-15-21 8.20 17,550,000 19,430,307
Total 408,941,192
Utah (1.7%)
Association Municipal Power System Hunter Series A
(AMBAC Insured)
07-01-12 5.50 4,000,000 4,001,640
Carbon County Solid Waste Disposal
Refunding Revenue Bonds Sunnyside
Cogeneration Associates Series 1991 A.M.T.
07-01-18 9.25 25,350,000(l) 13,942,500
Housing Finance Agency Single Family Mortgage
Senior Bonds Series 1991C (FGIC Insured)
07-01-11 7.30 740,000 781,714
07-01-16 7.35 585,000 617,520
Hurricane Health Facilities Development Revenue Bonds
Mission Health Services Series 1990
07-01-20 10.50 7,570,000 8,447,741
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series 1993B Inverse Floater
07-01-11 7.06 7,600,000(d) 8,246,000
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series 1996C (MBIA Insured)
07-01-17 5.70 46,000,000 48,360,720
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series F (AMBAC Insured)
07-01-13 5.00 5,000,000 4,999,800
Intermountain Power Agency Power Supply
Revenue Bonds Series 1987A (MBIA Insured)
07-01-12 5.00 8,000,000 8,000,080
Tooele County Pollution Control Refunding Revenue Bonds
Laidlaw Environmental Services Incorporated
Series 1997A A.M.T.
07-01-27 7.55 4,000,000 4,430,400
Total 101,828,115
Virginia (0.7%)
Fairfax County Economic Development Authority
Educational Facilities Revenue Bonds
Browne Academy Series 1998
10-01-08 6.00 1,500,000 1,486,215
10-01-23 6.45 5,200,000 5,248,776
Fairfax County Redevelopment & Housing Authority
Multi-family Housing Revenue Bonds
Burkeshire Commons Series 1996
10-01-36 7.60 13,200,000 14,186,436
Hopewell City Industrial Development Authority
Pollution Control Refunding Revenue Bonds
Stone Container Series 1992
05-01-10 8.25 3,170,000 3,542,095
Housing Development Authority Commonwealth
Mortgage Bonds Series 1992A
01-01-33 7.15 15,000,000 15,737,550
Prince William County Service Authority Water & Sewer
Systems Refunding Revenue Bonds
Series 1997 (FGIC Insured)
07-01-29 4.75 2,375,000 2,228,391
Total 42,429,463
Washington (2.9%)
King County Housing Authority Pooled Housing
Refunding Revenue Bonds Series 1995A
03-01-26 7.20 4,000,000 4,132,960
Longview Industrial Development Corporation Solid Waste
Revenue Bonds Weyerhauser Series 1991 A.M.T.
02-01-13 7.45 20,000,000 21,716,000
Public Power Supply System Nuclear Project 1
Refunding Revenue Bonds Bonneville Power Administration
Series 1993A Inverse Floater (FSA Insured)
07-01-11 7.22 25,000,000(d) 29,468,750
Public Power Supply System Nuclear Project 1
Refunding Revenue Bonds Series A
07-01-15 6.50 21,000,000 23,184,210
Public Power Supply System Nuclear Project 1
Revenue Bonds Series 1990A
07-01-17 6.00 38,875,000 40,432,333
Public Power Supply System Nuclear Project 2
Revenue Bonds Series 1994A
07-01-11 5.375 10,000,000 10,199,800
Snohomish County Public Utilitiy District 1
Generation System Revenue Bonds Series 1986A
01-01-20 5.00 17,750,000 18,006,487
State General Obligation
Refunding Revenue Bonds
Zero Coupon Series 1997A
07-01-19 5.95 16,260,000(e) 5,428,726
State Higher Education Facilities Authority College
Refunding Revenue Bonds
Gonzaga University
Series 1998 (MBIA Insured)
04-01-17 5.00 5,000,000 4,915,800
State Housing Finance Commission
Refunding Revenue Bonds Horizon House
Series 1995A (Asset Guaranty)
07-01-17 6.00 3,700,000 3,906,793
07-01-27 6.125 3,850,000 4,086,159
State Public Power Supply System Nuclear Project 1
Electric Refunding Revenue Bonds Series 1998A
07-01-17 5.125 7,455,000 7,351,972
Total 172,829,990
West Virginia (1.2%)
Kanawha County Pollution Control
Revenue Bonds Union Carbide Series 1984
