Table of Contents
USAA Family of Funds 1
Message from the President 2
Investment Review:
Florida Tax-Free Income Fund 4
Florida Tax-Free Money Market Fund 9
Financial Information:
Independent Auditors' Report 12
Statements of Assets and Liabilities 13
Portfolios of Investments in Securities:
Florida Tax-Free Income Fund 15
Florida Tax-Free Money Market Fund 18
Notes to Portfolios of Investments 21
Statements of Operations 22
Statements of Changes in Net Assets 23
Notes to Financial Statements 24
Important Information
Through our ongoing efforts to reduce expenses and respond to shareholder
requests, your annual and semiannual report mailings are "streamlined." One copy
of each report is sent to each address, rather than to every registered owner.
For many shareholders and their families, this eliminates duplicate copies,
saving paper and postage costs to the Funds.
If you are the primary shareholder on at least one account, prefer not to
participate in streamlining, and would like to continue receiving one report per
registered account owner, you may request this in writing to:
USAA Investment Management Company
Attn: Report Mail
9800 Fredericksburg Road
San Antonio, TX 78284-8916
or phone a Mutual Fund Representative at 1-800-531-8448 during business hours.
This report is for the information of the shareholders and others who have
received a copy of the currently effective prospectus of the USAA Florida Funds,
managed by USAA Investment Management Company (IMCO). It may be used as sales
literature only when preceded or accompanied by a current prospectus which gives
further details about the funds.
USAA with the eagle is registered in the U.S. Patent & Trademark Office.
(Copyright) 1997, USAA. All rights reserved.
<TABLE>
USAA Family of Funds Performance Summary
If you own only one or two USAA funds, you may not be aware of the performance
of our other funds. This summary is a snapshot of the performance of all 33
funds by investment objective as of March 31, 1997.
<CAPTION>
Average Annual Total Return(%)*
Investment Inception Since
Objective Date 1 yr 5 yrs 10 yrs Inception
<S> <C> <C> <C> <C> <C>
Capital Appreciation
========================================================================================================
Aggressive Growth 10/19/81 -5.70 11.02 8.98 -
Emerging Markets(1) 11/7/94 12.86 - - 8.14
Gold(1) 8/15/84 -24.30 6.19 -4.11 -
Growth 4/5/71 10.96 14.37 10.98 -
Growth & Income 6/1/93 17.96 - - 15.82
International(1) 7/11/88 15.64 14.34 - 10.77
S&P 500 Index(4) 5/1/96 - - - 19.78+
World Growth(1) 10/1/92 14.38 - - 13.53
Asset Allocation
==================
Balanced Strategy(1) 9/1/95 12.87 - - 11.35
Cornerstone Strategy(1) 8/15/84 13.36 13.32 8.63 -
Growth and Tax Strategy(2)** 1/11/89 8.57 10.08 - 9.71
Growth Strategy(1) 9/1/95 11.02 - - 16.09
Income Strategy 9/1/95 7.17 - - 7.36
Income-Taxable
================
GNMA 2/1/91 5.59 6.94 - 7.35
Income 3/4/74 4.53 7.49 8.79 -
Income Stock 5/4/87 14.01 13.16 - 12.49
Short-Term Bond 6/1/93 6.73 - - 5.45
Income - Tax Exempt
=====================
Long-Term(2)** 3/19/82 6.51 6.80 7.04 -
Intermediate-Term(2)** 3/19/82 5.80 6.82 6.92 -
Short-Term(2)** 3/19/82 4.70 4.85 5.38 -
California Bond(2)** 8/1/89 6.60 7.06 - 7.32
Florida Tax-Free Income(2)** 10/1/93 6.51 - - 3.45
New York Bond(2)** 10/15/90 5.89 6.60 - 8.03
Texas Tax-Free Income(2)** 8/1/94 7.06 - - 8.32
Virginia Bond(2)a** 10/15/90 5.82 7.01 - 7.80
Money Market
==============
Money Market(3) 2/2/81 5.21 4.41 5.82 -
Tax Exempt Money Market(2,3)** 2/6/84 3.30 3.03 4.18 -
Treasury Money Market Trust(3) 2/1/91 5.07 4.20 - 4.35
California Money Market(2,3)** 8/1/89 3.23 2.93 - 3.62
Florida Tax-Free Money Market(2,3)** 10/1/93 3.20 - - 3.01
New York Money Market(2,3)** 10/15/90 3.16 2.80 - 3.07
Texas Tax-Free Money Market(2,3)** 8/1/94 3.22 - - 3.30
Virginia Money Market(2,3)** 10/15/90 3.14 2.85 - 3.19
</TABLE>
Non-deposit investment products offered by USAA Investment Management Company
are not insured by the FDIC, are not deposits or other obligations of, or
guaranteed by, USAA Federal Savings Bank, and are subject to investment risks,
including possible loss of the principal amount invested.
For more complete information about the mutual funds managed and
distributed by USAA IMCO, including charges and expenses, please call
1-800-531-8181 for a prospectus. Read it carefully before you invest.
1 Foreign investing is subject to additional risks, which are discussed in
the funds' prospectuses.
2 Some income may be subject to state or local taxes or the federal alterna-
tive minimum tax.
3 An investment in a money market fund is neither insured nor guaranteed by
the U.S. government and there is no assurance that any of the funds will be
able to maintain a stable net asset value of $1 per share.
4 S&P 500(Registered Trademark) is a trademark of The McGraw-Hill Companies,
Inc., and has been licensed for use. The product is not sponsored, sold or
promoted by Standard & Poor's, and Standard & Poor's makes no representation
regarding the advisability of investing in the product.
* Total return equals income return plus share price change and assumes
reinvestment of all dividends and capital gain distributions. No adjustment
has been made for taxes payable by shareholders on their reinvested dividends
and capital gain distributions. The performance data quoted represent past
performance and are not an indication of future results. Investment return
and principal value of an investment will fluctuate, and an investor's
shares, when redeemed, may be worth more or less than their original cost.
** IRAs are not available for tax-exempt funds. The Growth and Tax Strategy Fund
is not available as an investment for your IRA because the majority of its
income is tax-exempt. California, Florida, New York, Texas, and Virginia
funds available to residents only.
+ Cumulative total return since inception, including account maintenance fee.
Message from the President
[Photograph of Michael J. C. Roth, CFA, President and Vice Chairman of the
Board appears here]
At the most recent USAA Strategic Planning Conference, we spent much of our
time discussing USAA's Mission and how to accomplish it in today's world. Our
Mission has three main elements:
+We want to facilitate the financial
security of those whom we serve.
