-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tk1tWhHa0iupk+0YXKFrmpPXGG/l7AtVphWj2mWLNsKx+zUgiq3JlsiVwZn58eFD pu7aucq95mA0Q5umx28RMg== 0000932471-02-000722.txt : 20020725 0000932471-02-000722.hdr.sgml : 20020725 20020725172100 ACCESSION NUMBER: 0000932471-02-000722 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020531 FILED AS OF DATE: 20020725 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VANGUARD PENNSYLVANIA TAX-FREE FUNDS CENTRAL INDEX KEY: 0000788606 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04571 FILM NUMBER: 02711233 BUSINESS ADDRESS: STREET 1: PO BOX 2600 STREET 2: V26 CITY: VALLEY FORGE STATE: PA ZIP: 19482 BUSINESS PHONE: 6106696295 MAIL ADDRESS: STREET 1: PO BOX 2600 STREET 2: V26 CITY: VALLEY FORGE STATE: PA ZIP: 19482 FORMER COMPANY: FORMER CONFORMED NAME: VANGUARD PENNSYLVANIA INSURED TAX FREE FUND DATE OF NAME CHANGE: 19880407 FORMER COMPANY: FORMER CONFORMED NAME: VANGUARD PENNSYLVANIA TAX FREE FUND DATE OF NAME CHANGE: 19920703 N-30D 1 vanguardpataxexemptfund.txt VANGUARDPATAXEXEMPTFUND VANGUARD(R) PENNSYLVANIA TAX-EXEMPT FUNDS SEMIANNUAL REPORT * MAY 31, 2002 BOND [PHOTO OF SHIP] [THE VANGAURD GROUP(R) LOGO] WHAT YOU CAN CONTROL As an investor, you cannot control how the financial markets perform. But there are vital variables that you can control. You can decide how much to invest. You can limit the risk in your portfolio by diversifying your holdings. And you can control the investment costs you incur. Costs may seem the least dramatic of the three. But costs have a powerful impact on how your wealth accumulates; they reduce, dollar for dollar, the returns that you can derive from an investment. Every mutual fund has operating expenses--to pay for investment managers, telephone support, and so on. These costs appear in the fund's expense ratio, which reflects the percentage of average net assets (your money) consumed each year by operating costs. In 2001, the average mutual fund had an expense ratio of 1.34% (or $13.40 per $1,000 in assets), according to data from Lipper Inc. For Vanguard(R) funds, the average expense ratio was less than one-fourth that amount (0.27%, or $2.70 per $1,000 in assets). Our average expense ratio has been less than the industry average for 25 years, and it's an advantage we aim to maintain. Under our unique corporate structure, shareholders like you own the Vanguard funds, which in turn own The Vanguard Group. No middleman makes a profit from managing the operation. You bear all of the investment risk. It's only right that you reap as much of the potential reward as possible. CONTENTS Letter from the Chairman 1 Report from the Adviser 5 Fund Profiles 8 Glossary of Investment Terms 10 Performance Summaries 11 Financial Statements 13 SUMMARY * The Vanguard Pennsylvania Tax-Exempt Funds earned six-month total returns that were ahead of those of their average peers. * Prices of short- and intermediate-term municipal bonds rose slightly during the fiscal half-year as interest rates inched downward. * Though bonds posted only modest returns for the six months, their results were far better than the -3.4% return of the broad stock market. LETTER FROM THE CHAIRMAN Fellow Shareholder, VANGUARD(R) PENNSYLVANIA LONG-TERM TAX-EXEMPT FUND earned a modest total return of 2.8% during the first half of its 2002 fiscal year. As you can see in the table below, for the six months ended May 31, 2002, your fund's total return (capital change plus reinvested distributions) topped those of its average peer and a broad measure of the municipal bond market. VANGUARD(R) PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUNd also outperformed its average peer during the period. The fund's net asset value remained at $1 per share, as was expected but not guaranteed. The components of the total return for each fund are presented in the table on page 4. - -------------------------------------------------------------------------------- TOTAL RETURNS SIX MONTHS ENDED MAY 31, 2002 - -------------------------------------------------------------------------------- VANGUARD PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND 0.7% (SEC 7-Day Annualized Yield: 1.38%) Average Pennsylvania Tax-Exempt Money Market Fund* 0.5 - -------------------------------------------------------------------------------- VANGUARD PENNSYLVANIA LONG-TERM TAX-EXEMPT FUND Investor Shares 2.8% Admiral Shares 2.8 Average Pennsylvania Municipal Debt Fund* 2.0 Lehman Municipal Bond Index 2.6 - -------------------------------------------------------------------------------- *Derived from data provided by Lipper Inc. On May 31, the yield of the Long-Term Tax-Exempt Fund (Investor Shares) stood at 4.23%, up from 4.09% at the end of November 2001; the Tax-Exempt Money Market Fund's yield was 1.38%, down from 1.67%. For Pennsylvania residents, income earned by the funds is exempt from federal and state income taxes, but may be subject to local taxes and to the federal alternative minimum tax. That means that for taxpayers in the highest federal income tax bracket, the taxable equivalent yields were about 7.09% for the Long-Term Tax-Exempt Fund and about 2.31% for the Tax-Exempt Money Market Fund. THE ECONOMY'S EXPANSION RESTRAINED BOND RETURNS An economic recovery took hold in the United States during early 2002, but it appears as though the growth will not result in higher short-term interest rates--at least for now. The Federal Reserve Board indicated that an "accommodative" monetary policy, characterized by low short-term interest rates, was appropriate in light - -------------------------------------------------------------------------------- INVESTOR SHARES The class most commonly purchased. ADMIRAL(TM) SHARES A lower-cost class of shares available to longtime shareholders and to those with significant investments in the fund. - -------------------------------------------------------------------------------- 1 - -------------------------------------------------------------------------------- MARKET BAROMETER TOTAL RETURNS PERIODS ENDED MAY 31, 2002 -------------------------------- SIX ONE FIVE MONTHS YEAR YEARS* - -------------------------------------------------------------------------------- BONDS Lehman Aggregate Bond Index 2.3% 8.1% 7.6% (Broad taxable market) Lehman 10 Year Municipal Bond Index 3.0 6.6 6.3 Salomon Smith Barney 3-Month U.S. Treasury Bill Index 0.9 2.6 4.7 - -------------------------------------------------------------------------------- STOCKS Russell 1000 Index (Large-caps) -4.9% -13.3% 6.4% Russell 2000 Index (Small-caps) 6.5 -0.5 6.4 Wilshire 5000 Index (Entire market) -3.4 -11.8 6.0 MSCI EAFE Index (International) 3.1 -9.6 0.3 - -------------------------------------------------------------------------------- CPI Consumer Price Index 1.4% 1.2% 2.3% - -------------------------------------------------------------------------------- *Annualized. of rising unemployment and continuing economic uncertainty. However, the bond market apparently expects that growth will mean higher rates down the road: From November 30, 2001, to May 31, 2002, the yield of the 10-year U.S. Treasury note-- a rate controlled by the market, not the Fed--rose 30 basis points (0.30 percentage point) to 5.05%. Bond prices declined as rates rose, but interest income offset the drop, providing investors with modestly positive total returns for the six months. The Lehman Brothers Aggregate Bond Index, a proxy for the broad investment-grade bond market, returned 2.3%. Despite some high-profile blowups in the telecommunications sector, corporate bonds provided modestly higher returns than U.S. Treasury securities with comparable maturities. IN THE MUNI MARKET, MOST YIELDS DIPPED Among tax-exempt municipal bonds, yields of short- and intermediate-term securities inched lower while yields of long-term bonds rose slightly. Yields of top-grade, 2-year municipal securities fell 8 basis points to 2.27% and yields of 10-year notes dipped 4 basis points to 4.16%. The 30-year muni bond yielded 5.17% on May 31, up 11 basis points from its starting point on November 30, 2001. Municipal bonds generally outperformed U.S. Treasury securities during the six months. However, as a result of the rise in Treasury yields and the slight declines in short- and intermediate-term muni yields, municipal bonds were not as attractive relative to Treasuries at the end of the fiscal half-year as they were at the beginning. On May 31, the 10-year municipal bond, whose interest income is exempt from federal income taxes, offered a yield that was equal to about 82% of the yield of the fully taxable 10-year U.S. Treasury note--still a great value for most investors. (The ratio was even higher, about 88%, at the end of November 2001.) See the Report from the Adviser on page 5 for more details on the municipal bond market. STOCKS STAYED WEAK During the past six months, weak corporate earnings and lingering concern about the integrity of financial statements obscured the good news about the economy's 2 quick rebound from the 2001 recession. U.S. stocks, as represented by the Wilshire 5000 Total Market Index, returned -3.4% as investors focused on the negative. Large, previously top-performing companies, such as Intel and Cisco Systems, were hit especially hard. Corporate America continued to cut back on capital spending, particularly on the big-dollar technology investments that fueled much of the late-1990s boom. As profits shrank, stock valuations pulled back, a pattern that has prevailed since the bursting of the growth-stock bubble in March 2000. During the six months ended May 31, the stock market's best performers were small stocks with value characteristics. As a group, these stocks returned 16.4%, as measured by the Russell 2000 Value Index. Value stocks held up better, both because these shares had not been priced for the most optimistic scenarios and because many of these stocks represent basic industries, such as commodities producers, that thrive in the early stages of an economic recovery. Natural-resource and basic-processing industries have enjoyed an especially favorable climate in 2002. During the first quarter, more than half of the 6.1% annualized growth in U.S. real gross domestic product derived from additions to inventory, rather than final sales to consumers--a boon to the companies that supply the raw materials for goods to be finished farther up the production line. YOUR FUNDS OUTPACED THEIR PEERS As noted earlier, the Pennsylvania Long-Term Tax-Exempt Fund's total return of 2.8% for the fiscal half-year topped that of its average peer. The fund's Investor Shares earned an income return of 2.5%, which was augmented by a 0.3% capital return. A six-month return, of course, does not provide a complete picture of a bond fund's performance. That's because semiannual returns for bond funds account for only half of the year's interest income, while price changes immediately reflect current movements in interest rates--rising when rates fall and falling when rates rise. For perspective, it's important to consider a full year's interest income when evaluating a bond fund. For the 12 months ended May 31, 2002, the Long-Term Tax-Exempt Fund Investor Shares earned a total return of 6.8%, consisting of an income return of 5.1% and a capital return of 1.7%. Though bond prices rise and fall over time, it is interest income that accounts for virtually all of a bond fund's long-term total return. Therefore, the best indicator of a bond fund's performance--though it is a far-from-perfect measure--is the fund's yield, currently about 4.2% for the Long-Term Tax-Exempt Fund. Our funds are aided in their quest to achieve superior performance by the skilled investment management of Vanguard's Fixed Income Group, which oversees all of our municipal bond funds, - -------------------------------------------------------------------------------- YOUR FUNDS ARE AIDED IN THEIR QUEST TO ACHIEVE SUPERIOR PERFORMANCE BY SKILLED INVESTMENT MANAGEMENT AND LOW COSTS. - -------------------------------------------------------------------------------- 3 and by our significant cost advantage over competing funds. Our Long-Term Tax-Exempt Fund's Investor Shares and our Tax-Exempt Money Market Fund have