IDS Insured
Tax-Exempt
Fund
1998 SEMIANNUAL REPORT
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The goal of IDS Insured Tax-Exempt Fund, a part of IDS Special Tax-Exempt Series
Trust, is to provide a high level of income generally exempt from federal income
tax and preservation of shareholders' capital. The Fund invests primarily in
securities that are insured as to their scheduled payment of principal and
interest for at least as long as the securities are held in the Fund. Insured
securities fluctuate in market value as interest rates change.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
<PAGE>
No-default Insurance
Any investment involves risks. For a municipal bond investor, there's the risk
that the bond issuer could default on its payments. But there are bonds that are
insured against default, and these are the ones that Insured Tax-Exempt Fund
invests in. While this doesn't mean that shareholders are insulated from
fluctuations in bond market values, it does ensure that the Fund receives
principal and interest payments when they are due. Along the way, shareholders
enjoy regular income that is generally free from federal income tax.
Contents
From the Chairman 3
From the Portfolio Manager 3
Fund Facts 5
The 10 Largest Holdings 6
Financial Statements 7
Notes to Financial Statements 10
Investments in Securities 17
<PAGE>
From the Chairman
(picture of) William R. Pearce
William R. Pearce
Chairman of the board
If you're an experienced investor, you know that the past several months was a
highly volatile period in many financial markets. But history tells us that
substantial market moves are nothing new. Though they're often unpredictable,
declines -- whether they're brief or long-lasting, moderate or substantial --
are always a possibility.
The potential for such volatility reinforces the need for investors to review
periodically their long-term goals and examine whether their investment program
remains on track to achieving them. Your quarterly investment statements are one
part of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes more important if there's a major change
in your financial situation or in the financial markets.
William R. Pearce
From the Portfolio Manager
(picture of) Paul B. Hylle
Paul B. Hylle
Portfolio manager
In a largely positive environment for municipal bonds, the IDS Insured
Tax-Exempt Fund enjoyed a productive six months. For investors in the Fund's
Class A shares, the total return (which includes net asset value change and
interest income) was 3.04% for the first half of the fiscal year -- July through
December 1998. The bulk of the return came in the form of tax-free income.
The low rate of inflation that has dominated the investment environment in
recent years remained in place during the period, providing ongoing reassurance
for the bond market. But this time the market got an additional boost from
another outbreak of the so-called "Asian flu," the financial malady that first
struck Asia in the fall of 1997. This past summer it was Russia and Latin
America that were affected.
The result was a flood of money into the U.S. bond market from investors who
were seeking what they believed to be a safe haven for investment. This "flight
to quality" drove down long-term interest rates until mid-fall, boosting bond
prices along the way. While U.S. Treasury bonds attracted the bulk of the buying
and, thus, enjoyed the most price appreciation by a large margin, municipal
bonds also benefited from the trend.
DEMAND STRONG
As has been the case in recent years, there was a substantial supply of
municipal bonds during the six months. But, thanks to healthy demand from
investors, the supply was readily absorbed. On the other hand, because of the
declining interest-rate trend, many bonds were "called" by their issuers and
replaced by new issues paying lower interest. Ultimately, this resulted in a
slightly lower Fund yield over the period.
On the whole, I kept the Fund's duration somewhat shorter than average, a
strategy that results in less volatility in the Fund's net asset value. This is
in keeping with my preference to focus on keeping the yield as high as possible,
rather than trying to capture more potential price appreciation.
As the second half of the fiscal year begins, demand for municipal bonds is
still good, while the inflation and interest-rate environment remains favorable.
Therefore, barring any major change in those factors, I think municipal bonds
will continue to be a good choice for income-seeking investors.
Paul B. Hylle
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Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1998 $5.65
June 30, 1998 $5.63
Increase $0.02
Distributions -- July 1, 1998 - Dec. 31, 1998
From income $0.14
From capital gains $0.01
Total distributions $0.15
Total return* +3.04%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1998 $5.65
June 30, 1998 $5.63
Increase $0.02
Distributions -- July 1, 1998 - Dec. 31, 1998
From income $0.12
From capital gains $0.01
Total distributions $0.13
Total return* +2.66%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1998 $5.66
June 30, 1998 $5.64
Increase $0.02
Distributions -- July 1, 1998 - Dec. 31, 1998
From income $0.14
From capital gains $0.01
Total distributions $0.15
Total return* +3.10%**
*The prospectus discusses the effect of sales charges, if any, on the various
classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
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<CAPTION>
The 10 Largest Holdings
Percent Value
(of net assets) (as of Dec. 31, 1998)
Brazos River Texas Authority Collateralized Pollution Control Refunding Revenue Bonds Texas
Utility Electric Series 1992C A.M.T.
<S> <C> <C> <C>
6.70% 2022 3.20% $16,457,473
New York State Energy Research & Development Authority Solid Waste Development
Revenue Bonds State Gas & Electric Company Series A A.M.T.
5.70% 2028 2.28 11,730,255
Pittsburgh Pennsylvania Water & Sewer Authority System Pre-refunded Revenue Bonds
Series 1991A
6.50% 2014 2.12 10,912,300
Metropolitan Washington D.C. Airports Authority Airport System Revenue Bonds
Series 1992A A.M.T.
6.63% 2019 2.02 10,373,304
San Diego County California Certificate of Participation Regional Authority Bonds Mt. Tower
Series 1991 Inverse Floater
6.36% 2019 1.88 9,639,629
Colorado River Texas Municipal Water District Water System Pre-refunded Revenue Bonds
Series 1991A
6.63% 2021 1.84 9,434,533
Harris County Texas Toll Road Senior Lien Pre-refunded Revenue Bonds Series 1992A
6.50% 2017 1.77 9,078,586
Austin Texas Combined Utilities System Refunding Revenue Bonds Series 1994
5.75% 2024 1.76 9,065,930
Louisiana Energy & Power Authority Refunding Revenue Bonds Rodemacher Unit 2 Series 1991
6.75% 2008 1.47 7,543,690
Houston Texas Water & Sewer System Junior Lien Refunding Revenue Bonds Series 1997A
5.25% 2022 1.43 7,329,542
Note: Investment income from certain securities may be subject to the Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section entitled
"Investments in Securities" herein.