+We seek to do this with highly competitive
products and services.
+In so doing, we want to be the provider of
choice to the military community.
One evening I sat down and considered each of these separately. Perhaps the most
interesting outcome was my thoughts on financial security. What does that mean
to those who make up the USAA family?
I set down these elements:
+Housing and caring for a family
+Pursuing a rewarding career
+Providing for children's educations
+Providing proper medical care
+Protecting the family against accidents and emergencies
+Providing for a comfortable retirement
+Perhaps providing comfort to aging parents
+Creating an estate plan that will serve well those who survive you
+Enjoying life
The last point struck me especially.
Financial planning almost always focuses on the very serious reasons to save and
invest. But there needs to be a balance in people's lives. Here I have learned a
valuable lesson from my wife, Jutta. She has special china and silver. However,
she has always said, "Nothing is stored away in cabinets. I use it as often as I
can. These things are meant to be enjoyed."
This philosophy meshed very well with my ideas on saving. Here too I have urged
balance. You must save for the future, but you must not strangle on that saving.
You should use plans like 401(k)s and IRAs, but you should also set something
aside for now. That means saving in accounts that are not tax-sheltered, and
that means looking at vehicles like tax-exempt bond and money market funds. They
can perform the job of controlling overall portfolio risk, just as they would in
an IRA by combining equity and taxable bond funds. In this case, they are
valuable tools in helping your after-tax return while you enjoy life, the most
pleasant outcome of financial planning.
Sincerely,
Michael J.C. Roth, CFA
President and
Vice Chairman of the Board
USAA Funds Rated 5 Stars
on Overall Performance
Five-star ratings for overall risk-adjusted performance have been awarded by
Morningstar for USAA Funds as of March 31, 1997.*
USAA Tax Exempt Intermediate-Term Fund & USAA Tax Exempt Short-Term Fund
were rated 5 Stars overall among 1,751, 1,237, 601, and 267 municipal bond
funds for the 1-,3-,5-, and 10-year periods, respectively.
USAA Growth & Income Fund was rated 5 Stars for the 3-year period and 4 Stars
for the 1-year period among 1,919 and 3,048 domestic equity funds, respectively.
USAA International Fund was rated 5 Stars for the 5-year period and 4 Stars for
the 1- and 3-year periods overall and among 219, 939, and 478 international
equity funds, respectively.
*Morningstar proprietary ratings reflect historical risk-adjusted performance
through March, 31 1997. The ratings are subject to change monthly. Past
performance is no guarantee of future results. Morningstar ratings are
calculated from the fund's 3-, 5-, and 10-year average annual total returns
(with fee adjustments) in excess of 90-day Treasury bill returns, and a risk
factor that reflects fund performance below 90-day T-bill returns. The one-year
rating is calculated using the same methodology, but is not a component of the
overall rating. Ten percent of the funds in a rating category receive five
stars and the next 22.5% receive four stars.
For more information about mutual funds managed and distributed by USAA IMCO,
including charges and expenses, please call for a prospectus. Read it carefully
before investing.
Investment Review
FLORIDA TAX-FREE INCOME FUND
OBJECTIVE: Provide Florida investors with a high level of current interest
income that is exempt from federal income taxes and shares that are exempt from
the Florida intangible personal property tax.
TYPES OF INVESTMENTS: Invests primarily in long-term investment grade Florida
tax-exempt securities.
3/31/96 3/31/97
Net Assets............................ $69.1 Million $95.5 Million
Net Asset Value Per Share............. $9.26 $9.33
Average Annual Total Returns as of 3/31/97
1 Year........................................... 6.51%
Since inception on October 1, 1993............... 3.45%
30-Day SEC Yield* on March 31, 1997.............. 5.56%
*Calculated as prescribed by the Securities and Exchange Commission.
A graph is shown here which is a comparison of the change in value of a $10,000
investment for the period of 10/01/93 to 3/31/97, with dividends and capital
gains reinvested. The ending values for the items graphed are:
Lehman Brothers Muni. Bond Index $11,767
USAA Florida Tax-Free Income Fund 11,263
Lipper Florida Municipal Debt Funds Average 11,340
The broad-based Lehman Brothers Municipal Bond Index is an unmanaged index that
tracks total return performance for the long-term investment grade tax-exempt
bond market. The Lipper Florida Municipal Debt Funds Average is the average
performance level of all Florida Municipal Debt Funds, as computed by Lipper
Analytical Services, an independent organization that monitors the performance
of mutual funds. All tax-exempt bond funds will find it difficult to outperform
the Lehman Index, since funds have expenses.
Total return equals income return plus share price change and assumes
reinvestment of all dividends and capital gain distributions. No adjustment has
been made for taxes payable by shareholders on their reinvested dividends and
capital gain distributions. The performance data quoted represent past
performance and are not an indication of future results. Investment return and
principal value of an investment will fluctuate, and an investor's shares, when
redeemed, may be worth more or less than their original cost.
Message From The Manager
[A PICTURE OF ROBERT R. PARISEAU, CFA IS HERE]
The Envy Of The World
Since 1983, the United States economy has enjoyed impressive, but not
spectacular, growth with steadily rising employment, relatively low inflation
and only one short recession in these 14 years. Using conventional wisdom
from the 1970's and early 1980's, an economist would expect such sustained
growth to strain production capacity and trigger higher prices. However, since
1991, inflation has been consistently below 3.5%, as measured by the Comsumer
Price Index.
Has inflation been tamed? My first boss at USAA, Harry Miller, Senior Vice
President for Equity Investments, taught me that the four most dangerous words
in investing are - "it's different this time." Fixed income investors demand
higher interest rates when the inflation rate accelerates, because their
future interest payments will have less purchasing power. Since bond prices
fall then interest rates rise, the bond market reacts negatively to the
threat of higher inflation.
What Is Different This Time?
Compared to earlier decades, quite different factors now influence the many
pieces of the economic puzzle. For example: Have computer technology and
just-in-time manufacturing increased productivity and smoothed economic
cycles? Are workers and managers too concerned about job security and benefits
to demand a raise? Have manufacturers lost pricing power to global
competitors? Has the threat of reform tamed the excessive growth in healthcare
costs? Will the new fiscal conservatism prevail in Congress? Finally, will
these factors continue to dampen inflationary pressures; or, are they
temporary in nature?