annualized expense ratios (expenses as a percentage of average net assets) of 0.17% and 0.16%, respectively, or $1.70 and $1.60 per $1,000 invested. This is far below the 1.15% charged by the average Pennsylvania municipal tax-exempt fund and the 0.62% charged by the average Pennsylvania tax-exempt money market fund, according to Lipper Inc. (The Admiral Shares of our Long-Term Tax-Exempt Fund have an expense ratio of 0.12%.) Low costs are an especially powerful force in bond investing because the expenses incurred by a fund directly reduce the income paid by the fund. And because managers of funds with similar mandates choose from a similar pool of securities, differences in costs often translate into differences in total returns. THE VALUE OF BONDS ENDURES Though the popularity of bonds has risen as the stock market has fallen, it's important to understand that the value of holding a portion of your portfolio in fixed income investments does not fluctuate with the fortunes of stocks. We believe that bond funds and money market funds--particularly those that are exempt from federal and state taxes--are valuable in any kind of market. That is why we will always recommend that investors build and maintain investment programs with an appropriate combination of stock, bond, and money market funds. We thank you for your confidence in our approach and for entrusting your money to us. Sincerely, /S/ John J. Brennan JOHN J. BRENNAN CHAIRMAN AND CHIEF EXECUTIVE OFFICER JUNE 11, 2002 - -------------------------------------------------------------------------------- YOUR FUND'S PERFORMANCE AT A GLANCE: NOVEMBER 30, 2001-MAY 31, 2002 DISTRIBUTIONS PER SHARE STARTING ENDING INCOME CAPITAL SHARE PRICE SHARE PRICE DIVIDENDS GAINS - -------------------------------------------------------------------------------- Vanguard Pennsylvania Tax-Exempt Money Market Fund $ 1.00 $ 1.00 $0.007 $0.000 - -------------------------------------------------------------------------------- Vanguard Pennsylvania Long-Term Tax-Exempt Fund Investor Shares $11.36 $11.35 $0.279 $0.040 Admiral Shares 11.36 11.35 0.282 0.040 - -------------------------------------------------------------------------------- 4 REPORT FROM THE ADVISER During the six months ended May 31, 2002, Vanguard Pennsylvania Long-Term Tax-Exempt Fund and Vanguard Pennsylvania Tax-Exempt Money Market Fund provided positive returns that outpaced the results of their average peers. Overall, the increasing signs of economic recovery pushed U.S. Treasury bond prices lower during the fiscal half-year. However, yields of short- and intermediate-term municipal securities dipped as their prices rose. THE U.S. ECONOMY RECOVERED The economic picture during the first half of the funds' 2002 fiscal year was considerably brighter than in the previous 12 months. The U.S. economy surged during the later stages of the semiannual period. In the first three months of 2002, real gross domestic product grew at an annual rate of 6.1%, well ahead of the 1.7% growth rate in fourth-quarter 2001 (not to mention the -1.3% contraction in the quarter before that). However, we note that U.S. consumers have essentially been carrying the rest of the economy on their backs. Spending continued at a terrific pace during the half-year as the wave of earlier home refinancings put extra cash into Americans' pockets. It's important to note that during the six months that ended on May 31, the nation and the financial markets were still dealing with the horrible events of September 11. The bond market, in particular, was affected by the intense interest in the safety offered by U.S. Treasury securities. Treasury prices soared immediately after the terrorist attacks but tailed off somewhat during the ensuing months as signs of economic growth emerged. As mentioned above, the most interesting aspect of the strong first-quarter economic growth was the remarkable spending stamina demonstrated by the American populace. Throughout the (relatively brief) recession, the U.S. consumer never blinked. People kept right on spending despite massive equity market losses, widespread layoffs, and a reportedly sharp drop in consumer confidence that was triggered by the terrorist attacks. Overall, the economy appeared to be digging out of the recession, as the slowdown in inventory cutbacks added strongly to growth. However, we believe that the recovery may not be quite as rapid as some market participants expect. In fact, we see at least two factors arguing for a more modest rebound: the reduced - -------------------------------------------------------------------------------- INVESTMENT PHILOSOPHY The adviser believes that each fund, while operating within stated maturity and stringent quality targets, can achieve a high level of current income that is exempt from federal and Pennsylvania income taxes by investing in high-quality securities issued by Pennsylvania state, county, and municipal governments. - -------------------------------------------------------------------------------- 5 level of business investment and the probability that consumer spending cannot continue at such a torrid pace. Of course, the economic environment affected the level of interest rates during the half-year. The recession and the tragic events of September 11 prompted the Federal Reserve Board to reduce its target for short-term interest rates to 1.75%--a four-decade low. However, the Fed seems in no hurry to increase short-term interest rates, even in light of the seemingly positive economic news. With inflation well in check--companies have little pricing power, and commodity prices are low--the Fed can afford to keep rates low without fearing that economic growth will trigger higher prices anytime soon. MUNICIPAL BONDS PERFORMED WELL The impact of the recession on many municipalities has lingered, despite the recent economic improvement. To fill budget gaps caused by lower tax receipts, state and local governments have used a variety of tactics. They have: * Securitized tobacco settlement payments (essentially trading the rights to future payments for cash now). So far, Pennsylvania has not chosen to take this action. * Cut spending. * Curtailed planned income-tax reductions. As shown in the table below, yields of short- and intermediate-term municipal bonds dipped during the six months. However, Treasury yields generally rose, and this widening spread made munis somewhat less attractive to investors with taxable accounts than they were six months ago. Two-year municipal bonds, which provided about 83% of the yield of a comparable Treasury security at the end of the 2001 fiscal year, offered about 71% of the Treasury yield as of May 31. Longer-term municipal bonds also offered less relative to Treasuries than they had on November 30, 2001, but these munis still provided about 93% of the 30-year bond's yield as of May 31. - -------------------------------------------------------------------------------- MUNICIPAL BOND YIELDS CHANGE MATURITY MAY 31, 2002 NOV. 30, 2001 (BASIS POINTS) - -------------------------------------------------------------------------------- 2 years 2.27% 2.35% -8 5 years 3.31 3.40 -9 10 years 4.16 4.20 -4 30 years 5.17 5.06 +11 - -------------------------------------------------------------------------------- Source: The Vanguard Group. Nationally, issuance of municipal bonds through the first five months of 2002 was about 14% higher than a year earlier. In Pennsylvania, the supply of municipal debt that came to the market through May was ahead of last year's pace by about 30%. Though municipal bonds are not quite as attractive relative to Treasuries as they were six months ago, we believe that munis still represent good value. In fact, for investors in the top federal income tax bracket, the 4.16% yield of a 10-year 6 municipal bond on May 31 was equivalent to a yield of about 6.78% for a fully taxable 10-year U.S. Treasury note. (The yield of the 10-year Treasury on May 31 was 5.05%.) This "extra" after-tax income represents a significant advantage for muni investors. OUR PLEDGE TO OUR SHAREHOLDERS Our dedication to sound investment-management principles and low costs has helped us to build an impressive performance record, both in the past six months and over the lifetimes of our funds. We fully expect that our time-tested investment philosophy will continue to work to the benefit of each of our shareholders. Ian A. MacKinnon, Managing Director Christopher M. Ryon, Principal Pamela Wisehaupt Tynan, Principal John M. Carbone, Principal Christopher W. Alwine, Principal VANGUARD FIXED INCOME GROUP June 17, 2002 7 FUND PROFILE AS OF MAY 31, 2002 FOR PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND This profile provides a snapshot of the fund's characteristics. Key terms are defined on page 10. - -------------------------------------------------------------------------------- FINANCIAL ATTRIBUTES Yield 1.4% Average Maturity 25 days Average Quality MIG-1 Expense Ratio 0.16%* - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO) MIG-1/SP-1+ 60.4% A-1/P-1 34.5 AAA/AA 4.9 A 0.2 - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- 8 FUND PROFILE AS OF MAY 31, 2002 FOR PENNSYLVANIA LONG-TERM TAX-EXEMPT FUND This Profile provides a snapshot of the fund's characteristics, compared where appropriate with an unmanaged index. Key terms are defined on page 10. - -------------------------------------------------------------------------------- FINANCIAL ATTRIBUTES Lehman Fund Index* - -------------------------------------------------------------------------------- Number of Issues 416 43,314 Yield 4.3% Investor Shares 4.2% Admiral Shares 4.3% Yield to Maturity 4.3% -- Average Coupon 4.9% 5.3% Average Maturity 8.7 years 13.9 years Average Quality AAA AA+ Average Duration 6.3 years 7.8 years Expense Ratio -- Investor Shares 0.17%** Admiral Shares 0.12%** Cash Investments 0.8% -- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO) AAA 91.2% AA 4.0 A 4.0 BBB 0.8 BB 0.0 B 0.0 - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INVESTMENT FOCUS Credit Quality High Average Maturity Long - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- VOLATILITY MEASURES Lehman Fund Index* - -------------------------------------------------------------------------------- R-Squared 0.98 1.00 Beta 1.11 1.00 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DISTRIBUTION BY MATURITY (% OF PORTFOLIO) Under 1 Year 12.2% 1-5 Years 10.4 5-10 Years 49.2 10-20 Years 21.1 20-30 Years 6.8 Over 30 Years 0.3 - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- (PICTURE OF COMPUTER) VISIT OUR WEBSITE WWW.VANGUARD.COM FOR REGULARLY UPDATED FUND INFORMATION. *Lehman Municipal Bond Index. **Annualized. 