<PAGE>
Van Kampen American Capital
HIGH YIELD
MUNICIPAL FUND
Annual Report
November 30, 1997
[PHOTO]
----- A Wealth of Knowledge . A Knowledge of Wealth/sm/ -----
VAN KAMPEN AMERICAN CAPITAL
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter to Shareholders.................................... 1
Performance Results....................................... 3
Portfolio Highlights...................................... 4
Performance in Perspective................................ 5
Portfolio Management Review............................... 6
Glossary of Terms......................................... 8
Portfolio of Investments.................................. 10
Statement of Assets and Liabilities....................... 31
Statement of Operations................................... 32
Statement of Changes in Net Assets........................ 33
Financial Highlights...................................... 34
Notes to Financial Statements............................. 37
Report of Independent Accountants......................... 42
</TABLE>
HYMANR 1/98
<PAGE>
Letter to Shareholders
[PHOTO]
Dennis J. McDonnell and Don G. Powell
January 5, 1998
Dear Shareholder,
On August 4, 1997, the announcement of exchange privileges between Van
Kampen American Capital and Morgan Stanley funds opened the door to even greater
investment opportunities. We are proud to offer an expanded family of mutual
funds covering virtually every market and continent. In our view, the rapid
appreciation of U.S. stock prices in recent years has created a need for
investors to examine their portfolios carefully to ensure proper diversification
among domestic and foreign investments. The Morgan Stanley funds, with their
emphasis on global markets, can be valuable tools for accomplishing this
diversification.
Economic Overview
Solid growth and robust job creation continued to characterize the U.S.
economic environment during the reporting period. The nation's output of goods
and services during the first quarter grew at its fastest pace in nine years.
Meanwhile, unemployment fell to 4.6 percent of the workforce in November, its
lowest level since October 1973.
Despite the thriving labor market and the rapid pace of economic activity,
there was little evidence of inflation. Wholesale prices actually fell during
each of the first seven months of 1997, the longest stretch of consecutive
monthly declines in history. At the consumer level, prices increased by 1.8
percent over the 12 months through November.
Several factors contributed to keeping inflation in check. A strong rally
in the U.S. dollar helped limit price increases on imported goods. Also, a sharp
acceleration in productivity gains allowed employers to offset the cost of
higher salaries without significantly raising prices.
The inflationary implications of the nation's low unemployment rate caused
the Federal Reserve Board to raise short-term interest rates by 0.25 percent in
March. Signs that economic growth slowed modestly during the second and third
quarters, however, led Fed policy-makers to leave interest rates unchanged for
the rest of the year.
Market Review
Long-term interest rates fluctuated modestly during the reporting period.
As the U.S. economy strengthened early in the year, the yield on the Treasury's
benchmark 30-year bond climbed to 7.17 percent in mid-April amid fears of higher
inflation. (As bond yields climb, bond prices fall.) When those concerns proved
unfounded, Treasury bond yields gradually fell back to 6.04 percent by the end
of the reporting period. The widespread devaluation of Asian currencies also
helped to spark demand for fixed-income investments by increasing the likelihood
that inflation in the U.S. would remain under control.
Treasury bonds in particular were aided by a global "flight to quality" as
the economic crisis in Asia and related equity-market turbulence made government
securities an increasingly attractive alternative. The outperformance of
Treasury bonds late in the reporting period allowed the yield spread between
taxable and tax-exempt securities to narrow. For example, the Bond Buyer
Municipal Revenue Bond yield as a percentage of the 30-year Treasury-bond yield
rose from approximately 88 percent in September to approximately 91 percent in
November. At the close of the reporting period, long-term AAA-rated
Continued on page two
1
<PAGE>
general obligation bonds provided a yield of 5.13 percent, which is equivalent
to a 7.43 percent yield on a taxable security for an investor in the 31 percent
federal income-tax bracket.
The decline in inflationary expectations helped to make long-term bonds the
best-performing sector of the tax-exempt market. In the 12 months ended November
30, long-term general obligation bonds returned over nine percent, compared to
less than eight percent for intermediate-term issues.
Outlook
We expect that the recent upheaval in Southeast Asia will have a mixed
impact on the domestic economy and a generally positive effect on fixed-income
investments. Reduced demand for American exports to Asia will exert a mild drag
on the U.S. economy in coming months. But while corporate profits could suffer,
slower economic growth will help to mitigate the inflationary pressures caused
by the strong domestic labor market. Also, we believe that lower currency values
in Asia will result in less inflation in the U.S. and a greater likelihood of
stable or falling interest rates. This scenario is especially favorable for
high-quality bonds over the long term.
If bond yields continue to drift lower, economic growth in the United
States could accelerate later in the year. We believe that the Federal Reserve
would respond to any significant pickup in economic activity with a moderate
increase in short-term interest rates. We also expect the healthy economy to
keep credit spreads relatively tight in coming months.
The new economic environment must be viewed against a backdrop in which
financial asset prices have appreciated substantially in recent years. The
return of significant volatility to global equity markets in recent months is a
reminder of the ongoing need to monitor your portfolio carefully for proper
diversification among asset classes. We urge our fund shareholders to use this
opportunity to consider how their holdings are currently divided among the three
major asset classes of stocks, bonds, and cash. Uneven moves in the various
markets can distort a carefully planned investment program. We encourage you to
review your portfolio with an eye toward correcting imbalances in the way your
assets are allocated.
Sincerely,
/s/ Don G. Powell /s/ Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Investment Advisory Corp. Investment Advisory Corp.
2
<PAGE>
Performance Results for the Period Ended November 30, 1997
Van Kampen American Capital High Yield Municipal Fund
<TABLE>
<CAPTION>
A Shares B Shares C Shares
<S> <C> <C> <C>
Total Returns
One-year total return based on NAV/1/.......... 9.63% 8.82% 8.82%
One-year total return/2/....................... 4.38% 4.82% 7.82%
Five-year average annual total return/2/....... 6.95% 6.95% N/A
Ten-year average annual total return/2/........ 7.81% N/A N/A
Life-of-Fund average annual total return/2/.... 7.12% 6.95% 6.51%
Commencement date.............................. 01/02/86 07/20/92 12/10/93
Distribution Rates and Yield
Distribution rate/3/........................... 5.99% 5.55% 5.56%
Taxable-equivalent distribution rate/4/........ 9.36% 8.67% 8.69%
SEC Yield/5/................................... 5.31% 4.82% 4.83%
</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
deferred 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 contingent
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
Exchange Commission for determining the amount of net income a portfolio should
theoretically generate for the 30-day period ending November 30, 1997.
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 Highlights
Van Kampen American Capital High Yield Municipal Fund
Top Ten States as of November 30, 1997
<TABLE>
<CAPTION>
Percentage of Fund's
Long-Term Investments
<S> <C>
Pennsylvania..................................... 10.9%
Massachusetts.................................... 8.4%
California....................................... 7.8%
Florida.......................................... 7.5%
Illinois......................................... 7.3%
New Jersey....................................... 4.6%
Colorado......................................... 4.4%
New Hampshire.................................... 3.8%
Ohio............................................. 3.5%
Texas............................................ 3.0%
Credit Quality as a Percentage of Long-Term Investments
[Pie Chart Appears Here]
As of November 30, 1997
AAA......................................... 3.6%
AA.......................................... 4.3%
A........................................... 2.3%
BBB......................................... 9.6%
BB.......................................... 6.1%
B........................................... 0.9%
Non-Rated...................................73.2%
[Pie Chart Appears Here]
As of May 31, 1997
AAA......................................... 1.8%
AA.......................................... 0.7%
A........................................... 1.4%
BBB......................................... 7.7%
BB.......................................... 8.7%
B........................................... 0.2%
Non-Rated...................................79.5%
</TABLE>
Based upon the highest credit quality ratings as determined by Standard & Poor's
or Moody's.
Top Five Portfolio Sectors as a Percentage of Long-Term Investments
<TABLE>
<CAPTION>
As of November 30, 1997
<S> <C>
Industrial Revenue................................. 21.6%
Other Care......................................... 20.0%
Health Care........................................ 16.3%
Multi-Family Housing............................... 11.9%
Tax District....................................... 7.1%
</TABLE>
<TABLE>
<CAPTION>
As of May 31, 1997
<S> <C>
Other Care......................................... 22.3%
Health Care........................................ 18.8%
Industrial Revenue................................. 18.3%
Multi-Family Housing............................... 12.0%
Tax District....................................... 4.8%
</TABLE>
Duration
<TABLE>
<CAPTION>
As of November 30, 1997 As of May 31, 1997
<S> <C> <C>
Duration 5.94 years 5.63 years
</TABLE>
4
<PAGE>
Putting Your Fund's Performance in Perspective
As you evaluate your progress toward achieving your financial goals, it is
important to track your investment portfolio's performance at regular intervals.
A good starting point is a comparison of your investment holdings to an
applicable benchmark, such as a broad-based market index. Such a comparison can:
. Illustrate the general market environment in which your investments are
being managed
. Reflect the impact of favorable market trends or difficult market
conditions
. Help you evaluate the extent to which your Fund's management team has
responded to the opportunities and challenges presented to them over the
period measured
For these reasons, you may find it helpful to review the chart below, which
compares your Fund's performance to that of the Lehman Brothers Municipal Bond
Index over time. As a broad-based, unmanaged statistical composite, this index
does not reflect any commissions or fees which would be incurred by an investor
purchasing the securities it represents. Similarly, its performance does not
reflect any sales charges or other costs which would be applicable to an
actively managed portfolio, such as that of the Fund.
Growth of a Hypothetical $10,000 Investment
Van Kampen American Capital High Yield Municipal Fund vs. Lehman Brothers
Municipal Bond Index
(November 30, 1987 through November 30, 1997)
Fund's Total Return
1 Year Avg. Annual = 4.38%
5 Year Avg. Annual = 6.95%
10 Year Avg. Annual = 7.81%
Inception Avg. Annual = 7.12%
[PLOT POINTS TO COME]
The above chart reflects the performance of Class A shares of the Fund. The
performance of Class A shares will differ from that of other share classes of
the Fund because of the difference in sales charges and/or expenses paid by
shareholders investing in the different share classes. The Fund's performance
assumes reinvestment of all distributions and includes payment of the maximum
sales charge (4.75% for A shares).
While past performance is not indicative of future performance, the above
information provides a broader vantage point from which to evaluate the
discussion of the Fund's performance found in the following pages.
5
<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 Fund's fiscal year. The team includes Wayne D. Godlin,
portfolio manager, and Peter W. Hegel, chief investment officer for fixed-income
investments. The following excerpts reflect their views on the Fund's
performance during the 12-month period ended November 30, 1997.
Q How would you describe the market environment in which the Fund has
operated during the past 12 months?
A The bond market saw healthy advances in price during the first 11 months of
1997, but this ascension was not a smooth ride. Early in the year, when
economic indicators fueled concerns about rising inflation and a potential
interest rate hike by the Federal Reserve Board, bond prices began to fall. When
the Fed did raise interest rates by a modest 0.25 percent in late March, bond
prices fell further. By mid-April, however, the market's mood reversed, showing
few signs of price pressures despite the economy's strength. Bond prices also
benefited from continued heavy purchases by foreign investors and concerns that
the stock market rally was nearing an end.
As the economy continued to show few if any signs of inflation, long-term
interest rates declined further. This caused credit spreads between investment-
grade and lower- or non-rated bonds to contract significantly. We also saw an
unprecedented amount of insured bond issuance, which has reduced the supply of
higher-yielding, lower- and non-rated bonds available in the market.
Q Have these conditions affected the management of the Fund?
A The Fund's investment strategy did not change based on what happened in the
market this year. Instead, we evaluated bond issues on an individual basis
and made purchases where we found the most appropriate opportunity. This
strategy is referred to as a 'bottom-up' approach to bond selection.
The narrowing of credit spreads, while limiting the attractiveness of the
high-yielding, high-risk securities, actually increased the value of the lower-
and non-rated bonds held in the Fund's portfolio. We found bonds in the 15- to
20-year maturity range the most attractive for maintaining the Fund's yield. The
Fund typically maintains a greater percentage of assets in higher-yielding,
lower-rated securities than other funds in its peer group. Currently, the Fund
holds over 70 percent in non-investment grade securities. By relying heavily on
our research and analysis to find attractive high-yielding issues, we are able
to consistently provide shareholders with a higher level of income potential.
Q What changes have you made to the portfolio?
A Turnover in the Fund has remained relatively low, staying within a range
of 20 to 25 percent over the reporting period. We continued to allocate the
Fund's assets according to the stringent credit standards we've established. Our
sector weightings are a reflection of where we found opportunities on a bond by
bond basis. Health care and senior housing issues, namely Continuing Care
Retirement Centers (CCRC), represent two areas of interest for the portfolio.
CCRCs provide housing, activities, and nursing services for elderly and retired
individuals. Our health care holdings include several long-term care and acute
care centers.
The CCRCs have gained prominence as part of our portfolio holdings during
the reporting period. As the population lives longer and the number of people at
retirement age increases, the need for continuing care will naturally expand.
Our CCRC holding--19.0 percent of the Fund's total assets--includes centers in
Pennsylvania, New Jersey, and Arizona. These issues performed well during the
reporting period.
The duration of the Fund remained at approximately 5.75 to 6.00 years, and
ended the 12-month period at 5.94 years. In order to minimize volatility, we
typically maintain the Fund's duration in this range. Rather than trying to time
the market, we concentrated on maintaining a balanced portfolio that we feel
will perform well during both upward and downward swings in interest rates. For
additional Fund portfolio highlights, please refer to page four.
6
<PAGE>
Q How did the Fund perform during the reporting period?
A The Fund posted positive results for the fiscal year. Total return for the
12 months ended November 30, 1997 was 9.63 percent/1/ (Class A shares at
net asset value), and the Fund's net asset value closed the period at $11.45 per
Class A share, up 3 percent from $11.14 per Class A share at the beginning of
the fiscal year. The Fund's tax-exempt distribution rate as of November 30,
1997, was 5.99 percent/3/, representing a taxable-equivalent distribution rate
of 9.36 percent/4/ for an investor in the 36-percent federal income tax bracket.
The Fund's total return compared favorably to that of the Lehman Brothers
Municipal Bond Index, which returned 7.17 percent over the same period. This
index is a broad-based, unmanaged 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 results.
In addition to its favorable return, the Fund received an overall rating of
five stars from Morningstar, among 1,481 funds in the Municipal Bond Category.
This five-star composite rating is the highest rating assigned by Morningstar
and is evaluated on a monthly basis. Morningstar is an independent rating
company that reviews and assigns ratings to mutual funds.* While past
performance is no guarantee of future results, Morningstar ratings provide a
means to measure a fund's ability to achieve its investment goals. The ratings
calculate the funds' three-, five-, and ten-year average annual returns with 10
percent of the funds in a category receiving five stars, 22.5 percent receiving
four stars, 35 percent receiving three stars, 22.5 percent receiving two stars,
and 10 percent receiving one star. The fund was rated among 1,481 funds, 695
funds, and 332 funds and received five-star ratings for the three-, five-, and
ten-year periods, respectively.
Q What is your outlook for the months ahead?
A We expect that interest rates will remain fairly stable into 1998. As
inflation continues to appear under control, the Fed will not likely raise
rates at their first meeting in February 1998. If economic indicators begin to
show signs of inflation, we believe the Fed will respond with a small rate
increase midway through 1998.
We believe the Fund is well positioned to weather changes in interest rates
in the coming year. We would like to see credit spreads widen in the new year,
but all indicators lead us to believe that spreads will remain tight for the
foreseeable future. Regardless, thanks to our relatively low duration and our
'bottom-up' approach to bond selection, we feel the Fund will be less volatile
to any upward or downward changes in interest rates. In conclusion, we are
confident that the securities we've chosen are consistent with the stringent
standards we set for the portfolio.
/s/ Peter W. Hegel /s/ Wayne D. Godlin
Peter W. Hegel Wayne D. Godlin
Chief Investment Officer Portfolio Manager
Fixed Income Investments
* The five-star rating is a composite rating. Morningstar is an independent
mutual fund performance monitor. Morningstar proprietary ratings reflect
historical risk-adjusted performance as of November 30, 1997. The ratings are
subject to change every month. Past performance is no guarantee of future
results. Morningstar ratings are calculated from the funds' three-, five-, and
ten-year average annual returns (if applicable) in excess of 90-day Treasury
bill returns with appropriate fee adjustments, and a risk factor that reflects
fund performance below 90-day T-bill returns.
7
<PAGE>
Glossary of Terms
Basis point:
A measure used in quoting yields on bonds. One hundred basis points is
equal to one percent. For example, if a bond's yield changes from 7.00 to 6.65
percent, it would be considered a 35 basis point move.
Call feature:
Allows the issuer to buy back the bond before the date of maturity. When
the bond is called, the issuer repurchases it at or above its face value, and
stops paying interest on that loan.
Class A shares:
When Class A shares of a fund are purchased, the share price includes the
net asset value plus a one-time sales charge (or "load"). There is no redemption
fee (Contingent Deferred Sales Charge).
Coupon rate:
The stated rate of interest the bond pays until maturity, expressed as a
percentage of the face value.
