<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of We are pleased to report that during the 12 months
Charles T. Bauer, covered by this report, Institutional Cash Reserve
Chairman of the Shares of the Cash Reserve Portfolio of Tax-Free
Board of The Fund Investments Co. offered competitive short-term
APPEARS HERE] tax-free money market rates during a declining
interest rate environment.
Economic conditions were stable during the fiscal
LETTER year ended March 31, 1996. Economic growth during
TO OUR 1995 was a sluggish 2%, and inflation remained
SHAREHOLDERS tame. Short-term interest rates dropped as the
Federal Reserve Board cut the federal funds rate
March 31, 1996 three times over the period covered by this report.
YOUR INVESTMENT PORTFOLIO
Cash Reserve Portfolio maintained its strict investment
discipline by continuing to hold a AAAm credit quality rating,
the highest given by Standard & Poor's Ratings Group, a widely
known credit rating agency. The AAAm rating is historical and is
based on annual analysis of the Portfolio's credit quality,
composition, management, and weekly portfolio review. As with any
money market fund, an investment in Cash Reserve Portfolio is
neither insured nor guaranteed by the U.S. government, and there
can be no assurance the Portfolio will be able to maintain a
stable net asset value of $1.00 per share.
Cash Reserve Portfolio invests only in securities rated
"First-Tier" as defined in Rule 2a-7 under the Investment Company
Act of 1940. On March 21, 1996, the U.S. Securities and Exchange
Commission adopted amendments to Rule 2a-7, which revised the
diversification and credit quality conditions under which tax-free
money funds are required to operate. Cash Reserve Portfolio was
not affected by the changes because its investments already
complied with the revised standards set forth in the amended rule.
Such standards become fully effective on October 3, 1996.
With declining short-term interest rates, portfolio managers
lengthened the weighted average maturity of holdings over the
course of the year from 20 days as of March 31, 1995, to 46 days
as of March 31, 1996.
The 30-day yield for Institutional Cash Reserve Shares of the
Cash Reserve Portfolio was 3.13% as of March 31, 1996, higher
than the 2.79% average monthly yield reported in March for
IBC/Donoghue's All Tax-Free Money Fund Averages(TM), as shown
in the chart on the following page. At the close of the reporting
period, net assets of Institutional Cash Reserve Shares of the
Cash Reserve Portfolio were $1.01 billion, the same as last year.
OUTLOOK FOR THE FUTURE
Financial markets were favorable during the first half of the
period covered by this report. However, late in 1995, signs of
economic weakness began to emerge, including contraction in
industrial production and declines in the index of leading
economic indicators. These were sufficient to prompt the Federal
Reserve Board to lower short-term interest rates in December and
again at the end of January 1996. Long-term interest rates edged
higher through March on growing concerns that a stronger-than-
expected February employment report indicated an accelerating
economy.
At the close of the reporting period, the near-term prognosis
was for slow-to-moderate economic growth coupled with low
inflation. With the threat of recession lessened, the Federal
Reserve Board did not cut rates at its meeting in late March. In
testimony before a Senate panel in March, Federal Reserve Board
Chairman Alan Greenspan observed that the economy is "running at a
reasonably good clip." Such a relatively optimistic outlook allows
Cash Reserve Portfolio to continue to manage its weighted average
maturity and portfolio structure so that it may maximize available
yield without sacrificing liquidity or taking on additional net
asset value risk.
We are pleased to send you this report concerning Institutional
Cash Reserve Shares of the Cash Reserve Portfolio. The Portfolio
is committed to its objective of generating as high a level of
tax-exempt income as is consistent with preservation of capital
and maintenance of liquidity. As always, we are ready to respond
to your comments and to any questions. Please contact one of our
representatives at 800-659-1005.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE>
AVERAGE MONTHLY YIELD COMPARISON
12 months ended 3/31/96 (Yields are 30-day average yields for the month-ends
shown)
<TABLE>
<CAPTION>
IBC/Donoghue's Tax-Free IBC/Donoghue's All TFIC Institutional
Money Fund Averages(TM2) Tax-Free Money Fund Averages(TM3) Cash Reserve Shares(1)
<S> <C> <C> <C>
4/95 3.82% 3.59% 3.96%
5/95 3.95 3.74 4.14
6/95 3.54 3.32 3.63
7/95 3.33 3.10 3.41
8/95 3.44 3.22 3.59
9/95 3.51 3.28 3.67
10/95 3.48 3.24 3.62
11/95 3.51 3.29 3.66
12/95 3.75 3.52 3.90
1/96 3.18 2.97 3.27
2/96 3.05 2.85 3.18
3/96 3.00 2.79 3.13
</TABLE>
(1)Yields shown above are net of expenses.
(2)Average yield for all Tax-Free Money Funds (Institutions Only) category
compiled by IBC Money Market Insight(TM).
(3)Average yield for all Tax-Free Money Funds category compiled by IBC Money
Market Insight(TM).
TFIC Institutional Cash Reserves Shares' 7-day SEC yield as of March 31, 1996
was 3.20%.
Past performance cannot guarantee comparable future results.
2
<PAGE>
SCHEDULE OF INVESTMENTS
March 31, 1996
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ALABAMA - 4.02%
Birmingham (City of); General
Obligation Series 1994-A Warrants
3.60% 06/01/18(b)(c) A-1+ VMIG-1 $ 3,000 $ 3,000,000
- ------------------------------------------------------------------------------
Birmingham (City of); Series 1995
General Obligation
Refunding Bonds
3.45% 06/01/23(b)(c) A-1+ VMIG-1 5,000 5,000,000
- ------------------------------------------------------------------------------
BMC Special Care Facilities Financing
Authority; Variable Rate Hospital
Series 1985 RB
3.30% Series B 12/01/30(b)(d) A-1 Aaa 3,200 3,200,000
- ------------------------------------------------------------------------------
3.30% Series C 12/01/30(b)(d) A-1 Aaa 3,075 3,075,000
- ------------------------------------------------------------------------------
3.30% Series D 12/01/30(b)(d) A-1 Aaa 4,000 4,000,000
- ------------------------------------------------------------------------------
3.30% Series E 12/01/30(b)(d) A-1 Aaa 4,400 4,400,000
- ------------------------------------------------------------------------------
3.30% Series H 12/01/30(b)(d) A-1 Aaa 1,500 1,500,000
- ------------------------------------------------------------------------------
Jefferson (County of); Sewer Series
1995-A Revenue Warrants
3.45% 09/01/25(b)(c) A-1+ VMIG-1 15,000 15,000,000
- ------------------------------------------------------------------------------
Marshall (County of); Special
Obligation School Refunding Series
1994 Warrants
3.50% 02/01/12(b)(c) A-1+ -- 2,850 2,850,000
- ------------------------------------------------------------------------------
42,025,000
- ------------------------------------------------------------------------------
ALASKA - 0.19%
North Slope (Borough of); Series 1994
B GO
5.20% 06/30/96(d) AAA Aaa 2,000 2,008,098
- ------------------------------------------------------------------------------
ARIZONA - 2.21%
Arizona (State of) Agricultural
Improvement and Power District (Salt
River Project); Promissory Notes
3.65% 04/04/96 A-1+ P-1 8,573 8,573,000
- ------------------------------------------------------------------------------
Arizona State University; RB
7.50% 07/01/96(e)(f) -- AAA 1,500 1,545,397
- ------------------------------------------------------------------------------
Chandler (City of) Industrial
Development Authority (Southpark
Apartment Project); Multifamily
Housing Series 1989 RB
3.40% 12/01/02(b)(c) A-1+ -- 1,500 1,500,000
- ------------------------------------------------------------------------------
Maricopa County High School District
No. 210; Series A BAN
3.75% 07/01/96 AA Aa 1,500 1,499,520
- ------------------------------------------------------------------------------
Phoenix (City of); Refunding Series
1992 B GO
5.05% 07/01/96 AA+ Aa1 1,035 1,038,371
- ------------------------------------------------------------------------------
Phoenix (City of); Series 1995 A-2 RB
3.80% 06/01/20(b) A-1+ Aa1 1,000 1,000,000
- ------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Arizona - (continued)
Phoenix (City of) Industrial
Development Authority (Southwest
Villages Project); Variable Rate
Demand Multifamily Housing Series
1985 A RB
3.40% 12/01/06(b)(c) A-1+ -- $ 4,300 $ 4,300,000
- -------------------------------------------------------------------------------
Scottsdale (City of) Municipal
Property Corp.; Series 1986 COP
7.875% 11/01/96(d)(e) AAA Aaa 1,400 1,460,041
- -------------------------------------------------------------------------------
Tempe (City of) Industrial
Development Authority (Elliot's
Crossing Apartment Project);
Variable Rate Demand Multifamily
Housing Series 1985 RB
3.40% 10/01/08(b)(c) A-1+ -- 2,150 2,150,000
- -------------------------------------------------------------------------------
23,066,329
- -------------------------------------------------------------------------------
ARKANSAS - 0.11%
Arkansas (State of); College Savings
GO
3.65% 06/01/96 AA Aa 1,100 1,099,345
- -------------------------------------------------------------------------------
COLORADO - 2.66%
Adams (County of) Industrial
Development (Clear Creek Business);
RB
3.40% 11/01/08(b)(c) -- VMIG-1 6,500 6,500,000
- -------------------------------------------------------------------------------
Colorado (State of) General Fund;
Series A TRAN
4.50% 06/27/96 SP-1+ - 1,000 1,002,423
- -------------------------------------------------------------------------------
Colorado Health Facilities Authority
(Boulder Community Hospital
Project); Variable Rate Demand
Hospital Series 1989 RB
3.35% 10/01/14(b)(d) A-1+ VMIG-1 3,310 3,310,000
- -------------------------------------------------------------------------------
Colorado Housing Finance Authority
(Winridge Project); Adjustable
Reference Multifamily Housing Series
1993 RB
3.40% 02/01/23(b)(c) A-1+ -- 5,715 5,715,000