9 GLOSSARY OF INVESTMENT TERMS AVERAGE COUPON. The average interest rate paid on the securities held by a fund. It is expressed as a percentage of face value. - -------------------------------------------------------------------------------- AVERAGE DURATION. An estimate of how much a bond fund's share price will fluctuate in response to a change in interest rates. To see how the price could shift, multiply the fund's duration by the change in rates. If interest rates rise by one percentage point, the share price of a fund with an average duration of five years would decline by about 5%. If rates decrease by a percentage point, the fund's share price would rise by 5%. - -------------------------------------------------------------------------------- AVERAGE MATURITY. The average length of time until bonds held by a fund reach maturity (or are called) and are repaid. In general, the longer the average maturity, the more a fund's share price will fluctuate in response to changes in market interest rates. - -------------------------------------------------------------------------------- AVERAGE QUALITY. An indicator of credit risk, this figure is the average of the ratings assigned to a fund's holdings by credit-rating agencies. The agencies make their judgment after appraising an issuer's ability to meet its obligations. Quality is graded on a scale, with Aaa or AAA indicating the most creditworthy bond issuers and A-1 or MIG-1 indicating the most creditworthy issuers of money market securities. - -------------------------------------------------------------------------------- BETA. A measure of the magnitude of a fund's past share-price fluctuations in relation to the ups and downs of the overall market (or appropriate market index). The market (or index) is assigned a beta of 1.00, so a fund with a beta of 1.20 would have seen its share price rise or fall by 12% when the overall market rose or fell by 10%. - -------------------------------------------------------------------------------- CASH INVESTMENTS. The percentage of a fund's net assets invested in "cash equivalents"--highly liquid, short-term, interest-bearing securities. This figure does not include cash invested in futures contracts to simulate bond investment. - -------------------------------------------------------------------------------- EXPENSE RATIO. The percentage of a fund's average net assets used to pay its annual administrative and advisory expenses. These expenses directly reduce returns to investors. - -------------------------------------------------------------------------------- R-SQUARED. A measure of how much of a fund's past returns can be explained by the returns from the overall market (or its benchmark index). If a fund's total returns were precisely synchronized with the overall market's return, its R-squared would be 1.00. If the fund's returns bore no relationship to the market's returns, its R-squared would be 0. - -------------------------------------------------------------------------------- YIELD. A snapshot of a fund's interest income. The yield, expressed as a percentage of the fund's net asset value, is based on income earned over the past 30 days (7 days for money market funds) and is annualized, or projected forward for the coming year. - -------------------------------------------------------------------------------- YIELD TO MATURITY. The rate of return an investor would receive if the securities held by a fund were held to their maturity dates. - -------------------------------------------------------------------------------- 10 PERFORMANCE SUMMARIES AS OF MAY 31, 2002 All of the data on this page and the following page represent past performance, which cannot be used to predict future returns that may be achieved by the funds. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Tax-Exempt Money Market Fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund. For bond funds, both share price and return can fluctuate widely. An investor's shares, when redeemed, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND - -------------------------------------------------------------------------------- FISCAL-YEAR TOTAL RETURNS (%) NOVEMBER 30, 1991-MAY 31, 2002 - -------------------------------------------------------------------------------- PENNSYLVANIA TAX-EXEMPT AVERAGE MONEY MARKET FUND FUND* FISCAL TOTAL TOTAL YEAR RETURN RETURN - -------------------------------------------------------------------------------- 1992 3.0% 2.9% 1993 2.4 2.2 1994 2.6 2.4 1995 3.7 3.5 1996 3.4 3.1 1997 3.5 3.2 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PENNSYLVANIA TAX-EXEMPT AVERAGE MONEY MARKET FUND FUND* FISCAL TOTAL TOTAL YEAR RETURN RETURN - -------------------------------------------------------------------------------- 1998 3.3% 3.0% 1999 3.1 2.7 2000 3.9 3.6 2001 2.9 2.5 2002** 0.7 0.5 - -------------------------------------------------------------------------------- *Average Pennsylvania Tax-Exempt Money Market Fund; derived from data provided by Lipper Inc. **Six months ended May 31, 2002. Note: See Financial Highlights table on page 31 for dividend information. SEC 7-Day Annualized Yield (5/31/2002): 1.38% - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED MARCH 31, 2002 This table presents average annual total returns through the latest calendar quarter--rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information. TEN YEARS ONE FIVE -------------------- INCEPTION DATE YEAR YEARS CAPITAL INCOME TOTAL - -------------------------------------------------------------------------------- Pennsylvania Tax-Exempt Money Market Fund 6/13/1988 2.19% 3.20% 0.00% 3.10% 3.10% - -------------------------------------------------------------------------------- 11 PERFORMANCE SUMMARIES (CONTINUED) PENNSYLVANIA LONG-TERM TAX-EXEMPT FUND - -------------------------------------------------------------------------------- FISCAL-YEAR TOTAL RETURNS (%) NOVEMBER 30, 1991-MAY 31, 2002 - -------------------------------------------------------------------------------- PENNSYLVANIA LONG-TERM TAX-EXEMPT FUND INVESTOR SHARES LEHMAN* FISCAL CAPITAL INCOME TOTAL TOTAL YEAR RETURN RETURN RETURN RETURN - -------------------------------------------------------------------------------- 1992 5.0% 6.7% 11.7% 10.0% 1993 5.8 6.1 11.9 11.1 1994 -10.7 5.3 -5.4 -5.2 1995 12.0 6.5 18.5 18.9 1996 0.2 5.6 5.8 5.9 1997 0.7 5.5 6.2 7.2 - -------------------------------------------------------------------------------- *Lehman Municipal Bond Index. **Six months ended May 31, 2002. Note: See Financial Highlights tables on pages 32 and 33 for dividend and capital gains information. - -------------------------------------------------------------------------------- PENNSYLVANIA LONG-TERM TAX-EXEMPT FUND INVESTOR SHARES LEHMAN* FISCAL CAPITAL INCOME TOTAL TOTAL YEAR RETURN RETURN RETURN RETURN - -------------------------------------------------------------------------------- 1998 2.1% 5.5% 7.6% 7.8% 1999 -6.7 5.0 -1.7 -1.1 2000 3.1 5.8 8.9 8.2 2001 3.5 5.3 8.8 8.8 2002** 0.3 2.5 2.8 2.6 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED MARCH 31, 2002 This table presents average annual total returns through the latest calendar quarter--rather than through the end of the fiscal period. Securities and exchange commission rules require that we provide this information. TEN YEARS ONE FIVE -------------------- INCEPTION DATE YEAR YEARS CAPITAL INCOME TOTAL - -------------------------------------------------------------------------------- Pennsylvania Long-Term Tax-Exempt Fund Investor Shares 4/7/1986 3.71% 6.02% 1.07% 5.65% 6.72% Admiral Shares 5/14/2001 4.40* -- -- -- -- - -------------------------------------------------------------------------------- *Return since inception. 12 FINANCIAL STATEMENTS MAY 31, 2002 (UNAUDITED) STATEMENT OF NET ASSETS This Statement provides a detailed list of each fund's municipal bond holdings, including each security's market value on the last day of the reporting period and information on credit enhancements (insurance or letters of credit). Other assets are added to, and liabilities are subtracted from, the value of Total Municipal Bonds to calculate the fund's Net Assets. Finally, Net Assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) Per Share. At the end of the Statement of Net Assets, you will find a table displaying the composition of the fund's net assets. Undistributed Net Investment Income is usually zero because the fund distributes its net income to shareholders as a dividend each day. Any realized gains must be distributed annually, so the bulk of net assets consists of Paid-in Capital (money invested by shareholders). The balance shown for Accumulated Net Realized Gains usually approximates the amount available to distribute to shareholders as taxable capital gains as of the statement date, but may differ because certain investments or transactions may be treated differently for financial statement and tax purposes. Any Accumulated Net Realized Losses, and any cumulative excess of distributions over net realized gains, will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS (99.1%) - ------------------------------------------------------------------------------------------------------------------- Allegheny County PA Higher Educ. Auth. Rev. (Washington & Jefferson College) VRDO 1.45% 6/6/2002LOC 15,500 15,500 Allegheny County PA Higher Educ. Building Auth. (Carnegie Mellon Univ.) VRDO 1.60% 6/4/2002 64,250 64,250 Allegheny County PA Hosp. Dev. Auth. Rev. (Presbyterian Univ. Health System) VRDO 1.45% 6/6/2002LOC 8,600 8,600 Allegheny County PA Hosp. Dev. Auth. Rev. (Presbyterian Univ. Health System) VRDO 1.45% 6/6/2002(1) 56,780 56,780 Allegheny County PA IDA Rev. (Duquesne Light Co.) VRDO 1.50% 6/5/2002(2) 31,500 31,500 Allegheny County PA IDA Rev. (Western PA School for Blind Children) PUT 4.00% 7/1/2002 15,000 15,017 Allegheny County PA TRAN 2.00% 12/20/2002 30,000 30,076 Beaver County PA IDA (Duquesne Light Co.) CP 1.45% 7/31/2002(2) 43,500 43,500 Beaver County PA IDA PCR (Duquesne Light Co.) VRDO 1.40% 6/5/2002(2) 18,000 18,000 Beaver County PA IDA PCR (Duquesne Light Co.) VRDO 1.55% 6/5/2002(2) 25,000 25,000 Bethlehem PA Area School Dist. GO TOB VRDO 1.45% 6/5/2002(3)* 19,800 19,800 Central Bucks PA School Dist. VRDO 1.46% 6/6/2002(3) 13,150 13,150 Chester County PA IDA (Archdiocese of Philadelphia) VRDO 1.60% 6/4/2002LOC 1,500 1,500 Cumberland County PA Muni. Auth. College Rev. (Dickinson College) PUT 2.10% 11/1/2002LOC 10,250 10,250 Cumberland County PA Muni. Auth. College Rev. (Dickinson College) PUT 2.10% 11/1/2002(2) 7,305 7,305 Dallastown Area School Dist. York County PA GO VRDO 1.46% 6/6/2002(3) 18,475 18,475 Daniel Boone PA Area School Dist. GO VRDO 1.40% 6/6/2002(2) 10,000 10,000 Dauphin County PA General Auth. Hosp. Rev. (Reading Hosp. & Medical Center) VRDO 1.35% 6/5/2002 12,665 12,665 Delaware County PA Auth. Univ. Rev. (Villanova Univ.) VRDO 1.25% 6/6/2002LOC 7,525 7,525
13
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Delaware County PA Hosp. Auth. Rev. (Crozer-Chester Medical Center) VRDO 1.40% 6/6/2002LOC 10,000 10,000 Delaware County PA Hosp. Auth. Rev. (Crozer-Chester Medical Center) VRDO 1.63% 6/5/2002LOC 4,600 4,600 Delaware County PA IDA Airport Fac. (United Parcel Service) VRDO 1.50% 6/4/2002 56,795 56,795 Delaware County PA IDA PCR (BP Exploration & Oil) VRDO 1.55% 6/4/2002 10,750 10,750 Delaware County PA IDA PCR (Exelon Generation Co.) CP 1.40% 6/17/2002LOC 5,000 5,000 Delaware County PA IDA PCR (Exelon Generation Co.) CP 1.50% 10/17/200LOC 15,000 15,000 Delaware County PA IDA PCR (PECO) CP 1.30% 7/12/2002(3) 26,400 26,400 Delaware County PA IDA PCR (PECO) CP 1.30% 7/17/2002(3) 37,900 37,900 Delaware County PA IDA PCR (PECO) CP 1.45% 8/8/2002LOC 4,500 4,500 Delaware County PA IDA Refunding Resource Recovery Fac. (General Electric Capital Corp.) VRDO 1.45% 6/5/2002 66,505 66,505 Delaware County PA IDA Solid Waste Rev. (Scott Paper Co.) VRDO 1.50% 6/5/2002 76,305 76,305 Franklin County PA IDA Healthcare Rev. (Chambersburg Hosp.) VRDO 1.50% 6/6/2002(2) 7,000 7,000 Geisinger Health System Auth. of Pennsylvania Rev. (Penn State Geisinger Health System) VRDO 1.55% 6/4/2002 700 700 Lancaster County PA GO VRDO 1.46% 6/6/2002(3) 12,100 12,100 Lancaster PA Higher Educ. Auth. Rev. (Franklin & Marshall College) VRDO 1.50% 6/6/2002 8,000 8,000 Lehigh County PA General Purpose Hosp. Auth. Rev. (Lehigh Valley Health Network) VRDO 1.60% 6/4/2002(1) 3,100 3,100 Lehigh County PA General Purpose Hosp. Auth. Rev. (St. Luke's Hosp.) VRDO 1.65% 6/4/2002 4,000 4,000 Lehigh County PA IDA PCR (Pennsylvania Power & Light) TOB VRDO 1.41% 6/6/2002(1)* 4,910 4,910 Mercersburg Borough PA General Purpose Auth. (Mercersburg College) VRDO 1.45% 6/5/2002LOC 7,700 7,700 Montgomery County PA IDA PCR (Exelon Generation Co.) CP 1.35% 6/11/2002LOC 37,800 37,800 Montgomery County PA IDA PCR (PECO) CP 1.30% 7/12/2002LOC 16,200 16,200 Montgomery County PA IDA PCR (PECO) CP 1.35% 9/12/2002LOC 13,340 13,340 Montgomery County PA TRAN 3.00% 12/31/2002 7,500 7,565 Neshaminy PA School Dist. GO 6.30%8/15/2002(Prere.) 3,600 3,633 Northampton County PA General Purpose Auth. Univ. Rev. (Lehigh Univ.) VRDO 1.30% 6/6/2002 42,780 42,780 Northampton County PA Higher Educ. Auth. Rev. (Lehigh Univ.) VRDO 1.30% 6/6/2002 7,485 7,485 Northeastern Pennsylvania Hosp. Auth. Rev. (Central Services Capital Asset Financing Program) CP 1.40% 6/21/2002 (1) 5,407 5,407 Pennsbury PA School Dist. VRDO 1.40% 6/6/2002(3) 9,000 9,000 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Amtrak Project) VRDO 1.45% 6/6/2002LOC 18,100 18,100 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Merck & Co. West Point) VRDO 1.47% 6/6/2002 18,000 18,000 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Merck & Co.) VRDO 1.47% 6/6/2002 21,900 21,900 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Reliant Energy Seward Project) VRDO 1.50% 6/5/2002LOC 25,000 25,000
