<PAGE>
TABLE OF CONTENTS
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................... 1
Performance Results......................... 3
Portfolio Management Review................. 4
Portfolio of Investments.................... 8
Statement of Assets and Liabilities......... 26
Statement of Operations..................... 27
Statement of Changes in Net Assets.......... 28
Financial Highlights........................ 29
Notes to Financial Statements............... 32
</TABLE>
HYM SAR 7/96
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO OF DENNIS J. MCDONNELL AND DON G. POWELL]
DENNIS J. MCDONNELL AND DON G. POWELL
July 8, 1996
Dear Shareholder,
During the six-month period covered by this report, December 1, 1995 through
May 31, 1996, we saw the end of a solid year for the financial markets--and
the beginning of a new year that promises to offer investment challenges and
opportunities.
Events on the horizon--from the presidential election in the United States
to the likelihood of significant tax reform--reiterate the importance of main-
taining a long-term investment perspective. While short-term political and
economic events may affect investment performance, a long-term strategy that
includes protecting your investments from federal income tax may help you
achieve your financial objectives.
ECONOMIC OVERVIEW
While interest rates drifted downward during the fourth quarter of last
year, such was not the case in the first quarter of 1996. During the quarter,
municipal bond prices fell in conjunction with February's economic announce-
ments, which revealed a revival in economic growth and impressive employment
levels. This more positive economic environment translated into higher yields
in the bond markets because inflation often accompanies economic growth.
Little evidence of higher inflation was visible, however, during the report-
ing period. In fact, recent Consumer Price Index reports indicated the closely
watched "core" rate (which excludes volatile food and energy components) in-
creased at a 2.7 percent rate in the twelve-month period ending May 1996. In
the second quarter, yields on municipal bonds, measured by the Bond Buyer 40
Municipal Bond Index, regained relative stability and traded in a range of
6.00 to 6.25 percent. That compares to a range of 5.50 to 5.75 percent early
in the first quarter.
Other factors influencing the municipal bond markets in the first half of 1996
included:
. Intense winter weather conditions, which hindered distribution and
manufacturing, were experienced by much of the United States and affected
certain municipal bond sectors.
. The expectation that a federal budget agreement was forthcoming helped to
bolster municipal bonds, especially at the longer end of the spectrum.
. Tax reform proposals--several of which threatened to diminish the tax-exempt
status of municipal bonds--continued to dampen demand for municipals.
A performance summary of the High Yield Municipal Fund and an interview with
the Fund's portfolio management team follow this letter.
Continued on page two
1
<PAGE>
ECONOMIC OUTLOOK
The economy rebounded in the first quarter of 1996, despite poor weather in
the East and the remnants of a slow fourth quarter in 1995, which was hurt by
weak construction activity, two government shutdowns, and a strike at Boeing.
Upward momentum continued into the second quarter, due in part to renewed auto
production in the aftermath of the strike at several General Motors plants and
an end to the budget stalemate between the White House and Congress. This mo-
mentum was particularly evident in robust reports for retail sales. We expect a
modest slowdown in the summer months, as higher interest rates could slow ac-
tivity in interest-sensitive sectors of the economy, such as housing.
The Fed's protracted period of easing, and relatively neutral stance on in-
terest rates, favors the growth we are currently experiencing. Given the strong
employment situation, we believe the Fed will await further economic evidence
before acting--probably mid- to late-summer at the earliest. So far, guides
such as the Consumer Price Index continue to reveal modest levels of inflation.
More importantly, we still see little sign of emerging inflation in either unit
labor costs, hourly earnings or the employment cost index, all of which have
been important drivers of inflation.
Finally, as the November elections approach, the debate on tax reform may
grow. We believe the outcome and long-term effects will be positive for munici-
pal bonds. That's good news for the market, which was concerned that flat tax
proposals could threaten the tax-exempt status of municipal bonds. While the
debate may not be over and legislation may be forthcoming, the market should be
more confident. Indeed, we expect investor demand for municipal securities to
exceed supply, which should add price stability to the market.
In summary, our view of the general municipal market is positive. From the
decreasing likelihood of tax reform in the near term to specific market condi-
tions, we believe the market is on solid ground. With our dedication to compre-
hensive research and our long-term investment perspective, we believe your Fund
is in a position to benefit over the coming months.
Sincerely,
/s/ Don G. Powell /s/ Dennis J. McDonnell
Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Asset Management, Inc. Asset Management, Inc.
2
<PAGE>
PERFORMANCE RESULTS FOR THE PERIOD ENDED MAY 31, 1996
VAN KAMPEN AMERICAN CAPITAL HIGH YIELD MUNICIPAL FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
TOTAL RETURNS
Six-month total return
based on NAV/1/.................................. 1.05% 0.58% 0.58%
Six-month total return/2/........................ (3.77%) (3.33%) (0.40%)
One-year total return
based on NAV1.................................... 5.94% 5.05% 5.05%
One-year total return/2/......................... 0.91% 1.09% 4.06%
Five-year average
annual total return/2/........................... 6.76% N/A N/A
Ten-year average
annual total return/2/........................... 6.44% N/A N/A
Life-of-Fund average
annual total return/2/........................... 6.70% 5.50% 4.82%
Commencement date................................ 01/02/86 07/20/92 12/10/93
DISTRIBUTION RATES AND YIELD
Distribution rate/3/............................. 6.40% 5.96% 5.97%
Taxable equivalent
distribution rate/4/............................. 10.00% 9.31% 9.33%
SEC Yield/5/..................................... 5.94% 5.46% 5.47%
</TABLE>
N/A = Not Applicable
/1/Assumes reinvestment of all distributions for the period and does not include
payment of the maximum sales charge (4.75% for A shares) or contingent de-
ferred sales charge for early withdrawal (4% for B shares and 1% for C
shares).
/2/Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (A shares) or contin-
gent deferred sales charge for early withdrawal (B shares and C shares).
/3/Distribution Rate represents the monthly annualized distributions of the Fund
at the end of the period and not the earnings of the Fund.
/4/Taxable equivalent calculations reflect a federal income tax rate of 36%.
/5/SEC Yield is a standardized calculation prescribed by the Securities and Ex-
change Commission for determining the amount of net income a portfolio should
theoretically generate for the 30-day period ending May 31, 1996.
A portion of the interest income may be subject to federal alternative minimum
tax (AMT).
See the Prior Performance section of the current prospectus. Past performance
does not guarantee future results. Investment return and net asset value will
fluctuate with market conditions. Fund shares, when redeemed, may be worth
more or less than their original cost.
3
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL HIGH YIELD MUNICIPAL FUND
We recently spoke with the management team of the Van Kampen American Capital
High Yield Municipal Fund about the key events and economic forces that shaped
the markets during the first half of the Fund's fiscal year. The team is led
by Wayne Godlin, portfolio manager, and Peter W. Hegel, executive vice
president for fixed-income investments. The following excerpts reflect their
views on the Fund's performance during the six-month period ended May 31,
1996.
THE MUNICIPAL BOND MARKET EXPERIENCED SOME VOLATILITY OVER THE LAST SIX
Q MONTHS. COULD YOU EXPLAIN WHAT HAPPENED IN THE MARKET DURING THIS PERIOD
AND WHAT FACTORS PLAYED THE GREATEST ROLE IN ANY FLUCTUATIONS?
A It's true, the municipal bond market experienced some volatility over the
last six months. In particular, the first two months of the period (De-
cember 1995 and January 1996) we enjoyed a positive investment environment,
but from February through May, we saw an abrupt end to the bond rally.
In December and January, the Federal Reserve Board lowered its key lending
rate in an effort to spur the economy. This helped create a positive municipal
market environment, because when interest rates are lowered, bond prices and
the net asset value of bond funds increase. This resulted in strong 1995 year-
end performance.
However, opposing market conditions prevailed between February and May 1996.
Instead of anticipating further interest rate reductions, the market grew wary
that interest rates might be increased (or tightened) by the Fed. This concern
was triggered by two main factors: First, the federal government was shut down
twice, along with the realization that balanced budget legislation was not im-
minent. Second, several economic indicators pointed to accelerating economic
growth--including a number of monthly employment reports that showed signifi-
cant increases. This led to fears that inflation, which had been holding at a
modest 3 percent level, might increase. These fears were fueled when agricul-
tural commodity and oil prices rose to their highest levels in two years. As a
result of these factors, the Fed shifted its policy on interest rates from an
accommodative mode (lowering interest rates) to a stable, or neutral, mode.
The bond market reacted negatively and bond prices began to decline.
Q THE HIGH YIELD MUNICIPAL FUND PERFORMED WELL THROUGHOUT THIS NEGATIVE
MARKET ENVIRONMENT. CAN YOU EXPLAIN WHY?
A The Fund has often performed well in bearish (negative) environments be-
cause we have primarily invested in non-rated municipal securities, which
typically offer relatively higher yields than securities rated investment
grade. Non-rated securities tend to be less responsive to interest rates (and
more dependent on credit quality), yet have provided higher yields than in-
vestment grade bonds, although with greater potential risk. Because the Fund
relies heavily on non-rated issues, our priority has always been to attempt to
offset incremental risk by relying on our stringent internal credit standards
and our extensive credit research capabilities.
4
<PAGE>
Q WERE THERE OTHER FACTORS THAT INFLUENCED THE MUNICIPAL BOND MARKET OVER
THE LAST SIX MONTHS?
A The supply and demand relationship continued to be a positive influence
on the municipal bond market over the period. Supply remained low, while
demand remained fairly strong--conditions that help bond prices appreciate. In
other words, we had more buyers for municipal bonds than we had new bonds be-
ing issued. This helped to neutralize the negative effect that lower interest
rates had on bond prices.
Another influence was the possibility of major tax reform. The municipal
market experienced an initial negative reaction to this issue, as proposed re-
form would remove the tax advantage municipal bonds now offer. We believe the
market has discounted the potential impact of tax reform. Furthermore, we do
not expect any reform to be implemented until 1997, at the earliest. However,
this issue will continue to receive media coverage throughout the remainder of
1996 (primarily during the presidential elections in November), and we will
continue to monitor it closely for any developments.
Q WHAT IS THE MANAGEMENT STYLE FOR THE FUND AND HOW WAS THE FUND POSITIONED
OVER THE LAST SIX MONTHS?
A The Fund is managed to provide both an attractive tax-exempt yield and a
relatively stable net asset value (share price). By following the Fund's
long-term investment strategy and concentrating its holdings in non-rated se-
curities (currently at 74.6 percent of long-term investments), we were able to
achieve these objectives in spite of the reporting period's market fluctua-
tions. However, past performance does not guarantee future results.
We continued to seek value in the market and acquired issues that offered
high yields without exposing shareholders to excessive levels of credit risk.
The Fund continued to be structured defensively with a relatively short dura-
tion in the 7- to 8-year range. Duration is a measurement of a portfolio's
sensitivity to interest rate changes--the shorter the duration, the less sen-
sitive the portfolio is to interest rate fluctuations. The Fund's average
weighted maturity remained between 15 and 20 years, which we feel offered the
best overall performance.
Q WHAT WERE THE MOST ATTRACTIVE MARKET SECTORS FOR THE FUND?
A We remained heavily diversified across many areas. The Fund is managed in
such a way that we do not necessarily concentrate on any one sector. In-
stead, we look at individual issues across many industries that we believe
should provide high yields, while meeting our stringent credit standards. One
sector that continues to remain attractive is healthcare and its related busi-
nesses. Currently, healthcare accounts for 19.3 percent of the Fund's long-
term investments.
5
<PAGE>
[PIE CHART APPEARS HERE]
HOLDINGS BY MARKET SECTOR AS A PERCENTAGE OF LONG-TERM INVESTMENTS AS OF MAY 31,
1996
Other Care.............................. 19.7%
Healthcare.............................. 19.3%
Industrial Revenue...................... 17.7%
Multi-Family Housing.................... 13.7%
Tax District............................ 8.8%
Higher Education........................ 4.8%
Retail Electric/Gas/Telecommunications.. 4.3%
Other................................... 11.7%
Q HOW DID THE FUND PERFORM DURING THE SIX MONTHS ENDED MAY 31, 1996?
A We are pleased with the Fund's consistent performance record. In fact, it
earned Morningstar's highest rating in the Municipal Bond Category, which
contains a total of 1,767 funds. This five-star composite rating, which is
evaluated monthly, is for the period beginning November 30, 1995 through May
31, 1996. Morningstar is an independent rating company that reviews and assigns
ratings to mutual funds*.
Just as importantly, the Fund continued to provide investors with an attrac-
tive level of tax-free income. At its current annualized dividend level of
$.735 per share, the Fund provided shareholders with a tax-free distribution
rate of 6.40 percent/3/ (Class A shares) as of May 31, 1996. At this distribu-
tion rate, the Fund provided shareholders in the 36 percent federal income
bracket with a yield equivalent to a taxable investment earning 10.00 per-
cent/4/.