08-01-04 7.35 3,000,000 3,447,870
Mason County Pollution Control Refunding Revenue Bonds
Appalachian Power Series 1992J
10-01-22 6.60 25,000,000 26,954,500
Pea Ridge Public Service District Sewer
Refunding Revenue Bonds Series 1990
05-01-20 9.25 2,540,000 2,852,903
Putnam County Pollution Control Revenue Bonds
Appalachian Power Series C
07-01-19 6.60 10,600,000 11,369,560
School Building Authority Capital Improvement
Revenue Bonds Series 1991A
07-01-21 6.00 20,785,000 21,692,057
South Charleston Pollution Control Refunding
Revenue Bonds Union Carbide Series 1985
08-01-05 7.625 3,000,000 3,518,400
Total 69,835,290
Wisconsin (0.6%)
Health & Education Facilities Authority
Revenue Bonds St. Clare Hospital
02-15-22 7.00% $12,115,000 $13,092,681
Health Facilities Authority Refunding Revenue Bonds
Villa Clement Series 1986
06-01-12 8.75 4,311,000 4,322,553
Madison Industrial Development
Refunding Revenue Bonds Madison Gas & Electric
Series 1992B
10-01-27 6.70 19,300,000 21,025,613
Total 38,440,847
Wyoming (0.2%)
Natrona County Hospital Revenue Bonds
Wyoming Medical Center
09-15-10 8.125 6,500,000 7,203,690
State Farm Loan Board Capital Facilities
Revenue Bonds Series 1994
04-01-24 6.10 5,000,000 5,376,850
Total 12,580,540
Total municipal bonds
(Cost: $5,176,699,401) $5,779,947,537
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (2.3%)
Issuer (c,g,i) Annualized Amount Value(a)
yield on date payable at
of purchase maturity
<S> <C> <C> <C>
Municipal notes
Burke County Georgia Development Authority Pollution
Control Revenue Bonds Georgia Power Plant Vogtle
07-01-24 3.95% $100,000 $100,000
09-01-26 3.95 1,200,000 1,200,000
California State Revenue Anticipation Notes Series 1997
06-30-98 3.63 20,000,000 20,020,295
Carbon County Pollution Control Revenue Bonds
Pacificorp V.R.
11-01-24 4.00 2,300,000 2,300,000
City of Houston Tax & Revenue Anticipation Notes
Series 1997
06-30-98 3.63 3,600,000 3,603,537
Cohasset Revenue Bonds Minnesota Power
Series A V.R.D.N.
06-01-20 4.00 1,200,000 1,200,000
Delta County Economic Development Authority
Mead Escanaba Paper V.R.
12-01-13 4.00 1,900,000 1,900,000
Farmington Pollution Control Revenue Bonds
Arizona Public Service Series B V.R.
05-01-24 3.95 2,300,000 2,300,000
09-01-24 3.95 1,500,000 1,500,000
Hapeville Georgia Industrial Development Authority
Hapeville Hotel V.R.
11-01-15 3.95 7,900,000 7,900,000
Iowa Higher Education Authority Revenue Bonds
Palmer Chiropractic
04-01-27 4.10 825,000 825,000
Joliet Regional Port District Marine Terminal
Revenue Bonds Exxon
10-01-24 4.00 1,300,000 1,300,000
Kansas City Industrial Development Authority
Hospital Refunding Revenue Bonds Series 1985
10-15-14 3.95 1,100,000 1,100,000
Louisiana State Offshore Terminal Authority Deepwater Port
Revenue Bonds Loop Incorporated V.R.
09-01-08 4.00 1,400,000 1,400,000
Maricopa County Arizona Pollution Control Revenue Bonds
Arizona Public Service
Series 1994A V.R.
05-01-29 4.00 1,900,000 1,900,000
Maricopa County Arizona Pollution Control Revenue Bonds
Arizona Public Service
Series 1994F V.R.
05-01-29 4.00 4,000,000 4,000,000
Maricopa County Arizona Pollution Control Revenue Bonds
Series 1994C V.R.
05-01-29 3.95 1,400,000 1,400,000
Maricopa County Arizona Public Service
Bank of America V.R.
05-01-29 4.05 1,700,000 1,700,000
Massachusetts State Health & Educational Facility
Capital Assets Series 1985B V.R.
01-01-35 3.75 2,900,000 2,900,000
Massachusetts State Health & Educational Facility
Capital Assets V.R.
01-01-35 3.95 4,700,000 4,700,000
Massachusetts State Health & Educational Facility
Series 1985B V.R.