14
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Reliant Energy Seward Project) VRDO 1.70% 6/5/2002LOC 26,000 26,000 Pennsylvania GO 4.00% 2/1/2003 9,855 10,015 Pennsylvania GO 4.00% 5/1/2003(4) 7,345 7,494 Pennsylvania GO 5.00% 6/1/2002(1) 3,000 3,000 Pennsylvania GO 5.00% 6/15/2002 3,000 3,003 Pennsylvania GO 5.00% 1/15/2003 10,000 10,216 Pennsylvania GO 5.125% 9/15/2002(2) 2,000 2,020 Pennsylvania GO 5.60% 7/1/2002 5,000 5,014 Pennsylvania GO TOB VRDO 1.43% 6/6/2002(3)* 14,698 14,698 Pennsylvania GO TOB VRDO 1.45% 6/6/2002* 9,075 9,075 Pennsylvania GO TOB VRDO 1.48% 6/6/2002* 7,520 7,520 Pennsylvania Higher Educ. Assistance Agency Student Loan Rev. VRDO 1.45% 6/5/2002(2) 32,800 32,800 Pennsylvania Higher Educ. Assistance Agency Student Loan Rev. VRDO 1.50% 6/5/2002(2) 165,800 165,800 Pennsylvania Higher Educ. Fac. Auth. Rev. 3.50% 6/15/2002(2) 14,950 14,956 Pennsylvania Higher Educ. Fac. Auth. Rev. (Carnegie Mellon Univ.) VRDO 1.55% 6/4/2002 101,300 101,300 Pennsylvania Higher Educ. Fac. Auth. Rev. (Drexel Univ.) VRDO 1.40% 6/6/2002LOC 22,500 22,500 Pennsylvania Higher Educ. Fac. Auth. Rev. (Lafayette College) 2.875% 11/27/2002 7,765 7,804 Pennsylvania Higher Educ. Fac. Auth. Rev. (Lycoming College) PUT 3.00% 11/1/2002LOC 4,000 4,016 Pennsylvania Higher Educ. Fac. Auth. Rev. (Muhlenberg College) VRDO 1.60% 6/4/2002 11,800 11,800 Pennsylvania Higher Educ. Fac. Auth. Rev. (Temple Univ.) VRDO 1.60% 6/4/2002LOC 41,050 41,050 Pennsylvania Higher Educ. Fac. Auth. Rev. (Univ. of Pennsylvania Health System Obligated Group) VRDO 1.35% 6/5/2002LOC 215,325 215,325 Pennsylvania Higher Educ. Fac. Auth. Rev. (Univ. of the Sciences) VRDO 1.40% 6/6/2002LOC 19,000 19,000 Pennsylvania Higher Educ. Fac. Auth. Rev. (Ursinus College) VRDO 1.50% 6/5/2002LOC 7,700 7,700 Pennsylvania Housing Finance Agency Rev. TOB VRDO 1.46% 6/6/2002* 11,645 11,645 Pennsylvania Intergovernmental Cooperation Auth. Rev. 5.00% 6/15/2002(3) 10,040 10,049 Pennsylvania Intergovernmental Cooperation Auth. Rev. 6.00% 6/15/2002(3) 10,000 10,012 Pennsylvania Intergovernmental Cooperation Auth. Rev. 6.80%6/15/2002(Prere.) 11,100 11,119 Pennsylvania Public School Building Auth. (Parkland School Dist.) VRDO 1.46% 6/6/2002(3) 10,365 10,365 Pennsylvania State Univ. Rev. 5.20% 8/15/2002 3,500 3,527 Pennsylvania State Univ. Rev. VRDO 1.40% 6/6/2002 20,000 20,000 Pennsylvania Turnpike Comm. Registration Fee Rev. TOB VRDO 1.45% 6/6/2002(2)* 11,495 11,495 Pennsylvania Turnpike Comm. Rev. 4.00% 6/1/2002(3) 10,000 10,000 Pennsylvania Turnpike Comm. Rev. 4.50% 7/15/2002(2) 4,030 4,039 Pennsylvania Turnpike Comm. Rev. CP 1.40% 6/6/2002 66,320 66,320 Pennsylvania Turnpike Comm. Rev. VRDO 1.60% 6/4/2002 19,800 19,800 Philadelphia PA Gas Works Rev. 7.00% 7/1/2002(8) 12,090 12,133 Philadelphia PA Hosp. & Higher Educ. Fac. Auth. Rev. (Children's Hosp.) VRDO 1.55% 6/4/2002 10,800 10,800
15
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Philadelphia PA IDA Rev. (Cancer Research) VRDO 1.60% 6/4/2002LOC 4,400 4,400 Philadelphia PA School Dist. GO TOB VRDO 1.41% 6/6/2002(1)* 4,120 4,120 Philadelphia PA TRAN 4.00% 6/28/2002 20,000 20,020 Philadelphia PA Water & Waste Water Rev. VRDO 1.40% 6/5/2002(2) 9,400 9,400 Pittsburgh PA GO 5.00% 3/1/2003(1) 2,000 2,052 Pittsburgh PA GO TOB PUT 1.40% 7/11/2002(2)* 4,995 4,995 Sayre PA Health Care Fac. Auth. Rev. (VHA of Pennsylvania, Pooled Capital Asset Financial Program) VRDO 1.40% 6/5/2002(2) 26,155 26,155 Sayre PA Health Care Fac. Auth. Rev. (VHA of Pennsylvania, Pooled Capital Asset Financial Program) VRDO 1.45% 6/5/2002(2) 23,700 23,700 Seneca Valley PA School Dist. GO TOB VRDO 1.45% 6/5/2002(1)* 23,320 23,320 South Fork PA Hosp. Auth. Rev. (Conemaugh Valley Hosp.) VRDO 1.60% 6/4/2002(1) 10,115 10,115 Southcentral Pennsylvania General Auth. Rev. VRDO 1.46% 6/6/2002(2) 8,000 8,000 Southcentral Pennsylvania General Auth. Rev. VRDO 1.48% 6/6/2002(2) 3,500 3,500 Spring-Ford PA Area School Dist. TOB VRDO 1.43% 6/6/2002(4)* 3,573 3,573 Univ. of Pittsburgh of the Commonwealth System of Higher Educ. PA (Univ. Capital Project) 2.25% 3/3/2003 35,000 35,174 Univ. of Pittsburgh of the Commonwealth System of Higher Educ. PA (Univ. Capital Project) VRDO 1.35% 6/5/2002 56,700 56,700 Univ. of Pittsburgh of the Commonwealth System of Higher Educ. PA (Univ. Capital Project) VRDO 1.40% 6/5/2002 70,400 70,400 Univ. of Pittsburgh PA Refunding Rev. 5.50% 6/1/2002(1) 2,815 2,815 Washington County PA Higher Educ. (Pooled Equipment Lease Program) VRDO 1.50% 6/5/2002LOC 21,535 21,535 Washington County PA Hosp. Auth. Rev. (Washington Hosp.) PUT 4.00% 7/1/2002 5,500 5,506 York County PA IDA PCR (PECO) CP 1.45% 8/8/2002LOC 10,940 10,940 York County PA TRAN 1.70% 7/31/2002 11,000 11,005 Outside Pennsylvania: Puerto Rico Govt. Dev. Bank VRDO 1.00% 6/5/2002(1) 300 300 Puerto Rico Highway & Transp. Auth. Rev. TOB VRDO 1.30% 6/6/2002(1)* 7,740 7,740 Puerto Rico Infrastructure Financing Auth. Special Obligation Bonds TOB VRDO 1.32% 6/6/2002* 12,450 12,450 Puerto Rico TRAN 3.00% 7/30/2002 20,000 20,027 - ------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (Cost $2,347,720) 2,347,720 - -------------------------------------------------------------------------------------------------------------------
16 - -------------------------------------------------------------------------------- MARKET VALUE* OTHER ASSETS AND LIABILITIES (0.9%) (000) - -------------------------------------------------------------------------------- Other Assets--Note B $ 28,138 Liabilities (7,564) ------------- 20,574 ------------- - -------------------------------------------------------------------------------- NET ASSETS (100%) - -------------------------------------------------------------------------------- Applicable to 2,368,563,012 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $2,368,294 ================================================================================ NET ASSET VALUE PER SHARE $1.00 ================================================================================ *See Note A in Notes to Financial Statements. *Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At May 31, 2002, the aggregate value of these securities was $135,341,000, representing 5.7% of net assets. For key to abbreviations and other references, see page 28. - -------------------------------------------------------------------------------- AT MAY 31, 2002, NET ASSETS CONSISTED OF: - -------------------------------------------------------------------------------- AMOUNT PER (000) SHARE - -------------------------------------------------------------------------------- Paid-in Capital 368,570 $1.00 Undistributed Net Investment Income -- -- Accumulated Net Realized Losses (276) -- Unrealized Appreciation -- -- - -------------------------------------------------------------------------------- NET ASSETS $2,368,294 $1.00 ================================================================================ 17
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS (99.2%) - ------------------------------------------------------------------------------------------------------------------- Adams County PA GO 5.30% 11/15/2031(3) 10,240 10,283 Adams County PA GO 5.50% 11/15/2013(3) 880 956 Adams County PA GO 5.50% 11/15/2014(3) 925 998 Adams County PA GO 5.50% 11/15/2015(3) 975 1,045 Adams County PA GO 5.75% 11/15/2016(3) 1,030 1,122 Allegheny County PA Airport Rev. (Pittsburgh International Airport) 5.00% 1/1/2017(1) 12,205 12,286 Allegheny County PA Airport Rev. (Pittsburgh International Airport) 5.00% 1/1/2019(1) 15,750 15,679 Allegheny County PA Airport Rev. (Pittsburgh International Airport) 6.00% 1/1/2014(3) 4,295 4,672 Allegheny County PA GO 0.00% 5/1/2003(2) 11,675 11,467 Allegheny County PA GO 0.00% 4/1/2010(1) 2,000 1,416 Allegheny County PA GO 5.25% 11/1/2021(3) 3,000 3,045 Allegheny County PA GO 5.25% 11/1/2023(3) 3,400 3,426 Allegheny County PA GO 5.50% 11/1/2013(3) 1,455 1,580 Allegheny County PA GO 5.50% 11/1/2014(3) 1,050 1,132 Allegheny County PA GO 5.75% 11/1/2011(3) 1,725 1,930 Allegheny County PA GO 6.00% 5/1/2010(2) 3,030 3,101 Allegheny County PA Hosp. Dev. Auth. Rev. (Catholic Health East) 5.25% 11/15/2013(2) 1,000 1,049 Allegheny County PA Hosp. Dev. Auth. Rev. (Magee Women's Hosp.) 6.00% 10/1/2010(3) 4,235 4,811 Allegheny County PA Hosp. Dev. Auth. Rev. (Univ. of Pittsburgh) 5.60% 4/1/2017(1) 2,000 2,078 Allegheny County PA Hosp. Dev. Auth. Rev. (Univ. of Pittsburgh) 6.00% 7/1/2026(1) 1,875 2,080 Allegheny County PA Port Auth. Rev. 5.00% 3/1/2029(3) 7,000 6,759 Allegheny County PA Port Auth. Rev. 5.375% 3/1/2012(3) 4,965 5,411 Allegheny County PA Port Auth. Rev. 5.50% 3/1/2013(3) 7,000 7,639 Allegheny County PA Port Auth. Rev. 5.50% 3/1/2014(3) 2,355 2,552 Allegheny County PA Port Auth. Rev. 5.50% 3/1/2015(3) 3,000 3,230 Allegheny County PA Port Auth. Rev. 5.50% 3/1/2016(3) 1,500 1,605 Allegheny County PA Port Auth. Rev. 5.50% 3/1/2017(3) 2,750 2,929 Allegheny County PA Port Auth. Rev. 6.00% 3/1/2009(1)(Prere.) 24,715 28,099 Allegheny County PA Port Auth. Rev. 6.25% 3/1/2009(1)(Prere.) 5,740 6,610 Allegheny County PA Sanitation Auth. Sewer Rev. 5.375% 12/1/2014(1) 6,370 6,864 Allegheny County PA Sanitation Auth. Sewer Rev. 5.375% 12/1/2015(1) 3,375 3,613 Allegheny County PA Sanitation Auth. Sewer Rev. 5.375% 12/1/2016(1) 3,545 3,769 Allegheny County PA Sanitation Auth. Sewer Rev. 5.375% 12/1/2017(1) 5,000 5,284 Allegheny County PA Sanitation Auth. Sewer Rev. 5.375% 12/1/2018(1) 15,000 15,747 Allegheny County PA Sanitation Auth. Sewer Rev. 5.50%12/1/2002(3)(Prere.) 22,370 23,243 Allegheny County PA Sanitation Auth. Sewer Rev. 5.50% 12/1/2013(3) 13,100 13,422 Allegheny County PA Sanitation Auth. Sewer Rev. 5.50% 12/1/2016(3)(ETM) 11,295 11,735 Allegheny County PA Sanitation Auth. Sewer Rev. 5.50% 12/1/2030(1) 14,030 14,379 Allegheny County PA Sanitation Auth. Sewer Rev. 5.75% 12/1/2012(1) 1,180 1,316 Allegheny County PA Sanitation Auth. Sewer Rev. 5.75% 12/1/2013(1) 2,000 2,216 Allegheny County PA Sanitation Auth. Sewer Rev. 6.00%12/1/2007(1)(Prere.) 54,630 62,713 Allegheny County PA Sanitation Auth. Sewer Rev. 6.00% 12/1/2010(1) 1,500 1,711 Allegheny County PA Sanitation Auth. Sewer Rev. 6.00% 12/1/2011(1) 1,490 1,697 Allegheny County PA Sanitation Auth. Sewer Rev. 6.25% 12/1/2014(1) 9,660 10,585
18
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Berks County PA GO 0.00% 11/15/2013(3)(ETM) 7,250 4,206 Berks County PA GO 0.00% 11/15/2014(3)(ETM) 8,615 4,697 Berks County PA GO 0.00% 11/15/2015(3)(ETM) 6,250 3,203 Berks County PA GO 5.75% 11/15/2012(3) 7,750 7,883 Berks County PA Hosp. Rev. (Reading Hosp.) 5.70% 10/1/2014(1) 4,500 4,989 Berks County PA Hosp. Rev. (Reading Hosp.) 6.10%10/1/2004(1)(Prere.) 16,500 18,235 Bethlehem PA Area School Dist. 5.375% 3/15/2020(3) 7,500 7,715 Blair County PA Hosp. Auth. Rev. (Altoona Hosp.) 5.00% 7/1/2022(2) 2,315 2,249 Blair County PA Hosp. Auth. Rev. (Altoona Hosp.) 5.50% 7/1/2016(2) 4,480 4,793 Bucks County PA IDA (Pennswood Village Project) 6.00% 10/1/2034 1,600 1,593 Butler County PA GO 6.00%7/15/2002(3)(Prere.) 5,185 5,211 Carlisle PA Area School Dist. GO 5.375% 3/1/2016(1) 1,550 1,640 Carlisle PA Area School Dist. GO 5.375% 3/1/2017(1) 1,635 1,719 Carlisle PA Area School Dist. GO 5.375% 3/1/2018(1) 1,725 1,801 Carlisle PA Area School Dist. GO 5.375% 3/1/2019(1) 1,820 1,891 Center City Philadelphia PA Business Improvement 5.50% 12/1/2015(2) 6,955 7,284 Center Township PA Sewer Auth. Rev. 5.50% 4/15/2011(1) 2,375 2,492 Central Bucks PA School Dist. 5.50% 5/15/2015(3) 5,540 5,981 Central Bucks PA School Dist. 5.50% 5/15/2017(3) 3,785 4,036 Central Bucks PA School Dist. 5.50% 5/15/2018(3) 2,400 2,540 Central Bucks PA School Dist. 5.50% 5/15/2019(3) 1,500 1,579 Central Dauphin PA School Dist. GO 0.00% 6/1/2004(2) 4,800 4,572 Chester County PA Health & Educ. Fac. Auth. Rev. (Chester County Hosp.) 5.875% 7/1/2016(1) 7,870 8,251 Chester County PA Health & Educ. Fac. Auth. Rev. (Jefferson Health System) 5.125% 5/15/2018(2) 12,445 12,489 Chester County PA Health & Educ. Fac. Auth. Rev. (Jefferson Health System) 5.25% 5/15/2022(2) 36,580 36,650 Chester County PA IDA (Archdiocese of Philadelphia) VRDO 1.60% 6/4/2002LOC 2,100 2,100 Coatesville PA School Dist. GO 5.75% 4/1/2007(4)(Prere.) 10,080 11,156 Corry PA Area School Dist. GO 5.50% 12/15/2010(1) 4,000 4,075 Council Rock PA School Dist. GO 4.75% 11/15/2017(3) 4,750 4,719 Cumberland County PA Muni. Auth. College Rev. (Dickinson College) 5.50% 11/1/2030(2) 3,230 3,297 Dauphin County PA General Auth. Hosp. Rev. (West Pennsylvania Hosp.) 5.50% 7/1/2013(1) 5,000 5,506 Delaware County PA Auth. Rev. (Catholic Health East) 5.25% 11/15/2012(2) 3,300 3,456 Delaware County PA Auth. Rev. (Catholic Health East) 5.25% 11/15/2013(2) 4,665 4,852 Delaware County PA Auth. Univ. Rev. (Villanova Univ.) 5.00% 12/1/2028(1) 7,050 6,791 Delaware County PA Hosp. Auth. Rev. (Delaware County Memorial Hosp.) 5.50% 8/15/2013(1) 12,000 12,539 Delaware County PA IDA PCR (BP Exploration & Oil) VRDO 1.55% 6/4/2002 19,300 19,300 Delaware County PA Regional Water Quality Control Auth. Rev. 5.50% 5/1/2014(3) 2,405 2,601 Delaware County PA Regional Water Quality Control Auth. Rev. 5.50% 5/1/2016(3) 2,685 2,868 Delaware River Joint Toll Bridge Comm. Pennsylvania & New Jersey Rev. 5.50% 1/1/2026(3) 13,025 13,364 Delaware River Joint Toll Bridge Comm. Pennsylvania & New Jersey Rev. 5.70% 1/1/2023(4) 8,345 8,804 Delaware River Joint Toll Bridge Comm. Pennsylvania & New Jersey Rev. 6.00% 7/1/2018(3) 3,040 3,050
