<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
--Registered Trademark--
Expressing concern about potential inflationary
[PHOTO OF pressures, including white-hot economic growth,
Charles T. Bauer, a tight labor market and rising energy prices,
Chairman of the the Federal Reserve Board (the Fed) raised
LETTER Board of the Fund short-term interest rates by 0.50% to 6.50% in
TO OUR APPEARS HERE] mid-May but held rates steady at its June,
SHAREHOLDERS August and (shortly after the close of the
reporting period) October meetings as key economic indicators
suggested that the economy was slowing. While interest-rate
concerns hurt bond-market performance in the spring, most bond-
market sectors did well for the reporting period after it became
clear that the Fed's rate hikes may be nearing an end. That fact,
together with attractive yields, restored investor confidence in
the bond market.
Municipal-bond issuance continued to decline. Year-to-date,
total issuance was $137 billion--19% lower than for the first
three quarters of 1999. Many states and localities were reluctant
to offer new issues while interest rates were rising. Fortunately
for them, increased tax revenue (resulting from low unemployment,
strong consumer spending, rising property values and increased
capital gains) have reduced the need to issue bonds to fund
capital projects. Reduced issuance has resulted in greater demand
for (and better performance by) municipal bonds. Given the
strength of the economy and the resulting strong revenue flows to
states and localities, municipal credit quality is, on average,
at or near all-time highs.
In addition, during the first quarter of 2000, the U.S.
Treasury announced plans to issue fewer securities and to begin
buying back its own debt. Such a decrease in supply has led to
higher prices, especially among longer-term Treasuries (15+
years) where the buyback has been concentrated. Higher prices
mean lower yields, which has resulted in an inverted yield curve
(long-term yields below short-term yields). Consequently, cash in
the form of three- and six-month Treasury bills provided
attractive income.
YOUR INVESTMENT PORTFOLIO
For the six months ended September 30, 2000, the performance of
the portfolio's Resource Class compared quite favorably with the
performance reported for its comparative index, as shown in the
table. (Had the advisor not waived fees and expenses during the
reporting period, returns would have been lower.) Net assets of
the Resource Class stood at $9.2 million at the close of the
reporting period.
The Cash Reserve Portfolio continues to hold the highest
credit-quality ratings given by three nationally known credit-
rating agencies: AAAm from Standard & Poor's, Aaa from Moody's
and AAA from Fitch IBCA.
<TABLE>
<CAPTION>
YIELDS AS OF 9/30/00
AVERAGE SEVEN-DAY
MONTHLY YIELD YIELD
<S> <C> <C> <C>
Cash Reserve Portfolio
Resource Class 3.94% 4.32%
IBC Tax-Free Money Funds
Averages Institutions Only(TM) 3.93% 4.00%
</TABLE>
(continued)
<PAGE>
These historical ratings are based on an analysis of the
portfolio's credit quality, composition, management and weekly
portfolio reviews. AIM is the largest multi-fund complex to have
all its institutional money market portfolios awarded the highest
rating by three nationally recognized ratings agencies, according
to IBC Financial Data, Inc.
The Cash Reserve Portfolio invests solely in securities rated
"first-tier" as defined in Rule 2a-7 under the Investment Company
Act of 1940. Its objective is to generate as high a level of
federally tax-exempt income as is consistent with preservation of
capital and the maintenance of liquidity. An investment in a
money market fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation 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
August saw a decline in the Consumer Price Index and the Producer
Price Index and flat retail sales, which led to a widespread
consensus among financial markets that the Fed will not increase
short-term rates for the rest of the year. Jobless claims are the
highest they have been since mid-1998. With a presidential
election in the near future, the Fed is expected to remain on
hold, and the economy will experience the gradual effect of the
aggregate 125-basis-point short-term rate increase. Considering
the short weighted average maturity the portfolio maintains, the
inversion of the Treasury yield curve has allowed it to maintain
outstanding performance, along with the flexibility to adjust its
maturity schedule in the event of sudden rate changes or curve
corrections.
We are pleased to send you this report on your investment. AIM
is committed to the primary goals of safety, liquidity and yield
in institutional fund management. We are also dedicated to
customer service, and we are ready to respond to your comments
about this report. If you have any questions, please contact one
of our representatives at 800-659-1005 if we may help.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE>
SCHEDULE OF INVESTMENTS
September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL OBLIGATIONS - 98.27%
ALABAMA - 1.29%
Birmingham (City of)(YMCA-Birmingham);
Public Park and Recreation Board VRD Series
1996 RB (LOC-Amsouth Bank of Alabama)
5.60%, 06/01/16(b) -- VMIG-1 $ 2,795 $ 2,795,000
-------------------------------------------------------------------------------
Mobile (County of) Alabama Board School of
Commissioners; Capital Outlay Series 1996
Wts.
4.75%, 03/01/01(c)(d) -- -- 3,000 3,006,004
-------------------------------------------------------------------------------
Montgomery (City of) Alabama BMC Special
Care Facilities Financing Authority
(Veterans Hospital Association of Alabama,
Inc.); VRD Series 1985 B RB
5.70%, 12/01/30(b)(c) A-1+ -- 5,400 5,400,000
===============================================================================
11,201,004
===============================================================================
ARIZONA - 0.33%
Central Arizona Water Conservation District
Contract; Series 1991 B RB
6.50%, 05/01/01(e) NRR NRR 1,000 1,031,996
-------------------------------------------------------------------------------
Maricopa (County of) Arizona Pollution
Central Corp.
(Arizona Public Service Co.); VRD Series
1994 D PCR
(LOC-Bank of America NT & S.A.)
5.55%, 05/01/29(b) A-1+ P-1 1,800 1,800,000
===============================================================================
2,831,996
===============================================================================
COLORADO - 1.03%
Boulder (City of) Water & Sewer;
Series 2000 RB
5.00%, 12/01/00(d) -- -- 1,560 1,560,958
-------------------------------------------------------------------------------
Eagle Ranch Metro District Golf Course;
VRD Series 1999 B RB
(LOC-Societe Generale)
5.75%, 10/15/18(b) A-1+ -- 3,900 3,900,000
-------------------------------------------------------------------------------
Pitkin (County of) Industrial Development
(Aspen Skiing Co. Project); Refunding VRD
Series 1994 A IDR (LOC-First National Bank)
5.60%, 04/01/16(b) A-1 -- 3,550 3,550,000
===============================================================================
9,010,958
===============================================================================
CONNECTICUT - 0.00%
Connecticut (State of) Development Authority
(Corporation for Independent Living
Project); Health Care VRD Series 1990 RB
(LOC-Chase Manhattan Bank)
