<PAGE> 1
AIM MUNICIPAL
BOND FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT JUNE 30, 1998
<PAGE> 2
------------------------------------
AIM MUNICIPAL BOND FUND
For shareholders who seek
a high level of current income
exempt from federal income
taxes by investing in
a diversified portfolio
of municipal bonds.
------------------------------------
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Municipal Bond Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed at net asset value
without a sales charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the Fund's Class B and Class C shares will differ from
that of Class A shares due to differing fees and expenses.
o Because Class C shares have been offered for less than one year (since
8/4/97) all total return figures for Class C reflect cumulative total
returns that have not been annualized.
o The Fund's average annual total returns, including sales charges, for the
periods ended 6/30/98 are as follows: For Class A shares, one year, 1.67%;
five years, 4.29%; 10 years, 7.18%. For Class B shares, one year, 1.12%;
since inception (9/1/93), 3.87. For Class C shares, cumulative total return
since inception (8/4/97), 3.31%.
o The taxable-equivalent yield is calculated in the same manner as the 30-day
yield with an adjustment for a stated, assumed tax rate.
o The 30-day yield is calculated on the basis of a formula defined by the SEC.
The formula is based on the portfolio's potential earnings from dividends,
interest, yield-to-maturity or yield-to-call of the bonds in the portfolio,
net of all expenses and expressed on an annualized basis.
o The Fund's annualized distribution rate reflects the Fund's most recent
monthly dividend distribution multiplied by 12 and divided by the most
recent month-end net asset value.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
0 Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Government securities, such as U.S. Treasury bills, notes, and bonds, offer
a high degree of safety and are guaranteed as to the timely payment of
principal and interest if held to maturity. Fund shares are not insured and
their value and yield will vary with market conditions.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS
ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY;
ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK OR ANY AFFILIATE; AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current
shareholders or to persons who have received a
current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
When we last reported to you, for the fiscal year ended
[PHOTO OF December 31, 1997, equity markets worldwide were still
Charles T. shaken by the financial crisis in Asia. By June 30, 1998,
Bauer, the end of this six-month reporting period, most markets had
Chairman of recovered nicely, with domestic equities producing generous
the Board of returns and European markets outpacing the U.S. Only Asian
THE FUND markets remained in the doldrums. High-quality bonds have
APPEARS HERE] turned in a solid performance with generous real returns.
Good economic news has been arriving almost daily.
Inflation and joblessness in the U.S. have been at their
lowest levels in decades, consumer confidence at its
highest. The economic fundamentals in the U.S. appear sound,
and we at AIM remain cautiously optimistic that the current
economic expansion may continue for the foreseeable future
although market valuations are high compared to historical
standards.
By the close of this reporting period, markets had become less ebullient.
Equities had declined slightly from the heights reached earlier in the period.
Many participants in the U.S. equity markets voiced concern about prices that
continued rising despite slowing earnings growth, especially for larger
companies. The performance of European markets had exceeded everyone's
expectations. Asia's economic woes, especially the continuing recession in
Japan, which markets had shrugged off for a while, seemed more troublesome as
the reporting period closed.
In the face of such uncertainty, the best course for investors is to remain
realistic. We are now in the fourth year of unprecedented market advances. Even
accounting for the steep drop in equities in early August, after the close of
this reporting period, equities still have the potential to produce returns
above 30% again for the full year. We have never experienced this before, and it
may have fostered unrealistic expectations among investors, who would do well to
remember that the long-term average return for equities is closer to 10% per
year.
A well-diversified portfolio is still one of the most effective tools for
coping with market shifts because different asset classes and different national
markets tend to move independently of one another. Your financial consultant
remains your best source of information about how to allocate your investments
based on your goals and situation.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Shortly before the close of the reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds. During
the next few months you will be receiving more details about this transaction
and the products it adds to The AIM Family of Funds --Registered Trademark--.
This transaction gives you, our shareholders, access to a greater variety of
investment choices. A complete list of the funds now included in The AIM Family
of Funds --Registered Trademark-- appears on the back cover of this report. We
encourage you to discuss with your financial consultant how these funds may fit
into your portfolio.
The transaction also helps strengthen AIM's position as a major participant
in the money-management industry worldwide. Such strength will enable us to
continue enlarging both the scope of our fund offerings and our menu of services
for our shareholders. AIM continuously reviews its products and services with a
view to enhancing our ability to help shareholders meet their investment goals.
YOUR FUND MANAGERS COMMENT
On the pages that follow, the managers of your AIM Fund discuss how the Fund
performed during the six months covered by this report and give their near-term
market outlook. We hope you will find their discussion informative.
We are pleased to send you this report on your Fund. If you have any
questions or comments, please contact our Client Services department at
800-959-4246 or visit our Web site at www.aimfunds.com. You can access
information about your account on our Web site and also on our automated AIM
Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
- --Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
------------------------------------
A well-diversified portfolio
is still one of the most
effective tools for coping with
market shifts because
different asset classes and
different national markets tend
to move independently
of one another.
------------------------------------
<PAGE> 4
The Managers' Overview
MUNICIPAL BONDS PROVIDE SOLID INCOME AT RELATIVELY LOW PRICES
Aroundtable discussion with the Fund management team for AIM Municipal Bond
Fund for the six months ended June 30, 1998.
- --------------------------------------------------------------------------------
Q. PRICES OF HIGHER-QUALITY BONDS ROSE SIGNIFICANTLY TOWARD THE END OF THE
REPORTING PERIOD. HOW DID THE FUND PERFORM?
A. During the reporting period, municipal bonds represented one of the better
bargains in the fixed-income market. Largely because of a dramatic surge in
new issue supply, municipal bonds were favorably priced in comparison with
federally taxable U.S. Treasury securities. At the same time, municipal
bonds with longer maturities offered more than 90% of the yield of long-term
U.S. Treasury issues. In line with these trends, your Fund continued to
provide solid current income (see chart below), exempt from federal taxes,
while maintaining share-price stability.
For the six months ended June 30, total return was 2.30% for Class A
shares and 1.90% for Class B and Class C shares. During the reporting
period, net asset value per share remained within a relatively narrow range
of $8.24 to $8.43 for Class A, B, and C shares, continuing the Fund's
long-standing record of relative price stability as illustrated by the
accompanying chart.
Q. WHAT WERE SOME OF THE MAJOR THEMES IN THE BOND MARKET DURING THE REPORTING
PERIOD?
================================================================================
FUND PROVIDES ATTRACTIVE INCOME
As of 6/30/98
- --------------------------------------------------------------------------------
30-DAY TAXABLE 30-DAY TAXABLE
DISTRIBUTION EQUIVALENT SEC YIELD EQUIVALENT
RATE DISTRIBUTION AT MAXIMUM 30-DAY
AT NAV RATE* OFFERING PRICE SEC YIELD*
Class A 5.05% 8.36% 3.72% 6.16%
Class B 4.32 7.15 3.14 5.20
Class C 4.32 7.15 3.14 5.20
*Assumes highest marginal federal tax rate of 39.6%.
================================================================================
A. A late rally in the bond market tended to be rather narrow in scope, with
high-quality, long-term bonds, particularly U.S. Treasury issues, being the
primary beneficiaries. These bonds benefited from renewed concerns that the
economic problems in Asia would undermine corporate profits in the U.S. and
other developed countries. That caused financial markets to be volatile
toward the end of the reporting period. Investors, seeking relatively safe
havens for their money, shifted more of their assets into higher-rated
bonds, particularly U.S. Treasury issues. The late rally in the bond market
was reflected in the yield on the benchmark 30-year U.S. Treasury bond,
which fell from 5.95% on April 30, 1998, to 5.63% at the end of the
reporting period.
During the four months prior to the rally, bond prices had remained
essentially flat. At one point, investors had hoped that the Federal Reserve
Board (the Fed) would lower interest rates to offset negative pressure from
the Asian crisis. However, inflation remained contained, so the Fed left
interest rates un changed. The failure of the Fed to ease monetary policy
dampened some of the enthusiasm for bonds until renewed concerns about the
Asian situation reversed this trend.
Q. WHAT WERE THE MAJOR TRENDS IN THE MUNICIPAL BOND MARKET?
A. When the U.S. Treasury market rallied, municipal bonds also appreciated in
value, but not nearly as much as Treasury issues. Foreign investors, who
helped boost the price of Treasuries, generally did not buy municipal bonds
since they don't receive tax advantages from owning municipal securities.
A significant increase in new-issue supply also kept municipal-bond
prices from rising dramatically. During the six months ended June 30, more
than $146 billion in new municipal debt was issued, the third-largest total
for the first half of a calendar year, according to The Bond Buyer. Falling
interest rates prompted many state and local governments to refinance
existing debt or to issue bonds to finance new projects.
At the same time municipal-bond supply was increasing, the federal
government was cutting back on the issuance of Treasury securities. As a
result, municipal-bond prices were relatively low--and yields high--in
comparison to Treasury issues.
Q. HOW DID YOU MANAGE THE FUND?
================================================================================
CLASS A SHARES VS. 30-YEAR TREASURY
As of 6/30/98
- --------------------------------------------------------------------------------
Class A Taxable Equivalent
Distribution Rate* 8.36%
Class A Taxable Equivalent
SEC Yield* 6.16%
30-Year Treasury Bond Yield 5.63%
================================================================================
2 See important fund and index disclosures inside front cover.
<PAGE> 5
<TABLE>
<CAPTION>
=============================================================================================================
PORTFOLIO COMPOSITION
As of 6/30/98
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOP 5 BOND HOLDINGS
TOTAL NUMBER OF HOLDINGS: 262 ISSUER COUPON MATURITY % OF NET ASSETS
AVERAGE MATURITY: 13.82 YEARS 1. NEW YORK STATE URBAN
DURATION: 5.15 YEARS DEVELOPMENT CORP. 7.375% 01/01/02 2.29%
2. CONNECTICUT (STATE OF) 6.50% 03/15/02 1.56
3. MISSISSIPPI HIGHER
GENERAL OBLIGATION 15% EDUCATION ASSISTANCE CORP. 7.50% 09/01/09 1.41
REVENUE 85% 4. UNIVERSITY OF ILLINOIS
AUXILIARY FACILITIES SYSTEM 5.75% 04/01/22 1.26
5. ALASKA (STATE OF)
HOUSING FINANCE CORP. 6.75% 12/01/24 1.26
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
=============================================================================================================
</TABLE>
A. We emphasized revenue bonds, which are paid with income generated by various
projects such as hospitals, highways, and housing. The creditworthiness of
revenue bonds tends to be less sensitive to the political environment than
that of general obligation bonds, which are paid with tax dollars. Public
opposition to tax hikes is making it increasingly difficult for state and
local governments to raise taxes to support general obligation bond issues.
We particularly liked revenue bonds for essential services, such as
water and sewer service, gas and electric service, and solid waste disposal.