Overall, for the six months ended May 31, 1996, the Fund's total return was
1.05 percent/1/ (for Class A shares based on net asset value). By comparison,
the Lehman Brothers Municipal Bond Index earned a total return of -0.58 percent
over the same period. Please keep in mind that the Index is a broad-based un-
managed index of municipal bonds and does not reflect any commissions or fees
that would be paid by an investor purchasing the securities it represents.
(Please refer to the chart on page three for additional Fund performance re-
sults.)
Q WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL BOND MARKET IN THE UPCOMING MONTHS
AND WHAT FACTORS COULD INFLUENCE YOUR MANAGEMENT OF THE FUND?
A The municipal market should remain positive over the next few months, es-
pecially if the strong market fundamentals--such as low inflation, moder-
ate economic growth, and the supply/demand ratio--remain in place. Although we
do not anticipate any significant changes in the management of the Fund, we may
see some changes in market fundamentals going forward:
. Inflation has been holding at a low 2 to 3 percent range for some time now,
which is positive for the bond market because it indicates that economic
growth is moderate. Going forward, there is some concern that inflation could
slowly creep upward, which could have a negative effect on the market.
6
<PAGE>
. Although we anticipate the Fed will remain in a neutral policy mode, the Fed
may find it necessary to tighten interest rates if the economy keeps showing
signs of strength. Even if we do see interest rates rise over the next six
months, we do not foresee making any significant portfolio changes. As
mentioned earlier, the Fund's portfolio is less sensitive to interest rate
fluctuations than other fixed-income investments.
. The lower supply and higher demand ratio should continue in the coming
months, which is a positive influence on municipal bond values.
/s/ Peter W. Hegel /s/ Wayne D. Godlin
Peter W. Hegel Wayne D. Godlin
Executive Vice President Portfolio Manager
Fixed Income Investments
* This five-star rating is a composite rating. The ratings for the 3 , 5 and 10
year periods are also five stars. Morningstar is an independent mutual fund
performance monitor. Its rating of one star (lowest) and five stars (highest)
is based on a fund's historic risk/reward ratio compared with similar funds for
3, 5, and 10 year periods including all sales charges and fees. 10 percent of
the funds in an asset class receive a five star rating. Fund performance is
relative to the 3-month Treasury bill monthly return.
Please see footnotes on page three
7
<PAGE>
PORTFOLIO OF INVESTMENTS
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
ALABAMA 0.5%
$1,000 Gardendale, AL Hosp & Nursing Home Med
Clinic Brd Rev Ser A................... 9.500% 04/01/20 $ 1,038,900
1,550 Gulf Shores, AL Rev Quality Inn
Beachsiding Proj Ser 1986.............. 11.000 06/01/16 1,578,102
400 Selma, AL Spl Care Fac Fin Auth Hosp
Rev Vaughan Regl Med Cent Proj
(Prerefunded @ 06/01/97)............... 9.500 06/01/14 433,516
750 Vincent, AL Indl Dev Brd Shelby Motel
Group Inc Proj......................... 10.500 09/01/16 735,938
------------
3,786,456
------------
ALASKA 0.3%
2,250 Seward, AK Rev AK Sealife Cent Proj.... 7.650 10/01/16 2,226,780
------------
ARIZONA 1.3%
500 Casa Grande, AZ Indl Dev Auth Rfdg..... 8.250 12/01/15 506,295
2,915 Chandler, AZ Indl Dev Auth Rev Chandler
Financial Cent Proj Ser 1986 (d)....... 9.875 12/01/16 2,464,347
1,044 Peoria, AZ Indl Dev Auth Sierra Winds
Life Care Cmnty Proj (Var Rate Cpn).... 10.750 11/01/17 772,884
1,025 Pinal Cnty, AZ Indl Dev Auth Casa
Grande Regl Med Cent Proj Ser A........ 8.125 12/01/22 1,060,834
475 Pinal Cnty, AZ Indl Dev Auth Casa
Grande Regl Med Cent Proj Ser B........ 8.125 12/01/22 491,606
1,035 Scottsdale, AZ Indl Dev Auth Rev First
Mtg Westminster Village Rfdg........... 8.000 06/01/11 1,099,605
2,000 Scottsdale, AZ Indl Dev Auth Rev First
Mtg Westminster Village Rfdg........... 8.250 06/01/15 2,129,540
2,540 Scottsdale, AZ Indl Dev Auth Rev First
Mtg Westminster Village (Prerefunded @
06/01/97).............................. 10.000 06/01/17 2,765,171
------------
11,290,282
------------
ARKANSAS 0.1%
500 Fayetteville, AR Pub Fac Brd Rev
Butterfield Trail Village Proj Ser B... 9.500 09/01/14 548,415
------------
CALIFORNIA 5.8%
1,500 Antioch, CA Impt Act................... 7.125 09/02/16 1,508,025
1,800 Brea & Olinda, CA Univ Sch Disc Cfts
Partn High Sch Pgm Ser B Rfdg.......... 7.000 08/01/18 1,850,382
3,000 California Hlth Fac Auth Rev Vly
Presbyterian Hosp Proj................. 9.000 05/01/12 3,028,590
5,820 California St Veterans Bonds........... 7.375 04/01/19 5,941,987
1,500 Colton, CA Pub Fin Auth Elec Sys Impts. 7.500 10/01/20 1,491,465
2,500 Corona, CA Ctfs Partn Vista Hosp Sys
Inc Ser C.............................. 8.375 07/01/11 2,493,350
1,300 Emeryville, CA Impt Bonds.............. 7.300 09/02/21 1,337,882
2,855 Fresno, CA Ctfs Partn.................. 8.500 05/01/16 2,952,298
900 Fresno, CA Jt Pwrs Fin Auth Loc Agy Rev
Ser B.................................. 7.350 09/02/12 916,047
</TABLE>
See Notes to Financial Statements
8
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$1,500 Glendale, CA Hosp Rev Glendale Mem Hosp
& Hlth Ser A Rfdg (Prerefunded @
11/01/97)............................... 9.000% 11/01/17 $ 1,637,145
1,500 Huntington Park, CA Ser C............... 7.600 09/01/18 1,537,260
1,000 Moreno Valley, CA Spl Tax Rev Towngate
Cmnty Fac Dist 87-1..................... 7.125 10/01/23 1,003,610
1,530 Norco, CA Swr & Wtr Rev Rfdg............ 7.200 10/01/19 1,552,032
2,000 Perris, CA Pub Fdg Ser D................ 7.875 09/01/25 2,047,580
1,500 Rancho Cucamonga, CA Cmnty Fac Dist..... 8.250 09/01/19 1,564,665
100 Rancho Cucamonga, CA Cmnty Fac Dist..... 8.000 09/01/20 104,358
1,250 Richmond, CA Jt Pwrs Fin Auth Impt Dist
No 851 & No 853 Ser A................... 7.400 09/02/19 1,287,688
3,105 Richmond, CA Redev Agy.................. 7.500 09/01/23 3,159,338
500 Riverside Cnty, CA Impt Bonds........... 7.400 09/02/09 495,760
1,000 Riverside Cnty, CA Impt Bonds........... 7.625 09/02/14 987,230
4,000 Riverside Cnty, CA Air Force Village
West Inc Ser A Rfdg..................... 8.125 06/15/20 4,082,320
3,000 San Bernardino, CA Hosp Rev............. 7.875 12/01/19 2,984,100
1,000 San Diego, CA Spl Tax Cmnty Fac Dist No1
Ser B................................... 7.100 09/01/20 982,830
3,000 Santa Ana, CA Cmnty Redev City Ser B
Rfdg.................................... 7.500 09/01/16 3,058,110
1,000 Santa Rosa, CA Fountaingrove Prkwy
Extension............................... 7.625 09/02/19 1,014,600
------------
49,018,652
------------
COLORADO 6.1%
1,000 Arrowhead Metro Dist CO................. 8.125 12/01/11 1,044,190
2,000 Beaver Creek Metro Dist CO (Prerefunded
@ 12/01/96)............................. 9.250 12/01/05 2,074,120
1,060 Berry Creek Metro Dist CO Rfdg.......... 7.300 12/01/12 1,079,144
2,400 Bowles Metro Dist CO GO................. 7.750 12/01/15 2,329,752
1,500 Colorado Hlth Fac Auth Rev Christian
Living Campus........................... 9.000 01/01/25 1,578,210
1,000 Colorado Hlth Fac Auth Rev Cleo Wallace
Cent Proj............................... 7.000 08/01/15 1,016,730
400 Colorado Hlth Fac Auth Rev Mile High
Transplant Bank (Prerefunded @
06/01/97)............................... 8.500 06/01/07 412,444
1,650 Colorado Hlth Fac Auth Rev Shalom Park
Proj Rfdg & Impt........................ 7.125 12/15/17 1,657,607
2,000 Colorado Hlth Fac Auth Rev Shalom Park
Proj Rfdg & Impt........................ 7.250 12/15/25 2,007,120
1,250 Cordillera Metro Dist CO Eagle Cnty..... 8.250 12/01/13 1,326,838
1,055 Denver, CO City & Cnty Indl Dev Rev
Jewish Cmnty Cent Proj.................. 7.375 03/01/09 1,104,849
1,130 Denver, CO City & Cnty Indl Dev Rev
Jewish Cmnty Cent Proj.................. 7.500 03/01/14 1,177,370
815 Denver, CO City & Cnty Indl Dev Rev
Jewish Cmnty Cent Proj.................. 7.875 03/01/19 852,066
3,170 Denver, CO City & Cnty Ser A GNMA
Collateralized.......................... 8.125 12/01/20 3,276,734
1,930 Denver, CO Urbn Renewal Auth Tax
Increment Rev........................... 8.500 05/01/16 2,079,536
1,650 Dove Vly Metro Dist Arapahoe Cnty CO.... 9.500 12/01/08 1,698,279
1,315 Edgewater, CO Redev Auth Tax Increment
Rev Edgewater Dev Proj Rfdg............. 6.750 12/01/08 1,347,388
4,000 Fairlake Metro Dist City & Cnty of
Denver CO Ser 1991...................... 9.625 12/01/10 4,609,680
2,000 Greenwood Metro Dist CO................. 7.300 12/01/06 2,258,520
</TABLE>
See Notes to Financial Statements
9
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COLORADO (CONTINUED)
$1,500 Greenwood South Metro Dist CO.......... 7.250% 12/01/06 $ 1,689,765
2,500 Hyland Hills, CO Metro Park &
Recreation Dist Spl Rev Ser A.......... 8.625 12/15/12 2,681,450
1,000 Landmark Metro Dist CO................. 8.750 12/01/05 1,024,790
3,000 Mountain Village Metro Dist San Miguel
Cnty CO (Prerefunded @ 12/01/98)....... 11.000 12/01/07 3,521,670
265 Panorama Metro Dist CO (Prerefunded @
12/01/96).............................. 9.500 12/01/05 270,708
500 Panorama Metro Dist CO Ser B........... 9.000 12/01/09 523,340
147 Skyland Metro Dist CO Gunnison Cnty
Rfdg (Var Rate Cpn).................... * 12/01/08 102,550
750 Snowmass Village, CO Multi-Family Ser A
Rfdg................................... 8.000 09/01/14 783,308
2,175 Southtech Metro Dist CO Rfdg GO
(Prerefunded @ 12/01/97)............... 9.500 12/01/11 2,372,990
660 Superior, CO Metro Dist No 2 Ser A
Rfdg................................... 7.250 12/01/02 676,091
840 Superior, CO Metro Dist No 2 Ser A
Rfdg................................... 7.750 12/01/13 874,264
2,000 Telluride, CO Hsg Auth Hsg Rev Shandoka
Apartments Proj Rfdg................... 7.875 06/01/17 2,106,020
1,500 Telluride, CO Hsg Auth Hsg Rev Ser
1991................................... 9.100 06/01/01 1,648,845
------------
51,206,368
------------
CONNECTICUT 1.4%
2,415 Connecticut St Dev Auth First Mtg Gross
Rev Hlth Care Proj CT Baptist Homes Inc
Proj................................... 8.750 09/01/12 2,534,229
1,500 Connecticut St Dev Auth First Mtg Gross
Rev Hlth Care Proj CT Baptist Homes Inc
Proj................................... 9.000 09/01/22 1,602,150
1,225 Connecticut St Dev Auth Hlth Care Rev
Independent Living Proj Ser B.......... 8.000 07/01/17 1,259,839
1,950 Connecticut St Dev Auth Hlthcare Rev
Jerome Home Proj....................... 8.000 11/01/19 1,988,220
2,500 Connecticut St Hlth & Edl Fac Rev
Tolland Cnty Hlth Care Inc Ser A....... 9.200 07/01/21 2,696,825
1,365 New Haven, CT Fac Rev Easter Seal
Goodwill Rehab Proj.................... 8.875 04/01/16 1,438,778
------------
11,520,041
------------
DELAWARE 1.2%
2,670 Delaware St Econ Dev Auth Indl Dev Rev. 7.875 04/01/08 2,849,718
400 Delaware St Econ Dev Auth Rev First Mtg
