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VANGUARD(R)
CALIFORNIA TAX-EXEMPT FUNDS
ANNUAL REPORT
NOVEMBER 30, 1999
[SHIP GRAPHIC]
[MEMBERS OF THE VANGUARD GROUP]
VANGUARD CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
VANGUARD CALIFORNIA INSURED INTERMEDIATE-TERM TAX-EXEMPT FUND
VANGUARD CALIFORNIA INSURED LONG-TERM TAX-EXEMPT FUND
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DEAR SHAREHOLDERS:
Two roads diverged in a wood, and I--I took the one less traveled by, and that
has made all the difference.
I can think of no better words than those of Robert Frost to begin this special
letter to our shareholders, who have placed such extraordinary trust in me and
in Vanguard over the past quarter century. When the firm was founded 25 years
ago, we deliberately took a new road to managing a mutual fund enterprise.
Instead of having the funds controlled by an outside management company with its
own financial interests, the Vanguard funds--there were only 11 of them
then--would be controlled by their own shareholders and operate solely in their
financial interests. The outcome of our unprecedented decision was by no means
certain. We described it then as "The Vanguard Experiment."
Well, I guess it's fair to say it's an experiment no more. During the past 25
years, the assets we hold in stewardship for investors have grown from $1
billion to more than $500 billion, and I believe that our reputation for
integrity, fair-dealing, and sound investment principles is second to none in
this industry. Our staggering growth--which I never sought--has come in
important part as a result of the simple investment ideas and basic human values
that are the foundation of my personal philosophy. I have every confidence that
they will long endure at Vanguard, for they are the right ideas and right
values, unshakable and eternal.
While Emerson believed that "an institution is the lengthened shadow of one
man," Vanguard today is far greater than any individual. The Vanguard crew has
splendidly implemented and enthusiastically supported our founding ideas and
values, and deserves the credit for a vital role in forging our success over the
years. It is a dedicated crew of fine human beings, working together in an
organization that is well prepared to press on regardless long after I am gone.
Creating and leading this enterprise has been an exhilarating run. Through it
all, I've taken the kudos and the blows alike, enjoying every moment to the
fullest, and even getting a second chance at life with a heart transplant three
years ago. What more could a man ask?
While I shall no longer be serving on the Vanguard Board, I want to assure
you that I
will remain vigorous and active in a newly created Vanguard unit, researching
the financial markets, writing, and speaking. I'll continue to focus whatever
intellectual power and ethical strength I possess on my mission to assure that
mutual fund investors everywhere receive a fair shake. In the spirit of Robert
Frost:
But I have promises to keep, and miles to go before I sleep, and miles to go
before I sleep.
You have given me your loyalty and friendship over these long years,
and I deeply appreciate your thousands of letters of support. For my part, I
will continue to keep an eagle eye on your interests, for you deserve no less.
May God bless you all, always.
/S/
JCB
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CONTENTS
REPORT FROM THE CHAIRMAN .................1
THE MARKETS IN PERSPECTIVE ...............6
REPORT FROM THE ADVISER ..................8
FUND PROFILES ...........................10
PERFORMANCE SUMMARIES ...................14
FINANCIAL STATEMENTS ....................17
REPORT OF INDEPENDENT ACCOUNTANTS........42
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REPORT FROM THE CHAIRMAN
Concerns about higher inflation took hold of the bond market during the early
months of Vanguard California Tax-Exempt Funds' 1999 fiscal year and never
loosened their grip. The resulting decline in prices made the 12 months ended
November 30 a difficult period for fixed-income investors. In this environment,
the 2.8% return of the California Tax-Exempt Money Market Fund, the 0.3% return
of the California Insured Intermediate-Term Tax-Exempt Fund, and the -2.2%
return of the California Insured Long-Term Tax-Exempt Fund surpassed the returns
of their mutual fund peers.
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TOTAL RETURNS
FISCAL YEAR ENDED
NOVEMBER 30, 1999
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VANGUARD CALIFORNIA TAX-EXEMPT
MONEY MARKET FUND 2.8%
(SEC 7-Day Annualized Yield: 3.25%)
Average California Tax-Exempt
Money Market Fund* 2.4
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VANGUARD CALIFORNIA INSURED
INTERMEDIATE-TERM TAX-EXEMPT FUND 0.3%
Average California Intermediate
Municipal Debt Fund* -0.5
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VANGUARD CALIFORNIA INSURED LONG-TERM
TAX-EXEMPT FUND -2.2%
Average California Insured
Municipal Debt Fund* -3.8
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*Derived from data provided by Lipper Inc.
The table at right presents each fund's 12-month return along with those of
our average mutual fund competitors. The total return (capital change plus
reinvested dividends) of our Insured Intermediate-Term Tax-Exempt Fund is based
on a decrease in net asset value from $10.95 per share on November 30, 1998, to
$10.50 per share on November 30, 1999, and is adjusted for dividends totaling
$0.480 per share paid from net investment income. The total return (capital
change plus reinvested dividends) of our Insured Long-Term Tax-Exempt Fund is
based on a decrease in net asset value from $11.73 per share on November 30,
1998, to $10.81 per share on November 30, 1999, and is adjusted for dividends
totaling $0.563 per share paid from net investment income and a distribution of
$0.110 per share paid from net realized capital gains. The Money Market Fund's
net asset value remained at $1 per share, as was expected but not guaranteed. At
the end of the fiscal year, the Insured Long-Term Fund's yield was 5.14%, up
from 4.33% a year earlier; the Insured Intermediate-Term Fund's yield was 4.66%,
up from 3.87%; the Money Market Fund's yield was 3.25%, up from 2.74%.
For California residents, income earned by our funds is exempt from federal
and California state income taxes, but may be subject to local taxes and to the
alternative minimum tax.
FINANCIAL MARKETS IN REVIEW
The 12 months ended November 30 featured plenty of positive economic news, as
well as a good deal of apprehension over how long the good times can last
without touching off higher inflation. The U.S. economy expanded at an
inflation-adjusted rate of 4.3% from the third quarter of 1998 to the third
quarter of 1999, the nation's unemployment rate hovered near record-low levels,
and inflation barely stirred.
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However, the nagging concern that inflation would soon accelerate resulted
in a steady rise in interest rates during the fiscal year. The rate increase
merely restrained the stock market, which managed an impressive advance, but
dealt a heavy blow to bond prices, which suffered their worst year since 1994.
The Federal Reserve Board went along with the uptrend in interest rates, hiking
its target for short-term interest rates by 25 basis points on three separate
occasions in an attempt to head off inflation it believes could result from
strong growth and tight labor markets.
Technology companies propelled the U.S. stock market higher, and the
Standard & Poor's 500 Index, which is dominated by large-capitalization stocks,
returned 20.9%--the index's fifth straight year of returns higher than 20%. The
broad market, as represented by the Wilshire 5000 Total Market Index, advanced
an even higher 22.4%, but a large portion of the gain was concentrated in a
relatively small number of stocks. Many value-oriented stocks were left far
behind.
The yield of the 30-year U.S. Treasury bond ended the fiscal year at 6.29%,
up 123 basis points (1.23 percentage points) from its starting point of 5.06% on
November 30, 1998. The yield of 3-month U.S. Treasury bills climbed to 5.30% on
balance, from 4.48%. Yields of high-quality, long-term municipal bonds climbed
nearly a full percentage point, from 4.89% when the period began to 5.87% on
November 30, 1999. Yields of top-grade (MIG-1) 3-month notes, which react more
quickly to changes in short-term interest rates, rose from 2.95% to 3.80%.
The Lehman Brothers 10 Year Municipal Bond Index, a good measure of the
long-term municipal market, recorded a return of -0.4% during our fiscal year.
Long-term bonds suffer more when interest rates are rising, just as they benefit
more from a decline in interest rates.
Municipal bonds performed well early in the 1999 fiscal year as new
issuance dropped off from 1998's near-record levels and yields remained high
relative to Treasuries. But their relative performance faltered later in the
period because many investors were attracted to corporate bonds.
At the end of the fiscal year, the spread between yields of long-term
Treasuries and long-term munis stood at just 42 basis points (0.42 percentage
point). This is an extremely narrow gap, given that the income from Treasuries
is subject to federal income taxes (but not state taxes), while income from a
state-specific municipal bond fund is fully exempt from federal and state taxes.
On November 30, the yield of a top-quality, long-term municipal bond was equal
to about 93% of the yield of the 30-year U.S. Treasury bond. Historically, the
ratio has been about 84%.
FISCAL 1999 PERFORMANCE OVERVIEW
The -2.2% return of Vanguard California Insured Long-Term Tax-Exempt Fund
outpaced the -3.8% return of the average California insured municipal bond fund,
which has lower average credit quality than our fund but a similar average
maturity. Our return, however, was 1.1 percentage points behind that of the
unmanaged Lehman Municipal Bond Index. Though our fund earned an income return
of 4.8%, a price decline of -7.0% engendered by the rise in interest rates
pulled our total return into negative territory for the year. Our Insured
Intermediate-Term Fund's return of 0.3%, which topped the -0.5% return of its
average peer, consisted of a price decline of -4.1% and an income return of
4.4%. (The Performance Summaries beginning on page 14 present a breakdown of our
funds' returns into their income and capital components dating to each fund's
inception.) Our performance advantage over our average peer was primarily the
result of our lower
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costs. The Lehman index, which includes municipal bonds from across the country,
is a notoriously tough competitor because it does not incur the "real world"
operating expenses and transaction costs that all mutual funds must bear. The
index also has a slightly lower average duration than our Long-Term Tax-Exempt
Fund, making the index less sensitive to interest rate changes--an advantage
during fiscal 1999.
The Tax-Exempt Money Market Fund provided a total return of 2.8%, ahead of
the 2.4% return of its average peer.
Though the rise in interest rates during the past 12 months was to blame
for the poor bond returns, a slide in rates just one year ago provided a boost
to bond prices and returns. The simple lesson is that interest rates rise and
fall, sometimes gradually and sometimes sharply. All bond investors should know
that over long periods, the ups and downs in interest rates tend to offset each
other, leaving a bond fund's interest income as the chief source of return. And
considering that interest paid on munis today is considerably higher than a year
ago, it would seem that tax-exempt securities have become more attractive. At a
yield of about 5.1% compounded annually, money doubles in a little more than 14
years, or more than two years sooner than at 4.3%.
THE MUNICIPAL BOND TAX ADVANTAGE
For California residents, the income earned by our funds is exempt from federal,
state, and, in most cases, local taxes. At current yields, investors in
long-term municipal bonds who are taxed at the highest marginal tax rate (39.6%)
can earn an astounding 55% more after-tax income than they could in comparable
long-term U.S. Treasury bonds, and investors in intermediate-term municipal
bonds can earn 38% more after-tax income than in comparable Treasury bonds.
Tax-exempt money market securities also offer an advantage over taxable
investments with similar maturities. On November 30, the yield of MIG-1 notes
was 19% higher than the after-tax yield of 90-day U.S. Treasury bills. For
California taxpayers subject to the highest tax rates, a yield of 5.9% on a
tax-exempt long-term bond is the equivalent of a 9.8% taxable yield. For a
tax-exempt short-term yield of 3.8%, the taxable equivalent is 6.3%.
These remarkable advantages are illustrated in the table below, which
compares the nnual net income earned on U.S. Treasury and tax-exempt securities
as of November 30, 1999, assuming a $100,000 investment. Our illustration
assumes current yields (as of November 30, 1999) of 6.3% for long-term
Treasuries, 6.2% for intermediate-term Treasuries, 5.3% for U.S. Treasury bills,
5.9% for long-term municipals, 5.1% for intermediate-term municipals, and 3.8%
for short-term municipals.
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ILLUSTRATION OF INCOME FROM
A HYPOTHETICAL $100,000 INVESTMENT
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SHORT-TERM INTERMEDIATE-TERM LONG-TERM
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Taxable gross income $5,300 $6,200 $6,300
Less taxes (39.6%) (2,100) (2,500) (2,500)
Net after-tax income 3,200 3,700 3,800
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Tax-exempt income $3,800 $5,100 $5,900
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Tax-exempt income
advantage $ 600 $1,400 $2,100
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Percentage advantage 19% 38% 55%
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The tax adjustment assumes a typical itemized tax return based on a federal tax
rate of 39.6%. Income from U.S. Treasuries is not subject to state taxes; local
taxes are not considered. The illustration is not intended to represent future
results.
There is an important distinction between state-specific municipal bond
funds and U.S. Treasury bonds. Treasury securities are backed by the full faith
and credit of the U.S. government and therefore have unmatched credit quality.
Also, municipal
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bond funds that confine their investments to a single state lack the
diversification that comes from spreading investments among various states,
which may be subject to different economic conditions and different risks.
Private insurance on the bonds in our Long-Term Tax-Exempt and Intermediate-Term
Tax-Exempt Funds, however, helps to reduce these additional credit risks. Though
the insurance does not provide protection against fluctuations in the fund's
value, it guarantees full payment of interest and principal for our bond
holdings.
This insurance, however, is not generally available for short-term
securities. As a result, our investment adviser, Vanguard's Fixed Income Group,
is responsible for preserving the principal value of the Tax-Exempt Money Market
Fund. Money market mutual funds are not guaranteed by the Federal Deposit
Insurance Corporation, which insures bank accounts and certificates of deposit.
LONG-TERM PERFORMANCE OVERVIEW
The table below presents the longer-term performance of each of our funds, along
with those of their average peer mutual funds. It also illustrates the growth of
hypothetical $10,000 investments in each of our funds and in similar funds over
the past decade. As you can see, the Vanguard California Tax-Exempt Funds have
established fine records versus their competitors. In the case of the Insured
Long-Term Tax-Exempt Fund, our advantage has amounted to $1,278, or about 13% of
the original investment, over the past decade.
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TOTAL RETURNS
TEN YEARS ENDED NOVEMBER 30, 1999
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FINAL VALUE OF
AVERAGE A $10,000
ANNUAL RETURN INITIAL INVESTMENT*
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AVERAGE AVERAGE
CALIFORNIA VANGUARD COMPETING VANGUARD COMPETING VANGUARD
TAX-EXEMPT FUND FUND FUND FUND FUND ADVANTAGE
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Money Market 3.4% 3.1% $14,008 $13,538 $ 470
Insured Intermediate-
Term** 5.8 4.8 13,803 13,120 683
Insured Long-Term 7.0 6.2 19,596 18,318 1,278
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*Assuming reinvestment of all income dividends and capital gains distributions.
**Annualized returns since fund's inception on March 4, 1994.
A large part of our performance edge versus competitors over nearly a
decade can be explained by the same factor that explained our outperformance
during the 1999 fiscal year: cost. Our funds have expense ratios (annual
expenses as a percentage of average net assets) of about 0.20%--far below the
1.19% charged by the average insured long-term California municipal fund, the
0.78% charged by the average intermediate-term California municipal fund, and
the 0.63% charged by the average California tax-exempt money market fund.
Because fund operating costs are deducted directly from the income earned by a
bond fund, our funds have a significant edge in their quest to provide returns
that are superior to those of similar funds. The combination of our cost
advantage and skillful management by Vanguard's Fixed Income Group has benefited
our shareholders over the past decade, and we expect it to continue to do so in
the future.
IN SUMMARY
During a period when the stock market seems invulnerable, it's easy to overlook
the merits of bonds. However, bond funds must not be judged by how well their
returns stack up against those of stock funds in a particular period, but by
what they can add to a balanced investment program, namely, current income and
relative stability. Vanguard California
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Tax-Exempt Funds can provide a high level of after-tax income, particularly for
those in high income tax brackets, and especially compared with the income
available from the stock market, whose average dividend yield is less than 1.5%.
And because the performance of bonds often differs from that of equities, a
commitment to bonds is a useful diversifier that can help smooth the
sometimes-volatile returns of stocks.
We advise investors to hold balanced portfolios of stock funds, bond funds,
and short-term reserves in proportions suitable to their own investment goals,
time horizon, and tolerance for risk. Once you have such a plan in place, we
advise you to stick with it through good times and bad.
/s/
John J. Brennan
Chairman and Chief Executive Officer
December 18, 1999
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A NOTE OF THANKS TO OUR FOUNDER
================================================================================
As you may have read on the inside cover of our report, our founder, John C.
Bogle, is retiring December 31, 1999, as Senior Chairman of our Board after
nearly 25 years of devoted service to Vanguard and our shareholders. Vanguard
investors have Jack to thank for creating a truly mutual mutual fund company
that operates solely in the interest of its fund shareholders. And mutual fund
investors everywhere have benefited from his energetic efforts to improve this
industry. Finally, on a personal note, I am forever grateful to Jack for giving
me the opportunity to join this great company in 1982.
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THE MARKETS IN PERSPECTIVE
YEAR ENDED NOVEMBER 30, 1999
Strong economic expansion sent global stock markets charging higher but dealt a
blow to bond prices during the fiscal year ended November 30, 1999. The
powerhouse U.S. economy led the global growth parade, joined by Asian, European,
and Latin American economies that had slumped or stagnated in 1998.
Interest rates rose sharply as investors and monetary policymakers grew
increasingly worried that such strong economic growth would cause inflation to
surge. Although the rise in rates caused bond prices to fall, it only tempered
the stock market's advance.
U.S. STOCK MARKETS
Against the backdrop of a booming economy, U.S. companies reported solid
increases in earnings during the fiscal year. The nation's economic output
increased at an inflation-adjusted rate of 4.3%--a very rapid pace for such a
large, mature economy. Consumer spending, which accounts for roughly two-thirds
of economic activity, powered the expansion. Americans spent freely, encouraged
by rising wealth from a long bull market, a hot job market, and climbing
incomes.
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AVERAGE ANNUAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
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1 YEAR 3 YEARS 5 YEARS
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STOCKS
S&P 500 Index 20.9% 24.3% 27.5%
Russell 2000 Index 15.7 10.1 14.8
Wilshire 5000 Index 22.4 22.6 25.6
MSCI EAFE Index 21.4 12.3 11.4
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BONDS
Lehman Aggregate Bond Index 0.0% 5.6% 8.0%
Lehman 10 Year Municipal
Bond Index -0.4 4.8 7.6
Salomon Smith Barney 3-Month
U.S. Treasury Bill Index 4.7 5.0 5.2
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OTHER
Consumer Price Index 2.6% 2.0% 2.4%
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The stock market, as measured by the Wilshire 5000 Index, gained 22.4%
overall. For a change, mid-capitalization and small-cap stocks outpaced their
large-cap brethren. The large-cap S&P 500 Index, which accounts for more than
75% of the U.S. stock market's total value, gained 20.9% during the year; the
rest of the market (as measured by the Wilshire 4500 Index) gained 29.0%.
Increasingly optimistic expectations for future corporate earnings more
than offset the negative effects of rising interest rates during fiscal 1999.
Higher rates often hurt stock prices because many investors use current rates to
discount the value of a stock's projected earnings and dividends. The higher the
interest rate, the more future earnings are discounted, and the less investors
will pay for the stock now.
Because of a remarkable surge in prices for technology stocks, growth
stocks again outperformed value stocks during the past year. Within the S&P 500
Index, growth stocks--characterized by high prices in relation to earnings, book
value, and dividends--recorded a 28.5% return, 16 percentage points above the
12.5% return for value stocks. The disparity was even greater in the small-cap
segment of the market; growth stocks within the small-cap Russell 2000 Index
gained 32.7%, while value stocks posted a -1.4% return.
Technology stocks within the S&P 500 Index gained 66%. QUALCOMM posted an
eye-popping 1,200% return, and a number of computer-related stocks doubled or
tripled in
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price, including Sun Microsystems (+257%), Apple Computer (+206%),
Oracle (+197%), Gateway (+172%), Texas Instruments (+152%), and Cisco Systems
(+136%).
