<PAGE> 1
[COVER IMAGE]
AIM
MUNICIPAL BOND FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT DECEMBER 31 1998
INVEST WITH DISCIPLINE--Registered Trademark--
<PAGE> 2
[COVER IMAGE]
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BENEATH THE BROOKLYN BRIDGE BY JANE WOOSTER SCOTT
(1939-, AMERICAN)
STATE AND LOCAL GOVERNMENTS REGULARLY ISSUE MUNICIPAL BONDS
TO FUND A WIDE ARRAY
OF PROJECTS, INCLUDING ROADS, BRIDGES AND
RECREATIONAL FACILITIES, THAT IMPROVE THE QUALITY OF LIFE IN COM-
MUNITIES ACROSS THE NATION. SCOTT'S PAINTING CAPTURES A SLICE
OF AN URBAN LANDSCAPE MADE MORE HOSPITABLE AND ENJOYABLE
BECAUSE OF THESE PROJECTS.
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AIM Municipal Bond Fund is 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 differences in sales charge structure and
class expenses.
o In 1998, the Fund paid distributions for Class A, Class B and Class C
shares of $0.42, $0.36 and $0.36 per share, respectively.
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 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 Fund's annualized distribution rate reflects the Fund's most recent
monthly dividend distribution multiplied by 12 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.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Lehman Municipal Bond Index is an unmanaged composite representing an
approximation of the performance of investment-grade municipal bonds.
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 will vary with market conditions.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE A
PORTION OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to
persons who have received a current prospectus of the Fund.
AIM MUNICIPAL BOND FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
As the fiscal year opened, markets were recovering from the
[PHOTO OF concerns produced by financial crises in Asia during 1997,
Charles T. and this optimism early in 1998 led several equity market
Bauer, indexes to all-time highs in spring and early summer.
Chairman of However, the year was to bring two particularly serious
the Board of financial shocks, first the debt default by Russia, and
THE FUND later the gathering crisis in Brazil, which devalued its
APPEARS HERE] currency shortly after the fiscal year closed. The result
was another year of significant volatility in both equity
and fixed-income markets.
MARKET RECAP
Buoyant equity markets and healthy economic growth in Europe
and the U.S. kept bond prices relatively stable early in
1998. But optimism turned to profound pessimism over the
summer as global financial crises caused a worldwide loss of
confidence. Investors flocked to securities perceived as safe and liquid,
especially U.S. Treasuries. Even high-quality corporate bonds went out of favor,
and high-yield corporate bonds plummeted. Beginning in late September, the U.S.
Federal Reserve Board intervened to pump liquidity and confidence into markets.
Numerous interest rate cuts in other countries followed. Investors responded
favorably, and by year end, bond market volatility had generally subsided.
HOW SHOULD INVESTORS RESPOND?
We understood how unnerving 1998's level of volatility could have been. Our
repeated message to you is to keep a long-term outlook on investments rather
than responding to short-term fluctuations. And we are pleased to note that most
mutual fund shareholders remained cool headed and did not pull out of the
markets during 1998. In the end, most were rewarded for their long-term
perspective.
In view of recent volatility and the divergent performance of market
sectors, this may be a very good time to meet with your financial consultant to
review your current asset allocation and the diversification of your portfolio.
Broad portfolio diversification remains one of the most fundamental principles
of investing, along with long-term thinking and realistic expectations.
YOUR FUND MANAGERS' COMMENTS
On the pages that follow, your Fund's managers, experienced professionals who
have weathered previous periods of market turbulence, offer more detailed
discussion of how markets behaved, how they managed the portfolio in light of
recent volatility, and what they foresee for markets and your Fund. We hope you
find their discussion informative.
YEAR 2000 CONCERN
Many of our shareholders have asked us about AIM's year 2000 readiness status.
We appreciate these concerns, and we take the year 2000 issue seriously. AIM has
devoted considerable effort to creating a comprehensive plan for assessing,
correcting and testing our in-house systems. We will also participate in an
industrywide testing effort scheduled to begin in March. But no matter how well
we prepare and test, no one can know for sure what the year 2000 will bring. Our
industry's systems are connected in complex ways to many third parties, and
there may be unforeseen problems when the year 2000 actually arrives. Though we
cannot predict what all those problems might be, we are working with our
business recovery team to develop contingency plans appropriate for a variety of
year 2000 scenarios.
We are pleased to send you this report on your Fund's fiscal year. If you
have any questions or comments, please contact our Client Services department at
800-959-4246, or e-mail your inquiry to us at [email protected]. You can
access information about your account through our AIM Investor Line at
800-246-5463 or at our Web site, www.aimfunds.com. We often post market updates
on our Web site.
We thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
-------------------------------------
. . . WE ARE PLEASED
TO NOTE THAT MOST
MUTUAL FUND
SHAREHOLDERS REMAINED
COOL HEADED AND
DID NOT PULL OUT OF THE
MARKETS DURING 1998.
-------------------------------------
AIM MUNICIPAL BOND FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
MUNICIPAL BONDS OFFER PRICE STABILITY,
ATTRACTIVE YIELDS
MUNICIPAL BONDS WERE AN ATTRACTIVE INVESTMENT OPTION DURING THE FISCAL YEAR. HOW
DID AIM MUNICIPAL BOND FUND PERFORM?
The case for investing in municipal bonds exempt from federal income taxes was
compelling in 1998. At the end of the year, high-quality municipal bonds were
offering yields that were roughly equivalent to those of U.S. Treasury issues,
which are subject to federal income taxes--a situation that had not existed in
more than a decade. That led one analyst to conclude that municipal bonds were
becoming a "screaming buy" rather than just a good bargain.
In conjunction with these trends, your Fund continued to provide attractive
current income (see chart below), exempt from federal income taxes, while
maintaining share-price stability. During the year, net asset value per share
remained within a relatively narrow range of $8.24 to $8.48 for Class A, B and C
shares, extending the Fund's long-time record of relative price stability as
shown on the accompanying chart.
For the fiscal year ended December 31, 1998, total return was 5.28%, 4.48%
and 4.36% for Class A, B and C shares, respectively.
WHAT WERE CONDITIONS LIKE IN THE BOND MARKET IN 1998?
In the unsettled market environment, created by severe economic problems in
Asia, Russia and Latin America and political controversy in the United States,
investors favored Treasuries because of their perceived safety and liquidity
over lower-rated bonds. U.S. Treasury securities rose dramatically in price,
sending their yields to historic lows. For example, the yield of the benchmark
30-year Treasury bond fell from 5.92% at the beginning of the year to 4.71% on
October 5--its lowest level since this issue came into existence in 1977--before
ending 1998 at 5.09%.
While the Treasury market rallied, other types of bonds appreciated less
dramatically in value or actually declined in price. That caused yield
differentials to widen substantially between Treasuries and other bonds subject
to federal income taxes.
However, the Federal Reserve Board (the Fed), in an effort to infuse
liquidity back into the broader financial markets, cut interest rates three
times in the fall. While yield spreads began to contract between Treasuries and
other bonds subject to federal income taxes, they remained relatively wide at
the end of the year.
HOW DID MUNICIPAL BONDS FARE?
In the volatile market environment, municipal-bond prices and yields tended to
be relatively stable. Municipal-bond prices were kept in check by a large
increase in new issue supply. In 1998, more than $284 billion in new municipal
debt was issued, the highest level in five years, according to The Bond Buyer, a
newspaper that tracks the municipal-bond market. State and city governments,
school districts and other entities issued new municipal bonds to take advantage
of the lowest interest rates in a generation.
While new municipal bonds were flooding the market, the supply of
Treasuries
<TABLE>
<CAPTION>
================================================================================
FUND PROVIDES SOLID INCOME
As of 12/31/98
30-DAY TAXABLE 30-DAY TAXABLE
DISTRIBUTION EQUIVALENT SEC YIELD EQUIVALENT
RATE AT DISTRIBUTION AT MAXIMUM 30-DAY
NAV RATE* OFFERING PRICE SEC YIELD*
<S> <C> <C> <C> <C>
Class A 5.03% 8.33% 3.58% 5.93%
Class B 4.30 7.12 2.99 4.95
Class C 4.31 7.14 2.99 4.95
*Assumes highest marginal federal income tax rate of 39.6%
================================================================================
</TABLE>
<TABLE>
<CAPTION>
================================================================================
CLASS A SHARES VS. 30-YEAR U.S. TREASURY BOND
================================================================================
<S> <C> <C>
8.33%
5.93% 5.09%
[Bar Chart]
Taxable Taxable 30-year
equivalent equivalent Treasury
distribution yield* yield
rate*
================================================================================
</TABLE>
HISTORY OF NET ASSET VALUE STABILITY
<TABLE>
<CAPTION>
================================================================================
Class A Shares Net Asset Value
6/30/92-12/31/98
================================================================================
<S> <C> <C> <C>
6/30/92 8.23 2/28/94 8.46 10/31/95 8.21 6/30/97 8.2
7/31/92 8.5 3/31/94 8.13 11/30/95 8.28 7/31/97 8.31
8/31/92 8.33 4/29/94 8.12 12/29/95 8.72 8/31/97 8.23
9/30/92 8.31 5/27/94 8.16 1/31/96 8.32 9/30/97 8.27
10/30/92 8.11 6/30/94 8.09 2/29/96 8.26 10/31/97 8.28
11/30/92 8.27 7/29/94 8.17 3/29/96 8.16 11/28/97 8.28
12/31/92 8.27 8/31/94 8.15 4/30/96 8.11 12/31/97 8.36
1/29/93 8.31 9/30/94 8.01 5/31/96 8.08 1/31/98 8.38
2/26/93 8.57 10/31/94 7.86 6/28/96 8.1 2/28/98 8.35
3/30/93 8.43 11/30/94 7.74 7/31/96 8.12 3/31/98 8.32
4/30/93 8.48 12/30/94 7.78 8/30/96 8.1 4/30/98 8.27
5/28/93 8.47 1/31/95 7.91 9/30/96 8.14 5/31/98 8.33
6/30/93 8.58 2/28/95 8.02 10/31/96 8.17 6/30/98 8.32
7/30/93 8.54 3/31/95 8.04 11/29/96 8.24 7/31/98 8.31
8/31/93 8.69 4/28/95 8.03 12/31/96 8.19 8/31/98 8.37
9/30/93 8.74 5/31/95 8.17 1/31/97 8.18 9/30/98 8.41
10/29/93 8.74 6/30/95 8.11 2/28/97 8.2 10/31/98 8.38
11/29/93 8.63 7/31/95 8.12 3/31/97 8.1 11/30/98 8.37
12/31/93 8.61 8/31/95 8.16 4/30/97 8.11 12/31/98 8.35
1/31/94 8.68 9/29/95 8.16 5/30/97 8.17
================================================================================
</TABLE>
See important Fund and index disclosures inside front cover.