Gilpin Hall Proj....................... 7.375 07/01/15 402,972
1,000 Delaware St Econ Dev Auth Rev First Mtg
Gilpin Hall Proj....................... 7.625 07/01/25 1,011,070
3,000 Delaware St Econ Dev Auth Rev
Osteopathic Hosp Assn of DE Ser A
(Escrowed to Maturity)................. 6.900 01/01/18 3,270,450
975 Delaware St Econ Dev Auth Rev
Osteopathic Hosp Assn of DE Ser A
(Prerefunded @ 07/01/04)............... 9.500 01/01/22 1,261,621
300 Wilmington, DE Hosp Rev Osteopathic
Hosp Assn of DE/Riverside Hosp Ser A
(Prerefunded @ 10/01/98)............... 10.000 10/01/03 342,618
500 Wilmington, DE Hosp Rev Osteopathic
Hosp Assn of DE/Riverside Hosp Ser A
(Prerefunded @ 10/01/98)............... 10.200 10/01/18 573,225
------------
9,711,674
------------
</TABLE>
See Notes to Financial Statements
10
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
DISTRICT OF COLUMBIA 0.7%
$2,090 District of Columbia Hosp Ser A........ 7.125% 08/15/19 $ 2,084,984
3,500 District of Columbia Rev Natl Pub Radio
Ser A.................................. 7.700 01/01/23 3,754,065
------------
5,839,049
------------
FLORIDA 5.7%
1,375 Atlantic Beach, FL Rev Ser A........... 7.500 10/01/02 1,422,960
2,085 Atlantic Beach, FL Rev Ser A........... 7.875 10/01/08 2,175,239
1,500 Bay Cnty, FL Hosp Sys Rev.............. 8.000 10/01/12 1,631,055
500 Bay Cnty, FL Hosp Sys Rev.............. 8.000 10/01/19 543,685
1,605 Brevard Cnty, FL Hlth Fac.............. 7.375 11/15/04 1,643,360
2,200 Brevard Cnty, FL Hlth Fac Auth Rev
Courtenay Springs Village.............. 7.750 11/15/17 2,344,298
180 Charlotte Cnty, FL Indl Dev Auth
Beverly Enterprises Inc Rfdg........... 10.000 06/01/11 205,297
1,650 Collier Cnty, FL Ida Rfdg.............. 10.750 03/01/03 1,919,330
865 Fort Walton Beach, FL First Mtg
Shoney's Inn & Restaurant.............. 10.500 12/01/16 909,945
1,185 Hernando Cnty, FL Beverly Enterprises
Inc Rfdg............................... 10.000 09/01/11 1,356,707
3,000 Hialeah Gardens, FL Waterford
Convalescent Ser A..................... 8.250 12/01/14 3,105,720
1,500 Homestead, FL Brookwood Gardens Cent
Proj Ser A............................. 8.250 12/01/14 1,605,060
2,500 Lake Saint Charles, FL Spl Assmt Rev... 7.875 05/01/17 2,487,050
250 Lee Cnty, FL Indl Dev Auth Econ Dev Rev
Encore Nursing Cent Partner Rfdg....... 8.125 12/01/07 264,750
1,300 Marion Cnty, FL Indl Dev Auth Rev
Marion Ross Corp....................... 11.875 08/01/11 1,308,528
2,570 North Miami, FL Hlth Care Fac Rev
Imperial Club Proj Ser A............... 9.250 01/01/13 2,814,279
2,880 Orange Cnty, FL Hlth Fac Auth Rev
Pooled Hosp Ln Pgm Ser A (FGIC
Insd)(c)............................... 7.875 12/01/25 3,031,574
2,675 Orange Cnty, FL Hsg Fin Auth Multi-
Family Rev Mtg Hands Inc Proj Ser A.... 7.875 10/01/15 2,698,487
2,035 Orange Cnty, FL Hsg Fin Auth Multi-
Family Rev Mtg Hands Inc Proj Ser A.... 8.000 10/01/25 2,057,283
465 Orange Cnty, FL Indl Dev Auth Rev
Beverly Enterprises Inc Rfdg........... 9.250 08/01/10 515,122
3,400 Palm Beach Cnty, FL Hlth Fac Auth Rev
Waterford Proj Rfdg.................... 7.750 10/01/15 3,454,026
1,370 Plantation, FL Hlth Fac Auth Rev
Covenant Retirement Cmnties Inc........ 7.625 12/01/12 1,451,597
750 Plantation, FL Hlth Fac Auth Rev
Covenant Retirement Cmnties Inc........ 7.750 12/01/22 793,448
250 Santa Rosa Cnty, FL Indl Dev Auth Rev
First Mtg Sandy Ridge Care Cent........ 10.500 04/01/16 253,980
3,000 Sarasota Cnty, FL Hlth Fac Auth Rev
Hlth Care Manatee Jewish Rfdg.......... 7.000 07/01/16 2,977,410
1,000 Sarasota Cnty, FL Hlth Fac Auth Rev
Hlth Fac Sunnyside Pptys Rfdg.......... 6.700 07/01/25 954,520
465 Sunrise, FL Sunshine Palms Adult
Congregate Living Fac Ser 86........... 10.750 12/01/16 475,170
</TABLE>
See Notes to Financial Statements
11
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FLORIDA (CONTINUED)
$1,920 Tampa Palms, FL Open Space & Transn
Cmnty Dev Dist Rev Cap Impt Area 7 Proj
(b).................................... 8.500% 05/01/17 $ 1,910,400
1,775 Westchase East Cmnty Dev Dist FL Cap
Impt Rev............................... 7.500 05/01/17 1,718,555
------------
48,028,835
------------
GEORGIA 0.5%
3,000 Atlanta, GA Urban Residential Fin Auth
Multi-Family Rev Renaissance on
Peachtree Apts Proj.................... 8.500 04/01/26 2,790,570
300 Richmond Cnty, GA Dev Auth Nursing Home
Rev Beverly Enterprises Inc GA Proj
Rfdg................................... 8.750 06/01/11 330,390
1,500 Rockdale Cnty, GA Dev Auth Rev Solid
Waste Disp Visy Paper Inc Proj......... 7.500 01/01/26 1,521,315
------------
4,642,275
------------
HAWAII 0.1%
930 Hawaii Cnty, HI Impt Dist No 17 Spl
Assessment-Kaloko Subdivision.......... 9.500 08/01/11 980,480
------------
ILLINOIS 8.1%
1,000 Bedford Park, IL Tax Increment Rev
Bedford City Proj...................... 9.250 02/01/12 1,090,650
1,500 Bedford Park, IL Tax Increment Rev Mark
IV Proj................................ 9.750 03/01/12 1,688,865
3,000 Broadview, IL Tax Increment Rev........ 8.250 07/01/13 3,258,750
1,000 Chicago, IL O'Hare Intl Arpt........... 8.200 12/01/24 1,131,140
540 Chicago, IL O'Hare Int Arpt Rev
American Airls Inc Proj Ser A.......... 7.875 11/01/25 581,283
3,500 Chicago, IL O'Hare Intl Arpt Spl Fac
Rev United Airls Inc................... 8.500 05/01/18 3,823,295
3,000 Crestwood, IL Tax Increment Rev Rfdg... 7.250 12/01/08 2,966,100
1,350 Hanover Park, IL First Mtg Rev Windsor
Park Manor Proj........................ 9.500 12/01/14 1,443,582
500 Hodgkins, IL Tax Increment Rev......... 9.500 12/01/09 576,695
4,000 Hodgkins, IL Tax Increment Rev......... 7.625 12/01/13 4,117,280
3,500 Huntley, IL Tax Increment Alloc Rev
Huntley Redev Proj Ser A............... 8.500 12/01/15 3,340,505
2,000 Illinois Dev Fin Auth Debt Restructure-
East Saint Louis....................... 7.375 11/15/11 2,120,680
2,470 Illinois Dev Fin Auth Hlth Fac Rev
Cmnty Living Options................... 7.125 03/01/10 2,497,269
1,500 Illinois Dev Fin Auth IL Pwr Co Proj
Ser A Rfdg............................. 8.300 04/01/17 1,602,000
650 Illinois Dev Fin Auth Rev Cmnty Fac
Clinic Altgeld Proj.................... 8.000 11/15/06 648,141
1,405 Illinois Dev Fin Auth Rev Cmnty Fac
Clinic Altgeld Proj.................... 8.000 11/15/16 1,402,106
1,475 Illinois Hlth Fac Auth Rev Covenant
Retirement Cmnties Ser A............... 7.600 12/01/12 1,529,074
1,000 Illinois Hlth Fac Auth Rev Fairview
Oblig Group Proj Ser A................. 9.500 10/01/22 1,259,340
3,000 Illinois Hlth Fac Auth Rev Fairview
Oblig Group Proj Ser B Rfdg............ 7.400 08/15/23 2,996,010
1,250 Illinois Hlth Fac Auth Rev Saint
Elizabeth's Hosp....................... 7.625 07/01/10 1,284,363
1,500 Illinois Hlth Fac Auth Rev Saint
Elizabeth's Hosp....................... 7.750 07/01/16 1,540,980
1,700 Illinois Hlth Fac Auth Rev Lifelink
Corp Oblig Ser B....................... 8.000 02/15/25 1,735,921
530 Illinois Hlth Fac Auth Rev Hinsdale Ser
C...................................... 9.500 11/15/19 617,636
1,500 Jackson Park Hosp Fndtn Chicago, IL
Jackson Park Hosp (d).................. 9.000 03/01/05 1,462,620
3,305 Loves Park, IL First Mtg Rev Hossier
Care Proj Ser A........................ 9.750 08/01/19 3,528,187
</TABLE>
See Notes to Financial Statements
12
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ILLINOIS (CONTINUED)
$2,500 Mill Creek Wtr Reclamation Dist IL Swr
Rev.................................... 8.000% 03/01/10 $ 2,483,075
1,500 Mill Creek Wtr Reclamation Dist IL
Wtrwks Rev............................. 8.000 03/01/10 1,489,845
3,100 Robbins, IL Res Recovery Rev Robbins
Res Recov Partners Ser A............... 9.250 10/15/14 2,945,000
1,795 Round Lake Beach, IL Tax Increment Rev
Ser 1993............................... 7.200 12/01/04 1,850,107
2,500 Round Lake Beach, IL Tax Increment Rev
Ser 1993............................... 7.500 12/01/13 2,520,225
3,965 Saint Charles, IL Multi-Family Rev
Wessel Court Proj...................... 7.600 04/01/24 4,067,337
3,115 Saint Charles, IL Tri-City Cent Proj... 7.500 11/01/13 3,188,514
500 Sherman, IL Villa Hlth Care First Mtg
Ser A.................................. 8.500 10/01/24 522,085
500 Sherman, IL Villa Hlth Care First Mtg
Ser A.................................. 8.250 10/01/14 521,325
------------
67,829,985
------------
INDIANA 2.6%
500 Carmel, IN Retirement Rent Hsg Rev
Beverly Enterprises Inc Proj Ser 1992
Rfdg................................... 8.750 12/01/08 557,500
2,160 East Chicago, IN Pollutn Ctl Rev Inland
Steel Co Proj #9....................... 10.000 11/01/11 2,258,453
1,500 Indiana Hlth Fac Auth Saint Anthony
Home................................... 7.000 05/15/17 1,445,775
1,000 Indiana Hlth Fac Auth Saint Anthony
Home................................... 7.250 05/15/24 983,490
3,000 Indiana St Dev Fin Auth................ 7.500 03/01/11 2,936,790
560 Valparaiso, IN Econ Dev Rev............ 7.300 01/01/02 597,072
980 Valparaiso, IN Econ Dev Rev............ 7.500 01/01/07 1,043,259
1,405 Valparaiso, IN Econ Dev Rev............ 7.750 01/01/12 1,483,806
2,045 Valparaiso, IN Econ Dev Rev............ 8.000 01/01/17 2,173,876
3,675 Valparaiso, IN Econ Dev Rev First Mtg
Whispering Pines Rfdg (Prerefunded @
01/01/00).............................. 9.500 01/01/07 4,305,851
400 Wells Cnty, IN Hosp Auth Rev Caylor-
Nickel Med Cent Inc.................... 8.500 04/15/03 424,636
3,600 Wells Cnty, IN Hosp Auth Rev Caylor-
Nickel Med Cent Inc.................... 8.750 04/15/12 3,987,072
------------
22,197,580
------------
IOWA 0.4%
2,770 Iowa Fin Auth Multi-Family Rev Park
West Proj Rfdg......................... 8.000 10/01/23 2,787,783
510 Pocahontas, IA Indl Dev Rev Intl
Harvester Co........................... 10.250 10/01/00 510,954
------------
3,298,737
------------
KANSAS 0.3%
1,500 Newton, KS Hosp Rev Newton Hlthcare
Corp Ser A............................. 7.375 11/15/14 1,541,715
1,000 Newton, KS Hosp Rev Ser A.............. 7.750 11/15/24 1,051,880
------------
2,593,595
------------
KENTUCKY 0.6%
1,250 Erlanger, KY Assessment Rev Pub Impt
Proj................................... 7.500 08/01/18 1,299,825
2,400 Kenton Cnty, KY Arpt Brd Arpt Rev Spl
Fac Delta Airls Proj Ser A............. 7.500 02/01/12 2,548,752
1,195 Kenton Cnty, KY Arpt Brd Arpt Rev Spl
Fac Delta Airls Proj................... 8.100 12/01/15 1,280,478
------------
5,129,055
------------
</TABLE>
See Notes to Financial Statements
13
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LOUISIANA 2.7%
$4,700 Hodge, LA Util Rev Stone Container Ser
1990................................... 9.000% 03/01/10 $ 5,049,727
4,000 Lake Charles, LA Harbor & Term Fac Rev
Trunkline Liquified Natural Gas Co
Proj................................... 7.750 08/15/22 4,425,440
690 Louisiana Pub Fac Auth Indl Dev Rev
Beverly Enterprises Inc Rfdg........... 8.250 09/01/08 722,078
2,500 Parish of Saint James, LA Solid Waste
Disp Rev Kaiser Aluminum Proj.......... 7.750 08/01/22 2,659,475
