<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of As the end of the fiscal year arrived on
Charles T. Bauer, March 31, 1999, the U.S. economy continued to
Chairman of the move ahead at a brisk pace. After growing in the
LETTER Board of the Fund final quarter of 1998 at the fastest rate in
TO OUR APPEARS HERE two-and-a-half years, total gross domestic
SHAREHOLDERS product (GDP) growth results for 1998 remained
at 3.9%. Throughout the second half of 1998, markets around the
globe experienced economic turmoil, financial instability and
increased credit concerns. Certain regions, particularly Asia,
Russia and Latin America, suffered from a severe downturn as their
economies fought to stay afloat. Financial markets in the United
States and Europe were also affected by the downturn, but
surprisingly strong growth continued in both economies.
As a result of the global meltdown, the Federal Reserve Board
(the Fed) reduced the federal funds rate from 5.5% to 4.75%. A 25
basis point rate cut was approved at both the September and
November Fed policy meetings, as well as an unexpected 25 basis
point cut between those two regularly scheduled meetings. The
discount rate was also reduced from 5% to 4.5% during that period.
The discount rate is the rate member banks pay the Federal Reserve
when they borrow money. The lowering of interest rates was not
done solely to stimulate an already strong U.S. economy, but also
to minimize the impact of the international economic crisis upon
the U.S. economy, to decrease volatility, and to calm the
financial markets.
The yield on the one-year Treasury bill, which was as high as
5.32% in early July of 1998, dropped to 4.37% in early December.
The yield dropped because of an increase in the one-year Treasury
bill's price. The price increase was due to investors' increased
demand for Treasury securities in a "flight to quality" investment
environment resulting from the international crises and credit
concerns.
The municipal market continued to suffer from a lack of supply
over the last six months of the reporting period because the
strong financial position of local governments reduced their need
to issue new securities. Demand remained strong and yields in the
tax-free market dropped into the 3% range for one-year notes.
Spreads widened between tax-free and Treasury bill yields. The
tax-free yield curve remained flat as investors expected a steady
Fed policy.
YOUR INVESTMENT PORTFOLIO
For the fiscal year ended March 31, 1999, Cash Reserve Portfolio
maintained its competitive position, as shown in the table. The
Portfolio holds the highest credit-quality ratings given by three
widely known credit-rating agencies. It continues to be rated AAAm
by Standard & Poor's Corporation and Aaa by Moody's Investors
Service, Inc. In addition, shortly before the fiscal year closed,
the Portfolio received the highest rating, AAA, granted by Fitch
IBCA, Inc. These ratings are historical and are based on an
analysis of the Portfolio's credit quality, composition,
management and weekly portfolio reviews. With the addition of the
AAA Fitch rating, AIM became the largest multi-fund complex to
have all of its institutional money market portfolios given the
highest rating by three different rating agencies.
<TABLE>
<CAPTION>
YIELDS AS OF 3/31/99
<S> <C> <C> <C>
AVERAGE SEVEN-DAY
MONTHLY YIELD YIELD
Cash Reserve Portfolio
Cash Management Class 2.74% 2.79%
IBC Tax-Free Money Fund
Averages Institutions Only(TM) 2.69% 2.72%
IBC All Tax-Free Money
Funds Averages(TM) 2.44% 2.47%
</TABLE>
Cash Reserve Portfolio seeks to generate as high a level of
federally tax-exempt income as is consistent with preservation of
capital and maintenance of liquidity by investing in
(continued)
<PAGE>
high-quality, short-term municipal obligations. It invests solely
in securities rated "First Tier" as defined in Rule 2a-7 under the
Investment Company Act of 1940. Net assets of Cash Management
Class of the Portfolio stood at $7.1 million at the close of the
fiscal year.
An investment in a money market fund such as Cash Reserve
Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other government agency.
Although a money market fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money
investing in the Fund.
OUTLOOK
As the first quarter of 1999 came to a close, the U.S. economy
continued to show strong growth with little or no inflationary
pressures. GDP growth for the first quarter was expected to weaken
from the 6% level posted in the fourth quarter of 1998 but still
remain in the solid 3% to 4% range. Although oil prices surged
about $5 per barrel during the closing weeks of the fiscal year,
there is little evidence of inflationary tendencies. Therefore,
the markets have adjusted their expectations to a steady Fed
policy over the next few months. Tax-free yields have backed up
during the tax season but are expected to level out in the 3%
range in the near future.
We are pleased to send you this report concerning your
investment. AIM is committed to customer service and to the
primary goals of safety, liquidity and yield in institutional fund
management. We are ready to respond to your comments about this
report and to any questions you may have. Please contact one of
our representatives at 800-659-1005 if we may be of service.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE>
SCHEDULE OF INVESTMENTS
March 31, 1999
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL OBLIGATIONS - 103.47%
ALABAMA - 0.50%
Birmingham (City of) (YMCA-Birmingham);
Public Park and Recreation Board RB
3.15%, 06/01/16(b)(c) -- VMIG-1 $ 3,165 $ 3,165,000
- -------------------------------------------------------------------------------
Marshall (County of); Special Obligation
School Refunding Series 1994 Warrants
3.05%, 02/01/12(b)(c) A-1+ -- 2,695 2,695,000
- -------------------------------------------------------------------------------
5,860,000
- -------------------------------------------------------------------------------
ALASKA - 0.40%
Alaska Housing Finance Corp.; General
Mortgage Series 1991 A RB
2.95%, 06/01/26(b) A-1+ VMIG-1 4,636 4,636,000
- -------------------------------------------------------------------------------
ARIZONA - 3.67%
Maricopa (County of) Arizona Pollution
Control Corp. (El Paso Electric Co.