- -------------------------------------------------------------------------------
Douglas (County of) (Autumn Chase
Project); Variable Rate Demand
Multifamily Housing Series 1985 RB
3.40% 07/01/06(b)(c) - VMIG-1 3,700 3,700,000
- -------------------------------------------------------------------------------
Pitkin (County of) (Centennial-Aspen
Project); Multifamily Housing Series
1984 RB
3.40% 04/01/07(b)(c) -- VMIG-1 7,700 7,700,000
- -------------------------------------------------------------------------------
27,927,423
- -------------------------------------------------------------------------------
DELAWARE - 0.10%
Delaware (State of); Series 1986 A GO
7.50% 07/01/96(e)(f) AAA Aaa 1,000 1,030,102
- -------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 2.46%
District of Columbia (American
Association for the Advancement of
Science); Series 1995 RB
3.75% 10/01/22(b)(c) A-1 VMIG-1 21,850 21,850,000
- -------------------------------------------------------------------------------
District of Columbia (The American
University Issue); Variable Rate
Weekly Demand Series 1985 RB
3.40% 10/01/15(b)(c) -- VMIG-1 3,800 3,800,000
- -------------------------------------------------------------------------------
25,650,000
- -------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
FLORIDA - 6.27%
Dade (County of) Health Facilities
Authority (Miami Children's Hospital
Project); Series 1990 Hospital RB
3.85% 09/01/20(b)(c) - VMIG-1 $ 2,600 $ 2,600,000
- -------------------------------------------------------------------------------
Eagle Tax-Exempt Trust; Series 950901
A COP
3.52% 06/01/21(b)(d)(g) A-1+c -- 12,700 12,700,000
- -------------------------------------------------------------------------------
Florida (State of); Pollution Control
GO
7.125% Series 1986 T 07/01/96(e)(f) -- AAA 900 925,348
- -------------------------------------------------------------------------------
7.20% Series 1986 T 07/01/96(e)(f) -- Aaa 2,495 2,567,116
- -------------------------------------------------------------------------------
Florida State General Services
Department (Florida Facilities
Pool); Facilities Management Series
1986 RB
7.75% 09/01/96(e)(f) AAA Aaa 1,500 1,556,916
- -------------------------------------------------------------------------------
Hillsborough County Industrial
Development Authority (Tampa
Electric Co. Project); Refunding
Series 1990 PCR
3.85% 09/01/25(b)(d) AA VMIG-1 2,800 2,800,000
- -------------------------------------------------------------------------------
Pinellas (County of) Health
Facilities Authority (Pooled
Hospital Loan Program); Series 1985
RB
3.85% 12/01/15(b)(c) A-1 VMIG-1 3,200 3,200,000
- -------------------------------------------------------------------------------
Putnam County Development Authority
(Seminole Electric Cooperative, Inc.
Project); National Rural Utilities
Cooperative Finance Corp. Guaranteed
Semiannual Adjustable Series 1984 H-
4 PCR
3.25% 09/15/96(c)(e) A-1+ MIG-1 3,500 3,500,000
- -------------------------------------------------------------------------------
Putnam County Development Authority
(Seminole Electric Cooperative, Inc.
Project); National Rural Utilities
Cooperative Finance Corp. Guaranteed
Floating/Fixed Rate PCR
3.40% Pooled Series 1984H-1
03/15/14(b)(c) A-1+ P-1 4,015 4,015,000
- -------------------------------------------------------------------------------
3.40% Pooled Series 1984H-2
03/15/14(b)(c) A-1+ P-1 1,650 1,650,000
- -------------------------------------------------------------------------------
Sunshine State Governmental Financing
Commission; Commercial Paper Notes
3.25% 05/20/96(d) A-1+ -- 15,000 15,000,000
- -------------------------------------------------------------------------------
3.20% 08/09/96(d) A-1+ -- 15,000 15,000,000
- -------------------------------------------------------------------------------
65,514,380
- -------------------------------------------------------------------------------
GEORGIA - 1.88%
Cobb (County of); Water and Sewer
Series 1985 RB
9.50% 07/01/96(e)(f) AAA Aaa 1,500 1,552,005
- -------------------------------------------------------------------------------
Decatur County Bainbridge Industrial
Development Authority (Kaiser
Agriculture Chemical Inc. Project);
Series 1985 IDR
3.45% 12/01/02(b)(c) A-1+ -- 3,500 3,500,000
- -------------------------------------------------------------------------------
Development Authority of DeKalb
County (Radiation Sterilizers, Inc.
Project); Variable Rate Demand
Series 1985 IDR
3.50% 03/01/05(b)(c) A-1 -- 4,600 4,600,000
- -------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Georgia - (continued)
Housing Authority of Cobb County
(Terrell Mill II Associates, Ltd.
Project); Multifamily Housing
Refunding Series 1993 RB
3.45% 12/01/05(b)(c) A-1 -- $10,000 $ 10,000,000
- -------------------------------------------------------------------------------
19,652,005
- -------------------------------------------------------------------------------
ILLINOIS - 11.90%
Burbank (City of) (Service
Merchandise Co. Inc. Project);
Floating Rate Monthly Demand
Industrial Building Series 1984 RB
3.45% 09/15/24(b)(c) A-1+ -- 3,600 3,600,000
- -------------------------------------------------------------------------------
Chicago (City of) Tender Notes Series
1996 GO
3.10% 02/04/97(c)(e) SP-1 MIG-1 28,300 28,262,618
- -------------------------------------------------------------------------------
Chicago (City of) (O'Hare
International Airport); General
Airport Second Lien Series 1994 C RB
3.35% 01/01/18(b)(c) A-1+ VMIG-1 3,400 3,400,000
- -------------------------------------------------------------------------------
Chicago School Reform Board of
Trustees (Chicago School Reform
Board of Trustees Equipment
Acquisition Project); Series 1995
COP
3.70% 12/01/96(c) AA- -- 4,000 4,000,000
- -------------------------------------------------------------------------------
Cook (County of) (Catholic Charities
Housing Development Corp. Project);
Adjustable Demand Series 1988 A-1 RB
3.45% 01/01/28(b)(c) -- VMIG-1 1,700 1,700,000
- -------------------------------------------------------------------------------
Cook (County of) Township High School
District No. 211 (Palatine and
Schaumburg, Illinois); Limited
School Tax Series 1995 GO
4.25% 12/01/96 AA Aa1 6,140 6,177,754
- -------------------------------------------------------------------------------
East Peoria (City of) (Radnor/East
Peoria Partnership Project);
Multifamily Housing Series 1983 RB
3.55% 06/01/08(b)(c) -- Aa3 6,345 6,345,000
- -------------------------------------------------------------------------------
Illinois (State of); Series 1981 GO
11.00% 11/01/96(e)(f) AAA Aaa 2,000 2,108,026
- -------------------------------------------------------------------------------
Illinois (State of); Series August
1995 RAN
4.50% 05/10/96 SP-1+ MIG-1 5,000 5,003,629
- -------------------------------------------------------------------------------
Illinois (State of); Series August
1995-June 1996 RAN
4.50% 06/10/96 SP-1+ MIG-1 2,060 2,063,058
- -------------------------------------------------------------------------------
Illinois (State of) Metropolitan Fair
and Exposition Authority; Series
1996 RB
8.00% 06/01/96(e)(f) AAA -- 1,000 1,027,035
- -------------------------------------------------------------------------------
Illinois Development Finance
Authority (Institutional Gas
Technology Project); Variable Rate
Series 1993 RB
3.40% 09/01/18(b)(c) A-1+ -- 2,700 2,700,000
- -------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Illinois - (continued)
Illinois Development Finance Authority
(Jewish Charities Revenue Anticipation
Notes Program); Variable Rate Demand
Series 1995-1996 B RAN
3.50% 06/28/96(b)(c) A-1+ -- $ 5,030 $ 5,030,000
- -------------------------------------------------------------------------------
Illinois Educational Facilities Authority
(DePaul University Project); Series 1992
CP-1 RB
3.40% 04/01/26(b)(c) A-1+ VMIG-1 8,700 8,700,000
- -------------------------------------------------------------------------------
Illinois Health Facilities Authority
(Highland Park Hospital); Adjustable Rate
Series 1991 B RB
4.00% 06/01/96(d)(e) A-1+ VMIG-1 8,000 8,000,000
- -------------------------------------------------------------------------------
Illinois Health Facilities Authority
(Northwestern Memorial Hospital);
Variable Rate Demand Series 1995 RB
3.70% 08/15/25(b)(d) A-1+ VMIG-1 2,600 2,600,000
- -------------------------------------------------------------------------------
Illinois Health Facilities Authority
(South Suburban Hospital Project);
Variable Rate Demand Series 1994 RB
3.45% 02/15/14(b)(c) A-1+ -- 12,500 12,500,000
- -------------------------------------------------------------------------------
Marseilles (City of) (Kaiser Agricultural
Chemicals Inc. Project); Variable Rate
Demand Series 1985 IDR
3.45% 01/01/98(b)(c) A-1+ -- 4,650 4,650,000
- -------------------------------------------------------------------------------
Oak Forest (City of) (Homewood Pool);
Series 1989 RB
3.45% 07/01/24(b)(c) -- VMIG-1 3,000 3,000,000
- -------------------------------------------------------------------------------
University of Illinois (University of
Illinois Natural Gas Purchase Project);
Series 1995 COP
4.30% 04/01/96(d) AAA Aaa 1,085 1,085,000
- -------------------------------------------------------------------------------
Village of Lisle (Four Lakes Project);
Multi-Family Housing
Series 1985 A RB
3.45% 04/01/19(b)(c) A-1 -- 1,400 1,400,000
- -------------------------------------------------------------------------------
Village of Northbrook (Euromarket Designs,
Inc. Project); Variable Rate Demand
Refunding Series 1993 IDR
3.40% 07/01/02(b)(c) A-1+ -- 3,400 3,400,000
- -------------------------------------------------------------------------------
Winnebage and Boone (Counties of) School
District No. 206; Tax Anticipation
Warrants Series 1996 GO
4.35% 10/30/96(d) SP-1 MIG-1 7,500 7,551,234
- -------------------------------------------------------------------------------
124,303,354
- -------------------------------------------------------------------------------
INDIANA - 2.00%
Auburn (City of) (Sealed Power Corp.