19
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Ephrata PA Area School Dist. GO 5.25% 4/15/2015(3) 2,385 2,509 Erie County PA Hosp. Auth. Rev. (St. Vincent Health Care) 6.125% 7/1/2013(1) 3,900 3,990 Erie PA School Dist. GO 0.00% 9/1/2010(4) 5,665 3,934 Erie PA School Dist. GO 0.00% 9/1/2011(4) 5,780 3,799 Erie PA School Dist. GO 0.00% 9/1/2013(4) 2,780 1,629 Erie PA School Dist. GO 0.00% 5/1/2016(1) 3,175 1,586 Erie PA School Dist. GO 0.00% 9/1/2016(4) 5,785 2,811 Erie PA School Dist. GO 0.00% 9/1/2018(4) 1,615 690 Erie PA School Dist. GO 5.80% 9/1/2010(2)(Prere.) 4,500 5,067 Fort LeBoeuf PA School Dist. GO 5.80% 1/1/2003(1)(Prere.) 5,500 5,632 Geisinger Health System Auth. of Pennsylvania Rev. (Penn State Geisinger Health System) VRDO 1.55% 6/4/2002 9,600 9,600 Greensburg Salem PA School Dist. GO 6.45% 9/15/2018(1) 7,500 7,606 Hazleton PA Area School Dist. GO 0.00% 3/1/2017(3) 4,425 2,072 Hazleton PA Area School Dist. GO 0.00% 3/1/2022(3) 5,265 1,790 Hazleton PA Area School Dist. GO 5.50% 3/1/2011(3) 3,740 4,110 Hazleton PA Area School Dist. GO 5.75% 3/1/2012(3) 1,420 1,588 Hazleton PA Area School Dist. GO 6.00% 3/1/2016(3) 18,245 20,785 Indiana County PA IDA (PSEG Power) 5.85% 6/1/2027 2,500 2,416 Lake Lehman PA School Dist. GO 0.00% 4/1/2014(1) 1,290 725 Lake Lehman PA School Dist. GO 0.00% 4/1/2015(1) 1,295 685 Lake Lehman PA School Dist. GO 0.00% 4/1/2016(1) 1,310 650 Lake Lehman PA School Dist. GO 0.00% 4/1/2017(1) 1,315 613 Lake Lehman PA School Dist. GO 0.00% 4/1/2018(1) 1,000 436 Lancaster County PA GO 5.50% 11/1/2016(3) 1,025 1,098 Lancaster County PA GO 5.50% 11/1/2017(3) 1,060 1,130 Lancaster County PA GO 5.50% 11/1/2018(3) 1,120 1,187 Lancaster County PA GO 5.50% 11/1/2019(3) 1,175 1,238 Lancaster County PA GO 5.80% 5/1/2015(3) 1,865 2,034 Lancaster County PA GO 6.25% 5/1/2013(3) 4,370 4,958 Lancaster County PA GO 6.25% 5/1/2014(3) 4,605 5,215 Lancaster County PA Hosp. Auth. Rev. (Willow Valley Retirement Project) 5.875% 6/1/2021 1,000 1,009 Lancaster County PA Hosp. Auth. Rev. (Willow Valley Retirement Project) 5.875% 6/1/2031 6,000 5,955 Lancaster PA School Dist. GO 5.375% 2/15/2017(3) 5,590 5,745 Latrobe PA IDA (Saint Vincent College) 5.60% 5/1/2021 1,635 1,612 Latrobe PA IDA (Saint Vincent College) 5.70% 5/1/2031 2,165 2,117 Lehigh County PA General Purpose Hosp. Auth. Rev. (Lehigh Valley Health Network) 5.00% 7/1/2028(1) 13,905 13,284 Lehigh County PA General Purpose Hosp. Auth. Rev. (Lehigh Valley Health Network) 5.375% 7/1/2014(4) 900 953 Lehigh County PA General Purpose Hosp. Auth. Rev. (Lehigh Valley Health Network) 5.625% 7/1/2005(1)(Prere.) 800 882 Lehigh County PA General Purpose Hosp. Auth. Rev. (Lehigh Valley Health Network) 5.625% 7/1/2025(1) 9,200 9,327 Lehigh County PA General Purpose Hosp. Auth. Rev. (Lehigh Valley Health Network) 5.70% 7/1/2010(1) 3,905 4,139 Lehigh County PA General Purpose Hosp. Auth. Rev. (Lehigh Valley Health Network) 7.00% 7/1/2016(1) 4,415 5,365 Lehigh County PA General Purpose Hosp. Auth. Rev. (Lehigh Valley Health Network) VRDO 1.60% 6/4/2002(2) 4,100 4,100
20
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Lehigh County PA GO 5.00% 11/15/2016 3,000 3,073 Luzerne County PA GO 0.00% 11/15/2016(1) 2,360 1,100 Luzerne County PA GO 0.00% 11/15/2017(1) 2,390 1,037 Luzerne County PA GO 0.00% 11/15/2019(1) 1,255 473 McKeesport PA Area School Dist. GO 0.00% 10/1/2004(1) 1,040 982 McKeesport PA Area School Dist. GO 0.00% 10/1/2005(1) 1,050 949 McKeesport PA Area School Dist. GO 0.00% 10/1/2006(1) 2,015 1,741 McKeesport PA Area School Dist. GO 0.00% 10/1/2007(1) 2,080 1,708 McKeesport PA Area School Dist. GO 0.00% 10/1/2008(1) 2,270 1,763 McKeesport PA Area School Dist. GO 0.00% 10/1/2009(1) 2,020 1,482 McKeesport PA Area School Dist. GO 0.00% 10/1/2010(1) 1,840 1,273 McKeesport PA Area School Dist. GO 0.00% 10/1/2011(1) 1,835 1,201 McKeesport PA Area School Dist. GO 0.00% 10/1/2014(1) 2,040 1,119 McKeesport PA Area School Dist. GO 0.00% 10/1/2015(1) 2,040 1,052 McKeesport PA Area School Dist. GO 0.00% 10/1/2016(1) 4,655 2,252 McKeesport PA Area School Dist. GO 0.00% 10/1/2018(2) 3,075 1,309 McKeesport PA Area School Dist. GO 0.00% 10/1/2028(2) 2,340 539 Mifflin County PA GO 5.625% 9/1/2028(3) 2,000 2,076 Montgomery County PA GO 5.00% 7/15/2019 8,800 8,862 Montgomery County PA GO 5.375% 10/15/2025 7,930 8,011 Montgomery County PA GO 5.40% 3/15/2007(Prere.) 1,860 2,031 Montgomery County PA Higher Educ. & Health Auth. Rev. (Abington Memorial Hosp.) 5.00% 6/1/2028(2) 7,660 7,320 Montgomery County PA Higher Educ. & Health Auth. Rev. (Abington Memorial Hosp.) 6.00% 6/1/2003(2)(Prere.) 8,140 8,640 Montgomery County PA Higher Educ. & Health Auth. Rev. (Abington Memorial Hosp.) 6.10% 6/1/2012(2) 5,000 5,299 Montgomery County PA Higher Educ. & Health Auth. Rev. (Pottstown Healthcare) 5.00% 1/1/2027(4) 5,000 4,788 Montgomery County PA Higher Educ. & Health Auth. Rev. (Pottstown Healthcare) 5.375% 1/1/2012(4) 5,085 5,392 Mount Lebanon PA Hosp. Dev. Auth. Rev. (St. Clair Memorial Hosp.) 6.25% 7/1/2006(3) 9,250 10,340 Nazareth PA School Dist. GO 5.50%5/15/2005(2)(Prere.) 1,500 1,615 Neshaminy PA School Dist. GO 5.70% 2/15/2014(3) 8,795 9,321 North Hills PA School Dist. GO 5.25%11/15/2007(3)(Prere) 7,440 8,135 North Penn PA Water Auth. Rev. 6.125% 11/1/2010(3) 5,140 5,280 Northampton County PA Hosp. Auth. Rev. (Easton Hosp.) 6.25% 7/1/2002(1)(Prere.) 10,000 10,239 Northampton County PA IDA PCR (Central Metro. Edison) 6.10% 7/15/2021(1) 4,410 4,716 Northeastern PA Hosp. & Educ. Health Rev. (Wyoming Valley Health) 5.25% 1/1/2016(2) 5,910 6,028 Northeastern PA Hosp. & Educ. Health Rev. (Wyoming Valley Health) 5.25% 1/1/2026(2) 2,850 2,827 Owen J. Roberts School Dist. PA GO 5.375% 5/15/2018(1) 2,815 3,075 Owen J. Roberts School Dist. PA GO 5.50% 8/15/2017 1,495 1,596 Oxford Area PA School Dist. GO 5.50% 2/15/2014 1,815 1,968 Oxford Area PA School Dist. GO 5.50% 2/15/2015 1,710 1,842 Parkland PA School Dist. GO 5.375% 9/1/2015(3) 3,050 3,301 Parkland PA School Dist. GO 5.375% 9/1/2016(3) 2,000 2,156 Pennsylvania Convention Center Auth. Rev. 0.00% 9/1/2004(3)(ETM) 5,000 4,729 Pennsylvania Convention Center Auth. Rev. 6.00% 9/1/2019(3)(ETM) 14,275 16,304 Pennsylvania Convention Center Auth. Rev. 6.70% 9/1/2016(3)(ETM) 25,150 30,133
21
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Amtrak Project) 6.00% 11/1/2007 920 972 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Amtrak Project) 6.00% 11/1/2008 975 1,028 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Amtrak Project) 6.00% 11/1/2010 1,095 1,152 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Amtrak Project) 6.00% 11/1/2011 1,160 1,217 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Amtrak Project) 6.125% 11/1/2021 2,900 2,876 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Amtrak Project) 6.25% 11/1/2031 2,000 1,999 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Amtrak Project) 6.375% 11/1/2041 5,000 4,960 Pennsylvania Econ. Dev. Financing Auth. Fac. Rev. (Amtrak Project) 6.50% 11/1/2016 2,650 2,784 Pennsylvania GO 5.00% 11/15/2015(2) 5,000 5,127 Pennsylvania GO 5.125% 1/15/2014 17,630 18,570 Pennsylvania GO 5.125% 3/15/2017(2) 7,990 8,183 Pennsylvania GO 5.25% 10/15/2011 11,200 12,151 Pennsylvania GO 5.25% 10/15/2012 11,300 12,176 Pennsylvania GO 5.25% 10/15/2014 8,850 9,401 Pennsylvania GO 5.375% 5/15/2010(3) 13,800 14,665 Pennsylvania GO 5.375% 5/15/2012(3) 16,570 17,477 Pennsylvania GO 5.375% 5/15/2014(3) 14,000 14,662 Pennsylvania GO 5.375% 5/15/2016(3) 5,000 5,201 Pennsylvania GO 5.75% 10/1/2015(3) 19,850 21,631 Pennsylvania GO 6.00% 1/15/2011 3,000 3,383 Pennsylvania Higher Educ. Assistance Agency Rev. 6.125%12/15/2010(1)(Prere) 2,000 2,306 Pennsylvania Higher Educ. Fac. Auth. Health Services Rev. (Allegheny/Delaware Valley Obligated Group) 5.875% 11/15/2016(1) 19,900 21,087 Pennsylvania Higher Educ. Fac. Auth. Health Services Rev. (Allegheny/Delaware Valley Obligated Group) 5.875% 11/15/2021(1) 9,545 9,841 Pennsylvania Higher Educ. Fac. Auth. Rev. 5.00% 5/1/2031 9,800 9,947 Pennsylvania Higher Educ. Fac. Auth. Rev. 5.50% 6/15/2017(2) 935 987 Pennsylvania Higher Educ. Fac. Auth. Rev. 5.625% 6/15/2019(2) 1,160 1,224 Pennsylvania Higher Educ. Fac. Auth. Rev. (Bryn Mawr College) 5.625% 12/1/2014(1) 2,200 2,354 Pennsylvania Higher Educ. Fac. Auth. Rev. (Carnegie Mellon Univ.) VRDO 1.55% 6/4/2002 900 900 Pennsylvania Higher Educ. Fac. Auth. Rev. (Temple Univ.) 5.00% 4/1/2029(1) 8,700 8,364 Pennsylvania Higher Educ. Fac. Auth. Rev. (Temple Univ.) 5.25% 4/1/2011(1) 3,545 3,769 Pennsylvania Higher Educ. Fac. Auth. Rev. (Univ. of Pennsylvania Health System Obligated Group) VRDO 1.35% 6/5/2002LOC 15,995 15,995 Pennsylvania Higher Educ. Fac. Auth. Rev. (UPMC Health Systems) 6.00% 1/15/2022 5,000 5,051 Pennsylvania Higher Educ. Fac. Auth. Rev. (UPMC Health Systems) 6.00% 1/15/2031 5,000 5,000 Pennsylvania Higher Educ. Fac. Auth. Rev. (UPMC Health Systems) 6.25% 1/15/2016 3,120 3,310 Pennsylvania Housing Finance Agency Rev. 5.25% 4/1/2021 5,000 4,970 Pennsylvania Housing Finance Agency Rev. 5.35% 10/1/2031 13,000 12,735
22
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Pennsylvania Housing Finance Agency Rev. 5.40% 10/1/2024 6,105 6,334 Pennsylvania Housing Finance Agency Rev. 6.15% 10/1/2020(7) 5,000 5,245 Pennsylvania IDA Auth. Rev. (Economic Dev.) 5.50% 7/1/2016(2) 14,865 15,989 Pennsylvania IDA Auth. Rev. (Economic Dev.) 5.50% 7/1/2017(2) 7,000 7,492 Pennsylvania IDA Auth. Rev. (Economic Dev.) 5.50% 7/1/2018(2) 7,630 8,112 Pennsylvania IDA Auth. Rev. (Economic Dev.) 5.50% 7/1/2019(2) 6,340 6,701 Pennsylvania IDA Auth. Rev. (Economic Dev.) 5.50% 7/1/2020(2) 4,495 4,712 Pennsylvania IDA Auth. Rev. (Economic Dev.) 5.50% 7/1/2021(2) 6,500 6,785 Pennsylvania Intergovernmental Cooperation Auth. Rev. 4.75% 6/15/2023(3) 13,000 12,193 Pennsylvania Intergovernmental Cooperation Auth. Rev. 5.25% 6/15/2013(3) 10,000 10,522 Pennsylvania Intergovernmental Cooperation Auth. Rev. 5.25% 6/15/2014(3) 10,765 11,254 Pennsylvania Intergovernmental Cooperation Auth. Rev. 5.25% 6/15/2017(3) 7,830 8,052 Pennsylvania Intergovernmental Cooperation Auth. Rev. 5.625% 6/15/2013(3) 2,605 2,727 Pennsylvania Intergovernmental Cooperation Auth. Rev. 7.00%6/15/2005(3)(Prere.) 2,250 2,526 Pennsylvania Turnpike Comm. Oil Franchise Tax Rev. 4.75% 12/1/2027(2) 12,610 11,639 Pennsylvania Turnpike Comm. Oil Franchise Tax Rev. 5.125% 12/1/2016(2) 1,735 1,789 Pennsylvania Turnpike Comm. Rev. 5.375% 7/15/2013(2) 2,810 3,046 Pennsylvania Turnpike Comm. Rev. 5.375% 7/15/2014(2) 5,350 5,753 Pennsylvania Turnpike Comm. Rev. 5.375% 7/15/2015(2) 6,370 6,806 Pennsylvania Turnpike Comm. Rev. 5.375% 7/15/2016(2) 1,000 1,061 Pennsylvania Turnpike Comm. Rev. 5.375% 7/15/2017(2) 3,070 3,240 Pennsylvania Turnpike Comm. Rev. 5.375% 7/15/2018(2) 1,505 1,578 Pennsylvania Turnpike Comm. Rev. 5.375% 7/15/2019(2) 2,500 2,607 Pennsylvania Turnpike Comm. Rev. 5.50% 12/1/2013(3) 5,000 5,521 Pennsylvania Turnpike Comm. Rev. 5.50% 12/1/2017(3) 16,000 16,314 Pennsylvania Turnpike Comm. Rev. 5.50% 7/15/2032(2) 12,010 12,306 Pennsylvania Turnpike Comm. Rev. 5.625% 6/1/2012(3) 9,000 10,001 Pennsylvania Turnpike Comm. Rev. 5.625% 6/1/2013(3) 8,000 8,826 Pennsylvania Turnpike Comm. Rev. 5.75% 12/1/2012(2) 10,000 10,385 Philadelphia PA Gas Works Rev. 5.25% 7/1/2011(4) 3,965 4,193 Philadelphia PA Gas Works Rev. 5.375% 7/1/2012(4) 4,000 4,237 Philadelphia PA Gas Works Rev. 5.375% 7/1/2014(4) 4,310 4,513 Philadelphia PA GO 5.00% 5/15/2020(1) 8,000 7,962 Philadelphia PA GO 5.00% 3/15/2028(4) 2,500 2,409 Philadelphia PA GO 5.25% 3/15/2014(4) 1,750 1,839 Philadelphia PA GO 5.25% 9/15/2014(4) 7,460 7,862 Philadelphia PA GO 5.25% 3/15/2015(4) 2,600 2,718 Philadelphia PA GO 5.25% 9/15/2015(4) 2,775 2,906 Philadelphia PA GO 5.25% 9/15/2016(4) 3,225 3,354 Philadelphia PA GO 5.25% 9/15/2017(4) 5,000 5,167 Philadelphia PA GO 5.25% 9/15/2018(4) 2,135 2,192 Philadelphia PA GO 6.00% 11/15/2010(3) 1,065 1,168 Philadelphia PA GO 6.00% 11/15/2011(3) 1,145 1,260 Philadelphia PA GO 6.00% 11/15/2012(3) 1,270 1,392 Philadelphia PA GO 6.00% 11/15/2013(3) 715 776 Philadelphia PA Hosp. & Higher Educ. Fac. Auth. Rev. (Children's Hosp.) VRDO 1.55% 6/4/2002 1,230 1,230 Philadelphia PA Hosp. & Higher Educ. Fac. Auth. Rev. (Jefferson Health System) 5.125% 5/15/2018(2) 5,700 5,720 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.125% 7/1/2028(3) 17,100 16,418 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.25% 6/15/2015(3) 5,695 5,888 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.375% 6/15/2012(3) 1,000 1,050