The demand for these services tends to remain constant regardless of
economic trends.
Q. ARE YOU MAINTAINING A HIGH-QUALITY PORTFOLIO?
A. Yes, as of June 30,1998, the Fund had an average portfolio quality rating of
AA/Aa as measured by Standard & Poor's (S&P) and Moody's Investors Service,
Inc., two widely known credit rating agencies. S&P and Moody's ratings are
historical and are based on analysis of the credit quality of the individual
municipal securities in the Fund's portfolio.
Approximately 58% of the portfolio's holdings were securities rated
AAA, and 92% of the portfolio was rated A or better. Credit-enhanced
securities-those backed by insurance or escrowed with U.S. Treasury
securities-composed about 55% of the portfolio.
Q. ISN'T THE FUND ALSO MANAGED FOR TAX EFFICIENCY?
A. Yes, we make every effort to avoid transactions that would result in capital
gains that are not offset by capital losses. For more than four years, the
Fund paid no taxable capital gains distributions or ordinary income
distributions.
Q. WHAT IS YOUR OUTLOOK FOR THE IMMEDIATE FUTURE?
A. The fundamentals for the bond market, including municipal issues, appear to
be sound. The inflation rate remains low. And rapid economic growth, a
potential source of inflation, has shown signs of slowing. The Fed has left
interest rates unchanged for more than a year. Should inflation remain
contained, the Fed will be less inclined to change monetary policy. Such an
environment would be favorable for bonds. However, in testimony before
Congress in July, Fed Chairman Alan Greenspan warned that a tight labor
market could accelerate inflation.
We are particularly optimistic about municipal bonds because of their
relatively attractive prices and yields in comparison to U.S. Treasury
issues. During the first half of 1998, 40% of the assets flowing into mutual
funds were directed toward bond funds, compared to 15% for the same period
in 1997. Of the new money flowing into bond funds, 20% was directed toward
tax-exempt funds. We believe tax-exempt funds could continue to gain in
popularity as more Americans become subject to the higher tax brackets.
================================================================================
HISTORY OF NET ASSET VALUE STABILITY
Class A Shares Net Asset Value
6/30/92-6/30/98
- --------------------------------------------------------------------------------
6/92 8.58 12/95 8.31
8.54 8.32
8.69 8.26
8.74 8.167
8.74 8.11
8.62 8.08
12/93 8.61 8.1
8.68 8.12
8.46 8.1
8.13 8.14
8.12 8.17
8.16 8.24
8.09 12/96 8.19
8.17 8.18
8.15 8.2
8.01 8.1
7.86 8.11
7.7 8.17
12/94 7.78 8.2
7.91 8.31
8.02 8.23
8.04 8.27
8.03 8.28
8.17 8.28
8.11 12/97 8.34
8.12 8.38
8.16 8.35
8.16 8.32
8.21 8.27
8.28 8.33
6/98 8.32
================================================================================
Source: Towers Data Systems HYPO--Registered Trademark--. This chart has no
calculations, it only shows observation and tracking of net asset value. There
is no guarantee that the Fund will maintain a constant NAV. Figures are
historical and reflect reinvestment of all distributions, changes in net asset
value, and exclude the effect of the Fund's maximum sales charge. Class B shares
commenced sales 9/1/93 and Class C shares commenced sales 8/4/97. NAV per share
for Class A, Class B, and Class C shares has not differed by more than $0.02 per
share.
3 See important fund disclosures inside front cover.
<PAGE> 6
SCHEDULE OF INVESTMENTS
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ALABAMA-1.38%
Alabama (State of) Housing
Finance Authority; Single
Family Mortgage Series D-2 RB
5.50%, 10/01/17(b) - Aaa $1,700 $ 1,722,593
- ---------------------------------------------------------------------
Courtland Industrial
Development Board (Champion
International Corp. Project);
Refunding PCR
6.40%, 11/01/26(b) - Baa1 2,315 2,499,899
- ---------------------------------------------------------------------
McIntosh Industrial Development
Board; Environmental
Improvement Series C IDR
5.375%, 06/01/28 AA- A2 1,000 1,001,250
- ---------------------------------------------------------------------
5,223,742
- ---------------------------------------------------------------------
ALASKA-1.60%
Alaska (State of) Housing
Finance Corp.; Collateralized
First Veterans' Home Mortgage
Series A-2 RB
6.75%, 12/01/24(b) AAA Aaa 4,590 4,872,974
- ---------------------------------------------------------------------
Alaska (State of) Housing
Finance Corp.; Collateralized
Mortgage Program First Series
RB
6.875%, 06/01/33 AAA Aaa 1,145 1,210,941
- ---------------------------------------------------------------------
6,083,915
- ---------------------------------------------------------------------
ARKANSAS-1.37%
Fayetteville (City of); Water
and Sewer Refunding and
Improvement Series 1992 RB
6.15%, 08/15/12 A A 2,000 2,087,380
- ---------------------------------------------------------------------
Independence (County of)
(Mississippi Power & Light
Project); Series C PCR
9.50%, 07/01/14 - Baa2 1,000 1,049,570
- ---------------------------------------------------------------------
Little Rock (City of); Sewer
Improvement Series B RB
5.75%, 02/01/06 AA+ Aa 2,000 2,046,540
- ---------------------------------------------------------------------
5,183,490
- ---------------------------------------------------------------------
ARIZONA-1.73%
Arizona (State of) Educational
Loan Marketing Corp.; RB
6.125%, 09/01/02(b) - Aa 1,900 2,011,929
- ---------------------------------------------------------------------
Mohave (County of) Unified
School District #1 (Lake
Havasu); Series 1996 A GO
5.90%, 07/01/15(c) AAA Aaa 1,000 1,079,090
- ---------------------------------------------------------------------
Pima (County of) Unified School
District #10 (Amphitheater);
School Improvement Series
1992 E GO
6.50%, 07/01/05 A+ A3 3,100 3,485,888
- ---------------------------------------------------------------------
6,576,907
- ---------------------------------------------------------------------
CALIFORNIA-1.49%
Foothill/Eastern Corridor
Agency (California Toll Road
Project); Senior Lien Series
A RB
6.00%, 01/01/16 BBB- Baa 400 433,536
- ---------------------------------------------------------------------
Irvine Ranch Water District
Joint Powers Agency; Issue II
Series RB
8.25%, 08/15/23 A+ - 500 502,210
- ---------------------------------------------------------------------
Los Angeles Unified School
District (Multiple Properties
Project); Refunding
Certificates of Participation
5.625%, 07/10/98(d)(e) AAA Aaa 3,000 3,000,690
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
CALIFORNIA-(CONTINUED)
Sacramento (City of) California
Cogeneration Authority
(Procter & Gamble Project);
Series 1995 RB
7.00%, 07/01/04 BBB- - $ 500 $ 562,165
- ---------------------------------------------------------------------
San Francisco (City and County
of) Parking Authority;
Parking Meter Series 1994 RB
7.00%, 06/01/13(c) AAA Aaa 1,000 1,166,130
- ---------------------------------------------------------------------
5,664,731
- ---------------------------------------------------------------------
COLORADO-0.86%
Adams County School District
Number 1; Unlimited Tax
Building Series 1992 A GO
6.625%, 12/01/02(d)(e) AAA Aaa 500 555,180
- ---------------------------------------------------------------------
Highlands Ranch Metro District
No. 1; Refunding &
Improvement Unlimited Tax
Series A GO
7.30%, 09/01/02(d)(e) NRR NRR 500 572,745
- ---------------------------------------------------------------------
Mesa County School District No.
51; 1989 Series B
Certificates of Participation
6.875%, 12/01/05(c) AAA Aaa 1,465 1,595,341
- ---------------------------------------------------------------------
Mountain Village Metro District
(San Miguel County);
Unlimited Tax Refunding
Series GO
7.95%, 12/01/02(d)(e) NRR NRR 50 57,982
- ---------------------------------------------------------------------
7.95%, 12/01/03(f) - - 450 502,389
- ---------------------------------------------------------------------
3,283,637
- ---------------------------------------------------------------------
CONNECTICUT-4.10%
Bridgeport (City of); Unlimited
Tax Series A GO
6.00%, 09/01/06(c) AAA Aaa 1,000 1,116,530
- ---------------------------------------------------------------------
Connecticut (State of); General
Purpose Public Improvement
Series 1992-A GO
6.50%, 03/15/02(d)(e) NRR NRR 5,500 6,038,230
- ---------------------------------------------------------------------
Connecticut (State of) Housing
Finance Authority; Housing
Mortgage Financing Program
Sub-Series C-2 RB
5.85%, 11/15/28(b) AA Aa3 3,500 3,614,100
- ---------------------------------------------------------------------
Connecticut Resource Recovery
Authority (American Ref-Fuel
Co.) (Southeastern
Connecticut Project); RB
7.875%, Series 1988 A
11/15/06(b) - A2 1,700 1,775,174
- ---------------------------------------------------------------------
8.00%, Series 1988 A
11/15/15(b) - A2 1,000 1,044,660
- ---------------------------------------------------------------------
8.10%, Corporate Credit
Series 1988 11/15/15(b) A- A2 925 966,357
- ---------------------------------------------------------------------
Waterbury Housing Authority;
Refunding Mortgage Series A
RB
5.45%, 07/01/23(c) AAA Aaa 1,000 1,001,580
- ---------------------------------------------------------------------
15,556,631
- ---------------------------------------------------------------------
DELAWARE-0.08%
Delaware Economic Development
Authority (Osteopathic
Hospital Association); Series
A RB
6.75%, 01/01/13(d) NRR Aaa 250 289,813
- ---------------------------------------------------------------------
FLORIDA-0.87%
Dade (County of) (Courthouse
Center Project); RB
5.90%, 04/01/10 - A3 500 535,170
- ---------------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
FLORIDA-(CONTINUED)
Escambia (County of) (Champion
International Corp. Project);
PCR
6.90%, 08/01/22(b) BBB Baa1 $1,125 $ 1,250,449
- ---------------------------------------------------------------------
Miami (City of) Parking System;
Series 1992 A RB
6.70%, 10/01/06 A A3 1,120 1,219,456
- ---------------------------------------------------------------------
Plantation (City of) Health
Facilities Authority
(Covenant Retirement
Communities Inc.); RB
7.75%, 12/01/02(d)(e) NRR NRR 250 290,363
- ---------------------------------------------------------------------
3,295,438
- ---------------------------------------------------------------------
GEORGIA-1.18%
Fulton (County of) Development
Authority; (Delta Airlines
Inc. Project); Special
Facilities RB
5.45%, 05/01/23(b) BBB- Baa3 2,500 2,472,950
- ---------------------------------------------------------------------
Georgia (State of) Housing and
Finance Authority (Home
Ownership Opportunity
Program); Series C RB
6.50%, 12/01/11 AA+ Aa2 860 924,552
- ---------------------------------------------------------------------
Savannah (City of) Economic
Development Authority
(Hershey Foods Corp.