AIM MUNICIPAL BOND FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
was dwindling in the face of increased demand. A budget surplus allowed the
federal government to cut back on the issuance of Treasuries. Consequently, as
the prices of Treasury issues soared, their yields plummeted to the point where
they were comparable to municipal bonds even before taking account of the tax
advantages of the latter.
HOW WAS THE FUND'S PORTFOLIO STRUCTURED?
We maintained our focus on revenue bonds, which are paid with income from
projects like toll bridges, water-treatment facilities and hospitals. The
creditworthiness of revenue bonds tends to be less sensitive to the political
environment than that of general obligation bonds, which are supported with tax
dollars. In some quarters, state and city governments have found it difficult to
raise taxes to support general obligation bond issues because of public
opposition.
We particularly liked revenue bonds for essential service projects, which
benefit from nearly constant demand regardless of economic conditions. These
include water and sewer and utility bonds.
WHAT WAS THE CREDIT-QUALITY RATING OF THE FUND'S PORTFOLIO?
At the close of the fiscal year, the Fund had an average portfolio quality
rating of AA/Aa as measured by Standard & Poor's Corporation (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 90% of the portfolio was rated A or better. Credit-enhanced
securities--those backed by insurance or escrowed with U.S. Treasury
securities--composed about 56% of the portfolio.
HOW TAX EFFICIENT WAS THE FUND?
For five years, the Fund has paid no taxable capital gains distributions or
ordinary income distributions. We make every effort to avoid transactions that
would result in capital gains that are not offset by capital losses.
WHAT IS YOUR OUTLOOK?
At the close of the fiscal year, the environment appeared favorable for bonds.
Perhaps most important, inflation and interest rates were low. Economic growth
was still healthy, although it was expected to moderate in the months ahead. And
while the concerns that precipitated the flight to Treasuries were still lurking
in the background, the Fed appeared ready to make additional interest rate cuts,
if deemed necessary, to promote liquidity in the bond market.
In the months ahead, we believe municipal bonds will remain attractively
priced and will continue to offer yields comparable to Treasuries. We believe a
record for new municipal-bond issuance could be set in 1999. In November 1998,
voters approved approximately $210 billion in new municipal bonds, and this
could bolster new issue supply this year. That could keep municipal-bond prices
from rising significantly. Consequently, municipal-bond yields could remain
relatively stable and continue to be roughly equivalent to Treasury yields,
which aren't expected to deviate much from their current levels in the near
term.
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION
As of 12/31/98, based on total net assets
================================================================================
<S> <C> <C> <C>
TOP FIVE BOND HOLDINGS
COUPON MATURITY %
New York 7.375% 01/01/02 2.14%
State Urban
Development
Corp.
Connecticut 6.50 03/15/02 1.48
(State of)
Mississippi 5.00 07/01/28 1.35
(State of)
Development
Board
(Panola County
Hospital)
Mississippi 7.50 09/01/09 1.31
Higher
Education
Assistance
Corp.
New York 7.65 02/01/02 1.31
(City of)
================================================================================
</TABLE>
<TABLE>
<CAPTION>
================================================================================
PERCENTAGE OF HOLDINGS
<S> <C>
Revenue 76%
General
Obligation 24%
[Pie Chart]
NUMBER OF HOLDINGS 286
AVERAGE MATURITY 13.90 YEARS
DURATION 5.41 YEARS
Please keep in mind the Fund's portfolio is subject to change and there is no
assurance the Fund will continue to hold any particular security.
================================================================================
</TABLE>
See important Fund and index disclosures inside front cover.
AIM Municipal Bond Fund
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM MUNICIPAL BOND FUND, CLASS A SHARES, VS. BENCHMARK INDEX
12/31/88-12/31/98
<TABLE>
<CAPTION>
================================================================================
AIM Municipal Bond
Fund, Class A Shares Lehman Municipal Bond Index
================================================================================
in thousands
<S> <C> <C>
12/31/88 9,526 10,000
12/89 10,451 11,079
12/90 11,001 11,886
12/91 12,464 13,329
12/92 13,599 14,505
12/93 15,184 16,286
12/94 14,608 15,444
12/95 16,514 18,141
12/96 17,158 18,944
12/97 18,406 20,686
12/98 19,377 22,026
PAST PERFORMANCE CANNOT GUARANTEE COMPARABLE FUTURE RESULTS.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
================================================================================
</TABLE>
<TABLE>
<CAPTION>
================================================================================
<S> <C>
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/98, including sales charges
CLASS A SHARES
10 years 6.84%
5 years 3.98
1 year 0.23*
*5.28% excluding sales charges
CLASS B SHARES
Inception (9/1/93) 4.14%
5 years 3.85
1 year -0.52**
**4.48% excluding CDSC
CLASS C SHARES
Inception (8/4/97) 4.80%
1 year 3.36***
***4.36% excluding CDSC
================================================================================
Source: Towers Data Systems HYPO--Registered Trademark--.
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. For Fund performance
calculations and descriptions of indexes cited on this page, please refer to the
inside front cover.
================================================================================
</TABLE>
ABOUT THIS CHART
The chart above compares your Fund's Class A shares to a benchmark index. It is
intended to give you a general idea of how your Fund performed compared to the
bond market over the period 12/31/88-12/31/98. It is important to understand
the difference between your Fund and an index. Your Fund's total return is shown
with a sales charge and includes Fund expenses and management fees. An index
measures the performance of a hypothetical portfolio, in this case the Lehman
Municipal Bond Index. Market indexes are not managed, incurring no sales
charges, expenses, or fees. If you could buy all the securities that make up a
market index, you would incur expenses that would affect your investment's
return.
AIM MUNICIPAL BOND FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ALABAMA-1.28%
Alabama (State of) Housing
Finance Authority; Single
Family Mortgage Series
D-2 RB
5.50%, 10/01/17(b) - Aaa $ 1,700 $ 1,737,196
- -----------------------------------------------------------------------
Courtland Industrial
Development Board
(Champion International
Corp. Project); Refunding
PCR
6.40%, 11/01/26(b) - Baa1 2,315 2,485,778
- -----------------------------------------------------------------------
McIntosh Industrial
Development Board;
Environmental Improvement
Series C IDR
5.375%, 06/01/28 AA- A2 1,000 1,015,720
- -----------------------------------------------------------------------
5,238,694
- -----------------------------------------------------------------------
ALASKA-1.66%
Alaska (State of) Housing
Finance Corp.;
Collateralized First
Veterans' Home Mortgage
Series A-2 RB
6.75%, 12/01/24(b) AAA Aaa 4,500 4,749,795
- -----------------------------------------------------------------------
Alaska (State of) Housing
Finance Corp.;
Collateralized Mortgage
Program First Series RB
6.875%, 06/01/33 AAA Aaa 695 730,640
- -----------------------------------------------------------------------
Alaska (State of) Housing
Finance Corp.; Series A
RB
4.00%, 06/01/26(c) A1+ VMIG-1 1,320 1,320,000
- -----------------------------------------------------------------------
6,800,435
- -----------------------------------------------------------------------
ARKANSAS-1.25%
Fayetteville (City of);
Water and Sewer Refunding
and Improvement Series
1992 RB
6.15%, 08/15/12 A A 2,000 2,076,760
- -----------------------------------------------------------------------
Independence (County of)
(Mississippi Power &
Light Project); Series C
PCR
9.50%, 07/01/14 - Baa2 1,000 1,025,320
- -----------------------------------------------------------------------
Little Rock (City of);
Sewer Improvement Series
B RB
5.75%, 02/01/06 AA Aa3 2,000 2,039,380
- -----------------------------------------------------------------------
5,141,460
- -----------------------------------------------------------------------
ARIZONA-1.62%
Arizona (State of)
Educational Loan
Marketing Corp.; RB
6.125%, 09/01/02(b) - Aa 1,900 2,006,077
- -----------------------------------------------------------------------
Mohave (County of) Unified
School District No. 1
(Lake Havasu); Series
1996 A GO
5.90%, 07/01/15(d) AAA Aaa 1,000 1,089,320
- -----------------------------------------------------------------------
Pima (County of) Unified
School District No. 10
(Amphitheater); School
Improvement Series 1992 E
GO
6.50%, 07/01/05 A+ A3 3,100 3,550,306
- -----------------------------------------------------------------------
6,645,703
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
CALIFORNIA-0.54%
Foothill/Eastern Corridor
Agency (California Toll
Road Project); Senior
Lien Series A RB
6.00%, 01/01/16 BBB- Baa3 $ 400 $ 453,412
- -----------------------------------------------------------------------
Sacramento (City of)
California Cogeneration
Authority (Procter &
Gamble Project); Series
1995 RB
7.00%, 07/01/04 BBB- - 500 570,590
- -----------------------------------------------------------------------
San Francisco (City and
County of) Parking
Authority; Parking Meter
Series 1994 RB
7.00%, 06/01/13(d) AAA Aaa 1,000 1,184,700
- -----------------------------------------------------------------------
2,208,702
- -----------------------------------------------------------------------
COLORADO-1.37%
Adams County School
District No. 1; Unlimited
Tax Building Series 1992
A GO
6.625%, 12/01/02(e)(f) AAA Aaa 500 556,040
- -----------------------------------------------------------------------
Colorado Health Facilities
Authority (National
Jewish Medical and
Research Project);
Hospital Series RB
5.25%, 01/01/18 BBB - 500 494,665
- -----------------------------------------------------------------------
5.375%, 01/01/29 BBB - 1,000 990,430
- -----------------------------------------------------------------------
Highlands Ranch Metro
District No. 1; Refunding
& Improvement Unlimited
Tax Series A GO
7.30%, 09/01/02(e)(f) NRR NRR 500 572,200
- -----------------------------------------------------------------------
Mesa County School District
No. 51; 1989 Series B
Certificates of
Participation
6.875%, 12/01/05(d) AAA Aaa 1,465 1,595,282
- -----------------------------------------------------------------------
Mountain Village Metro
District (San Miguel
County); Unlimited Tax
Refunding Series GO
7.95%, 12/01/02(e)(f) NRR NRR 50 57,924
- -----------------------------------------------------------------------
7.95%, 12/01/03(g) - - 375 407,284
- -----------------------------------------------------------------------
Westminster (City of);
Certificates of
Participation
4.35%, 12/01/07(d) AAA Aaa 955 963,394
- -----------------------------------------------------------------------
5,637,219
- -----------------------------------------------------------------------
CONNECTICUT-3.22%
Bridgeport (City of);
Unlimited Tax Series A GO
6.00%, 09/01/06(d) AAA Aaa 1,000 1,124,360
- -----------------------------------------------------------------------
Connecticut (State of);
General Purpose Public
Improvement Series 1992-A
GO
6.50%, 03/15/02(e)(f) NRR NRR 5,500 6,048,295
- -----------------------------------------------------------------------
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 3,651,235
- -----------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
CONNECTICUT-(CONTINUED)
Connecticut (State of)
Special Tax Obligation;
Second Lien Series RB
4.10%, 12/01/10(c) A1+ VMIG-1 $ 406 $ 406,000
- ---------------------------------------------------------------------
Connecticut Resource
Recovery Authority
(American Ref-Fuel Co.)
