Table of Contents
USAA Family of Funds 1
Message from the President 2
Fund Performance 4
Investment Review:
Long-Term Fund 6
Intermediate-Term Fund 9
Short-Term Fund 12
Tax Exempt Money Market Fund 15
Shareholder Voting Results 18
Financial Information:
Statements of Assets and Liabilities 20
Portfolios of Investments in Securities:
Long-Term Fund 23
Intermediate-Term Fund 30
Short-Term Fund 42
Tax Exempt Money Market Fund 51
Notes to Portfolios of Investments 64
Statements of Operations 65
Statements of Changes in Net Assets 66
Notes to Financial Statements 68
Important Information:
Through our ongoing efforts to reduce expenses and respond to
shareholder requests, your annual and semiannual report mailings are now
"streamlined." One copy of each report will be sent to each address,
instead of our previous practice of sending one report to every registered
owner. For many shareholders and their families, this eliminates
duplicate copies, saving paper and postage costs to the Funds.
If you are the primary shareholder on at least one account, prefer not
to participate in streamlining, and would like to continue receiving one
report per registered account owner, you may request this in writing to:
USAA Investment Management Company
Attn: Report Mail
9800 Fredericksburg Road
San Antonio, TX 78284-8916
or phone a Mutual Fund Representative at 1-800-531-8448 during business
hours.
This report is for the information of the shareholders and others who
have received a copy of the currently effective prospectus of the USAA
Tax Exempt Fund, Inc., managed by USAA Investment Management Company
(IMCO). It may be used as sales literature only when preceded or
accompanied by a current prospectus which gives further details about
the funds.
USAA with the eagle is registered in the U.S. Patent & Trademark Office.
(copyright)1995, USAA. All rights reserved.
USAA Family of Funds Performance Summary
If you own only one or two USAA funds, you may not be aware of the
performance of our other funds. This summary is a snapshot of the
performance of all 32 funds by investment objective as of September 30,
1995. For more complete information about the mutual funds managed and
distributed by USAA IMCO, including charges and expenses, please call
1-800-531-8181 for a prospectus. Read it carefully before you invest.
<TABLE>
<CAPTION>
Average Annual Total Return*
Investment Inception Since 7-Day 30-Day(1)
Objective Date 1 yr 5 yrs 10 yrs Inception Simple SEC
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation
Aggressive Growth 10/19/81 46.21 22.58 12.68 - - -
Emerging Markets(2) 11/7/94 - - - (.60) - -
Gold(2) 8/15/84 (9.21) 2.95 4.46 - - -
Growth 4/5/71 18.48 16.12 13.22 - - -
Growth & Income 6/1/93 23.46 - - 12.88 - -
International(2) 7/11/88 1.58 13.34 - 9.56 - -
World Growth(2) 10/1/92 6.47 - - 12.43 - -
Asset Allocation
Balanced Strategy 9/1/95 - - - .40 - -
Cornerstone Strategy(2)# 8/15/84 10.89 11.97 12.98 - - -
Growth and Tax Strategy**# 1/11/89 13.86 10.20 - 9.35 - 3.75
Growth Strategy(2) 9/1/95 - - - .30 - -
Income Strategy 9/1/95 - - - 1.50 - -
Income - Taxable
GNMA 2/1/91 12.56 - - 8.18 - 6.82
Income 3/4/74 18.64 10.98 10.47 - - 6.61
Income Stock 5/4/87 20.54 15.74 - 11.95 - -
Short-Term Bond 6/1/93 9.37 - - 5.15 - 6.58
Income - Tax Exempt
Long-Term(3)** 3/19/82 9.83 8.25 8.92 - - 5.73
Intermediate-Term(3)** 3/19/82 9.76 8.14 8.23 - - 5.15
Short-Term(3)** 3/19/82 6.41 5.65 5.94 - - 4.33
California Bond(3)** 8/1/89 11.24 8.28 - 7.39 - 5.75
Florida Tax-Free Income(3)** 10/1/93 9.67 - - 1.17 - 5.71
New York Bond(3)** 10/15/90 9.71 - - 8.68 - 5.65
Texas Tax-Free Income(3)** 8/1/94 13.26 - - 9.80 - 5.61
Virginia Bond(3)** 10/15/90 10.51 - - 8.38 - 5.72
Money Market
Money Market(4) 2/2/81 5.67 4.65 6.01 - 5.56 -
Tax Exempt Money Market(3),(4)** 2/6/84 3.57 3.45 4.40 - 3.89 -
Treasury Money Market Trust(4) 2/1/91 5.42 - - 4.09 5.35 -
California Money Market(3),(4)** 8/1/89 3.53 3.27 - 3.70 3.79 -
Florida Tax-Free Money
Market(3),(4)** 10/1/93 3.45 - - 2.81 3.67 -
New York Money Market(3),(4)** 10/15/90 3.42 - - 3.01 3.89 -
Texas Tax-Free Money
Market(3),(4)** 8/1/94 3.46 - - 3.33 3.57 -
Virginia Money Market(3),(4)** 10/15/90 3.44 - - 3.19 3.62 -
</TABLE>
(1) Calculated as prescribed by the Securities and Exchange Commission.
(2) Foreign investing is subject to additional risks, which are discussed
in the funds' prospectuses.
(3) Some income may be subject to state or local taxes or the federal
alternative minimum tax.
(4) An investment in a money market fund is neither insured nor guaranteed
by the U.S. government and there is no assurance that any of the funds
will be able to maintain a stable net asset value of $1 per share.
* Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions. No
adjustment has been made for taxes payable by shareholders on their
reinvested dividends and capital gain distributions. The performance
data quoted represents past performance and is not an indication of
future results. Investment return and principal value of an investment
will fluctuate, and an investor's shares, when redeemed, may be worth
more or less than their original cost.
** IRAs are not available for tax-exempt funds. The Growth and Tax
Strategy Fund is not available as an investment for your IRA because the
majority of its income is tax exempt. California, New York, Virginia,
Florida, and Texas funds available to residents only.
# Formerly known as Cornerstone Fund and Balanced Portfolio Fund,
respectively.
Message from the President
[Photograph of Michael J. C. Roth, President and Vice Chairman
of the Board appears here]
In September I attended an Investment Company Institute conference for
mutual fund directors. It was in Washington D.C., and the speakers included
a current member of the House and a former senator. Both delivered similar
messages: Expect a reform of the tax system.
This news is not a surprise to tax-exempt fund investors. As
I pointed out in a letter earlier this year, the tax-exempt bond market
has spent much of 1995 adjusting to the expectation of lower tax rates.
It has done this by narrowing the difference in yields between taxable
and tax-exempt bonds. This adjustment has been well masked by the very
handsome total returns in tax-exempt bonds this year. The portfolio
managers will give you details in their reports.
"We will always remember that you are
the reason we are in business."
I wish I could give you simple guidance on where to go from here, but I
cannot. In fact, one of the most difficult questions in reforming the
tax system will be how to approach the tax-exempt bond market. It is not
only important to you, the investor, but also to the state and local
entities that borrow your money through these bonds.
Do we suddenly, in one fell swoop, dramatically raise their cost of
borrowing? If we do, current owners of bonds will be hurt, but so will
everyone who pays taxes in states and cities. Those borrowers will
need more revenue to pay interest on their bonds. Therefore, a radical
reform might lower federal taxes, but raise state and local taxes.
I do not think this is a desirable or desired outcome. It certainly is
not a simple problem to solve.
I do not believe that any major change will take place until after the
next national election. At this uncertain time I will make this pledge
to you:
We will watch the tax reform situation very closely.
Our guidance to you will keep your interests uppermost.
We will always remember that you are the reason we are in business.
Sincerely,
Michael J.C. Roth, CFA
President and
Vice Chairman of the Board
Fund Performance
The graph and table below compare the total return of the three USAA
tax-exempt bond funds for the 10-year period ended September 30, 1995,
to the Lehman Brothers Municipal Bond Index, an unmanaged total return
performance benchmark for the investment grade tax-exempt bond market.
This index, like most broad market indices, is a hypothetical portfolio
which, unlike a mutual fund, has no operating expenses or transaction
costs. It assumes all income and capital gains are reinvested. All
tax-exempt bond funds will find it difficult to outperform such an
index, since funds have expenses.
Average Annual Total Returns as of 9/30/95
1 Year 5 Years 10 Years
------ ------- --------
Long-Term Fund 9.83% 8.25% 8.92%
Intermediate-Term Fund 9.76% 8.14% 8.23%
Short-Term Fund 6.41% 5.65% 5.94%
Lehman Brothers Municipal Bond Index 11.18% 8.86% 9.65%
A graph is shown here which is a comparison of the change in value of
a $10,000 investment for the period of 9/30/85 to 9/30/95, with
dividends and capital gains reinvested. The vertical axis shows
the dollar amount and the horizontal axis shows the time period. The
ending values for the items graphed are:
Lehman Brothers Muni. Bond Index $25,121
USAA Long-Term Fund 23,511
USAA Intermediate-Term Fund 22,059
USAA Short-Term Fund 17,812
Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gains distributions. No
adjustment has been made for taxes payable to shareholders on their
reinvested dividends and capital gains distributions. The performance
data quoted represents past performance and is not an indication of
future results. Investment return and principal value of an investment
will fluctuate, and an investor's shares, when redeemed, may be worth
more or less than their original cost.
The graph on the preceding page shows how the value of a $10,000
investment on September 30, 1985, in the Long-Term, Intermediate-Term,
and Short-Term Funds would have grown in value to $23,511, $22,059,
and $17,812, respectively, at September 30, 1995. The same $10,000
investment based on the long-term benchmark of the Lehman Brothers
Municipal Bond Index for the same time period would be valued at
$25,121. This comparisonillustrates that the longer the maturities
of the bonds in a fund, the higher the potential returns offered
to compensate investors for longer exposure to an uncertain future.
In other words, the higher the risk, the higher the potential reward.
While past performance is no guarantee of future results, the USAA
funds generally performed as expected, given their varying maturities -
the longer the maturity, the greater the return.
The exemption of interest income for federal income tax purposes does
not necessarily result in exemption under the income or other tax laws
of any state or local taxing authority or the alternative minimum tax.
Shareholders should consult their tax advisors about the status of
distributions from a fund in their own states and localities.
Investment Review
Long-Term Fund
OBJECTIVE: Provide investors with interest income that is exempt from
federal income tax.
Types of Investments: Invests primarily in investment grade tax-exempt
securities of varying maturities. The average weighted portfolio
maturity is 10 years or more.
3/31/95 9/30/95
Net Assets $1,774.6 Million $1,814.1 Million
Net Asset Value Per Share $12.96 $13.16
Average Annual Total Returns as of 9/30/95
March 31, 1995 to September 30, 1995 4.70%*
1 Year 9.83%
5 Years 8.25%
10 Years 8.92%
* Total returns for periods of less than one year are not
annualized. This six-month return is cumulative.
30-Day SEC Yield on September 30, 1995 5.73%**
**Calculated as prescribed by the Securities and Exchange Commission.
A graph is shown here comparing the 12-month dividend yield of the
USAA Long-Term Fund and the Lipper General Municipal Debt Funds
Average from 9/30/86 to 9/30/95. The vertical axis shows the
yield and the horizontal axis shows the time period. The values
are:
USAA Long-Term
Fund 8.09 8.30 7.55 7.29 7.38 6.93 6.45 5.83 6.01 6.13
Lipper General
Muni. Debt.
Funds Avg. 7.51 7.66 7.13 6.96 6.93 6.46 6.01 5.33 5.45 5.16
The Lipper General Municipal Debt Funds average is computed
by Lipper Analytical Services, an independent organization that monitors
the performance of mutual funds. 12-month dividend yield is computed by
dividing income dividends paid during the previous 12 months by the
latest month-end net asset value adjusted for capital gains distributions.
The graph represents data from 9/30/86 to 9/30/95.
Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions. No
adjustment has been made for taxes payable by shareholders on their
reinvested dividends and capital gain distributions. The performance
data quoted represents past performance and is not an indication of
future results. Investment return and principal value of an investment
will fluctuate, and an investor's shares, when redeemed, may be worth
more or less than their original cost.
Message from the Manager
[Photograph of Kenneth E. Willmann, Portfolio Manager, appears here]
Long-Term Fund
The bull market in bonds, which began in November 1994, continued during
the six-month period ending September 30, 1995. The standard for bond
interest rates, the active 30-year U.S. Treasury bond (the long bond),
fell from a yield of 7.43% on March 31, 1995, to 6.53% on September 30,
1995. This resulted in a 10.2% rise in price.
Tax-exempt bonds also benefited, but to a lesser degree. The Bond Buyer
40-Bond Index (BBI40) is an industry benchmark for long-term municipal bonds.
Its yield declined from 6.37% on March 31, 1995, to 6.07% on September 30,
1995. The resultant price rise was a modest 1.6%. The Long-Term Fund's
performance mirrored the index. The net asset value (NAV) per share
rose 1.5% from March 31, 1995, to September 30, 1995. The 30-Day SEC yield
was still an attractive 5.73%at the end of that period.
What Happened
Why did tax-exempt bonds respond in this relatively subdued fashion? The
clue is in the difference in yield decline between the long bond and the
BBI40. Tax-exempt bonds typically yield less than taxable bonds because
the market gives them credit for the tax exemption. On March 31, 1995,
the BBI40 yield was 85.8% of the yield of the long bond. By September
30, 1995, that ratio had risen to 93.4%. The reason is all the rhetoric
about tax reform emanating from the federal government. The market for
tax-exempt bonds, in its collective wisdom, reduced the credit given for
tax exemption. In short, the market was nervous. See the "Message from
the President" on page two for a discussion of the tax reform debate.
Outlook
I believe the U.S. economy is slowly decelerating. This gradual slowdown
should keep inflationary pressures in check, which has the further
effect of keeping interest rates from rising. In fact, I believe
interest rates are more likely to decline than to rise over the next few
months.
I will continue to follow a strategy of favoring tax-exempt income over
capital gains while maintaining a high-quality portfolio. For the six
months ended September 30, 1995, the annualized dividend yield(1) on the
Long-Term Fund was 6.10%, well ahead of Lipper's General Municipal
Debt Funds average of 5.07%.(2) I believe such a strategy is preferable
for tax-sensitive investors in the upper income tax brackets.
(1) Dividend yield is computed by dividing income dividends paid during
the previous 6 months by the latest month-end net asset value adjusted
for capital gains distributions and annualizing the result.
(2) Lipper Analytical Services is an independent organization that
monitors the performance of mutual funds.
See page 23 for a complete listing of the Portfolio of Investments in
Securities.
Note: Income may be subject to federal, state or local taxes, or the
alternative minimum tax.
Portfolio Ratings/Mix
September 30, 1995
[A pie chart is shown here depicting the Portfolio Ratings/Mix
as of September 30, 1995 for the USAA Long-Term Fund to be:
AAA - 17%, AA - 32%, A - 26%, BBB - 23% and Cash Equivalents -
2%.]
This chart reflects the highest rating of either Moody's Investors
Service, Standard & Poor's Rating Group or Fitch Investors Service.
Investment Review
Intermediate-Term Fund
OBJECTIVE: Provide investors with interest income that is exempt from
federal income tax.
Types of Investments: Invests primarily in investment grade tax-exempt
securities of varying maturities. The average weighted portfolio
maturity is between 3 and 10 years.