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The 10 holdings listed here
make up 19.77% of net assets
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<CAPTION>
Financial Statements
Statement of assets and liabilities
IDS Insured Tax-Exempt Fund
Dec. 31, 1998 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $458,082,914) $508,102,648
Cash in bank on demand deposit 246,691
Accrued interest receivable 8,345,775
Receivable for investment securities sold 21,812
------
Total assets 516,716,926
-----------
Liabilities
Dividends payable to shareholders 589,357
Payable for investment securities purchased 2,397,694
Accrued investment management services fee 6,324
Accrued distribution fee 1,115
Accrued service fee 2,459
Accrued transfer agency fee 560
Accrued administrative services fee 562
Other accrued expenses 27,452
------
Total liabilities 3,025,523
---------
Net assets applicable to outstanding shares $513,691,403
============
Represented by
Shares of beneficial interest-- $.01 par value (Note 1) $ 909,386
Additional paid-in capital 477,497,692
Undistributed net investment income (359,858)
Accumulated net realized gain (loss) (14,325,114)
Unrealized appreciation (depreciation) on investments 49,969,297
----------
Total-- representing net assets applicable to outstanding shares $513,691,403
============
Net assets applicable to outstanding shares: Class A 459,102,844
Class B 54,587,280
Class Y 1,279
Net asset value per share of outstanding shares: Class A shares 81,274,093 $ 5.65
Class B shares 9,664,299 $ 5.65
Class Y shares 226 $ 5.66
See accompanying notes to financial statements.
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<CAPTION>
Statement of operations
IDS Insured Tax-Exempt Fund
Six months ended Dec. 31, 1998 (Unaudited)
Investment income
Income:
<S> <C>
Interest $14,085,303
-----------
Expenses (Note 2):
Investment management services fee 1,146,557
Distribution fee -- Class B 182,692
Transfer agency fee 101,962
Incremental transfer agency fee-- Class B 702
Service fee
Class A 398,499
Class B 42,520
Administrative services fees and expenses 104,595
Compensation of board members 4,913
Custodian fees 17,313
Postage 16,077
Registration fees 38,540
Reports to shareholders 7,630
Audit fees 9,000
Other 1,438
-----
Total expenses 2,072,438
Earnings credits on cash balances (Note 2) (14,389)
-------
Total net expenses 2,058,049
Investment income (loss) -- net 12,027,254
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 301,072
Financial futures contracts 135,326
-------
Net realized gain (loss) on investments 436,398
Net change in unrealized appreciation (depreciation) on investments 2,681,795
---------
Net gain (loss) on investments 3,118,193
---------
Net increase (decrease) in net assets resulting from operations $15,145,447
===========
See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
IDS Insured Tax-Exempt Fund
Dec. 31, 1998 June 30, 1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 12,027,254 $ 25,080,192
Net realized gain (loss) on investments 436,398 358,569
Net change in unrealized appreciation
(depreciation) on investments 2,681,795 10,861,233
--------- ----------
Net increase (decrease) in net assets resulting
from operations 15,145,447 36,299,994
---------- ----------
Distributions to shareholders from:
Net investment income
Class A (11,375,923) (23,865,771)
Class B (1,020,352) (1,669,839)
Class Y (32) (64)
Net realized gains
Class A (922,787) --
Class B (107,713) --
Class Y (3) --
------ ------
Total distributions (13,426,810) (25,535,674)
----------- -----------
Share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 27,611,558 40,050,443
Class B shares 11,951,552 15,365,511
Reinvestment of distributions at net asset value
Class A shares 8,323,577 16,237,196
Class B shares 860,024 1,264,769
Class Y shares 35 63
Payments for redemptions
Class A shares (33,162,842) (73,881,447)
Class B shares (Note 2) (2,534,390) (4,572,619)
---------- ----------
Increase (decrease) in net assets from
share transactions 13,049,514 (5,536,084)
---------- ----------
Total increase (decrease) in net assets 14,768,151 5,228,236
Net assets at beginning of period 498,923,252 493,695,016
----------- -----------
Net assets at end of period $513,691,403 $498,923,252
============ ============
Undistributed (excess of distributions over)
net investment income $ (359,858) $ 9,195
------------ ------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
IDS Insured Tax-Exempt Fund
(Unaudited as to Dec. 31, 1998)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
IDS Special Tax-Exempt Series Trust was organized as a Massachusetts business
trust on April 7, 1986. IDS Special Tax-Exempt Series Trust is a "series fund"
that is currently composed of six individual funds, including IDS Insured
Tax-Exempt Fund. The Fund is registered under the Investment Company Act of 1940
(as amended) as a diversified, open-end management investment company. The Fund
has unlimited authorized shares of beneficial interest.
The Fund invests primarily in securities that are insured as to their scheduled
payment of principal and interest for at least as long as the securities are
held in the Fund. Insured securities fluctuate in market value as interest rates
change.
The Fund offers Class A, Class B and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class Y shares have no sales charge and are offered only to
qualifying institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class specific
expenses) and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets.
The Fund's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and sell put and call
options and write covered call options on portfolio securities as well as write
cash-secured put options. The risk in writing a call option is that the Fund
gives up the opportunity for profit if the market price of the security
increases. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of being unable to enter into a
closing transaction if a liquid secondary market does not exist. The Fund also
may write over-the-counter options where completing the obligation depends upon
the credit standing of the other party.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When
options on debt securities or futures are exercised, the Fund will realize a
gain or loss. When other options are exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts. Risks of entering into futures contracts and
related options include the possibility of an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to shareholders. No provision for income or excise taxes is thus
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts and losses deferred due to "wash sale" transactions.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded by the Fund.
Dividends to shareholders
Dividends from net investment income, declared daily and payable monthly, are
reinvested in additional shares of the Fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last income
dividend of the calendar year.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Interest income, including level-yield amortization of premium and
discount, is accrued daily.
2. EXPENSES AND SALES CHARGES
Effective March 20, 1995, the Fund entered into agreements with American Express
Financial Corporation (AEFC) for managing its portfolio and providing
administrative services. Under its Investment Management Services Agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Fund's average daily net assets in reducing
percentages from 0.45% to 0.35% annually.
Under its Administrative Services Agreement, the Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.04% to 0.02% annually.
Additional administrative service expenses paid by the Fund are office expenses,
consultants' fees and compensation of officers and employees. Under this
agreement, the Fund also pays taxes, audit and certain legal fees, registration
fees for shares, compensation of board members, corporate filing fees and any
other expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $15.50
o Class B $16.50
o Class Y $15.50
Also effective March 20, 1995, the Fund entered into agreements with American
Express Financial Advisors Inc. for distribution and shareholder services. Under
a Plan and Agreement of Distribution, the Fund pays a distribution fee at an
annual rate of 0.75% of the Fund's average daily net assets attributable to
Class B shares for distribution services.