Project); IDR
6.60%, 06/01/12 A+ - 1,000 1,096,440
- ---------------------------------------------------------------------
4,493,942
- ---------------------------------------------------------------------
ILLINOIS-11.30%
Berwyn (City of) (Macneal
Memorial Hospital
Association); Hospital Series
1991 RB
7.00%, 06/01/01(d)(e) AAA Aaa 3,250 3,572,465
- ---------------------------------------------------------------------
Chicago (City of); Sales Tax
Series RB
5.25%, 01/01/28(c) AAA Aaa 650 650,566
- ---------------------------------------------------------------------
Chicago (City of); Wastewater
Transmission; RB
5.25%, Second Lien Series B
01/01/17(c) AAA Aaa 2,500 2,523,600
- ---------------------------------------------------------------------
5.125%, Second Lien Series
01/01/18(c) AAA Aaa 1,000 993,290
- ---------------------------------------------------------------------
Chicago Emergency Telephone
System; Unlimited Tax Series
GO
5.60%, 01/01/10(c) AAA Aaa 400 432,776
- ---------------------------------------------------------------------
Chicago Midway Airport; Series
A RB
5.625%, 01/01/22(c) AAA Aaa 1,000 1,040,570
- ---------------------------------------------------------------------
Cook (County of); Series 1992 B
GO
5.75%, 11/15/02(d)(e) AAA Aaa 2,000 2,162,200
- ---------------------------------------------------------------------
Du Page (County of) High School
District No. 87 (Glenbard
TWP); Unlimited Tax Series B
GO
5.10%, 12/01/20 - Aa3 2,000 1,973,600
- ---------------------------------------------------------------------
Illinois (State of); Sales Tax
Series 1993 B RB
6.50%, 06/15/01(d)(e) AAA NRR 1,500 1,627,560
- ---------------------------------------------------------------------
Illinois (State of); Unlimited
Tax Series GO
5.25%, 07/01/22(c) AAA Aaa 4,475 4,497,196
- ---------------------------------------------------------------------
Illinois (State of) Development
Finance Authority (CPC
International Project); PCR
6.75%, 05/01/16 - A2 2,500 2,690,650
- ---------------------------------------------------------------------
Illinois Educational Facilities
Authority (Northwestern
University); Adjustable
Medium Term Series RB
5.25%, 11/01/14(e) AA+ Aa1 1,000 1,033,240
- ---------------------------------------------------------------------
Illinois Educational Facilities
Authority (Shedd Aquarium
Society); RB
5.60%, 07/01/27(c) AAA Aaa 3,500 3,627,855
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ILLINOIS-(CONTINUED)
Illinois Health Facilities
Authority (Evangelical
Hospital Corp.); RB
6.25%, Series A 04/15/22(d) NRR NRR $1,000 $ 1,134,520
- ---------------------------------------------------------------------
6.25%, Series 1992-C
04/15/22(d) NRR NRR 1,150 1,304,698
- ---------------------------------------------------------------------
Illinois Health Facilities
Authority (Franciscan Sisters
Health Care); Refunding
Series 1992 RB
6.40%, 09/01/04(d) AAA Aaa 2,475 2,760,269
- ---------------------------------------------------------------------
Illinois Health Facilities
Authority (Memorial
Hospital); RB
7.25%, 05/01/02(d)(e) NRR NRR 200 224,942
- ---------------------------------------------------------------------
Illinois Health Facilities
Authority (Ravenswood
Hospital Medical Center);
Refunding Series 1987 A RB
8.80%, 06/01/06 - Baa1 1,000 1,015,600
- ---------------------------------------------------------------------
Kane (County of) School
District No. 131 (Aurora East
Side); Limited GO
5.35%, 01/01/04(c) AAA Aaa 1,000 1,049,320
- ---------------------------------------------------------------------
Lake County Community
Consolidated School District
No. 73 (Hawthorn); Unlimited
Tax Series 1997 GO
5.45%, 01/01/12(c) - Aaa 1,950 2,068,775
- ---------------------------------------------------------------------
Peoria and Pekin and Waukegan
(Cities of); GNMA
Collateralized Mortgage
Series 1990 RB
7.875%, 08/01/22(b) AA+ - 110 116,052
- ---------------------------------------------------------------------
Tazewell County Community High
School District No. 303
(Pekin); Unlimited Tax Series
1996 GO
5.625%, 01/01/14(c) AAA Aaa 1,435 1,507,525
- ---------------------------------------------------------------------
University of Illinois
Auxiliary Facilities System;
Series 1991 RB
5.75%, 04/01/22 AA- Aa3 4,750 4,878,013
- ---------------------------------------------------------------------
42,885,282
- ---------------------------------------------------------------------
INDIANA-0.22%
Carmel Retirement Rental
Housing (Beverly Enterprises
Project); Refunding Series RB
8.75%, 12/01/08(f) - - 95 107,827
- ---------------------------------------------------------------------
Indiana (State of) Housing
Finance Authority; Series B-1
RB
6.15%, 07/01/17 - Aaa 175 186,295
- ---------------------------------------------------------------------
Indiana Transportation Finance
Authority (Airport Lease
Facility); Series A RB
6.25%, 11/01/02(d)(e) NRR Aaa 395 434,575
- ---------------------------------------------------------------------
6.25%, 11/01/16 A A-1 105 113,090
- ---------------------------------------------------------------------
841,787
- ---------------------------------------------------------------------
IOWA-0.29%
Iowa Finance Authority (Trinity
Regional Hospital Project);
Hospital Facilities Refunding
Series 1997 RB
6.00%, 07/01/12(c) AAA Aaa 1,000 1,114,710
- ---------------------------------------------------------------------
KANSAS-0.08%
Newton (City of) (Newton
Healthcare Corp.); Hospital
Series A RB
7.375%, 11/15/04(d)(e) NRR NRR 250 296,938
- ---------------------------------------------------------------------
KENTUCKY-1.13%
Kentucky Economic Development
Finance Authority
(Appalachian Regional
Healthcare); Refunding &
Improvement Hospital Systems
Series RB
5.875%, 10/01/22 BBB - 1,000 1,027,650
- ---------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
KENTUCKY-(CONTINUED)
Mount Sterling (City of); Lease
Funding Series 1993 A RB
6.15%, 03/01/13 - Aa $3,000 $ 3,251,640
- ---------------------------------------------------------------------
4,279,290
- ---------------------------------------------------------------------
LOUISIANA-3.39%
Louisiana Public Facilities
Authority (Medical Center at
New Orleans Project); RB
6.125%, 10/15/07(c) AAA - 2,775 2,950,574
- ---------------------------------------------------------------------
Louisiana Public Facilities
Authority (Our Lady of Lake
Regional Hospital); Hospital
Refunding Series C RB
6.00%, 12/01/07(c) AAA Aaa 2,500 2,659,125
- ---------------------------------------------------------------------
Louisiana Public Facilities
Authority (Tulane University
of Louisiana); RB
6.00%, 10/01/16(c) AAA Aaa 2,500 2,739,300
- ---------------------------------------------------------------------
New Orleans Levee District;
Series 1995 A RB
5.95%, 11/01/07(c) AAA Aaa 1,000 1,100,510
- ---------------------------------------------------------------------
Ouachita Parish Hospital
Service District No. 1
(Glenwood Regional Medical
Center); Refunding Series
1996 RB
5.70%, 05/15/16(c) AAA Aaa 1,000 1,059,220
- ---------------------------------------------------------------------
St. John Baptist Parish (Sales
Tax Distribution); Public
Improvement Series 1987 RB
7.60%, 01/01/08(d) NRR NRR 500 616,425
- ---------------------------------------------------------------------
7.60%, 01/01/09(d) NRR NRR 500 622,730
- ---------------------------------------------------------------------
West Feliciana Parish (Gulf
States Utility Co.); Series A
PCR
7.50%, 05/01/15 BB+ Ba1 1,000 1,117,760
- ---------------------------------------------------------------------
12,865,644
- ---------------------------------------------------------------------
MAINE-0.27%
Maine (State of) Education Loan
Authority; Education Loan
Series A-2 RB
6.95%, 12/01/07(b) - A 955 1,033,215
- ---------------------------------------------------------------------
MARYLAND-0.51%
Maryland Health and Higher
Education Facilities
Authority (Doctors Community
Hospital Inc.); Series 1990
RB
8.75%, 07/01/00(d)(e) AAA Aaa 1,000 1,110,340
- ---------------------------------------------------------------------
Maryland State Community
Development Administration
(Department of Economic and
Community Development);
Single Family Housing
Refunding Series 5 RB
7.70%, 04/01/15(b) - Aa2 790 830,258
- ---------------------------------------------------------------------
1,940,598
- ---------------------------------------------------------------------
MASSACHUSETTS-4.31%
Massachusetts (State of);
Consolidated Loan Series 1991
C GO
7.00%, 08/01/01(d)(e) NRR NRR 2,450 2,699,851
- ---------------------------------------------------------------------
Massachusetts Health and
Education Facilities
Authority (Lowell General
Hospital); Series 1991 A RB
8.40%, 06/01/01(d)(e) NRR NRR 3,550 4,031,877
- ---------------------------------------------------------------------
Massachusetts Health and
Education Facilities
Authority (Valley Regional
Health System Issue); Series
1990 B RB
8.00%, 07/01/00(d)(e) NRR Aaa 3,000 3,288,420
- ---------------------------------------------------------------------
Massachusetts Health and
Education Facilities
Authority (Winchester
Hospital); Series D RB
5.80%, 07/01/09(c) AAA - 1,000 1,071,950
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MASSACHUSETTS-(CONTINUED)
Massachusetts Housing Finance
Authority; Single Family
Series 13 RB
7.95%, 06/01/23(b) A+ Aa $1,635 $ 1,732,740
- ---------------------------------------------------------------------
Massachusetts Industrial
Finance Agency (Beverly
Enterprises); Refunding
Series RB
8.00%, 05/01/02(f) - - 200 209,924
- ---------------------------------------------------------------------
Massachusetts Municipal
Wholesale Electric
Cooperative Power Supply;
System Series 1992 A RB
6.75%, 07/01/08(c) AAA Aaa 3,000 3,299,790
- ---------------------------------------------------------------------
16,334,552
- ---------------------------------------------------------------------
MICHIGAN-3.78%
Detroit (City of) School
District; School Building and
Site Unlimited Tax Series
1992 GO
6.00%, 05/01/05 AA+ Aa2 1,000 1,065,930
- ---------------------------------------------------------------------
6.15%, 05/01/07 AA+ Aa2 1,300 1,387,256
- ---------------------------------------------------------------------
Garden City Hospital Finance
Authority (Garden City
Hospital); Hospital Refunding
Series RB
5.625%, 09/01/10 - Ba3 1,000 997,300
- ---------------------------------------------------------------------
Lake Orion Community School
District; School Building and
Site Unlimited Tax Refunding
Series 1994 GO
7.00%, 05/01/05(d)(e) AAA Aaa 2,500 2,929,975
- ---------------------------------------------------------------------
Lakeview Community School
District; Unlimited Tax
Series 1996 GO
5.75%, 05/01/16(c) AAA Aaa 1,000 1,059,460
- ---------------------------------------------------------------------
Lincoln Park (City of) School
District; Unlimited Tax
Series 1996 GO
6.00%, 05/01/06(d)(e) AAA Aaa 1,210 1,353,954
- ---------------------------------------------------------------------
Michigan (State of) Housing
Development Authority;
Refunding Series A RB
6.60%, 04/01/12 AA- - 1,000 1,082,510
- ---------------------------------------------------------------------
Ypsilanti (City of) School
District; Refunding Unlimited
Tax Series 1996 GO
5.75%, 05/01/15(c) AAA Aaa 2,100 2,229,507
- ---------------------------------------------------------------------
5.75%, 05/01/16(c) AAA Aaa 2,175 2,304,326
- ---------------------------------------------------------------------
14,410,218
- ---------------------------------------------------------------------
MINNESOTA-0.28%
Centennial Independent School
District No. 12; Unlimited
Tax Series A GO
5.60%, 02/01/05(c) AAA Aaa 1,000 1,077,230
- ---------------------------------------------------------------------
MISSISSIPPI-1.93%
Mississippi (State of)
Development Board (Panola
County Hospital); Special
Obligation Series RB
5.00%, 07/01/28 A - 2,000 1,898,860
- ---------------------------------------------------------------------
Mississippi Higher Education
Assistance Corp.; Student
Loan Sub-Series C RB
7.50%, 09/01/09(b) - A 5,000 5,425,950
- ---------------------------------------------------------------------
7,324,810
- ---------------------------------------------------------------------
MISSOURI-2.27%
Joplin Industrial Development
Authority (Catholic Health
Initiatives); Refunding
Series A RB
5.125%, 12/01/15 AA Aa2 1,350 1,349,150
- ---------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MISSOURI-(CONTINUED)
Kansas City Industrial
Development Authority
(General Motors Corp.