(Southeastern Connecticut
Project); Corporate
Credit Series 1988 RB(b)
8.10%, 01/11/99 A- A2 925 955,803
- ---------------------------------------------------------------------
Waterbury Housing
Authority; Refunding
Mortgage Series A RB
5.45%, 07/01/23(d) AAA Aaa 1,000 1,004,610
- ---------------------------------------------------------------------
13,190,303
- ---------------------------------------------------------------------
DELAWARE-0.07%
Delaware Economic
Development Authority
(Osteopathic Hospital
Association); Series A RB
6.75%, 01/01/13(e) NRR Aaa 250 295,475
- ---------------------------------------------------------------------
FLORIDA-1.44%
Dade (County of)
(Courthouse Center
Project); RB
5.90%, 04/01/10 - A3 500 542,100
- ---------------------------------------------------------------------
Escambia (County of)
(Champion International
Corp. Project); PCR
6.90%, 08/01/22(b) BBB Baa1 1,125 1,225,305
- ---------------------------------------------------------------------
Highlands (County of)
Health Facilities
Authority (Adventist
Health System Project);
Hospital Series RB
5.25%, 11/15/20 A- Baa1 2,000 1,979,340
- ---------------------------------------------------------------------
Lee (County of) Housing
Finance Authority
(Forestwood Apartments
Project); Multifamily
Housing Series A RB
3.40%, 06/15/25(c) AAA - 95 95,000
- ---------------------------------------------------------------------
Miami (City of) Parking
System; Series 1992 A RB
6.70%, 10/01/01(f) A A3 1,120 1,228,394
- ---------------------------------------------------------------------
Miramar (City of) Water
Improvement Assessment;
RB
5.00% 10/01/28(d) - Aaa 550 549,114
- ---------------------------------------------------------------------
Plantation (City of) Health
Facilities Authority
(Covenant Retirement
Communities Inc.); RB
7.75%, 12/01/02(e)(f) NRR NRR 250 290,305
- ---------------------------------------------------------------------
5,909,558
- ---------------------------------------------------------------------
GEORGIA-1.49%
De Kalb Private Hospital
Authority (Egleston
Children's Hospital
Project); Series A RB
3.90%, 03/01/24(c) A1+ VMIG-1 511 511,000
- ---------------------------------------------------------------------
Fulton (County of)
Development Authority;
(Delta Airlines Inc.
Project); Special
Facilities RB
5.45%, 05/01/23(b) BBB- Baa3 3,700 3,665,257
- ---------------------------------------------------------------------
Georgia (State of) Housing
and Finance Authority
(Home Ownership
Opportunity Program);
Series C RB
6.50%, 12/01/11 AA+ Aa2 800 853,456
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GEORGIA-(CONTINUED)
Savannah (City of) Economic
Development Authority
(Hershey Foods Corp.
Project); IDR
6.60%, 06/01/12 A+ - $ 1,000 $ 1,090,670
- ---------------------------------------------------------------------
6,120,383
- ---------------------------------------------------------------------
IDAHO-0.28%
Idaho Health Facilities
Authority (Elks
Rehabilitation Hospital
Project); Hospital Series
RB
5.30%, 07/15/18 BBB - 1,150 1,145,826
- ---------------------------------------------------------------------
ILLINOIS-11.45%
Berwyn (City of) (Macneal
Memorial Hospital
Association); Hospital
Series 1991 RB
7.00%, 06/01/01(e)(f) AAA Aaa 3,250 3,559,302
- ---------------------------------------------------------------------
Chicago (City of); Sales
Tax Series RB
5.25%, 01/01/28(d) AAA Aaa 650 661,785
- ---------------------------------------------------------------------
Chicago (City of);
Wastewater Transmission;
RB
5.25%, Second Lien Series
B 01/01/17(d) AAA Aaa 2,500 2,548,075
- ---------------------------------------------------------------------
5.125%, Second Lien
Series 01/01/18(d) AAA Aaa 1,000 1,009,620
- ---------------------------------------------------------------------
Chicago Emergency Telephone
System; Unlimited Tax
Series GO
5.60%, 01/01/10(d) AAA Aaa 400 438,172
- ---------------------------------------------------------------------
Chicago Midway Airport;
Series A RB
5.625%, 01/01/22(d) AAA Aaa 1,000 1,059,670
- ---------------------------------------------------------------------
Cook (County of); Series
1992 B GO
5.75%, 11/15/02(e)(f) AAA Aaa 2,000 2,174,740
- ---------------------------------------------------------------------
Cook (County of) School
District No. 148
(Dolton); Unlimited Tax
Series GO
5.10%, Refunding Series A
12/01/17(d) - Aaa 665 660,185
- ---------------------------------------------------------------------
5.10%, Series B
12/01/17(d) - Aaa 810 804,136
- ---------------------------------------------------------------------
5.10%, Series B
06/01/18(d) - Aaa 625 619,650
- ---------------------------------------------------------------------
Du Page (County of) High
School District No. 87
(Glenbard TWP); Unlimited
Tax Series B GO
5.10%, 12/01/20 - Aa3 2,000 2,004,160
- ---------------------------------------------------------------------
Illinois (State of); Sales
Tax Series 1993 B RB
6.50%, 06/15/01(e)(f) AAA NRR 1,500 1,625,325
- ---------------------------------------------------------------------
Illinois (State of);
Unlimited Tax Series GO
5.25%, 07/01/22(d) AAA Aaa 4,475 4,539,843
- ---------------------------------------------------------------------
Illinois (State of)
Development Finance
Authority (American
College of Surgeons);
Series 1996 RB
3.85%, 08/01/26(c) A1+ - 243 243,000
- ---------------------------------------------------------------------
Illinois (State of)
Development Finance
Authority (CPC
International Project);
PCR
6.75%, 05/01/16 - A2 2,500 2,681,650
- ---------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ILLINOIS-(CONTINUED)
Illinois Educational
Facilities Authority
(Midwestern University);
Series B RB
5.50%, 05/15/18 A - $ 1,000 $ 1,039,350
- ---------------------------------------------------------------------
Illinois Educational
Facilities Authority
(Northwestern
University); Adjustable
Medium Term Series RB
5.25%, 11/01/14(f) AA+ Aa1 1,000 1,048,280
- ---------------------------------------------------------------------
Illinois Educational
Facilities Authority
(Shedd Aquarium Society);
RB
5.60%, 07/01/27(d) AAA Aaa 3,500 3,693,130
- ---------------------------------------------------------------------
Illinois Health Facilities
Authority (Evangelical
Hospital Corp.); RB
6.25%, Series A
04/15/02(e)(f) NRR NRR 1,000 1,152,260
- ---------------------------------------------------------------------
6.25%, Series 1992-C
04/15/02(e)(f) NRR NRR 1,150 1,325,099
- ---------------------------------------------------------------------
Illinois Health Facilities
Authority (Franciscan
Sisters Health Care);
Refunding Series 1992 RB
6.40%, 09/01/04(e) AAA Aaa 2,475 2,775,366
- ---------------------------------------------------------------------
Illinois Health Facilities
Authority (Memorial
Hospital); RB
7.25%, 05/01/02(e)(f) NRR NRR 200 224,642
- ---------------------------------------------------------------------
Illinois Health Facilities
Authority (Ravenswood
Hospital Medical Center);
Refunding Series 1987 A
RB
8.80%, 06/01/06 - Baa1 1,000 1,015,250
- ---------------------------------------------------------------------
Illinois Health Facilities
Authority; Revolving Fund
Pool Series D RB
4.10%, 08/01/15(c) A1+ VMIG-1 304 304,000
- ---------------------------------------------------------------------
Kane (County of) School
District No. 131 (Aurora
East Side); Limited GO
5.35%, 01/01/04(d) AAA Aaa 1,000 1,060,010
- ---------------------------------------------------------------------
Lake County Community
Consolidated School
District No. 73
(Hawthorn); Unlimited Tax
Series 1997 GO
5.45%, 01/01/12(d) - Aaa 1,950 2,102,763
- ---------------------------------------------------------------------
Peoria and Pekin and
Waukegan (Cities of);
GNMA Collateralized
Mortgage Series 1990 RB
7.875%, 08/01/22(b) AA+ - 105 110,091
- ---------------------------------------------------------------------
Tazewell County Community
High School District No.