Credit spread:
Also called quality spread, the difference in yield between higher-quality
issues (such as AAA-rated municipal securities) and lower-quality issues (such
as BBB- and non-rated municipal bonds). Under normal circumstances, lower-
quality issues provide higher yields in order to compensate investors for the
additional credit risk.
Duration:
A measure of a bond's sensitivity to changes in interest rates, expressed
in years. The longer a fund's duration, the greater the effect of interest rate
movements on net asset value. Typically, funds with shorter durations have
performed better in rising rate environments, while funds with longer durations
have performed better when rates decline.
Federal funds rate:
The interest rate charged by one institution lending federal funds to
another. This overnight rate is used to meet banks' daily reserve requirements.
The Federal Reserve Board uses the federal funds rate to affect the direction of
interest rates.
Federal Reserve Board (The Fed):
A seven-member group that directs the operations of the Federal Reserve
System, the central bank system of the United States. Currently led by Chairman
Alan Greenspan, the Fed meets eight times a year to establish monetary policy
and monitor the country's economic pulse.
General obligation bonds:
Bonds backed by the full faith and credit (taxing authority) of the issuer
for timely payment of interest and principal. General obligation bonds are
issued to finance essential government projects, such as highways and schools.
Inflation:
An economic state in which the amount of money supply and business
activity dramatically increases, accompanied by sharply rising prices. Inflation
is widely measured by the Consumer Price Index, a leading economic indicator
that measures the change in the cost of purchased goods and services.
Municipal bond:
A debt security issued by a state, municipality, or other governmental
entity to finance capital expenditures. Such expenditures might include the
construction of highways, public works, or school buildings.
Municipal revenue bonds:
Bonds that are payable only from the revenues the project will generate and
are not backed by any taxing authority of the issuer. Revenue bonds are issued
to finance the building of hospitals, toll bridges, electric dams, airports, and
college dormitories.
8
<PAGE>
Municipal yield curve:
A representation of the actual or projected yields of municipal bond
securities in relationship to their maturities.
Net asset value (NAV):
The value of a mutual fund share, calculated by deducting a fund's
liabilities from its total assets and dividing this amount by the number of
shares outstanding. The NAV does not include any initial or contingent deferred
sales charges.
Put bond:
A long-term bond that the bondholder can "put" back to the issuer for
redemption at a specified price on a specified future date prior to maturity.
Refunding:
A process whereby new bonds are issued to refinance an outstanding bond
issue. This typically occurs when interest rates decline and an issuer wishes to
replace higher-yielding bonds with current lower-yielding issues.
Yield curve:
A result of viewing the yields of U.S. Treasury securities maturing in 1,
5, 10, and 30 years, grouped together, will often reflect a pattern of
increasing yield as maturity extends. This pattern creates an upward sloping
"curve." A "flat" yield curve represents little difference between short- and
long-term interest rates. An "inverted" yield curve indicates that short-term
rates are rising as long-term rates move lower.
Zero coupon bonds:
A corporate or municipal debt security traded at a deep discount from face
value that pays no interest and it may be redeemed at maturity for full face
value.
9
<PAGE>
Portfolio of Investments
November 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bonds 99.4%
Alabama 0.3%
$ 750 Vincent, AL Indl Dev Brd Shelby Motel Group Inc Proj.................... 10.500% 09/01/16 $ 764,812
2,500 West Jefferson Cnty, AL Amusement & Pub Pk Auth First Mtg
Visionland Proj. ....................................................... 8.000 12/01/26 2,594,425
------------
3,359,237
-----------
Alaska 0.8%
3,000 Alaska St Hsg Fin Corp Amt Hsg Dev Ser B................................ 5.800 12/01/29 3,029,460
2,250 Seward, AK Rev AK Sealife Cent Proj..................................... 7.650 10/01/16 2,389,388
5,000 Valdez, AK Marine Terminal Rev BP Pipelines Inc......................... 5.850 08/01/25 5,133,100
-----------
10,551,948
-----------
Arizona 1.8%
1,220 Casa Grande, AZ Indl Dev Auth Rfdg...................................... 8.250 12/01/15 1,315,392
2,880 Chandler, AZ Indl Dev Auth Rev Chandler Financial Cent
Proj Ser 1986 (c)....................................................... 9.875 12/01/16 2,448,291
3,000 Maricopa Cnty, AZ Indl Dev Auth Sr Living Fac Rev....................... 7.750 04/01/15 3,126,690
1,300 McDowell, AZ Mountain Ranch Cmnty Fac Dist.............................. 6.500 07/15/22 1,317,784
1,112 Peoria, AZ Indl Dev Auth Sierra Winds Life Care Cmnty Proj (Var
Rate Cpn)............................................................... 6.500 11/01/17 1,093,052
2,750 Pima Cnty, AZ Indl Dev Auth Indl Rev Amt Tucson Elec Pwr Co
Ser A................................................................... 6.100 09/01/25 2,788,390
4,500 Pima Cnty, AZ Indl Dev Auth Indl Rev Tucson Elec Pwr Co Proj
Ser B................................................................... 6.000 09/01/29 4,560,525
2,000 Pima Cnty, AZ Indl Dev Auth Rev La Posada at Park Cent Ser A............ 7.000 05/15/27 2,082,000
1,025 Pinal Cnty, AZ Indl Dev Auth Casa Grande Regl Med Cent Proj Ser A....... 8.125 12/01/22 1,097,549
475 Pinal Cnty, AZ Indl Dev Auth Casa Grande Regl Med Cent Proj Ser B....... 8.125 12/01/22 508,620
1,035 Scottsdale, AZ Indl Dev Auth Rev First Mtg Westminster Village
Rfdg Ser A.............................................................. 8.000 06/01/11 1,139,276
2,000 Scottsdale, AZ Indl Dev Auth Rev First Mtg Westminster Village
Rfdg Ser A.............................................................. 8.250 06/01/15 2,218,240
-----------
23,695,809
-----------
Arkansas 0.4%
500 Fayetteville, AR Pub Fac Brd Rev Butterfield Trail Village Proj B
(Prerefunded @ 09/01/99)................................................ 9.500 09/01/14 554,245
4,420 Jackson Cnty, AR Hlth Care Fac Brd First Mtg Hosp Rev Newport
Hosp & Clinic Inc....................................................... 7.375 11/01/11 4,455,139
-----------
5,009,384
-----------
California 7.7%
1,000 Brentwood, CA Impt Bond Act 1915 (a).................................... 6.000 09/02/27 991,660
1,210 California Edl Fac Auth Rev Pacific Graduate Sch of Psych............... 7.600 11/01/21 1,261,909
2,385 California Edl Fac Auth Rev Pacific Graduate Sch of Psych............... 8.000 11/01/21 2,572,485
5,205 California St Veterans Bonds Ser AY (b)................................. 7.375 04/01/19 5,217,856
15,500 California Statewide Cmntys Dev Auth Spl Fac United Airls............... 5.625 10/01/34 15,341,590
15,000 California Statewide Cmntys Dev Auth Spl Fac United Airls Ser A......... 5.700 10/01/33 15,062,850
1,000 Capistrano, CA Uni Sch Dist Cmnty Fac Dist Spl Tax...................... 7.100 09/01/21 1,089,070
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California (Continued)
$ 2,000 Corona, CA Ctfs Partn Vista Hosp Sys Inc Ser B.......................... 9.500% 07/01/20 $ 2,367,540
2,500 Corona, CA Ctfs Partn Vista Hosp Sys Inc Ser C.......................... 8.375 07/01/11 2,759,050
1,500 Davis, CA Pub Fac Fin Auth Local Agy Rev................................ 6.600 09/01/25 1,561,215
1,300 Emeryville, CA Impt Bond Act 1915 Assmt Dist 93-1
East Baybridge.......................................................... 7.300 09/02/21 1,365,507
1,000 Folsom, CA Pub Fin Auth Ser A........................................... 6.875 09/02/19 1,030,600
1,500 Folsom, CA Spl Tax Cmnty Fac Dist No 7 Rfdg............................. 7.250 09/01/21 1,614,165
2,795 Fresno, CA Ctfs Partn................................................... 8.500 05/01/16 2,977,570
1,000 Indio, CA Pub Fin Auth Rev Tax Increment................................ 6.500 08/15/27 1,018,490
4,000 Lake Elsinore, CA Pub Fin Auth Local Agy Rev............................ 7.100 09/01/20 4,267,480
1,500 Los Angeles, CA Cmnty Fac Dist Spl Tax No. 3 Cascades
Business Park........................................................... 6.400 09/01/22 1,515,870
3,500 Millbrae, CA Residential Fac Rev Magnolia of Millbrae Proj Ser A........ 7.375 09/01/27 3,525,585
1,000 Moreno Vly, CA Spl Tax Towngate Cmnty Fac Dist 87-1..................... 7.125 10/01/23 1,058,840
1,530 Norco, CA Swr & Wtr Rev Rfdg............................................ 7.200 10/01/19 1,684,683
2,000 Perris, CA Pub Fin Auth Loc Agy Rev Ser D............................... 7.875 09/01/25 2,232,420
1,500 Rancho Cucamonga, CA Cmnty Fac Dist Spl Tax No 88-2..................... 8.250 09/01/19 1,681,860
100 Rancho Cucamonga, CA Cmnty Fac Dist Spl Tax No 88-2..................... 8.000 09/01/20 110,408
3,000 Reedley, CA Ctfs Partn.................................................. 7.500 10/01/26 3,199,170
3,105 Richmond, CA Redev Agy Multi-Family Rev Ser A........................... 7.500 09/01/23 3,124,220
7,500 Riverside Cnty, CA Air Force Village West Inc Ser A Rfdg................ 8.125 06/15/20 8,148,525
2,000 Sacramento, CA Spl Tax Cmnty Fac Dist No 97-1 Ser A..................... 6.700 09/01/17 2,012,520
2,000 Sacramento, CA Spl Tax Cmnty Fac Dist No 97-1 Ser A..................... 6.750 09/01/27 2,011,060
3,000 San Bernardino, CA Hosp Rev San Bernardino Cmnty Hosp Rfdg.............. 7.875 12/01/19 3,151,800
1,900 San Luis Obispo, CA Ctfs Partn Vista Hosp Sys Inc....................... 8.375 07/01/29 1,973,321
3,000 Santa Ana, CA Cmnty Redev Agy Tax Alloc Ser B Rfdg...................... 7.500 09/01/16 3,182,040
1,000 Santa Rosa, CA Impt Bond Act 1915 Fountaingrove Prkwy
Extension Assmt......................................................... 7.625 09/02/19 1,033,650
------------
100,145,009
------------
Colorado 4.3%
1,000 Arrowhead Metro Dist CO................................................. 8.125 12/01/11 1,078,900
1,060 Berry Creek Metro Dist CO Rfdg.......................................... 7.300 12/01/12 1,156,068
2,400 Bowles Metro Dist CO GO................................................. 7.750 12/01/15 2,534,496
2,250 Colorado Hlth Fac Auth Rev Baptist Home Assn Ser A...................... 6.375 08/15/24 2,261,700
1,300 Colorado Hlth Fac Auth Rev Sr Living Fac Eaton Terrace A................ 6.800 07/01/09 1,313,910
3,250 Colorado Hlth Fac Auth Rev Sr Living Fac Eaton Terrace A................ 7.250 07/01/22 3,323,840
1,500 Colorado Hlth Fac Auth Rev Christian Living Campus Proj................. 9.000 01/01/25 1,756,995
2,000 Colorado Hlth Fac Auth Rev Shalom Park Proj Rfdg & Impt................. 7.250 12/15/25 2,056,580
1,250 Cordillera Metro Dist CO Eagle Cnty..................................... 8.250 12/01/13 1,408,175
3,000 Cottonwood Wtr & Sanitation Dist CO Ser A Rfdg.......................... 7.750 12/01/20 3,184,200
1,055 Denver, CO City & Cnty Indl Dev Rev Jewish Cmnty Cent Proj.............. 7.375 03/01/09 1,185,999
1,130 Denver, CO City & Cnty Indl Dev Rev Jewish Cmnty Cent Proj.............. 7.500 03/01/14 1,256,628
815 Denver, CO City & Cnty Indl Dev Rev Jewish Cmnty Cent Proj.............. 7.875 03/01/19 913,077
</TABLE>
See Notes to Financial Statements
11
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Colorado (Continued)
$ 2,295 Denver, CO City & Cnty Single Family Mtg Rev Ser A
(GNMA Collateralized).................................................. 8.125% 12/01/20 $2,375,050
1,895 Denver, CO Urban Renewal Auth Tax Increment Rev
South Bdwy/Montgomery Ward............................................. 8.500 05/01/16 2,098,333
2,000 Eagle Cnty, CO Air Term Corp Rev Arpt Term Proj........................ 7.500 05/01/21 2,150,740
1,000 Eaglebend, CO Affordable Hsg Corp Multi-Family Rev Hsg Proj............ 6.200 07/01/12 1,009,810
1,735 Eaglebend, CO Affordable Hsg Corp Multi-Family Rev Hsg Proj............ 6.400 07/01/17 1,751,830
1,500 Eaglebend, CO Affordable Hsg Corp Multi-Family Rev Hsg Proj............ 6.450 07/01/21 1,514,520
4,000 Fairlake Metro Dist City & Cnty of Denver, CO.......................... 9.625 12/01/10 4,554,160
2,500 Hyland Hills, CO Metro Park & Recreation Dist Spl Rev Ser A
(Prerefunded @ 12/15/02)............................................... 8.625 12/15/12 3,019,300
1,000 Landmark Metro Dist CO (Prerefunded @ 06/01/00)........................ 8.750 12/01/05 1,051,640
3,000 Mountain Village Metro Dist CO San Miguel Cnty Rfdg
(Prerefunded @ 12/01/98)............................................... 11.000 12/01/07 3,266,700
4,300 Northern Metro Dist CO Adams Cnty Rfdg................................. 6.500 12/01/16 4,356,115
500 Panorama Metro Dist CO Ser B Rfdg (Prerefunded @ 12/01/99)............. 9.000 12/01/09 551,635
147 Skyland Metro Dist CO Gunnison Cnty Rfdg (Var Rate Cpn)................ 4.000 12/01/08 104,835
750 Snowmass Village, CO Multi-Family Hsg Rev Ser A Rfdg................... 8.000 09/01/14 786,120
660 Superior, CO Metro Dist No 2 Ser A Rfdg................................ 7.250 12/01/02 693,660
840 Superior, CO Metro Dist No 2 Ser A Rfdg................................ 7.750 12/01/13 913,794
650 Telluride, CO Hsg Auth Hsg Rev......................................... 9.100 06/01/01 673,452
2,000 Telluride, CO Hsg Auth Hsg Rev Shandoka Apartments Proj Rfdg........... 7.875 06/01/17 2,133,040
-----------
56,435,302
-----------
Connecticut 2.6%
1,000 Connecticut St Dev Auth Mystic Marinelife Aquar Proj A................. 7.000 12/01/27 1,059,380
2,275 Connecticut St Dev Auth First Mtg Gross Rev Hlthcare Proj
CT Baptist Homes Inc Proj.............................................. 8.750 09/01/12 2,556,895
1,500 Connecticut St Dev Auth First Mtg Gross Rev Hlthcare Proj
CT Baptist Homes Inc Proj.............................................. 9.000 09/01/22 1,701,150
1,225 Connecticut St Dev Auth Hlthcare Rev Independent Living Proj
Ser B.................................................................. 8.000 07/01/17 1,315,625
1,885 Connecticut St Dev Auth Hlthcare Rev Jerome Home Proj.................. 8.000 11/01/19 1,990,428
2,000 Connecticut St Hlth & Edl Fac Auth Rev................................. 6.875 07/01/27 2,102,340
2,500 Connecticut St Hlth & Edl Fac Auth Rev Tolland Cnty Hlthcare Inc
Ser A.................................................................. 9.200 07/01/21 2,826,175
2,760 Connecticut St Hsg Fin Auth............................................ 5.850 11/15/28 2,807,472
5,000 Greenwich, CT Hsg Auth Multi-Family Rev Hsg Greenwich Close
Ser A.................................................................. 6.350 09/01/27 5,044,050
1,500 Greenwich, CT Hsg Auth Multi-Family Rev Hsg Greenwich Close
Ser B.................................................................. 7.500 09/01/27 1,504,110
1,520 Manchester, CT Redev Agy Multi-Family Mtg Rev Bennet Hsg
Dev Rfdg............................................................... 7.200 12/01/18 1,624,090