Project A); Series 1994 PCR
3.00%, 07/01/14(b)(c) -- P-1 20,000 20,000,000
- -------------------------------------------------------------------------------
Phoenix (City of); Series 95A-2 GO
3.25%, 06/01/20(b) A-1+ VMIG-1 7,800 7,800,000
- -------------------------------------------------------------------------------
Phoenix (City of) Industrial Development
Authority (Southwest Villages Project);
Multifamily Housing Variable Rate
Demand Series 1985 A RB
3.00%, 12/01/06(b)(c) A-1+ -- 4,000 4,000,000
- -------------------------------------------------------------------------------
Salt River Project Agricultural
Improvement and Power District;
Series B Promissory Notes
2.85%, 06/17/99 A-1+ P-1 11,100 11,100,000
- -------------------------------------------------------------------------------
42,900,000
- -------------------------------------------------------------------------------
CALIFORNIA - 1.75%
California Health Facilities Authority
(St. Francis Medical Center);
Series 1995 F RB
2.70%, 07/10/10(b)(d) A-1+ VMIG-1 15,000 15,000,000
- -------------------------------------------------------------------------------
Huntington Beach (City of) (Seabridge
Villas Project); Floating Rate
Multifamily Housing Series 1985 A RB
4.00%, 02/01/10(b)(c) -- VMIG-1 3,000 3,000,000
- -------------------------------------------------------------------------------
Student Loan Marketing Corporation;
Student Loan Revenue Refunding
Series 1993 A RB
3.00%, 11/01/99(c)(e) -- VMIG-1 2,500 2,500,000
- -------------------------------------------------------------------------------
20,500,000
- -------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
COLORADO - 0.89%
Colorado (State of) General Fund;
Series 1998 A TRAN
4.00%, 06/25/99 SP-1+ -- $ 5,000 $ 5,004,712
- -------------------------------------------------------------------------------
Colorado Housing Finance Authority
(Coventry Village Project); Multifamily
Housing Refunding Series 1996 B RB
3.00%, 10/15/16(b)(c) A-1+ -- 5,370 5,370,000
- -------------------------------------------------------------------------------
10,374,712
- -------------------------------------------------------------------------------
CONNECTICUT - 0.60%
Connecticut (State of) (Transportation
Infrastructure Purpose S-1); Special Tax
Obligation RB
2.90%, 12/01/10(b)(c) A-1+ VMIG-1 4,262 4,262,000
- -------------------------------------------------------------------------------
Connecticut (State of) Development
Authority (Corporation for Independent
Living Project); Health Care Series
1990 RB
2.80%, 07/01/15(b)(c) -- VMIG-1 2,750 2,750,000
- -------------------------------------------------------------------------------
7,012,000
- -------------------------------------------------------------------------------
DELAWARE - 0.96%
Delaware (State of) Economic Development
Authority (Hospital Billing); Adjustable
Rate Series C RB
3.10%, 12/01/15(b)(d) A-1+ VMIG-1 5,500 5,500,000
- -------------------------------------------------------------------------------
University of Delaware; Variable Rate
Demand Series 1998 RB
3.00%, 11/01/23(b) A-1+ -- 5,711 5,711,000
- -------------------------------------------------------------------------------
11,211,000
- -------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 0.40%
District of Columbia Housing Finance
Agency (Livingston Manor Apts Project);
Multifamily Variable Rate Housing
Mortgage RB
3.05%, 07/01/21(b)(c) A-1 -- 4,630 4,630,000
- -------------------------------------------------------------------------------
FLORIDA - 6.17%
Broward (County of) Housing Finance
Authority (Welleby Apartments Project);
Multifamily Variable Rate Demand Housing
Series 1984 RB
2.95%, 12/01/06(b)(c) -- MIG-1 5,350 5,350,000
- -------------------------------------------------------------------------------
Eustis (City of) Health Facility
Authority (Florida Hospital/Waterman
Inc. Project); Series 1992 RB
2.95%, 12/01/15(b)(c) -- VMIG-1 3,525 3,525,000
- -------------------------------------------------------------------------------
Gulf Breeze (City of) (Florida Muncipal
Bond Fund); Variable Rate Demand
Series 1996 A RB
3.10%, 03/31/21(b)(c) A-1+ -- 3,595 3,595,000
- -------------------------------------------------------------------------------
Gulf Breeze (City of) (Local Government
Loan Program); Floating Rate
Series 1985 B RB
3.05%, 12/01/15(b)(d) A-1+ VMIG-1 3,700 3,700,000
- -------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
FLORIDA - (CONTINUED)
Lee (County of) Housing Finance
Authority (Forestwood Apartments
Project); Housing Series 1995 A RB
3.00%, 06/15/25(b)(c) A-1+ -- $ 3,800 $ 3,800,000
- -----------------------------------------------------------------------------
Morgan Stanley Float Program, (Board
of Education Lottery); Floating Rate
Trust Certificate Series 57 1998 RB
3.08%, 01/01/07(b)(d)(f) A-1c -- 15,000 15,000,000
- -----------------------------------------------------------------------------
Morgan Stanley Float Program,
Jacksonville (City of) Health
Facilities Authority; Floating Rate
Trust Certificates Series 49 1998 RB
3.08%,02/15/07(b)(d)(f) A-1c -- 12,980 12,980,000
- -----------------------------------------------------------------------------
Morgan Stanley Float Program, Orange
(County of) School Board; Floating Rate
Trust Certificates Series 1997 A RB
3.08%, 08/01/06(b)(d)(f) -- VMIG-1 8,135 8,135,000
- -----------------------------------------------------------------------------
Morgan Stanley Float Program, Tampa Bay
(City of) Water Utility System;
Floating Rate Trust Certificates Series
1998 B RB
3.08%, 10/01/18(b)(d)(f) A-1c -- 4,995 4,995,000
- -----------------------------------------------------------------------------
Putnam County Development Authority
(Seminole Electric Cooperative, Inc.
Project); National Rural Utilities
Guaranteed Semiannual Adjustable
Pooled PCR
3.00%, Series 1984 H-3, 09/15/99(c)(e) A-1+ MIG-1 4,400 4,400,000
- -----------------------------------------------------------------------------
3.00%, Series 1984 H-4, 09/15/99(c) A-1+ P-1 3,600 3,600,000
- -----------------------------------------------------------------------------
St. John's (County of) Housing Finance
Authority (Anastasia Project);
Mutifamily Housing Series 1996 RB
3.00%, 11/01/14(b)(c) A-1+ -- 3,100 3,100,000
- -----------------------------------------------------------------------------
72,180,000
- -----------------------------------------------------------------------------
GEORGIA - 4.96%
Clark (County of) Georgia School
District (School Sales Tax);
Series 1997 GO
4.55%, 03/01/00(d) AAA Aaa 2,150 2,179,938
- -----------------------------------------------------------------------------
Cobb (County of) Housing Authority
(Greenhouse Frey Apartment Project);
Multifamily Housing RB
3.00%, 09/15/26(b)(c) A-1+ -- 5,000 5,000,000
- -----------------------------------------------------------------------------
Decatur County Bainbridge Industrial
Development Authority
(Kaiser Agriculture Chemical Inc.