A Preemptive Move
Chairman Greenspan and the Federal Reserve Board (the "Fed") grappled with
these issues over the last year. Their dilemma - although economic statistics
still indicated benign inflation, economic growth has been vibrant. After
concluding it was to risky to wait for inflation to accelerate, the Fed raised
the federal funds rate on March 25 by .25% to 5.50%. This was the first
increase since February 1995. Inflation won't have a free ride on their watch!
As the adage goes, the Fed's job is to remove the punch bowl just before the
party really gets going. I believe the Fed hopes that a preemptive rate
increase now would slow the economy, restrain inflation, and eliminate the
need for a more forceful response later.
Portfolio Strategy
What should investors do? For many investors, a diversified portfolio of
stocks, bonds, and cash equivalents (money market or short-term bond funds)
gives them the confidence to endure the bumps in the road. As I have said
in the past, no one has yet proven that they can consistently predict the
future of interest rates. Rather than chasing the market. I follow a
strategy of generating maximum tax-exempt income that potentially should
produce the best after-tax total return over a 3-5 year investment horizon.
Since I tend to focus on maturities 20 years or longer, this Fund will
generally be more volatile than a fund with a shorter average maturity.
Potentially, investors should be rewarded over time with higher tax-free
income and the volatility, both up and down, typically evens out.
Focus On Healthcare
You may notice that healthcare-related bonds are the largest "industry"
segment for this Fund. I actively seek healthcare providers with certain
credit characteristics. Typically, they yield more because of the
uncertainty of healthcare reform and excess capacity in some markets.
I believe we have picked the winners. Healthcare has been and will continue
to be an essential service. Those providers with dominant market share,
solidly profitable operations, and talented management will not just survive,
but thrive in a more competitive environment.
Bond Selection
You may be interested to know what isn't in the Fund. The Fund currently
owns no lease revenue bonds that rely upon a local municipality, such as a
city or county, to appropriate annually the debt service from their
General Fund. Unless extenuating circumstances exist, an analyst cannot
confidently predict debt service payments that depend upon the actions
of an elected governmental body five or ten years into the future.
Since considerable public controversy typically embroils sports stadium
financing, I tend to avoid these bonds also. As I have said before, I
do not buy exotic derivatives, futures contracts, or bonds subject to the
alternative minimum tax (AMT).
Interest Rates
Interest rates on the 30-year U.S. Treasury Bond(1) (the "Long Bond") began
the reporting period at 6.67% on March 29, 1996. Over the next seven months,
rates traded nervously in a choppy range from 6.60% to 7.19%, falling to a
fiscal year low of 6.35% in November 1996. In December, Long Bond rates
began an upward trend closing the year at 7.10% on March 31, 1997. The yield
on the Bond Buyer 40-Bond Index (BBI40), the industry standard for long-term,
investment-grade municipal bonds, behaved similarly. The BBI40 began the
one-year period at 5.96% on March 29, 1996, but closed slightly lower at
5.95% on March 31, 1997.
(1)The 30-year Treasury Bond is generally considered the benchmark for
long-term interest rates in the U.S.
Your Fund's Performance
Your Fund's net asset value per share increased by $.07, or .76%, since
March 31, 1996. The Fund's performance compared very favorably to its peer
group. While past performance is no guarantee of future results, the Fund's
dividend distribution yield(2) for the past 12 months was 5.57%, as compared
to Lipper's Florida Municipal Debt Funds average of 4.97% for the 78 funds in
the category.(3) For the same period, the Fund's total return(4) was 6.51%,
compared to the Lipper average of 4.75%.
(2) 12-month dividend yield is computed by dividing income dividends paid
during the previous 12 months by the latest month-end net asset value
adjusted for capital gains distributions.
(3) Lipper Analytical Services is an independent organization that
monitors the performance of mutual funds.
(4) Total return equals income return plus share price change and assumes
reinvestment of all dividends and capital gain distributions.
A graph is shown here comparing the 12-month dividend yield of the USAA
Florida Income Fund and the Lipper Florida Municipal Debt Funds Average
from 3/31/95 to 3/31/97. The vertical axis shows the yield and the
horizontal axis shows the time period.
The values are:
USAA Florida
Income Fund 5.40 5.60 5.60
Lipper. Florida
Muni. Debt
Funds Avg. 5.30 5.10 5.00
The Lipper Florida Municipal Debt Funds Average is computed by Lipper Analytical
Services, an independent organization that monitors the performance of mutual
funds. 12-month dividend yield is computed by dividing income dividends paid
during the previous 12 months by the latest month-end net asset value adjusted
for capital gains distributions. The graph represents data from 3/31/95 to
3/31/97.
The State Of Florida
One of the nation's fastest growing states, Florida's economic strength derives
from growth in trade and services, as well as tourism and agriculture. The
State continues to outperform the nation in income growth and employment.
Florida's unemployment rate improved to 4.8% in January 1997 as compared to a
year earlier of 5.4% and the nation's current 5.4%.
The State's population growth creates budgetary pressures for social programs
and infrastructure. To this end, the level of Florida's debt has increased
and future borrowing is anticipated. Sales tax revenues remain critical to
the State's fiscal health as they comprise approximately 70% of governmental
revenues. The State is targeting their budget stabilization and working
capital reserve funds to reach $629 million by June 1997. Moody's and Fitch
continue to rate Florida as a "AA" credit. On April 3, 1997, S&P upgraded
the State to a "AA+" reflecting its economic potential and continued
diversification.
To Match the Florida Tax-Free Income Fund's Closing 30-Day SEC Yield of
5.56% and:
Assuming a Marginal Federal Tax Rate of:
28% 31% 36% 39.6%
Assuming an Investor, Filing Jointly, with $300,000 in Intangible Assets:
A Fully Taxable Investment
Must Pay: 7.73% 8.07% 8.70% 9.22%
This table is based on a hypothetical investment calculated for illustrative
purposes only. It is not an indication of performance for any of the USAA Family
of Funds.
A pie chart is shown here depicting the Portfolio Ratings/Mix as of
March 31, 1997 for the USAA Florida Tax-Free Income Fund to be: AAA - 20%,
AA - 13%, A - 38%, BBB - 27%, and Cash Equivalents - 2%.
This chart reflects the highest rating of either Moody's Investors Service,
Standard & Poor's Rating Group, or Fitch Investors Service. Unrated securities
that have been determined by USAA IMCO to be of equivalent investment quality to
category BBB account for 5.0% of the Fund's investments.
Note: Income may be subject to the federal alternative minimum tax.
See page 15 for a complete listing of the Portfolio of Investments in
Securities.