5,000 Mashantucket Western Pequot Tribe CT Spl Rev Ser B, 144-A (e).......... 5.750 09/01/27 5,044,600
1,365 New Haven, CT Fac Rev Easter Seal Goodwill Rehab Proj.................. 8.875 04/01/16 1,282,964
2,335 New Haven, CT Indl Fac Rev Adj Govt Cent Thermal Energies.............. 7.250 07/01/09 2,339,600
-----------
33,198,879
-----------
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware 0.6%
$ 2,530 Delaware St Econ Dev Auth Indl Dev Rev First Mtg Dover
Hlthcare Rfdg............................................................ 7.875% 04/01/08 $2,696,777
400 Delaware St Econ Dev Auth Rev First Mtg Gilpin Hall Proj................. 7.375 07/01/15 422,000
2,800 Delaware St Econ Dev Auth Rev First Mtg Gilpin Hall Proj................. 7.625 07/01/25 2,952,292
965 Delaware St Econ Dev Auth Rev Osteopathic Hosp Assn of DE Ser A
(Prerefunded @ 07/01/04)................................................. 9.500 01/01/22 1,185,881
300 Wilmington, DE Hosp Rev Osteopathic Hosp Assn of DE/Riverside
Hosp Ser A (Prerefunded @ 10/01/98)...................................... 10.000 10/01/03 320,610
500 Wilmington, DE Hosp Rev Osteopathic Hosp Assn of DE/Riverside
Hosp Ser A (Prerefunded @ 10/01/98)...................................... 10.200 10/01/18 535,025
---------
8,112,585
---------
District of Columbia 0.3%
3,500 District of Columbia Rev Natl Pub Radio Ser A............................ 7.700 01/01/23 3,785,705
---------
Florida 7.5%
1,000 Atlantic Beach, FL Rev Fleet Landing Proj Ser A Rfdg & Impt.............. 7.500 10/01/02 1,051,200
2,085 Atlantic Beach, FL Rev Fleet Landing Proj Ser A Rfdg & Impt.............. 7.875 10/01/08 2,358,489
1,500 Bay Cnty, FL Hosp Sys Rev Bay Med Cent Proj Rfdg
(Prerefunded @ 10/01/04)................................................. 8.000 10/01/12 1,792,530
500 Bay Cnty, FL Hosp Sys Rev Bay Med Cent Proj Rfdg
(Prerefunded @ 10/01/04)................................................. 8.000 10/01/19 611,895
1,500 Bobcat Trail Cmnty, FL Dev Dist Cap Impt Rev............................. 6.750 05/01/04 1,506,330
1,300 Bobcat Trail Cmnty, FL Dev Dist Cap Impt Rev............................. 7.500 05/01/19 1,320,956
3,335 Boca Raton, FL Hsg Auth Mtg Hsg Rev First Lien Banyan Place
Sr Living A.............................................................. 7.150 04/01/31 3,385,092
910 Boca Raton, FL Hsg Auth Mtg Hsg Rev Second Lien Banyan Place
Sr Living B.............................................................. 8.700 10/01/32 915,223
1,330 Brevard Cnty, FL Hlth Fac Auth Rev Courtenay Springs Village Rfdg........ 7.375 11/15/04 1,437,983
2,200 Brevard Cnty, FL Hlth Fac Auth Rev Courtenay Springs Village Rfdg........ 7.750 11/15/17 2,398,660
170 Charlotte Cnty, FL Indl Dev Auth Rev Beverly Enterprises Rfdg............ 10.000 06/01/11 193,933
1,545 Collier Cnty, FL Indl Dev Auth Retirement Rental Hsg Rev................. 10.750 03/01/03 1,774,324
1,000 Dade Cnty, FL Hsg Fin Auth Multi-Family Mtg Rev.......................... 6.000 11/01/32 1,012,690
3,000 Fishhawk Cmnty, FL Dev Dist Spl Assmt Rev................................ 7.625 05/01/18 3,184,860
835 Fort Walton Beach, FL Indl Dev Rev First Mtg Fort Walton Beach
Venture Proj............................................................. 10.500 12/01/16 879,956
1,070 Hernando Cnty, FL Indl Dev Rev Beverly Enterprises Rfdg.................. 10.000 09/01/11 1,229,901
3,000 Hialeah Gardens, FL Indl Dev Rev Waterford Convalescent
Ser A Rfdg............................................................... 8.250 12/01/14 3,249,000
1,500 Homestead, FL Indl Dev Rev Brookwood Gardens Cent Proj
Ser A Rfdg............................................................... 8.250 12/01/14 1,624,500
1,330 Lake Bernadette, FL Cmnty Dev Dist Spl Assmt Rev Ser A................... 8.000 05/01/17 1,410,478
2,500 Lake Saint Charles, FL Cmnty Dev Dist Spl Assmt Rev...................... 7.875 05/01/17 2,651,100
2,000 Lee Cnty, FL Indl Dev Auth Hlth Care Fac Rev............................. 6.250 10/01/17 2,034,960
1,500 Lee Cnty, FL Indl Dev Auth Hlth Care Fac Rev............................. 6.375 10/01/25 1,533,885
730 Lee Cnty, FL Indl Dev Auth Econ Rev Encore Nursing Cent Partner
Rfdg..................................................................... 8.125 12/01/07 810,285
1,300 Marion Cnty, FL Indl Dev Auth Rev Midland Ross Corp Proj................. 11.875 08/01/11 1,313,611
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida (Continued)
$ 4,055 Mount Dora, FL Hlth Fac Auth Hlth Rev................................. 7.125% 08/15/21 $ 4,120,934
2,545 North Miami, FL Hlthcare Fac Rev Imperial Club Proj Ser A............. 9.250 01/01/13 2,887,761
1,000 North Springs Impt Dist FL Spl Assessment Rev......................... 6.250 05/01/05 1,005,000
1,000 North Springs Impt Dist FL Spl Assessment Rev......................... 7.000 05/01/19 1,012,170
3,000 Northern Palm Beach Cnty, FL Impt Dist Wtr Ctl & Impt Unit Dev........ 7.200 08/01/16 3,246,060
2,500 Northern Palm Beach Cnty, FL Impt Dist Wtr Ctl & Impt Unit Dev........ 7.300 08/01/27 2,713,175
440 Orange Cnty, FL Hlth Fac Auth Rev First Mtg Orlando Lutheran
Twr Rfdg.............................................................. 8.125 07/01/06 486,464
2,035 Orange Cnty, FL Hlth Fac Auth Rev First Mtg Orlando Lutheran
Twr Rfdg.............................................................. 8.400 07/01/14 2,321,528
1,325 Orange Cnty, FL Hlth Fac Auth Rev First Mtg Orlando Lutheran
Twr Rfdg.............................................................. 8.625 07/01/20 1,535,741
1,000 Orange Cnty, FL Hlth Fac Auth Rev First Mtg Orlando Lutheran
Twr Rfdg.............................................................. 8.750 07/01/26 1,163,570
2,585 Orange Cnty, FL Hsg Fin Auth Multi-Family Rev Mtg Hands Inc
Proj Ser A............................................................ 7.875 10/01/15 2,760,625
2,035 Orange Cnty, FL Hsg Fin Auth Multi-Family Rev Mtg Hands Inc
Proj Ser A............................................................ 8.000 10/01/25 2,191,166
435 Orange Cnty, FL Indl Dev Auth Rev Beverly Enterprises Proj Rfdg....... 9.250 08/01/10 488,414
3,000 Overoaks, FL Cmnty Dev Dist Cap Impt Rev.............................. 8.250 05/01/17 3,094,830
3,400 Palm Beach Cnty, FL Hlth Fac Auth Rev Waterford Proj Rfdg............. 7.750 10/01/15 3,477,690
3,000 Pinellas Cnty, FL Edl Fac Auth Rev College Harbor Proj Ser A.......... 8.250 12/01/21 3,146,460
1,000 Piney Z Cmnty Dev Dist FL Cap Impt Rev Ser A.......................... 7.250 05/01/19 1,008,190
1,300 Piney Z Cmnty Dev Dist FL Cap Impt Rev Ser B.......................... 6.500 05/01/02 1,289,990
1,370 Plantation, FL Hlth Fac Auth Rev Covenant Retirement Cmnty Inc........ 7.625 12/01/12 1,536,674
750 Plantation, FL Hlth Fac Auth Rev Covenant Retirement Cmnty Inc
Rfdg.................................................................. 7.750 12/01/22 843,563
1,000 Saint John's Cnty, FL Indl Dev Auth Hlthcare Rev Bayview Proj
Ser A................................................................. 7.100 10/01/16 1,066,910
2,000 Saint John's Cnty, FL Indl Dev Auth Hlthcare Rev Bayview Proj Ser A... 7.100 10/01/26 2,133,820
250 Santa Rosa Cnty, FL Indl Dev Auth Rev First Mtg Sandy Ridge
Care Cent............................................................. 10.500 04/01/16 253,580
1,000 Sarasota Cnty, FL Hlth Fac Auth Rev Hlthcare Manatee Jewish Rfdg...... 7.000 07/01/16 1,063,370
1,000 Tamarac, FL Indl Dev Rev Sun Belt Precision Prods Inc................. 6.500 08/01/17 1,015,000
1,780 Tampa Palms, FL Open Space & Transn Cmnty Dev Dist Rev Cap
Impt Area 7 Proj...................................................... 8.500 05/01/17 1,956,487
1,000 Tampa Palms, FL Open Space & Transn Cmnty Dev Dist Rev Cap
Impt Area 7 Proj...................................................... 7.500 05/01/18 1,048,150
710 Volusia Cnty, FL Indl Dev Auth Bishops Glen Proj Rfdg................. 7.125 11/01/06 732,230
1,890 Volusia Cnty, FL Indl Dev Auth Bishops Glen Proj Rfdg................. 7.500 11/01/16 1,979,114
2,000 Volusia Cnty, FL Indl Dev Auth Bishops Glen Proj Rfdg................. 7.625 11/01/26 2,108,260
1,775 Westchase East Cmnty, FL Dev Dist Cap Impt Rev........................ 7.500 05/01/17 1,857,875
1,965 Westchase East Cmnty, FL Dev Dist Cap Impt Rev........................ 7.300 05/01/18 2,046,449
-----------
97,273,091
-----------
</TABLE>
See Notes to Financial Statements
14
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Georgia 1.0%
$ 1,640 Athens Clarke Cnty, GA Residential Care Fac For The Elderly Auth Rev...... 6.350% 10/01/17 $ 1,660,254
1,220 Athens Clarke Cnty, GA Residential Care Fac For The Elderly Auth Rev...... 6.375 10/01/27 1,231,578
3,000 Atlanta, GA Urban Residential Fin Auth Multi-Family Hsg Renaissance
on Peachtree Apts Proj Ser 85............................................. 8.500 04/01/26 3,159,420
375 Coweta Cnty, GA Residential Care Fac For The Elderly Auth Rev First
Lien Wesley Woods Ser A................................................... 7.625 10/01/06 419,850
1,500 Coweta Cnty, GA Residential Care Fac For The Elderly Auth Rev First
Lien Wesley Woods Ser A................................................... 8.200 10/01/16 1,733,070
1,500 Coweta Cnty, GA Residential Care Fac For The Elderly Auth Rev First
Lien Wesley Woods Ser A................................................... 8.250 10/01/26 1,738,140
300 Richmond Cnty, GA Dev Auth Nursing Home Rev Beverly
Enterprises GA Proj Rfdg.................................................. 8.750 06/01/11 338,208
3,000 Rockdale Cnty, GA Dev Auth Solid Waste Disp Visy Paper Inc Proj........... 7.500 01/01/26 3,243,150
-----------
13,523,670
Hawaii 0.2% -----------
870 Hawaii Cnty, HI Impt Dist No 17 Spl Assmt Kaloko Subdivision.............. 9.500 08/01/11 935,407
2,000 Hawaii St Dept Transport Spl Fac Continental Airls Inc (a)................ 5.625 11/15/27 1,975,680
-----------
2,911,087
-----------
Illinois 7.3%
1,475 Bedford Park, IL Tax Increment Rev 71st & Cicero Proj Rfdg................ 7.375 01/01/12 1,560,388
1,500 Bedford Park, IL Tax Increment Rev Mark IV Proj
(Prerefunded @ 03/01/02).................................................. 9.750 03/01/12 1,838,475
985 Bedford Park, IL Tax Increment Rev Sr Lien Bedford City Sq Proj........... 9.250 02/01/12 1,134,415
2,910 Broadview, IL Tax Increment Rev........................................... 8.250 07/01/13 3,291,501
250 Carol Stream, IL First Mtg Rev Windsor Park Manor Proj.................... 7.000 12/01/13 259,462
2,000 Carol Stream, IL First Mtg Rev Windsor Park Manor Proj.................... 7.200 12/01/14 2,108,620
1,000 Chicago, IL O'Hare Intl Arpt Spl Fac Rev American Airls Inc
Proj Rfdg................................................................. 8.200 12/01/24 1,209,330
540 Chicago, IL O'Hare Intl Arpt Spl Fac Rev American Airls Inc Proj
Ser A..................................................................... 7.875 11/01/25 592,942
3,500 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United Airls Inc (b)............. 8.500 05/01/18 3,848,530
1,500 Chicago, IL Tax Increment................................................. 7.250 01/01/14 1,583,820
3,000 Crestwood, IL Tax Increment Rev Rfdg...................................... 7.250 12/01/08 3,195,960
500 Hodgkins, IL Tax Increment................................................ 9.500 12/01/09 589,560
4,000 Hodgkins, IL Tax Increment Rfdg Ser A..................................... 7.625 12/01/13 4,384,760
3,500 Huntley, IL Increment Alloc Rev Huntley Redev Proj Ser A.................. 8.500 12/01/15 3,861,795
2,470 Illinois Dev Fin Auth Hlth Fac Rev Cmnty Living Options................... 7.125 03/01/10 2,703,761
1,500 Illinois Dev Fin Auth Pollutn Ctl Rev IL Pwr Co Proj Ser A Rfdg........... 8.300 04/01/17 1,546,470
605 Illinois Dev Fin Auth Rev Cmnty Fac Clinic Altgeld Proj................... 8.000 11/15/06 643,514
1,405 Illinois Dev Fin Auth Rev Cmnty Fac Clinic Altgeld Proj................... 8.000 11/15/16 1,494,007
2,000 Illinois Dev Fin Auth Rev Debt Restructure-East Saint Louis............... 7.375 11/15/11 2,251,800
4,000 Illinois Edl Fac Auth Rev Peace Mem Ministries Proj....................... 7.500 08/15/26 4,190,160
240 Illinois Hlth Fac Auth Rev Fairview Oblig Group Ser A..................... 7.125 08/15/17 254,650
4,000 Illinois Hlth Fac Auth Rev Victory Hlth Services Ser A.................... 5.750 08/15/27 4,034,640
1,475 Illinois Hlth Fac Auth Rev Covenant Retirement Cmntys Ser A............... 7.600 12/01/12 1,659,803
</TABLE>
15 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois (Continued)
$ 3,000 Illinois Hlth Fac Auth Rev Fairview Oblig Group Ser A Rfdg............... 7.400% 08/15/23 $ 3,234,480
490 Illinois Hlth Fac Auth Rev Hinsdale Ser C................................ 9.500 11/15/19 573,810
1,700 Illinois Hlth Fac Auth Rev Lifelink Corp Oblig Group Ser B............... 8.000 02/15/25 1,825,936
4,000 Illinois Hlth Fac Auth Rev Lutheran Home & Svcs Proj Ser A............... 7.500 02/15/26 4,195,160
1,250 Illinois Hlth Fac Auth Rev Saint Elizabeth's Hosp Rfdg
(Prerefunded @ 07/01/04)................................................. 7.625 07/01/10 1,487,275
1,500 Illinois Hlth Fac Auth Rev Saint Elizabeth's Hosp Rfdg
(Prerefunded @ 07/01/04)................................................. 7.750 07/01/16 1,795,305
1,380 Jackson Park Hosp Fndtn Chicago, IL Jackson Park Hosp.................... 9.000 03/01/05 1,352,400
3,215 Loves Park, IL First Mtg Rev Hoosier Care Proj Ser A..................... 9.750 08/01/19 3,431,466
2,500 Mill Creek Wtr Reclamation Dist IL Swr Rev............................... 8.000 03/01/10 2,751,075
1,500 Mill Creek Wtr Reclamation Dist IL Wtrwks Rev............................ 8.000 03/01/10 1,650,645
2,480 Palatine, IL Tax Increment Rev Rand/Dundee Cent Proj..................... 7.750 01/01/17 2,584,507
765 Peoria, IL Spl Tax Weaverridge Spl Svc Area.............................. 7.625 02/01/08 810,892
2,050 Peoria, IL Spl Tax Weaverridge Spl Svc Area.............................. 8.050 02/01/17 2,216,665
5,100 Robbins, IL Res Recov Rev................................................ 8.375 10/15/16 5,268,198
1,610 Round Lake Beach, IL Tax Increment Rev Rfdg.............................. 7.200 12/01/04 1,740,474
2,500 Round Lake Beach, IL Tax Increment Rev Rfdg.............................. 7.500 12/01/13 2,719,100
2,950 Saint Charles, IL Indl Dev Rev Tri-City Cent Proj........................ 7.500 11/01/13 3,103,783
3,965 Saint Charles, IL Multi-Family Hsg Rev Bonds Wessel Court Proj........... 7.600 04/01/24 4,111,229
500 Sherman, IL Rev First Mtg Villa Hlthcare Ser A........................... 8.250 10/01/14 525,005
500 Sherman, IL Rev First Mtg Villa Hlthcare Ser A........................... 8.500 10/01/24 526,855
----------
94,142,623
----------
Indiana 2.5%
485 Carmel, IN Retirement Rental Hsg Rev Beverly Enterprises Inc
Proj Rfdg................................................................ 8.750 12/01/08 551,266
1,100 Crawfordsville, IN Redev Comm Dist Tax Increment Rev..................... 7.350 02/01/17 1,113,112
1,500 Delaware Cnty, IN Redev Dist Tax Increment Rev........................... 6.875 02/01/18 1,514,595