5.40%, 07/01/15(b) -- VMIG-1 22 22,000
===============================================================================
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
DELAWARE - 0.20%
University of Delaware; VRD Series 1998 RB
5.60%, 11/01/23(b) A-1+ -- $ 1,710 $ 1,710,000
==============================================================================
DISTRICT OF COLUMBIA - 0.30%
District of Columbia (American Council on
Education); Pooled Loan Program VRD Series
1998 A RB (LOC-NationsBank N.A.)
5.70%, 01/01/29(b) A-1+ -- 2,615 2,615,000
==============================================================================
FLORIDA - 9.42%
Capital Trust Agency (Reliance Community
Revitalization Project); Multifamily
Housing VRD Series 1999 B RB
5.67%, 12/01/32(b) A-1+ -- 52,168 52,168,000
------------------------------------------------------------------------------
Gulf Breeze (City of) Healthcare Facilities
(Heritage Health Care Project); VRD Series
1999 RB
5.67%, 01/01/24(b) -- VMIG-1 7,000 7,000,000
------------------------------------------------------------------------------
Hillsborough (County of) Industrial
Development Authority (Tampa Metro Area
YMCA Project); VRD Series 2000 RB
(LOC-Bank of America N.A.)
5.75%, 03/01/25(b)(d) -- -- 5,000 5,000,000
------------------------------------------------------------------------------
Hillsborough (County of) Industrial
Development Authority (Tampa Electric Co.-
Gannon Project); Refunding VRD Series 1992
DD PCR
5.55%, 05/15/18(b) A-1+ VMIG-1 2,100 2,100,000
------------------------------------------------------------------------------
North Miami (City of) Educational Facility
(Miami Country Day School Project); VRD
Series 1999 RB (LOC-Bank of America N.A.)
5.75%, 08/01/19(b)(d) -- -- 1,550 1,550,000
------------------------------------------------------------------------------
Orange (County of) Health Facilities
Authority (Hospital Association Health);
VRD Series 2000 A RB
5.60%, 06/01/30(b)(c) -- VMIG-1 12,000 12,000,000
------------------------------------------------------------------------------
St. John's (County of) (Florida Housing
Finance Authority); Multifamily Housing
Refunding VRD Series 1996 RB (LOC-Bank of
America N.A.)
5.55%, 11/01/14(b) A-1+ -- 2,200 2,200,000
==============================================================================
82,018,000
==============================================================================
GEORGIA - 6.30%
Cobb (County of) Development Authority
(Institute of Nuclear Power Operations);
VRD Series 1998 IDR (LOC-Suntrust Bank)
5.60%, 02/01/13(b)(d) -- -- 4,970 4,970,000
------------------------------------------------------------------------------
Cobb (County of) Georgia School District;
Ltd. Tax Series 2000 GO Notes
4.38%, 12/29/00 -- MIG-1 5,000 5,004,779
------------------------------------------------------------------------------
Cobb (County of) Kennestone Hospital
Authority (Equipment Pool Project); VRD
Series 1999 RAC
5.60%, 04/01/26(b) A-1+ VMIG-1 15,000 15,000,000
------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Georgia - (continued)
Eagle Tax Exempt Trust (State of
Georgia); VRD Series 00-01 Class C
5.62%, 07/01/15(b)(f) A-1+c -- $ 7,000 $ 7,000,000
-----------------------------------------------------------------------------
Floyd (County of) Development Authority
(Shorter College Project);
VRD Series 1998 RB (LOC-Suntrust Bank)
5.60%, 06/01/17(b) A-1+ -- 4,000 4,000,000
-----------------------------------------------------------------------------
Fulton (County of); Unlimited Tax Series
2000 TAN
5.00%, 12/29/00 SP-1+ MIG-1 5,000 5,008,681
-----------------------------------------------------------------------------
South (County of) Hospital Authority
(Georgia Alliance Community Hospitals);
VRD Series 1999 A RB
5.60%, 04/01/29(b)(c) -- VMIG-1 13,900 13,900,000
=============================================================================
54,883,460
=============================================================================
ILLINOIS - 9.01%
Bear Stearns Municipal Securities Trust
Certificates (Illinois Sales Tax); Class
A VRD Series 1998-25 Y RB
5.70%, 03/15/07(b)(f) A-1 -- 10,000 10,000,000
-----------------------------------------------------------------------------
Bear Stearns Municipal Securities Trust
Certificates (Illinois State Toll
Highway Authority); Refunding Class A
VRD Series 1998-67 RB
5.70%, 02/15/12(b)(c)(f) A-1 -- 11,700 11,700,000
-----------------------------------------------------------------------------
Chicago (City of); Ltd. Tax Tender Notes
Series 1999 GO (LOC-Westduetsche Landesbank
Girozentrale)
4.00%, 01/27/00(g) A-1+ VMIG-1 10,000 10,000,000
-----------------------------------------------------------------------------
Eagle Tax Exempt Trust (State of
Illinois); VRD Series 2000-1304 Class A
5.62%, 06/01/19(b)(c) A-1+c -- 7,340 7,340,000
-----------------------------------------------------------------------------
East Peoria (City of) (Radnor/East Peoria
Partnership Project); Multifamily
Housing VRD Series 1983 RB (LOC-Bank of
America N.T.)
5.75%, 06/01/08(b)(d) -- -- 4,695 4,695,000
-----------------------------------------------------------------------------
Illinois Development Finance Authority
(American College of Surgeons Project);
Tax Exempt VRD Series 1996 RB (LOC-
Northern Trust Co.)
5.60%, 08/01/26(b) A-1+ -- 3,320 3,320,000
-----------------------------------------------------------------------------
Illinois Development Finance Authority
(Jewish Charities Program);
VRD Series 2000 B RAN (LOC-Harris Trust
& Savings Bank)
5.55%, 06/29/01(b) A-1+ -- 4,190 4,190,000
-----------------------------------------------------------------------------
Illinois Development Finance Authority
(Local Government Financing Program);
VRD Series 1999 A RB
5.60%, 09/01/29(b)(c) -- VMIG-1 10,000 10,000,000
-----------------------------------------------------------------------------
Illinois Educational Facilities Authority
(National Louis University);
VDR Series 1999 A RB (LOC-American
National B&T)
5.63%, 06/01/29(b) A-1 -- 10,300 10,300,000
-----------------------------------------------------------------------------
Illinois Health Facilities Authority
(Washington & Jane Smith Home); VRD
Series 1991 RB (LOC-Comerica Bank)
5.55%, 07/01/26(b) -- VMIG-1 3,000 3,000,000
-----------------------------------------------------------------------------
University of Illinois; MERLOTS VRD
Series 2000 S RB
5.50%, 04/01/30(b)(c)(f) -- VMIG-1 3,900 3,900,000
=============================================================================
78,445,000
=============================================================================
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
INDIANA - 2.66%
Auburn (City of) (Sealed Power Corp.