3/31/95 9/30/95
Net Assets $1,529.8 Million $1,622.9 Million
Net Asset Value Per Share $12.50 $12.83
Average Annual Total Returns as of 9/30/95
March 31, 1995 to September 30, 1995 5.54%*
1 Year 9.76%
5 Years 8.14%
10 Years 8.23%
*Total returns for periods of less than one year are not
annualized. This six-month return is cumulative.
30-Day SEC Yield on September 30, 1995 5.15%**
**Calculated as prescribed by the Securities and Exchange Commission.
A graph is shown here comparing the 12-month dividend yield of the
USAA Intermediate-Term Fund and the Lipper Intermediate Municipal
Debt Funds Average from 9/30/86 to 9/30/95. The vertical axis shows
the yield and the horizontal axis shows the time period. The values
are:
USAA Intermediate-
Term Fund 7.72 7.31 7.14 7.01 6.98 6.67 6.07 5.35 5.55 5.50
Lipper Int. Muni. Debt
Funds Avg. 6.71 6.40 6.33 6.42 6.33 5.96 5.45 4.68 4.67 4.50
The Lipper Intermediate Municipal Debt Funds average is computed
by Lipper Analytical Services, an independent organization that monitors
the performance of mutual funds. 12-month dividend yield is computed by
dividing income dividends paid during the previous 12 months by the
latest month-end net asset value adjusted for capital gains
distributions. The graph represents data from 9/30/86 to 9/30/95.
Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions. No
adjustment has been made for taxes payable by shareholders on their
reinvested dividends and capital gain distributions. The performance
data quoted represents past performance and is not an indication of
future results. Investment return and principal value of an investment
will fluctuate, and an investor's shares, when redeemed, may be worth
more or less than their original cost.
Message from the Manager
[Photograph of Clifford A. Gladson, Portfolio Manager, appears here]
Credit Market Review
Since our March 31, 1995, report, we have seen a gradual slowdown of the
growth in the domestic economy and a very subdued rate of inflation.
On July 6, 1995, the Federal Reserve (Fed) responded to these developments
by cutting short-term rates by .25%. The credit markets, having gained
confidence in the Fed's ability to hold inflation in check, reacted by
driving down bond yields.
Recent Fund Performance
My primary objective is to purchase a combination of high-grade and
investment-grade municipal bonds that maximize distributable tax-exempt
income. A secondary, and sometimes competing goal, is to maximize the
Fund's total return. Even though bond yields fell as bond prices rose
over the last six months, it is my pleasure to report that your Fund
continues to post solid performance in both dividend yield and total return.
For the six-month period, the Fund provided an annualized dividend
yield(1) of 5.53%, which was well above the 4.50% average dividend yield
of the 131 funds in the Lipper Municipal Intermediate Debt Fund Index.(2)
During this period, the Fund's share price increased $.33 or 2.64%.
Your Fund's total return(3) for the last six months was 5.54%. This
compares quite favorably to the 4.57% average for the Lipper Index.
Independent Credit Analysis
In the past, I have emphasized that we utilize the credit ratings of
three nationally recognized statistical rating organizations(4) as
guidelines, but actual purchase decisions are based on our independent
credit analysis. While most analysts employ the three Cs (character,
cash flow, and collateral), the art of credit analysis transcends
simple formulas. The analyst must develop a forward-looking judgement
that builds on past events to assess a creditor's future willingness,
ability, and incentive to pay. We don't want to prepare for the previous war.
There are a number of high-grade securities rated A or better, some with
ratings of AAA, that I will not purchase. On the other hand, if a
holding is downgraded below the investment level, we do not sell
automatically. This might be the easiest action for the portfolio
manager to make, but it may not be in the best interest of the
shareholder. It is USAA IMCO policy to conduct an independent analysis
to determine if the bond is "dollar good." Then the portfolio manager
must decide if it is in the best interest of the shareholder to hold or
sell the security. If the decision is made to hold the security, it is
placed on close and constant surveillance. This independent analysis and
constant monitoring is performed by a seasoned team of fixed-income
professionals who look out for your best interests.
Interest Rate Outlook
With inflation running well below 3% and the economy growing at a
moderate rate, it appears interest rates for intermediate-term debt
will remain in a narrow range.
(1) Dividend yield is computed by dividing income dividends paid during
the previous 6 months by the latest month-end net asset value adjusted
for capital gains distributions and annualizing the result.
(2) Lipper Analytical Services is an independent organization that
monitors the performance of mutual funds.
(3) Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions.
(4) Rating services include Fitch Investors Service, Inc., Moody's
Investors Service, and Standard & Poor's Corporation.
See page 30 for a complete listing of the Portfolio of Investments in
Securities.
Note: Income may be subject to federal, state or local taxes, or the
alternative minimum tax.
Portfolio Ratings/Mix
September 30, 1995
[A pie chart is shown here depicting the Portfolio Ratings/Mix as of
September 30, 1995 for the USAA Intermediate-Term Fund to be: AAA - 17%,
AA - 13%, A - 46%, BBB - 18%, BB - 5% and Cash Equivalents - 1%.]
This chart reflects the highest rating of either Moody's Investors
Service, Standard & Poor's Rating Group or Fitch Investors Service.
Unrated securities that have been determined by USAA IMCO to be of
equivalent investment quality to categories AAA and BBB account for .2%
and .1%, respectively, of the Fund's investments.
Investment Review
Short-Term Fund
OBJECTIVE: Provide investors with interest income that is exempt from
federal income tax.
Types of Investments: Invests primarily in investment grade tax-exempt
securities of varying maturities. The average weighted portfolio
maturity is 3 years or less.
3/31/95 9/30/95
Net Assets $801.2 Million $778.2 Million
Net Asset Value Per Share $10.47 $10.60
Average Annual Total Returns as of 9/30/95
March 31, 1995 to September 30, 1995 3.66%*
1 Year 6.41%
5 Years 5.65%
10 Years 5.94%
* Total returns for periods of less than one year are not
annualized. This six-month return is cumulative.
30-Day SEC Yield on September 30, 1995 4.33%**
** Calculated as prescribed by the Securities and Exchange Commission.
A graph is shown here comparing the 12-month dividend yield of the
USAA Short-Term Fund and the Lipper Short-Term Municipal Debt Funds
Average from 9/30/86 to 9/30/95. The vertical axis shows the yield
and the horizontal axis shows the time period. The values are:
USAA Short-
Term Fund 6.39 5.80 5.96 6.35 6.51 6.14 5.15 4.44 4.30 4.65
Lipper Short-
Term Muni.
Debt Funds
Average 6.16 5.60 5.72 6.13 6.19 5.87 5.14 4.31 3.94 4.12
The Lipper Short-Term Municipal Debt Funds average is computed
by Lipper Analytical Services, an independent organization that monitors
the performance of mutual funds. 12-month dividend yield is computed
by dividing income dividends paid during the previous 12 months by the
latest month-end net asset value adjusted for capital gains distributions.
The graph represents data from 9/30/86 to 9/30/95.
Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions. No
adjustment has been made for taxes payable by shareholders on their
reinvested dividends and capital gain distributions. The performance
data quoted represents past performance and is not an indication of
future results. Investment return and principal value of an investment
will fluctuate, and an investor's shares, when redeemed, may be worth
more or less than their original cost.
Message from the Manager
[Photograph of Clifford A. Gladson, Portfolio Manager, appears here]
Credit Market Review
Since our report of March 31, 1995, it appears that the rate of growth
in the economy has slowed to a level that will preserve the current low
inflation rate. On July 6, 1995, the Federal Reserve (Fed) responded to
these developments by cutting short-term rates by .25%. Having gained
confidence in the Fed's ability to hold inflation in check, the
short-term credit market reacted by lowering yields.
Recent Fund Performance
My two objectives are to purchase a combination of high-grade and
investment-grade municipal bonds that maximize distributable tax-exempt
income and maintain a relatively stable share price. Even though
short-term tax-exempt yields fell over the last six months, your
Fund continued to offer solid returns.
For the six-month period, the Fund provided an annualized dividend
yield(1) of 4.71%, which was above the 4.16% average dividend yield
of the 53 funds in Lipper Short-Term Municipal Debt Fund Index.(2)
During this period, the Fund's share price increased $.13 or 1.24%.
Your Fund's total return(3) for the last six months was 3.66%. This
compares quite favorably to the 3.26% average for the Lipper Index.
Who's The Boss?
Recently, I was asked, "Who's your boss?" I answered, "I report to Ken
Willmann, and I am paid by USAA IMCO, but as a Chartered Financial Analyst
(CFA), I work for the shareholder."(4)
While I have been a CFA for over five years, this is the first report
where I specifically asked that the CFA professional designation be
printed after my name. My request was not made to promote my investment
prowess, but to emphasize high ethical standards demanded of every CFA.
The president and every portfolio manager at IMCO are CFAs. Each CFA
is responsible for advising their employer of the CFA's obligation to comply
with the AIMR Code of Ethics and Standards of Professional Conduct(5) and
is subject to sanctions for code violations. Sections III and IV of the
Code emphasize the CFA's duty is first to the shareholders. The shareholders'
interests must be placed ahead of the firm, the firm's employees, and the
CFA. Given USAA's nearly 75 years of putting the member first, the Code
is very compatible with USAA's business practices and internal code of
ethics. So, you're my boss.
Interest Rate Outlook
With inflation running well below 3% and the economy growing at a
moderate rate, it appears that short-term interest rates will continue
to slowly decline.
(1) Dividend yield is computed by dividing income dividends paid during
the previous 6 months by the latest month-end net asset value adjusted
for capital gains distributions and annualizing the result.
(2) Lipper Analytical Services is an independent organization that
monitors the performance of mutual funds.
(3) Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions.
(4) Chartered Financial Analyst is a designation awarded by the Institute
of Chartered Financial Analysts (IFCA) to experienced financial analysts
who pass examinations in economics, financial accounting, portfolio
management, security analysis, and standards of conduct.
(5) Association for Investment Management and Research (AIMR).
See page 42 for a complete listing of the Portfolio of Investments in
Securities.
Note: Income may be subject to federal, state or local taxes, or the
alternative minimum tax.
Portfolio Ratings/Mix
September 30, 1995
[A pie chart is shown here depicting the Portfolio Ratings/Mix
as of September 30, 1995 for the USAA Short-Term Fund to be:
AAA - 14%, AA - 18%, A - 37%, BBB - 14%, BB - 2% and Cash
Equivalents - 15%.]
This chart reflects the highest rating of either Moody's Investors
Service, Standard & Poor's Rating Group or Fitch Investors Service.
Unrated securities that have been determined by USAA Investment
Management Company to be of equivalent investment quality to categories
A and BBB account for 1.4% and 1.0%, respectively, of the Fund's
investments.
Investment Review
Tax Exempt Money Market Fund
Objective: Provide investors with interest income that is exempt from
federal income tax while preserving capital and maintaining liquidity.
Types of Investments: High quality tax-exempt securities with maturities
of 397 days or less. The Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less and will endeavor to maintain a
constant net asset value per share of $1.00.*
*An investment in this Fund is neither insured nor guaranteed by the
U.S. government, and there can be no assurance that the Fund will be
able to maintain a stable net asset value of $1.00 per share.
3/31/95 9/30/95
Net Assets $1,456.7 Million $1,451.4 Million
Net Asset Value Per Share $1.00 $1.00
Average Annual Total Returns as of 9/30/95
March 31, 1995 to September 30, 1995 1.86%**
1 Year 3.57%
5 Years 3.45%
10 Years 4.40%
** Total returns for periods of less than one year are not
annualized. This six-month return is cumulative.
7-Day Simple Yield on September 30, 1995 3.89%
[A graph is shown here comparing the 7-day yield of the USAA Tax
Exempt Money Market Fund and the IBC/Donoghue's SB & GP (Tax-Free)
from 9/94 to 9/95. The vertical axis shows the yield and the horizontal
axis shows the time period. The ending value, on 9/25/95, for the
USAA Tax Exempt Money Market Fund is 3.75% and the ending value for the
IBC/Donoghue's SB & GB (Tax-Free) is 3.37%.]
Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions. No
adjustment has been made for taxes payable by shareholders on their
reinvested dividends and capital gain distributions. Past performance
is no guarantee of future results and the value of your investment
may vary according to the Fund's performance. The graph tracks the
Fund's 7-day simple yield against IBC/Donoghue's SB (Stock Broker)
and GP (General Purpose) (Tax-Free) Money Funds, an average of all
major money market fund yields.
Message from the Manager
[Photograph of Thomas Ramos, Portfolio Manager, appears here]
Credit Market Review
The Federal Reserve Board (Fed), the central monetary authority, has a
direct impact on short-term interest rates. On July 6, 1995, the Fed
lowered short-term interest rates by .25%. The move stemmed from
concerns by the Fed that its increases of short-term rates, primarily in
1994, had so weakened the economy that a recession was possible. Since
the Fed's last move in July, short-term Treasury yields have moved
slightly higher as the economy appears to be recovering. For 1995
one-year tax-exempt notes peaked in early January at slightly higher
than 5.0%, and hit a low of 3.7% in early June. Since June, yields on
one-year tax-exempt notes have moved modestly higher and have averaged
3.85%. Currently, one-year tax-exempt notes are about 3.85%, which is
72% of taxable yields.
Strategy
Given the market environment, I have been very selective about the
issues purchased for your Fund. Generally, we have bought only a few
fixed-rate notes and instead have focused on competitively-yielding
variable rate demand notes (VRDNs).(1) These are issues which can be put
back at par with a seven-day notice. They have a competitive market
yield without locking the Fund into an extended maturity. VRDNs are
primarily guaranteed by large, financially-strong banks. We diligently
monitor the credit quality of these banks through site visits,
management contacts and reviews of the banks' financial statements.
The fixed-rate notes we have purchased usually have a one-year maturity.
They are all high-quality securities. Most of the notes are general
obligations of states, cities, or school districts. We have been much
more selective this year in purchasing these types of issues. For
example, while historically we have bought several California issues,
because of the widely publicized problems in the state we have only
purchased a small number. For the securities we have purchased, and as
in the case with all of the securities we hold - our research team
rigorously reviews the issues we own, and we feel comfortable in
continuing to hold them.
The Portfolio
The average maturity of the Fund has decreased by approximately six days
to an average of 60 days since our last report. The current shorter
maturity provides the Fund flexibility, giving me the opportunity to
invest its assets at attractive rates in the future.
(1) Variable rate demand note (VRDN): A note representing borrowings that
is payable on demand and that bears interest tied to a money market
rate.
See page 51 for a complete listing of the Portfolio of Investments in
Securities.
Note: Income may be subject to federal, state or local taxes, or the
alternative minimum tax.
An investment in this fund is neither insured nor guaranteed by the U.S.
government, and there can be no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
[A graph is here showing the growth of $10,000, from 9/30/85 to 9/30/95,
invested in the USAA Tax Exempt Money Market Fund. The vertical axis
shows the dollar amount and the horizontal axis shows the time period.
The ending value is $15,385.]
Past performance is no guarantee of future results and the value of your
investment may vary according to the fund's performance. Income may be
subject to federal, state or local taxes, or to the alternative minimum
tax.
Shareholder Voting Results
On October 13, 1995, a special meeting of shareholders was held to vote
on the following proposals. All proposals were approved by the shareholders.
All shareholders of record on August 17, 1995 were entitled to vote on
each proposal. The number of votes shown below are shown by Fund for
proposal (2) and by aggregate for the entire USAA Tax Exempt Fund, Inc.
(the Company) for proposals (1) and (3).
