<PAGE>
[LOGO] STATE BOND
Tax Exempt Fund
State Bond
Tax Exempt Fund
Annual
Report
June 30, 1996
<PAGE>
State Bond Tax Exempt Fund
JULY 12, 1996
TO THE SHAREHOLDERS:
This Annual Report marks the completion of twelve years of operations for the
State Bond Tax Exempt Fund (the "Fund"). We welcome new shareholders who joined
us during the year, and we thank all of our shareholders for their interest and
support.
The Fund seeks to provide a favorable level of income to its shareholders, while
maintaining the quality requirements of its portfolio. A total of 57 cents per
share for the fiscal year was distributed through monthly dividends.
During this fiscal year ended June 30, 1996, the Federal Reserve reversed its
position of the previous year and became accommodative with reductions of a
quarter of a percent to the Federal Funds rate in July 1995, December 1995 and
January 1996. With these decreases in short-term interest rates, the 30-year
Treasury Bond yield, which began this fiscal year at 6.6%, decreased to under
6.0% in December 1995. However, economic activity began to increase during the
first quarter of 1996 and has continued through June. This economic strength
resulted in the 30-year Treasury Bond yield increasing to 6.9% at June 30, 1996.
The Fund's net asset value per share began the fiscal year at $10.77 and
increased in value to $11.05 at the end of January as interest rates fell.
However, as interest rates trended higher through June 1996, the per-share net
asset value decreased and closed the fiscal year at $10.78.
Portfolio holdings of the Fund reflect 69 tax-exempt issues representing
investments in 27 states and the District of Columbia. This provides
shareholders with both issue and geographic diversification. The top five
holdings in the portfolio include Indianapolis Public Improvement; Minnesota
State Housing; New York State Environmental Pollution Control; Chicago, Illinois
Gas Supply; and Metropolitan Pier Exposition Authority.
The portfolio's credit quality as of June 30, 1996 is reflected in the rating of
each security by Moody's Investors Service, Inc. and/or Standard & Poor's
Corporation. By selecting the higher rating awarded to each issue by either
service, bonds comprising 42.5% of the total portfolio market value were AAA
rated, 26.5% were AA rated, and 27.5% were A rated. The remaining 3.5% of the
portfolio is invested in quality rated short-term securities.
Should you desire additional information, we welcome your inquiries.
Sincerely,
/s/ Keith O. Martens
Keith O. Martens
Vice President
<PAGE>
State Bond Tax Exempt Fund
Schedule of Investments
June 30, 1996
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL
RATING AMOUNT VALUE
--------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS (96.5%)
ALASKA
Alaska Housing Finance Corp.,
Collateralized Veterans Mortgage
Program, Series 1991 B-1, 6.900%, due
2032 Aaa/AAA $ 690,000 $ 708,865
Alaska Housing Finance Corp.,
Collateralized Home Mortgage Bonds,
1988 Series A-1, 7.625%, due 2013 Aaa/AAA 325,000 335,322
Alaska Valdez Marine Terminal, 5.650%,
due 2028 Aa3/AA- 1,000,000 928,990
ARIZONA
Arizona Industrial Development
Authority, 5.450%, due 2009 A2/A 1,500,000 1,450,785
CALIFORNIA
Berkeley, CA School District, 5.800%,
due 2020 Aaa/AAA 500,000 493,580
Central Coast Water Authority Rev.
Bonds, Series 1992, 6.350%, due 2007 Aaa/AAA 1,000,000 1,070,730
Walnut Valley, CA, Water District,
Certificate of Participation, 6.125%,
due 2009 Aaa/AAA 1,000,000 1,028,540
COLORADO
Housing Finance Agency, Single Family
Housing Rev. Bonds, 1986 Series A,
8.000%, due 2017 Aa/NR 220,000 225,196
DISTRICT OF COLUMBIA
District of Columbia University Rev.