Project); Economic Development VRD Series
1985 RB (LOC-NBD Bank)
4.30%, 07/01/10(b) -- VMIG-1 $ 1,200 $ 1,200,000
-------------------------------------------------------------------------------
Evansville (City of) Independent Economic
Development (Ball Corp. Project);
Refunding VRD Series 1993 RB (LOC-Bank One
Illinois N.A.)
5.55%, 12/01/08(b) A-1 -- 3,500 3,500,000
-------------------------------------------------------------------------------
Indiana Health Facility Financing Authority
(Holy Cross Health Systems Corp.); Series
1998 RB
4.25%, 12/01/00(c)(d) -- -- 3,465 3,465,000
-------------------------------------------------------------------------------
Indiana State Development Finance Authority
(USX Corp. Project); Refunding
Environmental Improvement Series 1998 RB
(LOC-Scotia Bank)
4.05%, 10/05/00(g) A-1 VMIG-1 5,000 5,000,000
-------------------------------------------------------------------------------
Indiana (State of); Advanced Funding
Program Notes Series 2000 A-2
4.75%, 01/18/01 SP-1+ MIG-1 10,000 10,017,217
===============================================================================
23,182,217
===============================================================================
IOWA - 1.29%
Iowa Higher Education Loan Authority (ACES-
Education Loan Private College Facility);
VRD Series 1985 RB
5.70%, 12/01/15(b)(c) A-1+ MIG-1 2,200 2,200,000
-------------------------------------------------------------------------------
Iowa School Corp. (Iowa School Cash
Anticipation Program);
Warrant Ctfs.
5.50%, Series 2000 A 06/22/01(c) SP-1+ MIG-1 4,000 4,027,948
-------------------------------------------------------------------------------
4.75%, Series 2000 02/01/01(c) SP-1+ MIG-1 5,000 5,011,292
===============================================================================
11,239,240
===============================================================================
KENTUCKY - 2.76%
Kentucky Area Developing Districts
Financing Trust (Weekly Acquisition Lease
Program); VRD Series 2000 RB
5.50%, 06/01/33(b)(c) A-1 -- 9,000 9,000,000
-------------------------------------------------------------------------------
Kentucky Association of Counties Advance
Revenue/Cash Flow Borrowings; Series 2000
TRAN
5.00%, 06/29/01 SP-1+ -- 5,000 5,017,754
-------------------------------------------------------------------------------
Kentucky Interlocal School Transportation
Association;
Series 2000 TRAN
5.00%, 06/29/01 SP-1+ -- 10,000 10,042,639
===============================================================================
24,060,393
===============================================================================
LOUISIANA - 0.34%
Louisiana Public Facilities Authority
(Southfork Village Apartments);
Multifamily Housing VRD Series 1985 RB
5.55%, 05/15/30(b)(c) A-1+ -- 3,000 3,000,000
===============================================================================
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MARYLAND - 1.87%
Anne Arundel (County of) Maryland;
Commercial Paper Notes
4.15%, 11/08/00 A-1+ P-1 $ 8,000 $8,000,000
-----------------------------------------------------------------------------
Morgan Stanley Float Program (Washington
Suburban Sanitary District); Floating
Rate Trust Ctfs. Unlimited Tax
VRD Series 246 GO
5.65%, 06/01/09(b)(f) -- VMIG-1 8,305 8,305,000
=============================================================================
16,305,000
=============================================================================
MASSACHUSETTS - 1.38%
Danvers (City of); Limited Tax
Series 2000 BAN
4.50%, 12/22/00 -- MIG-1 3,185 3,186,711
-----------------------------------------------------------------------------
Hopkinton (City of); Unlimited Tax Series
2000 BAN
4.55%, 12/21/00 SP-1+ MIG-1 1,100 1,100,720
-----------------------------------------------------------------------------
Massachusetts State Health & Educational
Facilities Authority (Fallon Healthcare
System); Series 1991 A RB
6.75%, 06/01/01(b)(e) NRR NRR 5,000 5,174,068
-----------------------------------------------------------------------------
Worcester Massachusetts Municipal Purpose
Loan; Ltd. Tax
Series 1998 B GO
4.50%, 11/01/00(c) AAA Aaa 2,510 2,511,020
=============================================================================
11,972,519
=============================================================================
MICHIGAN - 5.58%
Bear Stearns Municipal Securities Trust
Ctfs., Detroit (City of) Sewage Disposal
Systems; VRD Series 1999-81 Class A RB
5.00%, 10/01/02(b)(c)(f) A-1c -- 15,000 15,000,000
-----------------------------------------------------------------------------
Dearborn Michigan Economic Development
(Henry Ford Village Inc.);
Ltd. Tax Obligation VRD Series 1998 RB
(LOC-Comerica Bank)
5.60%, 10/01/23(b)(d) -- -- 9,800 9,800,000
-----------------------------------------------------------------------------
Detroit (City of) Water Supply System; Sr.
Lien MERLOTS VRD Series 1999 D
5.50%, 07/01/29(b)(c)(f) -- VMIG-1 10,000 10,000,000
-----------------------------------------------------------------------------
Jackson County Economic Development Corp.
(Sealed Power Corp.); Economic Development
Refunding VRD Series 1984 RB
(LOC-NBD Bank)
4.30%, 10/01/19(b) -- VMIG-1 1,000 1,000,000
-----------------------------------------------------------------------------
Michigan State Hospital Finance Authority
(Mercy Mount Clemens Corp.); Series 1992 RB
6.00%, 05/15/01(e) NRR NRR 3,000 3,026,024
-----------------------------------------------------------------------------
Michigan (State of) Strategic Fund (Leader
Dogs for the Blind); Ltd. Tax Obligation
VRD Series 2000 RB (LOC-Comerica Bank)
5.60%, 02/01/10(b)(d) -- -- 6,500 6,500,000
-----------------------------------------------------------------------------
Michigan Strategic Fund (260 Brown St.
Associates Project); Convertible Ltd. Tax
Obligation VRD Series 1985 RB (LOC-
Comerica Bank)
4.40%, 10/01/15(b) -- VMIG-1 3,315 3,315,000
=============================================================================
48,641,024
=============================================================================
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MINNESOTA - 0.26%
Metropolitan Council (Minneapolis-St. Paul
Metro Area Transit); Unlimited Tax Series
2000 A GO
5.00%, 02/01/01(d) -- -- $ 2,250 $ 2,255,579
===============================================================================
MISSISSIPPI - 0.39%
Mississippi Business Finance Corp.
(Mississippi College Project); Refunding
VRD Series 1999 B RB (LOC-Bank of America
N.A.)