303 (Pekin); Unlimited
Tax Series 1996 GO
5.625%, 01/01/14(d) AAA Aaa 1,435 1,516,652
- ---------------------------------------------------------------------
University of Illinois
Auxiliary Facilities
System; Series 1991 RB
5.75%, 04/01/22 AA- Aa3 4,750 4,893,212
- ---------------------------------------------------------------------
46,889,418
- ---------------------------------------------------------------------
INDIANA-0.20%
Carmel Retirement Rental
Housing (Beverly
Enterprises Project);
Refunding Series RB
8.75%, 12/01/08(g) - - 95 106,885
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) - PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
INDIANA-(CONTINUED)
Indiana (State of) Housing
Finance Authority; Series
B-1 RB
6.15%, 07/01/17 - Aaa $ 170 $ 180,129
- ---------------------------------------------------------------------
Indiana Transportation
Finance Authority
(Airport Lease Facility);
Series A RB
6.25%, 11/01/02(e)(f) NRR Aaa 395 436,664
- ---------------------------------------------------------------------
6.25%, 11/01/16 A A-1 105 112,304
- ---------------------------------------------------------------------
835,982
- ---------------------------------------------------------------------
IOWA-0.28%
Iowa Finance Authority
(Trinity Regional
Hospital Project);
Hospital Facilities
Refunding Series 1997 RB
6.00%, 07/01/12(d) AAA Aaa 1,000 1,147,130
- ---------------------------------------------------------------------
KANSAS-0.07%
Newton (City of) (Newton
Healthcare Corp.);
Hospital Series A RB
7.375%, 11/15/04(e)(f) NRR NRR 250 298,350
- ---------------------------------------------------------------------
KENTUCKY-2.04%
Carrollton & Henderson
(Cities of) Public Energy
Authority; Series A RB
5.00%, 01/01/08(d) AAA Aaa 2,000 2,114,120
- ---------------------------------------------------------------------
5.00%, 01/01/09(d) AAA Aaa 1,880 1,985,919
- ---------------------------------------------------------------------
Kentucky Economic
Development Finance
Authority (Appalachian
Regional Healthcare);
Refunding & Improvement
Hospital Systems Series
RB
5.875%, 10/01/22 BBB - 1,000 1,034,410
- ---------------------------------------------------------------------
Mount Sterling (City of);
Lease Funding Series 1993
A RB
6.15%, 03/01/13 - Aa 3,000 3,245,970
- ---------------------------------------------------------------------
8,380,419
- ---------------------------------------------------------------------
LOUISIANA-3.65%
Louisiana Public Facilities
Authority (Medical Center
at New Orleans Project);
RB
6.125%, 10/15/07(d) AAA - 2,775 2,956,485
- ---------------------------------------------------------------------
Louisiana Public Facilities
Authority (Our Lady of
Lake Regional Hospital);
Hospital Refunding Series
C RB
6.00%, 12/01/01(e)(f) AAA Aaa 2,500 2,701,725
- ---------------------------------------------------------------------
Louisiana Public Facilities
Authority (Tulane
University of Louisiana);
RB
6.00%, 10/01/16(d) AAA Aaa 2,500 2,781,425
- ---------------------------------------------------------------------
Louisiana Stadium &
Exposition District Hotel
Occupancy Tax and Stadium
Revenue; Refunding Series
B RB
5.00%, 07/01/26(d) AAA Aaa 2,000 1,961,900
- ---------------------------------------------------------------------
New Orleans Levee District;
Series 1995 A RB
5.95%, 11/01/07(d) AAA Aaa 1,000 1,114,540
- ---------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
LOUISIANA-(CONTINUED)
Ouachita Parish Hospital
Service District No. 1
(Glenwood Regional
Medical Center);
Refunding Series 1996 RB
5.70%, 05/15/16(d) AAA Aaa $ 1,000 $ 1,081,680
- --------------------------------------------------------------------
St. John Baptist Parish
(Sales Tax Distribution);
Public Improvement Series
1987 RB
7.60%, 01/01/08(e) NRR NRR 500 622,755
- --------------------------------------------------------------------
7.60%, 01/01/09(e) NRR NRR 500 628,635
- --------------------------------------------------------------------
West Feliciana Parish (Gulf
States Utility Co.);
Series A PCR
7.50%, 05/01/15 BB+ Ba1 1,000 1,106,170
- --------------------------------------------------------------------
14,955,315
- --------------------------------------------------------------------
MAINE-0.22%
Maine (State of) Education
Loan Authority; Education
Loan Series A-2 RB
6.95%, 12/01/07(b) - A 855 904,676
- --------------------------------------------------------------------
MARYLAND-0.47%
Maryland Health and Higher
Education Facilities
Authority (Doctors
Community Hospital Inc.);
Series 1990 RB
8.75%, 07/01/00(e)(f) AAA Aaa 1,000 1,096,680
- --------------------------------------------------------------------
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 790 820,976
- --------------------------------------------------------------------
1,917,656
- --------------------------------------------------------------------
MASSACHUSETTS-5.18%
Massachusetts (State of);
Consolidated Loan Series
1991 C GO
7.00%, 08/01/01(e)(f) NRR NRR 2,450 2,694,118
- --------------------------------------------------------------------
Massachusetts Bay
Transportation Authority
(General Transportation
System Project); Series B
RB
5.00%, 03/01/28 AA- Aa3 2,000 1,951,900
- --------------------------------------------------------------------
Massachusetts Health and
Education Facilities
Authority (Lowell General
Hospital); Series 1991 A
RB
8.40%, 06/01/01(e)(f) NRR NRR 3,550 3,999,430
- --------------------------------------------------------------------
Massachusetts Health and
Education Facilities
Authority (Valley
Regional Health System
Issue); Series 1990 B RB
8.00%, 07/01/00(e)(f) NRR Aaa 3,000 3,257,700
- --------------------------------------------------------------------
Massachusetts Health and
Education Facilities
Authority (Winchester
Hospital); Series D RB
5.80%, 07/01/09(d) AAA - 1,000 1,082,820
- --------------------------------------------------------------------
Massachusetts Housing
Finance Authority; Single
Family Series 11 RB
7.75%, 12/01/22(b) AAA Aaa 3,000 3,127,200
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MASSACHUSETTS-(CONTINUED)
Massachusetts Industrial
Finance Agency (Beverly
Enterprises); Refunding
Series RB
8.00%, 05/01/02(g) - - $ 200 $ 208,876
- --------------------------------------------------------------------
Massachusetts Municipal
Wholesale Electric
Cooperative Power Supply;
System Series 1992 A RB
6.75%, 07/01/08(d) AAA Aaa 3,000 3,295,530
- --------------------------------------------------------------------
Massachusetts Water
Resources Authority;
General Refunding Series
B RB
5.00%, 03/01/22(d) AAA Aaa 1,600 1,578,304
- --------------------------------------------------------------------
21,195,878
- --------------------------------------------------------------------
MICHIGAN-3.79%
Detroit (City of) School
District; School Building
and Site Unlimited Tax
Series 1992 GO
6.00%, 05/01/01(e)(f) NRR NRR 1,000 1,070,140
- --------------------------------------------------------------------
6.15%, 05/01/01(e)(f) NRR NRR 1,300 1,395,485
- --------------------------------------------------------------------
Flint (City of) Hospital
Building Authority;
Hospital Series B RB
5.375%, 07/01/18(d) A - 1,000 1,010,670
- --------------------------------------------------------------------
Garden City Hospital
Finance Authority (Garden
City Hospital); Hospital
Refunding Series RB
5.625%, 09/01/10 - Ba3 1,000 999,910
- --------------------------------------------------------------------
Lake Orion Community School
District; School Building
and Site Unlimited Tax
Refunding Series 1994 GO
7.00%, 05/01/05(e)(f) AAA Aaa 2,500 2,942,100
- --------------------------------------------------------------------
Lakeview Community School
District; Unlimited Tax
Series 1996 GO
5.75%, 05/01/16(d) AAA Aaa 1,000 1,068,700
- --------------------------------------------------------------------
Lincoln Park (City of)
School District;
Unlimited Tax Series 1996
GO
6.00%, 05/01/06(e)(f) AAA Aaa 1,210 1,367,106
- --------------------------------------------------------------------
Michigan (State of) Housing
Development Authority;
Refunding Series A RB
6.60%, 04/01/12 AA- - 945 1,020,316
- --------------------------------------------------------------------
Ypsilanti (City of) School
District; Refunding
Unlimited Tax Series 1996
GO
5.75%, 05/01/07(d)(f) AAA Aaa 4,275 4,669,598
- --------------------------------------------------------------------
15,544,025
- --------------------------------------------------------------------
MINNESOTA-0.27%
Centennial Independent
School District No. 12;
Unlimited Tax Series A GO
5.60%, 02/01/05(d) AAA Aaa 1,000 1,088,810
- --------------------------------------------------------------------
MISSISSIPPI-2.66%
Mississippi (State of)
Development Board (Panola
County Hospital); Special
Obligation Series RB
5.00%, 07/01/28 A - 5,750 5,535,525
- --------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MISSISSIPPI-(CONTINUED)
Mississippi Higher
Education Assistance
Corp.; Student Loan
Sub-Series C RB
7.50%, 09/01/09(b) - A $ 5,000 $ 5,376,800
- --------------------------------------------------------------------
10,912,325
- --------------------------------------------------------------------
MISSOURI-2.83%
Joplin Industrial
Development Authority
(Catholic Health
Initiatives); Refunding
Series A RB
5.125%, 12/01/15 AA Aa2 1,350 1,363,986
- --------------------------------------------------------------------
Kansas City Industrial
Development Authority
(General Motors Corp.
Project); PCR
6.05%, 04/01/06 A A3 1,435 1,460,184
- --------------------------------------------------------------------
Kansas City Municipal
Assistance Corp.(Truman
Medical Center Charitable
Foundation); Leasehold
Improvement Series 1991 A
RB
7.00%, 11/01/01(e)(f) NRR NRR 605 659,638
- --------------------------------------------------------------------
Missouri (State of )
Environmental Improvement
and Energy Resources;
Series 1995 C PCR
5.85%, 01/01/10 - Aa1 1,000 1,085,480
- --------------------------------------------------------------------
Missouri (State of) Health
and Educational
Facilities Authority (BJC
Health System Project);
Hospital Series RB
5.00%, 05/15/28 AA Aa2 3,000 2,914,380
- --------------------------------------------------------------------
Missouri (State of) Health
and Educational
Facilities Authority
(Fontbonne College);
Educational Facilities
Series RB
5.125%, 10/01/17(d) A - 2,555 2,555,767
- --------------------------------------------------------------------
5.20%, 10/01/20(d) A - 1,575 1,577,252
- --------------------------------------------------------------------
11,616,687
- --------------------------------------------------------------------
NEVADA-1.49%
Boulder (City of) Hospital
(Boulder City Hospital
Inc.); Hospital Refunding
Series RB
5.85%, 01/01/22(g) - - 500 497,310
- --------------------------------------------------------------------
Humboldt (County of)
(Sierra Pacific Project);
Series 1987 PCR
6.55%, 10/01/13(d) AAA Aaa 3,000 3,265,440
- --------------------------------------------------------------------
Las Vegas (City of);
Refunding 1992 Limited
Tax GO
6.50%, 04/01/02(e)(f) AAA Aaa 1,000 1,100,730
- --------------------------------------------------------------------
Reno Redevelopment Agency;
Refunding Sub-Series A
Tax Allocation Notes
6.00%, 06/01/10 - Baa 1,185 1,251,976
- --------------------------------------------------------------------