Project); Variable Rate Demand Economic
Development Series 1985 RB
3.50% 07/01/10(b)(c) -- VMIG-1 1,200 1,200,000
- -------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Indiana - (continued)
Indiana (State of) (Advance Funding
Project); Series 1996 A-2 RAN
4.25% 01/09/97 SP-1+ MIG-1 $14,000 $ 14,078,663
- -------------------------------------------------------------------------------
Indiana Housing Finance Authority; Single
Family Mortgage
Series 1994 D RB
3.90% 07/01/96(d)(e) -- VMIG-1 3,000 3,000,000
- -------------------------------------------------------------------------------
Indianapolis (City of); Public
Improvement Bond Series F RAN
4.50% 07/11/96(d) A-1+ P-1 1,300 1,302,813
- -------------------------------------------------------------------------------
Jasper (County of) (Northern Indiana
Public Service Co. Project); Variable
Rate Demand Refunding Series 1994 A PCR
3.85% 08/01/10(b)(c) A-1+ VMIG-1 1,300 1,300,000
- -------------------------------------------------------------------------------
20,881,476
- -------------------------------------------------------------------------------
IOWA - 0.74%
Iowa (State of) School Corporations
(Corporations of Iowa School Cash
Anticipation Program); Warrant
Certificates Series 1995-1996 B TRAN
4.25% 01/30/97(d) SP-1+ MIG-1 1,000 1,006,840
- -------------------------------------------------------------------------------
Waterloo (City of) Civic Center Hotel
Company; Series 1983 IDR
3.45% 11/01/08(b)(d) A-1 -- 6,700 6,700,000
- -------------------------------------------------------------------------------
7,706,840
- -------------------------------------------------------------------------------
KANSAS - 0.94%
Kansas State Development Finance
Authority (Water Pollution Control-SRF);
Series 1993 I RB
4.30% 11/01/96 -- Aa1 1,250 1,254,232
- -------------------------------------------------------------------------------
Mission (City of) (Woodland Village
Project); Multifamily Housing Series
1985 RB
3.40% 12/01/97(b)(c) A-1 -- 8,600 8,600,000
- -------------------------------------------------------------------------------
9,854,232
- -------------------------------------------------------------------------------
KENTUCKY - 1.24%
Kentucky State Turnpike Authority;
Economic Development Road Series A RB
7.875% 07/01/96(e)(f) AAA Aaa 3,550 3,660,865
- -------------------------------------------------------------------------------
Mason County (East Kentucky Power
Cooperative, Inc. Project); National
Rural Utilities Cooperative Finance
Corp. Guaranteed Floating/Fixed Rate
Pooled Series 1984 B-1 PCR
3.40% 10/15/14(b)(c) A-1+ Aa3 9,300 9,300,000
- -------------------------------------------------------------------------------
12,960,865
- -------------------------------------------------------------------------------
LOUISIANA - 2.98%
DeSoto (Parish of) (Central Louisiana
Electric Company); Refunding Series 1991
A PCR
3.30% 07/01/18(b)(c) A-1+ VMIG-1 8,410 8,410,000
- -------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Louisiana - (continued)
Louisiana (State of); Series 1993 B GO
4.20% 08/01/96(d) AAA Aaa $ 1,000 $ 1,001,450
- -----------------------------------------------------------------------------
Louisiana Offshore Terminal Authority
(LOOP Inc. Project); Deepwater Port
Refunding Series 1992 A RB
3.85% 09/01/08(b)(c) A-1+ VMIG-1 2,100 2,100,000
- -----------------------------------------------------------------------------
Louisiana Public Facilities Authority
(Greenbriar Hospital Inc. Project);
Variable Rate Demand Series 1984 RB
3.45% 11/01/14(b)(c) -- Aa2 2,000 2,000,000
- -----------------------------------------------------------------------------
Louisiana Public Facilities Authority
(Will-Knighton Medical Center
Project); Hospital Series 1995 RB
3.50% 09/01/25(b)(d) A-1 VMIG-1 11,000 11,000,000
- -----------------------------------------------------------------------------
Plaquemine Port Harbor & Terminal
Authority (TECO Energy, Inc.); Marine
Terminal Facility Refunding Series
1985 D RB
3.45% 04/01/96(d)(e) -- P-1 5,600 5,600,000
- -----------------------------------------------------------------------------
South Louisiana Port Commission Marine
Terminal Facilities (Occidental
Petroleum Corp. Project); Refunding
Series 1991 RB
3.35% 07/01/21(b)(c) A-1+ VMIG-1 1,000 1,000,000
- -----------------------------------------------------------------------------
31,111,450
- -----------------------------------------------------------------------------
MARYLAND - 0.34%
Prince George (County of) Housing
Authority (Laurel-Oxford Associates
Apartment Project); Mortgage Series
1985 RB
3.425% 10/01/07(b)(c) -- VMIG-1 3,500 3,500,000
- -----------------------------------------------------------------------------
MASSACHUSETTS - 0.29%
Massachusetts Muni Wholesale Electric;
Co-power Supply Systems Series A RB
3.60% 07/01/96(d) AAA Aaa 3,000 3,002,480
- -----------------------------------------------------------------------------
MICHIGAN - 4.25%
Charter County of Wayne; Downriver
Sewage Disposal System Adjustable Rate
Series 1994 B Limited Tax GO
3.30% 06/17/96(c)(e) A-1 VMIG-1 8,170 8,170,000
- -----------------------------------------------------------------------------
Jackson County Economic Development
Corp. (Sealed Power Corp.); Economic
Development Variable Refunding RB
3.50% 10/01/19(b)(c) -- VMIG-1 1,000 1,000,000
- -----------------------------------------------------------------------------
Michigan Municipal Bond Authority;
Series 1995 B RB
4.50% 07/03/96 SP-1+ -- 4,000 4,006,851
- -----------------------------------------------------------------------------
Michigan State Hospital Finance
Authority
(Hospital Equipment Loan Program);
Hospital RB
3.55% Pooled Series 1994 A
12/01/23(b)(c) -- VMIG-1 4,200 4,200,000
- -----------------------------------------------------------------------------
3.55% Pooled Series 1995 A
12/01/23(b)(c) -- VMIG-1 3,400 3,400,000
- -----------------------------------------------------------------------------
3.55% Series 1996 A 12/01/23(b)(c) -- VMIG-1 5,000 5,000,000
- -----------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Michigan - (continued)
Michigan Strategic Fund (260 Brown St.
Associates Project); Convertible
Variable Rate Demand Limited Obligation
Series 1985 RB
3.35% 10/01/15(b)(c) -- VMIG-1 $ 3,750 $ 3,750,000
- -------------------------------------------------------------------------------
Michigan Strategic Fund (The Norcor Corp.
Project); IDR
3.40% 12/01/00(b)(c) -- P-1 4,400 4,400,000
- -------------------------------------------------------------------------------
University of Michigan (University of
Michigan Hospital); Variable Rate Demand
Hospital Refunding Series 1995 A RB
3.85% 12/01/27(b)(d) -- VMIG-1 2,900 2,900,000
- -------------------------------------------------------------------------------
Wayne County School District; State
School Aid
Series 1995 Limited Tax GO
4.50% 05/01/96(e) SP-1+ -- 7,500 7,503,884
- -------------------------------------------------------------------------------
44,330,735
- -------------------------------------------------------------------------------
MINNESOTA - 1.29%
Mankato (City of) (Northern States Power
Co. Project); Floating Collateralized
Series 1985 PCR
3.40% 03/01/11(b)(d) AA- A1 2,900 2,900,000
- -------------------------------------------------------------------------------
Minneapolis (City of) Community
Development Agency (Walker Methodist
Health Systems); Adjustable Refunding
Series 1995 RB
3.45% 04/01/10(b)(c) A-1 -- 6,000 6,000,000
- -------------------------------------------------------------------------------
Red Wing (City of) Industrial Development
Authority (Northern States Power Co.);
Floating Rate Collateralized Series 1985
PCR
3.40% 03/01/11(b)(d) AA- A1 4,600 4,600,000
- -------------------------------------------------------------------------------
13,500,000
- -------------------------------------------------------------------------------
MISSISSIPPI - 0.55%
Jackson (County of) (Chevron
Corporations); Water Systems RB
3.30% 08/01/96(d)(e) -- VMIG-1 2,000 2,000,000
- -------------------------------------------------------------------------------
Mississippi (State of); Capital
Improvement Series A GO
5.50% 05/01/96 AA- Aa 2,705 2,708,946
- -------------------------------------------------------------------------------
State Environment Improvement & Energy
Resources Authority (Union Electric Co.
