<PAGE> 1
As filed with the Securities and Exchange Commission on July 27, 1995
1933 Act Reg. No. 33-66242
1940 Act Reg. No. 811-7890
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----
Pre-Effective Amendment No.
------ -----
Post-Effective Amendment No. 3 X
------ -----
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
-----
Amendment No. 4 X
------- -----
</TABLE>
(Check appropriate box or boxes.)
AIM TAX-EXEMPT FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 1919, Houston, TX 77046
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
Charles T. Bauer
11 Greenway Plaza, Suite 1919, Houston, TX 77046
(Name and Address of Agent for Service)
Copy to:
<TABLE>
<S> <C>
P. Michelle Grace, Esquire Martha J. Hayes, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll
11 Greenway Plaza, Suite 1919 1735 Market Street, 51st Floor
Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: As soon as practicable after the effective
date of this Amendment
</TABLE>
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
-------
X on August 1, 1995 pursuant to paragraph (b)
-------
60 days after filing pursuant to paragraph (a)(1)
-------
on (date) pursuant to paragraph (a)(1)
-------
75 days after filing pursuant to paragraph (a)(2)
-------
on (date) pursuant to paragraph (a)(2) of Rule 485.
-------
If appropriate, check the following box:
This post-effective amendment designates a new effective date
------- for a previously filed post-effective amendment.
(Continued on next page)
<PAGE> 2
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933*
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being Being Price per Offering Registration
Registered Registered Share** Price Fee
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common
Stock
Par Value
$0.001
Name of Series:
AIM Tax-Exempt 4,261,507.270 $1.00 $4,261,507.270 $67.70
Cash Fund
AIM Tax-Exempt 519,363.095 $11.31 $5,873,996.604 $0
Bond Fund of
Connecticut
AIM Tax-Free 1,947,530.332 $10.91 $21,247,555.924 $32.30
------------- -----
Intermediate
Shares
Total 6,728,400.697 $31,383,059.799 $100.00
</TABLE>
* Registrant continues its election to register an indefinite number of
its shares of common stock under Rule 24f-2 under the Investment
Company Act of 1940 and filed its Rule 24f-2 Notice for the fiscal
year ended March 31, 1995 on May 26, 1995.
** Registrant elects to calculate the maximum offering price pursuant to
Rule 24e-2. 61,178,932.6 shares of AIM Tax-Exempt Cash Fund,
889,769.891 shares of AIM Tax-Exempt Bond Fund of Connecticut, and
3,561,083.95 shares of AIM Tax-Free Intermediate Shares were redeemed
during the Registrant's fiscal year ended March 31, 1995.
57,113,755.33 shares of AIM Tax-Exempt Cash Fund, 370,406.796 shares
of AIM Tax-Exempt Bond Fund of Connecticut, and 1,622,139.319 shares
of AIM Tax-Free Intermediate Shares were used for reduction pursuant
to Paragraph (c) of Rule 24f-2 during the current year. 4,065,177.270
shares of AIM Tax-Exempt Cash Fund, 519,363.095 shares of AIM
Tax-Exempt Bond Fund of Connecticut, and 1,938,944.631 shares of AIM
Tax-Free Intermediate Shares is the amount of redeemed shares being
registered in this amendment. Pursuant to Rule 457(d) under the
Securities Act of 1933, the offering price per share of common stock
of AIM Tax-Exempt Cash Fund of $1.00 per share, for AIM Tax-Exempt
Bond Fund of Connecticut of $11.31 per share, and for AIM Tax-Free
Intermediate Shares of $10.91 per share on July 21, 1995, is the price
used as the basis for these calculations. While no fee is required
for the 4,065,177.270 shares of AIM Tax-Exempt Cash Fund, 519,363.095
shares of AIM Tax-Exempt Bond Fund of Connecticut, and 1,938,944.631
shares of AIM Tax-Free Intermediate Shares, the Registrant has elected
to register for $100, an additional 204,915.701 shares (196,330
shares of AIM Tax-Exempt Cash Fund and 8,585.701 shares of AIM Tax-Free
Intermediate Shares).
<PAGE> 3
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
FORM N-1A ITEM PROSPECTUS CAPTION
- -------------- ------------------
<S> <C>
Part A
Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . . . . . . . . Financial Highlights; Performance
Item 4. General Description of Registrant . . . . . . . . . . . . . . . . . . . . . . . Cover Page; Summary; Investment
Program; Management; General Information
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Investment Program;
Management; General Information
Item 5A. Management's Discussion of Fund Performance . . . . . . . . . . . . . . . . . . . [included in annual report]
Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . Summary; Management; Organization of the Company;
Dividends, Distributions and Tax Matters;
General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . . . . . . . Management; How to Purchase Shares;
Terms and Conditions of Purchase
of the AIM Funds; Special Plans;
Exchange Privilege; Determination
of Net Asset Value
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . How To Redeem Shares; Special Plans
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
STATEMENT OF ADDITIONAL INFORMATION CAPTION
Part B
Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . . . . . . . . . . . Introduction; General Information
About the Company
Item 13. Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . Investment Program and Restrictions;
Ratings of Securities
Item 14. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management
Item 15. Control Persons and Principal
Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous Information
Item 16. Investment Advisory and Other Services . . . . . . . . . . . . . . . . Investment Advisory and Other Services
Item 17. Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . . . . . . . . . Portfolio Transactions
Item 18. Capital Stock and Other Securities . . . . . . . . . . . . . . . . . . . General Information About the Company
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered . . . . . . . . . . . . . . . . . . . . . General Information About the Company
Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividend, Distributions and Tax Matters
Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment Advisory and Other Services
Item 22. Calculation of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Information
Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
</TABLE>
<PAGE> 4
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R)
AIM TAX-EXEMPT FUNDS, INC.
AIM TAX-EXEMPT CASH FUND
AIM TAX-FREE INTERMEDIATE SHARES
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
PROSPECTUS
JULY 31, 1995
AIM Tax-Exempt Funds, Inc. (the "Company") is designed for investors
seeking income which is exempt from federal income taxes and, for
investments in one portfolio of the Company, Connecticut taxes. This
Prospectus contains information about the three mutual funds listed
below (the "Funds"), which are separate series portfolios of the
Company.
AIM TAX-EXEMPT CASH FUND: A diversified portfolio primarily
consisting of municipal obligations, including project notes, various
anticipation notes and tax-exempt commercial paper having a maturity
of 397 days or less. AN INVESTMENT IN AIM TAX-EXEMPT CASH FUND IS
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN
BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
INTERMEDIATE PORTFOLIO: A diversified portfolio primarily consisting
of high quality, intermediate-term municipal obligations having a
maturity of ten and one-half years or less. The Fund currently offers
one class of shares, AIM TAX-FREE INTERMEDIATE SHARES.
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT: A non-diversified portfolio
primarily consisting of municipal bonds and other municipal
securities issued by the State of Connecticut and authorities,
agencies, instrumentalities and political subdivisions of the State
of Connecticut. THE FUND MAY INVEST IN LOWER RATED DEBT SECURITIES,
COMMONLY REFERRED TO AS "JUNK BONDS." JUNK BONDS ARE CONSIDERED TO BE
SPECULATIVE WITH REGARD TO THE PAYMENT OF INTEREST AND RETURN OF
PRINCIPAL. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THIS FUND. FOR A DISCUSSION OF CERTAIN RISK
FACTORS ASSOCIATED WITH THE FUND, SEE "AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT -- QUALITY STANDARDS" UNDER "INVESTMENT PROGRAM."
This Prospectus sets forth basic information that a prospective investor
should know about the Funds before investing. It should be read and
retained for future reference. A Statement of Additional Information,
dated July 31, 1995, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. The Statement of
Additional Information is available without charge upon written request
to the Company at P.O. Box 4739, Houston, Texas 77210-4739.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE FUNDS' SHARES ARE NOT FEDERALLY INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF
THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................. 2
THE FUNDS............................... 3
Table of Fees and Expenses............ 3
Financial Highlights.................. 4
Performance........................... 6
Investment Program.................... 7
Management............................ 13
Organization of the Company........... 15
INVESTOR'S GUIDE TO THE AIM
FAMILY OF FUNDS(R).................... A-1
Introduction to The AIM Family of
Funds(R)........................... A-1
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares................ A-1
Terms and Conditions of Purchase of
the AIM Funds...................... A-2
Special Plans......................... A-7
Exchange Privilege.................... A-8
How to Redeem Shares.................. A-10
Determination of Net Asset Value...... A-13
Dividends, Distributions and Tax
Matters............................ A-13
General Information................... A-15
APPENDIX A.............................. A-17
APPLICATION INSTRUCTIONS................ B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUNDS. AIM Tax-Exempt Funds, Inc. (the "Company") is a Maryland
corporation organized as an open-end series management investment company.
Currently, the Company has three separate series portfolios. This Prospectus
relates to all of such portfolios, which are: AIM TAX-EXEMPT CASH FUND, the
INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
(collectively, the "Funds"). The INTERMEDIATE PORTFOLIO currently offers one
class of shares, AIM TAX-FREE INTERMEDIATE SHARES.
MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Funds' investment
advisor pursuant to a Master Investment Advisory Agreement (the "Advisory
Agreement"). AIM acts as manager or advisor to 37 investment company portfolios.
As of July 1, 1995, the total assets advised or managed by AIM or its affiliates
were approximately $32.5 billion. Under the terms of the Advisory Agreement, AIM
supervises all aspects of each Fund's operations and provides investment
advisory services to each Fund. As compensation for these services, AIM receives
a fee based on the respective average daily net assets of each Fund. Under a
Master Administrative Services Agreement, AIM may be reimbursed by each Fund for
its costs of performing, or arranging for the performance of, certain
accounting, shareholder servicing and other administrative services for the
Funds. Under a Transfer Agency and Service Agreement, A I M Fund Services, Inc.
("AFS"), AIM's wholly-owned subsidiary and a registered transfer agent, receives
a fee for its provision of transfer agency, dividend distribution and
disbursement, and shareholder services to the Funds.
PURCHASING SHARES. Shares of AIM TAX-EXEMPT CASH FUND are offered by this
Prospectus at net asset value. Shares of the INTERMEDIATE PORTFOLIO are offered
by this Prospectus at net asset value plus a maximum sales charge of 1% of the
public offering price per share, which sales charge is reduced on purchases of
$100,000 or more. Shares of AIM TAX-EXEMPT BOND FUND OF CONNECTICUT are offered
by this Prospectus at net asset value plus a maximum sales charge of 4.75% of
the public offering price, which sales charge is reduced on purchases of $50,000
or more. Initial investments in each Fund generally must be at least $500, and
subsequent investments must be at least $50. The distributor of the Funds'
shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston,
Texas 77210-4739. See "How to Purchase Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Funds are among those mutual funds distributed by
AIM Distributors (collectively, "The AIM Family of Funds(R)"). Shares of the
Funds may be exchanged for shares of other funds in The AIM Family of Funds(R)
in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
REDEEMING SHARES. Shareholders may redeem all or a portion of their shares
at net asset value, generally without charge. A contingent deferred sales charge
of 1% may apply to certain redemptions of shares of AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, where purchases of $1 million or more are made at net asset value.
See "How To Redeem Shares."
DISTRIBUTIONS. Dividends from net investment income are declared daily and
paid monthly, and distributions from net capital gains, if any, are paid
annually, although AIM TAX-EXEMPT CASH FUND may pay distributions of short-term
capital gains more frequently. Dividends and distributions paid by a Fund may be
reinvested at their net asset value (without payment of a sales charge) in the
Fund's shares or, subject to certain conditions, in shares of another fund in
The AIM Family of Funds(R). See "Dividends, Distributions and Tax Matters" and
"Special Plans."
The AIM Family of Funds, AIM, The AIM Family of Funds and Design (i.e., the
AIM logo), and AIM and Design are registered service marks of A I M Management
Group Inc.
2
<PAGE> 6
THE FUNDS
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Funds understand
the various costs that an investor will bear, both directly and indirectly. The
fees and expenses set forth in the table are based on expenses of the Funds for
the most recent fiscal year, except where they have been restated to reflect
current fee waivers and expense reimbursements. With respect to AIM TAX-EXEMPT
CASH FUND, absent a partial fee waiver, Rule 12b-1 distribution plan payments
would have been 0.25%. Had fees not been waived, management fees1 would have
been 0.50%. In addition, the rules of the Securities and Exchange Commission
require that the maximum sales charge be reflected in the table, even though
certain investors may qualify for reduced sales charges. See "How to Purchase
Shares."
<TABLE>
<CAPTION>
AIM AIM
TAX- AIM TAX-EXEMPT
EXEMPT TAX-FREE BOND FUND
CASH INTERMEDIATE OF
FUND SHARES CONNECTICUT
------ ------------ ----------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchases of shares (as a
% of offering price)................................. None 1.00% 4.75%
Maximum sales load on reinvested dividends and
distributions........................................ None None None
Deferred sales load..................................... None None None*
Redemption fees......................................... None None None
Exchange fee**.......................................... None None None
Annual Operating Expenses (as a % of average net assets)
Management fees......................................... 0.35% 0.30% 0.00%***
Rule 12b-1 distribution plan payments................... 0.10%*** None 0.25%
Other expenses (after expense reimbursements)........... 0.56% 0.29% 0.41%****
------ ----- -----
Total fund operating expenses................... 1.01% 0.59% 0.66%
======= =========== ==========
</TABLE>
- ------------
(1) With respect to AIM Tax-Exempt Bond Fund of Connecticut, the fees and
expenses set forth in the table have been restated to reflect current
agreements.
* Purchases of $1 million or more are not subject to an initial sales
charge. However, a contingent deferred sales charge of 1% applies to
certain redemptions made within 18 months following the end of the
calendar month of such purchase. See the Investor's Guide, under the
caption "How to Redeem Shares -- Contingent Deferred Sales Charge Program
for Large Purchases."
** No fee will be charged for exchanges among The AIM Family of Funds(R);
however, a $5 service fee will be charged for exchanges by accounts of
market timers.
*** After fee waiver.
**** After expense reimbursements.
EXAMPLES. An investor in each of the Funds would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual return and (2) redemption at
the end of each time period:
<TABLE>
<CAPTION>
AIM
AIM TAX-EXEMPT
TAX- AIM BOND
EXEMPT TAX-FREE FUND
CASH INTERMEDIATE OF
FUND SHARES CONNECTICUT
---- ------------ -----------
<S> <C> <C> <C>
1 Year......................................... $ 10 $16 $ 54
3 Years........................................ $ 32 $29 $ 68
5 Years........................................ $ 56 $43 $ 83
10 Years....................................... $124 $83 $126
</TABLE>
As a result of 12b-1 distribution plan payments, a long-term shareholder of
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT may pay more than the economic
equivalent of the maximum front-end sales charges permitted by rules of the
National Association of Securities Dealers, Inc. Given the maximum front-end
sales charge and 12b-1 distribution plan payments applicable to shares of AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, it is estimated that it would require a
substantial number of years to exceed the maximum permissible front-end sales
charges.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED TO BE REPRESENTATIVE OF THE
FUNDS' ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN.
In addition, while the examples assume a 5% annual return, the Funds' actual
performance will vary and may result in an actual return that is greater or less
than 5%.The examples assume reinvestment of all dividends and distributions and
that the percentage amounts for total operating expenses remain the same for
each year. The examples assume payment of a sales charge at the time of purchase
(if applicable); actual expenses may vary for purchases of $1 million or more
which are made at net asset value and are subject to a contingent deferred sales
charge for 18 months following the end of the calendar month of purchase.
3
<PAGE> 7
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AIM TAX-EXEMPT CASH FUND*
Shown below are the condensed financial highlights for the year ended March
31, 1995, the three months ended March 31, 1994 and the year ended December 31,
1993, which have been audited by KPMG Peat Marwick LLP, independent auditors,
whose reports thereon were unqualified. The information presented for the
periods other than the year ended March 31, 1995, the three months ended March
31, 1994 and the year ended December 31, 1993 was derived from financial
statements audited by Price Waterhouse LLP, independent accountants, whose
reports thereon were also unqualified. The report of KPMG Peat Marwick LLP,
independent auditors, for the fiscal year ended March 31, 1995 is included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------------------ ----------------------------------------------------------
1995 1994 1993 1992(a) 1991 1990 1989
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income....... 0.03 0.004 0.02 0.02 0.04 0.05 0.05
------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income......... (0.03) (0.004) (0.02) (0.02) (0.04) (0.05) (0.05)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= =======
Total return................. 2.54% 1.73%(d) 1.78% 2.42% 3.91% 5.17% 5.62%
======= ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............ $30,365 $33,658 $35,230 $41,291 $43,366 $43,302 $45,995
======= ======= ======= ======= ======= ======= =======
Ratio of expenses to average
net assets................ 1.01%(b)(c) 1.00%(c)(d) 1.00%(e) 0.98%(f) 0.98% 0.99% 0.93%
======= ======= ======= ======= ======= ======= =======
Ratio of net investment
income to average net
assets.................... 2.53%(b)(c) 1.75%(c)(d) 1.76%(e) 2.42%(f) 3.87% 5.05% 5.48%
======= ======= ======= ======= ======= ======= =======
<CAPTION>
1988 1987 1986
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning
of period................... $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income....... 0.05 0.04 0.05
------- ------- -------
Less distributions:
Dividends from net
investment income......... (0.05) (0.04) (0.05)
------- ------- -------
Net asset value, end of
period...................... $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total return................. 4.65% 3.95% 4.68%
======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............ $51,597 $54,616 $54,531
======= ======= =======
Ratio of expenses to average
net assets................ 0.83% 0.72% 0.59%
======= ======= =======
Ratio of net investment
income to average net
assets.................... 4.54% 3.87% 4.51%
======= ======= =======
</TABLE>
- ---------------
* On October 15, 1993 the Fund redomesticated from a portfolio of a
Massachusetts business trust to a portfolio of the Company. In addition, on
April 30, 1985 shareholders of the Fund approved a plan of reorganization
whereby the Fund, which was a Maryland corporation, became a portfolio of a
Massachusetts business trust.
(a) The Fund changed investment advisors on June 30, 1992.
(b) Ratios are based on average net assets of $34,024,407.
(c) After waiver of distribution fees. Ratios of expenses and net investment
income to average net assets prior to waiver of distribution fees were 1.16%
and 2.38%, respectively, for 1995, and 1.14% and 1.61%, respectively, for
1994.
(d) Annualized.
(e) After waiver of advisory fees and expense reimbursements. Ratios of expenses
and net investment income to average net assets prior to waiver of advisory
fees and expense reimbursements were 1.36% and 1.40%, respectively.
(f) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees were 1.00% and 2.40%,
respectively.
4
<PAGE> 8
- --------------------------------------------------------------------------------
AIM TAX-FREE INTERMEDIATE SHARES*
Shown below are the condensed financial highlights for each of the years in
the six-year period ended March 31, 1995, the eleven months ended March 31, 1989
and the period from May 11, 1987 (date operations commenced) through April 30,
1988. The following information has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon was unqualified.
<TABLE>
<CAPTION>
MARCH 31, APRIL
-------------------------------------------------------------------------------------------- 30,
1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period........... $ 10.62 $ 10.74 $ 10.27 $ 10.07 $ 9.89 $ 9.69 $ 9.88 $ 10.00
Income from
investment
operations:
Net investment
income......... 0.49 0.48 0.53 0.62 0.63 0.62 0.56 0.55
Net gains
(losses) on
securities
(both realized
and
unrealized).... 0.04 (0.10) 0.47 0.20 0.18 0.20 (0.19) (0.12)
-------- -------- -------- -------- -------- -------- -------- ---------
Total from
investment
operations..... 0.53 0.38 1.00 0.82 0.81 0.82 0.37 0.43
-------- -------- -------- -------- -------- -------- -------- ---------
Less distributions:
Dividends from
net investment
income......... (0.48) (0.48) (0.53) (0.62) (0.63) (0.62) (0.56) (0.55)
Distributions
from net
realized
capital
gains.......... -- (0.02) -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- ---------
Total
distributions... (0.48) (0.50) (0.53) (0.62) (0.63) (0.62) (0.56) (0.55)
-------- -------- -------- -------- -------- -------- -------- ---------
Net asset value,
end of period.... $ 10.67 $ 10.62 $ 10.74 $ 10.27 $ 10.07 $ 9.89 $ 9.69 $ 9.88
========== ========== ========== ========== ========== ========== ========== =========
Total return(a).... 5.17% 3.47% 10.01% 8.39% 8.39% 8.66% 3.85% 4.46%
========== ========== ========== ========== ========== ========== ========== =========
Ratios/supplemental
data:
Net assets, end
of period (000s
omitted)....... $ 82,355 $ 99,757 $ 70,120 $ 38,773 $ 6,184 $ 5,231 $ 4,413 $ 5,594
========== ========== ========== ========== ========== ========== ========== =========
Ratio of expenses
to average net
assets......... 0.59%(b) 0.61%(c) 0.38%(c) 0.02%(d) 0.50%(d) 0.50%(d) 0.53%(d)(e) 0.50%(d)(e)
========== ========== ========== ========== ========== ========== ========== =========
Ratio of net
investment
income to
average net
assets......... 4.65%(b) 4.37%(c) 5.00%(c) 5.78%(d) 6.29%(d) 6.27%(d) 6.74%(d)(e) 5.86%(d)(e)
========== ========== ========== ========== ========== ========== ========== =========
Portfolio
turnover
rate........... 75% 26% 29% 15% 0% 12% 31% 80%
========== ========== ========== ========== ========== ========== ========== =========
</TABLE>
- ---------------
* On October 15, 1993 the Fund redomesticated from a portfolio of another
Maryland corporation to a portfolio of the Company.
(a) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(b) Ratios are based on average net assets of $94,663,178.
(c) After waiver of advisory fees.
(d) After waiver of advisory fees and expense reimbursements.
(e) Annualized.
5
<PAGE> 9
- --------------------------------------------------------------------------------
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT*
Shown below are the condensed financial highlights for the year ended March
31, 1995, the three months ended March 31, 1994 and the year ended December 31,
1993, which have been audited by KPMG Peat Marwick LLP, independent auditors,
whose reports thereon were unqualified. The information presented for the period
October 3, 1989 (date operations commenced) through December 31, 1989, and the
three-year period ended December 31, 1992 was derived from financial statements
audited by Price Waterhouse LLP, independent accountants, whose reports thereon
were also unqualified.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------------- ------------------------------------------------------
1995 1994 1993 1992(a) 1991 1990 1989
------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........... $ 10.69 $ 11.29 $ 10.65 $ 10.52 $ 10.07 $ 10.19 $10.00
Income from investment operations:
Net investment income........................ 0.56 0.15 0.60 0.66 0.69 0.67 0.14
Net gains (losses) on securities (both
realized and unrealized)................... 0.04 (0.61) 0.65 0.17 0.50 (0.10) 0.16
------- ------- ------- ------- ------- ------- ------
Total from investment operations............. 0.60 (0.46) 1.25 0.83 1.19 0.57 0.30
------- ------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment
income..................................... (0.57) (0.14) (0.60) (0.66) (0.69) (0.69) (0.11)
Distributions from net realized capital
gains...................................... -- -- (0.01) (0.04) (0.05) -- --
Returns of capital........................... (0.01) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------
Total distributions.......................... (0.58) (0.14) (0.61) (0.70) (0.74) (0.69) (0.11)
------- ------- ------- ------- ------- ------- ------
Net asset value, end of period................. $ 10.71 $ 10.69 $ 11.29 $ 10.65 $ 10.52 $ 10.07 $10.19
======== ======== ======== ======== ======== ======== =======
Total return(b)................................ 5.78% (4.06)% 11.99% 8.22% 12.23% 5.88% 3.06%
======== ======== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............................. $38,289 $42,361 $46,224 $33,110 $27,298 $16,685 $6,556
======== ======== ======== ======== ======== ======== =======
Ratio of expenses to average net
assets(c).................................. 0.55%(d) 0.50%(e) 0.34% 0.25% 0.25% 0.25% 0.25%(e)
======== ======== ======== ======== ======== ======== =======
Ratio of net investment income to average net
assets(c).................................. 5.37%(d) 5.32%(e) 5.42% 6.25% 6.73% 6.82% 6.21%(e)
======== ======== ======== ======== ======== ======== =======
Portfolio turnover rate...................... 7% 2% 5% 43% 43% 57% 63%
======== ======== ======== ======== ======== ======== =======
</TABLE>
- ---------------
* On October 15, 1993 the Fund redomesticated from a portfolio of a
Massachusetts business trust to a portfolio of the Company.
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(c) After waiver of advisory fees and expense reimbursements. Ratios of expenses
to average net assets prior to waiver of advisory fees and expense
reimbursements were 1.13%, 1.23% (annualized), 1.30%, 1.12%, 1.26%, 1.33%
and 1.99% (annualized) for the period 1995-1989, respectively. Ratios of net
investment income to average net assets prior to waiver of advisory fees and
expense reimbursements were 4.79%, 4.59% (annualized), 4.45%, 5.38%, 5.72%,
5.74% and 4.48% (annualized) for the period 1995-1989, respectively.
(d) Ratios are based on average daily net assets of $39,082,578.
(e) Annualized.
- --------------------------------------------------------------------------------
PERFORMANCE
The performance of each Fund may be quoted in advertising in terms of yield
or total return. Both types of performance are based on historical results and
are not intended to indicate future performance. All advertisements for each
Fund will disclose the maximum sales charge imposed on purchases of that Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge, such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Funds. Further information regarding each Fund's
performance is contained in that Fund's annual report to shareholders, which is
available upon request and without charge.
A Fund's total return shows its overall change in value, including changes
in share price and assuming all the Fund's dividends and capital gain
distributions are reinvested. A cumulative total return reflects the performance
of a Fund over a stated period of time. An average annual total return reflects
the hypothetical annually compounded return that would have produced the same
cumulative
6
<PAGE> 10
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN A FUND'S RETURNS,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-
YEAR RESULTS. To illustrate the components of overall performance, a Fund may
separate its cumulative and average annual returns into income results and
capital gain or loss.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield reflects investment
income net of expenses over the relevant period attributable to a Fund share,
expressed as an annualized percentage of the maximum offering price per share
for AIM TAX-FREE INTERMEDIATE SHARES and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, and net asset value per share for AIM TAX-EXEMPT CASH FUND.
Yield is a function of the type and quality of a Fund's investments, the
maturity of the securities held in a Fund's portfolio and the operating expense
ratio of the Fund. A shareholder's investment in a Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in a Fund. A tax-equivalent yield is calculated in the same
manner as the standard yield with an adjustment for a stated, assumed tax rate.
The Funds may also demonstrate the effect of such tax-equivalent adjustments
generally by comparing various yield levels with their corresponding
tax-equivalent yields, given a stated tax rate.
From time to time and in its discretion, AIM may waive all or a portion of
its advisory fees and/or assume certain expenses of any Fund. Such a practice
will have the effect of increasing the Fund's yield and total return.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
AIM TAX-EXEMPT CASH FUND
AIM TAX-EXEMPT CASH FUND's investment objective is to earn the highest
level of current income free from federal income taxes that is consistent with
safety of principal and liquidity. The Fund's policy is to invest at least 80%
of its net assets in securities which are exempt from federal income taxes. This
objective will not be changed without the approval of a majority of the Fund's
outstanding shares (within the meaning of the Investment Company Act of 1940
(the "1940 Act")). There can be no assurance that the Fund will attain its
objective. As used in this Prospectus and the Statement of Additional
Information, interest which is "tax-exempt" or "exempt from federal income
taxes" means interest on municipal securities which is excluded from gross
income for federal income tax purposes, and which does not give rise to federal
alternative minimum tax liability.
The Fund may invest up to 20% of its net assets in money market instruments
that may be subject to federal taxes. Such taxable instruments may include,
without limitation, repurchase agreements, bankers' acceptances and commercial
paper. Money market instruments in which the Fund may invest will be "Eligible
Securities" as defined in Rule 2a-7 under the 1940 Act, as such Rule may be
amended from time to time. The securities in which the Fund invests may include
but shall not be limited to the following:
MUNICIPAL SECURITIES. "Municipal Securities" can be broadly classified as
follows: (a) "general obligation" bonds, debentures and notes, which are secured
as to payment of principal and interest by a state or local government's pledge
of its full faith, credit and taxing power and (b) "revenue" bonds, debentures
and notes, which are payable only from the revenues derived from a particular
facility or class of facilities, from the proceeds of a special excise tax or
from some other specifically identified revenue source. Municipal Securities,
such as those listed below, include short-term obligations issued or guaranteed
by any state, territory or possession of the United States, or by the District
of Columbia, or by any political subdivision, agency, municipality or
instrumentality thereof.
BOND ANTICIPATION NOTES usually are general obligations of state and local
governmental issuers which are sold to obtain interim financing for projects
that will eventually be funded through the sale of long-term debt obligations or
bonds.
TAX ANTICIPATION NOTES are issued by state and local governments to finance
the current operations of such governments. Repayment is generally to be derived
from specific future tax revenues. Tax anticipation notes are usually general
obligations of the issuer.
REVENUE ANTICIPATION NOTES are issued by governments or governmental bodies
with the expectation that future revenues from a designated source will be used
to repay the notes. In general, they also constitute general obligations of the
issuer.
TAX-EXEMPT COMMERCIAL PAPER (MUNICIPAL PAPER) is identical to taxable
commercial paper, except that tax-exempt commercial paper is issued by states,
municipalities and their agencies.
VARIABLE OR FLOATING RATE INSTRUMENTS are Municipal Securities which have
variable or floating interest rates which readjust periodically. Such
readjustment may be based either upon a predetermined standard, such as a bank
prime rate or the U.S. Treasury bill rate, or upon prevailing market conditions.
Variable or floating interest rates generally reduce changes in the market price
of Municipal Securities from their original purchase price. Accordingly, as
interest rates decrease or increase, the potential for capital appreciation or
depreciation is less for variable or floating rate Municipal Securities than for
fixed income securities. Many variable or floating rate securities are subject
to redemption or repurchase at par, plus accrued interest, upon demand by the
Fund (frequently
7
<PAGE> 11
upon no more than seven days' notice). The terms of such demand instruments
require payment of principal and accrued interest from the issuer or a
guarantor. Frequently such obligations are secured by letters of credit or other
credit support arrangements provided by financial institutions. For a further
discussion of such instruments, see the Statement of Additional Information.
QUALITY STANDARDS. AIM TAX-EXEMPT CASH FUND will limit its investments to
those securities which at the date of purchase are "Eligible Securities" as
defined in Rule 2a-7, as such Rule may be amended from time to time. The United
States Securities and Exchange Commission ("SEC") has proposed certain changes
to Rule 2a-7. While the proposed changes may have a prospective impact on
investments held by the Fund, the Fund anticipates no difficulty in complying
with any proposed change if adopted by the SEC. Generally, "Eligible Securities"
are securities that are rated in one of the two highest rating categories by two
nationally recognized statistical rating organizations ("NRSROs"), or if rated
only by one NRSRO, are rated in one of the two highest rating categories by that
NRSRO, or if unrated, are determined by AIM (under the supervision of and
pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets such quality standards. For a
complete definition of "Eligible Security" see the Statement of Additional
Information.
MATURITIES. AIM TAX-EXEMPT CASH FUND will attempt to maintain a constant
net asset value per share of $1.00 and, to this end, values its assets by the
amortized cost method and rounds the per share net asset value of its shares in
compliance with applicable rules and regulations. Accordingly, the Fund invests
only in securities having remaining maturities of 397 days or less and maintains
a dollar weighted average portfolio maturity of 90 days or less. The maturity of
a security held by the Fund is determined in compliance with applicable rules
and regulations. Certain securities bearing interest at rates that are adjusted
prior to the stated maturity of the instrument or that are subject to redemption
or repurchase agreements are deemed to have maturities shorter than their stated
maturities.
SYNTHETIC MUNICIPAL INSTRUMENTS. AIM believes that certain synthetic
municipal instruments provide opportunities for mutual funds to invest in high
credit quality securities providing attractive returns, even in market
conditions where the supply of short-term tax-exempt instruments may be limited.
Synthetic municipal instruments (sometimes referred to as "derivative municipal
instruments") are securities the value of and return on which are derived from
underlying securities. Synthetic municipal instruments comprise a large
percentage of tax-exempt securities eligible for purchase by tax-exempt money
market funds. The types of synthetic municipal instruments in which AIM
TAX-EXEMPT CASH FUND may invest involve the deposit into a trust or custodial
account of one or more long-term tax-exempt bonds or notes ("Underlying Bonds"),
and the sale of certificates evidencing interests in the trust or custodial
account to investors such as the Fund. The trustee or custodian 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. Synthetic municipal instruments typically are created by a
bank, broker-dealer or other financial institution ("Sponsor"). Typically, a
portion of the interest paid on the Underlying Bonds which exceeds the interest
paid to the certificate holders is paid to the Sponsor or other investors. For
further information regarding specific types of synthetic municipal instruments
in which the Fund may invest see the Statement of Additional Information.
All such instruments must meet the minimum quality standards required for
the Fund's investments and must present minimal credit risks. In selecting
synthetic municipal instruments for the Fund, AIM considers the
creditworthiness of the issuer of the Underlying Bond, the Sponsor and the
party providing certificate holders with a conditional right to sell (put)
their certificates at stated times and prices. Typically, a certificate holder
cannot exercise its put upon the occurrence of certain conditions, such as
where the issuer of the Underlying Bond defaults on interest payments.
Moreover, because synthetic municipal instruments involve a trust or custodial
account 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.
The tax-exempt character of the interest paid to certificate holders is
based on the assumption that the holders have an ownership interest in the
Underlying Bonds; however, the Internal Revenue Service has not issued a ruling
addressing this issue. In the event the Internal Revenue Service issues an
adverse ruling or successfully litigates this issue, it is possible that the
interest paid to the Fund on certain synthetic municipal instruments would be
deemed to be taxable. The Fund relies on opinions of counsel on this ownership
question and opinions of bond counsel regarding the tax-exempt character of
interest paid on the Underlying Bonds.
WHEN-ISSUED OR DELAYED DELIVERY SECURITIES. AIM TAX-EXEMPT CASH FUND may
purchase securities on a "when-issued" basis, that is, delivery of and payment
for the securities is not fixed at the date of purchase but is set after the
securities are issued (normally within forty-five days after the date of the
transaction), and may purchase or sell securities on a delayed delivery basis.
The payment obligation and the interest rate that will be received on the
securities are fixed at the time the buyer enters into the commitment. The Fund
will only make commitments to purchase when-issued or delayed delivery
securities with the intention of actually acquiring such securities, but may
sell these securities before the settlement date if it is deemed advisable. No
more than 25% of the Fund's net assets may be committed to when-issued or
delayed delivery securities.
Investments in when-issued or delayed delivery securities may increase the
Fund's exposure to market fluctuations and may increase the possibility that the
Fund will incur short-term gains subject to federal taxation or short-term
losses if the Fund engages in portfolio transactions in order to honor a
when-issued or delayed delivery commitment. In a delayed delivery transaction,
the Fund relies on the other party to complete the transaction. If the
transaction is not completed, the Fund may miss a price or yield considered to
be advantageous. The Fund will employ techniques designed to reduce such risks.
8
<PAGE> 12
If the Fund purchases a when-issued or delayed delivery security, it will
direct its custodian bank to segregate cash or other high grade securities
(including temporary investments and Municipal Securities) in an amount equal to
the when-issued or delayed delivery commitment. If the market value of such
segregated securities declines, additional cash or securities will be segregated
on a daily basis so that the market value of the segregated cash or securities
will equal the amount of the Fund's when-issued or delayed delivery commitments.
To the extent assets of the Fund are segregated, they will not be available for
new investments or to meet redemptions.
For a more complete description of when-issued and delayed delivery
securities, see the Statement of Additional Information.
PARTICIPATION INTERESTS AND MUNICIPAL LEASES. The Fund may purchase
participation interests or custodial receipts from financial institutions. These
participation interests give the purchaser an undivided interest in one or more
underlying Municipal Securities. The Fund may also invest in municipal leases
and participation interests therein. Such obligations, which may take the form
of a lease or an installment sales contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities. Interest payments on qualifying municipal leases are exempt from
federal income taxes.
OTHER CONSIDERATIONS. The ability of the Fund to attain its investment
objective depends on the continuing ability of the issuers or guarantors of
Municipal Securities held by the Fund to meet their obligations for the payment
of interest and principal when due. The securities in which the Fund invests may
not yield as high a level of current income as longer term or lower grade
securities, which generally have less liquidity and greater fluctuation in
value.
The investment policies and standards stated above are not fundamental
policies of the Fund and may be changed by the Board of Directors without
shareholder approval. Shareholders will be notified before any material change
in the foregoing investment policies becomes effective.
INTERMEDIATE PORTFOLIO
The investment objective of the INTERMEDIATE PORTFOLIO is to generate as
high a level of tax-exempt income as is consistent with preservation of capital
by investing in high quality, intermediate-term Municipal Securities having a
maturity of ten and one-half years or less. No assurance can be given that the
Fund's investment objective will be achieved.
MUNICIPAL SECURITIES. Municipal Securities which are considered appropriate
for investment by the Fund (provided that the interest paid thereon, in the
opinion of bond counsel, is exempt from federal income taxes) include debt
obligations issued to obtain funds for various public purposes, including the
construction of a wide range of public facilities, the refunding of outstanding
obligations, the obtaining of funds for general operating expenses and the
lending of such funds to other public institutions and facilities. Certain types
of industrial development bonds issued by or on behalf of public authorities to
obtain funds to provide for the construction, equipment, repair or improvement
of privately operated facilities ("private activity bonds") also are considered
appropriate for investment by the Fund. The Fund will seek to avoid the purchase
of those private activity bonds the interest on which could give rise to an
alternative minimum tax liability for shareholders under the Internal Revenue
Code of 1986, as amended (the "Code"). See "Dividends, Distributions and Tax
Matters" herein and the Statement of Additional Information.
VARIABLE OR FLOATING RATE INSTRUMENTS. The Fund may invest in Municipal
Securities which have variable or floating interest rates. All variable or
floating rate instruments must meet the quality standards of the Fund. AIM will
monitor the pricing, quality and liquidity of the variable or floating rate
Municipal Securities held by the Fund. For additional information regarding such
instruments see "AIM TAX-EXEMPT CASH FUND -- Variable or Floating Rate
Instruments" above and the Statement of Additional Information.
QUALITY STANDARDS. The following quality standards apply at the time a
security is purchased. Information concerning the ratings criteria of Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), and
Fitch Investors Service, Inc. ("Fitch") appears in Appendix A to this Prospectus
and/or in the Statement of Additional Information.
The INTERMEDIATE PORTFOLIO may purchase Municipal Securities which meet any
of the following quality criteria:
(a) They are rated within the three highest ratings for municipal
obligations by Moody's (Aaa, Aa or A) or S&P (AAA, AA or A), or have
received a comparable rating from another NRSRO; or
(b) They are rated within the two highest ratings for short-term
municipal obligations by Moody's (MIG 1/VMIG 1/P-1 or MIG 2/VMIG 2/P-2), or
S&P (SP-1/A-1 or SP-2/A-2), or have received a comparable rating from
another NRSRO; or
(c) They are guaranteed as to payment of principal and interest by the
U.S. Government; or
(d) They are fully collateralized by an escrow of U.S. Government or
other high quality securities; or
(e) They are not rated, if other Municipal Securities of the same
issuer are rated A or better by Moody's or S&P, or have received a
comparable rating from another NRSRO; or
(f) They are not rated, but are determined by AIM to be of comparable
quality to the rated obligations in which the Fund may invest.
9
<PAGE> 13
MATURITIES. The Fund may invest only in Municipal Securities which have
maturities of ten and one-half years or less, and will maintain a dollar
weighted average maturity of seven and one-half years or less. For purposes of
this limitation, the maturity of an instrument will be considered to be the
earlier of:
(a) the stated maturity of the instrument; or
(b) the date, if any, on which the issuer has agreed to redeem or
purchase the instrument; or
(c) in the case of a variable rate instrument, the next date on which
the coupon rate is to be adjusted.
WHEN-ISSUED OR DELAYED DELIVERY SECURITIES. The Fund may purchase Municipal
Securities on a when-issued or delayed delivery basis, but no more than 25% of
the Fund's net assets may be committed to such investments. For further
information regarding such investments see "AIM TAX-EXEMPT CASH FUND --
When-Issued or Delayed Delivery Securities" above and the Statement of
Additional Information.
PARTICIPATION INTERESTS AND MUNICIPAL LEASES. The Fund may purchase
participation interests or custodial receipts from financial institutions. These
participation interests give the purchaser an undivided interest in one or more
underlying Municipal Securities. The Fund may also invest in municipal leases
and participation interests therein. Such obligations, which may take the form
of a lease or an installment sales contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities. Interest payments on qualifying municipal leases are exempt from
federal income taxes.
TEMPORARY INVESTMENTS. The Fund may from time to time on a temporary basis
or for defensive purposes, make certain investments which may result in taxable
ordinary income; however, the Fund intends to minimize taxable income through
investment, when possible, in short-term tax-exempt securities. Short-term
taxable investments may include obligations of the U.S. Government, its agencies
or instrumentalities, and repurchase agreements (instruments under which the
seller agrees to repurchase the security at a specified time and price) relating
thereto; commercial paper rated within the highest rating category by a NRSRO;
and certificates of deposit of domestic banks with assets of $1.5 billion or
more as of the date of their most recently published financial statements.
It is a fundamental policy of the Fund to invest its assets so that at
least 80% of the Fund's assets will be invested in securities that generate
interest that is exempt from federal income taxes. The Fund will seek to avoid
the purchase of "private activity bonds" the interest on which could give rise
to an alternative minimum tax liability for individuals and other noncorporate
shareholders.
PORTFOLIO TURNOVER. Ordinarily, the Fund does not purchase securities with
the intention of engaging in short-term trading. However, any particular
security will be sold, and the proceeds reinvested, whenever such action is
deemed prudent from the view-point of the Fund's investment objective,
regardless of the holding period of that security. Also, to the extent that
higher portfolio turnover results in a higher rate of net realized capital gains
to the Fund, the portion of the Fund's distributions constituting taxable
capital gain may increase. It is expected that total portfolio turnover in any
year will be less than 100%. See "Dividends, Distributions and Tax Matters."
OTHER CONSIDERATIONS. The ability of the Fund to achieve its investment
objective depends upon the continuing ability of the issuers or guarantors of
Municipal Securities held by the Fund to meet their obligations for the payment
of interest and principal when due. The securities in which the Fund invests may
not yield as high a level of current income as longer term or lower grade
securities, which generally have less liquidity and greater fluctuation in
value. The net asset value of shares of the Fund will generally vary inversely
with changes in prevailing interest rates.
Unless otherwise noted, the investment policies and standards stated above
are not fundamental policies of the Fund and may be changed by the Board of
Directors without shareholder approval. Shareholders will be notified before any
material change in the foregoing investment policies becomes effective.
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT's investment objective is to earn a
high level of current income free from federal taxes and Connecticut taxes by
investing at least 80% of its net assets in municipal bonds and other Municipal
Securities. This objective is a fundamental policy and will not be changed
without the approval of a majority of the Fund's outstanding shares (within the
meaning of the 1940 Act). There can be no assurance that the Fund will attain
its objective.
MUNICIPAL SECURITIES. To achieve its objective, the Fund intends to invest
up to 100% of its assets, and no less than 80% of its net assets, in municipal
bonds and other Municipal Securities issued by the State of Connecticut and
authorities, agencies, instrumentalities and political subdivisions of the State
of Connecticut, or other entities, the interest from which, in the opinion of
bond counsel for the issuer, is exempt from federal income taxes (including the
alternative minimum tax) and from Connecticut income taxes. The Fund will
maintain at least 65% of its assets in municipal bonds. This 65% figure
represents a minimum level of investment; the actual level of investment will,
of course, fluctuate in accordance with AIM's assessment of market conditions.