(1) Proposal to elect a Board of Directors as follows:
Votes Votes
Director For Withheld
---------------------------------------------------------------
Hansford T. Johnson 1,263,957,222 40,330,706
Michael J.C. Roth 1,262,975,844 41,312,084
John W. Saunders, Jr. 1,263,409,381 40,878,547
George E. Brown 1,250,233,665 54,054,263
Howard L. Freeman, Jr. 1,259,213,299 45,074,629
Richard A. Zucker 1,252,694,421 51,593,507
Barbara B. Dreeben 1,242,417,451 61,870,477
Mr. C. Dale Briscoe did not stand for re-election to the Board. His term
of office will terminate on December 31, 1995.
(2) Proposals to reclassify, amend or eliminate certain investment
restrictions as follows:
Proposal to reclassify the investment restriction on illiquid securities
from fundamental to non-fundamental and amend the restriction to permit
investments in illiquid securities, including repurchase agreements
maturing in more than seven days, to no more than the following:
<TABLE>
<CAPTION>
Number of Shares Voting
For Against Abstain
----------------------------------
<S> <C> <C> <C>
15% of the value of the Long-Term
Fund's net assets 75,799,180 7,884,385 3,607,552
15% of the value of the Intermediate-
Term Fund's net assets 68,352,888 7,686,773 3,712,025
15% of the value of the Short-Term Fund's
net assets 34,881,095 4,632,447 1,805,090
10% of the value of the Tax Exempt
Money Market Fund's net assets 672,944,579 97,502,899 46,235,368
</TABLE>
Proposal to amend the restriction that a Fund may not underwrite any
issue of securities to state that a Fund may be deemed to act as a
statutory underwriter in the distribution of any restricted securities
or not readily marketable securities.
Long-Term Fund 76,122,978 7,295,878 3,872,261
Intermediate-Term Fund 68,510,619 7,148,958 4,092,109
Short-Term Fund 35,138,804 4,166,295 2,013,534
Tax Exempt Money Market Fund 675,726,352 92,934,502 48,021,993
Proposal to amend the restriction relating to borrowing to allow a Fund
to borrow an amount not exceeding 33 1/3% of its total assets (including
the amount borrowed) less liabilities (other than borrowings) for
temporary or emergency purposes.
<TABLE>
<CAPTION>
Number of Shares Voting
For Against Abstain
----------------------------------
<S> <C> <C> <C>
Long-Term Fund 73,343,451 10,198,125 3,749,541
Intermediate-Term Fund 66,146,686 9,708,639 3,896,361
Short-Term Fund 33,809,984 5,555,376 1,953,273
Tax Exempt Money Market Fund 650,733,353 120,281,441 45,668,052
Proposal to amend the restriction relating to lending portfolio
securities to permit a Fund to lend up to 1/3 of its total assets to
other parties.
Long-Term Fund 74,248,255 9,353,034 3,689,828
Intermediate-Term Fund 67,056,509 8,839,623 3,855,555
Short-Term Fund 34,451,571 4,867,770 1,999,291
Tax Exempt Money Market Fund 656,973,580 112,865,642 46,843,624
Proposal to eliminate the unnecessary restriction relating to
investments in taxable securities, while retaining the restriction that
during normal market conditions investments will be made so that 80%
of the Fund's annual income will be exempt from federal personal income
tax. Note that it is anticipated that substantially all of the income of
each Fund will continue to be tax-exempt.
Long-Term Fund 73,826,839 10,057,187 3,407,091
Intermediate-Term Fund 66,941,422 9,169,326 3,640,938
Short-Term Fund 33,772,734 5,370,095 2,175,804
Tax Exempt Money Market Fund 647,575,662 127,029,351 42,077,833
Proposal to eliminate the restriction prohibiting a Fund from purchasing
restricted securities.
Long-Term Fund 74,573,885 8,679,187 4,038,046
Intermediate-Term Fund 67,537,065 8,239,702 3,974,919
Short-Term Fund 34,057,223 4,922,342 2,339,068
Tax Exempt Money Market Fund 657,417,306 110,553,052 48,712,489
Proposal to amend the 5% issuer diversification restriction to apply to
75% of a Fund's total assets rather than 100%.
Long-Term Fund 75,378,712 8,143,073 3,769,331
Intermediate-Term Fund 68,159,259 7,833,649 3,758,779
Short-Term Fund 34,290,829 4,821,597 2,206,207
Tax Exempt Money Market Fund 667,726,629 103,709,222 45,246,996
(3) Proposal to ratify or reject the selection by the Board of Directors
of KPMG Peat Marwick LLP as auditors for the Company for the fiscal year
ending March 31, 1996.
1,220,377,387 32,420,032 51,490,499
</TABLE>
[CAPTION]
<TABLE>
Statements of Assets and Liabilities
(In Thousands)
September 30, 1995
(Unaudited)
Tax Exempt
Long-Term Intermediate- Short-Term Money Market
Fund Term Fund Fund
--------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Assets
Investments in securities, at market value
(identified cost of $1,694,383, $1,542,776,
$752,178, and $1,436,954, respectively) $ 1,780,139 $ 1,610,737 $ 760,470 $ 1,436,954
Cash 1,572 4,193 951 2,048
Receivables:
Capital shares sold 15,446 390 386 1,866
Interest 30,930 24,191 10,472 12,906
Securities sold 19,828 _ 15,150 17,000
------------ ------------ ---------- -----------
Total assets 1,847,915 1,639,511 787,429 1,470,774
------------ ------------ ---------- -----------
Liabilities
Securities purchased 30,340 13,614 7,501 -
Capital shares redeemed 269 709 951 18,584
USAA Investment Management Company 416 371 179 332
USAA Transfer Agency Company 91 89 57 87
Accounts payable and accrued expenses 159 152 113 183
Dividends on capital shares 2,506 1,640 469 216
----------- ----------- ---------- ----------
Total liabilities 33,781 16,575 9,270 19,402
----------- ----------- ---------- ----------
Net assets applicable to capital
shares outstanding $ 1,814,134 $ 1,622,936 $ 778,159 $ 1,451,372
============ ============ ============ ===========
Represented by:
Paid-in capital $ 1,785,640 $ 1,564,620 $ 773,832 $ 1,451,372
Accumulated net realized loss on investments (57,262) (9,645) (3,965) _
Net unrealized appreciation of investments 85,756 67,961 8,292 _
------------ ------------ ------------ -----------
Net assets applicable to capital shares
outstanding $ 1,814,134 $ 1,622,936 $ 778,159 $ 1,451,372
============ ============ ============ ===========
Capital shares outstanding 137,841 126,523 73,443 1,451,372
============ ============ ============ ===========
Net asset value, redemption price, and
offering price per share $ 13.16 $ 12.83 $ 10.60 $ 1.00
============ ============ ============ ==========
</TABLE>
See accompanying notes to financial statements.
Categories & Definitions
Portfolios of Investments in Securities
September 30, 1995
(Unaudited)
Fixed Rate Instruments _ consist of municipal bonds, notes, and
commercial paper. The coupon rate is constant to maturity. Prior
to maturity, the price of a fixed rate instrument generally varies
inversely to the movement of interest rates. At maturity, the security
pays face value.
Put Bonds _ provide the right to tender, or put, the bond for redemption
at face value at specific tender dates prior to final maturity. The put
feature shortens the effective maturity to the next tender date. Between
tender dates, the price of a put bond generally varies inversely to the
movement of interest rates.
Variable Rate Demand Notes (VRDN) _ provide the right, on any business
day, to demand, or put, the security for redemption at face value on either
that day or in seven days. The interest rate is adjusted at the
stipulated daily, weekly, or monthly interval to a rate that reflects
current market conditions. In money market funds, the VRDN's effective
maturity is the longer of the next put date or the interest reset date
rather than the final maturity. In bond funds, the effective maturity is
the next put date. Most VRDNs possess a credit enhancement.
Credit Enhancement (CRE) _ adds the financial strength of the provider
to support the underlying obligor's debt service obligations and/or the
put option. The enhancement may be provided by either a high quality
bank, insurance company or other corporation, or a collateral trust.
Typically, the rating agencies evaluate the security based upon the
credit standing of the credit enhancement.
Long-Term Fund
Portfolio of Investments in Securities
(In Thousands)
September 30, 1995
(Unaudited)
Principal Coupon Final Market
Amount Security Rate Maturity Value
--------- -------- ------ -------- ------
Fixed Rate Instruments (96.2%)
Alaska
Housing Finance Corp. Collateralized RB,
$ 11,705 1991 Second Series 6.90% 6/01/32 $ 12,124
16,820 1993 First Series 5.88 12/01/35 15,847
10,460 1994 First Series 6.70 12/01/19 10,747
15,195 1995 First Series 6.55 12/01/37 15,441
Valdez Marine Terminal RB,
21,175 Series 1985A 7.00 12/01/25 22,583
22,000 Series 1985A 5.75 11/01/28 21,060
63,435 Series 1993C 5.65 12/01/28 59,559
Arizona
16,745 Salt River Project Agriculture and
Power District Electric System RB,
Series 1987E 7.25 1/01/17(a) 17,825
California
30,400 Central Valley Financing Auth. RB 6.20 7/01/20 29,683
23,000 San Joaquin Hills Transportation
RB 6.97(b) 1/01/14 6,673
74,000 San Joaquin Hills
Transportation RB 6.75 1/01/32 74,748
Colorado
11,480 Summit County Sports Facilities RB,
Series 1990 7.88 9/01/08 13,473
District of Columbia
12,350 Health Facilities Mortgage RB,
Series 1985 7.75 8/01/29 2,882
8,000 Hospital RB, Series 1992B 7.00 8/15/15 7,881
Florida
1,750 Orange County Health Facilities
Auth. RB, Series 1995 6.75 7/01/20 1,733
30,000 Orlando and Orange County Expressway
Auth. RB, Series 1993 5.95 7/01/23 29,203
Georgia
20,000 GO, Series 1995B 3.20 3/01/15 14,305
10,000 Savannah Economic Development
Auth. PCRB,Series 1995 6.15 3/01/17 10,203
Illinois
Chicago Gas Supply RB,
13,500 Series 1985B 7.50 3/01/15 14,935
7,500 Series 1985C 7.50 3/01/15 8,297
17,250 Series 1995A 6.10 6/01/25 17,248
13,725 Chicago - O'Hare International Airport RB,
Series 1994 8.20 12/01/24 16,029
13,000 Educational Facilities Auth. RB 5.70 12/01/25 12,441
Health Facilities Auth. RB,
4,160 Series 1988 8.10 12/01/03 4,227
17,775 Series 1992 7.00 1/01/15 18,552
10,170 Series 1993A 6.95 11/15/13 10,476
16,360 Series 1993A 7.00 11/15/19 16,619
12,540 Series 1993B 6.95 11/15/13 12,918
6,745 Series 1993B 7.00 11/15/19 6,852
19,600 Quincy Hospital RB, Series 1993 6.00 11/15/18 18,368
10,980 Regional Transport Auth. GO,
Series 1994C (CRE) 7.10 6/01/25 12,018
Indiana
5,535 Fifth Avenue Housing Development
Corp. RB, Series 1992C 7.25 7/01/25 5,741
100,675 Health Facility Financing Auth. RB,
Series 1992C 7.89(b) 7/01/23 13,215
40,000 Indianapolis Airport Facility RB 6.80 4/01/17 41,919
Kansas
60,245 Sedgwick County Mortgage Loan RB,
Senior Series 1991A 7.11(b) 12/01/22 8,372
Kentucky
21,065 Boone County PCRB, Series 1992A 6.50 11/15/22 21,930
12,500 Jefferson County PCRB,
Series 1995A 5.90 4/15/23 12,432
Louisiana
9,000 Delhi IDA RB, Series 1982 7.50 12/01/12 9,350
25,730 Lake Charles Harbor and Terminal
District Port Facilities RB 7.75 8/15/22 28,698
51,420 Orleans Parish School Board GO
(CRE) 7.65 2/01/14 51,620
Massachusetts
24,000 GO, Series 1991A 7.63 6/01/08(a) 27,950
15,400 Health and Educational Facilities
Auth. RB, Series G1 5.50 12/01/27 13,499
Michigan
9,900 Battle Creek Downtown Development Auth.
Development Bonds, Series 1994 7.60 5/01/16 10,914
13,500 Hospital Finance Auth. MFH RB,
Series 1994A 7.50 10/01/27 13,670
6,500 Job Development Auth. RB,
Series 1990A 8.00 12/01/13 7,195
Minnesota
29,940 St. Paul Housing and Redevelopment Auth.
Hospital RB, Series 1993-A 6.63 11/01/17 29,377
Mississippi
Lafayette County Hospital RB,
2,940 Series 1991A 7.95 3/01/16 3,172
15,175 Series 1991B 7.95 3/01/16 16,371
Union County Hospital RB,
4,450 Series 1991A 7.95 3/01/16 4,801
8,350 Series 1991B 7.95 3/01/16 9,008
Missouri
22,185 Environmental Improvement and Energy
Resources Auth. PCRB, Series
1984G-2 (CRE) 8.25 11/15/14 23,335
Nevada
15,650 Humboldt County PCRB, Series 1984 8.30 12/01/14 18,446
New Hampshire
13,070 Business Finance Auth. PCRB,
Series 1993 6.63 2/01/22 13,109
10,785 Higher Educational and Health
Facilities Auth. RB, Series 1993 6.38 7/01/23 10,397
New Mexico
16,000 Chaves County Hospital RB 7.25 12/01/22 16,211
30,100 Lordsburg PCRB 6.50 4/01/13 31,177
New York
8,920 Dormitory Auth. RB, Series 1993C 5.40 5/15/23 7,906
15,500 Energy Research and Development RB,
Series 1995A 6.10 8/15/20 15,420
52,000 Housing New York Corp. MFH RB 5.00 11/01/18 45,312
21,875 Housing New York Corp. MFH RB 5.50 11/01/20 20,068
Medical Care Facilities Finance Agency RB,
36,275 Series 1994A (CRE) 6.90 8/15/34 38,902
13,900 Series 1995A 6.85 2/15/17 14,274
5,880 Series 1995A 6.38 11/15/19 5,976
New York City GO,
12,875 Series 1993A 6.25 8/01/20 12,572
50,000 Series 1995B 7.25 8/15/19 52,983
North Carolina
19,905 Housing Finance Agency RB,
Series R 6.95 9/01/23 20,923
Ohio
13,000 Air Quality Development Auth. RB,
Series 1995 6.10 9/01/30 12,925
Pennsylvania
Philadelphia Gas Works RB,
26,470 14th Series 6.38 7/01/26 26,413
2,925 14th Series A 6.38 7/01/14 2,943
Puerto Rico
Electric Power Auth. RB,
21,175 Series T 6.38 7/01/24 21,795
25,450 Series X 6.13 7/01/21 25,521
Rhode Island
25,000 Housing and Mortgage Finance Corp.
Single-Family Housing RB,
Series 15-A 6.85 10/01/24 26,102
South Carolina
27,515 Piedmont Municipal Power Agency RB,
Series 1991 4.00 1/01/23 18,862
South Dakota
16,155 Housing Development Auth. Home
Mortgage RB, Series 1993A 6.00 5/01/21 16,008
Texas
19,500 Bell County Health Facilities Development
Corp. RB, Series 1989 6.50 7/01/19(a) 21,113
6,855 Department of Housing and Community
Affairs RB, Series 1991A 6.95 7/01/23 7,146
12,500 Harris County Health Facilities RB,
Series 1992 7.13 6/01/15 13,213
19,100 Harris County IDC RB, Series 1992 6.95 2/01/22 20,081
9,630 Red River Auth. PCRB, Series 1984 7.88 9/15/14 10,142
21,055 San Antonio Electric and Gas RB,
Series 1989A 6.00 2/01/14 21,108
10,435 Tyler Health Facilities Development
Corp. RB, Series 1993B 6.75 11/01/25 10,172
20,000 Waco Health Facilities RB 10.13 11/01/15 20,487
Utah
7,000 Juab County PCRB, Series 1991 6.00(d) 8/01/11 6,617
Virginia
9,300 Henrico County IDA Hospital RB,
Series 1985C 7.50 9/01/11(a) 10,629
26,100 Housing Development Auth.