Big gains for wireless telecommunications and cable-TV stocks powered the
utilities category to an overall gain of nearly 28%. The producer-durables
group, which includes some technology-related manufacturers as well as aircraft
and equipment makers, gained 27%. Oil exploration and service firms in the
"other energy" category posted a 26% return, assisted by a jump in prices for
oil and natural gas.
The year's worst-performing sector was consumer staples (down nearly -12%).
This group suffered as severe price competition and a stronger dollar in Europe
crimped profits for many food and beverage makers, and the specter of litigation
costs caused tobacco stocks to slump. The auto & transportation group declined
- -2% overall, with airline stocks hurt by rising prices for jet fuel.
U.S. BOND MARKETS
Stock investors may cheer a fast-growing economy, but rapid growth tends to
worry bond investors. Early in the fiscal year, inflation seemed
dormant--plunging oil prices had taken commodity price indexes to the lowest
point in a quarter-century. But as the world economy began hitting on all
cylinders, the bond market feared that a minuscule U.S. unemployment rate,
rising commodity prices, and capacity constraints would cause inflation to
accelerate. Although oil prices were up nearly 150% during the fiscal year, the
overall price level, as measured by the Consumer Price Index, increased by a
moderate 2.6%.
The Federal Reserve Board, anticipating price pressures, abandoned its bias
toward easier monetary policy, and by mid-year was boosting interest rates to
try to throttle back the economic engines. The bond market was ahead of the
Fed--interest rates began rising sharply in February. By fiscal year-end, the
yield of 30-year U.S. Treasury bonds had risen 1.23 percentage points (123 basis
points) to 6.29%. The 10-year Treasury note's yield rose 148 basis points, from
4.71% to 6.19%. The rise in short-term rates was more restrained; 3-month
Treasury bill yields were up 82 basis points to 5.30% at fiscal year-end.
Bond prices fall when interest rates rise, and long-term bond prices are
most sensitive to changing rates. Long-term Treasury bond prices fell by more
than -13%, resulting in total returns of -8%. The Lehman Aggregate Bond Index, a
measure of the overall taxable bond market, which has an intermediate-term
structure on average, broke even on the year, as interest income of 6.2% was
offset by price declines. The damage to municipal bond prices was not as severe
as for Treasuries, and the intermediate-term Lehman 7 Year Municipal Bond Index
recorded a price decline of -3.7% and a total return of 0.5%.
INTERNATIONAL STOCK MARKETS
International markets had a strong year, with European stocks gaining 21.9% in
local-currency terms and Pacific-region stocks advancing 30.2%. However,
currency effects significantly altered the returns to U.S.-based investors. The
U.S. dollar rose in value against most European currencies but fell sharply
against the Japanese yen. As a result, returns from Europe plunged to 9.8% in
dollar terms while returns from the Pacific soared to 51.0%.
Overall, U.S. investors earned 21.4% in the major developed international
markets, as measured by the Morgan Stanley Capital International Europe,
Australasia, Far East (EAFE) Index. The bull markets in most nations stemmed
from renewed optimism that economic growth would continue to accelerate. Japan
and the rest of Asia, which were hit hardest by currency and economic crises in
1997 and 1998, saw the biggest stock gains.
Emerging markets, as measured by the Select Emerging Markets Free Index,
gained 37.1% in U.S.-dollar terms, as investors regained an appetite for the
considerable risks of smaller markets.
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REPORT FROM THE ADVISER
Interest rates rose during the 12 months ended November 30, 1999, the fiscal
year for the Vanguard California Tax-Exempt Funds. The rise was principally due
to investors' fears about the impact of the strong economy and the low
unemployment rate on inflation. In the past, these factors have caused inflation
to increase, and many investors expect that history will repeat itself at some
point. So far, employment costs and consumer price indexes have not risen
substantially, but each number is being closely watched for any upsurge. A
desire to head off inflation and concerns about the booming stock market led the
Federal Reserve Board to increase interest rates three times during the fiscal
year, raising the federal funds rate by a total of 0.75 percentage point.
As you might expect, yields of insured long-term municipal bonds rose along
with yields on U.S. Treasury bonds during fiscal 1999. During the first half of
the year, insured long-term municipals performed better than Treasury
securities; municipal yields increased by less than half as much as those for
long-term Treasuries. But the relative performance flip-flopped during the
second half, when yields on long-term municipals increased almost 11/2 times as
much as those on long Treasuries. Over the full fiscal year, the yield on the
benchmark 30-year U.S. Treasury bond rose by 1.23 percentage points (from 5.06%
to 6.29%), while the yield of a similar AAA-rated municipal bond rose by nearly
1 percentage point (from 4.89% to 5.87%).
Two factors account for the first-half outperformance of insured municipal
bonds and for their later underperformance. First, as the fiscal year began in
December 1998, insured municipal bonds were especially attractive to investors,
because the AAA-rated insured municipal's tax-exempt yield of 4.9% was equal to
97% of the yield of a 30-year Treasury. For an investor in the top marginal tax
bracket of 39.6%, that 4.9% yield was equivalent to an 8.1% yield on a taxable
bond. By May 31, the middle of our fiscal year, the long-term insured
municipal's yield was about 89% as high as the 30-year Treasury's yield, making
insured municipal bonds somewhat less alluring. The second factor was that in
the second half of the fiscal year, corporate bond yields had become quite
attractive, providing stiff competition for the bond investor's dollar. During
this period the corporate bond market encountered the same type of supply
imbalance that the municipal market had seen in fiscal 1998, as corporations
rushed bond issues to market to complete their financing before the end of the
century. The result was attractively high yields on corporate debt, which
enticed some large institutional buyers away from the municipal market. At
year-end, yields on long-term insured municipal bonds had risen in relation to
those on Treasuries, and 30-year munis offered yields equal to 94% of yields on
30-year Treasuries.
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INVESTMENT PHILOSOPHY
The adviser believes that each fund, while operating within stated maturity and
stringent quality targets, can achieve a high level of current income that is
exempt from federal and California income taxes by investing in insured and
high-quality uninsured securities issued by California state, county, and
municipal governments.
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The municipal market was aided by the fact that the supply of new issues
was lower during 1999 than in 1998. Through November, issuance of municipal
securities in 1999 amounted to $207 billion, down more than 20% from the same
period in 1998. The main reason for the decline was a 53% decrease in the
issuance of refunding bonds, whose proceeds are used to pay off older,
higher-coupon bonds. Because of the rise
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in interest rates, refunding issues generally did not make fiscal sense during
1999. As the economy continued to expand, the supply of bonds issued for new
projects was unchanged from 1998.
THE INSURED INTERMEDIATE-TERM AND INSURED LONG-TERM TAX-EXEMPT FUNDS
As you know, when interest rates rise, bond prices fall. For bond funds, the
magnitude of the price decline rises along with the average maturity of the
fund. Our Insured Intermediate-Term Tax-Exempt Fund's price declined -4.1%,
offsetting most of the 4.4% interest income earned during fiscal 1999 and
leaving the fund's total return barely positive at 0.3%. The Insured Long-Term
Tax-Exempt Fund returned -2.2%, as the price decline of -7.0% outweighed the
fund's 4.8% in interest income. A negative return is not good news, but our
Long-Term Tax-Exempt Fund's result was solidly better than the total return of
- -3.8% for our average peer.
Across all bond maturities, we seek to find the best values for each level
of interest rate risk. This strategy helped in a year of rising interest rates.
Our focus on keeping expenses low is helpful at all times and is critical in
delivering above-average tax-exempt income, since expenses are deducted directly
from a bond fund's interest income. Our emphasis on keeping the funds invested
in high-quality securities benefits our shareholders by reducing credit risk.
The overall effect of combining low costs and high quality is to provide both
superior yields and low credit risk.
THE TAX-EXEMPT MONEY MARKET FUND
Our Tax-Exempt Money Market Fund returned 2.8% during fiscal 1999, beating the
2.4% return of the average California tax-exempt money market fund. The rise in
short-term rates during the period was slightly less pronounced than the
increase for long-term bonds. After an increase of 19 basis points during the
first half of the fiscal year, the yield on 1-year municipals rose 69 basis
points during the second half, which is traditionally a time of heavy borrowing
by municipalities. The benchmark 1-year MIG-1 note closed the fiscal year with a
yield of 3.87%, up 88 basis points from the 2.99% yield a year earlier. Yields
on the 1-year U.S. Treasury bill, meanwhile, rose by 118 basis points for the
year to 5.68%, after a second-half jump of 71 basis points. On balance,
short-term tax-exempt securities became slightly more attractive relative to
Treasury securities: The ratio of the yield on 1-year MIG-1 notes to that on
1-year Treasury bills rose from 66.4% to 68.1% during the year.
As we begin fiscal year 2000, the Tax-Exempt Money Market Fund is
positioned to take advantage of its dual strengths of conservative,
quality-oriented management and low operating expenses. We believe these
strengths will continue to generate superior risk-adjusted returns for our
shareholders.
Ian A. MacKinnon, Managing Director
Christopher M. Ryon, Principal
Pamela Wisehaupt Tynan, Principal
John M. Carbone, Principal
Daniel S. Solender, Manager
Vanguard Fixed Income Group
December 13, 1999
9
<PAGE>
FUND PROFILE
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
This Profile provides a snapshot of the fund's characteristics as of November
30, 1999. Key elements of this Profile are defined on page 11.
FINANCIAL ATTRIBUTES
- -------------------------------------------------
Yield 3.3%
Average Maturity 66 days
Average Quality MIG-1
Expense Ratio 0.20%
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -------------------------------------------------
MIG-1/SP-1+ 60.2%
A-1/P-1 37.8
AAA/AA 2.0
A 0.0
- -------------------------------------------------
Total 100.0%
10
<PAGE>
AVERAGE COUPON. The average interest rate paid on the securities held by a fund.
It is expressed as a percentage of face value.
AVERAGE DURATION. An estimate of how much a bond fund's share price will
fluctuate in response to a change in interest rates. To see how the price could
shift, multiply the fund's duration by the change in rates. If interest rates
rise by one percentage point, the share price of a fund with an average duration
of five years would decline by about 5%. If rates decrease by a percentage
point, the fund's share price would rise by 5%.
AVERAGE MATURITY. The average length of time until bonds held by a fund reach
maturity (or are called) and are repaid. In general, the longer the average
maturity, the more a fund's share price will fluctuate in response to changes in
market interest rates.
AVERAGE QUALITY. An indicator of credit risk, this figure is the average of the
ratings assigned to a fund's securities holdings by credit-rating agencies. The
agencies make their judgment after appraising an issuer's ability to meet its
obligations. Quality is graded on a scale, with Aaa or AAA indicating the most
creditworthy bond issuers and A-1 or MIG-1 indicating the most creditworthy
issuers of money market securities.
BETA. A measure of the magnitude of a fund's past share-price fluctuations in
relation to the ups and downs of the overall market (or appropriate market
index). The market (or index) is assigned a beta of 1.00, so a fund with a beta
of 1.20 would have seen its share price rise or fall by 12% when the overall
market rose or fell by 10%.
CASH RESERVES. The percentage of a fund's net assets invested in "cash
equivalents"--highly liquid, short-term, interest-bearing securities. This
figure does not include cash invested in futures contracts to simulate bond
investment.
DISTRIBUTION BY CREDIT QUALITY. This breakdown of a fund's securities by credit
rating can help in gauging the risk that returns could be affected by defaults
or other credit problems.
DISTRIBUTION BY MATURITY. An indicator of interest-rate risk. In general, the
higher the concentration of longer-maturity issues, the more a fund's share
price will fluctuate in response to changes in interest rates.
EXPENSE RATIO. The percentage of a fund's average net assets used to pay its
annual administrative and advisory expenses. These expenses directly reduce
returns to investors.
INVESTMENT FOCUS. This grid indicates the focus of a fund in terms of two
attributes: average maturity (short, medium, or long) and average credit quality
(high, medium, or low).
NUMBER OF ISSUES. An indicator of diversification. The more separate issues a
fund holds, the less susceptible it is to a price decline stemming from the
problems of a particular issue.
R-SQUARED. A measure of how much of a fund's past returns can be explained by
the returns from the overall market (or its benchmark index). If a fund's total
return were precisely synchronized with the overall market's return, its
R-squared would be 1.00. If a fund's returns bore no relationship to the
market's returns, its R-squared would be 0.
YIELD. A snapshot of a fund's interest income. The yield, expressed as a
percentage of the fund's net asset value, is based on income earned over the
past 30 days (7 days for money market funds) and is annualized, or projected
forward for the coming year.
YIELD TO MATURITY. The rate of return an investor would receive if the
securities held by a fund were held to their maturity dates.
11
<PAGE>
FUND PROFILE
CALIFORNIA INSURED INTERMEDIATE-TERM TAX-EXEMPT FUND
This Profile provides a snapshot of the fund's characteristics as of November
30, 1999, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 11.
FINANCIAL ATTRIBUTES
- ----------------------------------------------------------
CALIFORNIA INSURED LEHMAN
INTERMEDIATE-TERM INDEX*
- ----------------------------------------------------------
Number of Issues 354 52,144
Yield 4.7% --
Yield to Maturity 4.8% --
Average Coupon 5.3% 5.5%
Average Maturity 8.1 years 13.0 years
Average Quality AAA AA+
Average Duration 6.2 years 7.5 years
Expense Ratio 0.17% --
Cash Reserves 0.7% --
*Lehman Municipal Bond Index.
INVESTMENT FOCUS
- ---------------------------------------
[grid]
AVERAGE MATURITY MEDIUM
CREDIT QUALITY HIGH
VOLATILITY MEASURES
- ----------------------------------------------------------
CALIFORNIA INSURED LEHMAN
INTERMEDIATE-TERM INDEX*
- ----------------------------------------------------------
R-Squared 0.93 1.00
Beta 0.86 1.00
*Lehman Municipal Bond Index.
DISTRIBUTION BY CREDIT QUALITY
(% OF PORTFOLIO)
- ---------------------------------------
AAA 98.3%
AA 1.7
A 0.0
BBB 0.0
BB 0.0
B 0.0
- ---------------------------------------
Total 100.0%
DISTRIBUTION BY MATURITY
(% OF PORTFOLIO)
- ---------------------------------------
Under 1 Year 8.0%
1-5 Years 16.4
5-10 Years 42.5
10-20 Years 32.8
20-30 Years 0.3
Over 30 Years 0.0
- ---------------------------------------
Total 100.0%
12
<PAGE>
FUND PROFILE
CALIFORNIA INSURED LONG-TERM TAX-EXEMPT FUND
This Profile provides a snapshot of the fund's characteristics as of November
30, 1999, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 11.
FINANCIAL ATTRIBUTES
- ---------------------------------------------------------
CALIFORNIA INSURED LEHMAN
LONG-TERM INDEX*
- ---------------------------------------------------------
Number of Issues 251 52,144
Yield 5.1% --
Yield to Maturity 5.4% --
Average Coupon 5.3% 5.5%
Average Maturity 14.5 years 13.0 years
Average Quality AAA AA+
Average Duration 9.1 years 7.5 years
Expense Ratio 0.18% --
Cash Reserves 0.0% --
*Lehman Municipal Bond Index.
INVESTMENT FOCUS
- ---------------------------------------
[grid]
AVERAGE MATURITY LONG
CREDIT QUALITY HIGH
VOLATILITY MEASURES
- ---------------------------------------------------------
CALIFORNIA INSURED LEHMAN
LONG-TERM INDEX*
- ---------------------------------------------------------
R-Squared 0.97 1.00
Beta 1.23 1.00
*Lehman Municipal Bond Index.
DISTRIBUTION BY CREDIT QUALITY
(% OF PORTFOLIO)
- ---------------------------------------
AAA 96.6%
AA 3.4
A 0.0
BBB 0.0
BB 0.0
B 0.0
- ---------------------------------------
Total 100.0%
DISTRIBUTION BY MATURITY
(% OF PORTFOLIO)
- ---------------------------------------
Under 1 Year 3.8%
1-5 Years 10.1
5-10 Years 15.5
10-20 Years 46.4
20-30 Years 23.6
Over 30 Years 0.6
- ---------------------------------------
Total 100.0%
13
<PAGE>
PERFORMANCE SUMMARY
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note that annual
returns can fluctuate widely. An investment in a money market fund is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the fund seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in the
fund.
TOTAL INVESTMENT RETURNS: JUNE 1, 1987-NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
CALIFORNIA TAX-EXEMPT AVERAGE
MONEY MARKET FUND FUND*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- --------------------------------------------------------------------------------
1987 0.0% 2.2% 2.2% 2.1%
1988 0.0 5.1 5.1 4.8
1989 0.0 6.2 6.2 5.8
1990 0.0 5.6 5.6 5.3
1991 0.0 4.4 4.4 4.2
1992 0.0 3.0 3.0 2.7
1993 0.0 2.4 2.4 2.0
1994 0.0% 2.6% 2.6% 2.3%
1995 0.0 3.7 3.7 3.3
1996 0.0 3.3 3.3 2.9
1997 0.0 3.4 3.4 3.0
1998 0.0 3.1 3.1 2.8
1999 0.0 2.8 2.8 2.4
SEC 7-Day Annualized Yield (11/30/1999): 3.25%
- --------------------------------------------------------------------------------
*Average California Tax-Exempt Money Market Fund.
See Financial Highlights table on page 37 for dividend information for the past
five years.
CUMULATIVE PERFORMANCE: NOVEMBER 30, 1989-NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
198911 10000 10000
199002 10139 10129
199005 10280 10266
199008 10419 10396
199011 10559 10530
199102 10687 10650
199105 10806 10759
199108 10916 10860
199111 11028 10968
199202 11125 11054
199205 11212 11134
199208 11283 11198
199211 11356 11262
199302 11425 11322
199305 11493 11380
199308 11561 11435
199311 11629 11492
199402 11693 11548
199405 11763 11609
199408 11839 11673
199411 11931 11751
199502 12040 11848
199505 12156 11954
199508 12262 12045
199511 12372 12138
199602 12476 12234
199605 12577 12324
199608 12678 12405
199611 12783 12491
199702 12886 12583
199705 12996 12681
199708 13106 12772
199711 13218 12866
199802 13323 12960
199805 13435 13060
199808 13533 13143
199811 13628 13221
199902 13715 13299
199905 13812 13386
199908 13907 13468
199911 14008 13538
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
-------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- --------------------------------------------------------------------------------
California Tax-Exempt
Money Market Fund 2.79% 3.26% 3.43% $14,008
Average California Tax-Exempt
Money Market Fund* 2.40 2.87 3.08 13,538
*Derived from data provided by Lipper Inc.
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1999*
- --------------------------------------------------------------------------------
10 YEARS
INCEPTION ----------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------
California Tax-Exempt
Money Market Fund 6/1/1987 2.75% 3.27% 0.00% 3.48% 3.48%
- --------------------------------------------------------------------------------
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
14
<PAGE>
PERFORMANCE SUMMARY
CALIFORNIA INSURED INTERMEDIATE-TERM TAX-EXEMPT FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note, too, that both
share price and return can fluctuate widely. An investor's shares, when
redeemed, could be worth more or less than their original cost.
TOTAL INVESTMENT RETURNS: MARCH 4, 1994-NOVEMBER 30, 1999
- ---------------------------------------------------------
CALIFORNIA INSURED INTERMEDIATE-
TERM TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ---------------------------------------------------
1994 -3.6% 3.4% -0.2% -1.1%
1995 8.3 5.6 13.9 15.2
1996 1.3 5.1 6.4 5.2
- ---------------------------------------------------
CALIFORNIA INSURED INTERMEDIATE-
TERM TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ---------------------------------------------------
1997 1.0% 4.9% 5.9% 6.0%
1998 2.7 4.8 7.5 7.3
1999 -4.1 4.4 0.3 0.5
- ---------------------------------------------------
*Lehman 7 Year Municipal Bond Index.