6,115,456
- --------------------------------------------------------------------
NEW HAMPSHIRE-1.65%
Hudson (City of); Unlimited
Tax Series GO
5.25%, 03/15/28 - Aa3 1,610 1,626,325
- --------------------------------------------------------------------
New Hampshire Higher
Educational & Health
Facilities Authority
(Dartmouth College);
Refunding Series RB
5.375%, 06/01/23 - Aaa 1,000 1,029,660
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW HAMPSHIRE-(CONTINUED)
New Hampshire State
Turnpike System; Series
1990 RB
7.40%, 04/01/00(e)(f) AAA Aaa $ 3,850 $ 4,110,876
- --------------------------------------------------------------------
6,766,861
- --------------------------------------------------------------------
NEW JERSEY-0.95%
Hudson County Correctional
Facility; Certificate of
Participation Series 1992
RB
6.60%, 12/01/21(d) AAA Aaa 1,250 1,360,837
- --------------------------------------------------------------------
New Jersey Economic
Development Authority
(Atlantic City Sewer
Co.); Sewer Facility
Series 1991 RB
7.25%, 12/01/11(b)(g) - - 1,715 1,849,336
- --------------------------------------------------------------------
New Jersey City Economic
Development Authority
(Franciscan Oaks
Project); First Mortgage
Series RB
5.70%, 10/01/17(g) - - 500 505,330
- --------------------------------------------------------------------
New Jersey Health Care
Facility Financing
Authority (St. Peters
Medical Center); Series
1987 C RB
8.60%, 07/01/17(d) AAA Aaa 190 194,416
- --------------------------------------------------------------------
3,909,919
- --------------------------------------------------------------------
NEW MEXICO-1.49%
Albuquerque (City of)
(Albuquerque Academy
Project); Educational
Facilities Series 1995 RB
5.75%, 10/15/15 AA- Aa2 915 957,181
- --------------------------------------------------------------------
Las Cruces South Central
Solid Waste Authority;
Environmental Services RB
5.65%, 06/01/09 - A 575 602,928
- --------------------------------------------------------------------
Los Alamos (County of);
Utility Series A RB
6.00%, 07/01/15(d) AAA Aaa 2,000 2,192,120
- --------------------------------------------------------------------
Santa Fe (City of); Series
1994 A RB
6.25%, 06/01/04(e)(f) AAA Aaa 2,100 2,338,224
- --------------------------------------------------------------------
6,090,453
- --------------------------------------------------------------------
NEW YORK-8.73%
New York (City of); GO
8.25%, Unlimited Tax
Series 1991 F
11/15/01(e)(f) AAA Aaa 1,955 2,223,304
- --------------------------------------------------------------------
Series 1991 F
11/15/01(e)(f) NRR NRR 45 51,110
- --------------------------------------------------------------------
7.65%, Unlimited Tax
Series 1992 F
02/01/02(e)(f) NRR Aaa 4,775 5,373,928
- --------------------------------------------------------------------
7.00%, Unlimited Tax
Series H 02/01/02(e)(f) NRR NRR 295 326,037
- --------------------------------------------------------------------
02/01/20 A- A3 55 60,033
- --------------------------------------------------------------------
7.20%, Unlimited Tax
Series H 02/01/02(e)(f) NRR NRR 375 416,609
- --------------------------------------------------------------------
02/01/15 A- A3 125 137,264
- --------------------------------------------------------------------
7.70%, Unlimited Tax
Series D 02/01/02(e)(f) NRR Aaa 1,970 2,219,914
- --------------------------------------------------------------------
02/01/09 A- A3 30 33,481
- --------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW YORK-(CONTINUED)
7.00%, Unlimited Tax
Series C, Sub-Series
C-1 08/01/02(e)(f) NRR Aaa $ 2,000 $ 2,238,434
- --------------------------------------------------------------------
7.375, Unlimited Tax
Series B, Sub-Series
B-1 08/15/04(e)(f) NRR Aaa 285 335,947
- --------------------------------------------------------------------
7.375, Unlimited Tax
Series B, Sub-Series
B-1 08/15/04(e)(f) NRR NRR 215 249,667
- --------------------------------------------------------------------
6.25%, Unlimited Tax
Series A 08/01/17 A- A3 3,035 3,357,499
- --------------------------------------------------------------------
7.00%, Unlimited Tax
Series B 02/01/18(d) AAA Aaa 1,000 1,096,960
- --------------------------------------------------------------------
New York City Industrial
Development Agency
(Brooklyn Navy Yard Cogen
Partners); RB
5.65%, 10/01/28(b) BBB- Baa3 500 509,845
- --------------------------------------------------------------------
New York City Industrial
Development Agency (The
Lighthouse Inc. Project);
Series 1992 RB
6.50%, 07/01/02(e)(f) NRR NRR 1,500 1,657,380
- --------------------------------------------------------------------
New York City Municipal
Water Finance Authority;
Water & Sewer Systems
Series A RB
5.00%, 06/15/17 A A1 1,350 1,322,879
- --------------------------------------------------------------------
New York State Dorm
Authority (City
University System);
Series C RB
6.00%, 07/01/00(e)(f) NRR NRR 135 139,945
- --------------------------------------------------------------------
6.00%, 07/01/16 BBB+ Baa1 365 375,322
- --------------------------------------------------------------------
New York State Dorm
Authority (State
University Educational
Facilities); Refunding
Series A RB
6.50%, 05/15/06 A- A3 1,000 1,141,510
- --------------------------------------------------------------------
New York State
Environmental Facility
Corp.; Water Revenue
Series E PCR
6.875%, 06/15/01(e)(f) NRR Aaa 2,300 2,513,808
- --------------------------------------------------------------------
6.875%, 06/15/10 AA+ Aaa 1,100 1,197,658
- --------------------------------------------------------------------
New York State Urban
Development Corp.;
Capital Facilities 1991
Series 3 RB
7.375%, 01/01/02(e)(f) NRR Aaa 7,850 8,787,290
- --------------------------------------------------------------------
35,765,824
- --------------------------------------------------------------------
NORTH CAROLINA-1.77%
North Carolina Eastern
Municipal Power Agency;
Series A RB
6.125%, 01/01/10(d) AAA Aaa 1,500 1,621,740
- --------------------------------------------------------------------
North Carolina Housing
Finance Agency; Single
Family-Series II RB
6.20%, 03/01/16 AA Aa2 615 655,141
- --------------------------------------------------------------------
North Carolina Medical Care
Community Hospital (Annie
Penn Memorial Hospital);
Refunding Series RB
5.375%, 01/01/22 - Baa3 250 250,305
- --------------------------------------------------------------------
North Carolina Municipal
Power Agency (No. 1
Catawba Electric
Project); Refunding RB
7.25%, 01/01/07 A- A3 2,750 3,254,653
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NORTH CAROLINA-(CONTINUED)
North Carolina Municipal
Power Agency (No. 1
Catawba Electric
Project); Series 1990 RB
6.50%, 01/01/10(e) AAA Aaa $ 260 $ 303,625
- --------------------------------------------------------------------
6.50%, 01/01/10(d) AAA Aaa 1,115 1,162,577
- --------------------------------------------------------------------
7,248,041
- --------------------------------------------------------------------
NORTH DAKOTA-0.25%
North Dakota Housing
Finance Agency; Home
Mortgage Series B RB
5.85%, 07/01/28(b) - Aa3 970 1,010,905
- --------------------------------------------------------------------
OHIO-1.77%
Cleveland (City of) Parking
Facilities; Improvement
Series RB
8.00%, 09/15/02(e)(f) NRR NRR 500 581,300
- --------------------------------------------------------------------
Fairfield (City of) School
District; Unlimited Tax
Series 1995 GO
6.10%, 12/01/15(h) AAA Aaa 1,000 1,085,340
- --------------------------------------------------------------------
Findlay (City of); Limited
Tax Series 1996 GO
5.875%, 07/01/17 AA- Aa3 1,000 1,096,870
- --------------------------------------------------------------------
Mason (City of) Health Care
Facilities (MCV Health
Care Facilities, Inc.);
Series 1990 RB
7.625%, 02/01/40(d) AAA - 2,135 2,317,073
- --------------------------------------------------------------------
Montgomery (County of)
(Grandview Hospital &
Medical Center);
Refunding Hospital Series
RB
5.50%, 12/01/10 BBB- - 1,000 972,650
- --------------------------------------------------------------------
Ohio Department of
Transportation (Panhandle
Rail Line Project);
Series 1992 Certificates
of Participation
6.50%, 04/15/12(d) AAA Aaa 1,100 1,201,090
- --------------------------------------------------------------------
7,254,323
- --------------------------------------------------------------------
OKLAHOMA-2.21%
Edmond (City of) Economic
Development Authority
(Collegiate Housing
Foundation Project);
Series A RB
5.375%, 12/01/19 - Baa3 500 491,045
- --------------------------------------------------------------------
5.50%, 12/01/28 - Baa3 500 492,395
- --------------------------------------------------------------------
McAlester (City of) Public
Works Authority;
Refunding and Improvement
Series 1995 RB
5.50%, 12/01/10(d) AAA Aaa 975 1,079,374
- --------------------------------------------------------------------
Oklahoma Development
Finance Authority Public
Facilities Financing
Program (Oklahoma State
University Project); RB
5.00%, 07/01/18(d) - Aaa 600 599,256
- --------------------------------------------------------------------
Sapula (City of) Municipal
Authority; Capital
Improvement Series RB
5.00%, 07/01/21(d) AAA Aaa 1,000 1,000,800
- --------------------------------------------------------------------
Southern Oklahoma Memorial
Hospital Authority;
Series 1993 A RB
5.60%, 02/01/00(e) NRR NRR 1,250 1,279,275
- --------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OKLAHOMA-(CONTINUED)
Tulsa (City of) Industrial
Authority (St. Johns
Hospital); RB
6.25%, 02/15/14 AA Aa3 $ 2,000 $ 2,157,480
- --------------------------------------------------------------------
Tulsa (City of) Industrial
Authority (Tulsa Regional
Medical Center); Hospital
Series RB
7.20%, 06/01/03(e)(f) AAA NRR 500 576,775
- --------------------------------------------------------------------
Tulsa Public Facilities
Authority-Capital
Improvements-Water
System; Series 1988 B RB
6.00%, 03/01/08 A+ - 1,305 1,398,973
- --------------------------------------------------------------------
9,075,373
- --------------------------------------------------------------------
OREGON-1.37%
Bend (City of) Urban
Renewal Agency (Bend
Development Board); RB
4.85%, 06/01/18 - A3 1,080 1,062,612
- --------------------------------------------------------------------
Cow Creek Band Umpqua Tribe
Of Indians; Series B RB
5.10%, 07/01/12(d) AAA Aaa 1,000 1,009,280
- --------------------------------------------------------------------
Marion (County of) (Ogden
Martin Systems);
Refunding Solid Waste &
Electric Series RB
5.50%, 10/01/06(d) AAA Aaa 1,000 1,095,410
- --------------------------------------------------------------------
Portland (City of) Sewer
System; Series 1994 A RB
6.20%, 06/01/04(e)(f) NRR NRR 1,200 1,342,980
- --------------------------------------------------------------------
6.25%, 06/01/04(e)(f) NRR NRR 1,000 1,121,560
- --------------------------------------------------------------------
5,631,842
- --------------------------------------------------------------------
PENNSYLVANIA-2.73%
Allegheny (County of)
Industrial Development
Authority (USX Corp.);
Environmental Improvement
Series IDR
5.60%, 09/01/30 BBB- Baa2 1,000 1,004,860