3,000 Indiana Dev Fin Auth Indl Dev Rev Unr Rohn Inc Proj...................... 7.500 03/01/11 3,165,120
1,000 Indiana Hlth Fac Auth Cmnty Hartsfield Village Proj Ser A................ 6.250 08/15/14 1,006,680
2,000 Indiana Hlth Fac Auth Cmnty Hartsfield Village Proj Ser A................ 6.375 08/15/27 2,016,560
1,500 Indiana Hlth Fac Auth Saint Anthony Home................................. 7.000 05/15/17 1,529,430
1,000 Indiana Hlth Fac Auth Saint Anthony Home................................. 7.250 05/15/24 1,024,190
3,750 Indianapolis, IN Arpt Auth Rev Spl Fac United Air Lines Proj Ser A....... 6.500 11/15/31 4,010,587
2,500 Jasper Cnty, IN Econ Dev Georgia Pacific Corp Proj (a)................... 5.625 12/01/27 2,466,100
175 Saint Joseph Cnty, IN Redev Dist Tax Increment Rev....................... * 12/30/10 65,097
135 Saint Joseph Cnty, IN Redev Dist Tax Increment Rev....................... * 12/30/11 46,518
130 Saint Joseph Cnty, IN Redev Dist Tax Increment Rev....................... * 12/30/12 41,496
130 Saint Joseph Cnty, IN Redev Dist Tax Increment Rev....................... * 12/30/13 38,438
125 Saint Joseph Cnty, IN Redev Dist Tax Increment Rev....................... * 12/30/14 34,238
125 Saint Joseph Cnty, IN Redev Dist Tax Increment Rev....................... * 12/30/15 31,746
125 Saint Joseph Cnty, IN Redev Dist Tax Increment Rev....................... * 12/30/16 29,409
560 Valparaiso, IN Econ Dev Rev First Mtg Whispering Pines Cent.............. 7.300 01/01/02 544,975
980 Valparaiso, IN Econ Dev Rev First Mtg Whispering Pines Cent.............. 7.500 01/01/07 956,598
</TABLE>
See Notes to Financial Statements
16
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indiana (Continued)
$ 1,405 Valparaiso, IN Econ Dev Rev First Mtg Whispering Pines Cent............ 7.750% 01/01/12 $ 1,374,778
2,045 Valparaiso, IN Econ Dev Rev First Mtg Whispering Pines Cent............ 8.000 01/01/17 2,014,734
3,475 Valparaiso, IN Econ Dev Rev First Mtg Whispering Pines Cent Rfdg
(Prerefunded @ 01/01/00)............................................... 9.500 01/01/07 3,899,853
400 Wells Cnty, IN Hosp Auth Rev Caylor Nickel Med Cent Inc Rfdg........... 8.500 04/15/03 452,200
3,600 Wells Cnty, IN Hosp Auth Rev Caylor Nickel Med Cent Inc Rfdg........... 8.750 04/15/12 4,191,264
-----------
32,118,984
-----------
Iowa 0.2%
2,770 Iowa Fin Auth Multi-Family Rev Hsg Park West Proj Rfdg................. 8.000 10/01/23 2,860,468
-----------
Kansas 0.8%
1,000 Lawrence, KS Commercial Dev Rev Holiday Inn Sr Ser A................... 8.000 07/01/16 1,064,470
2,000 Lenexa, KS Hlth Care Fac Rev Lakeview Village Ser B.................... 6.250 05/15/26 2,100,200
3,000 Manhattan, KS Commercial Dev Rev Holiday Inn Sr Ser A Rfdg............. 8.000 07/01/16 3,193,410
1,500 Newton, KS Hosp Rev Newton Hlthcare Corp Ser A......................... 7.375 11/15/14 1,654,785
1,000 Newton, KS Hosp Rev Newton Hlthcare Corp Ser A......................... 7.750 11/15/24 1,116,490
1,125 Shawnee Cnty, KS Rev Rfdg United Methodist Homes Inc A................. 6.125 11/15/19 1,131,120
-----------
10,260,475
-----------
Kentucky 0.3%
1,195 Kenton Cnty, KY Arpt Brd Arpt Rev Spl Fac Delta Airls Proj Ser A....... 8.100 12/01/15 1,285,163
1,000 Kentucky Econ Dev Fin Auth Hosp Sys Rev................................ 5.800 10/01/12 1,005,170
1,500 Kentucky Econ Dev Fin Auth Hosp Sys Rev................................ 5.850 10/01/17 1,516,965
-----------
3,807,298
-----------
Louisiana 1.9%
980 East Baton Rouge, LA Mtg Fin Auth Single Family Mtg Ser A
(GNMA Collateralized).................................................. 7.600 02/01/20 1,019,141
4,700 Hodge, LA Util Rev..................................................... 9.000 03/01/10 5,122,342
1,400 Iberia Parish, LA Hosp Svc Dist No 1 Hosp Rev.......................... 7.500 05/26/06 1,454,306
2,000 Iberia Parish, LA Hosp Svc Dist No 1 Hosp Rev.......................... 8.000 05/26/16 2,106,940
4,000 Lake Charles, LA Harbor & Terminal Dist Port Fac Rev Trunkline
Lng Co Rfdg............................................................ 7.750 08/15/22 4,610,160
635 Louisiana Pub Fac Auth Rev Indl Dev Beverly Enterprises Inc Rfdg....... 8.250 09/01/08 705,796
1,850 Port New Orleans, LA Indl Dev Rev Avondale Industries Inc Proj Rfdg.... 8.250 06/01/04 2,038,423
3,000 Port New Orleans, LA Indl Dev Rev Continental Grain Co Proj Rfdg....... 7.500 07/01/13 3,309,690
2,500 Saint James Parish, LA Solid Waste Disp Rev Kaiser Aluminum Proj....... 7.750 08/01/22 2,773,850
500 West Feliciana Parish, LA Pollutn Ctl Rev Gulf States Util Co Proj
Ser A.................................................................. 7.500 05/01/15 559,720
1,000 West Feliciana Parish, LA Pollutn Ctl Rev Gulf States Util Co Proj
Ser B.................................................................. 9.000 05/01/15 1,120,320
-----------
24,820,688
-----------
Maine 0.4%
3,200 Maine Fin Auth Solid Waste Disposal Rev Boise Cascade Corp Proj........ 7.900 06/01/15 3,461,952
1,500 Maine Vets Homes Rev................................................... 7.750 10/01/20 1,650,240
-----------
5,112,192
-----------
</TABLE>
See Notes to Financial Statements
17
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maryland 1.2%
$ 2,000 Baltimore Cnty, MD Pollutn Ctl Rev Bethlehem Steel Corp Proj
Ser A Rfdg (b) 7.550% 06/01/17 $ 2,214,140
2,500 Baltimore Cnty, MD Pollutn Ctl Rev Bethlehem Steel Corp Proj
Ser B Rfdg 7.500 06/01/15 2,760,975
2,000 Calvert Cnty, MD Econ Dev Rev Asbury-Solomons Island Fac Proj 8.375 01/01/15 2,226,060
2,000 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty Dev 5.875 09/01/25 2,043,600
755 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty Dev 5.750 07/01/39 757,491
2,000 Maryland St Energy Fin Admin Ltd Oblig Rev Cogeneration AES
Warrior Run 7.400 09/01/19 2,198,920
3,000 Prince Georges Cnty, MD Spl Oblig Spl Assmt Woodview Ser A 8.000 07/01/26 3,163,770
------------
15,364,956
------------
Massachusetts 8.4%
1,480 Massachusetts St Hlth & Edl Fac Auth Rev Indpt Living Ser A 8.100 07/01/18 1,595,573
3,000 Massachusetts St Hlth & Edl Fac Auth Rev Milford-Whitinsville Regl
Hosp Ser B 7.750 07/15/17 3,280,710
1,000 Massachusetts St Hlth & Edl Fac Auth Rev Norwood Hosp Ser E 8.000 07/01/12 1,028,670
745 Massachusetts St Hlth & Edl Fac Auth Rev Saint Anne's Hosp Ser A 9.250 07/01/05 747,444
2,000 Massachusetts St Hlth & Edl Fac Auth Rev Saint Anne's Hosp Ser A 9.375 07/01/14 2,006,760
2,000 Massachusetts St Indl Fin Agy Assisted Living Fac Rev 8.000 09/01/27 2,022,720
2,750 Massachusetts St Indl Fin Agy Hillcrest Edl Cent Inc Proj 8.450 07/01/18 3,034,652
4,000 Massachusetts St Indl Fin Agy Hlthcare Fac Rev Metro Hlth Fndtn Inc
Proj A 6.750 12/01/27 3,994,840
1,075 Massachusetts St Indl Fin Agy Indl Rev Beverly Enterprises Inc/
Gloucester & Lexington Proj Rfdg 8.000 05/01/02 1,146,799
800 Massachusetts St Indl Fin Agy Indl Rev Beverly Enterprises Rfdg 8.375 05/01/09 889,080
1,000 Massachusetts St Indl Fin Agy Indl Rev First Hlthcare Corp Proj
Ser A Rfdg 7.625 04/01/13 1,044,800
1,175 Massachusetts St Indl Fin Agy Rev HMEA Issue 7.000 09/01/12 1,191,744
920 Massachusetts St Indl Fin Agy Rev Seven Hills Fndtn Issue 7.000 09/01/12 934,150
595 Massachusetts St Indl Fin Agy Rev Seven Hills Fndtn Issue 7.150 09/01/17 603,264
2,020 Massachusetts St Indl Fin Agy Rev Seven Hills Fndtn Issue 7.250 09/01/27 2,049,512
500 Massachusetts St Indl Fin Agy Rev Atlantic Med Cent Ser B 10.125 11/01/14 541,530
3,490 Massachusetts St Indl Fin Agy Rev Boston Architectural Cent Proj 8.500 08/01/19 3,729,205
500 Massachusetts St Indl Fin Agy Rev Dimmock Cmnty Hlth Cent 8.000 12/01/06 549,460
1,000 Massachusetts St Indl Fin Agy Rev Dimmock Cmnty Hlth Cent 8.375 12/01/13 1,140,720
3,000 Massachusetts St Indl Fin Agy Rev Dimmock Cmnty Hlth Cent 8.500 12/01/20 3,420,420
2,555 Massachusetts St Indl Fin Agy Rev East Boston Neighborhood Proj 7.500 07/01/16 2,658,299
2,560 Massachusetts St Indl Fin Agy Rev East Boston Neighborhood Proj 7.625 07/01/26 2,646,707
7,000 Massachusetts St Indl Fin Agy Rev Emerson College Issue Ser A (b) 8.900 01/01/18 7,744,450
785 Massachusetts St Indl Fin Agy Rev Evergreen Cent Inc 8.000 11/01/06 856,513
4,300 Massachusetts St Indl Fin Agy Rev Evergreen Cent Inc 9.250 11/01/11 4,725,399
1,230 Massachusetts St Indl Fin Agy Rev Evergreen Cent Inc 8.375 11/01/13 1,415,878
2,165 Massachusetts St Indl Fin Agy Rev Evergreen Cent Inc 8.500 11/01/20 2,515,189
500 Massachusetts St Indl Fin Agy Rev First Mtg Brookhaven Cmnty
(Prerefunded @ 01/01/98) 10.250 01/01/18 517,770
</TABLE>
See Notes to Financial Statements
18
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts (Continued)
$ 1,005 Massachusetts St Indl Fin Agy Rev First Mtg Evanswood Bethzatha
Ser A Rfdg 7.400% 01/15/09 $ 1,058,597
2,000 Massachusetts St Indl Fin Agy Rev First Mtg Evanswood Bethzatha
Ser A Rfdg 7.625 01/15/14 2,105,640
2,000 Massachusetts St Indl Fin Agy Rev First Mtg Evanswood Bethzatha
Ser A Rfdg 7.875 01/15/20 2,138,340
690 Massachusetts St Indl Fin Agy Rev First Mtg Loomis House &
Village Proj 7.250 07/01/07 761,422
1,410 Massachusetts St Indl Fin Agy Rev First Mtg Loomis House &
Village Proj 7.400 07/01/12 1,568,808
1,530 Massachusetts St Indl Fin Agy Rev First Mtg Loomis House &
Village Proj 7.500 07/01/17 1,711,626
30 Massachusetts St Indl Fin Agy Rev First Mtg Pioneer Vly 7.000 10/01/01 28,823
500 Massachusetts St Indl Fin Agy Rev First Mtg Pioneer Vly Amended 7.000 10/01/20 469,640
1,000 Massachusetts St Indl Fin Agy Rev First Mtg Reeds Landing Proj 7.750 10/01/00 1,020,890
8,300 Massachusetts St Indl Fin Agy Rev First Mtg Reeds Landing Proj (b) 8.625 10/01/23 9,257,156
1,700 Massachusetts St Indl Fin Agy Rev First Mtg Stone Institute &
Newton 7.700 01/01/14 1,822,332
1,760 Massachusetts St Indl Fin Agy Rev Glenmeadow Retirement Cmnty
Ser C 8.250 02/15/08 1,918,840
1,000 Massachusetts St Indl Fin Agy Rev Glenmeadow Retirement Cmnty
Ser C 8.625 02/15/26 1,096,910
3,715 Massachusetts St Indl Fin Agy Rev Gtr Lynn Mental Hlth Assn Proj 8.800 06/01/14 4,329,944
325 Massachusetts St Indl Fin Agy Rev Hillcrest Edl Cent Inc Proj 7.500 07/01/00 332,910
740 Massachusetts St Indl Fin Agy Rev Hillcrest Edl Cent Inc Proj 8.000 07/01/05 797,816
3,380 Massachusetts St Indl Fin Agy Rev JRC Assisted Living 7.500 07/01/26 3,570,632
2,360 Massachusetts St Indl Fin Agy Rev NE Cent For Autism 9.000 11/01/05 2,548,635
4,910 Massachusetts St Indl Fin Agy Rev NE Cent For Autism 9.500 11/01/17 5,364,077
1,100 Massachusetts St Indl Fin Agy Rev NE Cent For Autism 7.000 11/01/19 1,108,536
2,000 Massachusetts St Indl Fin Agy Rev Orchard Cove Issue
(Prerefunded @ 05/01/02) 9.000 05/01/22 2,410,680
1,135 Massachusetts St Indl Fin Agy Rev Vinten Corp Issue 7.100 11/15/18 1,249,374
980 Massachusetts St Indl Fin Agy Rev Waarc Inc Proj 7.300 09/01/10 1,038,908
915 Massachusetts St Indl Fin Agy Rev Waarc Inc Proj 7.600 09/01/17 969,259
1,820 Massachusetts St Indl Fin Agy Rev Waarc Inc Proj 7.750 09/01/25 1,933,823
------------
108,645,876
------------
Michigan 2.9%
1,000 Detroit, MI Local Dev Fin Auth Tax Increment Sr Ser B 6.700 05/01/21 1,018,960
3,500 Detroit, MI Local Dev Fin Auth Ser C 6.850 05/01/21 3,576,825
435 Detroit, MI Local Dev Fin Auth Tax Increment Ser A
(Prerefunded @ 05/01/03) 9.500 05/01/21 533,684
1,315 Dickinson Cnty, MI Mem Hosp Sys Hosp Rev 7.625 11/01/05 1,446,382
1,000 Dickinson Cnty, MI Mem Hosp Sys Hosp Rev 8.000 11/01/14 1,123,970
2,390 Meridian, MI Econ Dev Corp First Mtg Burcham Hills Ser A Rfdg 7.500 07/01/13 2,536,889
3,430 Meridian, MI Econ Dev Corp First Mtg Burcham Hills Ser A Rfdg 7.750 07/01/19 3,691,640
</TABLE>
See Notes to Financial Statements
19
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Continued)
November 30, 1997
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michigan (Continued)
$ 4,020 Michigan St Hosp Fin Auth Rev Detroit-Macomb Hosp Corp
Ser A Rfdg............................................................... 7.300% 06/01/01 $ 4,049,467
2,400 Michigan St Hosp Fin Auth Rev Gratiot Cmnty Hosp Ser A Rfdg
(Prerefunded @ 10/01/98)................................................. 8.750 10/01/07 2,495,256
500 Michigan St Hosp Fin Auth Rev Hosp Genesys Hlth Sys Ser A Rfdg........... 7.500 10/01/07 572,075
1,500 Michigan St Hosp Fin Auth Rev Hosp Genesys Hlth Sys
Ser A Rfdg (b)........................................................... 8.100 10/01/13 1,777,320
5,590 Michigan St Hosp Fin Auth Rev Saratoga Cmnty Hosp Rfdg................... 8.750 06/01/10 6,317,874
1,500 Michigan St Strategic Fd Ltd Oblig Rev Great Lakes Pulp &
Fibre Proj (d)........................................................... 10.250 12/01/16 832,500
4,000 Michigan St Strategic Fd Solid Waste Disp Rev Genesee Pwr
Station Proj............................................................. 7.500 01/01/21 4,323,160
2,200 Michigan St Strategic Fd Ltd Oblig Rev Environmental
Impt Ser A............................................................... 6.500 08/01/21 2,238,830
500 Oakland Cnty, MI Econ Dev Corp Ltd Oblig Rev Pontiac Osteopathic
Hosp Proj (Prerefunded @01/01/00)........................................ 9.625 01/01/20 562,325
-----------
37,097,157
-----------
Minnesota 2.1%
1,020 Austin, MN Multi-Family Rev Hsg Cedars of Austin Proj Rfdg............... 7.500 04/01/17 1,062,126
2,000 Austin, MN Multi-Family Rev Hsg Cedars of Austin Proj Rfdg............... 7.500 04/01/18 2,082,600
1,955 Brooklyn Cent MN Multi-Family Hsg Rev Four Courts Apts Proj
Ser A Rfdg............................................................... 7.400 12/01/15 2,004,931
1,220 Brooklyn Cent MN Multi-Family Hsg Rev Four Courts Apts Proj
Ser A Rfdg............................................................... 7.500 06/01/25 1,250,146
750 Chisago City, MN Hlth Fac Rev Part Pleasant Heights Proj
Ser A Rfdg............................................................... 7.300 07/01/25 782,422
1,200 Maplewood, MN Hlthcare Fac Rev VOA Care Cent Proj........................ 7.450 10/01/16 1,298,904
682 Minneapolis, MN Cmnty Dev Agy Commercial Dev Rev Std Mill
Hotel Proj (d)........................................................... 12.000 04/01/10 341,010
1,950 Minneapolis, MN Hlthcare Fac Rev Ebenezer Society Proj Ser A............. 7.200 07/01/23 2,020,239
1,000 Minneapolis, MN Hlthcare Fac Rev Saint Olaf Residence Inc Proj........... 7.100 10/01/23 1,039,330
350 Minneapolis, MN Multi-Family Rev Hsg Belmont Apts Proj................... 7.250 11/01/16 356,577
1,320 Minneapolis, MN Multi-Family Rev Hsg Belmont Apts Proj................... 7.625 11/01/27 1,339,404
3,040 New Brighton, MN Rental Hsg Rev Polynesian Village Apts Proj
Ser A Rfdg............................................................... 7.500 10/01/17 3,111,166
815 New Hope, MN Multi-Family Rev Hsg Broadway Lanel Proj.................... 7.750 09/01/07 848,016
2,320 New Hope, MN Multi-Family Rev Hsg Broadway Lanel Proj Rfdg............... 8.000 09/01/18 2,403,404
880 North Saint Paul, MN Multi-Family Rev Hsg Cottages North Saint
Paul Rfdg................................................................ 9.000 02/01/09 945,762
2,220 North Saint Paul, MN Multi-Family Rev Hsg Cottages North Saint