Bonds, 6.300%, due 2013 NR/AAA 1,250,000 1,269,100
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
MOODY'S/S/P PRINCIPAL
RATING AMOUNT VALUE
---------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
ILLINOIS
Chicago, Illinois, Water Rev. Bonds,
7.200%, due 2016 A1/AA- $2,000,000 $2,195,240
Chicago, Illinois, Public District
Capital Improvement Bonds, 5.450%, due Aaa/AAA 1,000,000 1,020,100
2004
City of Chicago, Illinois, Gas Supply
Rev. Bonds, 7.500%, due 2015 Aa3/AA- 1,480,000 1,608,952
City of Chicago, Illinois Gas Supply
Rev. Bonds, 7.500%, due 2015 Aa3/AA- 1,100,000 1,195,843
Cook County, Illinois Community Cons.
School District #6, 5.875%, due 2008 Aaa/AAA 1,000,000 1,021,030
Illinois Health Facility Authorized
Revenue, 6.000%, due 2015 Aaa/AAA 1,400,000 1,395,338
Illinois State Dedicated Tax, 6.000%,
due 2015 Aaa/AAA 1,000,000 1,002,680
Illinois State University Auxiliary
Facility System, Board of Regents Rev.
Bonds, Series 1989, 7.400%, due 2014 Aaa/A 1,050,000 1,157,373
Illinois State University Auxiliary
Facility System, Board of Regents Rev.
Bonds, Series 1989, 7.400%, due 2013 Aaa/A 500,000 551,130
Metropolitan Pier Exposition Authority,
Illinois Dedicated State Tax Rev.
Bonds, 6.000%, due 2014 A/A+ 2,350,000 2,349,718
Rolling Meadows, Illinois Mortgage Rev.
Bonds Woodfield Garden, 7.750%,
due 2004 NR/A- 2,000,000 2,125,640
INDIANA
Beech Grove, IN, IDR for Westvaco
Corp., 8.750%, due 2010 A1/A 550,000 556,798
Highland, IN, School Building Corp.,
6.750%, due 2012 NR/AAA 1,000,000 1,107,260
</TABLE>
3
<PAGE>
State Bond Tax Exempt Fund
Schedule of Investments (continued)
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL
RATING AMOUNT VALUE
------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
INDIANA (CONTINUED)
Indiana Municipal Power Agency, Series
1992 A, 6.000%, due 2007 Aaa/AAA $1,300,000 $1,360,762
Indiana State Toll Roads, Revenue
Refunding Bond, 6.00%, due 2013 A-/A 1,100,000 1,101,023
Indiana Transportation Finance
Authority, Series A, 6.250%, due 2016 A/NR 1,150,000 1,160,281
Indianapolis, IN, Public Improvement
Bonds, Bank Series C, 6.700%, due 2017 Aaa/NR 3,225,000 3,554,982
LOUISIANA
Rapides Parish, LA, Housing & Mortgage
Finance Authority, Single Family
Mortgage, 7.250%, due 2010 Aaa/AA- 750,000 804,645
MAINE
Maine State Housing Authority, Mortgage
Purchase Bonds, 1988 Series B, 8.000%,
due 2015 A1/AA- 400,000 421,620
MARYLAND
Maryland City Housing Multi-Family
Housing, FNMA, Series A, 7.250%, due
2023 NR/AAA 745,000 776,834
MASSACHUSETTS
Massachusetts State Housing Project
Financial Agency, 6.300%, due 2013 A1/A+ 1,000,000 1,006,560
Massachusetts State Housing Project
Financial Agency, 6.100%, due 2016 Aaa/AAA 1,000,000 1,002,390
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL
RATING AMOUNT VALUE
----------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN
Clintondale, Michigan Community Schools,
5.750%, due 2016 Aa/AA $ 500,000 $ 491,825
Michigan State Housing Development
Authority, Single Family, Series A,
7.550%, due 2014 NR/AA+ 145,000 145,779
Michigan State Housing Development,
Series B, 6.950%, due 2020 NR/AA+ 1,000,000 1,053,010
MINNESOTA
Burnsville, Minnesota, Multi-Family Rev.