For temporary defensive purposes, the Fund may invest up to 35% of its net
assets in municipal bond obligations and in other Municipal Securities issued by
or on behalf of states (including the State of Connecticut) territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies, authorities and instrumentalities which are
free from federal income taxes but are subject to Connecticut income taxes, and
up to 20% of its net assets in money market instruments that may not be exempt
from federal income
10
<PAGE> 14
taxes. See "Tax Matters" in the Statement of Additional Information for a
further discussion of federal and Connecticut tax considerations. The net asset
value of shares of the Fund can be expected to rise when market interest rates
decline and to fall when market interest rates rise.
The Fund may invest in high quality, taxable short-term money market
instruments such as certificates of deposit, commercial paper, bankers'
acceptances, short-term U.S. Government obligations, repurchase agreements and
reverse repurchase agreements, pending investment in portfolio securities or to
meet anticipated short-term cash needs such as dividend payments or redemptions
of shares. Such investments generally will have maturities of 60 days or less
and normally will be held to maturity.
Municipal bonds include debt obligations issued to obtain funds for various
public purposes, including the construction of public facilities, the refunding
of outstanding obligations, the obtaining of funds for general operating
expenses and the providing of loans to public institutions and facilities. The
principal and interest payments on industrial development bonds or pollution
control bonds are often the sole responsibility of the industrial user and
therefore may not be backed by the taxing power of the issuing municipality.
Such obligations are included within the term municipal bonds if the interest
paid thereon qualifies as exempt from federal income tax, although such interest
may be subject to the alternative minimum tax.
VARIABLE OR FLOATING RATE INSTRUMENTS. The Fund may invest in Municipal
Securities which have variable or floating interest rates. All variable or
floating rate instruments must meet the quality standards of the Fund. AIM will
monitor the pricing, quality and liquidity of the variable or floating rate
Municipal Securities held by the Fund. For further information regarding such
instruments see "AIM TAX-EXEMPT CASH FUND -- Variable or Floating Rate
Instruments" above and the Statement of Additional Information.
QUALITY STANDARDS. At least 80% of the municipal bonds purchased by the
Fund will be rated within the four highest rating categories, or will be
obligations of issuers having an issue of outstanding municipal bonds rated
within the four highest rating categories, of any NRSRO. A description of
municipal bond ratings is contained in the Statement of Additional Information.
The Fund will maintain less than 35% of its net assets in bonds and other
Municipal Securities rated below Baa/BBB by Moody's or S&P, respectively, or a
comparable rating of any other NRSRO. During the last fiscal year, the Fund did
not invest in any such securities, and the Fund expects to invest less than 5%
of its net assets in such securities during the current fiscal year. See
Appendix A to this Prospectus and the Statement of Additional Information for
information regarding bond rating categories. Up to 20% of the Fund's net assets
may be invested in unrated municipal bonds and other Municipal Securities if in
the judgment of AIM, after considering available information as to the
creditworthiness of the issuer and its ability to meet its future debt
obligations, such investments are similar in quality to those bonds and other
Municipal Securities rated within the four highest NRSRO rating categories
mentioned above.
Securities held by the Fund that are rated below Baa/BBB by Moody's or S&P,
respectively, may be subject to certain risk factors to which other securities
are not subject to the same degree. An economic downturn tends to disrupt the
market for high yield bonds and adversely affect their values. Such an economic
downturn may be expected to result in increased price volatility of high yield
bonds and an increase in issuers' defaults on such bonds.
Also, many issuers of high yield bonds are substantially leveraged, which
may impair their ability to meet their obligations. In some cases, the
securities in which the Fund invests are subordinated to the prior payment of
senior indebtedness, thus potentially limiting the Fund's ability to recover
full principal or to receive payments when senior securities are in default.
The credit rating of a security does not necessarily address its market
value risk. Also, ratings may from time to time be changed to reflect
developments in the issuer's financial condition. Securities held by the Fund
may have speculative characteristics which are apt to increase in number and
significance with each lower rating category.
When the secondary market for high yield bonds becomes increasingly
illiquid, or in the absence of readily available market quotations for such
bonds, the relative lack of reliable, objective data makes the responsibility of
the Board of Directors to value the Fund's securities more difficult, and
judgment plays a greater role in the valuation of portfolio securities. Also,
increased illiquidity of the high yield bond market may affect the Fund's
ability to dispose of portfolio securities at a desirable price.
In addition, if the Fund experiences unexpected net redemptions, it could
be forced to sell its high yield bonds without regard to their investment
merits, thereby decreasing the asset base upon which the Fund's expenses can be
spread and possibly reducing the Fund's rate of return. Also, prices of high
yield bonds have been found to be less sensitive to interest rate changes and
more sensitive to adverse economic changes and individual issuer developments
than are more highly rated instruments.
WHEN-ISSUED OR DELAYED DELIVERY SECURITIES. The Fund may purchase
securities on a when-issued or delayed delivery basis. For further information
regarding such securities see "AIM TAX-EXEMPT CASH FUND -- When-Issued or
Delayed Delivery Securities" above and the Statement of Additional Information.
PARTICIPATION INTERESTS AND MUNICIPAL LEASES. The Fund may purchase
participation interests or custodial receipts from financial institutions. These
participation interests give the purchaser an undivided interest in one or more
underlying Municipal Securities. The Fund may also invest in municipal leases
and participation interests therein. Such obligations, which may take the form
of a lease or an installment sales contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities. Interest payments on qualifying municipal leases are exempt from
federal income taxes.
11
<PAGE> 15
RISK FACTORS IN CONCENTRATING IN CONNECTICUT MUNICIPAL OBLIGATIONS. Since
the Fund invests primarily in obligations of the State of Connecticut, the
marketability and market value of these obligations may be affected by the
regional economy, certain Connecticut constitutional amendments, legislative
measures, executive orders, administrative regulations and voter initiatives.
The ability of the Fund to achieve its objective is affected by the ability of
municipal issuers to meet their payment obligations. Problems which may arise in
the foregoing areas and which are not resolved could adversely affect the
various Connecticut issuers' abilities to meet their financial obligations.
INTEREST RATE FUTURES CONTRACTS AND RELATED OPTIONS. The Fund may purchase
and sell interest rate futures contracts or purchase options thereon to hedge
its portfolio against changes in interest rates. An interest rate futures
contract is an agreement between two parties to buy and sell a debt security for
a set price on a future date. The Fund will only enter into interest rate
futures contracts or purchase related options thereon for the purpose of hedging
securities in its portfolio or the value of securities which the Fund intends to
purchase. Generally, the Fund may elect to close a position in a futures
contract by taking an opposite position which will operate to terminate the
Fund's position in the future contract. See the Statement of Additional
Information for a description of interest rate futures contracts and options on
futures contracts, including certain related risks.
The Fund will not purchase or sell futures contracts or purchase related
options thereon, if immediately thereafter the sum of the amount of margin
deposits and premiums on open positions with respect to futures contracts and
related options would exceed 5% of the market value of the Fund's total assets.
The Fund will not hedge more than 20% of its assets at one time.
PORTFOLIO TURNOVER. Ordinarily, the Fund does not purchase securities with
the intention of engaging in short-term trading. However, any particular
security will be sold, and the proceeds reinvested, whenever such action is
deemed prudent in light of the Fund's investment objective, regardless of the
holding period of that security. A higher rate of portfolio turnover may result
in higher transaction costs. Also, to the extent that higher portfolio turnover
results in a higher rate of net realized capital gains to the Fund, the portion
of the Fund's distributions constituting taxable capital gain may increase. It
is expected that total portfolio turnover in any year will be less than 100%.
See "Dividends, Distributions and Tax Matters."
Unless otherwise noted, the investment policies and standards stated above
are not fundamental policies of the Fund and may be changed by the Board of
Directors without shareholder approval. Shareholders will be notified before any
material change in the foregoing investment policies becomes effective.
INVESTMENT RESTRICTIONS
Each of the Funds' investment programs is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. The most significant of these restrictions are set forth
below, and other investment restrictions are set forth in the Statement of
Additional Information. In addition to the restrictions described herein, AIM
TAX-EXEMPT CASH FUND must comply with the requirements of Rule 2a-7 under the
1940 Act which may be more restrictive. Pursuant to these restrictions:
(1) Neither AIM TAX-EXEMPT CASH FUND nor the INTERMEDIATE PORTFOLIO
will, with respect to 75% of its total assets, purchase the securities of
any issuer if such purchase would cause more than 5% of the value of its
total assets to be invested in the securities of such issuer (except
securities issued, guaranteed or sponsored by the U.S. Government or its
agencies and instrumentalities and, with respect to AIM TAX-EXEMPT CASH
FUND, except as permitted by Rule 2a-7, as amended from time to time).
(2) The Funds will not borrow money or issue senior securities except
for temporary or emergency purposes, except that the Funds may enter into
reverse repurchase agreements and may purchase when-issued securities
(consistent with their respective investment policies and objectives), and
except that AIM TAX-EXEMPT BOND FUND OF CONNECTICUT may enter into
financial futures contracts and it may borrow from banks provided that no
borrowing exceeds one-third of the value of its total assets. The Funds
will not purchase securities while borrowings in excess of 5% of their
respective total assets are outstanding and, in addition, AIM TAX-EXEMPT
CASH FUND will not borrow money if such borrowing will exceed the borrowing
limits established by the Securities and Exchange Commission (the "SEC")
for money market funds, as amended from time to time.
(3) The INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT will not invest more than 15% of the value of their respective
net assets in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days. AIM TAX-EXEMPT CASH FUND will
not invest more than 10% of its net assets in such securities.
Restrictions (1) and (2) above are matters of fundamental policy and may
not be changed without shareholder approval. Restriction (3) above is a
non-fundamental policy which may be changed by the Board of Directors. For
additional investment restrictions applicable to the Funds see the Statement of
Additional Information.
12
<PAGE> 16
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Funds is vested
in the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Company, on behalf of the Funds, and persons
or companies furnishing services to the Funds, including the investment advisory
agreement and administrative services agreement with AIM, the agreement with AIM
Distributors regarding distribution of each Fund's shares, the agreement with
State Street Bank and Trust Company as the custodian and the agreement with AFS
as transfer agent. The day-to-day operations of each Fund are delegated to the
officers of the Company and to AIM, subject always to the objective and policies
of the applicable Fund and to the general supervision of the Board of Directors.
Certain directors and officers of the Company are affiliated with AIM and A I M
Management Group Inc. ("AIM Management"), the parent corporation of AIM. AIM
Management is a holding company engaged in the financial service business.
Information concerning the Board of Directors may be found in the Statement of
Additional Information.
INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046, serves as the investment advisor to each Fund pursuant to
a Master Investment Advisory Agreement, dated as of October 18, 1993 (the
"Advisory Agreement"). AIM was organized in 1976 and, together with its
affiliates, manages or advises 37 investment company portfolios. As of July 1,
1995, the total assets of such investment company portfolios were approximately
$32.5 billion.
Under the terms of the Advisory Agreement, AIM supervises all aspects of
each Fund's operations and provides investment advisory services to the Funds.
AIM obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Funds. The Advisory
Agreement also provides that, upon the request of the Board of Directors, AIM
may perform or arrange for certain accounting, shareholder servicing and other
administrative services for the Funds which are not required to be performed by
AIM under the Advisory Agreement. The Board of Directors has made such a
request. As a result, AIM and the Company have entered into a Master
Administrative Services Agreement, dated as of October 18, 1993 (the
"Administrative Services Agreement"), pursuant to which AIM is entitled to
receive from each Fund reimbursement of its costs or such reasonable
compensation as may be approved by the Board of Directors. Currently, AIM is
reimbursed for the services of the Funds' principal financial officer and his
staff, and any expenses related to such services. In addition, A I M Fund
Services Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046, a
wholly-owned subsidiary of AIM and a registered transfer agent, receives a fee
pursuant to a Transfer Agency and Service Agreement for its provision of
transfer agency, dividend distribution and disbursement, and shareholder
services to the Funds.
In accordance with policies established by the directors, AIM may take into
account sales of shares of the Funds and other funds advised by AIM in selecting
broker-dealers to effect portfolio transactions on behalf of the Funds. See the
Statement of Additional Information under the caption "Portfolio Transactions."
PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Funds. AIM's investment staff consists of 91 individuals. While
individual members of AIM's investment staff are assigned primary responsibility
for the day-to-day management of each of AIM's accounts, all accounts are
reviewed on a regular basis by AIM's Investment Policy Committee to ensure that
they are being invested in accordance with the accounts' and AIM's investment
policies. The individuals on the investment team primarily responsible for the
day-to-day management of AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and the
INTERMEDIATE PORTFOLIO are Richard A. Berry and Stephen D. Turman. Mr. Berry is
Vice President of A I M Capital Management, Inc. ("AIM Capital"), and has been
responsible for AIM TAX-EXEMPT BOND FUND OF CONNECTICUT since 1992 and for the
INTERMEDIATE PORTFOLIO since 1987. Mr. Berry has been associated with AIM since
1987, and has a total of 27 years of experience as an investment professional.
Mr. Turman is Vice President of AIM Capital, and has been responsible for AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT since 1992 and for the INTERMEDIATE
PORTFOLIO since 1988. Mr. Turman has been associated with AIM since 1985 and has
a total of 12 years of experience as an investment professional.
FEES AND EXPENSES. For the year ended March 31, 1995, AIM TAX-EXEMPT CASH
FUND paid 0.35% of its average daily net assets to AIM for its advisory
services, and its total expenses for the same period, stated as a percentage of
average daily net assets, were 1.01%. For the year ended March 31, 1995, the
INTERMEDIATE PORTFOLIO paid 0.30% of its average daily net assets to AIM for its
advisory services, and its total expenses for the same period, stated as a
percentage of its average daily net assets were 0.59%. For the year ended March
31, 1995, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT paid no advisory fees to AIM,
and its total expenses for the same period, stated as a percentage of its
average daily net assets, were 0.55%.
For the year ended March 31, 1995, AIM TAX-EXEMPT CASH FUND paid 0.13% of
its average daily net assets to AIM as reimbursement for administrative
services. For the year ended March 31, 1995, the INTERMEDIATE PORTFOLIO paid
0.05% of its average daily net assets to AIM as reimbursement for administrative
services. For the year ended March 31, 1995, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT paid 0.12% of its average daily net assets to AIM as reimbursement
for administrative services.
FEE WAIVERS. In order to increase the yield to investors, AIM may from time
to time voluntarily waive or reduce its fee, while retaining its ability to be
reimbursed for such fee prior to the end of each fiscal year. Fee waivers or
reductions, other than those which may be set forth in the Advisory Agreement,
may be rescinded at any time without notice to investors.
13
<PAGE> 17
For the year ended March 31, 1995, AIM voluntarily waived its entire
advisory fee from AIM TAX-EXEMPT BOND FUND OF CONNECTICUT. Had it not waived
such fee, the advisory fee would have been 0.50% of that Fund's average daily
net assets for this period.
DISTRIBUTOR. The Company has entered into a Master Distribution Agreement,
dated October 18, 1993, relating to the Funds (the "Distribution Agreement")
with A I M Distributors, Inc. ("AIM Distributors"), a registered broker-dealer
and a wholly-owned subsidiary of AIM, to act as the distributor of the Funds'
shares. The address of AIM Distributors is P.O. Box 4739, Houston, Texas
77210-4739. Certain directors and officers of the Company are affiliated with
AIM Distributors. The Distribution Agreement provides AIM Distributors with the
exclusive right to distribute shares of the Funds through affiliated
broker-dealers and through other broker-dealers with whom AIM Distributors has
entered into selected dealer agreements.
DISTRIBUTION PLAN. The Company has adopted a Master Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to AIM TAX-EXEMPT
CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT. The Company has not
adopted such a plan with respect to the INTERMEDIATE PORTFOLIO. Under the Plan,
AIM TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT each pays
compensation of 0.25% per annum of its respective average daily net assets to
AIM Distributors for the purpose of financing any activity which is primarily
intended to result in the sale of shares of each respective Fund. The Plan is
designed to compensate AIM Distributors for certain promotional and other
sales-related costs, and to implement an incentive program which provides for
periodic payments to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
shares of such Funds. Under the Plan, AIM Distributors may in its discretion
from time to time agree to waive voluntarily all or any portion of its fee,
while retaining its ability to be reimbursed for such fee prior to the end of
the fiscal year. Currently, AIM Distributors has voluntarily elected to waive a
portion of its compensation payable by AIM TAX-EXEMPT CASH FUND such that the
compensation paid pursuant to the Plan equals 0.10% per annum of that Fund's
average daily net assets. This waiver may be rescinded by AIM Distributors at
any time and without further notice to investors.
Activities that may be financed under the Plan include, but are not limited
to, the following: printing of prospectuses and statements of additional
information and reports for other than existing shareholders, overhead,
preparation and distribution of advertising material and sales literature,
supplemental payments to dealers and other institutions such as asset-based
sales charges or as payments of service fees under shareholder service
arrangements and the cost of administering the Plan. Amounts payable by AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT under the Plan
need not be directly related to the expenses actually incurred by AIM
Distributors on behalf of each Fund. Thus, even if AIM Distributors' actual
expenses exceed the fee payable to AIM Distributors thereunder at any given
time, such Funds will not be obligated to pay more than that fee, and, if AIM
Distributors' expenses are less than the fee it receives, AIM Distributors will
retain the full amount of the fee.
The Plan may be terminated at any time by a vote of a majority of those
directors who are not "interested persons" of the Company or by a vote of the
holders of a majority of the outstanding shares of AIM TAX-EXEMPT CASH FUND or
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
Certain financial institutions which have entered into service agreements
and which sell shares of AIM TAX-EXEMPT CASH FUND and/or AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT on an agency basis, may receive payments from those Funds
pursuant to the Plan. AIM Distributors does not act as principal, but rather as
agent, for those Funds in making such payments. The Funds will obtain a
representation from such financial institutions that they will either be
licensed as dealers as required under applicable state law, or that they will
not engage in activities which would constitute acting as a "dealer" as defined
under applicable state law.
Payments pursuant to the Plan are subject to any applicable limitations
imposed by rules of the National Association of Securities Dealers, Inc.
("NASD"). The Plan conforms to rules of the NASD by limiting payments made to
dealers and other financial institutions who provide continuing personal
shareholder services to their customers who purchase and own shares of AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT to no more than
0.25% per annum of the average daily net assets of each Fund attributable to the
customers of such dealers or financial institutions, and by imposing a cap on
the total sales charges, including asset-based sales charges, that may be paid
by each Fund. As a result of AIM Distributors' waiver of compensation due from
AIM TAX-EXEMPT CASH FUND, payments to dealers and other financial institutions
by that Fund will be limited to 0.10% of that Fund's average daily net assets.
For additional information concerning the operation of the Plan see the
Statement of Additional Information.
14
<PAGE> 18
- --------------------------------------------------------------------------------
ORGANIZATION OF THE COMPANY
The Company was incorporated in Maryland on May 4, 1993. Shares of common
stock of the Company are currently divided into three portfolios, AIM TAX-EXEMPT
CASH FUND, the INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT. The INTERMEDIATE PORTFOLIO currently has one class, AIM TAX-FREE
INTERMEDIATE SHARES. All shares of the Company have equal rights with respect to
voting, except that the holders of shares of a particular Fund will have the
exclusive right to vote on matters (such as advisory fees) pertaining solely to
that Fund. In the event of dissolution or liquidation, holders of each Fund's
shares will receive pro rata, subject to the rights of creditors, (a) the
proceeds of the sale of the assets held in the respective Fund to which such
shares relate, less (b) the liabilities of the Company attributable to the
respective Fund or allocated between the Funds based on the respective
liquidation values of each such Fund.
There are no preemptive or conversion rights applicable to any of the
Company's shares, and such shares, when issued, are fully paid and
non-assessable.
Under Maryland law and the Company's By-laws, the Company need not hold an
annual meeting of shareholders unless a meeting is otherwise required under the
1940 Act to elect directors. Shareholders may remove directors from office, and
a meeting of shareholders may be called at the request of the holders of 10% or
more of the Company's outstanding shares.
15
<PAGE> 19
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 5:30 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS(R)
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS(R)
THE AIM FAMILY OF FUNDS(R) consists of the following mutual funds:
<TABLE>
<S> <C>
AIM AGGRESSIVE GROWTH FUND AIM INCOME FUND+
AIM BALANCED FUND+ AIM INTERNATIONAL EQUITY FUND+
AIM CHARTER FUND+ AIM LIMITED MATURITY TREASURY SHARES
AIM CONSTELLATION FUND AIM MONEY MARKET FUND*+
AIM GOVERNMENT SECURITIES FUND+ AIM MUNICIPAL BOND FUND+
AIM GLOBAL AGGRESSIVE GROWTH AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
FUND+ AIM TAX-EXEMPT CASH FUND*
AIM GLOBAL GROWTH FUND+ AIM TAX-FREE INTERMEDIATE SHARES
AIM GLOBAL INCOME FUND+ AIM VALUE FUND+
AIM GLOBAL UTILITIES FUND+ AIM WEINGARTEN FUND+
AIM GROWTH FUND+
AIM HIGH YIELD FUND+
</TABLE>
* Shares of AIM TAX-EXEMPT CASH FUND, and Class C Shares of AIM MONEY MARKET
FUND, are offered to investors at net asset value, without payment of a sales
charge, as described below.
+ Shares of different classes of these funds, including the Class A and Class B
Shares of AIM MONEY MARKET FUND, are offered to investors at different sales
charges pursuant to a Multiple Distribution System. For more information
consult the prospectus of any of these funds.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY
REVIEW THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER
THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds(R) ("AIM Funds"), an investor must submit a fully completed New
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or
Form W-9 (certifying exempt status) accompanying the registration information
will be subject to backup withholding. See the Account Application for
applicable Internal Revenue Service penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for a spousal IRA account is $250. There are no minimum initial
investment requirements applicable to money-purchase/profit-sharing plans,
401(k) plans, IRA/SEP, 403(b) plans or 457 (state deferred compensation) plans
(except that the minimum initial investment for salary deferrals for such plans
is $25), or for investment of dividends and distributions of any of the AIM
Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at one of the following telephone numbers:
(713) 626-1919 Extension 5224 (in Houston)
(800) 959-4246 (elsewhere)
Shares of any AIM Funds not named on the cover of this Prospectus are
offered pursuant to separate prospectuses. Copies of other prospectuses may be
obtained by calling (713) 626-1919, Extension 5001 (in Houston) or (800)
347-4246 (elsewhere).
HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
RET 07/95
A-1
<PAGE> 20
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS, as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number
and the name of the Fund being purchased. The remittance slip from a
confirmation statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or
his dealer should call AFS' Client Services Department at (800) 959-4246 prior
to sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
Texas Commerce Bank
ABA 113000609
Attn: AIM Wire Purchase
DDA 00100366807
Fund Name/Reference Number
Shareholder Name
Shareholder Account Number
If wires are received after 4:15 p.m. Eastern Time or during a bank
holiday, purchases will be confirmed at the price determined on the next
business day of the applicable AIM Fund.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds may be purchased at their respective net asset
value plus a sales charge as indicated below, except that shares of AIM
TAX-EXEMPT CASH FUND and Class C Shares of AIM MONEY MARKET FUND (the "No Load
Funds") are sold without a sales charge. For information on purchasing any of
the AIM Funds and to receive a prospectus, please call (713) 626-1919, Extension
5001 (in Houston) or (800) 347-4246 (elsewhere). As described below, the sales
charge otherwise applicable to a purchase of shares of a fund may be reduced if
certain conditions are met. In order to take advantage of a reduced sales
charge, the prospective investor or his dealer must advise AIM Distributors that
the conditions for obtaining a reduced sales charge have been met. Net asset
value is determined in the manner described under the caption "Determination of
Net Asset Value." The following tables show the sales charge and dealer
concession at various investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM AGGRESSIVE GROWTH FUND,
AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH
FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and
AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
--------------------------------------------- --------------------
AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ----------------------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. Purchases of $1,000,000 or more are at net asset value, subject to
a contingent deferred sales charge of 1% if shares are redeemed prior to 18
months from the end of the calendar month of the date of purchase, as described
under the caption "How to Redeem Shares -- Contingent Deferred Sales Charge
Program for Large Purchases."
RET 07/95
A-2
<PAGE> 21
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are AIM TAX-EXEMPT BOND FUND OF CONNECTICUT; and the Class A
shares of each of AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GOVERNMENT SECURITIES FUND, AIM
HIGH YIELD FUND, AIM INCOME FUND and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION> DEALER
CONCESSION
INVESTOR'S SALES CHARGE -------------------
--------------------------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ----------------------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. Purchases of $1,000,000 or more are at net asset value, subject to
a contingent deferred sales charge of 1% if shares are redeemed prior to 18
months from the end of the calendar month of the date of purchase, as described
under the caption "How to Redeem Shares -- Contingent Deferred Sales Charge
Program for Large Purchases."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE
INTERMEDIATE SHARES.
<TABLE>
<CAPTION> DEALER
INVESTOR'S SALES CHARGE CONCESSION
--------------------------------------------- -------------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE PUBLIC OF THE NET OF THE PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ----------------------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
sales charge to dealers for all sales with respect to which orders are placed
with AIM Distributors during a particular period. Dealers to whom substantially
the entire sales charge is re-allowed may be deemed to be "underwriters" as that
term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are
dealers of record for purchases of $1 million or more which are subject to a
contingent deferred sales charge for all AIM Funds other than AIM LIMITED
MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE SHARES as follows: 1% of
the first $2 million of such purchases, plus 0.80% of the next $1 million of
such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25%
of amounts in excess of $20 million of such purchases.
RET 07/95
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<PAGE> 22
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than the Money Market Funds, as described below) received by dealers
prior to 4:15 p.m. Eastern Time on any business day of an AIM Fund and either
received by AIM Distributors in its Houston, Texas office prior to 5:00 p.m.
Central Time on that day or transmitted by dealers to the Transfer Agent through
the facilities of the National Securities Clearing Corporation ("NSCC") by 7:00
p.m. Eastern Time on that day, will be confirmed at the price determined as of
the close of that day. Orders received by dealers after 4:15 p.m. Eastern Time
will be confirmed at the price determined on the next business day of the AIM
Fund. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis to AIM Distributors or to the Transfer Agent
through the facilities of NSCC. Any loss resulting from the dealer's failure to
submit an order within the prescribed time frame will be borne by that dealer.
Please see "How to Purchase Shares -- Purchases by Wire" for information on
obtaining a reference number for wire orders, which will facilitate the handling
of such orders and ensure prompt credit to an investor's account. A "business
day" of an AIM Fund is any day on which the New York Stock Exchange is open for
business, except for AIM LIMITED MATURITY TREASURY SHARES, for which a "business
day" is any day on which either the New York Stock Exchange or such fund's
custodian bank is open for business. It is expected that the New York Stock
Exchange will be closed during the next twelve months on Saturdays and Sundays
and on the days on which New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day are
observed by the New York Stock Exchange.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MONEY MARKET FUNDS. Shares of AIM MONEY
MARKET FUND or AIM TAX-EXEMPT CASH FUND (the "Money Market Funds") are purchased
or exchanged at the net asset value next determined after acceptance of an order
for purchase or exchange in proper form, except for Class A shares of AIM MONEY
MARKET FUND, which are sold with a sales charge. Net asset value is normally
determined at 12:00 noon and 4:15 p.m. Eastern Time on each business day of AIM
MONEY MARKET FUND and at 4:15 p.m. Eastern Time on each business day of AIM
TAX-EXEMPT CASH FUND. Because each Money Market Fund uses the amortized cost
method of valuing the securities it holds and rounds its per share net asset
value to the nearest whole cent, it is anticipated that the net asset value of
the shares of such funds will remain constant at $1.00 per share. However, there
is no assurance that either Money Market Fund can maintain a $1.00 net asset
value per share. In order to earn dividends with respect to AIM MONEY MARKET
FUND on the same day that a purchase is made, purchase payments in the form of
federal funds must be received by the Transfer Agent before 12:00 noon Eastern
Time on that day. See "How to Purchase Shares -- Purchases by Wire." Purchases
made by payments in any other form, or payments in the form of federal funds
received after such time, will begin to earn dividends on the next business day
following the date of purchase. The Money Market Funds generally will not issue
share certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise such shares will be held on the shareholder's behalf by the applicable
AIM Fund(s) and be recorded on the books of such fund(s). See "Exchange
Privilege -- Exchanges by Telephone" and "How to Redeem Shares -- Redemptions by
Telephone" for restrictions applicable to shares issued in certificate form.
Please note that certificates will not be issued for shares held in prototype
retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds (except for
the No Load Funds, which are sold without payment of a sales charge) provided
that such purchases are made by a "purchaser" as hereinafter defined.
The term "purchaser" means:
- an individual and his or her spouse and minor children, including any
trust established exclusively for the benefit of any such person; or a
pension, profit-sharing, or other benefit plan established exclusively
for the benefit of any such person, such as an Individual Retirement
Account (IRA), a single-participant money-purchase/profit-sharing plan or
an individual participant in a 403(b) Plan (unless such 403(b) plan
qualifies as the purchaser as defined below);
RET 07/95
A-4
<PAGE> 23
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of
the Code, a Simplified Employee Pension (SEP), Salary Reduction and other
Elective Simplified Employee Pension Accounts ("SARSEP")) and 457 plans,
although more than one beneficiary or participant is involved;
- any other organized group of persons, whether incorporated or not,
provided the organization has been in existence for at least six months
and has some purpose other than the purchase at a discount of redeemable
securities of a registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. or A I M
Capital Management, Inc.
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for (i) the No
Load Funds and (ii) Class B Shares of funds offered pursuant to a Multiple
Distribution System) within the following 13 consecutive months. By marking the
LOI section on the account application and by signing the account application,
the purchaser indicates that he understands and agrees to the terms of the LOI
and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gains distributions will not be applied to the LOI. At any time during the
13-month period after meeting the original obligation, a purchaser may revise
his intended investment amount upward by submitting a written and signed
request. Such a revision will not change the original expiration date. By
signing an LOI, a purchaser is not making a binding commitment to purchase
additional shares, but if purchases made within the 13-month period do not total
the amount specified, the investor will pay the increased amount of sales charge
as described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the
initial purchase (or subsequent purchases if necessary) the Transfer Agent will
escrow in the form of shares an appropriate dollar amount (computed to the
nearest full share). All dividends and any capital gain distributions on the
escrowed shares will be credited to the purchaser. All shares purchased,
including those escrowed, will be registered in the purchaser's name. If the
total investment specified under this LOI is completed within the 13-month
period, the escrowed shares will be promptly released. If the intended
investment is not completed, the purchaser will pay the Transfer Agent the
difference between the sales charge on the specified amount and the amount
actually purchased. If the purchaser does not pay such difference within 20 days
of the expiration date, he irrevocably constitutes and appoints the Transfer
Agent as his attorney to surrender for redemption any or all escrowed shares, to
make up such difference within 60 days of the expiration date. Full shares and
any cash proceeds for a fractional share remaining after such redemption will be
released from escrow.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) the No Load Funds
and (ii) Class B Shares
RET 07/95
A-5
<PAGE> 24
of funds offered pursuant to a Multiple Distribution System) at the time of
the proposed purchase. Rights of Accumulation are also available to holders of
the Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) the No Load Funds and (ii) Class B Shares of funds offered
pursuant to a Multiple Distribution System) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AIM Distributors
with a list of the account numbers and the names in which such accounts of the
purchaser are registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds
at net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) AIM Management and
its affiliated companies; (b) any current or retired officer, director, trustee
or employee, or any member of the immediate family (including spouse, minor
children, parents and parents of spouse) of any such person, of AIM Management
or its affiliates or of certain mutual funds which are advised or managed by
AIM, or any trust established exclusively for the benefit of such persons; (c)
any employee benefit plan established for employees of AIM Management or its
affiliates; (d) any current or retired officer, director, trustee or employee,
or any member of the immediate family (including spouse, minor children, parents
and parents of spouse) of any such person, or of CIGNA Corporation or of any of
its affiliated companies, or of The Shareholders Services Group, Inc., a
wholly-owned subsidiary of First Data Corporation; (e) any investment company
sponsored by CIGNA Investments, Inc. or any of its affiliated companies for the
benefit of its directors' deferred compensation plans; (f) discretionary advised
clients of AIM or AIM Capital; (g) registered representatives and employees of
dealers who have entered into agreements with AIM Distributors (or financial
institutions that have arrangements with such dealers with respect to the sale
of shares of the AIM Funds) and any member of the immediate family (including
spouse, minor children, parents and parents of spouse) of any such person,
provided that purchases at net asset value are permitted by the policies of such
person's employer; and (h) certain broker-dealers, investment advisers or bank
trust departments that provide asset allocation or similar specialized
investment services to their customers, that charge a minimum annual fee for
such services, and that have entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the initial amount invested in
the fund(s) is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, or
(3) such shares are purchased by an employer-sponsored plan with at least 100
eligible employees. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms up to 1.00% of the net asset value of any shares of the Load
Funds, up to 0.10% of the net asset value of any shares of AIM LIMITED MATURITY
TREASURY SHARES, and up to 0.25% of the net asset value of any shares of all
other AIM Funds sold at net asset value to an employee benefit plan in
accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors
of AIM Equity Funds, Inc. Unit holders of such trusts may elect to invest
cash distributions from such trusts in Class A shares of AIM WEINGARTEN FUND
or AIM CONSTELLATION FUND at net asset value, including: (a) distributions
of any dividend
RET 07/95
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<PAGE> 25
income or other income received by such trusts; (b) distributions of any net
capital gains received in respect of Class A shares of AIM WEINGARTEN FUND or
AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such
trusts, a unit holder may invest the proceeds from the redemption or repurchase
of his units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND
at net asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AIM Distributors at the address
provided under "How to Purchase Shares," or by calling the Client Services
Department of AIM Distributors at the phone numbers provided under "How to
Purchase Shares." IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder can arrange for monthly, quarterly or annual checks in any amount
(but not less than $50) to be drawn against the balance of his account in the
designated AIM Fund. Payment of this amount is normally made on or about the
tenth or the twenty-fifth day of each month in which a payment is to be made. A
minimum account balance of $5,000 is required to establish a Systematic
Withdrawal Plan, but there is no requirement thereafter to maintain any minimum
investment.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested in shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events.
Since such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares, it
is disadvantageous to effect such purchases while a Systematic Withdrawal Plan
is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly
investments may establish an Automatic Investment Plan. Under this plan, on or
about the tenth and/or the twenty-fifth day of each month, a draft is drawn on
the shareholder's bank account in the amount specified by the shareholder
(minimum $50 per investment, per account). The proceeds of the draft are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the draft. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an
account balance in the dividend paying fund of at least $10,000; (b) the
account must be held in the name of the shareholder (i.e., the account may
not be held in nomi-
RET 07/95
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<PAGE> 26
nee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an
authorization form available from AIM Distributors. An AIM Fund will waive the
$10,000 minimum account value requirement if the shareholder has an account
in the fund selected to receive the dividends and distributions with a value
of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds. The account from which exchanges are to be made must have a value of
at least $5,000 when a shareholder elects to begin this program, and the
exchange minimum is $50 per transaction. All of the accounts that are part of
this program must have identical registrations. The net asset value of shares
purchased under this program may vary, and may be more or less advantageous than
if shares were not exchanged automatically. There is no charge for entering the
Dollar Cost Averaging program, and exchanges made pursuant to this program are
not subject to an exchange fee. Sales charges may apply, as described under the
caption "Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype
retirement plans available to corporations, individuals and employees of
non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; Individual Retirement Account
("IRA") plans; and Simplified Employee Pension ("SEP") plans (collectively,
"retirement accounts"). Information concerning these plans, including the
custodian's fees and the forms necessary to adopt such plans, can be obtained by
calling or writing the AIM Funds or AIM Distributors. Shares of the AIM Funds
are also available for investment through existing 401(k) plans (for both
individuals and employers) adopted under the Code. The plan custodian currently
imposes an annual $10 maintenance fee with respect to each retirement account
for which it serves as the custodian. This fee is generally charged in December.
Each AIM Fund and/or the custodian reserve the right to change this maintenance
fee and to initiate an establishment fee (not to exceed its cost).
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, referred to herein as the "Load Funds," are sold at a public offering
price that includes a maximum sales charge of 5.50% or 4.75% of the public
offering price of such shares; shares of certain of the AIM Funds, referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and shares of certain other funds, referred to herein as the "No Load
Funds," are sold at net asset value, without payment of a sales charge. In the
event shares of any AIM Fund sold at net asset value are subject to a contingent
deferred sales charge of 1% for 18 months from the end of the calendar month of
the date of purchase, and subsequently are exchanged for shares of any other AIM
Fund, the 18-month period shall be computed from the end of the calendar month
of the date of the first purchase subject to this charge. See "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM AGGRESSIVE GROWTH AIM HIGH YIELD AIM LIMITED MATURITY TREASURY
FUND -- CLASS A FUND -- CLASS A SHARES
AIM BALANCED FUND -- CLASS A AIM INCOME FUND -- CLASS A AIM TAX-FREE INTERMEDIATE SHARES
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM CONSTELLATION FUND -- FUND -- CLASS A NO LOAD FUNDS:
CLASS A AIM MONEY MARKET
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A AIM MONEY MARKET FUND -- CLASS C
FUND -- CLASS A AIM MUNICIPAL BOND AIM TAX-EXEMPT CASH FUND
AIM GLOBAL GROWTH FUND -- FUND -- CLASS A
CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL INCOME FUND -- OF CONNECTICUT
CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- AIM WEINGARTEN FUND --
CLASS A CLASS A
AIM GOVERNMENT SECURITIES
FUND -- CLASS A
AIM GROWTH FUND -- CLASS A
(Table continued on following page)
</TABLE>
RET 07/95
A-8
<PAGE> 27
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
LOWER LOAD NO LOAD
FROM: TO: LOAD FUNDS FUNDS FUNDS
- -------------------- --------------------------------------------- ----------------- -------------
<S> <C> <C> <C>
Load Funds.......... Net Asset Value Net Asset Value Net Asset
Value
Lower Load Funds.... Net Asset Value if shares were held for at Net Asset Value Net Asset
least 30 days; or if shares were acquired Value
upon exchange of any Load Fund; or if shares
were acquired upon exchange from any Lower
Load Fund and such shares were held for at
least 30 days. (No exchange privilege is
available for the first 30 days following the
purchase of the Lower Load Fund shares.)
No Load Funds....... Offering Price if No Load shares were Net Asset Value Net Asset
directly purchased. Net Asset Value if No if No Load shares Value
Load shares were acquired upon exchange of were acquired
shares of any Load Fund or any Lower Load upon exchange of
Fund; Net Asset Value if No Load shares were shares of any
acquired upon exchange of Lower Load Fund Load Fund or any
shares and were held at least 30 days Lower Load Fund;
following the purchase of the Lower Load Fund otherwise,
shares. (No exchange privilege is available Offering Price.
for the first 30 days following the
acquisition of the Lower Load Fund shares.)
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
LOWER LOAD NO LOAD
FROM: TO: LOAD FUNDS FUNDS FUNDS
- -------------------- --------------------------------------------- ----------------- -------------
<S> <C> <C> <C>
Load Funds.......... Net Asset Value Net Asset Value Net Asset
Value
Lower Load Funds.... Net Asset Value if shares were acquired upon Net Asset Value Net Asset
exchange of any Load Fund. Otherwise, Value
difference in sales charge will apply.
No Load Funds....... Offering Price if No Load shares were Net Asset Value Net Asset
directly purchased. Net Asset Value if No if No Load shares Value
Load shares were acquired upon exchange of were acquired
shares of any Load Fund. Difference in sales upon exchange of
charge will apply if No Load shares were shares of any
acquired upon exchange of Lower Load shares. Load Fund or any
Lower Load Fund;
otherwise,
Offering Price.
</TABLE>
An exchange is permitted only in the following circumstances: (a) the
dollar amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the fund acquired through such exchange; (b) the
shares of the fund acquired through exchange must be qualified for sale in the
state in which the shareholder resides; (c) the exchange must be made between
accounts having identical registrations and addresses; (d) the full amount of
the purchase price for the shares being exchanged must have already been
received by the fund; (e) the account from which shares have been exchanged must
be coded as having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign status) or Form
W-9 (certifying exempt status) must have been received by the fund; (f) newly
acquired shares (through either an initial or subsequent investment) are held in
an account for at least ten days, and all other shares are held in an account
for at least one day, prior to the exchange; (g) certificates representing
shares must be returned before shares can be exchanged; and (h) if the fund
offers more than one class of shares, the exchange must be between the same
class of shares.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
There is no fee for exchanges among the AIM Funds. A service fee of $5 per
transaction will, however, be charged by AIM Distributors on accounts of market
timing investment firms to help to defray the costs of maintaining an automated
exchange service. This service fee will be charged against the market timing
account from which shares are being exchanged.
RET 07/95
A-9
<PAGE> 28
Shares to be exchanged are redeemed at their net asset value as determined
at the close of business on the day that an exchange request in proper form
(described below) is received by AFS in its Houston, Texas office, provided that
such request is received prior to 4:15 p.m. Eastern Time. Exchange requests
received after this time will result in the redemption of shares at their net
asset value as determined at the close of business on the next business day.
Normally, shares of an AIM Fund to be acquired by exchange are purchased at
their net asset value or applicable offering price, as the case may be,
determined on the date that such request is received by AIM Distributors, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (see "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AIM Distributors. The request should contain the account
registration and account number, the dollar amount or number of shares to be
exchanged, and the names of the funds from which and into which the exchange is
to be made. The request should comply with all of the requirements for
redemption by mail, except those required for redemption of IRAs. See "How to
Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AIM Distributors at the appropriate telephone
number indicated under the caption "How to Purchase Shares." If a shareholder is
unable to reach AIM Distributors by telephone, he may also request exchanges by
telegraph or use overnight courier services to expedite exchanges by mail, which
will be effective on the business day received by the applicable fund(s) as long
as such request is received prior to 4:15 p.m. Eastern Time. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone exchange request that they reasonably believe to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions. Procedures for verification of telephone transactions
may include recordings of telephone transactions (maintained for six months),
requests for confirmation of the shareholder's Social Security number and
current address, and mailings of confirmations promptly after the transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors
or through any dealer who has entered into an agreement with AIM Distributors.
In addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. A contingent
deferred sales charge of 1% applies to purchases of $1,000,000 or more that are
redeemed within 18 months of the end of the calendar month of the date of
purchase. For a description of the AIM Funds participating in this program, see
"Terms and Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer
Concessions." This charge will be 1% of the lesser of the value of the shares
redeemed (excluding reinvested dividends and capital gain distributions) or the
total original cost of such shares. No such charge will be imposed upon
exchanges unless the shares acquired by exchange are redeemed within 18 months
of the end of the calendar month in which the shares were purchased. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvestment of
dividends and capital gains distributions and amounts representing increases
from capital appreciation), and then other shares are redeemed in the order of
purchase. The charge will be waived in the following circumstances:
(1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under
Section 403(b) of the Code and sponsored by nonprofit organizations as
defined under Section 501(c)(3) of the Code, where (a) the initial amount
invested by a Plan in one or more of the AIM Funds is at least $1,000,000,
(b) the sponsor of a Plan signs a letter of intent to invest at least
$1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100
eligible employees; provided, however, that Plans
RET 07/95
A-10
<PAGE> 29
created under Section 403(b) of the Code which are sponsored by public
educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the
AIM Funds, and not on the aggregate investment made by the Plan or on the
number of eligible employees;
(2) redemptions of shares following the registered shareholder's (or
in the case of joint accounts, all registered joint owners') death or
disability, as defined in Section 72(m)(7) of the Code; and
(3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at
least $1,000,000.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to
either the Transfer Agent or AIM Distributors. Upon receipt of a redemption
request in proper form, payment will be made as soon as practicable, but in any
event will normally be made within seven days after receipt. However, in the
event of a redemption of shares purchased by check, the investor may be required
to wait up to ten business days before the redemption proceeds are sent. See
"Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish an IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares: (a) a
statement as to whether or not the shareholder has attained age 59 1/2; and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or wired to the
pre-authorized bank account as indicated on the account application; (b) there
has been no change of address of record on the account within the preceding 30
days; (c) the shares to be redeemed are not in certificate form; (d) the person
requesting the redemption can provide proper identification information; and (e)
the proceeds of the redemption do not exceed $50,000. Accounts in AIM
Distributors' prototype retirement plans (such as IRA and IRA-SEP) or 403(b)
plans are not eligible for the telephone redemption option. AIM Distributors has
made arrangements with certain dealers and investment advisors to accept
telephone instructions for the redemption of shares. AIM Distributors reserves
the right to impose conditions on these dealers and investment advisors,
including the condition that they enter into agreements (which contain
additional conditions with respect to the redemption of shares) with AIM
Distributors. The Transfer Agent and AIM Distributors will not be liable for any
loss, expense or cost arising out of any telephone redemption request effected
in accordance with the authorization set forth at that item of the account
application if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security number and current address,
and mailings of confirmations promptly after the transaction. The telephone
redemption privilege is not available on accounts where the address has been
changed within 30 days prior to a redemption. The redemption proceeds will not
be mailed or wired except to the address of record or bank of record.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to 4:15 p.m. Eastern Time, the redemption will be made at the net asset
value determined at 4:15 p.m. Eastern Time and payment will be generally
transmitted on the next business day.
REDEMPTIONS BY CHECK (NO LOAD FUNDS). After completing the appropriate
authorization form, shareholders may use checks to effect redemptions from the
No Load Funds. Checks may be drawn in any amount of $250 or more. This privilege
does not apply to retirement accounts or qualified plans. Checks drawn against
insufficient shares in the account, against shares held less than ten days, or
in amounts of less than the applicable minimum will be returned to the payee.
The payee of the check may cash or deposit it in the same way as an ordinary
bank check. When a check is presented to the Transfer Agent for payment, the
Transfer Agent will cause a sufficient number of shares of such fund to be
redeemed to cover the amount of the check. Shareholders are entitled to
dividends on the shares redeemed through the day on which the check is presented
to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
are redeemed at their net asset value next computed after a request for
redemption in proper form (including signature guarantees and other required
documentation for written redemptions) is received by the Transfer Agent or AIM
Distributors, except that shares which are subject to a contingent deferred
sales charge program for large purchases described above may be subject to the
imposition of deferred sales charges that will be deducted from the redemption
proceeds. See "Contingent Deferred Sales Charge Program for Large Purchases."
Orders for the redemption of shares received in proper form by dealers prior to
4:15 p.m. Eastern Time on any business day of an AIM Fund and either received
by
RET 07/95
A-11
<PAGE> 30
AIM Distributors in its Houston, Texas office prior to 5:00 p.m. Central Time
on that day or transmitted by dealers to the Transfer Agent through the
facilities of NSCC by 7:00 p.m. Eastern Time on that day, will be confirmed at
the price determined as of the close of that day. Orders received by dealers
after 4:15 p.m. Eastern Time will be confirmed at the price determined on the
next business day of an AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to AIM Distributors or
to the Transfer Agent through the facilities of NSCC. Any resulting loss from
the dealer's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer. Telephone redemption requests must be
made by 4:15 p.m. Eastern Time on any business day of an AIM Fund and will be
confirmed at the price determined as of the close of that day. No AIM Fund will
accept requests which specify a particular date for redemption or which specify
any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Timing of Purchase
Orders." A charge for special handling (such as wiring of funds or expedited
delivery services) may be made by the Transfer Agent. The right of redemption
may not be suspended or the date of payment upon redemption postponed except
under unusual circumstances such as when trading on the New York Stock Exchange
is restricted or suspended. Payment of the proceeds of redemptions relating to
shares for which checks sent in payment have not yet cleared will be delayed
until it is determined that the check has cleared, which may take up to ten
business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions,
national securities exchanges, savings associations and any other organization,
provided that such institution or organization qualifies as an "eligible
guarantor institution" as that term is defined in rules adopted by the
Securities and Exchange Commission, and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the New York Stock Exchange Medallion
Signature Program, provided that in either event, the amount of the transaction
involved does not exceed the surety coverage amount indicated on the medallion.
For information regarding whether a particular institution or organization
qualifies as an "eligible guarantor institution," an investor should contact the
Client Services Department of AIM Distributors.
REINSTATEMENT PRIVILEGE. Within 90 days of a redemption, a shareholder may
invest all or part of the redemption proceeds in shares of the AIM Fund from
which the redemption was made, at the net asset value next computed after
receipt by AIM Distributors of the funds to be reinvested. The shareholder must
ask AIM Distributors for such privilege at the time of reinvestment. A realized
gain on the redemption is taxable, and reinvestment will not alter any capital
gains payable. If there has been a loss on the redemption, all of the loss may
not be tax deductible, depending on the timing and amount reinvested. Under the
Code, if the redemption proceeds of fund shares on which a sales charge was paid
are reinvested in (or exchanged for) shares of the same fund within 90 days of
the payment of the sales charge, the shareholder's basis in the fund shares
redeemed may not include the amount of the sales charge paid, thereby reducing
the loss or increasing the gain recognized from the redemption. Each AIM Fund
may amend, suspend or cease offering this privilege at any time as to shares
redeemed after the date of such amendment, suspension or cessation. This
privilege may only be exercised once each year by a shareholder with respect to
each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of shares of any AIM Fund, and who subsequently
reinvest a portion or all of the value of the redeemed shares in shares of the
same AIM Fund within 90 days after such redemption may do so at net asset value
if such privilege is claimed at the time of reinvestment. Such reinvested
proceeds will not be subject to either a front-end sales charge at the time of
reinvestment or an additional contingent deferred sales charge upon subsequent
redemption. In order to exercise this reinvestment privilege, the shareholder
must notify AIM Distributors of his or her intent to do so at the time of
reinvestment.
RET 07/95
A-12
<PAGE> 31
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:15 p.m. Eastern Time (12:00 noon and 4:15 p.m. Eastern Time
with respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the New York Stock Exchange (the "NYSE"),
closes early (i.e., before 4:00 p.m. Eastern Time) on a particular day, the net
asset value of an AIM Fund's share will be determined 15 minutes following the
close of the NYSE on such day. The net asset value per share is calculated by
subtracting a fund's liabilities from its assets and dividing the result by the
total number of fund shares outstanding. The determination of each fund's net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, a fund's liabilities include accrued expenses and
dividends payable, and its total assets include portfolio securities valued at
their market value, as well as income accrued but not yet received. Securities
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under the supervision of the fund's officers
and in accordance with methods which are specifically authorized by its
governing Board of Directors or Trustees. Short-term obligations with maturities
of 60 days or less, and the securities held by the Money Market Funds, are
valued at amortized cost as reflecting fair value. AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE SHARES value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the New York Stock Exchange. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the times at
which the values of the securities are determined and the close of the NYSE
which will not be reflected in the computation of an AIM Fund's net asset value.
If events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as determined
in good faith by or under the supervision of the Board of Directors or Trustees
of the applicable AIM Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------- ----------------------- --------------- ---------------
<S> <C> <C> <C>
AIM AGGRESSIVE GROWTH FUND............ declared and paid annually annually
annually
AIM BALANCED FUND..................... declared and paid quarterly annually
quarterly
AIM CHARTER FUND...................... declared and paid annually annually
quarterly
AIM CONSTELLATION FUND................ declared and paid annually annually
annually
AIM GLOBAL AGGRESSIVE GROWTH FUND..... declared and paid annually annually
annually
AIM GLOBAL GROWTH FUND................ declared and paid annually annually
annually
AIM GLOBAL INCOME FUND................ declared daily; paid annually annually
monthly
AIM GLOBAL UTILITIES FUND............. declared daily; paid annually annually
monthly
AIM GOVERNMENT SECURITIES FUND........ declared daily; paid annually annually
monthly
AIM GROWTH FUND....................... declared and paid annually annually
annually
AIM HIGH YIELD FUND................... declared daily; paid annually annually
monthly
AIM INCOME FUND....................... declared daily; paid annually annually
monthly
AIM INTERNATIONAL EQUITY FUND......... declared and paid annually annually
annually
AIM LIMITED MATURITY TREASURY
SHARES.............................. declared daily; paid quarterly annually
monthly
AIM MONEY MARKET FUND................. declared daily; paid at least annually
monthly annually
AIM MUNICIPAL BOND FUND............... declared daily; paid annually annually
monthly
AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT......................... declared daily; paid annually annually
monthly
AIM TAX-EXEMPT CASH FUND.............. declared daily; paid at least annually
monthly annually
AIM TAX-FREE INTERMEDIATE SHARES...... declared daily; paid annually annually
monthly
AIM VALUE FUND........................ declared and paid annually annually
annually
AIM WEINGARTEN FUND................... declared and paid annually annually
annually
</TABLE>
RET 07/95
A-13
<PAGE> 32
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment. For
funds that do not declare a dividend daily, such dividends and distributions
will be reinvested at the net asset value per share determined on the
ex-dividend date. For funds that declare a dividend daily, such dividends and
distributions will be reinvested at the net asset value per share determined on
the payable date. Shareholders may elect, by written notice to AIM Distributors,
to receive such distributions, or the dividend portion thereof, in cash, or to
invest such dividends and distributions in shares of another fund in the AIM
Funds. Investors who have not previously selected such a reinvestment option on
the account application form may contact AIM Distributors at any time to obtain
a form to authorize such reinvestments in another AIM Fund. Such reinvestments
into the AIM Funds are not subject to sales charges, and shares so purchased are
automatically credited to the account of the shareholder.
Changes in the form of dividend and distribution payments may be made by
the shareholder at any time by notice to AIM Distributors and are effective as
to any subsequent payment if such notice is received by AIM Distributors prior
to the record date of such payment. Any dividend and distribution election
remains in effect until AIM Distributors receives a revised written election by
the shareholder.
Any dividend or distribution paid by a fund which does not declare
dividends daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified or intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gain net income that are distributed to
shareholders. Each fund, for purposes of determining taxable income,
distribution requirements and other requirements of Subchapter M, is treated as
a separate corporation. Therefore, no fund may offset its gains against another
fund's losses and each fund must individually comply with all of the provisions
of the Code which are applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a non-
deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE
FUND SHARES (the "Tax-Exempt Funds") which are exempt from federal tax.
Dividends paid by a fund (other than capital gain distributions) may qualify for
the federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM
GOVERNMENT SECURITIES FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY SHARES, AIM MONEY
MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT,
AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE SHARES will qualify for
this dividends received deduction. Shortly after the end of each year,
shareholders will receive information regarding the amount and federal income
tax treatment of all distributions paid during the year.
For each redemption of a fund's shares by a non-exempt shareholder, the
fund or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals,
foreign partnerships and foreign corporations may be subject to federal income
tax withholding at a 30% rate on income dividends and distributions (other than
exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
Certain states exempt from state income taxes dividends paid by mutual
funds out of interest on U.S. Treasury and certain other U.S. Government
obligations, and investors should consult with their own tax advisors concerning
the availability of such exemption.
RET 07/95
A-14
<PAGE> 33
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and other taxable securities. For additional
information concerning the alternative minimum tax and certain collateral tax
consequences of the receipt of exempt-interest dividends, see the Statements of
Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable,
but will endeavor to avoid investments which would result in taxable dividends.
The percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually and will be applied uniformly to all dividends declared
during the year. This percentage may differ from the actual percentages for any
particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that
would have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM GOVERNMENT SECURITIES FUND AND AIM LIMITED MATURITY TREASURY
SHARES -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. Government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND AND AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM LIMITED MATURITY
TREASURY SHARES, for which The Bank of New York, 110 Washington Street, New
York, New York 10286, serves as custodian. Texas Commerce Bank National
Association, P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian
for retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and as
dividend payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and has passed
upon the legality of the shares offered pursuant to this Prospectus.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an AIM Distributors Client Services Representative by
calling (713) 626-1919 (extension 5224) (in Houston), or toll-free at (800)
959-4246 (elsewhere). The Transfer Agent may impose certain copying charges for
requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
RET 07/95
A-15
<PAGE> 34
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. A Statement of Additional Information has been filed with the Securities
and Exchange Commission and is available upon request and without charge, by
writing or calling AIM Distributors. This Prospectus omits certain information
contained in the registration statement filed with the Securities and Exchange
Commission. Copies of the registration statement, including items omitted from
this Prospectus, may be obtained from the Securities and Exchange Commission by
paying the charges prescribed under its rules and regulations.
RET 07/95
A-16
<PAGE> 35
APPENDIX A
DESCRIPTIONS OF RATING CATEGORIES
The following are descriptions of ratings assigned by Moody's Investors
Service, Inc. ("Moody's") and Standard and Poor's Corporation ("S&P") to certain
debt securities in which AIM TAX-EXEMPT BOND FUND OF CONNECTICUT may invest. See
the Statement of Additional Information for descriptions of other Moody's and
S&P rating categories, and the categories of other nationally recognized
statistical rating organizations.
MOODY'S: AAA -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
AA -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. These are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
BAA -- Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
CAA -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
CA -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
S&P: AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA -- Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C -- Debt rated BB, B, CCC, CC and C is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and C
the highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties of
major risk exposures to adverse conditions.
RET 07/95
A-17
<PAGE> 36
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minors Minor Corporation, Partnership, Corporation, Partnership,
Other Organization Other Organization
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the
applicant is a nonresident alien, foreign corporation or foreign partnership and
has attached a completed Internal Revenue Service ("IRS") Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN,
or
(3) the investor is notified by the IRS that the investor is subject to
backup withholding because the investor failed to report all of the
interest and dividends on such investor's tax return (for reportable
interest and dividends only), or
(4) the investor fails to certify to the Fund that the investor is not
subject to backup withholding under (3) above (for reportable interest
and dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after
1983, or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and
information reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions accompanying Form W-9 (which can be obtained from
the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Internal Revenue Code of 1986,
as amended.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct
TIN will be subject to a $50 penalty imposed by the IRS unless such failure is
due to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities
are not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three
RET 07/95
B-1
<PAGE> 37
calendar years beginning with the calendar year in which it is received by the
Fund. Such shareholders may, however, be subject to appropriate withholding as
described in the Prospectus under "Dividends, Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the
New Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney to surrender for redemption any and all unissued shares
held by the Transfer Agent in the designated account(s), or in any other account
with any of The AIM Family of Funds(R), present or future, which has the
identical registration as the designated account(s), with full power of
substitution in the premises. The Transfer Agent and AIM Distributors are
thereby authorized and directed to accept and act upon any telephone redemptions
of shares held in any of the account(s) listed, from any person who requests the
redemption proceeds to be applied to purchase shares in any one or more of The
AIM Family of Funds(R), provided that such fund is available for sale and
provided that the registration and mailing address of the shares to be purchased
are identical to the registration of the shares being redeemed. An investor
acknowledges by signing the form that he understands and agrees that the
Transfer Agent and AIM Distributors may not be liable for any loss, expense or
cost arising out of any telephone exchange requests effected in accordance with
the authorization set forth in these instructions if they reasonably believe
such request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions. Procedures for verification of
telephone transactions may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security number and current address, and mailings of confirmations
promptly after the transactions. The Transfer Agent reserves the right to cease
to act as agent subject to this appointment, and AIM Distributors reserves the
right to modify or terminate the telephone exchange privilege at any time
without notice.
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing
the New Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney to surrender for redemption any and all unissued shares
held by the Transfer Agent in the designated account(s), present or future, with
full power of substitution in the premises. The Transfer Agent and AIM
Distributors are thereby authorized and directed to accept and act upon any
telephone redemptions of shares held in any of the account(s) listed, from any
person who requests the redemption. An investor acknowledges by signing the form
that he understands and agrees that the Transfer Agent and AIM Distributors may
not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months) requests for
confirmation of the shareholder's Social Security number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as agent subject to this appointment,
and AIM Distributors reserves the right to modify or terminate the telephone
redemption privilege at any time without notice. An investor may elect not to
have this privilege by marking the appropriate box on the application. Then any
exchanges must be effected in writing by the investor (see the applicable Fund's
prospectus under the caption "Exchange Privilege -- Exchanges by Mail").
B-2
<PAGE> 38
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R)
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Building
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of
Funds(R), including charges and expenses, please call (800) 347-1919, (713)
626-1919 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
<PAGE> 39
STATEMENT OF
ADDITIONAL INFORMATION
AIM TAX-EXEMPT FUNDS, INC.
AIM TAX-EXEMPT CASH FUND
AIM TAX-FREE INTERMEDIATE SHARES
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
11 Greenway Plaza
Suite 1919
Houston, Texas 77046
(713) 626-1919
______________________
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD
BE READ IN CONJUNCTION WITH A PROSPECTUS FOR THE ABOVE-NAMED FUNDS, A
COPY OF WHICH MAY BE OBTAINED FROM AUTHORIZED DEALERS OR BY
WRITING A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON,
TEXAS 77210-4739, OR BY CALLING (713) 626-1919
(IN HOUSTON) OR (800) 347-4246 (ELSEWHERE)
______________________
Statement of Additional Information Dated: July 31, 1995
Relating to the Prospectus Dated: July 31, 1995
<PAGE> 40
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Yield Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Historical Portfolio Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
INVESTMENT PROGRAM AND RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Investment Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Municipal Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
When-Issued or Delayed Delivery Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Synthetic Municipal Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Variable or Floating Rate Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Investments in Securities Owned by Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . 10
Eligible Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Concentration of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Investment in High Risk Securities: AIM Tax-Exempt Bond Fund of Connecticut Only . . . . . . . . . . . . . . 14
Risks Regarding Interest Rate Futures Contracts and Related Options: AIM Tax-Exempt Bond Fund of
Connecticut Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Control Persons and Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
RATINGS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
i
<PAGE> 41
INTRODUCTION
AIM Tax-Exempt Funds, Inc. (formerly named AIM Tax-Free Funds, Inc.)
(the "Company") is a series mutual fund. The rules and regulations of the
United States Securities and Exchange Commission (the "SEC") require all mutual
funds to furnish prospective investors certain information concerning the
activities of the fund being considered for investment. This information is
included in a Prospectus (the "Prospectus"), dated July 31, 1995 which relates
to the Company's AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE SHARES, a
class of the INTERMEDIATE PORTFOLIO, and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT series (collectively, the "Funds" and each separately a "Fund").
Copies of the Prospectus and additional copies of this Statement of Additional
Information may be obtained without charge by writing the distributor of the
Funds' shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, Texas 77210-4739, or by calling (713) 626-1919 (in Houston) or (800)
347-4246 (elsewhere). Investors must receive a Prospectus before they invest
in any Fund.
This Statement of Additional Information is intended to furnish
investors with additional information concerning the Funds. Some of the
information required to be in this Statement of Additional Information is also
included in the Funds' current Prospectus. Additionally, the Prospectus and
this Statement of Additional Information omit certain information contained in
the Company's Registration Statement filed with the SEC. Copies of the
Registration Statement, including items omitted from the Prospectus and this
Statement of Additional Information, may be obtained from the SEC by paying the
charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE COMPANY
THE COMPANY AND ITS SHARES
The Company was incorporated under the laws of the State of Maryland
on May 4, 1993, and is registered with the SEC as an open-end series management
investment company.
On October 15, 1993, pursuant to an Agreement and Plan of
Reorganization between the Company and AIM Funds Group, a Massachusetts
business trust ("AFG"), the Company's AIM TAX-EXEMPT CASH FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT succeeded to the assets and assumed the
liabilities of AFG's AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of
Connecticut (the "AFG Funds"), respectively. Similarly, on October 15, 1993,
pursuant to an Agreement and Plan of Reorganization between the Company and
Tax-Free Investments Co., a Maryland corporation ("TFIC"), the Company's
INTERMEDIATE PORTFOLIO succeeded to the assets and assumed the liabilities of
TFIC's Intermediate Portfolio (together with the AFG Funds, the "Predecessor
Funds"). All historical financial and other information contained in this
Statement of Additional Information for periods prior to October 15, 1993
relating to the Funds is that of the Predecessor Funds. Shares of common stock
of the Company are redeemable at their net asset value at the option of the
shareholder or at the option of the Company in certain circumstances. Shares
of AIM TAX-EXEMPT BOND FUND OF CONNECTICUT purchased in amounts of $1 million
or more may be subject to a contingent deferred sales charge under certain
circumstances. For information concerning the methods of redemption and the
rights of share ownership, investors should consult the Prospectus under the
captions "General Information" and "How to Redeem Shares."
As used in the Prospectus, the term "majority of the outstanding
shares" of the Company or a Fund means, respectively, the vote of the lesser of
(i) 67% or more of the shares of the Company or the Fund present at a meeting
of shareholders, if the holders of more than 50% of the outstanding shares of
the Company or the Fund are present or represented by proxy or (ii) more than
50% of the outstanding shares of the Company or the Fund.
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<PAGE> 42
Each share of a Fund is entitled to one vote, to participate equally
in dividends and distributions declared by the Board of Directors with respect
to the Fund and, upon liquidation of a Fund, to participate proportionately in
the Fund's net assets remaining after satisfaction of the Fund's outstanding
liabilities. Each Fund's shares are fully paid, non-assessable and fully
transferable when issued and have no preemptive, conversion or exchange rights.
Fractional shares have proportionately the same rights, including voting
rights, as do full shares.
Shareholders of the Funds do not have cumulative voting rights and
therefore the holders of more than 50% of the outstanding shares of all Funds
voting together for election of directors can elect all the members of the
Board of Directors of the Company. In such event, the remaining holders cannot
elect any directors of the Company.
The assets received by the Company for the issue or sale of shares of
each Fund, and all income, earnings, profits, losses and proceeds thereof,
subject only to the rights of creditors, are specifically allocated to the
appropriate Fund. They constitute the underlying assets of each Fund, are
required to be segregated on the Company's books of account, and are to be
charged with the expenses of such Fund. Any general expenses of the Company
not readily identifiable as belonging to a particular Fund are allocated by or
under the direction of the Board of Directors, primarily on the basis of
relative net assets, or other relevant factors.
PERFORMANCE INFORMATION
YIELD CALCULATIONS
INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
Calculations of yield will take into account the total income earned
by the INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT,
respectively, including taxable income, if any; however, both Funds intend to
invest their respective assets so that 100% of annual interest income will be
tax-exempt.
Yields for each Fund used in advertising are computed as follows: (a)
divide the Fund's income for a given 30- day or one-month period, net of
expenses, by the average number of shares entitled to receive dividends during
the period; (b) divide the figure arrived at in step (a) by the offering price
of the Fund's shares (including the maximum sales charge) at the end of the
period; and (c) annualize the result (assuming compounding of income) in order
to arrive at an annual percentage rate. For purposes of such yield quotation,
income is calculated in accordance with standardized methods applicable to all
stock and bond mutual funds. In general, interest income is reduced with
respect to bonds trading at a premium over their par value by subtracting a
portion of the premium from income on a daily basis, and is increased with
respect to bonds trading at a discount by adding a portion of the discount to
daily income. Capital gains and losses are excluded from this yield
calculation.
A Fund's tax equivalent yield is the rate an investor would have to
earn from a fully taxable investment in order to equal the Fund's yield after
taxes. Tax equivalent yields are calculated by dividing the Fund's yield by
one minus a stated tax rate (if only a portion of the Fund's yield was
tax-exempt, only that portion would be adjusted in the calculation).
A Fund also may quote its distribution rate, which expresses the
historical amount of income the Fund paid as dividends to its shareholders as a
percentage of the Fund's offering price. The distribution rates for the
INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT for the
thirty days ended March 31, 1995 were 4.45% and 5.12%, respectively.
2
<PAGE> 43
Income calculated for purposes of calculating a Fund's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding assumed in
yield calculations, the yield quoted for a Fund may differ from the rate of
distributions from the Fund paid over the same period or the rate of income
reported in the Fund's financial statements.
AIM TAX-EXEMPT CASH FUND
The standard formula for calculating annualized yield for AIM
TAX-EXEMPT CASH FUND is as follows:
Y =(V1 -- V0) x 365
-------- ---
V0 7
Where Y = annualized yield.
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of a stated seven-day period.
V1 = the value of such an account at the end of the
stated period.
The standard formula for calculating effective annualized yield for
the Fund is as follows:
EY = (Y + 1)365/7 - 1
Where EY = effective annualized yield.
Y = annualized yield, as determined above.
For purposes of the annualized yield and effective annualized yield,
the net change in the value of the hypothetical AIM TAX-EXEMPT CASH FUND
account reflects the value of additional shares purchased with dividends from
the original shares and any such additional shares, and all fees charged, other
than non-recurring account or sales charges, to all shareholder accounts in
proportion to the length of the base period and the Fund's average account
size, but does not include realized gains or losses or unrealized appreciation
and depreciation.
Tax-equivalent yield for the Fund will be calculated by dividing that
portion of the yield of the Fund (as determined above) which is tax-exempt by
one minus a stated income tax rate and adding the product to that portion of
the yield that is not tax-exempt.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of a Fund's
return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the Fund's net asset value per share over the
period. Average annual total returns are calculated by determining the growth
or decline in value of a hypothetical investment in a Fund over a stated period
of time, and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant over the period. While average annual total returns are a
convenient means of comparing investment alternatives, investors should realize
that a Fund's performance is not constant over time, but changes from year to
year, and that average annual total return does not represent the actual
year-to-year performance of a Fund.
3
<PAGE> 44
In addition to average annual total return, a Fund may quote
unaveraged or cumulative total return reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions, over any time period. Total returns may be broken down into their
components of income and capital (including capital gains and changes in share
price) in order to illustrate the relationship of these factors and their
contributions to total return. Total returns, yields, and other performance
information may be quoted numerically or in tables, graphs or similar
illustrations. Total returns may be quoted with or without taking any
applicable maximum sales charge into account. The total returns included for
the Funds do not include applicable maximum sales charges. Excluding a sales
charge from a total return calculation produces a higher total return figure.
HISTORICAL PORTFOLIO RESULTS
A Fund's performance may be compared in advertising to the performance
of other mutual funds in general, or of particular types of mutual funds,
especially those with similar objectives. Such performance data may be
prepared by Lipper Analytical Services, Inc. and other independent services
which monitor the performance of mutual funds. A Fund may also advertise
mutual fund performance rankings which have been assigned to it by such
monitoring services.
A Fund's performance may also be compared in advertising to the
performance of comparative benchmarks such as the Consumer Price Index, the
Standard & Poor's 500 Stock Index, and fixed-price investments such as bank
certificates of deposit and/or savings accounts. In addition, a Fund's
long-term performance may be described in advertising in relation to
historical, political and/or economic events. An investor should be aware that
an investment in a Fund is subject to risks not present in ownership of a
certificate of deposit, due to greater risk of loss of capital.
From time to time, sales literature and/or advertisements for any of
the Funds may disclose the largest holdings in the Fund's portfolio.
Although performance data may be useful to prospective investors when
comparing a Fund's performance with other mutual funds and other potential
investments, investors should note that the methods of computing performance of
other potential investments are not necessarily comparable to the methods
employed by a Fund.
From time to time, the Funds' sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. These
topics include, but are not limited to, literature addressing general
information about mutual funds, variable annuities, dollar-cost averaging,
stocks, bonds, money markets, certificates of deposit, asset allocation,
tax-free investing, college planning and inflation.
AIM TAX-EXEMPT CASH FUND
The annualized and effective annualized yields for the seven-day
period ended March 31, 1995 were 3.06% and 3.11%, respectively. Assuming a tax
rate of 36%, these yields for the Fund on a tax-equivalent basis were 4.78% and
4.86%, respectively.
The annual average total returns of the Fund for the one, five and
ten-year periods ended March 31, 1995 were 2.56%, 2.99% and 3.86%,
respectively. The cumulative total returns of the Fund for the one, five and
ten-year periods ended March 31, 1995 were 2.56%, 15.89% and 46.10%,
respectively.
4
<PAGE> 45
INTERMEDIATE PORTFOLIO - AIM TAX-FREE INTERMEDIATE SHARES
The following chart shows the total returns of the Fund for the one
and five-year periods ended March 31, 1995, and the period from May 11, 1987
(date operations commenced) through March 31, 1995:
<TABLE>
<CAPTION>
Average
Period Annual Return Cumulative Return
------ ------------- -----------------
<S> <C> <C>
One year ended 3/31/95 5.17% 5.17%
Five year ended 3/31/95 7.05% 40.59%
5/11/87 through 3/31/95 6.61% 65.71%
</TABLE>
The Fund's 30-day yield as of March 31, 1995 was 4.51%, with a
corresponding tax-equivalent yield of 7.47%, assuming a tax rate of 39.6%.
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
The following chart shows the total returns of the Fund for the one
and five-year periods ended March 31, 1995 and the period from October 3, 1989
(date operations commenced) through March 31, 1995:
<TABLE>
<CAPTION>
Average
Period Annual Return Cumulative Return
------ ------------- -----------------
<S> <C> <C>
One year ended 3/31/95 5.78% 5.78%
Five year ended 3/31/95 7.94% 46.54%
10/03/89 through 3/31/95 7.75% 50.62%
</TABLE>
The Fund's 30-day yield as of March 31, 1995 was 4.68%, with a
corresponding tax-equivalent yield of 8.11%, assuming a federal tax rate of
39.6%, and a state tax rate of 4.5%.
PORTFOLIO TRANSACTIONS
A I M Advisors, Inc. ("AIM") is responsible for decisions to buy and
sell securities for the Funds, selection of broker-dealers and negotiation of
commission rates. Since purchases and sales of portfolio securities by the
Funds are usually principal transactions, each Fund incurs little or no
brokerage commissions. Portfolio securities are normally purchased directly
from the issuer or from a market maker for the securities. The purchase price
paid to dealers serving as market makers may include a spread between the bid
and asked prices. The Funds also may purchase securities from underwriters at
prices which include a commission paid by the issuer to the underwriter.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To
the extent that the execution and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which AIM deems
to be beneficial to the Funds' investment programs. Such research services
supplement AIM's own research. Research services may include the following:
statistical and background information on U.S. and foreign economies, industry
groups and individual companies; forecasts and interpretations with respect to
U.S. and foreign economies, money markets, fixed income markets, equity
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indices and investment
accounts; information concerning prices of securities; the providing of
equipment used to communicate research information; the arranging of meetings
5
<PAGE> 46
with management of companies; and the providing of access to consultants who
supply research information. Certain research services furnished by dealers
may be useful to AIM with clients other than the Funds. Similarly, any
research services received by AIM through placement of portfolio transactions
of other clients may be of value to AIM in fulfilling their obligations to a
Fund. AIM is of the opinion that the material received is beneficial in
supplementing AIM's research and analysis; and therefore, it may benefit a Fund
by improving the quality of AIM's investment advice. The advisory fee paid by
a Fund is not reduced because AIM receives such services; however, because AIM
must evaluate information received as a result of such services, receipt of
such services does not reduce AIM's workload.
Under the Investment Company Act of 1940, as amended (the "1940 Act"),
persons affiliated with the Company are prohibited from dealing with the Funds
as principal in any purchase or sale of securities unless an exemptive order
allowing such transactions is obtained from the SEC.
From time to time, an identical security may be sold by an AIM Fund or
another investment account advised by AIM or A I M Capital Management, Inc.
("AIM Capital") and simultaneously purchased by another investment account
advised by AIM or AIM Capital, when such transactions comply with applicable
rules and regulations and are deemed consistent with the investment
objective(s) and policies of the investment accounts involved. Procedures
pursuant or Rule 17a-7 under the 1940 Act regarding transactions between
investment accounts advised by AIM or AIM Capital have been adopted by the
Boards of Directors/Trustees of the various AIM Funds including the Funds.
Although such transactions may result in custodian, tax or other related
expenses, no brokerage commissions or other direct transaction costs are
generated by transactions among the investment accounts advised by AIM or AIM
Capital.
Provisions of the 1940 Act and rules and regulations thereunder have
also been construed to prohibit the Funds from purchasing securities or
instruments from, or selling securities or instruments to, any holder of 5% or
more of the voting securities of any investment company managed or advised by
AIM. The Company has obtained an order of exemption from the SEC which permits
the Funds to engage in certain transactions with such 5% holder if the Funds
comply with conditions and procedures designed to ensure that such transactions
are executed at fair market value and present no conflicts of interest.
AIM and its affiliates manage several other investment companies (the
"AIM Funds"), some of which may have objectives similar to those of the Funds.
It is possible that at times identical securities will be appropriate for
investment by a Fund and by one or more of the AIM Funds. The position of each
account, however, in the securities of the same issue may vary and the length
of time that each account may choose to hold its investment in the securities
of the same issue may likewise vary. The timing and amount of purchase by each
account will also be determined by its cash position. If the purchase or sale
of securities consistent with the investment policies of a Fund and one or more
of the AIM Funds is considered at or about the same time, transactions in such
securities will be allocated among the Fund and the AIM Funds in a manner
deemed equitable by AIM. AIM may combine such transactions, in accordance with
applicable laws and regulations, in order to obtain the best net price and most
favorable execution. Simultaneous transactions could, however, adversely
affect the ability of a Fund to obtain or dispose of the full amount of a
security which it seeks to purchase or sell.
In some cases the procedure for allocating portfolio transactions
among the Funds and the AIM Funds could have an adverse effect on the price or
amount of securities available to a Fund. In making such allocations, the main
factors considered by AIM are the respective investment objectives and policies
of the Funds and the AIM Funds, the relative size of portfolio holdings by the
same or comparable securities, the availability of cash for investment, the
size of investment commitments generally held and the judgments of the persons
responsible for recommending the investment.
The Funds paid no brokerage commissions to brokers affiliated with the
Funds during the past three fiscal years of each Fund.
6
<PAGE> 47
INVESTMENT PROGRAM AND RESTRICTIONS
INVESTMENT PROGRAM
Information concerning each Fund's investment objective and operating
policies is set forth in the Prospectus. The principal features of each Fund's
investment program and the primary risks associated with that investment
program are also discussed in the Prospectus. There can be no assurance that a
Fund will achieve its objective. The values of the securities in which a Fund
invests fluctuate based upon interest rates, the financial stability of the
issuer and other market factors. The following is a more detailed description
of the portfolio instruments eligible for purchase by the Funds, which augments
the discussion of the Funds' investment programs which appears under the
caption "Investment Program" in the Prospectus.
Subsequent to its purchase by a Fund, an issue of Municipal Securities
may cease to be rated by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Corporation ("S&P"), or another nationally recognized
statistical rating organization ("NRSRO"), or the rating of such a security may
be reduced below the minimum rating required for purchase by a Fund. Neither
event would require a Fund to dispose of the security, but AIM will consider
such events to be relevant in determining whether the Fund should continue to
hold the security. To the extent that the ratings applied by Moody's, S&P or
another NRSRO to Municipal Securities may change as a result of changes in
these rating systems, a Fund will attempt to use comparable ratings as
standards for its investments in Municipal Securities in accordance with the
investment policies described herein.
The Funds may from time to time invest in taxable short-term
investments ("Taxable Investments") consisting of obligations of the U.S.
Government, its agencies or instrumentalities, and repurchase
agreements/reverse repurchase agreements (instruments under which the seller
agrees to repurchase the security at a specified time and price) relating
thereto; commercial paper rated within the highest rating category by a
recognized rating agency; and certificates of deposit of domestic banks with
assets of at least $1.5 billion or more as of the date of their most recently
published financial statements. A Fund may invest in Taxable Investments, for
example, due to market conditions or pending the investment of proceeds from
the sale of its shares or proceeds from the sale of portfolio securities or in
anticipation of redemptions. Although interest earned from Taxable Investments
will be taxable to shareholders as ordinary income, the Funds generally intend
to minimize taxable income through investment, when possible, in short-term
tax-exempt securities, which may include shares of other investment companies
whose dividends are tax-exempt.
MUNICIPAL SECURITIES
"Municipal Securities" include debt obligations issued to obtain funds
for various public purposes, including the construction of a wide range of
public facilities such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works.
Other public purposes for which Municipal Securities may be issued
include the refunding of outstanding obligations, obtaining funds for general
operating expenses and lending such funds to other public institutions and
facilities. In addition, certain types of industrial development bonds are
issued by or on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated housing
facilities, airport, mass transit, industrial, port or parking facilities, air
or water pollution control facilities and certain local facilities for water
supply, gas, electricity or sewage or solid waste disposal. The interest paid
on such bonds may be exempt from federal income tax, although current federal
tax laws place substantial limitations on the purposes and size of such issues.
Such obligations are considered to be Municipal Securities provided that the
interest paid thereon, in the opinion
7
<PAGE> 48
of bond counsel, qualifies as exempt from federal income tax. However,
interest on Municipal Securities may give rise to a federal alternative minimum
tax liability and may have other collateral federal income tax consequences.
See "Dividends, Distributions and Tax Matters - Tax Matters."
The two major classifications of Municipal Securities are bonds and
notes. Bonds may be further classified as "general obligation" or "revenue"
issues. General obligation bonds are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenues derived from a particular facility
or class of facilities, and in some cases, from the proceeds of a special
excise or other specific revenue source, but not from the general taxing power.
Tax-exempt industrial development bonds are in most cases revenue bonds and do
not generally carry the pledge of the credit of the issuing municipality.
Notes are short-term instruments which usually mature in less than two years.
Most notes are general obligations of the issuing municipalities or agencies
and are sold in anticipation of a bond sale, collection of taxes or receipt of
other revenues. There are, of course, variations in the risks associated with
Municipal Securities, both within a particular classification and between
classifications. The Funds' assets may consist of any combination of general
obligation bonds, revenue bonds, industrial revenue bonds and notes. The
percentage of such Municipal Securities held by a Fund will vary from time to
time.
For purposes of the diversification requirements applicable to a Fund,
the identification of the issuer of Municipal Securities depends on the terms
and conditions of each individual security. When the assets and revenues of an
agency, authority, instrumentality or other political subdivision are separate
from those of the government creating the subdivision, and the security is
backed only by the assets and revenues of the subdivision, such subdivision
will be deemed to be the sole issuer. Similarly, in the case of an industrial
revenue bond, if that bond is backed only by the assets and revenues of the
non-governmental user, then such non-governmental user will be deemed to be the
sole issuer. If, however, in either case, the creating government or some
other entity guarantees a security, such guarantee would be considered a
separate security and will be treated as an issue of such government or other
entity. Certain Municipal Securities may be secured by a guaranty or
irrevocable letter of credit of a major banking institution, or may be insured
by an insurance company.
The yields on Municipal Securities are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions of the Municipal Securities market, size of a particular
offering, and maturity and rating of the obligation. The yield realized by a
Fund's shareholders will be the yield realized by the Fund on its investments,
reduced by the general expenses of the Fund and the Company. The market values
of the Municipal Securities held by a Fund will be affected by changes in the
yields available on similar securities. If yields increase following the
purchase of a Municipal Security, the market value of such Municipal Security
will generally decrease. Conversely, if yields decrease, the market value of a
Municipal Security will generally increase.
WHEN-ISSUED OR DELAYED DELIVERY SECURITIES
The Funds may purchase Municipal Securities on a "when-issued" basis,
that is, the date for delivery of and payment for the securities is not fixed
at the date of purchase, but is set after the securities are issued (normally
within forty-five days after the date of the transaction). The Funds also may
purchase or sell Municipal Securities on a delayed delivery basis. The payment
obligation and the interest rate that will be received on the when-issued
securities are fixed at the time the buyer enters into the commitment. The
Funds will only make commitments to purchase when-issued or delayed delivery
Municipal Securities with the intention of actually acquiring such securities,
but the Funds may sell these securities before the settlement date if it is
deemed advisable.
If a Fund purchases a when-issued or delayed delivery security, the
Fund will direct its custodian bank to segregate cash or other high grade
securities (including Temporary Investments and Municipal Securities) in an
amount equal to the when-issued or delayed delivery commitment. If Fund assets
are so
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<PAGE> 49
segregated, the assets will be valued at market for the purpose of determining
the adequacy of the segregated securities. If the market value of such
securities declines, additional cash or securities will be segregated on a
daily basis so that the market value of the segregated assets will equal the
amount of the Fund's when-issued or delayed delivery commitments. To the
extent assets are segregated, they will not be available for new investment or
to meet redemptions.
Securities purchased on a when-issued or delayed delivery basis and
the other securities held by a Fund are subject to changes in market value
based on the public's perception of the creditworthiness of the issuer and
changes in the level of interest rates (which will generally result in all of
those securities changing in value in the same way (e.g., appreciating when
interest rates fall)). Therefore, if in order to achieve higher interest
income a Fund remains substantially fully invested at the same time that it has
purchased securities on a when-issued or delayed delivery basis, there is a
possibility that the Fund will experience greater fluctuation in the market
value of its assets.
Furthermore, when the time comes for a Fund to meet its obligations
under when-issued or delayed delivery commitments, the Fund will do so by use
of its then available cash, by the sale of the segregated securities, by the
sale of other securities or, although it would not normally expect to do so, by
directing the sale of the when-issued or delayed delivery securities themselves
(which may have a market value greater or less than the Fund's payment
obligation thereunder). The sale of securities to meet such obligations
carries with it a greater potential for the realization of net short-term
capital gains, which are not exempt from federal income taxes. The value of
when-issued or delayed delivery securities on the settlement date may be more
or less than the purchase price.
In a delayed delivery transaction, a Fund relies on the other party to
complete the transaction. If the transaction is not completed, the Fund may
miss a price or yield considered to be advantageous.
As a non-fundamental policy, AIM TAX-EXEMPT CASH FUND will not enter
into when-issued commitments if more than 25% of its net assets would be
subject to commitments for when-issued and delayed delivery securities.
SYNTHETIC MUNICIPAL INSTRUMENTS
AIM TAX-EXEMPT CASH 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
tender option bonds and variable rate trust certificates. Both types of
instruments involve the deposit into a trust or custodial account of one or
more long-term tax-exempt bonds or notes ("Underlying Bonds"), and the sale of
certificates evidencing interests in the trust or custodial account to
investors such as the Fund. The trustee or custodian 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 "tender option bond" provides a certificate holder with the
conditional right to sell (put) its certificate to the Sponsor or some
designated third party at specified intervals and receive the par value of the
certificate plus accrued interest. 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 or custodial
account 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. For further information regarding certain risks associated with
investing in synthetic municipal instruments see the Prospectus under the
caption "Investment Program--AIM Tax-Exempt Cash Fund--Synthetic Municipal
Instruments."
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<PAGE> 50
VARIABLE OR FLOATING RATE INSTRUMENTS
The Funds may invest in Municipal Securities which have variable or
floating interest rates which are readjusted periodically. Variable or
floating interest rates generally reduce changes in the market price of
Municipal Securities from their original purchase price. Accordingly, as
interest rates decrease or increase, the potential for capital appreciation or
depreciation is less for variable or floating rate Municipal Securities than
for fixed rate obligations.
Many Municipal Securities with variable or floating interest rates
purchased by a Fund are subject to payment of principal and accrued interest
(usually within seven days) on the Fund's demand. The terms of such demand
instruments require payment of principal and accrued interest by the issuer, a
guarantor, and/or a liquidity provider. All variable or floating rate
instruments will meet the applicable quality standards of a Fund. AIM will
monitor the pricing, quality and liquidity of the variable or floating rate
Municipal Securities held by the Funds.