Under a Shareholder Service Agreement, the Fund pays a fee for service provided
to shareholders by financial advisors and other servicing agents. The fee is
calculated at a rate of 0.175% of the Fund's average daily net assets
attributable to Class A and Class B shares and 0.10% of the Fund's average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $617,416 for Class A and $20,938 for Class B for
the six months ended Dec. 31, 1998.
During the six months ended Dec. 31, 1998, the Fund's custodian and transfer
agency fees were reduced by $14,389 as a result of earnings credits from
overnight cash balances.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $15,531,176 and $10,562,970, respectively, for the six
months ended Dec. 31, 1998. Realized gains and losses are determined on an
identified cost basis.
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<TABLE>
<CAPTION>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund for the periods indicated are as follows:
Six months ended Dec. 31, 1998
Class A Class B Class Y
<S> <C> <C> <C>
Sold 4,875,192 2,108,885 --
Issued for reinvested distributions 1,471,437 152,041 6
Redeemed (5,857,976) (448,661) --
---------- -------- -----
Net increase (decrease) 488,653 1,812,265 6
Year ended June 30, 1998
Class A Class B Class Y
Sold 7,152,603 2,743,185 --
Issued for reinvested distributions 2,900,525 225,893 12
Redeemed (13,187,728) (816,165) --
----------- -------- -----
Net increase (decrease) (3,134,600) 2,152,913 12
5. INTEREST RATE FUTURES CONTRACTS
As of Dec. 31, 1998, investments in securities included securities valued at
$6,475,606 that were pledged as collateral to cover initial margin deposits on
45 open purchase contracts. The market value of the open purchase contracts at
Dec. 31, 1998, was $5,625,000 with a net unrealized loss of $50,437. See
"Summary of significant accounting policies."
6. BANK BORROWINGS
The Fund entered into a revolving credit agreement with U.S. Bank, N.A., whereby
the Fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The Fund must have asset coverage for
borrowings not to exceed the aggregate of 333% of advances equal to or less than
five business days plus 367% of advances over five business days. The agreement,
which enables the Fund to participate with other IDS Funds, permits borrowings
up to $200 million, collectively. Interest is charged to each Fund based on its
borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the
Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90
days after such loan is executed. The Fund also pays a commitment fee equal to
its pro rata share of the amount of the credit facility at a rate of 0.05% per
annum. The Fund had no borrowings outstanding during the six months ended Dec.
31, 1998.
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<CAPTION>
7. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended June 30,
Per share income and capital changesa
Class A
1998b 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.63 $5.51 $5.43 $5.40 $5.35
Income from investment operations:
Net investment income (loss) .13 .28 .30 .30 .30
Net gains (losses) (both realized and unrealized) .04 .13 .07 .03 .05
Total from investment operations .17 .41 .37 .33 .35
Less distributions:
Dividends from net investment income (.14) (.29) (.29) (.28) (.30)
Distributions from realized gains (.01) -- -- (.02) --
Total distributions (.15) (.29) (.29) (.30) (.30)
Net asset value, end of period $5.65 $5.63 $5.51 $5.43 $5.40
Ratios/supplemental data
Class A
1998b 1998 1997 1996 1995
Net assets, end of period (in millions) $459 $455 $462 $491 $505
Ratio of expenses to average daily net assetsd .74%c .73% .74% .75% .66%
Ratio of net investment income (loss)
to average daily net assets 4.79%c 5.09% 5.42% 5.16% 5.66%
Portfolio turnover rate (excluding
short-term securities) 2% 17% 33% 52% 53%
Total returne 3.04% 7.60% 7.08% 6.26% 6.65%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Dec. 31, 1998 (Unaudited).
c Adjusted to an annual basis.
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
e Total return does not reflect payment of a sales charge.
</TABLE>
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<TABLE>
<CAPTION>
Fiscal period ended June 30,
Per share income and capital changesa
Class B Class Y
1998c 1998 1997 1996 1995b 1998c 1998 1997 1996 1995b
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.63 $5.51 $5.43 $5.40 $5.47 $5.64 $5.52 $5.44 $5.41 $5.47
Income from investment operations:
Net investment income (loss) .11 .24 .25 .26 .09 .14 .29 .30 .31 .08
Net gains (losses) (both realized
and unrealized) .04 .13 .08 .03 (.07) .03 .13 .08 .03 (.06)
Total from investment operations .15 .37 .33 .29 .02 .17 .42 .38 .34 .02
Less distributions:
Dividends from net investment income (.12) (.25) (.25) (.24) (.09) (.14) (.30) (.30) (.29) (.08)
Distributions from realized gains (.01) -- -- (.02) -- (.01) -- -- (.02) --
Total distributions (.13) (.25) (.25) (.26) (.09) (.15) (.30) (.30) (.31) (.08)
Net asset value, end of period $5.65 $5.63 $5.51 $5.43 $5.40 $5.66 $5.64 $5.52 $5.44 $5.41
Ratios/supplemental data
Class B Class Y
1998c 1998 1997 1996 1995b 1998c 1998 1997 1996 1995b
Net assets, end of period (in millions) $55 $44 $31 $21 $6 $-- $-- $-- $-- $--
Ratio of expenses to
average daily net assetsd 1.50%e 1.49% 1.50% 1.51% 1.49%e .58%e .48% .58% .57% .54%e
Ratio of net investment income
(loss) to average daily net assets 4.03%e 4.34% 4.71% 4.42% 4.72%e 4.94%e 5.30% 5.78% 5.32% 5.38%e
Portfolio turnover rate (excluding
short-term securities) 2% 17% 33% 52% 53% 2% 17% 33% 52% 53%
Total returnf 2.66% 6.80% 6.26% 5.46% .41% 3.10% 7.73% 7.25% 6.40% .49%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was March 20, 1995.
c Six months ended Dec. 31, 1998 (Unaudited).
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
e Adjusted to an annual basis.
f Total return does not reflect payment of a sales charge.