Ref. Bonds, Coventry Court Apartments
Project, Series 1989, 7.500%, due 2027 NR/AAA 800,000 837,680
City of Minnetonka, MN, Multi-Family
Rental Housing Rev. Bonds, 7.250%,
due 2002 NR/AAA 800,000 834,144
Minneapolis, Minnesota Special School
District # 001, 5.900%, due 2011 Aaa/AAA 2,000,000 2,034,740
Minnesota Housing Finance Agency, Single
Family Mortgage, 6.250%, due 2015 Aa/AA+ 1,300,000 1,316,224
Minnesota Housing Finance Agency Single
Family Mortgage Rev. Bonds 1989
Series D, 7.350%, due 2016 Aa/AA+ 525,000 555,408
Minnesota Housing Finance Authority,
Series 1993 E, 6.000%, due 2014 NR/AA+ 1,460,000 1,456,759
NEVADA
Clark County, Nevada Improvement
District, 5.850%, due 2015 Aaa/AAA 350,000 348,842
Clark County, Nevada School District,
General Obligation Bonds, 5.300%,
due 2004 Aaa/AAA 1,000,000 1,008,860
</TABLE>
5
<PAGE>
State Bond Tax Exempt Fund
Schedule of Investments (continued)
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL
RATING AMOUNT VALUE
-----------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
NEVADA (CONTINUED)
Humboldt County, NV, Pollution Control
Rev. Bonds, Idaho Power Company,
8.300%, due 2014 NR/A+ $1,000,000 $1,161,170
Lyon County, Nevada School District,
6.750%, due 2011 Aaa/AAA 800,000 894,488
Washoe County, Nevada, General
Obligation Bonds, 6.000%, due 2009 Aaa/AAA 585,000 604,299
NEW HAMPSHIRE
New Hampshire Municipal Bond Bank,
Series 91 J, Non-State Guaranteed,
6.900%, due 2012 NR/A+ 1,080,000 1,188,108
State of New Hampshire Turnpike System
Rev. Bonds, 8.375%, due 2017 Aaa/A 900,000 969,957
NEW YORK
New York Metro Transit Authority, 5.100%,
due 2004 Aaa/AAA 1,000,000 1,003,910
New York State Environmental Pollution
Control Rev. Bonds, 7.250%, due 2010 Aa/A 2,900,000 3,238,517
New York State Local Government
Assistance Corp., 6.000%, due 2016 A/A 1,000,000 1,006,980
NORTH CAROLINA
Wake County, Ind. Facilities Pollution
Control, Carolina Power and Light,
6.900%, due 2009 A2/A1 1,000,000 1,071,610
NORTH DAKOTA
North Dakota Housing, Single Family
Mortgage, 1992 Series A, 6.750%,
due 2012 Aa/A+ 1,590,000 1,651,500
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL
RATING AMOUNT VALUE
-----------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
OREGON
Portland Oregon Sewer System, 6.050%,
due 2009 A1/A+ $ 500,000 $ 521,355
PENNSYLVANIA
Erie County, PA, Industrial Development
Auth., Pollution Control Rev. Ref. Bonds,
Series 1991, 7.150%, due 2013 A3/A- 400,000 423,428
RHODE ISLAND
Rhode Island Depositors, Economic
Protection Corp. Bonds, 6.625%, due 2019 Aaa/AAA 1,675,000 1,847,642
SOUTH DAKOTA
South Dakota Housing Development, Multi-
Family Housing Rev. Bonds, 6.700%,
due 2020 A1/A+ 1,400,000 1,422,568
South Dakota State Building Authority
Co-op, Series A, 7.500%, due 2016 A1/A+ 950,000 979,773
TEXAS
Brownsville, Texas Utility System Rev.,
6.875%, due 2020 Aaa/AAA 1,000,000 1,097,570
Houston, Texas, Water & Sewer Rev. Ref.