INVESTMENTS IN SECURITIES OWNED BY OFFICERS AND DIRECTORS
No Fund will purchase or retain the securities of any issuer if the
officers and directors of the Company or AIM who beneficially own more than 1/2
of 1% of the securities of such issuer together own more than 5% of the
securities of such issuer. This is a non-fundamental policy of each of the
Funds.
ELIGIBLE SECURITIES
AIM TAX-EXEMPT CASH FUND will limit its investments to those
securities which at the time of purchase are "Eligible Securities" as defined
in Rule 2a-7 under the 1940 Act, as amended from time to time. Rule 2a-7
defines an "Eligible Security" as follows:
(i) a security with a remaining maturity of 397 days or less that
is rated (or that has been issued by an issuer that is rated
with respect to a class of short-term obligations, or any
security within that class, that is comparable in priority and
security with the security) by the Requisite NRSROs(1) in one
of the two highest rating categories for short-term debt
obligations (within which there may be sub-categories or
gradations indicating relative standing); or
(ii) a security:
(A) that at the time of issuance was a long-term security
but that has a remaining maturity of 397 calendar days
or less; and
(B) whose issuer has received from the Requisite NRSROs a
rating, with respect to a class of short-term
obligations (or any security within that class) that is
now comparable in priority and security with the
security, in one of the two highest rating
__________________________________
(1) "Requisite NRSRO" shall mean (a) any two nationally recognized
statistical rating organizations that have issued a rating with
respect to a security or class of debt obligations of an issuer, or
(b) if only one NRSRO has issued a rating with respect to such
security or issuer at the time the Fund purchases or rolls over the
security, that NRSRO. At present the NRSROs are: S&P, Moody's, Duff
and Phelps, Inc., Fitch Investors Services, Inc. and, with respect to
certain types of securities, IBCA Limited and its affiliate, IBCA Inc.
Subcategories or graduations in ratings (such as a "+" or "-") do not
count as rating categories.
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<PAGE> 51
categories for short-term debt obligations (within which
there may be sub-categories or gradations indicating
relative standing); or
(iii) an unrated security that is of comparable quality to a
security meeting requirements (i) or (ii) above, as determined
by the Company's Board of Directors; provided, however, that:
(A) the Board of Directors may base its determination that a
standby commitment is an Eligible Security upon a
finding that the issuer of the commitment presents a
minimal risk of default; and
(B) a security that at the time of issuance was a long-term
security but that has a remaining maturity of 397
calendar days or less and that is an unrated security(2)
is not an Eligible Security if the security has a
long-term rating from any NRSRO that is not within the
NRSRO's two highest categories (within which there may
be sub-categories or gradations indicating relative
standing).
CONCENTRATION OF INVESTMENTS
As a non-fundamental policy, neither AIM TAX-EXEMPT CASH FUND nor the
INTERMEDIATE PORTFOLIO will purchase any securities which would cause more than
25% of the value of its net assets at the time of such purchase to be invested
in: (i) securities of one or more issuers conducting their principal activities
in the same state, (ii) securities, the interest on which is paid from revenues
of projects with similar characteristics or (iii) industrial development bonds
issued by issuers in the same industry; provided, that there is no limit with
respect to investments in U.S. Treasury bills, other obligations issued or
guaranteed by the U.S. Government and its agencies or instrumentalities,
certificates of deposit and guarantees of Municipal Securities by banks.
INVESTMENT RESTRICTIONS
In addition to those investment restrictions set forth in the
Prospectus, each Fund is subject to the following restrictions which may not be
changed without the approval of the lesser of (i) 67% or more of the Fund's
shares present at a meeting if the holders of more than 50% of the outstanding
shares are present in person or represented by proxy, or (ii) more than 50% of
the Fund's outstanding shares. Any investment restriction that involves a
percentage limitation applies at the time of investment, without regard to
later increases or decreases in the values of securities or assets.
AIM TAX-EXEMPT CASH FUND may not:
1. Lend any portfolio securities if the value of the
securities loaned by it would exceed an amount equal to one-third of
its total assets.
__________________________________
(2) An "unrated security" is a security (i) issued by an issuer that does
not have a current short-term rating from any NRSRO, either as to the
particular security or as to any other short-term obligations of
comparable priority and security; (ii) that was a long-term security
at the time of issuance and whose issuer has not received from any
NRSRO a rating with respect to a class of short-term debt obligations
now comparable in priority and security; or (iii) a security that is
rated but which is the subject of an external credit support agreement
not in effect when the security was assigned its rating, provided that
a security is not an unrated security if any short-term debt
obligation issued by the issuer and comparable in priority and
security is rated by an NRSRO.
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<PAGE> 52
2. Concentrate 25% or more of its total assets in issuers in
a particular industry. Tax-exempt securities issued by governments or
political subdivisions of governments are not included within this
restriction.
3. Make short sales of securities or purchase securities on
margin or invest in puts, calls, straddles, spreads or any combination
thereof, except that it may obtain such short-term credits as are
necessary for the clearance of purchases and sales of securities.
4. Make loans, other than by investing in obligations in
which it may invest consistent with its investment objective and
policies, and other than by engaging in repurchase agreements and
loans of portfolio securities as described above.
5. Pledge, mortgage or hypothecate more than 33-1/3% of its
total assets; provided that for purposes of this restriction, reverse
repurchase agreements and loans of portfolio securities are not deemed
to involve the pledge, mortgage or hypothecation of assets.
6. Purchase or sell real estate, but it may invest in
marketable securities secured by real estate or interests therein.
7. Purchase or sell commodities or commodities futures
contracts.
8. Underwrite any issue of securities, except that it may
purchase securities, either directly from an issuer or from an
underwriter for an issuer, and later dispose of such securities in
accordance with its investment program.
9. Invest in shares of any other investment company, other
than in connection with a merger, consolidation, reorganization or
acquisition of assets, except that it may invest in shares of other
investment companies representing compensation otherwise payable to
directors of the Company pursuant to any deferred compensation plan.
The INTERMEDIATE PORTFOLIO may not:
1. Lend money or lend any portfolio securities if the value
of the securities loaned by it would exceed an amount equal to
one-third of its total assets.
2. Concentrate 25% or more of its total assets in issuers in
a particular industry. Tax-exempt securities issued by governments or
political subdivisions of governments are not included within this
restriction.
3. Make short sales of securities or purchase securities on
margin or invest in puts, calls, straddles, spreads or any combination
thereof, except that it may obtain such short-term credits as are
necessary for the clearance of purchases and sales of securities.
4. Make loans, other than by investing in obligations in
which it may invest consistent with its investment objective and
policies, and other than by engaging in repurchase agreements and
loans of portfolio securities as described above.
5. Pledge, mortgage or hypothecate more than 33-1/3% of its
total assets; provided that for purposes of this restriction, reverse
repurchase agreements and loans of portfolio securities are not deemed
to involve the pledge, mortgage or hypothecation of assets.
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<PAGE> 53
6. Purchase or sell real estate, but it may invest in
marketable securities secured by real estate or interests therein.
7. Purchase or sell commodities or commodities futures
contracts.
8. Underwrite any issue of securities, except that it may
purchase securities, either directly from an issuer or from an
underwriter for an issuer, and later dispose of such securities in
accordance with its investment program.
9. Invest in shares of any other investment company, other
than in connection with a merger, consolidation, reorganization or
acquisition of assets, except that for temporary purposes it may
invest up to 10% of its assets in securities of other investment
companies whose dividends are tax-exempt; provided that it will not
invest more than 5% of its assets in securities of any investment
company or purchase more than 3% of the outstanding voting stock of
any investment company.
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT may not:
1. Lend any portfolio securities if the value of the
securities loaned by it would exceed an amount equal to one-third of
its total assets.
2. Concentrate 25% or more of its total assets in issuers in
a particular industry. Tax-exempt securities issued by governments or
political subdivisions of governments are not included within this
restriction.
3. Make short sales of securities or purchase securities on
margin or invest in puts, calls, straddles, spreads or any combination
thereof, except that it may obtain such short-term credits as are
necessary for the clearance of purchases and sales of securities, and
it may make margin payments in connection with transactions in
financial futures contracts and options thereon and municipal bond
index futures contracts.
4. Make loans, other than by investing in obligations in
which it may invest consistent with its investment objective and
policies, and other than by engaging in repurchase agreements and
loans of portfolio securities as described above.
5. Pledge, mortgage or hypothecate more than 33-1/3% of its
total assets; provided that for purposes of this restriction, reverse
repurchase agreements and loans of portfolio securities are not deemed
to involve the pledge, mortgage or hypothecation of assets, and
provided further that collateral arrangements with respect to margin
for financial or municipal bond index futures contracts are not deemed
to involve the pledge, mortgage or hypothecation of assets.
6. Purchase or sell real estate, but it may invest in
marketable securities secured by real estate or interests therein.
7. Purchase or sell commodities or commodities futures
contracts.
8. Underwrite any issue of securities, except that it may
purchase securities, either directly from an issuer or from an
underwriter for an issuer, and later dispose of such securities in
accordance with its investment program.
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<PAGE> 54
9. Invest in shares of any other investment company, other
than in connection with a merger, consolidation, reorganization or
acquisition of assets, except that it may invest in shares of other
investment companies representing compensation otherwise payable to
directors of the Company pursuant to any deferred compensation plan.
The following restrictions are non-fundamental and may be changed by
the Company's Board of Directors. Pursuant to such restrictions:
1. None of the Funds may invest in oil, gas or other mineral
leases, rights, royalty contracts or exploration or development
programs.
2. None of the Funds may invest for the purpose of exercising
control.
In order to permit the sale of the Funds' shares in certain states,
the Funds may from time to time make commitments that are more restrictive than
the restrictions described above. For example, as of the date of this
Statement of Additional Information, (1) each of the Funds has undertaken that
it will not invest more than 15% of its average net assets at the time of
purchase in investments which are not readily marketable (Texas); (2) each of
the Funds has undertaken to comply with Texas Rule 123.2(6) and follow SEC
guidelines which provide that loans of portfolio securities will be fully
collateralized (Texas); (3) each of the Funds has undertaken to comply with
Texas Rule 123.2(4) and not issue shares for any consideration other than cash
(Texas); (4) AIM TAX-EXEMPT BOND FUND OF CONNECTICUT has undertaken to not
hedge over 5% of the value of its assets without first amending its prospectus
to inform investors of the relevant risks (Maryland); (5) each of the Funds has
undertaken that it will not invest more than 15% of its respective total assets
in securities of issuers which together with any predecessors have a record of
less than three years of continuous operation or securities of issuers which
are restricted as to disposition (Ohio); and (6) the INTERMEDIATE PORTFOLIO has
undertaken that it will not invest more than 5% of its total assets in
securities of issuers which together with any predecessors have a record of
less than three years of continuous operation (Arkansas). Should any of the
Funds determine that any such commitment is no longer in the best interests of
the Fund and its shareholders, that Fund will revoke the commitment by
terminating sales of its shares in the state(s) involved.
Any loan of portfolio securities by a Fund (as permitted by the above
restrictions) would involve risks of delay in receiving additional collateral
in the event the value of the collateral decreased below the value of the
securities loaned, or of delay in recovering the securities loaned, or even
loss of rights in the collateral should the borrower of the securities fail
financially. However, loans of securities will only be made to borrowers
determined by AIM to be of good standing and only when, in AIM's judgment, the
income to be earned from such loans justifies the attendant risks.
INVESTMENT IN HIGH RISK SECURITIES: AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
ONLY
As noted in the Prospectus, in pursuit of its investment objective,
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT will maintain less than 35% of its net
assets in debt securities rated below Baa/BBB. Such non-investment grade debt
securities are typically considered high risk securities and are commonly
referred to as "junk bonds." During the latest fiscal year, the Fund did not
invest in any securities which were rated below investment grade, and the Fund
expects to invest less than 5% of its net assets in such securities during the
next fiscal year.
Issuers of non-investment grade debt securities are substantially
leveraged, which may impair their ability to meet their obligations. In some
cases, such securities are subordinated to the prior payment of indebtedness
senior to the securities purchased by the Fund, thus potentially limiting the
Fund's ability to recover full principal or to receive payments when senior
securities are in default. When the secondary market for non-investment grade
debt securities becomes increasingly illiquid, including the absence of
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<PAGE> 55
readily available market quotations, the relative lack of reliable, objective
data makes the responsibility of the Board of Directors to value the Fund's
securities more difficult, and judgment plays a greater role in the valuation
of portfolio securities, which may have a negative impact on the ability to
accurately value the Fund's assets. Also, increased illiquidity in the
non-investment grade debt market may affect the Fund's ability to dispose of
portfolio securities at a desirable price.
The credit rating of a security does not necessarily address its
market value risk. Also, ratings may from time to time be changed to reflect
developments in the issuer's financial condition. Non-investment grade debt
securities have speculative characteristics which generally increase in number
and significance with each successive lower rating category. Also, prices of
non-investment grade debt securities have been found to be less sensitive to
interest rate changes and more sensitive to adverse economic changes and
individual corporate developments than more highly rated debt securities.
RISKS REGARDING INTEREST RATE FUTURES CONTRACTS AND RELATED OPTIONS: AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT ONLY
There are several risks related to the use of interest rate futures
contracts and related options as hedging devices. One risk arises because of
the imperfect correlation between movements in the price of futures contracts
and movements in the price of the debt securities which are the subject of the
hedge. Such imperfect correlation is exacerbated in the case of AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT by the fact that futures contracts are not based on a
portfolio of bonds issued by the State of Connecticut and its political
subdivisions. If the price of a futures contract moves less than the price of
the Fund's investments which are the subject of the hedge, the hedge will not
be fully effective. If the price of a futures contract moves more than the
price of the Fund's investments, the Fund will experience either a loss or a
gain on the futures contract which will not be completely offset by movements
in the price of the investments which are the subject of the hedge. The use of
options on interest rate futures contracts also involves the risk that changes
in the value of the underlying futures contract will not be fully reflected in
the value of the option.
Successful use of interest rate futures contracts by the Fund is also
subject to AIM's ability to predict correctly movements in the direction of
interest rates. Because of possible price distortions in the futures and
options markets and because of the imperfect correlation between movements in
the prices of futures contracts and the investments being hedged, even a
correct forecast by AIM of general market trends may not result in a completely
successful hedging transaction.
It is possible that where the Fund has sold interest rate futures
contracts to hedge its portfolio against a decline in the market, the market
may advance and the value of debt securities held by the Fund may decline. If
this occurred, the Fund would lose money on the futures contracts and also
experience a decline in the value of its portfolio securities.
Positions in futures contracts or options may be closed out only on an
exchange on which such contracts are traded. Although the Fund intends to
purchase or sell futures contracts or purchase options only on exchanges or
boards of trade where there appears to be an active market, there is no
assurance that a liquid market on an exchange or board of trade will exist for
any particular contract or at any particular time. If there is not a liquid
market at a particular time, it may not be possible to close a futures contract
position or purchase an option at such time. In the event of adverse price
movements under those circumstances, the Fund would continue to be required to
make daily cash payments of maintenance margin on its futures positions. The
extent to which the Fund may engage in futures contracts or related options
will be limited by tax law requirements for qualification as a regulated
investment company and the Fund's intent to continue to qualify as such.
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<PAGE> 56
The result of any hedging program cannot be foreseen and may cause the
Fund to incur losses which it would not otherwise sustain.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during the last five years are set forth below. Unless otherwise
noted, the address of each director and officer is 11 Greenway Plaza, Suite
1919, Houston, Texas 77046.
*CHARLES T. BAUER, Director and Chairman (76)
Director, Chairman and Chief Executive Officer, A I M Management Group
Inc.; Chairman of the Board of Directors, A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company; and Director, AIM Global Advisors
Limited, A I M Global Management Company Limited and AIM Global Ventures Co.
BRUCE L. CROCKETT, Director (51)
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Director, President and Chief Executive Officer, COMSAT Corporation
(includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises , COMSAT RSI and COMSAT International Ventures). Previously,
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT; (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services company).
OWEN DALY II, Director (70)
6 Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly,
Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the Board of Equitable
Bancorporation.
__________________________________
* A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
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<PAGE> 57
*CARL FRISCHLING, Director (58
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel (law firm).
Formerly, Partner, Reid & Priest (law firm); and prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling (law firm).
*ROBERT H. GRAHAM, Director and President (48)
Director, President and Chief Operating Officer, A I M Management
Group Inc.; Director and President, A I M Advisors, Inc.; Director and
Executive Vice President, A I M Distributors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M Fund Services, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., AIM Global Ventures Co.,
A I M Institutional Fund Services, Inc. and Fund Management Company; and Senior
Vice President, AIM Global Advisors Limited.
JOHN F. KROEGER, Director (70)
24875 Swan Road - Martingham
Box 464
St. Michaels, MD 21663
Director, Flag Investors International Fund, Inc., Flag Investors
Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag
Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund,
Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax-Free Fund, Inc., Flag Investors Real Estate Securities Fund,
Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government Bond
Fund, Inc. (investment companies). Formerly, Consultant, Wendell & Stockel
Associates, Inc. (consulting firm).
LEWIS F. PENNOCK, Director (52)
8955 Katy Freeway, Suite 204
Houston, TX 77024
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Director (72)
183 River Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Service, Inc. (provider of centralized management services
to telephone companies); Executive Vice President, Bell Atlantic Corporation
(parent of seven telephone companies); and Vice President and Chief Financial
Officer, Bell Telephone Company of Pennsylvania and Diamond State Telephone
Company.
__________________________________
* A director who is an "interested person" of the Company as defined in
the 1940 Act.
** A director who is an "interested person of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
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<PAGE> 58
LOUIS S. SKLAR, Director (55)
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
***JOHN J. ARTHUR, Senior Vice President and Treasurer (50)
Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice
President and Treasurer, A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company; and Vice President, AIM Global
Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc.
and AIM Global Ventures Co.
GARY T. CRUM, Senior Vice President (47)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc. and AIM Global Ventures
Co.; Director, A I M Distributors, Inc.; and Senior Vice President, AIM Global
Advisors Limited.
***CAROL F. RELIHAN, Vice President and Secretary (40)
Vice President, General Counsel and Secretary, A I M Management Group
Inc., A I M Advisors, Inc., A I M Fund Services, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company; Vice President and Secretary, A I M
Distributors, Inc, A I M Global Associates, Inc. and A I M Global Holdings,
Inc.; Vice President and Assistant Secretary AIM Global Advisors Limited and
AIM Global Ventures Co.; and Secretary, A I M Capital Management, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (36)
Vice President and Fund Controller, A I M Advisors, Inc.; and
Assistant Vice President and Assistant Treasurer, Fund Management Company.
STUART W. COCO, Vice President (40)
Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc.
MELVILLE B. COX, Vice President (51)
Vice President, A I M Advisors, Inc., A I M Capital Management, Inc.,
A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc.; and
Assistant Vice President, A I M Distributors, Inc. and Fund Management Company.
Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary,
Charles Schwab Family of Funds and Schwab Investments; Chief Compliance
Officer, Charles Schwab Investment Management, Inc.; and Vice President,
Integrated Resources Life Insurance Co. and Capitol Life Insurance Co.
__________________________________
*** Mr. Arthur and Ms. Relihan are married.
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<PAGE> 59
KAREN DUNN KELLEY, Vice President (35)
Director, A I M Global Management Company Limited; Senior Vice
President, A I M Capital Management, Inc. and AIM Global Advisors Limited; and
Vice President, A I M Advisors, Inc. and AIM Global Ventures Co. Formerly,
trader, Federated Investors, Inc.
All of the directors of the Company serve as directors or trustees of
some or all of the other AIM Funds. All of the Company's executive officers
hold similar offices with some or all of the other AIM Funds.
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee, and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger
(Chairman), Pennock and Robinson. The Audit Committee is responsible for
meeting with the Funds' auditors to review audit procedures and results and to
consider any matters arising from an audit to be brought to the attention of
the directors as a whole with respect to the Funds' portfolio accounting or
their internal accounting controls, and for considering such matters as may
from time to time be set forth in a charter adopted by the Board of Directors
and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible
for reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating
individuals to stand for election as directors who are not interested persons
as long as any of the Funds maintains a distribution plan pursuant to Rule
12b-1 under the 1940 Act, reviewing from time to time the compensation payable
to the disinterested directors, and considering such matters as may from time
to time be set forth in a charter adopted by the Board of Directors and such
committee.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in connection with
each meeting of the Board of Directors or any Committee attended. The
Directors of the Company who do not serve as officers of the Company are
compensated for their services according to a fee schedule which recognizes the
fact that they also serve as directors or trustees of certain other investment
companies advised or managed by AIM. Each such director receives a fee,
allocated among the AIM Funds for which he serves as a director or trustee,
which consists of an annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended March 31, 1995 for each director of the Company:
<TABLE>
<CAPTION>
RETIREMENT
BENEFITS
AGGREGATE ACCRUED TOTAL
COMPENSATION BY ALL AIM COMPENSATION
Director FROM THE COMPANY(1) FUNDS(2) FROM ALL AIM FUNDS(3)
-------- ------------------- ---------- ---------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
</TABLE>
19
<PAGE> 60
<TABLE>
<CAPTION>
RETIREMENT
BENEFITS
AGGREGATE ACCRUED TOTAL
COMPENSATION BY ALL AIM COMPENSATION
Director FROM THE COMPANY(1) FUNDS(2) FROM ALL AIM FUNDS(3)
-------- ------------------- ---------- ---------------------
<S> <C> <C> <C>
Bruce L. Crockett $2,157.20 3,446.35 45,093.75
Owen Daly II 2,134.39 17,603.00 45,843.75
Carl Frischling 2,157.20 9,618.55 45,093.75 (4)
Robert H. Graham 0 0 0
John F. Kroeger 2,134.39 24,043.55 45,843.75
Lewis F. Pennock 2,134.39 5,850.45 45,843.75
Ian Robinson 2,157.20 13,201.65 45,093.75
Louis S. Sklar 2,157.20 5,871.80 45,093.75
</TABLE>
________________
(1) The total amount of compensation deferred by all Directors of the
Company during the fiscal year ended March 31, 1995, including interest earned
thereon, was $9,134.28.
(2) During the fiscal year ended March 31, 1995, the total amount of
expenses allocated to the Company in respect of such retirement benefits was
$505.23.
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serve as
Director or Trustee of a total of 11 AIM Funds. Messrs. Crockett, Frischling,
Robinson and Sklar each serves as a Director or Trustee of a total of 10 AIM
Funds. Data reflects compensation earned for the calendar year ended December
31, 1994.
(4) See also page 21 regarding fees earned by Mr. Frischling's former law firm.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not an employee of any
of the AIM Funds, A I M Management Group Inc. or any of their affiliates) may
be entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "AIM
Funds"). Each eligible director is entitled to receive an annual benefit from
the AIM Funds commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to 5% of such Director's
compensation paid by the AIM Funds multiplied by the number of such Director's
years of service (not in excess of 10 years of service) completed with respect
to any of the AIM Funds. Such benefit is payable to each eligible director in
quarterly installments for a period of no more than five years. If an eligible
director dies after attaining the normal retirement date but before receipt of
any benefits under the Plan commences, the director's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased director for no more than five years beginning the first day of
the calendar quarter
20
<PAGE> 61
following the date of the director's death. Payments under the Plan are not
secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming various compensation
and years of service classifications. The estimated credited years of service
as of December 31, 1994 for Messrs. Crockett, Daly, Frischling, Kroeger,
Pennock, Robinson and Sklar are 7, 8, 17, 17, 13, 7 and 5 years, respectively.
<TABLE>
<CAPTION>
Annual Compensation Paid By All AIM Funds
$40,000 $45,000 $50,000 $55,000
<S> <C> <C> <C> <C> <C>
Number of 10 $20,000 $22,500 $25,000 $27,500
Years of 9 $18,000 $20,250 $22,500 $24,750
Service With 8 $16,000 $18,000 $20,000 $22,000
the AIM Funds 7 $14,000 $15,750 $17,500 $19,250
6 $12,000 $13,500 $15,000 $16,500
5 $10,000 $11,250 $12,500 $13,750
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Company, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of his deferral account shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will
be paid in cash, in generally equal quarterly installments over a period of
five years beginning on the date the deferring director's retirement benefits
commence under the Plan. The Company's Board of Directors, in its sole
discretion, may accelerate or extend the distribution of such deferral accounts
after the deferring director's termination of service as a director of the
Company. If a deferring director dies prior to the distribution of amounts in
his deferral account, the balance of the deferral account will be distributed
to his designated beneficiary in a single lump sum payment as soon as
practicable after such deferring director's death. The Agreements are not
funded and, with respect to the payments of amounts held in the deferral
accounts, the deferring directors have the status of unsecured creditors of the
Company and of each other AIM Fund from which they are deferring compensation.
During the year ended March 31, 1995, the three months ended March 31,
1994 and the year ended December 31, 1993, AIM TAX-EXEMPT CASH FUND paid
$3,132, $95 and $8,709, respectively, in legal fees to Reid & Priest, the law
firm in which Mr. Frischling, a director of the Company, was a partner. During
the year ended March 31, 1995, the three months ended March 31, 1994 and the
year ended December 31, 1993, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT paid
$3,154, $115 and $8,916, respectively, in legal fees to Reid & Priest. During
the years ended March 31, 1995 and 1994, the INTERMEDIATE PORTFOLIO paid $3,392
and $4,717, respectively, in legal fees to Reid & Priest. Effective September,
1994, the firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel ("Kramer
Levin") was appointed counsel to the Board of Directors. AIM Tax-Exempt Cash
Fund, AIM Tax-Exempt Bond Fund of Connecticut and Intermediate Portfolio paid
legal fees of $601, $605 and $655, respectively, to Kramer
21
<PAGE> 62
Levin for services rendered to the Board of Directors. Mr. Frischling, a
director of the Company, is a partner in Kramer Levin.
INVESTMENT ADVISORY AND OTHER SERVICES
AIM is a wholly owned subsidiary of A I M Management Group Inc. ("AIM
Management"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046. AIM
Management is a holding company that has been engaged in the financial services
business since 1976. Certain of the directors and officers of AIM are also
executive officers of the Company and their affiliations are shown under
"Directors and Officers". AIM Capital, a wholly owned subsidiary of AIM, is
engaged in the business of providing investment advisory services to investment
companies, corporations, institutions and other accounts.
AIM was organized in 1976, and advises or manages 37 investment
company portfolios. As of July 1, 1995, the total assets of the investment
company portfolios advised or managed by AIM and its affiliates were
approximately $32.5 billion.
AIM and the Company have adopted a Code of Ethics (the "Code") which
requires investment personnel (a) to pre- clear all personal securities
transactions, (b) to file reports regarding such transactions, and (c) to
refrain from personally engaging in (i) short-term trading of a security, (ii)
transactions involving a security within seven days of an AIM Fund transaction
involving the same security, and (iii) transactions involving securities being
considered for investment by an AIM Fund. The Code also prohibits investment
personnel from purchasing securities in an initial public offering. Personal
trading reports are reviewed periodically by AIM, and the Board of Directors
annually reviews such reports (including information on any substantial
violations of the Code). Violations of the Code may result in censure,
monetary penalties, suspension or termination of employment.
The Company, on behalf of each Fund, has entered into a Master
Investment Advisory Agreement (the "Advisory Agreement") and a Master
Administrative Services Agreement (the "Administrative Agreement") with AIM.
CIGNA Investments, Inc. ("CII") served as advisor to AIM TAX-EXEMPT CASH FUND
and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT prior to June 30, 1992.
The Advisory Agreement provides that each Fund will pay or cause to be
paid all expenses of the Fund not assumed by AIM, including, without
limitation: brokerage commissions; taxes, legal, accounting, auditing or
governmental fees; the cost of preparing share certificates; custodian,
transfer and shareholder service agent costs; expenses of issue, sale,
redemption and repurchase of shares; expenses of registering and qualifying
shares for sale; expenses relating to directors and shareholders meetings; the
cost of preparing and distributing reports and notices to shareholders; the
fees and other expenses incurred by the Company on behalf of each Fund in
connection with membership in investment company organizations; the cost of
printing copies of prospectuses and statements of additional information
distributed to the Fund's shareholders; and all other charges and costs of the
Fund's operations unless otherwise explicitly provided. The Advisory Agreement
will continue in effect from year to year only if such continuance is
specifically approved at least annually by the Company's Board of Directors and
by the affirmative vote of a majority of the directors who are not parties to
the Advisory Agreement or "interested persons" of any such party (the
"Non-Interested Directors") by votes cast in person at a meeting called for
such purpose. The Advisory Agreement was approved by the Company's Board of
Directors (including the affirmative vote of all the Non-Interested Directors
on July 19, 1993. The Advisory Agreement became effective as of October 18,
1993. Under the Advisory Agreement, AIM is entitled to receive a fee from AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT at the annual
rates of 0.35% and 0.50% of those Funds' average daily net assets,
respectively. The Advisory Agreement also provides that AIM is entitled to
receive a fee from the INTERMEDIATE PORTFOLIO at the following annual rates
based on the Fund's average daily net assets:
22
<PAGE> 63
INTERMEDIATE PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $500 million 0.30%
Next $500 million 0.25%
Amount over $1 billion 0.20%
</TABLE>
Each Fund or AIM may terminate the Advisory Agreement on sixty (60)
days' written notice without penalty. The Advisory Agreement terminates
automatically in the event of its assignment.
The Advisory Agreement provides that if, for any fiscal year, the
total of all ordinary business expenses of a Fund, including all investment
advisory fees, but excluding brokerage commissions and fees, taxes, interest
and extraordinary expenses, such as litigation costs, exceed the applicable
expense limitations imposed by state securities regulations in any state in
which that Fund's shares are qualified for sale, as such limitations may be
raised or lowered from time to time, the aggregate of all such investment
advisory fees shall be reduced by the amount of such excess. The amount of any
such reduction to be borne by AIM shall be deducted from the monthly investment
advisory fee otherwise payable to AIM during such fiscal year. If required
pursuant to such state securities regulations, AIM will reimburse a Fund no
later than the last day of the first month of the next succeeding fiscal year
for any such annual operating expenses (after reduction of all investment
advisory fees in excess of such limitation).
For the year ended March 31, 1995, the three-month period ended March
31, 1994 and the year ended December 31, 1993, AIM received advisory fees from
AIM TAX-EXEMPT CASH FUND of $119,085, $17,773 and $37,767, respectively. For
the six-month period ended June 30, 1992 and the year ended December 31, 1991,
CII received advisory fees from the Fund of $73,449 and $156,568, respectively.
For the years ended March 31, 1995, 1994 and 1993, AIM received
advisory fees from the INTERMEDIATE PORTFOLIO of $283,990, $246,347 and $9,932,
respectively. For the years ended March 31, 1995, 1994 and 1993, AIM waived
advisory fees from the INTERMEDIATE PORTFOLIO in the amounts of $0, $25,418
and $150,179, respectively.
For the year ended March 31, 1995, the three-month period ended March
31, 1994 and the year ended December 31, 1993, AIM received no advisory fees
from AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, and waived $195,413, $55,417 and
$198,782, respectively, of such fees. For the six months ended June 30, 1992
and the year ended December 31, 1991, CII also received no advisory fees from
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, and waived $76,586 and $135,115,
respectively, of such fees.
The Administrative Agreement for the Funds provides that AIM may
perform, or arrange for the performance of, certain accounting, shareholder
servicing and other administrative services to the Funds which are not required
to be performed by AIM under the Advisory Agreement. For such services, AIM
would be entitled to receive from each Fund reimbursement of AIM's costs or
such reasonable compensation as may be approved by the Company's Board of
Directors. The Administrative Agreement provides that such agreement will
continue in effect until June 30, 1995, and shall continue in effect from year
to year thereafter only if such continuance is specifically approved at least
annually by the Company's Board of Directors, including the Non-Interested
Directors, by votes cast in person at a meeting called for such purpose. The
Administrative Agreement was approved by the Company's Board of Directors
(including the Non- Interested Directors) on July 19, 1993 and became effective
as of October 18, 1993.
In addition, the Transfer Agency and Service agreement for the Fund
provides that A I M Fund Services, Inc. ("AFS"), a registered transfer agent
and wholly-owned subsidiary of AIM, will perform certain
23
<PAGE> 64
shareholder services for the Fund for a fee per account serviced. The Transfer
Agency and Service Agreement provides that AFS will receive a per account fee
plus out-of-pocket expenses to process orders for purchases, redemptions and
exchanges of shares, prepare and transmit payments for dividends and
distributions declared by the Fund, maintain shareholder accounts and provide
shareholders with information regarding the Fund and their accounts. The
Transfer Agency and Service Agreement became effective on November 1, 1994.
For the year ended March 31, 1995, the three-month period ended March
31, 1994 and the year ended December 31, 1993, AIM TAX-EXEMPT CASH FUND
reimbursed AIM $43,481, $11,576 and $37,419, respectively, for administrative
services. For the six-month period ended June 30, 1992, the Fund reimbursed
CII for the Office of the Treasurer and the Office of the Secretary in the
amounts of $10,999 and $2,862, respectively.
For the years ended March 31, 1995, 1994 and 1993, the INTERMEDIATE
PORTFOLIO reimbursed AIM $43,890, $44,521 and $34,090 respectively, for
administrative services.
For the year ended March 31, 1995, the three-month period ended March
31, 1994 and the year ended December 31, 1993, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT reimbursed AIM for administrative services in the amounts of
$46,754, $11,548 and $43,717, respectively. Had AIM not waived such
reimbursement for the six-month period ended December 31, 1992, the Fund would
have reimbursed AIM $7,000 for administrative services. For the six-month
period ended June 30, 1992, the Fund did not reimburse CII for administrative
services due to CII's waiver of such payments. Had CII not waived such
payments, the Fund would have reimbursed CII $8,593 and $2,242 for the Office
of the Treasurer and the Office of the Secretary, respectively.
DISTRIBUTION PLAN
The Company has adopted a Master Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act relating to AIM TAX-EXEMPT CASH FUND
and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT (collectively, the "Covered
Funds"). The Plan provides that each Covered Fund pays a fee to AIM
Distributors for distribution-related services performed by AIM Distributors,
including, but not limited to, expenses of organizing and conducting sales
seminars, printing of prospectuses and statements of additional information
(and supplements thereto) and reports for other than existing shareholders,
preparation and distribution of advertising material and sales literature and
costs of administering the Plan. Under the Plan, AIM Distributors is entitled
to receive a distribution fee, which is accrued daily and paid monthly, of
0.25% on an annualized basis of the average daily net assets of each Covered
Fund. The Plan does not obligate the Covered Funds to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Plan on behalf of the Covered Funds. Thus, under the
Plan, even if AIM Distributors' actual expenses exceed the fees payable by the
Covered Funds thereunder at any given time, the Covered Funds will not be
obligated to pay more than those fees. If AIM Distributors' expenses are less
than the fees it receives, AIM Distributors will retain the full amount of the
fees. Currently, AIM Distributors has voluntarily elected to waive a portion
of its compensation payable by AIM TAX-EXEMPT CASH FUND such that the
compensation paid pursuant to the Plan equals 0.10% per annum of that Fund's
average daily net assets. This waiver may be rescinded by AIM Distributors at
any time and without notice to investors.
AIM Distributors is a wholly-owned subsidiary of AIM, which is in turn
a wholly-owned subsidiary of A I M Management Group Inc. ("AIM Management").
The Plan requires the officers of the Company to provide the Board of
Directors at least quarterly with a written report of the amounts expended
pursuant to the Plan and the purposes for which such
24
<PAGE> 65
expenditures were made. The Board of Directors reviews these reports in
connection with their decisions with respect to the Plan.
As required by Rule 12b-1 under the 1940 Act, the Plan was approved by
the Board of Directors, including a majority of the directors who are not
"interested persons" (as defined in the 1940 Act) of the Company and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan ("Qualified Directors") on July 19, 1993. In
approving the Plan in accordance with the requirements of Rule 12b-1, the
directors considered various factors and determined that there is a reasonable
likelihood that the Plan would benefit the Covered Funds and their respective
shareholders.
The Plan became effective on August 6, 1993, and unless terminated
earlier in accordance with its terms, shall continue in effect until June 30,
1995, and each year thereafter as long as such continuance is specifically
approved at least annually by the Board of Directors, including a majority of
the Qualified Directors.
The Plan may be terminated by a vote of a majority of the Qualified
Directors, or, with respect to a Covered Fund, by a vote of a majority of the
holders of the outstanding voting securities of that Covered Fund. Any change
in the Plan that would increase materially the distribution expenses paid by a
Covered Fund requires shareholder approval; otherwise the Plan may be amended
by the Board of Directors, including a majority of the Qualified Directors, by
votes cast in person at a meeting called for the purpose of voting upon such
amendment. As long as the Plan is in effect, the selection or nomination of the
Qualified Directors is committed to the discretion of the Qualified Directors.
The Covered Funds had a different plan of distribution pursuant to
Rule 12b-1 under the 1940 Act (the "Former Plan") for the period prior to
October 15, 1993. The Former Plan provided that the Covered Funds would pay
AIM Distributors a fee of up to 0.25% of each Covered Fund's respective average
daily net assets to reimburse AIM Distributors for its expenses incurred in
distributing shares of the Covered Funds.
For the year ended March 31, 1995, the three-month period ended March
31, 1994 and the year ended December 31, 1993, AIM TAX-EXEMPT CASH FUND paid a
total of $34,024, $8,350 and $83,903, respectively, under the Plan and the
Former Plan, which constituted 0.10%, 0.10% (annualized) and 0.25%,
respectively, of the Fund's average daily net assets. For the year ended March
31, 1995, the three-month period ended March 31, 1994 and the year ended
December 31, 1993, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT paid a total of
$97,706, $27,709 and $99,391, respectively, under the Plan and the Former Plan,
which constituted 0.25%, 0.25% (annualized) and 0.25%, respectively, of the
Fund's average daily net assets. The fees paid by each Covered Fund under the
Plan and the Former Plan during the year ended March 31, 1995, the three-month
period ended March 31, 1994 and the year ended December 31, 1993 were spent as
follows:
<TABLE>
<CAPTION>
AIM TAX- AIM TAX-EXEMPT
EXEMPT BOND FUND OF
CASH FUND* CONNECTICUT*
--------- -----------
1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Advertising $ 0 $ 0 $ 982 $ 0 $ 0 $ 20
Printing and mailing 0 0 5,731 0 0 362
Shareholder Service Agreements 40,345 8,350 77,190 99,600 27,709 99,009
</TABLE>
* Table contains estimated numbers.
25
<PAGE> 66
Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with such investment dealers
selected from time to time by AIM Distributors to provide distribution
assistance in connection with the sale of the Covered Funds' shares to such
dealers' customers, and to provide continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Covered Funds. The distribution assistance and continuing personal shareholder
services to be rendered by dealers under the Shareholder Service Agreements may
include, but shall not be limited to, the following: distributing sales
literature; answering routine customer inquiries concerning the Covered Funds;
assisting customers in changing dividend options, account designations and
addresses, and in enrolling in any of several special investment plans offered
in connection with the purchase of the Covered Funds' shares; assisting in the
establishment and maintenance of customer accounts and records and in the
processing of purchase and redemption transactions; investing dividends and any
capital gains distributions automatically in the Covered Funds' shares; and
providing such other information and services as the Covered Funds or the
customer may reasonably request.
Under the Plan, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plan to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding a Covered
Fund and the Company; performing sub-accounting; establishing and maintaining
shareholder accounts and records; processing customer purchase and redemption
transactions; providing periodic statements showing a shareholder's account
balance and the integration of such statements with those of other transactions
and balances in the shareholder's other accounts serviced by the bank;
forwarding applicable prospectuses, proxy statements, reports and notices to
bank clients who hold Covered Fund shares; and such other administrative
services as a Covered Fund reasonably may request, to the extent permitted by
applicable statute, rule or regulation.
Under a Shareholder Service Agreement, a Covered Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement will be calculated at the end of each payment period for each
business day of the Covered Funds during such period at the annual rate of
0.25% of the average daily net asset value of each Covered Fund's shares
purchased or acquired through exchange. Fees calculated in this manner shall
be paid only to those selected dealers or other institutions who are dealers or
institutions of record at the close of business on the last business day of the
applicable payment period for the account in which such Covered Fund's shares
are held. Due to AIM Distributors' waiver of fees payable by AIM TAX-EXEMPT
CASH FUND under the Plan, fees payable under Shareholder Service Agreements
currently are limited to 0.10% of the average daily net asset value of that
Covered Fund's shares purchased or acquired through exchange.
The Plan is subject to any applicable limitations imposed from time to
time by rules of the National Association of Securities Dealers, Inc.
AIM Distributors does not act as principal, but rather as agent for
the Covered Funds, in making dealer incentive and shareholder servicing
payments under the Plan. These payments are an obligation of the Covered Funds
and not of AIM Distributors.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Funds' shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A
Master Distribution Agreement (the "Distribution Agreement") was approved by
the Board of Directors of the Company on July 19, 1993. The Distribution
Agreement provides that AIM
26
<PAGE> 67
Distributors will bear the expenses of printing from the final proof and
distributing the Funds' prospectuses and statements of additional information
relating to public offerings made by AIM Distributors pursuant to the
Distribution Agreement (other than those prospectuses and statements of
additional information distributed to existing shareholders of the Funds), and
any promotional or sales literature used by AIM Distributors or furnished by
AIM Distributors to dealers in connection with the public offering of the
Funds' shares, including expenses of advertising in connection with such public
offerings. AIM Distributors has not undertaken to sell any specified number of
shares of the Funds.
AIM Distributors will make payments to dealers and institutions who
are dealers of record for purchases of $1 million or more at net asset value
and subject to a contingent deferred sales charge for all AIM Funds other than
AIM Limited Maturity Treasury Shares and AIM TAX-FREE INTERMEDIATE SHARES as
follows: 1% of the first $2 million of such purchases, plus 0.80% of the next
$1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases.
Each Fund or AIM Distributors may terminate the Distribution Agreement
on sixty (60) days' written notice without penalty. The Distribution Agreement
will terminate automatically in the event of its assignment.
For the years ended March 31, 1995, 1994 and 1993, the total sales
charges paid in connection with the sale of shares of AIM TAX-FREE INTERMEDIATE
SHARES were $71,141, $382,263 and $534,895, respectively, of which AIM
Distributors retained $18,075, $76,101 and $123,119, respectively.
For the year ended March 31, 1995, the three-month period ended March
31, 1994 and the year ended December 31, 1993, the total sales charges paid in
connection with the sale of shares of AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
were $132,560, $39,971 and $236,948, respectively, of which AIM Distributors
retained $21,690, $8,070 and $50,617, respectively. For the six-month period
ended June 30, 1992 and the year ended December 31, 1991, the total sales
charges paid in connection with the sale of shares of the Fund were $263,733
and $276,743, respectively, of which CIGNA Capital Brokerage, Inc. ("CCB"), the
Fund's former distributor, retained $4,133 and $8,000, respectively.
MISCELLANEOUS INFORMATION
SHAREHOLDER INQUIRIES
The Transfer Agent may impose certain copying charges for requests for
copies of shareholder account statements and other historical account
information older than the current year and the immediately preceding year.
AUDIT REPORTS
The Board of Directors will issue to shareholders at least
semi-annually the Funds' financial statements. Financial statements, audited
by independent auditors, will be issued annually. The firm of Price Waterhouse
LLP served as the auditors to AIM TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT for the year ended December 31, 1992. The firm of KPMG
Peat Marwick LLP currently serves as the auditors of the Funds.
LEGAL MATTERS
Legal matters for the Company have been passed upon by Ballard Spahr
Andrews & Ingersoll, Philadelphia, Pennsylvania.