5.70%, 02/01/09(b)(d) -- -- 3,400 3,400,000
===============================================================================
MISSOURI - 0.79%
Kansas City (City of) Municipal Assistance
Corp. (H. Roe Bartle); Leasehold
Improvement Series 1991 B RB
6.63%, 04/15/01(e) NRR NRR 1,225 1,263,899
-------------------------------------------------------------------------------
Missouri Health & Educational Facilities
Authority (Washington University); VRD RB
5.55%, Series 2000 C 03/01/40(b) A-1+ VMIG-1 2,200 2,200,000
-------------------------------------------------------------------------------
5.55%, Series 1996 D 09/01/30(b) A-1+ VMIG-1 3,400 3,400,000
===============================================================================
6,863,899
===============================================================================
NEW HAMPSHIRE - 2.18%
Nashua (City of); Unlimited Tax Series
2000 BAN
4.35%, 12/14/00 -- MIG-1 5,000 5,000,982
-------------------------------------------------------------------------------
4.70%, 12/14/00 -- MIG-1 10,000 10,008,045
-------------------------------------------------------------------------------
Rockingham (County of); Unlimited Tax Series
2000 TAN
4.50%, 12/29/00(d) -- -- 4,000 4,002,373
===============================================================================
19,011,400
===============================================================================
NEVADA - 1.46%
Las Vegas Valley (City of) Water District
(SNWA Water Supply);
Series A Commercial Paper Notes
4.20%, 12/07/00 A-1+ P-1 11,000 11,000,000
-------------------------------------------------------------------------------
Reno (City of) Hospital (St. Mary's Health
Care Group); Series 1991 A RB
6.70%, 07/01/01(e) NRR NRR 1,700 1,759,965
===============================================================================
12,759,965
===============================================================================
NEW YORK - 0.51%
Mamaroneck (City of) (Union Free School
District); Unlimited Tax Series 2000 TAN
4.75%, 02/08/01(d) -- -- 4,400 4,407,108
===============================================================================
NORTH CAROLINA - 0.65%
North Carolina Educational Facilities
Financing Agency (Gaston Day School); VRD
Series 2000 RB (LOC-Bank of America N.A.)
5.70%, 07/01/20(b)(d) -- -- 2,600 2,600,000
-------------------------------------------------------------------------------
North Carolina Medical Care Community
Hospital (Lincoln Health Systems Project);
VRD Series 1996 A RB (LOC-Bank of America
N.A.)
5.70%, 04/01/16(b) A-1+ -- 3,100 3,100,000
===============================================================================
5,700,000
===============================================================================
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OHIO - 2.05%
Canton (City of) School District; Ltd. Tax
Series 2000 BAN
4.63%, 12/15/00 SP-1+ -- $10,000 $ 10,007,467
-------------------------------------------------------------------------------
Jackson (County of) Local School District
(Stark & Summit Counties); Unlimited Tax
Series 2000 BAN
4.75%, 11/01/00 SP-1+ -- 5,000 5,001,855
-------------------------------------------------------------------------------
Marion (County of) (Pooled Lease Program);
Hospital Improvement VRD Series 1992 RB
(LOC-Bank One Akron N.A.)
5.60%, 10/01/22(b) A-1 -- 930 930,000
-------------------------------------------------------------------------------
Ohio Housing Financing Agency (Kenwood
Congregate Retirement Community Project);
Multifamily Housing VRD Series 1985 RB
(LOC-Morgan Guaranty Trust)
4.25%, 12/01/15(b) -- VMIG-1 856 856,000
-------------------------------------------------------------------------------
Ohio State Public Facilities Commission
(Higher Education Facilities); Series 1991
II-A RB
6.30%, 05/01/01(e) NRR NRR 1,000 1,030,869
===============================================================================
17,826,191
===============================================================================
OKLAHOMA - 2.21%
Claremore (City of) Public Works Authority
Capital Improvement; Refunding Series 2000 RB
5.50%, 06/01/01(c)(d) -- -- 1,065 1,069,087
-------------------------------------------------------------------------------
Oklahoma Development Financing Authority
(Oklahoma Hospital Association); VRD
Series 1999 A RB
5.60%, 06/01/29(b) A-1+ -- 18,200 18,200,000
===============================================================================
19,269,087
===============================================================================
OREGON - 0.70%
Oregon State Housing & Community Services
Department (Single Family Mortgage
Project); Series 2000 G RB
4.30%, 11/02/00 -- MIG-1 6,105 6,105,000
===============================================================================
PENNSYLVANIA - 8.60%
Allegheny (County of); Refunding Unlimited
Tax VRD Series 2000 C-50 GO
4.25%, 11/01/00 A-1c VMIG-1 37,345 37,345,000
-------------------------------------------------------------------------------
Bedford (County of) Industrial Development
Authority (Seton Co.);
VRD Series 1985 IDR (LOC-First Union
National Bank)
5.00%, 11/01/05(b) A-1 -- 2,500 2,500,000
-------------------------------------------------------------------------------
Dallastown (City of) Area School District;
Unlimited Tax VRD
Series 2000 GO
5.60%, 05/01/20(b)(c) A-1+ -- 2,500 2,500,000
-------------------------------------------------------------------------------
East Hempfield (Township) Industrial
Development Authority
(The Mennonite Home Project); VRD Series
2000 RB (LOC-Northern Trust Company)
5.60%, 06/01/25(b) A-1+ -- 4,000 4,000,000
-------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Pennsylvania - (continued)
Franklin (County of) Industrial
Development Authority (Chambersburg
Hospital); Health Care VRD Series 2000 RB
5.62%, 12/01/24(b)(c) A-1 -- $ 5,500 $ 5,500,000
-----------------------------------------------------------------------------
Lancaster (County of) Hospital Authority
(Bretheren Village Health Center); VRD
Series 2000 RB (LOC-Suntrust Bank)
5.60%, 06/15/20(b) A-1+ -- 7,825 7,825,000
-----------------------------------------------------------------------------
Lancaster (County of) Hospital Authority
(Masonic Homes of Pennsylvania); VRD
Series 1999 RB
5.40%, 07/01/34(b)(c) A-1 VMIG-1 1,785 1,785,000
-----------------------------------------------------------------------------
Lancaster (County of); Unlimited Tax VRD
Series 2000 GO
5.60%, 05/01/30(b)(c) A-1+ -- 3,700 3,700,000
-----------------------------------------------------------------------------
Lebanon (County of) Health Facilities
(United Church of Christ Homes); VRD
Series 1997 RB (LOC-Allfirst Bank)
5.50%, 12/01/22(b) A-1 -- 4,000 4,000,000
-----------------------------------------------------------------------------
Montgomery (County of) Higher Education &
Health Authority (Pennsylvania Higher
Education & Heath Loan);
VRD Series 1996 A RB (LOC-Allfirst Bank)
5.50%, 08/01/21(b)(c) A-1 -- 1,970 1,970,000
-----------------------------------------------------------------------------
West Chester (City of) Area School
District; Unlimited Tax Series 1991 A GO
6.65%, 01/15/01(e) NRR NRR 1,500 1,508,969
-----------------------------------------------------------------------------
York (City of) General Authority
(Harrisburg Parking); Pooled Financing
VRD Series 1996 Sub-C RB
(LOC-First Union National Bank)
5.40%, 09/01/26(b)(c) A-1 -- 2,300 2,300,000
=============================================================================
74,933,969
=============================================================================
RHODE ISLAND - 1.74%
Eagle Tax Exempt (Rhode Island &
Providence); Refunding VRD Series
943901 Class A COP
5.62%, 06/15/07(b)(c)(f) A-1+c -- 15,175 15,175,000
=============================================================================
SOUTH CAROLINA - 1.80%
Eagle Tax Exempt Trust (South Carolina
State Public Service Authority); VRD
Series 2000-4001
5.62%, 01/01/22(b)(c)(f) A-1+c -- 4,000 4,000,000
-----------------------------------------------------------------------------
South Carolina (State of) Jobs Economic
Development Authority (The Methodist
Home Project); Health Facilities VRD
Series 1994 RB (LOC-Bank of America N.A.)