Bonds, 6.400%, due 2009 A/A 1,545,000 1,625,973
Texas Water Development Board Rev., State
Revolving Fund Bonds, 6.400%, due 2007 Aa1/AAA 1,000,000 1,070,290
</TABLE>
7
<PAGE>
State Bond Tax Exempt Fund
Schedule of Investments (continued)
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL
RATING AMOUNT VALUE
----------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
UTAH
Intermountain Power Agency Utah Power
Supply, 6.000%, due 2016 Aa/AA- $1,000,000 $ 998,840
Utah State Municipal Finance Co-op,
Government Revenue Bonds, 6.400%, due
2009 A/A 1,000,000 1,018,050
VIRGINIA
Virginia Housing Authority, Residential
Mortgage Rev. Bonds, Series B, 7.550%,
due 2012 Aa/AAA 460,000 461,090
Virginia Housing Development
Authority, Series C 1992, 6.500%, due Aa1/AA+ 500,000 522,915
2007
WASHINGTON
Skagit County Washington Cons. School
District, 6.700%, due 2007 Aaa/AAA 1,000,000 1,083,500
Washington State Municipal Finance
Co-op, Government Revenue Bonds,
5.600%, due 2007 Aa/AA 1,500,000 1,450,980
WISCONSIN
Wisconsin Housing and Economic
Development Authority, Series A,
7.100%, due 2023 Aa/AA 985,000 1,034,083
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL
RATING AMOUNT VALUE
---------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
WISCONSIN (CONTINUED)
Wisconsin Housing and Economic
Development Authority, 6.000%,
due 2015 Aa/AA $ 550,000 $ 543,164
WYOMING
Sweetwater County, WY, PCR for Idaho
Power, 7.625%, due 2013 A3/A 2,150,000 2,230,088
-----------
TOTAL MUNICIPAL BONDS
(Cost $73,868,197) 77,192,426
SHORT-TERM SECURITIES (3.5%)
American Express Credit Corp., 5.320%,
due 07/05/96 1,000,000 999,409
Ford Motor Credit Corp., 5.360%, due
07/03/96 1,540,000 1,539,541
General Electric Capital Corp.,
5.280%, due 07/02/96 300,000 299,956
-----------
TOTAL SHORT-TERM SECURITIES
(Cost $2,838,906) 2,838,906
-----------
TOTAL INVESTMENTS (100.0%)
(Cost $76,707,103*) $80,031,332
===========
</TABLE>
*Also represents cost for federal income tax purposes.
Ratings were provided by Moody's Investors Service, Inc. and Standard and Poor's
Corporation and are not covered by the report of Ernst & Young LLP.
See accompanying notes.
9
<PAGE>
State Bond Tax Exempt Fund
Statement of Assets and Liabilities
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment in securities, at value (cost $76,707,103)
See accompanying schedule $80,031,332
Interest receivable 1,350,043
-----------
TOTAL ASSETS 81,381,375
LIABILITIES
Cash overdraft 175,599
Dividends payable 57,694
Payable to affiliates 46,323
Accrued expenses 7,197
-----------
TOTAL LIABILITIES 286,813
-----------
NET ASSETS $81,094,562
===========
Net Assets consist of:
Paid-in capital $77,730,196
Accumulated undistributed net realized gain on investments 40,137
Net unrealized appreciation on investments 3,324,229
-----------
NET ASSETS, for 7,522,296 shares outstanding $81,094,562
===========
NET ASSET VALUE and redemption price per share $ 10.78
===========
Maximum offering price per share (includes maximum sales
charge of 4.5%-reduced on purchases of $50,000 or more) $ 11.29
===========
</TABLE>
See accompanying notes.