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<TABLE>
<CAPTION>
Investments in Securities
IDS Insured Tax-Exempt Fund
Dec. 31, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Municipal bonds (97.4%)
Name of issuer Coupon Principal Value(a)
and title of rate amount
issue(b,c)
Alabama (0.6%)
Mobile General Obligation Capital Improvement Warrants
Convention Center Pre-refunded Bonds
Series 1990 (AMBAC Insured)
<S> <C> <C> <C> <C>
08-15-20 7.13% $3,000,000 $3,234,060
Alaska (1.8%)
North Slope Borough Capital Appreciation
Unlimited General Obligation Bonds
Zero Coupon Series 1995A (MBIA Insured)
06-30-06 5.61 5,300,000(e) 3,852,146
North Slope Borough General Obligation Bonds
Zero Coupon Series 1996B (MBIA Insured)
06-30-07 5.72 8,000,000(e) 5,544,560
Total 9,396,706
Arizona (1.5%)
Chandler Water & Sewer Refunding Revenue Bonds
Series 1991 (FGIC Insured)
07-01-12 7.00 1,250,000 1,353,900
Health Facilities Authority Hospital System
Refunding Revenue Bonds Phoenix Baptist Hospital
Series 1992 (MBIA Insured)
09-01-11 6.25 1,650,000 1,816,089
Phoenix Civic Improvement Wastewater System
Lease Refunding Revenue Bonds (Secondary MBIA Insured)
07-01-23 4.75 4,500,000 4,311,450
Total 7,481,439
Arkansas (0.3%)
Jonesboro Residential Housing & Health Care Facility Board
St. Bernards Regional Medical Center Hospital Refunding
Revenue & Construction Bonds Series 1996B
(AMBAC Insured)
07-01-16 5.90 1,200,000 1,303,656
California (12.0%)
Contra Costa Water District Revenue Bonds
Series 1994G (MBIA Insured)
10-01-19 5.50 4,675,000 4,896,642
Delta Counties Home Mortgage Finance Authority Single Family Mortgage Revenue
Bonds Series 1998A (MBIA Insured) A.M.T.
06-01-24 6.70 1,500,000 1,662,825
Desert Sands Unified School District Convertible
Capital Appreciation Certificates Zero Coupon Series 1995
(FSA Insured)
03-01-01 6.45 3,000,000(f) 2,977,230
Eastern Municipal Water District Riverside County
Water & Sewer Pre-refunded Revenue
Certificates of Participation Series 1991 (FGIC Insured)
07-01-20 6.50 5,460,000 5,954,512
Fontana Unified School District
San Bernardino County General Obligation
Convertible Capital Appreciation Bonds
Series 1995C (FGIC Insured)
05-01-20 6.15 6,000,000 6,729,660
Fresno Health Facility Revenue Bonds Holy Cross-St. Agnes
(Secondary MBIA Insured)
06-01-21 6.63 2,000,000 2,227,720
Los Angeles Department of Airports Revenue Bonds
Los Angeles International Airport Series 1995D
(FGIC Insured) A.M.T.
05-15-15 5.50 2,000,000 2,095,220
Los Angeles Department of Water & Power Waterworks
Refunding Revenue Bonds
Second Issue (Secondary FGIC Insured)
05-15-23 4.50 2,000,000 1,849,300
Northern California Transmission Select Auction
Variable Rate Security & Residual Interest Revenue Bonds
Inverse Floater (MBIA Insured)
04-29-24 5.50 2,500,000(h) 2,595,650
Oceanside Certificate of Participation Refunding Bonds
Oceanside Civic Center (MBIA Insured)
08-01-19 5.25 1,730,000 1,764,652
Rural Home Mortgage Financing Authority Single Family Mortgage Revenue Bonds 3rd
Series 1997A (GNMA Insured) A.M.T.
09-01-29 7.00 1,425,000 1,606,531
San Diego County Certificate of Participation
Regional Authority Bonds Mt. Tower
Series 1991 Inverse Floater (MBIA Insured)
11-18-19 6.36 9,000,000(h) 9,639,629
San Jose Redevelopment Agency Merged Area
Redevelopment Tax Allocation Bonds
Series 1993 (MBIA Insured)
08-01-24 4.75 2,400,000 2,297,136
San Jose Redevelopment Agency Tax
Allocation Bonds Series 1997 (MBIA Insured)
08-01-17 5.50 1,000,000 1,064,690
San Mateo County Joint Power Financing Authority
Lease Revenue Bonds San Mateo County Health Center
Series 1994A (FSA Insured)
07-15-22 5.75 1,500,000 1,592,145
State Public Works Board Lease Revenue Bonds
Department of Correction Substance Abuse Treatment
Facility & State Prison at Corcoran
Series 1996A (AMBAC Insured)
01-01-21 5.25 2,000,000 2,033,960
State Public Works Board Lease Revenue Bonds
University of California Series 1992A (AMBAC Insured)
12-01-16 6.40 2,000,000 2,239,140
State Unlimited Tax General Obligation Bonds
(Secondary FGIC Insured)
09-01-23 4.75 2,500,000 2,391,325
Statewide Community Development Authority
Certificate of Participation
Sutter Health Obligated Group (MBIA Insured)
08-15-22 5.50 5,750,000 6,010,475
Total 61,628,442
Colorado (1.8%)
Denver City & County Airport Revenue Bonds Series 1995B (MBIA Insured) A.M.T.
11-15-17 5.75 4,290,000(i) 4,555,894
Douglas County School District General Obligation
Improvement Bonds Series 1994A (MBIA Insured)
12-15-16 6.50 1,500,000 1,691,880
Larimer County School District R-1 Certificate of Participation
Series 1997 (MBIA Insured)
12-01-16 5.65 1,000,000(i) 1,075,190
Larimer, Weld & Boulder Counties School District R-2J
Thompson Unlimited General Obligation Capital
Appreciation Bonds Zero Coupon
Series 1997 (FGIC Insured)
12-15-11 5.45 2,000,000(e) 1,102,540
12-15-12 5.50 1,400,000(e) 727,118
Total 9,152,622
Delaware (0.2%)
Health Facilities Authority Refunding Revenue Bonds
Medical Center of Delaware Series 1989 (MBIA Insured)
10-01-15 7.00 1,000,000 1,146,850
District of Columbia (2.9%)
Association of American Medical Colleges
College Revenue Bonds Series 1997A (AMBAC Insured)
02-15-27 5.38 2,500,000 2,570,150
Metropolitan Washington Airports Authority Airport System Revenue Bonds Series
1992A (MBIA Insured) A.M.T.