Commonwealth Mortgage RB, Series
1990B, Subseries B5 6.90 7/01/13 27,085
21,950 Peninsula Ports Auth. RB,
Series 1992 (CRE) 7.38 6/01/20 23,338
Washington
66,485 King County GO, Series 1994A 6.25 1/01/34 67,314
68,500 Seattle Metropolitan Sewer RB,
Series V 6.20 1/01/32 69,373
West Virginia
12,500 Water Development Auth. RB,
Series 1991A (CRE) 7.00 11/01/25 13,441
Wyoming
33,735 Community Development Auth.
Single-Family Housing RB,
Series 1993A 6.10 6/01/33 32,906
---------
Total fixed rate instruments (cost: $1,660,173) 1,745,929
---------
Variable Rate Demand Notes (1.9%)
California
2,900 Richmond Joint Powers Financing Auth. Lease
RB, Series 1994 (CRE) 4.75 9/01/04 2,900
6,610 San Diego Housing Auth. MFH RB,
Series 1985L (CRE) 5.50 12/01/08 6,610
Colorado
5,200 Denver City and County MFH RB,
Series 1985 (CRE) 4.75 12/01/09 5,200
Pennsylvania
Schuylkill County IDA RB,
7,900 Series 1985 (CRE) 4.60 11/01/09 7,900
7,500 Series 1985 (CRE) 4.50 12/01/11 7,500
Virginia
4,100 Loudoun County IDA RB, Series
1985 (CRE) 4.60 9/01/15 4,100
----------
Total variable rate demand notes (cost: $34,210) 34,210
----------
Total investments (cost: $1,694,383) $1,780,139
==========
Portfolio Summary By Industry
- -----------------------------
Hospitals 16.5%
Electric Power 13.2
General Obligations 11.0
Single-Family Housing 10.6
Toll Roads 6.1
Oil - International 5.7
Escrowed Securities 4.3
Gas Utilities 3.8
Sewer 3.8
Buildings 3.6
Air Freight 2.3
Metals - Miscellaneous 1.7
Distribution & Pipelines 1.6
Ports/Wharfs 1.4
Paper & Forest Products 1.3
Healthcare - Miscellaneous 1.2
Leasing 1.1
Education 1.0
Multi-Family Housing 1.0
Other 6.9
----
Total 98.1%
====
Portfolio Summary By State
--------------------------
Alaska 8.7% Arizona 1.0% California 6.6%
Colorado 1.0 District of Columbia 1.1 Florida 1.7
Georgia 1.4 Illinois 9.3 Indiana 3.4
Kansas .5 Kentucky 1.9 Louisiana 4.9
Massachusetts 2.3 Michigan 1.8 Minnesota 1.6
Mississippi 1.8 Missouri 1.3 Nevada 1.0
New Hampshire 1.3 New Mexico 2.6 New York 11.8
North Carolina 1.2 Ohio .7 Pennsylvania 2.5
Puerto Rico 2.6 Rhode Island 1.4 South Carolina 1.0
South Dakota .9 Texas 6.8 Utah .4
Virginia 3.6 Washington 7.5 West Virginia .7
Wyoming 1.8 ----
Total 98.1%
====
Intermediate-Term Fund
Portfolio of Investments in Securities
(In Thousands)
September 30, 1995
(Unaudited)
Principal Coupon Final Market
Amount Security Rate Maturity Value
--------- -------- ------ -------- ------
Fixed Rate Instruments (90.2%)
Alaska
$ 10,000 North Slope Borough GO, Series
1995A (CRE) 5.75%(b) 6/30/06 $ 5,590
Arizona
4,000 Educational Loan Marketing Corp. RB,
Series 1992A 6.70 3/01/00 4,221
Arkansas
7,520 Mississippi County Hospital RB,
Series 1992B 6.85 11/01/02 8,104
8,635 St. Francis County Hospital RB,
Series 1985 6.50 2/01/05 9,053
2,850 Student Loan RB, Series 1991 7.15 6/01/02 3,042
California
10,500 Contra Costa Transportation Auth. RB,
Series 1991A (CRE) 6.30(b) 3/01/03(a) 7,309
Foothill/Eastern Transportation Corridor
Agency RB,
10,000 Series 1995A 6.87(b) 1/01/10 5,411
15,000 Series 1995A 7.10(b) 1/01/11 8,091
9,085 Series 1995A 6.82(b) 1/01/13 4,891
30,505 Pleasanton Joint Powers Financing Auth. RB,
Series 1993A 6.00 9/02/05 31,917
3,300 Sacramento Cogeneration Auth. RB,
Series 1995 6.38 7/01/10 3,347
20,920 Sacramento Municipal Utility
District Electric RB,
Series 1993D 5.25 11/15/04 21,221
10,900 San Diego Port Facilities RB,
Series 1992 (CRE) 6.60 12/01/02 10,169
San Joaquin Hills Transportation RB,
3,525 Series 1993 7.05(b) 1/01/05 2,472
8,305 Series 1993 7.87(b) 1/01/06 5,855
5,000 Series 1993 7.50(b) 1/01/07 3,535
16,795 Series 1993 7.71(b) 1/01/08 11,985
12,695 Southern California Public Power
Auth. RB, Series 1992 6.10(b) 7/01/04 8,022
Colorado
5,200 Arapahoe County IDA RB, Series
1991 7.00 2/01/01 5,627
10,000 Highlands Ranch Metropolitan
District #2 GO, Series 1991
(CRE) 6.70 6/15/01 10,632
10,310 Student Obligations RB, Series
1991A-2 6.90 9/01/02 10,770
District of Columbia
GO,
9,000 Series 1987A 7.40 6/01/99 9,345
27,750 Series 1993A 5.80 6/01/04 26,814
8,000 Series 1994A-3 5.50 6/01/06 7,397
11,780 Series E 5.75 6/01/05 11,185
12,000 Series E 5.75 6/01/06 11,305
6,250 Hospital RB, Series 1992B 6.75 8/15/07 6,320
Florida
5,000 Housing Finance Agency MFH RB,
Series 1984C 6.25 12/01/06 5,156
4,355 Miami Health Facilities Auth.
RB, Series 1988A 7.75 8/01/00 4,692
5,935 Nassau County PCRB,
Series 1989 7.65 6/01/06 6,406
3,570 Pensacola Health Facilities
RB, Series 1988 7.50 1/01/98(a) 3,773
Georgia
7,300 Gwinnett County MFH RB, Series
1985B (CRE) 7.50 6/01/98 7,748
8,760 Metropolitan Atlanta Rapid
Transit RB, Series M 6.25 7/01/03 9,533
Municipal Electric Auth. RB,
26,305 Series 1993CC 7.00 1/01/07 29,862
6,500 Series Q 7.75 1/01/00 7,065
Guam
Power Auth. RB,
2,195 Series 1994A 6.00 10/01/05 2,256
2,180 Series 1994A 6.13 10/01/06 2,250
2,580 Series 1994A 6.20 10/01/07 2,657
Illinois
3,000 Bedford Park Tax Increment RB,
Series 1993 7.38 12/01/04 3,241
8,685 Chicago GO, Series 1986A 7.40 1/01/00 9,046
21,235 Chicago-O'Hare International
Airport RB,Series 1994A (CRE) 6.20 1/01/07 23,061
10,110 Development Finance Auth.
RB, Series 1995 7.00 3/01/07 10,479
Health Facilities Auth. RB,
3,120 Series 1989 7.75 5/15/00(a) 3,519
6,700 Series 1992 7.00 1/01/07 7,143
1,675 Independent Higher Education
Loan Auth. RB, Series
1985 (CRE) 7.50 12/01/99 1,687
15,000 Joliet Gas Supply RB,
Series 1984B 8.00 6/01/99 16,592
Indiana
Health Facility Financing Auth. RB,
620 Series 1991 8.50 9/01/96 639
620 Series 1991 8.50 9/01/97 639
205 Series 1991 8.50 9/01/98 212
205 Series 1991 8.50 9/01/99 212
20,300 Series 1993 5.40 11/01/05 20,657
5,900 Series 1993 5.90 11/01/09 5,913
16,800 Series 1994 6.20 7/01/09 17,187
Marion County Hospital Auth. RB,
8,400 Series 1992 6.10 10/01/03 8,789
6,500 Series 1992 6.55 10/01/08 6,854
Pike Township School Building Corp. RB,
4,600 Series 1992A 6.00 2/01/06 4,844
4,700 Series 1992A 6.00 8/01/06 4,949
3,150 Scottsburg Economic Development RB,
Series 1990 7.13 3/01/99 3,290
Iowa
10,000 Student Loan Liquidity Corp. RB,
Series 1992A 6.45 3/01/02 10,595
Kansas
5,000 Kansas City IDA PCRB,
Series 1984 5.45 4/01/06 4,972
Louisiana
9,650 Orleans Parish School Board RB,
Series 1991 (CRE) 6.63 2/01/02 9,675
8,500 Vidalia IDA RB, Series 1983 7.50 12/01/00 8,542
Maine
40,400 Bucksport Solid Waste
Disposal RB 6.25 5/01/10 40,878
3,615 Winslow PCRB, Series 1985A 9.00 6/01/00 3,660
Maryland
2,260 Community Development
Administration RB,
1987 Second Series 7.60 4/01/99 2,338
12,725 Transportation Facilities
Auth. RB, Series 1992 (CRE) 6.00(b) 7/01/04 8,200
Massachusetts
15,000 GO, Series 1991D 6.63 7/01/03 16,603
3,640 Housing Finance Agency RB,
Series 1992C 6.35 11/15/03 3,847
14,495 Industrial Finance Agency RB,
Series 1989A 7.10 8/01/99 15,746
New England Education Loan
Marketing Corp. RB,
45,200 Series 1985A 5.80 3/01/02 47,235
10,750 Series 1993A 5.70 7/01/05 10,805
Michigan
23,330 Dickinson County Economic
Development Corp. RB,
Series 1989 6.55 3/01/07 24,479
5,000 State Hospital Finance Auth. RB,
Series 1995A 7.50 10/01/07 5,330
Minnesota
South St. Paul Housing and Redevelopment
Auth. Hospital Facility RB,
13,500 Series 1994 6.50 11/01/04 13,881
9,095 Series 1994 6.75 11/01/09 9,329
Mississippi
15,000 Adams County PCRB, Series 1994A 5.50 12/01/05 15,232
Lafayette County Hospital RB,
720 Series 1991A 7.70 3/01/03 785
3,725 Series 1991B 7.70 3/01/03 4,062
3,720 Prentiss County Hospital RB,
Series 1985 6.50 2/01/05 3,790
Union County Hospital RB,
1,100 Series 1991A 7.70 3/01/03 1,243
2,045 Series 1991B 7.70 3/01/03 2,310
Nevada
16,640 Clark County School District GO,
Series 1991B (CRE) 6.24(b) 3/01/04 11,039
New Hampshire
Higher Educational and Health Facilities
Auth. RB,
2,655 Series 1985A (CRE) 7.50 12/01/00 2,707
2,275 Series 1990 8.50 12/01/01 2,414
New Jersey
15,000 Economic Development Auth. RB,
Series 1994A (CRE) 5.88 7/01/11 15,243
32,260 Turnpike Auth. RB, Series 1991A 6.50 1/01/03 35,745
New Mexico
6,595 Chaves County Hospital RB,
Series 1992 7.25 12/01/10 6,727
New York
Dormitory Auth. RB,
7,625 Series 1993A 5.88 5/15/11 7,513
2,725 Series 1994B 5.90 5/15/06 2,775
2,500 Series 1994B 6.00 5/15/07 2,525
6,550 Environmental Facilities Corp. PCRB,
Series 1991E 6.40 6/15/03 7,132
4,730 GO, Series 1995A 5.60 3/15/06 4,851
2,275 Housing Finance Agency Service Contract RB,
Series 1995A 6.25 9/15/10 2,277
Medical Care Facilities Finance Agency RB,
5,000 Series 1994A (CRE) 6.40 2/15/07 5,545
5,000 Series 1994A (CRE) 6.50 2/15/08 5,542
2,675 Series 1995A 6.70 2/15/05 2,763
2,750 Series 1995A 6.70 8/15/05 2,844
2,860 Series 1995A 6.75 2/15/06 2,961
2,940 Series 1995A 6.75 8/15/06 3,047
3,045 Series 1995A 6.80 2/15/07 3,159
3,130 Series 1995A 6.80 8/15/07 3,248
7,780 Series 1995A 6.00 11/15/10 7,880
5,700 Series 1995A 6.80 8/15/12 5,863
2,560 Mortgage Agency RB, Series EE-1 7.75 10/01/00 2,623
New York City GO,
10,160 Series 1991D 8.00 8/01/99 11,249
1,375 Series 1991D (Escrowed) 8.00 8/01/99(a) 1,549
12,780 Series 1992H 6.88 2/01/04 13,631
17,000 Series 1993B 6.75 10/01/04 18,088
9,000 Series 1993C 6.50 8/01/04 9,429
15,000 Series 1994A 6.25 8/01/08 15,057
13,000 New York City Municipal Assistance Corp. RB,
Series 67 7.30 7/01/00 14,502
New York City Municipal Water Finance RB,
3,295 Series 1992A 6.70 6/15/03 3,627
3,345 Series 1992A 6.70 6/15/03(a) 3,738
27,665 Series 1994B 5.30 6/15/06 27,704
Thruway Auth. RB,
7,500 Series 1995 6.00 4/01/09 7,556
2,150 Series 1995 6.10 4/01/10 2,166
North Carolina
6,000 Municipal Power Agency #1 RB,
Series 1992 6.00 1/01/04 6,184
Ohio
4,000 IDA RB, Series 1992 5.75 12/01/02 4,156
Oklahoma
54,460 Grand River Dam Auth. RB, Series
1993 4.00 6/01/04 50,995
Industries Auth. Health Facilities RB,
2,350 Series 1989A 7.30 6/01/01(a) 2,622
2,045 Series 1989A 7.30 6/01/01 2,253
2,355 Tulsa County Home Finance Auth. RB,
Series 1990 (CRE) 7.10 5/01/02 2,633
Pennsylvania
13,000 Finance Auth. RB 6.60 11/01/09 13,887
9,440 GO, Second Series 1992 6.11(b) 7/01/04 6,078
3,565 Housing Finance Agency RB, Series
1992 5.90 7/01/04 3,630
5,000 York County IDA RB, Series 1992 6.25 7/01/02 5,327
Puerto Rico
Electric Power Auth. RB,
5,000 Series S 7.00 7/01/06 5,702
4,420 Series X 5.80 7/01/09 4,488
4,500 Series X 5.90 7/01/10 4,568
4,000 Series X 6.00 7/01/11 4,060
22,200 Housing Bank and Finance Agency
RB 7.50 12/01/06 24,454
8,005 Municipal Finance Agency RB,
Series 1992A 5.80 7/01/04 8,298
14,060 Public Building Auth. RB,
Series K 6.50 7/01/03 15,380
Public Improvement GO,
24,850 Series 1993 5.38 7/01/05 25,367
7,500 Series 1994 6.10 7/01/06 8,040
7,825 Series 1994 6.20 7/01/07 8,358
Rhode Island
Housing and Mortgage Finance Corp. RB,
6,180 Series 15-B 6.30 10/01/07 6,371
7,600 Series 1995A (CRE) 5.70 7/01/07 7,710
South Dakota
5,400 Rapid City IDA RB, Series 1990 7.25 11/01/00 5,898
Tennessee
2,500 Shelby County Hospital RB, Series
1993 5.10 11/01/03 2,472
Texas
Abilene Higher Education Facilities Corp. RB,
1,500 Series 1995 6.00 10/01/06 1,535
2,010 Series 1995 6.10 10/01/07 2,058
2,130 Series 1995 6.20 10/01/08 2,181
3,495 Brazos County Health Facilities RB,
Series 1989B 7.50 1/01/01(a) 3,813
15,400 Gulf Coast Waste Disposal Auth. PCRB,
Series 1992 6.13 11/01/04 16,271
6,200 Gulf Coast Waste Disposal Auth. RB,
Series 1994 5.70 5/01/06 6,283
Harris County Toll Road RB,
6,195 Series 1995A (CRE) 5.85(b) 8/15/09 2,869(c)
9,175 Series 1995A (CRE) 5.90(b) 8/15/10 3,991(c)
9,140 Series 1995A (CRE) 6.00(b) 8/15/11 3,702(c)
9,115 Series 1995A (CRE) 6.05(b) 8/15/12 3,458(c)
5,000 Houston Water and Sewer System RB,
Series 1992B 6.00 12/01/04 5,329
Lower Colorado River Auth. RB,
33,000 Fifth Supplemental Series 5.25 1/01/05 33,480
11,700 Series 1992 (CRE) 6.45(b) 1/01/03 8,142
5,000 Metro Health Facilities Development Corp.