23
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.375% 7/1/2013(3) 10,000 10,407 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 7/1/2012(3) 5,505 5,910 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 6/15/2013(3) 1,030 1,095 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 7/1/2013(3) 5,825 6,205 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 6/15/2014(3) 1,090 1,149 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 7/1/2014(3) 6,155 6,501 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 6/15/2015(3) 1,150 1,202 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 7/1/2015(3) 6,435 6,739 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 6/15/2016(3) 1,210 1,254 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 7/1/2016(3) 5,000 5,192 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 6/15/2017(3) 1,280 1,319 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 6/15/2018(3) 1,350 1,383 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.50% 7/1/2018(3) 4,000 4,106 Philadelphia PA IDA Rev. (Philadelphia Airport System) 5.75% 6/15/2010(3) 4,440 4,832 Philadelphia PA Parking Auth. Rev. 5.125% 2/15/2024(2) 2,500 2,479 Philadelphia PA Parking Auth. Rev. 5.25% 9/1/2029(4) 3,530 3,504 Philadelphia PA Parking Auth. Rev. 5.40% 9/1/2011(2) 4,520 4,796 Philadelphia PA Parking Auth. Rev. 5.40% 9/1/2012(2) 5,990 6,330 Philadelphia PA Parking Auth. Rev. 5.40% 9/1/2015(2) 6,350 6,617 Philadelphia PA Parking Auth. Rev. 5.50% 9/1/2018(2) 4,250 4,407 Philadelphia PA Redevelopment Auth. Rev. 5.50% 4/15/2015(3) 3,000 3,224 Philadelphia PA Redevelopment Auth. Rev. 5.50% 4/15/2017(3) 2,255 2,398 Philadelphia PA Redevelopment Auth. Rev. 5.50% 4/15/2019(3) 2,815 2,959 Philadelphia PA Redevelopment Auth. Rev. 5.50% 4/15/2020(3) 2,000 2,087 Philadelphia PA Redevelopment Auth. Rev. 5.50% 4/15/2022(3) 5,275 5,462 Philadelphia PA School Dist. GO 5.25% 2/1/2012(4) 1,000 1,078 Philadelphia PA School Dist. GO 5.25% 4/1/2017(1) 3,000 3,081 Philadelphia PA School Dist. GO 5.375% 4/1/2027(2) 1,490 1,498 Philadelphia PA School Dist. GO 5.50% 9/1/2005(2)(Prere.) 1,150 1,268 Philadelphia PA School Dist. GO 5.50% 2/1/2013(4) 1,800 1,960 Philadelphia PA School Dist. GO 5.50% 2/1/2014(4) 2,500 2,702 Philadelphia PA School Dist. GO 5.50% 2/1/2015(4) 2,000 2,147 Philadelphia PA School Dist. GO 5.50% 9/1/2015(2) 9,330 9,739 Philadelphia PA School Dist. GO 5.50% 2/1/2016(4) 4,520 4,823 Philadelphia PA School Dist. GO 5.50% 2/1/2017(4) 2,000 2,125 Philadelphia PA School Dist. GO 5.50% 2/1/2018(4) 1,000 1,056 Philadelphia PA School Dist. GO 5.50% 9/1/2018(2) 4,000 4,121 Philadelphia PA School Dist. GO 5.50% 9/1/2025(2) 14,750 14,977 Philadelphia PA School Dist. GO 5.50% 2/1/2031(4) 6,200 6,325 Philadelphia PA School Dist. GO 5.625% 8/1/2017(4)* 1,000 1,071 Philadelphia PA School Dist. GO 5.625% 8/1/2019(4)* 6,500 6,879 Philadelphia PA School Dist. GO 5.625% 8/1/2020(4)* 6,000 6,300 Philadelphia PA School Dist. GO 5.625% 8/1/2022(4)* 1,000 1,043 Philadelphia PA School Dist. GO 5.75% 2/1/2011(4) 5,800 6,460 Philadelphia PA School Dist. GO 5.75% 2/1/2012(4) 7,420 8,219 Philadelphia PA School Dist. GO 5.75% 2/1/2013(4) 2,500 2,750 Philadelphia PA Water & Waste Water Rev. 5.25%12/15/2014(2) 7,100 7,634 Philadelphia PA Water & Waste Water Rev. 5.25% 11/1/2016(3) 5,040 5,270 Philadelphia PA Water & Waste Water Rev. 5.25% 11/1/2017(3) 5,460 5,668 Philadelphia PA Water & Waste Water Rev. 5.375% 11/1/2018(3) 6,780 7,079 Philadelphia PA Water & Waste Water Rev. 5.375% 11/1/2019(3) 4,155 4,314 Philadelphia PA Water & Waste Water Rev. 5.50% 8/1/2014(1) 12,900 13,512
24
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Philadelphia PA Water & Waste Water Rev. 5.60% 8/1/2018(1) 5,920 6,149 Philadelphia PA Water & Waste Water Rev. 6.25% 8/1/2011(1) 3,750 4,348 Philadelphia PA Water & Waste Water Rev. 7.00% 6/15/2010(3) 33,865 40,481 Philadelphia PA Water & Waste Water Rev. 7.00% 6/15/2011(3) 35,685 43,165 Pine-Richland School Dist. PA GO 5.50% 9/1/2006(4)(Prere.) 3,430 3,758 Pittsburgh PA GO 5.125% 9/1/2014(3) 8,435 8,728 Pittsburgh PA GO 5.125% 9/1/2015(3) 6,395 6,582 Pittsburgh PA GO 5.25% 9/1/2017(3) 4,980 5,113 Pittsburgh PA GO 5.50% 9/1/2013(2) 10,965 11,976 Pittsburgh PA GO 5.50% 9/1/2014(2) 12,000 13,167 Pittsburgh PA GO 5.50% 9/1/2015(2) 4,140 4,457 Pittsburgh PA GO 5.75% 9/1/2009(3)(Prere.) 4,505 5,054 Pittsburgh PA GO 6.00% 9/1/2009(3)(Prere.) 4,450 5,062 Pittsburgh PA Public Parking Auth. Rev. 5.875% 12/1/2012(3) 8,200 8,522 Pittsburgh PA School Dist. GO 0.00% 8/1/2009(2) 4,000 2,957 Pittsburgh PA School Dist. GO 5.25% 3/1/2012(3) 7,000 7,350 Pittsburgh PA School Dist. GO 5.25% 3/1/2013(3) 5,200 5,425 Pittsburgh PA School Dist. GO 5.35% 3/1/2014(3) 3,510 3,662 Pittsburgh PA School Dist. GO 5.375% 9/1/2013(4) 5,000 5,443 Pittsburgh PA School Dist. GO 5.375% 9/1/2014(4) 1,755 1,905 Pittsburgh PA School Dist. GO 5.50% 9/1/2013(4) 2,680 2,863 Pittsburgh PA School Dist. GO 5.50% 9/1/2015(4) 2,985 3,153 Pittsburgh PA Water & Sewer Auth. Rev. 0.00% 9/1/2027(3) 10,000 2,425 Pittsburgh PA Water & Sewer Auth. Rev. 0.00% 9/1/2028(3) 8,965 2,048 Pittsburgh PA Water & Sewer Auth. Rev. 5.00% 9/1/2019(4) 1,920 1,925 Pittsburgh PA Water & Sewer Auth. Rev. 7.25% 9/1/2014(3)(ETM) 25,210 30,561 Pittsburgh PA Water & Sewer Auth. Rev. 7.625% 9/1/2004(3)(ETM) 5,370 5,740 Reading PA GO 5.875% 11/15/2012(2) 13,825 14,070 Reading PA School Dist. GO 0.00% 1/15/2015(3) 9,260 4,838 Reading PA School Dist. GO 0.00% 1/15/2016(3) 9,270 4,529 Sayre PA Health Care Fac. Auth. Rev. (Guthrie Health Care System) 5.75% 12/1/2021 3,000 3,021 Sayre PA Health Care Fac. Auth. Rev. (Guthrie Health Care System) 5.875% 12/1/2031 12,500 12,540 Sayre PA Health Care Fac. Auth. Rev. (Guthrie Health Care System) 6.25% 12/1/2013 2,000 2,159 Sayre PA Health Care Fac. Auth. Rev. (Guthrie Health Care System) 6.25% 12/1/2014 1,925 2,060 Sayre PA Health Care Fac. Auth. Rev. (Guthrie Health Care System) 6.25% 12/1/2015 2,045 2,171 Sayre PA Health Care Fac. Auth. Rev. (Guthrie Health Care System) 6.25% 12/1/2016 3,225 3,398 Sayre PA Health Care Fac. Auth. Rev. (Guthrie Health Care System) 6.25% 12/1/2017 6,640 6,952 Sayre PA Health Care Fac. Auth. Rev. (Guthrie Health Care System) 6.25% 12/1/2018 2,500 2,608 Sayre PA Health Care Fac. Auth. Rev. (VHA of Pennsylvania, Pooled Capital Asset Financial Program) VRDO 1.45% 6/5/2002(2) 4,800 4,800 Scranton-Lackawanna PA Health & Welfare Auth. Rev. (Mercy Health System) 5.625% 1/1/2016(1) 5,490 5,730 Scranton-Lackawanna PA Health & Welfare Auth. Rev. (Mercy Health System) 5.70% 1/1/2023(1) 9,205 9,438
25
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Seneca Valley PA School Dist. GO 5.125% 1/1/2015(1) 1,275 1,328 Seneca Valley PA School Dist. GO 5.125% 1/1/2016(1) 1,580 1,634 South Fork PA Hosp. Auth. Rev. (Conemaugh Valley Hosp.) 5.625% 7/1/2010(6) 2,300 2,497 South Fork PA Hosp. Auth. Rev. (Conemaugh Valley Hosp.) 5.75% 7/1/2018(6) 7,000 7,689 South Fork PA Hosp. Auth. Rev. (Conemaugh Valley Hosp.) VRDO 1.60% 6/4/2002(1) 495 495 Southcentral Pennsylvania General Auth. Rev. (Wellspan Health) 5.25% 5/15/2031(1) 2,500 2,467 Southeastern Pennsylvania Transp. Auth. Rev. 5.375% 3/1/2017(3) 2,500 2,595 Southeastern Pennsylvania Transp. Auth. Rev. 5.375% 3/1/2022(3) 15,825 16,079 Southeastern Pennsylvania Transp. Auth. Rev. 5.45% 3/1/2011(3) 3,730 4,000 Spring-Ford PA Area School Dist. GO 4.75% 3/1/2025(3) 3,125 2,902 Spring-Ford PA Area School Dist. GO 5.50% 9/1/2016(4) 1,770 1,886 St. Mary's Hosp. Auth. Bucks County PA Rev. (Catholic Health Iniatives) 5.375% 6/1/2008(Prere.) 4,865 5,341 Stroudsburg PA Area School Dist. 5.00% 4/1/2016(4) 1,295 1,328 Stroudsburg PA Area School Dist. 5.00% 4/1/2017(4) 1,360 1,386 Univ. Area PA Joint Auth. Sewer Rev. 5.00% 11/1/2012(1) 1,505 1,593 Univ. Area PA Joint Auth. Sewer Rev. 5.00% 11/1/2013(1) 1,580 1,657 Univ. Area PA Joint Auth. Sewer Rev. 5.00% 11/1/2014(1) 1,655 1,720 Univ. of Pittsburgh of the Commonwealth System of Higher Educ. PA (Univ. Capital Project) VRDO 1.35% 6/5/2002 5,000 5,000 Univ. of Pittsburgh PA Rev. 5.25% 6/1/2017(3) 6,995 7,201 Univ. of Pittsburgh PA Rev. 5.50% 6/1/2010(1) 5,285 5,713 Univ. of Pittsburgh PA Rev. 5.50% 6/1/2014(1) 11,780 12,510 Univ. of Pittsburgh PA Rev. 6.125% 6/1/2021(1) 13,545 13,836 Univ. of Pittsburgh PA Rev. 6.25% 6/1/2012(1) 1,490 1,525 Upper Darby PA School Dist. GO 5.00% 5/1/2019(2) 5,970 6,001 Warwick PA School Dist. GO 5.375% 2/15/2015(3) 2,435 2,588 Warwick PA School Dist. GO 5.375% 2/15/2016(3) 2,570 2,714 Washington County PA Hosp. Auth. Rev. (Shadyside Hosp.) 5.875%12/15/2002(2)(Prere) 22,000 22,933 Washington County PA Hosp. Auth. Rev. (Washington Hosp.) 5.125% 7/1/2011(2) 1,840 1,930 Washington County PA Hosp. Auth. Rev. (Washington Hosp.) 5.125% 7/1/2012(2) 1,935 2,043 Washington County PA Hosp. Auth. Rev. (Washington Hosp.) 5.25% 7/1/2010(2) 1,750 1,856 Washington County PA Hosp. Auth. Rev. (Washington Hosp.) 5.25% 7/1/2013(2) 2,035 2,165 Washington County PA Hosp. Auth. Rev. (Washington Hosp.) 5.375% 7/1/2014(2) 1,640 1,757 Washington County PA Hosp. Auth. Rev. (Washington Hosp.) 5.375% 7/1/2015(2) 2,250 2,399 Washington County PA Hosp. Auth. Rev. (Washington Hosp.) 5.50% 7/1/2016(2) 2,375 2,566 West Allegheny PA School Dist. GO 6.25% 8/1/2002(2)(Prere.) 6,155 6,196 West Cornwall Township PA Muni. Auth. College Rev. (Elizabethtown College) 6.00% 12/15/2022 2,650 2,652 West Cornwall Township PA Muni. Auth. College Rev. (Elizabethtown College) 6.00% 12/15/2027 2,000 1,987 West Jefferson Hills PA School Dist. GO 5.20% 8/1/2017(4) 1,955 2,021 West Jefferson Hills PA School Dist. GO 5.20% 8/1/2018(4) 2,060 2,115 West Jefferson Hills PA School Dist. GO 5.90% 8/1/2002(3)(Prere.) 3,160 3,183 West Jefferson Hills PA School Dist. GO 5.95% 8/1/2002(3)(Prere.) 7,180 7,233 West Mifflin PA School Dist. GO 5.625%8/15/2005(3)(Prere.) 7,000 7,607 West Shore PA Area Hosp. Auth. (Holy Spirit Hosp. Project) 6.25% 1/1/2032 3,000 3,002 Westmoreland County PA Muni. Auth. Rev. 6.125% 7/1/2017(1)(ETM) 8,205 9,411 Westmoreland County PA Muni. Auth. Service Water Rev. 0.00% 8/15/2015(3) 5,000 2,588 Westmoreland County PA Muni. Auth. Service Water Rev. 0.00% 8/15/2023(1) 5,000 1,545
26