Project); PCR
6.05%, 04/01/06 A A3 $1,435 $ 1,470,602
- ---------------------------------------------------------------------
Kansas City Municipal
Assistance Corp. (Truman
Medical Center Charitable
Foundation); Leasehold
Improvement Series 1991 A RB
7.00%, 11/01/08 A A3 605 654,199
- ---------------------------------------------------------------------
Missouri (State of)
Environmental Improvement and
Energy Resources; Series 1995
C PCR
5.85%, 01/01/10 - Aa1 1,000 1,080,940
- ---------------------------------------------------------------------
Missouri (State of) Health and
Educational Facilities
Authority (Fontbonne
College); Educational
Facilities Series RB
5.125%, 10/01/17(c) A - 2,555 2,513,354
- ---------------------------------------------------------------------
5.20%, 10/01/20(c) A - 1,575 1,548,367
- ---------------------------------------------------------------------
8,616,612
- ---------------------------------------------------------------------
NEVADA-1.47%
Humboldt (County of) (Sierra
Pacific Project); Series 1987
PCR
6.55%, 10/01/13(c) AAA Aaa 3,000 3,254,040
- ---------------------------------------------------------------------
Las Vegas (City of); Refunding
1992 Limited Tax GO
6.50%, 04/01/02(d)(e) AAA Aaa 1,000 1,098,720
- ---------------------------------------------------------------------
Reno Redevelopment Agency;
Refunding Sub-Series A Tax
Allocation Notes
6.00%, 06/01/10 - Baa 1,185 1,244,049
- ---------------------------------------------------------------------
5,596,809
- ---------------------------------------------------------------------
NEW HAMPSHIRE-2.05%
Hudson (City of); Unlimited Tax
Series GO
5.25%, 03/15/28 - Aa3 1,610 1,637,547
- ---------------------------------------------------------------------
New Hampshire Higher
Educational & Health
Facilities Authority
(Dartmouth College);
Refunding Series RB
5.375%, 06/01/23 - Aaa 1,000 1,009,980
- ---------------------------------------------------------------------
New Hampshire Higher
Educational & Health
Facilities Authority (Saint
Anselm College); RB
5.00%, 07/10/18(c) AAA Aaa 1,000 978,960
- ---------------------------------------------------------------------
New Hampshire State Turnpike
System; Series 1990 RB
7.40%, 04/01/00(d)(e) AAA Aaa 3,850 4,144,371
- ---------------------------------------------------------------------
7,770,858
- ---------------------------------------------------------------------
NEW JERSEY-1.06%
Hudson County Correctional
Facility; Certificate of
Participation Series 1992 RB
6.60%, 12/01/21(c) AAA Aaa 1,250 1,354,475
- ---------------------------------------------------------------------
New Jersey Economic Development
Authority (Atlantic City
Sewer Co.); Sewer Facility
Series 1991 RB
7.25%, 12/01/11(b)(f) - - 1,795 1,953,678
- ---------------------------------------------------------------------
New Jersey City Economic
Development Authority
(Franciscan Oaks Project);
First Mortgage Series RB
5.70%, 10/01/17(f) - - 500 507,920
- ---------------------------------------------------------------------
New Jersey Health Care Facility
Financing Authority (St.
Peters Medical Center);
Series 1987 C RB
8.60%, 07/01/17(c) AAA Aaa 190 194,427
- ---------------------------------------------------------------------
4,010,500
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW MEXICO-1.59%
Albuquerque (City of)
(Albuquerque Academy
Project); Educational
Facilities Series 1995 RB
5.75%, 10/15/15 AA- Aa2 $ 915 $ 955,004
- ---------------------------------------------------------------------
Las Cruces South Central Solid
Waste Authority;
Environmental Services RB
5.65%, 06/01/09 - A 575 598,943
- ---------------------------------------------------------------------
Los Alamos (County of); Utility
Series A RB
6.00%, 07/01/15(c) AAA Aaa 2,000 2,172,220
- ---------------------------------------------------------------------
Santa Fe (City of); Series 1994
A RB
6.25%, 06/01/04(d)(e) AAA Aaa 2,100 2,322,894
- ---------------------------------------------------------------------
6,049,061
- ---------------------------------------------------------------------
NEW YORK-9.42%
New York (City of); GO
8.25%, Unlimited Tax Series
1991 F 11/15/01(d)(e) AAA Aaa 1,840 2,107,481
- ---------------------------------------------------------------------
7.00%, Unlimited Tax Series H
02/01/02(d) (e) NRR NRR 295 326,748
- ---------------------------------------------------------------------
7.20%, Unlimited Tax Series H
02/01/02(d) (e) NRR NRR 375 417,821
- ---------------------------------------------------------------------
7.65%, Unlimited Tax Series
1992 F 02/01/02(d)(e) NRR Aaa 4,295 4,856,657
- ---------------------------------------------------------------------
7.70%, Unlimited Tax Series D
02/01/02(d)(e) NRR Aaa 1,840 2,083,634
- ---------------------------------------------------------------------
7.00%, Unlimited Tax Series
C, Sub-Series C-1
08/01/02(d)(e) NRR Aaa 1,685 1,889,812
- ---------------------------------------------------------------------
7.375%, Unlimited Tax Series
B, Sub-Series B-1
08/15/04(d)(e) NRR Aaa 285 335,499
- ---------------------------------------------------------------------
7.375%, Unlimited Tax Series
B, Sub-Series B-1
08/15/04(d)(e) NRR NRR 215 248,321
- ---------------------------------------------------------------------
7.65%, Unlimited Tax Series
1992 F 02/01/06 BBB+ A3 480 535,968
- ---------------------------------------------------------------------
7.70%, Unlimited Tax Series D
02/01/09 BBB+ A3 160 178,749
- ---------------------------------------------------------------------
7.20%, Unlimited Tax Series H
02/01/15 BBB+ A3 125 137,695
- ---------------------------------------------------------------------
8.25%, Unlimited Tax Series
1991 F 11/15/15 BBB+ A3 160 181,472
- ---------------------------------------------------------------------
6.25%, Unlimited Tax Series A
08/01/17 BBB+ A3 3,035 3,314,797
- ---------------------------------------------------------------------
7.00%, Unlimited Tax Series
C, Sub-Series C-1 08/01/17 BBB+ A3 315 348,535
- ---------------------------------------------------------------------
7.00%, Unlimited Tax Series B
02/01/18(c) AAA Aaa 1,000 1,098,510
- ---------------------------------------------------------------------
7.00%, Unlimited Tax Series H
02/01/20 BBB+ A3 55 60,265
- ---------------------------------------------------------------------
New York City Industrial
Development Agency (Brooklyn
Navy Yard Cogen Partners); RB
5.65%, 10/01/28(b) BBB- Baa3 500 505,675
- ---------------------------------------------------------------------
New York City Industrial
Development Agency (The
Lighthouse Inc. Project);
Series 1992 RB
6.50%, 07/01/22(g) AA Aa2 1,500 1,602,780
- ---------------------------------------------------------------------
New York City Municipal Water
Finance Authority; Water &
Sewer Systems Series A RB
5.00%, 06/15/17 A- A2 1,350 1,317,668
- ---------------------------------------------------------------------
New York State Dorm Authority
(City University System);
Series C RB
6.00%, 07/01/00(d)(e) NRR NRR 135 140,235
- ---------------------------------------------------------------------
6.00%, 07/01/16 BBB+ Baa1 365 370,782
- ---------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW YORK-(CONTINUED)
New York State Dorm Authority
(State University Educational
Facilities); Refunding Series
A RB
6.50%, 05/15/06 A- A3 $1,000 $ 1,130,370
- ---------------------------------------------------------------------
New York State Environmental
Facility Corp.; Water Revenue
Series E PCR
6.875%, 06/15/01(d)(e) NRR NRR 2,300 2,522,640
- ---------------------------------------------------------------------
6.875%, 06/15/10 AA+ Aaa 1,100 1,203,587
- ---------------------------------------------------------------------
New York State Urban
Development Corp.; Capital
Facilities 1991 Series 3 RB
7.375%, 01/01/02(d)(e) NRR Aaa 7,850 8,821,673
- ---------------------------------------------------------------------
35,737,374
- ---------------------------------------------------------------------
NORTH CAROLINA-1.91%
North Carolina Eastern
Municipal Power Agency;
Series A RB
6.125%, 01/01/10(c) AAA Aaa 1,500 1,622,580
- ---------------------------------------------------------------------
North Carolina Housing Finance
Agency; Single Family-Series
II RB
6.20%, 03/01/16 AA Aa2 625 670,925
- ---------------------------------------------------------------------
North Carolina Medical Care
Community Hospital (Annie
Penn Memorial Hospital);
Refunding Series RB
5.375%, 01/01/22 - Baa3 250 248,513
- ---------------------------------------------------------------------
North Carolina Municipal Power
Agency (No.1 Catawba Electric
Project); Refunding RB
7.25%, 01/01/07 A- A3 2,750 3,231,855
- ---------------------------------------------------------------------
North Carolina Municipal Power
Agency (No. 1 Catawba
Electric Project); Series
1990 RB
6.50%, 01/01/10(d) AAA Aaa 260 296,083
- ---------------------------------------------------------------------
6.50%, 01/01/10(c) AAA Aaa 1,115 1,171,698
- ---------------------------------------------------------------------
7,241,654
- ---------------------------------------------------------------------
NORTH DAKOTA-0.27%
North Dakota Housing Finance
Agency; Home Mortgage Series
B RB
5.85%, 07/01/28(b) - Aa3 1,000 1,039,430
- ---------------------------------------------------------------------
OHIO-2.46%
Cleveland (City of) Parking
Facilities; Improvement
Series RB
8.00%, 09/15/02(d)(e) NRR NRR 500 582,365
- ---------------------------------------------------------------------