10
<PAGE>
State Bond Tax Exempt Fund
Statement of Operations
Year Ended June 30, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest $5,041,950
EXPENSES
Investment advisory and management fees 407,880
Rule 12b-1 plan fees 204,057
Transfer agent fees 31,461
Printing expenses 18,150
Accounting and custodian fees 30,415
Professional fees 20,498
Other expenses 23,952
----------
Total expenses 736,413
----------
Net investment income 4,305,537
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 40,206
Change in unrealized appreciation on investment 64,146
----------
Net gain on investments 104,352
----------
Net increase in net assets resulting from operations $4,409,889
==========
</TABLE>
See accompanying notes.
11
<PAGE>
State Bond Tax Exempt Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1996 1995
---------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 4,305,537 $ 4,457,677
Net realized gain on investments 40,206 38,720
Change in net unrealized appreciation 64,146 1,466,299
---------------------------
Net increase in net assets resulting
from operations 4,409,889 5,962,696
Distributions to shareholders from:
Net investment income (4,305,537) (4,457,677)
Net realized gain (38,789) -
---------------------------
Total distributions to shareholders (4,344,326) (4,457,677)
Capital share transactions:
Proceeds from sales of shares 3,140,961 4,250,461
Proceeds from reinvested distributions 3,149,165 3,066,110
Cost of shares redeemed (6,903,498) (8,328,499)
---------------------------
Net decrease in net assets resulting
from share transactions (613,372) (1,011,928)
---------------------------
Total increase (decrease) in net assets (547,809) 493,091
NET ASSETS
Beginning of year 81,642,371 81,149,280
---------------------------
End of year $81,094,562 $81,642,371
===========================
OTHER INFORMATION
Shares:
Sold 290,245 404,927
Issued through reinvestment of
distributions 289,771 291,063
Redeemed (636,574) (788,793)
---------------------------
Net decrease (56,558) (92,803)
===========================
</TABLE>
See accompanying notes.
12
<PAGE>
State Bond Tax Exempt Fund
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------
1996 1995 1994 1993 1992
-------------------------------------------------------
SELECTED PER-SHARE DATA
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 10.77 $ 10.58 $ 11.09 $ 10.86 $ 10.52
Income from investment operations:
Net investment income .57 .58 .59 .63 .68
Net realized and unrealized gain
(loss) on investments .01 .19 (.41) .34 .36
-------------------------------------------------------
Total from investment operations .58 .77 .18 .97 1.04
Less distributions:
From net investment income (.57) (.58) (.59) (.63) (.68)
From net realized gain (.00) (B) - (.10) (.11) (.02)
-------------------------------------------------------
Total distributions (.57) (.58) (.69) (.74) (.70)
-------------------------------------------------------
Net asset value, end of year $ 10.78 $ 10.77 $ 10.58 $ 11.09 $ 10.86
=======================================================
TOTAL RETURN (A) 5.54% 7.53% 1.55% 9.30% 10.18%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) $81,095 $81,642 $81,149 $80,055 $70,565
Ratio of expenses to average net assets .90% .93% .94% .93% .87%
Ratio of net investment income to
average net assets 5.27% 5.52% 5.37% 5.75% 6.33%
Portfolio turnover rate 16% 15% 17% 21% 16%
</TABLE>
(A) Total returns do not consider the effects of the one time sales charge.
(B) Less than $0.01 per share.
13
<PAGE>
State Bond Tax Exempt Fund
Notes to Financial Statements
June 30, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The State Bond Tax Exempt Fund (the "Fund") is the only investment portfolio of
State Bond Municipal Funds, Inc., which is registered under the Investment
Company Act of 1940, as amended, as an open-end diversified management
investment company. The primary investment objective of the Fund is to maximize
current income exempt from federal income taxes to the extent consistent with
the preservation of capital, with consideration given to the opportunity for
capital gains by investing in tax-exempt securities. The ability of the issuers
of the securities held by the Fund to meet their obligations may be affected by
economic developments in a specific state, industry or region.