10-01-19 6.63 9,420,000 10,373,304
Unlimited Tax General Obligation Refunding Bonds
Series 1993B-2 (FSA Insured)
06-01-10 5.50 2,000,000 2,170,620
Total 15,114,074
Florida (2.1%)
Alachua County Public Improvement
Refunding Revenue Bonds
(FSA Insured)
08-01-21 5.13 2,000,000 2,003,660
Department of Transportation Turnpike Revenue Bonds
Series 1991A (AMBAC Insured)
07-01-20 6.25 1,250,000 1,330,063
Escambia County Housing Finance Authority
College Revenue Bonds
University of West Florida Foundation
Series 1998 (MBIA Insured)
06-01-28 4.75 2,500,000 2,370,975
Fort Myers Utility System Refunding Revenue Bonds
Series 1989A (BIG Insured)
10-01-19 6.00 2,000,000 2,036,400
Gulf Breeze Local Government Loan Program Boca Raton
Series 1985A (FGIC Insured)
12-01-15 7.75 2,000,000 2,114,180
State Correctional Privatization Commission
Certificate of Participation 350 Bed Youthful Columbia
Series 1995A (AMBAC Insured)
08-01-17 5.00 1,000,000 1,005,090
Total 10,860,368
Georgia (3.8%)
Atlanta Metropolitan Rapid Transit Authority Sales Tax
Pre-refunded Revenue Bonds Series 1990L
(AMBAC Insured)
07-01-20 7.20 3,000,000 3,120,750
Chatham County Hospital Authority Revenue Bonds
Memorial Medical Center Series 1990A (MBIA Insured)
01-01-21 7.00 4,500,000 4,884,750
Cherokee County Water & Sewer Authority
Water & Sewer Revenue Bonds Series 1995
(MBIA Insured)
08-01-25 5.20 4,970,000 5,135,898
Fulton County Water & Sewer Revenue Bonds
(FGIC Insured)
01-01-14 6.38 3,250,000 3,844,521
Richmond County Water & Sewer Refunding Revenue
Improvement Bonds Series 1996A (FGIC Insured)
10-01-28 5.25 2,500,000 2,536,000
Total 19,521,919
Hawaii (0.2%)
Harbor System Revenue Bonds
Series 1997 (MBIA Insured) A.M.T.
07-01-27 5.50 1,000,000 1,029,750
Illinois (3.7%)
Chicago O'Hare International Airport
General Revenue Bonds Series 1990A
(AMBAC Insured) A.M.T.
01-01-16 7.50 2,000,000 2,109,440
Chicago O'Hare International Airport Terminal
Revenue Bonds (MBIA Insured) A.M.T.
01-01-10 7.63 3,000,000 3,177,600
Chicago Public Building Commission
Pre-refunded Revenue Bonds Series 1989A (FGIC Insured)
01-01-06 7.75 1,000,000 1,020,000
Chicago Public Building Commission
Pre-refunded Revenue Bonds Series 1990A (MBIA Insured)
01-01-15 7.13 5,000,000 5,332,700
Cook County Consolidated High School
District 200 Limited Tax General Obligation Bonds
Oak Park Zero Coupon Series 1998 (FSA Insured)
12-01-15 5.60 7,190,000(e) 3,042,808
12-01-17 5.62 3,750,000(e) 1,398,150
McHenry County Community High School District
157 Unlimited Tax Capital Appreciation General
Obligation Bonds Zero Coupon Series 1998 (FSA Insured)
12-01-17 5.60 5,790,000(e) 2,160,307
St. Clair County Public Community Building
Capital Appreciation Revenue Bonds
Zero Coupon Series 1997B (FGIC Insured)
12-01-14 5.95 2,000,000(e) 912,700
Total 19,153,705
Indiana (2.5%)
Fort Wayne Hospital Authority Revenue Bonds
Parkview Health System (MBIA Insured)
11-15-28 4.75 2,500,000 2,315,925
Marion County Hospital Authority Refunding Revenue Bonds
Methodist Hospital Series 1989 (MBIA Insured)
09-01-13 6.50 4,000,000 4,123,960
State Health Facility Finance Authority Hospital
Refunding Revenue Bonds Columbus Regional Hospital
Series 1993 (CGIC Insured)
08-15-15 7.00 5,000,000 6,278,700
Total 12,718,585
Kansas (0.5%)
Labette County Single Family Housing Revenue
Bonds Series 1998A-2 (GNMA Insured)
12-01-11 7.65 450,000 492,188
Sedgwick & Shawnee Counties Single Family Housing Revenue Mortgage Backed
Securities 1st Series 1997A (MBIA Insured) A.M.T.
06-01-29 6.95 2,000,000(g) 2,228,340
Total 2,720,528
Louisiana (1.5%)
Energy & Power Authority Refunding Revenue Bonds
Rodemacher Unit 2 Series 1991 (FGIC Insured)
01-01-08 6.75 7,000,000(i) 7,543,690
Maine (0.4%)
State Turnpike Authority Turnpike Revenue Bonds
(MBIA Insured)
07-01-18 6.00 1,790,000 2,005,319
Massachusetts (4.3%)
Health & Educational Facilities Authority
Pre-refunded Bonds Northeastern University
Series 1989C (AMBAC Insured)
10-01-06 7.10 1,000,000 1,047,790
Health & Educational Facilities Authority
Revenue Bonds Cape Cod Health System
Series 1993A (Connie Lee Insured)
11-15-21 5.25 4,000,000 4,011,160
Health & Educational Facilities Authority
Revenue Bonds Valley Regional Health System
Series 1994C (Connie Lee Insured)
07-01-18 5.75 1,500,000 1,579,215
Industrial Finance Agency Revenue Bonds
Brandeis University (MBIA Insured)
10-01-19 6.80 1,700,000 1,774,681
Municipal Wholesale Electric Power
Supply System Refunding Revenue Bonds
Series 1994B (MBIA Insured)
07-01-11 4.75 5,250,000 5,307,802
State Bay Transportation Authority Series 1995B
(AMBAC Insured)
03-01-25 5.38 4,000,000 4,104,679
State Health & Education Facilities Authority
Revenue Bonds Southcoast Health System
Series 1998A (MBIA Insured)
07-01-27 4.75 1,265,000 1,182,649
State Turnpike Authority Metro Highway System
Senior Lien Revenue Bonds Toll Road
Series 1997A (MBIA Insured)
01-01-37 5.00 1,000,000 971,840
State Water Resource Authority Revenue Bonds
Series 1992A (Secondary MBIA Insured)
07-15-22 5.50 2,000,000 2,117,680
Total 22,097,496
Michigan (3.9%)
Almont Community Schools
Unlimited Tax General Obligation Bonds
Series 1996 (FGIC Insured)
05-01-22 5.38 1,900,000 1,946,664
Chippewa Valley Schools Unlimited Tax
General Obligation Refunding Bonds
Series 1998 (AMBAC Insured)
05-01-23 4.75 1,000,000 948,790
Genesee County Sewer Disposal System 3
Limited Tax General Obligation Bonds
Series 1996A (AMBAC Insured)
04-01-16 5.50 1,400,000 1,472,184
Grand Rapids Sanitary Sewer System Revenue Bonds
Series 1998A (FGIC Insured)
01-01-28 4.75 3,000,000 2,833,230
Iron Mountain School Unlimited Tax
General Obligation Refunding Bonds (AMBAC Insured)
05-01-21 5.13 1,500,000 1,491,015
Kalamazoo Hospital Finance Authority
Refunding & Improvement Bonds
Bronson Methodist Hospital (Secondary MBIA Insured)
05-15-12 6.25 3,000,000 3,339,750
Lincoln Park School District Wayne County School Building & Site
Unlimited Tax General Obligation Bonds (FGIC Insured)
05-01-26 5.90 1,500,000 1,685,940
Monroe County Pollution Control Refunding Bonds Detroit Edison Series 1992I-B
(MBIA Insured) A.M.T.