500 Parish of West Feliciana, LA Gulf
States Util Proj Ser A................. 7.500 05/01/15 527,860
1,000 Parish of West Feliciana, LA Gulf
States Util Proj Ser A................. 9.000 05/01/15 1,121,070
2,000 Port of New Orleans, LA Avondale
Industries Inc Proj.................... 8.250 06/01/04 2,121,060
2,000 Port of New Orleans, LA Continental
Grain Co............................... 14.500 01/01/02 2,077,760
1,000 Port of New Orleans, LA Continental
Grain Co Ser A......................... 14.500 02/01/02 1,044,210
3,000 Port of New Orleans, LA Continental
Grain Co Rfdg.......................... 7.500 07/01/13 3,039,060
------------
22,787,740
------------
MAINE 0.6%
3,200 Maine Fin Auth Solid Waste............. 7.900 06/01/15 3,388,896
460 Maine Hlth & Higher Edl Fac Auth Rev
Franklin Mem Hosp (Prerefunded @
07/01/96).............................. 9.875 07/01/13 502,320
1,500 Maine Vets Homes Rev................... 7.750 10/01/20 1,478,775
------------
5,369,991
------------
MARYLAND 0.8%
2,500 Baltimore Cnty, MD Bethlehem Steel Corp
Proj Ser A............................. 7.500 06/01/15 2,543,925
560 Baltimore Cnty, MD Bethlehem Steel Corp
Proj Ser A............................. 7.550 06/01/17 567,834
2,000 Calvert Cnty, MD Econ Dev.............. 8.375 01/01/15 2,036,880
2,000 Maryland St Energy Fin Admin Ltd Oblig
Rev Cogeneration Aes Warrior Run....... 7.400 09/01/19 1,988,680
------------
7,137,319
------------
MASSACHUSETTS 9.2%
1,495 Massachusetts St Hlth & Edl Fac Auth
Rev Indpt Living....................... 8.100 07/01/18 1,514,928
3,000 Massachusetts St Hlth & Edl Fac Auth
Rev Milford-Whitinsville Regl Proj Ser
B...................................... 7.750 07/15/17 2,956,740
1,000 Massachusetts St Hlth & Edl Fac Auth
Rev Norwood Hosp Ser E................. 8.000 07/01/12 1,007,120
745 Massachusetts St Hlth & Edl Fac Auth
Rev Saint Annes Hosp Ser A............. 9.250 07/01/05 738,608
2,000 Massachusetts St Hlth & Edl Fac Auth
Rev Saint Annes Hosp Ser A............. 9.375 07/01/14 1,987,660
500 Massachusetts St Indl Fin Agy Rev
Atlanticare Med Cent Ser B............. 10.125 11/01/14 545,140
800 Massachusetts St Indl Fin Agy Rev
Beverly Enterprises Rfdg............... 8.375 05/01/09 866,632
1,075 Massachusetts St Indl Fin Agy Rev
Beverly Enterprises/Gloucester &
Lexington Projs Ser 1992 Rfdg.......... 8.000 05/01/02 1,137,425
3,595 Massachusetts St Indl Fin Agy Rev
Boston Architectural Cent Proj......... 8.500 09/01/19 3,757,458
500 Massachusetts St Indl Fin Agy Rev
Dimmock Cmnty Hlth Cent................ 8.000 12/01/06 518,315
</TABLE>
See Notes to Financial Statements
14
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MASSACHUSETTS (CONTINUED)
$1,000 Massachusetts St Indl Fin Agy Rev
Dimmock Cmnty Hlth Cent................. 8.375% 12/01/13 $ 1,047,630
3,000 Massachusetts St Indl Fin Agy Rev
Dimmock Cmnty Hlth Cent................. 8.500 12/01/20 3,113,880
7,000 Massachusetts St Indl Fin Agy Rev
Emerson College Issue Ser A Rfdg........ 8.900 01/01/18 7,734,090
785 Massachusetts St Indl Fin Agy Rev
Evergreen Cent Inc...................... 8.000 11/01/06 816,400
1,230 Massachusetts St Indl Fin Agy Rev
Evergreen Cent Inc...................... 8.375 11/01/13 1,291,229
2,165 Massachusetts St Indl Fin Agy Rev
Evergreen Cent Inc...................... 8.500 11/01/20 2,319,126
1,005 Massachusetts St Indl Fin Agy Rev First
Mtg Ser A Rfdg.......................... 7.400 01/15/09 1,009,271
1,000 Massachusetts St Indl Fin Agy Rev First
Mtg Brookhaven Cmnty Ser A.............. 7.000 01/01/15 927,610
500 Massachusetts St Indl Fin Agy Rev First
Mtg Brookhaven Cmnty (Prerefunded @
01/01/98)............................... 10.250 01/01/18 558,640
2,000 Massachusetts St Indl Fin Agy Rev First
Mtg Evanswood Bethzatha Ser A Rfdg...... 7.625 01/15/14 1,986,340
1,000 Massachusetts St Indl Fin Agy Rev First
Mtg Hlthcare Corp Proj Ser A Rfdg....... 7.625 04/01/13 1,007,040
690 Massachusetts St Indl Fin Agy Rev First
Mtg Loomis House & Village Projs........ 7.250 07/01/07 690,228
1,410 Massachusetts St Indl Fin Agy Rev First
Mtg Loomis House & Village Projs........ 7.400 07/01/12 1,391,642
1,530 Massachusetts St Indl Fin Agy Rev First
Mtg Loomis House & Village Projs........ 7.500 07/01/17 1,523,436
35 Massachusetts St Indl Fin Agy Rev First
Mtg Pioneer Vly......................... 7.000 10/01/01 35,271
500 Massachusetts St Indl Fin Agy Rev First
Mtg Pioneer Vly......................... 7.000 10/01/20 500,000
1,000 Massachusetts St Indl Fin Agy Rev First
Mtg Reeds Landing Proj.................. 7.750 10/01/00 1,033,820
4,300 Massachusetts St Indl Fin Agy Rev First
Mtg Reeds Landing Proj.................. 8.625 10/01/23 4,612,524
1,700 Massachusetts St Indl Fin Agy Rev First
Mtg Stone Inst & Newton................. 7.700 01/01/14 1,701,037
1,760 Massachusetts St Indl Fin Agy Rev
Glenmeadow Retirement Cmnty Ser C....... 8.250 02/15/08 1,728,672
500 Massachusetts St Indl Fin Agy Rev
Glenmeadow Retirement Cmnty Ser C....... 8.625 02/15/26 478,335
3,745 Massachusetts St Indl Fin Agy Rev Gtr
Lynn Mental Hlth Assn Proj.............. 8.800 06/01/14 4,088,679
510 Massachusetts St Indl Fin Agy Rev
Hillcrest Edl Cent Inc Proj............. 7.500 07/01/00 509,245
740 Massachusetts St Indl Fin Agy Rev
Hillcrest Edl Cent Inc Proj............. 8.000 07/01/05 740,392
2,750 Massachusetts St Indl Fin Agy Rev
Hillcrest Edl Cent Inc Proj............. 8.450 07/01/18 2,672,203
2,735 Massachusetts St Indl Fin Agy Rev N E
Cent for Autism......................... 9.000 11/01/05 2,964,658
4,910 Massachusetts St Indl Fin Agy Rev N E
Cent for Autism......................... 9.500 11/01/17 5,345,763
5,000 Massachusetts St Indl Fin Agy Rev
Orchard Cove Inc Issue.................. 9.000 05/01/22 5,414,550
1,190 Massachusetts St Indl Fin Agy Rev Vinten
Corp Issue.............................. 7.100 11/15/18 1,133,665
</TABLE>
See Notes to Financial Statements
15
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MASSACHUSETTS (CONTINUED)
$1,020 Massachusetts St Indl Fin Agy Rev Waarc
Inc Proj............................... 7.300% 09/01/10 $ 1,003,027
915 Massachusetts St Indl Fin Agy Rev Waarc
Inc Proj............................... 7.600 09/01/17 892,290
1,820 Massachusetts St Indl Fin Agy Rev Waarc
Inc Proj............................... 7.750 09/01/25 1,770,514
------------
77,071,233
------------
MICHIGAN 2.0%
440 Detroit, MI Local Dev Fin Auth Tax
Increment Ser A........................ 9.500 05/01/21 474,976
1,000 Dickinson Cnty, MI Mem Hosp Sys Hosp
Rev.................................... 8.000 11/01/14 1,023,280
2,400 Michigan St Hosp Fin Auth Rev Gratiot
Cmnty Hosp Ser A Rfdg (Prerefunded @
10/01/98).............................. 8.750 10/01/07 2,631,672
5,790 Michigan St Hosp Fin Auth Rev Saratoga
Cmnty Hosp Rfdg........................ 8.750 06/01/10 6,211,975
1,500 Michigan St Hosp Fin Auth Ser A........ 8.100 10/01/13 1,630,485
500 Michigan St Hosp Fin Auth Ser A........ 7.500 10/01/07 544,800
1,500 Michigan St Strategic Fd Ltd Oblig Rev
Great Lakes Pulp & Fibre Proj.......... 10.250 12/01/16 1,398,810
2,500 Michigan St Strategic Fd Solid Waste
Disp Rev Genesee Pwr Station Proj Rfdg. 7.500 01/01/21 2,521,825
500 Oakland Cnty, MI Econ Dev Pontiac
Osteopathic Hosp Proj (Prerefunded @
01/01/00).............................. 9.625 01/01/20 587,785
------------
17,025,608
------------
MINNESOTA 3.1%
2,000 Austin, MN Multi-Family Rev Cedars of
Austin Proj Rfdg....................... 7.500 04/01/18 2,015,000
1,020 Austin, MN Multi-Family Rev Cedars of
Austin Proj Rfdg....................... 7.500 04/01/17 1,030,200
1,955 Brooklyn Cent MN Multi-Family Hsg Rev
Ser A.................................. 7.400 12/01/15 1,935,450
1,220 Brooklyn Cent MN Multi-Family Hsg Rev
Ser A.................................. 7.500 06/01/25 1,209,325
750 Chisago City, MN Hlth Fac Pt Pleasant
Heights Proj Ser A Rfdg................ 7.300 07/01/25 724,553
1,200 Maplewood, MN Hlth Care Fac Rev Voa
Care Cent Proj......................... 7.450 10/01/16 1,188,672
800 Minneapolis, MN Commercial Dev Rev
Holiday Inn Metrodome Proj............. 10.500 06/01/03 808,000
650 Minneapolis, MN Cmnty Dev Rev Agy Coml
Dev Rev Std Mill Hotel Proj (d)........ 8.000 04/01/10 508,625
1,950 Minneapolis, MN Hlth Care Fac Auth Rev
Ebenezer Society Proj Ser A............ 7.200 07/01/23 1,852,247
1,000 Minneapolis, MN Hlth Care Fac Auth Rev
Saint Olaf Residence Inc Proj.......... 7.100 10/01/23 1,000,540
3,040 New Brighton, MN Rental Hsg Rev
Polynesian Village Apts Proj A Rfdg.... 7.500 10/01/17 3,026,715
910 New Hope, MN Multi-Family Rev Broadway
Lanel Proj Rfdg........................ 7.750 09/01/07 927,063
2,320 New Hope, MN Multi-Family Rev Broadway
Lanel Proj Rfdg........................ 8.000 09/01/18 2,334,500
920 North Saint Paul, MN Multi-Family
Cottages North Saint Paul Rfdg......... 9.000 02/01/09 966,000
2,220 North Saint Paul, MN Multi-Family
Cottages North Saint Paul Rfdg......... 9.250 02/01/22 2,408,700
</TABLE>
See Notes to Financial Statements
16
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MINNESOTA (CONTINUED)
$1,880 Saint Paul, MN Hsg & Redev Auth
Commercial Dev Rev Beverly Enterprises
Inc Rfdg............................... 7.750% 11/01/02 $ 1,929,350
500 Shoreview, MN Sr Hsg Rev Shoreview Sr
Residence Proj......................... 7.250 02/01/26 489,375
2,000 Spring Lake Park, MN Multi-Family Rev
Rfdg................................... 8.375 01/01/22 2,102,500
------------
26,456,815
------------
MISSISSIPPI 2.2%
5,500 Claiborne Cnty, MS Pollutn Ctl Rev
Middle South Energy.................... 8.250 06/01/14 5,943,355
7,575 Claiborne Cnty, MS Pollutn Ctl Rev
Middle South Energy.................... 9.875 12/01/14 8,369,466
1,000 Lowndes Cnty, MS Hosp Rev Golden
Triangle Med Cent Rfdg................. 8.500 02/01/10 1,071,870
3,000 Ridgeland, MS Urban Renewal The Orchard
Ltd Proj Ser A......................... 7.750 12/01/15 3,012,810
------------
18,397,501
------------
MISSOURI 1.8%
1,500 Chesterfield, MO Indl Dev Auth Rev
Saint Andrews Episcopal-Presbyterian
Ser A.................................. 8.500 12/01/19 1,579,575
1,000 Good Shepherd Nursing Home Dist MO
Nursing Home Fac Rev................... 7.625 07/01/15 973,340
3,000 Good Shepherd Nursing Home Dist MO
Nursing Home Fac Rev................... 7.750 07/01/25 2,951,790
2,905 Jefferson Cnty, MO Indl Dev Auth Indl
Rev Cedars Hlthcare Cent Proj Ser A.... 8.250 12/01/15 2,825,664
1,075 Missouri St Hlth & Edl Fac Bethesda
Hlth Group Inc Proj Ser A.............. 7.500 08/15/12 1,060,961
785 Perry Cnty, MO Nursing Home Rev Ser A.. 7.650 03/01/16 781,695
1,745 Perry Cnty, MO Nursing Home Rev Ser A.. 7.750 03/01/26 1,736,641
500 Saint Louis, MO Indl Dev Auth Rev First
Mtg Deaconess Manor Assn............... 7.500 06/01/16 475,735
500 Saint Louis, MO Indl Dev Auth Rev First
Mtg Deaconess Manor Assn............... 7.500 06/01/23 473,035