Project); Adjustable-Fixed Rate Series
1984 A PCR
4.00% 06/01/96(c) A-1+ P-1 1,000 1,000,000
- -------------------------------------------------------------------------------
5,708,946
- -------------------------------------------------------------------------------
MISSOURI - 4.80%
Independence (City of) Industrial
Development Authority (The Independence
Ridge Apartment Project); Multi-Family
Housing Series 1985 RB
3.40% 12/01/15(b)(c) A-1+ -- 9,500 9,500,000
- -------------------------------------------------------------------------------
Kansas City (City of) Industrial
Development Authority (The Lorcarno
Multifamily Housing Project); Variable
Rate Demand Multifamily Housing Series
1985 RB
3.40% 12/01/15(b)(c) A-1+ -- 6,600 6,600,000
- -------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Missouri - (continued)
Missouri Health & Educational Facilities
Authority; School District Advance
Refunding Program Series 1995 Notes
4.50% 08/19/96 SP-1+ -- $ 3,840 $ 3,847,739
- -------------------------------------------------------------------------------
Missouri Health & Educational Facilities
Authority (SSM Health Care Project);
Health Facilities Tax-Exempt Insured
Variable Rate Demand Series 1995 B RB
3.30% 06/01/22(b)(d) A-1+ Aaa 10,700 10,700,000
- -------------------------------------------------------------------------------
Missouri State Environmental Improvement
& Energy Resource Authority (Associated
Electric Cooperative, Inc. Project);
Pooled Series 1993-M RB
3.40% 12/15/03(b)(c) AA- VMIG-1 2,770 2,770,000
- -------------------------------------------------------------------------------
Saint Louis (City of) Industrial
Development Authority (Sugar Pines
Apartment Project); Multifamily Housing
Series 1991 A RB
3.40% 07/15/06(b)(c) A-1+ -- 9,785 9,785,000
- -------------------------------------------------------------------------------
Saint Louis County Industrial Development
Authority (Bonhomme Village Apartments
Association Project); Variable Rate
Demand Housing Series 1985 RB
3.60% 10/01/07(b)(d) -- VMIG-1 6,900 6,900,000
- -------------------------------------------------------------------------------
50,102,739
- -------------------------------------------------------------------------------
MONTANA - 0.68%
Forsyth (City of) (Portland General
Electric Company Colstrip Project);
Flexible Demand Series 1983 A PCR
3.30% 06/01/13(b)(c) A-1+ P-1 7,100 7,100,000
- -------------------------------------------------------------------------------
NEBRASKA - 0.50%
Nebraska Public Power District; Series B
Commercial Paper Notes
3.65% 04/02/96 A-1 P-1 4,165 4,165,000
- -------------------------------------------------------------------------------
Omaha Public Power District; Nebraska
Electric Series 1993 D RB
3.90% 02/01/97 AA Aa 1,000 1,005,712
- -------------------------------------------------------------------------------
5,170,712
- -------------------------------------------------------------------------------
NEVADA - 0.58%
Clark (County of) (Nevada Power Company
Project); Series 1995 D-1 PCR
3.35% 10/01/11(b)(c) A-1+ -- 2,600 2,600,000
- -------------------------------------------------------------------------------
Director of Nevada State Department of
Commerce (FMC Corp. Project); Series
1985 IDR
4.00% 09/15/96(c)(e) -- VMIG-1 3,500 3,500,000
- -------------------------------------------------------------------------------
6,100,000
- -------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW HAMPSHIRE - 0.67%
Business Finance Authority for the State
of New Hampshire (Connecticut Power &
Light); Series 1993 A PCR
3.35% 12/01/22(b)(c) -- VMIG-1 $ 1,600 $ 1,600,000
- -------------------------------------------------------------------------------
New Hampshire Higher Educational and
Health Facilities Authority (VHA of New
England Capital Asset Financial
Program); Variable Rate Hospital RB
3.30% Series 1985 B 12/01/25(b)(d) A-1 -- 4,000 4,000,000
- -------------------------------------------------------------------------------
3.30% Series 1985 G 12/01/25(b)(d) A-1 -- 1,000 1,000,000
- -------------------------------------------------------------------------------
New Hampshire Industrial Development
Authority (Bangor Hydro-Electric Co.
Project); Variable Rate Demand Series
1983 PCR
3.50% 01/01/09(b)(c) A-1+ -- 400 400,000
- -------------------------------------------------------------------------------
7,000,000
- -------------------------------------------------------------------------------
NEW JERSEY - 0.34%
New Jersey Economic Development Authority
(Trailer Marine Transport Corp.
Project); Adjustable Rate Port Facility
Series 1983 RB
3.35% 02/01/02(b)(c) A-1 -- 3,500 3,500,000
- -------------------------------------------------------------------------------
NEW MEXICO - 1.08%
Farmington (City of); Refunding Bonds
Series 1994 B PCR
3.75% 09/01/24(b)(c) A-1+ P-1 3,400 3,400,000
- -------------------------------------------------------------------------------
Hurley (Town of) (Kennecott Santa Fe
Corp. Project); Unit Priced Demand
Adjustable Series 1985 PCR
3.75% 12/01/15(b)(d) A-1+ P-1 3,800 3,800,000
- -------------------------------------------------------------------------------
New Mexico (State of); State Severance
Tax Series 1994 B RB
7.60% 07/01/96(b)(d) AA Aa 4,000 4,040,022
- -------------------------------------------------------------------------------
11,240,022
- -------------------------------------------------------------------------------
NEW YORK - 12.26%
Buffalo (City of); Series 1995-1996A RAN
4.20% 07/16/96(c) SP-1+ MIG-1 2,800 2,806,362
- -------------------------------------------------------------------------------
Eagle Tax Exempt Trust; Class A COP(g)
3.52% Series 1993 E 08/01/06(b) A-1+c -- 15,000 15,000,000
- -------------------------------------------------------------------------------
3.52% Series 943802 05/01/07(b)(d) A-1+c -- 17,800 17,800,000
- -------------------------------------------------------------------------------
3.52% Series 943901 06/15/07(b)(c) A-1+c -- 14,500 14,500,000
- -------------------------------------------------------------------------------
3.52% Series 94C2102 06/01/14(b)(d) A-1+c -- 11,600 11,600,000
- -------------------------------------------------------------------------------
3.47% Series 1994 C-1 06/15/18(b) A-1+c -- 18,000 18,000,000
- -------------------------------------------------------------------------------
3.47% Series 943207 07/01/29(b)(d) A-1+c -- 14,200 14,200,000
- -------------------------------------------------------------------------------
Merrill Lynch Group Float Program; Power
Supply System
Series 1993 A RB
3.40% 01/01/16(b)(d) -- VMIG-1 5,000 5,000,000
- -------------------------------------------------------------------------------
New York (City of); General Obligation
Fiscal Series 1996 D RAN
8.50% 08/01/96(f) -- Aaa 3,385 3,507,326
- -------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
New York - (continued)
New York (City of); General Obligation
Fiscal 1994 Series B RAN
3.25% 08/15/23(b)(c) A-1+ VMIG-1 $ 6,300 $ 6,300,000
- -------------------------------------------------------------------------------
New York (City of); Variable Rate Demand
Series 1995 Subseries
B-5 GO
3.80% 08/15/22(b)(d) A-1+ VMIG-1 10,000 10,000,000
- -------------------------------------------------------------------------------
New York State Energy Research and
Development Authority (New York Electric
& Gas); Series B PCR
3.40% 02/01/29(b)(c) A-1+ VMIG-1 6,500 6,500,000
- -------------------------------------------------------------------------------
New York State Thruway Authority; Series A
RB
4.20% 04/01/96(d) AAA Aaa 1,000 1,000,000
- -------------------------------------------------------------------------------
Trust for the Cultural Resource Authority
(Soloman R Guggenheim Foundation); Series
1990B RB
3.60% 12/01/15(b)(c) A-1 VMIG-1 1,800 1,800,000
- -------------------------------------------------------------------------------
128,013,688
- -------------------------------------------------------------------------------
NORTH CAROLINA - 0.92%
Alamance Industrial Facilities & Pollution
Control Financing Authority (Science
Manufacturing Inc. Project); Series 1985
IDR
3.90% 04/01/15(b)(c) -- P-1 4,400 4,400,000
- -------------------------------------------------------------------------------
North Carolina Eastern Muni Power Systems;
Series A RB
7.50% 01/01/97(e)(f) -- AAA 5,000 5,254,433
- -------------------------------------------------------------------------------
9,654,433
- -------------------------------------------------------------------------------
OHIO - 1.65%
Cleveland (City of) Ohio School District;
Series 1995 RAN
4.50% 06/01/96(d) AAA Aaa 5,000 5,007,903
- -------------------------------------------------------------------------------
Cleveland (City of) Ohio School District;
Series 1991 GO
7.70% 12/01/96(f) -- AAA 1,500 1,539,106
- -------------------------------------------------------------------------------
Cuyahoga (County of) (S&R Playhouse Realty
Co.); Adjustable Rate Demand Series 1984
IDR
3.45% 12/01/09(b)(c) -- MIG-1 655 655,000
- -------------------------------------------------------------------------------
Franklin (County of) (Bricker & Eckler
Building Co. Project); Variable Rate
Demand Series 1984 IDR
3.55% 11/01/14(b)(c) -- P-1 9,000 9,000,000
- -------------------------------------------------------------------------------
Ohio Housing Finance Agency (Kenwood
Congregate Retirement Community Project);
Variable Rate Demand Multifamily Housing
Series 1985 RB
3.40% 12/01/15(b)(c) -- VMIG-1 980 980,000
- -------------------------------------------------------------------------------
17,182,009
- -------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OKLAHOMA - 0.39%
Oklahoma State SSM Healthcare System (St.