Paul Rfdg................................................................ 9.250 02/01/22 2,383,570
500 Shoreview, MN Sr Hsg Rev Shoreview Sr Residence Proj..................... 7.250 02/01/26 506,020
2,000 Spring Lake Park, MN Multi-Family Hsg Cottages Spring Lake Rfdg.......... 8.375 01/01/22 2,048,420
1,500 Winona, MN Hsg Rev Saint Anne Hospice Inc................................ 6.750 07/01/27 1,511,670
-----------
27,335,717
-----------
20
See Notes to Financial Statements
</TABLE>
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mississippi 1.8%
$ 5,500 Claiborne Cnty, MS Pollutn Ctl Rev Middle South Energy Inc
Ser B (b)...................................................................... 8.250% 06/01/14 $ 5,905,295
7,575 Claiborne Cnty, MS Pollutn Ctl Rev Middle South Energy Inc
Ser C (b)...................................................................... 9.875 12/01/14 8,193,196
2,500 Jones Cnty, MS Solid Waste Disp Rev Intl Paper Co Proj Ser A................... 5.800 10/01/21 2,531,850
1,000 Lowndes Cnty, MS Hosp Rev Golden Triangle Med Cent Rfdg........................ 8.500 02/01/10 1,096,020
2,300 Mississippi Dev Bank Spl Oblig Diamond Lakes Utilities
Ser A Rfdg (a)................................................................. 6.250 12/01/17 2,300,000
3,000 Ridgeland, MS Urban Renewal Rev the Orchard Ltd Proj Ser A Rfdg................ 7.750 12/01/15 3,232,860
-----------
23,259,221
-----------
Missouri 1.9%
1,500 Chesterfield, MO Indl Dev Auth Rev Saint Andrews Episcopal-
Presbyterian Ser A (Prerefunded @ 12/01/00).................................... 8.500 12/01/19 1,732,050
1,000 Ferguson, MO Tax Increment Rev Crossings At Halls Ferry Proj................... 7.250 04/01/07 1,002,420
2,000 Ferguson, MO Tax Increment Rev Crossings At Halls Ferry Proj................... 7.625 04/01/17 2,013,580
1,000 Ferguson, MO Tax Increment Rev Crossings At Halls Ferry Proj................... 7.625 04/01/18 1,006,790
1,000 Good Shepherd Nursing Home Dist MO Nursing Home Fac Rev........................ 7.625 08/15/15 1,055,910
3,000 Good Shepherd Nursing Home Dist MO Nursing Home Fac Rev........................ 7.750 08/15/25 3,208,320
2,775 Jefferson Cnty, MO Indl Dev Auth Indl Rev Cedars Hlthcare Cent Proj
Ser A Rfdg..................................................................... 8.250 12/01/15 2,937,670
1,115 Madison Cnty, MO Hosp Rev Ser A................................................ 7.700 10/01/18 1,171,809
1,490 Madison Cnty, MO Hosp Rev Ser A................................................ 7.900 10/01/26 1,577,716
1,075 Missouri St Hlth & Edl Fac Bethesda Hlth Group Inc Proj A Rfdg................. 7.500 08/15/12 1,204,312
1,240 Perry Cnty, MO Nursing Home Rev Ser A.......................................... 7.450 03/01/27 1,272,091
785 Perry Cnty, MO Nursing Home Rev Ser A.......................................... 7.650 03/01/16 828,772
1,745 Perry Cnty, MO Nursing Home Rev Ser A.......................................... 7.750 03/01/26 1,848,409
1,060 Perry Cnty, MO Nursing Home Rev Ser A.......................................... 7.300 03/01/18 1,091,821
500 Saint Louis Cnty, MO Indl Dev Auth Rev First Mtg Deaconess
Manor Assn (Prerefunded @ 06/01/98)............................................ 7.500 06/01/16 523,910
500 Saint Louis Cnty, MO Indl Dev Auth Rev First Mtg Deaconess
Manor Assn (Prerefunded @ 06/01/98)............................................ 7.500 06/01/23 523,910
1,765 Saint Louis, MO Tax Increment Rev Scullin Redev Area Ser A..................... 10.000 08/01/10 2,216,611
-----------
25,216,101
-----------
Montana 0.1%
2,000 Montana St Brd Invt Res Recovery Rev Yellowstone Energy L P Proj............... 7.000 12/31/19 1,963,920
-----------
Nebraska 0.3%
3,500 Nebraska Investment Fin Auth Single Family Hsg Rev Ser B....................... 5.850 09/01/28 3,559,185
-----------
Nevada 1.8%
3,075 Clark Cnty, NV Assisted Living Homestead Boulder City Proj (a)................. 6.500 12/01/27 3,082,595
6,000 Clark Cnty, NV Indl Dev Rev Nevada Pwr Co Proj Ser A........................... 5.900 11/01/32 6,060,360
5,000 Clark Cnty, NV Indl Dev Rev Nevada Pwr Co Proj Ser B Rfdg...................... 5.900 10/01/30 5,045,150
1,500 Henderson, NV Local Impt Dist No T-10.......................................... 7.500 08/01/15 1,551,930
1,395 Henderson, NV Local Impt Dist No T-4 Ser B..................................... 7.300 11/01/12 1,446,978
</TABLE>
21 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nevada (Continued)
$ 985 Las Vegas, NV Spl Impt Dist No 505 Elkhorn Springs............. 8.000% 09/15/13 $ 1,021,780
1,735 Nevada St Dept Commerce Hlth Fac Rev Washoe Convalescent Cent
Proj Rfdg...................................................... 8.125 06/01/03 1,816,927
3,000 Washoe Cnty, NV Impt Bonds Spl Assessment Dist No 23........... 6.500 11/01/17 3,010,260
------------
23,035,980
------------
New Hampshire 3.8%
500 New Hampshire Higher Edl & Hlth Fac Auth Rev................... 5.800 11/01/27 515,175
435 New Hampshire Higher Edl & Hlth Fac Auth Rev Colby-Sawyer
College Issue.................................................. 7.200 06/01/12 469,626
2,565 New Hampshire Higher Edl & Hlth Fac Auth Rev Colby-Sawyer
College Issue.................................................. 7.500 06/01/26 2,803,135
5,000 New Hampshire Higher Edl & Hlth Fac Auth Rev Daniel Webster
College Issue Rfdg............................................. 7.625 07/01/16 5,461,400
1,350 New Hampshire Higher Edl & Hlth Fac Auth Rev First Mtg Odd
Fellows Home Rfdg.............................................. 8.000 06/01/04 1,449,346
2,000 New Hampshire Higher Edl & Hlth Fac Auth Rev First Mtg Odd
Fellows Home Rfdg.............................................. 9.000 06/01/14 2,362,960
1,000 New Hampshire Higher Edl & Hlth Fac Auth Rev Havenwood-
Heritage Heights............................................... 7.350 01/01/18 1,056,270
4,825 New Hampshire Higher Edl & Hlth Fac Auth Rev Havenwood-
Heritage Heights............................................... 7.450 01/01/25 5,131,677
2,365 New Hampshire Higher Edl & Hlth Fac Auth Rev Hlthcare
Visiting Nurse................................................. 7.250 09/01/23 2,473,743
1,410 New Hampshire Higher Edl & Hlth Fac Auth Rev Monadock Cmnty
Hosp Issue..................................................... 9.125 10/01/20 1,526,551
2,000 New Hampshire Higher Edl & Hlth Fac Auth Rev New London Hosp
Assn Proj...................................................... 7.500 06/01/05 2,239,560
3,455 New Hampshire Higher Edl & Hlth Fac Auth Rev Vly Regl Hosp..... 7.350 04/01/23 3,471,549
4,040 New Hampshire St Business Fin Auth Elec Fac Rev Plymouth
Cogeneration................................................... 7.750 06/01/14 4,308,579
1,500 New Hampshire St Business Fin Auth Swr & Solid Waste Disp Rev
Crown Paper Co Proj............................................ 7.875 07/01/26 1,673,760
10,100 New Hampshire St Hsg Fin Auth Single Family Rev................ 5.900 07/01/28 10,256,449
3,440 New Hampshire St Hsg Fin Auth Single Family Residential........ 8.500 07/01/14 3,571,339
------------
48,771,119
------------
New Jersey 4.6%
4,990 Camden Cnty, NJ Impt Auth Lease Rev Dockside Refrigerated...... 8.400 04/01/24 5,614,997
4,500 Camden Cnty, NJ Impt Auth Lease Rev Kaighn PT Marine Term A.... 8.000 06/01/27 4,809,645
500 New Jersey Econ Dev Auth Econ Dev Rev Green Acres Manor Inc
Ser A Rfdg..................................................... 8.000 01/01/09 529,150
1,000 New Jersey Econ Dev Auth Econ Dev Rev Green Acres Manor Inc
Ser A Rfdg..................................................... 8.250 01/01/17 1,063,750
4,365 New Jersey Econ Dev Auth Econ Dev Rev United Methodist Homes... 7.500 07/01/20 4,762,651
420 New Jersey Econ Dev Auth Econ Dev Rev United Methodist Homes... 7.500 07/01/24 450,509
500 New Jersey Econ Dev Auth Econ Dev Rev Zirbser Greenbriar Inc
Ser A Rfdg..................................................... 7.375 07/15/03 533,200
</TABLE>
22 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Jersey (Continued)
$ 915 New Jersey Econ Dev Auth Econ Dev Rev Zirbser Greenbriar Inc
Ser A Rfdg................................................................ 7.750% 07/15/08 $ 979,892
250 New Jersey Econ Dev Auth First Mtg Cranes Mill Ser A...................... 7.000 02/01/10 257,050
1,500 New Jersey Econ Dev Auth First Mtg Cranes Mill Ser A...................... 7.375 02/01/17 1,644,405
3,500 New Jersey Econ Dev Auth First Mtg Cranes Mill Ser A...................... 7.500 02/01/27 3,841,355
750 New Jersey Econ Dev Auth First Mtg Delaire Nursing Ser A Rfdg
(Prerefunded @ 11/01/99).................................................. 8.750 11/01/10 840,472
500 New Jersey Econ Dev Auth First Mtg Gross Rev Burnt Tavern
Convalescent Ser A Rfdg................................................... 9.000 11/15/13 544,930
2,250 New Jersey Econ Dev Auth First Mtg Gross Rev Franciscan Oaks Proj
Ser A..................................................................... 8.500 10/01/23 2,527,965
840 New Jersey Econ Dev Auth First Mtg Gross Rev Stone Arch
Nursing Home Proj Rfdg.................................................... 8.750 12/01/10 916,306
1,000 New Jersey Econ Dev Auth First Mtg Gross Rev The Evergreens
(Prerefunded @ 10/01/02).................................................. 9.250 10/01/22 1,232,150
1,000 New Jersey Econ Dev Auth Holt Hauling & Warehsg Rev Ser G Rfdg............ 8.400 12/15/15 1,091,890
650 New Jersey Econ Dev Auth Rev.............................................. 6.000 10/01/17 655,974
700 New Jersey Econ Dev Auth Rev.............................................. 6.000 10/01/22 704,123
500 New Jersey Econ Dev Auth Rev First Mtg Fellowship Village Proj
Ser A..................................................................... 8.500 01/01/10 551,885
1,000 New Jersey Econ Dev Auth Rev First Mtg Fellowship Village Proj
Ser A..................................................................... 9.250 01/01/25 1,207,600
975 New Jersey Econ Dev Auth Rev First Mtg Millhouse Proj Ser A............... 8.250 04/01/10 1,074,596
2,060 New Jersey Econ Dev Auth Rev First Mtg Millhouse Proj Ser A............... 8.500 04/01/16 2,293,563
1,860 New Jersey Econ Dev Auth Rev First Mtg Winchester Gardens
Ser A..................................................................... 7.500 11/01/05 1,928,839
1,000 New Jersey Econ Dev Auth Rev First Mtg Winchester Gardens
Ser A..................................................................... 8.500 11/01/16 1,053,750
1,500 New Jersey Econ Dev Auth Rev First Mtg Winchester Gardens
Ser A..................................................................... 8.625 11/01/25 1,594,035
855 New Jersey Econ Dev Auth Rev Sr Mtg Arbor Glen Proj Ser A................. 8.000 05/15/02 907,702
750 New Jersey Econ Dev Auth Rev Sr Mtg Arbor Glen Proj Ser A................. 8.000 05/15/04 804,908
2,000 New Jersey Econ Dev Auth Rev Sr Mtg Arbor Glen Proj Ser A................. 8.000 05/15/12 2,176,520
2,510 New Jersey Econ Dev Auth Rev Sr Mtg Arbor Glen Proj Ser A................. 8.750 05/15/26 2,833,840
2,500 New Jersey Hlthcare Fac Fin Auth Rev Care Institute Inc Cherry
Hill Proj................................................................. 7.750 07/01/10 2,685,025
2,500 New Jersey Hlthcare Fac Fin Auth Rev Raritan Bay Med Cent
Issue Rfdg................................................................ 7.250 07/01/14 2,696,225
4,000 New Jersey St Edl Fac Auth Rev Felician College of Lodi Ser D............. 7.375 11/01/22 4,015,400
1,000 New Jersey St Edl Fac Auth Rev Caldwell College Ser A..................... 7.250 07/01/25 1,081,650
------------
59,905,952
------------
New Mexico 1.2%
680 Albuquerque, NM Nursing Home Rev Albuquerque Hlthcare Rfdg................ 9.750 12/01/14 720,827
4,555 Albuquerque, NM Retirement Fac Rev La Vida Liena Proj Ser A Rfdg.......... 8.850 02/01/23 4,874,123
3,000 Bernalillo Cnty, NM Mult-Family Rev Hsg Topke Commons/Arbors
Proj Ser D................................................................ 7.700 04/01/27 3,070,140
</TABLE>
23 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Mexico (Continued)
$ 1,610 Bernalillo Cnty, NM Multi-Family Rev Hsg Sr Solar Villas Apts Ser F...... 7.250% 10/15/22 $ 1,620,385
3,500 Farmington, NM Pollutn Ctl Rev Pub Service Co RMK Ser A Rfdg............. 5.800 04/01/22 3,528,385
700 Santa Fe, NM Indl Rev Casa Real Nursing Home Rfdg........................ 9.750 01/01/13 754,705
455 Truth or Consequences, NM Nursing Home Rev Sierra Hlthcare Rfdg & Impt... 9.750 12/01/14 464,077
-------------
15,032,642
-------------
New York 2.8%
2,000 Castle Rest Residential Hlthcare Fac NY Rev Hlthcare Fac Ser B........... 8.000 08/01/10 2,015,020
1,210 Clifton Springs, NY Hosp & Clinic Ser A Rfdg & Impt...................... 7.650 01/01/12 1,286,085
4,800 Islip, NY Cmnty Dev Agy Cmnty Dev Rev NY Institute of Technology Rfdg.... 7.500 03/01/26 5,178,480
4,000 New York City Ser J...................................................... 5.500 02/15/26 3,965,640
2,500 New York City Indl Dev Agy Civic Fac Rev Cmnty Res Developmentally
Disabled................................................................. 7.500 08/01/26 2,634,825
4,125 New York City Indl Dev Agy Civic Fac Rev Our Lady of Mercy Med Cent Pkg
Corp Proj................................................................ 8.500 12/30/22 4,701,097
2,500 New York City Indl Dev Agy Rev Solid Waste Disposal Visy Paper Proj...... 7.800 01/01/16 2,847,425
2,000 New York St Energy Resh & Dev Auth Elec Fac Rev Long Island Ser A........ 7.150 12/01/20 2,176,700
6,500 New York St Mtg Agy Rev Amt Homeowner Mtg Ser 67......................... 5.800 10/01/28 6,604,650
2,830 Newark-Wayne Cmnty Hosp Inc NY Hosp Rev Ser A............................ 7.600 09/01/15 3,049,127
2,000 North Syracuse, NY Hsg Auth Rev Janus Park Proj.......................... 8.000 06/01/14 2,090,580
400 Syracuse, NY Hsg Auth Rev Sub Proj Loretto Rest Ser B.................... 7.500 08/01/10 404,392
-------------
36,954,021
-------------
North Carolina 0.2%
425 North Carolina Med Care Comm Hlth Care Fac Rev........................... 6.000 11/01/19 426,407
2,075 North Carolina Med Care Comm Hlth Care Fac Rev........................... 6.000 11/01/27 2,071,161
-------------
2,497,568
-------------
Ohio 3.5%
1,500 Athens Cnty, OH Hosp Fac Rev O'Bleness Mem Hosp Proj..................... 7.100 11/15/23 1,542,090
1,000 Cuyahoga Cnty, OH Hlthcare Fac Rev Jennings Hall......................... 7.200 11/15/14 1,063,460
1,500 Cuyahoga Cnty, OH Hlthcare Fac Rev Jennings Hall......................... 7.300 11/15/23 1,586,835
2,500 Cuyahoga Cnty, OH Hlthcare Fac Rev Judson Retirement Cmnty Ser A Rfdg.... 7.250 11/15/13 2,663,475
3,000 Cuyahoga Cnty, OH Hlthcare Fac Rev Judson Retirement Cmnty Ser A Rfdg.... 7.250 11/15/18 3,184,050
2,500 Cuyahoga Cnty, OH Multi-Family Rev Hsg Park Lane Apts Proj Ser A......... 8.250 07/01/28 2,532,900
7,625 Dayton, OH Spl Fac Rev Emery Air Freight Corp Ser A Rfdg (b)............. 12.500 10/01/09 8,199,696
435 Fairfield, OH Econ Dev Rev Beverly Enterprises Inc Proj Rfdg............. 8.500 01/01/03 472,675