27
<PAGE> 68
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin
Street, Boston, Massachusetts 02110 is custodian of all securities and cash of
the Funds. Under its contract with the Company, the Custodian maintains the
portfolio securities of the Funds, administers the purchases and sales of
portfolio securities, collects interest and dividends and other distributions
made on the securities held in the portfolios of the Funds and performs other
ministerial duties. A I M Fund Services, Inc. (a wholly-owned subsidiary of
AIM)(the "Transfer Agent"), P.O. Box 4739, Houston, Texas 77210-4739, acts as
transfer and dividend disbursing agent for the Funds. These services do not
include any supervisory function over management or provide any protection
against any possible depreciation of assets. The Funds pay the Custodian and
the Transfer Agent such compensation as may be agreed upon from time to time.
Texas Commerce Bank National Association, P. O. Box 2558, Houston,
Texas 77252-8084, serves as Sub-Custodian for retail purchases of the AIM
Funds.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of July 17, 1995, the directors and officers of the Company as a
group owned less than 1% of the outstanding shares of AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT. Also as of July 17, 1995, Charles T. Bauer, Chairman and
Director of the Company, owned of record 2.71% of the outstanding shares of AIM
TAX-EXEMPT CASH FUND and Gary T. Crum, Senior Vice President of the Company,
owned of record 0.64% of the outstanding shares of that Fund, while the other
officers and directors of the Company as a group owned less than 1% of the
outstanding shares of that Fund. Also as of July 17, 1995, Robert H. Graham
beneficially owned 1.04% of the outstanding shares of the INTERMEDIATE
PORTFOLIO, while the other officers and directors of the Company as a group
owned less than 1% of the outstanding shares of that Fund.
To the best knowledge of the Company, the names and addresses of the
holders of 5% or more of the outstanding shares of each Fund as of July 17,
1995, and the amount of outstanding shares held of record or beneficially by
such holders are set forth below:
<TABLE>
<CAPTION>
Percent Owned
Name and Address of Number of Shares Owned of Record
Fund Record or Beneficial Owner of Record or Beneficially or Beneficially
- ---- -------------------------- ------------------------- ------------------
<S> <C> <C> <C>
Intermediate Portfolio Merrill Lynch, Pierce, 473,394.000* 6.92%*
Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232
</TABLE>
* The Company has no knowledge as to whether all or any of the shares owned of
record only are also owned beneficially.
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<PAGE> 69
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which the shares of the Funds
may be purchased appears in the Prospectus under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
The sales charge normally deducted on purchases of shares of AIM
TAX-FREE INTERMEDIATE SHARES and AIM TAX- EXEMPT BOND FUND OF CONNECTICUT is
used to compensate AIM Distributors and participating dealers for their
expenses incurred in connection with the distribution of such Funds' shares.
Since there is little expense associated with unsolicited orders placed
directly with AIM Distributors by persons who, because of their relationship
with the Funds or with AIM and its affiliates, are familiar with the Funds
(e.g., due to the size of the transaction and shareholder records required),
AIM Distributors believes that it is appropriate and in a Fund's best interest
that such persons, and certain other persons whose purchases result in
relatively low expenses of distribution, be permitted to purchase shares of AIM
TAX-FREE INTERMEDIATE SHARES and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
through AIM Distributors without payment of a sales charge. The persons who
may purchase shares of those Funds without a sales charge are set forth in the
Prospectus.
Complete information concerning the method of exchanging shares of the
Funds for shares of the other AIM Funds is set forth in the Prospectus under
the heading "Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in
the Prospectus under the heading "How to Redeem Shares." In addition to the
Funds' obligation to redeem shares, AIM Distributors may also repurchase shares
as an accommodation to shareholders. To effect a repurchase, those dealers who
have executed Selected Dealer Agreements with AIM Distributors must phone
orders to the order desk of the Funds (Telephone: (713) 626-1919 (in Houston)
or (800) 959-4246 (elsewhere)) and guarantee delivery of all required documents
in good order. A repurchase is effected at the net asset value per share of
the applicable Fund next determined after the repurchase order is received.
Such arrangement is subject to timely receipt by A I M Fund Services, Inc. (a
wholly-owned subsidiary of AIM), the Funds' transfer agent, of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation. While there is no charge imposed by a Fund or by AIM
Distributors when shares are redeemed or repurchased, dealers may charge a fair
service fee for handling the transaction.
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the New York Stock Exchange is restricted, as
determined by applicable rules and regulations of the SEC, (b) the New York
Stock Exchange is closed for other than customary weekend and holiday closings,
(c) the SEC has by order permitted such suspension, or (d) an emergency as
determined by the SEC exists making disposition of portfolio securities or the
valuation of the net assets of the Fund not reasonably practicable.
A Fund's net asset value is calculated by dividing the number of
outstanding shares into the net assets of the Fund. Net assets are the excess
of a Fund's assets over its liabilities.
For AIM TAX-EXEMPT CASH FUND: The Fund may use the amortized cost
method to determine its net asset value so long as the Fund does not (a)
purchase any instrument with a remaining maturity greater than 397 days (for
these purposes, repurchase agreements shall not be deemed to involve the
purchase by the Fund of the securities pledged as collateral in connection with
such agreements) or (b) maintain a dollar-weighted average portfolio maturity
in excess of 90 days, and otherwise complies with the terms of rules adopted by
the SEC.
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<PAGE> 70
Under the amortized cost method, each investment is valued at its cost
and thereafter any discount or premium is amortized on a constant basis to
maturity. While this method provides certainty of valuation, it may result in
periods in which the amortized cost value of the Fund's investments is higher
or lower than the price that would be received if the investments were sold.
During periods of declining interest rates, use by the Fund of the amortized
cost method of valuing its portfolio may result in a lower value than the
market value of the portfolio, which could be an advantage to new investors
relative to existing shareholders. The converse would apply in a period of
rising interest rates.
The Board of Directors has established procedures designed to
stabilize at $1.00, to the extent reasonably possible, the Fund's net asset
value per share. Such procedures include review of portfolio holdings by the
directors at such intervals as they may deem appropriate to determine whether
net asset value, calculated by using available market quotations, deviates from
$1.00 per share and, if so, whether such deviation may result in material
dilution or is otherwise unfair to investors or existing shareholders. In the
event the directors determine that a deviation having such a result exists,
they intend to take such corrective action as they deem necessary and
appropriate, including the sale of portfolio securities prior to maturity in
order to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends; redemption of shares in kind; or establishing
a net asset value per share by using available market quotations, in which
case, the net asset value could possibly be more or less than $1.00 per share.
For the INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT: Securities held by the INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT are valued using market quotations or at fair value
determined by a pricing service approved by the Board of Directors. Debt
securities with remaining maturities of sixty (60) days or less are valued on
the basis of amortized cost. All variable rate securities held by such Funds,
with an unconditional demand or put feature exercisable within seven (7) days
or less are valued at par, which reflects the market value of such securities.
Securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
the Board of Directors.
The following formula may be used to determine the public offering
price per share of an investment in the INTERMEDIATE PORTFOLIO or AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT:
Net Asset Value / (1 - Sales Charge as % of Offering Price) = Offering Price.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Net investment income for each Fund is declared as a dividend to the
shareholders of record of such Fund on each business day of the Fund.
Dividends will be paid monthly. Net realized capital gains, if any, are
normally distributed annually, although AIM TAX-EXEMPT CASH FUND may distribute
short-term capital gains more frequently. Dividends and distributions are
reinvested in additional full and fractional shares of the Fund at the net
asset value thereof, unless the shareholder has elected to have dividends and
distributions paid in cash. Dividends and distributions may also be reinvested
in shares of another AIM Fund. See the caption "Dividends, Distributions and
Tax Matters" in the Prospectus.
Dividends with respect to the shares of the INTERMEDIATE PORTFOLIO and
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT begin accruing on the day on which
payment is received for the purchase of shares, and accrue through the day
preceding the date of payment of redemption proceeds. Dividends with respect
to the shares of AIM TAX-EXEMPT CASH FUND begin accruing on the day after which
payment is received, and accrue through the date of payment of redemption
proceeds.
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<PAGE> 71
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Funds and their shareholders that are
not described in the Funds' Prospectus. No attempt is made to present a
detailed explanation of the tax treatment of the Funds or their shareholders,
and the discussion here and in the Funds' Prospectus is not intended as a
substitute for careful tax planning. Investors are urged to consult their tax
advisors with specific reference to their own tax situation.
Qualification as a Regulated Investment Company. Each Fund intends to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). As a regulated investment
company, a Fund is not subject to federal income tax on the portion of its net
investment income (i.e., taxable interest, dividends and other taxable ordinary
income, net of expenses) and capital gain net income (i.e., the excess of
capital gains over capital losses) that it distributes to shareholders,
provided that it distributes an amount at least equal to the sum of (a) 90% of
its investment company taxable income (i.e., net investment income and the
excess of net short-term capital gain over net long-term capital loss) and (b)
90% of its tax-exempt income (net of allocable expenses and amortized bond
premium) for the taxable year (the "Distribution Requirement"), and satisfies
certain other requirements of the Code that are described below. Distributions
by each Fund made during the taxable year or, under specified circumstances,
within twelve months after the close of the taxable year, will be considered
distributions of income and gains of the taxable year and can therefore satisfy
the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities)
and other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
securities or currencies (the "Income Requirement"); and (2) derive less than
30% of its gross income from the sale or other disposition of securities or
foreign currencies that are not directly related to its principal business of
investing in securities (or options, futures or forward contracts thereon) held
for less than three months (the "Short-Short Gain Test"). Because of the
Short-Short Gain Test, a Fund may have to limit the sale of appreciated
securities that it has held for less than three months. However, the
Short-Short Gain Test will not prevent a Fund from disposing of investments at
a loss, since the recognition of a loss before the expiration of the
three-month holding period is disregarded. Interest (including original issue
discount) received by a Fund at maturity or upon the disposition of a security
held for less than three months will not be treated as gross income derived
from the sale or other disposition of such security within the meaning of the
Short-Short Gain Test. However, income that is attributable to realized market
appreciation will be treated as gross income from the sale or other disposition
of securities for this purpose.
At the close of each quarter of a Fund's taxable year, at least 50% of
the value of the Fund's assets must consist of cash and cash items, U.S.
Government securities, securities of other regulated investment companies, and
securities of other issuers (as to which the Fund has not invested more than 5%
of the value of the Fund's total assets in securities of such issuer and as to
which the Fund does not hold more than 10% of the outstanding voting securities
of such issuer), and no more than 25% of the value of its total assets may be
invested in the securities of any one issuer (other than U.S. Government
securities and securities of other regulated investment companies), or in two
or more issuers which the Fund controls and which are engaged in the same or
similar trades or businesses.
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and
such distributions will be taxable as ordinary dividends to the extent of the
Fund's current
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<PAGE> 72
and accumulated earnings and profits. Such distributions will be eligible for
the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies. A 4% non-deductible
excise tax is imposed on a regulated investment company that fails to
distribute in each calendar year an amount equal to 98% of its ordinary taxable
income for the calendar year plus 98% of its capital gain net income (excess of
capital gains over capital losses) for the one-year period ended on October 31
of such calendar year. The balance of such income must be distributed during
the next calendar year. Undistributed tax-exempt interest on Municipal
Securities (as defined under "Investment Program and Restrictions -- Municipal
Securities") is not subject to the excise tax. For the foregoing purposes, a
regulated investment company is treated as having distributed any amount on
which it is subject to income tax for any taxable year ending in such calendar
year.
Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax.
However, investors should note that a Fund may in certain circumstances be
required to liquidate portfolio investments if it intends to make sufficient
distributions to avoid excise tax liability.
Tax Treatment of Interest Rate Futures Contracts and Related Options.
Section 1092 of the Code affects the taxation of certain transactions involving
futures or options contracts. If a futures or options contract is part of a
"straddle" (which could include another futures contract or underlying stock or
securities), as defined in Section 1092 of the Code, then, generally, losses
are deferred first to the extent that the modified "wash sale" rules of the
Section 1092 regulations apply, and second to the extent of unrecognized gains
on offsetting positions. Further, a Fund may be required to capitalize, rather
than deduct currently, any interest expense on indebtedness incurred or
continued to purchase or carry any positions that are part of a straddle.
Sections 1092 of the Code and the Treasury Regulations thereunder also suspend
the holding periods for straddle positions with possible adverse effects
regarding long-term capital gain treatment.
Section 1256 of the Code generally requires that futures contracts and
options on futures contracts be "marked- to-market" at the end of each year for
federal income tax purposes. Code Section 1256 further characterizes 60% of
any capital gain or loss with respect to such futures and options contracts as
long-term capital gain or loss and 40% as short-term capital gain or loss. If
such a future or option is held as an offsetting position and can be considered
a straddle under Section 1092 of the Code, such a straddle will constitute a
mixed straddle. A mixed straddle will be subject to both Section 1256 and
Section 1092 unless certain elections are made by a Fund.
Fund Distributions. Each Fund intends to qualify to pay
exempt-interest dividends by satisfying the requirement that at the close of
each quarter of a Fund's taxable year at least 50% of the Fund's total assets
consist of tax-exempt Municipal Securities. Distributions from a Fund will
constitute exempt-interest dividends to the extent of the Fund's tax-exempt
interest income (net of allocable expenses and amortized bond premium).
Exempt-interest dividends distributed to shareholders of a Fund are excluded
from gross income for federal income tax purposes. However, shareholders who
file federal income tax returns will be required to report the receipt of
exempt-interest dividends on such returns. Moreover, while exempt-interest
dividends are excluded from gross income for federal income tax purposes, they
may be subject to alternative minimum tax ("AMT") in certain circumstances and
may have other collateral tax consequences as discussed below. Distributions
by a Fund of any investment company taxable income or of any net capital gain
will be taxable to shareholders as discussed below.
AMT is imposed in addition to, but only to the extent it exceeds, the
regular tax and is computed at a maximum rate of 28% for non-corporate
taxpayers and 20% for corporate taxpayers on the excess of the taxpayer's
alternative minimum taxable income ("AMTI") over an exemption amount. In
addition, under the Superfund Amendments and Reauthorization Act of 1986, a tax
is imposed for taxable years beginning
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<PAGE> 73
after 1986 and before 1996 at the rate of 0.12% on the excess of a corporate
taxpayer's AMTI (determined without regard to the deduction for this tax and
the AMT net operating loss deduction) over $2 million. Exempt-interest
dividends derived from certain "private activity" Municipal Securities issued
after August 7, 1986 will generally constitute an item of tax preference
includable in AMTI for both corporate and non-corporate taxpayers. In
addition, exempt-interest dividends derived from all Municipal Securities,
regardless of the date of issue, must be included in adjusted current earnings,
which are used in computing an additional corporate preference item (i.e., 75%
of the excess of a corporate taxpayer's adjusted current earnings over its AMTI
(determined without regard to this item and the AMT net operating loss
deduction)) includable in AMTI.
Exempt-interest dividends must be taken into account in computing the
portion, if any, of social security or railroad retirement benefits that must
be included in an individual shareholder's gross income subject to federal
income tax. Further, a shareholder of a Fund is denied a deduction for
interest on indebtedness incurred or continued to purchase or carry such
shares. Moreover, a shareholder who is (or is related to) a "substantial user"
of a facility financed by industrial development bonds held by a Fund will
likely be subject to tax on dividends paid by the Fund which are derived from
interest on such bonds. Receipt of exempt-interest dividends may result in
other collateral federal income tax consequences to certain taxpayers,
including financial institutions, property and casualty insurance companies and
foreign corporations engaged in a trade or business in the United States.
Prospective investors should consult their own tax advisors as to such
consequences.
Each Fund anticipates distributing substantially all of its investment
company taxable income, if any, for each taxable year. Such distributions will
be taxable to shareholders as ordinary income and treated as dividends for
federal income tax purposes, but they will not qualify for the 70%
dividends-received deduction for corporations.
Each Fund may either retain or distribute to shareholders its net
capital gain, if any, for each taxable year. Each Fund currently intends to
distribute any such amounts. If net capital gain is distributed and designated
as a capital gain distribution, it will be taxable to shareholders as long-term
capital gain, regardless of the length of time the shareholder has held his
shares or whether such gain was recognized by a Fund prior to the date on which
the shareholder acquired his shares. If a Fund does not distribute its net
capital gain in any taxable year, such Fund will be subject to taxes on such
net capital gain at the highest corporate rate. If a Fund elects to retain its
net capital gain, it is expected that the Fund also will elect to have
shareholders treated as if each received a distribution of its pro rata share
of such gain, with the result that each shareholder will be required to report
its pro rata share of such gain on its tax return as long-term capital gain,
will receive a refundable tax credit for its share of tax paid by the Fund on
the gain, and will increase the tax basis for its shares by an amount equal to
the deemed distribution less the tax credit. Realized market discount on
Municipal Securities purchased after April 30, 1993 will be treated as ordinary
income and not as capital gain.
Distributions by a Fund that do not constitute ordinary income
dividends, exempt-interest dividends or capital gain distributions will be
treated as a return of capital to the extent of (and in reduction of) the
shareholder's tax basis in his shares; any excess will be treated as gain from
the sale of his shares, as discussed below.
Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another AIM Fund). Shareholders electing
to reinvest a distribution in additional shares will be treated as receiving a
distribution in an amount equal to the net asset value of the shares acquired,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of a Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the
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<PAGE> 74
manner described above, although such distributions economically would
constitute a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by a Fund
into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
Each Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain
distributions, and the proceeds of redemptions of shares, paid to any
shareholder who (1) has provided either an incorrect tax identification number
or no number at all, (2) is subject to backup withholding by the Internal
Revenue Service for failure to properly report the receipt of interest or
dividend income, or (3) has failed to certify to the Fund that it is not
subject to backup withholding or that it is a corporation or other "exempt
recipient."
Sale or Redemption of Share. A shareholder will recognize gain or
loss on the sale or redemption of shares of a Fund in an amount equal to the
difference between the proceeds of the sale or redemption and the shareholder's
adjusted tax basis in the shares. All or a portion of any loss so recognized
may be disallowed if the shareholder purchases other shares of the same Fund
within 30 days before or after the sale or redemption. Investors should note
that this rule applies to shares purchased through the reinvestment of
dividends within 30 days before or after a sale or redemption of shares. In
general, any gain or loss arising from (or treated as arising from) the sale or
redemption of shares of a Fund will be considered capital gain or loss and will
be long-term capital gain or loss if the shares were held for longer than one
year. However, any capital loss arising from the sale or redemption of shares
held for six months or less will be disallowed to the extent of the amount of
exempt-interest dividends received on such shares and (to the extent not
disallowed) will be treated as a long-term capital loss to the extent of the
amount of capital gain dividends received on such shares. For this purpose,
the special holding period rules of Code Section 246(c)(3) and (4) generally
will apply in determining the holding period of shares. Long-term capital
gains of non-corporate taxpayers are currently taxed at a maximum rate at least
11.6% lower than the maximum rate applicable to ordinary income. Capital
losses in any year are deductible only to the extent of capital gains plus, in
the case of non-corporate taxpayers, $3,000 of ordinary income.
If a shareholder (i) incurs a sales load in acquiring shares of a
Fund, (ii) disposes of such shares less than 91 days after they are acquired
and (iii) subsequently acquires such shares or shares of another fund at a
reduced sales load pursuant to a right to reinvest at such reduced sales load
acquired in connection with the acquisition of the shares disposed of, then the
sales load on the shares disposed of (to the extent of the reduction in the
sales load on the shares subsequently acquired) shall not be taken into account
in determining gain or loss on the shares disposed of but shall be treated as
incurred on the acquisition of the shares subsequently acquired (unless such
shares also are disposed of less than 91 days after they are acquired).
Foreign Shareholders. Taxation of a shareholder who, as to the United
States, is a nonresident alien individual, foreign trust or estate, foreign
corporation, or foreign partnership ("foreign shareholder"), depends on whether
the income from a Fund is "effectively connected" with a U.S. trade or business
carried on by such shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, dividends and
distributions (other than capital gain distributions and exempt-interest
dividends) will be subject to U.S. withholding tax at the rate of 30% (or lower
applicable treaty rate) upon the gross amount of the dividend or distribution.
Such a foreign shareholder would generally be
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<PAGE> 75
exempt from U.S. federal income tax on gains realized on the sale of shares of
a Fund, capital gain distributions and exempt-interest dividends.
If the income from a Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income
dividends, capital gain distributions and any gains realized upon the sale of
shares of the Fund will be subject to U.S. federal income tax at the rates
applicable to U.S. citizens or domestic corporations.
In the case of foreign non-corporate shareholders, a Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
(other than exempt-interest dividends) that are otherwise exempt from
withholding tax (or taxable at a reduced treaty rate) unless such shareholders
furnish the Fund with proper notification of their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisors with
respect to the particular tax consequences to them of an investment in a Fund.
Effect of Future Legislation; Local Tax Considerations. The foregoing
general discussion of federal income tax consequences is based on the Code and
the regulations issued thereunder as in effect on the date of this Statement of
Additional Information. Future legislative or administrative changes or court
decisions may significantly change the conclusions expressed herein, and any
such changes or decisions may have a retroactive effect with respect to the
transactions discussed herein.
Connecticut Tax Consideration. The Connecticut income tax ("CIT") is
imposed on individuals resident in Connecticut and certain non-residents and
partial-year residents with income derived from or connected with sources
located within Connecticut. The CIT is imposed on the federal adjusted gross
income of taxpayers (including married couples who file a joint federal income
tax return) with certain adjustments. The applicable CIT law provides that
distributions by a regulated investment company that qualify as exempt-interest
dividends for federal income tax purposes are not added to federal adjusted
gross income and thus are not subject to CIT to the extent such distributions
are derived from obligations issued by or on behalf of the State of
Connecticut, any political subdivision thereof, or public instrumentality,
state or local authority, district or similar public entity created under the
laws thereof, and certain other U.S. Government obligations and obligations of
certain U.S. Territories. Distributions of the net income of AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT from other sources, including distributions from
Municipal Securities issued by other states or authorities and short-term
capital gains that are treated as ordinary income dividends for federal income
tax purposes are taxable as dividends for CIT purposes.
In addition, the Connecticut corporation business tax ("CCBT") is
imposed on any corporation or association carrying on, or having the right to
carry on, business in Connecticut. Distributions from any source that are
treated as exempt-interest dividends for federal income tax purposes are
includable in gross income for purposes of the CCBT. Moreover, while the CCBT
generally allows a 70% deduction for amounts includable in taxable income for
CCBT purposes that are treated as "dividends" for federal income tax purposes,
such as distributions of taxable net investment income and net short-term
capital gains, the Connecticut Department of Revenue Services has ruled that
the CCBT does not allow this deduction for exempt-interest dividends and
capital gain distributions whose character as "dividends" has been altered for
federal income tax purposes.
Rules of state and local taxation of ordinary income dividends,
exempt-interest dividends and capital gain distributions from regulated
investment companies often differ from the rules for U.S. federal income
taxation described above. Shareholders are urged to consult their tax advisors
as to the consequences of these and other federal, state and local tax rules
affecting investments in the Funds.
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RATINGS OF SECURITIES
The following is a description of the factors underlying the
commercial paper and debt ratings of Moody's, S&P and Fitch:
MOODY'S BOND RATINGS
Moody's describes its ratings for corporate bonds as follows:
AAA
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. These are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium- grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
BAA
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
36
<PAGE> 77
CAA
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA
Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, 3 in the Aa and A
groups when assigning ratings to industrial development bonds secured by either
a letter of credit or bond insurance. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue
ranks in the low end of its generic rating category.
MOODY'S MUNICIPAL BOND RATINGS
AAA
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium- grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
BAA
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
37
<PAGE> 78
great length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
BA
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
CAA
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA
Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Note: Those bonds in the Aa, A, Baa and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols Aa1, A1, Baa1, Ba1 and B1.
MOODY'S SHORT-TERM LOAN RATINGS
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or (MIG). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in bond
risk, long-term secular trends for example, may be less important over the
short run.
A short-term rating may also be assigned on an issue having a demand
feature (i.e., a variable rate demand obligation or VRDO). Such ratings will
be designated as VMIG or, if the demand feature is not rated, as NR.
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. Additionally, the source of payment may be limited to the external
liquidity with no or limited legal recourse to the issuer in the event the
demand is not met.
38
<PAGE> 79
A VMIG rating may also be assigned to commercial paper programs. Such
programs are characterized as having variable short-term maturities but having
neither a variable rate nor demand feature.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4.
Gradations of investment quality are indicated by rating symbols, with
each symbol representing a group in which the quality characteristics are
broadly the same.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/VMIG 3
This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
MIG 4/VMIG 4
This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
MOODY'S COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issues
to repay punctually promissory obligations not having an original maturity in
excess of nine months.
PRIME-1
Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return
on funds employed; conservative capitalization structures with moderate
reliance on debt and ample asset protection; broad margins in earnings coverage
of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
PRIME-2
Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to
39
<PAGE> 80
variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3
Issuers rated Prime-3 (or related supported institutions) have an
acceptable capacity for repayment of short- term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME
Issuers rated Not Prime do not fall within any of the Prime rating
categories.
S&P BOND RATINGS
S&P describes its ratings for corporate bonds as follows:
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A
Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB
Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB-B-CCC-CC-C
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
40
<PAGE> 81
S&P DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have, as part of
their structure, a put option or demand feature.
The first rating addresses the likelihood of repayment of principal
and interest as due, and the second rating addresses only the demand feature.
The long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols for the put option (e.g.,
AAA/A-1+). With short-term demand debt, the note rating symbols are used with
the commercial paper rating symbols (e.g., SP-1+/A-1+).
S&P MUNICIPAL NOTE RATINGS
A S&P note rating reflects the liquidity factors and market-access
risks unique to notes. Notes maturing in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in making
that assessment: amortization schedule (the larger the final maturity relative
to other maturities, the more likely the issue will be treated as a note); and
source of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
Note rating symbols and definitions are as follows.
SP-1
Category denotes strong capacity to pay principal and interest. Those
issues determined to possess very strong characteristics are given a plus (+)
designation.
SP-2
Rating denotes satisfactory capacity to pay principal and interest,
with some vulnerability to adverse financial and economic changes over the term
of the notes.
SP-3
Speculative capacity to pay principal and interest.
S&P COMMERCIAL PAPER RATINGS
A S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days.
Rating categories are as follows:
A-1
This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
41
<PAGE> 82
A-2
This rating indicates capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues designated
A-1.
A-3
This rating indicates adequate capacity for timely payment. However,
the relative degree of safety is not as high as for issues designated A-1.
B
This rating indicates only a speculative capacity for timely payment.
C
This rating indicates, for short-term debt, a doubtful capacity for
payment.
D
This rating indicates that payment is in default. The D rating
category is used when interest payments or principal payments are not made on
the date due, even if the applicable grace period has not expired, unless it is
believed that such payments will be made during such grace period.
FITCH INVESTMENT GRADE BOND RATINGS
Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue or class of debt in a timely manner.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be
provided by insurance policies or financial guaranties unless otherwise
indicated.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any
security. Ratings do not comment on the adequacy of market price, the
suitability of any security for a particular investor, or the tax-exempt nature
or taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.
42
<PAGE> 83
AAA
Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA
Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA." Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+."
A
Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB
Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
PLUS (+) MINUS (-)
Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the "AAA" category.
NR
Indicates that Fitch does not rate the specific issue.
CONDITIONAL
A conditional rating is premised on the successful completion of a
project or the occurrence of a specific event.
SUSPENDED
A rating is suspended when Fitch deems the amount of information
available from the issuer to be inadequate for rating purposes.
WITHDRAWN
A rating will be withdrawn when an issue matures or is called or
refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper
and timely information.
43
<PAGE> 84
FITCHALERT
Ratings are placed on FitchAlert to notify investors of an occurrence
that is likely to result in a rating change and the likely direction of such
change. These are designated as "Positive," indicating a potential upgrade,
"Negative," for potential downgrade, or "Evolving," where ratings may be raised
or lowered. FitchAlert is relatively short-term, and should be resolved within
12 months.
CREDIT TREND
Credit trend indicators show whether credit fundamentals are
improving, stable, declining, or uncertain, as follows:
Improving (arrow up)
Stable (double horizontal arrow)
Declining (arrow down)
Uncertain (double verticle arrow)
Credit trend indicators are not predictions that any rating change
will occur, and have a longer-term time frame than issues placed on FitchAlert.
FITCH SPECULATIVE GRADE BOND RATINGS
Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
("BB" to "C") represent Fitch's assessment of the likelihood of timely payment
of principal and interest in accordance with the terms of obligation for bond
issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an
assessment of the ultimate recovery value through reorganization or
liquidation.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since rating categories cannot fully reflect the
differences in degrees of credit risk.
BB
Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B
Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity throughout
the life of the issue.
44
<PAGE> 85
CCC
Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC
Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C
Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D
Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D"
represents the lowest potential for recovery.
PLUS (+) MINUS (-)
Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the "DDD", "DD", or "D" categories.
FITCH SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
The short-term rating places greater emphasis than a long-term rating
on the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
Fitch short-term ratings are as follows:
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."
F-2
Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as for issues assigned "F-1+" and "F-1" ratings.
45
<PAGE> 86
F-3
Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate,
however, near-term adverse changes could cause these securities to be rated
below investment grade.
F-S
Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions.
D
Default. Issues assigned this rating are in actual or imminent payment
default.
LOC
The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
46
<PAGE> 87
FINANCIAL STATEMENTS
F-1
<PAGE> 88
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Tax-Exempt Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of AIM
Tax-Exempt Cash Fund (a portfolio of AIM Tax-Exempt Funds, Inc.), including the
schedule of investments, as of March 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
the year then ended and the three-month period ended March 31, 1994, and the
financial highlights for the year then ended, the three-month period ended
March 31, 1994, and the year ended December 31, 1993. These financial
statements and financial highlights are the responsbility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the 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 the 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, 1995, by correspondence with the custodian. 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 the financial highlights
referred to above present fairly, in all material respects, the financial
position of AIM Tax-Exempt Cash Fund as of March 31, 1995, the results of its
operations for the year then ended, changes in its net assets for the year then
ended and the three-month period ended March 31, 1994, and the financial
highlights for the year then ended, the three-month period ended March 31, 1994
and the year ended December 31, 1993, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
----------------------------
KPMG Peat Marwick LLP
Houston, Texas
May 5, 1995
F-2
<PAGE> 89
FINANCIALS
SCHEDULE OF INVESTMENTS
March 31, 1995
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES-98.37%
ALABAMA-1.65%
Winfield (City of) (Union Underwear, Inc. Project);
IDR
4.15%, 12/01/97(b)(c) A-1+ -- $ 500 $ 500,000
- ---------------------------------------------------------------------------------------------------------
ALASKA-0.88%
North Slope (Borough of); Alaska Refunding GO
10.40%, 06/30/95(d) NRR NRR 265 268,602
- ---------------------------------------------------------------------------------------------------------
ARIZONA-1.65%
Maricopa (County of) Tempe Union High School
District No. 213 TAN
4.70%, 07/28/95 SP-1+ -- 500 500,779
- ---------------------------------------------------------------------------------------------------------
CONNECTICUT-1.32%
Connecticut (State of); Economic Recovery Notes
Series 1991 A GO
5.40%, 06/15/95 AA- A2 200 200,459
- ---------------------------------------------------------------------------------------------------------
Connecticut State Development Authority (The Allen
Group Inc.); Floating Rate Refunding
Series 1983 IDR
3.95%, 02/01/13(b)(c) -- P-1 200 200,000
- ---------------------------------------------------------------------------------------------------------
400,459
- ---------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA-2.14%
District of Columbia (The Catholic University of
America Issue); Series 1993 RB
4.20%, 10/01/95(f) AAA -- 150 150,000
- ---------------------------------------------------------------------------------------------------------
District of Columbia (Catholic University); Variable/Fixed
Rate Series A RB
4.10%, 12/01/09(b)(c) -- VMIG-1 500 500,000
- ---------------------------------------------------------------------------------------------------------
650,000
- ---------------------------------------------------------------------------------------------------------
FLORIDA-13.50%
Florida Housing Finance Agency (Monterey Meadows
Apartments); Multi-Family Housing Series 1985-YY RB
4.05%, 12/01/07(b)(c) A-1 -- 800 800,000
- ---------------------------------------------------------------------------------------------------------
Jacksonville (City of) (Baptist Health Properties
Project); Health Facilities Authority RB
4.50%, 06/01/20(b)(c) A-1 -- 500 500,000
- ---------------------------------------------------------------------------------------------------------
Orange (County of) Florida School District; Revenue
Anticipation Notes Series A
3.75%, 04/06/95 -- MIG-1 1,500 1,499,821
- ---------------------------------------------------------------------------------------------------------
St. Johns (County of) (Remington At Ponte Vedra Project);
Housing Finance Authority Series 1993 RB
4.05%, 02/01/17(c)(f) A-1+ -- 1,300 1,300,000
- ---------------------------------------------------------------------------------------------------------
4,099,821
- ---------------------------------------------------------------------------------------------------------
</TABLE>
F-3
<PAGE> 90
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GEORGIA-9.22%
Development Authority of DeKalb County (Joyce
International, Inc. Project); Monthly Floating Rate
1984 Demand IDR
4.00%, 01/01/00(b)(c) A-1 -- $1,300 $1,300,000
- ---------------------------------------------------------------------------------------------------------
Development Authority of Richmond County (NutraSweet
Company); Adjustable Monthly Mode-Taxable Series 1990 IDR
6.10%, 06/01/00(b)(c)(g) AAA -- 1,500 1,500,000
- ---------------------------------------------------------------------------------------------------------
2,800,000
- ---------------------------------------------------------------------------------------------------------
ILLINOIS-5.60%
Illinois (State of); Series A 1979 GO
5.50%, 06/01/95 AA- Aa 100 100,185
- ---------------------------------------------------------------------------------------------------------
Illinois Development Finance Authority (Jewish
Charities); Variable Rate Demand Series 1994-1995 Notes
4.25%, 06/30/95(b)(c) A-1+ -- 200 200,000
- ---------------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority (The University
of Chicago Hospitals Project); Adjustable Rate Series 1994 C RB
4.10%, 08/15/26(c)(f) -- VMIG-1 1,400 1,400,000
- ---------------------------------------------------------------------------------------------------------
1,700,185
- ---------------------------------------------------------------------------------------------------------
IOWA-0.66%
Burlington (City of) (Joyce International Project);
1984 IDR
4.00%, 07/01/95(b)(c) A-1 -- 200 200,000
- ---------------------------------------------------------------------------------------------------------
LOUISIANA--6.92%
Parish of DeSoto (Central Louisiana Electric Company, Inc.
Project); Adjustable Tender Pollution Control
Series 1991 Refunding RB
4.00%, 07/01/18(b)(c) A-1+ VMIG-1 100 100,000
- ---------------------------------------------------------------------------------------------------------
Plaquemine Port Harbor and Terminal Authority (TECO
Energy, Inc.); Marine Terminal Facility Series A 1985 Refunding RB
3.80%, 04/17/95 -- P-1 2,000 2,000,000
- ---------------------------------------------------------------------------------------------------------
2,100,000
- ---------------------------------------------------------------------------------------------------------
MICHIGAN-4.28%
Michigan State Hospital Finance Authority (Hospital
Equipment Loan Program); Adjustable Series 1995 A RB
4.15%, 12/01/23(b)(c) -- VMIG-1 1,000 1,000,000
- ---------------------------------------------------------------------------------------------------------
Plymouth (Township of) Economic Development
Corporation (Key International Project); Floating
Rate Monthly Demand Series 1984 IDR
4.00%, 07/01/04(b)(c)(e) -- -- 300 300,000
- ---------------------------------------------------------------------------------------------------------
1,300,000
- ---------------------------------------------------------------------------------------------------------
MONTANA-3.62%
Missoula (County of) (Washington Corporations
Project); Floating Rate Monthly Demand Series 1984 IDR
4.05%, 11/01/04(b)(c)(e) -- -- 1,100 1,100,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>
F-4
<PAGE> 91
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEVADA-0.56%
North Las Vegas (City of) Nevada; Limited Tax Series 1994 GO
8.25%, 06/01/95(f) AAA Aaa $ 170 $ 171,108
- ---------------------------------------------------------------------------------------------------------
NEW JERSEY--2.21%
Bayonne (City of) New Jersey; Series 1994 GO
5.80%, 05/01/95(f) AAA Aaa 670 670,940
- ---------------------------------------------------------------------------------------------------------
NEW YORK--4.94%
Dormitory Authority of the State of New York;
Oxford University Press, Inc. Series 1993 RB
4.45%, 07/01/23(b)(c) -- VMIG-1 1,500 1,500,000
- ---------------------------------------------------------------------------------------------------------
NORTH CAROLINA-0.33%
New Hanover County Industrial Facilities and Pollution
Control Financing Authority (Gang-Nail Systems,
Inc. Project); Series 1984 IDR
4.15%, 12/01/99(b)(c) -- P-1 100 100,000
- ---------------------------------------------------------------------------------------------------------
OHIO-0.99%
Delaware (County of) (Radiation Sterilizers, Inc.);
Series 1984 IDR
4.00%, 12/01/04(b)(c) A-1 -- 300 300,000
- ---------------------------------------------------------------------------------------------------------
OREGON-3.95%
Clackamus (County of); Hospital Facility Authority (Kaiser
Permanente Medical Care Program); 1984 Tender Bond
3.85%, 04/01/95 A-1+ -- 200 199,987
- ---------------------------------------------------------------------------------------------------------
Klamath Falls (City of) (Salt Caves Hydroelectric Project);
Fixed Adjustable Rate Series 1986 B RB
3.75%, 05/02/95(d)(h) SP-1+ NRR 1,000 999,225
- ---------------------------------------------------------------------------------------------------------
1,199,212
- ---------------------------------------------------------------------------------------------------------
PENNSYLVANIA-7.73%
Beaver (County of) Industrial Development Authority
(Duquesne Light Company Project); Pollution Control
Series 1994 Refunding RB
4.50%, 10/10/95(b)(h) -- VMIG-1 550 550,000
- ---------------------------------------------------------------------------------------------------------
Beaver (County of) Industrial Development Authority (Ohio
Edison Company); Pollution Control Series A RB
3.45%, 10/01/95(b) A-1+ P-1 500 496,909
- ---------------------------------------------------------------------------------------------------------
Delaware (County of) Industrial Development Authority
(Scotfoam Corporation Project); Series 1985 IDR
4.00%, 10/01/05(b)(c)(e) -- -- 700 700,000
- ---------------------------------------------------------------------------------------------------------
Delaware (County of) Industrial Development
Authority (Scott Paper Company Project); Variable Rate
Demand Series 1984 D RB
4.25%, 12/01/18(b)(c) A-1+ -- 600 600,000
- ---------------------------------------------------------------------------------------------------------
2,346,909
- ---------------------------------------------------------------------------------------------------------
</TABLE>
F-5
<PAGE> 92
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
SOUTH DAKOTA-0.60%
South Dakota Building Authority; GO
7.875%, 09/01/95(f) AAA Aaa $ 180 $ 182,125
- ---------------------------------------------------------------------------------------------------------
TENNESSEE--1.65%
Industrial Development Board of the Metropolitan
Government of Nashville & Davidson County
(Amberwood, Ltd. Project); Multi-family Housing
Series 1993 A RB
4.00%, 07/01/95(b)(h) -- VMIG-1 500 500,000
- ---------------------------------------------------------------------------------------------------------
TEXAS-9.48%
Austin (County of) (Justin Industries) Industrial Development
Corporation; Adjustable Tender Bonds
4.25%, 12/01/14(b)(c) -- P-1 900 900,000
- ---------------------------------------------------------------------------------------------------------
Cherokee (County of); Series 1994 Unlimited GO
4.40%, 09/15/95(f) AAA Aaa 80 79,940
- ---------------------------------------------------------------------------------------------------------
Houston (City of); Certificates of Obligation Series 1993 B
4.15%, 04/01/14(c) A-1+ VMIG-1 1,700 1,700,000
- ---------------------------------------------------------------------------------------------------------
North Central Texas Health Facilities Development Corporation
(Presbyterian Medical Center); Health Facility Series 1985 D RB
4.60%, 12/01/15(c)(f) A-1 VMIG-1 200 200,000
- ---------------------------------------------------------------------------------------------------------
2,879,940
- ---------------------------------------------------------------------------------------------------------
VIRGINIA-4.94%
Virginia Housing Development Authority (AHC Service Corp.);
Series 1987 A RB
4.15%, 09/01/17(b)(c) -- P-1 1,500 1,500,000
- ---------------------------------------------------------------------------------------------------------
WASHINGTON-1.65%
Industrial Development Corporation of Port Townsend
(Port Townsend Paper Corp. Project);
Series 1988 A Refunding RB
4.20%, 03/01/09(b)(c) -- VMIG-1 500 500,000
- ---------------------------------------------------------------------------------------------------------
WEST VIRGINIA-4.94%
West Virginia Hospital Finance Authority (VHA Mid-Atlantic States, Inc.
Capital Asset Financing Program);
Series 1985 G
4.10%, 12/01/25(c)(f) A-1 -- 1,500 1,500,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>
F-6
<PAGE> 93
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WYOMING-2.96%
Platte (County of) Pollution Control (Tri-State Generation and
Transmission Association, Inc., Project);
Series 1984 B Refunding RB
4.60%, 07/01/14(b)(c) -- P-1 900 $ 900,000
- ---------------------------------------------------------------------------------------------------------
Total Short-Term Municipal Securities 29,870,080
- ---------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT(i)-0.87%
Goldman Sachs & Co., Inc.
6.30%, 04/03/95(g)(j) 264 264,661
- ---------------------------------------------------------------------------------------------------------
Total Repurchase Agreement 264,661
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.24% 30,134,741(k)
- ---------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.76% 229,815
- ---------------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $30,364,556
=========================================================================================================
</TABLE>
ABBREVIATIONS:
GO -General Obligation Bonds
IDR -Industrial Development Revenue Bonds
NRR -Not re-rated
RB -Revenue Bonds
TAN -Tax Anticipation Notes
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Ratings assigned by Standard & Poor's Corporation ("S&P") and Moody's
Investors Service, Inc. ("Moody's"). NRR indicates a security that is not
re-rated subsequent to funding of an escrow fund (consisting of U.S.
Treasury obligations); this funding is pursuant to an advance refunding
of the security. Ratings are not covered by the Independent Auditors'
Report.
(b) Secured by a letter of credit.
(c) Demand security; payable upon demand by the Fund at specified time
intervals no greater than 13 months. Interest rate is redetermined
periodically; Rate shown was the rate in effect on 03/31/95.
(d) Secured by an escrow fund of U.S. Treasury obligations.
(e) Unrated; 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.
(f) Secured by bond insurance.
(g) Interest does not qualify as exempt interest for federal tax purposes.
(h) Subject to an irrevocable call or mandatory put. Maturity date and value
reflect such call or put.
(i) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The investments in some
repurchase agreements are through participation in joint accounts with
other mutual funds managed by the investment advisor. The collateral is
marked to market daily to ensure its market value as being 102% of the
maturing value of the repurchase agreement.
(j) Joint repurchase agreement entered into 03/31/95 with a maturing value of
$268,814,612, with the Fund's pro-rata interest being $264,800.
Collateralized by $275,283,000 U.S. Treasury obligations, 0.00% to 7.125%
due 05/04/95 to 02/29/00.
(k) Cost for federal income tax purposes is $30,132,306.
See Notes to Financial Statements.