09-01-24 6.55 5,000,000 5,536,350
State Trunk Line Bonds Series 1998A (MBIA Insured)
11-01-20 4.75 1,000,000 954,160
Total 20,208,083
Minnesota (2.1%)
Southern Minnesota Municipal Power Agency
Power Supply System Refunding Revenue Bonds
Series 1993A (Secondary FGIC Insured)
01-01-16 4.75 4,250,000 4,196,323
Southern Minnesota Municipal Power Agency
Power Supply System Refunding Revenue Bonds
Zero Coupon Series 1994A (MBIA Insured)
01-01-21 6.12 6,000,000(e) 1,994,220
Western Minnesota Municipal Power Agency
Revenue Bonds Escrowed to Maturity (AMBAC Insured)
01-01-16 6.75 4,500,000 4,824,180
Total 11,014,723
Mississippi (0.7%)
Alcorn County Hospital Refunding Revenue Bonds
Magnolia Regional Hospital Center (AMBAC Insured)
10-01-13 5.75 1,000,000 1,089,560
State Development Bank Special Obligation
Water & Sewer Revenue Bonds
D'lberville Series 1998 (AMBAC Insured)
07-01-23 5.00 150,000 146,888
State Home Single Family Mortgage Revenue Bonds Series 1997H (GNMA & FNMA
Insured) A.M.T.
12-01-29 6.70 1,980,000(g) 2,158,378
Total 3,394,826
Montana (1.9%)
Forsyth Rosebud County Pollution Refunding
Revenue Bonds Puget Sound Power & Light
(AMBAC Insured) A.M.T.
08-01-21 7.25 4,000,000 4,370,600
State Board of Investments Payroll Tax Bonds
Worker's Compensation Program
Series 1991 (MBIA Insured)
06-01-20 6.88 4,750,000 5,186,953
Total 9,557,553
Nevada (1.0%)
Clark County Passenger Facility Charge Revenue Bonds Las Vegas McCarren Airport
Series 1995B (Secondary AMBAC Insured) A.M.T.
07-01-25 5.50 5,000,000 5,095,900
New Hampshire (1.0%)
Industrial Development Authority Pollution Control Revenue Bonds Light & Power
Series 1989 (AMBAC Insured) A.M.T.
12-01-19 7.38 5,000,000(i) 5,259,300
New Mexico (0.2%)
Santa Fe Water Revenue Bonds (AMBAC Insured)
06-01-24 6.30 1,000,000 1,116,750
New York (7.7%)
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds
Series 1995A (Secondary MBIA Insured)
06-15-23 5.50 5,000,000 5,200,650
State Dormitory Authority City University System
Consolidated 3rd Resolution Revenue Bonds
2nd Series 1994 (MBIA Insured)
07-01-19 6.25 2,500,000 2,794,850
State Dormitory Authority State University Education Facility
Revenue Bonds (Secondary AMBAC Insured)
05-15-15 5.25 2,700,000 2,870,046
State Energy Research & Development Authority Pollution Control Refunding
Revenue Bonds Rochester Gas & Electric (MBIA Insured) A.M.T.
05-15-32 6.50 4,000,000 4,349,560
State Energy Research & Development Authority Solid Waste Development Revenue
Bonds State Gas & Electric Company Series A (MBIA Insured) A.M.T.
12-01-28 5.70 11,210,000 11,730,255
State Energy Resource & Development Authority
Gas Facility Revenue Bonds Brooklyn Union Gas
(MBIA Insured) A.M.T.
06-01-25 5.60 4,500,000 4,676,490
State Energy Resource & Development Authority
Pollution Control Bonds Series 1987A
(MBIA Insured) A.M.T.