Investment Review
FLORIDA TAX-FREE MONEY MARKET FUND
OBJECTIVE: Provide Florida investors with a high level of current interest
income that is exempt from federal income taxes and shares that are exempt from
the Florida intangible personal property tax, while preserving capital and
maintaining liquidity.
TYPES OF INVESTMENTS: High quality Florida tax-exempt securities with maturities
of 397 days or less. The Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less and will endeavor to maintain a constant net asset
value per share of $1.00.*
* An investment in this Fund is neither insured nor guaranteed by the U.S.
government, and there can be no assurance that the Fund will maintain a stable
net asset value of $1.00 per share.
3/31/96 3/31/97
Net Assets................................ $71.2 Million $87.1 Million
Net Asset Value Per Share................. $1.00 $1.00
Average Annual Total Returns as of 3/31/97
1 Year............................................................ 3.20%
Since inception on October 1, 1993................................ 3.01%
7-Day Simple Yield on March 31, 1997.............................. 3.04%
A graph is shown here comparing the 7-day yield of the USAA Florida Tax-Free
Money Market Fund and the IBC/Donoghue's State Specific SB & GP (Tax-Free)
from 3/96 to 3/97. The vertical axis shows the yield and the horizontal axis
shows the time period. The ending value, on 3/25/97, for the USAA Florida
Tax-Free Money Market Fund is 2.96% and the ending value for the IBC
Donoghue's State Specific SB & GP (Tax-Free) is 2.70%.
Total return equals income return and assumes reinvestment of all dividends and
any capital gain distributions. No adjustment has been made for taxes payable by
shareholders on their reinvested dividends and capital gain distributions. Past
performance is no guarantee of future results and the value of your investment
may vary according to the Fund's performance. The graph tracks the Fund's 7-day
simple yield against IBC/Donoghue's State Specific SB (Stock Broker) & GP
(General Purpose) (Tax-Free) Money Funds, an average of all major money market
fund yields.
Message from the Manager
[A PICTURE OF JOHN C. BONNELL, CFA IS HERE]
Interest Rates
The short-term debt markets are heavily influenced by actions taken, or not
taken by the Federal Reserve (the Fed). After lowering the federal funds rate
(the rate banks charge each other for overnight loans) .25% on January 31, 1996,
the Fed maintained a stable policy for the remainder of 1996. However, an
exceptionally strong jobs report in February 1996 was the first of many signs
that the economy was growing much faster than originally anticipated. These
strong economic indicators and statistics were perceived by many to have the
potential of producing inflation. On March 25, 1997, the Fed announced it was
increasing the federal funds rate .25% in an attempt to prevent inflation before
it became a problem. It is still unclear (as it always is) whether this will be
a single move, or one of a series of rate hikes. The volatility in short-term
rates is illustrated by the one-year Treasury bill rate which increased more
than 1.0% between February and July 1996, before falling approximately .5% by
the end of 1996. The first quarter of 1997 brought higher rates once again with
the one-year Treasury bill increasing .5% to end the quarter at 6.0%, the
highest since May 22, 1995.
Strategy
We strive to meet the Fund's objective in any prevailing interest rate
environment. This is done in part by maintaining a mix of fixed rate securities
and variable rate securities in the Fund. Fixed rate securities lock in rates
for a given period of time, and help stabilize the Fund's yield during the
periods when there is a large amount of cash in the market relative to supply.
Variable rate securities pay interest that adjusts periodically to prevailing
market conditions, and also provide liquidity necessary to take advantage of
higher yielding securities when opportunities arise. Maintaining an appropriate
mix of different types of securities and conducting internal credit research
combine to provide a highly competitive return. As part of our stringent
selection criteria, we strive to ensure all purchases are the best relative
value in the market at any given time.
Performance
While past performance is no guarantee of future results, for the 12 months
ending March 31, 1997, your Fund ranked 12 out of 149 State Specific Tax-Exempt
Money Market Funds according to IBC Financial Data, Inc.(1) The Fund's
compounded dividend yield was 3.20%, while the average for the category over
the same time period was 2.89%.
(1) IBC Financial Data, Inc. provides independent analyses of trends in
the financial services and investing industries, with particular
concentration on money market funds.
Florida
Florida is one of the nation's fastest growing states in terms of population.
Economic strength is derived from the rapidly growing trade and service sectors,
as well as tourism and agriculture. The state is outperforming the nation in
income growth and employment. According to the Bureau of Labor Statistics,
Florida's seasonally adjusted unemployment rate improved to 4.8% in January 1997
from 5.4% in January 1996. The corresponding national rates were 5.4% and 5.7%,
respectively. The rapid population growth creates fiscal pressures for both
social programs and infrastructure needs. As a result, the level of Florida's
debt has increased, and additional future borrowing is anticipated. Sales tax
revenues remain critical to the State's fiscal health as they comprise
approximately 70% of governmental revenues. We continue to analyze each issue on
a case by case basis and remain very selective when investing fund assets.
A graph is here showing the growth of $10,000, from 10/1/93 to 3/31/97,
invested in the USAA Florida Tax-Fee Money Market Fund. The vertical axis
shows the dollar amount and the horizontal axis shows the time period.
The ending value is $11,094.
Past performance is no guarantee of future results and the value of your
investment may vary according to the Fund's performance. Income may be
subject to federal taxes, or to the alternative minimum tax.
An investment in this Fund is neither insured nor guaranteed by the U.S.
government and there is no assurance that the Fund will maintain a stable net
asset value of $1 per share.
See page 18 for a complete listing of the Portfolio of Investments in
Securities.
Independent Auditors' Report
The Shareholders and Board of Trustees
USAA State Tax-Free Trust:
We have audited the accompanying statements of assets and liabilities and
portfolios of investments in securities of the Florida Tax-Free Income and
Florida Tax-Free Money Market Funds, separate Funds of USAA State Tax-Free
Trust, as of March 31, 1997, the related statements of operations for the year
then ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights information presented
in note 7 to the financial statements for each of the years in the three-year
period ended March 31, 1997, and the six-month period ended March 31, 1994.