5.75%, 12/01/14(b) A-1+ -- 5,200 5,200,000
-----------------------------------------------------------------------------
South Carolina (State of) Public Service
Authority; MERLOTS VRD
Series 2000 L RB
5.50%, 01/01/22(b)(c)(f) -- VMIG-1 6,500 6,500,000
=============================================================================
15,700,000
=============================================================================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TENNESSEE - 4.30%
Hamilton (County of) Industrial Development
Board (Trade Center
Hotel Associates #4); Refunding VRD Series
1998 D IDR (LOC-Mellon Bank N.A.)
5.60%, 09/01/16(b) -- VMIG-1 $ 3,598 $3,597,750
------------------------------------------------------------------------------
Memphis (City of) Health Education & Housing
Facility Board (American International
Group Inc.); Multifamily Project VRD Series
2000 RB
5.67%, 08/01/32(b) A-1+ -- 10,000 10,000,000
------------------------------------------------------------------------------
Nashville and Davidson Counties Industrial
Development Board of the Metropolitan
Government (Amberwood, Ltd. Project);
Multifamily Housing Refunding IDR (LOC-
Commerzbank A.G.)
5.82% VRD Series 1993 A, 07/01/13(b) A-1+ P-1 2,050 2,050,000
------------------------------------------------------------------------------
5.82% VRD Series 1993 B, 07/01/13(b) A-1+ P-1 1,755 1,755,000
------------------------------------------------------------------------------
Nashville and Davidson Counties Industrial
Development Board of the Metropolitan
Government (Easter Seal Society Project);
VRD Series 1999 RB (LOC-Bank of America
N.A.)
5.70%, 08/01/19(b)(d) -- -- 2,425 2,425,000
------------------------------------------------------------------------------
Sevier (County of) Public Building Authority
(Local Government Public Improvement); RB
5.55%, VRD Series 2000 IV B-13
06/01/07(b)(c) -- VMIG-1 2,000 2,000,000
------------------------------------------------------------------------------
5.55%, VRD Series 2000 IV B-1
06/01/20(b)(c) -- VMIG-1 2,300 2,300,000
------------------------------------------------------------------------------
5.55%, VRD Series 2000 IV B-8
06/01/20(b)(c) -- VMIG-1 1,300 1,300,000
------------------------------------------------------------------------------
5.55%, VRD Series 2000 IV-4 06/01/21(b)(c) -- VMIG-1 1,000 1,000,000
------------------------------------------------------------------------------
Shelby (County of) Health & Education
(Baptist Memorial Hospital); Commercial
Paper Notes (LOC-Bank of America N.A.)
4.50%, 10/19/00 A-1+ -- 3,500 3,500,000
------------------------------------------------------------------------------
4.25%, 12/14/00 A-1+ -- 7,500 7,500,000
==============================================================================
37,427,750
==============================================================================
TEXAS - 17.12%
Bexar (County of) Texas Housing Finance
Authority (Fountainhead Apartments);
Refunding Multifamily Housing VRD Series
1996 RB
5.55%, 09/15/26(b) A-1+ -- 5,117 5,117,000
------------------------------------------------------------------------------
Dallas (City of) Water & Sewer; Commercial
Paper Notes
4.13%, 10/10/00 A-1+ P-1 20,923 20,923,000
------------------------------------------------------------------------------
4.25%, 10/11/00 A-1+ P-1 9,339 9,339,000
------------------------------------------------------------------------------
Eagle Tax Exempt Trust (Houston Water &
Sewer); VRD Series 974305 Class A
5.62, 12/01/27(b)(c)(f) A-1+c -- 14,005 14,005,000
------------------------------------------------------------------------------
Garland (City of) Independent School
District; Unlimited Tax Series 1991 GO
6.00%, 02/15/01(e) NRR NRR 1,950 1,962,123
------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
Texas - (continued)
Harris County Health Facilities Development
Corp. (Gulf Coast Regional Blood Center
Project); VRD Series 1992 RB
(LOC-Texas Commerce Bank N.A.)
5.60%, 04/01/17(b) A-1+ -- $ 3,050 $ 3,050,000
-------------------------------------------------------------------------------
Harris (County of); Series 2000 TAN
4.75%, 02/28/01 SP-1+ MIG-1 8,000 8,016,413
-------------------------------------------------------------------------------
Harris (County of) Toll Road; Floating
Trust Series 2000 N1 Regulation D
5.60%, 08/01/03(b)(f) -- VMIG-1 10,000 10,000,000
-------------------------------------------------------------------------------
Hays (City of) Memorial Health Facilities
Development Corp. (Texas Medical Center
Project); Hospital VRD Series 1990 B RB
(LOC-Suntrust Bank N.A.)
5.75%, 11/15/14(b) A-1+ -- 1,750 1,750,000
-------------------------------------------------------------------------------
Hockley (County of) Industrial Development
Corp. (Amoco Project); VRD Series 1985 PCR
4.30%, 11/01/00 A-1+ P-1 6,440 6,440,000
-------------------------------------------------------------------------------
Houston (City of) Water & Sewer Systems;
Series A Commercial Paper Notes
4.30%, 11/09/00 A-1 P-1 20,000 20,000,000
-------------------------------------------------------------------------------
La Porte (City of) Independent School
District; Unlimited Tax Series 1998 GO
6.00%, 02/15/01(d) -- -- 1,150 1,157,194
-------------------------------------------------------------------------------
North Central Texas Health Facility
Development Corp. (Los Barrios Unidos
Community); VRD Series 1999 RB (LOC-Bank
of America N.A.)