- --------------------------------------------------------------------
Chester (County of) Health
and Educational
Facilities Authority
(Jefferson Health
Systems); Series B RB
5.375%, 05/15/27 AA- A1 4,000 4,042,080
- --------------------------------------------------------------------
Chester Upland School
Authority; Refunding
School Series B RB
5.25%, 09/01/21(d) AAA Aaa 1,000 1,014,510
- --------------------------------------------------------------------
Montgomery County
Industrial Development
Authority (Meadowood
Corp. Project); Refunding
First Mortgage Series A
RB
10.25%, 12/01/00(e)(f) NRR NRR 100 114,187
- --------------------------------------------------------------------
Montgomery County
Industrial Development
Authority (Pennsburg
Nursing & Rehabilitation
Center); RB
7.625%, 03/31/04(e)(f) NRR Aaa 100 119,219
- --------------------------------------------------------------------
Pennsylvania (State of);
Third Series GO
6.75%, 11/15/13(d) AAA Aaa 1,250 1,420,938
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
PENNSYLVANIA-(CONTINUED)
Pennsylvania Economic
Development Finance
Authority (Colver
Project); Resource
Recovery Series 1994 D RB
7.05%, 12/01/10(b) BBB- - $ 2,900 $ 3,213,895
- --------------------------------------------------------------------
Scranton-Lackawanna Health
& Welfare Authority
(Moses Taylor Hospital
Project); Series B RB
8.50%, 07/01/01(e)(f) AAA NRR 250 283,135
- --------------------------------------------------------------------
11,212,824
- --------------------------------------------------------------------
PUERTO RICO-1.35%
Puerto Rico (Commonwealth
of) Electric Power
Authority; RB
7.00%, Series 1991 P
07/01/01(e)(f) NRR Aaa 1,325 1,457,129
- --------------------------------------------------------------------
6.00%, Series 1989
07/01/99(f) BBB+ Baa1 4,000 4,057,440
- --------------------------------------------------------------------
5,514,569
- --------------------------------------------------------------------
RHODE ISLAND-0.60%
Rhode Island Depositors
Economic Protection
Corp.; Special Obligation
Series 1992 A RB
6.95%, 08/01/02(e)(f) AAA Aaa 1,250 1,404,325
- --------------------------------------------------------------------
Rhode Island Housing and
Mortgage Finance Agency;
Homeownership Opportunity
Series 15 B RB
6.00%, 10/01/04 AA+ Aa2 1,000 1,066,170
- --------------------------------------------------------------------
2,470,495
- --------------------------------------------------------------------
SOUTH CAROLINA-0.53%
Piedmont Municipal Power
Agency; Refunding
Electric Series A RB
5.75%, 01/01/24 BBB Baa2 1,150 1,151,610
- --------------------------------------------------------------------
South Carolina State
Education Assistance
Authority; Guaranteed
Student Loan Series 1990
RB
6.60%, 09/01/01(b) AA - 500 517,410
- --------------------------------------------------------------------
South Carolina State
Housing Finance and
Development Authority;
Homeownership Mortgage
Series 1990 C RB
7.50%, 07/01/05(b) AA Aa2 500 521,770
- --------------------------------------------------------------------
2,190,790
- --------------------------------------------------------------------
SOUTH DAKOTA-0.53%
South Dakota Health &
Educational Facilities
Authority (Huron Regional
Medical Center); RB
7.25%, 04/01/20 BBB - 100 110,276
- --------------------------------------------------------------------
South Dakota Housing
Development Authority;
Homeownership Mortgage
Series F RB
5.80%, 05/01/28(b) AAA Aa1 2,000 2,081,760
- --------------------------------------------------------------------
2,192,036
- --------------------------------------------------------------------
TENNESSEE-1.46%
Franklin Industrial
Development Board
(Landings Apartment
Project); Multifamily
Housing Series A RB
5.75%, 04/01/10(d) AAA Aaa 1,115 1,184,041
- --------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TENNESSEE-(CONTINUED)
Montgomery (County of)
Health, Educational and
Housing Facilities Board
(Clarksville Project);
Refunding and Improvement
Hospital Series RB
5.375%, 01/01/28(d) A - $ 1,800 $ 1,762,452
- ---------------------------------------------------------------------
Shelby (County of);
Unlimited Tax School
Series B GO
6.00%, 03/01/02(e)(f) NRR NRR 1,000 1,075,160
- ---------------------------------------------------------------------
Shelby County Health,
Educational & Housing
Facilities Board (Kirby
Pines); Health Care
Facilities Series A RB
6.25%, 11/15/16(g) - - 1,000 1,026,100
- ---------------------------------------------------------------------
Tennessee Housing
Development Agency;
Homeownership Progressive
Series Q RB
6.80%, 07/01/17 AA Aa2 895 948,306
- ---------------------------------------------------------------------
5,996,059
- ---------------------------------------------------------------------
TEXAS-14.53%
Arlington Independent
School District;
Refunding Series 1995 GO
5.75%, 02/15/21(d) - Aaa 1,000 1,044,350
- ---------------------------------------------------------------------
Austin (City of); Utility
System RB
6.50%, 05/15/01(e)(f) AAA Aaa 1,380 1,493,367
- ---------------------------------------------------------------------
Austin Community College
District; Combined Fee
Revenue Building and
Refunding Series 1995 RB
6.10%, 02/01/05(e)(f) AAA Aaa 1,115 1,236,870
- ---------------------------------------------------------------------
Bellville Independent
School District;
Unlimited Tax School
Building and Refunding
Series 1995 A GO
6.125%, 02/01/20(d) - Aaa 830 897,819
- ---------------------------------------------------------------------
Brazos (County of) Health
Facilities Development
Corp. (Franciscan
Services Corp.); Series A
RB
5.375%, 01/01/22(d) AAA Aaa 2,000 2,042,600
- ---------------------------------------------------------------------
Brazos Higher Education
Loan Authority Inc.;
Student Loan Refunding RB
6.30%, Series 1992 C-1
11/01/01(b) - Aa 325 341,182
- ---------------------------------------------------------------------
6.45%, Series 1992 C-1
11/01/02(b) - Aa 1,135 1,207,685
- ---------------------------------------------------------------------
6.50%, Series 1994 B-1
06/01/04(b) - A 260 277,238
- ---------------------------------------------------------------------
Carrollton (City of); GO
5.75%, 08/15/16 AA- Aa2 1,000 1,079,730
- ---------------------------------------------------------------------
Comal County Industrial
Development Authority
(The Coleman Company,
Inc. Project); Industrial
Development Series 1980
RB
9.25%, 08/01/00(e) NRR NRR 590 619,972
- ---------------------------------------------------------------------
Dallas (City of);
Waterworks and Sewer
System Series A RB
6.00%, 10/01/01(e)(f) NRR NRR 2,030 2,172,892
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
Dallas (City of);
Waterworks and Sewer
System Refunding and
Improvement Series RB
5.35%, 04/01/14 AA Aa2 $ 3,055 $ 3,183,370
- ---------------------------------------------------------------------
Dallas-Fort Worth Regional
Airport Authority;
Airport Series 1985 RB
6.10%, 11/01/07 A+ A1 160 160,515
- ---------------------------------------------------------------------
6.10%, 11/01/07(d) AAA Aaa 400 400,772
- ---------------------------------------------------------------------
DeSoto (City of)
Independent School
District; Refunding
Unlimited Tax Series GO
5.125%, 08/15/17(d) AAA - 2,155 2,156,099
- ---------------------------------------------------------------------
Edgewood (City of)
Independent School
District; Unlimited Tax
School Series GO
5.40%, 02/15/23(d) - Aaa 800 819,024
- ---------------------------------------------------------------------
Georgetown (City of);
Utility System Series
1995 A RB
6.20%, 08/15/05(e)(f) AAA Aaa 1,500 1,680,660
- ---------------------------------------------------------------------
Harris County; Toll Road
Unlimited Tax General
Obligation and
Subordinate Lien
Refunding Series 1991 RB
6.75%, 08/01/14 AA Aa2 3,850 4,205,240
- ---------------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (Saint Luke's
Episcopal Hospital
Project); Series 1991 RB
6.70%, 02/15/01(e)(f) AAA NRR 1,000 1,107,290
- ---------------------------------------------------------------------
Harris County Mental Health
and Mental Retardation
Authority; Refunding
Series 1992 RB
6.25%, 09/15/10(d) AAA Aaa 4,500 4,799,430
- ---------------------------------------------------------------------
Houston (City of);
Refunding Series 1992 C
GO
6.25%, 03/01/02(e)(f) NRR NRR 1,470 1,575,972
- ---------------------------------------------------------------------
Hurst, Euless, Bedford,
Texas Independent School
District; Refunding RB
6.50%, 08/15/04(e)(f) AAA Aaa 640 721,350
- ---------------------------------------------------------------------
6.50%, 08/15/24(d) AAA Aaa 360 395,878
- ---------------------------------------------------------------------
Keller (City of)
Independent School
District; Certificates of
Participation Series 1994
RB
6.00%, 08/15/05(d) AAA Aaa 1,000 1,112,630
- ---------------------------------------------------------------------
Lockhart (City of);
Certificates of
Participation Tax and
Utility Systems Series
1996 GO
5.90%, 08/01/06(e)(f) AAA Aaa 1,100 1,227,699
- ---------------------------------------------------------------------
5.85%, 08/01/11(d) AAA Aaa 605 660,122
- ---------------------------------------------------------------------
North Central Texas Health
Facilities Development
Corp. (CC Young Memorial
Project); Hospital Series
RB
5.375%, 02/15/25(d) A - 1,000 1,007,850
- ---------------------------------------------------------------------
North Texas Higher
Education Authority Inc.;
Student Loan Refunding
Series D RB
6.10%, 04/01/08(b) - Aa 1,000 1,031,210
- ---------------------------------------------------------------------
6.30%, 04/01/09(b) - A 500 518,155
- ---------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
Plano (City of) Independent
School District;
Unlimited Tax Series 1991
B GO
5.625%, 02/15/01(e)(f) AAA Aaa $ 2,500 $ 2,599,225
- --------------------------------------------------------------------
Richardson (City of)
Hospital Authority
(Baylor/Richardson
Project); Refunding and
Improvement Hospital
Series RB
5.50%, 12/01/18 BBB+ Baa2 1,000 985,670
- --------------------------------------------------------------------
5.625%, 12/01/28 BBB+ Baa2 1,250 1,233,013
- --------------------------------------------------------------------
Tarrant County Texas Water
Control and Improvement
District No. 1; Refunding
Series 1993 RB
5.20%, 03/01/10(d) AAA Aaa 2,000 2,057,720
- --------------------------------------------------------------------
Texas (State of) Public
Property Finance Corp.
(Mental Health Mental
Retardation); Series 1996
RB
6.20%, 09/01/16 BBB+ - 1,590 1,682,395
- --------------------------------------------------------------------
Texas (State of); Unlimited
Tax Veteran's Land GO
6.40%, 12/01/24(b) AA Aa2 2,000 2,165,880
- --------------------------------------------------------------------
Texas (State of) Department
of Housing and Community
Affairs (Asmara Project);
Multifamily Housing
Series 1996 A RB
6.30%, 01/01/16 A - 310 338,083
- --------------------------------------------------------------------
Texas (State of) Housing
Agency; Residential
Development Mortgage
Series 1987 D RB
8.40%, 07/01/20(b) A+ Aa 2,805 2,900,398
- --------------------------------------------------------------------
Texas National Research
Laboratory Community
Financing Corp.