Fairfield (City of) School
District; Unlimited Tax
Series 1995 GO
6.10%, 12/01/15(c) AAA Aaa 1,000 1,078,200
- ---------------------------------------------------------------------
Findlay (City of); Limited Tax
Series 1996 GO
5.875%, 07/01/17 AA- Aa3 1,000 1,076,260
- ---------------------------------------------------------------------
Hamilton (County of); Electric
System Mortgage Series 1998
RB
8.00%, 10/15/98(d)(e) AAA Aaa 1,000 1,031,890
- ---------------------------------------------------------------------
Mason (City of) Health Care
Facilities (MCV Health Care
Facilities, Inc.); Series
1990 RB
7.625%, 02/01/40(c) AAA - 2,140 2,344,520
- ---------------------------------------------------------------------
Montgomery (County of)
(Grandview Hospital & Medical
Center); Refunding Hospital
Series RB
5.50%, 12/01/10 BBB - 1,000 1,023,770
- ---------------------------------------------------------------------
Ohio Department of
Transportation (Panhandle
Rail Line Project); Series
1992 Certificates of
Participation
6.50%, 04/15/12(c) AAA Aaa 1,100 1,197,306
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OHIO-(CONTINUED)
Washington (County of)
(Marietta Memorial Hospital);
Series B RB
7.00%, 09/01/12(c) AAA Aaa $1,000 $ 1,003,830
- ---------------------------------------------------------------------
9,338,141
- ---------------------------------------------------------------------
OKLAHOMA-1.96%
McAlester (City of) Public
Works Authority; Refunding
and Improvement Series 1995
RB 5.50%, 12/01/10(c) AAA Aaa 975 1,077,170
- ---------------------------------------------------------------------
Sapula (City of) Municipal
Authority; Capital
Improvement Series RB
5.00%, 07/01/21(c) AAA Aaa 1,000 960,380
- ---------------------------------------------------------------------
Southern Oklahoma Memorial
Hospital Authority; Series
1993 A RB
5.60%, 02/01/00(d) NRR NRR 1,250 1,281,613
- ---------------------------------------------------------------------
Tulsa (City of) Industrial
Authority (St. Johns
Hospital); RB
6.25%, 02/15/14 AA Aa3 2,000 2,158,300
- ---------------------------------------------------------------------
Tulsa (City of) Industrial
Authority (Tulsa Regional
Medical Center); Hospital
Series RB
7.20%, 06/01/03(d)(e) AAA NRR 500 575,170
- ---------------------------------------------------------------------
Tulsa Public Facilities
Authority - Capital
Improvements - Water System;
Series 1988 B RB
6.00%, 03/01/08 A+ - 1,305 1,395,528
- ---------------------------------------------------------------------
7,448,161
- ---------------------------------------------------------------------
OREGON-0.93%
Marion (County of) (Ogden
Martin Systems); Refunding
Solid Waste & Electric Series
RB
5.50%, 10/01/06(c) AAA Aaa 1,000 1,078,100
- ---------------------------------------------------------------------
Portland (City of) Sewer
System; Series 1994 A RB
6.20%, 06/01/04(d)(e) NRR NRR 1,200 1,333,644
- ---------------------------------------------------------------------
6.25%, 06/01/04(d)(e) NRR NRR 1,000 1,113,960
- ---------------------------------------------------------------------
3,525,704
- ---------------------------------------------------------------------
PENNSYLVANIA-2.95%
Allegheny (County of)
Industrial Development
Authority (USX Corp.);
Environmental Improvement
Series IDR
5.60%, 09/01/30 BBB- Baa2 1,000 1,010,150
- ---------------------------------------------------------------------
Chester (County of) Health and
Educational Facilities
Authority (Jefferson Health
Systems); Series B RB
5.375%, 05/15/27 AA- A1 4,000 4,011,880
- ---------------------------------------------------------------------
Chester Upland School
Authority; Refunding School
Series B RB
5.25%, 09/01/21(c) AAA Aaa 1,000 1,006,420
- ---------------------------------------------------------------------
Montgomery County Industrial
Development Authority
(Meadowood Corp. Project);
Refunding First Mortgage
Series A RB
10.25%, 12/01/00(d)(e) NRR NRR 100 115,743
- ---------------------------------------------------------------------
Montgomery County Industrial
Development Authority
(Pennsburg Nursing &
Rehabilitation Center); RB
7.625%, 03/31/04(d)(e) NRR NRR 100 118,908
- ---------------------------------------------------------------------
Pennsylvania (State of); Third
Series GO
6.75%, 11/15/13(c) AAA Aaa 1,250 1,418,050
- ---------------------------------------------------------------------
Pennsylvania Economic
Development Finance Authority
(Colver Project); Resource
Recovery Series 1994 D RB
7.05%, 12/01/10(b) BBB- - 2,900 3,230,542
- ---------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
PENNSYLVANIA-(CONTINUED)
Scranton-Lackawanna Health &
Welfare Authority (Moses
Taylor Hospital Project);
Series B RB
8.50%, 07/01/01(d)(e) AAA NRR $ 250 $ 285,428
- ---------------------------------------------------------------------
11,197,121
- ---------------------------------------------------------------------
PUERTO RICO-1.45%
Puerto Rico (Commonwealth of)
Electric Power Authority; RB
7.00%, Series 1991 P
07/01/01(d)(e) NRR Aaa 1,325 1,463,330
- ---------------------------------------------------------------------
6.00%, Series 1989 07/01/10 BBB+ Baa1 4,000 4,042,560
- ---------------------------------------------------------------------
5,505,890
- ---------------------------------------------------------------------
RHODE ISLAND-0.65%
Rhode Island Depositors
Economic Protection Corp.;
Special Obligation Series
1992 A RB
6.95%, 08/01/02(d)(e) AAA Aaa 1,250 1,402,413
- ---------------------------------------------------------------------
Rhode Island Housing and
Mortgage Finance Agency;
Homeownership Opportunity
Series 15 B RB
6.00%, 10/01/04 AA+ Aa2 1,000 1,077,870
- ---------------------------------------------------------------------
2,480,283
- ---------------------------------------------------------------------
SOUTH CAROLINA-0.58%
Piedmont Municipal Power
Agency; Refunding Electric
Series A RB
5.75%, 01/01/24 BBB Baa1 1,150 1,151,219
- ---------------------------------------------------------------------
South Carolina State Education
Assistance Authority;
Guaranteed Student Loan
Series 1990 RB
6.60%, 09/01/01(b) AA - 500 523,325
- ---------------------------------------------------------------------
South Carolina State Housing
Finance and Development
Authority; Homeownership
Mortgage Series 1990 C RB
7.50%, 07/01/05(b) AA Aa2 500 525,900
- ---------------------------------------------------------------------
2,200,444
- ---------------------------------------------------------------------
SOUTH DAKOTA-0.57%
South Dakota Health &
Educational Facilities
Authority (Huron Regional
Medical Center); RB
7.25%, 04/01/20 BBB - 100 110,483
- ---------------------------------------------------------------------
South Dakota Housing
Development Authority;
Homeownership Mortgage Series
F RB
5.80%, 05/01/28(b) AAA Aa1 2,000 2,069,700
- ---------------------------------------------------------------------
2,180,183
- ---------------------------------------------------------------------
TENNESSEE-1.11%
Franklin Industrial Development
Board (Landings Apartment
Project); Multifamily Housing
Series A RB
5.75%, 04/01/10(c) AAA Aaa 1,115 1,176,682
- ---------------------------------------------------------------------
Shelby (County of); Unlimited
Tax School Series B GO
6.00%, 03/01/02(d)(e) NRR NRR 1,000 1,071,700
- ---------------------------------------------------------------------
Shelby County Health,
Educational & Housing
Facilities Board (Kirby
Pines); Health Care
Facilities Series A RB
6.25%, 11/15/16(f) - - 1,000 1,024,450
- ---------------------------------------------------------------------
Tennessee Housing Development
Agency; Homeownership
Progressive Series Q RB
6.80%, 07/01/17 AA Aa2 895 951,868
- ---------------------------------------------------------------------
4,224,700
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS-14.86%
Arlington Independent School
District; Refunding Series
1995 GO
5.75%, 02/15/21(c) - Aaa $1,000 $ 1,038,850
- ---------------------------------------------------------------------
Austin (City of); Utility
System RB
6.50%, 05/15/01(d)(e) AAA Aaa 1,380 1,494,913
- ---------------------------------------------------------------------
Austin Community College
District; Combined Fee
Revenue Building and
Refunding Series 1995 RB
6.10%, 02/01/05(d)(e) AAA Aaa 1,115 1,228,763
- ---------------------------------------------------------------------
Bellville Independent School
District; Unlimited Tax
School Building and Refunding
Series 1995 A GO
6.125%, 02/01/20(c) - Aaa 830 894,159
- ---------------------------------------------------------------------
Brazos (County of) Health
Facilities Development Corp.
(Franciscan Services Corp.);
Series A RB
5.375%, 01/01/22(c) AAA Aaa 2,000 2,022,300
- ---------------------------------------------------------------------
Brazos Higher Education Loan
Authority Inc.; Student Loan
Refunding RB
6.30%, Refunding Series 1992
C-1, 11/01/01(b) - Aa 325 341,598
- ---------------------------------------------------------------------
6.45%, Series 1992 C-1,
11/01/02(b) - Aa 1,135 1,208,537
- ---------------------------------------------------------------------
6.50%, Series 1994 B-1,
06/01/04(b) - A 260 279,432
- ---------------------------------------------------------------------
Carrollton (City of); GO
5.75%, 08/15/16 AA- Aa2 1,000 1,048,750
- ---------------------------------------------------------------------
Comal County Industrial
Development Authority (The
Coleman Company, Inc.