Anthony's Hospital); Adjustable Rate
Hospital Series 1988 C RB
3.30% 08/29/96(c)(e) -- VMIG-1 $ 4,100 $ 4,100,000
- -------------------------------------------------------------------------------
OREGON - 0.95%
Multnomah County School District No. 1J;
Series 1995 TRAN
4.75% 05/30/96 SP-1+ MIG-1 5,000 5,008,197
- -------------------------------------------------------------------------------
Portland (City of) (South Park Block
Project); Multifamily Housing Refunding
Series 1988 A RB
3.45% 12/01/11(b)(c) A-1+ -- 4,900 4,900,000
- -------------------------------------------------------------------------------
9,908,197
- -------------------------------------------------------------------------------
PENNSYLVANIA - 1.71%
Armstrong (County of) Pennsylvania
Hospital (St. Francis Medical Center
Project); Series A RB
5.10% 06/01/96(d) AAA Aaa 1,395 1,398,846
- -------------------------------------------------------------------------------
Delaware County Industrial Development
Authority (Henderson-Radnor Joint
Venture Project); Limited Obligation
Series 1985 RB
3.55% 04/01/15(b)(c) -- Aa3 900 900,000
- -------------------------------------------------------------------------------
Montour (County of) Geisinger Authority;
Health System
Series B 1992 RB
3.60% 07/01/22(b)(d) A-1+ -- 3,200 3,200,000
- -------------------------------------------------------------------------------
Northeastern Pennsylvania Hospital
Authority (Hospital Central Services
Capital Asset Program); Variable Rate
Demand
Series B RB
3.20% 05/29/96(d)(e) A-1+ Aaa 3,000 3,000,000
- -------------------------------------------------------------------------------
Pennsylvania State Higher Education
Facilities Authority (Carnegie Mellon
University); Series 1995 B RB
3.85% 11/01/27(b)(d) A-1+ -- 3,000 3,000,000
- -------------------------------------------------------------------------------
Quakertown Hospital Authority (HPF
Group); Variable Rate
Series 1985 A RB
3.30% 07/01/05(b)(c) -- VMIG-1 1,800 1,800,000
- -------------------------------------------------------------------------------
Schuykill County Industrial Development
Authority (Gilberton Power Project);
Variable Rate Resource Recovery Series
1985 RB
3.45% 12/01/02(b)(c) A-1 -- 2,300 2,300,000
- -------------------------------------------------------------------------------
Wilkes-Barre (City of) Industrial
Development Authority (Toys "R" Us/Penn
Inc. Project); Economic Development
Series 1984 RB
3.425% 07/01/14(b)(c) -- A1 2,300 2,300,000
- -------------------------------------------------------------------------------
17,898,846
- -------------------------------------------------------------------------------
RHODE ISLAND - 0.48%
Rhode Island State; TAN
4.50% 06/28/96(c) SP-1+ MIG-1 4,000 4,010,607
- -------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Rhode Island - (continued)
Rhode Island State Health & Education
Building (Roger Williams General
Hospital); RB
11.375% 07/01/96(f) AAA -- $ 1,000 $ 1,019,917
- -----------------------------------------------------------------------------
5,030,524
- -----------------------------------------------------------------------------
SOUTH CAROLINA - 3.68%
Florence (County of) (Stone Container
Corp.); Variable Rate
Series 1984 IDR
3.30% 02/01/07(b)(c) A-1+ -- 14,100 14,100,000
- -----------------------------------------------------------------------------
Goldman Sachs Series 1995 F Tender
Option Certificates
3.45% 06/16/14(b)(c)(g) A-1+c -- 12,500 12,500,000
- -----------------------------------------------------------------------------
Horry (County of) (Carolina Treatment
Center); Variable Rate Demand Series
1984 RB
3.45% 12/01/14(b)(c) -- Aa2 2,500 2,500,000
- -----------------------------------------------------------------------------
Rock Hill (City of); Utilities System
RB
3.30% 01/01/22(b)(d) A-1+ VMIG-1 6,100 6,100,000
- -----------------------------------------------------------------------------
York (County of) (North Carolina
Electric Membership Corp.); Pooled
Series 1984 N-2 PCR
3.40% 09/15/14(b)(c) A-1+ P-1 1,750 1,750,000
- -----------------------------------------------------------------------------
York (County of) (North Carolina
Electric Project National Rural
Utilities); Series 1984 N-6 RB
3.25% 09/15/96(c)(e) A-1+ VMIG-1 1,500 1,500,000
- -----------------------------------------------------------------------------
38,450,000
- -----------------------------------------------------------------------------
SOUTH DAKOTA - 0.90%
Rapid City, (Civic Center Associates
Project); Economic
Development RB
3.40% 12/01/16(b)(c) -- P-1 5,385 5,385,000
- -----------------------------------------------------------------------------
South Dakota School District (Cash Flow
Financing Program); COP
4.75% 07/30/96 SP-1+ -- 4,000 4,015,768
- -----------------------------------------------------------------------------
9,400,768
- -----------------------------------------------------------------------------
TENNESSEE - 4.44%
Health, Educational and Housing
Facility Board of Shelby County
(Rhodes College); Variable Rate Demand
Educational Facilities Series 1985 RB
3.55% 08/01/10(b)(c) A-1+ -- 2,195 2,195,000
- -----------------------------------------------------------------------------
Industrial Development Board of the
City of Franklin (The Landings
Project); Variable Rate Demand
Multifamily Housing
Series 1985 Class A RB
3.40% 12/01/06(b)(c) A-1+ -- 2,000 2,000,000
- -----------------------------------------------------------------------------
Industrial Development Board of the
City of Knoxville (Toys "R" Us Inc.,
Project); Series 1984 IDR
3.55% 05/01/14(b)(c) -- A1 1,150 1,150,000
- -----------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Tennessee - (continued)
Knox (County of) Industrial Development
Authority (Centre Square II, Ltd.
Project); Floating Rate Monthly Demand
Series 1984 IDR
3.40% 12/01/14(b)(c) A-1+ -- $ 5,400 $ 5,400,000
- -------------------------------------------------------------------------------
Knox (County of) Industrial Development
Authority (Old Kingston Properties);
Floating Rate Industrial Series 1984 RB
3.40% 12/01/14(b)(c) A-1+ -- 3,500 3,500,000
- -------------------------------------------------------------------------------
Knox (County of) Industrial Development
Authority (Professional Plaza, Ltd.
Project); Floating Rate Monthly Demand
Series 1984 IDR
3.40% 12/01/14(b)(c) A-1+ -- 2,900 2,900,000
- -------------------------------------------------------------------------------
Knox County Industrial Development Board
(Weisgarber Partners); Floating Rate
Series 1984 IDR
3.40% 12/01/4(b)(c) A-1+ -- 700 700,000
- -------------------------------------------------------------------------------
Nashville and Davidson (County of)
Industrial Development Board
of Metro Government (Amberwood, Ltd.
Project); Multifamily Housing RB
3.67% Series 1993 A 07/01/13(b)(c) -- VMIG-1 2,450 2,450,000
- -------------------------------------------------------------------------------
3.67% Series 1993 B 07/01/13(b)(c) -- VMIG-1 2,065 2,065,000
- -------------------------------------------------------------------------------
Tennessee Higher Educational Facilities;
Variable Rate
Series 1993 B BAN
3.35% 03/01/98(b) A-1+ VMIG-1 1,400 1,400,000
- -------------------------------------------------------------------------------
Tennessee State School Bond Authority;
Higher Education Facilities BAN
3.35% Series 1993 A 03/01/98(b) A-1+ VMIG-1 4,525 4,525,000
- -------------------------------------------------------------------------------
3.35% Series 1995 B 03/01/98(b) A-1+ VMIG-1 7,750 7,750,000
- -------------------------------------------------------------------------------
3.35% Series 1994 C 03/01/98(b) A-1+ VMIG-0 6,335 6,335,000
- -------------------------------------------------------------------------------
3.35% Series 1995 C 03/01/98(b) A-1+ VMIG-1 4,000 4,000,000
- -------------------------------------------------------------------------------
46,370,000
- -------------------------------------------------------------------------------
TEXAS - 10.10%
Angelina & Neches River Authority
Industrial Development Corp.