Project); Series 1985 IDR
3.00%, 12/01/02(b)(c) A-1+ -- 2,100 2,100,000
- -----------------------------------------------------------------------------
Dekalb (County of) Housing Authority
(Clairmont Crest Project); Multifamily
Housing Refunding Series 1995 RB
3.05%, 06/15/25(b)(c) A-1+ -- 6,400 6,400,000
- -----------------------------------------------------------------------------
Dekalb Private Hospital Authority
(Egleston Childrens Hospital at
Emory University); Variable Rate Demand
Series 1994 A RAN
2.90%, 03/01/24(b)(c) A-1+ VMIG-1 1,558 1,558,000
- -----------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GEORGIA - (CONTINUED)
Development Authority of Cobb County
(Institute of Nuclear Power Operations
Project); Series 1998 RB
3.10%, 02/01/13(b)(c) -- Aa3 $ 8,855 $ 8,855,000
- -------------------------------------------------------------------------------
Development Authority of Floyd County
(Shorter College Project);
Series 1998 RB
3.15%, 06/01/17(b)(c) A-1+ -- 4,000 4,000,000
- -------------------------------------------------------------------------------
Fulton (County of) Housing Authority
(Spring Creek Crossing Project);
Multifamily Housing Refunding Series RB
3.00%, 10/01/24(b)(c) A-1+ -- 5,000 5,000,000
- -------------------------------------------------------------------------------
Georgia (State of) Municipal Gas
Authority (Agency Project);
Gas Series 1996 A RB
3.05%, 11/01/06(b)(c) A-1+ -- 3,900 3,900,000
- -------------------------------------------------------------------------------
Gwinnett (County of) Housing Authority
(Greens Apartment Project); Variable
Rate Demand Multifamily Housing Series
1995 RB
3.05%, 06/15/25(b)(c) A-1+ -- 10,300 10,300,000
- -------------------------------------------------------------------------------
Gwinnett (County of) Housing Authority
(Post Chase Project); Variable Rate
Demand Multifamily Housing Series 1997
RB
3.00%, 06/01/25(b)(c) A-1+ -- 3,500 3,500,000
- -------------------------------------------------------------------------------
Roswell (City of) Housing Development
Authority (Azalea Project);
Multifamily Housing Refunding
Series 1996 RB
3.00%, 06/15/25(b)(c) A-1+ -- 5,200 5,200,000
- -------------------------------------------------------------------------------
57,992,938
- -------------------------------------------------------------------------------
IDAHO - 0.17%
Idaho (State of); Series 1998 TAN
4.50%, 06/30/99 SP-1+ MIG-1 2,000 2,004,283
- -------------------------------------------------------------------------------
ILLINOIS - 11.24%
Burbank (City of) (Service Merchandise
Co. Inc. Project); Floating Rate Monthly
Demand Industrial Building
Series 1984 RB
3.25%, 09/15/24(b)(c) A-1+ -- 2,800 2,800,000
- -------------------------------------------------------------------------------
Chicago (City of); Series 1998 GO
2.85%, 10/28/99(c)(e) A-1+ VMIG-1 4,000 4,000,000
- -------------------------------------------------------------------------------
East Peoria (City of) (Radnor/East Peoria
Partnership Project); Multifamily
Housing Series 1983 RB
3.25%, 06/01/08(b)(c) -- Aa3 5,445 5,445,000
- -------------------------------------------------------------------------------
Illinois (State of); Refunding Series GO
4.70%, 06/01/99 AA Aa2 3,000 3,007,609
- -------------------------------------------------------------------------------
Illinois (State of); Series 1998 GO
4.25%, 06/01/99(d) AAA Aaa 7,000 7,007,601
- -------------------------------------------------------------------------------
</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
(American College of Surgeons Project);
Tax Exempt Series 1996 RB
3.10%, 08/01/26(b)(c) A-1+ -- $ 6,551 $ 6,551,000
- -------------------------------------------------------------------------------
Illinois Development Finance Authority
(Jewish Charities Revenue Anticipation
Note Progam); Variable Rate Demand RAN
3.15%, Series 1998-1999 A 06/30/99(b)(c) A-1+ -- 5,600 5,600,000
- -------------------------------------------------------------------------------
3.15%, Series 1998-1999 B 06/30/99(b)(c) A-1+ -- 3,000 3,000,000
- -------------------------------------------------------------------------------
Illinois Educational Facilities Authority
(Northwestern University); Adjustable
Rate Series 1988 RB
3.00%, 03/01/28(b) A-1+ VMIG-1 6,450 6,450,000
- -------------------------------------------------------------------------------
Illinois Educational Facilities Authority
(Pooled Financing Program); Commercial
Paper
3.00%, 04/06/99 A-1+ -- 10,000 10,000,000
- -------------------------------------------------------------------------------
Illinois Health Facilities Authority;
Revolving Fund Pooled
Series D RB
2.95%, 08/01/15(b)(c) A-1+ VMIG-1 3,654 3,654,000
- -------------------------------------------------------------------------------
Illinois Health Facilities Authority
(Chicago Hospitals); Variable Rate Demand
Series 1998 RB
3.10%, 08/01/26(b)(d) A-1+ VMIG-1 15,000 15,000,000
- -------------------------------------------------------------------------------
Illinois Health Facilities Authority
(Northwestern Memorial Hospital);
Variable Rate Demand Series 1995 RB
3.10%, 08/15/25(b) A-1+ VMIG-1 8,000 8,000,000
- -------------------------------------------------------------------------------
Illinois Health Facilities Authority (The
Methodist Medical Center); Revenue
Refunding Series 1998 RB
4.50%, 11/15/99(d) AAA Aaa 2,090 2,107,835
- -------------------------------------------------------------------------------
Illinois (State of) Toll Highway
Authority; Refunding Series 1993 B RB
3.30%, 01/01/10(b)(d) A-1+ VMIG-1 3,360 3,360,000
- -------------------------------------------------------------------------------
Illinois (State of) Toll Highway
Authority; Refunding Series 1998 B RB
3.05%, 01/01/16(b)(c) -- VMIG-1 8,800 8,800,000
- -------------------------------------------------------------------------------
Morgan Stanley Float Program, Chicago
School Reform Board of Trustees of Board
of Education (Dedicated Tax Revenues);
Floating Rate Trust Certificates Series
1997 A RB
3.13%, 06/01/07(b)(d)(f) A-1c -- 24,280 24,280,000
- -------------------------------------------------------------------------------
Village of Lisle (Four Lakes Project
Phase Five); Multifamily Housing
Revenue Refunding Series 1996 RB
3.00%, 09/15/26(b)(c) A-1+ -- 8,300 8,300,000
- -------------------------------------------------------------------------------
Village of Sauget; Variable Rate Demand
Series 1997 GO
2.95%, 02/01/16(b)(c) A-1+ -- 4,200 4,200,000
- -------------------------------------------------------------------------------
131,563,045
- -------------------------------------------------------------------------------
INDIANA - 2.20%
Auburn (City of) (Sealed Power Corp.
Project); Variable Rate Demand
Economic Development Series 1985 RB
3.00%, 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 Development Finance Authority
(USX Corporation Project); Variable
Rate Environmental Improvement
Refunding Series 1998 RB
3.00%, 08/05/99(b)(c)(e) A-1+ -- $ 7,500 $ 7,500,000
- -----------------------------------------------------------------------------
Indianapolis (City of); Local
Improvement Bond Bank
Series 1995 B RB
5.00%, 02/01/00 AAA Aaa 1,500 1,522,632
- -----------------------------------------------------------------------------
Indianapolis (City of) (Jewish
Community Campus Project);
Variable Rate Economic Development RB
2.95%, 04/01/05(b)(c) -- VMIG-1 1,995 1,995,000
- -----------------------------------------------------------------------------
Morgan Stanley Float Program, Indiana
Health Facility Financing Authority
(Sisters of St. Francis Health
Services Inc.); Floating Rate Trust
Certificates Series 89 1999 A RB
3.13%, 05/01/07(b)(d)(f) A-1c -- 7,495 7,495,000
- -----------------------------------------------------------------------------
Petersburg (City of) (Indianapolis
Power and Light Co. Project);
Adjustable Rate Tender Securities
Series 1995 B PCR
3.05%, 01/01/23(b)(d) A-1+ VMIG-1 6,000 6,000,000
- -----------------------------------------------------------------------------
25,712,632
- -----------------------------------------------------------------------------
IOWA - 1.64%
Iowa Higher Education Loan Authority;
Private College Facility RB
3.15%, 12/01/15(b)(d) A-1+ VMIG-1 10,700 10,700,000
- -----------------------------------------------------------------------------
Iowa School Corporations (Iowa School
Cash Anticipation Program); Warrant
Certificates Series 1998-1999 A TRAN