Project); Industrial
Development Series 1980 RB
9.25%, 08/01/00(d) NRR NRR 840 891,652
- ---------------------------------------------------------------------
Dallas (City of); Waterworks
and Sewer System Refunding
and Improvement Series RB
5.35%, 04/01/14 AA Aa 3,055 3,154,990
- ---------------------------------------------------------------------
Dallas (City of); Waterworks
and Sewer System Series A RB
6.00%, 10/01/14 AA Aa2 2,030 2,125,654
- ---------------------------------------------------------------------
Dallas-Fort Worth Regional
Airport Authority; Airport
Series 1985 RB
6.10%, 11/01/07 A+ A1 200 200,528
- ---------------------------------------------------------------------
6.10%, 11/01/07(c) AAA Aaa 430 430,796
- ---------------------------------------------------------------------
De Soto (City of) Independent
School District; Refunding
Unlimited Tax Series GO
5.125%, 08/15/17(c) AAA - 2,155 2,129,011
- ---------------------------------------------------------------------
Edgewood (City of) Independent
School District; Unlimited
Tax School Series GO
5.40%, 02/15/23(c) - Aaa 800 805,912
- ---------------------------------------------------------------------
Georgetown (City of); Utility
System Series 1995 A RB
6.20%, 08/15/05(d)(e) AAA Aaa 1,500 1,668,030
- ---------------------------------------------------------------------
Harris County; Toll Road
Unlimited Tax General
Obligation and Subordinate
Lien Refunding Series 1991 RB
6.75%, 08/01/14 AA Aa2 3,850 4,196,422
- ---------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (Saint
Luke's Episcopal Hospital
Project); Series 1991 RB
6.70%, 02/15/03(d) AAA NRR 1,000 1,103,700
- ---------------------------------------------------------------------
Harris County Mental Health and
Mental Retardation Authority;
Refunding Series 1992 RB
6.25%, 09/15/10(c) AAA Aaa 4,500 4,811,580
- ---------------------------------------------------------------------
Houston (City of); Refunding
Series 1992 C GO
6.25%, 03/01/02(d)(e) NRR NRR 1,470 1,572,502
- ---------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
Hurst, Euless, Bedford, Texas
Independent School District;
Refunding RB
6.50%, 08/15/04(d)(e) AAA Aaa $ 640 $ 716,716
- ---------------------------------------------------------------------
6.50%, 08/15/24(c) AAA Aaa 360 394,638
- ---------------------------------------------------------------------
Keller (City of) Independent
School District; Certificates
of Participation Series 1994
RB
6.00%, 08/15/05(c) AAA Aaa 1,000 1,098,619
- ---------------------------------------------------------------------
Lockhart (City of);
Certificates of Participation
Tax and Utility Systems
Series 1996 GO
5.85%, 08/01/11(c) AAA Aaa 605 647,894
- ---------------------------------------------------------------------
5.90%, 08/01/16(c) AAA Aaa 1,100 1,172,544
- ---------------------------------------------------------------------
North Texas Higher Education
Authority Inc.; Student Loan
Refunding Series D RB
6.10%, 04/01/08(b) - Aa 1,000 1,037,839
- ---------------------------------------------------------------------
6.30%, 04/01/09(b) - A 500 521,639
- ---------------------------------------------------------------------
Plano (City of) Independent
School District; Unlimited
Tax Series 1991 B GO
5.625%, 02/15/01(d)(e) AAA Aaa 2,500 2,596,400
- ---------------------------------------------------------------------
Tarrant (County of) Texas Water
Control and Improvement
District No. 1; Refunding
Series 1993 RB
5.20%, 03/01/10(c) AAA Aaa 2,000 2,052,139
- ---------------------------------------------------------------------
Texas (State of) Public
Property Finance Corp.
(Mental Health Mental
Retardation); Series 1996 RB
6.20%, 09/01/16 BBB+ - 1,590 1,685,304
- ---------------------------------------------------------------------
Texas (State of); Unlimited Tax
Veteran's Land GO
6.40%, 12/01/24(b) AA Aa2 2,000 2,115,779
- ---------------------------------------------------------------------
Texas (State of) Department of
Housing and Community Affairs
(Asmara Project); Multifamily
Housing Series 1996 A RB
6.30%, 01/01/16 A - 310 336,718
- ---------------------------------------------------------------------
Texas (State of) Housing
Agency; Residential
Development Mortgage Series
1987 D RB
8.40%, 07/01/20(b) A+ Aa 2,895 3,035,349
- ---------------------------------------------------------------------
Texas National Research
Laboratory Community
Financing Corp.
(Superconducting Super
Collider); Lease RB
7.10%, 12/01/01(d)(e) AAA Aaa 600 668,063
- ---------------------------------------------------------------------
Travis (County of) Health
Facility (Charity Obligation
Group); Hospital Series A RB
5.125%, 11/01/24 AA+ Aa2 2,500 2,455,500
- ---------------------------------------------------------------------
Tyler Health Facilities
Development Corp. (Mother
Frances Hospital); Hospital
Series A RB
5.625%, 07/01/13 - Baa2 1,000 1,005,109
- ---------------------------------------------------------------------
Victoria (County of) (Texas
Hospital Citizens Medical
Center); RB
6.20%, 01/01/10(c) AAA Aaa 1,000 1,093,900
- ---------------------------------------------------------------------
Weatherford (City of)
Independent School District;
Refunding Series 1994 GO
6.40%, 02/15/05(d)(e) NRR Aaa 900 1,007,666
- ---------------------------------------------------------------------
6.40%, 02/15/12(c) - Aaa 100 109,673
- ---------------------------------------------------------------------
56,399,568
- ---------------------------------------------------------------------
UTAH-2.06%
Intermountain Power Agency
(Utah Power Supply); RB
5.00%, Series 1986 B,
07/01/16 A+ A1 1,550 1,501,717
- ---------------------------------------------------------------------
5.00%, Series 1986 C,
07/01/18 A+ A1 950 912,855
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
UTAH-(CONTINUED)
Salt Lake (County of)
(Westminster College
Project); RB
5.75%, 10/01/27 BBB - $1,000 $ 1,019,270
- ---------------------------------------------------------------------
Utah (State of) Housing Finance
Agency; Federally Insured
Term Subordinated Single
Family Mortgage RB
6.30%, Sub-Series 1994 E-1
07/01/06 A+ - 550 596,976
- ---------------------------------------------------------------------
7.15%, Sub-Series 1994 G-1
07/01/06 A+ A1 430 476,634
- ---------------------------------------------------------------------
Utah (State of) Housing Finance
Agency; Single Family
Mortgage RB
6.05%, Series 1994 C,
07/01/06 - A1 720 769,759
- ---------------------------------------------------------------------
6.45%, Series G2 RB,
07/01/27(b) AAA Aaa 1,185 1,273,674
- ---------------------------------------------------------------------
Utah (State of) Water Finance
Agency; Series A RB
5.30%, 10/01/23(c) AAA Aaa 1,250 1,257,738
- ---------------------------------------------------------------------
7,808,623
- ---------------------------------------------------------------------
VIRGIN ISLANDS-1.04%
Virgin Islands Public Finance
Authority; Matching Fund Loan
Notes Series A RB
7.25%, 10/01/02(d)(e) NRR NRR 1,000 1,139,590
- ---------------------------------------------------------------------
Virgin Islands Territory (Hugo
Insurance Claims Fund);
Special Tax Bond Series 1991
GO
7.75%, 10/01/01(d)(e) NRR NRR 2,565 2,817,550
- ---------------------------------------------------------------------
3,957,140
- ---------------------------------------------------------------------
VIRGINIA-1.56%
Covington-Alleghany (County of)
Industrial Development
Authority (Beverly
Enterprises); Refunding
Series RB
9.375%, 09/01/01(f) - - 55 58,860
- ---------------------------------------------------------------------
Lynchburg (City of) Industrial
Development Authority (Centra
Health Inc.); Refunding
Healthcare Facilities Series
RB
5.20%, 01/01/18 A+ A1 2,500 2,493,900
- ---------------------------------------------------------------------
Richmond (City of); Public
Improvement Refunding Series
B GO
6.25%, 01/15/18 AA A1 2,000 2,122,820
- ---------------------------------------------------------------------
Richmond (City of) Public
Utility; Refunding Series A
RB
5.125%, 01/15/28 A+ A1 1,000 982,800
- ---------------------------------------------------------------------
Virginia Housing Development
Authority; Commonwealth
Mortgage Series A RB
7.10%, 01/01/17 AA+ Aa1 250 264,040
- ---------------------------------------------------------------------
5,922,420
- ---------------------------------------------------------------------
WASHINGTON-2.46%
Clark (County of) Gamas School
District No. 117; GO
6.00%, 12/01/05(d)(e) AAA Aaa 1,000 1,103,420
- ---------------------------------------------------------------------
King (County of); Unlimited Tax
GO
5.50%, 07/01/07(d) AAA Aaa 500 533,950
- ---------------------------------------------------------------------
King (County of); Unlimited Tax
Refunding GO
6.50%, 12/01/11 AA+ Aa1 500 501,375
- ---------------------------------------------------------------------
Pend Oreille (County of) Public
Utility District No. 1;
Electric Series B RB
6.30%, 01/01/17 BBB+ A 1,400 1,508,710
- ---------------------------------------------------------------------
Seattle (City of) Metropolitan
Municipality Sewer District;
Series T RB
6.80%, 01/01/00(d)(e) NRR NRR 1,780 1,885,554
- ---------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WASHINGTON-(CONTINUED)
Washington State Public Power
Supply System (Nuclear
Project No. 1); Refunding
Series A RB
6.00%, 07/01/07(c) AAA Aaa $1,000 $ 1,103,630
- ---------------------------------------------------------------------
5.75%, 07/01/12(c) AAA Aaa 2,000 2,132,960
- ---------------------------------------------------------------------
West Richland (City of); Water
& Sewer Series RB
7.00%, 12/01/04(d)(e) AAA Aaa 500 576,340
- ---------------------------------------------------------------------
9,345,939
- ---------------------------------------------------------------------
WEST VIRGINIA-0.13%
Ohio County Board of Education;
Unlimited Tax Refunding
Series GO
5.125%, 06/01/18 A+ A 500 500,635
- ---------------------------------------------------------------------
WISCONSIN-1.58%
Wisconsin Housing and Economic
Development Authority; Home
Ownership RB
7.40%, Series 1994 F
07/01/13(b) AA Aa2 1,000 1,091,040
- ---------------------------------------------------------------------
7.35%, Series 1994 E 01/01/17 AA Aa2 500 542,950
- ---------------------------------------------------------------------
8.00%, Series 1990 E
03/01/21(b) AA Aa 300 314,563
- ---------------------------------------------------------------------
Wisconsin Health and
Educational Facilities
Authority (Childrens Hospital
of Wisconsin Inc.); RB
5.125%, 02/15/21(c) AAA Aaa 2,000 1,967,020
- ---------------------------------------------------------------------
Wisconsin Health and
Educational Facilities
Authority (Sinai Samaritan
Medical Center); Series 1994
F RB
5.75%, 08/15/16(c) AAA Aaa 1,500 1,584,660
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WISCONSIN-(CONTINUED)
Wisconsin Health and
Educational Facilities
Authority (Wheaton Franciscan
Services Inc.); RB
8.20%, 08/15/98(d)(e) NRR Aaa $ 500 $ 512,406
- ---------------------------------------------------------------------
6,012,639
- ---------------------------------------------------------------------
WYOMING-0.92%
Campbell (County of) School
District No. 1 (Gillette);
Unlimited Tax Series GO
5.35%, 06/01/04 AAA Aaa 1,000 1,059,520
- ---------------------------------------------------------------------
Laramie (County of) (Memorial
Hospital Project); Hospital
Series RB
6.70%, 05/01/12(c) AAA Aaa 250 275,788
- ---------------------------------------------------------------------
Natrona (County of) Wyoming
Medical Center; RB
6.00%, 09/15/11(c) AAA Aaa 1,000 1,086,640
- ---------------------------------------------------------------------
Sweetwater (County of) (Idaho
Power Company Project);
Series 1996 A PCR
6.05%, 07/15/26 A A3 1,000 1,073,010
- ---------------------------------------------------------------------
3,494,958
- ---------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.46% (cost $351,674,421) 377,661,367
- ---------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 0.54% 2,067,611
- ---------------------------------------------------------------------
NET ASSETS -- 100.00% $379,728,978
=====================================================================
</TABLE>
Investment Abbreviations:
GO - General Obligation Bonds
IDR - Industrial Development Revenue Bonds
NRR - Not Re-Rated
PCR - Pollution Control Revenue Bonds
RB - Revenue Bonds
Notes to Schedule of Investments:
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P"). NRR indicates a security that is not re-rated
subsequent to funding of an escrow fund (consisting of U.S. Treasury
obligations); this funding is pursuant to an advance refunding of the
security.