(Temple Inland Marine); Solid Waste
Disposal RB
3.80% Series 1984 B 05/01/14(b)(c) -- P-1 2,400 2,400,000
- -------------------------------------------------------------------------------
3.80% Series 1984 E 05/01/14(b)(c) -- P-1 5,000 5,000,000
- -------------------------------------------------------------------------------
Austin (City of) Texas Utility System;
Refunding Combination Series 1992 A RB
5.00% 11/15/96(d) AAA Aaa 1,975 1,992,947
- -------------------------------------------------------------------------------
Beaumont (City of) Texas Health Facilities
Development Authority; Health Facilities
Development Series 1985 RB
3.35% 12/01/10(b)(c) -- VMIG-1 3,265 3,265,000
- -------------------------------------------------------------------------------
Brazos River Harbor Navigation District of
Brazoria County
(Hoffman-La Roche Inc. Project); Series
1985 RB
3.55% 04/01/02(b)(c) -- A1 2,750 2,750,000
- -------------------------------------------------------------------------------
Texas (University of); Prerefunded Series
1986 RB
8.00% 08/15/96(d)(e) AAA Aaa 1,475 1,528,513
- -------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Texas - (continued)
Corpus Christi (Port of) Authority of
Nueces County Marine Terminal (Reynolds
Metals Company Project); Floating Rate
Demand Series 1984 RB
3.40% 09/01/14(b)(c) A-1+ -- $ 3,000 $ 3,000,000
- -------------------------------------------------------------------------------
Dallas (County of); Series 1986 A GO
6.50% 07/10/96(f) AAA Aaa 1,500 1,511,127
- -------------------------------------------------------------------------------
Fort Worth (City of) Water and Sewer
System; Tax Exempt
Series A Commercial Paper
3.30% 05/15/96 A-1+ P-1 5,300 5,300,000
- -------------------------------------------------------------------------------
Gulf Coast Waste Disposal Authority
(Exxon Project); Series 1989 PCR
3.35% 05/17/96(e) A-1+ P-1 5,000 5,000,000
- -------------------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (The Methodist
Hospital); Hospital Series 1994 RB
3.85% 12/01/25(b) A-1+ -- 10,000 10,000,000
- -------------------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (Greater Houston
Pooled Health); Series 1985 A RB
3.40% 11/01/25(b)(c) A-1 -- 3,100 3,100,000
- -------------------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (Gulf Coast Regional
Blood Center Project); Series 1992 RB
3.35% 04/01/17(b)(c) A-1 -- 3,550 3,550,000
- -------------------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (St. Luke's Episcopal
Hospital Project); Hospital Series 1985
B RB
3.85% 02/15/16(b) A-1+ -- 3,500 3,500,000
- -------------------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (Texas Medical Center
Project); Series 1992 RB
3.85% 02/15/22(b)(d) A-1 VMIG-1 4,300 4,300,000
- -------------------------------------------------------------------------------
Houston (City of); Senior Lien Hotel
Occupancy Tax Refunding Series 1995 RB
5.00% 07/01/96(d) AAA Aaa 650 651,726
- -------------------------------------------------------------------------------
Houston (City of) Texas Water and Sewer
System Revenue Exchange Prior Lien;
Series A RB
7.00% 12/01/96(e) AAA Aaa 1,265 1,320,328
- -------------------------------------------------------------------------------
Nueces County Health Facilities
Development Corp. (Driscoll Childrens
Hospital); Floating Rate Demand Hospital
Series 1985 RB
3.40% 07/01/15(b)(c) -- VMIG-1 2,570 2,570,000
- -------------------------------------------------------------------------------
San Antonio Independent School District;
RB
8.25% 06/15/96(e)(f) -- Aaa 3,250 3,283,386
- -------------------------------------------------------------------------------
Tarrant (County of) Texas Housing Finance
Corp. (Amherst Associates Project);
Multifamily Housing Series 1995 RB
3.40% 12/01/07(b)(c) -- VMIG-1 3,220 3,220,000
- -------------------------------------------------------------------------------
Texas Department of Housing and Urban
Affairs (Remington Hill Development);
Multi-Family Housing Refunding Series
1993 B RB
3.40% 02/01/23(b)(c) A-1+ -- 5,380 5,380,000
- -------------------------------------------------------------------------------
Texas (State of); TRAN
4.75% Series 1995 A 08/30/96 SP-1+ MIG-1 16,200 16,278,278
- -------------------------------------------------------------------------------
3.65% Series 1995 B 08/20/96 A-1+ P-1 4,000 4,000,000
- -------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Texas - (continued)
Texas (University of) Board of Regents
Permanent University Fund; Variable Rate
Series A Notes
3.20% 05/29/96(e) A-1+ VMIG-1 $ 1,800 $ 1,800,000
- ------------------------------------------------------------------------------
Texas (University of) Board of Regents
Revenue Financing System; Series A
Commercial Paper
3.25% 05/31/96 A-1+ P-1 7,516 7,516,000
- ------------------------------------------------------------------------------
Trinity River Authority (Texas Regional
Wastewater System); RB
5.00% 08/01/96(d) AAA Aaa 1,040 1,045,093
- ------------------------------------------------------------------------------
Trinity River Industrial Development
Authority (Radiation Sterilizers, Inc.
Project); Variable Rate Demand IDR
3.50% Series 1985 A 11/01/05(b)(c) A-1 -- 500 500,000
- ------------------------------------------------------------------------------
3.50% Series 1985 B 11/01/05(b)(c) A-1 -- 1,650 1,650,000
- ------------------------------------------------------------------------------
105,412,398
- ------------------------------------------------------------------------------
UTAH - 2.53%
Bountiful (City of) (Bountiful Gateway
Park Project); Adjustable Rate Refunding
Series 1987 IDR
3.60% 12/01/97(b)(c) A-1+ -- 3,835 3,835,000
- ------------------------------------------------------------------------------
Intermountain Power Agency Power Supply
Variable Rate RB
3.20% Series 1985 F 05/29/96(c)(e) A-1+ VMIG-1 1,700 1,700,000
- ------------------------------------------------------------------------------
3.90% Series 1993 A 07/01/96 AA- Aa 1,000 1,000,428
- ------------------------------------------------------------------------------
6.90% Series B 07/01/96 AA- Aa 2,000 2,015,491
- ------------------------------------------------------------------------------
7.00% Series 1986-C 07/01/96 AA- Aa 1,000 1,007,459
- ------------------------------------------------------------------------------
4.80% Series 1992 B 07/01/96 AA- Aa 1,130 1,132,795
- ------------------------------------------------------------------------------
State Board of Regents of the State of
Utah (University Inn Project); Variable
Rate Demand Series 1985 IDR
3.85% 12/01/15(b)(c) -- P-1 8,800 8,800,000
- ------------------------------------------------------------------------------
Utah State Housing Finance Agency; Single
Family Mortgage Variable Rate Issue 1993
D RB
3.40% 07/01/16(b) -- VMIG-1 3,400 3,400,000
- ------------------------------------------------------------------------------
West Valley (City of) (Johnson Matthey
Inc. Project); Multi-Modal
Interchangeable Rate Series 1987 IDR
3.95% 11/01/11(b)(c)(h) -- -- 3,550 3,550,000
- ------------------------------------------------------------------------------
26,441,173
- ------------------------------------------------------------------------------
VERMONT - 1.26%
Vermont (State of); General Obligation
Commercial Paper Series F RAN
3.35% 05/23/96 A-1+ P-1 10,000 10,000,000
- ------------------------------------------------------------------------------
Vermont (State of); Series 1993 B GO
6.60% 10/15/96 AA- Aa 2,100 2,132,672
- ------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Vermont - (continued)
Vermont Educational & Health Building
Finance Authority (VHA New England);
Variable Hospital Series 1985 B RB
3.30% 12/01/25(b)(d) A-1 Aaa $ 1,000 $ 1,000,000
- -------------------------------------------------------------------------------
13,132,672
- -------------------------------------------------------------------------------
VIRGINIA - 1.88%
Fairfax County Redevelopment and Housing
Authority (Chase Commons Project);
Variable Rate Demand Series 1984 A RB
3.425% 12/01/06(b)(c) -- VMIG-1 3,330 3,330,000
- -------------------------------------------------------------------------------
Henrico (County of) Virginia Industrial
Development Authority (Hermitage
Project); Variable Rate Health Facilities
Series 1994 Bonds
3.85% 05/01/24(b)(c) -- VMIG-1 4,000 4,000,000
- -------------------------------------------------------------------------------
Industrial Development Authority City of
Lynchburg (VHA Mid-Atlantic States, Inc.