- ------------------------------------------------------------------------------------------------------------------- FACE MARKET MATURITY AMOUNT VALUE* COUPON DATE (000) (000) - ------------------------------------------------------------------------------------------------------------------- Westmoreland County PA Muni. Auth. Service Water Rev. 0.00% 8/15/2024(3) 4,000 1,163 York County PA Hosp. Auth. Rev. (York Hosp.) 5.25% 7/1/2017(2) 3,500 3,558 York County PA Hosp. Auth. Rev. (York Hosp.) 5.25% 7/1/2023(2) 8,675 8,675 York County PA IDA (PSEG Power) 5.50% 9/1/2020 3,500 3,357 York County PA Solid Waste & Refuse Auth. Rev. 5.50% 12/1/2013(3) 6,750 7,434 York County PA Solid Waste & Refuse Auth. Rev. 5.50% 12/1/2014(3) 4,050 4,450 OUTSIDE PENNSYLVANIA: Puerto Rico GO 5.50% 7/1/2017(10) 10,000 10,937 Puerto Rico GO 5.50% 7/1/2018 10,000 10,731 Puerto Rico Govt. Dev. Bank VRDO 1.00% 6/5/2002(1) 700 700 Puerto Rico Highway & Transp. Auth. Rev. VRDO 1.30% 6/5/2002(2) 600 600 - ------------------------------------------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (Cost $2,207,388) 2,317,302 - ------------------------------------------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES (0.8%) - ------------------------------------------------------------------------------------------------------------------- Other Assets--Note B 40,082 Liabilities (22,424) ----------- 17,658 ----------- - ------------------------------------------------------------------------------------------------------------------- NET ASSETS (100%) $2,334,960 ===================================================================================================================
*See Note A in Notes to Financial Statements. *Security purchased on a when-issued or delayed delivery basis for which the fund has not taken delivery as of May 31, 2002. For key to abbreviations and other references, see page 28. - -------------------------------------------------------------------------------- AT MAY 31, 2002, NET ASSETS CONSISTED OF: - -------------------------------------------------------------------------------- AMOUNT (000) - -------------------------------------------------------------------------------- Paid-in Capital $2,222,058 Undistributed Net Investment Income -- Accumulated Net Realized Gains 2,988 Unrealized Appreciation--Note F 109,914 - -------------------------------------------------------------------------------- NET ASSETS $2,334,960 ================================================================================ Investor Shares--Net Assets Applicable to 136,875,798 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $1,553,811 - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE--INVESTOR SHARES $11.35 ================================================================================ Admiral Shares--Net Assets Applicable to 68,811,623 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $781,149 - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE--ADMIRAL SHARES $11.35 ================================================================================ 27 KEY TO ABBREVIATIONS BAN--Bond Anticipation Note. COP--Certificate of Participation. CP--Commercial Paper. GO--General Obligation Bond. IDA--Industrial Development Authority Bond. PCR--Pollution Control Revenue Bond. PUT--Put Option Obligation. RAN--Revenue Anticipation Note. TAN--Tax Anticipation Note. TOB--Tender Option Bond. TRAN--Tax Revenue Anticipation Note. VRDO--Variable Rate Demand Obligation. (ETM)--Escrowed to Maturity. (Prere.)--Prerefunded. SCHEDULED PRINCIPAL AND INTEREST PAYMENTS ARE GUARANTEED BY: (1) MBIA (Municipal Bond Insurance Association). (2) AMBAC (Ambac Assurance Corporation). (3) FGIC (Financial Guaranty Insurance Company). (4) FSA (Financial Security Assurance). (5) BIGI (Bond Investors Guaranty Insurance). (6) Connie Lee Inc. (7) FHA (Federal Housing Authority). (8) CapMAC (Capital Markets Assurance Corporation). (9) American Capital Access Financial Guaranty Corporation. (10) XLCA (XL Capital Assurance Inc.) The insurance does not guarantee the market value of the municipal bonds. LOC---Scheduled principal and interest payments are guaranteed by bank letter of credit. 28 STATEMENT OF OPERATIONS This Statement shows interest income earned by each fund during the reporting period, and details the operating expenses charged to each class of its shares. These expenses directly reduce the amount of investment income available to pay to shareholders as tax-exempt income dividends. This Statement also shows any Net Gain (Loss) realized on the sale of investments, and the increase or decrease in the Unrealized Appreciation (Depreciation) of investments during the period. For money market funds, Realized Net Gain (Loss) should always be minimal, and Unrealized Appreciation (Depreciation) should be zero. - -------------------------------------------------------------------------------- PENNSYLVANIA PENNSYLVANIA TAX-EXEMPT LONG-TERM MONEY MARKET FUND TAX-EXEMPT FUND ---------------------------------------------- SIX MONTHS ENDED MAY 31, 2002 ---------------------------------------------- (000) (000) - -------------------------------------------------------------------------------- INVESTMENT INCOME INCOME Interest $18,284 $58,133 - -------------------------------------------------------------------------------- Total Income 18,284 58,133 - -------------------------------------------------------------------------------- EXPENSES The Vanguard Group--Note B Investment Advisory Services 131 122 Management and Administrative Investor Shares 1,509 1,116 Admiral Shares* -- 331 Marketing and Distribution Investor Shares 263 123 Admiral Shares* -- 41 Custodian Fees 4 12 Auditing Fees 4 6 Shareholders' Reports Investor Shares 15 12 Admiral Shares* -- 4 Trustees' Fees and Expenses 1 1 - -------------------------------------------------------------------------------- Total Expenses 1,927 1,768 Expenses Paid Indirectly--Note C -- (131) - -------------------------------------------------------------------------------- Net Expenses 1,927 1,637 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 16,357 56,496 - -------------------------------------------------------------------------------- REALIZED NET GAIN (LOSS) Investment Securities Sold 72 7,931 Futures Contracts -- (687) - -------------------------------------------------------------------------------- REALIZED NET GAIN (LOSS) 72 7,244 - -------------------------------------------------------------------------------- CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) Investment Securities -- (181) Futures Contracts -- 219 - -------------------------------------------------------------------------------- CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) -- 38 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $16,429 $63,778 - -------------------------------------------------------------------------------- *The Tax-Exempt Money Market Fund does not offer Admiral Shares. 29 STATEMENT OF CHANGES IN NET ASSETS This Statement shows how each fund's total net assets changed during the two most recent reporting periods. The Operations section summarizes information detailed in the Statement of Operations. Because the fund distributes its income to shareholders each day, the amounts of Distributions--Net Investment Income generally equal the net income earned as shown under the Operations section. The amounts of Distributions--Realized Capital Gain may not match the capital gains shown in the Operations section, because distributions are determined on a tax basis and may be made in a period different from the one in which the gains were realized on the financial statements. The Capital Share Transactions section shows the net amount shareholders invested in or redeemed from the fund. Distributions and Capital Share Transactions are shown separately for each class of shares. - -------------------------------------------------------------------------------- PENNSYLVANIA PENNSYLVANIA TAX-EXEMPT LONG-TERM MONEY MARKET FUND TAX-EXEMPT FUND --------------------- ---------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED MAY 31, 2002 NOV. 30, 2001 MAY 31, 2002 NOV. 30, 2001 (000) (000) (000) (000) - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS Net Investment Income $ 16,357 $ 64,558 $ 56,496 $ 107,698 Realized Net Gain (Loss) 72 (277) 7,244 7,597 Change in Unrealized Appreciation (Depreciation) -- -- 38 58,338 - -------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations 16,429 64,281 63,778 173,633 - -------------------------------------------------------------------------------- DISTRIBUTIONS Net Investment Income Investor Shares (16,357) (64,558) (37,946) (92,964) Admiral Shares* -- -- (18,550) (14,734) Realized Capital Gain** Investor Shares -- -- (5,324) -- Admiral Shares* -- -- (2,538) -- - -------------------------------------------------------------------------------- Total Distributions (16,357) (64,558) (64,358) (107,698) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS-- NOTE G Investor Shares (59,146) 300,242 11,300 (441,232) Admiral Shares* -- -- 52,199 724,847 - -------------------------------------------------------------------------------- Net Increase (Decrease) from Capital Share Transactions (59,146) 300,242 63,499 283,615 - -------------------------------------------------------------------------------- Total Increase (Decrease) (59,074) 299,965 62,919 349,550 - -------------------------------------------------------------------------------- NET ASSETS Beginning of Period 2,427,368 2,127,403 2,272,041 1,922,491 - -------------------------------------------------------------------------------- End of Period $2,368,294 $2,427,368 $2,334,960 $2,272,041 ================================================================================ *The Tax-Exempt Money Market Fund does not offer Admiral Shares. **Includes fiscal 2002 short-term gain distributions totaling $1,473,000. Short-term gain distributions are treated as ordinary income dividends for tax purposes. 30 FINANCIAL HIGHLIGHTS This table summarizes each fund's investment results and distributions to shareholders on a per-share basis for each class of shares. It also presents the Total Return and shows net investment income and expenses as percentages of average net assets. These data will help you assess: the variability of the fund's net income and total returns from year to year; the relative contributions of net income and capital gains to the fund's total return; how much it costs to operate the fund; and the extent to which the fund tends to distribute capital gains. The table also shows the Portfolio Turnover Rate, a measure of trading activity. A turnover rate of 100% means that the average security is held in the fund for one year. Money market funds are not required to report a Portfolio Turnover Rate.
PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND - ------------------------------------------------------------------------------------------------------------------- FOR A SHARE OUTSTANDING YEAR ENDED NOVEMBER 30, THROUGHOUT EACH PERIOD SIX MONTHS ENDED -------------------------------------------------- MAY 31, 2002 2001 2000 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------- INVESTMENT OPERATIONS Net Investment Income .007 .028 .038 .030 .033 .034 Net Realized and Unrealized Gain (Loss) on Investments -- -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------- Total from Investment Operations .007 .028 .038 .030 .033 .034 - ------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS Dividends from Net Investment Income (.007) (.028) (.038) (.030) (.033) (.034) Distributions from Realized Capital Gains -- -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------- Total Distributions (.007) (.028) (.038) (.030) (.033) (.034) - ------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 =================================================================================================================== TOTAL RETURN 0.68% 2.89% 3.91% 3.06% 3.33% 3.49% =================================================================================================================== RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $2,368 $2,427 $2,127 $1,963 $1,869 $1,598 Ratio of Total Expenses to Average Net Assets 0.16%* 0.18% 0.18% 0.19% 0.20% 0.20% Ratio of Net Investment Income to Average Net Assets 1.36%* 2.82% 3.83% 3.01% 3.27% 3.42% =================================================================================================================== *Annualized.