07-01-26 6.15 3,000,000 3,283,830
State Urban Development Corporation Correctional
Capital Facilities Lease Revenue Bonds
Series 1995-96 (AMBAC Insured)
01-01-25 5.38 3,000,000 3,089,490
State Urban Development Correction Facility
Pre-refunded Revenue Bonds 1st Series 1990
(FSA Insured)
01-01-20 7.50 1,500,000 1,594,200
Total 39,589,371
North Carolina (1.7%)
Charlotte Pre-refunded Certificates of Participation
Convention Facility Series 1991 (AMBAC Insured)
12-01-21 6.75 3,150,000 3,480,908
Concord Certificate of Participation Series 1996B
(MBIA Insured)
06-01-16 5.75 1,480,000 1,591,947
Cumberland County Financial Corporation
Installment Payment Miscellaneous Revenue Bonds
Public Building & Equipment Series 1998 (MBIA Insured)
12-01-17 4.75 3,490,000 3,417,792
Fayetteville Financial Corporation Installment Payment
Revenue Bonds Series 1996 (MBIA Insured)
02-01-14 5.63 300,000 323,277
Total 8,813,924
North Dakota (0.9%)
Fargo Health System Meritcare Obligated Group
Revenue Bonds Series 1996A (MBIA Insured)
06-01-27 5.38 4,350,000 4,434,956
Ohio (1.2%)
Lorain County Hospital Facilities Refunding Revenue Bonds
EMH Regional Medical Center
Series 1995 (AMBAC Insured)
11-01-21 5.38 2,000,000 2,040,000
Lucas County Hospital Refunding Revenue Bonds
St. Vincent Medical Center Series 1993C (MBIA Insured)
08-15-22 5.25 1,725,000 1,737,351
Montgomery County Hospital Facility
Refunding Revenue & Improvement Bonds
Ketter Medical Center
Series 1996 (MBIA Insured)
04-01-26 5.50 2,500,000 2,602,750
Total 6,380,101
Oklahoma (1.0%)
McAlester Public Works Authority Oklahoma Improvement
Refunding Revenue Bonds (FSA Insured)
12-01-17 5.25 1,470,000 1,521,744
12-01-18 5.25 1,000,000 1,030,360
Moore Public Works Authority Refunding Revenue Bonds
Series 1989 (AMBAC Insured)
07-01-06 7.60 2,700,000 2,810,916
Total 5,363,020
Pennsylvania (3.7%)
Harrisburg Authority Dauphin County Revenue Bonds
Series 1997-II (MBIA Insured)
09-15-22 5.63 2,000,000 2,103,040
Philadelphia School District General Obligation Bonds
Series 1998 (MBIA Insured)
04-01-27 4.75 2,500,000 2,362,450
Pittsburgh Water & Sewer Authority System
Pre-refunded Revenue Bonds Series 1991A (FGIC Insured)
09-01-14 6.50 10,000,000 10,912,300
Robinson Township Municipal Authority Water & Sewer
Revenue Bonds (FGIC Insured)
11-15-19 6.00 2,200,000 2,461,976
Turnpike Commission Pre-refunded Revenue Bonds
Series 1989K (MBIA Insured)
12-01-12 7.50 1,000,000 1,059,370
Total 18,899,136
Rhode Island (0.6%)
Health & Education Building Corporation Higher Education
Facility Revenue Bonds Series 1996 (MBIA Insured)
06-01-26 5.63 3,000,000 3,171,630
South Carolina (0.2%)
Piedmont Municipal Power Agency Electric
Refunding Revenue Bonds (FGIC Insured)
01-01-21 6.25 1,000,000 1,171,570
Tennessee (1.5%)
Knox County Health Education & Housing Facility Board
Hospital Refunding Revenue Bonds Fort Sanders
Alliance Obligation Group Series 1993 (MBIA Insured)
01-01-14 5.75 3,750,000 4,187,625
Metropolitan Government Nashville & Davidson Counties
Health & Education Facilities Board Hospital
Revenue Bonds Baptist Hospital Incorporated
Series 1998 (MBIA Insured)
11-01-18 4.75 1,000,000 959,230
Metropolitan Government Nashville & Davidson Counties
Sports Authority Public Improvement Revenue Bonds
Series 1996 (AMBAC Insured)
07-01-17 5.75 2,160,000 2,322,173
Total 7,469,028
Texas (19.4%)
Austin Airport System Prior Lien Revenue Bonds Series 1995A (MBIA Insured)
A.M.T.
11-15-25 6.13 3,000,000 3,282,720
Austin Combined Utilities System Capital Appreciation
Refunding Revenue Bonds Series 1994 Zero Coupon
(FGIC Insured)
05-15-17 5.83 5,900,000(e) 2,322,299
Austin Combined Utilities System Refunding Revenue Bonds
Series 1994 (FGIC Insured)
05-15-24 5.75 8,500,000 9,065,930
Austin Combined Utilities System Revenue Bonds
Series 1987 (BIG Insured)
11-15-12 8.63 750,000 865,500
11-15-17 8.63 500,000 577,000
Bexar County Health Facility Development Hospital
Revenue Bonds San Antonio Baptist Memorial
Hospital System Series 1994 (MBIA Insured)
08-15-19 6.75 5,000,000 5,784,600
Brazos River Authority Collateralized Pollution Control
Refunding Revenue Bonds Texas Utility Electric
Series 1992C (FGIC Insured) A.M.T.
10-01-22 6.70 14,935,000 16,457,473
Colorado River Municipal Water District Water System
Pre-refunded Revenue Bonds Series 1991A
(AMBAC Insured)
01-01-21 6.63 8,900,000 9,434,533
Corsicana Waterworks & Sewer System
Refunding Revenue Bonds Series 1997A (FGIC Insured)
08-15-22 5.75 2,075,000 2,216,038
Georgetown Combination Tax & Utilities System
Limited Revenue Certificates of Obligation
Series 1997 (FGIC Insured)
08-15-17 5.38 1,000,000 1,036,150
Harris County Health Facilities Development Hospital
Revenue Bonds State Children's Hospital
Series 1989A (MBIA Insured)
10-01-19 7.00 1,500,000 1,572,945
Harris County Toll Road Senior Lien
Pre-refunded Revenue Bonds Series 1992A
(AMBAC Insured)
08-15-17 6.50 8,170,000 9,078,586
Hillsboro Independent School District
Unlimited Tax School Building & Refunding
Revenue Bonds
Series 1997 (Permanent School Fund Guarantee)
08-15-26 5.25 1,000,000 1,007,520
Houston Water & Sewer System
Junior Lien Refunding Revenue Bonds
Series 1997A (FGIC Insured)
12-01-22 5.25 7,210,000 7,329,542
League City General Obligation
Refunding & Improvement Bonds
Series 1990 (FGIC Insured)
02-01-13 6.25 2,500,000 2,620,050
Matagorda County Navigation District 1
Collateralized Pollution Control Revenue Bonds
Central Power & Light Series 1984A (AMBAC Insured)
12-15-14 7.50 2,500,000 2,660,900
Matagorda County Navigation District 1 Pollution Control
Refunding Revenue Bonds Houston Light & Power
Series 1989E (FGIC Insured)
12-01-18 7.20 2,150,000 2,262,166
Matagorda County Navigation District 1 Pollution Control
Revenue Bonds Central Power & Light
Series 1990 (AMBAC Insured) A.M.T.