07-01-05 3.80 400,000 400,000
McIntosh Alabama Industrial Development Pollution
Control Revenue Bonds Ciba Geigy
07-01-04 4.00 700,000 700,000
Minneapolis St. Paul Minnesota Housing & Redevelopment
Health Care Children's Hospital Series 1995B V.R.
08-15-25 4.05 510,000 510,000
Missouri State Health & Education
Washington University Series 1996B V.R.
09-01-30 4.10 1,300,000 1,300,000
Monroe County Georgia Development Authority
Pollution Control Revenue Bonds V.R.
07-01-25 3.95 1,000,000 1,000,000
New York City General Obligation Bonds
Series 1995B V.R.
08-15-23 4.00 5,500,000 5,500,000
New York City General Obligation Bonds V.R.
10-01-22 4.00 750,000 750,000
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds Series A
06-15-25 4.00 17,650,000 17,650,000
New York City Revenue Anticipation Nts Series 1997A
06-30-98 3.63 4,000,000 4,004,168
New York City Transit Finance Authority
Series C V.R.
05-01-28 3.95 5,400,000 5,400,000
New York City Water Finance Authority Water & Sewer
Systems Revenue Bonds Series 1995A V.R.
06-15-25 4.00 300,000 300,000
New York State Energy Research & Development
Pollution Control Revenue Bonds Niagara Mohawk
Series 1987A V.R.
03-01-27 3.95 300,000 300,000
Pennsylvania State Higher Education Facilities Authority
Revenue Bonds Carnegie Mellon University
Series 1995C V.R.
11-01-29 4.00 5,300,000 5,300,000
Philadelphia Hospital Revenue Bonds
Childrens Hospital Series A V.R.
03-01-27 4.00 1,600,000 1,600,000
Port Arthur Navigation District of Jefferson Texas
Pollution Control Revenue Bonds Texaco V.R.
10-01-24 4.10 600,000 600,000
Putnam County Georgia Development Authority
Pollution Control Revenue Bonds Georgia Power
Company Branch V.R.
04-01-32 4.00 200,000 200,000
Regents of the University of Michigan Hospital
Revenue Bonds Series 1995A V.R.
12-01-27 4.00 3,500,000 3,500,000
Royal Oak Michigan William Beaumont Hospitals
Series 1997L V.R.
01-01-27 4.00 3,100,000 3,100,000
Southwestern Illinois Development Shell Oil
Wood River Series 1992 V.R. A.M.T.
04-01-22 4.15 500,000 500,000
Syracuse New York Industrial Development Agency Civic
Facilities Revenue Bonds Multi-model
Syracuse University V.R.
03-01-23 3.95 3,000,000 3,000,000
Tempe Arizona Excise Tax Revenue Obligation Bonds
Series 1998 V.R.D.B.
07-01-23 4.00 5,200,000 5,200,000
Washington Health Care Facilities Authority
Sisters of Providence Series 1985B V.R.D.B.
10-01-05 3.95 3,700,000 3,700,000
Washington Health Care Facilities Authority
Sisters of Providence Series 1985D V.R.D.N.
10-01-05 3.95 2,000,000 2,000,000
Uinta County Wyoming Pollution Control
Revenue Bonds Chevron Series 1993 V.R.
08-15-20 3.95 1,700,000 1,700,000
University of Michigan Hospital Refunding
Revenue Bonds Series 1995A V.R.
12-01-27 4.00 500,000 500,000
Valdez Alaska Marine Terminal Revenue Bonds
Exxon Pipeline Company Series 1985 V.R.
10-01-25 4.00 2,400,000 2,400,000
Valdez Alaska Marine Terminal Revenue Bonds
Exxon Pipeline Company Series 1993A V.R.
12-01-33 4.00 4,200,000 4,200,000
Valdez Alaska Marine Terminal Revenue Bonds
Exxon Pipeline Company Series A V.R.
10-01-25 4.00 1,900,000 1,900,000
Total short-term securities
(Cost: $140,453,234) $140,463,000
Total investments in securities
(Cost: $5,317,152,635)(m) $5,920,410,537
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Investments in bonds, by rating category as a percentage of total bonds, are
as follows:
(Unaudited)
Rating 5-31-98 11-30-97
AAA 36% 30%
AA 4 5
A 13 15
BBB 26 28
BB and below 20 22
Non-rated 1 --
Total 100% 100%
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(d) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a decline
(increase) in market short-term rates. Interest rate disclosed is the rate in
effect on May 31, 1998. Inverse floaters in the aggregate represent 5.4% of the
Fund's net assets as of May 31, 1998.