See Financial Highlights table on page 38 for
dividend and capital gains information for the
past five years.
CUMULATIVE PERFORMANCE: MARCH 4, 1994-NOVEMBER 30, 1999
199405 10142 10039 10059
199408 10313 10189 10236
199411 9981 9813 9889
199502 10538 10349 10458
199505 10895 10730 10876
199508 11044 10879 11134
199511 11367 11171 11397
199602 11539 11295 11531
199605 11436 11180 11379
199608 11668 11352 11568
199611 12095 11731 11994
199702 12175 11779 12101
199705 12314 11909 12156
199708 12603 12180 12468
199711 12810 12361 12719
199802 13113 12639 13022
199805 13216 12761 13136
199808 13528 13007 13418
199811 13766 13191 13647
199902 13902 13291 13798
199905 13865 13283 13756
199908 13711 13096 13619
199911 13803 13120 13712
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
--------------------------------
FINAL VALUE OF
SINCE A $10,000
1 YEAR 5 YEARS INCEPTION INVESTMENT
- --------------------------------------------------------------------------------
California Insured
Intermediate-Term Tax-Exempt Fund 0.27% 6.70% 5.77% $13,803
Average California Intermediate
Municipal Fund* -0.54 5.98 4.84 13,120
Lehman 7 Year Municipal Bond Index 0.47 6.75 5.65 13,712
- --------------------------------------------------------------------------------
*Derived from data provided by Lipper Inc.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1999*
- -----------------------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION --------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -----------------------------------------------------------------------------------------------
California Insured
Intermediate-Term Tax-Exempt Fund 3/4/1994 0.16% 6.13% 1.00% 4.90% 5.90%
- -----------------------------------------------------------------------------------------------
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
</TABLE>
15
<PAGE>
PERFORMANCE SUMMARY
CALIFORNIA INSURED LONG-TERM TAX-EXEMPT FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note, too, that both
share price and return can fluctuate widely. An investor's shares, when
redeemed, could be worth more or less than their original cost.
TOTAL INVESTMENT RETURNS: APRIL 7, 1986-NOVEMBER 30, 1999
- ----------------------------------------------------------
CALIFORNIA INSURED LONG-TERM
TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ----------------------------------------------------------
1986 4.8% 4.6% 9.4% 9.4%
1987 -11.6 6.3 -5.3 -0.2
1988 4.9 7.3 12.2 10.6
1989 4.9 7.3 12.2 11.0
1990 0.3 6.8 7.1 7.7
1991 2.1 6.5 8.6 10.3
1992 4.4 6.4 10.8 10.0
- ----------------------------------------------------------
- ----------------------------------------------------------
CALIFORNIA INSURED LONG-TERM
TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ----------------------------------------------------------
1993 5.7% 5.8% 11.5% 11.1%
1994 -11.0 5.1 -5.9 -5.2
1995 13.6 6.5 20.1 18.9
1996 1.3 5.6 6.9 5.9
1997 1.1 5.4 6.5 7.2
1998 3.1 5.2 8.3 7.8
1999 -7.0 4.8 -2.2 -1.1
- ----------------------------------------------------------
*Lehman Municipal Bond Index.
See Financial Highlights table on page 38 for dividend and capital gains
information for the past five years.
CUMULATIVE PERFORMANCE: NOVEMBER 30, 1989-NOVEMBER 30, 1999
- -----------------------------------------------------------
198911 10000 10000 10000
199002 10046 10078 10124
199005 10192 10220 10273
199008 10144 10248 10363
199011 10707 10675 10770
199102 10897 10896 11057
199105 11124 11158 11308
199108 11387 11443 11585
199111 11629 11650 11875
199202 11910 11916 12161
199205 12206 12236 12418
199208 12663 12730 12878
199211 12885 12826 13065
199302 13858 13780 13835
199305 13859 13832 13904
199308 14358 14454 14449
199311 14370 14371 14513
199402 14507 14467 14600
199405 14116 13891 14248
199408 14356 14092 14475
199411 13526 13161 13755
199502 14925 14496 14881
199505 15512 15153 15551
199508 15529 15093 15759
199511 16246 15841 16356
199602 16446 16028 16525
199605 16095 15635 16261
199608 16496 15971 16585
199611 17368 16682 17317
199702 17368 16727 17435
199705 17589 16928 17608
199708 18075 17383 18119
199711 18501 17747 18559
199802 18992 18211 19029
199805 19202 18433 19259
199808 19680 18793 19687
199811 20039 19048 19999
199902 20262 19182 20199
199905 20159 19111 20159
199908 19648 18520 19785
199911 19596 18318 19785
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
- -------------------------------------------------------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California Insured Long-Term Tax-Exempt Fund -2.22% 7.69% 6.96% $19,596
Average California Insured Municipal Fund* -3.83 6.84 6.24 18,318
Lehman Municipal Bond Index -1.07 7.54 7.06 19,785
- ----------------------------------------------------------------------------------------------------
*Derived from data provided by Lipper Inc.
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1999*
- --------------------------------------------------------------------------------------------
10 YEARS
INCEPTION --------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
California Insured Long-Term
Tax-Exempt Fund 4/7/1986 -1.94% 6.91% 1.47% 5.86% 7.33%
- --------------------------------------------------------------------------------------------
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
</TABLE>
16
<PAGE>
FINANCIAL STATEMENTS
NOVEMBER 30, 1999
STATEMENT OF NET ASSETS
This Statement provides a detailed list of each fund's municipal bond holdings,
including each security's market value on the last day of the reporting period
and information on credit enhancements (insurance or letters of credit). Other
assets are added to, and liabilities are subtracted from, the value of Total
Municipal Bonds to calculate the fund's Net Assets. Finally, Net Assets are
divided by the outstanding shares of the fund to arrive at its share price, or
Net Asset Value (NAV) Per Share. At the end of the Statement of Net Assets, you
will find a table displaying the composition of the fund's net assets on both a
dollar and per-share basis. Undistributed Net Investment Income is usually zero
because the fund distributes its net income to shareholders as a dividend each
day. Any realized gains must be distributed annually, so the bulk of net assets
consists of Paid in Capital (money invested by shareholders). The balance shown
for Accumulated Net Realized Gains usually approximates the amount available to
distribute to shareholders as taxable capital gains as of the statement date,
but may differ because certain investments or transactions may be treated
differently for financial statement and tax purposes. Any Accumulated Net
Realized Losses, and any cumulative excess of distributions over net realized
gains, will appear as negative balances. Unrealized Appreciation (Depreciation)
is the difference between the value of the fund's investments and their cost,
and reflects the gains (losses) that would be realized if the fund were to sell
all of its investments at their statement-date values.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (98.8%)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alameda-Contra Costa CA School Financing Auth. COP VRDO
(Capital Improvement Financing Pooled Project) 3.60% 12/2/1999 14,000 14,000
Alameda-Contra Costa CA School Financing Auth. COP VRDO
(Capital Improvement Financing Pooled Project) 3.65% 12/2/1999 LOC 12,345 12,345
Anaheim CA Public Improvement Corp. Lease COP VRDO 3.50% 12/8/1999 (2) 31,580 31,580
California Communities Dev. Auth. COP VRDO
(Memorial Health Services) 3.80% 12/8/1999 63,650 63,650
California Community College Financing Auth. TRAN 4.00 6/30/2000 (4) 16,850 16,937
California Community College Financing Auth. TRAN 4.00% 7/28/2000 (4) 20,000 20,048
California Community College Financing Auth. TRAN 4.00% 9/29/2000 (4) 48,000 48,197
California Dept. of Water Resources Water System Rev.
(Central Valley Project) 6.95% 6/1/2000 (Prere.) 13,035 13,458
California Dept. of Water Resources Water System Rev. TOB VRDO
(Central Valley Project) 3.71% 12/2/1999 10,955 10,955
California Educ. Fac. Auth. Rev. VRDO
(California Institute of Technology) 3.45% 12/2/1999 9,200 9,200
California Educ. Fac. Auth. Rev. VRDO
(Pepperdine Univ.) 3.60% 12/2/1999 6,000 6,000
California Educ. Fac. Auth. Rev. VRDO
(Stanford Univ.) 3.60% 12/8/1999 5,000 5,000
California Finance Auth. VRDO (Pacific Gas &
Electric Co.) 3.50% 12/2/1999 LOC 3,350 3,350
California GO CP 3.00% 12/8/1999 14,400 14,400
California GO CP 3.05% 12/8/1999 20,000 20,000
California GO CP 3.65% 12/2/1999 8,200 8,200
California GO TOB VRDO 3.71% 12/2/1999 5,995 5,995
California GO TOB VRDO 3.71% 12/2/1999 (3) + 2,750 2,750
California Health Fac. Finance Auth. Rev. VRDO
(Adventist Health System West Sutter Health) 3.65% 12/2/1999 LOC 21,400 21,400
California Health Fac. Finance Auth. Rev. VRDO
(Catholic Healthcare West) 3.50% 12/8/1999 (1) 22,900 22,900
California Health Fac. Finance Auth. Rev. VRDO
(Catholic Healthcare West) 3.80% 12/8/1999 (1) 17,900 17,900
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California Health Fac. Finance Auth. Rev. VRDO
(Memorial Health Services) 3.80% 12/8/1999 20,700 20,700
California Health Fac. Finance Auth. Rev. VRDO
(St. Francis Medical Center) 3.80% 12/8/1999 (1) 27,900 27,900
California Housing Finance Agency Home
Mortgage Rev. VRDO 3.63% 12/8/1999 (1) 16,0001 6,000
California Housing Finance Agency PUT
(Single Family Mortgage Program) 3.00% 2/1/2000 3,090 3,090
California Housing Finance Agency
(Single Family Mortgage Program) 3.40% 8/1/2000 32,000 32,000
California PCR Financing Auth. VRDO
(Exxon Project) 3.45% 12/2/1999 1,400 1,400
California PCR Financing Auth. VRDO (Pacific Gas &
Electric Co.) 3.50% 12/2/1999 LOC 1,720 1,720
California PCR Financing Auth. VRDO
(Pacific Gas & Electric Co.) 3.50% 12/8/1999 LOC 109,100 109,100
California PCR Financing Auth. VRDO
(Pacific Gas & Electric Co.) 3.55% 12/2/1999 LOC 59,100 59,100
California PCR Financing Auth. VRDO
(Southern California Edison) 3.95% 12/2/1999 1,300 1,300
California Pollution Control Financing Auth.
Solid Waste Disposal Rev. VRDO
(Shell Oil Co.-Martinez Project) 3.50% 12/2/1999 40,050 40,050
California School Cash Reserve Program Auth. 4.00% 7/3/2000 (2) 89,000 89,459
California School Fac. Financing Corp. COP VRDO 3.80% 12/8/1999 LOC 12,890 12,890
California Statewide Community Dev. Auth. TRAN 4.00% 6/30/2000 63,640 63,935
California Statewide Community Dev. Auth. TRAN 4.00% 7/28/2000 (4) 5,700 5,717
California Water Resources TOB VRDO 3.67% 12/2/1999 (3)+ 11,000 11,000
Contra Costa County CA TRAN 4.00% 9/29/2000 10,000 10,023
Fresno County CA TRAN 4.00% 6/30/2000 24,710 24,801
Irvine CA Assessment Dist. Improvement Boards VRDO
(Orange County-Irvine County) 3.55% 12/8/1999 LOC 49,711 49,711
Irvine CA Ranch Water Dist. VRDO 3.40% 12/2/1999 LOC 900 900
Irvine CA Ranch Water Dist. VRDO 3.55% 12/2/1999 LOC 2,200 2,200
Irvine CA Ranch Water Dist. VRDO
(Consolidated Bonds Refunding) 3.40% 12/2/1999 LOC 1,900 1,900
Kern County CA VRDO (Public Fac. Project) 3.50% 12/8/1999 LOC 33,000 33,000
Los Angeles CA TRAN 4.00% 6/30/2000 15,075 15,130
Los Angeles CA Unified School Dist. COP VRDO
(Belmont Learning Complex) 3.60% 12/8/1999 LOC 9,300 9,300
Los Angeles CA Unified School Dist. TOB VRDO 3.71% 12/2/1999 (3)+ 11,120 11,120
Los Angeles CA Unified School Dist. TRAN 4.00% 6/30/2000 28,760 28,906
Los Angeles CA Waste Water System Rev. CP 2.90% 2/10/1999 LOC 20,400 20,400
Los Angeles CA Waste Water System Rev. CP 3.20% 3/6/2000 LOC 3,875 3,875
Los Angeles CA Waste Water System Rev. CP 3.65% 12/2/1999 LOC 10,000 10,000
Los Angeles County CA Capital Asset Lease Rev. CP 3.25% 12/14/1999 LOC 8,440 8,440
Los Angeles County CA Capital Asset Lease Rev. CP 3.50% 12/10/1999 LOC 5,000 5,000
Los Angeles County CA Dept. of Water & Power
Electric Plant CP 3.00% 2/1/1999 LOC 12,000 12,000
Los Angeles County CA Dept. of Water & Power
Electric Plant CP 3.25% 1/25/2000 LOC 29,500 29,500
Los Angeles County CA Dept. of Water & Power
Electric Plant CP 3.25% 3/8/2000 LOC 10,200 10,200
Los Angeles County CA Dept. of Water & Power
Electric Plant CP 3.30% 3/9/2000 LOC 35,000 35,000
Los Angeles County CA Dept. of Water & Power
Electric Plant CP 3.40 12/20/1999 LOC 9,000 9,000
Los Angeles County CA Metro. Transp. Auth. CP 2.90% 12/10/1999 LOC 8,200 8,200
Los Angeles County CA Metro. Transp. Auth. CP 3.40% 12/9/1999 LOC 7,797 7,797
Los Angeles County CA Metro. Transp. Auth
Sales Tax Rev. VRDO 3.50% 12/2/1999 (1) 43,265 43,265
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. VRDO 3.50% 12/8/1999 (3) 18,000 18,000
Los Angeles County CA Pension Obligations VRDO 3.50% 12/8/1999 (2) 77,500 77,500
Los Angeles County CA TRAN 4.00% 6/30/2000 25,000 25,096
Metro. Water Dist. of Southern California CP 2.95% 12/15/1999 16,500 16,500
Metro. Water Dist. of Southern California CP 3.00% 12/8/1999 8,900 8,900
Metro. Water Dist. of Southern California CP 3.35% 3/7/2000 10,000 10,000
Metro. Water Dist. of Southern California
Waterworks Rev. 3.60% 3/15/2000 19,500 19,500
Metro. Water Dist. of Southern California
Waterworks Rev. 3.65% 6/1/2000 17,000 17,000
Metro. Water Dist. of Southern California
Waterworks Rev.TOB VRDO 3.67% 12/2/1999 + 5,000 5,000
Metro. Water Dist. of Southern California
Waterworks Rev. TBO VRDO 3.71% 12/2/1999 + 4,750 4,750
Metro. Water Dist. of Southern California
Waterworks Rev. VRDO 3.50% 12/2/1999 11,500 11,500
Metro. Water Dist. of Southern California
Waterworks Rev. VRDO 3.55% 12/2/1999 18,200 18,200
18
<PAGE>
- -----------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -----------------------------------------------------------------------------------------
Mission Viejo CA Community Dev. Financing Auth. VRDO
(Mission Viejo Mall Improvement Project) 3.55% 12/8/1999 LOC 21,100 21,100
MSR California Public Power Agency VRDO
(San Juan Project) 3.50% 12/2/1999 (1) 15,100 15,100
Oakland CA Joint Powers Financing Auth.
Lease Rev. VRDO 3.50% 12/2/1999 (4) 25,000 25,000
Orange County CA Sanitation Dist. COP VRDO 3.50% 12/2/1999 (2) 25,800 25,800
Otay CA Water Dist. COP VRDO (Capital Project) 3.55% 12/8/1999 LOC 8,600 8,600
Rancho Mirage CA Joint Powers Financing Auth
COP VRDO(Eisenhower Medical Center) 3.58% 12/8/1999 (1) 25,100 25,100
Riverside County CA Public Fac. Project COP VRDO 3.30% 12/7/1999 LOC 12,700 12,700
Riverside County CA Public Fac. Project COP VRDO 3.65% 12/7/1999 LOC 1,120 1,120
Sacramento CA Muni. Util. Dist. Rev. 5.00% 7/1/2000 (2) 8,500 8,559
Sacramento County CA COP VRDO
(Administration Center & Courthouse Project) 3.65% 12/2/1999 LOC 10,000 10,000
San Bernardino County CA COP VRDO
(County Center Refinancing Project) 3.55% 12/8/1999 LOC 8,400 8,400
San Diego CA TAN 4.25% 9/29/2000 25,000 25,150
San Francisco CA Airport CP 3.00% 12/9/1999 LOC 10,135 10,135
San Francisco CA Airport CP 3.30% 3/7/2000 LOC 6,435 6,435
San Francisco CA Airport CP 3.45% 2/7/2000 LOC 7,745 7,745
San Francisco CA Airport CP 3.50% 4/11/2000 LOC 35,910 35,910
San Francisco CA Airport CP 3.60% 3/8/2000 LOC 9,330 9,330
San Francisco CA Bay Area Rapid Transit Dist.
Sales Tax Rev. TOB VRDO 3.71% 12/2/1999 (3) + 2,745 2,745
San Francisco CA City & County GO 4.00% 6/15/2000 (3) 7,970 7,980
San Jose CA Redev. Agency Rev. VRDO
(Merged Area Redev. Project) 3.65% 12/8/1999 LOC 14,900 14,900
San Jose/Santa Clara CA Clean Water &
Sewer Finance Auth. VRDO 3.50% 12/8/1999 (3) 3,700 3,700
Santa Barbara County CA School Financing
Auth. TRAN 4.00% 6/30/2000 21,700 21,810
Santa Clara CA El Camino Hosp. Dist. Fac.
Auth. Rev. Lease VRDO
(Valley Medical Center Project) 3.65% 12/7/1999 LOC 10,300 10,300
Sonoma County CA TRAN 3.50% 2/1/2000 11,400 11,409
Southern California Metro. Water Dist. CP 3.00% 12/1/1999 8,000 8,000
Southern California Public Power Auth. VRDO
(Southern Transmission Project) 3.50% 12/8/1999 (2) LOC132,000 132,000
Southern California Public Power Auth. VRDO
(Southern Transmission Project) 3.55% 12/8/1999 (4) 38,565 38,565
Torrance CA Little Co. of Mary Hosp. VRDO
(Torrance Memorial Medical Center) 3.66% 12/2/1999 LOC 3,000 3,000
Turlock CA Irrigation Dist. COP VRDO
(Transmission Project) 3.55% 12/8/1999 LOC 6,890 6,890
Univ. of California Regents CP 2.85% 12/8/1999 7,400 7,400
Univ. of California Regents CP 3.05% 1/27/2000 25,000 25,000
Univ. of California Regents CP 3.30% 3/7/2000 5,479 5,479
Univ. of California Regents CP 3.30% 3/8/2000 12,000 12,000
Univ. of California Regents CP 3.55% 3/8/2000 4,100 4,100
Ventura CA CP 3.65% 12/2/1999 LOC 12,000 12,000
Ventura County CA TRAN 4.00% 7/6/2000 25,000 25,116
Wateruse Financial Auth. of California VRDO 3.60% 12/8/1999 (4) 86,000 86,000
West Basin CA Muni. Water Dist. Rev. COP VRDO
(Phase II Recycled Water Project) 3.45% 12/8/1999 LOC 2,800 2,800
Outside California
Puerto Rico Aqueduct & Sewer Auth. Rev. TOB VRDO 3.71% 12/2/1999 (ETM) +13,640 13,640
Puerto Rico GO 7.70% 7/1/2000 (Prere.)6,750 7,050
Puerto Rico Govt. Dev. Bank CP 3.40% 12/6/1999 7,500 7,500
Puerto Rico Govt. Dev. Bank CP 3.60%12/15/1999 7,000 7,000
Puerto Rico Govt. Dev. Bank VRDO 3.60% 12/8/1999 (1) 3,310 3,310
Puerto Rico Highway & Transp. Auth. Rev. TOB VRDO 3.71% 12/2/1999 (2) + 17,005 17,005
Puerto Rico Highway & Transp. Auth. Rev. TOB VRDO 3.71% 12/2/1999 (1) + 12,735 12,735
Puerto Rico Highway & Transp. Auth. Rev. VRDO 3.65% 12/8/1999 (2) 4,000 4,000
Puerto Rico Public Buildings Auth. Govt. Fac.