(Superconducting Super
Collider); Lease RB
7.10%, 12/01/01(e)(f) AAA Aaa 600 667,302
- --------------------------------------------------------------------
Travis (County of) Health
Facility (Charity
Obligation Group);
Hospital Series A RB
5.125%, 11/01/24 AA+ Aa2 2,500 2,490,950
- --------------------------------------------------------------------
Tyler Health Facilities
Development Corp. (Mother
Frances Hospital);
Hospital Series A RB
5.625%, 07/01/13 - Baa2 1,000 1,007,370
- --------------------------------------------------------------------
Victoria (County of) (Texas
Hospital Citizens Medical
Center); RB
6.20%, 01/01/10(d) AAA Aaa 1,000 1,094,480
- --------------------------------------------------------------------
Weatherford (City of)
Independent School
District; Refunding
Series 1994 GO
6.40%, 02/15/05(e)(f) NRR Aaa 900 1,013,391
- --------------------------------------------------------------------
6.40%, 02/15/12(d) - Aaa 100 111,057
- --------------------------------------------------------------------
59,523,905
- --------------------------------------------------------------------
UTAH-1.75%
Intermountain Power Agency
(Utah Power Supply);
Series 1986 B RB
5.00%, 07/01/16 A+ A1 1,550 1,523,402
- --------------------------------------------------------------------
Salt Lake (County of)
(Westminster College
Project); RB
5.75%, 10/01/27 BBB - 1,000 1,022,110
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
UTAH-(CONTINUED)
Utah (State of) Associated
Municipal Power System
(San Juan Project);
Refunding Series RB
5.00%, 06/01/22(d) AAA Aaa $ 775 $ 763,398
- --------------------------------------------------------------------
Utah (State of) Housing
Finance Agency; Federally
Insured Term Subordinate
Single Family Mortgage RB
6.30%, Sub-Series 1994
E-1, 07/01/06 AA- - 465 498,764
- --------------------------------------------------------------------
7.15%, Sub-Series 1994
G-1, 07/01/06 AA- Aa2 290 316,700
- --------------------------------------------------------------------
Utah (State of) Housing
Finance Agency; Single
Family Mortgage RB
6.05%, Series 1994 C
07/01/06 - A1 605 642,322
- --------------------------------------------------------------------
6.45%, Series G2 RB
07/01/27(b) AAA Aaa 1,065 1,132,862
- --------------------------------------------------------------------
Utah (State of) Water
Finance Agency; Series A
RB
5.30%, 10/01/23(d) AAA Aaa 1,250 1,271,775
- --------------------------------------------------------------------
7,171,333
- --------------------------------------------------------------------
VIRGIN ISLANDS-0.91%
Virgin Islands Public
Finance Authority;
Matching Fund Loan Notes
Series A RB
7.25%, 10/01/02(e)(f) NRR NRR 1,000 1,141,540
- --------------------------------------------------------------------
Virgin Islands Territory
(Hugo Insurance Claims
Fund); Special Tax Bond
Series 1991 GO
7.75%, 10/01/01(e)(f) NRR NRR 2,350 2,593,742
- --------------------------------------------------------------------
3,735,282
- --------------------------------------------------------------------
VIRGINIA-1.68%
Covington-Alleghany (County
of) Industrial
Development Authority
(Beverly Enterprises);
Refunding Series RB
9.375%, 09/01/01(g) - - 40 42,420
- --------------------------------------------------------------------
Lynchburg (City of)
Industrial Development
Authority (Centra Health
Inc.); Refunding
Healthcare Facilities
Series RB
5.20%, 01/01/18 A+ A1 2,500 2,508,275
- --------------------------------------------------------------------
Richmond (City of); Public
Improvement Refunding
Series B GO
6.25%, 01/15/18 AA A1 2,000 2,122,780
- --------------------------------------------------------------------
Richmond (City of) Public
Utility; Refunding Series
A RB
5.125%, 01/15/28 A+ A1 1,000 990,290
- --------------------------------------------------------------------
Virginia Beach (City of)
Development Authority
(Sentara Health System);
Refunding Healthcare
Facilities Series RB
4.75%, 11/01/21 AA Aa2 1,000 949,170
- --------------------------------------------------------------------
Virginia Housing
Development Authority;
Commonwealth Mortgage
Series A RB
7.10%, 01/01/17 AA+ Aa1 250 264,065
- --------------------------------------------------------------------
6,877,000
- --------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WASHINGTON-2.30%
Clark (County of) Gamas
School District No. 117;
GO
6.00%, 12/01/05(e)(f) AAA Aaa $ 1,000 $ 1,113,180
- --------------------------------------------------------------------
King (County of); Unlimited
Tax GO
5.50%, 07/01/07(e) AAA Aaa 500 541,540
- --------------------------------------------------------------------
King (County of); Unlimited
Tax Refunding GO
6.50%, 12/01/11 AA+ Aa1 500 501,440
- --------------------------------------------------------------------
Pend Oreille (County of)
Public Utility District
No. 1; Electric Series B
RB
6.30%, 01/01/17 A- A 1,400 1,513,946
- --------------------------------------------------------------------
Seattle (City of)
Metropolitan Municipality
Sewer District; Series T
RB
6.80%, 01/01/00(e)(f) NRR NRR 1,780 1,872,631
- --------------------------------------------------------------------
Washington State Public
Power Supply System
(Nuclear Project No. 1);
Refunding Series A RB
6.00%, 07/01/07(d) AAA Aaa 1,000 1,129,660
- --------------------------------------------------------------------
5.75%, 07/01/12(d) AAA Aaa 2,000 2,180,700
- --------------------------------------------------------------------
West Richland (City of);
Water & Sewer Series RB
7.00%, 12/01/04(e)(f) AAA Aaa 500 579,570
- --------------------------------------------------------------------
9,432,667
- --------------------------------------------------------------------
WEST VIRGINIA-0.12%
Ohio County Board of
Education; Unlimited Tax
Refunding Series GO
5.125%, 06/01/18 A+ A 500 508,405
- --------------------------------------------------------------------
WISCONSIN-0.80%
Wisconsin Health and
Educational Facilities
Authority (Children's
Hospital of Wisconsin
Inc); RB
5.125%, 02/15/21(d) AAA Aaa 1,000 996,670
- --------------------------------------------------------------------
</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 (Sinai
Samaritan Medical
Center); Series 1994 F RB
5.75%, 08/15/16(d) AAA Aaa $ 1,500 $ 1,615,755
- --------------------------------------------------------------------
Wisconsin Housing and
Economic Development
Authority; Home Ownership
RB
7.35%, Series 1994 E
01/01/17 AA Aa2 500 538,600
- --------------------------------------------------------------------
8.00%, Series 1990 E
03/01/21(b) AA Aa 130 135,407
- --------------------------------------------------------------------
3,286,432
- --------------------------------------------------------------------
WYOMING-0.86%
Campbell (County of) School
District No. 1
(Gillette); Unlimited Tax
Series GO
5.35%, 06/01/04 AAA Aaa 1,000 1,072,500
- --------------------------------------------------------------------
Laramie (County of)
(Memorial Hospital
Project); Hospital Series
RB
6.70%, 05/01/12(d) AAA Aaa 250 276,935
- --------------------------------------------------------------------
Natrona (County of) Wyoming
Medical Center; RB
6.00%, 09/15/11(d) AAA Aaa 1,000 1,099,770
- --------------------------------------------------------------------
Sweetwater (County of)
(Idaho Power Company
Project); Series 1996 A
PCR
6.05%, 07/15/26 A A3 1,000 1,080,270
- --------------------------------------------------------------------
3,529,475
- --------------------------------------------------------------------
TOTAL INVESTMENTS-99.16%
(Cost $379,395,507) 406,530,698
- --------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.84% 3,462,519
- --------------------------------------------------------------------
NET ASSETS-100.00% $409,993,217
====================================================================
</TABLE>
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. Ratings are not covered by Independent Auditors' Report.
(b) Security subject to the alternative minimum tax.
(c) Demand security; payable upon demand by the Fund with usually no more than
seven calendar days' notice. Interest rates are redetermined periodically.
Rates shown are in effect on December 31, 1998.
(d) Secured by bond insurance.
(e) Secured by an escrow fund of U.S. Treasury obligations.
(f) Security has an irrevocable call or mandatory put by the issuer. Maturity
date reflects such call or put.
(g) 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.
(h) Secured by a letter of credit.
Abbreviations:
GO - General Obligation Bonds
IDR - Industrial Development Revenue Bonds
NRR - Not Re-Rated
PCR - Pollution Control Revenue Bonds
RB - Revenue Bonds
See Notes to Financial Statements.
14
<PAGE> 17
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$379,395,507) $406,530,698
- ----------------------------------------------------------
Receivables for:
Fund shares sold 667,653
- ----------------------------------------------------------
Interest 7,212,829
- ----------------------------------------------------------
Investments sold 474,995
- ----------------------------------------------------------
Investment for deferred compensation plan 67,607
- ----------------------------------------------------------
Other assets 53,298
- ----------------------------------------------------------
Total assets 415,007,080
- ----------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 395,648
- ----------------------------------------------------------
Investments purchased 3,223,120
- ----------------------------------------------------------
Dividends 778,082
- ----------------------------------------------------------
Amount due to custodian 6,120
- ----------------------------------------------------------
Deferred compensation plan 67,607
- ----------------------------------------------------------
Accrued advisory fees 156,126
- ----------------------------------------------------------
Accrued distribution fees 303,385
- ----------------------------------------------------------
Accrued transfer agent fees 17,837
- ----------------------------------------------------------
Accrued operating expenses 65,938
- ----------------------------------------------------------
Total liabilities 5,013,863
- ----------------------------------------------------------
Net assets applicable to shares outstanding $409,993,217
- ----------------------------------------------------------
NET ASSETS:
Class A $327,705,242
==========================================================
Class B $ 72,723,215
==========================================================
Class C $ 9,564,760
==========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 39,223,500
==========================================================
Class B 8,691,472
==========================================================
Class C 1,144,808
==========================================================
Class A:
Net asset value and redemption price per
share $ 8.35
- ----------------------------------------------------------
Offering price per share:
(Net asset value of $8.35
divided by 95.25%) $ 8.77
==========================================================
Class B:
Net asset value and offering price per
share $ 8.37
==========================================================
Class C:
Net asset value and offering price per
share $ 8.35
==========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $22,383,574
- ----------------------------------------------------------
EXPENSES:
Advisory fees 1,738,038
- ----------------------------------------------------------
Administrative services fees 73,917
- ----------------------------------------------------------
Custodian fees 18,454
- ----------------------------------------------------------
Transfer agent fees - Class A 163,401
- ----------------------------------------------------------
Transfer agent fees - Class B 28,772
- ----------------------------------------------------------
Transfer agent fees - Class C 2,514
- ----------------------------------------------------------
Trustees' fees 10,408
- ----------------------------------------------------------
Distribution fees - Class A 806,482
- ----------------------------------------------------------
Distribution fees - Class B 568,813
- ----------------------------------------------------------
Distribution fees - Class C 50,355
- ----------------------------------------------------------
Other 170,519
==========================================================
Total expenses 3,631,673
==========================================================
Less: Expenses paid indirectly (4,261)
==========================================================
Net expenses 3,627,412
==========================================================
Net investment income 18,756,162
==========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain from investment securities 595,427
- ----------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities (197,391)
- ----------------------------------------------------------
Net gain on investment securities 398,036
- ----------------------------------------------------------
Net increase in net assets resulting from
operations $19,154,198
==========================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE> 18
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 18,756,162 $ 16,818,463
- ------------------------------------------------------------------------------------------
Net realized gain from investment securities 595,427 114,781
- ------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (197,391) 9,751,922
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 19,154,198 26,685,166
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (16,134,077) (15,139,605)
- ------------------------------------------------------------------------------------------
Class B (2,410,612) (1,703,002)
- ------------------------------------------------------------------------------------------
Class C (214,027) (5,880)
- ------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A (87,502) (152,238)
- ------------------------------------------------------------------------------------------
Class B (15,369) (20,640)
- ------------------------------------------------------------------------------------------
Class C (1,355) (62)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A 8,923,504 30,852,332
- ------------------------------------------------------------------------------------------
Class B 25,558,113 12,563,423
- ------------------------------------------------------------------------------------------
Class C 8,741,537 817,511
- ------------------------------------------------------------------------------------------
Net increase in net assets 43,514,410 53,897,005
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 366,478,807 312,581,802
- ------------------------------------------------------------------------------------------
End of period $409,993,217 $366,478,807
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $383,815,745 $340,696,817
- ------------------------------------------------------------------------------------------
Undistributed net investment income (73,902) (71,348)
- ------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (883,817) (1,479,244)
- ------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 27,135,191 27,332,582
- ------------------------------------------------------------------------------------------
$409,993,217 $366,478,807
==========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
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 reflect the current market value of
the security. Securities for which market quotations either are not readily
available or are questionable
16
<PAGE> 19
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. On December 31, 1998
additional paid-in capital was decreased by $104,226 and undistributed net
investment income was increased by $104,226 in order to comply with the
requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
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 $871,215 (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 year ended December 31,
1998, AIM was reimbursed $73,917 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 year ended December 31, 1998, AFS
was paid $126,501 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 year ended December 31, 1998, the Class A, Class B and Class
C shares paid AIM Distributors $806,482, $568,813 and $50,355, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $100,100 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1998,
AIM Distributors received $48,077 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 year ended December 31, 1998, the Fund paid legal fees of $4,664
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 year ended December 31, 1998, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $4,261 under an expense
offset arrangement. The effect of the above arrangements resulted in a reduction
of the Fund's total expenses of $4,261 during the year ended December 31, 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 year ended December 31, 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.