F-7
<PAGE> 94
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments at value (amortized cost) $ 30,134,741
- -----------------------------------------------------------------
Interest receivable 248,782
- -----------------------------------------------------------------
Investment for deferred compensation plan 10,641
- -----------------------------------------------------------------
Other assets 9,714
- -----------------------------------------------------------------
Total assets 30,403,878
- -----------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 1,352
- -----------------------------------------------------------------
Deferred compensation 10,641
- -----------------------------------------------------------------
Accrued advisory fees 9,196
- -----------------------------------------------------------------
Accrued distribution fees 7,672
- -----------------------------------------------------------------
Accrued administrative service fees 2,924
- -----------------------------------------------------------------
Accrued operating expenses 7,537
- -----------------------------------------------------------------
Total liabilities 39,322
- -----------------------------------------------------------------
Net assets applicable to shares outstanding $ 30,364,556
=================================================================
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- -----------------------------------------------------------------
Outstanding 30,404,030
=================================================================
Net asset value, offering and redemption price per share $1.00
=================================================================
</TABLE>
See Notes to Financial Statements.
F-8
<PAGE> 95
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended March 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $1,206,916
- --------------------------------------------------------------------------
EXPENSES:
Advisory fees 119,085
- --------------------------------------------------------------------------
Custodian fees 14,265
- --------------------------------------------------------------------------
Administrative service fees 43,481
- --------------------------------------------------------------------------
Directors' fees and expenses 5,060
- --------------------------------------------------------------------------
Transfer agent fees 51,345
- --------------------------------------------------------------------------
Distribution fees 34,024
- --------------------------------------------------------------------------
Other 77,140
- --------------------------------------------------------------------------
Total expenses 344,400
- --------------------------------------------------------------------------
Net investment income 862,516
- --------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities (52,241)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities 1,646
- --------------------------------------------------------------------------
Net gain (loss) on investment securities (50,595)
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 811,921
==========================================================================
</TABLE>
See Notes to Financial Statements.
F-9
<PAGE> 96
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the year ended March 31, 1995
and the three months ended March 31, 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 862,516 $ 148,513
- ------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (52,241) (1,320)
- ------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 1,646 546
- ------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 811,921 147,739
- ------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (853,604) (148,513)
- ------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions (3,251,715) (1,570,854)
- ------------------------------------------------------------------------------------
Net increase (decrease) in net assets (3,293,398) (1,571,628)
- ------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 33,657,954 35,229,582
- ------------------------------------------------------------------------------------
End of period $30,364,556 $33,657,954
====================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $30,404,030 $33,655,745
- ------------------------------------------------------------------------------------
Undistributed net investment income 8,912 --
- ------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of
investment securities (50,821) 1,420
- ------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 2,435 789
- ------------------------------------------------------------------------------------
$30,364,556 $33,657,954
====================================================================================
</TABLE>
See Notes to Financial Statements.
F-10
<PAGE> 97
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
March 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Tax-Exempt Cash Fund (the "Fund") is a series portfolio of AIM Tax-Exempt
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of three separate
portfolios: AIM Tax-Exempt Cash Fund, AIM Tax-Exempt Bond Fund of Connecticut
and the Intermediate Portfolio. Matters affecting each portfolio are voted on
exclusively by the shareholders of such portfolio. The assets, liabilities and
operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. The
following is a summary of significant accounting policies followed by the
Fund in preparation of its financial statements.
A. Security Valuations - The Fund invests only in securities which have
maturities of 397 days or less from the date of purchase. The securities are
valued on the basis of amortized cost which approximates market value. This
method values a security at its cost on the date of purchase and thereafter
assumes a constant amortization to maturity of premiums or original issue
discounts.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date,
adjusted for amortization of premiums and discounts on investments, and is
recorded on the accrual basis. Discounts, other than original issue, are
amortized to unrealized appreciation for financial reporting purposes.
Dividends to shareholders are declared daily and are paid monthly.
C. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $1,710 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2003. The Fund cannot distribute capital gains to
shareholders until the tax loss carryforwards have been utilized.
F-11
<PAGE> 98
FINANCIALS
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 investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.35% of
the Fund's average daily net assets. This agreement requires AIM to reduce its
fees or, if necessary, make payments to the Fund to the extent required to
satisfy any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting and shareholder services to the Fund. During the year
ended March 31, 1995, the Fund reimbursed AIM $43,481 for such services.
Effective November 1, 1994, A I M Fund Services, Inc. ("AFS") became the
transfer agent for the Fund and was paid $12,405 for such services during the
five months ended March 31, 1995.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") pursuant to which AIM Distributors
serves as the distributor for the Fund. The Company has also adopted a plan
pursuant to Rule 12b-1 under the 1940 Act (the "Plan") with respect to the
Fund whereby the Fund will pay AIM Distributors up to a maximum annual rate of
0.25% of the Fund's average daily net assets as compensation for services
related to the sale and distribution of the Fund's shares. Currently, AIM
Distributors has voluntarily elected to waive a portion of its compensation
payable by the Fund such that the compensation paid pursuant to the Plan
equals 0.10% per annum of the Fund's average daily net assets. This waiver may
be rescinded by AIM Distributors at any time without further notice to
investors. The Plan provides that of the aggregate amount payable under the
Plan, payments to dealers and other financial institutions that provide
continuing personal shareholder services to their customers who purchase and
own shares of the Fund in amounts of up to 0.25% of the average daily net
assets of the Fund attributable to the customers of such dealers or financial
institutions may be characterized as a service fee, and that payments to
dealers and other financial institutions in excess of such amount and payments
to AIM Distributors would be characterized as 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 Company with respect to
the Fund. As a result of AIM Distributors' waiver of compensation due from
the Fund, payments to dealers and other financial institutions by that Fund
will be limited to 0.10% of the Fund's average daily net assets. During the
year ended March 31, 1995, the Fund paid AIM Distributors $34,024 as
compensation pursuant to the Plan.
Certain officers and directors of the Company are officers and directors of
AIM, AFS and AIM Distributors. The Fund paid legal fees of $3,132 for services
rendered by Reid & Priest as counsel to the Board of Directors. Effective
September 1994, the firm Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed counsel to the Board of Directors. The Fund paid legal fees of $601
for services rendered by that firm as counsel to the Fund's Board of Directors.
A member of that firm is a director of the Company and, prior to September
1994, was a member of Reid & Priest.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The company invests directors'
fees, if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
F-12
<PAGE> 99
FINANCIALS
NOTE 4 - CAPITAL STOCK
Changes in capital stock outstanding during the year ended March 31, 1995 and
the three months ended March 31, 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------------- --------------------------
Shares Value Shares Value
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Sold 57,113,755 $57,113,755 19,620,250 $ 19,620,250
- ----------------------------------- ----------- ----------- ----------- ------------
Issued as reinvestment of dividends 813,463 813,463 140,650 140,650
- ----------------------------------- ----------- ----------- ----------- ------------
Reacquired (61,178,933) (61,178,933) (21,331,754) (21,331,754)
- ----------------------------------- ----------- ----------- ----------- ------------
(3,251,715) $(3,251,715) (1,570,854) $ (1,570,854)
=========== =========== =========== ============
</TABLE>
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Fund share
outstanding during the year ended March 31, 1995, the three months ended
March 31, 1994 and each of the years inthe eight-year period ended
December 31, 1993.
<TABLE>
<CAPTION>
March 31, December 31,
---------------------- --------------------------------------------------
1995 1994 1993 1992(3) 1991 1990
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------ ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income 0.03 0.004 0.02 0.02 0.04 0.05
- ------------------------------ ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.03) (0.004) (0.02) (0.02) (0.04) (0.05)
- ------------------------------ ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================== ======= ======= ======= ======= ======= =======
Total return 2.54% 1.73%(d) 1.78% 2.42% 3.91% 5.17%
============================== ======= ======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $30,365 $33,658 $35,230 $41,291 $43,366 $43,302
============================== ======= ======= ======= ======= ======= =======
Ratio of expenses to
average net assets 1.01%(b)(c) 1.00%(c)(d) 1.00%(e) 0.98%(f) 0.98% 0.99%
============================== ======= ======= ======= ======= ======= =======
Ratio of net investment income
to average net assets 2.53%(b)(c) 1.75%(c)(d) 1.76%(e) 2.42%(f) 3.87% 5.05%
============================== ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------
1989 1988 1987 1986
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------ ------- ------- ------- -------
Income from investment
operations:
Net investment income 0.05 0.05 0.04 0.05
- ------------------------------ ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.04) (0.05)
- ------------------------------ ------- ------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================== ======= ======= ======= =======
Total return 5.62% 4.65% 3.95% 4.68%
============================== ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $45,995 $51,597 $54,616 $54,531
============================== ======= ======= ======= =======
Ratio of expenses to
average net assets 0.93% 0.83% 0.72% 0.59%
============================== ======= ======= ======= =======
Ratio of net investment income
to average net assets 5.48% 4.54% 3.87% 4.51%
============================== ======= ======= ======= =======
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Ratios are based on average daily net assets of $34,024,407.
(c) After waiver of distribution fees. Annualized ratios of expenses and net
investment income to average net assets prior to waiver of distribution
fees were 1.16% and 2.38%, respectively for 1995, and 1.14% and 1.61%,
respectively for 1994.
(d) Annualized.
(e) After waiver of advisory fees and expense reimbursements. Ratios of
expenses and net investment income to average net assets prior to waiver of
advisory fees and expense reimbursements are 1.36% and 1.40%, respectively.
(f) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees are 1.00% and 2.40%,
respectively.
F-13
<PAGE> 100
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Tax-Exempt Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of AIM
Tax-Free Intermediate Shares (a portfolio of AIM Tax-Exempt Funds, Inc.),
including the schedule of investments, as of March 31, 1995, 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 six-year period then ended,
the eleven-month period ended March 31, 1989, and for the period May 11, 1987
(date operations commenced) through April 30, 1988. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
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 the 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, 1995, by correspondence with the custodian. 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 the financial highlights
referred to above present fairly, in all material respects, the financial
position of AIM Tax-Free Intermediate Shares as of March 31, 1995, the results
of its operations for the year then ended, 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 six-year period then ended, the eleven-month period
ended March 31, 1989, and for the period May 11, 1987 (date operations
commenced) through April 30, 1988, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
------------------------------
KPMG Peat Marwick LLP
Houston, Texas
May 5, 1995
F-14
<PAGE> 101
FINANCIALS
SCHEDULE OF INVESTMENTS
March 31, 1995
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ALABAMA-0.52%
Alabama State Municipal Electric Authority;
Power Supply Series A RB
6.30%, 09/01/01(b) AAA Aaa $ 400 $ 424,168
- ------------------------------------------------------------------------------------------
ARIZONA-2.90%
Maricopa County Gilbert Unified School District #41
(Project of 1988); School Improvement Series 1992
E GO
6.20%, 07/01/02(c) AAA Aaa 1,250 1,329,225
- ------------------------------------------------------------------------------------------
Phoenix (City of); Senior Lien Street and Highway
User Refunding Series 1992 RB
6.20%, 07/01/02 AA A-1 1,000 1,062,140
- ------------------------------------------------------------------------------------------
2,391,365
- ------------------------------------------------------------------------------------------
ARKANSAS-2.48%
Little Rock (City of) (Baptist Medical Center);
Health Facility Hospital RB
6.70%, 11/01/04(b) AAA Aaa 1,400 1,519,406
- ------------------------------------------------------------------------------------------
North Little Rock (City of); Electric System
Refunding Series 1992 A RB
6.00%, 07/01/01(b) AAA Aaa 500 526,780
- ------------------------------------------------------------------------------------------
2,046,186
- ------------------------------------------------------------------------------------------
CALIFORNIA-5.71%
California State Public Works Board (State Pool
Program); Energy Efficiency Series 1986 A RB
7.30%, 03/01/01 BBB+ A 1,250 1,297,425
- ------------------------------------------------------------------------------------------
Carlsbad Unified School District (Carlsbad USD
Educational Facilities Corp.); Series 1992
Project Phase IV Certificates of Participation
6.00%, 11/01/01 -- A-1 400 417,172
- ------------------------------------------------------------------------------------------
Folsom (City of) (School Facilities Project);
Series 1993 B GO
6.00%, 08/01/02(b) AAA Aaa 500 527,515
- ------------------------------------------------------------------------------------------
Inglewood (City of) (Daniel Freeman Hospitals
Inc.); Insured Hospital Series 1991 RB
6.50%, 05/01/01 A -- 400 418,948
- ------------------------------------------------------------------------------------------
Los Angeles (County of) (1991 Master Refunding
Program); Certificates of Participation
6.40%, 05/01/00 A- A 300 311,814
- ------------------------------------------------------------------------------------------
6.50%, 05/01/01 A- A 100 104,737
- ------------------------------------------------------------------------------------------
Los Angeles Unified School District (Capital
Facilities Project, 1991 A); Certificates of
Participation RB
7.00%, 05/01/99 A- A 200 215,284
- ------------------------------------------------------------------------------------------
Oakland (City of); Housing Finance Issue D-1 RB
6.70%, 01/01/98 A+ -- 220 223,489
- ------------------------------------------------------------------------------------------
</TABLE>
F-15
<PAGE> 102
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
CALIFORNIA-(CONTINUED)
Parking Authority of the City and County of San
Francisco; Parking Meter Series 1994 RB
6.75%, 06/01/05(b) AAA Aaa $ 500 $ 554,710
- ------------------------------------------------------------------------------------------
Regents (The) of the University of California
(Multiple Purpose Projects); Refunding Series A
RB
5.75%, 09/01/97 A- A 250 252,903
- ------------------------------------------------------------------------------------------
State Public Works Board of the State of California
(Department of Corrections) (State Prison-Madera
County); Lease Series 1990 A RB
7.00%, 09/01/00 A- A 100 107,131
- ------------------------------------------------------------------------------------------
West End Water Development, Treatment, and
Conservation Joint Powers Authority; 1990 Water
Facilities Certificates of Participation
7.00%, 10/01/00 BBB+ A 250 268,080
- ------------------------------------------------------------------------------------------
4,699,208
- ------------------------------------------------------------------------------------------
COLORADO-0.20%
Colorado Student Obligation Bond Authority; Student
Loan Series 1985 B RB
6.125%, 12/01/98 -- A 160 163,584
- ------------------------------------------------------------------------------------------
DELAWARE-0.96%
Delaware Transportation Authority; Senior Lien
Transportation System Series 1991 RB
6.00%, 07/01/01(c)(d) AAA Aaa 750 788,527
- ------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA-1.22%
District of Columbia; Series B GO
6.75%, 06/01/99(b) AAA Aaa 750 789,532
- ------------------------------------------------------------------------------------------
District of Columbia (The Howard University Issue);
University Series 1990 A RB
6.90%, 10/01/00 AA- A-1 200 214,602
- ------------------------------------------------------------------------------------------
1,004,134
- ------------------------------------------------------------------------------------------
FLORIDA-4.02%
Dade (County of); Special Series 1986 GO
6.70%, 10/01/03(b) AAA Aaa 1,000 1,040,780
- ------------------------------------------------------------------------------------------
Jacksonville (City of); Excise Tax Series 1986 A RB
7.60%, 10/01/96(c) NRR NRR 250 261,637
- ------------------------------------------------------------------------------------------
Palm Beach County Solid Waste Authority; RB
7.90%, 07/01/97 A A 100 106,878
- ------------------------------------------------------------------------------------------
Pinellas County Health Facilities Authority (Pooled
Hospital Loan Program); Series 1985 RB
4.55%, 12/01/15(e)(f) A-1 VMIG-1 1,900 1,900,000
- ------------------------------------------------------------------------------------------
3,309,295
- ------------------------------------------------------------------------------------------
</TABLE>
F-16
<PAGE> 103
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GEORGIA-6.09%
Albany (City of); Sewer System Series 1992 RB
6.30%, 07/01/02(b) AAA Aaa $ 500 $ 536,875
- ------------------------------------------------------------------------------------------
Fulton (County of); Water and Sewer Refunding
Series 1992 RB
5.75%, 01/01/02(b) AAA Aaa 715 738,723
- ------------------------------------------------------------------------------------------
Georgia (State of); Series 1988 D GO
7.10%, 06/01/99 AA+ Aaa 2,000 2,169,720
- ------------------------------------------------------------------------------------------
Georgia State Municipal Electric Authority; Series
V RB
6.00%, 01/01/01(b) AAA Aaa 1,000 1,045,790
- ------------------------------------------------------------------------------------------
Metropolitan Atlanta Rapid Transit Authority; Sales
Tax Refunding Series M RB
6.15%, 07/01/02 AA- A-1 500 526,485
- ------------------------------------------------------------------------------------------
5,017,593
- ------------------------------------------------------------------------------------------
ILLINOIS-5.84%
Chicago (City of) (Central Public Library Project);
Adjustable Rate Series 1988 C GO
6.10%, 01/01/99(b) AAA Aaa 500 518,895
- ------------------------------------------------------------------------------------------
Chicago Park District; Capital Improvement Series
1991 GO
5.80%, 01/01/98 AA- A-1 750 767,490
- ------------------------------------------------------------------------------------------
Chicago Public Building Commission; Building Series
1985-A RB
8.00%, 01/01/96(a) NRR Aaa 50 51,409
- ------------------------------------------------------------------------------------------
Glenview (City of); GO
6.25%, 12/01/96 -- MIG-1 1,000 1,020,260
- ------------------------------------------------------------------------------------------
Illinois Health Facilities Authority (Mercy
Hospital and Medical Center); Refunding Series
1992 RB
6.20%, 01/01/00 A- Baa1 250 249,085
- ------------------------------------------------------------------------------------------
Illinois State Toll Highway Authority; Toll Highway
Refunding Series 1993 B RB
4.25%, 01/01/10(e)(f) A-1+ VMIG-1 1,200 1,200,000
- ------------------------------------------------------------------------------------------
Joliet (City of); Waterworks and Sewer Series 1991
RB
6.95%, 01/01/01(b) AAA Aaa 250 271,735
- ------------------------------------------------------------------------------------------
Kane (County of) Public Building Commission;
Unlimited Tax Public Building Series B GO
6.20%, 12/01/01 -- Aa 700 729,197
- ------------------------------------------------------------------------------------------
4,808,071
- ------------------------------------------------------------------------------------------
INDIANA-0.63%
Indiana Transportation Finance Authority; Airport
Facilities Lease Series A RB
6.00%, 11/01/01 A A 500 516,125
- ------------------------------------------------------------------------------------------
IOWA-0.62%
Iowa Student Loan Liquidity Corp.; Student Loan
Series 1992 A RB
6.25%, 03/01/00 -- Aa1 500 514,415
- ------------------------------------------------------------------------------------------
</TABLE>
F-17
<PAGE> 104
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
KANSAS-3.52%
Mission (City of) (Woodland Village Project);
Multifamily Housing Variable Rate Demand Series
1985 RB
4.05%, 12/01/97(e)(f) A-1 -- $ 2,900 $ 2,900,000
- ------------------------------------------------------------------------------------------
KENTUCKY-0.35%
Kentucky State Turnpike Authority (Economic
Development Road Revitalization Project); RB
7.125%, 05/15/00(c)(d) AAA Aaa 260 287,828
- ------------------------------------------------------------------------------------------
LOUISIANA-2.78%
Lafayette Public Power Authority; Electric
Refunding Series 1987 RB
6.80%, 11/01/00 A A 275 290,840
- ------------------------------------------------------------------------------------------
Louisiana (State of); Refunding Series B GO
8.00%, 05/01/96 A Baa1 200 207,544
- ------------------------------------------------------------------------------------------
Louisiana Offshore Terminal Authority (Loop, Inc.);
Deepwater Port Refunding Series 1992 RB
6.00%, 09/01/01 A A3 1,000 1,029,390
- ------------------------------------------------------------------------------------------
Louisiana Public Facilities Authority (Tulane
University of Louisiana); Series 1987 C RB
7.30%, 08/15/99 A A-1 270 287,820
- ------------------------------------------------------------------------------------------
Orleans Parish School Board; Public School
Refunding Series 1991 GO
6.625%, 02/01/02(b) AAA Aaa 475 474,934
- ------------------------------------------------------------------------------------------
2,290,528
- ------------------------------------------------------------------------------------------
MASSACHUSETTS-1.69%
New England Education Loan Marketing Corp.; Student
Loan Refunding RB
5.00%, Issue 1993 G 08/01/00 A- A-1 1,000 975,730
- ------------------------------------------------------------------------------------------
6.20%, Senior Issue 1992 D 09/01/00 -- Aaa 400 416,352
- ------------------------------------------------------------------------------------------
1,392,082
- ------------------------------------------------------------------------------------------
MICHIGAN-4.89%
Dearborn (City of) Economic Development Corp.
(Oakwood Obligated Group); Hospital Series 1991 A
RB
6.95%, 08/15/01(c)(d) AAA Aaa 1,000 1,118,060
- ------------------------------------------------------------------------------------------
Michigan State Building Authority; Refunding Series
I RB
6.40%, 10/01/04 AA- A 2,000 2,134,880
- ------------------------------------------------------------------------------------------
Wayne County School District; Michigan School
Building Site Bond Unlimited Tax Series 1992 GO
5.60%, 05/01/01 AA A-1 765 773,193
- ------------------------------------------------------------------------------------------
4,026,133
- ------------------------------------------------------------------------------------------
MINNESOTA-0.39%
Minnesota Housing Finance Agency; Housing
Development Series 1979 A RB
6.50%, 02/01/96 A+ A-1 320 323,632
- ------------------------------------------------------------------------------------------
</TABLE>
F-18
<PAGE> 105
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MONTANA-0.57%
Montana Higher Education Assistance Corp.; Student
Loan Series 1992 A RB
6.60%, 12/01/00 -- A $ 455 $ 467,244
- ------------------------------------------------------------------------------------------
NEVADA-0.60%
Clark County Improvement District No. 65 (Lamb
Boulevard III); Series November 1, 1992 GO
6.20%, 12/01/02 A+ A 120 123,643
- ------------------------------------------------------------------------------------------
Nevada (State of) (Nevada Municipal Bond Bank
Project Nos. 38-39); Limited Tax Series 1992 A GO
6.00%, 07/01/01(c) NRR NRR 350 366,454
- ------------------------------------------------------------------------------------------
490,097
- ------------------------------------------------------------------------------------------
NEW JERSEY-4.10%
Gloucester County Utilities Authority; Sewer
Refunding Series 1991 RB
6.10%, 01/01/00 AA- A-1 225 235,424
- ------------------------------------------------------------------------------------------
Jersey City (City of) (Qualified School Bond); GO
6.40%, 02/15/00 AA A 1,000 1,056,700
- ------------------------------------------------------------------------------------------
New Jersey Health Care Facility Finance Authority
(Atlantic City Medical Center); RB
5.95%, 07/01/98 A- A 500 513,135
- ------------------------------------------------------------------------------------------
New Jersey Transportation Trust Fund Authority;
Transportation System Series 1992 A RB
5.90%, 6/15/99 A+ Aa 1,000 1,043,290
- ------------------------------------------------------------------------------------------
Trenton (City of); Fiscal Year Adjustment GO
6.10%, 08/15/02(b) AAA Aaa 500 525,665
- ------------------------------------------------------------------------------------------
3,374,214
- ------------------------------------------------------------------------------------------
NEW MEXICO-3.11%
Albuquerque (City of); Joint Water and Sewer Series
1990 A RB
6.00%, 07/01/00(c)(d) AAA NRR 1,000 1,047,460
- ------------------------------------------------------------------------------------------
Los Alamos (County of); Utility Series 1994 A RB
5.125%, 07/01/00(b) AAA Aaa 1,000 1,006,080
- ------------------------------------------------------------------------------------------
Santa Fe (City of); Series 1994 A RB
5.50%, 06/01/03(b) AAA Aaa 500 505,525
- ------------------------------------------------------------------------------------------
2,559,065
- ------------------------------------------------------------------------------------------
NEW YORK-1.32%
New York (City of); Series Fiscal 1994 F GO
5.125%, 08/01/01 A- Baa1 1,150 1,088,521
- ------------------------------------------------------------------------------------------
NORTH CAROLINA-0.60%
North Carolina Eastern Municipal Power Agency;
Power System Refunding Series 1986 A RB
7.50%, 01/01/00 A- A 475 497,420
- ------------------------------------------------------------------------------------------
</TABLE>
F-19
<PAGE> 106
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OHIO-7.51%
Franklin (County of); 1991 Issue GO
6.30%, 12/01/01(c)(d) NRR NRR $ 1,500 $ 1,629,075
- ------------------------------------------------------------------------------------------
Hilliard City School District; Unlimited Tax School
Improvement Refunding Series 1992 GO
6.05%, 12/01/00(b) AAA Aaa 500 525,335
- ------------------------------------------------------------------------------------------
6.15%, 12/01/01(b) AAA Aaa 250 264,945
- ------------------------------------------------------------------------------------------
Lucas County (St. Vincent's Medical Center);
Hospital Series A RB
6.75%, 08/15/20(b) AAA Aaa 2,000 2,185,700
- ------------------------------------------------------------------------------------------
Ohio State Public Facilities Commission; Mental
Health Series A RB
7.00%, 12/01/97 A+ A-1 1,500 1,580,385
- ------------------------------------------------------------------------------------------
6,185,440
- ------------------------------------------------------------------------------------------
OKLAHOMA-4.30%
Grand River Dam Authority; Refunding Series 1987 RB
6.45%, 06/01/97(c)(d) AAA NRR 500 527,035
- ------------------------------------------------------------------------------------------
Oklahoma Housing Finance Agency; Single Family
Mortgage Series A RB
6.55%, 03/01/00(b) AAA Aaa 160 164,098
- ------------------------------------------------------------------------------------------
Southern Oklahoma Memorial Hospital Authority;
Hospital Series 1993 A RB
5.60%, 02/01/00 A A 2,500 2,542,050
- ------------------------------------------------------------------------------------------
Tulsa Public Facilities Authority; Capital
Improvements Series 1988 B RB
5.40%, 03/01/02 A+ -- 310 307,340
- ------------------------------------------------------------------------------------------
3,540,523
- ------------------------------------------------------------------------------------------
OREGON-3.16%
Oregon (State of) Department of Transportation
(Westside Light Rail Project); Fund Series 1994
RB
5.00%, 06/01/97(b) AAA Aaa 1,000 1,009,940
- ------------------------------------------------------------------------------------------
Portland (City of); Sewer System Series 1994 A RB
5.45%, 06/01/03 A+ A-1 1,065 1,084,575
- ------------------------------------------------------------------------------------------
5.55%, 06/01/04 A+ A-1 500 510,760
- ------------------------------------------------------------------------------------------
2,605,275
- ------------------------------------------------------------------------------------------
PENNSYLVANIA-1.32%
Geisinger Authority; Health System Series A of 1987
RB
7.50%, 07/01/95(c)(d) NRR NRR 600 616,698
- ------------------------------------------------------------------------------------------
Pennsylvania Industrial Development Authority;
Economic Development Series 1991 A RB
6.40%, 01/01/97(c) NRR NRR 200 205,528
- ------------------------------------------------------------------------------------------
6.50%, 01/01/98(c) NRR NRR 100 104,243
- ------------------------------------------------------------------------------------------
6.50%, 07/01/98(c) NRR NRR 150 157,070
- ------------------------------------------------------------------------------------------
1,083,539
- ------------------------------------------------------------------------------------------
</TABLE>
F-20
<PAGE> 107
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
RHODE ISLAND-2.50%
Rhode Island (State of); Refunding Series 1992 A GO
6.10%, 06/15/03(b) AAA Aaa $ 1,000 $ 1,057,350
- ------------------------------------------------------------------------------------------
Rhode Island Student Loan Authority; Student Loan
Refunding Series 1992 RB
5.40%, 12/01/95 -- A 1,000 1,003,290
- ------------------------------------------------------------------------------------------
2,060,640
- ------------------------------------------------------------------------------------------
TEXAS-17.31%
Alamo Community College District; Series 1990 GO
6.90%, 02/15/00(c)(d) NRR Aaa 500 541,040
- ------------------------------------------------------------------------------------------
Austin (City of); Combined Utility System Refunding
Series 1986 RB
7.20%, 05/15/98 A A 200 208,712
- ------------------------------------------------------------------------------------------
Clint Independent School District; Unlimited Tax
Refunding Series 1991 GO
6.30%, 03/01/00(b) -- Aaa 185 193,048
- ------------------------------------------------------------------------------------------
Comal County Industrial Development Authority (The
Coleman Company, Inc. Project); Series 1980 IDR
9.25%, 08/01/00(c) NRR NRR 1,000 1,137,540
- ------------------------------------------------------------------------------------------
Conroe (City of) Independent School District;
Unlimited School Tax GO
7.375%, 02/01/01(b) -- Aaa 115 128,168
- ------------------------------------------------------------------------------------------
Gatesville Independent School District; Unlimited
Tax School Building and Refunding Series 1995 RB
5.80%, 02/01/03(b) -- Aaa 485 507,295
- ------------------------------------------------------------------------------------------
Harris County Health Facilities Development Corp.
(Memorial Hospital System Project); Hospital
Series 1992 RB
6.70%, 06/01/00 A- A 1,000 1,040,480
- ------------------------------------------------------------------------------------------
Houston (City of); Series 1987 GO
6.00%, 03/01/97(c)(d) NRR NRR 1,000 1,043,210
- ------------------------------------------------------------------------------------------
Keller (City of) Independent School District;
Certificates of Participation Series 1994 RB
5.75%, 08/15/01(b) AAA Aaa 915 949,971
- ------------------------------------------------------------------------------------------
Kerrville (City of); Electric System Refunding
Series 1991 RB
6.375%, 11/01/01(b) AAA Aaa 185 198,573
- ------------------------------------------------------------------------------------------
La Marque Independent School District; Unlimited
Schoolhouse Tax Series 1992 GO
7.50%, 08/15/99(b) AAA Aaa 575 632,908
- ------------------------------------------------------------------------------------------
7.50%, 08/15/02(b) AAA Aaa 750 856,425
- ------------------------------------------------------------------------------------------
North Central Texas Health Development Corp.
(Methodist Hospital of Dallas); Hospital Series
1985 B RB
4.50%, 10/01/15(b)(f) A-1 -- 1,100 1,100,000
- ------------------------------------------------------------------------------------------
Northside Independent School District; School
Improvement Series 1986 GO
6.90%, 02/01/97 AA- Aa 1,000 1,038,120
- ------------------------------------------------------------------------------------------
</TABLE>
F-21
<PAGE> 108
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
San Antonio (City of); Electric and Gas System
Refunding Series 1989 A RB
7.00%, 02/01/01 AA Aa1 $ 400 $ 431,356
- ------------------------------------------------------------------------------------------
San Antonio (City of); Texas General Improvement
Limited Tax Series 1994 GO
7.50%, 08/01/95 AA Aa 250 252,693
- ------------------------------------------------------------------------------------------
Temple (City of) (Bell County); Refunding Series
1992 GO
5.80%, 02/01/01(b) AAA Aaa 250 258,205
- ------------------------------------------------------------------------------------------
Texas Housing Agency; Residential Mortgage Series
1988 A RB
7.15%, 01/01/97 A+ Aa 195 197,389
- ------------------------------------------------------------------------------------------
Texas Municipal Power Agency; RB
5.75%, 09/01/02(c)(d) AAA Aaa 1,000 1,040,920
- ------------------------------------------------------------------------------------------
Texas Public Finance Authority; Equipment Refunding
Series 1993 A RB
4.00%, 08/01/97 A+ A 1,000 965,810
- ------------------------------------------------------------------------------------------
Texas Turnpike Authority (Addison Airport Toll
Tunnel Project); Dallas North Tollway Series 1994
RB
6.30%, 01/01/05(b) AAA Aaa 500 533,710
- ------------------------------------------------------------------------------------------
Texas Water Resources Finance Authority; Series
1989 A RB
7.25%, 08/15/97 A A 150 158,135
- ------------------------------------------------------------------------------------------
University of Texas System; General Tuition Series
1986 RB
7.75%, 08/15/96(c)(d) AAA Aaa 190 201,898
- ------------------------------------------------------------------------------------------
7.75%, 08/15/98(b) AAA Aaa 10 10,911
- ------------------------------------------------------------------------------------------
Weslaco Health Facilities Development Corp. (Knapp
Medical Center Project); Hospital Series 1994 RB
4.90%, 06/01/04(b) AAA -- 665 631,464
- ------------------------------------------------------------------------------------------
14,257,981
- ------------------------------------------------------------------------------------------
UTAH-1.87%
Intermountain Power Agency; Power Supply Refunding
Series 1986 F RB
7.00%, 07/01/01 AA Aa 500 522,375
- ------------------------------------------------------------------------------------------
Utah (State of) (Board of Water Resources Program);
Revolving Fund Recapitalization Series 1992 B RB
6.10%, 04/01/02 AA -- 500 524,330
- ------------------------------------------------------------------------------------------
Utah Municipal Finance Cooperative (Pooled Capital
Improvement Financing Program) (University
Hospital Project); Local Government Series August
1, 1991 RB
6.50%, 05/15/99 AA- -- 475 492,623
- ------------------------------------------------------------------------------------------
1,539,328
- ------------------------------------------------------------------------------------------
</TABLE>
F-22
<PAGE> 109
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
VIRGINIA-1.69%
Medical College of Hampton Roads; General Refunding
Series 1991 B RB
5.60%, 11/15/96 A- -- $ 300 $ 303,729
- ------------------------------------------------------------------------------------------
6.00%, 11/15/99 A- -- 605 618,885
- ------------------------------------------------------------------------------------------
Portsmouth (City of); Public Utility Refunding
Series 1992 GO
5.90%, 11/01/01 AA- A-1 450 470,403
- ------------------------------------------------------------------------------------------
1,393,017
- ------------------------------------------------------------------------------------------
WASHINGTON-2.73%
Seattle (City of) (West Seattle Bridge); Limited
Tax Refunding Series 1991 GO
6.40%, 10/01/01 AA+ Aa1 250 268,075
- ------------------------------------------------------------------------------------------
Seattle (Port of); Refunding Series 1994 C RB
4.20%, 07/01/00 AA- A-1 500 466,770
- ------------------------------------------------------------------------------------------
Seattle (Port of); Series 1992 A RB
6.00%, 11/01/01 AA- A-1 500 519,770
- ------------------------------------------------------------------------------------------
Washington (State of); Refunding Series 1986 GO
6.45%, 04/01/00 AA Aa 500 508,155
- ------------------------------------------------------------------------------------------
Washington Public Power Supply System (Nuclear
Project Number Two); Refunding Series 1993 B RB
5.00%, 07/01/00 AA Aa 500 486,690
- ------------------------------------------------------------------------------------------
2,249,460
- ------------------------------------------------------------------------------------------
WISCONSIN-1.25%
Wisconsin (State of); Series A GO
5.75%, 05/01/99 AA Aa 1,000 1,032,550
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.75% 81,327,188
- ------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.25% 1,027,476
- ------------------------------------------------------------------------------------------
NET ASSETS-100.00% $ 82,354,664
==========================================================================================
INVESTMENT ABBREVIATIONS:
GO- General Obligation Bonds
IDR- Industrial Development Revenue Bonds
NRR- Not re-rated
RB- Revenue Bonds
Notes to Schedule of Investments:
(a) Ratings assigned by Moody's Investors Service, Inc. ("MOODY'S") and Standard & Poor's
Corporation ("S&P"). NRR indicates a security that is not re-rated subsequent to
funding of an escrow fund (consisting of U.S. Treasury obligations); this funding is
pursuant to an advance refunding of the security. Ratings are not covered by
Independent Auditors' Report.
(b) Secured by bond insurance.
(c) Secured by an escrow fund of U.S. Treasury obligations.
(d) Subject to an outstanding irrevocable call or mandatory put by the issuer. Market
value and maturity date reflect such call or put.
(e) Secured by a letter of credit.
(f) Payable on demand by the Fund at specified time intervals no greater than thirteen
months. Interest rate is redetermined periodically. Rate shown is the rate in effect
on March 31, 1995.
</TABLE>
See Notes to Financial Statements.
F-23
<PAGE> 110
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (amortized cost $79,443,040) $ 81,327,188
- -----------------------------------------------------------------------------------------
Cash 21,789
- -----------------------------------------------------------------------------------------
Receivables for:
Capital stock sold 20,391
- -----------------------------------------------------------------------------------------
Interest 1,196,309
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 4,694
- -----------------------------------------------------------------------------------------
Other assets 47,014
- -----------------------------------------------------------------------------------------
Total assets 82,617,385
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 79,828
- -----------------------------------------------------------------------------------------
Dividends 127,607
- -----------------------------------------------------------------------------------------
Deferred compensation plan 4,694
- -----------------------------------------------------------------------------------------
Accrued advisory fees 20,987
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 3,053
- -----------------------------------------------------------------------------------------
Accrued directors' fees 1,243
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 2,040
- -----------------------------------------------------------------------------------------
Accrued operating expenses 23,269
- -----------------------------------------------------------------------------------------
Total liabilities 262,721
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $ 82,354,664
=========================================================================================
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- -----------------------------------------------------------------------------------------
Outstanding 7,718,206
=========================================================================================
Net asset value and redemption price per share $10.67
=========================================================================================
Offering price per share:
(Net asset value of $10.67 divided by 99.00%) $10.78
=========================================================================================
</TABLE>
See Notes to Financial Statements.
F-24
<PAGE> 111
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended March 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 4,962,197
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 283,990
- ----------------------------------------------------------------------------------------
Custodian fees 34,097
- ----------------------------------------------------------------------------------------
Transfer agent fees 43,182
- ----------------------------------------------------------------------------------------
Registration and filing fees 61,567
- ----------------------------------------------------------------------------------------
Administrative service fees 43,890
- ----------------------------------------------------------------------------------------
Directors' fees 5,409
- ----------------------------------------------------------------------------------------
Other 88,509
- ----------------------------------------------------------------------------------------
Total expenses 560,644
- ----------------------------------------------------------------------------------------
Net investment income 4,401,553
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities (1,102,920)
- ----------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 1,255,198
- ----------------------------------------------------------------------------------------
Net gain on investment securities 152,278
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 4,553,831
========================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 4,401,553 $ 3,961,302
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (1,102,920) 138,620
- --------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities 1,255,198 (1,819,870)
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 4,553,831 2,280,052
- --------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (4,304,084) (3,961,302)
- --------------------------------------------------------------------------------------------
Distributions to shareholders in excess of net investment income -- (13,188)
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities (28,666) (142,598)
- --------------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions (17,623,430) 31,473,921
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (17,402,349) 29,636,885
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 99,757,013 70,120,128
- --------------------------------------------------------------------------------------------
End of period $ 82,354,664 $99,757,013
============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 81,491,752 $99,115,182
- --------------------------------------------------------------------------------------------
Undistributed net investment income 84,281 (13,188)
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of
investment securities (1,105,517) 26,069
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 1,884,148 628,950
- --------------------------------------------------------------------------------------------
$ 82,354,664 $99,757,013
============================================================================================
</TABLE>
See Notes to Financial Statements.
F-25
<PAGE> 112
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
March 31, 1995
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Tax Exempt Funds, Inc. (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 three separate portfolios; the Intermediate Portfolio,
AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of Connecticut. Matters
affecting each portfolio are voted on exclusively by the shareholders of such
portfolio. The assets, liabilities, and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Intermediate Portfolio (the "Fund"). The Fund currently
offers one class of shares, AIM Tax-Free Intermediate Shares (the "Shares").
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. Security Valuations--Portfolio securities are valued based on market
quotations or at fair value determined by a pricing service approved by the
Company's Board of Directors, provided that securities with a demand feature
exercisable within one to seven days are valued at par. Prices provided by
the pricing service represent valuations of the mean between current bid and
asked market prices which may be determined without exclusive reliance on
quoted prices and may reflect appropriate factors such as institution-size
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, individual trading characteristics and other market
data. Portfolio securities for which prices are not provided by the pricing
service are valued at the mean between the last available bid and asked
prices, unless the Board of Directors, or its designees, determines that the
mean between the last available bid and asked prices does not accurately
reflect the current market value of the security. Securities for which market
quotations are not readily available are valued at fair value as determined
in good faith by or under the supervision of the Company's officers in
accordance with methods which are specifically authorized by the Board of
Directors. Notwithstanding the above, short-term obligations with maturities
of sixty days or less are valued at amortized cost.
B. Securities Transactions and Investment Income--Securities transactions are
recorded on a trade date basis. Interest income, adjusted for amortization of
premiums and original issue discounts on investments, is earned from
settlement date and is recorded on the accrual basis. Discounts, other than
original issue discounts, are amortized to unrealized appreciation for
financial reporting purposes. Realized gains and losses are computed on the
basis of specific identification of the securities sold.
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 (which may
be carried forward to offset future taxable capital gains, if any) of
$603,150, which expires, if not previously utilized, in the year 2003. In
addition, the Fund intends to invest in such municipal securities to allow it
to qualify to pay "exempt interest dividends," as defined in the Internal
Revenue Code.
F-26
<PAGE> 113
FINANCIALS
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 0.30% of
the first $500 million of the Fund's average daily net assets, plus 0.25% of the
Fund's average daily net assets in excess of $500 million, but not in excess of
$1 billion, plus 0.20% of the Fund's average daily net assets in excess of $1
billion. The investment advisory agreement requires AIM to reduce its fee or, if
necessary, make payments to the extent required to satisfy any expense
limitations imposed by securities laws or regulations thereunder in any state in
which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain costs incurred in providing accounting
services and shareholder services to the Fund. During the year ended March 31,
1995, the Fund reimbursed AIM $43,890 for such services. Effective November 1,
1994, A I M Fund Services, Inc. ("AFS") became the transfer agent for the Fund
and was paid $10,480 for such services during the five months ended March 31,
1995.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Shares. AIM Distributors received commissions of $18,075 from sales of Shares
during the year ended March 31, 1995. Such commissions are not an expense of the
Company. They are deducted from, and are not included in, the proceeds from
sales of Shares. Certain officers and directors of the Company are officers of
AIM, AFS and AIM Distributors.
The Fund paid legal fees of $3,392 for services rendered by Reid & Priest as
counsel to the Board of Directors. Effective September 1994, the firm Kramer,
Levin, Naftalis, Nessen, Kamin & Frankel was appointed counsel to the Board of
Directors. The Fund paid legal fees of $655 for services rendered by that firm
as counsel to the Board of Directors. A member of that firm is a director of the
Company and, prior to September 1994, was a member of Reid & Priest.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. 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-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended March 31, 1995 was $65,214,251 and
$83,472,713, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of March 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $2,099,546
- -----------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (215,398)
- -----------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $1,884,148
===================================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
F-27
<PAGE> 114
FINANCIALS
NOTE 5-CAPITAL STOCK
Changes in capital stock outstanding for the years ended March 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION> 1995 1994
-------------------------- --------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 1,622,139 $ 17,104,803 5,737,501 $ 62,762,565
- ------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends 261,976 2,765,599 192,613 2,104,831
- ------------------------------------------------------------------------------------------------------------------------
Reacquired (3,561,084) (37,493,832) (3,063,911) (33,393,475)
- ------------------------------------------------------------------------------------------------------------------------
(1,676,969) $(17,623,430) 2,866,203 $ 31,473,921
========================================================================================================================
</TABLE>
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of the Fund
outstanding during each of the years in the six-year period ended March 31,
1995, the eleven months ended March 31, 1989 and the period May 11, 1987 (date
operations commenced) through April 30, 1988.