1,680 Harrison, OH Harrison Ave Kmart Proj Ser A............................... 8.125 12/01/02 1,769,074
2,000 Montgomery Cnty, OH Hlth Care Fac Rev.................................... 6.250 02/01/22 2,006,720
2,420 Mount Vernon, OH Hosp Rev Knox Cmnty Hosp Rfdg........................... 7.875 06/01/12 2,486,042
1,000 North Canton, OH Hlthcare Fac Rev Waterford at Saint Luke Proj........... 8.625 11/15/21 1,094,050
</TABLE>
See Notes to Financial Statements
24
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio (Continued)
$ 1,036 Ohio St Indl Dev Rev First Mtg Swifton Commons Proj Rfdg (d)........... 8.125% 12/01/15 $ 776,778
2,500 Ohio St Solid Waste Rev CSC Ltd Proj................................... 8.500 08/01/22 2,578,500
2,000 Ohio St Solid Waste Rev Republic Engineered Steels Proj................ 8.250 10/01/14 2,025,740
4,000 Ohio St Solid Waste Rev Republic Engineered Steels Proj................ 9.000 06/01/21 4,190,040
2,000 Ohio St Wtr Dev Auth Pollutn Ctl Fac Rev Coll Cleveland Elec
Ser A Rfdg............................................................. 8.000 10/01/23 2,279,100
2,000 Ohio St Wtr Dev Auth Pollutn Ctl Fac Rev Coll Toledo Edison
Ser A Rfdg............................................................. 8.000 10/01/23 2,279,100
2,250 Sandusky Cnty, OH Hosp Fac Rev Mem Hosp Proj Rfdg...................... 7.750 12/01/09 2,253,172
-----------
44,983,497
-----------
Oklahoma 0.4%
500 Leflore Cnty, OK Hosp Auth Impt Rev.................................... 9.400 05/01/06 530,195
2,830 Oklahoma Cnty, OK Fin Auth Epworth Villa Proj Ser A Rfdg............... 7.000 04/01/25 2,872,988
140 Oklahoma Hsg Fin Agy Single Family Class A
(GNMA Collateralized).................................................. 7.997 08/01/18 145,276
500 Woodward, OK Muni Auth Hosp Rev........................................ 8.250 11/01/09 552,460
500 Woodward, OK Muni Auth Hosp Rev (Prerefunded @ 11/01/00)............... 9.250 11/01/14 576,715
-----------
4,677,634
-----------
Oregon 0.3%
1,745 Douglas Cnty, OR Hosp Fac Auth Rev Elderly Hsg Forest Glen Ser A....... 7.500 09/01/27 1,761,665
1,500 Salem, OR Hosp Fac Auth Rev Cap Manor Inc.............................. 7.500 12/01/24 1,607,280
-----------
3,368,945
-----------
Pennsylvania 10.8%
1,945 Allegheny Cnty, PA Hosp Dev Auth Rev Hlth Fac Allegheny Vly Sch........ 7.500 02/01/10 2,101,572
3,120 Allegheny Cnty, PA Hosp Dev Auth Rev Hlth Fac Allegheny Vly Sch........ 7.875 02/01/20 3,428,318
7,000 Beaver Cnty, PA Indl Dev Auth Pollutn Ctl Rev Collateral Toledo
Edison Co Proj Rfdg (b)................................................ 7.625 05/01/20 7,969,220
4,000 Beaver Cnty, PA Indl Dev Auth Pollutn Ctl Rev Collateral Toledo
Edison Co Proj Ser A Rfdg.............................................. 7.750 05/01/20 4,611,080
1,100 Beaver Cnty, PA Indl Dev Auth Pollutn Ctl Rev Collateral Toledo
Edison Co Proj Ser A Rfdg.............................................. 7.750 09/01/24 1,161,809
1,860 Berks Cnty, PA Muni Auth Rev Phoebe Berks Village Inc Proj Rfdg........ 7.500 05/15/13 1,982,537
1,860 Berks Cnty, PA Muni Auth Rev Phoebe Berks Village Inc Proj Rfdg........ 7.700 05/15/22 1,988,117
2,500 Berks Cnty, PA Muni Auth Rev Phoebe Berks Village Inc Proj Rfdg........ 8.250 05/15/22 2,686,150
1,000 Chartiers Vly, PA Indl & Commercial Dev Auth First Mtg Rev............. 7.250 12/01/11 1,034,220
2,000 Chartiers Vly, PA Indl & Commercial Dev Auth First Mtg Rev............. 7.400 12/01/15 2,111,360
1,000 Chartiers Vly, PA Indl & Commercial Dev Auth First Mtg Rev
(Prerefunded @ 12/01/98) (b)........................................... 9.500 12/01/15 1,073,740
900 Clarion Cnty, PA Hosp Auth Hosp Rev Clarion Hosp Proj Rfdg............. 5.625 07/01/21 879,840
4,480 Clarion Cnty, PA Hosp Auth Hosp Rev Clarion Hosp Proj
(Prerefunded @ 07/01/99)............................................... 8.100 07/01/12 4,837,280
1,000 Clarion Cnty, PA Hosp Auth Hosp Rev Clarion Hosp Proj
(Prerefunded @ 07/01/01)............................................... 8.500 07/01/21 1,152,970
</TABLE>
25 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania (Continued)
$ 820 Columbia Cnty, PA Indl Dev Auth First Mtg Rev First St Assn
Proj Rfdg............................................................. 9.000% 05/01/14 $ 913,045
870 Delaware Cnty, PA Auth Rev First Mtg Riddle Village Proj
(Prerefunded @ 06/01/02).............................................. 8.750 06/01/10 1,035,639
2,800 Delaware Cnty, PA Auth Rev First Mtg Riddle Village Proj
(Prerefunded @ 06/01/02).............................................. 9.250 06/01/22 3,387,804
2,500 Delaware Cnty, PA Auth Rev First Mtg Riddle Village Proj Rfdg......... 7.000 06/01/26 2,595,575
2,100 Delaware Cnty, PA Auth Rev White Horse Village Ser A Rfdg............. 7.500 07/01/18 2,230,053
1,350 Doylestown, PA Hosp Auth Hosp Rev Pine Run Ser A...................... 7.200 07/01/23 1,446,295
1,250 Lebanon Cnty, PA Hlth Fac Auth Hlth Cent Rev United Church of
Christ Homes Rfdg..................................................... 7.250 10/01/19 1,263,050
250 Lehigh Cnty, PA Genl Purp Auth Rev First Mtg Bible Fellowship Proj.... 7.150 12/15/08 263,938
2,315 Lehigh Cnty, PA Genl Purp Auth Rev First Mtg Bible Fellowship Proj.... 8.000 12/15/23 2,441,677
4,665 Lehigh Cnty, PA Indl Dev Auth Rev Rfdg................................ 8.000 08/01/12 4,986,838
3,000 Luzerne Cnty, PA Indl Dev Auth Exmpt Fac Rev PA Gas & Wtr Co
Proj Ser A Rfdg....................................................... 7.200 10/01/17 3,300,840
2,000 Luzerne Cnty, PA Indl Dev Auth First Mtg Gross Rev Rfdg............... 7.875 12/01/13 2,149,700
500 Montgomery Cnty, PA Higher Edl & Hlth Auth Rev Retirement Cmnty
GDL Farms A (Prerefunded @ 01/01/00).................................. 9.500 01/01/20 561,130
2,000 Montgomery Cnty, PA Indl Dev Auth Rev First Mtg The Meadowwood
Ser A Rfdg............................................................ 6.000 12/01/10 2,011,340
3,740 Montgomery Cnty, PA Indl Dev Auth Rev Assisted Living Ser A........... 8.250 05/01/23 4,043,389
1,269 Montgomery Cnty, PA Indl Dev Auth Rev First Mtg The Meadowood
Corp Proj Ser A....................................................... 9.250 12/01/00 1,444,795
2,025 Montgomery Cnty, PA Indl Dev Auth Rev First Mtg The Meadowood
Corp Proj Ser A (Prerefunded @ 12/01/00).............................. 10.000 12/01/19 2,384,053
2,500 Montgomery Cnty, PA Indl Dev Auth Rev First Mtg The Meadowood
Corp Proj Ser A Rfdg (Prerefunded @ 12/01/00)......................... 10.250 12/01/20 2,960,725
500 Montgomery Cnty, PA Indl Dev Auth Rev First Mtg The Meadowood
Corp Rfdg............................................................. 7.000 12/01/10 523,760
1,500 Montgomery Cnty, PA Indl Dev Auth Rev First Mtg The Meadowood
Corp Rfdg............................................................. 7.250 12/01/15 1,550,505
4,000 Montgomery Cnty, PA Indl Dev Auth Rev First Mtg The Meadowood
Corp Rfdg............................................................. 7.400 12/01/20 4,151,600
3,595 Montgomery Cnty, PA Indl Dev Auth Rev Hlthcare Adv Geriatric
Ser A................................................................. 8.375 07/01/23 3,860,599
790 Montgomery Cnty, PA Indl Dev Auth Rev Pennsburg Nursing &
Rehab Cent............................................................ 7.625 07/01/18 895,204
2,660 Montgomery Cnty, PA Indl Dev Auth Rev Wordsworth Academy.............. 7.750 09/01/14 2,861,548
2,000 Montgomery Cnty, PA Indl Dev Auth Rev Wordsworth Academy.............. 7.750 09/01/24 2,116,880
1,500 Montgomery Cnty, PA Indl Dev Rev First Mtg Meadowood
Ser A Rfdg............................................................ 6.250 12/01/17 1,517,805
2,200 Montgomery Cnty, PA Indl Rev GDL Farms Corp Proj Rfdg................. 6.500 01/01/20 2,221,846
750 Northampton Cnty, PA Indl Dev Auth Rev First Mtg Kirkland
Village Proj.......................................................... 7.375 12/15/18 756,053
750 Northampton Cnty, PA Indl Dev Auth Rev First Mtg Kirkland
Village Proj.......................................................... 7.500 12/15/23 756,607
</TABLE>
See Notes to Financial Statements
26
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania (Continued)
$ 1,000 Pennsylvania Econ Dev Fin Auth Exempt Fac Rev MacMillan Ltd
Partnership Proj........................................................ 7.600% 12/01/20 $ 1,164,170
2,950 Pennsylvania Hsg Fin Agy Amt Single Family Mtg Ser 59a.................. 5.800 10/01/29 2,995,223
1,395 Philadelphia, PA Auth For Indl Dev Rev Lutheran Retirement.............. 6.500 01/01/17 1,388,109
1,500 Philadelphia, PA Auth for Indl Dev Rev Cathedral Village................ 7.250 04/01/15 1,565,745
4,000 Philadelphia, PA Auth for Indl Dev Rev Coml RMK Rfdg.................... 7.750 12/01/17 4,452,720
1,155 Philadelphia, PA Auth for Indl Dev Rev First Mtg RHA/Care
Pavilion Proj........................................................... 10.250 02/01/18 1,181,981
2,000 Philadelphia, PA Auth for Indl Dev Rev Long-Term Care Maplewood......... 8.000 01/01/14 2,173,160
5,835 Philadelphia, PA Auth for Indl Dev Rev Long-Term Care Maplewood......... 8.000 01/01/24 6,323,856
1,000 Philadelphia, PA Auth for Indl Dev Rev Lutheran Retire Ser B
(Var Rate Cpn).......................................................... 5.000 01/01/17 979,710
1,180 Philadelphia, PA Hosps & Higher Edl Fac Auth Hosp Rev................... 6.500 07/01/27 1,205,736
1,830 Philadelphia, PA Hosps & Higher Edl Fac Auth Hosp Rev................... 7.250 03/01/24 1,879,941
500 Philadelphia, PA Pkg Auth Rev East Market............................... 8.750 03/01/05 505,550
1,785 Philadelphia, PA Pkg Auth Rev East Market............................... 8.875 03/01/10 1,804,760
1,950 Scranton Lackawanna, PA Hlth & Welfare Auth Rev......................... 6.200 07/01/17 1,995,201
1,465 Scranton Lackawanna, PA Hlth & Welfare Auth Rev Rfdg.................... 7.250 01/15/17 1,524,186
3,100 Scranton Lackawanna, PA Hlth & Welfare Auth Rev Rfdg.................... 7.350 01/15/22 3,214,824
3,000 Somerset Cnty, PA Hosp Auth Rev Somerset Cmnty Hosp Proj
(Prerefunded @ 03/01/02)................................................ 7.500 03/01/17 3,362,820
2,400 Southern Chester Cnty, PA Hlth & Higher Ed Auth Mtg Rev................. 6.300 06/01/10 2,415,024
250 Warren Cnty, PA Indl Dev Auth Beverly Enterprises Rfdg.................. 9.000 11/01/12 280,903
2,300 Washington Cnty, PA Hosp Auth Rev Canonsburg Genl Hosp Rfdg............. 7.350 06/01/13 2,350,393
------------
140,414,518
------------
South Carolina 0.3%
740 Charleston Cnty, SC Hlth Fac Rev First Mtg Episcopal Proj Rfdg
(Prerefunded @ 04/01/01)................................................ 9.750 04/01/16 885,662
2,000 Orangeburg Cnty, SC Solid Waste Disp Fac Rev (AMBAC Insd)............... 5.700 11/01/24 2,028,420
250 South Carolina Jobs Econ Dev Auth Hlth Fac Rev First Mtg
Lutheran Homes SC Proj.................................................. 7.750 10/01/12 265,760
750 South Carolina Jobs Econ Dev Auth Hlth Fac Rev First Mtg
Lutheran Homes SC Proj.................................................. 8.000 10/01/22 803,062
------------
3,982,904
------------
South Dakota 0.4%
4,000 South Dakota Hsg Dev Auth Homeownership Mtg Ser F....................... 5.800 05/01/28 4,059,880
1,000 South Dakota St Hlth & Edl Fac Auth Rev Huron Regl Med Cent............. 7.250 04/01/20 1,117,720
------------
5,177,600
------------
Tennessee 0.9%
2,000 Shelby Cnty, TN Hlth Edl & Hsg Fac Brd Rev.............................. 6.000 07/01/28 2,021,520
2,000 Shelby Cnty, TN Hlth Edl and Hsg Hlth Care Fac Kirby Pines A (a)........ 6.250 11/15/16 1,973,720
4,000 Shelby Cnty, TN Hlth Edl and Hsg Hlth Care Fac Kirby Pines A (a)........ 6.375 11/15/25 3,951,040
500 Smith Cnty, TN Hlth & Edl Fac First Hlthcare Corp Proj Rfdg............. 7.400 04/01/13 513,395
27 See Notes to Financial Statements
</TABLE>
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tennessee (Continued)
$ 3,250 Springfield, TN Hlth & Edl Fac Brd Hosp Rev Jesse Holman Jones
Hosp Proj............................................................... 8.250% 04/01/12 $ 3,576,235
-----------
12,035,910
-----------
Texas 3.0%
1,380 Amarillo, TX Hlth Fac Corp Rev Panhandle Retirement Ser B............... 7.000 08/15/15 1,409,670
3,000 Amarillo, TX Hlth Fac Corp Rev Panhandle Retirement Ser B............... 7.750 08/15/18 3,199,770
985 Bell Cnty, TX Hlth Fac Dev Corp Rev Hosp Proj........................... 9.250 07/01/08 1,066,302
3,425 Brazos Cnty, TX Hsg Fin Corp Single Family Mtg Rev
(GNMA Insd) (a).......................................................... 5.800 09/01/25 3,466,648
500 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp Rev
American Airls Inc...................................................... 7.500 11/01/25 543,965
1,500 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp Rev
American Airls Inc...................................................... 7.250 11/01/30 1,670,565
1,250 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp Rev Delta Airls Inc....... 7.625 11/01/21 1,385,688
2,665 De Soto, TX Hlth Fac Dev Park Manor Senior Care......................... 7.750 12/01/16 2,732,265
200 Harris Cnty, TX Hsg Fin Corp Single Family Hsg Rev...................... 9.875 03/15/14 200,796
200 Harris Cnty, TX Hsg Fin Corp Single Family Hsg Rev 1983 Ser A........... 10.125 07/15/03 200,246
1,285 Harris Cnty, TX Hsg Fin Corp Single Family Hsg Rev 1983 Ser A........... 10.375 07/15/14 1,285,822
5,000 Houston, TX Arpt Sys Rev Spl Fac Continental Airl Term Impt Ser B....... 6.125 07/15/27 5,174,150
770 Montgomery Cnty, TX Hlth Fac Dev Corp Hosp Mtg Rev Woodlands
Med Cent Proj Rfdg (Prerefunded @ 08/15/99)............................. 8.850 08/15/14 841,656
3,255 Rusk Cnty, TX Hlth Fac Corp Hosp Rev Henderson Mem Hosp
Proj Rfdg............................................................... 7.750 04/01/13 3,551,335
500 San Antonio, TX Hlth Fac Dev Corp Rev Encore Nursing Cent Partn......... 8.250 12/01/19 558,095
2,000 San Antonio, TX Hsg Fin Corp Multi-Family Hsg Rev Beverly Oaks
Apts Proj Ser A......................................................... 7.750 02/01/27 1,990,500
1,990 San Antonio, TX Hsg Fin Corp Multi-Family Hsg Rev Marbach
Manor Apts Proj Ser A................................................... 8.125 06/01/27 2,052,327
1,500 Tarrant Cnty, TX Hlth Fac Dev Corp Rev Mtg Cumberland Rest
Ser A Rfdg.............................................................. 7.000 08/15/19 1,521,735
1,401 Texas Genl Svcs Cmty Partn Interests Office Bldg & Land
Acquisition Proj........................................................ 7.000 08/01/24 1,438,286
3,795 Texoma Hsg Fin Corp Texas Single Family Mtg Rev
(GNMA Insd) (a)......................................................... 5.800 09/01/28 3,841,147
790 Weslaco, TX Hlth Fac Dev Corp Hosp Rev Weslaco Hlth Fac Proj
Ser B (Prerefunded @ 06/01/98).......................................... 10.375 06/01/16 823,314
-----------
38,954,282
-----------
Utah 0.9%
1,500 Carbon Cnty, UT Solid Waste Disposal Rev Rfdg Laidlaw
Environmentl Ser A...................................................... 7.450 07/01/17 1,640,565