4.50%, 06/25/99(c) SP-1+ MIG-1 8,500 8,516,232
- -----------------------------------------------------------------------------
19,216,232
- -----------------------------------------------------------------------------
KANSAS - 0.43%
Mission (City of) (Silverwood Apartment
Project); Multifamily RB
3.00%, 09/15/26(b)(c) A-1+ -- 5,000 5,000,000
- -----------------------------------------------------------------------------
KENTUCKY - 6.89%
Clark (County of) (East Kentucky
Power); Series 1984-J2 PCR
3.10%, 04/15/99(c) A-1+ P-1 3,100 3,100,000
- -----------------------------------------------------------------------------
Kentucky Asset/Liability Commission;
General Fund TRAN
4.00%, Series 1998 B 06/25/99 SP-1+ MIG-1 2,000 2,003,049
- -----------------------------------------------------------------------------
4.50%, Series 1998 A 06/25/99 SP-1+ MIG-1 5,000 5,010,453
- -----------------------------------------------------------------------------
Kentucky Asset/Liability Commission;
Project Notes General Fund Series 1998
A RB
2.85%, 08/12/99(b)(c) -- VMIG-1 8,000 8,000,000
- -----------------------------------------------------------------------------
2.90%, 08/12/99(b)(c) -- VMIG-1 15,000 15,000,000
- -----------------------------------------------------------------------------
Kentucky Economic Development Finance
Authority (Catholic Healthcare
Project); Hospital Facilities
Series 1998 A RB
3.00%, 12/01/27(b)(c) A-1+ VMIG-1 21,200 21,200,000
- -----------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
KENTUCKY - (CONTINUED)
Kentucky Interlocal School Transport
Association; Series 1998 TRAN
3.90%, 06/30/99 SP-1+ -- $22,000 $ 22,043,538
- -------------------------------------------------------------------------------
Trimble (County of) (Louisville Gas
and Electric Company Project);
Series 1992 A PCR
2.85%, 06/17/99 A-1 VMIG-1 4,300 4,300,000
- -------------------------------------------------------------------------------
80,657,040
- -------------------------------------------------------------------------------
LOUISIANA - 2.18%
Louisana Public Facilities Authority
(Tiger Athletic Foundation Project);
Series 1999 RB
3.20%, 09/01/28(b)(c) A-1+ -- 5,000 5,000,000
- -------------------------------------------------------------------------------
New Orleans (City of); Aviation Board
Series B RB
3.00%, 08/01/16(b)(d) A-1+ VMIG-1 4,935 4,935,000
- -------------------------------------------------------------------------------
New Orleans International Airport;
Aviation Board Refunding
Series 1995 A RB
3.00%, 08/01/15(b)(d) A-1+ VMIG-1 15,635 15,635,000
- -------------------------------------------------------------------------------
25,570,000
- -------------------------------------------------------------------------------
MAINE - 0.10%
Maine Health and Higher Educational
Facilities Authority;
Series 1998 B RB
3.70%, 07/01/99(c) AAA -- 1,120 1,120,000
- -------------------------------------------------------------------------------
MASSACHUSETTS - 1.46%
Massachusetts (State of); Series
1993 B GO
4.60%, 11/01/99 AA- Aa3 2,890 2,917,315
- -------------------------------------------------------------------------------
Massachusetts Health & Educational
Facilities Authority (Harvard University
Issue); Variable Rate Option Series I RB
2.85%, 08/01/17(b) A-1+ VMIG-1 5,245 5,245,000
- -------------------------------------------------------------------------------
Massachusetts Muni Wholesale Copower
Supply System;
Series 1999 A RB
4.30%, 07/01/99(d) AAA Aaa 1,450 1,454,635
- -------------------------------------------------------------------------------
Massachusetts State Health & Educational
Facilities Authority
(Partners Health Care Systems P-2); RB
2.95%, 07/01/27(b)(c) A-1+ VMIG-1 7,500 7,500,000
- -------------------------------------------------------------------------------
17,116,950
- -------------------------------------------------------------------------------
MICHIGAN - 1.55%
Grand Rapids (City of); Water Supply
Series 1990 RB
7.25%, 01/01/00(g) AAA Aaa 3,000 3,147,517
- -------------------------------------------------------------------------------
Jackson County Economic Development Corp.
(Sealed Power Corp.); Economic
Development Variable Refunding RB
3.00%, 10/01/19(b)(c) -- VMIG-1 1,000 1,000,000
- -------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MICHIGAN - (CONTINUED)
Michigan (State of); Municipal Bond
Authority RB
4.25%, Series 1998 D-1, 08/27/99 SP-1+ -- $ 3,500 $ 3,509,168
- -----------------------------------------------------------------------------
4.25%, Series 1998 D-2, 08/27/99(c) SP-1+ -- 7,000 7,027,576
- -----------------------------------------------------------------------------
Michigan Strategic Fund (260 Brown St.
Associates Project); Convertible
Variable Rate Demand Limited
Obligation Series 1985 RB
3.20%, 10/01/15(b)(c) -- VMIG-1 3,500 3,500,000
- -----------------------------------------------------------------------------
18,184,261
- -----------------------------------------------------------------------------
MINNESOTA - 0.72%
Bloomington (City of) Port Authority
(Mall of America Project); Special Tax
Revenue Series 1996 B RB
3.10% 02/01/13(b)(c) A-1+ VMIG-1 300 300,000
- -----------------------------------------------------------------------------
Mankato (City of) (Northern States
Power Co. Project); Floating
Collateralized Series 1985 PCR
3.15%, 03/01/11(b)(d) AA- Aa3 3,400 3,400,000
- -----------------------------------------------------------------------------
Morgan Stanley Float Program (Northern
Municipal Power Agency); Electric
System Floating Rate Trust Receipts
Refunding Series 1998 RB
3.08%, 01/01/16(b)(c)(f) A-1c -- 3,515 3,515,000
- -----------------------------------------------------------------------------
Red Wing (City of) Industrial
Development Authority (Northern States
Power Co.); Floating Rate
Collateralized Series 1985 PCR
3.15%, 03/01/11(b)(d) AA- A1 1,200 1,200,000
- -----------------------------------------------------------------------------
8,415,000
- -----------------------------------------------------------------------------
MISSISSIPPI - 0.43%
Mississippi (State of) (Four Lane
Highway Program); Series 1998 GO
3.50%, 07/01/99 SP-1+ MIG-1 5,000 5,007,360
- -----------------------------------------------------------------------------
MISSOURI - 6.56%
Independence (City of) Industrial
Development Authority (The Groves and
Graceland College Nursing Arts Center
Project); Variable Rate Demand Series
1997 A IDR
3.15%, 11/01/27(b)(c) A-1+ -- 5,000 5,000,000
- -----------------------------------------------------------------------------
Kansas City Industrial Development
Authority (Sleepy Hollow Apartment
Project); Multifamily Housing
Series 1996 RB
3.00%, 09/15/26(b)(c) A-1+ -- 7,500 7,500,000
- -----------------------------------------------------------------------------
Missouri Health & Educational
Facilities Authority (Deaconess Long
Term Care - A); Variable Rate Demand
Health Facilities Series 1996 RB
3.05%, 12/01/16(b)(c) A-1+ VMIG-1 10,955 10,955,000
- -----------------------------------------------------------------------------
Missouri Health & Educational
Facilities Authority (Sister of
Mercy); Variable Rate Health Facility
Series 1995 RB
3.00%, 12/01/16(b) A-1+ VMIG-1 7,300 7,300,000
- -----------------------------------------------------------------------------
</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 (Stowers
Institute for Medical Research);
Series 1998 RB
2.95%, 04/01/38(b)(c) A-1+ -- $ 41,000 $ 41,000,000
- -----------------------------------------------------------------------------
Morgan Stanley Float Program,
(University of Missouri Health System);
Floating Rate Trust Certificates
Series 1998 40 RB
3.13%, 11/01/28(b)(d)(f) -- VMIG-1 4,995 4,995,000
- -----------------------------------------------------------------------------
76,750,000
- -----------------------------------------------------------------------------
NEVADA - 1.28%
Las Vegas (City of) Valley Water
District; Series A Commercial Paper
2.85%, 07/21/99(c) A-1+ P-1 15,000 15,000,000
- -----------------------------------------------------------------------------
NEW HAMPSHIRE - 0.46%
New Hampshire Housing Finance
Authority (EQR-Bond Partnership-
Manchester Project); Multifamily
Housing Refunding Series 1996 RB
3.00%, 09/15/26(b)(c) -- VMIG-1 5,000 5,000,000
- -----------------------------------------------------------------------------
New Hampshire Industrial Development
Authority (Bangor Hydro-Electric Co.