5.75%, 04/01/19(b)(d) -- -- 1,590 1,590,000
-------------------------------------------------------------------------------
San Antonio (City of) Texas Electric & Gas
System; Commercial Paper Notes Series A
(LOC-Bank of New York)
4.00%, 10/03/00 A-1+ P-1 14,100 14,100,000
-------------------------------------------------------------------------------
San Antonio (City of) Texas Electric & Gas
System; Refunding Series 1991 B RB
5.00%, 02/01/01(e) NRR NRR 2,250 2,255,442
-------------------------------------------------------------------------------
Texas A&M University (Financing Systems);
Refunding Series 1997 RB
5.25%, 05/15/01(d) -- -- 1,000 1,005,787
-------------------------------------------------------------------------------
Texas (State of); Floating Trust VRD Series
2000 A-18 Regulation D RAN
5.65%, 08/31/01(b)(f) -- VMIG-1 5,000 5,000,000
-------------------------------------------------------------------------------
Texas (State of) Public Finance Authority
(General Services Communication Project);
Building Series 2000 A RB
5.50%, 02/01/01(d) -- -- 1,000 1,002,557
-------------------------------------------------------------------------------
Texas (State of); Series 2000 TRAN
5.25%, 08/31/01 SP-1+ MIG-1 15,000 15,128,283
-------------------------------------------------------------------------------
Trinity River Industrial Development
Authority (Radiation Sterilizers, Inc.
Project); VRD IDR (LOC-Comerica Bank)
5.50%, Series 1985 A 11/01/05(b) A-1 -- 500 500,000
-------------------------------------------------------------------------------
5.50%, Series 1985 B 11/01/05(b) A-1 -- 1,650 1,650,000
-------------------------------------------------------------------------------
University of Texas Board of Regents;
Commercial Paper Notes
4.10%, 11/13/00 A-1+ VMIG-1 2,000 2,000,000
-------------------------------------------------------------------------------
4.25%, 12/28/00 A-1+ VMIG-1 3,094 3,094,000
===============================================================================
149,085,799
===============================================================================
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
UTAH - 0.39%
Murray (City of) (IHC Hospitals Inc.);
Refunding Hospital Series 1993 RB
4.70%, 05/15/01(c)(d) -- -- $ 2,175 $ 2,180,144
-----------------------------------------------------------------------------
Salt Lake (County of) Housing Authority
(Santa Fe Apartments Project); Floating
Refunding VRD Series 1992 RB (LOC-
Dresdner Bank A.G.)
5.55%, 07/01/22(b) -- VMIG-1 1,220 1,220,000
=============================================================================
3,400,144
=============================================================================
VERMONT - 0.29%
Vermont Educational & Health Buildings
Financing Agency (Veterans Hospital
Association New England); VRD Series
1985 E RB
5.70%, 12/01/25(b)(c) A-1+ -- 2,500 2,500,000
=============================================================================
VIRGINIA - 0.23%
Chesterfield (County of) Water & Sewer;
Refunding Series 1992 A RB
5.50%, 11/01/00(d) -- -- 2,000 2,001,945
=============================================================================
WASHINGTON - 5.95%
Eagle Tax Exempt Trust (King County); VRD
Series 97C4702 Class A COP
5.62%, 01/01/20(b)(f) A-1+c -- 9,900 9,900,000
-----------------------------------------------------------------------------
Eagle Tax Exempt Trust (Washington Public
Power Supply Systems Project No. 2); VRD
Series 964703 Class A COP
5.62%, 07/01/11(b)(c)(f) A-1+c -- 5,870 5,870,000
-----------------------------------------------------------------------------
Eagle Tax Exempt Trust (Washington
State); VRD Series 984701
Class A COP
5.62%, 05/01/18(b)(f) A-1+c -- 14,400 14,400,000
-----------------------------------------------------------------------------
Eagle Tax Exempt Trust (Washington State
Public Power Supply); VRD Series 97C4703
Class A COP
5.62%, 01/01/01(b)(f) A-1+c -- 11,295 11,295,000
-----------------------------------------------------------------------------
Port Seattle (City of) Industrial
Development (Sysco Food Services
Project); Refunding VRD Series 1994 RB
5.65%, 11/01/25(b) A-1+ VMIG-1 4,700 4,700,000
-----------------------------------------------------------------------------
Washington (State of) Public Power Supply
System (Nuclear Project
No. 1); Refunding Series 1993 A RB
5.25%, 07/01/01(d) -- -- 2,250 2,262,181
-----------------------------------------------------------------------------
Washington (State of) Public Power Supply
System (Nuclear Project
No. 2); Refunding Series 1993 B RB
5.00%, 07/01/01(d) -- -- 1,000 1,003,605
-----------------------------------------------------------------------------
Washington (State of); Unlimited Tax
Series 1990 A GO
6.50%, 02/01/01(d) -- -- 2,350 2,366,803
=============================================================================
51,797,589
=============================================================================
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WISCONSIN - 2.89%
Franklin (City of); Series 2000 BAN
4.75%, 06/01/01 -- MIG-1 $10,000 $ 10,000,000
-------------------------------------------------------------------------------
Milwaukee (County of); Unlimited Tax Series
1995 A GO
5.13%, 12/01/00(d) -- -- 3,775 3,780,255
-------------------------------------------------------------------------------
River Falls School District (St. Coix &
Pierce Counties); Series 2000 A BAN
5.60%, 11/30/00 -- MIG-1 5,000 5,006,766
-------------------------------------------------------------------------------
Wisconsin Health & Educational Facilities
Authority (Ascension Health); Credit Series
1999 A RB
4.50%, 11/15/00(d) -- -- 2,285 2,286,075
-------------------------------------------------------------------------------
Wisconsin (State of) Clean Water; Series 1991
1 RB
6.40%, 06/01/01(d) -- -- 2,100 2,127,929
-------------------------------------------------------------------------------
Wisconsin (State of); Unlimited Tax GO
5.80%, Series 1992 A 05/01/01(d) -- -- 1,000 1,008,532
-------------------------------------------------------------------------------
5.25%, Series 1996 C 05/01/01(d) -- -- 1,000 1,005,137
===============================================================================
25,214,694
===============================================================================
TOTAL INVESTMENTS - 98.27% (Cost
$855,972,930)(h) 855,972,930
_______________________________________________________________________________
===============================================================================
OTHER ASSETS LESS LIABILITIES - 1.73% 15,026,793
_______________________________________________________________________________
===============================================================================
NET ASSETS - 100.00% $870,999,723
_______________________________________________________________________________
===============================================================================
</TABLE>
INVESTMENT ABBREVIATIONS:
BAN Bond Anticipation Notes
COP Certificates of Participation
Ctfs. Certificates
GO General Obligation
Gtd. Guaranteed
IDR Industrial Development Revenue Bonds
LOC Letter of Credit
Ltd. Limited
MERLOTS Municipal Exempt Receipts Liquidity Optional Tender
PCR Pollution Control Revenue Bonds
RAC Revenue Anticipation Certificates
RAN Revenue Anticipation Notes
RB Revenue Bonds
Sr. Senior
Sub. Subordinate
TAN Tax Anticipation Notes
TRAN Tax and Revenue Anticipation Notes
VRD Variable Rate Demand
Wts. Warrants
14
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P"). NRR indicates a security that is not
re-rated subsequent to funding of an escrow fund (consisting of U.S.