These financial statements and the financial highlights information are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights information
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of March 31, 1997, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights information
referred to above present fairly, in all material respects, the financial
position of the Florida Tax-Free Income and Florida Tax-Free Money Market Funds,
separate Funds of USAA State Tax-Free Trust, as of March 31, 1997, the results
of their operations for the year then ended, the changes in their net assets for
each of the years in the two-year period then ended, and the financial
highlights information for each of the years in the three-year period ended
March 31, 1997, and the six-month period ended March 31, 1994, in conformity
with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
San Antonio, Texas
May 9, 1997
<TABLE>
Statements of Assets and Liabilities
(In Thousands)
March 31, 1997
<CAPTION>
Florida Florida
Tax-Free Tax-Free Money
Income Fund Market Fund
----------- -----------
<S> <C> <C>
Assets
Investments in securities, at market value
(identified cost of $90,031 and $80,613, respectively) $ 91,270 $ 80,613
Cash 176 1,719
Receivables:
Capital shares sold 54 103
Interest 1,791 501
Securities sold 3,298 4,552
-------- --------
Total assets 96,589 87,488
-------- --------
Liabilities
Securities purchased 750 -
Capital shares redeemed 131 353
USAA Investment Management Company 48 42
USAA Transfer Agency Company 1 4
Accounts payable and accrued expenses 27 24
Dividends on capital shares 149 12
-------- --------
Total liabilities 1,106 435
-------- --------
Net assets applicable to capital shares outstanding $ 95,483 $ 87,053
======== ========
Represented by:
Paid-in capital $ 96,101 $ 87,053
Accumulated net realized loss on investments (1,857) -
Net unrealized appreciation of investments 1,239 -
-------- --------
Net assets applicable to capital shares outstanding $ 95,483 $ 87,053
======== ========
Capital shares outstanding, unlimited number of shares
authorized, $.001 par value 10,235 87,053
======== ========
Net asset value, redemption price, and offering price per share $ 9.33 $ 1.00
======== ========
</TABLE>
See accompanying notes to financial statements.
Categories & Definitions
Portfolios of Investments in Securities
March 31, 1997
Fixed Rate Instruments - consist of municipal bonds, notes, and commercial
paper. The interest rate is constant to maturity. Prior to maturity, the price
of a fixed rate instrument generally varies inversely to the movement of
interest rates.
Put Bonds - provide the right to sell the bond at face value at specific tender
dates prior to final maturity. The put feature shortens the effective maturity
to the next tender date.
Variable Rate Demand Notes (VRDN) - provide the right, on any business day, to
sell the security at face value on either that day or in seven days. The
interest rate is adjusted at a stipulated daily, weekly, or monthly interval to
a rate that reflects current market conditions. In money market funds, the
effective maturity is the date on which the underlying principal amount may be
recovered or the next rate adjustment date consistent with regulatory
requirements. In bond funds, the effective maturity is the next put date. Most
VRDNs possess a credit enhancement.
Credit Enhancement (CRE) - adds the financial strength of the provider of the
enhancement to support the issuer's ability to repay the principal when due. The
enhancement may be provided by either a high quality bank, insurance company, or
other corporation, or a collateral trust. Typically, the rating agencies
evaluate the security based upon the credit standing of the provider of the
credit enhancement, rather than the credit standing of the issuer.
<TABLE>
Florida Tax-Free Income Fund
Portfolio of Investments in Securities
(In Thousands)
March 31, 1997
<CAPTION>
Principal Coupon Final Market
Amount Security Rate Maturity Value
------ -------- ---- -------- ------
Fixed Rate Instruments (86.5%)
<C> <S> <C> <C> <C>
Florida (76.6%)
$ 3,400 Alachua County Health Facilities Auth. RB,
Series 1996A (CRE) 5.80 % 12/01/26 $ 3,352
3,500 Board of Education Capital Outlay Bonds,
Series 1995B 5.88 6/01/20 3,516
Broward County Housing Finance Auth. MFH RB,
1,100 Series 1995A 7.00 2/01/25 1,169
1,000 Series 1997A-1 6.00 5/01/32 991
1,855 Citrus County PCRB, Series 1992B 6.35 2/01/22 1,952
2,570 City of Venice Health Care RB, Series 1996 (CRE) 5.63 8/15/26 2,472
2,000 Collier County Health Facilities Auth. RB,
Series 1994 7.00 12/01/19 2,103
2,000 Dade County Special Obligation Bonds,
Series 1995 6.10 4/01/20 2,027
Duval County Housing Finance Auth. MFH RB,
1,700 Series 1996 5.90 9/01/16 1,677
2,510 Series 1996 6.00 3/01/21 2,472
2,000 Hillsborough County IDA PCRB 6.25 12/01/34 2,093
Housing Finance Agency RB,
1,800 Series 1994B 6.35 7/01/14 1,846
1,000 Series 1995H (CRE) 6.50 11/01/25 995
1,200 Indian River County Hospital District RB,
Series 1996 (CRE) 5.70 10/01/15 1,177
1,000 Miami Beach Health Facilities Auth. Hospital RB,
Series 1992 (CRE) 6.25 11/15/19 1,027
1,000 Miramar Wastewater Improvement Assessment
Bonds, Series 1994 (CRE) 6.75 10/01/25 1,086
4,800 North Miami Educational Facilities RB,
Series 1994A 6.13 4/01/20 4,603
2,130 North Miami Health Facilities Auth. RB,
Series 1996 (CRE) 6.00 8/15/24 2,102
5,750 Orange County Health Facilities Auth. RB,
Series 1995 6.75 7/01/20 6,056
1,000 Orange County Housing Finance Auth. RB 6.40 2/01/30 1,031
3,575 Orlando and Orange County Expressway Auth. RB,
Series 1993 5.95 7/01/23 3,537
3,405 Palm Beach County Health Facilities Auth.
Hospital RB, Series 1993 6.30 10/01/22 3,472
4,400 Palm Beach County Health Facilities Auth.
Retirement Community RB, Series 1996 5.63 11/15/20 4,114
1,340 Palm Beach County Housing Finance Auth. RB,
Series 1994B 6.40 4/01/14 1,391
6,805 St. Johns County IDA RB 6.00 8/01/22 6,778 (b)
3,215 Sunrise Special Tax District #1 GO,
Series 1991 (CRE) 6.38 11/01/21 3,293
1,150 Tallahassee Consolidated Utility Systems RB,
Series 1994 6.20 10/01/19 1,190
1,300 Turtle Run Community Development
District RB (CRE) 6.40 5/01/11 1,327
1,500 Volusia County Education Facility Auth. RB,
Series 1996A 6.13 10/15/26 1,489
3,000 Volusia County Health Facilities Auth.