Project); Variable Rate Demand Series
1983 PCR
3.05%, 01/01/09(b)(c) A-1+ -- 400 400,000
- -----------------------------------------------------------------------------
5,400,000
- -----------------------------------------------------------------------------
NEW MEXICO - 0.85%
New Mexico (State of); TRAN
3.75%, Series 1998-1999 A, 06/30/99 SP-1+ MIG-1 5,000 5,009,356
- -----------------------------------------------------------------------------
4.25%, Series 1998-1999, 06/30/99 SP-1+ MIG-1 5,000 5,007,736
- -----------------------------------------------------------------------------
10,017,092
- -----------------------------------------------------------------------------
NEW YORK - 16.66%
Eagle Tax Exempt Trust; Class A COP(f)
3.06%, Series 943207 07/01/29(b)(c) A-1+c -- 14,850 14,850,000
- -----------------------------------------------------------------------------
3.09%, Series 97C4702 01/01/20(b) A-1+c -- 9,900 9,900,000
- -----------------------------------------------------------------------------
3.11%, Series 97C4703 01/01/01(b)(g) A-1+c -- 11,295 11,295,000
- -----------------------------------------------------------------------------
3.11%, Series 1993 E 08/01/06(b)(d) A-1+c -- 15,000 15,000,000
- -----------------------------------------------------------------------------
3.11%, Series 1993 F 08/01/06(b)(d) A-1+c -- 20,850 20,850,000
- -----------------------------------------------------------------------------
3.11%, Series 943802 05/01/07(b)(d) A-1+c -- 17,800 17,800,000
- -----------------------------------------------------------------------------
3.11%, Series 943901 06/15/07(b)(c) A-1+c -- 15,175 15,175,000
- -----------------------------------------------------------------------------
3.11%, Series 950901 06/01/21(b)(g) A-1+c -- 13,315 13,315,000
- -----------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW YORK - (CONTINUED)
Eagle Tax Exempt Trust (Colorado
Housing and Finance Authority); Series
94C0601 Class A COP
3.11%, 10/01/23(b)(f) A-1+c -- $10,000 $ 10,000,000
- -----------------------------------------------------------------------------
Eagle Tax Exempt Trust (Houston Water
and Sewer); Series 974305 RB
Class A COP
3.11%, 12/01/27(b)(c)(f) A-1+c -- 14,005 14,005,000
- -----------------------------------------------------------------------------
Eagle Tax Exempt Trust (Washington
Public Power Supply System Project
No. 2); Series 964703 Class A COP
3.11%, 07/01/11(b)(c)(f) A-1+c -- 5,870 5,870,000
- -----------------------------------------------------------------------------
Eagle Tax Exempt Trust (Washington
State); Series 984701 Class A COP
3.09%, 05/01/18(b)(f) A-1+c -- 14,400 14,400,000
- -----------------------------------------------------------------------------
Long Island Power Authority;
Subordinated Series 1998 4 RB
3.00%, 04/08/99(c) A-1+ VMIG-1 13,000 13,000,000
- -----------------------------------------------------------------------------
2.85%, 08/19/99(c) A-1+ VMIG-1 3,000 3,000,000
- -----------------------------------------------------------------------------
Merrill Lynch Group Float Program,
New York State Medical Facilities
Finance Agency (St.Lukes-Roosevelt
Hospital Center); Floating Option
Tax-Exempt Receipts Series PA-113
1993 A Mortgage RB
3.05%, 02/15/29(b)(c)(f) A-1+c -- 9,700 9,700,000
- -----------------------------------------------------------------------------
Merrill Lynch Group Float Program,
New York State Mortgage Agency;
Floating Option Tax-Exempt Receipts
Series PT 158 RB
3.05%, 04/01/12(b)(c)(f) -- VMIG-1 1,100 1,100,000
- -----------------------------------------------------------------------------
New York (City of); Variable Rate
Demand Series 1993, Subseries E-5 GO
3.25%, 08/01/19(b)(c) A-1+c VMIG-1 5,800 5,800,000
- -----------------------------------------------------------------------------
195,060,000
- -----------------------------------------------------------------------------
NORTH CAROLINA - 1.94%
North Carolina Medical Care Commission
Retirement Community (Adult
Communities Total Services Inc.);
Variable Rate Demand Series 1996 RB
3.05%, 11/15/09(b)(c) A-1+ -- 5,655 5,655,000
- -----------------------------------------------------------------------------
North Carolina Medical Care Commission
(The Moses H. Cone Memorial Hospital
Project); Hospital RB
3.10%, Series 1995, 09/01/02(b)(c) A-1+ -- 5,400 5,400,000
- -----------------------------------------------------------------------------
3.10%, Series 1993, 10/01/23(b)(c) A-1+ -- 5,700 5,700,000
- -----------------------------------------------------------------------------
Raleigh Durham Airport Authority
(American Airlines Project);
Special Facilities Series 1995 B-1 RB
3.20%, 11/01/15(b)(c) A-1+ -- 5,950 5,950,000
- -----------------------------------------------------------------------------
22,705,000
- -----------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OHIO - 0.90%
Franklin (County of) (Bricker & Eckler
Building Co. Project); Variable Rate
Demand Series 1984 IDR
3.25%, 11/01/14(b)(c) -- P-1 $ 8,200 $ 8,200,000
- -----------------------------------------------------------------------------
Marion (County of) (Pooled Lease
Program); Hospital RB
3.10%, 10/01/22(b)(c) A-1+ -- 1,355 1,355,000
- -----------------------------------------------------------------------------
Ohio Housing Finance Agency (Kenwood
Congregate Retirement Community
Project); Variable Rate Demand
Multifamily Housing Series 1985 RB
3.00%, 12/01/15(b)(c) -- VMIG-1 956 956,000
- -----------------------------------------------------------------------------
10,511,000
- -----------------------------------------------------------------------------
OKLAHOMA - 0.43%
Oklahoma Water Resources Board (State
Loan Program); Series 1995 RB
2.95%, 09/01/99(b)(c) A-1+c -- 5,000 5,000,000
- -----------------------------------------------------------------------------
OREGON - 1.38%
Klamath Falls (City of) (Salt Caves
Hydroelectric Project);
Adjustable/Fixed Refunding Series
1986 D RB
3.80%, 05/03/99(e)(g) SP-1+ -- 5,670 5,670,331
- -----------------------------------------------------------------------------
Multnoma (County of) (Portland Public
School District); Series 1998 TRAN
4.25%, 06/30/99 SP-1+ MIG-1 2,600 2,603,710
- -----------------------------------------------------------------------------
Portland (City 0f) (South Park Block
Project); Multifamily Housing Variable
Rate Refunding Series 1988 A RB
3.00%, 12/01/11(b)(c) A-1+ -- 7,950 7,950,000
- -----------------------------------------------------------------------------
16,224,041
- -----------------------------------------------------------------------------
PENNSYLVANIA - 2.42%
Beaver County Industrial Development
Authority (Duquesne Light Company
Project); Refunding Series 1994 PCR
3.20%, 05/27/99(b) A-1+ VMIG-1 6,000 6,000,000
- -----------------------------------------------------------------------------
Delaware County Industrial Development
Authority (Henderson-Radnor Joint
Venture Project); Limited Obligation
Series 1985 IDR
3.35%, 04/01/15(b)(c) -- Aa3 765 765,000
- -----------------------------------------------------------------------------
Montour (County of) Geisinger Authority
Health System (Obligation Group);
Series A RB
5.30%, 07/01/99 AA Aa2 1,000 1,003,974
- -----------------------------------------------------------------------------
Philadelphia (City of) Parking
Authority; Parking Series 1999 RB
4.00%, 02/01/00(d) AAA Aaa 1,290 1,300,114
- -----------------------------------------------------------------------------
Philadelphia School District; TRAN
4.25%, Series 1998-1999 A, 06/30/99(c) SP-1 MIG-1 1,500 1,502,213
- -----------------------------------------------------------------------------
4.25%, Series 1998 B, 06/30/99(c) SP-1 MIG-1 10,000 10,027,622
- -----------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
PENNSYLVANIA - (CONTINUED)
York (City of) General Authority;
Adjustable Rate Pooled Financing
Series 1996 RB
3.10%, 09/01/26(b)(c) A-1 -- $ 7,785 $ 7,785,000
- -------------------------------------------------------------------------------
28,383,923
- -------------------------------------------------------------------------------
TENNESSEE - 1.17%
Industrial Development Board of the
Metropolitan Government of Nashville
and Davidson County (Amberwood, Ltd.