1,890 Saint Louis, MO Tax Increment Rev
Scullin Redev Area Ser A............... 10.000 08/01/10 2,199,506
------------
15,057,942
------------
NEVADA 0.8%
1,500 Henderson, NV Loc Impt Dist No T-4 Ser
B...................................... 7.300 11/01/12 1,453,965
1,500 Henderson, NV Loc Impt Dist No T-10.... 7.500 08/01/15 1,441,005
945 Las Vegas, NV Loc Impt Bonds Spl Impt
Dist No 404............................ 7.300 11/01/09 946,597
985 Las Vegas, NV Loc Impt Bonds Spl Impt
Dist No 505 Elkhorn Springs............ 8.000 09/15/13 975,731
1,975 Nevada St Dept Cmnty Hlth Fac Rev
Washoe Convalescent Cent Proj Rfdg..... 8.125 06/01/03 2,032,354
------------
6,849,652
------------
NEW HAMPSHIRE 5.3%
2,425 New Hampshire Higher Edl & Hlth Fac
Auth Rev Visiting Nurse................ 7.250 09/01/23 2,316,845
5,000 New Hampshire Higher Edl & Hlth Fac
Auth Rev Daniel Webster College Issue.. 7.625 07/01/16 4,938,850
2,000 New Hampshire Higher Edl & Hlth Fac
Auth Hosp Rev New London Hosp Assn
Proj................................... 7.500 06/01/05 2,178,740
</TABLE>
See Notes to Financial Statements
17
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW HAMPSHIRE (CONTINUED)
$1,440 New Hampshire Higher Edl & Hlth Fac
Auth Hosp Rev Monadnock Cmnty Hosp Ser
1990................................... 9.125% 10/01/20 $ 1,588,320
435 New Hampshire Higher Edl & Hlth Fac
Auth Rev Colby-Sawyer College Issue.... 7.200 06/01/12 435,344
2,565 New Hampshire Higher Edl & Hlth Fac
Auth Rev Colby-Sawyer College Issue.... 7.500 06/01/26 2,567,001
1,490 New Hampshire Higher Edl & Hlth Fac
Auth Rev First Mtg Odd Fellows Home
Rfdg................................... 8.000 06/01/04 1,571,712
2,000 New Hampshire Higher Edl & Hlth Fac
Auth Rev First Mtg Odd Fellows Home
Rfdg................................... 9.000 06/01/14 2,222,780
1,000 New Hampshire Higher Edl & Hlth Fac
Auth Rev Havenwood-Heritage Heights.... 7.350 01/01/18 954,270
4,825 New Hampshire Higher Edl & Hlth Fac
Auth Rev Havenwood-Heritage Heights.... 7.450 01/01/25 4,637,645
4,110 New Hampshire St Bus Fin Auth Elec Fac
Rev Plymouth Cogeneration.............. 7.750 06/01/14 4,035,856
4,535 New Hampshire St Hsg Fin Auth Single
Family Res Ser A....................... 8.500 07/01/14 4,710,731
4,000 New Hampshire St Indl Dev Auth Rev
Pollutn Ctl Ser B...................... 10.750 10/01/12 4,372,520
3,420 New Hampshire St Indl Dev Auth Rev
Pollutn Ctl Pub Svc Co of NH Proj Ser
A...................................... 7.650 05/01/21 3,533,270
2,300 New Hampshire St Indl Dev Auth Rev
Pollutn Ctl Pub Svc Co of NH Proj Ser
C...................................... 7.650 05/01/21 2,368,540
1,850 New Hampshire St Indl Dev Auth Rev
Pollutn Ctl Cent Rfdg.................. 7.375 05/01/14 1,837,124
------------
44,269,548
------------
NEW JERSEY 4.4%
1,000 Camden Cnty, NJ Impt Auth Lease Rev
Dockside Refrigerated.................. 8.400 04/01/24 995,540
2,975 Newark-Wayne Cmnty Hosp Inc NJ Hosp Rev
Ser A Rfdg & Impt...................... 7.600 09/01/15 3,131,812
500 New Jersey Econ Dev Auth First Mtg
Gross Rev Burnt Tavern Convalescent Ser
A Rfdg................................. 9.000 11/15/13 546,550
1,240 New Jersey Econ Dev Auth First Mtg
Gross Rev Dover Residential Hlthcare
Fac (d)................................ 13.375 11/01/14 445,582
2,250 New Jersey Econ Dev Auth First Mtg
Gross Rev Franciscan Oaks Proj Ser A... 8.500 10/01/23 2,407,275
840 New Jersey Econ Dev Auth First Mtg
Gross Rev Stone Arch Nursing Home Proj
Rfdg................................... 8.750 12/01/10 902,244
1,000 New Jersey Econ Dev Auth First Mtg
Gross Rev The Evergreens............... 9.250 10/01/22 1,107,320
750 New Jersey Econ Dev Auth Rev First Mtg
Delaire Nursing
Ser A Rfdg (Prerefunded @ 11/01/99).... 8.750 11/01/10 873,008
500 New Jersey Econ Dev Auth Rev First Mtg
Fellowship Village Ser A............... 8.500 01/01/10 517,930
1,000 New Jersey Econ Dev Auth Rev First Mtg
Fellowship Village
Ser A.................................. 9.250 01/01/25 1,058,700
</TABLE>
See Notes to Financial Statements
18
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW JERSEY (CONTINUED)
$ 975 New Jersey Econ Dev Auth Rev First Mtg
Millhouse Proj
Ser A.................................. 8.250% 04/01/10 $ 989,450
2,060 New Jersey Econ Dev Auth Rev First Mtg
Millhouse Proj
Ser A.................................. 8.500 04/01/16 2,115,311
1,000 New Jersey Econ Dev Auth Rev First Mtg
Winchester Gardens Ser A............... 8.500 11/01/16 966,160
1,500 New Jersey Econ Dev Auth Rev First Mtg
Winchester Gardens
Ser A.................................. 8.625 11/01/25 1,450,215
1,860 New Jersey Econ Dev Auth Rev First Mtg
Winchester Gardens
Ser A.................................. 7.500 11/01/25 1,807,436
500 New Jersey Econ Dev Auth Rev Green
Acres Manor Inc Ser A Rfdg............. 8.000 01/01/09 505,530
1,000 New Jersey Econ Dev Auth Rev Green
Acres Manor Inc Ser A Rfdg............. 8.250 01/01/17 1,030,480
1,000 New Jersey Econ Dev Auth Rev Holt
Hauling & Warehsg Ser G Rfdg........... 8.400 12/15/15 1,048,380
4,000 New Jersey Econ Dev Auth Rev Senior Mtg
Holt Hauling Ser D..................... 10.250 09/15/14 4,160,400
4,365 New Jersey Econ Dev Auth Rev United
Methodist Homes........................ 7.500 07/01/20 4,410,352
420 New Jersey Econ Dev Auth Rev United
Methodist Homes Oblig
Ser A.................................. 7.500 07/01/24 431,915
1,000 New Jersey Econ Dev Auth Rev Wells
Fargo Armored SVC Corp................. 11.200 08/01/04 1,036,780
500 New Jersey Econ Dev Auth Rev Zirbser
Greenbriar Inc Ser A Rfdg.............. 7.375 07/15/03 502,955
915 New Jersey Econ Dev Auth Rev Zirbser
Greenbriar Inc Ser A Rfdg.............. 7.750 07/15/08 922,000
2,500 New Jersey Hlthcare Fac Fin Auth Rev
Raritan Bay Med Cent Issue............. 7.250 07/01/14 2,579,100
1,000 New Jersey St Edl Fac Auth Rev Caldwell
College Ser A.......................... 7.250 07/01/25 1,001,420
------------
36,943,845
------------
NEW MEXICO 0.6%
710 Albuquerque, NM Nursing Home Rev
Albuquerque Hlthcare Rfdg.............. 9.750 12/01/14 758,436
2,555 Albuquerque, NM Retirement Fac Rev La
Vida Liena Proj Ser A Rfdg............. 8.850 02/01/23 2,795,196
715 Sante Fe, NM Casa Real Nursing Home
Rfdg................................... 9.750 01/01/13 766,451
460 Truth or Consequences, NM Nursing Home
Rev Sierra Hlth Care Rfdg & Impt....... 9.750 12/01/14 491,381
------------
4,811,464
------------
NEW YORK 2.6%
4,800 Islip, NY Cmnty Dev Agy Cmnty Dev Rev
NY Institutue of Tech Rfdg............. 7.500 03/01/26 4,802,880
1,500 New York, NY Indl Dev Agy Civil Fac Rev
Marymount Manhattan College Proj....... 7.000 07/01/23 1,548,660
4,170 New York, NY Indl Dev Agy Civil Fac Rev
O.L.M. Pkg Corp Proj................... 8.500 12/30/22 4,568,318
</TABLE>
See Notes to Financial Statements
19
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
$2,500 New York, NY Indl Dev Agy Visy Paper
Inc Proj............................... 7.800% 01/01/16 $ 2,514,875
2,000 New York, NY Ser C..................... 7.200 08/15/15 2,071,400
2,000 New York St Energy Resh & Dev Auth Elec
Fac Rev Long Island Ltg Ser A.......... 7.150 12/01/20 1,986,300
2,500 New York St Energy Resh & Dev Auth Elec
Fac Rev Long Island Ltg Ser B.......... 7.150 02/01/22 2,482,225
2,000 North Syracuse, NY Hsg Auth Rev Janus
Park Proj.............................. 8.000 06/01/14 1,930,000
------------
21,904,658
------------
OHIO 5.0%
1,500 Athens Cnty, OH Hosp Fac Rev O'Bleness
Mem Hosp Proj.......................... 7.100 11/15/23 1,391,310
3,150 Clark Cnty, OH Hosp Impt Rev Cmnty Hosp
Ser A Rfdg............................. 9.375 04/01/08 3,255,431
3,000 Cleveland, OH Parking Fac Impt Rev..... 8.000 09/15/12 3,111,390
1,000 Cuyahoga Cnty, OH Hlthcare Fac Rev
Jennings Hall.......................... 7.200 11/15/14 1,020,270
1,500 Cuyahoga Cnty, OH Hlthcare Fac Rev
Jennings Hall.......................... 7.300 11/15/23 1,530,240
2,555 Cuyahoga Cnty, OH Hlthcare Fac Rev
Judson Retirement Cmnty................ 8.875 11/15/19 2,723,937
7,625 Dayton, OH Spl Fac Rev Emery Air
Freight Corp Ser A..................... 12.500 10/01/09 8,523,835
500 Fairfield, OH Econ Dev Rev Rfdg Beverly
Enterprises Inc........................ 8.500 01/01/03 536,575
1,945 Harrison, OH Harrison Ave Kmart Corp
Proj Ser A Rfdg........................ 8.125 12/01/02 1,923,858
2,500 Mount Vernon, OH Hosp Rev Knox Cmnty
Hosp Rfdg.............................. 7.875 06/01/12 2,571,525
1,000 North Canton, OH Hlth Care Fac Rev
Waterford at St Luke Proj.............. 8.625 11/15/21 1,050,640
4,930 Ohio St Air Quality Dev Auth Rev Toledo
Edison Ser B........................... 9.875 11/01/22 5,220,032
1,035 Ohio St First Mtg Swifton Commons Rfdg. 8.125 12/01/15 1,033,695
2,000 Ohio St Solid Waste Rev Republic
Engineered Steels Proj................. 8.250 10/01/14 1,876,300
2,000 Ohio St Wtr Dev Auth Pollutn Ctl Fac
Rev Coll Cleveland Elec Ser A Rfdg..... 8.000 10/01/23 2,050,480
2,000 Ohio St Wtr Dev Auth Pollutn Ctl Fac
Rev Ser A.............................. 8.000 10/01/23 2,064,900
2,250 Sandusky Cnty, OH Hosp Fac Rev Mem Hosp
Proj Rfdg.............................. 7.750 12/01/09 2,187,855
------------
42,072,273
------------
OKLAHOMA 0.4%
1,000 Jackson Cnty, OK Mem Hosp Auth Rev
Jackson Mem Hosp (Prerefunded @
08/01/97).............................. 9.000 08/01/15 1,077,240
500 Leflore Cnty, OK Hosp Auth Impt Rev.... 9.400 05/01/06 536,015
765 Oklahoma Hsg Fin Agy Single Family
Class A (GNMA Collateralized).......... 7.997 08/01/18 805,163
500 Woodward, OK Muni Auth Hosp Rev........ 8.250 11/01/09 509,535
500 Woodward, OK Muni Auth Hosp Rev........ 9.250 11/01/14 539,750
------------
3,467,703
------------
OREGON 0.3%
700 Salem, OR Hosp Fac Auth Rev Capital
Manor inc.............................. 7.250 12/01/15 685,020
1,500 Salem, OR Hosp Fac Auth Rev Capital
Manor Inc.............................. 7.500 12/01/24 1,480,890
------------
2,165,910
------------
</TABLE>
See Notes to Financial Statements
20
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PENNSYLVANIA 13.2%
$1,945 Allegheny Cnty, PA Hosp Dev Auth Rev
Hlth Fac Allegheny Vly Sch.............. 7.500% 02/01/20 $ 1,929,965
3,120 Allegheny Cnty, PA Hosp Dev Auth Rev
Hlth Fac Allegheny Vly Sch.............. 7.875 02/01/20 3,173,477
4,000 Beaver Cnty, PA Indl Dev Auth Pollutn
Ctl Rev Coll Toledo Edison Ser A Rfdg... 7.750 05/01/20 4,184,760
1,100 Beaver Cnty, PA Indl Dev Auth Pollutn
Ctl Rev OH Edison Proj Ser A Rfdg....... 7.750 09/01/24 1,158,399
7,000 Beaver Cnty, PA Indl Dev Auth Toledo
Edison Ser A............................ 7.625 05/01/20 7,203,070
1,860 Berks Cnty, PA Muni Auth Phoebe Berks
Village Inc Proj Rfdg................... 7.500 05/15/13 1,831,895
2,500 Berks Cnty, PA Muni Auth Phoebe Berks
Village Inc Proj........................ 8.250 05/15/22 2,599,975
1,860 Berks Cnty, PA Muni Auth Phoebe Berks