Capital Asset Financing Program);
Variable Rate Hospital Series 1985 G RB
3.30% 12/01/25(b)(d) A-1 Aaa 2,300 2,300,000
- -------------------------------------------------------------------------------
Industrial Development Authority of the
City of Norfolk (Sentara Hospitals-
Norfolk Project); Hospital Series 1990 A
RB
3.25% 05/22/96(e) A-1+ VMIG-1 5,000 5,000,000
- -------------------------------------------------------------------------------
Richmond Redevelopment & Housing Authority
(1995 Old Manchester Project); Variable
Rate Demand Series 1995 A RB
3.55% 12/01/25(b)(c) A-1+ -- 5,000 5,000,000
- -------------------------------------------------------------------------------
19,630,000
- -------------------------------------------------------------------------------
WASHINGTON - 3.58%
Washington State Public Power Supply
Systems (Nuclear Project No. 3);
Refunding Series B RB
6.70% 07/01/96 AA Aa 1,000 1,007,259
- -------------------------------------------------------------------------------
Washington State Public Power Supply
Systems (Nuclear Project No. 1 & 3);
Refunding Electric Series 1993 RB
3.35% 07/01/17(b)(c) A-1+ VMIG-1 5,000 5,000,000
- -------------------------------------------------------------------------------
Washington State Public Power Supply
Systems (Nuclear Project No. 1);
Adjustable Refunding Series 1993 1A-3 RB
3.30% 07/01/17(b)(c) A-1+ VMIG-1 14,300 14,300,000
- -------------------------------------------------------------------------------
Washington State; Refunding Bonds Series
1986 D GO
8.00% 09/01/96(e)(f) AAA Aaa 14,740 15,034,985
- -------------------------------------------------------------------------------
Washington Suburban Sanitation District;
General Construction RB
7.375% 01/01/97(e)(f) AAA AAA 1,000 1,050,198
- -------------------------------------------------------------------------------
Washington Suburban Sanitation District;
Water Supply Refunding Series 1986 GO
5.90% 11/01/96 AA Aa1 1,000 1,012,477
- -------------------------------------------------------------------------------
37,404,919
- -------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WISCONSIN - 0.63%
City of Milwaukee Housing Authority
(Yankee Hill Apartments Project);
Multi-Family Housing 1986 Issue
Variable Bonds
3.40% 12/01/09(b)(c) A-1+ -- $ 5,500 $ 5,500,000
- -------------------------------------------------------------------------------
Wisconsin (State of) Transportation
Authority; Transportation Series 1988
A RB
7.50% 07/01/96(e)(f) AAA -- 1,000 1,029,085
- -------------------------------------------------------------------------------
6,529,085
- -------------------------------------------------------------------------------
WYOMING - 1.01%
Sweetwater (City of) (Pacificorp
Project); PCR
3.70% Series 1984 12/01/14(b)(c) A-1+ P-1 4,500 4,500,000
- -------------------------------------------------------------------------------
3.40% Series 1990A 07/01/15(b)(c) -- VMIG-1 6,000 6,000,000
- -------------------------------------------------------------------------------
10,500,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 103.44% 1,080,105,245(i)
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (3.44%) (35,926,817)
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $1,044,178,428
- -------------------------------------------------------------------------------
</TABLE>
INVESTMENT ABBREVIATIONS:
<TABLE>
<C> <S>
BAN Bond Anticipation Notes
COP Certificates of Participation
GO General Obligation Bonds
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
</TABLE>
<TABLE>
<S> <C>
RAN Revenue Anticipation Notes
RB Revenue Bonds
TAN Tax Anticipation Notes
TRAN Tax and Revenue Anticipation Notes
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P"). Ratings are not covered by
Independent Auditors' Report.
(b) Demand security: payable upon demand by the Fund at specified intervals no
greater than thirteen months. Interest rates are redetermined periodically.
Rates shown are the rates in effect on March 31, 1996.
(c) Security is secured by a letter of credit.
(d) Security is secured by bond insurance.
(e) Security has an outstanding call or mandatory put by the issuer. Par value
and maturity date reflect such call or put.
(f) Security is secured by an escrow fund.
(g) The Fund may invest in synthetic municipal instruments the value of and
return on which are derived from underlying securities. The types of
synthetic municipal instruments in which the Fund may invest include
variable rate instruments. These instruments involve the deposit into a
trust of one or more long-term tax-exempt bonds or notes ("Underlying
Bonds"), and the sale of certificates evidencing interests in the trust to
investors such as the Fund. The trustee receives the long-term fixed rate
interest payments on the Underlying Bonds, and pays certificate holders
short-term floating or variable interest rates which are reset
periodically. A "variable rate trust certificate" evidences an interest in
a trust entitling the certificate holder to receive variable rate interest
based on prevailing short-term interest rates and also typically providing
the certificate holder with the conditional right to put its certificate at
par value plus accrued interest. Because synthetic municipal instruments
involve a trust and a third party conditional put feature, they involve
complexities and potential risks that may not be present where a municipal
security is owned directly.
(h) Unrated security; determined by the directors to be of comparable quality
to the rated determination of quality adopted by the Board of Directors and
followed by the investment advisor.
(i) Cost for federal income tax purposes is $1,080,099,469.
See Notes to Financial Statements.
20
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $1,080,105,245
- ------------------------------------------------------------------------
Cash 45,530
- ------------------------------------------------------------------------
Receivables for:
Investments sold 700,785
- ------------------------------------------------------------------------
Interest 7,342,974
- ------------------------------------------------------------------------
Investment for deferred compensation plan 17,593
- ------------------------------------------------------------------------
Other assets 154,876
- ------------------------------------------------------------------------
Total assets 1,088,367,003
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 40,934,545
- ------------------------------------------------------------------------
Dividends 2,946,396
- ------------------------------------------------------------------------
Deferred compensation 17,593
- ------------------------------------------------------------------------
Accrued advisory fees 166,238
- ------------------------------------------------------------------------
Accrued directors' fees 3,296
- ------------------------------------------------------------------------
Accrued accounting service fees 5,920
- ------------------------------------------------------------------------
Accrued transfer agent fees 17,568
- ------------------------------------------------------------------------
Accrued distribution fees 7,674
- ------------------------------------------------------------------------
Accrued operating expenses 89,345
- ------------------------------------------------------------------------
Total liabilities 44,188,575
- ------------------------------------------------------------------------
NET ASSETS $1,044,178,428
========================================================================
NET ASSETS:
Institutional Shares $1,009,039,194
========================================================================
Private Investment Class $ 35,139,234
========================================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Institutional Shares:
Authorized 3,000,000,000
- ------------------------------------------------------------------------
Outstanding 1,009,122,349
========================================================================
Private Investment Class:
Authorized 1,000,000,000
- ------------------------------------------------------------------------
Outstanding 35,142,129
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
STATEMENT OF OPERATIONS
For the year ended March 31, 1996
<TABLE>
<CAPTION>
PRIVATE
INSTITUTIONAL INVESTMENT
SHARES CLASS FUND
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $41,603,217 $1,250,203 $42,853,420
- -----------------------------------------------------------------------
EXPENSES:
Advisory fees 2,436,634 72,995 2,509,629
- ------------------------------------------------------------------------
Custodian fees 126,323 1,514 127,837
- ------------------------------------------------------------------------
Transfer agent fees 69,176 2,073 71,249
- ------------------------------------------------------------------------
Registration and filing fees 21,006 22,045 43,051
- ------------------------------------------------------------------------
Accounting service fees 73,569 2,391 75,960
- ------------------------------------------------------------------------
Directors' fees 14,734 382 15,116
- ------------------------------------------------------------------------
Distribution fees (Note 2) -- 82,160 82,160
- ------------------------------------------------------------------------
Other expenses 129,902 5,235 135,137
- -----------------------------------------------------------------------
Total expenses 2,871,344 188,795 3,060,139
- ------------------------------------------------------------------------
Less expenses assumed by advisor (670,269) (40,128) (710,397)
- -----------------------------------------------------------------------
Net expenses 2,201,075 148,667 2,349,742
- -----------------------------------------------------------------------
Net investment income $39,402,142 $1,101,536 40,503,678
- -----------------------------------------------------------------------
Net realized gain on sales of investments 292,222
- ------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (30,577)
- -----------------------------------------------------------------------
Net increase in net assets resulting from operations $40,765,323
=======================================================================
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 40,503,678 $ 33,546,101
- -----------------------------------------------------------------------------
Net realized gain (loss) on sales of
investments 292,222 (430,985)
- -----------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments (30,577) 33,165
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 40,765,323 33,148,281
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Shares (39,402,142) (32,833,365)
- -----------------------------------------------------------------------------
Private Investment Class (1,101,536) (712,736)
- -----------------------------------------------------------------------------
Capital stock transactions - net:
Institutional Shares (1,106,286) (30,316,694)
- -----------------------------------------------------------------------------
Private Investment Class 5,845,831 12,695,756
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets 5,001,190 (18,018,758)
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,039,177,238 1,057,195,996
- -----------------------------------------------------------------------------
End of period $1,044,178,428 $1,039,177,238
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in):
Institutional Shares $1,009,122,349 $1,010,228,635
- -----------------------------------------------------------------------------
Private Investment Class 35,142,129 29,296,298
- -----------------------------------------------------------------------------
Undistributed net realized gain (loss) on
sales of investments (91,827) (384,049)
- -----------------------------------------------------------------------------
Unrealized appreciation of investments 5,777 36,354
- -----------------------------------------------------------------------------
$1,044,178,428 $1,039,177,238
=============================================================================
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Tax-Free Investments Co. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. The Company is organized as a Maryland
corporation consisting of one portfolio, the Cash Reserve Portfolio (the
"Fund"). The Fund consists of two different classes of shares, the
Institutional Cash Reserve Shares ("Institutional Shares") and the Private
Investment Class. Matters affecting each class are voted on exclusively by the
shareholders of each class. The investment objective of the Fund is to generate
as high a level of tax-exempt income as is consistent with preservation of
capital and maintenance of liquidity.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. 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.
A. Securities Valuations - The Fund uses the amortized cost method of valuing
investment portfolio securities which has been determined by the Board of
Directors of the Company to represent the fair value of the Fund's
investments.
B. Securities Transactions and Investment Income - Securities transactions are
recorded on a trade date basis. Realized gains and losses from securities
transactions are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of premiums and,
when appropriate, discounts on investments, is earned from settlement date
and is recorded on the accrual basis. Interest income is allocated to each
class daily, based upon each class' pro rata share of the total shares of
the Fund outstanding. Discounts, other than original issue, on short-term
obligations are amortized to unrealized appreciation for financial reporting
purposes.
C. Dividends and Distributions to Shareholders - 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
declared and paid annually. Net capital gains cannot be distributed to the
extent they can be offset by any capital loss carryovers of the Fund.