Hospital RB, Series 1996 (CRE) 5.50 11/15/26 2,837
Guam (1.1%)
1,000 Government Limited Obligation Infrastructure
Improvement RB, Series 1989A (CRE) 7.10 11/15/09 1,045
Puerto Rico (8.8%)
4,350 Electric Power Auth. RB, Series 1995Z 5.25 7/01/21 3,925
4,500 Highway Auth. RB, Series Q 6.00 7/01/20 4,494
- -----------------------------------------------------------------------------------------------------
Total fixed rate instruments (cost: $81,466) 82,639
- -----------------------------------------------------------------------------------------------------
Put Bond (7.6%)
Florida
7,055 Duval County Housing Finance Auth. MFH RB,
Series 1995 (CRE) (cost: $7,165) 6.75 4/01/25 7,231
- -----------------------------------------------------------------------------------------------------
Variable Rate Demand Note (1.5%)
Florida
1,400 Volusia County Health Facilities Auth. RB,
Series 1995 (CRE) (cost: $1,400) 3.80 9/01/20 1,400
- -----------------------------------------------------------------------------------------------------
Total investments (cost: $90,031) $ 91,270
=====================================================================================================
</TABLE>
Portfolio Summary By Industry
-----------------------------
Hospitals 22.1%
Multi-Family Housing 16.3
Special Assessment/Tax/Fee 13.0
Electric Power 8.3
Retirement Homes 6.5
Education 6.4
Healthcare - Miscellaneous 6.3
Nursing Care 3.7
Toll Roads 3.7
General Obligations 3.5
Single-Family Housing 3.4
Water/Sewer 2.4
----
Total 95.6%
====
<TABLE>
Florida Tax-Free Money Market Fund
Portfolio of Investments in Securities
(In Thousands)
March 31, 1997
<CAPTION>
Principal Coupon Final
Amount Security Rate Maturity Value
------ -------- ---- -------- -----
Variable Rate Demand Notes (53.1%)
<C> <S> <C> <C> <C>
Florida
$ 1,400 Brevard County Housing Finance Auth. MFH RB,
Series 1993 (CRE) 3.65 % 7/01/05 $ 1,400
1,460 Brevard County Mental Health Facilities RB,
Series 1994C (CRE) 3.55 1/01/10 1,460
Broward County Housing Finance Auth. MFH RB,
1,940 Series 1985 (CRE) 3.55 12/01/10 1,940
1,600 Series 1989 (CRE) 3.60 9/01/97 1,600
3,765 Series 1990 (CRE) 3.60 10/01/07 3,765
600 Broward County IDA RB, Series 1992 3.65 3/01/99 600
5,700 Dade County Aviation Facilities RB,
Series 1984A (CRE) 3.75 10/01/09 5,700
3,160 Dade County MFH RB, Series 1993-1 (CRE) 3.80 2/01/28 3,160
1,400 Hillsborough County IDA IDRB, Series 1994 (CRE) 3.55 8/01/19 1,400
4,200 Housing Finance Agency MFH RB,
Series 1985GGG (CRE) 3.60 12/01/08 4,200
1,300 Jacksonville Hospital RB, Series 1988 (CRE) 3.60 2/01/18 1,300
2,100 Jacksonville IDA RB, Series 1993 (CRE) 3.50 7/01/13 2,100
4,000 Miami Health Facilities Auth. RB,
Series 1996 (CRE) 3.50 12/01/16 4,000
500 Orange County Health Facilities Auth. RB,
Series 1992 (CRE) 3.30 11/15/14 500
2,500 Palm Beach County Housing Finance Auth.
MFH RB, Series 1988D (CRE) 3.55 11/01/07 2,500
300 Palm Beach County IDRB, Series 1990 (CRE) 3.50 5/01/02 300
6,690 Plant City Hospital RB, Series 1993 (CRE) 3.60 3/01/13 6,690
600 Southeast Volusia Hospital RB, Series 1995 (CRE) 3.50 5/01/22 600
3,000 Volusia County Housing Finance Auth. RB,
Series 1985C (CRE) 3.78 9/01/05 3,000 (a)
- ---------------------------------------------------------------------------------------------------------
Total variable rate demand notes (cost: $46,215) 46,215
- ---------------------------------------------------------------------------------------------------------
Put Bonds (9.8%)
Florida
2,000 Indian River County Hospital RB,
Series 1988 (CRE) 3.25 10/01/17 2,000
1,900 Sarasota County Public Hospital District
Hospital RB, Series 1985C (CRE) 3.55 10/01/20 1,900
1,500 St. Lucie County PCRB, Series 1992 3.45 5/01/27 1,500
3,100 West Orange Memorial Hospital RB,
Series 1991A-2 (CRE) 3.50 2/01/22 3,100
- ---------------------------------------------------------------------------------------------------------
Total put bonds (cost: $8,500) 8,500
- ---------------------------------------------------------------------------------------------------------
Fixed Rate Instruments (29.7%)
Florida
2,445 Dade County Public Improvement GO,
Series 1988 (CRE) 6.80 6/01/97 2,457
2,500 Dade County Sales Tax RB, Series 1996 (CRE) 4.00 10/01/97 2,505
2,500 Gainesville Utilities System CP Notes, Series C 3.55 5/02/97 2,500
1,000 Jacksonville District Water and Sewer RB,
Series 1996 (CRE) 4.00 10/01/97 1,002
2,000 Jacksonville Electric Auth. CP Notes,
Series 1996A 3.55 5/19/97 2,000
3,485 Local Government Finance Commission Pooled
CP Notes, Series 1995A (CRE) 3.45 5/13/97 3,485
1,500 Monroe County School District TAN, Series 1996 3.60 6/04/97 1,500
2,500 Municipal Power Agency CP Notes,
Series 1996A (CRE) 3.50 6/03/97 2,500
225 North Miami Health Facilities Auth RB,
Series 1996 (CRE) 4.10 8/15/97 225
3,500 Palm Beach County School District TAN,
Series 1996 4.50 9/26/97 3,510
440 Port of St. Lucie Special Assessment Bonds,
Series 1997A (CRE) 3.60 10/01/97 440
1,370 St. Lucie County School District GO,
Series 1997 (CRE) 4.00 2/01/98 1,374
2,400 Sunshine State Government Financing
Commission CP Notes 3.50 6/12/97 2,400
- --------------------------------------------------------------------------------------------------------
Total fixed rate instruments (cost: $25,898) 25,898
- --------------------------------------------------------------------------------------------------------
Total investments (cost: $80,613) $ 80,613
========================================================================================================
</TABLE>
Portfolio Summary By Industry
-----------------------------
Multi-Family Housing 24.8%
Hospitals 20.2
Electric Power 9.8
Finance - Municipal 6.8
Airports 6.5
Education 5.7
Nursing Care 4.6
General Obligations 4.4
Sales Tax Obligations 2.9
Hotel/Motel 2.4
Manufacturing - Diversified Industries 1.6
Water/Sewer 1.6
Aerospace/Defense .7
Community Service .3
Healthcare - Miscellaneous .3
----
Total 92.6%
====
Notes to Portfolios of Investments in Securities
March 31, 1997
General Notes
Values of securities are determined by procedures and practices discussed in
note 1 to the financial statements.