03-01-20 7.50 2,000,000 2,120,940
Mineral Wells Independent School Districts Palo
Pinto & Parker Counties Unlimited Tax General Obligation
School Building & Refunding Bonds Series 1998
Permanent School Fund Guarantee
02-15-28 4.75 2,000,000 1,894,300
Municipal Power Agency Refunding Revenue Bonds
Series 1991A (AMBAC Insured)
09-01-12 6.75 5,250,000 5,716,620
Rosenberg Limited Tax General Obligation Bonds
Series 1998 (FSA Insured)
03-01-16 4.50 740,000 701,579
03-01-17 4.50 785,000 740,067
Turnpike Authority Dallas North Tollway
Pre-refunded Revenue Bonds Series 1990
(AMBAC Insured)
01-01-20 6.00 5,000,000 5,000,000
Turnpike Authority Dallas North Tollway Revenue Bonds
Addison Airport Toll Tunnel Series 1994 (FGIC Insured)
01-01-23 6.60 2,000,000 2,307,660
University of Houston System Consolidated
Pre-refunded Revenue Bonds Series 1990A (MBIA Insured)
02-15-06 7.40 3,160,000 3,305,739
Total 99,360,857
Vermont (0.2%)
University of Vermont & State Agricultural College
Revenue Bonds Series 1998 (MBIA Insured)
10-01-38 4.75 1,000,000 945,440
Virginia (3.5%)
Hanover County Industrial Development Authority
Memorial Regional Medical Center (MBIA Insured)
08-15-25 5.50 3,800,000 3,947,706
Loudoun County Sanitation Authority Waste & Sewer
Refunding Revenue Bonds (MBIA Insured)
01-01-30 5.25 1,435,000 1,450,068
Portsmouth Redevelopment Housing Authority
Multi-family Housing Refunding Revenue Bonds
(FNMA Insured)
12-01-08 6.05 5,780,000 6,182,808
Upper Occoquan Sewer Authority Regional Sewer
Revenue Bonds Series 1995A (MBIA Insured)
07-01-29 4.75 4,000,000 3,796,400
William County Lease Certificate of Participation Bonds
(MBIA Insured)
12-01-20 5.50 2,590,000 2,706,757
Total 18,083,739
Washington (1.7%)
Public Power Supply System Non-refunded Revenue Bonds
Nuclear Project 1 Series 1989A (MBIA Insured)
07-01-15 7.50 3,000,000 3,124,530
Public Power Supply System Pre-refunded Revenue Bonds
Nuclear Project 3 Series 1989A (BIG Insured)
07-01-16 7.25 1,000,000 1,040,280
Public Power Supply System Refunding Revenue Bonds
Nuclear Project 3 Series 1989A (BIG Insured)
07-01-18 6.00 3,000,000 3,043,440
Spokane Regional Solid Waste Management System Revenue Bonds Series 1989 (AMBAC
Insured) A.M.T.
01-01-07 7.88 1,250,000 1,275,000
01-01-11 7.75 300,000 306,000
Total 8,789,250
West Virginia (2.6%)
Board of Regents Registration Fee Pre-refunded Revenue Bonds
Series 1989B (MBIA Insured)
04-01-09 7.40 2,000,000 2,061,160
School Building Authority Capital Improvement
Pre-refunded Revenue Bonds (MBIA Insured)
07-01-15 7.25 3,415,000 3,673,242
School Building Authority Capital Improvement
Revenue Bonds Series 1990B (MBIA Insured)
07-01-17 6.75 5,000,000 5,342,600
State Parkway Economic Development & Tourism
Authority Parkway Pre-refunded Revenue Bonds
Series 1989 (FGIC Insured)
07-01-19 7.13 2,000,000 2,079,800
Total 13,156,802
Wisconsin (0.6%)
Center District Sales Tax Appreciation Senior
Dedicated Bonds Zero Coupon Series 1996A
(MBIA Insured)
12-15-17 6.03 4,000,000(e) 1,539,840
12-15-21 5.45 3,045,000(e) 942,610
Southeast Professional Baseball Park District
Sales Tax Revenue Bonds Zero Coupon
(MBIA Insured)
12-15-29 5.15 2,125,000(e) 435,030
Total 2,917,480
Total municipal bonds
(Cost: $450,282,914) $500,302,648
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Municipal notes (1.5%)
Issuer(c,d) Effective Amount Value(a)
yield payable at
maturity
Clark County Nevada (Nevada Cogeneration)
Series 1991 V.R.
<S> <C> <C> <C> <C>
11-01-21 5.25% $1,000,000 $1,000,000
Kemmerer Wyoming Pollution Control Revenue Bonds
(Exxon) Series 1984 V.R.
11-01-14 5.10 100,000 100,000
Long Island New York Electric Power Authority
Revenue Bonds Series 5 V.R.
05-01-33 5.10 2,700,000 2,700,000
Louisiana State Offshore Terminal Authority
Deepwater Port Revenue Bonds (Loop)
Series 1992 V.R.
09-01-08 5.10 800,000 800,000
New York City Municipal Water Finance Authority Water & Sewer System Revenue
Bonds Series 1993 V.R.
06-15-23 5.10 2,900,000 2,900,000
Ohio State Air Quality Development Cincinnati Gas & Electric Series 1995A V.R.
09-01-30 5.00 200,000 200,000
Washington State Health Care Facility Authority Revenue Bonds (Sisters of
Providence) Series 1985E V.R.
10-01-05 5.10 100,000 100,000
Total municipal notes
(Cost: $7,800,000) $7,800,000
Total investments in securities
(Cost: $458,082,914)(j) $508,102,648
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) The following abbreviations may be used in portfolio descriptions to
identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(c) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax-- As of Dec. 31, 1998, the value of
securities subject to alternative minimum tax represented
19.22% of net assets.
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B. -- Variable Rate Demand Bond
V.R.D.N. -- Variable Rate Demand Note
(d) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parentheses, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies to
reflect current market conditions; rate shown is the effective rate on Dec. 31,
1998.
(e) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(f) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(g) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Dec. 31, 1998.
(h) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a decline
(increase) in market short-term rates. Interest rate disclosed is the rate in
effect on Dec. 31, 1998. Inverse floaters in the aggregate represent 2.38% of
the Fund's net assets as of Dec. 31, 1998.
(i) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
Municipal Bonds March 1999 $4,500,000
(j) At Dec. 31, 1998, the cost of securities for federal income tax purposes was
approximately $457,508,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $50,666,000
Unrealized depreciation (71,000)
Net unrealized appreciation $50,595,000
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 85
SPENCER, IA
S-6330 M (2/99)
IDS Insured Tax-Exempt Fund
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN EXPRESS Financial Advisors