31 FINANCIAL HIGHLIGHTS (CONTINUED)
PENNSYLVANIA LONG-TERM TAX-EXEMPT FUND INVESTOR SHARES - ------------------------------------------------------------------------------------------------------------------- FOR A SHARE OUTSTANDING YEAR ENDED NOVEMBER 30, THROUGHOUT EACH PERIOD SIX MONTHS ENDED -------------------------------------------------- MAY 31, 2002 2001 2000 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $11.36 $10.98 $10.65 $11.51 $11.27 $11.26 - ------------------------------------------------------------------------------------------------------------------- INVESTMENT OPERATIONS Net Investment Income .279 .570 .584 .578 .597 .598 Net Realized and Unrealized Gain (Loss) on Investments .030 .380 .330 (.768) .240 .074 - ------------------------------------------------------------------------------------------------------------------- Total from Investment Operations .309 .950 .914 (.190) .837 .672 - ------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS Dividends from Net Investment Income (.279) (.570) (.584) (.578) (.597) (.598) Distributions from Realized Capital Gains (.040) -- -- (.092) -- (.064) - ------------------------------------------------------------------------------------------------------------------- Total Distributions (.319) (.570) (.584) (.670) (.597) (.662) - ------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $11.35 $11.36 $10.98 $10.65 $11.51 $11.27 =================================================================================================================== TOTAL RETURN 2.77% 8.79% 8.86% -1.74% 7.60% 6.21% =================================================================================================================== RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $1,554 $1,543 $1,922 $1,870 $1,944 $1,746 Ratio of Total Expenses to Average Net Assets 0.17%* 0.20% 0.19% 0.19% 0.20% 0.18% Ratio of Net Investment Income to Average Net Assets 4.96%* 5.04% 5.45% 5.20% 5.23% 5.37% Portfolio Turnover Rate 18%* 13% 11% 13% 19% 9% =================================================================================================================== *Annualized.
32 PENNSYLVANIA LONG-TERM TAX-EXEMPT FUND ADMIRAL SHARES - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 14* TO MAY 31, NOV. 30, FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2002 2001 - -------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $11.36 $11.18 - -------------------------------------------------------------------------------- INVESTMENT OPERATIONS Net Investment Income .282 .312 Net Realized and Unrealized Gain (Loss) on Investments .030 .180 - -------------------------------------------------------------------------------- Total from Investment Operations .312 .492 - -------------------------------------------------------------------------------- DISTRIBUTIONS Dividends from Net Investment Income (.282) (.312) Distributions from Realized Capital Gains (.040) -- - -------------------------------------------------------------------------------- Total Distributions (.322) (.312) - -------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $11.35 $11.36 ================================================================================ TOTAL RETURN 2.79% 4.43% ================================================================================ RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $781 $729 Ratio of Total Expenses to Average Net Assets 0.12%** 0.15%** Ratio of Net Investment Income to Average Net Assets 5.01%** 4.98%** Portfolio Turnover Rate 18%** 13% ================================================================================ *Inception. **Annualized. 33 NOTES TO FINANCIAL STATEMENTS Vanguard Pennsylvania Tax-Exempt Funds comprise the Pennsylvania Tax-Exempt Money Market Fund and Pennsylvania Long-Term Tax-Exempt Fund (formerly known as Pennsylvania Insured Long-Term Tax-Exempt Fund), each of which is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. Each fund invests in debt instruments of municipal issuers whose ability to meet their obligations may be affected by economic and political developments in the Commonwealth of Pennsylvania. The Long-Term Tax-Exempt Fund offers two classes of shares, Investor Shares and Admiral Shares. Investor Shares are available to any investor who meets the fund's minimum purchase requirements. Admiral Shares were first issued on May 14, 2001, and are designed for investors who meet certain administrative, servicing, tenure, and account-size criteria. A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The funds consistently follow such policies in preparing their financial statements. 1. SECURITY VALUATION: Tax-Exempt Money Market Fund: Investment securities are valued at amortized cost, which approximates market value. Long-Term Tax-Exempt Fund: Bonds, and temporary cash investments acquired over 60 days to maturity, are valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services. Other temporary cash investments are valued at amortized cost, which approximates market value. Securities for which market quotations are not readily available are valued by methods deemed by the board of trustees to represent fair value. 2. FEDERAL INCOME TAXES: Each fund intends to continue to qualify as a regulated investment company and distribute all of its income. Accordingly, no provision for federal income taxes is required in the financial statements. 3. FUTURES CONTRACTS: The Long-Term Tax-Exempt Fund may use Municipal Bond Index, U.S. Treasury Bond, and U.S. Treasury Note futures contracts, with the objectives of enhancing returns, managing interest rate risk, maintaining liquidity, diversifying credit risk, and minimizing transaction costs. The fund may purchase or sell futures contracts instead of bonds to take advantage of pricing differentials between the futures contracts and the underlying bonds. The fund may also seek to take advantage of price differences among bond market sectors by simultaneously buying futures (or bonds) of one market sector and selling futures (or bonds) of another sector. Futures contracts may also be used to simulate a fully invested position in the underlying bonds while maintaining a cash balance for liquidity. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of bonds held by the fund and the prices of futures contracts, and the possibility of an illiquid market. Futures contracts are valued based upon their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the financial statements. Fluctuations in the value of the contracts are recorded in the Statement of Net Assets as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized futures gains (losses). 4. DISTRIBUTIONS: Distributions from net investment income are declared daily and paid on the first business day of the following month. Annual distributions from realized capital gains, if any, are recorded on the ex-dividend date. 5. OTHER: Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Premiums and discounts are amortized and accreted, respectively, to interest income over the lives of the respective securities. 34 Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets. B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to each fund under methods approved by the board of trustees. Each fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At May 31, 2002, the funds had contributed capital to Vanguard (included in Other Assets) of: - -------------------------------------------------------------------------------- CAPTIAL CONTRIBUTED PERCENTAGE PERCENTAGE TO VANGUARD OF FUND OF VANGUARD'S PENNSYLVANIA TAX-EXEMPT FUND (000) NET ASSETS CAPITALIZATION - -------------------------------------------------------------------------------- Money Market $425 0.02% 0.42% Long-Term 419 0.02 0.42 - -------------------------------------------------------------------------------- The funds' trustees and officers are also directors and officers of Vanguard. C. The funds' investment adviser may direct new issue purchases, subject to obtaining the best price and execution, to underwriters who have agreed to rebate or credit to the funds part of the underwriting fees generated. Such rebates or credits are used solely to reduce the funds' management and administrative expenses. The funds' custodian bank has also agreed to reduce its fees when the funds maintain cash on deposit in their non-interest-bearing custody accounts. For the six months ended May 31, 2002, these arrangements reduced the Long-Term Tax-Exempt Fund's management and administrative expenses by $124,000 and custodian fees by $7,000. The total expense reduction represented an effective annual rate of 0.01% of the fund's average net assets. D. During the six months ended May 31, 2002, the Long-Term Tax-Exempt Fund purchased $197,372,000 of investment securities and sold $225,729,000 of investment securities, other than temporary cash investments. E. Capital gain distributions are determined on a tax basis and may differ from realized capital gains for financial reporting purposes due to differences in the timing of realization of gains. The Long-Term Tax-Exempt Fund had realized losses totaling $4,409,000 through November 30, 2001, which are deferred for tax purposes and reduce the amount of unrealized appreciation on investment securities for tax purposes (see Note F). F. At May 31, 2002, net unrealized appreciation of Long-Term Tax-Exempt Fund investment securities for federal income tax purposes was $105,505,000, consisting of unrealized gains of $107,696,000 on securities that had risen in value since their purchase and $2,191,000 in unrealized losses on securities that had fallen in value since their purchase (see Note E). 35 NOTES TO FINANCIAL STATEMENTS (CONTINUED) G. Capital share transactions for each class of shares were: - -------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED MAY 31, 2002 NOV. 30, 2001 ---------------- -------------------- AMOUNT SHARES AMOUNT SHARES PENNSYLVANIA TAX-EXEMPT FUND (000) (000) (000) (000) - -------------------------------------------------------------------------------- MONEY MARKET Issued $1,156,382 1,156,382 $2,364,019 2,364,019 Issued in Lieu of Cash Distributions 15,261 15,261 60,568 60,568 Redeemed (1,230,789) (1,230,789)(2,124,345) (2,124,345) ---------------------------------------------- Net Increase (Decrease) (59,146) (59,146) 300,242 300,242 - -------------------------------------------------------------------------------- LONG-TERM Investor Shares Issued $ 157,086 13,925 $ 420,131 37,085 Issued in Lieu of Cash Distributions 31,164 2,766 63,050 5,572 Redeemed (176,950) (15,707) (924,413) (81,844) ---------------------------------------------- Net Increase (Decrease) --Investor Shares 11,300 984 (441,232) (39,187) ---------------------------------------------- Admiral Shares Issued 120,189 10,664 748,288 66,219 Issued in Lieu of Cash Distributions 14,661 1,301 10,019 877 Redeemed (82,651) (7,328) (33,460) (2,922) ---------------------------------------------- Net Increase (Decrease) --Admiral Shares 52,199 4,637 724,847 64,174 - -------------------------------------------------------------------------------- 36 THE PEOPLE WHO GOVERN YOUR FUND The trustees of your mutual fund are there to see that the fund is operated and managed in your best interests since, as a shareholder, you are a part owner of the fund. Your fund trustees also serve on the board of directors of The Vanguard Group, Inc., which is owned by the Vanguard funds and provides services to them on an at-cost basis. A majority of Vanguard's board members are independent, meaning that they have no affiliation with Vanguard or the funds they oversee, apart from the sizable personal investments they have made as private individuals. Our independent board members bring distinguished backgrounds in business, academia, and public service to their task of working with Vanguard officers to establish the policies and oversee the activities of the funds. Among board members' responsibilities are selecting investment advisers for the funds; monitoring fund operations, performance, and costs; reviewing contracts; nominating and selecting new trustees/directors; and electing Vanguard officers. - -------------------------------------------------------------------------------- TRUSTEES (YEAR ELECTED) JOHN J. BRENNAN Chairman of the Board, Chief Executive Officer, and (1987) Director/Trustee of The Vanguard Group, Inc., and of each of the investment companies served by The Vanguard Group. CHARLES D. ELLIS The Partners of '63 (pro bono ventures in education); (2001) Senior Adviser to Greenwich Associates Successor Trustee of Yale University; Overseer of the Stern School of Business at New York (international business-strategy consulting) University; Trustee of the Whitehead Institute for Biomedical Research. RAJIV L. GUPTA Chairman and Chief Executive Officer of Rohm and Haas (2001) Co. (chemicals); Director of Technitrol, Inc. (electronic components), and Agere Systems (communications components); Board Member of the American Chemistry Council; and Trustee of Drexel University. JOANN HEFFERNAN HEISEN Vice President, Chief Information Officer, and Member (1998) of the Executive Committee of Johnson & Johnson (pharmaceuticals/consumer products); Director of the Medical Center at Princeton and Women's Research and Education Institute. BURTON G. MALKIEL Chemical Bank Chairman's Professor of Economics, (1977) Princeton University; Director of Vanguard Investment Series plc (Irish investment fund), Vanguard Group (Ireland) Limited (Irish investment management firm), Prudential Insurance Co.of America, BKF Capital (investment management firm), The Jeffrey Co. (holding company), and NeuVis, Inc. (software company). ALFRED M. RANKIN, JR. Chairman, President, Chief Executive Officer, and (1993) Director of NACCO Industries, Inc. (forklift trucks/ housewares/lignite); Director of Goodrich Corporation (industrial products/aircraft systems and services). J. LAWRENCE WILSON Retired Chairman and Chief Executive Officer of Rohm (1985) and Haas Co. (chemicals); Director of Cummins Inc. (diesel engines), The Mead Corp. (paper products), and AmerisourceBergen Corp. (pharmaceutical distribution); Trustee of Vanderbilt University. - -------------------------------------------------------------------------------- EXECUTIVE OFFICERS R. GREGORY BARTON Secretary; Managing Director and General Counsel of The Vanguard Group, Inc.; Secretary of The Vanguard Group and of each of the investment companies served by The Vanguard Group. THOMAS J. HIGGINS Treasurer; Principal of The Vanguard Group, Inc.; Treasurer of each of the investment companies served by The Vanguard Group. More information about the trustees is in the Statement of Additional Information, available from The Vanguard Group. VANGUARD SENIOR MANAGEMENT TEAM MORTIMER J. BUCKLEY, Information Technology. F. WILLIAM MCNABB, III, Institutional Investor Group. JAMES H. GATELY, Direct Investor Services. MICHAEL S. MILLER, Planning and Development. KATHLEEN C. GUBANICH, Human Resources. RALPH K. PACKARD, Finance. IAN A. MACKINNON, Fixed Income Group. GEORGE U. SAUTER, Quantitative Equity Group. - -------------------------------------------------------------------------------- JOHN C. BOGLE, Founder; Chairman and Chief Executive Officer, 1974-1996. [PICTURE OF A SHIP] THE VANGUARD(R) LOGO POST OFFICE BOX 2600 VALLEY FORGE, PA 19482-2600 Vanguard, The Vanguard Group, Vanguard.com, Admiral, and the ship logo are trademarks of The Vanguard Group, Inc. All other marks are the property of their respective owners. All comparative mutual fund data are from Lipper Inc. or Morningstar, Inc., unless otherwise noted. ABOUT OUR COVER Our cover photographs were taken by Michael Kahn in September 2000 aboard HMS Rose in New York's Long Island Sound. Mr. Kahn is a renowned photographer--and accomplished sailor--whose work often focuses on seascapes and nautical images. The photographs are copyrighted by Mr. Kahn. FOR MORE INFORMATION This report is intended for the funds' shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current fund prospectus. To receive a free copy of the prospectus or the Statement of Additional Information, or to request additional information about the funds or other Vanguard funds, please contact us at one of the adjacent telephone numbers or by e-mail through VANGUARD.COM(TM). Prospectuses may also be viewed online. WORLD WIDE WEB www.vanguard.com FUND INFORMATION 1-800-662-7447 DIRECT INVESTOR ACCOUNT SERVICES 1-800-662-2739 INSTITUTIONAL INVESTOR SERVICES 1-800-523-1036 TEXT TELEPHONE 1-800-952-3335 (C)2002 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor. Q772 072002 -----END PRIVACY-ENHANCED MESSAGE-----