Village Inc Proj Rfdg................... 7.700 05/15/22 1,825,125
1,000 Chartiers Vly, PA Indl & Commerical Dev
Auth Ashbury Hlth Cent Proj............. 7.250 12/01/11 1,014,430
2,000 Chartiers Vly, PA Indl & Commerical Dev
Auth Ashbury Hlth Cent Proj............. 7.400 12/01/15 2,008,680
1,000 Chartiers Vly, PA Indl & Commerical Dev
Auth Ser A (Prerefunded @ 12/01/98)..... 9.500 12/01/15 1,138,720
3,000 Clarion Cnty, PA Hosp Auth Hosp Rev
Clarion Hosp Proj Rfdg.................. 8.100 07/01/12 3,165,660
1,000 Clarion Cnty, PA Hosp Auth Hosp Rev
Clarion Hosp Proj....................... 8.500 07/01/21 1,079,020
1,940 Clearfield, PA Hosp Auth Rev Clearfield
Hosp Proj Ser 1994...................... 6.875 06/01/16 1,993,641
825 Columbia Cnty, PA Indl Dev Auth First
Mtg Rev First Str Assn Proj Rfdg........ 9.000 05/01/14 914,298
2,800 Delaware Cnty, PA Auth Rev First Mtg
Riddle Village Proj..................... 9.250 06/01/22 3,147,312
870 Delaware Cnty, PA Auth Rev First Mtg
Riddle Village Proj..................... 8.750 06/01/10 946,151
1,350 Doylestown, PA Hosp Auth Rev Pine Run
Ser A................................... 7.200 07/01/23 1,365,998
1,250 Lebanon Cnty, PA Hlth Fac Auth Rev
Church of Christ Homes Proj............. 7.000 10/01/14 1,267,563
1,250 Lebanon Cnty, PA Hlth Fac Auth Rev
Church of Christ Homes Proj............. 7.250 10/01/19 1,263,025
250 Lehigh Cnty, PA Genl Purp Auth Rev First
Mtg Bible Fellowship Proj............... 7.150 12/15/08 251,733
2,315 Lehigh Cnty, PA Genl Purp Auth Rev First
Mtg Bible Fellowship Proj............... 8.000 12/15/23 2,359,193
4,415 Lehigh Cnty, PA Indl Dev Auth Rev
Allentown Interstate Motel Rfdg......... 8.000 08/01/12 4,594,779
3,000 Luzerne Cnty, PA Indl Dev Auth Exempt
Fac Rev PA Gas & Wtr Co Proj Ser A Rfdg. 7.200 10/01/17 3,127,230
2,000 Luzerne Cnty, PA Indl Dev Auth First Mtg
Rev Birchwood Nursing Cent Proj Ser A
Rfdg.................................... 7.875 12/01/13 2,124,980
500 Montgomery Cnty, PA Higher Edl & Hlth
Auth Rev Retirement Cmnty Gdl Farms Ser
A (Prerefunded @ 01/01/00).............. 9.500 01/01/20 585,830
3,780 Montgomery Cnty, PA Indl Dev Auth Rev
Assisted Living Fac..................... 8.250 05/01/23 4,022,147
</TABLE>
See Notes to Financial Statements
21
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
$ 500 Montgomery Cnty, PA Indl Dev Auth Rev
First Mtg The Meadowood Corp Proj Rfdg.. 7.000% 12/01/10 $ 481,965
1,500 Montgomery Cnty, PA Indl Dev Auth Rev
First Mtg The Meadowood Corp Proj Rfdg.. 7.250 12/01/15 1,450,005
4,000 Montgomery Cnty, PA Indl Dev Auth Rev
First Mtg The Meadowood Corp Proj Rfdg.. 7.400 12/01/20 3,830,520
2,660 Montgomery Cnty, PA Indl Dev Auth Rev
First Mtg The Meadowood Corp Proj....... 7.750 09/01/14 2,758,473
2,500 Montgomery Cnty, PA Indl Dev Auth Rev
First Mtg The Meadowood Corp Proj....... 10.250 12/01/20 3,091,725
1,550 Montgomery Cnty, PA Indl Dev Auth Rev
First Mtg The Meadowood Corp Proj Ser A. 9.250 12/01/00 1,650,781
2,025 Montgomery Cnty, PA Indl Dev Auth Rev
First Mtg The Meadowood Corp Proj
(Prerefunded @ 12/01/00)................ 10.000 12/01/19 2,484,007
3,595 Montgomery Cnty, PA Indl Dev Auth Rev
Hlth Care Advanced Geriatric Ser A...... 8.375 07/01/23 3,900,683
910 Montgomery Cnty, PA Indl Dev Rev
Pennsburg Nursing & Rehab Cent.......... 7.625 07/01/18 866,211
750 Northampton Cnty, PA Indl Dev Auth Rev
First Mgt Kirkland Village Proj......... 7.375 12/15/18 747,518
750 Northampton Cnty, PA Indl Dev Auth Rev
First Mtg Kirkland Village Proj......... 7.500 12/15/23 746,505
1,000 Pennsylvania Econ Dev Fin Auth Exempt
Fac Rev MacMillan Ltd Partnership Proj.. 7.600 12/01/20 1,090,190
1,500 Pennsylvania Econ Dev Fin Auth Recycling
Rev Ponderosa Fibres Proj Ser A......... 9.250 01/01/22 1,550,880
1,000 Pennsylvania St Higher Edl Fac Auth
College and Univ Rev College of Science
& Agriculture........................... 7.000 04/01/22 1,010,470
2,835 Philadelphia, PA Auth for Indl Dev Rev
Long-term Care Maplewood................ 8.000 01/01/24 2,950,952
2,000 Philadelphia, PA Auth for Indl Dev Rev
Long-term Care Maplewood................ 8.000 01/01/14 2,081,800
2,000 Philadelphia, PA Auth for Indl Dev Revs
Coml Dev Rfdg........................... 7.750 12/01/17 1,979,380
1,875 Philadelphia, PA Hosp & Higher Ed Fac
Auth Hosp Rev Roxborough Mem Hosp Ser 2. 7.250 03/01/24 1,833,113
1,500 Philadelphia, PA Indl Dev Auth Rev
Cathedral Village....................... 7.250 04/01/15 1,555,155
1,170 Philadelphia, PA Indl Dev Auth Rev First
Mtg RHA/Care Pavilion Proj.............. 10.250 02/01/18 1,207,253
1,000 Philadelphia, PA Indl Dev Auth Rev
Replacement Lutheran Retire Ser B....... 5.000 01/01/17 720,890
500 Philadelphia, PA Parking Auth Parking
Rev..................................... 8.750 03/01/05 504,700
1,785 Philadelphia, PA Parking Auth Parking
Rev..................................... 8.875 03/01/10 1,802,243
1,500 Scranton-Lackawanna, PA Hlth & Welfare
Auth Rev Allied Svcs Rehab Hosp Ser A... 7.125 07/15/05 1,548,510
</TABLE>
See Notes to Financial Statements
22
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
$3,000 Scranton-Lackawanna, PA Hlth & Welfare
Auth Rev Allied Svcs Rehab Hosp Ser A.. 7.375% 07/15/08 $ 3,096,750
3,000 Somerset Cnty, PA Hosp Auth Hosp Rev
Somerset Cmnty Hosp Proj............... 7.500% 03/01/17 3,066,690
250 Warren Cnty, PA Indl Dev Auth Rev
Beverly Enterprises Inc Rfdg........... 9.000% 11/01/12 276,168
2,300 Washington Cnty, PA Hosp Auth Rev
Canonsburg Genl Hosp Proj.............. 7.350% 06/01/13 2,106,708
------------
110,667,301
------------
SOUTH CAROLINA 0.5%
750 Charleston Cnty, SC Hlth Fac Rev First
Mtg Episcopal Proj Rfdg (Prerefunded @
04/01/01).............................. 9.750% 04/01/16 920,288
1,500 Charleston Cnty, SC Hlth Fac Rev First
Mtg Roper Geriatric Cent Inc Proj Rfdg. 7.750% 05/01/17 1,531,035
390 McCormick Cnty, SC Hosp Fac Rev
McCormick Hosp Ser 88.................. 10.500% 03/01/18 405,698
250 South Carolina Jobs Econ Dev Auth Hlth
Fac Rev First Mtg Lutheran Homes SC
Proj................................... 7.750% 10/01/12 265,470
750 South Carolina Jobs Econ Dev Auth Hlth
Fac Rev First Mtg Lutheran Homes SC
Proj................................... 8.000% 10/01/22 790,673
------------
3,913,164
------------
SOUTH DAKOTA 0.2%
1,000 South Dakota St Hlth & Edl Fac Auth Rev
Huron Regl Med Cent.................... 7.250% 04/01/20 1,000,550
1,000 South Dakota St Hlth & Edl Fac Auth Rev
Huron Regl Med Cent.................... 7.000% 04/01/10 987,690
------------
1,988,240
------------
TENNESSEE 0.3%
1,295 Scott Cnty, TN Ind Dev Fruehauf Corp
Proj................................... 10.750% 01/01/09 1,359,543
250 Smith Cnty, TN Hlth and Edl Fac
Hlthcare Corp Proj Rfdg................ 7.000% 04/01/08 250,675
500 Smith Cnty, TN Hlth and Edl Fac
Hlthcare Corp Proj Rfdg................ 7.400% 04/01/13 501,530
------------
2,111,748
------------
TEXAS 3.6%
1,085 Bell Cnty, TX Hlth Fac Dev Corp King's
Daughters Hosp......................... 9.250% 07/01/08 1,181,033
500 Dallas-Fort Worth, TX Intl Arpt Fac
Impt Corp Rev American Airls Inc....... 7.500% 11/01/25 530,980
1,500 Dallas-Fort Worth, TX Intl Arpt Fac
Impt Corp Rev American Airls Inc....... 7.250% 11/01/30 1,594,890
1,250 Dallas-Fort Worth, TX Intl Arpt Fac
Impt Corp Rev Delta Airls Inc.......... 7.625% 11/01/21 1,338,338
2,665 De Soto, TX Hlth Fac Dev Park Manor
Senior Care............................ 7.750% 12/01/16 2,569,886
235 Harris Cnty, TX Hsg Fin Corp Single
Family Mtg Rev......................... 9.875% 03/15/14 235,141
275 Harris Cnty, TX Hsg Fin Corp Single
Family Mtg Rev Ser 1983 Ser A.......... 10.125% 07/15/03 274,893
1,360 Harris Cnty, TX Hsg Fin Corp Single
Family Mtg Rev Ser 1983 Ser A.......... 10.375% 07/15/14 1,359,347
3,375 Houston, TX Hsg Fin Corp Single Family
Mtg Rev Ser B.......................... 10.375% 12/15/13 3,416,310
</TABLE>
See Notes to Financial Statements
23
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEXAS (CONTINUED)
$ 805 Montgomery Cnty, TX Hlth Fac Dev Corp
Hosp Mtg Rev Woodlands Med Cent Proj... 8.850% 08/15/14 $ 866,840
1,250 Northeast, Hosp TX Rev Ser B........... 7.250 07/01/22 1,279,500
4,505 Port of Corpus Christi, TX Indl Dev
Corp Rev Valero Refin & Mktg Co Ser A.. 10.250 06/01/17 4,856,030
500 Port of Corpus Christi, TX Indl Dev
Corp Rev Valero Refin & Mktg Co Ser B.. 10.625 06/01/08 538,790
3,255 Rusk Cnty, TX Hlth Fac Corp Hosp Rev
Henderson Mem Hosp Proj................ 7.750 04/01/13 3,395,942
500 San Antonio, TX Hlth Fac Dev Corp Rev
Encore Nursing Cent Partner............ 8.250 12/01/19 547,295
2,000 Tarrant Cnty, TX Hlth Facs Dev Corp Rev
Mtg Cumberland Rest Inc Ser A Rfdg..... 7.000 08/15/19 1,972,640
961 Texas Genl Svcs Cmnty Partner Interests
Office Bldg & Land Acquis Proj......... 7.000 08/01/09 979,237
1,091 Texas Genl Svcs Cmnty Partner Interests
Office Bldg & Land Acquis Proj......... 7.000 08/01/19 1,124,098
1,401 Texas Genl Svcs Cmnty Partner Interests
Office Bldg & Land Acquis Proj......... 7.000 08/01/24 1,443,649
790 Weslaco, TX Hlth Fac Dev Corp Hosp Rev
Weslaco Hlth Fac (Prerefunded @
06/01/98).............................. 10.375 06/01/16 887,407
------------
30,392,246
------------
UTAH 0.2%
500 Hildale, UT Elec Rev Gas Turbine Elec
Fac Proj............................... 7.000 09/01/02 495,205
500 Hildale, UT Elec Rev Gas Turbine Elec
Fac Proj............................... 7.600 09/01/06 486,435
1,000 Hildale, UT Elec Rev Gas Turbine Elec
Fac Proj............................... 7.800 09/01/15 930,470
------------
1,912,110
------------
VERMONT 0.1%
700 Vermont Edl & Hlth Bldgs Fin Agy Rev
Northwestern Med Cent (Prerefunded @
09/01/98).............................. 9.750 09/01/18 792,806
------------
VIRGIN ISLANDS 0.8%
1,210 University of the Virgin Islands Pub
Fin Auth Ser A......................... 7.500 10/01/09 1,253,802
1,965 University of the Virgin Islands Pub
Fin Auth Ser A......................... 7.650 10/01/14 2,067,887
3,000 Virgin Islands Pub Fin Auth Rev Ser A
Rfdg................................... 7.250 10/01/18 3,128,940
------------
6,450,629
------------
VIRGINIA 1.1%
980 Covington-Alleghany Cnty, VA Beverly
Enterprises Inc Rfdg................... 9.375 09/01/01 1,089,466
1,500 Hopewell, VA Indl Dev Auth Res Recovery
Rev Stone Container Corp Proj Rfdg..... 8.250 06/01/16 1,619,610
1,000 Pittsylvania Cnty, VA Indl Dev Auth Rev
Exempt Fac Ser A....................... 7.450 01/01/09 1,031,240
6,000 Richmond, VA Redev & Hsg Auth Multi-
Family Mtg Rev Ser A................... 8.750 12/15/21 5,779,260
------------
9,519,576
------------
</TABLE>
See Notes to Financial Statements
24
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
WASHINGTON 0.2%
$1,500 Port Walla Walla, WA Pub Corp Solid
Waste Recycling Rev Ponderosa Fibres
Proj................................... 9.125% 01/01/26 $ 1,501,905
------------
WEST VIRGINIA 0.1%