17
<PAGE> 20
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1998 was
$117,522,000 and $73,292,724, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1998 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $27,282,565
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (147,374)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $27,135,191
=========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 12,409,366 $ 103,769,637 10,031,224 $ 79,386,539
- --------------------------------------------------------------------------------------------------------------------------
Class B 5,306,019 44,489,342 2,368,696 19,504,059
- --------------------------------------------------------------------------------------------------------------------------
Class C* 1,294,847 10,824,561 111,584 923,229
- --------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 1,031,670 8,611,126 1,051,195 8,642,466
- --------------------------------------------------------------------------------------------------------------------------
Class B 183,219 1,532,455 131,460 1,082,551
- --------------------------------------------------------------------------------------------------------------------------
Class C* 16,529 138,044 510 4,239
- --------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (12,388,704) (103,457,259) (6,962,233) (57,176,673)
- --------------------------------------------------------------------------------------------------------------------------
Class B (2,444,886) (20,463,684) (975,132) (8,023,187)
- --------------------------------------------------------------------------------------------------------------------------
Class C* (265,347) (2,221,068) (13,315) (109,957)
- --------------------------------------------------------------------------------------------------------------------------
5,142,713 $ 43,223,154 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 and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1998; and for a share of Class C outstanding during the year ended
December 31, 1998 and the period August 4, 1997 (date sales commenced) through
December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.34 $ 8.19 $ 8.31 $ 7.78 $ 8.61
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.42 0.42 0.43 0.43 0.46
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.01 0.16 (0.12) 0.56 (0.78)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.43 0.58 0.31 0.99 (0.32)
- --------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.42) (0.43) (0.43) (0.43) (0.45)
- --------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- (0.03)
- --------------------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- (0.03) (0.03)
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (0.42) (0.43) (0.43) (0.46) (0.51)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.35 $ 8.34 $ 8.19 $ 8.31 $ 7.78
==========================================================================================================================
Total return(a) 5.28% 7.27% 3.90% 13.05% (3.79)%
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $327,705 $318,469 $278,812 $284,803 $257,456
==========================================================================================================================
Ratio of expenses to average net assets 0.82%(b) 0.90% 0.80% 0.88% 0.89%
==========================================================================================================================
Ratio of net investment income to average net assets 5.00%(b) 5.14% 5.29% 5.26% 5.61%
==========================================================================================================================
Portfolio turnover rate 19% 24% 26% 36% 43%
==========================================================================================================================
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average daily net assets of $322,592,733.
18
<PAGE> 21
NOTE 8-FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------ -----------------
1998 1997 1996 1995 1994 1998 1997
------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.36 $ 8.19 $ 8.31 $ 7.78 $ 8.61 $ 8.35 $ 8.30
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.36 0.36 0.37 0.39 0.39 0.36 0.15
- --------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) 0.01 0.17 (0.13) 0.54 (0.78) -- 0.04
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.37 0.53 0.24 0.93 (0.39) 0.36 0.19
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.36) (0.36) (0.36) (0.37) (0.38) (0.36) (0.14)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- (0.03) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- (0.03) (0.03) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.36) (0.36) (0.36) (0.40) (0.44) (0.36) (0.14)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.37 $ 8.36 $ 8.19 $ 8.31 $ 7.78 $ 8.35 $ 8.35
================================================================================================================================
Total return(a) 4.48% 6.59% 2.99% 12.14% (4.57)% 4.36% 2.36%
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $72,723 $47,185 $33,770 $21,478 $9,175 $9,565 $ 825
================================================================================================================================
Ratio of expenses to average net assets 1.57%(b) 1.66% 1.61% 1.68%(c) 1.67%(c) 1.57%(b) 1.67%(d)
================================================================================================================================
Ratio of net investment income to average net
assets 4.25%(b) 4.38% 4.49% 4.46%(e) 4.83%(e) 4.25%(b) 4.37%(d)
================================================================================================================================
Portfolio turnover rate 19% 24% 26% 36% 43% 19% 24%
================================================================================================================================
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average daily net assets of $56,881,310 and $5,035,467
for Class B and Class C, respectively.
(c) 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% and 1.84% for the periods 1995-1994, 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% and 4.66% for the periods 1995-1994, respectively.
19
<PAGE> 22
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Municipal Bond Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Municipal Bond Fund (a portfolio of
AIM Funds Group), including the schedule of investments,
as of December 31, 1998, and the related statement of
operations for the year then ended, the statement of
changes in net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years in the five-year period then ended.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1998, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM
Municipal Bond Fund as of December 31, 1998, the results
of its operations for the year then ended, the changes in
its net assets for each of the years in the two-year
period then ended and the financial highlights for each
of the years in the five-year period then ended, in
conformity with generally accepted accounting principles.
KPMG LLP
Houston, Texas
February 5, 1999
20
<PAGE> 23
Trustees & Officers
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <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
Prema Mathai-Davis New York, NY 10022
Chief Executive Officer, YWCA of the U.S.A.; P. Michelle Grace
Commissioner, New York City Dept. for Assistant Secretary DISTRIBUTOR
the Aging; and member of the Board of Directors,
Metropolitan Transportation Authority of Jeffrey H. Kupor A I M Distributors, Inc.
New York State Assistant Secretary 11 Greenway Plaza
Suite 100
Lewis F. Pennock Nancy L. Martin Houston, TX 77046
Attorney Assistant Secretary
AUDITORS
Ian W. Robinson Ofelia M. Mayo
Consultant; Formerly Executive Assistant Secretary KPMG LLP
Vice President and 700 Louisiana
Chief Financial Officer Lisa A. Moss Houston, TX 77002
Bell Atlantic Management Assistant Secretary
Services, Inc.
Kathleen J. Pflueger
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Samuel D. Sirko
Limited Partnership Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Municipal Bond Fund Class A, Class B, and Class C shares paid ordinary
dividends in the amount of $0.42, $0.36, and $0.36, respectively, to
shareholders during its tax year ended December 31, 1998. Of this amount, 0% is
qualified as exempt-interest dividends for federal income tax purposes.
<PAGE> 24
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately $109
AIM Capital Development Fund billion in assets for more than 6.2 million
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS shareholders, including individual investors,
AIM Mid Cap Equity Fund(2), (A) AIM Advisor International Value Fund corporate clients, and financial institutions,
AIM Select Growth Fund(3) AIM Asian Growth Fund as of December 31, 1998.
AIM Small Cap Growth Fund(2), (B) AIM Developing Markets Fund(2) The AIM Family of Funds--Registered Trademark--
AIM Small Cap Opportunities Fund AIM Europe Growth Fund(2) is distributed nationwide, and AIM today is the
AIM Value Fund AIM European Development Fund 10th-largest mutual fund complex in the U.S. in
AIM Weingarten Fund AIM International Equity Fund assets under management, according to Strategic
AIM Japan Growth Fund(2) Insight, an independent mutual fund monitor.
GROWTH & INCOME FUNDS AIM Latin American Growth Fund(2)
AIM Advisor Flex Fund AIM New Pacific Growth Fund(2)
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund GLOBAL GROWTH FUNDS
AIM Advisor Real Estate Fund AIM Global Aggressive Growth Fund
AIM Balanced Fund AIM Global Growth Fund
AIM Basic Value Fund(2), (C)
AIM Charter Fund GLOBAL GROWTH & INCOME FUNDS
AIM Global Growth & Income Fund(2)
INCOME FUNDS AIM Global Utilities Fund
AIM Floating Rate Fund(2)
AIM High Yield Fund GLOBAL INCOME FUNDS
AIM High Yield Fund II AIM Emerging Markets Debt Fund(2), (D)
AIM Income Fund AIM Global Government Income Fund(2)
AIM Intermediate Government Fund AIM Global Income Fund
AIM Limited Maturity Treasury Fund AIM Strategic Income Fund(2)
TAX-FREE INCOME FUNDS THEME FUNDS
AIM High Income Municipal Fund AIM Global Consumer Products and Services Fund(2)
AIM Municipal Bond Fund AIM Global Financial Services Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Health Care Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
AIM Global Trends Fund(2), (E)
</TABLE>
(1)AIM Aggressive Growth Fund reopened to new investors November 16, 1998.
(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. (A)On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B)On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C)On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D)On September 8, 1998, AIM Global High Income
Fund was renamed AIM Emerging Markets Debt Fund. (E)On September 8, 1998, AIM
New Dimension Fund was renamed AIM Global Trends 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.