Project); Multifamily Housing RB
3.31%, Series 1993 A 07/01/13(b)(c) -- VMIG-1 2,135 2,135,000
- -------------------------------------------------------------------------------
3.31%, Series 1993 B 07/01/13(b)(c) A-1 VMIG-1 1,825 1,825,000
- -------------------------------------------------------------------------------
Knox (County of) Health Educational and
Housing Facility Authority (Catholic
Healthcare Partners); Healthcare Series
1998 A RB
3.00%, 12/01/27(b) A-1+ VMIG-1 9,700 9,700,000
- -------------------------------------------------------------------------------
13,660,000
- -------------------------------------------------------------------------------
TEXAS - 12.17%
Bexar (County of) Texas Housing Finance
Authority (Fountainhead Apt.);
Multifamily RB
3.00%, 09/15/26(b)(c) A-1+ -- 17,146 17,146,000
- -------------------------------------------------------------------------------
Fort Worth (City of) (General Purpose
Program); Series B Commercial Paper
Notes
2.85%, 07/14/99 A-1+ P-1 6,000 6,000,000
- -------------------------------------------------------------------------------
Grand Prairie (City of) Texas Housing
Finance Corporation (Windridge Grand
Prairie Associates); Multifamily
Housing Refunding RB
3.05%, 06/01/10(b)(c) A-1+ -- 4,500 4,500,000
- -------------------------------------------------------------------------------
Gulf Coast Waste Disposal Authority
(Amoco Oil Company Project); Refunding
Series 1992 PCR
3.10%, 10/01/17(b) A-1+ VMIG-1 7,000 7,000,000
- -------------------------------------------------------------------------------
Harris County Health Facilities
Development Corp.; ACES Greater
Houston Pooled Health Series 1985 A RB
3.10%, 11/01/25(b)(c) A-1 -- 2,300 2,300,000
- -------------------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (Gulf Coast Regional
Blood Center Project); Blood Center
Series 1992 RB
3.15%, 04/01/17(b)(c) A-1 -- 3,250 3,250,000
- -------------------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (St. Lukes Episcopal
Hospital); Series 1997 B RB
3.10%, 02/15/27(b) A-1+ -- 5,700 5,700,000
- -------------------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (Texas Children's
Hospital); Series 1989 B-2 RB
3.05%, 10/01/19(b) -- VMIG-1 7,900 7,900,000
- -------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS - (CONTINUED)
Hockley (County of) Industrial
Development Corporation
(Amoco Project); Adjustable Rate
Series 1983 PCR
2.90%, 09/01/99(e) A-1+ -- $ 3,500 $ 3,500,000
- -------------------------------------------------------------------------------
Houston (City of); Series 1998 TRAN
4.25%, 06/30/99 SP-1+ MIG-1 10,000 10,023,380
- -------------------------------------------------------------------------------
Houston (City of); Series A Commercial
Paper Notes
2.90%, 07/08/99 A-1+ P-1 5,000 5,000,000
- -------------------------------------------------------------------------------
Houston (City of); Series B GO
2.90%, 07/08/99 A-1+ P-1 2,000 2,000,000
- -------------------------------------------------------------------------------
Houston (City of) Water and Sewer;
Commercial Paper Notes
2.65%, Series A, 05/11/99 A-1 P-1 10,000 10,000,000
- -------------------------------------------------------------------------------
3.20%, Series B, 07/29/99 A-1 P-1 10,000 10,000,000
- -------------------------------------------------------------------------------
Lubbuck Health Facilities Development
Corporation (St. Joseph Health System);
Series 1998 RB
5.00%, 07/01/99 AA Aa3 4,000 4,018,355
- -------------------------------------------------------------------------------
Sabine River Authority (Texas Utilities
Project); Series A PCR
3.15%, 03/01/26(b)(d) A-1+c VMIG-1 4,250 4,250,000
- -------------------------------------------------------------------------------
San Antonio (City of) Electric & Gas
System; Series A Commercial Paper Notes
3.00%, 04/07/99 A-1+ P-1 8,000 8,000,000
- -------------------------------------------------------------------------------
Tarrant (County of) Texas Health
Facilities Authority (Adventist Health
System); Series 1997 A RB
3.05%, 11/15/27(b)(c) A-1+ -- 8,775 8,775,000
- -------------------------------------------------------------------------------
Texas (State of); Series 1998 TRAN
4.50%, 08/31/99 SP-1+ MIG-1 19,000 19,107,020
- -------------------------------------------------------------------------------
Texas Water Development Board; State
Revolving Fund Senior Lein Series RB
5.00%, 07/15/99 AAA Aa1 1,800 1,806,807
- -------------------------------------------------------------------------------
Trinity River Industrial Development
Authority (Radiation Sterilizers, Inc.