Hospital RB, Series 1993 5.25 1/01/06 4,880
11,790 Public Finance Auth. RB (CRE) 6.06(b) 2/01/04 7,708
San Antonio Electric and Gas RB,
4,190 Series 1989 7.00 2/01/01 4,553
10,000 Series 1991B (CRE) 6.38(b) 2/01/04 6,538
4,000 Trinity River IDA RB 7.25 2/01/04 4,493
6,530 Tyler Health Facilities
Development Corp. RB,
Series 1993B 6.63 11/01/11 6,388
1,095 Waco Health Facilities RB 9.38 11/01/97 1,121
7,255 Water Resources Finance Auth.
RB, Series 1989 7.25 2/15/01 7,880
Utah
Intermountain Power Agency RB,
16,430 Series 1988B (CRE) 6.48(b) 7/01/03 11,000
21,895 Series 1988B (CRE) 6.18(b) 7/01/04 13,801
Virginia
5,000 Isle of Wight County IDA PCRB,
Series 1994 5.80 5/01/04 5,199
4,905 Loudoun County IDA Hospital RB,
Series 1990 7.50 6/01/98 5,003
Washington
15,800 GO, Series R-1989B 7.20 9/01/00 16,986
5,500 King County GO, Series 1993A 5.90 12/01/07 5,801
West Virginia
16,940 School Building Auth. RB,
Series 1994 6.25 7/01/04 18,224
Wyoming
491 Farm Loan Board COP, Series
1989 (CRE) 6.50 12/01/99 491
Total fixed rate instruments (cost: $1,399,678) ---------
1,464,346
---------
Put Bonds (7.8%)
Alabama
4,000 Housing Finance Auth. MFH RB,
Series 1992C (CRE) 5.90 8/01/07 4,014
California
3,535 Woodland MFH RB, Series 1994A 6.05 12/01/24 3,633
Florida
10,205 Broward County Housing Finance Auth. MFH RB,
Series 1991 (CRE) 7.20 5/01/07 10,593
6,245 Housing Finance Agency RB, Series 1994B
5.70 10/01/24 6,440
Illinois
13,795 Arlington Heights MFH RB, Series
1991 (CRE) 7.25 5/01/11 14,319
9,945 Glendale Heights MFH RB, Series
1985A (CRE) 7.70 1/01/09 10,048
8,055 Hoffman Estates MFH RB, Series
1985A (CRE) 7.00 12/01/09 8,226
Kansas
6,590 Merriam MFH RB, Series
1991A (CRE) 7.25 4/01/21 6,868
Louisiana
18,110 Public Facilities Auth. RB, Health and
Education Facilities, Series
1985A (CRE) 7.30 12/01/15 18,875
4,360 Shreveport Home Mortgage Auth. RB,
Series 1995A (CRE) 6.40 9/01/25 4,409
New Mexico
7,700 Bernalillo County MFH RB, Series
1994A (CRE) 6.50 10/01/19 7,895
Ohio
5,500 Montgomery County IDA RB, Series
1992 (CRE) 6.50 2/01/07 5,849
Texas
2,500 Gregg County Housing Finance Corp. RB,
Series 1995A 6.40 9/01/25 2,521
Utah
840 Housing Finance Agency RB,
Series 1985B 9.13 7/01/07 848
Salt Lake County MFH RB,
10,240 Series 1995A-1 (CRE) 5.70 10/01/25 10,255
6,500 Series 1995B-1 (CRE) 5.70 10/01/25 6,510
Washington
4,885 Chelan County Public Utility District #1 RB,
Series E 5.70 7/01/68 4,838
--------
Total put bonds (cost: $122,848) 126,141
--------
Variable Rate Demand Notes (1.2%)
California
6,700 Orange County Apartment Development RB,
Series 1985, Issue X (CRE) 5.75 11/01/08 6,700
10,000 San Bernardino County MFH RB,
Series 1992A (CRE) 5.50 8/01/05 10,000
Illinois
400 Health Facilities Auth. RB,
Series 1985A (CRE) 4.45 1/01/16 400
Louisiana
2,550 Calcasieu Parish Industrial Development
Board RB, Series
1993B (CRE) 4.55 2/01/16 2,550
New York
400 New York City Trust for Cultural
Resources RB,
Series 1990B (CRE) 4.85 12/01/15 400
Texas
200 Port Arthur Navigation District PCRB,
Series 1994 4.45 10/01/24 200
---------
Total variable rate demand notes (cost: $20,250) 20,250
---------
Total investments (cost: $1,542,776) $1,610,737
==========
Portfolio Summary By Industry
General Obligations 17.1%
Electric Power 14.5
Hospitals 13.4
Multi-Family Housing 10.2
Paper & Forest Products 6.4
Toll Roads 6.3
Student Loan 5.8
Special Assessment/Tax/Fee 4.2
Water Utilities 3.1
Education 2.9
Sales Tax Obligations 2.5
Airports 1.4
Finance - Municipal 1.4
Chemicals 1.0
Gas Utilities 1.0
Manufacturing - Diversified Industries 1.0
Single-Family Housing 1.0
Other 6.0
----
Total 99.2%
====
Portfolio Summary By State
Alabama .2% Alaska .3% Arizona .3%
Arkansas 1.2 California 8.9 Colorado 1.7
District of Columbia 4.5 Florida 2.3 Georgia 3.3
Guam .4 Illinois 6.6 Indiana 4.6
Iowa .7 Kansas .7 Louisiana 2.7
Maine 2.7 Maryland .7 Massachusetts 5.8
Michigan 1.8 Minnesota 1.4 Mississippi 1.7
Nevada .7 New Hampshire .3 New Jersey 3.1
New Mexico .9 New York 12.4 North Carolina .4
Ohio .6 Oklahoma 3.6 Pennsylvania 1.8
Puerto Rico 6.7 Rhode Island .9 South Dakota .4
Tennessee .2 Texas 8.6 Utah 2.6
Virginia .6 Washington 1.7 West Virginia 1.1
Wyoming .1 ----
Total 99.2%
====
Short-Term Fund
Portfolio of Investments in Securities
(In Thousands)
September 30, 1995
(Unaudited)
Principal Coupon Final Market
Amount Security Rate Maturity Value
--------- -------- ------ -------- ------
Fixed Rate Instruments (68.9%)
Alaska
$ 1,500 Anchorage Hospital RB, Series 1991 6.30% 10/01/95 $ 1,500
North Slope Borough GO,
7,000 Series 1988G 8.35 6/30/98 7,673
2,000 Series 1992A (CRE) 4.65 6/30/97 2,014
6,000 Series 1993B (CRE) 4.50 1/01/98 6,002
1,250 Series 1995A (CRE) 4.85(b) 6/30/99 1,053
Arizona
1,750 Educational Loan Marketing Corp. RB,
Series 1992A 6.70 3/01/00 1,847
Arkansas
2,635 Mississippi County Hospital RB,
Series 1992B 6.05 5/01/97 2,678
2,315 St. Francis County Hospital RB,
Series 1985 5.40 12/01/97 2,366
California
Foothill/Eastern Transportation Corridor
Agency RB,
1,500 Series 1995A 6.80(b) 1/01/05 826
2,000 Series 1995A 6.95(b) 1/01/07 1,087
4,865 Pleasanton Joint Powers Financing Auth. RB,
Series 1993A 5.20 9/02/98 4,909
Sacramento Cogeneration Auth. RB,
1,000 Series 1995 5.80 7/01/01 1,017
900 Series 1995 5.90 7/01/02 918
500 Series 1995 6.00 7/01/03 511
12,615 San Joaquin Hills Transportation
RB 7.10(b) 1/01/00 9,539
3,500 San Joaquin Hills Transportation
RB 7.16(b) 1/01/01 2,471
Colorado
13,000 Centennial Water and Sanitation District GO,
Series 1991A (CRE) 6.50 6/15/96 13,192
3,000 Student Obligation RB, Series
1991A-1 6.20 9/01/96 3,033
District of Columbia
18,790 GO, Series 1994A-3 4.70 6/01/99 17,914
Florida
1,115 Orange County Health Facilities Auth. RB,
Series 1995 5.63 7/01/01 1,108
Georgia
7,100 Municipal Electric Auth. RB, Series BB
4.50 1/01/98 7,095
Guam
GO,
20,000 Series 1994A 5.75 8/15/99 20,619
5,000 Series 1995A 5.38 9/01/00 5,002
10,000 Series 1995A 5.50 9/01/01 10,067
Power Auth. RB,
1,640 Series 1994A 5.50 10/01/99 1,673
1,725 Series 1994A 5.60 10/01/00 1,768
Idaho
Student Loan RB,
3,705 Series 1992 5.95 4/01/96 3,706
3,540 Series 1992 5.95 10/01/96 3,541
3,330 Series 1992 6.00 4/01/97 3,328
Illinois
9,000 Cook County GO (CRE) 7.38 11/01/08(a) 10,139
Development Finance Auth. RB,
3,500 Series 1985 5.70 10/01/99 3,566
1,215 Series 1995 6.13 3/01/98 1,226
1,285 Series 1995 6.25 3/01/99 1,304
4,310 Hodgkins Tax Increment RB, Series
1995A 6.90 12/01/01 4,357
1,000 Student Assistance Commission RB,
Series 1992AA 5.05 3/01/97 1,005
Indiana
Health Facility Financing Auth. RB,
4,200 Series 1991 6.25 9/01/96(a) 4,296
9,100 Series 1993 4.65 11/01/98 9,183
12,600 Series 1994 5.38 7/01/01 12,839
4,200 Marion County Hospital Auth.