Rev. TOB VRDO 3.71% 12/2/1999(2) + 4,000 4,000
- -----------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $2,258,858) 2,258,858
- -----------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
- --------------------------------------------------------------------------------
MARKET
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND VALUE*
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.2%)
- --------------------------------------------------------------------------------
Other Assets--Note B $ 33,765
Liabilities (6,372)
--------------
27,393
- --------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------
Applicable to 2,286,180,115 outstanding $.001 par value shares of
beneficial interest (unlimited authorization) $2,286,251
================================================================================
NET ASSET VALUE PER SHARE $1.00
================================================================================
*See Note A in Notes to Financial Statements.
+Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified buyers. At November 30, 1999, the aggregate value of these
securities was $84,745,000, representing 3.7% of net assets. For key to
abbreviations and other references, see page 33.
- --------------------------------------------------------------------------------
AT NOVEMBER 30, 1999, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------
Paid in Capital $2,286,322 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized Losses (71) --
Unrealized Appreciation -- --
- --------------------------------------------------------------------------------
NET ASSETS $2,286,251 $1.00
================================================================================
20
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FACE MARKET
CALIFORNIA INSURED MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE 000) (000)
- --------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (99.3%)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ISSUER INSURED (93.5%)
ABAG Finance Auth. For Non-Profit Corp. COP
(Children's Hospital Medical Center) 6.00% 12/1/2015 (2) 9,180 9,514
Alameda CA Corridor Transp. Auth. Rev. 5.125% 10/1/2016 (2) 5,000 4,727
Alameda CA Corridor Transp. Auth. Rev. 5.125% 10/1/2017 (1) 6,565 6,124
Alameda CA Corridor Transp. Auth. Rev. 5.125% 10/1/2018 (1) 6,575 6,084
Alameda County CA COP (Medical Center Project) 5.25% 6/1/2008 (1) 1,965 2,019
Alameda County CA COP (Medical Center Project) 5.25% 6/1/2009 (1) 2,910 2,976
Alameda County CA COP (Medical Center Project) 5.25% 6/1/2010 (1) 3,065 3,104
Alameda County CA COP (Medical Center Project) 5.25% 6/1/2011 (1) 1,615 1,624
Alameda County CA COP (Medical Center Project) 5.25% 6/1/2012 (1) 1,595 1,591
Alameda County CA COP (Medical Center Project) 5.25% 6/1/2013 (1) 1,785 1,761
Alameda County CA COP (Medical Center Project) 5.375% 6/1/2014 (1) 1,880 1,858
Alameda County CA COP (Medical Center Project) 5.375% 6/1/2015 (1) 3,960 3,872
Anaheim CA Convention Center Finance COP 0.00% 8/1/2004 (1) 3,120 2,521
Anaheim CA Public Finance Auth. Rev. 6.00% 9/1/2008 (4) 2,000 2,174
Antioch CA Public Financing Auth. Reassessment
Rev. 5.00% 9/2/2013 (2) 12,445 11,988
California GO 5.75% 12/1/2009 (2) 13,265 14,192
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 5.50% 7/1/2008 (1) 3,290 3,427
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 5.50% 7/1/2009 (1) 3,580 3,715
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 5.50% 7/1/2010 (1) 3,060 3,142
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 5.50% 7/1/2011 (1) 3,950 4,032
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 5.50% 7/1/2012 (1) 3,635 3,683
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 5.75% 7/1/2010 (1) 7,000 7,347
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 5.875% 7/1/2009 (2) 5,000 5,273
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 7.00% 7/1/2005 (2) 3,410 3,795
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 7.00% 7/1/2006 (2) 3,395 3,816
California Health Fac. Finance Auth. Rev.
(Children's Hosp.) 6.00% 7/1/2001 (1) 1,600 1,645
California Health Fac. Finance Auth. Rev.
(Children's Hosp.) 6.00% 7/1/2002 (1) 1,280 1,333
California Health Fac. Finance Auth. Rev.
(Children's Hosp.) 6.00% 7/1/2004 (1) 1,645 1,746
California Health Fac. Finance Auth. Rev.
(Children's Hosp.) 6.00% 7/1/2006 (1) 1,000 1,072
California Health Fac. Finance Auth. Rev.
(Kaiser Permanente) 5.25% 6/1/2009 (4) 6,290 6,408
California Health Fac. Finance Auth. Rev.
(Kaiser Permanente) 5.25% 10/1/2009 (2) 10,525 10,727
California Health Fac. Finance Auth. Rev.
(Kaiser Permanente) 5.25% 6/1/2010 (4) 5,310 5,357
California Health Fac. Finance Auth. Rev.
(Kaiser Permanente) 5.25% 6/1/2011 (4) 7,250 7,262
California Health Fac. Finance Auth. Rev.
(Mills Peninsula Health) 6.00% 1/15/2000 (6) 1,080 1,083
California Health Fac. Finance Auth. Rev.
(Pomona Valley Hosp.) 5.50% 7/1/2002 (1) 2,500 2,574
California Health Fac. Finance Auth. Rev.
(Pomona Valley Hosp.) 5.50% 7/1/2003 (1) 3,010 3,120
California Health Fac. Finance Auth. Rev.
(Pomona Valley Hosp.) 5.50% 7/1/2010 (1) 3,570 3,666
California Health Fac. Finance Auth. Rev.
(Pomona Valley Hosp.) 5.75% 7/1/2005 (1) 3,335 3,522
California Health Fac. Finance Auth. Rev.
(Pomona Valley Hosp.) 5.75% 7/1/2006 (1) 3,415 3,616
California Health Fac. Finance Auth. Rev.
(Presbyterian Hosp.) 5.25% 5/1/2001 (1) 1,500 1,523
California Health Fac. Finance Auth. Rev.
(Presbyterian Hosp.) 5.25% 5/1/2002 (1) 1,000 1,022
California Health Fac. Finance Auth. Rev.
(Presbyterian Hosp.) 5.25% 5/1/2003 (1) 1,000 1,027
California Health Fac. Finance Auth. Rev.
(Presbyterian Hosp.) 5.50% 5/1/2004 (1) 1,855 1,929
California Health Fac. Finance Auth. Rev.
(Presbyterian Hosp.) 5.50% 5/1/2005 (1) 1,500 1,564
California Health Fac. Finance Auth. Rev.
(Scripps Memorial Hosp.) 6.25% 10/1/2013 (1) 3,000 3,139
California Health Fac. Finance Auth. Rev.
(Sisters of Providence) 6.00% 10/1/2009 (2) 4,490 4,831
California Health Fac. Finance Auth. Rev.
(Summit Medical Center) 5.25% 5/1/2009 (4) 3,500 3,559
California Health Fac. Finance Auth. Rev.
(Summit Medical Center) 5.25% 5/1/2011 (4) 1,700 1,702
California Health Fac. Finance Auth. Rev.
(Sutter Health) 5.50% 8/15/2012 (4) 3,000 3,040
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FACE MARKET
CALIFORNIA INSURED MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California Health Fac. Finance Auth. Rev.
(UCSF Stanford Health Care) 5.00% 11/15/2009 (2) 2,500 2,500
California Health Fac. Finance Auth. Rev.
(UCSF Stanford Health Care) 5.00% 11/15/2010 (2) 1,000 988
California Housing Finance Agency Home
Mortgage Rev. 0.00% 8/1/2027 (1) 10,000 2,089
California Public Works Board
(Dept. of Corrections) 5.50% 1/1/2010 (2) 10,000 10,315
California Public Works Board
(Dept. of Corrections) 5.50% 1/1/2014 (2) 5,975 6,009
California Public Works Board 6.40% 1/1/2004 (1)(Prere.)5,000 5,514
(Dept. of Corrections)
California Public Works Board 6.60% 12/1/2002 (2)(Prere.)3,500 3,794
(Dept. of Corrections)
California Public Works Board (Secretary of State) 6.50% 12/1/2008 (2) 5,000 5,612
California Public Works Board (Univ. of California) 5.50% 9/1/2008 (2) 5,185 5,453
California Public Works Board (Univ. of California) 5.50% 9/1/2009 (2) 4,015 4,209
California Public Works Board 6.25% 12/1/2002 (2)(Prere.)1,000 1,074
(Univ. of California)
California Statewide Communities Dev. Auth. COP
(Children's Hosp. of Los Angeles) 6.00% 6/1/2009 (1) 3,615 3,883
California Statewide Communities Dev. Auth. COP
(Children's Hosp. of Los Angeles) 6.00% 6/1/2011 (1) 2,365 2,536
California Statewide Communities Dev. Auth. TRAN 4.00% 7/28/2000 (4) 2,520 2,527
Capistrano CA Unified Public Schools GO 6.00% 9/1/2004 (2) 2,160 2,307
Capistrano CA Unified Public Schools GO 6.00% 9/1/2005 (2) 2,395 2,575
Central Coast CA Water Auth. Rev. 6.05% 10/1/2002 (2)(Prere.)1,800 1,918
Central Coast CA Water Auth. Rev. 6.25% 10/1/2002 (2)(Prere.)2,000 2,141
Chino Basin CA Regional Financing Auth. Rev.
(Muni. Water Dist. Sewer System Project) 6.50% 8/1/2010 (2) 3,095 3,478
Clovis CA Unified School Dist. GO 0.00% 8/1/2004 (3) 5,000 4,058
Clovis CA Unified School Dist. GO 0.00% 8/1/2005 (3) 16,000 12,350
Clovis CA Unified School Dist. GO 0.00% 8/1/2006 (3) 17,000 12,454
Contra Costa CA (Merrithew Memorial Hosp.) 5.25% 11/1/2001 (1) 3,000 3,064
Contra Costa CA (Merrithew Memorial Hosp.) 5.25% 11/1/2003 (1) 3,230 3,335
Contra Costa CA (Merrithew Memorial Hosp.) 6.00% 11/1/2006 (1) 2,000 2,157
Contra Costa CA (Merrithew Memorial Hosp.) 6.00% 11/1/2007 (1) 2,000 2,161
Corona CA Community Fac. Dist. GO 4.35% 9/1/2001 (1) 1,755 1,765
Corona CA Community Fac. Dist. GO 4.45% 9/1/2002 (1) 1,830 1,845
Corona CA Redev. Project 7.50% 9/1/2004 (3) 970 1,095
Corona CA Redev. Project 7.50% 9/1/2005 (3) 1,040 1,186
Culver City Redev. Financing Auth. 5.375% 11/1/2016 (4) 3,260 3,166
East Bay CA Muni. Util. Dist. Waste Water
Treatment System Rev 5.00% 6/1/2014 (3) 3,850 3,704
East Bay CA Muni. Util. Dist. Waste Water
Treatment System Rev. 6.375% 12/1/2001 (2)(Prere.)4,000 4,249
East Whittier CA City School Dist. GO 5.75% 8/1/2017 (3) 1,670 1,696
El Dorado County CA Public Agency Finance
Auth. Rev. 5.50% 2/15/2021 (3) 2,420 2,315
El Dorado County CA Public Agency Finance
Auth. Rev 5.60% 2/15/2012 (3) 3,900 4,008
Elsinore Valley CA Muni. Water Dist. COP 5.90% 7/1/2006 (3) 1,685 1,809
Foothill/Eastern CA Corridor Agency Toll Road Rev. 5.25% 1/15/2013 (1) 2,500 2,481
Foothill/Eastern CA Corridor Agency Toll Road Rev. 5.375% 1/15/2015 (1) 5,000 4,916
Fresno CA COP (City Hall Project) 6.375% 8/1/2010 (2) 10,500 10,856
Glendale CA School Dist. 5.75% 9/1/2017 (3) 3,790 3,809
Imperial Irrigation Dist. California COP
(Electric System Project) 5.20% 11/1/2009 (2) 7,900 8,097
Intermodal Container Transfer Fac. Joint Powers
Auth. California Rev. 5.00% 11/1/2010 (2) 1,470 1,466
Intermodal Container Transfer Fac. Joint Powers
Auth. California Rev. 5.00% 11/1/2011 (2) 1,665 1,647
Intermodal Container Transfer Fac. Joint Powers
Auth. California Rev. 5.125% 11/1/2012 (2) 2,540 2,517
Intermodal Container Transfer Fac. Joint Powers
Auth. California Rev. 5.125% 11/1/2013 (2) 1,870 1,837
Irvine CA Public Fac. Rev. 4.30% 9/2/2010 (2) 3,500 3,269
Irvine CA Public Fac. Rev. 4.40% 9/2/2011 (2) 2,595 2,414
Irvine CA Public Fac. Rev. 4.50% 9/2/2012 (2) 1,700 1,572
Irvine CA Public Fac. Rev. 4.70% 9/2/2014 (2) 3,000 2,753
La Quinta CA Redev. Agency (Tax Allocation Project) 7.30% 9/1/2007 (1) 1,240 1,430
La Quinta CA Redev. Agency (Tax Allocation Project) 8.00% 9/1/2003 (1) 1,325 1,484
Long Beach CA Finance Auth. Lease Rev.
(Rainbow Harbor Refinancing Project) 5.25% 5/1/2014 (2) 2,035 2,001
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long Beach CA Financing Auth. Rev. 6.00% 11/1/2007 (2) 3,070 3,335
Long Beach CA Financing Auth. Rev. 6.00% 11/1/2009 (2) 3,735 4,064
Long Beach CA Financing Auth. Rev. 6.00% 11/1/2010 (2) 3,860 4,185
Long Beach CA Harbor Dept. Rev. 6.00% 5/15/2009 (3) 2,770 2,951
Long Beach CA Harbor Dept. Rev. 8.00% 5/15/2004 (1) 3,305 3,739
Los Angeles CA Dept. of Water & Power
Waterworks Rev. 5.00% 10/15/2015 (1) 10,000 9,454
Los Angeles CA Dept. of Water & Power
Waterworks Rev. 5.125% 10/15/2013 (1) 3,500 3,440
Los Angeles CA Transp. Comm. Sales Tax Rev. 6.25% 7/1/2002 (1)(Prere.)1,500 1,601
Los Angeles CA Unified School Dist. GO 5.25% 7/1/2010 (1) 5,665 5,780
Los Angeles CA Unified School Dist. GO 5.25% 7/1/2011 (1) 5,175 5,242
Los Angeles CA Unified School Dist. GO 5.375% 7/1/2014 (3) 7,000 6,982
Los Angeles CA Unified School Dist. GO 5.375% 7/1/2015 (3) 3,000 2,961
Los Angeles CA Unified School Dist. GO 5.375% 7/1/2016 (3) 4,000 3,903
Los Angeles CA Unified School Dist. GO 5.625% 7/1/2014 (1) 5,000 5,094
Los Angeles CA Unified School Dist. GO 5.625% 7/1/2015 (1) 5,000 5,049
Los Angeles CA Unified School Dist. GO 5.625% 7/1/2016 (1) 6,615 6,628
Los Angeles CA Waste Water Rev. 5.75% 6/1/2011 (1) 7,960 8,260
Los Angeles CA Waste Water Rev. 6.50% 6/1/2004 (1)(Prere.)1,695 1,865
Los Angeles CA Waste Water Rev. 8.70% 11/1/2002 (3) 2,535 2,839
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.00% 7/1/2013 (4) 5,000 4,861
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.25% 7/1/2008 (4) 6,155 6,365
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.25% 7/1/2010 (4) 7,070 7,214
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.25% 7/1/2014 (1) 7,00 6,881
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.40% 7/1/2009 (2) 1,725 1,781
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.50% 7/1/2017 (2) 1,500 1,469
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.75% 7/1/2008 (4) 2,445 2,614
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 6.00% 7/1/2006 (4) 1,630 1,760
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 6.00% 7/1/2007 (4) 2,450 2,654
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 9.00% 7/1/2005 (1) 4,015 4,879
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 9.00% 7/1/2006 (1) 4,380 5,439
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 9.00% 7/1/2007 (1) 4,770 6,034
Los Angeles County CA Public Works Finance
Auth. Rev. 4.10% 3/1/2000(4) 5,000 5,006
Los Angeles County CA Public Works Finance
Auth. Rev. 5.125% 9/1/2008(1) 4,605 4,717
Los Angeles County CA Public Works Finance
Auth. Rev. 5.25% 9/1/2012 (1) 6,345 6,362
Los Angeles County CA Schools COP 0.00% 8/1/2009 (2) 1,890 1,159
Los Angeles County CA Schools COP 0.00% 8/1/2011 (2) 1,945 1,047
Los Angeles County CA Schools COP 0.00% 8/1/2013 (2) 2,010 947
MSR California Public Power Agency
(San Juan Project) 5.375% 7/1/2013 (1) 2,500 2,508
MSR California Public Power Agency
(San Juan Project) 5.375% 7/1/2014 (1) 3,000 2,983
MSR California Public Power Agency
(San Juan Project) 5.50% 7/1/2001 (1) 6,500 6,643
MSR California Public Power Agenc
(San Juan Project) 5.85% 7/1/2006 (2) 1,500 1,588
MSR California Public Power Agency VRDO
(San Juan Project) 3.50% 12/2/1999 (1) 4,400 4,400
Modesto CA Irrigation Dist. Finance Auth. Rev. 5.00% 9/1/2009 (2) 1,130 1,142
Modesto CA Irrigation Dist. Finance Auth. Rev. 5.00% 9/1/2010 (2) 2,000 2,000
Modesto CA Irrigation Dist. Finance Auth. Rev. 5.00% 9/1/2011 (2) 1,790 1,774
Modesto CA Irrigation Dist. Finance Auth. Rev. 5.125% 9/1/2015 (2) 4,365 4,189
Mountain View CA Capital Improvement Finance Auth 6.25% 8/1/2012 (1) 5,000 5,228
North City West CA Community Dist. 5.75% 9/1/2015 (4) 2,000 2,031
North City West CA Community Dist. 6.00% 9/1/2005 (4) 1,510 1,624
North City West CA Community Dist. 6.00% 9/1/2006 (4) 1,600 1,729
North City West CA Community Dist. 6.00% 9/1/2007 (4) 1,695 1,837
Northern California Power Agency Capital Fac. Rev. 5.25% 8/1/2015 (2) 2,000 1,944
Northern California Power Agency Capital Fac. Rev. 5.25% 8/1/2016 (2) 3,000 2,881
Northern California Power Agency Project 4.25% 8/15/2001 (2) 2,445 2,454
Northern California Power Agency Project 5.00% 8/15/2007 (2) 3,160 3,225
Northern California Power Agency Project 5.00% 8/15/2008 (2) 3,685 3,745
Northern California Power Agency Project 5.00% 8/15/2009 (2) 2,870 2,898
Northern California Power Agency Project 5.00% 8/15/2010 (2) 3,410 3,407
Oakland CA Building Auth. Lease Rev.