Project); Variable Rate Demand IDR
3.00%, Series 1985 A 11/01/05(b)(c) A-1 -- 500 500,000
- -------------------------------------------------------------------------------
3.00%, Series 1985 B 11/01/05(b)(c) A-1 -- 1,650 1,650,000
- -------------------------------------------------------------------------------
142,426,562
- -------------------------------------------------------------------------------
UTAH - 0.34%
Central Utah Water Conservation District;
Refunding Series 1998 E GO
3.05%, 04/01/27(b)(d) A-1+ VMIG-1 4,000 4,000,000
- -------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
VERMONT - 0.82%
Vermont Educational and Health Building
Finance Authority (Middlebury College
Project A); Adjustable Rate Series
1988 RB
3.10%, 11/01/99(e) A-1+ -- $ 1,500 $ 1,500,000
- -------------------------------------------------------------------------------
Vermont Educational and Health Building
Finance Authority (VHA New England);
Variable Rate Hospital RB
3.15%, Series B 12/01/25(b)(d) A-1 -- 1,000 1,000,000
- -------------------------------------------------------------------------------
3.15%, Series E 12/01/25(b)(d) A-1 -- 2,500 2,500,000
- -------------------------------------------------------------------------------
3.15%, Series F 12/01/25(b)(d) A-1+ -- 2,100 2,100,000
- -------------------------------------------------------------------------------
3.15%, Series G 12/01/25(b)(d) A-1+ -- 2,500 2,500,000
- -------------------------------------------------------------------------------
9,600,000
- -------------------------------------------------------------------------------
VIRGINIA - 3.35%
Alexandria (City of) Virginia
Development and Housing Authority
(Goodwin Project); Residential Care
Facilities Series 1996 B RB
3.20%, 10/01/06(b)(c) A-1 -- 9,300 9,300,000
- -------------------------------------------------------------------------------
Industrial Development Authority of the
City of Lynchburg (VHA Mid-Atlantic
States, Inc.) Capital Asset Financing
Program; Variable Rate Hospital Series
1985 F RB
3.15%, 12/01/25(b)(d) A-1+ -- 6,700 6,700,000
- -------------------------------------------------------------------------------
Roanoke (City of) (Carillion Health
System); Hospital Series B RB
3.10%, 07/01/19(b)(c) A-1 VMIG-1 2,900 2,900,000
- -------------------------------------------------------------------------------
Virginia State Public School Authority;
School Financing Series 1998 RB
3.50%, 08/01/99 AA+ Aa1 5,225 5,235,399
- -------------------------------------------------------------------------------
Waynesboro (City of) Industrial
Development Authority (Residential
Care Facilities); RB
3.20%, 12/15/28(b)(c) A-1 -- 15,100 15,100,000
- -------------------------------------------------------------------------------
39,235,399
- -------------------------------------------------------------------------------
WASHINGTON - 0.88%
Industrial Development Corp. of Port
Townsend (Port Townsend Paper Corp.
Project); Variable Rate Refunding
Series 1988 A RB
3.00%, 03/01/09(b)(c) -- VMIG-1 3,100 3,100,000
- -------------------------------------------------------------------------------
Seattle (City of) Solid Waste Utility;
Series 1999 RB
4.75%, 08/01/99(c) AAA Aaa 3,835 3,858,551
- -------------------------------------------------------------------------------
Washington State Public Power Supply
(Nuclear Project No. 1); Series A Pre
Refunded RB
7.50%, 07/01/99(g) AAA Aaa 3,240 3,341,490
- -------------------------------------------------------------------------------
10,300,041
- -------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WEST VIRGINIA - 1.24%
West Virginia Hospital Finance
Authority (VHA Mid-Atlantic
States, Inc. Capital Asset
Financing Program); RB
3.15%, Series 1985 B 12/01/25(b)(d) A-1+ -- $3,000 $ 3,000,000
- -------------------------------------------------------------------------------
3.15%, Series 1985 C 12/01/25(b)(d) A-1 + -- 3,500 3,500,000
- -------------------------------------------------------------------------------
3.15%, Series 1985 H 12/01/25(b)(d) A-1 -- 8,000 8,000,000
- -------------------------------------------------------------------------------
14,500,000
- -------------------------------------------------------------------------------
WISCONSIN - 1.31%
Milwaukee (County of); Series 1995 GO
5.125%, 12/01/99 AA- Aa3 2,275 2,307,774
- -------------------------------------------------------------------------------
Wisconsin (State of); TAN
4.50%, 06/15/99 SP-1+ MIG-1 13,000 13,024,607
- -------------------------------------------------------------------------------
15,332,381
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 103.47% 1,210,968,892 (h)
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -
(3.47%) (40,627,008)
- -------------------------------------------------------------------------------
NET ASSETS - 100% $1,170,341,884
- -------------------------------------------------------------------------------
</TABLE>
INVESTMENT ABBREVIATIONS:
<TABLE>
<S> <C>
COP--Certificates of Participation RAN--Revenue Anticipation Notes
GO--General Obligation Bonds/Notes RB--Revenue Bonds
IDR--Industrial Development Revenue Bonds TAN--Tax Anticipation Notes
PCR--Pollution Control Revenue Bonds 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 03/31/99.
(c) Secured by a letter of credit.
(d) Secured by bond insurance.
(e) Subject to an irrevocable call or mandatory put by the issuer. Par value
and maturity date reflect such call or put.
(f) The Fund may invest in synthetic municipal instruments of which the value
of and return on 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 they may not be present where a municipal
security is owned directly.
(g) Secured by an escrow fund of U.S. Treasury obligations.
(h) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
17
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $1,210,968,892
- ------------------------------------------------------------------------
Cash 1,930,982
- ------------------------------------------------------------------------
Receivables for:
Investments sold 10,915,099
- ------------------------------------------------------------------------
Interest 8,817,033
- ------------------------------------------------------------------------
Investment for deferred compensation plan 41,727
- ------------------------------------------------------------------------
Other assets 161,487
- ------------------------------------------------------------------------
Total assets 1,232,835,220
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 59,383,437
- ------------------------------------------------------------------------
Dividends 2,866,059
- ------------------------------------------------------------------------
Deferred compensation 41,727
- ------------------------------------------------------------------------
Accrued administrative services fees 7,600
- ------------------------------------------------------------------------
Accrued advisory fees 20,056
- ------------------------------------------------------------------------
Accrued directors' fees 3,388
- ------------------------------------------------------------------------
Accrued transfer agent fees 21,176
- ------------------------------------------------------------------------
Accrued distribution fees 19,336
- ------------------------------------------------------------------------
Accrued operating expenses 130,557
- ------------------------------------------------------------------------
Total liabilities 62,493,336
- ------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,170,341,884
========================================================================
NET ASSETS:
Institutional Class $1,072,597,169
========================================================================
Private Investment Class $ 90,605,977
========================================================================
Cash Management Class $ 7,138,738
========================================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Institutional Class:
Authorized 3,000,000,000
- ------------------------------------------------------------------------
Outstanding 1,072,592,053
========================================================================
Private Investment Class:
Authorized 1,000,000,000
- ------------------------------------------------------------------------
Outstanding 90,604,835
========================================================================
Cash Management Class:
Authorized 1,000,000,000
- ------------------------------------------------------------------------
Outstanding 7,138,732
========================================================================
Net asset value, offering and redemption price per share $1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
STATEMENT OF OPERATIONS
For the year ended March 31, 1999
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest income $37,106,069
- ------------------------------------------------------------------
EXPENSES:
Advisory fees 2,455,821
- ------------------------------------------------------------------
Administrative services fees 86,020
- ------------------------------------------------------------------
Transfer agent fees 148,166
- ------------------------------------------------------------------
Custody fees 46,422
- ------------------------------------------------------------------
Directors' fees 15,376
- ------------------------------------------------------------------
Distribution fees (Note 2) 430,870
- ------------------------------------------------------------------
Other expenses 319,765
- ------------------------------------------------------------------
Total expenses 3,502,440
- ------------------------------------------------------------------
Less: Fees waived and expenses assumed (1,024,500)
- ------------------------------------------------------------------
Net expenses 2,477,940
- ------------------------------------------------------------------
Net investment income 34,628,129
- ------------------------------------------------------------------
Net realized gain on sales of investments 8,745
- ------------------------------------------------------------------
Net increase in net assets resulting from operations $34,636,874
==================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 34,628,129 $ 36,533,922
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 8,745 9,664
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 34,636,874 36,543,586
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (32,079,516) (34,792,247)
- -----------------------------------------------------------------------------
Private Investment Class (2,486,438) (1,741,675)
- -----------------------------------------------------------------------------
Cash Management Class (62,175) --
- -----------------------------------------------------------------------------
Capital stock transactions - net:
Institutional Class 175,685,921 (69,673,016)
- -----------------------------------------------------------------------------
Private Investment Class 10,142,224 42,918,457
- -----------------------------------------------------------------------------
Cash Management Class 7,138,732 --
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets 192,975,622 (26,744,895)
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 977,366,262 1,004,111,157
- -----------------------------------------------------------------------------
End of period $1,170,341,884 $ 977,366,262
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in):
Institutional Class $1,072,668,342 $ 896,906,132
- -----------------------------------------------------------------------------
Private Investment Class 90,611,277 80,462,611
- -----------------------------------------------------------------------------
Cash Management Class 7,139,494 --
- -----------------------------------------------------------------------------
Undistributed realized gain (loss) on sales
of investments (77,229) (2,481)
- -----------------------------------------------------------------------------
$1,170,341,884 $ 977,366,262
=============================================================================
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
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 currently offers six different classes of shares, the
Institutional Class ("Institutional Class"), the Private Investment Class, the
Personal Investment Class, the Cash Management Class, the Reserve Class and the
Resource 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. On March 31, 1999, paid in capital was increased by $83,493 and
undistributed net realized gains was decreased by $83,493 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. 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. Net realized capital gains (including net short-term capital
gains and market discounts), if any, are distributed annually.