500 Randolph Cnty, WV Bldg Commission Davis
Mem Hosp Proj Rfdg & Imp............... 7.650 11/01/21 529,760
------------
WISCONSIN 0.3%
795 Wisconsin St Hlth & Edl Fac Auth Rev
Hess Mem Hosp Assn..................... 7.200 11/01/05 780,070
2,000 Wisconsin St Hlth & Edl Fac Auth Rev
Hess Mem Hosp Assn..................... 7.875 11/01/22 1,943,620
------------
2,723,690
------------
TOTAL LONG-TERM INVESTMENTS 98.1%
(Cost $808,090,959)(a)........................................ 824,140,636
OTHER ASSETS IN EXCESS OF LIABILITIES 1.9%..................... 15,843,586
------------
NET ASSETS 100%................................................ $839,984,222
------------
</TABLE>
*Zero coupon bond
(a) At May 31, 1996, for federal income tax purposes, cost is $808,096,459, the
aggregate gross unrealized appreciation is $26,151,044 and the aggregate
gross unrealized depreciation is $10,106,867, resulting in net unrealized
appreciation of $16,044,177.
(b) Securities purchased on a when issued or delayed delivery basis.
(c) Assets segregated as collateral for when issued or delayed delivery
purchase commitments.
(d) Security is producing income of less than the stated coupon.
The following table summarizes the portfolio composition at May 31, 1996 based
upon quality ratings issued by Standard & Poor's. For securities not rated by
Standard & Poor's, the Moody's rating is used.
PORTFOLIO COMPOSITION BY CREDIT QUALITY
<TABLE>
<S> <C>
AAA............. 1.8%
A............... 2.0
BBB............. 10.4
BB.............. 10.9
B............... 0.3
Non-Rated....... 74.6
-----
100.0%
-----
</TABLE>
See Notes to Financial Statements
25
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Market Value (Cost $808,090,959) (Note 1)....... $824,140,636
Receivables:
Interest....................................................... 20,781,424
Fund Shares Sold............................................... 1,009,473
Investments Sold............................................... 990,020
Other........................................................... 42,804
------------
Total Assets................................................... 846,964,357
------------
LIABILITIES:
Payables:
Income Distributions........................................... 2,655,796
Investments Purchased.......................................... 1,924,987
Fund Shares Repurchased........................................ 1,135,216
Investment Advisory Fee (Note 2)............................... 385,677
Custodian Bank................................................. 256,883
Distributor and Affiliates (Note 2)............................ 99,300
Accrued Expenses................................................ 496,297
Deferred Compensation and Retirement Plans (Note 2)............. 25,979
------------
Total Liabilities.............................................. 6,980,135
------------
NET ASSETS...................................................... $839,984,222
------------
NET ASSETS CONSIST OF:
Capital (Note 3)................................................ $853,830,857
Net Unrealized Appreciation on Investments...................... 16,049,677
Accumulated Undistributed Net Investment Income................. 100,683
Accumulated Net Realized Loss on Investments.................... (29,996,995)
------------
NET ASSETS...................................................... $839,984,222
------------
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net
assets of $541,533,311 and 49,558,239 shares of capital stock
issued and outstanding) (Note 3)............................... $ 10.93
Maximum sales charge (4.75%* of offering price)................ .55
------------
Maximum offering price to public............................... $ 11.48
------------
Class B Shares:
Net asset value and offering price per share (Based on net
assets of $261,402,107 and 23,929,643 shares of capital stock
issued and outstanding) (Note 3)............................... $ 10.92
------------
Class C Shares:
Net asset value and offering price per share (Based on net
assets of $37,048,804 and 3,394,813 shares of capital stock
issued and outstanding) (Note 3)............................... $ 10.91
------------
</TABLE>
*On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
26
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest........................................................ $ 31,556,703
-------------
EXPENSES:
Investment Advisory Fee (Note 2)................................ 2,290,389
Distribution (12b-1) and Service Fees (Allocated to Classes A, B
and C of
$673,822, $1,276,325 and $179,145, respectively) (Note 5)...... 2,129,292
Shareholder Services (Note 2)................................... 427,631
Accounting Services (Note 2).................................... 84,499
Trustees Fees and Expenses (Note 2)............................. 20,221
Other........................................................... 190,656
-------------
Total Expenses................................................. 5,142,688
Less Expenses Reimbursed....................................... 6,800
-------------
Net Expenses................................................... 5,135,888
-------------
NET INVESTMENT INCOME........................................... $ 26,420,815
-------------
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS
Realized Gain/Loss on Investments:
Proceeds from Sales............................................ $ 102,343,822
Cost of Securities Sold........................................ (101,124,177)
-------------
Net Realized Gain on Investments................................ 1,219,645
-------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period........................................ 36,755,483
End of the Period.............................................. 16,049,677
-------------
Net Unrealized Depreciation on Investments During the Period.... (20,705,806)
-------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS................. $ (19,486,161)
-------------
NET INCREASE IN NET ASSETS FROM OPERATIONS...................... $ 6,934,654
-------------
</TABLE>
See Notes to Financial Statements
27
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended May 31, 1996 and the Year Ended November 30, 1995
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, 1996 November 30, 1995
- ---------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income...................... $ 26,420,815 $ 45,949,732
Net Realized Gain/Loss on Investments...... 1,219,645 (11,171,506)
Net Unrealized Appreciation/Depreciation on
Investments................................ (20,705,806) 56,699,702
------------ ------------
Change in Net Assets from Operations....... 6,934,654 91,477,928
------------ ------------
Distributions from Net Investment Income:
Class A Shares............................ (17,823,177) (32,309,178)
Class B Shares............................ (7,475,227) (12,327,837)
Class C Shares............................ (1,048,509) (1,507,847)
------------ ------------
Total Distributions....................... (26,346,913) (46,144,862)
------------ ------------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold.................. 126,763,785 222,380,164
Net Asset Value of Shares Issued Through
Dividend Reinvestment...................... 11,278,540 19,652,888
Cost of Shares Repurchased................. (59,956,570) (91,773,703)
------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS............................... 78,085,755 150,259,349
------------ ------------
TOTAL INCREASE IN NET ASSETS............... 58,673,496 195,592,415
NET ASSETS:
Beginning of the Period.................... 781,310,726 585,718,311
------------ ------------
End of the Period (Including undistributed
net investment income of $100,683 and
$26,781, respectively).................... $839,984,222 $781,310,726
------------ ------------
</TABLE>
See Notes to Financial Statements
28
<PAGE>
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the
Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year Ended November 30,
Ended ----------------------------
Class A Shares May 31, 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period.............................. $11.18 $10.44 $11.19 $10.95 $10.78
------- ------ ------ ------ ------
Net Investment Income.............. .368 .74 .76 .8132 .815
Net Realized and Unrealized
Gain/Loss on Investments.......... (.253) .7475 (.744) .2303 .195
------- ------ ------ ------ ------
Total from Investment Operations.... .115 1.4875 .016 1.0435 1.01
Less Distributions from Net
Investment Income................... .368 .7475 .766 .8035 .84
------- ------ ------ ------ ------
Net Asset Value, End of the Period . $10.927 $11.18 $10.44 $11.19 $10.95
------- ------ ------ ------ ------
Total Return**...................... 1.05%* 14.65% .10% 9.65% 9.77%
Net Assets at End of the Period (In
millions)........................... $541.5 $516.3 $411.1 $408.0 $309.5
Ratio of Expenses to Average Net
Assets**............................ .97% .98% 1.02% 1.03% 1.07%
Ratio of Net Investment Income to
Average Net Assets**................ 6.63% 6.81% 6.98% 7.13% 7.45%
Portfolio Turnover.................. 12%* 26% 33% 27% 24%
*Non-annualized
**If certain expenses had not been assumed by VKAC, total return would have
been lower and the ratios would have been as follows:
Ratio of Expenses to Average Net
Assets.............................. .98% .98% N/A N/A N/A
Ratio of Net Investment Income to
Average Net Assets.................. 6.63% 6.81% N/A N/A N/A
</TABLE>
N/A = Not Applicable
See Notes to Financial Statements
29
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended July 20, 1992
Six Months November 30, (Commencement
Ended ---------------------- of Distribution) to
Class B Shares May 31, 1996 1995 1994 1993 November 30, 1992
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period. $ 11.18 $ 10.43 $11.18 $10.96 $11.08
------- ------- ------ ------ ------
Net Investment Income.. .327 .66 .68 .6919 .27
Net Realized and
Unrealized
Gain/Loss on
Investments........... (.257) .7535 (.748) .2476 (.1122)
------- ------- ------ ------ ------
Total from Investment
Operations.............. .070 1.4135 (.068) .9395 .1578
Less Distributions from
Net Investment Income.. .326 .6635 .682 .7195 .2778
------- ------- ------ ------ ------
Net Asset Value, End of
the Period.............. $10.924 $11.18 $10.43 $11.18 $10.96
------- ------- ------ ------ ------
Total Return ........... 0.58%* 13.89% (.76%) 8.84% 1.45%*
Net Assets at End of the
Period
(In Millions).......... $261.4 $233.9 $159.3 $104.8 $21.0
Ratio of Expenses to
Average Net Assets**.... 1.73% 1.73% 1.77% 1.77% 1.71%
Ratio of Net Investment
Income to Average Net
Assets**............... 5.87% 6.03% 6.19% 6.15% 5.88%
Portfolio Turnover...... 12%* 26% 33% 27% 24%*
</TABLE>
*Non-annualized
**The Ratios of Expenses and Net Investment Income to Average Net Assets were
not affected by the assumption of expenses by VKAC.