4,000 Clearfield City, UT Hsg Mtg FHA Oakstone Apts A (FHA Insd)(a)........... 5.850 05/01/39 4,016,840
500 Hildale, UT Elec Rev Gas Turbine Elec Fac Proj.......................... 7.600 09/01/06 523,580
1,000 Hildale, UT Elec Rev Gas Turbine Elec Fac Proj.......................... 7.800 09/01/15 1,035,590
1,000 Tooele Cnty, UT Pollutn Ctl Rev Rfdg Laidlaw Environmentl Ser A......... 7.550 07/01/27 1,099,690
</TABLE>
28 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utah (Continued)
$ 2,000 Utah St Hsg Fin Agy Rev RHA Cmnty Services Proj Ser A................ 6.875% 07/01/27 $ 2,014,520
1,760 Utah St Hsg Fin Agy Single Family Mtg Ser C2......................... 7.950 07/01/20 1,809,544
-----------
12,140,329
Vermont 0.1%
700 Vermont Edl & Hlth Bldgs Fin Agy Rev Northwestern Med Cent
Ser A (Prerefunded @ 09/01/98)....................................... 9.750 09/01/18 743,834
-----------
Virginia 1.4%
2,955 Alexandria, VA Indl Dev Auth Rev Saint Coletta Sch Proj.............. 7.750 10/15/26 3,081,031
235 Alexandria, VA Indl Dev Auth Rev Saint Coletta Sch Proj.............. 7.750 10/15/26 242,854
725 Covington-Alleghany Cnty, VA Indl Dev Auth Beverly Enterprises
Inc Proj Rfdg........................................................ 9.375 09/01/01 793,012
3,000 Fairfax Cnty, VA Redev & Hsg Auth Multi-Family Hsg Rev............... 7.600 10/01/36 3,217,290
2,500 Henry Cnty, VA Indl Dev Auth Indl Dev Rev 5Bs Inc Proj Ser A......... 7.400 09/01/17 2,512,425
1,500 Hopewell, VA Indl Dev Auth Res Recovery Rev Stone Container
Corp Proj Rfdg....................................................... 8.250 06/01/16 1,695,840
1,000 Pittsylvania Cnty, VA Indl Dev Auth Rev Exempt Fac Ser A............. 7.450 01/01/09 1,098,390
6,000 Richmond, VA Redev & Hsg Auth Multi-Family Rev Ser A Rfdg
(Var Rate Cpn)....................................................... 7.750 12/15/21 6,036,360
-----------
18,677,202
-----------
Washington 0.4%
2,500 Spokane Cnty, WA Indl Dev Corp Solid Waste Disp Rev.................. 7.600 03/01/27 2,783,450
1,000 Vancouver, WA Hsg Auth Rev Hsg Maple Knoll Apts Proj................. 6.000 10/01/17 1,005,070
1,000 Vancouver, WA Hsg Auth Rev Hsg Maple Knoll Apts Proj................. 6.200 10/01/27 1,005,010
-----------
4,793,530
-----------
West Virginia 0.6%
500 Randolph Cnty, WV Bldg Commission Davis Mem Hosp Proj
Ser A Rfdg & Impt.................................................... 7.650 11/01/21 550,140
2,540 Weirton, WV Pollutn Ctl Rev Weirton Steel Proj Rfdg.................. 8.625 11/01/14 2,649,372
5,000 West Virginia St Hsg Dev Fund Hsg Fin Ser D.......................... 5.950 11/01/32 5,137,350
-----------
8,336,862
-----------
Wisconsin 1.1%
3,000 Oconto Falls, WI Cmnty Dev Oconto Falls Tissue Inc Proj (a).......... 7.750 12/01/22 3,000,000
1,560 Wisconsin Hsg & Econ Dev Auth Home Ownership Rev..................... 7.550 07/01/26 1,681,196
795 Wisconsin St Hlth & Edl Fac Auth Rev Hess Mem Hosp Assn.............. 7.200 11/01/05 815,106
2,000 Wisconsin St Hlth & Edl Fac Auth Rev Hess Mem Hosp Assn.............. 7.875 11/01/22 2,114,600
2,500 Wisconsin St Hlth & Edl Fac Auth Rev Natl Regency of New
Berlin Proj.......................................................... 8.000 08/15/25 2,702,575
3,000 Wisconsin St Hlth & Edl Milwaukee Catholic Home Proj................. 7.500 07/01/26 3,168,930
500 Wisconsin St Hlth and Edl Rev Mem Hosp At Oconomowoc Inc Proj........ 6.350 07/01/17 504,630
-----------
13,987,037
-----------
</TABLE>
29 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wyoming 1.0%
$ 5,000 Wyoming Cmnty Dev Auth Hsg Rev.......................................... 6.250% 06/01/27 $ 5,226,900
8,000 Wyoming Cmnty Dev Auth Hsg Rev.......................................... 5.850 06/01/28 8,155,280
--------------
13,382,180
--------------
U. S. Virgin Islands 0.3%
1,210 University of Virgin Islands Pub Fin Auth Ser A......................... 7.500 10/01/09 1,355,636
1,965 University of Virgin Islands Pub Fin Auth Ser A......................... 7.650 10/01/14 2,218,072
--------------
3,573,708
Total Long-Term Investments 99.4%
(Cost $1,224,221,636)................................................... 1,288,993,821
Short-Term Investments 0.1%
(Cost $1,200,000)....................................................... 1,200,000
--------------
Total Investments 99.5%
(Cost $1,225,421,636)................................................... 1,290,193,821
Other Assets in Excess of Liabilities 0.5%........................................ 6,558,774
--------------
Net Assets 100.0%................................................................. $1,296,752,595
==============
</TABLE>
*Zero coupon bond
(a) Securities purchased on a when issued or delayed delivery basis.
(b) Assets segregated as collateral for when issued or delayed delivery purchase
commitments and open futures transactions.
(c) Interest is accruing at less than the stated coupon.
(d) Non-Income producing security.
(e) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933. These securities may only be resold in
transactions exempt from registration which are normally transactions with
qualified institutional buyers.
See Notes to Financial Statements
30
<PAGE>
Statement of Assets and Liabilities
November 30, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Total Investments (Cost $1,225,421,636).......................................... $1,290,193,821
Cash............................................................................. 73,883
Receivables:
Interest....................................................................... 26,699,403
Investments Sold............................................................... 21,692,806
Fund Shares Sold............................................................... 2,699,937
Other............................................................................ 48,440
--------------
Total Assets................................................................ 1,341,408,290
--------------
Liabilities:
Payables:
Investments Purchased.......................................................... 38,450,937
Income Distributions........................................................... 3,724,653
Fund Shares Repurchased........................................................ 909,218
Distributor and Affiliates..................................................... 706,427
Investment Advisory Fee........................................................ 566,218
Variation Margin on Futures.................................................... 18,750
Accrued Expenses................................................................. 172,462
Trustees' Deferred Compensation and Retirement Plans............................. 107,030
--------------
Total Liabilities........................................................... 44,655,695
--------------
Net Assets....................................................................... $1,296,752,595
==============
Net Assets Consist of:
Capital.......................................................................... $1,255,492,509
Net Unrealized Appreciation...................................................... 64,464,321
Accumulated Undistributed Net Investment Income.................................. 487,485
Accumulated Net Realized Loss.................................................... (23,691,720)
--------------
Net Assets....................................................................... $1,296,752,595
==============
Maximum Offering Price Per Share:
Class A Shares:
Net asset value and redemption price per share
(Based on net assets of $779,884,248 and 68,085,219 shares of beneficial
interest issued and outstanding)............................................ $ 11.45
Maximum sales charge (4.75%* of offering price)............................. .57
--------------
Maximum offering price to public............................................ $ 12.02
==============
Class B Shares:
Net asset value and offering price per share
(Based on net assets of $425,577,694 and 37,162,826 shares of beneficial
interest issued and outstanding)............................................ $ 11.45
==============
Class C Shares:
Net asset value and offering price per share
(Based on net assets of $91,290,653 and 7,979,623 shares of beneficial
interest issued and outstanding)............................................ $ 11.44
==============
*On sales of $100,000 or more, the sales charge will be reduced.
</TABLE>
See Notes to Financial Statements
31
<PAGE>
Statement of Operations
For the Year Ended November 30, 1997
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest........................................................................................................ $78,709,930
-----------
Expenses:
Investment Advisory Fee......................................................................................... 5,728,036
Distribution (12b-1) and Service Fees (Attributed to Classes A, B and C of
$1,608,424, $3,474,149 and $591,365, respectively)............................................................ 5,673,938
Shareholder Services............................................................................................ 860,424
Custody......................................................................................................... 55,622
Legal........................................................................................................... 51,846
Trustees' Fees and Expenses..................................................................................... 25,972
Other........................................................................................................... 753,000
-----------
Total Expenses.................................................................................................. 13,148,838
Less Expenses Reimbursed...................................................................................... 1,500
-----------
Net Expenses.................................................................................................. 13,147,338
-----------
Net Investment Income........................................................................................... $65,562,592
===========
Realized and Unrealized Gain/Loss:
Net Realized Gain/Loss:
Investments................................................................................................... $(1,676,072)
Futures....................................................................................................... 27,335
-----------
Net Realized Loss............................................................................................... (1,648,737)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period....................................................................................... 32,939,996
-----------
End of the Period:
Investments................................................................................................. 64,772,185
Futures..................................................................................................... (307,864)
-----------
64,464,321
-----------
Net Unrealized Appreciation During the Period................................................................... 31,524,325
-----------
Net Realized and Unrealized Gain................................................................................ $29,875,588
===========
Net Increase in Net Assets from Operations...................................................................... $95,438,180
===========
</TABLE>
See Notes to Financial Statements
32
<PAGE>
Statement of Changes in Net Assets
For the Years Ended November 30, 1997 and 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
November 30, 1997 November 30, 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income................................................... $ 65,562,592 $ 54,897,556
Net Realized Gain/Loss.................................................. (1,648,737) 2,092,011
Net Unrealized Appreciation/Depreciation................................ 31,524,325 (3,815,487)
-------------- --------------
Change in Net Assets from Operations.................................... 95,438,180 53,174,080
-------------- --------------
Distributions from Net Investment Income:
Class A Shares........................................................ (41,904,414) (36,684,070)
Class B Shares........................................................ (19,909,861) (15,919,679)
Class C Shares........................................................ (3,388,275) (2,289,094)
-------------- --------------
Total Distributions................................................. (65,202,550) (54,892,843)
-------------- --------------
Net Change in Net Assets
from Investment Activities............................................ 30,235,630 (1,718,763)
-------------- --------------
From Capital Transactions:
Proceeds from Shares Sold............................................... 369,938,578 301,612,850
Net Asset Value of Shares Issued Through Dividend Reinvestment.......... 28,519,681 23,613,873
Cost of Shares Repurchased.............................................. (126,673,799) (110,086,181)
-------------- --------------
Change in Net Assets from Capital Transactions.......................... 271,784,460 215,140,542
-------------- --------------
Total Increase in Net Assets............................................ 302,020,090 213,421,779
Net Assets:
Beginning of the Period................................................. 994,732,505 781,310,726
-------------- --------------
End of the Period (Including accumulated undistributed net
investment income of $487,485 and $113,411, respectively)............. $1,296,752,595 $ 994,732,505
============== =============
</TABLE>
See Notes to Financial Statements
33
<PAGE>
Financial Highlights
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended November 30,
-----------------------------------------------
Class A Shares 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period................... $11.139 $ 11.18 $ 10.44 $ 11.19 $ 10.95
------- ------- ------- ------- -------
Net Investment Income.................................... .729 .735 .74 .76 .8132
Net Realized and Unrealized Gain/Loss.................... .312 (.041) .7475 (.744) .2303
------- ------- ------- ------- -------
Total from Investment Operations........................... 1.041 .694 1.4875 .016 1.0435
Less Distributions from Net Investment Income.............. .726 .735 .7475 .766 .8035
------- ------- ------- ------- -------
Net Asset Value, End of the Period......................... $11.454 $11.139 $ 11.18 $10.44 $ 11.19
======= ======= ======= ======= =======
Total Return (a)........................................... 9.63% 6.47% 14.65% .10% 9.65%
Net Assets at End of the Period (In millions).............. $ 779.9 $ 621.0 $ 516.3 $411.1 $ 408.0
Ratio of Expenses to Average Net Assets (b)................ .95% 1.01% .98% 1.02% 1.03%
Ratio of Net Investment Income to Average Net Assets (b)... 6.50% 6.64% 6.81% 6.98% 7.13%
Portfolio Turnover......................................... 29% 23% 26% 33% 27%
</TABLE>
(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(b) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC reimbursement of certain expenses was less than
0.01%.