(b) Security subject to the alternative minimum tax.
(c) Secured by bond insurance.
(d) Secured by an escrow fund of U.S. Treasury obligations.
(e) Security has an irrevocable call or mandatory put by the issuer. Maturity
date reflects such call or put.
(f) Unrated security; determined by the investment advisor to be of comparable
quality to the rated securities in which the Fund may invest pursuant to
guidelines of quality adopted by the Board of Trustees and followed by the
investment advisor.
(g) Secured by a letter of credit.
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$351,674,421) $377,661,367
- ----------------------------------------------------------
Receivables for:
Fund shares sold 536,702
- ----------------------------------------------------------
Interest 6,742,035
- ----------------------------------------------------------
Investments sold 3,704,257
- ----------------------------------------------------------
Investment for deferred compensation plan 60,465
- ----------------------------------------------------------
Other assets 37,709
- ----------------------------------------------------------
Total assets 388,742,535
- ----------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 424,301
- ----------------------------------------------------------
Investments purchased 4,512,917
- ----------------------------------------------------------
Dividends 746,917
- ----------------------------------------------------------
Amount due custodian 2,745,327
- ----------------------------------------------------------
Deferred compensation plan 60,465
- ----------------------------------------------------------
Accrued advisory fees 141,401
- ----------------------------------------------------------
Accrued administrative services fees 5,807
- ----------------------------------------------------------
Accrued distribution fees 265,255
- ----------------------------------------------------------
Accrued trustees' fees 2,200
- ----------------------------------------------------------
Accrued transfer agent fees 26,390
- ----------------------------------------------------------
Accrued operating expenses 82,577
- ----------------------------------------------------------
Total liabilities 9,013,557
- ----------------------------------------------------------
Net assets applicable to shares outstanding $379,728,978
==========================================================
NET ASSETS:
Class A $320,761,101
==========================================================
Class B $ 54,004,105
==========================================================
Class C $ 4,963,772
==========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 38,535,844
==========================================================
Class B 6,476,891
==========================================================
Class C 596,142
==========================================================
Class A:
Net asset value and redemption price per
share $ 8.32
- ----------------------------------------------------------
Offering price per share:
(Net asset value of $8.32 divided by $ 8.73
95.25%)
==========================================================
Class B:
Net asset value and offering price per
share $ 8.34
==========================================================
Class C:
Net asset value and offering price per
share $ 8.33
==========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $10,900,021
- ----------------------------------------------------------
EXPENSES:
Advisory fees 750,570
- ----------------------------------------------------------
Administrative services fees 34,842
- ----------------------------------------------------------
Custodian fees 9,559
- ----------------------------------------------------------
Transfer agent fees - Class A 88,929
- ----------------------------------------------------------
Transfer agent fees - Class B 14,548
- ----------------------------------------------------------
Transfer agent fees - Class C 821
- ----------------------------------------------------------
Trustees' fees 4,284
- ----------------------------------------------------------
Distribution fees - Class A 395,665
- ----------------------------------------------------------
Distribution fees - Class B 252,597
- ----------------------------------------------------------
Distribution fees - Class C 14,224
- ----------------------------------------------------------
Other 161,477
- ----------------------------------------------------------
Total expenses 1,727,516
- ----------------------------------------------------------
Less: Expenses paid indirectly (2,247)
- ----------------------------------------------------------
Net expenses 1,725,269
- ----------------------------------------------------------
Net investment income 9,174,752
- ----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain from investment securities 405,522
- ----------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities (1,345,637)
- ----------------------------------------------------------
Net gain (loss) on investment securities (940,115)
- ----------------------------------------------------------
Net increase in net assets resulting from
operations $ 8,234,637
==========================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 15
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,174,752 $ 16,818,463
- ------------------------------------------------------------------------------------------
Net realized gain from investment securities 405,522 114,781
- ------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (1,345,637) 9,751,922
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 8,234,637 26,685,166
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (8,035,202) (15,139,605)
- ------------------------------------------------------------------------------------------
Class B (1,080,204) (1,703,002)
- ------------------------------------------------------------------------------------------
Class C (60,848) (5,880)
- ------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A -- (152,238)
- ------------------------------------------------------------------------------------------
Class B -- (20,640)
- ------------------------------------------------------------------------------------------
Class C -- (62)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A 3,102,880 30,852,332
- ------------------------------------------------------------------------------------------
Class B 6,936,451 12,563,423
- ------------------------------------------------------------------------------------------
Class C 4,152,457 817,511
- ------------------------------------------------------------------------------------------
Net increase in net assets 13,250,171 53,897,005
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 366,478,807 312,581,802
- ------------------------------------------------------------------------------------------
End of period $379,728,978 $366,478,807
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $354,888,605 $340,696,817
- ------------------------------------------------------------------------------------------
Undistributed net investment income (72,850) (71,348)
- ------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (1,073,722) (1,479,244)
- ------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 25,986,945 27,332,582
- ------------------------------------------------------------------------------------------
$379,728,978 $366,478,807
==========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Municipal Bond Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate series
portfolios, each having an unlimited number of shares of beneficial interest.
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class are voted on exclusively
by the shareholders of such portfolio or class. The assets, liabilities and
operations of each portfolio are accounted for separately. Information presented
in these financial statements pertains only to the Fund. The Fund's objective is
to achieve a high level of current income exempt from federal income taxes
consistent with the preservation of principal by investing in a diversified
portfolio of municipal bonds.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations -- Portfolio securities are valued based on market
quotations or at fair value determined by a pricing service approved by the
Board of Trustees, provided that securities with a demand feature exercisable
within one to seven days will be valued at par. Prices provided by the
pricing service may be determined without exclusive reliance on quoted prices
and may reflect appropriate factors such as institution-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, individual trading characteristics and other market data. Portfolio
securities for which prices are not provided by the pricing service are
valued at the mean between the last available bid and asked prices, unless
the Board of Trustees, or persons designated by the Board of Trustees,
determines that the mean between the last available bid and asked prices does
not accurately
13
<PAGE> 16
reflect the current market value of the security. Securities for which market
quotations either are not readily available or are questionable are valued at
fair value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of
Trustees. Notwithstanding the above, short-term obligations with maturities
of 60 days or less are valued at amortized cost.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. It is the policy of the Fund to declare
daily dividends from net investment income. Such dividends are paid monthly.
Distributions from net realized capital gains, if any, are recorded on
ex-dividend date and are paid annually.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $1,479,245 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized, in
the year 2002. The Fund cannot distribute capital gains to shareholders until
the tax loss carryforwards have been utilized.
D. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.50% of
the first $200 million of the Fund's average daily net assets, plus 0.40% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.35% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended June 30, 1998, AIM
was reimbursed $34,842 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the six months ended June 30, 1998, AFS
was paid $63,208 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.25% of the average daily net assets of the Class A shares
and 1.00% of the average daily net assets of the Class C shares. The Fund
pursuant to the Class B Plan, pays AIM Distributors compensation at an annual
rate of 1.00% of the average daily net assets of the Class B shares. Of these
amounts, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class A, Class B or Class C shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own the appropriate class of shares of the Fund. Any
amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the six months ended June 30, 1998, the Class A, Class B and
Class C shares paid AIM Distributors $395,665, $252,597 and $14,224,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $53,368 from sales of the Class A
shares of the Fund during the six months ended June 30, 1998. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of Class A shares. During the six months ended June 30,
1998, AIM Distributors received $24,249 in contingent deferred sales charges
imposed on redemptions of Fund shares. Certain officers and trustees of the
Trust are officers and directors of AIM, AIM Distributors and AFS.
During the six months ended June 30, 1998, the Fund paid legal fees of $1,581
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the six months ended June 30, 1998, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $2,247 under an expense
offset arrangement. The effect of the above arrangements resulted in a reduction
of the Fund's total expenses of $2,247 during the six months ended June 30,
1998.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on May 1, 1998, the Fund was limited
to borrowing up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. During the six months ended June 30, 1998, the Fund
did not borrow under the line of credit agreement. The funds which are parties
to the line of credit are charged a commitment fee of 0.05% on the unused
balance of the committed line. The commitment fee is allocated among such funds
based on their respective average net assets for the period.