(e) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(f) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(g) The Portfolio is entitled to receive principal amount from issuer or
corporate guarantor, if indicated in parentheses, after a day or a week's
notice. The maturity date disclosed represents the final maturity. Interest rate
varies to reflect current market conditions; rates shown are the effective rates
on May 31, 1998.
(h) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 4 to the financial statements):
Type of security Notional amount
Purchase contracts
Municipal Bonds June 1998 $200,000
(i) The following abbreviation is used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax-- As of May 31, 1998, the value of
securities subject to alternative minimum tax represented 16.0%
of net assets.
B.A.N. . -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. . -- Revenue Anticipation Note
T.A.N. . -- Tax Anticipation Note
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B. -- Variable Rate Demand Bond
V.R.D.N. -- Variable Rate Demand Note
(j) Interest rate varies to reflect current market conditions; rate shown is the
effective rate on May 31, 1998.
(k) At May 31, 1998, the cost of securities purchased, including interest
purchased, on a when-issued basis was $9,625,349.
(l) Non-income producing. Items identified are in default as to payment of
interest and/or principal.
(m) At May 31, 1998, the cost of securities for federal income tax purposes was
approximately $5,317,153,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation ............................$628,409,000
Unrealized depreciation .............................(25,151,000)
Net unrealized appreciation ........................$603,258,000
<PAGE>
Board members and officers
Independent board members and officers
Chairman William R. Pearce*
of the board Chairman of the board, Board Services Corporation (provides
administrative services to boards including the boards of the
IDS and IDSLife funds and Master Trust portfolios).
H. Brewster Atwater, Jr.
Former chairman and chief executive officer, General Mills,
Inc.
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public
Policy Research.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Alan K. Simpson
Former United States senator for Wyoming.
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
Officer
Vice president, Leslie L. Ogg*
general counsel President, treasurer and corporate secretary of Board Services
and secretary Corporation.
Board members and officers associated with AEFC
President John R. Thomas*
Senior vice president, AEFC.
William H. Dudley*
Senior advisor to the chief executive officer, AEFC.
David R. Hubers*
President and chief executive officer, AEFC.
Officers associated with AEFC
Vice president Peter J. Anderson*
Senior vice president, AEFC
Vice president Frederick C. Quirsfeld*
Vice president, AEFC
Treasurer Matthew N. Karstetter*
Vice president, AEFC
* Interested person as defined by the Investment Company Act of 1940.
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world with countries
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies throughout the
world that are positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS International Fund
Invests primarily in common stocks of foreign companies that offer potential for
superior growth. The Fund may invest up to 20% of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies that
explore for, mine and process or distribute gold and other precious metals. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement. Buys and holds larger
growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected for their
potential for above-average growth. Above-average means that their growth
potential is better, in the opinion of the portfolio's investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) trees
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with
significant growth potential due to superiority in
technology, marketing or management. The Fund frequently
changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
These funds focus on securities of medium to large, well-established companies
that offer long-term growth of capital and reasonable income from dividends and
interest. Foreign investments may be subject to currency fluctuations and
political and economic risks of the countries in which the investments are made.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities purchased are
those recommended by our research analysts as the best from each industry
represented on the index. Offers potential for long-term growth as well as
dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek high current
income and growth of income and capital with reduced volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks to
seek high current income and, secondarily, to benefit from the growth potential
offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and senior
securities (preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
Income funds
The funds in this group invest their assets primarily in corporate bonds or
government securities to seek interest income. Secondary objective is capital
growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly of long-term, high-yielding corporate
fixed-income securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) two coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk
bond categories, or the equivalent, and in government bonds.
(icon of) Greek column
IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds and
other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or guaranteed as
to the timely payment of principal and interest by the U.S. government, its
agencies and instrumentalities. Seeks a high level of current income and safety
of principal consistent with its type of investments.
(icon of) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
(icon of) shield with star
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (CDs) and other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
(icon of) shield with piggy bank enclosed
For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus by contacting your financial advisor or
writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534. Read it carefully before you invest or send money.
<PAGE>
Quick telephone reference
American Express Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current fund prices
and performance, account values
and recent account transactions
AMERICAN EXPRESS Financial Advisors
IDS High Yield Tax-Exempt Fund
IDS Tower 10
Minneapolis, MN 55440-0010