The cost of securities for federal income tax purposes is approximately the same
as that reported in the financial statements.
The percentages shown represent the percentage of the investments to net assets.
Portfolio Description Abbreviations
CP Commercial Paper
CRE Credit Enhanced
IDA Industrial Development Authority/Agency
IDRB Industrial Development Revenue Bond
GO General Obligation
MFH Multi-Family Housing
PCRB Pollution Control Revenue Bond
RB Revenue Bond
TAN Tax Anticipation Note
Specific Notes
(a) This security was purchased within the terms of a private placement
memorandum and is subject to a seven day demand feature. Under
procedures adopted by the Board of Trustees, the Manager has determined
that this security is liquid. At March 31, 1997, this security
represented 3.4% of the Florida Tax-Free Money Market Fund's net assets.
(b) At March 31, 1997, the cost of the security purchased on a delayed
delivery basis for the Florida Tax-Free Income Fund was $742,215.
See accompanying notes to financial statements.
<TABLE>
Statements of Operations
(In Thousands)
Year ended March 31, 1997
<CAPTION>
Florida Florida
Tax-Free Tax-Free Money
Income Fund Market Fund
----------- -----------
<S> <C> <C>
Net investment income:
Interest income $ 4,965 $ 2,804
------- --------
Expenses:
Management fees 323 302
Transfer agent's fees 52 48
Custodian's fees 46 47
Postage 4 5
Shareholder reporting fees 3 5
Trustees' fees 7 7
Registration fees 8 5
Audit fees 10 10
Legal fees 6 6
Other 6 7
------- --------
Total expenses before reimbursement 465 442
Expenses reimbursed (55) (56)
------- --------
Total expenses after reimbursement 410 386
------- --------
Net investment income 4,555 2,418
------- --------
Net realized and unrealized gain on investments:
Net realized gain 80 -
Change in net unrealized appreciation/depreciation 457 -
------- --------
Net realized and unrealized gain 537 -
------- --------
Increase in net assets resulting from operations $ 5,092 $ 2,418
======= ========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
Statements of Changes in Net Assets
(In Thousands)
Year ended March 31,
<CAPTION>
Florida Tax-Free Florida Tax-Free
Income Fund Money Market Fund
----------- -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
From operations:
Net investment income $ 4,555 $ 3,080 $ 2,418 $ 2,065
Net realized gain (loss) on investments 80 (271) - -
Change in net unrealized appreciation/
depreciation of investments 457 823 - -
--------- -------- ---------- ----------
Increase in net assets resulting
from operations 5,092 3,632 2,418 2,065
--------- -------- ---------- ----------
Distributions to shareholders from:
Net investment income (4,555) (3,080) (2,418) (2,065)
--------- -------- ---------- ----------
From capital share transactions:
Proceeds from shares sold 41,561 45,807 147,643 121,576
Shares issued for dividends reinvested 3,019 2,216 2,229 1,875
Cost of shares redeemed (18,713) (22,387) (134,043) (104,452)
--------- -------- ---------- ----------
Increase in net assets from
capital share transactions 25,867 25,636 15,829 18,999
--------- -------- ---------- ----------
Net increase in net assets 26,404 26,188 15,829 18,999
Net assets:
Beginning of period 69,079 42,891 71,224 52,225
--------- -------- ---------- ----------
End of period $ 95,483 $ 69,079 $ 87,053 $ 71,224
========= ======== ========== ==========
Change in shares outstanding:
Shares sold 4,449 4,893 147,643 121,576
Shares issued for dividends reinvested 323 238 2,229 1,875
Shares redeemed (1,999) (2,386) (134,043) (104,452)
--------- -------- ---------- ----------
Increase in shares outstanding 2,773 2,745 15,829 18,999
========= ======== ========== ==========
</TABLE>
See accompanying notes to financial statements.
Notes to Financial Statements
March 31, 1997
(1) Summary of Significant Accounting Policies
USAA State Tax-Free Trust (the Trust), registered under the Investment Company
Act of 1940, as amended, is a diversified, open-end management investment
company organized as a Delaware business trust consisting of four separate
funds. The information presented in this annual report pertains only to the
Florida Tax-Free Income Fund and Florida Tax-Free Money Market Fund (the Funds).
The Funds have a common objective of providing Florida investors with a high
level of current interest income that is exempt from federal income taxes and
shares that are exempt from the Florida intangible personal property tax. The
Florida Tax-Free Money Market Fund has a further objective of preserving capital
and maintaining liquidity.
A. Security valuation - Investments in the Florida Tax-Free Income Fund are
valued each business day by a pricing service (the Service) approved by the
Trust's Board of Trustees. The Service uses the mean between quoted bid and
asked prices or the last sale price to price securities when, in the Service's
judgement, these prices are readily available and are representative of the
securities' market values. For many securities, such prices are not readily
available. The Service generally prices these securities based on methods which
include consideration of yields or prices of municipal securities of comparable
quality, coupon, maturity and type, indications as to values from dealers in
securities, and general market conditions. Securities which are not valued by
the Service, and all other assets, are valued in good faith at fair value using
methods determined by the Manager under the general supervision of the Board of
Trustees. Securities purchased with maturities of 60 days or less and, pursuant
to Rule 2a-7 of the Investment Company Act of 1940, as amended, all securities
in the Florida Tax-Free Money Market Fund, are stated at amortized cost which
approximates market value.
B. Federal taxes - Each Fund's policy is to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its income to its shareholders. Therefore, no
federal income or excise tax provision is required.
C. Investments in securities - Security transactions are accounted for on the
date the securities are purchased or sold (trade date). Gain or loss from sales
of investment securities is computed on the identified cost basis. Interest
income is recorded daily on the accrual basis. Premiums and original issue
discounts are amortized over the life of the respective securities. Market
discounts are not amortized. Any ordinary income related to market discounts is
recognized upon disposition of the bonds. The Funds concentrate their
investments in Florida municipal securities and therefore may be exposed to more
credit risk than portfolios with a broader geographical diversification.
D. Use of estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that may affect the reported amounts in the financial
statements.