<TABLE>
<CAPTION> March 31,
---------------------------------------------------------------------------- April 30,
1995 1994 1993 1992 1991 1990 1989 1988
------- ------- ------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 10.62 $ 10.74 $ 10.27 $ 10.07 $ 9.89 $ 9.69 $ 9.88 $10.00
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------
Income from investment
operations:
Net investment income 0.49 0.48 0.53 0.62 0.63 0.62 0.56 0.55
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------
Net gains (losses) on
securities (both realized
and unrealized) 0.04 (0.10) 0.47 0.20 0.18 0.20 (0.19) (0.12)
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------
Total from investment
operations 0.53 0.38 1.00 0.82 0.81 0.82 0.37 0.43
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------
Less distributions:
Dividends from net investment
income (0.48) (0.48) (0.53) (0.62) (0.63) (0.62) (0.56) (0.55)
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------
Distributions from net
realized capital gains -- (0.02) -- -- -- -- -- --
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------
Total distributions (0.48) (0.50) (0.53) (0.62) (0.63) (0.62) (0.56) (0.55)
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------
Net asset value, end of period $ 10.67 $ 10.62 $ 10.74 $ 10.27 $10.07 $ 9.89 $ 9.69 $ 9.88
========================================== ======= ======= ======= ====== ====== ====== ======
Total return(a) 5.17% 3.47% 10.01% 8.39% 8.39% 8.66% 3.85% 4.46%
========================================== ======= ======= ======= ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s
omitted) $82,355 $99,757 $70,120 $38,773 $6,184 $5,231 $4,413 $5,594
========================================== ======= ======= ======= ====== ====== ====== ======
Ratio of expenses to average net
assets 0.59%(b) 0.61%(c) 0.38%(c) 0.02%(d) 0.50%(d) 0.50%(d) 0.53%(d)(e) 0.50%(d)(e)
========================================== ======= ======= ======= ====== ====== ====== ======
Ratio of net investment income to
average net assets 4.65%(b) 4.37%(c) 5.00%(c) 5.78%(d) 6.29%(d) 6.27%(d) 6.74%(d)(e) 5.86%(d)(e)
========================================== ======= ======= ======= ====== ====== ====== ======
Portfolio turnover rate 74.98% 25.92% 29.33% 14.57% 0.00% 12.19% 31.16% 79.69%
========================================== ======= ======= ======= ====== ====== ====== ======
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(b) Ratios are based on average net assets of $94,663,178.
(c) After waiver of advisory fees.
(d) After waiver of advisory fees and expense reimbursements.
(e) Annualized.
F-28
<PAGE> 115
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Tax-Exempt Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of
AIM Tax-Exempt Bond Fund of Connecticut (a portfolio of AIM Tax-Exempt Funds,
Inc.), including the schedule of investments, as of March 31, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for the year then ended and the three-month period ended
March 31, 1994, and the financial highlights for the year then ended, the
three-month period ended March 31, 1994, and the year ended December 31, 1993.
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 the 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 the 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, 1995, by correspondence with the custodian. 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 the financial highlights
referred to above present fairly, in all material respects, the financial
position of AIM Tax-Exempt Bond Fund of Connecticut as of March 31, 1995, the
results of its operations for the year then ended, changes in its net assets
for the year then ended and the three-month period ended March 31, 1994, and
the financial highlights for the year then ended, the three-month period ended
March 31, 1994, and the year ended December 31, 1993, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
------------------------------
KPMG Peat Marwick LLP
Houston, Texas
May 5, 1995
F-29
<PAGE> 116
- --------------------------------------------------------------------------------
FINANCIALS
SCHEDULE OF INVESTMENTS
March 31, 1995
<TABLE>
<CAPTION>
RATING(a) MARKET
S&P MOODY'S PAR VALUE
<S> <C> <C> <C> <C>
MUNICIPAL OBLIGATIONS-98.08%
EDUCATION-8.70%
Connecticut Health and Education Facilities Authority
(Quinnipiac College); RB
4.90%, Series D, 07/01/98 BBB- - $ 500,000 $ 484,785
- ------------------------------------------------------------------------------------------------
7.25%, Series 1989 B, 07/01/99(b)(c) AAA NRR 450,000 498,141
- ------------------------------------------------------------------------------------------------
Connecticut Regional School District No. 5;
Series 1992 GO
6.00%, 03/01/12(d) AAA Aaa 335,000 342,792
- ------------------------------------------------------------------------------------------------
Connecticut Regional School District No. 5
(Towns of Bethany, Orange and Woodbridge); 1992
Issue GO
5.50%, 02/15/07(d) AAA Aaa 500,000 499,100
- ------------------------------------------------------------------------------------------------
Connecticut State Higher Education Supplemental
Loan Authority (Family Education Loan
Program); Series 1990 A RB
7.50%, 11/15/10(e) - A1 1,410,000 1,507,699
- ------------------------------------------------------------------------------------------------
Total Education 3,332,517
- ------------------------------------------------------------------------------------------------
ELECTRIC-9.37%
Connecticut Development Authority (Connecticut Power &
Light Co.); Series 1993 A PCR
3.80%, 09/01/28(f)(g) A-1+ VMIG-1 1,900,000 1,900,000
- ------------------------------------------------------------------------------------------------
Connecticut Development Authority (New England Power
Co.); Series 1985 Fixed Rate PCR
7.25%, 10/15/15 A+ A1 1,600,000 1,686,528
- ------------------------------------------------------------------------------------------------
Total Electric 3,586,528
- ------------------------------------------------------------------------------------------------
GENERAL OBLIGATION-13.00%
Cheshire (Town of), Connecticut; Series 1993 GO
5.25%, 08/15/12 - Aa 200,000 190,144
- ------------------------------------------------------------------------------------------------
5.25%, 08/15/13 - Aa 630,000 595,186
- ------------------------------------------------------------------------------------------------
Chester (Town of), Connecticut; Series 1989 GO
7.00%, 10/01/05 - A 190,000 205,071
- ------------------------------------------------------------------------------------------------
Connecticut (State of); Series 1991 A, GO
6.75%, 03/01/01(b)(c) NRR NRR 480,000 529,445
- ------------------------------------------------------------------------------------------------
Connecticut (State of) (General Purpose Public
Improvement); GO
6.75%, Series 1991 A, 03/01/01(b)(c) NRR NRR 200,000 220,602
- ------------------------------------------------------------------------------------------------
6.50%, Series 1992 A, 03/15/02(b)(c) NRR NRR 300,000 328,923
- ------------------------------------------------------------------------------------------------
Mansfield (City of), Connecticut; Series 1990 GO
6.00%, 06/15/07 - A1 100,000 104,755
- ------------------------------------------------------------------------------------------------
6.00%, 06/15/08 - A1 100,000 104,258
- ------------------------------------------------------------------------------------------------
6.00%, 06/15/09 - A1 100,000 103,624
- ------------------------------------------------------------------------------------------------
New Britain (City of), Connecticut; Series 1992
Various Purpose GO
6.00%, 02/01/11(d) AAA Aaa 400,000 414,060
- ------------------------------------------------------------------------------------------------
New Haven (City of), Connecticut; Series 1992 B GO
5.25%, 12/01/95 BBB Baa 300,000 302,013
- ------------------------------------------------------------------------------------------------
</TABLE>
F-30
<PAGE> 117
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) MARKET
S&P MOODY'S PAR VALUE
<S> <C> <C> <C> <C>
GENERAL OBLIGATION-Continued
North Canaan (City of), Connecticut;
Series 1991 GO
6.50%, 01/15/08 - A $ 125,000 $ 134,806
- ------------------------------------------------------------------------------------------------
6.50%, 01/15/09 - A 125,000 134,323
- ------------------------------------------------------------------------------------------------
6.50%, 01/15/10 - A 125,000 133,724
- ------------------------------------------------------------------------------------------------
6.50%, 01/15/11 - A 125,000 133,552
- ------------------------------------------------------------------------------------------------
Somers (City of), Connecticut; Series 1990 Various
Purpose GO
6.00%, 12/01/10 - A1 190,000 195,240
- ------------------------------------------------------------------------------------------------
Waterbury (Town of), Connecticut (Tax Revenue
Intercept); Series 1993 Refunding GO
4.80%, 04/15/01(d) AAA Aaa 750,000 739,942
- ------------------------------------------------------------------------------------------------
Westbrook (City of), Connecticut; Series 1992 GO
6.40%, 03/15/10(d) AAA Aaa 380,000 408,903
- ------------------------------------------------------------------------------------------------
Total General Obligation 4,978,571
- ------------------------------------------------------------------------------------------------
HEALTH CARE-13.76%
Connecticut Development Authority, Parking Facility
(Hartford Hospital Realty); Series 1986 RB
6.875%, 10/01/06(d)(e) AAA Aaa 985,000 1,064,667
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(Bridgeport Hospital); 1992 Series A RB
6.625%, 07/01/18(d) AAA Aaa 500,000 522,235
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(Capital Asset); Series 1989 B RB
7.00%, 01/01/00(b) NRR NRR 200,000 211,940
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(Danbury Hospital); 1991 Series E RB
6.50%, 07/01/14(d) AAA Aaa 500,000 518,985
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(Middlesex Hospital);
1992 Series G RB
6.25%, 07/01/12(d) AAA Aaa 1,100,000 1,124,651
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(New Britain Memorial Hospital); Series 1991 A RB
7.75%, 07/01/22 BBB- - 500,000 507,475
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities
Authority (St. Raphael Hospital);
1993 Series H RB
5.00%, 07/01/05(d) AAA Aaa 500,000 481,705
- ------------------------------------------------------------------------------------------------
Connecticut State Health and Education Facilities
Authority (Yale-New Haven Hospital);
Series 1990 F RB
7.10%, 07/01/25(d) AAA Aaa 775,000 835,442
- ------------------------------------------------------------------------------------------------
Total Health Care 5,267,100
- ------------------------------------------------------------------------------------------------
</TABLE>
F-31
<PAGE> 118
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) MARKET
S&P MOODY'S PAR VALUE
<S> <C> <C> <C> <C>
HOUSING-9.81%
Connecticut Housing Development Authority
(Housing Mortgage Finance Program); RB
4.90%, Series 1993 F, Sub-Series F-1, 05/15/04 AA Aa $1,000,000 $ 947,720
- ------------------------------------------------------------------------------------------------
7.55%, Series 1990 B-1, 11/15/08 AA Aa 1,230,000 1,296,715
- ------------------------------------------------------------------------------------------------
7.50%, Series 1990 A, 11/15/09(e) AA Aa 115,000 121,885
- ------------------------------------------------------------------------------------------------
7.00%, Series 1991 A-1, 11/15/09 AA Aa 250,000 264,460
- ------------------------------------------------------------------------------------------------
6.55%, Series 1991 C, Sub-Series C-3, 11/15/13 AA Aa 395,000 408,339
- ------------------------------------------------------------------------------------------------
7.125%, Series 1985 F, 11/15/18 AA Aa 195,000 201,806
- ------------------------------------------------------------------------------------------------
Connecticut (State of) (Housing Mortgage Finance
Program); Series C2 RB
6.70%, 11/15/22(e) AA Aa 500,000 514,580
- ------------------------------------------------------------------------------------------------
Total Housing 3,755,505
- ------------------------------------------------------------------------------------------------
LEASE RENTAL-1.08%
Connecticut (State of) (Middletown Courthouse
Facilities Project); 1991 Issue Lease-Rental
Revenue Certificates of Participation
6.25%, 12/15/10(d)(f) AAA Aaa 400,000 414,888
- ------------------------------------------------------------------------------------------------
Total Lease Rental 414,888
- ------------------------------------------------------------------------------------------------
RESOURCE RECOVERY-6.70%
Connecticut State Resource Recovery Authority
(American Ref-Fuel Co.-Southeastern Connecticut
Project); Series 1988 A RB
8.00%, 11/15/15(e) AA- A 500,000 545,895
- ------------------------------------------------------------------------------------------------
Connecticut State Resource Recovery Authority
(Bridgeport Resco Corp.-Ltd. Partners);
1985 Issue RB
7.625%, Project A, 01/01/09 A A 1,250,000 1,318,188
- ------------------------------------------------------------------------------------------------
8.625%, Project B, 01/01/04 A A 670,000 701,912
- ------------------------------------------------------------------------------------------------
Total Resource Recovery 2,565,995
- ------------------------------------------------------------------------------------------------
TRANSPORTATION-19.91%
Connecticut State Special Tax Obligation
(Transportation Infrastructure); RB
5.10%, Series 1992 B, 09/01/99 AA- A1 1,000,000 1,007,020
- ------------------------------------------------------------------------------------------------
6.80%, Series A, 06/01/03(c) NRR NRR 1,250,000 1,385,975
- ------------------------------------------------------------------------------------------------
6.25%, Series 1991 B, 10/01/09 AA- A1 1,000,000 1,040,740
- ------------------------------------------------------------------------------------------------
6.50%, Series 1991 B, 10/01/10 AA- A1 530,000 570,418
- ------------------------------------------------------------------------------------------------
Connecticut State Special Tax Obligation
(Transportation Infrastructure Purposes);
Second Lien RB
4.35%, Series 1 1990, 12/01/10(g) A1+ VMIG-1 400,000 400,000
- ------------------------------------------------------------------------------------------------
Connecticut State Special Tax Obligation
(Transportation Infrastructure Sales and
Excise Tax); RB
5.90%, Series 1991 B, 10/01/99 AA- A1 1,000,000 1,038,720
- ------------------------------------------------------------------------------------------------
6.80%, Series 1989 C, 12/01/99(b)(c) AAA NRR 500,000 547,575
- ------------------------------------------------------------------------------------------------
6.50%, Series 1991 B, 10/01/12 AA- A1 1,500,000 1,633,530
- ------------------------------------------------------------------------------------------------
Total Transportation 7,623,978
- ------------------------------------------------------------------------------------------------
</TABLE>
F-32
<PAGE> 119
FINANCIALS
<TABLE>
<CAPTION>
RATING(a) MARKET
S&P MOODY'S PAR VALUE
<S> <C> <C> <C> <C>
WATER & SEWER-8.69%
Connecticut Development Authority (Pfizer Inc.);
Series 1982 Refunding PCR
6.55%, 02/15/13 AAA Aaa $ 250,000 $ 262,415
- ------------------------------------------------------------------------------------------------
Connecticut Development Authority Water Facility
(Bridgeport Hydraulic Co. Project);
Series 1990 Refunding RB
7.25%, 06/01/20 A - 800,000 839,664
- ------------------------------------------------------------------------------------------------
Connecticut State Clean Water Fund; Series 1991
Clean Water RB
7.00%, 01/01/11 AA+ Aa 1,100,000 1,174,437
- ------------------------------------------------------------------------------------------------
Manchester (City of) Connecticut Eighth Utilities Fire
District; Series 1991 GO
6.75%, 08/15/06 - A1 180,000 200,595
- ------------------------------------------------------------------------------------------------
South Central Connecticut Regional Water
Authority; Eighth Series 1990 A Water System RB
6.60%, 08/01/00(b)(c) NRR NRR 250,000 272,343
- ------------------------------------------------------------------------------------------------
South Central Connecticut Regional Water
Authority; Series 1988 Water System RB
6.80%, 08/01/98(b)(c) NRR NRR 535,000 576,168
- ------------------------------------------------------------------------------------------------
Total Water & Sewer 3,325,622
- ------------------------------------------------------------------------------------------------
MISCELLANEOUS-7.06%
Connecticut Development Authority (Economic
Development Projects); 1992 Series Refunding Bonds
6.00%, 11/15/08 AA- Aa 500,000 512,460
- ------------------------------------------------------------------------------------------------
Guam (Government of); Series 1994 A GO
5.50%, 08/15/97 BBB - 500,000 497,445
- ------------------------------------------------------------------------------------------------
Guam Airport Authority; Series 1993 B RB
5.00%, 10/01/96(e) BBB - 1,700,000 1,693,455
- ------------------------------------------------------------------------------------------------
Total Miscellaneous 2,703,360
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.08% 37,554,064
- ------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.92% 734,611
- ------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $38,288,675
================================================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Ratings assigned by Moody's Investors Service,
Inc. ("Moody's") and Standard & Poor's
Corporation ("S&P"). NRR indicates a security
that is not re-rated subsequent to funding of an
escrow fund (consisting of U.S. Treasury
obligations); this funding is pursuant to an
advance refunding of the security. Ratings are
not covered by Independent Auditors' Report.
(b) Secured by an escrow fund of U.S. Treasury
obligations.
(c) Subject to an irrevocable call or mandatory put.
Market value and maturity date reflect such call
or put.
(d) Secured by bond insurance.
(e) Security subject to alternative minimum tax.
(f) Secured by a letter of credit.
(g) Demand security; payable upon demand by the Fund at specified time
intervals no greater than thirteen months. Interest rate is redetermined
periodically. Rate shown is the rate in effect on March 31, 1995.
INVESTMENT ABBREVIATIONS:
GO General Obligation Bonds
NRR Not re-rated
PCR Pollution Control Revenue Bonds
RB Revenue Bonds
See Notes to Financial Statements.
F-33
<PAGE> 120
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (amortized cost $36,249,293) $ 37,554,064
- -----------------------------------------------------------------------------------------
Cash 27,252
- -----------------------------------------------------------------------------------------
Receivables for:
Capital stock sold 124,786
- -----------------------------------------------------------------------------------------
Interest 710,486
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 5,731
- -----------------------------------------------------------------------------------------
Other assets 4,033
- -----------------------------------------------------------------------------------------
Total assets 38,426,352
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 21,047
- -----------------------------------------------------------------------------------------
Deferred compensation 5,731
- -----------------------------------------------------------------------------------------
Dividends 61,972
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 3,809
- -----------------------------------------------------------------------------------------
Accrued distribution fees 23,298
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 408
- -----------------------------------------------------------------------------------------
Accrued operating expenses 21,412
- -----------------------------------------------------------------------------------------
Total liabilities 137,677
- -----------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 38,288,675
=========================================================================================
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- -----------------------------------------------------------------------------------------
Outstanding 3,573,524
=========================================================================================
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 10.71
=========================================================================================
OFFERING PRICE PER SHARE:
(Net asset value of $10.71 divided by 95.25%) $ 11.24
=========================================================================================
</TABLE>
See Notes to Financial Statements.
F-34
<PAGE> 121
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended March 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $2,314,035
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 195,413
- ----------------------------------------------------------------------------------------
Custodian fees 12,133
- ----------------------------------------------------------------------------------------
Transfer agent fees 25,032
- ----------------------------------------------------------------------------------------
Directors' fees 4,851
- ----------------------------------------------------------------------------------------
Distribution fees 97,706
- ----------------------------------------------------------------------------------------
Administrative services fees 46,754
- ----------------------------------------------------------------------------------------
Other 59,175
- ----------------------------------------------------------------------------------------
Total expenses 441,064
- ----------------------------------------------------------------------------------------
Less expenses assumed by advisor (224,413)
- ----------------------------------------------------------------------------------------
Net expenses 216,651
- ----------------------------------------------------------------------------------------
Net investment income 2,097,384
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities (127,300)
- ----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 195,742
- ----------------------------------------------------------------------------------------
Net gain on investment securities 68,442
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $2,165,826
========================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the year ended March 31, 1995
and the three months ended March 31, 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,097,384 $ 589,239
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (127,300) (156)
- -------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities 195,742 (2,426,031)
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 2,165,826 (1,836,948)
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (2,111,073) (581,761)
- -------------------------------------------------------------------------------------------
Return of capital (19,319) --
- -------------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions (4,107,391) (1,444,907)
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (4,071,957) (3,863,616)
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 42,360,632 46,224,248
- -------------------------------------------------------------------------------------------
End of period $38,288,675 $42,360,632
===========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $37,094,637 $41,235,619
- -------------------------------------------------------------------------------------------
Undistributed net investment income (8,747) 22,950
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (101,986) (6,966)
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 1,304,771 1,109,029
- -------------------------------------------------------------------------------------------
$38,288,675 $42,360,632
===========================================================================================
</TABLE>
See Notes to Financial Statements.
F-35
<PAGE> 122
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
March 31, 1995
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Tax-Exempt Funds, Inc. (the "Company") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. The Company is organized as a Maryland
corporation consisting of three separate portfolios; AIM Tax-Exempt Bond Fund
of Connecticut, AIM Tax-Exempt Cash Fund and the Intermediate Portfolio.
Matters affecting each portfolio are voted on exclusively by the shareholders
of such portfolio. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the AIM Tax-Exempt Bond Fund of Connecticut (the "Fund"). The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations--Portfolio securities are valued based on market
quotations or at fair value determined by a pricing service approved by
the Board of Directors, provided that securities with a demand feature
exercisable within one to seven days are valued at par. Prices provided by
the pricing service represent valuations of the mean between current bid and
asked market prices which may be determined without exclusive reliance on
quoted prices and may reflect appropriate factors such as institution-size
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, individual trading characteristics and other market
data. Portfolio securities for which prices are not provided by the pricing
service are valued at the mean between the last available bid and asked
prices, unless the Board of Directors or its designees determines that the
mean between the last available bid and asked prices does not accurately
reflect the current market value of the security. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the Company's
officers in accordance with methods which are specifically authorized by the
Board of Directors. Notwithstanding the above, short-term obligations with
maturities of sixty days or less are valued at amortized cost.
B. Securities Transactions and Investment Income--Securities
transactions are recorded on a trade date basis. Realized gains and losses
on sales are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of premiums and
original issue discounts, is recorded as earned from settlement date and is
recorded on the accrual basis.
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. On
March 31, 1995, $32,280 was reclassified from undistributed net investment
income to undistributed net realized gain (loss) on sales of investment
securities as of result of permanent book/tax differences. In addition,
paid-in capital was reduced by $33,591 as a result of a return of capital
distribution of $19,319 and a permanent book/tax difference of $14,272. Net
assets of the Fund were unaffected by the reclassifications discussed above.
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 (which may be carried forward to offset future
taxable gains, if any) of $67,289, which expires, if not previously
utilized, through the year 2003. In addition, the Fund intends to invest in
such municipal securities to allow it to qualify to pay to shareholders
"exempt interest dividends," as defined in the Internal Revenue Code.
F-36
<PAGE> 123
FINANCIALS
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
0.50% of the Fund's average daily net assets. The master investment advisory
agreement requires AIM to reduce its fee or, if necessary, make payments to the
extent required to satisfy any expense limitations imposed by securities laws
or regulations thereunder of any state in which the Fund's shares are qualified
for sale. During the year ended March 31, 1995, AIM reimbursed expenses of
$29,000 and waived advisory fees of $195,413.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain costs incurred in providing accounting
and shareholder services to the Fund. During the year ended March 31, 1995,
the Fund reimbursed AIM $46,754 for such services. Effective November 1, 1994,
A I M Fund Services, Inc. ("AFS") became the transfer agent for the Fund and
was paid $4,288 for such services during the five months ended March 31, 1995.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund. The Company has also adopted a Plan pursuant to Rule 12b-1 under the
1940 Act (the "Plan") with respect to the Fund, whereby the Fund pays to AIM
Distributors compensation at an annual rate of 0.25% of the Fund's average
daily net assets. The Plan is designed to compensate AIM Distributors for
certain promotional and other sales related costs, and to implement a program
which provides periodic payments to selected dealers and financial institutions
who furnish continuing personal shareholder services to their customers who
purchase and own shares of the Fund. 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 sales charges, including asset-based sales charges,
that may be paid by the Fund. During the year ended March 31, 1995, the Fund
paid AIM Distributors $97,706 as compensation under the Plan. Certain officers
and directors of the Company are officers of AIM, AFS and AIM Distributors.
AIM Distributors received commissions of $21,690 from sales of shares of the
Fund's capital stock during the year ended March 31, 1995. Such commissions
are not an expense of the Fund. They are deducted from, and are not included
in, the proceeds from sales of capital stock.
The Fund paid legal fees of $3,154 for services rendered by Reid & Priest as
counsel to the Board of Directors. Effective September 1994, the firm Kramer,
Levin, Naftalis, Nessen, Kamin & Frankel was appointed as Counsel to the Board
of Directors. The Fund paid legal fees of $605 for services rendered by that
firm as counsel to the Board of Directors. A member of that firm is a director
of the Company and, prior to September 1994, was a member of Reid & Priest.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director
who is not an "interested person" of the Company. 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-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the year ended March 31, 1995 was
$2,824,300 and $9,304,603, respectively. The amount of unrealized appreciation
(depreciation) of investment securities as of March 31, 1995, on a tax basis,
is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $1,488,263
----------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (183,492)
----------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $1,304,771
========================================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
F-37
<PAGE> 124
FINANCIALS
NOTE 5-CAPITAL STOCK
Changes in capital stock outstanding for the year ended March 31, 1995 and the
three months ended March 31, 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------- -------------------------
Shares Amount Shares Amount
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sold 370,407 $ 3,925,610 129,232 $ 1,440,162
- -------------------------------------------------------------------- -------------------------
Issued as reinvestment of dividends 129,768 1,372,166 22,291 249,305
- -------------------------------------------------------------------- -------------------------
Reacquired (889,770) (9,405,167) (283,509) (3,134,374)
- -------------------------------------------------------------------- -------------------------
(389,595) $(4,107,391) (131,986) $(1,444,907)
==================================================================== =========================
</TABLE>
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of the Fund
outstanding during the year ended March 31, 1995, the three months ended
March 31, 1994, each of the years in the four-year period ended December 31,
1993, and the period October 3, 1989 (date operations commenced) through
December 31, 1989.
<TABLE>
<CAPTION>
March 31, December 31,
------------------- ------------------------------------------------------
1995 1994 1993 1992(a) 1991 1990 1989
------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.69 $ 11.29 $ 10.65 $ 10.52 $ 10.07 $ 10.19 $10.00
- ---------------------------------- ------- ------- ------- ------- ------- ------- ------
Income from investment operations:
Net investment income 0.56 0.15 0.60 0.66 0.69 0.67 0.14
- ---------------------------------- ------- ------- ------- ------- ------- ------- ------
Net gains (losses) on securities
(both realized and unrealized) 0.04 (0.61) 0.65 0.17 0.50 (0.10) 0.16
- ---------------------------------- ------- ------- ------- ------- ------- ------- ------
Total from investment
operations 0.60 (0.46) 1.25 0.83 1.19 0.57 0.30
- ---------------------------------- ------- ------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment
income (0.57) (0.14) (0.60) (0.66) (0.69) (0.69) (0.11)
- ---------------------------------- ------- ------- ------- ------- ------- ------- ------
Distributions from net realized
capital gains -- -- (0.01) (0.04) (0.05) -- --
- ---------------------------------- ------- ------- ------- ------- ------- ------- ------
Returns of capital (0.01) -- -- -- -- -- --
- ---------------------------------- ------- ------- ------- ------- ------- ------- ------
Total distributions (0.58) (0.14) (0.61) (0.70) (0.74) (0.69) (0.11)
- ---------------------------------- ------- ------- ------- ------- ------- ------- ------
Net asset value, end of period $ 10.71 $ 10.69 $ 11.29 $ 10.65 $ 10.52 $ 10.07 $10.19
================================== ======= ======= ======= ======= ======= ====== ======
Total return(b) 5.78% (4.06)% 11.99% 8.22% 12.23% 5.88% 3.06%
================================== ======= ======= ======= ======= ======= ====== ======
Net assets, end of period
(000s omitted) $38,289 $42,361 $46,224 $33,110 $27,298 $16,685 $6,556
================================== ======= ======= ======= ======= ======= ====== ======
Ratio of expenses to average
net assets(c) 0.55%(d) 0.50%(e) 0.34% 0.25% 0.25% 0.25% 0.25%(e)
================================== ======= ======= ======= ======= ======= ====== ======
Ratio of net investment income to
average net assets(c) 5.37%(d) 5.32%(e) 5.42% 6.25% 6.73% 6.82% 6.21%(e)
================================== ======= ======= ======= ======= ======= ====== ======
Portfolio turnover rate 7% 2% 5% 43% 43% 57% 63%
================================== ======= ======= ======= ======= ======= ====== ======
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After waiver of advisory fees and expense reimbursements. Ratios of
expenses to average net assets prior to waiver of advisory fees and
expense reimbursements are 1.13%, 1.23% (annualized), 1.30%, 1.12%, 1.26%,
1.33%, and 1.99% (annualized) for the period 1995-89, respectively. Ratios
of net investment income to average net assets prior to waiver of advisory
fees and expense reimbursements are 4.79%, 4.59% (annualized), 4.45%,
5.38%, 5.72%, 5.74%, and 4.48% (annualized) for the period 1995-89,
respectively.
(d) Ratios are based on average daily net assets of $39,082,578.
(e) Annualized.
F-38
<PAGE> 125
PART C
OTHER INFORMATION
<TABLE>
<S> <C> <C>
Item 24. (a) Financial Statements:
(1) AIM Tax-Exempt Cash Fund
In Part A: Financial Highlights
In Part B: (1) Independent Auditors' Report
(2) Schedule of Investments as of March 31, 1995
(3) Statement of Assets and Liabilities as of March 31, 1995
(4) Statement of Operations for the year ended March 31, 1995
(5) Statement of Changes in Net Assets for the year ended March 31, 1995 and the three
months ended March 31, 1994
(2) Intermediate Portfolio - AIM Tax-Free Intermediate Shares
In Part A: Financial Highlights
In Part B: (1) Independent Auditors' Report
(2) Schedule of Investments as of March 31, 1995
(3) Statement of Assets and Liabilities as of March 31, 1995
(4) Statement of Operations for the year ended March 31, 1995
(5) Statement of Changes in Net Assets for the years ended
March 31, 1995 and 1994
(3) AIM Tax-Exempt Bond Fund of Connecticut
In Part A: Financial Highlights
In Part B: (1) Independent Auditors' Report
(2) Schedule of Investments as of March 31, 1995
(3) Statement of Assets and Liabilities as of March 31, 1995
(4) Statement of Operations for the year ended March 31, 1995
(5) Statement of Changes in Net Assets for the year ended March 31, 1995 and the three
months ended March 31, 1994
</TABLE>
C-1
<PAGE> 126
(b) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ ---------------------------------------------------
<S> <C>
(1) (a) - Articles of Incorporation of Registrant were filed as an Exhibit to Registrant's Registration
Statement on July 19, 1993, and are hereby incorporated by reference.
(b) - Articles of Amendment were filed as an Exhibit to Registrant's Pre-Effective Amendment No. 1 on
October 12, 1993, and are hereby incorporated by reference.
(c) - Articles of Amendment were filed as an Exhibit to Registrant's Pre-Effective Amendment No. 1 on
October 12, 1993, and are hereby incorporated by reference.
(2) (a) - By-Laws of Registrant were filed as an Exhibit to Registrant's Registration Statement on July 19,
1993, and is filed herewith electronically.
(b) - First Amendment, dated March 14, 1995, to the By-Laws of Registrant is filed herewith.
(3) - Voting Trust Agreements - None.
(4) (a) - Specimen share certificate for AIM Tax-Exempt Cash Fund of Registrant (transfer agent change) is
filed herewith.
(b) - Specimen share certificate for Intermediate Portfolio - AIM Tax-Free Intermediate Shares of
Registrant (transfer agent change) is filed herewith.
(c) - Specimen share certificate for AIM Tax-Exempt Bond Fund of Connecticut of Registrant (transfer agent
change) is filed herewith.
(5) (a) - Master Investment Advisory Agreement, dated as of August 6, 1993, between Registrant and
A I M Advisors, Inc. was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 1 on October
12, 1993.
(b) - Master Investment Advisory Agreement, dated October 18, 1993, between Registrant and A I M Advisors,
Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on April 28, 1994 and is
hereby incorporated by reference.
(6) (a) - (1) Master Distribution Agreement, dated as of August 6, 1993, between Registrant and A I M
Distributors, Inc. was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 1 on October
12, 1993, and is hereby incorporated by reference.
</TABLE>
C-2
<PAGE> 127
<TABLE>
<S> <C>
(2) Master Distribution Agreement, dated October 18, 1993, between Registrant and A I M Distributors,
Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on April 28, 1994, and is
hereby incorporated by reference.
(b) - Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers is filed
herewith.
(c) - Form of Bank Agreement between A I M Distributors, Inc. and selected banks is filed herewith.
(7) (a) - Retirement Plan for Registrant's Non-Affiliated Directors was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 2 on July 26, 1994 as is hereby incorporated by reference.
(b) - Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Directors was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 2 on July 26, 1994 as is hereby incorporated by
reference.
(8) (a) - Custodian Agreement, dated October 15, 1993, between Registrant and State Street Bank and Trust
Company was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on April 28, 1994, and
is hereby incorporated by reference.
(b) - Subcustodian Agreement, dated September 9, 1994, between Registrant and Texas Commerce Bank National
Association is filed herewith.
(9) (a) - (1) Assignment and Acceptance of Assignment of Transfer Agency and Registrar Agreement, dated as of
October 15, 1993, among Registrant (on behalf of its Intermediate Portfolio - AIM Tax-Free
Intermediate Shares), Tax-Free Investments Co. (on behalf of its Intermediate Portfolio - AIM
Tax-Free Intermediate Shares) and The Shareholder Services Group, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 2 on July 26, 1994.
(2) Amendment No. 1, dated October 15, 1993, to the Transfer Agency and Registrar Agreement between
Registrant and The Shareholder Services Group, Inc. was filed as an Exhibit to Registrant's Post-
Effective Amendment No. 2 on July 26, 1994.
(3) Transfer Agency and Service Agreement, dated November 1, 1994, between Registrant and A I M Fund
Services, Inc. is filed herewith.
(4) Remote Access and Related Services Agreement, dated as December 23, 1994, between Registrant and
The Shareholder Services Group, Inc. is filed herewith.
(b) - (1) Master Administrative Services Agreement, dated as of August 6, 1993, between Registrant and
A I M Advisors, Inc. was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 1 on October
12, 1993.
</TABLE>
C-3
<PAGE> 128
<TABLE>
<S> <C>
(2) Master Administrative Services Agreement, dated October 18, 1993, between Registrant and
A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on April
28, 1994, and is hereby incorporated by reference.
(3)(i) Administrative Services Agreement, dated October 18, 1993, between A I M Advisors, Inc., on
behalf of Registrant's portfolios, and A I M Fund Services, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 1 on April 28, 1994.
(3)(ii) Amendment No. 1 to the Administrative Services Agreement, dated October 18, 1993, between
A I M Advisors, Inc., on behalf of Registrant's portfolios and classes, and A I M Fund Services, Inc.
was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2 on July 26, 1994.
(10) - Opinion of Ballard Spahr Andrews & Ingersoll was filed as an Exhibit to Registrant's Pre-Effective
Amendment No. 1 on October 12, 1993, and is hereby incorporated by reference.
(11) (a) - Consent of Ballard Spahr Andrews & Ingersoll is filed herewith.
(b) - Consent of KPMG Peat Marwick LLP is filed herewith.
(c) - Consent of Price Waterhouse LLP is filed herewith.
(12) - Financial Statements - None.
(13) - Agreements Concerning Initial Capitalization - None.
(14) - Retirement Plan Documents - None.
(15) (a) - Distribution Plan for Registrant's AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of
Connecticut, and related forms of agreements were filed as an Exhibit to Registrant's Post-Effective
Amendment No. 1 on April 28, 1994.
(b) - Amended Distribution Plan, dated as of September 10, 1994, for Registrant's AIM Tax-Exempt Cash Fund
and AIM Tax-Exempt Bond Fund of Connecticut, and related forms of agreement are filed herewith.
(16) - Schedule of Sample Performance Quotation Calculations was filed as an Exhibit to Registrant's Post-
Effective Amendment No. 2 on July 26, 1994 and is hereby incorporated by reference.
(17) - Specimen Price Make-up Sheet is filed herewith.
(27) - Financial Data Schedule is filed herewith.
</TABLE>
C-4
<PAGE> 129
Item 25. Persons Controlled by or Under Common Control with Registrant
Furnish a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant and as to each such
person indicate (1) if a company, the state or other sovereign power under the
laws of which it is organized, and (2) the percentage of voting securities
owned or other basis of control by the person, if any, immediately controlling
it.
Not Applicable.
Item 26. Number of Holders of Securities
State in substantially the tabular form indicated, as of a
specified date within 90 days prior to the date of filing, the number of record
holders of each class of securities of the Registrant.
<TABLE>
<CAPTION>
Number of Record Holders as
Title of Class of July 1, 1995
-------------- ------------------------------------
<S> <C>
AIM Tax-Exempt Cash Fund 2,013
Intermediate Portfolio -
AIM Tax-Free Intermediate Shares 1,818
AIM Tax-Exempt Bond Fund of Connecticut 951
</TABLE>
Item 27. Indemnification
State the general effect of any contract, arrangements or statute under
which any director, officer, underwriter or affiliated person of the Registrant
is insured or indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any director,
officer, affiliated person or underwriter for their own protection.
Pursuant to the Maryland General Corporation Law and the Registrant's
Charter and By-Laws, the Registrant may indemnify any person who was or
is a director, officer, employee or agent of the Registrant to the
maximum extent permitted by the Maryland General Corporation Law. The
specific terms of such indemnification are reflected in the Registrant's
Charter and By-Laws, which are incorporated herein as part of this
Registration Statement. No indemnification will be provided by the
Registrant to any director or officer of the Registrant for any liability
to the Registrant or shareholders to which such director or officer would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the
C-5
<PAGE> 130
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered
hereby, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy and will be governed by the final adjudication
of such issue. Insurance coverage is provided under a joint Mutual Fund
and Investment Advisory Professional Directors & Officers Liability
Policy, issued by ICI Mutual Insurance Company, with a $15,000,000 limit
of liability.
Item 28. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment advisor of the Registrant, and each
director, officer or partner of any such investment advisor, is or has been,
at any time during the past two fiscal years, engaged for his own account or in
the capacity of director, officer, employee, partner, or trustee.
The only employment of a substantial nature of the Advisor's directors
and officers is with the Advisor and its affiliated companies. Reference
is also made to the discussion under the captions "Management" of the
Prospectus which comprises Part A of this Registration Statement, and to
the discussion under the caption "Investment Advisory and Other Services"
of the Statement of Additional Information which comprises Part B of this
Registration Statement, and to Item 29(b) of Part C of this Registration
Statement.
Item 29. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal underwriter,
also acts as principal underwriter to the following investment
companies:
AIM Equity Funds, Inc. (Retail Classes)
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds (AIM Limited Maturity Treasury
Shares)
AIM Summit Fund, Inc.
AIM Variable Insurance Funds, Inc.
(b) The following table sets forth information with respect to each
director, officer or partner of A I M Distributors, Inc.
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Directors Chairman
</TABLE>
__________________________________
* 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-6
<PAGE> 131
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
Robert H. Graham Executive Vice President & Director President
James L. Salners Senior Vice President None
John Caldwell Senior Vice President None
William G. Littlepage Senior Vice President None
Gordan J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
Lawrence E. Manierre First Vice President None
James E. Stueve First Vice President None
John J. Arthur Vice President & Treasurer Senior Vice President
& Treasurer
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
and Assistant Secretary
William H. Kleh Vice President None
Carol F. Relihan Vice President Vice President
& Secretary & Secretary
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
Frank V. Serebrin Vice President None
B.J. Thompson Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer &
Controller
Melville B. Cox Assistant Vice President Vice President
</TABLE>
__________________________________________
*11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-7
<PAGE> 132
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Mary E. Gentempo Assistant Vice President None
Jeffrey L. Horne Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
Kathleen J. Pflueger Assistant Secretary Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
</TABLE>
(c) Not Applicable.
Item 30. Location of Accounts and Records
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, maintains physical possession of each such account, book or
other document of the Registrant at its principal executive offices,
except for those maintained by the Registrant's Custodian, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110,
and the Registrant's Transfer Agent and Dividend Paying Agent, A I M Fund
Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173.
Item 31. Management Services
Furnish a summary of the substantive provisions of any management-related
service contract not discussed in Part A or Part B of this Form (because the
contract was not believed to be of interest to a purchaser of securities of the
Registrant) under which services are provided to the Registrant, indicating the
parties to the contract, the total dollars paid and by whom, for the last three
fiscal years.
Not Applicable.
__________________________________________
*11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-8
<PAGE> 133
Item 32. Undertakings
The Registrant undertakes to furnish each person to whom a prospectus is
delivered a copy of the applicable Fund's latest annual report to
shareholders, upon request and without charge.
C-9
<PAGE> 134
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the city of Houston, Texas on the 27th day of July,
1995.
Registrant: AIM TAX-EXEMPT FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
------------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ CHARLES T. BAUER Chairman & Director July 27, 1995
-------------------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Director & President July 27, 1995
------------------------------------ (Principal Executive Officer)
(Robert H. Graham)
/s/ B.L. CROCKETT Director July 27, 1995
----------------------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Director July 27, 1995
-----------------------------------------
(Owen Daly II)
/s/ CARL FRISCHLING Director July 27, 1995
--------------------------------------
(Carl Frischling)
/s/ JOHN F. KROEGER Director July 27, 1995
-------------------------------------
(John F. Kroeger)
/s/ LEWIS F. PENNOCK Director July 27, 1995
-------------------------------------
(Lewis F. Pennock)
/s/ IAN W. ROBINSON Director July 27, 1995
--------------------------------------
(Ian W. Robinson)
/s/ LOUIS S. SKLAR Director July 27, 1995
----------------------------------------
(Louis S. Sklar)
Senior Vice President &
/s/ JOHN J. ARTHUR Treasurer (Principal Financial July 27, 1995
--------------------------------------- and Accounting Officer)
(John J. Arthur)
</TABLE>
<PAGE> 135
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C>
2(b) First Amendment, dated March 14, 1995, to the By-Laws of Registrant
4(a) Specimen share certificate for AIM Tax-Exempt Cash Fund of Registrant (transfer agent change)
4(b) Specimen share certificate for Intermediate Portfolio - AIM Tax-Free Intermediate Shares of Registrant
(transfer agent change)
4(c) Specimen share certificate for AIM Tax-Exempt Bond Fund of Connecticut of Registrant (transfer agent
change)
6(b) Form of Selected Dealer Agreement
6(c) Form of Bank Agreement
8(b) Subcustodian Agreement, dated September 9, 1994, between Registrant and Texas Commerce Bank National
Association
9(a)(3) Transfer Agency and Service Agreement, dated November 1, 1994, between Registrant and A I M Fund Services,
Inc.
9(a)(4) Remote Access and Related Services Agreement, dated as December 23, 1994, between Registrant and The
Shareholder Services Group, Inc.
11(a) Consent of Ballard Spahr Andrews & Ingersoll
11(b) Consent of KPMG Peat Marwick LLP
11(c) Consent of Price Waterhouse LLP
15(b) Amended Distribution Plan, dated as of September 10, 1994, for Registrant's AIM Tax-Exempt Cash Fund and
AIM Tax-Exempt Bond Fund of Connecticut, and related forms of agreements
17 Specimen Price Make-up Sheet
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 2(a)
AIM TAX-EXEMPT FUNDS, INC.
A MARYLAND CORPORATION
BY LAWS
ARTICLE I
STOCKHOLDERS
Section 1. Time and Place of Meetings. Meetings of the stockholders of
the Corporation need not be held except as required under the general laws of
the State of Maryland, as the same may be amended from time to time. Meetings of
the stockholders shall be held at places within the United States designated by
the Board of Directors and set forth in the notice of the meeting.
Section 2. Annual Meetings. If a meeting of the stockholders of the
Corporation is required by the Investment Company Act of 1940, as amended, to
take action with respect to the election of directors, then such matter shall be
submitted to the stockholders at a special meeting called for such purpose,
which shall be deemed the annual meeting of stockholders for that year. In years
in which no such action by stockholders is so required, no annual meeting of
stockholders need be held.
Section 3. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board of Directors,
if any, by the President or by a majority of the Board of Directors. In
addition, such special meetings shall be called by the Secretary upon receipt of
a request in writing, signed by stockholders entitled to cast at least 10% of
all the votes entitled to be cast at the meeting, which states the purpose of
the meeting and the matters proposed to be acted on at the meeting. Unless
requested by stockholders entitled
-1-
<PAGE> 2
to cast a majority of all the votes entitled to be cast at the meeting, a
special meeting need not be called to consider any matter which is substantially
the same as a matter voted on at a special meeting of the stockholders held
during the preceding twelve (12) months.