RB, Series 1992 5.25 10/01/97 4,272
Kentucky
2,000 Higher Education Student Loan RB,
Series A 4.40 12/01/98 1,996
Louisiana
10,000 De Soto Parish PCRB, Series 1993A 5.05 12/01/98 10,023
Offshore Terminal Auth. RB,
7,920 Series 1992B 6.00 9/01/01 8,337
5,000 Series 1992B 6.20 9/01/03 5,334
4,900 Series 1994B 5.85 9/01/00 5,109
3,440 Saint Charles Parish PCRB 7.63 6/01/03 3,702
Massachusetts
New England Education Loan Marketing Corp. RB,
14,800 Series 1985A 5.80 3/01/02 15,466
14,675 Series 1993H 4.75 12/01/99 14,745
5,000 Series A 6.13 9/01/99 5,294
5,995 Turnpike Auth. RB, Series A 4.75 1/01/02(a) 6,291
Michigan
Hospital Finance Auth. RB,
3,500 Series 1995 7.00 10/01/01 3,696
3,500 Series 1995A 6.80 10/01/00 3,662
Minnesota
4,475 Southern MN Municipal Power Agency RB,
Series A 4.30 1/01/99 4,428
Mississippi
Lafayette County Hospital RB,
75 Series 1991A 7.35 3/01/96 75
395 Series 1991B 7.35 3/01/96 399
Union County Hospital RB,
115 Series 1991A 7.35 3/01/96 116
215 Series 1991B 7.35 3/01/96 218
Missouri
6,530 Higher Education Loan Auth. RB,
Series 1992A 5.00 2/15/97 6,564
Nevada
8,640 Reno GO, Series 1991 6.30 4/01/96 8,730
New Jersey
790 Expressway Auth. RB, Series 1962 4.75 12/01/02(a) 792
New Mexico
2,300 Educational Assistance Foundation Student
Loan RB, Senior Series 1993-2A 4.40 12/01/97 2,298
New York
Dormitory Auth. RB,
1,285 Series 1994B 5.10 5/15/99 1,308
2,190 Series 1994B 5.30 5/15/00 2,241
25,805 Environmental Facilities Corp. PCRB,
Series 1994A 5.50 6/15/99 26,833
7,500 GO, Series 1991 6.40 3/01/96 7,578
5,325 Medical Care Facilities Finance
Agency RB, Series 1994A (CRE) 5.80 2/15/01 5,628
New York City GO,
9,000 Series 1992B 7.00 2/01/96 9,081
10,000 Series 1994D 6.00 8/15/99 10,386
8,000 Series 1994H 5.30 8/01/99 8,113
5,000 Series 1995A 5.40 8/01/00 5,050
5,000 Series 1995D 6.50 2/01/02 5,236
7,880 Thruway Auth. RB, Series 1995 5.10 4/01/01 7,895
North Carolina
3,000 Charlotte-Mecklenberg Hospital RB,
Series 1992 5.20 1/01/97 3,043
Oregon
5,000 Clackamas County Hospital RB,
Series 1992A 5.30 10/01/96 5,065
Pennsylvania
Beaver County Finance Auth. RB,
12,000 Series 1986A (CRE) 8.00 11/01/09(a) 12,720
4,000 Series 1986B (CRE) 8.00 11/01/09(a) 4,240
17,290 Higher Education Assistance Agency Student
Loan RB, Series 1985A (CRE) 6.80 12/01/00 18,550
11,770 IDA Economic Development RB, Series
1991A 6.30 1/01/96 11,837
Puerto Rico
Electric Power Auth. RB,
4,365 Series S 6.00 7/01/99 4,592
3,600 Series T 6.00 7/01/99 3,788
5,000 Highway and Transportation Auth. RB,
Series U 5.50 7/01/97 5,102
6,000 Housing Bank and Finance Agency RB 4.75 12/01/00 5,921
5,000 Municipal Finance Agency RB,
Series 1992A 4.75 7/01/97 5,034
14,000 Public Improvement GO, Series 1993 4.55 7/01/98 14,089
9,900 Telephone Auth. RB, Series M 4.30 1/01/98 9,870
Tennessee
7,595 Clarksville Public Building Auth. RB,
Series 1993 4.75 12/01/00 7,577
2,000 Shelby County Hospital RB,
Series 1993 4.50 11/01/98 1,991
Texas
Abilene Higher Education Facilities Corp. RB,
1,335 Series 1995 5.30 10/01/99 1,361
1,280 Series 1995 5.40 10/01/00 1,307
1,480 Series 1995 5.50 10/01/01 1,513
1,000 Series 1995 5.60 10/01/02 1,019
1,405 Harris County Health Facilities RB,
Series 1991A 6.00 2/15/96 1,415
1,450 Houston Water and Sewer System RB,
Series 1992B 4.90 12/01/97 1,467
4,090 Pasadena GO, Series 1994 5.75 2/15/99 4,259
6,500 San Antonio Electric and Gas RB,
Series 1991A 6.00 2/01/96 6,551
Virginia
1,650 Fairfax County Economic Development
Auth. RB, Series 1991A 7.13 6/01/96 1,671
West Virginia
13,480 School Building Auth. Capital Improvement RB,
Series 1994 6.00 7/01/00 14,239
Wisconsin
1,000 Housing and Economic Development Auth. RB,
Series 1992A 5.20 11/01/96 1,005
--------
Total fixed rate instruments (cost: $529,169) 536,494
--------
Put Bonds (13.8%)
California
2,200 Modesto MFH RB, Series 1992A (CRE) 5.00 3/01/06 2,203
7,500 Redwood City MFH RB, Series
1985B (CRE) 5.20 10/01/08 7,500(c)
Colorado
5,000 Denver City and County Airport System RB,
Series 1991C (CRE) 6.00 12/01/25 5,126
Florida
Housing Finance Agency MFH RB,
5,000 Series 1983F 5.35 12/01/05 5,068
4,000 Series 1983G 5.35 12/01/05 4,055
5,000 Orange County Housing Auth. MFH RB,
Series 1985H (CRE) 4.50 11/01/97 5,003
Illinois
Development Finance Auth. RB,
5,000 Series 1993A (CRE) 5.00 1/01/28 5,042
13,580 Series 1993B-1 4.38 6/01/28 13,574
11,900 Educational Facilities Auth. RB,
Series 1992 (CRE) 5.63 10/01/26 11,981
Kansas
6,270 Lenexa Health Care Facilities RB,
Series 1991 6.25 5/15/11(a) 6,358
Maryland
9,000 Howard County MFH RB, Series
1984 (CRE) 6.00 12/01/05 9,090
Michigan
7,000 Ottawa County Economic Development RB,
Series 1991 (CRE) 6.38 5/01/16 7,074
Nebraska
7,310 Investment Finance Auth. MFH RB,
Series 1985 (CRE) 6.63 9/01/05 7,376
Pennsylvania
3,800 Armstrong County Hospital Auth. RB,
Series 1992A (CRE) 5.25 11/01/12 3,875
13,625 Montgomery County Redevelopment
MFH RB, Series 1991A (CRE) 6.13 8/01/07 13,666
-------
Total put bonds (cost: $106,024) 106,991
-------
Variable Rate Demand Notes (15.0%)
Alabama
3,650 Gadsden Industrial Development PCRB,
Series 1994 4.85 6/01/15 3,650
Alaska
3,400 Anchorage Higher Education RB,
Series 1993 (CRE) 4.50 7/01/17 3,400
California
8,200 Hemet MFH RB, Series 1984A (CRE) 5.40 6/01/96 8,200
27,000 Los Angeles Community Redevelopment Agency
MFH RB, Series 1989 (CRE) 5.50 4/01/09 27,000
21,810 Orange County Housing Auth. MFH RB,
Series 1985-AA (CRE) 5.50 12/01/08 21,810
3,205 Sacramento County MFH RB,
Series 1988B (CRE) 5.50 12/01/98 3,205
Colorado
2,100 Denver City and County MFH RB,
Series 1985 (CRE) 4.75 12/01/09 2,100
Florida
6,900 Dade County Health Facilities Auth. RB,
Series 1990 (CRE) 4.60 9/01/20 6,900
5,800 Jacksonville PCRB, Series 1995 4.50 5/01/29 5,800
St. Lucie County PCRB,
3,000 Series 1993 4.75 1/01/26 3,000
5,300 Series 1995 4.50 3/01/27 5,300
2,000 Volusia County Health Facilities Auth. RB,
Series 1995 (CRE) 4.70 9/01/20 2,000
Georgia
2,200 Burke County Development Auth. PCRB,
Series 1994 4.75 10/01/24 2,200
Illinois
2,000 Health Facilities Auth. RB,
Series 1985A(CRE) 4.45 1/01/16 2,000
920 West Frankfort Commercial
Redevelopment RB 6.78 4/01/07 920
Michigan
7,400 Strategic Fund RB, Series 1994 4.50 2/01/09 7,400
New Hampshire
6,000 Manchester Housing Auth. MFH RB,
Series 1990A (CRE) 6.00 6/15/15 6,000
Tennessee
2,700 Bradley County IDRB, Series
1993C (CRE) 4.55 11/01/17 2,700
Texas
3,400 Harris County IDC PCRB, Series 1984A 4.60 3/01/24 3,400
-------
Total variable rate demand notes (cost: $116,985) 116,985
-------
Total investments (cost: $752,178) $760,470
========
Portfolio Summary By Industry
General Obligations 21.4%
Multi-Family Housing 17.1
Student Loan 10.2
Hospitals 9.1
Electric Power 8.5
Finance - Municipal 5.3
Special Assessment/Tax/Fee 3.7
Toll Roads 3.6
Water Utilities 3.5
Ports/Wharfs 2.4
Education 1.8
Community Service 1.5
Escrowed Securities 1.5
Nursing Care 1.5
Chemicals 1.4
Paper & Forest Products 1.3
Telephones 1.3
Other 2.6
----
Total 97.7%
====
Portfolio Summary By State
Alabama .5% Alaska 2.8% Arizona .2%
Arkansas .6 California 11.7 Colorado 3.0
District of Columbia 2.3 Florida 4.9 Georgia 1.2
Guam 5.0 Idaho 1.4 Illinois 7.1
Indiana 3.9 Kansas .8 Kentucky .3
Louisiana 4.2 Maryland 1.2 Massachusetts 5.4
Michigan 2.8 Minnesota .6 Mississippi .1
Missouri .8 Nebraska .9 Nevada 1.1
New Hampshire .8 New Jersey .1 New Mexico .3
New York 11.5 North Carolina .4 Oregon .7
Pennsylvania 8.3 Puerto Rico 6.2 Tennessee 1.6
Texas 2.9 Virginia .2 West Virginia 1.8
Wisconsin .1 ----
Total 97.7%
====
Tax Exempt Money Market Fund
Portfolio of Investments in Securities
(In Thousands)
September 30, 1995
(Unaudited)
Principal Coupon Final
Amount Security Rate Maturity Value
--------- -------- ------ -------- -----
Variable Rate Demand Notes (58.1%)
Alabama
$ 9,400 Birmingham Medical Clinic Board RB,
Series 1991 (CRE) 4.95% 12/01/26 $ 9,400
2,265 Northport MFH RB, Series 1995A
(CRE) 4.55 9/03/15 2,265
6,150 Phenix City Industrial Development Board RB,
Series 1990 (CRE) 4.60 0/01/25 6,150
Arizona
34,100 Apache County IDA PCRB, Series
1981A (CRE) 4.38 6/15/20 34,100
Arkansas
9,000 Union County Industrial Board PCRB,
Series 1988 (CRE) 4.51 2/01/00 9,000
California
6,900 Agoura Hills MFH RB, Series
1995 (CRE) 4.75 6/01/15 6,900
7,280 Covina Redevelopment Agency MFH RB,
Series 1994A (CRE) 4.85 12/01/15 7,280
10,925 Fontana COP, Series 1991 (CRE) 4.70 7/01/21 10,925
2,000 Foothill/Eastern Transportation Corridor
Agency RB,
Series 1995D (CRE) 4.25 1/02/35 2,000
6,915 Los Angeles County Housing Auth. MFH RB,
Series 1994B (CRE) 4.85 9/01/18 6,915
8,200 San Diego MFH RB, Series 1993A
(CRE) 4.65 12/01/15 8,200
6,000 San Francisco City and County Redevelopment
Financing Auth. RB,
Series 1995 (CRE) 4.35 9/01/06 6,000
10,000 Statewide Communities Development Auth. COP,
Series 1992 (CRE) 4.40 12/01/22 10,000
Colorado
6,860 Commerce City Golf Enterprise RB,
Series 1994 (CRE) 4.50 11/01/21 6,860
17,900 Denver City and County Airport System RB,
Series 1991B (CRE) 4.75 12/01/25 17,900
6,260 Denver City and County MFH RB,
Series 1985 (CRE) 4.75 12/01/09 6,260
Housing Finance Auth. MFH RB,
2,555 Series 1990, Huntersridge
Project (CRE) 4.60 3/01/12 2,555
7,955 Series 1990, Huntington Apartments
Project (CRE) 4.60 3/01/12 7,955
16,100 Smith Creek Metropolitan District RB,
Series 1995 (CRE) 4.50 10/01/35 16,100
District of Columbia
7,302 Health Facilities RB, Series 1991
(CRE) 4.45 2/01/21 7,302
Florida
Brevard County Housing Finance Auth. MFH RB,
2,400 Series 1993 (CRE) 4.85 7/01/05 2,400
1,500 Series 1995 (CRE) 4.45 2/01/15 1,500
765 Broward County Housing Finance Auth.
MFH RB, Series 1990 (CRE) 4.75 10/01/07 765
2,600 Dade County Aviation Facilities RB,
Series 1984A (CRE) 4.40 10/01/09 2,600
1,600 Dade County Housing Finance Auth. MFH RB,
Series 1995-3 (CRE) 4.40 6/01/05 1,600
3,185 Dade County IDA PCRB 4.50 4/01/20 3,185
400 Dade County IDA RB, Series
1985B (CRE) 4.35 1/01/16 400
4,790 Dade County MFH RB, Series 1993-1
(CRE) 4.55 2/01/28 4,790
3,400 Hillsborough County IDA RB,
Series 1992 4.50 5/15/18 3,400
Housing Finance Agency MFH RB,
7,710 Series 1990D (CRE) 4.75 12/01/09 7,710
12,400 Series 1995D (CRE) 4.40 4/01/13 12,400
5,900 Jacksonville Health Facilities Auth. RB,
Series 1990 (CRE) 4.65 6/01/20 5,900
3,000 Jacksonville IDA RB,
Series 1993 (CRE) 4.35 7/01/13 3,000
300 Jacksonville IDRB, Series
1989 (CRE) 4.25 7/01/19 300
4,900 Jacksonville Parking System Improvement RB,
Series 1992 (CRE) 4.20 5/01/22 4,900
12,800 Manatee County Housing Finance Auth. MFH RB,
Series 1989A (CRE) 4.50 6/01/07 12,800
900 Miami Health Facilities Auth. RB,
Series 1992 (CRE) 4.40 3/01/12 900
2,755 Palm Beach County Health Facilities RB,
Series 1993 (CRE) 4.35 9/01/08 2,755
1,855 Palm Beach County IDRB, Series
1990 (CRE) 4.40 5/01/02 1,855
Pinellas County Housing Finance Auth. MFH RB,
7,700 Series 1989A (CRE) 4.50 7/01/07 7,700
1,395 Series 1991A (CRE) 4.50 7/01/11 1,395
2,585 Plant City Hospital RB, Series
1993 (CRE) 4.55 3/01/13 2,585
4,500 Sarasota County Health Facilities Auth. RB,
Series 1989 (CRE) 4.50 12/01/19 4,500
2,700 St. Johns County Hospital RB,
Series 1986A (CRE) 4.40 8/01/16 2,700
3,000 Wauchula IDA RB, Series 1993 (CRE) 4.40 12/01/13 3,000
Georgia
6,500 Catoosa County IDA RB, Series
1991 (CRE) 4.55 12/01/06 6,500
2,550 Clayton County Housing Auth. MFH RB,
Series 1992 (CRE) 4.50 6/15/17 2,550
6,165 Columbus IDA RB, Series 1991 (CRE) 4.50 1/01/11 6,165
13,860 Fulton County Housing Auth. MFH RB,
Series 1994A (CRE) 4.45 10/01/25 13,860
10,600 Hapeville Hotel IDA RB,
Series 1985 (CRE) 4.60 11/01/15 10,600
Illinois
7,300 Chicago-O'Hare International Airport RB,
Series 1984A (CRE) 4.35 1/01/15 7,300
2,720 Development Finance Auth. Demand Notes,
Fiscal Year 1995-1996A (CRE)4.45 6/28/96 2,720
Development Finance Auth. MFH RB,
7,400 Series 1991 (CRE) 4.55 10/01/25 7,400
4,500 Series 1993 (CRE) 4.85 12/01/13 4,500
Indiana
2,600 Salem Economic Development RB,
Series 1985 (CRE) 5.69 10/01/00 2,600
4,060 St. Joseph County Hospital Auth. RB,
Series 1995 (CRE) 4.45 3/04/15 4,060
Iowa
13,600 Housing Finance Auth. MFH RB,
Series 1985A (CRE) 4.10 5/01/97 13,600
5,900 Waterloo IDRB (CRE) 3.80 11/01/08 5,900
Kansas
2,870 Kansas City MFH RB, Series 1993 (CRE)4.75 6/01/15 2,870
4,930 Ottawa IDA RB, Series 1991 (CRE) 4.40 10/01/04 4,930
Kentucky
6,000 Fulton Hospital RB, Series 1985 (CRE)4.50 5/01/10 6,000
9,490 Hancock County Industrial Building RB,
Series 1991 (CRE) 4.65 7/01/11 9,490
19,000 Ohio County PCRB, Series 1983 (CRE) 4.55 6/01/13 19,000
Louisiana
6,050 Caddo Parish Industrial Development Board RB,
Series 1987 (CRE) 4.50 1/01/03 6,050
Housing Finance Agency MFH RB,
990 Series 1988A (CRE) 4.55 1/01/26 990
3,720 Series 1988B (CRE) 4.55 12/01/25 3,720
8,245 Orleans Levee District Levee Improvement
Bonds, Series 1986 (CRE) 4.50 11/01/14 8,245
5,635 Orleans Levee District Public Improvement
Bonds, Series 1986 (CRE) 4.50 11/01/15 5,635
8,700 Public Facilities Auth. MFH RB,
Series 1988 (CRE) 4.85 12/01/13 8,700
12,685 Public Facilities IDA RB,
Series 1993 (CRE) 4.40 2/01/13 12,685
8,000 St. Tammany Public Trust Financing Auth. RB,
Series 1995B (CRE) 4.40 6/01/05 8,000
Maryland
7,400 Baltimore IDA RB, Series 1986 (CRE) 4.60 8/01/16 7,400
Michigan
20,000 Underground Storage Tank Financial Assurance
Auth. RB, Series 1995I (CRE)4.35 12/01/04 20,000
Minnesota
4,400 Hastings Hospital RB, Series
1988 (CRE) 4.60 11/01/13 4,400
13,400 Minneapolis Community Development Agency RB,
Series 1995 (CRE) 4.40 4/01/10 13,400
16,700 St. Paul Housing and Redevelopment Auth. RB,
Series 1982A (CRE) 4.55 12/01/12 16,700
Mississippi
4,345 Hinds County Urban Renewal RN,
Series 1991 (CRE) 4.55 1/01/07 4,345
Missouri
Clayton IDA RB,
6,325 Series 1994A (CRE) 4.55 12/01/06 6,325
6,375 Series 1994B (CRE) 4.55 2/01/07 6,375
8,780 Series 1995C (CRE) 4.55 5/01/05 8,780
New Hampshire
1,085 Housing Finance Auth. MFH RB,
Series 1990 (CRE) 4.75 7/01/06 1,085
New Jersey
3,240 Economic Development Auth. RB,
Series 1989 (CRE) 4.55 12/01/00 3,240
New York
2,600 Chautauqua County IDA RB, Series
1984A (CRE) 4.25 1/01/00 2,600
750 Glens Falls IDA RB,
Series 1985 (CRE) 4.20 8/01/05 750
200 New York City GO, Series
1995B-8 (CRE) 4.35 8/15/24 200
New York City Housing Development Corp. RB,
38,760 Series 1984A (CRE) 5.70 12/01/16 38,760
3,500 Series 1985A (CRE) 5.70 12/01/09 3,500
400 New York City IDA RB, Series
1993 (CRE) 4.10 6/30/23 400
1,200 Oswego County IDA PCRB, Series 1992 4.30 12/01/08 1,200
500 Rotterdam IDA RB, Series 1993A (CRE) 4.15 11/01/09 500
600 Suffolk County IDA RB,
Series 1992 (CRE) 4.00 12/01/12 600
North Carolina
400 Medical Care Commission Hospital RB,
Series 1991B (CRE) 4.60 10/01/13 400
Ohio
6,000 Clark County IDA RB (CRE) 5.43 12/01/10 6,000
Oklahoma
Muskogee Industrial Trust RB,
3,160 Series 1985, Muskogee Mall
Project (CRE) 4.60 12/01/15 3,160
2,400 Series 1985, Warmack-Muskogee
Project (CRE) 4.60 12/01/15 2,400
9,000 Oklahoma City Industrial and Cultural
Facilities Trust RB, Series
1985 (CRE) 4.78 7/01/15 9,000
6,600 Tulsa Industrial Auth. Univ. RB,
Series 1985 (CRE) 4.65 3/01/15 6,600
Pennsylvania
2,875 Montgomery County Higher
Education and Health Auth.