(2) Lines of Credit
The Funds participate with other USAA funds in two joint short-term revolving
loan agreements totaling $850 million through January 13, 1998, one with USAA
Capital Corporation (CAPCO), an affiliate of the Manager ($750 million
uncommitted), and one with an unaffiliated bank ($100 million committed). The
purpose of the agreements is to meet temporary or emergency cash needs,
including redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability under these agreements,
each Fund may borrow up to a maximum of 15% of its total assets, of which only
5% may be borrowed from CAPCO, at the lending institution's borrowing rate
plus a markup. The Funds had no borrowings under either of these agreements
during the year ended March 31, 1997.
(3) Distributions
Net investment income is accrued daily as dividends and distributed to
shareholders monthly. All net investment income available for distribution
was distributed at March 31, 1997.
Distributions of realized gains from security transactions not offset by capital
losses are made in the succeeding fiscal year or as otherwise required to avoid
the payment of federal taxes. At March 31, 1997, the Florida Tax-Free Income
Fund had capital loss carryovers for federal income tax purposes of
approximately $1,857,000 which, if not offset by subsequent capital gains, will
expire between 2003-2004. It is unlikely that the Board of Trustees of the Trust
will authorize a distribution of capital gains realized in the future until the
capital loss carryovers have been utilized or expire.
The Funds completed their fiscal year on March 31, 1997. Federal law (Internal
Revenue Code of 1986, as amended, and the regulations thereunder) requires each
Fund to notify its shareholders after the close of its taxable year as to what
portion of its earnings was exempt from federal taxation and dividend
distributions which represent long-term capital gains. The net investment income
earned and distributed by each of the Funds was 100% tax exempt for federal
income tax purposes. There were no long-term capital gain distributions for the
year ended March 31, 1997.
(4) Investment Transactions
Purchases and sales/maturities of securities, excluding short-term
securities, for the year ended March 31, 1997 for the Florida Tax-Free
Income Fund were $60,190,758 and $35,461,818, respectively. Purchases and
sales/maturities of securities for the year ended March 31, 1997 for the
Florida Tax-Free Money Market Fund were $308,632,627 and $298,650,700,
respectively.
Gross unrealized appreciation and depreciation of investments at March 31, 1997
for the Florida Tax-Free Income Fund was $1,676,962 and $438,735, respectively.
(5) Transactions with Manager
A. Management fees - The investment policies of the Funds and the management
of the Funds' portfolios are carried out by USAA Investment Management Company
(the Manager). Management fees are computed as a percentage of aggregate
average net assets (ANA) of both Funds combined, which on an annual basis
is equal to .50% of the first $50,000,000, .40% of that portion over
$50,000,000 but not over $100,000,000, and .30% of that portion over
$100,000,000. These fees are allocated on a proportional basis to each Fund
monthly based upon ANA.
The Manager has voluntarily agreed to limit the annual expenses of each Fund to
.50% of its annual average net assets.
B. Transfer agent's fees - USAA Transfer Agency Company, d/b/a USAA Shareholder
Account Services, an affiliate of the Manager, provides transfer agent services
to the Funds based on an annual charge per shareholder account plus
out-of-pocket expenses.
C. Underwriting services - The Manager provides exclusive underwriting and
distribution of the Funds' shares on a continuing best efforts basis. The
Manager receives no commissions or fees for this service.
(6) Transactions with Affiliates
Certain trustees and officers of the Funds are also directors, officers,
and/or employees of the Manager. None of the affiliated trustees or Fund
officers received any compensation from the Funds.
<TABLE>
Florida Tax-Free Income Fund
March 31, 1997
(7) Financial Highlights
Per share operating performance for a share outstanding throughout each period
is as follows:
<CAPTION>
Year Ended March 31,
----------------------------------------------------------
1997 1996 1995 1994 **
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value at
beginning of period $ 9.26 $ 9.09 $ 8.98 $ 10.00
Net investment income .52 .52 .49 .21
Net realized and
unrealized gain (loss) .07 .17 .11 (1.02)
Distributions from net
investment income (.52) (.52) (.49) (.21)
-------- --------- -------- --------
Net asset value at
end of period $ 9.33 $ 9.26 $ 9.09 $ 8.98
======== ========= ======== ========
Total return (%) * 6.51 7.66 7.01 (8.22)
Net assets at end
of period (000) $ 95,483 $ 69,079 $ 42,891 $ 24,948
Ratio of expenses to
average net assets (%) .50(a) .50(a) .50(a) .50 (a)(b)
Ratio of net investment
income to average
net assets (%) 5.57(a) 5.52(a) 5.59(a) 4.63 (a)(b)
Portfolio turnover (%) 44.75 88.20 71.76 284.11
(a) The information contained in this table is based on actual expenses for the
period, after giving effect to reimbursements of expenses by the Manager.
Absent such reimbursements the Fund's ratios would have been:
Ratio of expenses to
average net assets (%) .57 .67 .81 1.33(b)
Ratio of net investment
income to average
net assets (%) 5.50 5.35 5.28 3.80(b)
</TABLE>
(b) Annualized. The ratio is not necessarily indicative of 12 months
of operations.
* Assumes reinvestment of all dividend income distributions during the
period.
** Fund commenced operations October 1, 1993.
<TABLE>
Florida Tax-Free Money Market Fund
March 31, 1997
(7) Financial Highlights (continued)
Per share operating performance for a share outstanding throughout each period
is as follows:
<CAPTION>
Year Ended March 31,
----------------------------------------------------------
1997 1996 1995 1994 **
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value at
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income .03 .03 .03 .01
Distributions from net
investment income (.03) (.03) (.03) (.01)
-------- --------- -------- --------
Net asset value at
end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ========= ======== ========
Total return (%) * 3.20 3.51 2.86 .96
Net assets at end
of period (000) $ 87,053 $ 71,224 $ 52,225 $ 29,877
Ratio of expenses to
average net assets (%) .50(a) .50(a) .50(a) .50 (a)(b)
Ratio of net investment
income to average
net assets (%) 3.15(a) 3.45(a) 2.97(a) 1.98 (a)(b)
(a) The information contained in this table is based on actual expenses for the
period, after giving effect to reimbursements of expenses by the Manager.
Absent such reimbursements the Fund's ratios would have been:
Ratio of expenses to
average net assets (%) .57 .64 .72 1.11(b)
Ratio of net investment
income to average
net assets (%) 3.08 3.31 2.75 1.37(b)
</TABLE>
(b) Annualized. The ratio is not necessarily indicative of 12 months
of operations.
* Assumes reinvestment of all dividend income distributions during the
period.
** Fund commenced operations October 1, 1993.