ARM Financial Group, Inc. ("ARM") completed the acquisition of substantially all
of the assets and business operations of SBM Company ("SBM") on June 14, 1995.
As part of this acquisition, ARM Capital Advisors, Inc. ("ARM Capital
Advisors"), a subsidiary of ARM, assumed the responsibilities of SBM as manager
of the Fund. The Investment Advisory and Management Agreement between the Fund
and ARM Capital Advisors contains the same material terms and conditions
(including the fees payable to ARM Capital Advisors) as were contained in the
Fund's prior Investment Advisory and Management Agreement with SBM.
As part of the acquisition, ARM acquired all of the issued and outstanding
common stock of SBM Financial Services, Inc. ("SBM Financial Services"), the
Fund's distributor. Effective February 1, 1996, ARM Transfer Agency, Inc. ("ARM
Transfer Agency") replaced SBM Financial Services as transfer agent for the
Fund. ARM Transfer Agency assumed SBM Financial Services' responsibility
pursuant to a transfer agency agreement with the Fund. ARM Transfer Agency is a
wholly-owned subsidiary of ARM.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for investment companies.
14
<PAGE>
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS IN SECURITIES
Investment securities are stated at aggregate market values. Market valuations
are furnished by a pricing service approved by the Board of Directors. The
pricing service values portfolio securities which have remaining maturities of
more than 60 days from the date of valuation at quoted bid prices. Such
securities for which quotations are not readily available (which constitute a
majority of the Fund's portfolio securities) are valued at fair 60 days or less
and short-term securities are valued at amortized cost which approximates market
value. The procedures of the pricing service and its valuations are reviewed by
the officers of the Fund under the general supervision of the Board of
Directors.
Security transactions are accounted for on trade date, and interest income is
recorded on the accrual basis. Realized gains or losses from investment
transactions are determined on the basis of specific identification.
At June 30, 1996, net unrealized appreciation on a federal income tax basis was
$3,324,229, which is comprised of unrealized appreciation of $3,475,338 and
unrealized depreciation of $151,109 for tax purposes.
INCOME TAX STATUS AND RELATED MATTERS
The Fund complied with the requirements of the Internal Revenue Code applicable
to regulated investment companies and distributed its taxable net investment
income and net realized gains sufficient to relieve it from all, or
substantially all, federal income, excise, and state income taxes.
The Fund hereby designates $38,789 as capital gain dividends attributable to the
fiscal year ended June 30, 1996 for the purpose of the dividend paid deduction
on the Fund's federal income tax returns.
DISTRIBUTIONS TO SHAREHOLDERS
Exempt interest dividends from net investment income are declared daily and
distributed monthly. Distributions from taxable net realized investment gains,
if any, will be declared at least once a year. Dividends and distributions are
recorded on the ex-dividend date.
15
<PAGE>
BOARD OF DIRECTORS
William B. Faulkner
President, William Faulkner & Associates, Inc.
Director, State Bond mutual funds
John Katz
Executive Vice President, Equitable Investment Corporation, retired 1991
Director, State Bond mutual funds
John R. Lindholm
Executive Vice President, ARM Financial Group, Inc.
Chairman, State Bond mutual funds
Chris L. Mahai
Senior Vice President, Strategic Integration, Star Tribune
Director, State Bond mutual funds
Theodore S. Rosky
Executive Vice President and Chief Financial Officer,
Providian Corporation, retired 1992
Director, State Bond mutual funds
-----------------------------------
INVESTMENT ADVISER
ARM Capital Advisors, Inc.
GENERAL DISTRIBUTOR
SBM Financial Services, Inc.
100 North Minnesota Street
P.O. Box 69
New Ulm, Minnesota 56073-0069
1-800-328-4735
CUSTODIAN
Investors Fiduciary Trust Company
Kansas City, Missouri
-----------------------------------
This report is intended for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless
accompanied or preceded by the offering prospectus of the Fund, which contains
details of sales commissions and other information.
Catalog #001723(8/96)