D. 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 $175,320 (which may be carried forward to offset future
taxable gains, if any) which expires, if not previously utilized, through
the year 2004. The Fund cannot distribute capital gains to shareholders
until the tax loss carryforwards have been utilized. In addition, the Fund
intends to invest in sufficient municipal securities to allow it to qualify
to pay "exempt interest dividends," as defined in the Internal Revenue Code,
to shareholders.
E. Expenses - Operating expenses directly attributable to a class are charged
to that class' operations. Expenses which are applicable to both classes,
e.g., advisory fees, are allocated between them.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company 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 the annual rate of 0.25% of
the first $500 million of the Fund's average daily net assets plus 0.20% of the
Fund's average daily net assets in excess of $500 million. AIM will, if
necessary, reduce its fees for any fiscal year to the extent required so that
the amount of ordinary expenses of each class (excluding interest, taxes,
brokerage commissions and extraordinary expenses) paid or incurred by each
class for such fiscal year does not exceed the applicable expense limitations
imposed by securities regulations in any state or jurisdiction in which the
Company's shares are qualified for sale. AIM has voluntarily agreed to reduce
its fee from the Fund to the extent necessary so that the amount of ordinary
expenses of the Institutional Shares (excluding interest, taxes, brokerage
commissions, directors' fees, extraordinary expenses and federal registration
fees) paid or incurred by the Institutional Shares does not exceed 0.20% of the
Institutional Shares' average daily net assets. As a result, AIM's advisory fee
on the Private Investment Class is reduced in the same proportion as the
Institutional Shares. For the year ended March 31, 1996, AIM reduced its fees
from the Fund by $690,397. AIM also assumed expenses of $20,000 on the Private
Investment Class during the same period.
24
<PAGE>
Under the terms of a master distribution agreement between Fund Management
Company ("FMC") and the Company, FMC acts as the exclusive distributor of
capital stock of the Institutional Shares and the Private Investment Class. The
Company has adopted a master distribution plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act with respect to the Private Investment Class. The Plan
provides that the Private Investment Class may pay up to a 0.50% maximum annual
rate of the Private Investment Class' average daily net assets. Of this amount,
the Fund may pay an asset-based sales charge to FMC and the Fund may pay a
service fee of 0.25% of the average daily net assets of the Private Investment
Class to selected broker-dealers and other financial institutions who offer
continuing personal shareholder services to their customers who purchase and
own shares of the Private Investment Class. Any amounts not paid as a service
fee under such Plan would constitute an asset-based sales charge. The Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Fund with respect to the Private Investment
Class. During the year ended March 31, 1996, the Private Investment Class paid
$82,160 as compensation under the Plan.
The Fund, pursuant to the Company's master investment advisory agreement with
AIM, has agreed to reimburse AIM for certain costs incurred in providing
accounting services to the Fund. During the year ended March 31, 1996, the Fund
reimbursed AIM $75,960 for such services.
Effective July 1, 1995, A I M Institutional Fund Services, Inc. ("AIFS")
became the exclusive transfer agent of the Fund. The Fund, pursuant to a
transfer agent and service agreement, has agreed to pay AIFS a fee for
providing transfer agent and shareholder services to the Fund. During the year
ended March 31, 1996, the Fund paid AIFS $64,592 for such services. Certain
officers and directors of the Company are directors or officers of AIM, AIFS
and FMC.
During the year ended March 31, 1996, the Fund paid legal fees of $6,329 for
services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Board of Directors. A member of that firm is a director of the
Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended March 31, 1996 and
1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Shares 5,051,588,995 $ 5,051,588,995 5,223,878,446 $ 5,223,878,446
- -----------------------------------------------------------------------------------------
Private Investment
Class 218,503,050 218,503,050 147,139,503 147,139,503
- -----------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Shares 99,312 99,312 74,376 74,376
- -----------------------------------------------------------------------------------------
Private Investment
Class 1,064,127 1,064,127 600,786 600,786
- -----------------------------------------------------------------------------------------
Redeemed:
Institutional Shares (5,052,794,593) (5,052,794,593) (5,254,269,516) (5,254,269,516)
- -----------------------------------------------------------------------------------------
Private Investment
Class (213,721,346) (213,721,346) (135,044,533) (135,044,533)
- -----------------------------------------------------------------------------------------
Net increase
(decrease) 4,739,545 $ 4,739,545 (17,620,938) $ (17,620,938)
=========================================================================================
</TABLE>
25
<PAGE>
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of the
Institutional Shares capital stock outstanding during each of the years in the
seven-year period ended March 31, 1996, the eleven months ended March 31, 1989
and each of the years in the two-year period ended April 30, 1988.
<TABLE>
<CAPTION>
MARCH 31,
-------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990
---------- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------- ---------- ---------- ---------- -------- ---------- ---------- ----------
Income from
investment
operations:
Net investment
income 0.04 0.03 0.02 0.03 0.04 0.06 0.06
- ---------------- ---------- ---------- ---------- -------- ---------- ---------- ----------
Less
distributions:
Dividends from
net investment
income (0.04) (0.03) (0.02) (0.03) (0.04) (0.06) (0.06)
- ---------------- ---------- ---------- ---------- -------- ---------- ---------- ----------
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------- ---------- ---------- ---------- -------- ---------- ---------- ----------
Total return 3.67% 3.06% 2.33% 2.66% 4.09% 5.68% 6.22%
================ ========== ========== ========== ======== ========== ========== ==========
Ratios/supplemental
data:
Net assets, end
of period (000s
omitted) $1,009,039 $1,009,891 $1,040,595 $994,828 $1,191,209 $1,156,557 $1,114,813
================ ========== ========== ========== ======== ========== ========== ==========
Ratio of
expenses to
average net
assets 0.20%(b)(c) 0.20%(b) 0.20%(b) 0.20%(b) 0.20%(b) 0.20%(b) 0.20%(b)
================ ========== ========== ========== ======== ========== ========== ==========
Ratio of net
investment
income to
average net
assets 3.59%(b)(c) 3.01%(b) 2.30%(b) 2.66%(b) 4.00%(b) 5.52%(b) 6.03%(b)
================ ========== ========== ========== ======== ========== ========== ==========
APRIL 30,
---------- -----------------------
1989 1988 1987
---------- ---------- --------
<S> <C> <C> <C>
Net asset value,
beginning of
period $1.00 $1.00 $1.00
- ---------------- ---------- ---------- --------
Income from
investment
operations:
Net investment
income 0.05 0.04 0.04
- ---------------- ---------- ---------- --------
Less
distributions:
Dividends from
net investment
income (0.05) (0.04) (0.04)
- ---------------- ---------- ---------- --------
Net asset value,
end of period $1.00 $1.00 $1.00
================ ========== ========== ========
Total return 5.67%(a) 4.56% 4.24%
================ ========== ========== ========
Ratios/supplemental
data:
Net assets, end
of period (000s
omitted) $1,062,479 $1,192,604 $993,392
================ ========== ========== ========
Ratio of
expenses to
average net
assets 0.20%(a)(b) 0.21%(b) 0.21%(d)
================ ========== ========== ========
Ratio of net
investment
income to
average net
assets 5.52%(a)(b) 4.47%(b) 4.14%(d)
================ ========== ========== ========
</TABLE>
(a) Annualized.
(b) After waiver of advisory fees.
(c) Ratios are based on average net assets of $1,097,089,368. Ratios of
expenses and net investment income to average net assets prior to waiver of
advisory fees are 0.26% and 3.53%, respectively.
(d) After waiver of advisory fees and distribution fees.
26
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Tax-Free Investments Co.
We have audited the accompanying statement of assets and liabilities of the
Cash Reserve Portfolio (a Portfolio of Tax-Free Investments Co.), including the
schedule of investments, as of March 31, 1996, 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 seven-year period then ended, the
eleven-month period ended March 31, 1989, and each of the years in the two-year
period ended April 30, 1988. 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
March 31, 1996, 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 the
Cash Reserve Portfolio as of March 31, 1996, 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 seven-year period then ended, the eleven-month period ended March 31,
1989, and each of the years in the two-year period ended April 30, 1988, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
May 3, 1996
27
<PAGE>
<TABLE>
<S> <C>
DIRECTORS
Charles T. Bauer John F. Kroeger Tax-Free
Bruce L. Crockett Lewis F. Pennock Investments Co.
Owen Daly II Ian W. Robinson (TFIC)
Carl Frischling Louis S. Sklar
Robert H. Graham
OFFICERS
Charles T. Bauer Chairman
Robert H. Graham President
John J. Arthur Sr. Vice President & Treasurer Cash Reserve
Gary T. Crum Sr. Vice President Portfolio
Carol F. Relihan Vice President & Secretary -----------------------------------------------------
Stuart W. Coco Vice President Institutional Cash ANNUAL
Melville B. Cox Vice President Reserve Shares REPORT
Karen Dunn Kelley Vice President
J. Abbott Sprague Vice President
Dana R. Sutton Vice President & Assistant Treasurer
P. Michelle Grace Assistant Secretary MARCH 31, 1996
Nancy L. Martin Assistant Secretary
Ofelia M. Mayo Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046
(800) 347-1919
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 1919
Houston, TX 77046
(800) 659-1005
CUSTODIAN
The Bank of New York
110 Washington Street,
New York, NY 10286
LEGAL COUNSEL TO FUND
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
LEGAL COUNSEL TO DIRECTORS
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, NY 10022
TRANSFER AGENT
A I M Institutional Fund Services, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046
This report may be distributed only to current shareholders or [LOGO APPEARS HERE]
to persons who have received a current Fund prospectus. FUND MANAGEMENT COMPANY
</TABLE>