(Harris Building) 5.25% 4/1/2009 (2) 5,235 5,378
Oakland CA Redev. Agency (Central Dist. Project) 6.00% 2/1/2006 (2) 5,125 5,512
Oakland CA Redev. Agency (Central Dist. Project) 6.00% 2/1/2007 (2) 2,860 3,087
Oakland CA Redev. Agency (Central Dist. Project) 6.00% 2/1/2008 (2) 5,585 6,045
Orange County CA Airport Rev. 5.50% 7/1/2004 (1) 3,555 3,702
</TABLE>
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<CAPTION>
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FACE MARKET
CALIFORNIA INSURED MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Orange County CA Airport Rev. 5.50% 7/1/2011 (1) 3,580 3,655
Orange County CA Airport Rev. 6.00% 7/1/2001 (1) 7,245 7,451
Orange County CA Airport Rev. 6.00% 7/1/2005 (1) 4,020 4,292
Orange County CA Airport Rev. 6.00% 7/1/2006 (1) 9,565 10,256
Orange County CA Local Transp. Auth. Sales Tax Rev. 5.25% 2/15/2004 (1) 10,590 10,936
Orange County CA Local Transp. Auth. Sales Tax Rev. 5.25% 2/15/2005 (1) 10,260 10,618
Orange County CA Local Transp. Auth. Sales Tax Rev. 5.70% 2/15/2011 (2) 4,000 4,199
Orange County CA Local Transp. Auth. Sales Tax Rev. 5.80% 2/15/2005 (3) 6,000 6,361
Orange County CA Local Transp. Auth. Sales Tax Rev 5.90% 2/15/2006 (3) 8,000 8,559
Orange County CA Local Transp. Auth. Sales Tax Rev. 9.50% 2/15/2003 (3) 5,765 6,638
Orange County CA Sanitation Dist. COP 6.00% 8/1/2001 (3)(Prere.)1,500 1,574
Orange County CA Sanitation Dist. COP 6.40% 8/1/2007 (3) 1,415 1,489
Orange County CA Sanitation Dist. VRDO 3.40% 12/2/1999 (2 LOC 100 100
Palomar Pomerado Health System California Rev. 5.375% 11/1/2010 (1) 2,670 2,742
Palomar Pomerado Health System California Rev. 5.375% 11/1/2012 (1) 7,080 7,161
Pittsburg CA Redev. Agency Rev. 5.50% 8/1/2007 (3) 5,750 5,948
Poway CA Redev. Agency Rev. 7.25% 12/15/2011 (3) 7,500 7,770
Poway CA Unified School Dist. Fac. GO 5.00% 10/1/2003 (1) 2,670 2,738
Poway CA Unified School Dist. Fac. GO 5.00% 10/1/2006 (1) 1,775 1,819
Poway CA Unified School Dist. Fac. GO 5.00% 10/1/2007 (1) 3,775 3,856
Poway CA Unified School Dist. Fac. GO 5.00% 10/1/2008 (1) 4,045 4,114
Poway CA Unified School Dist. Fac. GO 5.00% 10/1/2009 (1) 2,435 2,461
Rancho CA Water Dist. Finance Auth. Rev. 5.875% 11/1/2010 (3) 3,000 3,172
Rancho CA Water Dist. Finance Auth. Rev. 6.25% 8/1/2012 (3) 1,950 2,039
Rancho CA Water Dist. Finance Auth. Rev. 6.50% 11/1/2001 (3) 1,590 1,661
Rancho Cucamonga CA Redev. Auth. Rev. 5.00% 9/1/2011 (1) 3,165 3,132
Riverside CA Electric Rev. 5.00% 10/1/2005 (2) 2,575 2,644
Riverside CA Electric Rev. 5.375% 10/1/2009 (2) 4,115 4,279
Riverside County CA Public Finance Auth. Rev. 5.25% 9/1/2003 (1) 2,210 2,284
Roseville CA Water Utility Rev. COP 5.20% 12/1/2015 (3) 5,000 4,826
Sacramento CA Cogeneration Project Rev. 5.25% 7/1/2011 (1) 4,730 4,787
Sacramento CA Cogeneration Project Rev. 5.25% 7/1/2015 (1) 5,755 5,594
Sacramento CA Muni. Util. Dist. Rev. 5.75% 1/1/2010 (1) 5,000 5,194
Sacramento CA Muni. Util. Dist. Rev. 6.20% 8/15/2005 (1) 2,000 2,125
Sacramento CA Muni. Util. Dist. Rev. 6.25% 8/15/2007 (1) 8,000 8,509
Sacramento CA Redev. Agency
(Merged Downtown Project) 5.25% 11/1/2010 (4) 3,895 3,969
Sacramento CA Redev. Agency
(Merged Downtown Project) 6.75% 11/1/2005 (1) 1,000 1,044
Sacramento CA Redev. Agency
(Tax Allocation Project) 6.50% 11/1/2000 (1)(Prere.)1,775 1,853
Sacramento CA Redev. Agency
(Tax Allocation Project) 6.50% 11/1/2013 (1) 225 234
Sacramento County CA Public Fac. Finance Corp. COP
(Main Detention Fac. Project) 5.50% 6/1/2010 (1) 5,500 5,727
San Bernardino County CA COP
(Medical Center Financing Project) 4.30% 8/1/2000 (1) 6,000 6,023
San Bernardino County CA COP
(Medical Center Financing Project) 4.40% 8/1/2001 (1) 9,500 9,551
San Bernardino County CA COP
(Medical Center Financing Project) 4.50% 8/1/2002 (1) 7,000 7,054
San Bernardino County CA COP
(Medical Center Financing Project) 5.00% 8/1/2003 (1) 2,500 2,555
San Bernardino County CA COP
(Medical Center Financing Project) 5.50% 8/1/2006 (1) 8,500 8,910
San Bernardino County CA COP
(Medical Center Financing Project) 5.50% 8/1/2007 (1) 6,000 6,282
San Diego CA Financing Auth. Lease Rev.
(Convention Center Expansion) 5.25% 4/1/2011 (2) 5,150 5,213
San Diego CA Financing Auth. Lease Rev.
(Convention Center Expansion) 5.25% 4/1/2012 (2) 3,000 3,012
San Diego CA Public Fac. Financing Auth.
Sewer Rev. 5.00% 5/15/2008 (3) 1,000 1,017
San Diego CA Public Fac. Financing Auth.
Sewer Rev. 5.00% 5/15/2009 (3) 1,240 1,253
San Diego CA Public Fac. Financing Auth.
Sewer Rev. 5.00% 5/15/2016 (3) 3,250 3,029
San Diego CA Public Fac. Financing Auth.
Sewer Rev. 5.10% 5/15/2010 (3) 2,770 2,791
San Diego CA Public Fac. Financing Auth.
Sewer Rev. 5.125% 5/15/2012 (3) 3,330 3,307
San Diego CA Public Fac. Financing Auth.
Sewer Rev. 5.125% 5/15/2012 (3) 3,040 3,019
San Diego CA Unified School Dist. COP 5.375% 7/1/2002 (1) 10,835 11,138
San Diego CA Unified School Dist. COP 5.375% 7/1/2003 (1) 10,435 10,790
San Diego CA Unified School Dist. GO 0.00% 7/1/2009 (3) 6,270 3,873
San Diego CA Unified School Dist. GO 0.00% 7/1/2014 (3) 3,400 1,508
San Diego CA Water Util. Rev. 5.25% 8/1/2009 (3) 2,000 2,059
San Diego CA Water Util. Rev. 5.375% 8/1/2010 (3) 6,000 6,184
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
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FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
San Diego CA Water Util. Rev. 5.375% 8/1/2012 (3) 2,000 2,030
San Diego CA Water Util. Rev. 5.375% 8/1/2014 (3) 3,000 2,992
San Diego County CA COP 5.25% 5/1/2011 (2) 3,395 3,433
San Diego County CA Regional Transp. Comm. 6.00% 4/1/2004 (2) 3,000 3,190
San Diego County CA Regional Transp. Comm. 6.00% 4/1/2007 (2) 3,000 3,243
San Diego County CA Regional Transp. Comm. 6.25% 4/1/2002 (3) 5,000 5,229
San Francisco CA Bay Area Rapid Transit Rev. 5.55% 7/1/2009 (3) 4,920 5,109
San Fransisco CA City & County Airport Rev. 5.25% 5/1/2010 (1) 3,110 3,137
San Francisco CA City & County Airport Rev. 5.25% 5/1/2011 (3) 4,150 4,136
San Francisco CA City & County Airport Rev. 5.25% 5/1/2012 (3) 4,380 4,325
San Francisco CA City & County Airport Rev. 5.25% 5/1/2012 (4) 2,250 2,261
San Fransisco CA City & County Airport Rev. 5.50% 5/1/2009 (1) 2,945 3,054
San Francisco CA City & County Airport Rev. 5.50% 5/1/2009 (4) 5,025 5,233
San Francisco CA City & County Airport Rev. 5.50% 5/1/2010 (3) 2,880 2,968
San Francisco CA City & County Airport Rev. 5.50% 5/1/2010 (4) 5,300 5,475
San Francisco CA City & County Airport Rev. 5.50% 5/1/2011 (3) 3,080 3,159
San Francisco CA City & County Airport Rev. 5.50% 5/1/2011 (4) 2,135 2,207
San Fransisco CA City & County Airport Rev. 6.00% 5/1/2007 (1) 2,645 2,838
San Francisco CA City & County Airport Rev. 6.20% 5/1/2002 (2) (Prere.)645 686
San Francisco CA City & County Airport Rev. 6.20% 5/1/2007 (2) 970 1,026
San Fransisco CA City & County Airport Rev. 6.25% 5/1/2008 (1) 2,190 2,389
San Francisco CA City & County Airport Rev. 6.30% 5/1/2002 (2) (Prere.)435 463
San Francisco CA City & County Airport Rev. 6.30% 5/1/2011 (2) 650 688
San Francisco CA City & County Airport Rev. 6.40% 5/1/2003 (1) (Prere.)470 509
San Francisco CA City & County Airport Rev. 6.40% 5/1/2005 (1) 2,330 2,505
San Francisco CA City & County Airport Rev. 6.50% 5/1/2002 (2) (Prere.)865 926
San Francisco CA City & County Airport Rev. 6.50% 5/1/2013 (2) 1,295 1,373
San Francisco CA City & County Airport Rev. 6.60% 5/1/2003 (1) (Prere.)170 185
San Francisco CA City & County Airport Rev. 6.60% 5/1/2007 (1) 830 898
San Francisco CA City & County Sewer Rev. 6.00% 10/1/2011 (2) 2,000 2,109
San Joaquin Hills CA Transp. Corridor Agency
Toll Road Rev. 0.00% 1/15/2003 (1) 6,000 5,221
San Joaquin Hills CA Transp. Corridor Agency
Toll Road Rev. 0.00% 1/15/2006 (1) 14,745 11,021
San Joaquin Hills CA Transp. Corridor Agency
Toll Road Rev. 0.00% 1/15/2011 (1) 7,140 3,964
San Jose CA Redev. Agency
(Merged Area Redev. Project) 5.375% 8/1/2000 (1) 2,045 2,068
San Jose CA Redev. Agency
(Merged Area Redev. Project) 5.375% 8/1/2001 (1) 2,165 2,211
San Jose CA Redev. Agency
(Merged Area Redev. Project) 5.375% 8/1/2002 (1) 2,270 2,338
San Jose CA Redev. Agency
(Tax Allocation Project) 6.00% 8/1/2006 (1) 1,000 1,080
San Mateo CA Transp. Dist. Sales Tax Rev. 5.25% 6/1/2013 (4) 3,615 3,598
San Mateo CA Transp. Dist. Sales Tax Rev. 5.25% 6/1/2014 (4) 4,275 4,211
San Ramon Valley CA Unified School Dist. GO 0.00% 7/1/2006 (3) 3,750 2,744
San Ramon Valley CA Unified School Dist. GO 0.00% 7/1/2007 (3) 4,950 3,429
San Ramon Valley CA Unified School Dist. GO 0.00% 7/1/2008 (3) 6,050 3,962
Santa Anna CA Finance Auth. Rev. 5.375% 9/1/2009 (1) 3,040 3,155
Santa Anna CA Finance Auth. Rev. 5.375% 9/1/2010 (1) 1,600 1,647
Santa Barbara CA Redev. Agency
(Tax Allocation Central City Project) 5.50% 3/1/2000 (2) 2,075 2,085
Santa Barbara CA Redev. Agency
(Tax Allocation Central City Project) 5.50% 3/1/2001 (2) 2,215 2,256
Santa Clara County CA Financing Auth. Lease Rev. 5.50% 5/15/2011 (2)+ 4,535 4,605
Santa Clara County CA Financing Auth. Lease Rev. 5.50% 5/15/2012 (2)+ 4,785 4,818
Santa Margarita/Dana Point CA Auth. Rev. 5.50% 8/1/2008 (2) 3,345 3,517
Santa Margarita/Dana Point CA Auth. Rev. 5.50% 8/1/2009 (2) 3,860 4,045
Santa Margarita/Dana Point CA Auth. Rev. 5.50% 8/1/2010 (2) 2,245 2,328
Santa Margarita/Dana Point CA Auth. Rev. 7.25% 8/1/2006 (1) 3,315 3,803
Santa Margarita/Dana Point CA Auth. Rev. 7.25% 8/1/2010 (1) 2,180 2,578
Santa Margarita/Dana Point CA Auth. Rev. 7.25% 8/1/2011 (1) 1,640 1,949
Santa Rosa CA Waste Water Service Fac. Dist. 6.20% 7/2/2009 (2) 2,450 2,591
South Orange County CA Public Finance Auth. 5.25% 8/15/2013 (2) 2,290 2,272
South Orange County CA Public Finance Auth. 5.375% 8/15/2012 (4) 5,605 5,675
South Orange County CA Public Finance Auth. 5.375% 8/15/2013 (4) 5,910 5,931
South Orange County CA Public Finance Auth. 7.00% 9/1/2005 (1) 3,440 3,858
South Orange County CA Public Finance Auth. 7.00% 9/1/2007 (1) 1,000 1,143
South Orange County CA Public Finance Auth. 7.00% 9/1/2008 (1) 5,610 6,457
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
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FACE MARKET
CALIFORNIA INSURED MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
South Orange County CA Public Finance Auth. 7.00% 9/1/2009 (1) 5,000 5,789
South Orange County CA Public Finance Auth. 7.00% 9/1/2010 (1) 3,300 3,826
South Orange County CA Public Finance Auth. 9.50% 8/15/2004 (1) 4,395 5,318
Southern California Rapid Transit Dist. 5.80% 9/1/2006 (2) 4,000 4,283
Southern California Rapid Transit Dist. 5.90% 9/1/2007 (2) 3,155 3,404
Southern California Rapid Transit Dist. 6.00% 9/1/2008 (2) 2,650 2,802
Sweetwater CA Water Rev. 7.00% 4/1/2010 (2) 1,950 1,993
Tri-City CA Hosp. Dist. Rev. 5.50% 2/15/2008 (1) 3,805 3,957
Tri-City CA Hosp. Dist. Rev. 5.50% 2/15/2009 (1) 2,665 2,754
Tri-City CA Hosp. Dist. Rev. 5.625% 2/15/2011 (1) 2,970 3,049
Tri-City CA Hosp. Dist. Rev. 5.625% 2/15/2012 (1) 1,880 1,918
Tulare County CA COP 5.00% 8/15/2009 (1) 3,880 3,915
Tulare County CA COP 5.70% 11/15/2003 (1) 1,000 1,051
Tulare County CA COP 5.80% 11/15/2004 (1) 1,000 1,062
Turlock Irrigation Dist. Rev. 5.00% 1/1/2015 (1) 2,555 2,420
Tustin CA Unified School Dist. Special Tax 5.00% 9/1/2011 (4) 2,070 2,048
Tustin CA Unified School Dist. Special Tax 5.00% 9/1/2013 (4) 2,540 2,464
Tustin CA Unified School Dist. Special Tax 5.00% 9/1/2015 (4) 3,080 2,906
Univ. of California Research Fac. Rev. 5.00% 9/1/2008 (4) 4,290 4,363
Univ. of California Research Fac. Rev. 5.00% 9/1/2009 (4) 4,510 4,554
Univ. of California Research Fac. Rev. 5.00% 9/1/2010 (4) 4,730 4,730
Univ. of California Rev. (Medical Center) 5.625% 7/1/2010 (2) 6,660 6,882
Univ. of California Rev. (Multiple Purpose Project) 6.00% 9/1/2002 (1)(Prere.)1,500 1,595
Univ. of California Rev. (Multiple Purpose Project) 10.00% 9/1/2002 (2) 1,000 1,147
Univ. of California Rev. (Multiple Purpose Project) 10.00% 9/1/2002 (1) 2,950 3,385
Univ. of California Rev. (Multiple Purpose Project) 10.00% 9/1/2003 (2) 2,000 2,386
Univ. of California Rev. (Multiple Purpose Project) 12.00% 9/1/2003 (2) 2,000 2,519
Visalia CA Waste Water System Rev. 6.00% 12/1/2007 (1) 1,000 1,087
West Basin CA Water Dist. Rev. 6.80% 8/1/2000 (2)(Prere.)2,000 2,079
Whittier CA Insured Health Fac. Rev.(Presbyterian Hosp.) 6.00% 6/1/2000 (1) 1,895 1,916
Whittier CA Insured Health Fac. Rev.(Presbyterian Hosp.) 6.00% 6/1/2003 (1) 3,380 3,554
Whittier CA Insured Health Fac. Rev.(Presbyterian Hosp.) 6.00% 6/1/2004 (1) 3,580 3,797
Whittier CA Insured Health Fac. Rev.(Presbyterian Hosp.) 6.00% 6/1/2005 (1) 3,675 3,921
OUTSIDE CALIFORNIA:
Guam Govt.Ltd. Obligation Infrastructure Improvement Rev. 4.75% 11/1/2000 (2) 2,020 2,035
Guam Govt.Ltd. Obligation Infrastructure Improvement Rev. 5.00% 11/1/2001 (2) 2,410 2,445
Guam Govt.Ltd. Obligation Infrastructure Improvement Rev. 5.25% 11/1/2003 (2) 1,635 1,681
Puerto Rico Aqueduct & Sewer Auth. Rev. 6.00% 7/1/2009 (1) 5,250 5,662
Puerto Rico Electric Power Auth. Rev. 6.00% 7/1/2012 (1) 6,680 7,169
Puerto Rico Electric Power Auth. Rev. 6.50% 7/1/2005 (1) 20,525 22,415
Puerto Rico GO 6.50% 7/1/2011 (1) 2,500 2,806
Puerto Rico Govt. Dev. Bank VRDO 3.60% 12/8/1999 (1) 700 700
Puerto Rico Public Buildings Auth. Public Educ. &
Health Fac. Rev. 5.75% 7/1/2010 (2) 5,000 5,297
Puerto Rico Public Improvement GO 5.75% 7/1/2008 (1) 6,985 7,407
- --------------------------------------------------------------------------------------------------------
1,248,517
- --------------------------------------------------------------------------------------------------------
SECONDARY MARKET INSURED (2.8%)
Cailfornia GO 6.50% 9/1/2006 (2) 3,000 3,327
Long Beach CA Harbor Rev. 8.50% 5/15/2003 (1) 6,235 7,004
Los Angeles County CA Public Works
Finance Auth. Rev. 5.00% 10/1/2016 (1) 10,000 9,309
Sacramento CA Cogeneration Project Auth. Rev. 5.25% 7/1/2014 (1) 5,500 5,412
Santa Monica CA Malibu Unified School Dist. Rev. 5.25% 8/1/2011 (3) 3,695 3,756
OUTSIDE CALIFORNIA:
Puerto Rico GO 5.00% 7/1/2005 (1) 5,630 5,742
Puerto Rico Public Improvement GO 5.50% 7/1/2009 (1) 2,500 2,602
- --------------------------------------------------------------------------------------------------------
37,152
- --------------------------------------------------------------------------------------------------------
NONINSURED (3.0%)
California Dept. of Water Resources
(Central Valley Project) 5.125% 12/1/2013 2,000 1,966
California Dept. of Water Resources
(Central Valley Project) 5.125% 12/1/2015 1,410 1,353
California Dept. of Water Resources
(Central Valley Project) 5.125% 12/1/2016 1,000 945
California Educ. Fac. Auth. Rev.