Treasury obligations); this funding is pursuant to an advance refunding of
the security.
(b) 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 09/30/2000.
(c) Secured by bond insurance provided by one of the following companies: Ambac
Assurance Corp., Financial Guaranty Insurance Co., Financial Security
Assurance, or MBIA Insurance Co.
(d) Determined by the investment advisor to be of comparable quality to the
rated securities in which the Fund may invest, pursuant to guidelines for
the determination of quality adopted by the Board of Directors and followed
by the investment advisor.
(e) Secured by an escrow fund of U.S. Treasury obligations.
(f) 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.
(g) Subject to an irrevocable call or mandatory put by the issuer. Par value
and maturity date reflect such call or put.
(h) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
15
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $ 855,972,930
----------------------------------------------------------------------------
Cash 8,296,299
----------------------------------------------------------------------------
Receivables for:
Investments sold 2,270,000
----------------------------------------------------------------------------
Interest 7,697,729
----------------------------------------------------------------------------
Investment for deferred compensation plan 54,859
----------------------------------------------------------------------------
Other assets 33,175
============================================================================
Total assets 874,324,992
============================================================================
LIABILITIES:
Payables for:
Dividends 3,062,714
----------------------------------------------------------------------------
Deferred compensation plan 54,859
----------------------------------------------------------------------------
Accrued advisory fees 81,036
----------------------------------------------------------------------------
Accrued administrative services fees 12,560
----------------------------------------------------------------------------
Accrued distribution fees 33,817
----------------------------------------------------------------------------
Accrued directors' fees 2,065
----------------------------------------------------------------------------
Accrued transfer agent fees 42,797
----------------------------------------------------------------------------
Accrued operating expenses 35,421
============================================================================
Total liabilities 3,325,269
============================================================================
Net assets applicable to shares outstanding $ 870,999,723
____________________________________________________________________________
============================================================================
NET ASSETS:
Institutional Class $ 736,984,586
____________________________________________________________________________
============================================================================
Private Investment Class $ 95,034,117
____________________________________________________________________________
============================================================================
Cash Management Class $ 13,240,481
____________________________________________________________________________
============================================================================
Reserve Class $ 16,511,350
____________________________________________________________________________
============================================================================
Resource Class $ 9,229,189
____________________________________________________________________________
============================================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Institutional Class:
Authorized 3,000,000,000
----------------------------------------------------------------------------
Outstanding 736,982,150
____________________________________________________________________________
============================================================================
Private Investment Class:
Authorized 1,000,000,000
----------------------------------------------------------------------------
Outstanding 95,031,606
____________________________________________________________________________
============================================================================
Cash Management Class:
Authorized 1,000,000,000
----------------------------------------------------------------------------
Outstanding 13,240,587
____________________________________________________________________________
============================================================================
Reserve Class:
Authorized 1,000,000,000
----------------------------------------------------------------------------
Outstanding 16,510,251
____________________________________________________________________________
============================================================================
Resource Class:
Authorized 1,000,000,000
----------------------------------------------------------------------------
Outstanding 9,229,397
____________________________________________________________________________
============================================================================
Net asset value, offering and redemption price per share for
all classes $ 1.00
____________________________________________________________________________
============================================================================
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
STATEMENT OF OPERATIONS
For the six months ended September 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $21,854,224
==================================================================
EXPENSES:
Advisory fees 1,150,816
------------------------------------------------------------------
Administrative services fees 78,053
------------------------------------------------------------------
Custodian fees 26,293
------------------------------------------------------------------
Distribution fees:
Private Investment Class 239,741
------------------------------------------------------------------
Cash Management Class 5,032
------------------------------------------------------------------
Reserve Class 120,041
------------------------------------------------------------------
Resource Class 10,937
------------------------------------------------------------------
Transfer agent fees 108,387
------------------------------------------------------------------
Directors' fees 4,641
------------------------------------------------------------------
Other 144,843
==================================================================
Total expenses 1,888,784
==================================================================
Less:Fees waived (610,043)
==================================================================
Net expenses 1,278,741
==================================================================
Net investment income 20,575,483
==================================================================
Net increase in net assets resulting from operations $20,575,483
__________________________________________________________________
==================================================================
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended September 30, 2000 and the year ended March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
2000 2000
------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 20,575,483 $ 35,508,776
----------------------------------------------------------------------------
Net realized gain (loss) from investment
securities -- (532)
============================================================================
Net increase in net assets resulting from
operations 20,575,483 35,508,244
============================================================================
Distributions to shareholders from net
investment income:
Institutional Class (17,936,245) (32,180,120)
----------------------------------------------------------------------------
Private Investment Class (1,831,975) (2,570,746)
----------------------------------------------------------------------------
Cash Management Class (203,502) (218,513)
----------------------------------------------------------------------------
Reserve Class (392,858) (505,734)
----------------------------------------------------------------------------
Resource Class (210,903) (33,663)
----------------------------------------------------------------------------
Share transactions - net:
Institutional Class (227,412,810) (108,197,093)
----------------------------------------------------------------------------
Private Investment Class 11,580,650 (7,153,879)
----------------------------------------------------------------------------
Cash Management Class 7,063,042 (961,187)
----------------------------------------------------------------------------
Reserve Class (6,771,049) 23,281,300
----------------------------------------------------------------------------
Resource Class 5,632,447 3,596,950
============================================================================
Net increase (decrease) in net assets (209,907,720) (89,434,441)
============================================================================
NET ASSETS:
Beginning of period 1,080,907,443 1,170,341,884
============================================================================
End of period $ 870,999,723 $1,080,907,443
____________________________________________________________________________
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 871,077,484 $1,080,985,204
----------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (77,761) (77,761)
============================================================================
$ 870,999,723 $1,080,907,443
____________________________________________________________________________
============================================================================
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
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 offers six different classes of shares, the Institutional
Class, the Private Investment Class, the Personal Investment Class, the Cash
Management Class, the Reserve Class and the Resource Class. As of September 30,
2000, the Personal Investment class had no assets. Matters affecting each class
are voted on exclusively by the shareholders of each class. The Fund's
investment objective is to provide as high a level of tax-exempt income as is
consistent with the preservation of capital and maintenance of liquidity.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - The Fund's securities are valued on the basis of
amortized cost which approximates market value as permitted under Rule 2a-7
of the 1940 Act. This method values a security at its cost on the date of
purchase and thereafter, assumes a constant amortization to maturity of any
discount or premiums.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income, adjusted for amortization of premiums and discounts on
investments, is recorded on the accrual basis from settlement date.