RB, Series 1992 (CRE) 4.38 12/01/02 2,875
South Carolina
Housing Finance and Development Auth. RB,
4,465 Series 1987 (CRE) 4.50 12/01/11 4,465
6,600 Series 1988 (CRE) 4.50 11/01/07 6,600
5,000 Job and Economic Development Auth. RB,
Series 1994 (CRE) 4.50 12/01/14 5,000
8,600 State Housing Finance and Development Auth.
RB, Series 1988 (CRE) 4.50 7/01/07 8,600
Tennessee
5,000 Hamilton County IDRB, Series
1985 (CRE) 4.40 11/01/05 5,000
Montgomery County Public Building Auth. RB,
15,000 Series 1995 (CRE) 4.45 7/01/15 15,000
19,000 Series 1995 (CRE) 4.45 3/01/25 19,000
1,000 Nashville and Davidson County Health and
Educational Facilities Board RB,
Series 1989 (CRE) 4.50 2/01/09 1,000
Nashville and Davidson County Industrial
Development Board RB,
4,500 Series 1994 (CRE) 4.45 6/01/08 4,500
4,000 Series 1995 (CRE) 4.45 6/01/10 4,000
Texas
5,000 Austin Higher Education Auth. RB,
Series 1995 (CRE) 4.50 8/01/19 5,000
400 Brazos River Auth. PCRB, Series 1988 4.40 11/01/00 400
400 Capital IDC PCRB, Series 1984 4.30 10/01/00 400
360 El Paso IDA RB, Series 1991 (CRE) 4.50 11/01/03 360
1,850 Euless IDA RB, Series 1985 (CRE) 4.40 12/01/15 1,850
6,000 Gulf Coast IDA RB, Series 1989 (CRE) 4.50 11/01/19 6,000
500 Harris County Health Facilities RB,
Series 1988 (CRE) 4.40 5/01/18 500
1,000 Hunt County Health Facilities Development
Corp. RB, Series 1985 (CRE) 4.40 10/01/15 1,000
900 Hunt County IDC RB, Series 1987 (CRE)4.60 10/01/02 900
500 McAllen IDA RB, Series 1985 (CRE) 4.50 12/01/99 500
300 Metropolitan Higher Education Auth. RB,
Series 1984 (CRE) 4.50 12/01/04 300
150 North Central Texas Health Facilities
Development Corp. RB, Series
1989 (CRE) 4.50 12/01/98 150
12,700 Nueces River Auth. PCRB, Series
1985 (CRE) 4.60 12/01/99 12,700
5,750 Port Arthur Navigation District IDC PCRB,
Series 1985 (CRE) 4.60 5/01/03 5,750
9,200 Port Development Corp. RB, Series
1984 (CRE) 4.65 12/01/04 9,200
14,275 Tarrant County Housing Finance Corp.
MFH RB, Series 1994 (CRE) 4.85 11/01/07 14,275
1,975 Travis County Housing Finance
Corp. MFH RB, Series
1985S (CRE) 4.60 12/01/07 1,975
Utah
8,600 Ogden City IDA RB, Series 1986 (CRE )4.20 9/01/13 8,600
Virginia
3,800 Alexandria IDA RB, Series 1989 (CRE) 4.45 1/01/09 3,800
Chesterfield County IDA PCRB,
4,700 Series 1992 4.40 4/01/09 4,700
3,950 Series 1993 4.40 8/01/09 3,950
2,969 Fairfax County American College of Radiology
RB (CRE) 4.45 2/01/11 2,969
3,800 Fluvanna County IDA RB, Series
1984 (CRE) 4.53 12/01/09 3,800
1,891 Hampton Redevelopment and Housing Auth. MFH
RB, Series 1985 (CRE) 4.45 12/01/05 1,891
5,253 Harrisonburg Redevelopment and Housing Auth.
RN, Series 1985 (CRE) 4.45 12/01/15 5,253
Henrico County IDA RB,
3,050 Series 1986C 4.35 7/15/16 3,050
3,738 Series 1991 (CRE) 4.45 9/01/11 3,738
5,000 Louisa County IDA RB, Series
1995 (CRE) 4.45 1/01/20 5,000
2,100 Newport News Redevelopment and Housing Auth.
MFH RB, Series 1984 (CRE) 4.10 9/01/06 2,100
2,450 Polytechnic Institute and State Univ. Dorm
and Dining Hall RB, Series
1984B (CRE) 4.10 6/01/04 2,450
Washington
2,305 Port of Benton Economic
Development Corp. RB,
Series 1989 (CRE) 4.70 11/01/05 2,305
2,225 Port of Pasco Economic Development Corp. RB,
Series 1991 (CRE) 4.65 7/01/00 2,225
2,260 Seattle IDA RB, Series 1989-I,
Lot 1 (CRE) 4.65 8/01/04 2,260
West Virginia
6,270 Cabell County Nursing and
Rehabilitation Facilities
RB, Series 1993 (CRE) 4.50 10/01/10 6,270
Wisconsin
10,000 Wausau IDRB, Series 1993 (CRE) 4.45 10/01/02 10,000
--------
Total variable rate demand notes (cost: $842,958) 842,958
--------
Put Bonds (24.9%)
California
12,000 Higher Education Loan Auth. RB,
Series 1987B (CRE) 3.90 7/01/02 12,000
35,040 Irvine Assessment District
#85-7 CP (CRE) 3.90 9/02/11 35,040
15,000 Irvine Assessment District
#85-7 CP (CRE) 3.75 9/02/11 15,000
25,000 Student Education Loan Marketing Corp. RB,
Series 1993A (CRE) 4.40 11/01/02 25,000
Florida
7,900 Jacksonville IDA RB,
Series 1989 (CRE) 4.00 10/01/09 7,900
St. Lucie County PCRB,
1,200 Series 1992 4.25 5/01/27 1,200
15,300 Series 1992 4.23 5/01/27 15,300
5,000 Series 1994B 4.25 7/01/29 5,000
1,000 Series 1994B 4.23 7/01/29 1,000
Georgia
7,925 Roswell Housing Auth. MFH RB,
Series 1984B (CRE) 4.30 11/01/14 7,925
Illinois
Chicago GO,
15,000 Series 1994C (CRE) 3.90 10/31/99 15,000
8,500 Series 1995A (CRE) 4.60 10/31/96 8,500
4,000 Decatur Water RB, Series 1985 (CRE) 4.05 5/01/15 4,000
Health Facilities Auth. RB,
8,000 Series 1990A (CRE) 4.00 2/01/19 8,000
16,300 Series 1991A (CRE) 4.00 10/01/15 16,300
14,000 Series 1992 4.30 1/01/26 14,000
20,000 Series 1995 3.65 6/01/30 20,000
Kentucky
2,000 Lexington-Fayette Urban County Government
Residential Facilities RB,
Series 1987 (CRE) 4.50 4/01/15 2,000
3,000 Pendleton County Self-Insurance
Funding RB, Series
1987 (CRE) 4.00 7/01/01 3,000
Louisiana
Plaquemines Port Harbor and Terminal
District Port Facilities RB,
8,850 Series 1984B (CRE) 4.50 3/15/06 8,850
11,100 Series 1985B 3.90 9/01/07 11,100
8,510 Public Facilities IDA RB,
Series 1984 (CRE) 4.75 12/01/14 8,510
Maryland
6,900 Anne Arundel County RB,
1988 Issue (CRE) 3.90 6/15/11 6,900
4,300 Calvert County RB, 1987 Issue (CRE) 3.90 12/01/04 4,300
Missouri
Environmental Improvement and Energy
Resources Auth. PCRB,
7,000 Series 1984 (CRE) 4.00 6/01/14 7,000
11,800 Series 1984A (CRE) 4.00 6/01/14 11,800
New Hampshire
5,000 Higher Educational and Health Facilities
Auth. RB, Series 1985 4.10 6/01/25 5,000
New York
Energy Research and Development Auth. PCRB,
2,200 Series 1985A (CRE) 4.65 3/15/15 2,200
3,500 Series 1985B (CRE) 4.10 10/15/15 3,500
4,000 Series 1985D (CRE) 4.60 12/01/15 4,000
North Carolina
7,845 Wake County Industrial Facilities PCRB,
Series 1990B (CRE) 3.80 6/15/14 7,845
Oregon
3,000 Clackamas County Hospital Facility
Auth. RB 4.20 4/01/14 3,000
18,000 Klamath Falls Electric RB, Series
1986C 4.40 5/01/23 18,000
Pennsylvania
6,320 Ferguson Industrial and Commercial
Development Auth. RB,
Series 1981 4.30 11/01/06 6,320
Philadelphia GO,
8,300 Series 1990 (CRE) 3.90 8/01/20 8,300
2,100 Series 1990 (CRE) 3.80 8/01/20 2,100
Virginia
18,000 Housing Development Auth. Commonwealth
Mortgage RB, Series 1995D 3.65 1/01/19 18,000
Washington
3,500 Seattle Municipal Light and Power RB,
Series 1991B 4.40 5/01/11 3,500
Wisconsin
Health and Educational Facilities Auth. RB,
2,100 Series 1988A (CRE) 4.05 3/01/17 2,100
3,400 Series 1988A (CRE) 4.00 3/01/17 3,400
--------
Total put bonds (cost: $361,890) 361,890
--------
Fixed Rate Instruments (16.0%)
California
3,225 Community College Financing Auth. TRAN,
Series 1995B 5.00 8/30/96 3,239
7,000 Pasadena TRAN, Series 1994 4.75 10/27/95 7,003
Revenue Anticipation Warrants,
13,110 Series 1994C (CRE) 5.75 4/25/96 13,195
12,500 Series 1994C (Insured) (CRE) 5.75 4/25/96 12,655
10,000 San Bernardino County TRAN,
Series 1995-96 (CRE) 4.50 7/05/96 10,040
4,400 San Ramon Valley Unified School District
TRAN, Series 1994-1995 5.25 3/13/96 4,406
12,000 Sonoma County TRAN, Series 1994-1995 4.75 10/10/95 12,002
Idaho
13,360 Boise RAN, Series 1995A 5.00 3/29/96 13,408
Illinois
14,500 Toll Highway Auth. RB, Series 1986 7.38 1/01/06(a) 14,910
Massachusetts
15,000 Gloucester BAN, Series 1995C (CRE) 4.25 9/20/96 15,049
12,000 Massachusetts Bay Transportation Auth. Notes,
Series 1995A 5.50 3/01/96 12,042
Minnesota
3,600 St. Paul Independent School District 625 Tax
Anticipation GO, Series
1995A (CRE) 5.38 3/28/96 3,614
3,650 Westonka Independent School District 277 Tax
Anticipation GO,
Series 1995 (CRE) 5.50 3/09/96 3,663
12,500 White Bear Lake Independent School District
624 Tax Anticipation GO,
Series 1995A (CRE) 5.25 3/21/96 12,532
New Jersey
6,835 Bridgewater Township BAN 4.75 11/27/95 6,835
7,027 North Bergen Township BAN 5.75 1/26/96 7,041
New Mexico
8,500 Albuquerque Municipal School District
Number 12 GO, Series 1995 5.10 8/01/96 8,583
New York
5,304 Hempstead BAN, Series 1995A 5.25 3/01/96 5,318
12,500 Urban Development Corp. RB,
Series 1986B 8.00 1/01/06(a) 12,856
Ohio
5,515 Shaker Heights GO BAN 4.63 10/19/95 5,516
6,800 Univ. of Cincinnati BAN, Series K1 5.00 3/21/96 6,811
Texas
9,400 Houston Water and Sewer System RB,
Series 1991D (CRE) 5.55 12/01/95 9,421
11,900 Richardson Independent School
District TRAN, Series 1995 4.50 8/30/96 11,947
19,900 TRAN, Series 1995A 4.75 8/30/96 20,020
----------
Total fixed rate instruments (cost: $232,106) 232,106
----------
Total investments (cost: $1,436,954) $1,436,954
==========
Portfolio Summary By Industry
Multi-Family Housing 18.4%
General Obligations 11.7
Electric Power 8.6
Hospitals 8.3
Education 6.3
Buildings 6.0
Special Assessment/Tax/Fee 5.3
Escrowed Securities 3.2
Nursing Care 3.1
Community Service 2.5
Hotel/Motel 2.5
Ports/Wharfs 2.0
Airports 1.9
Manufacturing - Diversified Industries 1.5
Pollution Control 1.4
Gas Utilities 1.2
Single-Family Housing 1.2
Water Utilities 1.2
Transportation - Miscellaneous 1.1
Other 11.6
-----
Total 99.0%
=====
Portfolio Summary By State
Alabama 1.2% Arizona 2.3% Arkansas .6%
California 14.3 Colorado 4.0 District of Columbia .5
Florida 8.6 Georgia 3.3 Idaho .9
Illinois 8.4 Indiana .5 Iowa 1.3
Kansas .5 Kentucky 2.7 Louisiana 5.7
Maryland 1.3 Massachusetts 1.9 Michigan 1.4
Minnesota 3.7 Mississippi .3 Missouri 2.8
New Hampshire .4 New Jersey 1.2 New Mexico .6
New York 5.3 North Carolina .6 Ohio 1.3
Oklahoma 1.5 Oregon 1.4 Pennsylvania 1.4
South Carolina 1.7 Tennessee 3.3 Texas 7.1
Utah .6 Virginia 4.2 Washington .7
West Virginia .4 Wisconsin 1.1 ----
Total 99.0%
====
Notes to Portfolios of Investments
(In Thousands)
September 30, 1995
(Unaudited)
General Notes
Market values of securities are determined by procedures and practices
discussed in note 1 to the financial statements.