See Notes to Financial Statements
30
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of the
Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 10, 1993
Six Months (Commencement
Ended Year Ended of Distribution) to
Class C Shares May 31, 1996 November 30, 1995 November 30, 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value,
Beginning of the Period.. $ 11.17 $ 10.42 $ 11.29
------- ------- -------
Net Investment Income... .326 .66 .63
Net Realized and
Unrealized
Gain/Loss on
Investments............ (.257) .7535 (.8363)
------- ------- -------
Total from Investment
Operations............... .069 1.4135 (.2063)
Less Distributions from
Net Investment Income.... .326 .6635 .6637
------- ------- -------
Net Asset Value, End of
the Period............... $10.913 $ 11.17 $ 10.42
------- ------- -------
Total Return** .......... 0.58%* 13.79% (1.80%)*
Net Assets at End of the
Period (In millions)..... $37.0 $31.1 $15.3
Ratio of Expenses to
Average Net Assets**..... 1.72% 1.72% 1.75%
Ratio of Net Investment
Income to Average Net
Assets**................ 5.85% 5.98% 6.07%
Portfolio Turnover....... 12%* 26% 33%*
*Non-annualized
**If certain expenses had not been assumed by VKAC, total return would have been
lower and the ratios would have been as follows:
Ratio of Expenses to
Average Net Assets....... 1.73% 1.72% N/A
Ratio of Net Investment
Income to Average Net
Assets.................. 5.85% 5.98% N/A
</TABLE>
N/A = Not Applicable
See Notes to Financial Statements
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS
May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital High Yield Municipal Fund (the "Fund") is orga-
nized as a series of the Van Kampen American Capital Tax-Exempt Trust, a Dela-
ware business trust, and is registered as a diversified open-end management
investment company under the Investment Company Act of 1940, as amended. The
Fund's investment objective is to provide as high a level of interest income
exempt from federal income tax as is consistent with investing in medium- to
lower-rated high yielding municipal securities. The Fund commenced/investment
operations on January 2, 1986. The distribution of the Fund's Class B and
Class C shares commenced on July 20, 1992 and December 10, 1993, respectively.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATIONS-Municipal bonds are valued at the most recently quoted
bid prices furnished by an independent pricing service or dealers. Securities
for which market quotations are not readily available are valued at fair value
as determined in good faith by the Board of Trustees of the Fund. Short-term
securities with remaining maturities of less than 60 days are valued at amor-
tized cost.
The Fund's investments include lower-rated and unrated debt securities which
may be more susceptible to adverse economic conditions than investment grade
holdings. These securities are often subordinated to the prior claims of other
senior lenders and uncertainties exist as to an issuer's ability to meet
principal and interest payments. Securities rated below investment grade and
comparable unrated securities represented approximately 86% of the Fund's
investment portfolio at the end of the period.
B. SECURITY TRANSACTIONS-Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may purchase and sell securities on a "when issued" or "delayed de-
livery" basis, with settlement to occur at a later date. The value of the se-
curity so purchased is subject to market fluctuations during this period. The
Fund will maintain, in a segregated account with is custodian, assets having
an aggregate value at least equal to the amount of the when issued or delayed
delivery purchase commitments until payment is made.
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------
A repurchase agreement is a short-term investment in which a Fund acquires
ownership of a debt security and the seller agrees to repurchase the security
at a future time and specified price. The Fund may invest independently in re-
purchase agreements, or transfer uninvested cash balances into a pooled cash
account along with other investment companies advised by Van Kampen American
Capital Asset Management, Inc. (the "Adviser"), the daily aggregate of which
is invested in repurchase agreements. Repurchase agreements are collateralized
by the underlying debt securities. The Fund will make payment for such securi-
ties only upon physical delivery or evidence of book entry transfer to the ac-
count of the custodian bank. The seller is required to maintain the value of
the underlying security at not less than the repurchase proceeds due the Fund.
C. INVESTMENT INCOME-Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the life of each appli-
cable security. Market discounts are recognized at the time of sale as real-
ized gains for book purposes and ordinary income for tax purposes.
D. FEDERAL INCOME TAXES-It is the Fund's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated investment compa-
nies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following
the year of the loss and offset these losses against any future realized capi-
tal gains. At November 30, 1995, the Fund had an accumulated capital loss
carryforward for tax purposes of $30,930,852 which will expire between 1996
and 2003. Of this amount, $6,455,885 will expire in 1996. Net realized loss
differs for financial and tax reporting purposes by approximately $280,300
primarily as a result of the deferral of post October 31 losses which are not
recognized for tax purposes until the first day of the following fiscal year.
E. DISTRIBUTION OF INCOME AND GAINS-The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are distrib-
uted annually.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS % PER ANNUM
- --------------------------------------------------------------------------------
<S> <C>
First $300 million.................................................. .60 of 1%
Next $300 million................................................... .55 of 1%
Over $600 million................................................... .50 of 1%
</TABLE>
For the six months ended May 31, 1996, the Fund recognized expenses of ap-
proximately $84,500 representing Van Kampen American Capital Distributors,
Inc.'s or its affiliates' (collectively "VKAC") cost of providing accounting
services to the Fund. These services are provided by VKAC at cost.
ACCESS Investor Services, Inc., an affiliate of the Adviser, serves as the
shareholder servicing agent for the Fund. For the six months ended May 31,
1996, the Fund recognized expenses of approximately $350,200, representing AC-
CESS' cost of providing transfer agency and shareholder services plus a prof-
it.
Additionally, for the six months ended May 31, 1996, the Fund reimbursed
VKAC approximately $14,200 related to the cost of consolidating the VKAC open-
end fund complex. The reimbursement represents savings realized by the Fund as
a result of the consolidation.
Certain officers and trustees of the Fund are also officers and directors of
VKAC. The Fund does not compensate its officers or trustees who are officers
of VKAC.
The Fund has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer
all or a portion of their compensation to a later date. The retirement plan
covers those trustees who are not officers of VKAC.
3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of common shares, Classes A, B and C
each with a par value of $.01 per share. There are an unlimited number of
shares of each class authorized.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------
At May 31, 1996, capital aggregated $552,895,125, $264,047,708, and
$36,888,024 for Classes A, B, and C, respectively. For the six months ended
May 31, 1996, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A............................................. 6,571,720 $ 73,257,279
Class B............................................. 3,841,379 42,871,195
Class C............................................. 953,614 10,635,311
---------- ------------
Total Sales.......................................... 11,366,713 $126,763,785
---------- ------------
Dividend Reinvestment:
Class A............................................. 678,248 $ 7,520,510
Class B............................................. 286,008 3,169,014
Class C............................................. 53,239 589,016
---------- ------------
Total Dividend Reinvestment.......................... 1,017,495 $ 11,278,540
---------- ------------
Repurchases:
Class A............................................. (3,876,746) $(43,036,189)
Class B............................................. (1,124,838) (12,468,048)
Class C............................................. (401,440) (4,452,333)
---------- ------------
Total Repurchases.................................... (5,403,024) $(59,956,570)
---------- ------------
</TABLE>
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
At November 30, 1995, capital aggregated $515,153,525, $230,475,547 and
$30,116,030 for Classes A, B, and C, respectively. For the year ended November
30, 1995, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A............................................. 11,754,020 $128,111,398
Class B............................................. 7,098,582 77,416,914
Class C............................................. 1,551,140 16,851,852
---------- ------------
Total Sales.......................................... 20,403,742 $222,380,164
---------- ------------
Dividend Reinvestment:
Class A............................................. 1,242,463 $ 13,570,942
Class B............................................. 481,085 5,256,068
Class C............................................. 75,559 825,878
---------- ------------
Total Dividend Reinvestment.......................... 1,799,107 $ 19,652,888
---------- ------------
Repurchases:
Class A............................................. (6,209,642) $(67,504,220)
Class B............................................. (1,925,903) (20,990,727)
Class C............................................. (303,107) (3,278,756)
---------- ------------
Total Repurchases.................................... (8,438,652) $(91,773,703)
---------- ------------
</TABLE>
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC will be imposed
on most redemptions made within six years of the purchase for Class B and one
year of the purchase for Class C as detailed in the following schedule. The
Class B and C shares bear the expense of their respective deferred sales ar-
rangements, including higher distribution and service fees and incremental
transfer agency costs.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
YEAR OF REDEMPTION CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C>
First....................................................... 4.00% 1.00%
Second...................................................... 4.00% None
Third....................................................... 3.00% None
Fourth...................................................... 2.50% None
Fifth....................................................... 1.50% None
Sixth and Thereafter........................................ None None
</TABLE>
For the six months ended May 31, 1996, VKAC, as distributor for the Fund,
received net commissions on sales of the Fund's Class A shares of approxi-
mately $211,100 and CDSC on the redeemed shares of Classes B and C of approxi-
mately $267,000. Sales charges do not represent expenses of the Fund.
4. INVESTMENT TRANSACTIONS
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the six months ended May 31, 1996, were $188,583,617 and
$101,124,177, respectively.
5. DISTRIBUTION AND SERVICE PLANS
The Fund and its shareholders have adopted a distribution plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940 and a service plan (col-
lectively the "Plans"). The Plans govern payments for the distribution of the
Fund's shares, ongoing shareholder services and maintenance of shareholder ac-
counts.
Annual fees under the Plans of up to .25% for Class A and 1.00% each for
Class B and Class C shares are accrued daily. Included in these fees for the
six months ended May 31, 1996, are payments to VKAC of approximately $991,700.
37
<PAGE>
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-421-5666 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
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VAN KAMPEN AMERICAN CAPITAL HIGH YIELD MUNICIPAL FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
LINDA HUTTON HEAGY
ROGER HILSMAN
R. CRAIG KENNEDY
DENNIS J. MCDONNELL*
DONALD C. MILLER - Co-Chairman
JACK E. NELSON
DON G. POWELL*
JEROME L. ROBINSON
FERNANDO SISTO - Co-Chairman
WAYNE W. WHALEN*
WILLIAM S. WOODSIDE
OFFICERS
DON G. POWELL*
President and Chief Executive Officer
DENNIS J. MCDONNELL*
Executive Vice President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD III*
Vice President and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN*
Treasurer
TONYA M. LODEN*
Controller
WILLIAM N. BROWN*
PETER W. HEGEL*
ROBERT C. PECK, JR.*
ALAN T. SACHTLEBEN*
PAUL R. WOLKENBERG*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
2800 Post Oak Blvd.
Houston, Texas 77056
DISTRIBUTOR
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
SHAREHOLDER SERVICING AGENT
ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK AND TRUST CO.
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1201 Louisiana
Houston, Texas 77002
* "Interested" persons of the Fund, as defined in the
Investment Company Act of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1996
All rights reserved.
(SM)denotes a service mark of
Van Kampen American Capital Distributors, Inc.
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors un-
less it has been preceded or is accompanied by an effective prospectus of the
Fund which contains additional information on how to purchase shares, the
sales charge, and other pertinent data.
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VAN KAMPEN AMERICAN CAPITAL HIGH YIELD MUNICIPAL FUND
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