(Univ. of Southern California Project) 5.60% 10/1/2009 2,680 2,833
California PCR Financing Auth. VRDO
(Pacific Gas & Electric Co.) 3.50% 12/2/1999 LOC 900 900
Chula Vista CA Industrial Rev. VRDO 3.55% 12/2/1999 600 600
</TABLE>
26
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<CAPTION>
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FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Irvine CA Ranch Water Dist. VRDO
(Consolidated Bonds Refunding) 3.40% 12/2/1999 300 300
Los Angeles CA Harbor Dept. Rev. 5.25% 11/1/2008 4,195 4,267
Los Angeles CA Harbor Dept. Rev. 5.50% 8/1/2007 3,000 3,110
Los Angeles CA Harbor Dept. Rev. 5.90% 8/1/2011 7,385 7,674
Los Angeles County CA School Pooled
Financing Program TRAN 4.00% 9/29/2000 5,000 5,013
San Diego CA Unified School Dist. COP 5.25% 7/1/2001 11,265 11,470
- --------------------------------------------------------------------------------------------------------
40,431
---------
- --------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,337,080) 1,326,100
- --------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (0.7%)
- --------------------------------------------------------------------------------------------------------
Other Assets--Note B 26,268
Liabilities (16,597)
---------
9,671
- --------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------------------------
Applicable to 127,242,105 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $1,335,771
========================================================================================================
NET ASSET VALUE PER SHARE $10.50
========================================================================================================
*See Note A in Notes to Financial Statements.
+Security purchased on a when-issued or delayed delivery basis for which the
fund has not taken delivery as of November 30, 1999. For key to abbreviations
and other references, see page 33.
- --------------------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1999, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------------------------------
Paid in Capital $1,347,832 $10.59
Undistributed Net Investment Income -- --
Accumulated Net Realized Losses--Note E (1,081) (.01)
Unrealized Depreciation--Note F (10,980) (.08)
- --------------------------------------------------------------------------------------------------------
NET ASSETS $1,335,771 $10.50
========================================================================================================
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
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FACE MARKET
CALIFORNIA INSURED MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (100.8%)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ISSUER INSURED (91.6%)
ABAG Finance Auth. For Non-Profit Corp. COP
(Children's Hosp. Medical Center) 6.00% 12/1/2029 (2) 5,750 5,760
Alameda CA Corridor Transp. Auth. Rev. 5.125% 10/1/2016 (2) 7,165 6,774
Anaheim CA Convention Center Finance COP 0.00% 8/1/2005 (1) 1,250 959
Anaheim CA Convention Center Finance COP 0.00% 8/1/2006 (1) 3,125 2,274
Anaheim CA Convention Center Finance COP 5.50% 8/1/2014 (1) 5,750 5,771
Barstow CA Redev. Agency 6.25% 9/1/2022 (1) 2,225 2,275
California Community College Financing Auth. TRAN 4.00% 7/28/2000 (4) 20,000 20,049
California Dept. of Transp. COP 5.25% 3/1/2016 (1) 9,250 8,878
California Dept. of Veteran Affairs Rev. 5.45% 12/1/2019 (2) 18,450 17,908
California Educ. Fac. Auth.
(Point Loma Nazarene Univ.) 5.00% 10/1/2021 (1) 11,000 9,768
California Educ. Fac. Auth. (Santa Clara Univ.) 5.25% 9/1/2015 (2) 1,325 1,290
California Educ. Fac. Auth. (Santa Clara Univ.) 5.25% 9/1/2016 (2) 1,000 964
California Educ. Fac. Auth. (Santa Clara Univ.) 5.25% 9/1/2017 (2) 1,000 955
California GO 5.25% 10/1/2014 (3) 15,610 15,372
California GO 6.00% 8/1/2019 (3) 210 212
Califronia GO 7.00% 11/1/2004 (3)(Prere.)1,935 2,183
California GO 7.00% 11/1/2013 (3) 65 72
California Health Fac. Finance Auth. Rev.
(Adventist Health System) 6.75% 3/1/2011 (1) 5,000 5,230
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 5.75% 7/1/2015 (2) 4,080 4,107
California Health Fac. Finance Auth. Rev.
(Catholic Healthcare West) 6.00% 7/1/2017 (1) 27,900 28,404
California Health Fac. Finance Auth. Rev.
(Kaiser Permanente) 5.25% 10/1/2010 (2) 9,785 9,873
California Health Fac. Finance Auth. Rev.
(Little Company of Mary) 5.00% 10/1/2020 (2) 15,655 13,874
California Health Fac. Finance Auth. Rev.
(San Diego Hosp.) 6.20% 8/1/2020 (1) 3,820 3,869
California Health Fac. Finance Auth. Rev.
(Scripps Health) 5.00% 10/1/2018 (1) 7,355 6,592
California Health Fac. Finance Auth. Rev.
(Scripps Health) 5.00% 10/1/2022 (1) 5,760 5,068
California Health Fac. Finance Auth. Rev.
(UCSF Stanford Health Care) 5.00%1 1/15/2018 (2) 10,000 8,960
California Health Fac. Finance Auth. Rev. VRDO
(Catholic Healthcare West) 3.50% 12/8/1999 (1) 1,000 1,000
California Health Fac. Finance Auth. Rev. VRDO
(Catholic Healthcare West) 3.80% 12/8/1999 (1) 6,000 6,000
California Housing Finance Agency Home Mortgage Rev.
0.00% 8/1/2018 (2) 8,825 2,829
California Housing Finance Agency Multifamily
Housing Rev. 8.625% 8/1/2015 (1) 145 147
California Public Works Board Lease Rev.
(California State Univ.) 5.40% 10/1/2022 (1) 14,465 13,615
California Public Works Board Lease Rev.
(Dept. of Corrections) 5.50% 12/1/2012 (1) 2,000 2,031
California Public Works Board Lease Rev.
(Dept. of Corrections) 5.50% 1/1/2017 (2) 22,285 21,825
California Public Works Board Lease Rev.
(Dept. of Corrections) 5.625% 11/1/2016 (1) 9,200 9,203
California Public Works Board Lease Rev.
(Dept. of Health Services) 5.75% 11/1/2024 (1) 7,885 7,711
California Public Works Board Lease Rev.
(Univ. of California) 5.375% 10/1/2017 (2) 8,250 7,969
California State Univ. Rev. & Colleges
Housing System Rev. 5.625% 11/1/2024 (3) 6,920 6,647
California Statewide Community Dev. Auth. TRAN 4.00% 7/28/2000 (4) 10,000 10,026
Calleguas-Las Virgenes CA Public Finance Auth. Rev. 5.00% 11/1/2017 (4) 3,435 3,156
Calleguas-Las Virgenes CA Public Finance Auth. Rev. 5.00% 11/1/2023 (4) 3,500 3,087
Capistrano CA Unified Public Schools GO 5.70% 9/1/2016 (2) 10,000 10,054
Central Coast CA Water Auth. Rev. 5.00% 10/1/2022 (2) 7,500 6,641
Chino Basin CA Regional Financing Auth. Rev.
(Inland Empire Util. Agency Sewer Project) 5.75% 11/1/2019 (1) 3,325 3,313
Chino Basin CA Regional Financing Auth. Rev.
(Inland Empire Util. Agency Sewer Project) 5.75% 11/1/2022 (1) 1,000 985
Chino Basin CA Regional Financing Auth. Rev.
(Muni. Water Dist. Sewer System Project) 6.00% 8/1/2016 (2) 5,500 5,624
Clovis CA Unified School Dist. GO 0.00% 8/1/2007 (3) 15,000 10,410
Clovis CA Unified School Dist. GO 0.00% 8/1/2008 (3) 14,265 9,368
Clovis CA Unified School Dist. GO 0.00% 8/1/2009 (3) 19,725 12,224
Clovis CA Unified School Dist. GO 0.00% 8/1/2010 (3) 21,485 12,476
Clovis CA Unified School Dist. GO 0.00% 8/1/2011 (3) 1,625 886
Contra Costa CA COP 5.50% 6/1/2012 (2) 6,850 6,931
Contra Costa CA Water Dist. Rev. 5.50% 10/1/2019 (1) 5,000 4,830
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Culver City CA Redev. Finance Auth. Rev. 5.60% 11/1/2025 (4) 2,250 2,152
Culver City CA Wastewater Fac. Rev. 5.70% 9/1/2029 (3) 5,000 4,867
East Bay CA Muni. Util. Dist. Waste
Water Treatment System Rev. 6.50% 6/1/2004 (2)(Prere.)2,000 2,201
Eastern CA Muni. Water. Dist. Water & Sewer Rev. 6.75% 7/1/2012 (3) 8,500 9,731
El Dorado County CA Public Agency Finance
Auth. Rev. 5.50% 2/15/2016 (3) 9,000 8,904
Elsinore Valley CA Muni. Water Dist. COP 6.00% 7/1/2012 (3) 2,210 2,380
Escondido CA Union High School Dist. GO 0.00% 11/1/2020 (1) 3,000 850
Fresno CA Water System Rev. 5.00% 6/1/2024 (3) 3,000 2,638
Glendale CA Hosp. Rev. (Adventist Health System) 6.00% 3/1/2014 (1) 3,000 3,077
Helix CA Water Dist. COP 5.00% 4/1/2019 (4) 4,250 3,835
Kern CA High School Dist. GO 6.25% 8/1/2011 (1) 1,065 1,175
Kern CA High School Dist. GO 6.40% 8/1/2014 (1) 1,490 1,635
Kern CA High School Dist. GO 6.40% 8/1/2015 (1) 1,645 1,794
Kern CA High School Dist. GO 6.40% 8/1/2016 (1) 1,815 1,972
King County CA Joint Unified High School Dist. 5.00% 8/1/2020 (1) 2,695 2,404
La Quinta CA Redev. Agency (Tax Allocation Project) 7.30% 9/1/2010 (1) 1,145 1,356
Long Beach CA Finance Auth. Lease Rev.
(Rainbow Harbor Refinancing Project) 5.125% 5/1/2020 (2) 2,750 2,490
Long Beach CA Finance Auth. Lease Rev.
(Temple & Willow Fac.) 5.50% 10/1/2018 (1) 5,030 4,897
Long Beach CA Finance Auth. Rev. 6.00% 11/1/2017 (2) 2,000 2,087
Los Angeles CA Dept. of Water & Power Rev. 5.00% 10/15/2017 (1) 11,600 10,660
Los Angeles CA Dept. of Water & Power Rev. 5.00% 10/15/2018 (1) 11,600 10,568
Los Angeles CA Unified School Dist. GO 5.00% 7/1/2021 (3) 12,000 10,664
Los Angeles CA Unified School Dist. GO 5.00% 7/1/2023 (3) 5,000 4,413
Los Angeles CA Wastewater System Rev. 5.00% 6/1/2028 (3) 11,750 10,212
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.00% 7/1/2012 (4) 8,090 7,949
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.00% 7/1/2023 (2) 10,100 8,915
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.25% 7/1/2011 (4) 9,570 9,702
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.25% 7/1/2023 (2) 13,025 11,923
Los Angeles County CA Metro. Transp. Auth.
Sales Tax Rev. 5.25% 7/1/2027 (1) 8,210 7,466
Los Angeles County CA Schools COP 0.00% 8/1/2014 (2) 1,000 440
MSR California Public Power Agency
(San Juan Project) 6.125% 7/1/2013 (2) 8,000 8,665
MSR California Public Power Agency
(San Juan Project) 6.75% 7/1/2020 (1) 38,785 43,300
MSR California Public Power Agency VRDO
(San Juan Project) 3.50% 12/2/1999 (1) 400 400
Metro. Water Dist. of Southern California Rev. 5.50% 7/1/2025 (1) 17,500 16,581
Modesto CA Irrigation Dist. Finance Auth. Rev.
(Domestic Water Project) 5.75% 9/1/2005 (2)(Prere.)3,750 4,043
Modesto CA Irrigation Dist. Finance Auth. Rev.
(Woodland Project) 6.50% 10/1/2011 (2) 8,125 9,026
Modesto CA Irrigation Dist. Finance Auth. Rev.
(Woodland Project) 6.50% 10/1/2022 (2) 9,750 10,465
Natomas CA Unified School Dist. GO 5.20% 9/1/2019 (3) 5,000 4,646
North City West CA School Fac. Finance Auth. 6.00% 9/1/2019 (4) 2,000 2,011
Northern California Power Agency
(Hydro Electric Project) 6.00% 7/1/2009 (1) 7,530 8,157
Northern California Power Agency
(Hydro Electric Project) 6.30% 7/1/2018 (1) 10,000 10,717
Northern California Power Agency
(Hydro Electric Project) 7.50% 7/1/2021 (2)(Prere.)1,810 2,160
Oakland CA Building Auth. Lease Rev.
(Harris Building) 5.00% 4/1/2023 (2) 4,000 3,533
Oakland CA Building Auth. Lease Rev.
(Harris Building) 5.25% 4/1/2010 (2) 5,495 5,596
Oakland CA Redev. Agency (Central Dist. Project) 5.50% 2/1/2014 (2) 5,500 5,559
Palmdale CA Elementary School Dist. Special Tax Rev. 5.70% 8/1/2018 (4) 2,000 1,988
Palmdale CA Elementary School Dist. Special Tax Rev. 5.80% 8/1/2029 (4) 6,410 6,311
Palomar Pomerado Health System California Rev. 5.375% 11/1/2011 (1) 3,865 3,940
Palomar Pomerado Health System California Rev. 5.375% 11/1/2013 (1) 6,730 6,748
Pasadena CA Unified School Dist. GO 5.00% 7/1/2020 (3) 4,000 3,570
Pasadena CA Unified School Dist. GO 5.00% 5/1/2023 (3) 5,155 4,552
Pittsburg CA Redev. Agency
(Los Medanos Community Dev. Project) 0.00% 8/1/2023 (2) 8,750 2,067
Placer County CA Water Agency COP
(Capital Improvement Projects) 5.50% 7/1/2029 (2) 4,500 4,243
Pomona CA Unified School Dist. GO 5.60% 8/1/2014 (1) 1,585 1,612
Pomona CA Unified School Dist. GO 5.60% 8/1/2015 (1) 2,000 2,014
Pomona CA Unified School Dist. GO 5.60% 8/1/2016 (1) 1,000 1,000
Pomona CA Unified School Dist. GO 7.50% 8/1/2017 (1) 2,540 3,048
Port of Oakland CA Rev. 5.40% 11/1/2017 (1) 16,705 16,201
Port of Oakland CA Rev. 5.60% 11/1/2019 (1) 22,280 21,756
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FACE MARKET
CALIFORNIA INSURED MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rancho CA Water Dist. Finance Auth. Rev. 5.875% 11/1/2010 (3) 3,585 3,790
Rancho CA Water Dist. Finance Auth. Rev. 6.25% 8/1/2012 (3) 3,000 3,137
Rancho Cucamonga CA Redev. Agency
(Rancho Redev. Project) 5.10% 9/1/2014 (4) 3,040 2,945
Redding CA Joint Power Finance Auth.
Waste Water Rev. 5.50% 12/1/2018 (3) 5,400 5,251
Riverside CA Electric Rev. 5.375% 10/1/2013 (2) 5,895 5,931
Riverside County CA Transp. Comm. Rev. 5.75% 6/1/2009 (2) 3,800 4,055
Sacramento CA Finance Auth. Rev. 5.25% 5/1/2019 (2) 21,950 20,529
Sacramento CA Finance Auth. Rev. 5.375% 11/1/2014 (2) 9,000 8,940
Sacramento CA Finance Auth. Rev. 5.40% 11/1/2020 (2) 9,785 9,364
Sacramento CA Muni. Util. Dist. Rev. 6.25% 8/15/2010 (1) 33,800 37,179
Sacramento CA Muni. Util. Dist. Rev. 6.30% 8/15/2018 (1) 14,000 14,481
Sacramento CA Redev. Agency
(Tax Allocation Project) 6.50% 11/1/2000 (1)(Prere.)4,850 5,063
Sacramento CA Redev. Agency
(Tax Allocation Project) 6.50% 11/1/2013 (1) 650 675
Sacramento CA Rev. (Cogeneration Project) 5.00% 7/1/2017 (1) 4,760 4,373
Sacramento County CA Airport System Rev. 5.00% 7/1/2026 (3) 3,250 2,840
Sacramento County CA Public Fac. Finance Corp. COP
(Main Detention Fac. Project) 5.50% 6/1/2010 (1) 5,760 5,998
San Bernardino County CA COP
(Medical Center Financing Project) 5.50% 8/1/2005 (1)(Prere)12,790 13,595
San Bernardino County CA COP
(Medical Center Financing Project) 6.50% 8/1/2017 (1) 17,915 19,686
San Diego CA Financing Auth. Lease Rev.
(Convention Center Expansion) 5.25% 4/1/2014 (2) 5,680 5,590
San Diego CA Public Fac. Finance Auth. Sewer Rev. 5.25% 5/15/2027 (3) 6,450 5,875
San Diego CA Unified School Dist. COP 5.00% 8/1/2009 (1) 4,875 4,912
San Diego CA Unified School Dist. GO 0.00% 7/1/2015 (3) 5,370 2,219
San Diego CA Unified School Dist. GO 0.00% 7/1/2016 (3) 4,565 1,754
San Diego CA Unified School Dist. GO 0.00% 7/1/2018 (3) 4,500 1,500
San Diego CA Water Auth. Rev. COP 5.25% 5/1/2015 (3) 14,290 13,907
San Diego CA Water Util. Rev. 5.00% 8/1/2018 (3) 2,000 1,823
San Diego CA Water Util. Rev. 5.00% 8/1/2021 (3) 4,975 4,420
San Francisco CA Bay Area Rapid Transit Rev. 6.75% 7/1/2010 (2) 6,370 7,277
San Francisco CA Bay Area Rapid Transit Rev. 6.75% 7/1/2011 (2) 7,455 8,542
San Francisco CA Building Auth. Rev.
(Civic Center Complex) 5.25% 12/1/2016 (2) 22,575 21,692
San Francisco CA Building Auth. Rev.