The cost of securities for federal income tax purposes is approximately
the same as that reported in the financial statements.
The percentages shown represent the percentage of the investments to net
assets.
Portfolio Description Abbreviations
BAN Bond Anticipation Note IDRB Industrial Development
COP Certificate of Participation Revenue
CP Commercial Paper MFH Multi-Family Housing
CRE Credit Enhanced PCRB Polluton Control
GO General Obligation Revenue Bond
IDA Industrial Development RAN Revenue Anticipation Note
Authority/Agency RB Revenue Bond
IDC Industrial Development RN Revenue Note
Corporation TRAN Tax Revenue
Anticipation Note
Specific Notes
(a) Prerefunded to various dates prior to maturity at the call price.
(b) Zero Coupon security. Rate represents the effective yield at date
of purchase.
(c) At September 30, 1995, the cost of securities purchased on a
delayed delivery basis for the Intermediate-Term and Short-Term
Funds was $13,614 and $7,501, respectively.
(d) Rate changes periodically and is subject to a floor of 6% and a
ceiling of 12%.
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
Statements of Operations
(In Thousands)
Six-month period ended September 30, 1995
(Unaudited)
Tax Exempt
Long-Term Intermediate- Short-Term Money Market
Fund Term Fund Fund Fund
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Net investment income:
Interest income $ 58,301 $ 46,942 $ 20,236 $ 29,531
Expenses:
Management fees 2,511 2,203 1,099 2,024
Transfer agent's fees 542 528 339 502
Custodian's fees 116 111 76 167
Postage 56 54 44 82
Shareholder reporting fees 24 24 24 45
Directors' fees 1 1 1 1
Registration fees 22 21 22 32
Audit fees 17 17 17 17
Legal fees 3 3 8 3
Other 26 23 16 26
------ ------ ------ ------
Total expenses 3,318 2,985 1,646 2,899
------ ------ ------ ------
Net investment
income 54,983 43,957 18,590 26,632
------ ------ ------ ------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 5,093 (744) (360) _
Change in net unrealized
appreciation
/depreciation 23,698 41,197 9,908 _
------ ------ ------ ------
Net realized and
unrealized gain 28,791 40,453 9,548 _
------ ------ ------ ------
Increase in net assets resulting
from operations $ 83,774 $ 84,410 $ 28,138 $ 26,632
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
(In Thousands)
Six-month period ended September 30, 1995 and Year ended March 31, 1995
(Unaudited)
Tax Exempt
Long-Term Intermediate- Short-Term Money Market
Fund Term Fund Fund Fund
---- --------- ---- ----
9/30/95 3/31/95 9/30/95 3/31/95 9/30/95 3/31/95 9/30/95 3/31/95
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income $ 54,983 $ 109,659 $ 43,957 $ 84,836 $ 18,590 $ 40,035 $ 26,632 $ 44,967
Net realized gain (loss) on investments 5,093 (62,334) (744) (8,896) (360) (3,175) - -
Change in net unrealized appreciation
/depreciation of investments 23,698 36,258 41,197 10,764 9,908 535 - -
--------- ---------- ---------- --------- --------- --------- --------- ----------
Increase in net assets
resulting from operations 83,774 83,583 84,410 86,704 28,138 37,395 26,632 44,967
--------- ---------- ---------- --------- --------- --------- --------- ----------
Distributions to shareholders from:
Net investment income (54,983) (107,798) (43,957) (84,836) (18,590) (40,035) (26,632) (44,967)
--------- ---------- --------- --------- --------- -------- --------- ----------
Net realized gains - (12,042) - (3,178) - - - -
--------- ---------- --------- --------- --------- -------- --------- ----------
From capital share transactions:
Shares sold 341,510 752,881 132,210 334,817 124,643 370,243 842,074 1,991,020
Shares issued for dividends reinvested 39,448 87,645 33,913 68,192 15,604 33,428 25,054 42,040
Shares redeemed (370,258) (861,319) (113,390) (431,132) (172,793) (595,498) (872,503)(2,146,073)
--------- --------- --------- --------- --------- --------- --------- ----------
Increase (decrease) in net assets
from capital share transactions 10,700 (20,793) 52,733 (28,123) (32,546) (191,827) (5,375) (113,013)
-------- --------- --------- --------- --------- --------- --------- ----------
Net increase (decrease) in net assets 39,491 (57,050) 93,186 (29,433) (22,998) (194,467) (5,375) (113,013)
Net assets:
Beginning of period 1,774,643 1,831,693 1,529,750 1,559,183 801,157 995,624 1,456,747 1,569,760
--------- --------- --------- --------- --------- -------- --------- ---------
End of period $1,814,134 $1,774,643 $1,622,936 $1,529,750 $ 778,159 $ 801,15 $1,451,372 $1,456,747
========== ========== ========== ========== ========== ======== ========== ==========
Change in shares outstanding:
Shares sold 26,129 59,286 10,420 27,070 11,829 35,503 842,074 1,991,020
Shares issued for dividends reinvested 3,014 6,859 2,670 5,523 1,480 3,205 25,054 42,040
Shares redeemed (28,243) (67,925) (8,942) (35,144) (16,403) (57,164) (872,503)(2,146,073)
--------- ---------- --------- --------- --------- -------- --------- ----------
Increase (decrease) in shares
outstanding 900 (1,780) 4,148 (2,551) (3,094) (18,456) (5,375) (113,013)
========= ========== ========= ========= ========= ======== ========= ==========
Authorized shares of $.01 par value 175,000 175,000 170,000 170,000 135,000 135,00 2,600,000 2,600,000
========= ========== ========= ========= ========= ======= ========= ==========
</TABLE>
See accompanying notes to financial statements.
Notes to Financial Statements
(In Thousands)
September 30, 1995
(Unaudited)
(1) Summary of Significant Accounting Policies
USAA TAX EXEMPT FUND, INC. (the Company), registered under the
Investment Company Act of 1940, is a diversified, open-end management
investment company incorporated under the laws of Maryland consisting of
ten separate funds. The information presented in this semiannual report
pertains only to the Long-Term Fund, Intermediate-Term Fund, Short-Term
Fund, and Tax Exempt Money Market Fund (the Funds).
A. Security valuation _ Investments in the Long-Term, Intermediate-Term,
and Short-Term Funds are valued each business day by a pricing service
(the Service) approved by the Company's Board of Directors. The Service
uses the mean between quoted bid and asked prices or the last sale price
to price securities when, in the Service's judgement, these prices are
readily available and are representative of the securities' market
values. For many securities, such prices are not readily available. The
Service generally prices these securities based on methods which include
consideration of yields or prices of municipal securities of comparable
quality, coupon, maturity and type, indications as to values from
dealers in securities, and general market conditions. Securities which
are not valued by the Service, and all other assets, are valued in good
faith at fair value using methods determined by the Manager under the
general supervision of the Board of Directors. Securities purchased
with maturities of 60 days or less and, pursuant to Rule 2a-7 of the
Securities and Exchange Commission, all securities in the Tax Exempt
Money Market Fund are stated at amortized cost which approximates market
value.
B. Federal taxes _ Each Fund's policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its income
to its shareholders. Therefore, no federal income or excise tax
provision is required.
C. Investments in securities _ As is common in the industry, security
transactions are accounted for on the date the securities are purchased
or sold (trade date). Gain or loss from sales of investment securities
is computed on the identified cost basis. Interest income is recorded
daily on the accrual basis. Premiums and original issue discounts are
amortized over the life of the respective securities. Market discounts
are not amortized. Any ordinary income related to market discounts
is recognized upon disposition of the bonds.
(2) Line of Credit
The Funds participate with other USAA funds in a joint $150 million
short-term revolving loan agreement (the Agreement) through January 15,
1996 for temporary or emergency purposes, including the meeting of
redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability under this Agreement,
each Fund may borrow amounts not to exceed 5% of the value of its total
assets. All borrowings must be repaid before additional investments are made.
Borrowings under this Agreement bear interest at .125% over the Federal
Funds Rate as published by the Federal Reserve Bank of New York or at
.125% over the London Interbank Offered Rate. The Long-Term Fund had
four borrowings (each for one business day) under this Agreement during
the six-month period ended September 30, 1995, incurring $4 in interest
expense. The Intermediate-Term, Short-Term, and Tax Exempt Money Market
Funds had no borrowings under the Agreement during the period.
(3) Distributions
Net investment income is accrued daily as dividends and distributed to
shareholders monthly. All net investment income available for distribution
was distributed at September 30, 1995.
Distributions of realized gains from security transactions not offset by
capital losses are generally made in the succeeding fiscal year. At
September 30, 1995, the Long-Term, Intermediate-Term, and Short-Term
Funds had capital loss carryovers of approximately $57,262, $9,645, and
$3,965, respectively, which will expire in or before 2004. It is unlikely
that the Board of Directors of the Company will authorize a distribution
of capital gains realized in the future until the capital loss carryovers
have been utilized or expire.
(4) Investment Transactions
Purchases and sales/maturities of securities, excluding short-term
securities, for the six-month period ended September 30, 1995 were as
follows:
Long-Term Intermediate- Short-Term
Fund Term Fund Fund
---- --------- ----
Purchases $ 486,298 $ 242,307 $ 118,104
Sales $ 496,414 $ 202,352 $ 187,018
Purchases and sales/maturities of securities for the six-month ended
September 30, 1995 for the Tax Exempt Money Market Fund were $2,193,469
and $2,194,142, respectively.
Gross unrealized appreciation and depreciation of investments at
September 30, 1995 was as follows:
Long-Term Intermediate- Short-Term
Fund Term Fund Fund
---- --------- ----
Appreciation $ 90,550 $ 72,082 $ 9,174
Depreciation (4,794) (4,121) (882)
----------- ----------- ----------
Net $ 85,756 $ 67,961 $ 8,292
=========== =========== ==========
(5) Transactions with Manager
A. Management fees _ The investment policy of the Funds and the
management of the Funds' portfolios is carried out by USAA Investment
Management Company (the Manager). Management fees are computed at .28%
of the average annual net assets of each Fund.
B. Transfer agent's fees _ USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services, an affiliate of the Manager, provides
transfer agent services to the Company. Shareholder accounting service
fees are based on an annual charge per shareholder account plus
out-of-pocket expenses.
C. Underwriting agreement _ The Company has an agreement with the
Manager for exclusive underwriting and distribution of the Funds' shares
on a continuing best efforts basis. The agreement provides that the
Manager will receive no fee or other remuneration for such services.
(6) Transactions with Affiliates
USAA Investment Management Company is indirectly wholly owned by United
Services Automobile Association (the Association), a large, diversified
financial services institution.
At September 30, 1995, the Association and its affiliates owned 4,070
shares (3.2%) of the Intermediate-Term Fund and 10,260 shares (.7%) of
the Tax Exempt Money Market Fund.
<TABLE>
<CAPTION>
(7) Financial Highlights
Per share operating performance for a share outstanding throughout each
period is as follows:
Net Asset Net Net Realized Distributions
Fiscal Value At Invest- and from Net Distributions
Year Beginning Ment Unrealized Investment of Realized
Ended Of Period Income Gain (Loss) Income Capital Gains
----- ($) ($) ($) ($) ($)
--------- ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C>
Long-Term Fund:
March 31, 1991 13.01 .94 .12 (.94) -
1992 13.13 .92 .41 (.92) -
1993 13.54 .88 .75 (.88) (.08)
1994 14.21 .81 (.44) (.82) (.56)
1995 13.20 .79 (.16) (.78) (.09)
1996** 12.96 .40 .20 (.40) -
Intermediate-Term Fund:
March 31, 1991 11.87 .82 .13 (.82) -
1992 12.00 .79 .29 (.79) -
1993 12.29 .74 .61 (.74) -
1994 12.90 .69 (.29) (.69) (.13)
1995 12.48 .69 .05 (.69) (.03)
1996** 12.50 .35 .33 (.35) -
Short-Term Fund:
March 31, 1991 10.39 .67 (.04) (.67) -
1992 10.35 .59 .13 (.59) -
1993 10.48 .50 .15 (.50) -
1994 10.63 .45 (.15) (.45) -
1995 10.48 .47 (.01) (.47) -
1996** 10.47 .25 .13 (.25) -
Tax Exempt Money Market Fund:
March 31, 1991 1.00 .06 - (.06) -
1992 1.00 .04 - (.04) -
1993 1.00 .03 - (.03) -
1994 1.00 .02 - (.02) -
1995 1.00 .03 - (.03) -
1996** 1.00 .02 - (.02) -
</TABLE>
[CAPTION]
<TABLE>
Ratio of Net
Net Asset Ratio of Investment
Fiscal Value at Net Assets Expenses Income
Year End Total at End To Average to Average Portfolio
Ended Of Period Return Of Period Net Assets Net Assets Turnover
------ ($) (%)* ($000) (%) (%) (%)
--------- ------ --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Long-Term Fund:
March 31, 1991 13.13 8.46 1,355,321 .40 7.22 91.41
1992 13.54 10.39 1,638,848 .40 6.83 76.28
1993 14.21 12.46 1,882,882 .39 6.35 88.27
1994 13.20 2.36 1,831,693 .38 5.69 109.28
1995 12.96 5.07 1,774,643 .38 6.23 163.38
1996** 13.16 4.70 1,814,134 .37(a) 6.13(a) 27.92(b)
Intermediate-Term Fund:
March 31, 1991 12.00 8.30 575,770 .43 6.91 66.26
1992 12.29 9.24 893,874 .44 6.45 66.57
1993 12.90 11.29 1,374,159 .42 5.85 74.02
1994 12.48 3.06 1,559,183 .40 5.30 69.45
1995 12.50 6.16 1,529,750 .40 5.63 72.00
1996** 12.83 5.54 1,622,936 .38(a) 5.59(a) 13.08(b)
Short-Term Fund:
March 31, 1991 10.35 6.27 423.914 .50 6.48 96.10
1992 10.48 7.09 680,075 .48 5.59 107.35
1993 10.63 6.37 862,182 .43 4.75 138.20
1994 10.48 2.87 995,624 .43 4.25 101.67
1995 10.47 4.51 801,157 .42 4.50 102.93
1996** 10.60 3.66 778,159 .42(a) 4.74(a) 17.13(b)
Tax Exempt Money Market Fund:
March 31, 1991 1.00 5.94 1,508,862 .40 5.76 -
1992 1.00 4.30 1,483,554 .39 4.21 -
1993 1.00 2.89 1,501,098 .40 2.85 -
1994 1.00 2.31 1,569,760 .40 2.29 -
1995 1.00 2.98 1,456,747 .39 2.93 -
1996** 1.00 1.86 1,451,372 .40(a) 3.68(a) -
</TABLE>
(a) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(b) Effective September 30, 1995, portfolio turnover rates have been
calculated excluding short-term variable rate securities, which are
those with put dateintervals of less than one year. Had these securities
been excluded for March 31, 1995, the portfolio turnover rates for
the Long-Term, Intermediate-Term, and Short-Term Funds would have been
64.72%, 27.26%, and 32.61%, respectively.
* Assumes reinvestment of all dividend income and capital gain
distributions during the period.
** For the six-month period ended September 30, 1995.