Discounts, other than original issue, are amortized to unrealized
appreciation for financial reporting purposes.
C. Distributions - It is the policy of the Fund to declare dividends from net
investment income daily and pay monthly. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on ex-
dividend date. The Fund may elect to use a portion of the proceeds from
redemptions as distributions for federal income tax purposes.
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 in varying increments, if not
previously utilized, in the year 2004.
E. Expenses - Distribution expenses directly attributable to a class of shares
are charged to those classes' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment agreement, AIM
receives a monthly fee with respect to the Fund 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 agreed to
waive fees (excluding 12b-1 distribution plan fees, interest, taxes, directors'
fees, federal registration fees, extraordinary items and increases due to
offset arrangements, if any) to limit total annual Fund operating expenses to
0.20%. During the six months ended September 30, 2000, AIM waived fees of
$462,970.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the six months ended September 30, 2000,
AIM was paid $78,053 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the six months ended September 30, 2000,
AFS was paid $78,995 for such services.
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
19
<PAGE>
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 0.50%, 0.75%, 0.10%, 1.00% and 0.20%, respectively, 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, the
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 Portfolio with respect to each class. Currently, FMC has elected to
waive a portion of its compensation payable by the Fund such that compensation
paid pursuant to the Plan with respect to the Private Investment Class, the
Personal Investment Class, the Cash Management Class and the Reserve Class
equals the maximum annual rate of 0.25%, 0.50%, 0.08%, and 0.80%, respectively,
of the average daily net assets attributable to such class. During the six
months ended September 30, 2000, the Private Investment Class, the Cash
management Class, the Reserve Class and the Resource Class paid $119,870,
$4,026, $96,033, and $8,750, respectively, as compensation under the Plan and
FMC waived fees of $147,073 for the same period.
Certain officers and directors of the Fund are officers of AIM, FMC, and AFS.
During the six months ended September 30, 2000, the Portfolio paid legal fees
of $3,721 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 Fund.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Fund 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 shares outstanding during the six months ended September 30, 2000
and the year ended March 31, 2000 were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 MARCH 31, 2000
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 2,418,116,013 $2,418,116,013 6,322,728,466 $6,322,728,466
---------------------------------------------------------------------------------------
Private Investment
Class 160,026,400 160,026,400 370,686,399 370,686,399
---------------------------------------------------------------------------------------
Cash Management Class 65,121,137 65,121,137 103,822,089 103,822,089
---------------------------------------------------------------------------------------
Reserve Class * 106,567,169 106,567,169 195,924,640 195,924,640
---------------------------------------------------------------------------------------
Resource Class ** 29,650,871 29,650,871 18,257,101 18,257,101
---------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 2,028,743 2,028,743 2,285,592 2,285,592
---------------------------------------------------------------------------------------
Private Investment
Class 1,404,820 1,404,820 2,041,123 2,041,123
---------------------------------------------------------------------------------------
Cash Management Class 165,606 165,606 175,159 175,159
---------------------------------------------------------------------------------------
Reserve Class * 386,940 386,940 456,780 456,780
---------------------------------------------------------------------------------------
Resource Class ** 190,034 190,034 22,084 22,084
---------------------------------------------------------------------------------------
Reacquired:
Institutional Class (2,647,557,566) (2,647,557,566) (6,433,211,151) (6,433,211,151)
---------------------------------------------------------------------------------------
Private Investment
Class (149,850,570) (149,850,570) (379,881,401) (379,881,401)
---------------------------------------------------------------------------------------
Cash Management Class (58,223,701) (58,223,701) (104,958,435) (104,958,435)
---------------------------------------------------------------------------------------
Reserve Class * (113,725,158) (113,725,158) (173,100,120) (173,100,120)
---------------------------------------------------------------------------------------
Resource Class ** (24,208,458) (24,208,458) (14,682,235) (14,682,235)
=======================================================================================
(209,907,720) $ (209,907,720) (89,433,909) $ (89,433,909)
_______________________________________________________________________________________
=======================================================================================
</TABLE>
* The Reserve Class commenced sales on June 1, 1999.
**The Resource Class commenced sales on April 6, 1999.
20
<PAGE>
NOTE 5--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the
Resource Class outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
RESOURCE CLASS
-----------------------------
APRIL 6, 1999
SIX MONTHS (DATE SALES
ENDED COMMENCED)
SEPTEMBER 30, TO MARCH 31,
2000 2000
------------- -------------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
--------------------------------------------- ------ ------
Income from investment operations:
Net investment income 0.02 0.03
============================================= ====== ======
Less distributions:
Dividends from net investment income (0.02) (0.03)
============================================= ====== ======
Net asset value, end of period $ 1.00 $ 1.00
_____________________________________________ ______ ______
============================================= ====== ======
Total return(a) 1.97% 3.15%
_____________________________________________ ______ ______
============================================= ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $9,229 $3,597
_____________________________________________ ______ ______
============================================= ====== ======
Ratio of expenses to average net assets:
With fee waivers 0.36%(b) 0.36%(c)
_____________________________________________ ______ ______
============================================= ====== ======
Without fee waivers 0.49%(b) 0.49%(c)
_____________________________________________ ______ ______
============================================= ====== ======
Ratio of net investment income to average
net assets 3.90%(b) 3.09%(c)
_____________________________________________ ______ ______
============================================= ====== ======
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $10,907,282.
(c) Annualized.
21
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
DIRECTORS
Charles T. Bauer Carl Frischling Tax-Free
Bruce L. Crockett Robert H. Graham Investments Co.
Owen Daly II Prema Mathai-Davis (TFIC)
Edward K. Dunn, Jr. Lewis F. Pennock
Jack M. 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 Resource SEMI-
Melville B. Cox Vice President Class ANNUAL
Karen Dunn Kelley Vice President REPORT
J. Abbott Sprague Vice President
Mary J. Benson Assistant Vice President & Assistant Treasurer
Sheri Morris Assistant Vice President & Assistant Treasurer
Jim A. Coppedge Assistant Secretary
Renee A. Friedli Assistant Secretary
P. Michelle Grace Assistant Secretary
Nancy L. Martin Assistant Secretary SEPTEMBER 30, 2000
Ofelia M. Mayo Assistant Secretary
Lisa A. Moss Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
[LOGO APPEARS HERE]
Fund Management Company
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
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 LLP
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>
TFIC-SAR-5