14
<PAGE> 17
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended June 30, 1998 was
$68,846,486 and $49,322,177, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1998 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $26,010,946
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (24,000)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $25,986,946
=========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 1998 and the
year ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 4,505,198 $37,552,165 10,031,224 $ 79,386,539
- ------------------------------------------------------------ ---------- ----------- ---------- ------------
Class B 1,449,103 12,108,121 2,368,696 19,504,059
- ------------------------------------------------------------ ---------- ----------- ---------- ------------
Class C* 539,509 4,504,220 111,584 923,229
- ------------------------------------------------------------ ---------- ----------- ---------- ------------
Issued as reinvestment of dividends:
Class A 512,633 4,269,344 1,051,195 8,642,466
- ------------------------------------------------------------ ---------- ----------- ---------- ------------
Class B 81,388 678,873 131,460 1,082,551
- ------------------------------------------------------------ ---------- ----------- ---------- ------------
Class C* 5,980 49,770 510 4,239
- ------------------------------------------------------------ ---------- ----------- ---------- ------------
Reacquired:
Class A (4,653,155) (38,718,629) (6,962,233) (57,176,673)
- ------------------------------------------------------------ ---------- ----------- ---------- ------------
Class B (700,720) (5,850,543) (975,132) (8,023,187)
- ------------------------------------------------------------ ---------- ----------- ---------- ------------
Class C* (48,126) (401,533) (13,315) (109,957)
- ------------------------------------------------------------ ---------- ----------- ---------- ------------
1,691,810 $14,191,788 5,743,989 $ 44,233,266
============================================================ ========== =========== ========== ============
</TABLE>
* Class C shares commenced sales on August 4, 1997.
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A outstanding
during the six months ended June 30, 1998 and each of the years in the five-year
period ended December 31, 1997; for a share of Class B outstanding during the
six months ended June 30, 1998, each of the years in the four-year period ended
December 31, 1997 and the period September 1, 1993 (date sales commenced)
through December 31, 1993; and for a share of Class C outstanding during the six
months ended June 30, 1998 and the period August 4, 1997 (date sales commenced)
through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
DECEMBER 31,
JUNE 30, ------------------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.34 $ 8.19 $ 8.31 $ 7.78 $ 8.61 $ 8.27
- ------------------------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.21 0.42 0.43 0.43 0.46 0.48
- ------------------------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) (0.02) 0.16 (0.12) 0.56 (0.78) 0.46
- ------------------------------------------------------ -------- -------- -------- -------- -------- --------
Total from investment operations 0.19 0.58 0.31 0.99 (0.32) 0.94
- ------------------------------------------------------ -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.21) (0.43) (0.43) (0.43) (0.45) (0.48)
- ------------------------------------------------------ -------- -------- -------- -------- -------- --------
Distributions from net realized gains -- -- -- -- (0.03) (0.11)
- ------------------------------------------------------ -------- -------- -------- -------- -------- --------
Returns of capital -- -- -- (0.03) (0.03) (0.01)
- ------------------------------------------------------ -------- -------- -------- -------- -------- --------
Total distributions (0.21) (0.43) (0.43) (0.46) (0.51) (0.60)
- ------------------------------------------------------ -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 8.32 $ 8.34 $ 8.19 $ 8.31 $ 7.78 $ 8.61
====================================================== ======== ======== ======== ======== ======== ========
Total return(a) 2.30% 7.27% 3.90% 13.05% (3.79)% 11.66%
====================================================== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $320,761 $318,469 $278,812 $284,803 $257,456 $294,209
====================================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.83%(b) 0.90% 0.80% 0.88% 0.89% 0.91%
====================================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 5.07%(b) 5.14% 5.29% 5.26% 5.61% 5.65%
====================================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 14% 24% 26% 36% 43% 24%
====================================================== ======== ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average daily net assets of $319,154,910.
15
<PAGE> 18
NOTE 8-FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------------------------- ------------------------
DECEMBER 31,
JUNE 30, ---------------------------------------------------------- JUNE 30, DECEMBER 31,
1998 1997 1996 1995 1994 1993 1998 1997
-------- -------- ------- ------- ------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 8.36 $ 8.19 $ 8.31 $ 7.78 $ 8.61 $ 8.71 $ 8.35 $ 8.30
- ---------------------------- -------- ------- ------- ------- ------ ------ ------ ------
Income from investment
operations:
Net investment income 0.18 0.36 0.37 0.39 0.39 0.14 0.18 0.15
- ---------------------------- -------- ------- ------- ------- ------ ------ ------ ------
Net gains (losses) on
securities (both
realized and unrealized) (0.02) 0.17 (0.13) 0.54 (0.78) 0.01 (0.02) 0.04
- ---------------------------- -------- ------- ------- ------- ------ ------ ------ ------
Total from investment
operations 0.16 0.53 0.24 0.93 (0.39) 0.15 0.16 0.19
- ---------------------------- -------- ------- ------- ------- ------ ------ ------ ------
Less distributions:
Dividends from net
investment income (0.18) (0.36) (0.36) (0.37) (0.38) (0.13) (0.18) (0.14)
- ---------------------------- -------- ------- ------- ------- ------ ------ ------ ------
Distributions from net
realized gains -- -- -- -- (0.03) (0.11) -- --
- ---------------------------- -------- ------- ------- ------- ------ ------ ------ ------
Returns of capital -- -- -- (0.03) (0.03) (0.01) -- --
- ---------------------------- -------- ------- ------- ------- ------ ------ ------ ------
Total distributions (0.18) (0.36) (0.36) (0.40) (0.44) (0.25) (0.14)
- ---------------------------- -------- ------- ------- ------- ------ ------ ------ ------
Net asset value, end of
period $ 8.34 $ 8.36 $ 8.19 $ 8.31 $ 7.78 $ 8.61 $ 8.33 $ 8.35
============================ ======== ======= ======= ======= ====== ====== ====== ======
Total return(a) 1.90% 6.59% 2.99% 12.14% (4.57)% 1.95% 1.90% 2.36%
============================ ======== ======= ======= ======= ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $ 54,004 $47,185 $33,770 $21,478 $9,175 $2,319 $4,964 $ 825
============================ ======== ======= ======= ======= ====== ====== ====== ======
Ratio of expenses to average
net assets(b) 1.58%(c) 1.66% 1.61% 1.68% 1.67% 1.65%(d) 1.58%(c) 1.67%(d)
============================ ======== ======= ======= ======= ====== ====== ====== ======
Ratio of net investment
income to average net
assets(e) 4.32%(c) 4.38% 4.49% 4.46% 4.83% 4.91%(d) 4.32%(c) 4.37%(d)
============================ ======== ======= ======= ======= ====== ====== ====== ======
Portfolio turnover rate 14% 24% 26% 36% 43% 24% 14% 24%
============================ ======== ======= ======= ======= ====== ====== ====== ======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average daily net assets prior to fee waivers and/or expense reimbursements
were 1.77%, 1.84% and 3.08% (annualized) for the periods 1995-1993,
respectively.
(c) Ratios are annualized and based on average daily net assets of $50,938,013
and $2,868,468 for Class B and Class C, respectively.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average daily net assets prior to fee waivers and/or expense
reimbursements were 4.37%, 4.66% and 3.48% (annualized) for the periods
1995-1993, respectively.
16
<PAGE> 19
Trustees & Officers
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II TRANSFER AGENT
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Assistant Treasurer
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Robert G. Alley
President, Mercantile Bankshares Vice President The Bank of New York
90 Washington Street,
Jack Fields Stuart W. Coco 11th floor
Chief Executive Officer Vice President New York, NY 10286
Texana Global, Inc.;
Formerly Member Melville B. Cox COUNSEL TO THE FUND
of the U.S. House of Representatives Vice President
Ballard Spahr
Carl Frischling Karen Dunn Kelley Andrews & Ingersoll, LLP
Partner Vice President 1735 Market Street
Kramer, Levin, Naftalis & Frankel Philadelphia, PA 19103
Jonathan C. Schoolar
Robert H. Graham Vice President COUNSEL TO THE TRUSTEES
President and Chief Executive Officer
A I M Management Group Inc. Renee A. Friedli Kramer, Levin, Naftalis & Frankel
Assistant Secretary 919 Third Avenue
Lewis F. Pennock New York, NY 10022
Attorney P. Michelle Grace
Assistant Secretary DISTRIBUTOR
Ian W. Robinson
Consultant; Formerly Executive Jeffrey H. Kupor A I M Distributors, Inc.
Vice President and Assistant Secretary 11 Greenway Plaza
Chief Financial Officer Suite 100
Bell Atlantic Management Nancy L. Martin Houston, TX 77046
Services, Inc. Assistant Secretary
Louis S. Sklar Ofelia M. Mayo
Executive Vice President Assistant Secretary
Hines Interests
Limited Partnership Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
<PAGE> 20
<TABLE>
<S> <C> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund
AIM Blue Chip Fund AIM Asian Growth Fund
AIM Capital Development Fund AIM Developing Markets Fund(2)
AIM Constellation Fund AIM Emerging Markets Fund(2)
AIM Mid Cap Growth Fund(2) AIM Europe Growth Fund(2)
AIM Select Growth Fund(3) AIM European Development Fund
AIM Small Cap Equity Fund(2) AIM International Equity Fund
[PHOTO OF AIM Small Cap Opportunities Fund AIM International Growth Fund(2)
11 GREENWAY PLAZA AIM Value Fund AIM Japan Growth Fund(2)
APPEARS HERE] AIM Weingarten Fund AIM Latin American Growth Fund(2)
AIM New Pacific Growth Fund(2)
GROWTH & INCOME FUNDS
GLOBAL GROWTH FUNDS
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund
AIM Advisor MultiFlex Fund AIM Global Growth Fund
AIM Advisor Real Estate Fund AIM Worldwide Growth Fund(2)
AIM America Value Fund(2)
AIM Balanced Fund GLOBAL GROWTH & INCOME FUNDS
AIM Charter Fund
AIM Global Growth & Income Fund(2)
INCOME FUNDS AIM Global Utilities Fund
AIM Floating Rate Fund(2) GLOBAL INCOME FUNDS
AIM High Yield Fund
AIM Income Fund AIM Global Government Income Fund(2)
AIM Intermediate Government Fund AIM Global High Income Fund(2)
AIM Limited Maturity Treasury Fund AIM Global Income Fund
AIM Strategic Income Fund(2)
TAX-FREE INCOME FUNDS
THEME FUNDS
AIM High Income Municipal Fund
AIM Municipal Bond Fund AIM Global Consumer Products and Services Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Financial Services Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
MONEY MARKET FUNDS AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
AIM Dollar Fund(2) AIM New Dimension Fund(2)
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
</TABLE>
(1)AIM Aggressive Growth Fund was closed to new investors on June 5, 1997.
(2)Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds. (3)On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth
Fund. For more complete information about any AIM Fund(s), including sales
charges and expenses, ask your financial consultant or securities dealer for a
free prospectus(es). Please read the prospectus(es) carefully before you invest
or send money.
A I M Management Group Inc. has provided leadership in the mutual fund industry
since 1976 and managed approximately $101 billion in assets for more than 5.2
million shareholders, including individual investors, corporate clients, and
financial institutions, as of June 30, 1998. The AIM Family of Funds
- --Registered Trademark-- is distributed nationwide, and AIM today is the
ninth-largest mutual fund complex in the U.S. in assets under management,
according to Strategic Insight, an independent mutual fund monitor.
INVEST WITH DISCIPLINE(SM)