(Civic Center Complex) 5.25% 12/1/2021 (2) 9,000 8,295
San Francisco CA City & County Airport Rev. 5.00% 5/1/2023 (3) 8,500 7,333
San Francisco CA City & County Airport Rev. 5.65% 5/1/2006 (3)(Prere.)6,200 6,611
San Francisco CA City & County Airport Rev. 6.00% 5/1/2003 (1)(Prere.)1,915 2,045
San Francisco CA City & County Airport Rev. 6.00% 5/1/2010 (1) 1,640 1,718
San Francisco CA City & County Airport Rev. 6.00% 5/1/2011 (1) 1,720 1,801
San Francisco CA City & County Airport Rev. 6.00% 5/1/2020 (1) 5,325 5,361
San Francisco CA City & County Airport Rev. 6.20% 5/1/2002 (2)(Prere.)2,410 2,563
San Francisco CA City & County Airport Rev. 6.20% 5/1/2006 (2) 2,995 3,169
San Francisco CA City & County Airport Rev. 6.20% 5/1/2008 (2) 595 629
San Francisco CA City & County Airport Rev. 6.30% 5/1/2002 (2)(Prere.)2,005 2,136
San Francisco CA City & County Airport Rev. 6.30% 5/1/2011 (2) 2,995 3,169
San Francisco CA City & County Airport Rev. 6.50% 5/1/2003 (1)(Prere.) 545 591
San Francisco CA City & County Airport Rev. 6.50% 5/1/2006 (1) 2,735 2,949
San Francisco CA City & County Airport Rev. 6.60% 5/1/2003 (1)(Prere.) 410 446
San Francisco CA City & County Airport Rev. 6.60% 5/1/2007 (1) 2,080 2,249
San Francisco CA City & County Airport Rev. 6.625% 5/1/2003 (1)(Prere.) 620 675
San Francisco CA City & County Airport Rev. 6.625% 5/1/2008 (1) 3,100 3,355
San Francisco CA City & County Airport Rev. 6.70% 5/1/2003 (1)(Prere. 665 726
San Francisco CA City & County Airport Rev. 6.70% 5/1/2009 (1) 3,305 3,584
San Francisco CA City & County GO 5.00% 6/15/2016 (3) 10,000 9,317
San Joaquin Hills CA Transp.
Corridor Agency Toll Road Rev. 0.00% 1/15/2021 (1) 12,385 3,452
San Joaquin Hills CA Transp.
Corridor Agency Toll Road Rev. 5.25% 1/15/2030 (1) 10,000 9,037
San Joaquin Hills CA Transp.
Corridor Agency Toll Road Rev. 5.375% 1/15/2029 (1) 34,290 31,753
San Jose CA Redev. Agency 5.00% 8/1/2020 (1) 3,500 3,115
San Jose CA Redev. Agency 6.00% 8/1/2011 (1) 8,845 9,570
San Jose CA Unified School Dist. COP 5.75% 6/1/2024 (1) 6,300 6,194
San Mateo CA Transp. Dist. Rev. 5.25% 6/1/2015 (4) 4,525 4,403
San Mateo County CA Finance Auth. Rev. 6.50% 7/1/2013 (1) 14,560 16,095
San Ramon Valley CA Unified School Dist. GO 0.00% 7/1/2009 (3) 4,895 3,023
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
San Ramon Valley CA Unified School Dist. GO 0.00% 7/1/2010 (3) 7,050 4,077
San Ramon Valley CA Unified School Dist. GO 0.00% 7/1/2011 (3) 7,355 3,990
San Ramon Valley CA Unified School Dist. GO 0.00% 7/1/2012 (3) 6,645 3,377
San Ramon Valley CA Unified School Dist. GO 0.00% 7/1/2013 (3) 7,430 3,532
San Ramon Valley CA Unified School Dist. GO 0.00% 7/1/2014 (3) 8,290 3,678
San Ramon Valley CA Unified School Dist. GO 0.00% 7/1/2015 (3) 5,605 2,317
Santa Ana CA Finance Auth. Rev. 6.25% 7/1/2016 (1) 5,345 5,753
Santa Ana CA Finance Auth. Rev. 6.25% 7/1/2017 (1) 2,000 2,142
Santa Clara CA Redev. Agency
(Bayshore North Project) 7.00% 7/1/2010 (2) 7,000 7,900
Santa Clara CA Valley Water Dist. COP 6.00% 2/1/2024 (3) 20,000 20,100
Santa Clara County CA Finance Auth. Rev. 5.00%1 1/15/2017 (2) 5,500 5,053
Santa Clara County CA Finance Auth. Rev.
(Multiple Fac. Project-2000) 5.50% 5/15/2013 (2) + 5,050 5,042
Santa Clara County CA Finance Auth. Rev.
(Multiple Fac. Project-2000) 5.50% 5/15/2014 (2) + 5,325 5,271
Santa Clara County CA Finance Auth. Rev.
(Multiple Fac. Project-2000) 5.50% 5/15/2015 (2) + 5,620 5,506
Santa Rosa CA Waste Water Rev. 6.00% 9/1/2015 (3) 5,580 5,871
Santa Rosa CA Waste Water Rev. 6.25% 9/1/2002 (3)(Prere.)7,075 7,539
Santa Rosa CA Waste Water Service Fac. Dist. 6.00% 7/2/2015 (2) 7,000 7,363
Sante Fe Springs CA Redev. Agency 6.00% 9/1/2014 (1) 5,350 5,583
South Coast CA Air Quality Management Dist. Rev. 5.50% 8/1/2014 (1) 8,000 8,025
South Coast CA Air Quality Management Dist. Rev. 6.00% 8/1/2011 (2) 3,200 3,462
South County CA Regional Waste Water Auth. (Gilroy) 5.50% 8/1/2022 (3) 8,625 8,900
South Orange County CA Public Finance Auth. Rev. 5.25% 8/15/2018 (4) 11,100 10,432
South Orange County CA Public Finance Auth. Rev. 7.00% 9/1/2011 (1) 3,000 3,487
South Orange County CA Public Finance Auth. Rev. 9.50% 8/15/2004 (1) 3,000 3,630
Southern California Public Power Auth.
(Transmission Project) 5.75% 7/1/2021 (1) 3,000 2,956
Southern California Public Power Auth. VRDO
(Southern Transmission Project) 3.55% 12/8/1999 (4) 3,100 3,100
Three Valley CA Muni. Water Dist. COP 5.25% 11/1/2010 (3) 4,220 4,267
Tulare County CA COP 5.00% 8/15/2014 (1) 5,065 4,866
Tulare County CA COP 5.00% 8/15/2015 (1) 6,460 6,110
Ukiah CA Electric Rev. 6.00% 6/1/2008 (1) 4,565 4,954
Ukiah CA Electric Rev. 6.25% 6/1/2018 (1) 6,000 6,396
Univ. of California Rev. (Medical Center) 5.75% 7/1/2012 (2) 10,395 10,707
Univ. of California Rev. (Medical Center) 5.75% 7/1/2014 (2) 12,160 12,348
Univ. of California Rev. (Medical Center) 5.75% 7/1/2024 (2) 10,000 9,655
Univ. of California Rev. (Medical Center) 6.00% 7/1/2026 (2) 11,000 10,956
Univ. of California Rev.(Multiple Purpose Project) 6.25% 9/1/2002 (1)(Prere)10,000 10,700
Walnut CA Public Finance Auth. 6.00% 9/1/2015 (1) 5,000 5,101
Walnut Valley CA Unified School Dist. 6.00% 8/1/2012 (2) 1,790 1,921
Walnut Valley CA Unified School Dist. 6.00% 8/1/2013 (2) 1,980 2,109
Walnut Valley CA Unified School Dist. 6.00% 8/1/2014 (2) 2,205 2,331
Walnut Valley CA Unified School Dist. 6.00% 8/1/2015 (2) 2,470 2,590
Walnut Valley CA Unified School Dist. 6.00% 8/1/2016 (2) 2,690 2,814
Walnut Valley CA Unified School Dist. 6.20% 8/1/2009 (2) 1,270 1,400
West Sacramento CA Finance Auth. Rev.
(Water System Improvement Project) 5.25% 8/1/2008 (3) 2,160 2,204
West Sacramento CA Tax Allocation (Redev. Project) 6.25% 9/1/2001 (1)(Prere.)8,250 8,704
Whittier CA Insured Health Fac. Rev.
(Presbyterian Hosp.) 6.25% 6/1/2007 (1) 4,260 4,637
Whittier CA Insured Health Fac. Rev.
(Presbyterian Hosp.) 6.25% 6/1/2008 (1) 3,530 3,853
OUTSIDE CALIFORNIA:
Puerto Rico Govt. Dev. Bank VRDO 3.60% 12/8/1999 (1) 13,250 13,250
---------
1,416,361
---------
SECONDARY MARKET INSURED (3.6%)
California GO 5.00% 10/1/2016 (3) 4,380 4,077
California GO 6.25% 9/1/2012 (3) 9,000 9,907
California Public Works Rev. (Dept. of Corrections) 6.50% 9/1/2017 (2) 30,000 32,974
Los Angeles County CA Public Works Financing Auth. 5.00% 10/1/2016 (1) 8,540 7,950
---------
54,908
---------
31
<PAGE>
- --------------------------------------------------------------------------------------------------------
FACE MARKET
CALIFORNIA INSURED MATURITY AMOUNT VALUE*
INTERMEDIATE-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------
NONINSURED (5.6%)
California Dept. of Water (Central Valley Project) 6.40% 6/1/2002 (Prere.) 20,400 21,721
California Educ. Fac. Auth. Rev.
(Univ. of Southern California Project) 5.80% 10/1/2015 6,550 6,640
California GO 3.20% 12/1/2000 3,400 3,386
California Health Fac. Finance Auth. Rev. VRDO
(Adventist Health System West Sutter Health) 3.65% 12/2/1999 LOC 3,300 3,300
California PCR Finance Auth. VRDO (Exxon Project) 3.45% 12/2/1999 100 100
California PCR Finance Auth. VRDO
(Pacific Gas & Electric Co.) 3.50% 12/8/1999 5,000 5,000
California PCR Finance Auth. VRDO
(Pacific Gas & Electric Co.) 3.55% 12/2/1999 LOC 3,725 3,725
California PCR Finance Auth. VRDO
(Pacific Gas & Electric Co.) 3.90% 12/2/1999 LOC 175 175
California PCR Financing Auth. Solid Waste Disposal Rev.
VRDO (Shell Oil Co.-Martinez) 3.50% 12/2/1999 960 960
East Bay CA Muni. Util. Dist. Water System Rev. 5.25% 6/1/2018 4,000 3,778
East Bay CA Muni. Util. Dist. Water System Rev. 5.25% 6/1/2019 4,445 4,167
Irvine CA Assessment Dist. Improvement Boards
Rev. VRDO 3.40% 12/2/1999 700 700
Irvine CA Assessment Dist. Improvement Boards Rev.
VRDO (Northwest Irvine) 3.40% 12/2/1999 LOC 1,300 1,300
Irvine CA Assessment Dist. Improvement Boards Rev.
VRDO (Oak Creek) 3.40% 12/2/1999 LOC 1,200 1,200
Irvine CA Ranch Water Dist. VRDO 3.40% 12/2/1999 LOC 2,600 2,600
Los Angeles CA Dept. of Water & Power Electric
Plant Rev. 6.50% 4/1/2010 3,950 4,199
Los Angeles County CA Public Works Rev. 5.50% 10/1/2012 6,750 6,899
Los Angeles County CA School Pooled Financing
Program TRAN 4.00% 9/29/2000 8,000 8,021
Metro. Water Dist. of Southern California 8.00% 7/1/2008 2,000 2,440
Riverside County CA Public Fac. Project VRDO 3.65% 12/7/1999 LOC 4,700 4,700
San Diego CA Water Auth. Rev. COP 5.00% 5/1/2017 2,300 2,107
---------
87,118
---------
- --------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,560,737) 1,558,387
- --------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.8%)
- --------------------------------------------------------------------------------------------------------
Other Assets--Note B 30,560
Liabilities (43,600)
- --------------------------------------------------------------------------------------------------------
(13,040)
- --------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------------------------
Applicable to 142,982,511 outstanding $.001 par value shares of beneficial interest
(unlimited authorization) $1,545,347
========================================================================================================
NET ASSET VALUE PER SHARE $10.81
========================================================================================================
*See Note A in Notes to Financial Statements.
+Security purchased on a when-issued or delayed delivery basis for which the
fund has not taken delivery as of November 30, 1999. For key to abbreviations
and other references, see page 33.
- --------------------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1999, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------------------------------
Paid in Capital $1,554,310 $10.87
Undistributed Net Investment Income -- --
Overdistributed Net Realized Gains--Note E (6,613) (.05)
Unrealized Depreciation--Note F (2,350) (.01)
========================================================================================================
NET ASSETS $1,545,347 $10.81
========================================================================================================
</TABLE>
32
<PAGE>
KEY TO ABBREVIATIONS
COP--Certificate of Participation.
CP--Commercial Paper.
GO--General Obligation Bond.
PCR--Pollution Control Revenue Bond.
PUT--Put Option Obligation.
TAN--Tax Anticipation Note.
TOB--Tender Option Bond.
TRAN--Tax Revenue Anticipation Note.
VRDO--Variable Rate Demand Obligation.
(ETM)--Escrowed To Maturity.
(Prere.)--Prerefunded.
Scheduled principal and interest payments are guaranteed by:
(1) MBIA (Municipal Bond Insurance Association).
(2) AMBAC (Ambac Assurance Corporation).
(3) FGIC (Financial Guaranty Insurance Company).
(4) FSA (Financial Security Assurance).
(5) BIGI (Bond Investors Guaranty Insurance).
(6) Connie Lee Inc.
The insurance does not guarantee the market value of the municipal bonds.
LOC--Scheduled principal and interest payments are guaranteed by bank letter of
credit.
33
<PAGE>
STATEMENT OF OPERATIONS
This Statement shows interest earned by each fund during the reporting period,
and details the operating expenses charged to the fund. These expenses directly
reduce the amount of investment income available to pay to shareholders as
tax-exempt income dividends. This Statement also shows any Net Gain (Loss)
realized on the sale of investments, and the increase or decrease in the
Unrealized Appreciation (Depreciation) on investments during the period. If a
fund invested in futures contracts during the period, the results of these
investments are shown separately.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
CALIFORNIA CALIFORNIA
CALIFORNIA INSURED INSURED
TAX-EXEMPT INTERMEDIATE- LONG-TERM
MONEY MARKET TERM TAX-EXEMPT
FUND TAX-EXEMPT FUND
FUND
---------------------------------------
YEAR ENDED NOVEMBER 30, 1999
---------------------------------------
(000) (000) (000)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Interest $62,629 $55,491 80,560
---------------------------------------
Total Income 62,629 55,491 80,560
---------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 262 145 195
Management and Administrative 3,385 1,597 2,325
Marketing and Distribution 482 257 262
Custodian Fees 22 10 14
Auditing Fees 8 8 8
Shareholders' Reports 18 8 15
Trustees' Fees and Expenses 3 1 2
---------------------------------------
Total Expenses 4,180 2,026 2,821
Expenses Paid Indirectly--Note C (22) (11) (14)
- ----------------------------------------------------------------------------------------
Net Expenses 4,158 2,015 2,807
- ----------------------------------------------------------------------------------------
NET INVESTMENT INCOME 58,471 53,476 77,753
- -----------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold (11) (265) (7,165)
Futures Contracts -- 1,685 7,657
- ----------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) (11) 1,420 492
- ----------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities -- (53,092) (116,120)
Futures Contracts -- 205 882
- ----------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) -- (52,887) (115,238)
- -----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $58,460 $ 2,009 $ (36,993)
========================================================================================
</TABLE>
34
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how each fund's total net assets changed during the two
most recent reporting periods. The Operations section summarizes information
detailed in the Statement of Operations. Because the fund distributes its income
to shareholders each day, the amounts of Distributions--Net Investment Income
generally equal the net income earned as shown under the Operations section. The
amounts of Distributions--Realized Capital Gain may not match the capital gains
shown in the Operations section, because distributions are determined on a tax
basis and may be made in a period different from the one in which the gains were
realized on the financial statements. The Capital Share Transactions section
shows the amount shareholders invested in the fund, either by purchasing shares
or by reinvesting distributions, and the amounts redeemed. The corresponding
numbers of Shares Issued and Redeemed are shown at the end of the Statement.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
CALIFORNIA CALIFORNIA INSURED
TAX-EXEMPT INTERMEDIATE-TERM
MONEY MARKET FUND TAX-EXEMPT FUND
------------------------------------------------
YEAR ENDED NOVEMBER 30,
------------------------------------------------
1999 1998 1999 1998
(000) (000) (000) (000)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 58,471 $ 58,937 $ 53,476 $ 35,732
Realized Net Gain (Loss) (11) 1 1,420 (1,042)
Change in Unrealized
Appreciation (Depreciation) -- -- (52,887) 21,816
------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 58,460 58,938 2,009 56,506
------------------------------------------------------
DISTRIBUTIONS
Net Investment Income (58,471) (58,937) (53,476) (35,732)
Realized Capital Gain -- -- -- --
------------------------------------------------------
Total Distributions (58,471) (58,937) (53,476) (35,732)
CAPITAL SHARE TRANSACTIONS1
Issued 2,484,987 2,145,061 719,578 561,031
Issued in Lieu of Cash Distributions 54,288 54,801 42,416 27,849
Redeemed (2,223,239) (2,029,569) (380,849) (199,993)
------------------------------------------------------
Net Increase from Capital
Share Transactions 316,036 170,293 381,145 388,887
- ----------------------------------------------------------------------------------------
Total Increase 316,025 170,294 329,678 409,661
- ----------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year 1,970,226 1,799,932 1,006,093 596,432
------------------------------------------------------
End of Year $2,286,251 $1,970,226 $1,335,771 $1,006,093
========================================================================================
1Shares Issued (Redeemed)
Issued 2,484,987 2,145,061 66,941 51,907
Issued in Lieu of Cash Distributions 54,288 54,801 3,963 2,573
Redeemed (2,223,239) (2,029,569) (35,553) (18,538)
------------------------------------------------------
Net Increase in Shares Outstanding 316,036 170,293 35,351 35,942
=============================================----------=================================
</TABLE>
35
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
CALIFORNIA
INSURED LONG-TERM
TAX-EXEMPT FUND
YEAR ENDED NOVEMBER 30,
---------------------------------
1999 1998
(000) (000)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 77,753 $ 66,239
Realized Net Gain (Loss) 492 13,608
Change in Unrealized Appreciation
(Depreciation) (115,238) 26,524
---------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (36,993) 106,371
DISTRIBUTIONS
Net Investment Income (77,753) (66,239)
Realized Capital Gain (14,021) (7,325)
---------------------------------
Total Distributions (91,774) (73,564)
CAPITAL SHARE TRANSACTIONS1
Issued 458,784 398,698
Issued in Lieu of Cash Distributions 64,040 50,100
Redeemed (337,266) (199,574)
- --------------------------------------------------------------------------------
Net Increase from Capital Share Transactions 185,558 249,224
- --------------------------------------------------------------------------------
Total Increase 56,791 282,031
- --------------------------------------------------------------------------------
NET ASSETS
Beginning of Year 1,488,556 1,206,525
--------------------------
End of Year $1,545,347 $1,488,556
================================================================================
1Shares Issued (Redeemed)
Issued 40,428 34,419
Issued in Lieu of Cash Distributions 5,667 4,327
Redeemed (30,015) (17,261)
---------------------------------
Net Increase in Shares Outstanding 16,080 21,485
================================================================================
36
<PAGE>
FINANCIAL HIGHLIGHTS
This table summarizes each fund's investment results and distributions to
shareholders on a per-share basis. It also presents the fund's Total Return and
shows net investment income and expenses as percentages of average net assets.