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 $77,230 (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 - Distribution 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 between the classes.
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 has voluntarily agreed to reduce its fee from the Fund to the extent
necessary so that the amount of ordinary expenses of the Institutional Class
(excluding interest, taxes, brokerage commissions, directors' fees,
extraordinary expenses and federal registration fees) paid or incurred by the
Institutional Class does not exceed 0.20% of the Institutional Class' average
daily net assets. As a result, AIM's advisory fee on the Private Investment
Class and the Cash Management Class, are reduced in the same proportion as the
Institutional Class. For the year ended March 31, 1999, AIM reduced its
advisory fee from the Fund by $809,773.
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 March 31, 1999, the Fund
reimbursed AIM $86,020 for such services.
20
<PAGE>
Under the terms of a master distribution agreement between Fund Management
Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the
Fund's shares. The Fund 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 Personal Investment Class, the Cash Management Class, the
Reserve Class, and the Resource Class of the Portfolio. The plan provides that
the Private Investment Class, the Personal Investment Class, the Cash
Management Class, the Reserve Class, and the Resource Class pay up to a 0.50%,
0.75%, 0.10%, 1.00%, and 0.20%, respectively, maximum annual rate of the
average daily net assets attributable to such class. Of this amount, the Fund
may pay an asset-based sales charge to FMC and the Fund may pay a service fee
of (a) 0.25% of the average daily net assets of each of the Private Investment
Class, Personal Investment Class, and the Reserve Class, (b) 0.10% of the
average daily net assets of the Cash Management Class and (c) 0.20% of the
average daily net assets of the Resource Class, to selected banks, 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, the Personal Investment Class, the Cash Management
Class, the Reserve Class, or the Resource 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 each class.
During the year ended March 31, 1999, the Private Investment Class and the Cash
Management Class paid $214,255 and $1,888, respectively, as compensation to FMC
under the Plan. FMC waived fee of $214,727 during the same period.
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 agent and
shareholder services to the Fund. During the year ended March 31, 1999, the
Fund paid AFS $97,188 for such services.
During the year ended March 31, 1999, the Fund paid legal fees of $5,333 for
services rendered by Kramer, Levin, Naftalis & 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, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------------------- -------------------------------
Shares Amount Shares Amount
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 7,257,933,597 $ 7,257,933,597 5,302,472,459 $ 5,302,472,459
- -------------------------------------------------------------------------------------------
Private Investment
Class 580,913,749 580,913,749 484,657,926 484,657,926
- -------------------------------------------------------------------------------------------
Cash Management Class* 13,152,591 13,152,591 -- --
- -------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 1,929,870 1,929,870 2,107,154 2,107,154
- -------------------------------------------------------------------------------------------
Private Investment
Class 2,254,362 2,254,362 1,514,378 1,514,378
- -------------------------------------------------------------------------------------------
Cash Management Class* 41,812 41,812 -- --
- -------------------------------------------------------------------------------------------
Redeemed:
Institutional Class (7,084,177,546) (7,084,177,546) (5,374,252,629) (5,374,252,629)
- -------------------------------------------------------------------------------------------
Private Investment
Class (573,025,887) (573,025,887) (443,253,847) (443,253,847)
- -------------------------------------------------------------------------------------------
Cash Management Class* (6,055,671) (6,055,671) -- --
- -------------------------------------------------------------------------------------------
Net increase
(decrease) 192,966,877 $ 192,966,877 (26,754,559) $ (26,754,559)
- -------------------------------------------------------------------------------------------
</TABLE>
* The Cash Management Class commenced sales on January 1, 1999.
21
<PAGE>
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Cash Management Class
capital stock outstanding during the period January 1, 1999 (date sales
commenced) through March 31, 1999.
<TABLE>
<CAPTION>
March 31,
1999
---------
<S> <C>
Net asset value, beginning of period $ 1.00
- ------------------------------------------------------- ------
Income from investment operations:
Net investment income 0.01
- ------------------------------------------------------- ------
Less distributions:
Dividends from net investment income (0.01)
- ------------------------------------------------------- ------
Net asset value, end of period $ 1.00
- ------------------------------------------------------- ------
Total return 0.64%
- ------------------------------------------------------- ------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $7,139
- ------------------------------------------------------- ------
Ratio of expenses to average net assets(a) 0.28%(b)
- ------------------------------------------------------- ------
Ratio of net investment income to average net assets(c) 3.08%(b)
- ------------------------------------------------------- ------
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements are
0.38% (annualized).
(b) Ratios are annualized and based on average net assets of $2,359,815.
(c) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements are 2.98% (annualized).
22
<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, 1999, 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
March 31, 1999, 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, 1999, 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
May 7, 1999
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
DIRECTORS
Charles T. Bauer Carl Frischling Tax-Free
Bruce L. Crockett Robert H. Graham Investments Co.
Owen Daily II Prema Mathai-Davis (TFIC)
Edward K. Dunn, Jr. Lewis F. Pennock
Jack Fields Louis S. Sklar
OFFICERS
Charles T. Bauer Chairman
Robert H. Graham President
Gary T. Crum Sr. Vice President Cash Reserve
Carol F. Relihan Sr. Vice President & Secretary Portfolio
Dana R. Sutton Vice President & Treasurer ------------------------------------------
Stuart W. Coco Vice President Cash Management ANNUAL
Melville B. Cox Vice President Class REPORT
Karen Dunn Kelley Vice President
J. Abbott Sprague Vice President
Mary J. Benson Assistant Vice President & Assistant Treasurer
Sheri Morris Assistant Vice President & Assistant Treasurer
Renee A. Friedli Assistant Secretary
P. Michelle Grace Assistant Secretary
Jeffrey H. Kupor Assistant Secretary MARCH 31, 1999
Nancy L. Martin Assistant Secretary
Ofelia M. Mayo Assistant Secretary
Lisa A. Moss Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
[LOGO APPEARS HERE]
Fund Management Company
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046
(800) 347-1919
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
(800) 659-1005
CUSTODIAN
The Bank of New York
90 Washington Street, 11th Floor
New York, NY 10286
LEGAL COUNSEL TO FUND
Ballard Spahr Andrews & Ingersoll LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
LEGAL COUNSEL TO DIRECTORS
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
TRANSFER AGENT
A I M Fund Services, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
This report may be distributed only to current shareholders or
to persons who have received a current prospectus.
</TABLE>