34 See Notes to Financial Statements
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended November 30,
----------------------------------------------
Class B Shares 1997 1996 1995 1994 1993(a)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period................... $11.136 $ 11.18 $ 10.43 $11.18 $10.96
------- ------- ------- ------ ------
Net Investment Income...................................... .645 .653 .66 .68 .6919
Net Realized and Unrealized Gain/Loss...................... .313 (.046) .7535 (.748) .2476
------- ------- ------- ------ ------
Total from Investment Operations........................... .958 .607 1.4135 (.068) .9395
Less Distributions from Net Investment Income.............. .642 .651 .6635 .682 .7195
------- ------- ------- ------ ------
Net Asset Value, End of the Period......................... $11.452 $11.136 $ 11.18 $10.43 $11.18
======= ======= ======= ====== ======
Total Return (b)........................................... 8.82% 5.67% 13.89% (.76%) 8.84%
Net Assets at End of the Period (In millions).............. $ 425.6 $ 323.8 $ 233.9 $159.3 $104.8
Ratio of Expenses to Average Net Assets (c)................ 1.71% 1.77% 1.73% 1.77% 1.77%
Ratio of Net Investment Income to Average Net Assets (c)... 5.74% 5.88% 6.03% 6.19% 6.15%
Portfolio Turnover......................................... 29% 23% 26% 33% 27%
</TABLE>
(a) Based on average month-end shares outstanding.
(b) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(c) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC reimbursement of certain expenses was less than
0.01%.
35 See Notes to Financial Statements
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 10, 1993
Year Ended November 30, (Commencement
--------------------------- of Distribution) to
1997 1996 1995 November 30, 1994 (a)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class C Shares
Net Asset Value, Beginning of the Period....................... $11.126 $ 11.17 $ 10.42 $ 11.29
------- ------- ------- ---------
Net Investment Income........................................ .644 .652 .66 .63
Net Realized and Unrealized Gain/Loss........................ .312 (.045) .7535 (.8363)
------- ------- ------- ---------
Total from Investment Operations............................... .956 .607 1.4135 (.2063)
Less Distributions from Net Investment Income.................. .642 .651 .6635 .6637
------- ------- ------- ---------
Net Asset Value, End of the Period............................. $11.440 $11.126 $ 11.17 $ 10.42
======= ======= ======= =========
Total Return (b)............................................... 8.82% 5.68% 13.79% (1.80%)*
Net Assets at End of the Period (In millions).................. $ 91.3 $ 50.0 $ 31.1 $ 15.3
Ratio of Expenses to Average Net Assets (c).................... 1.70% 1.77% 1.72% 1.75%
Ratio of Net Investment Income to Average Net Assets (c)....... 5.69% 5.86% 5.98% 6.07%
Portfolio Turnover............................................. 29% 23% 26% 33%
</TABLE>
*Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Total Return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(c) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC certain reimbursement of expenses was less than
0.01%.
See Notes to Financial Statements
36
<PAGE>
Notes to Financial Statements
November 30, 1997
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Van Kampen American Capital High Yield Municipal Fund (the "Fund") is organized
as a series of the Van Kampen American Capital Tax-Exempt Trust, a Delaware
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 by independent pricing
services or dealers using the most recently quoted bid price or, in the absence
of market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services are valued at fair value
using procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
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 73% 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 delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
maintain, in a segregated account with its 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.
The Fund may invest in repurchase agreements, which are short-term
investments in which the 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 repurchase 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
"Advisor") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are fully collateralized by the
underlying debt securities. The Fund will make payment for such securities only
upon physical delivery or evidence of book entry transfer to the account 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
applicable security.
D. Federal Income Taxes--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
37
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997
- --------------------------------------------------------------------------------
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 capital
gains. At November 30, 1997, the Fund had an accumulated capital loss
carryforward for tax purposes of $23,896,048 which expires between November 30,
1998 and November 30, 2005. Of this amount, $192,128 will expire in 1998. Net
realized gains or losses differ for financial reporting and tax purposes
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 and
gains or losses recognized for tax purposes on open futures positions at
November 31, 1997.
At November 30, 1997, for federal income tax purposes, cost of long- and
short-term investments is $1,225,423,763; the aggregate gross unrealized
appreciation is $68,669,479 and the aggregate gross unrealized depreciation is
$3,899,421, resulting in net unrealized appreciation of $64,770,058.
E. Distribution of Income and Gains--The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Permanent book and tax basis differences relating to the
expiration of a portion of the capital loss carryforward totaling $2,674,127
were reclassified from net realized gain/loss on securities to capital.
Additionally, permanent differences relating to the recognition of expenses
associated with the consolidation of the VKAC open-end fund complex totaling
$14,032 were reclassified from accumulated undistributed net investment income
to capital.
For the year ended November 30, 1997, 99.99% of the income distributions
made by the Fund were exempt from federal income taxes. In January, 1998, the
Fund will provide tax information to shareholders for the 1997 calendar year.
2. Investment Advisory Agreement and Other Transactions with Affiliates
Under the terms of the Funds 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>
The Adviser agreed to reimburse the Fund for certain trustees' compensation
in connection with the July, 1995 increase in the number of trustees of the
Fund. This reimbursement was effective through December 31, 1996.
For the year ended November 30, 1997, the Fund recognized expenses of
approximately $41,900 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
For the year ended November 30, 1997, the Fund recognized expenses of
approximately $240,500 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 year ended November 30, 1997,
the Fund recognized expenses of approximately $643,900, representing ACCESS'
cost of providing transfer agency and shareholder services plus a profit.
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.
38
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997
- --------------------------------------------------------------------------------
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits under the retirement plan are payable for a ten-year period and
are based upon each trustee's years of service to the Trust. The maximum annual
benefit under the plan is equal to $2,500.
3. Capital Transactions
The Fund has outstanding three classes of shares of beneficial interest, 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. At November 30, 1997, capital
aggregated $757,169,936, $410,171,761 and $88,150,812 for Classes A, B, and C,
respectively. For the year ended November 30, 1997, transactions were as
follows:
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------------------------
Sales:
<S> <C> <C>
Class A........................................ 18,562,392 $ 210,055,169
Class B........................................ 10,089,692 114,185,577
Class C........................................ 4,036,766 45,697,832
------------ -------------
Total Sales...................................... 32,688,850 $ 369,938,578
============ =============
Dividend Reinvestment:
Class A........................................ 1,614,240 $ 18,155,813
Class B........................................ 745,441 8,385,472
Class C........................................ 175,898 1,978,396
------------ -------------
Total Dividend Reinvestments..................... 2,535,579 $ 28,519,681
============ =============
Repurchases:
Class A........................................ (7,837,512) $ (87,719,551)
Class B........................................ (2,749,344) (30,839,936)
Class C........................................ (723,574) (8,114,312)
------------ -------------
Total Repurchases................................ (11,310,430) $(126,673,799)
============ =============
</TABLE>
39
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997
- --------------------------------------------------------------------------------
At November 30, 1996, capital aggregated $618,328,415, $319,327,477, and
$48,740,316 for Classes A, B, and C, respectively. For the year ended November
30, 1996, transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
Sales:
<S> <C> <C>
Class A........................................... 15,132,127 $ 167,632,504
Class B........................................... 9,807,767 108,566,918
Class C........................................... 2,297,440 25,413,428
---------- -------------
Total Sales......................................... 27,237,334 $ 301,612,850
========== =============
Dividend Reinvestment:
Class A........................................... 1,410,020 $ 15,593,441
Class B........................................... 607,360 6,714,015
Class C........................................... 118,310 1,306,417
---------- -------------
Total Dividend Reinvestments........................ 2,135,690 $ 23,613,873
========== =============
Repurchases:
Class A........................................... (6,981,065) $ (77,174,763)
Class B........................................... (2,265,184) (25,018,771)
Class C........................................... (714,617) (7,892,647)
---------- -------------
Total Repurchases................................... (9,960,866) $(110,086,181)
========== =============
</TABLE>
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 five 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
arrangements, 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 year ended November 30, 1997, VKAC, as distributor for the Fund,
received net commissions on sales of the Fund's Class A shares of approximately
$656,500 and CDSC on the redeemed shares of Classes B and C of approximately
$551,300. Sales charges do not represent expenses of the Fund.
4. Investment Transactions
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $586,332,607 and $305,119,034,
respectively.
40
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997
- --------------------------------------------------------------------------------
5. Derivative Financial Instruments
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio and to manage the portfolio's effective yield, maturity and duration.
All of the Fund's portfolio holdings, including derivative instruments, are
marked to market each day with the change in value reflected in the unrealized
appreciation/depreciation on securities. Upon disposition, a realized gain or
loss is recognized accordingly, except when exercising an option contract or
taking delivery of a security underlying a futures contract. In these instances
the recognition of gain or loss is postponed until the disposal of the security
underlying the option or futures contract.
During the period the Fund invested in future contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Fund
generally invests in futures on U.S. Treasury Bonds and the Municipal Bond Index
and typically closes the contract prior to the delivery date. These contracts
are generally used to manage the portfolio's effective maturity and duration.
Upon entering into future contracts, the Fund maintains, in a segregated
account with its custodian, securities with a value equal to its obligation
under the futures contracts. During the period the futures contract is open,
payments are received from or made to the broker based upon changes in the value
of the contract (the variation margin).
Transactions in futures contracts for the year ended November 30, 1997,
were as follows:
<TABLE>
<CAPTION>
Contracts
- -------------------------------------------------------------------------------
<S> <C>
Outstanding at November 30, 1996...................................... 0
Futures Opened........................................................ 975
Futures Closed........................................................ (775)
----
Outstanding at November 30, 1997...................................... 200
====
</TABLE>
The futures contracts outstanding as of November 30, 1997, and the
description and unrealized depreciation are as follows:
<TABLE>
<CAPTION>
Unrealized
Contracts Depreciation
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Short Contracts:
U.S. Treasury Bond Futures
December 1997 -- (Current Notional Value of $119,188 per contract).................... 200 $(307,864)
=== =========
</TABLE>
6. 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 (collectively
the "Plans"). The Plans govern payments for the distribution of the Fund's
shares, ongoing shareholder services and maintenance of shareholder accounts.
Annual fees under the Plans of up to .25% for Class A net assets and 1.00%
each for Class B and Class C net assets are accrued daily. Included in these
fees for the year ended November 30, 1997, are payments to VKAC of approximately
$3,006,800.
41
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Trustees of
Van Kampen American Capital High Yield Municipal Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen American Capital High
Yield Municipal Fund (the "Fund"), a series of the Van Kampen American Capital
Tax-Exempt Trust, at November 30, 1997, and the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
November 30, 1997 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Chicago, Illinois
January 12, 1998
42
<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
Growth Fund
Pace Fund
Growth & Income
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 York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
MORGAN STANLEY
FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
U.S. Real Estate Fund
Value Fund
Worldwide High Income 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 weekdays from 7:00 a.m. to 7:00 p.m.
Central time at 1-800-341-2911 for Van Kampen American Capital and Morgan
Stanley funds.
43
<PAGE>
Van Kampen American Capital High Yield Municipal Fund
Board of Trustees
J. Miles Branagan
Richard M. DeMartini*
Linda Hutton Heagy
R. Craig Kennedy
Jack E. Nelson
Jerome L. Robinson
Phillip B. Rooney
Fernando Sisto
Wayne W. Whalen*--Chairman
Officers
Dennis J. McDonnell*
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
Tanya M. Loden*
Controller
Peter W. Hegel*
Alan T. Sachtleben*
Paul R. Wolkenberg*
Vice Presidents
Investment Adviser
Van Kampen American Capital
Asset Management, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
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 Company
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
Legal Counsel
Skadden, Arps, Slate,
Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Independent Accountants
Price Waterhouse LLP
200 E. Randolph Drive
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the Investment Company Act
of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1998 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 unless 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 pertinant data. After March 31, 1998, the report, if used with prospective
investors, must be accompanied by a quarterly performance update.
44
<PAGE>
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
- ------------------
Bulk Rate
U.S. Postage
PAID
VAN KAMPEN
AMERICAN CAPITAL
- ------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> HIGH YIELD MUNICIPAL FUND CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 1,225,421,636<F1>
<INVESTMENTS-AT-VALUE> 1,290,193,821<F1>
<RECEIVABLES> 51,092,146<F1>
<ASSETS-OTHER> 48,440<F1>
<OTHER-ITEMS-ASSETS> 73,883<F1>
<TOTAL-ASSETS> 1,341,408,290<F1>
<PAYABLE-FOR-SECURITIES> 38,450,937<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 6,204,758<F1>
<TOTAL-LIABILITIES> 44,655,695<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 757,169,936
<SHARES-COMMON-STOCK> 68,085,219
<SHARES-COMMON-PRIOR> 55,746,099
<ACCUMULATED-NII-CURRENT> 487,485<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (23,691,720)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 64,464,321<F1>
<NET-ASSETS> 779,884,248
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 78,709,930<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (13,147,338)<F1>
<NET-INVESTMENT-INCOME> 65,562,592<F1>
<REALIZED-GAINS-CURRENT> (1,648,737)<F1>
<APPREC-INCREASE-CURRENT> 31,524,325<F1>
<NET-CHANGE-FROM-OPS> 95,438,180<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (41,904,414)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,562,392
<NUMBER-OF-SHARES-REDEEMED> (7,837,512)
<SHARES-REINVESTED> 1,614,240
<NET-CHANGE-IN-ASSETS> 67,124,642
<ACCUMULATED-NII-PRIOR> 113,411<F1>
<ACCUMULATED-GAINS-PRIOR> (24,717,110)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 5,728,036<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 13,148,838<F1>
<AVERAGE-NET-ASSETS> 648,882,998
<PER-SHARE-NAV-BEGIN> 11.139
<PER-SHARE-NII> 0.729
<PER-SHARE-GAIN-APPREC> 0.312
<PER-SHARE-DIVIDEND> (0.726)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.454
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> HIGH YIELD MUNICIPAL FUND CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 1,225,421,636<F1>
<INVESTMENTS-AT-VALUE> 1,290,193,821<F1>
<RECEIVABLES> 51,092,146<F1>
<ASSETS-OTHER> 48,440<F1>
<OTHER-ITEMS-ASSETS> 73,883<F1>
<TOTAL-ASSETS> 1,341,408,290<F1>
<PAYABLE-FOR-SECURITIES> 38,450,937<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 6,204,758<F1>
<TOTAL-LIABILITIES> 44,655,695<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 410,171,761
<SHARES-COMMON-STOCK> 37,162,826
<SHARES-COMMON-PRIOR> 29,077,037
<ACCUMULATED-NII-CURRENT> 487,485<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (23,691,720)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 64,464,321<F1>
<NET-ASSETS> 425,577,694
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 78,709,930<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (13,147,338)<F1>
<NET-INVESTMENT-INCOME> 65,562,592<F1>
<REALIZED-GAINS-CURRENT> (1,648,737)<F1>
<APPREC-INCREASE-CURRENT> 31,524,325<F1>
<NET-CHANGE-FROM-OPS> 95,438,180<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (19,909,861)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,089,692
<NUMBER-OF-SHARES-REDEEMED> (2,749,344)
<SHARES-REINVESTED> 745,441
<NET-CHANGE-IN-ASSETS> 101,766,477
<ACCUMULATED-NII-PRIOR> 113,411<F1>
<ACCUMULATED-GAINS-PRIOR> (24,717,110)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 5,728,036<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 13,148,838<F1>
<AVERAGE-NET-ASSETS> 348,775,752
<PER-SHARE-NAV-BEGIN> 11.136
<PER-SHARE-NII> 0.645
<PER-SHARE-GAIN-APPREC> 0.313
<PER-SHARE-DIVIDEND> (0.642)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.452
<EXPENSE-RATIO> 1.71
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> HIGH YIELD MUNICIPAL FUND CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 1,225,421,636<F1>
<INVESTMENTS-AT-VALUE> 1,290,193,821<F1>
<RECEIVABLES> 51,092,146<F1>
<ASSETS-OTHER> 48,440<F1>
<OTHER-ITEMS-ASSETS> 73,883<F1>
<TOTAL-ASSETS> 1,341,408,290<F1>
<PAYABLE-FOR-SECURITIES> 38,450,937<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 6,204,758<F1>
<TOTAL-LIABILITIES> 44,655,695<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 88,150,812
<SHARES-COMMON-STOCK> 7,979,623
<SHARES-COMMON-PRIOR> 4,490,533
<ACCUMULATED-NII-CURRENT> 487,485<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (23,691,720)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 64,464,321<F1>
<NET-ASSETS> 91,290,653
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 78,709,930<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (13,147,338)<F1>
<NET-INVESTMENT-INCOME> 65,562,592<F1>
<REALIZED-GAINS-CURRENT> (1,648,737)<F1>
<APPREC-INCREASE-CURRENT> 31,524,325<F1>
<NET-CHANGE-FROM-OPS> 95,438,180<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (3,388,275)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,036,766
<NUMBER-OF-SHARES-REDEEMED> (723,574)
<SHARES-REINVESTED> 175,898
<NET-CHANGE-IN-ASSETS> 41,329,942
<ACCUMULATED-NII-PRIOR> 113,411<F1>
<ACCUMULATED-GAINS-PRIOR> (24,717,110)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 5,728,036<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 13,148,838<F1>
<AVERAGE-NET-ASSETS> 59,551,281
<PER-SHARE-NAV-BEGIN> 11.126
<PER-SHARE-NII> 0.644
<PER-SHARE-GAIN-APPREC> 0.312
<PER-SHARE-DIVIDEND> (0.642)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.440
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