These data will help you assess: the variability of the fund's net income and
total returns from year to year; the relative contributions of net income and
capital gains to the fund's total return; how much it costs to operate the fund;
and the extent to which the fund tends to distribute capital gains. The table
also shows the Portfolio Turnover Rate, a measure of trading activity. A
turnover rate of 100% means that the average security is held in the fund for
one year. Money market funds are not required to report a Portfolio Turnover
Rate.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
YEAR ENDED NOVEMBER 30,
-------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .027 .031 .034 .033 .036
Net Realized and Unrealized Gain (Loss) on
Investments -- -- -- -- --
-------------------------------------------
Total from Investment Operations .027 .031 .034 .033 .036
-------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.027) (.031) (.034) (.033) (.036)
Distributions from Realized Capital Gains -- -- -- -- --
-------------------------------------------
Total Distributions (.027) (.031) (.034) (.033) (.036)
- --------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
==================================================================================================
TOTAL RETURN 2.79% 3.10% 3.41% 3.32% 3.69%
==================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $2,286 $1,970 $1,800 $1,443 $1,202
Ratio of Total Expenses to Average Net Assets 0.20% 0.20% 0.18% 0.19% 0.20%
Ratio of Net Investment Income to Average Net Assets 2.75% 3.05% 3.35% 3.27% 3.61%
==================================================================================================
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA INSURED INTERMEDIATE-TERM TAX-EXEMPT FUND
YEAR ENDED NOVEMBER 30,
<S> <C> <C> <C> <C> <C>
----------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $10.95 $10.66 $10.58 $10.44 $ 9.64
- -----------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .480 .489 .505 .508 .511
Net Realized and Unrealized Gain (Loss)
on Investments (.450) .290 .102 .140 .800
-----------------------------------------------
Total from Investment Operations .030 .779 .607 .648 1.311
-----------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.480) (.489) (.505) (.508) (.511)
Distributions from Realized Capital Gains -- -- (.022) -- --
-----------------------------------------------
Total Distributions (.480) (.489) (.527) (.508) (.511)
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.50 $10.95 $10.66 $10.58 $10.44
=====================================================================================================
TOTAL RETURN 0.27% 7.47% 5.91% 6.41% 13.88%
=====================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $1,336 $1,006 $596 $343 $206
Ratio of Total Expenses to Average Net Assets 0.17% 0.19% 0.18% 0.19% 0.21%
Ratio of Net Investment Income to Average Net Assets 4.48% 4.52% 4.78% 4.90% 5.05%
Portfolio Turnover Rate 9% 2% 10% 21% 11%
=====================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CALIFORNIA INSURED LONG-TERM TAX-EXEMPT FUND
YEAR ENDED NOVEMBER 30,
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $11.73 $11.45 $11.42 $11.27 $9.92
- -----------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .563 .577 .592 .598 .602
Net Realized and Unrealized Gain (Loss)
on Investments (.810) .349 .121 .150 1.350
-----------------------------------------------
Total from Investment Operations (.247) .926 .713 .748 1.952
-----------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.563) (.577) (.592) (.598) (.602)
Distributions from Realized Capital Gains (.110) (.069) (.091) -- --
-----------------------------------------------
Total Distributions (.673) (.646) (.683) (.598) (.602)
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.81 $11.73 $11.45 $11.42 $11.27
=====================================================================================================
TOTAL RETURN -2.22% 8.31% 6.52% 6.91% 20.11%
=====================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $1,545 $1,489 $1,207 $1,066 $975
Ratio of Total Expenses to Average Net Assets 0.18% 0.19% 0.16% 0.19% 0.20%
Ratio of Net Investment Income to Average Net Assets 4.98% 4.98% 5.26% 5.38% 5.59%
Portfolio Turnover Rate 11% 15% 21% 23% 23%
=====================================================================================================
</TABLE>
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Vanguard California Tax-Exempt Funds comprise the California Tax-Exempt Money
Market Fund, California Insured Intermediate-Term Tax-Exempt Fund, and
California Insured Long-Term Tax-Exempt Fund, each of which is registered under
the Investment Company Act of 1940 as an open-end investment company, or mutual
fund. Each fund invests in debt instruments of municipal issuers whose ability
to meet their obligations may be affected by economic and political developments
in the state of California.
A. The following significant accounting policies conform to generally accepted
accounting principles for mutual funds. The funds consistently follow such
policies in preparing their financial statements.
1. SECURITY VALUATION: Tax-Exempt Money Market Fund: Investment securities
are valued at amortized cost, which approximates market value. Other funds:
Bonds, and temporary cash investments acquired over 60 days to maturity, are
valued using the latest bid prices or using valuations based on a matrix system
(which considers such factors as security prices, yields, maturities, and
ratings), both as furnished by independent pricing services. Other temporary
cash investments are valued at amortized cost, which approximates market value.
Securities for which market quotations are not available are valued by methods
deemed by the Board of Trustees to represent fair value.
2. FEDERAL INCOME TAXES: Each fund intends to continue to qualify as a
regulated investment company and distribute all of its income. Accordingly, no
provision for federal income taxes is required in the financial statements.
3. FUTURES CONTRACTS: The Insured Intermediate-Term and Insured Long-Term
Tax-Exempt Funds may use Municipal Bond Index, U.S. Treasury Bond, and U.S.
Treasury Note futures contracts, with the objectives of enhancing returns,
managing interest-rate risk, maintaining liquidity, diversifying credit risk,
and minimizing transaction costs. The funds may purchase or sell futures
contracts instead of bonds to take advantage of pricing differentials between
the futures contracts and the underlying bonds. The funds may also seek to take
advantage of price differences among bond market sectors by simultaneously
buying futures (or bonds) of one market sector and selling futures (or bonds) of
another sector. Futures contracts may also be used to simulate a fully invested
position in the underlying bonds while maintaining a cash balance for liquidity.
The primary risks associated with the use of futures contracts are imperfect
correlation between changes in market values of bonds held by the funds and the
prices of futures contracts, and the possibility of an illiquid market.
Futures contracts are valued based upon their quoted daily settlement
prices. The aggregate principal amounts of the contracts are not recorded in the
financial statements. Fluctuations in the value of the contracts are recorded in
the Statement of Net Assets as an asset (liability) and in the Statement of
Operations as unrealized appreciation (depreciation) until the contracts are
closed, when they are recorded as realized futures gains (losses).
4. DISTRIBUTIONS: Distributions from net investment income are declared
daily and paid on the first business day of the following month. Annual
distributions from realized capital gains, if any, are recorded on the
ex-dividend date.
5. OTHER: Security transactions are accounted for on the date securities
are bought or sold. Costs used to determine realized gains (losses) on the sale
of investment securities are those of the specific securities sold. Premiums and
original issue discounts are amortized and accreted, respectively, to interest
income over the lives of the respective securities.
B. The Vanguard Group furnishes at cost investment advisory, corporate
management, administrative, marketing, and distribution services. The costs of
such services are allocated to each fund under methods approved by the board of
trustees. Each fund has committed to provide up to
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
0.40% of its net assets in capital contributions to Vanguard. At November 30,
1999, the funds had contributed capital to Vanguard (included in Other Assets)
of:
- --------------------------------------------------------------------------------
CAPITAL CONTRIBUTED PERCENTAGE PERCENTAGE
TO VANGUARD OF FUND OF VANGUARD'S
CALIFORNIA TAX-EXEMPT FUND (000) NET ASSETS CAPITALIZATION
- --------------------------------------------------------------------------------
Money Market $467 0.02% 0.5%
Insured Intermediate-Term 272 0.02 0.3
Insured Long-Term 321 0.02 0.3
- --------------------------------------------------------------------------------
The funds' trustees and officers are also directors and officers of Vanguard.
C. The funds' investment adviser may direct new issue purchases, subject to
obtaining the best price and execution, to underwriters who have agreed to
rebate or credit to the funds part of the underwriting fees generated. Such
rebates or credits are used solely to reduce the funds' manage-ment and
administrative expenses. The funds' custodian bank has also agreed to reduce its
fees when the funds maintain cash on deposit in their non-interest-bearing
custody accounts. For the year ended November 30, 1999, these arrangements
reduced expenses by:
- --------------------------------------------------------------------------------
EXPENSE
REDUCTION
(000)
------------------------------
MANAGEMENT AND CUSTODIAN
CALIFORNIA TAX-EXEMPT FUND ADMINISTRATIVE FEES
- --------------------------------------------------------------------------------
Money Market -- $22
Insured Intermediate-Term $1 10
Insured Long-Term -- 14
- --------------------------------------------------------------------------------
D. During the year ended November 30, 1999, purchases and sales of investment
securities other than temporary cash investments were:
- --------------------------------------------------------------------------------
(000)
------------------------------
CALIFORNIA TAX-EXEMPT FUND PURCHASES SALES
- --------------------------------------------------------------------------------
Insured Intermediate-Term $470,569 $ 99,936
Insured Long-Term 346,121 165,981
- --------------------------------------------------------------------------------
E. Capital gains distributions are determined on a tax basis and may differ from
realized capital gains for financial reporting purposes due to differences in
the timing of realization of gains. The Insured Intermediate-Term Tax-Exempt
Fund and the Insured Long-Term Tax-Exempt Fund had realized losses totaling
$752,000 and $4,062,000, respectively, through November 30, 1999, which are
deferred for tax purposes and reduce the amount of unrealized appreciation on
40
<PAGE>
investment securities for tax purposes (see Note F). For federal income tax
purposes at November 30, 1999, the funds had the following capital losses
available to offset future capital gains:
- --------------------------------------------------------------------------------
CAPITAL LOSS
------------------------------
EXPIRATION
FISCAL YEAR(S)
AMOUNT ENDING
CALIFORNIA TAX-EXEMPT FUND (000) NOVEMBER 30
- --------------------------------------------------------------------------------
Insured Intermediate-Term $ (329) 2006
Insured Long-Term (2,551) 2007
- --------------------------------------------------------------------------------
F. At November 30, 1999, net unrealized depreciation of investment securities
for federal income tax purposes was:
- --------------------------------------------------------------------------------
(000)
--------------------------------------------
APPRECIATED DEPRECIATED NET UNREALIZED
CALIFORNIA TAX-EXEMPT FUND SECURITIES SECURITIES DEPRECIATION
- --------------------------------------------------------------------------------
Insured Intermediate-Term* $11,223 $(22,955) $(11,732)
Insured Long-Term* 38,804 (45,216) (6,412)
- --------------------------------------------------------------------------------
*See Note E.
41
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Vanguard California Tax-Exempt Funds
In our opinion, the accompanying statements of net assets 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
Vanguard California Tax-Exempt Money Market Fund, Vanguard California Insured
Intermediate-Term Tax-Exempt Fund, and Vanguard California Insured Long-Term
Tax-Exempt Fund (constituting Vanguard California Tax-Exempt Funds, hereafter
referred to as the "Funds") at November 30, 1999, the results of each of their
operations for the year then ended, the changes in each of their net assets for
each of the two years in the period then ended and the financial highlights for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' 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, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
January 10, 2000
42
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL 1999 TAX INFORMATION (UNAUDITED) FOR VANGUARD CALIFORNIA TAX-EXEMPT
FUNDS
This information for the fiscal year ended November 30, 1999, is included
pursuant to provisions of the Internal Revenue Code
The Insured Long-Term Tax Exempt Fund distributed $12,262,000 as capital
gain dividends (from net long-term capital gains) to shareholders in December
1998, all of which is designated as a 20% rate gain distribution.
Each fund designates 100% of its income dividends as exempt-interest
dividends.
- --------------------------------------------------------------------------------
43
<PAGE>
THE VANGUARD FAMILY OF FUNDS
STOCK FUNDS
- --------------------------------------------------
500 Index Fund
Aggressive Growth Fund
Capital Opportunity Fund
Convertible Securities Fund
Emerging Markets Stock Index Fund
Energy Fund Equity Income Fund
European Stock Index Fund
Explorer Fund
Extended Market Index Fund*
Global Equity Fund
Gold and Precious Metals Fund
Growth and Income Fund
Growth Index Fund*
Health Care Fund
Institutional Index Fund*
International Growth Fund
International Value Fund
Mid-Cap Index Fund*
Morgan Growth Fund
Pacific Stock Index Fun
PRIMECAP Fund
REIT Index Fund
Selected Value Fund
Small-Cap Growth Index Fund*
Small-Cap Index Fund*
Small-Cap Value Index Fund*
Tax-Managed Capital Appreciation Fund*
Tax-Managed Growth and Income Fund*
Tax-Managed International Fund*
Tax-Managed Small-Cap Fund*
Total International Stock Index Fund
Total Stock Market Index Fund*
U.S. Growth Fund
Utilities Income Fund
Value Index Fund*
Windsor Fund
Windsor II Fund
BALANCED FUNDS
- --------------------------------------------------
Asset Allocation Fund
Balanced Index Fund
Global Asset Allocation Fund
LifeStrategy Conservative Growth Fund
LifeStrategy Growth Fund
LifeStrategy Income Fund
LifeStrategy Moderate Growth Fund
STAR Fund
Tax-Managed Balanced Fund
Wellesley Income Fund
Wellington Fund
BOND FUNDS
- --------------------------------------------------
Admiral Intermediate-Term Treasury Fund
Admiral Long-Term Treasury Fund
Admiral Short-Term Treasury Fund
GNMA Fund
High-Yield Corporate Fund
High-Yield Tax-Exempt Fund
Insured Long-Term Tax-Exempt Fund
Intermediate-Term Bond Index Fund
Intermediate-Term Corporate Fund
Intermediate-Term Tax-Exempt Fund
Intermediate-Term Treasury Fund
Limited-Term Tax-Exempt Fund
Long-Term Bond Index Fund
Long-Term Corporate Fund
Long-Term Tax-Exempt Fund
Long-Term Treasury Fund
Preferred Stock Fund
Short-Term Bond Index Fund
Short-Term Corporate Fund*
Short-Term Federal Fund
Short-Term Tax-Exempt Fund
Short-Term Treasury Fund
State Tax-Exempt Bond Funds (California,
Florida, Massachusetts, New Jersey, New York,
Ohio, Pennsylvania)
Total Bond Market Index Fund*
MONEY MARKET FUNDS
- --------------------------------------------------
Admiral Treasury Money Market Fund
Federal Money Market Fund
Prime Money Market Fund*
State Tax-Exempt Money Market Funds (California,
New Jersey, New York, Ohio, Pennsylvania)
Tax-Exempt Money Market Fund
Treasury Money Market Fund
VARIABLE ANNUITY PLAN
- --------------------------------------------------
Balanced Portfolio
Diversified Value Portfolio
Equity Income Portfolio
Equity Index Portfolio
Growth Portfolio
High-Grade Bond Portfolio
High Yield Bond Portfolio
International Portfolio
Mid-Cap Index Portfolio
Money Market Portfolio
REIT Index Portfolio
Short-Term Corporate Portfolio
Small Company Growth Portfolio
*Offers Institutional Shares.
For information about Vanguard funds and our variable annuity plan, including
charges and expenses, obtain a prospectus from The Vanguard Group, P.O. Box
2600, Valley Forge, PA 19482-2600. Read it carefully before you invest or send
money.
44
<PAGE>
- --------------------------------------------------------------------------------
THE PEOPLE WHO GOVERN YOUR FUND
The Trustees of your mutual fund are there to see that the fund is operated
and managed in your best interests since, as a shareholder, you are part owner
of the fund. Your fund Trustees also serve on the Board of Directors of The
Vanguard Group, which is owned by the funds and exists solely to provide
services to them on an at-cost basis.
The majority of Vanguard's board members are independent, meaning that
they have no affiliation with Vanguard or the funds they oversee, apart from the
sizable personal investments they have made as private individuals. They bring
distinguished backgrounds in business, academia, and public service to their
task of working with Vanguard officers to establish the policies and oversee the
activities of the funds.
Among board members' responsibilities are selecting investment advisers
for the funds; monitoring fund operations, performance, and costs; reviewing
contracts; nominating and selecting new Trustees/Directors; and electing
Vanguard officers.
The list below provides a brief description of each Trustee's
professional affiliations. Noted in parentheses is the year in which the Trustee
joined the Vanguard Board.
TRUSTEES
JOHN C. BOGLE (1967) Founder, Senior Chairman of the Board, and Director/Trustee
of The Vanguard Group, Inc., and each of the investment companies in The
Vanguard Group.
JOHN J. BRENNAN (1987) Chairman of the Board, Chief Executive Officer, and
Director/Trustee of The Vanguard Group, Inc., and each of the investment
companies in The Vanguard Group.
JOANN HEFFERNAN HEISEN (1998) Vice President, Chief Information Officer, and a
member of the Executive Committee of Johnson & Johnson; Director of Johnson &
JohnsonoMerck Consumer Pharmaceuticals Co., The Medical Center at Princeton, and
Women's Research and Education Institute.
BRUCE K. MACLAURY (1990) President Emeritus of The Brookings Institution;
Director of American Express Bank Ltd., The St. Paul Companies, Inc., and
National Steel Corp.
BURTON G. MALKIEL (1977) Chemical Bank Chairman's Professor of Economics,
Princeton University; Director of Prudential Insurance Co. of America, Banco
Bilbao Gestinova, Baker Fentress & Co., The Jeffrey Co., and Select Sector SPDR
Trust.
ALFRED M. RANKIN, JR. (1993) Chairman, President, Chief Executive Officer, and
Director of NACCO Industries, Inc.; Director of The BFGoodrich Co.
JOHN C. SAWHILL (1991) President and Chief Executive Officer of The Nature
Conservancy; formerly, Director and Senior Partner of McKinsey & Co. and
President of New York University; Director of Pacific Gas and Electric Co.,
Procter & Gamble Co., NACCO Industries, and Newfield Exploration Co.
JAMES O. WELCH, JR. (1971) Retired Chairman of Nabisco Brands, Inc.;
retired Vice Chairman and Director of RJR Nabisco; Director of TECO Energy,
Inc., and Kmart Corp.
J. LAWRENCE WILSON (1985) Retired Chairman of Rohm & Haas Co.; Director of
Cummins Engine Co. and The Mead Corp.; Trustee of Vanderbilt University.
- --------------------------------------------------------------------------------
OTHER FUND OFFICERS
RAYMOND J. KLAPINSKY Secretary; Managing Director and Secretary of The
Vanguard Group, Inc.; Secretary of each of the investment companies in The
Vanguard Group.
THOMAS J. HIGGINS Treasurer; Principal of The Vanguard Group, Inc.; Treasurer
of each of the investment companies in The Vanguard Group.
VANGUARD MANAGING DIRECTORS
R. GREGORY BARTON Legal Department.
ROBERT A. DISTEFANO Information Technology.
JAMES H. GATELY Individual Investor Group.
KATHLEEN C. GUBANICH Human Resources.
IAN A. MACKINNON Fixed Income Group.
F. WILLIAM MCNABB, III Institutional Investor Group.
MICHAEL S. MILLER Planning and Development.
RALPH K. PACKARD Chief Financial Officer.
GEORGE U. SAUTER Core Management Group.
<PAGE>
ABOUT OUR COVER
Our cover art, depicting HMS Vanguard at sea, is a reproduction of Leading the
Way, a 1984 work created and copyrighted by noted naval artist Tom Freeman, of
Forest Hill, Maryland.
[SHIP]
[THE VANGUARD GROUP LOGO]
Post Office Box 2600
Valley Forge, Pennsylvania 19482-2600
All comparative mutual fund data are from Lipper Inc. or Morningstar, Inc.,
unless otherwise noted.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc.
Frank Russell Company is the owner of trademarks and copyrights relating to the
Russell Indexes. "Wilshire 4500" and "Wilshire 5000" are trademarks of Wilshire
Associates.
WORLD WIDE WEB
www.vanguard.com
FUND INFORMATION
1-800-662-7447
INDIVIDUAL ACCOUNT SERVICES
1-800-662-2739
INSTITUTIONAL INVESTOR SERVICES
1-800-523-1036
This report is intended for the fund's shareholders. It may not be distributed
to prospective investors unless it is preceded or accompanied by the current
fund prospectus.
Q750-01/21/2000
(C) 2000 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing
Corporation, Distributor.