Section 4. Notice of Meeting of Stockholders. Written or printed notice
of every meeting of stockholders, stating the time and place thereof (and the
purpose of any special meeting), shall be given, not less than ten (10) days nor
more than ninety (90) days before the date of the meeting, to each stockholder
entitled to vote at the meeting and each other stockholder entitled to notice,
by delivering such notice personally, or leaving such notice at each
stockholder's residence or usual place of business, or by mailing such notice,
postage prepaid, addressed to each stockholder at such stockholder's address as
it appears upon the books of the Corporation. Each person who is entitled to
notice of any meeting shall be deemed to have waived notice if present at the
meeting in person or by proxy or if such person signs a waiver of notice (either
before or after the meeting) which is filed with the records of stockholders
meetings.
Section 5. Closing of Transfer Books, Record Dates. The Board of
Directors may set a record date for the purpose of making any proper
determination with respect to stockholders, including determining which
stockholders are entitled to notice of and to vote at a meeting, receive a
dividend or be allotted other rights. The record date may not be prior to the
close of business on the day the record date is fixed and shall be not more than
90 days before the date on which the action requiring the determination is
taken. In the case of a meeting of stockholders, the record date shall be at
least ten days before the date of the meeting. Only stockholders of record on
such date shall be entitled to notice of and to vote at such meeting, or to
receive such dividends or rights, as the case may be.
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Section 6. Manner of Acting; Adjournment of Meetings. A majority of all
votes cast at a meeting of stockholders at which a quorum is present shall be
sufficient to approve any matter which properly comes before the meeting, unless
otherwise provided by applicable law, the Charter of the Corporation or these By
Laws. A meeting of stockholders convened on the date for which it was called may
be adjourned from time to time without further notice, to a date not more than
120 days after the original record date for such meeting, but no business shall
be transacted at any such adjourned meeting, except business which might have
been lawfully transacted had the meeting not been adjourned.
Section 7. Voting and Inspectors. (a) At all meetings of stockholders,
every stockholder of record entitled to vote may do so either in person or by
written proxy signed by such stockholder or such stockholder's duly authorized
attorney in fact. Unless a proxy provides otherwise, such proxy shall not be
valid more than eleven (11) months after its date.
(b) At any meeting of stockholders considering the election of
directors, the Board of Directors prior to the convening of such meeting may,
or, if the Board has not so acted, the Chairman of the meeting may, appoint two
(2) inspectors of election, who shall first subscribe an oath or affirmation to
execute faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and shall after the
election certify the result of the vote taken. No candidate for election as a
director shall be appointed to act as an inspector of election.
(c) The Chairman of the meeting may cause a vote by ballot to be taken
with respect to any election or matter.
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Section 8. Conduct of Stockholders Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board, or if the
Chairman shall not be present or if there is no Chairman, by the President, or
if the President shall not be present, by a Vice-President, or if no
Vice-President is present, by a chairman elected for such purpose at the
meeting. The Secretary of the Corporation, if present, shall act as Secretary of
such meetings, or if the Secretary is not present, an Assistant Secretary of the
Corporation shall so act, and if no Assistant Secretary is present, then the
meeting shall elect a secretary for the meeting.
Section 9. Validity of Proxies and Ballots. At every meeting of the
stockholders, all proxies shall be received and maintained by, and all ballots
shall be received and canvassed by, the secretary of the meeting, who shall
decide all questions concerning the qualification of voters, the validity of
proxies, and the acceptance or rejection of votes, unless inspectors of election
shall have been appointed, in which case the inspectors of election shall decide
all such questions.
Section 10. Nominations and Stockholder Business.
(a) Annual Meetings of Stockholders. (1) Nominations of individuals for
election to the board of directors and the proposal of business to be considered
by the stockholders may be made at an annual meeting of stockholders (i)
pursuant to the corporation's notice of meeting, (ii) by or at the direction of
the directors or (iii) by any stockholder of the corporation who was a
stockholder of record at the time of giving of notice provided for in this
Section 10(a), who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 10(a).
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(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (iii) or paragraph
(a)(1) of this Section 10, the stockholder must have given timely notice thereof
in writing to the secretary of the corporation. To be timely, a stockholder's
notice shall be delivered to the secretary at the principal executive offices of
the corporation not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the tenth day following
the day on which public announcement of the date of such meeting is first made.
Such stockholder's notice shall set forth (i) as to each person whom the
stockholder proposes to nominate for election or reelection as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (including such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected); (ii) as to any other business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such stockholder and of the beneficial
owner, if any, on whose behalf the proposal is made; and (iii) as to the
stockholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made, (x) the name and address of such
stockholder, as they appear on the corporation's books, and of such beneficial
owner and (y) the class and number of shares of stock of the corporation which
are owned beneficially and of record by such stockholder and such beneficial
owner.
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(3) Notwithstanding anything in the second sentence of
paragraph (a)(2) of this Section 10 to the contrary, in the event that the
number of directors to be elected to the board of directors is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased board of directors made by the corporation
at least 70 days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this Section 10(a) shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the secretary at the
principal executive offices of the corporation not later than the close of
business on the tenth day following the day on which such public announcement is
first made by the corporation.
(b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the corporation's notice of meeting. Nominations of
persons for election to the board of directors may be made at a special meeting
of stockholders at which directors are to be elected (i) pursuant to the
corporation's notice of meeting (ii) by or at the direction of the board of
directors or (iii) provided that the board of directors has determined that
directors shall be elected at such special meeting, by any stockholder of the
corporation who is a stockholder of record at the time of giving of notice
provided for in this Section 10(b), who is entitled to vote at the meeting and
who complied with the notice procedures set forth in this Section 10(b). In the
event the corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the board of directors, any such stockholder
may nominate a person or persons (as the case may be) for election to such
position as specified in the corporation's notice of meeting, if the
stockholder's notice required by paragraph (a)(2) of this Section 10 shall be
delivered to the secretary at the principal executive offices of the corporation
not earlier than the 90th day prior to such special meeting and not later than
the close of business on the later of the 60th day prior
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to such special meeting or the tenth day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the directors to be elected at such meeting.
(c) General. (1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 10 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 10. The presiding officer of the meeting shall have
the power and duty to determine whether a nomination or any business proposed to
be brought before the meeting was made in accordance with the procedures set
forth in this Section 10 and, if any proposed nomination or business is not in
compliance with this Section 10, to declare that such defective nomination or
proposal be disregarded.
(2) For purposes of this Section 10, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable news service or in a document publicly filed by
the corporation with the Securities and Exchange Commission pursuant to Sections
13, 14, or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section
10, a stockholder shall also comply with all applicable requirements of state
law and of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 10. Nothing in this Section 10
shall be deemed to affect any rights of stockholders to request inclusion of
proposals in the corporation's proxy statement pursuant to Rule 14a-8 under this
Exchange Act.
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ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Term of Office. The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors
initially consisting of three (3) directors, which number may be increased or
decreased as herein provided. Directors shall hold office until their respective
successors have been duly elected and qualify. Directors need not be
stockholders.
Section 2. Increase or Decrease in Number of Directors. The Board of
Directors, by the vote of a majority of the entire Board, may increase the
number of directors to a number not exceeding fifteen (15), and may appoint
directors to fill the vacancies created by any increase in the number of
directors, and such appointed directors shall hold office until their successors
have been duly elected and qualify. The Board of Directors, by the vote of a
majority of the entire Board, may decrease the number of directors to a number
not less than three (3) or the number of stockholders, whichever is less, but
any such decrease shall not affect the term of office of any director. Vacancies
occurring other than by reason of any increase in the number of directors shall
be filled as provided by the Maryland General Corporation Law.
Section 3. Place of Meetings. The directors may hold their meetings and
keep the books of the Corporation outside the State of Maryland, at any office
or offices of the Corporation or at any other place as they may from time to
time determine; and in the case of meetings, as shall be specified in the
respective notices of such meetings.
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Section 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and on such notice, if any, as the directors may from
time to time determine.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be held from time to time upon call of the Chairman of the Board of
Directors, if any, the President, or any two (2) or more of the directors, by
oral, telegraphic or written notice duly given to each director not less than
one (1) business day before such meeting or, if sent or mailed to each director,
not less than three (3) business days before such meeting. Each director who is
entitled to notice shall be deemed to have waived notice if such director is
present at the meeting or, either before or after the meeting, such director
signs a waiver of notice which is filed with the minutes of the meeting. Such
notice or waiver of notice need not state the purpose or purposes of such
meeting.
Section 6. Quorum. One third (1/3) of the directors then in office (but
in no event less than two (2) directors) shall constitute a quorum of the Board
of Directors for the transaction of business. If at any meeting of the Board
there shall be less than a quorum present, a majority of those directors present
may adjourn the meeting from time to time until a quorum shall have been
attained. The action of a majority of the directors present at any meeting at
which there is a quorum shall be the action of the Board of Directors, except as
may be otherwise specifically provided by applicable law, the Charter or these
By Laws.
Section 7. Telephonic Meetings. The members of the Board of Directors,
or any committee of the Board of Directors, may participate in a meeting by
means of a conference telephone call or similar communications equipment if all
persons participating in such meeting
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can simultaneously hear each other, and participation in a meeting by these
means constitutes presence in person at such meeting.
Section 8. Executive Committee. The Board of Directors may appoint an
Executive Committee consisting of two (2) or more directors. Between meetings of
the Board of Directors, the Executive Committee, if any, shall have and may
exercise any or all of the powers of the Board of Directors with respect to the
management of the business and affairs of the Corporation, except (a) as
otherwise provided by law and (b) the power to increase or decrease the size of,
or fill vacancies on, the Board of Directors. The Executive Committee may
determine its own rules of procedure, and may meet when and as the Executive
Committee determines, or when directed by resolution of the Board of Directors.
The presence of a majority of the Executive Committee shall constitute a quorum.
The Board of Directors shall have the power at any time to change the members
and powers of, to fill vacancies on, and to dissolve the Executive Committee. In
the absence of any member of the Executive Committee, the members present at any
meeting, whether or not they constitute a quorum, may appoint a director to act
in the place of such absent member.
Section 9. Other Committees. The Board of Directors may appoint other
committees which shall in each case consist of such number of directors (not
less than two (2)), which shall have and may exercise such powers as the Board
may from time to time determine, subject to applicable law. A majority of all
members of any such committee may determine its action, and the time and place
of its meetings, unless the Board of Directors shall provide otherwise. The
Board of Directors shall have the power at any time to change the members and
powers of, to fill vacancies on, and to dissolve any such committee. In the
absence of any member of such
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committee, the members present at any meeting, whether or not they constitute a
quorum, may appoint a director to act in the place of such absent member.
Section 10. Informal Action by Directors. Except to the extent
otherwise specifically prohibited by applicable law, any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting, if a written consent to such action is
signed by all members of the Board or such committee, and such consent is filed
with the minutes of proceedings of the Board or such committee.
Section 11. Compensation of Directors. Directors shall be entitled to
receive such compensation from the Corporation for their services as directors
as the Board of Directors may from time to time determine.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The initial executive officers of the
Corporation shall be elected by the Board of Directors as soon as practicable
after the incorporation of the Corporation. The executive officers may include a
Chairman of the Board, and shall include a President, one or more Vice
Presidents (the number thereof to be determine by the Board of Directors), a
Secretary and a Treasurer. The Chairman of the Board, if any, shall be selected
from among the directors. The Board of Directors may also in its discretion
appoint Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers,
and other officers, agents and employees, who shall have such authority and
perform such duties as the Board may determine. The Board of Directors may fill
any vacancy which may occur in any office. Any two (2) offices,
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except those of President and Vice President, may be held by the same person,
but no officer shall execute, acknowledge or verify any instrument on behalf of
the Corporation in more than one (1) capacity, if such instrument is required by
law or by these By Laws to be executed, acknowledged or verified by two (2) or
more officers.
Section 2. Term of Office. Unless otherwise specifically determined by
the Board of Directors, the officers shall serve at the pleasure of the Board of
Directors. If the Board of Directors in its judgment finds that the best
interests of the Corporation will be served, the Board of Directors may remove
any officer of the Corporation at any time with or without cause.
Section 3. President. The President shall be the chief executive
officer of the Corporation and, subject to the Board of Directors, shall
generally manage the business and affairs of the Corporation. If there is no
Chairman of the Board, or if the Chairman of the Board has been appointed but is
absent, the President shall, if present, preside at all meetings of the
stockholders and the Board of Directors.
Section 4. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the stockholders and the Board of Directors, if
the Chairman of the Board is present. The Chairman of the Board shall have such
other powers and duties as shall be determined by the Board of Directors, and
shall undertake such other assignments as may be requested by the President.
Section 5. Other Officers. The Chairman of the Board or one or more
Vice Presidents shall have and exercise such powers and duties of the President
in the absence or inability to act of the President, as may be assigned to them,
respectively, by the Board of Directors or, to the
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extent not so assigned, by the President. In the absence or inability to act of
the President, the powers and duties of the President not otherwise assigned by
the Board of Directors or the President shall devolve upon the Chairman of the
Board, or in the Chairman's absence, the Vice Presidents in the order of their
election.
Section 6. Secretary. The Secretary shall have custody of the seal of
the Corporation, and shall keep the minutes of the meetings of the stockholders,
Board of Directors and any committees thereof, and shall issue all notices of
the Corporation. The Secretary shall have charge of the stock records and such
other books and papers as the Board may direct, and shall perform such other
duties as may be incidental to the office or which are assigned by the Board of
Directors. The Secretary shall also keep or cause to be kept a stock book, which
may be maintained by means of computer systems, containing the names,
alphabetically arranged, of all persons who are stockholders of the Corporation,
showing their places of residence, the number and class or series of any class
of shares of stock held by them, respectively, and the dates when they became
the record owners thereof, and such book shall be open for inspection as
prescribed by the laws of the State of Maryland.
Section 7. Treasurer. The Treasurer shall have the care and custody of
the funds and securities of the Corporation and shall deposit the same in the
name of the Corporation in such bank or banks or other depositories, subject to
withdrawal in such manner as these By Laws or the Board of Directors may
determine. The Treasurer shall, if required by the Board of Directors, give such
bond for the faithful discharge of duties in such form as the Board of Directors
may require.
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<PAGE> 14
ARTICLE IV
STOCK
Section 1. Stock Certificates. Each stockholder of the Corporation
shall be entitled to a certificate or certificates for the full number of shares
of each class or series of stock of the Corporation owned by such stockholder,
in such form as the Board of Directors may from time to time determine, subject
to applicable law.
Section 2. Transfer of Shares. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder(s) thereof, in person
or by such holder's duly authorized attorney or legal representative, upon
surrender and cancellation of certificates, if any, for the same number of
shares, duly endorsed or accompanied by proper instruments of assignment and
transfer, with such proof of the authenticity of the signature(s) as the
Corporation or its agents may reasonably require. In the case of shares not
represented by certificates, the same or similar requirements may be imposed by
the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the Corporation,
containing the names and addresses of the stockholders and the number of shares
held by them, respectively, shall be kept at the principal offices of the
Corporation, or if the Corporation has appointed a transfer agent, at the
offices of such transfer agent.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Directors may determine the conditions upon which a new stock certificate of any
class or series may be issued in place of a certificate which is alleged to have
been lost, stolen or destroyed. The Board of Directors may in its discretion
require the owner of such certificate to give bond, with sufficient surety to
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<PAGE> 15
the Corporation and the transfer agent, if any, to indemnify the Corporation and
such transfer agent against any and all losses or claims which may arise by
reason of the issuance of a replacement certificate.
ARTICLE V
CORPORATE SEAL
The Board of Directors may provide for a suitable corporate seal, in
such form and bearing such inscriptions as it may determine. In lieu of fixing
the Corporation's seal to a document, it is sufficient to meet the requirements
of any law, rule or regulation relating to a corporate seal to place the word
"(seal)" adjacent to the signature of the person authorized to sign the document
on behalf of the Corporation.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the Board of
Directors.
ARTICLE VII
INDEMNIFICATION AND ADVANCES FOR EXPENSES
Section 1. Indemnification of Directors and Officers. The Corporation
shall indemnify its directors to the fullest extent that indemnification of
directors is permitted by the Maryland General Corporation Law. The Corporation
shall indemnify its officers to the same extent as its directors and to such
further extent as is consistent with law. The Corporation shall indemnify its
directors and officers who while serving as directors or officers also serve at
the request of the Corporation
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<PAGE> 16
as a director, officer, partner, trustee, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust, other enterprise or
employee benefit plan to the fullest extent consistent with law. The
indemnification and other rights provided for by this Article shall continue as
to a person who has ceased to be a director or officer, and shall inure to the
benefit of the heirs, executors and administrators of such a person. This
Article shall not protect any such person against any liability to the
Corporation or any stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such person's office
("disabling conduct").
Section 2. Advances. The Corporation shall advance payment to any
current or former director or officer of the Corporation for reasonable expenses
incurred in connection with any proceeding in which the individual is made a
party by reason of service as a director or officer in the manner and to the
fullest extent permissible under the Maryland General Corporation Law. Upon
receipt by the Corporation of a written affirmation of his or her good faith
belief that the standard of conduct necessary for indemnification by the
Corporation has been met and a written undertaking to repay any such advance if
it should ultimately be determined that the requisite standard of conduct has
not been met. In addition, at least one of the following conditions must be
satisfied: (a) the individual shall provide security in form and amount
acceptable to the Corporation for the foregoing undertaking, (b) the Corporation
shall be insured against losses arising by reason of the advance, or (c) a
majority of a quorum of directors of the Corporation who are neither "interested
persons," as defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended, nor parties to the proceeding ("disinterested non-party directors"),
or independent legal counsel in a written opinion, shall have determined, based
on a review of facts readily available to the Corporation at the time the
advance is proposed to be made, that there
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<PAGE> 17
is reason to believe that the person seeking indemnification will
ultimately be found to meet the requisite standard of conduct.
Section 3. Procedure. At the request of any person claiming
indemnification under this Article, the Board of Directors shall determine, or
cause to be determined, in a manner consistent with the Maryland General
Corporation Law, whether the standards required by this Article have been met.
Indemnification shall be made only following: (a) a final decision on the merits
by a court or other body before whom the proceeding was brought that the person
to be indemnified was not liable by reason of disabling conduct, or (b) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the person to be indemnified was not liable by reason of
disabling conduct by, (i) the vote of a majority of a quorum of disinterested
non-party directors, or (ii) an independent legal counsel in a written opinion.
Section 4. Indemnification of Employees and Agents. Employees and
agents who are not officers or directors of the Corporation may be indemnified,
and reasonable expenses may be advanced to such employees or agents, as may be
provided by action of the Board of Directors or by contract, subject to any
limitations imposed by the Investment Company Act of 1940, as amended.
Section 5. Other Rights. The Board of Directors may make further
provision consistent with law for indemnification and advancement of expenses to
directors, officers, employees and agents by resolution, agreement or otherwise.
The indemnification provided for by this Article shall not be deemed exclusive
of any other right, with respect to indemnification or otherwise, to which those
seeking indemnification may be entitled under any insurance, other agreement,
resolution of stockholders or disinterested directors, or otherwise.
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Section 6. Subsequent Changes to Law. References in this Article are to
the Maryland General Corporation Law and to the Investment Company Act of 1940
as from time to time amended. No amendment of these By Laws shall affect any
right of any person under this Article based on any event, omission or
proceeding occurring prior to such amendment.
ARTICLE VIII
AMENDMENT OF BY LAWS
These By Laws may be altered, amended or repealed by the Board of
Directors.
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<PAGE> 1
EXHIBIT 2(b)
AIM TAX-EXEMPT FUNDS, INC.
FIRST AMENDMENT, DATED MARCH 14, 1995,
TO BY-LAWS
Article I, Section 7(a) of the By-Laws of AIM Tax-Exempt Funds, Inc. is
hereby amended to read in full as follows:
"At all meetings of the stockholders, every stockholder of
record entitled to vote thereat shall be entitled to vote at such
meeting either in person or by written proxy signed by the stockholder
or by his duly authorized attorney in fact. A stockholder may duly
authorize such attorney in fact through written, electronic,
telephonic, computerized, facsimile, telecommunication, telex or oral
communication or by any other form of communication. Unless a proxy
provides otherwise, such proxy is not valid more than eleven months
after its date."
<PAGE> 1
EXHIBIT 4(a)
NO. SHARES
-------------
AIM TAX-EXEMPT CASH FUND
OF
AIM TAX-EXEMPT FUNDS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT:
CUSIP 001419 20 9
is the holder of
FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER
SHARE
Shares of Common Stock of the above named Portfolio of AIM TAX-EXEMPT FUNDS,
INC. are transferable on the books of the Corporation by the holder hereof in
person or by duly authorized Attorney upon surrender of this Certificate
properly endorsed. This certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
[MARYLAND CORPORATE SEAL]
Dated Countersigned:
AIM FUND SERVICES, INC.
Transfer Agent
[SEAL] (Houston, Texas)
/s/ Robert H. Graham )
President )
)
) FOR THE DIRECTORS
) By
/s/ Carol F. Relihan ) -------------------------
Secretary ) Authorized Signature
<PAGE> 2
The Corporation will furnish to any stockholder upon request and without charge
a full statement of the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, terms and conditions of redemption of the stock or each class
which the Corporation is authorized to issue, differences in the relative rights
and preferences between the shares of each series to the extent they have been
set, and authority of the Board of Directors to set the relative rights and
preferences of each series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT- ____________ Custodian ___________ under Uniform Gifts
(Cust) (Minor)
to Minors Act _______________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ___________________________ hereby sell, assign and transfer
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
unto /____________________________________/ _________________________________
Please print or type name and address including zip code of assignee.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ shares
of common stock represented by the within certificate, and hereby irrevocably
constitute and appoint _________________________________________________________
______________________________________________________________________ attorney
to transfer the said shares on the books of the within mentioned Corporation
with full power of substitution in the premises.
Dated ______________________________________
____________________________________________
Signature guaranteed: ______________________
Acceptable guarantors include banks, brokers-dealers, credit unions,
national securities exchanges, savings associations and any other organization,
provided that such institution or organization qualifies as an "eligible
guarantor institution" as that term is defined in rules adopted by the
Securities and Exchange Commission, and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the New York Stock Exchange Medallion
Signature Program, provided that in either event, the amount of the transaction
involved does not exceed the surety coverage amount indicated on the medallion.
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration or enlargement, or any change whatever.
<PAGE> 1
EXHIBIT 4(b)
NO. SHARES
-------------
AIM TAX-FREE INTERMEDIATE SHARES
A CLASS OF THE INTERMEDIATE PORTFOLIO
OF
AIM TAX-EXEMPT FUNDS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT:
CUSIP 001419 40 7
is the holder of
FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER
SHARE
Shares of Common Stock of the above named Portfolio and Class of AIM TAX-EXEMPT
FUNDS, INC. transferable on the books of the Corporation by the holder hereof in
person or by duly authorized Attorney upon surrender of this Certificate
properly endorsed. This certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
[MARYLAND CORPORATE SEAL]
Dated Countersigned:
AIM FUND SERVICES, INC.
Transfer Agent
[SEAL] (Houston, Texas)
/s/ Robert H. Graham )
President )
)
) FOR THE DIRECTORS
) By
/s/ Carol F. Relihan ) -------------------------
Secretary ) Authorized Signature
<PAGE> 2
The Corporation will furnish to any stockholder upon request and without charge
a full statement of the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, terms and conditions of redemption of the stock or each class
which the Corporation is authorized to issue, differences in the relative rights
and preferences between the shares of each series to the extent they have been
set, and authority of the Board of Directors to set the relative rights and
preferences of each series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT- ____________ Custodian ___________ under Uniform Gifts
(Cust) (Minor)
to Minors Act _______________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ___________________________ hereby sell, assign and transfer
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
unto /____________________________________/ _________________________________
Please print or type name and address including zip code of assignee.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ shares
of common stock represented by the within certificate, and hereby irrevocably
constitute and appoint _________________________________________________________
______________________________________________________________________ attorney
to transfer the said shares on the books of the within mentioned Corporation
with full power of substitution in the premises.
Dated ______________________________________
____________________________________________
Signature guaranteed: ______________________
Acceptable guarantors include banks, brokers-dealers, credit unions,
national securities exchanges, savings associations and any other organization,
provided that such institution or organization qualifies as an "eligible
guarantor institution" as that term is defined in rules adopted by the
Securities and Exchange Commission, and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the New York Stock Exchange Medallion
Signature Program, provided that in either event, the amount of the transaction
involved does not exceed the surety coverage amount indicated on the medallion.
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration or enlargement, or any change whatever.
<PAGE> 1
EXHIBIT 4(c)
NO. SHARES
-------------
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
OF
AIM TAX-EXEMPT FUNDS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT:
CUSIP 001419 30 8
is the holder of
FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER
SHARE
Shares of Common Stock of the above named Portfolio of AIM TAX-EXEMPT FUNDS,
INC. are transferable on the books of the Corporation by the holder hereof in
person or by duly authorized Attorney upon surrender of this Certificate
properly endorsed. This certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
[MARYLAND CORPORATE SEAL]
Dated Countersigned:
AIM FUND SERVICES, INC.
Transfer Agent
[SEAL] (Houston, Texas)
/s/ Robert H. Graham )
President )
)
) FOR THE DIRECTORS
) By
/s/ Carol F. Relihan ) -------------------------
Secretary ) Authorized Signature
<PAGE> 2
The Corporation will furnish to any stockholder upon request and without charge
a full statement of the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, terms and conditions of redemption of the stock or each class
which the Corporation is authorized to issue, differences in the relative rights
and preferences between the shares of each series to the extent they have been
set, and authority of the Board of Directors to set the relative rights and
preferences of each series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT- ____________ Custodian ___________ under Uniform Gifts
(Cust) (Minor)
to Minors Act _______________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ___________________________ hereby sell, assign and transfer
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
unto /____________________________________/ _________________________________
Please print or type name and address including zip code of assignee.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ shares
of common stock represented by the within certificate, and hereby irrevocably
constitute and appoint _________________________________________________________
______________________________________________________________________ attorney
to transfer the said shares on the books of the within mentioned Corporation
with full power of substitution in the premises.
Dated ______________________________________
____________________________________________
Signature guaranteed: ______________________
Acceptable guarantors include banks, brokers-dealers, credit unions,
national securities exchanges, savings associations and any other organization,
provided that such institution or organization qualifies as an "eligible
guarantor institution" as that term is defined in rules adopted by the
Securities and Exchange Commission, and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the New York Stock Exchange Medallion
Signature Program, provided that in either event, the amount of the transaction
involved does not exceed the surety coverage amount indicated on the medallion.
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration or enlargement, or any change whatever.
<PAGE> 1
[AIM LOGO APPEARS HERE] EXHIBIT 6(b)
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares of
the common stock (the "Shares") of the registered investment companies listed
on Schedule A attached hereto which may be amended from time to time by us (the
"Funds"), understands that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that
you agree to abide by all of the rules and regulations of the NASD for purposes
of this Agreement (which you confirm by your signature below). In consideration
of the mutual covenants stated below, you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares), as determined in accordance with the then effective
prospectus used in connection with the offer and sale of Shares
(the "Prospectus"), which public offering price may reflect scheduled
variations in, or the elimination of, the Sales Charge on sales of the
Funds' Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus. You agree that you will
apply any scheduled variation in, or elimination of, the Sales Charge
uniformly to all offerees in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole descretion to reject any order.
4 With respect to the Funds the Shares of which are indicated on the attached
Schedule as being sold with a Sales Charge (the "Load Funds"), you will be
allowed the concessions from the public offering price provided in the
Load Funds' prospectus. With respect to the Funds, the Shares of which are
indicated on the attached Schedule A as being sold with a contingent
deferred sales charge (the "CDSC Funds"), you will be paid a commission or
consession as disclosed in the CDSC Fund's then current prospectus. Wtih
respect to the Funds whose Shares are indicated on the attached Schedule as
being sold without a Sales Charge or a contingent deferred sales charge
(the "No-Load Funds"), you may charge a reasonable administrative fee. For
the purpose of this Agreement the terms "Sales Charge" and "Dealer
Commission" apply only to the Load Funds and the CDSC Funds. All commissions
and concessions are subject to change without notice by us and will comply
with any changes in regulatory requirements. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders. Redemptions
by a Fund and repurchases by us will be effected in the manner and upon the
terms described in the Prospectus. We will, upon your request, assist you
in processing such orders for redemptions or repurchases. To facilitate
prompt payment following a redemption or repurchase of Shares, the owner's
signature shall appear as registered on the Funds' records and, as
described in the Prospectus, it may be required to be guaranteed by a
commercial bank, trust company or a member of a national securities
exchange.
<PAGE> 2
6 Sales and exchages of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer's Concesssion
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any commissions plus interest thereon.
9 You and we agree to abide by the Rules of Fair Practice of the NASD and all
other federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within
seven (7) business days after the date of our confirmation to you of your
original purchase order therefore, you agree to pay forthwith to us the
full amount of the concession allowed to you on the original sale and we
agree to pay such amount to the Fund when received by us. We also agree to
pay to the Fund the amount of our share of the Sales Charge on the original
sale of such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospecutus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representaion, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
<PAGE> 3
16 We will supply you with copies of the Prospectuses and Statements of
Additional Information of the Funds (including any amendments thereto) in
reasonable quantities upon request. You will provide all customers with a
Prospectus prior to or at the time such customer purchases Shares. You will
provide any customer who so requests a copy of the Statement of Additional
Information on file with the U.S. Securities and Exchange Commission.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ MICHAEL J. CEMO
------------------ ---------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
05/95
<PAGE> 4
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
SELECTED DEALER AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges With CDSC
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund Yes No
AIM Balanced Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes No
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Government Securities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Class A Yes Yes
AIM Money Market Fund Class C No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Limited Maturity Treasury Shares, AIM Money Market Fund
Class C, AIM Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Shares.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
05/95
<PAGE> 1
[AIM LOGO APPEARS HERE] EXHIBIT 6(c)
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Mutual Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies listed on Schedule A hereto which may be
amended from time to time by us (the "Funds"). As exclusive agent for the
Funds, we are offering to make available shares of common stock or of
beneficial interest, as the case may be, of the Funds (the "Shares") for
purchase by your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated on the attached Schedule A as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus. With respect to the Funds,
the Shares of which are indicated on the attached Schedule A as being sold
with a contingent deferred sales charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
<PAGE> 2
11 If payment is not received within ten (10) business days of our acceptance
of the order, we reserve the right to cancel the sale or, at our option, to
sell Shares to the Fund at the then prevailing net asset value. In this
event you agree to be responsible for any loss resulting to the Fund from
the failure to make payment as aforesaid.
12 Shares sold hereunder shall be available in book-entry form on the books of
the Funds' Transfer Agent unless other instructions have been given.
13 No person is authorized to make any representations concerning Shares of
any Fund except those contained in the applicable current Prospectus and
printed information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
make Shares available to your customers except under circumstances that
will result in compliance with the applicable Federal and State Securities
and Banking Laws and that you will not furnish to any person any
information contained in the then current Prospectus or cause any
advertisement to be published in any newspaper or posted in any public
place without our consent and the consent of the appropriate Fund.
14 Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sales, and you agree to indemnify us and/or the Funds for any claim,
liability, expense or loss in any way arising out of a sale of Shares in
any state or jurisdiction not identified by us as a state or jurisdiction
in which such Shares are so registered or qualified. We agree to indemnify
you for any claim, liability, expense or loss in any way arising out of a
sale of shares in any state or jurisdiction identified by us as a state or
jurisdiction in which shares are so registered or qualified.
15 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
16 All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares and,
upon notice, to change the sales charge or discount or to modify, cancel or
change the terms of this Agreement. You agree that any order to purchase
Shares of the Funds placed by you after any notice of amendment to this
Agreement has been sent to you shall constitute your agreement to any such
agreement.
17 The names of your customers shall remain your sole property and shall not
be used by us for any purpose except for servicing and information mailings
in the normal course of business to Fund Shareholders.
18 Your acceptance of this Agreement constitutes a representation that you are
a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder.
All communications to us should be sent to A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046. Any notice to you shall
be duly given if mailed or telegraphed to you at the address specified by
you below or to such other address as you shall have designated in writing
to us. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ MICHAEL J. CEMO
------------------ ---------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
05/95
<PAGE> 3
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
BANK SELLING GROUP AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges With CDSC
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund Yes No
AIM Balanced Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes No
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Government Securities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Class A Yes Yes
AIM Money Market Fund Class C No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Limited Maturity Treasury Shares, AIM Money Market Fund
Class C, AIM Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Shares.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
05/95
<PAGE> 1
EXHIBIT 8(b)
SUBCUSTODIAN AGREEMENT
WITH
TEXAS COMMERCE BANK
The undersigned custodian (the "Custodian") for the funds listed on
Schedule A hereto (the "Funds"), each an open-end investment company registered
under the Investment Company Act of 1940 (the "1940 Act"), hereby appoints Texas
Commerce Bank National Association as subcustodian (the "Subcustodian") for each
of the Funds and their respective series, if any, and the Subcustodian hereby
accepts such appointment on the following terms and conditions as of the date
set forth below and along with A I M Fund Services, Inc. ("AFS"), transfer agent
for the Funds, agree as follows:
1. Qualification. The Custodian and the Subcustodian each represent to
the other and to the Funds that it is qualified to act as custodian for a
registered investment company under the 1940 Act, and the Custodian represents
to the Subcustodian that it is the duly appointed, qualified and acting
Custodian of the Funds, with all necessary power and authority to enter into
this Agreement.
2. Subcustody. The Subcustodian shall maintain custodian accounts for
the Funds ("Subscription Accounts"). Checks issued in payment for purchases of
the Funds' shares ("Subscription Checks") shall be deposited by AFS with the
Subcustodian and AFS shall instruct Subcustodian into which Subscription Account
to deposit such checks. The Subcustodian shall debit AFS account no. 100366815
(the "Bounced Check Account") for the aggregate amount of all Subscription
Checks returned to the Subcustodian for non-payment ("Return Items"), informing
AFS daily of any returned Subscription Checks. In the event that the available
funds in the Bounced Check Account are insufficient to cover the amount of the
Return Items, Subcustodian shall promptly notify Transfer Agent in writing of
the amount of such insufficiency. Upon receipt of such written notice, Transfer
Agent agrees to remit to Subcustodian the full amount of such insufficiency.
Each business day AFS shall provide instructions to the Subcustodian to
wire transfer certain funds to Boston Safe Deposit & Trust Company and other
entities that AFS may specify from time to time, which shall deposit the
proceeds of such wire transfers from the Subcustodian into the Settlement
Account at Boston Safe Deposit & Trust Company. The Subcustodian agrees that it
will comply with the instructions of AFS so long as the instructions do not
require the transfer of funds in an amount in excess of the aggregate of the
ledger balances in the Subscription Accounts in question and the Subcustodian is
not prohibited from making the transfer by applicable law or regulation. Boston
Safe Deposit & Trust Company will net the Subscription Check proceeds with the
redemption proceeds and the net amount will be wired to the Settlement Account
at the Custodian. The Funds will compensate the Subcustodian for (i) service
fees charged by the Subcustodian for processing Subscription Checks as set forth
on Schedule 1 to this Agreement (these amounts will be paid monthly and computed
based on overall account relationship), (ii) other miscellaneous fees as
described in Schedule 1 and (iii) Return Items not paid by the Transfer Agent
within five (5) days following a payment by Subcustodian pursuant to paragraph 2
hereof.
-1-
<PAGE> 2
3. Instructions; Other Communications. Any one officer or other
authorized representative of AFS designated as hereinafter provided as an
officer or other authorized representative of AFS authorized to give
instructions to the Subcustodian with respect to the Funds' assets held in the
Subscription Accounts (an "Authorized Officer"), shall be authorized to instruct
the Subcustodian as to the deposit, withdrawal or any other action with respect
to the Funds' assets from time to time by telephone, or in writing signed by
such Authorized Officer and delivered by telecopy, tested telex, tested computer
printout or such other reasonable methods as AFS and Subcustodian shall agree
upon; provided, however, the Subcustodian is authorized to accept and act upon
instructions from AFS, whether orally, by telephone or otherwise, which it
reasonably believes to be given by an Authorized Officer. The Subcustodian may
require that any instructions given orally or by telecommunications be promptly
confirmed in writing.
The Authorized Officers shall be as set forth on Schedule 2 attached
hereto or as otherwise from time to time certified in writing by AFS to the
Subcustodian signed by the President or any Vice President and any Assistant
Vice President, Assistant Secretary or Assistant Treasurer of AFS. In addition
to a written list of authorized officers, AFS will provide Subcustodian with
additional information and signature cards as reasonably requested by
Subcustodian relating to the Authorized Officers. The Subcustodian shall furnish
to AFS (i) prompt telephonic and written notice of Return Items, (ii) monthly
reports on activity in each of the Subscription Accounts mailed within five (5)
days after the end of each calendar month and (iii) a daily statement of
activity in each of the Subscription Accounts, which will be made available via
the MicroLink balance reporting service. AFS will furnish a copy of the
information provided by Subcustodian to (i) each Fund, and (ii) the Custodian
(as to the Custodian, only items (ii) and (iii) above are required).
4. Fees. The service fees charged by the Subcustodian under the
Agreement are as set forth in Schedule 1 attached hereto. Schedule 1 may be
amended by the parties in writing provided written notice is furnished to the
Funds thirty (30) days in advance of any increase in fees.
5. Liabilities. (i) The Subcustodian shall be indemnified and held
harmless by AFS and the Funds and not be liable for any action taken or omitted
to be taken by it in good faith or for any mistake of law or fact, or for
anything Subcustodian may do or refrain from doing in connection with or as
required by this Agreement, except for failure to exercise ordinary care or act
in good faith. Except as otherwise set forth herein, the Subcustodian shall have
no responsibility with respect to Fund assets. The Subcustodian shall, for the
benefit of the Custodian, AFS and the Funds, use the same care with respect to
the handling of the Funds' assets in the Subscription Accounts as it uses with
respect to its own assets similarly held. The Subcustodian shall have no
responsibility with respect to any monies or any wire transfer, checks or other
instruments for the payment of money unless and until actually received or
secured by wire transfer by the Subcustodian. IN NO EVENT WILL THE SUBCUSTODIAN
BE LIABLE TO THE CUSTODIAN, AFS OR THE FUNDS FOR ANY INDIRECT DAMAGES, LOST
PROFITS, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES WHICH ARISE OUT OF OR IN
CONNECTION WITH THE SERVICES CONTEMPLATED HEREIN.
(ii) The Subcustodian shall indemnify, defend and save harmless the
Custodian, AFS and each Fund from and against all loss, liability, claims and
demands incurred by the Custodian, AFS or the Funds and any related
out-of-pocket expenses, arising directly from the Subcustodian's bad
-2-
<PAGE> 3
faith, willful malfeasance or negligence in connection with its obligations
under this Agreement and the Investment Company Act of 1940, as amended.
(iii) The Custodian agrees to indemnify and hold the Subcustodian
harmless from and against any and all loss, liability, claims and demands
incurred by Subcustodian in connection with the performance by the Subcustodian
in good faith of any activity under this Agreement pursuant to instructions of
the Custodian.
(iv) It is understood and stipulated that neither the shareholders of
any Fund nor the members of the Board of such Fund shall be personally liable
hereunder.
6. Termination. Each party may terminate this Agreement at any time by
not less than thirty (30) days prior written notice which shall specify the date
of such termination; provided, however, that the Custodian may immediately
terminate this Agreement in the event of the appointment of a conservator or
receiver for the Subcustodian by the Federal Deposit Insurance Corporation or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction. Upon termination of this Agreement,
the Subcustodian shall promptly make delivery of all assets of the Funds held in
the Subscription Accounts to the Custodian or any third party, qualified to act
as a custodian pursuant to the rules and regulations of the Investment Company
Act of 1940, as amended, specified by the Custodian in writing. If any
Subscription Checks are subsequently returned unpaid, the Funds shall direct AFS
to pay the Subcustodian the amount thereof on behalf of the Funds promptly upon
demand. All indemnities provided pursuant to this Agreement shall survive the
termination of this Agreement.
7. Communications. All communications required or permitted to be given
under this Agreement shall be in writing (including telex, telegraph or telefax,
facsimile or similar electronic transmittal device) and shall be deemed given
(a) upon delivery in person to the persons indicated below, or (b) three days
after deposit in the United States postal service, postage prepaid, registered
or certified mail, return receipt requested, or (c) upon receipt by facsimile
(provided that receipt of such facsimile is confirmed telephonically by the
addressee) or (d) by overnight delivery service (with receipt of delivery) sent
to the address shown below, or to such different address(es) as such party shall
designate by written notice to the other parties hereto at least ten days in
advance of the date on which such change of address shall be effective. All
communications required or permitted to be given under this Agreement shall be
addressed as follows:
(i) to the Subcustodian: Texas Commerce Bank National Association
P.O. Box 2558
Houston, Texas 77252-8084
Attn: Kathy Wallace
(ii) to the Custodian: State Street Bank and Trust Company
Mutual Fund Services
Boston, Massachusetts 02105
Attn: AIM Funds
-3-
<PAGE> 4
(iii) to the Transfer Agent: A I M Fund Services, Inc.
11 Greenway Plaza
Suite 1919
Houston, Texas 77046
Attn: Robert Frazer
8. Records. The books and records pertaining to the Subscription
Accounts which are in the possession of the Subcustodian shall be preserved by
the Subcustodian for six years, the first two years of which the books and
records shall be maintained by the Subcustodian in an easily accessible place.
The Subcustodian will not refuse any reasonable request for inspection and audit
of its books and records concerning transactions and balances of the
Subscription Accounts by an agent of any Fund, AFS or the Custodian.
9. Cooperation. The Subcustodian shall cooperate with each Fund and the
Custodian and their respective independent public accountants in connection with
annual and other audits of the books and records of the Custodian or the Funds
and shall take all reasonable actions to assure that such information is made
available to such accountants for the expression of their opinion.
10. Terms and Conditions of Deposit Accounts. The handling of the
Subscription Accounts and the Bounced Check Account and all other accounts
maintained with the Subcustodian in connection with or relating to this
Agreement will be subject to the Subcustodian's Terms and Conditions of Deposit
Accounts, and any and all rules or regulations now or hereafter promulgated by
the Subcustodian which relate to such accounts, and the Uniform Commercial Code
as adopted in the State of Texas (except in the event any of the same are
contrary to the specific provisions hereof). In the event of any specific
conflict between the provisions hereof and the provisions of any of the
foregoing, the provisions of this Agreement shall control.
11. Miscellaneous. This Agreement shall be (i) governed by and
construed in accordance with the laws of the State of Texas without regard to
conflicts of law rules, (ii) may be executed in counterparts each of which shall
be deemed an original but all of which shall constitute the same instrument, and
(iii) may only be amended by the parties hereto in writing.
12. Signature Authority. Each of the undersigned represents and
warrants that he/she has the requisite authority to execute this Agreement on
behalf of the party for whom the undersigned signs; that all necessary action
has been taken to authorize this Agreement; that this Agreement, upon execution
and delivery, shall be a binding obligation of such party.
-4-
<PAGE> 5
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed this 9th day of September, 1994.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
(as Subcustodian)
By: /s/ Kathy Wallace
------------------------------------
Title: Financial Services Officer
---------------------------------
STATE STREET BANK AND TRUST COMPANY
(as Custodian)
By:
------------------------------------
Title:
---------------------------------
A I M FUND SERVICES, INC.
(as Transfer Agent)
By:
------------------------------------
Title:
---------------------------------
Each of the Funds hereby consents and agrees to the terms of the
foregoing Subcustodian Agreement; provided, however, that the same shall not
relieve the Custodian of any of its responsibilities to the Fund as set forth in
the Custodian Agreements between the Funds and the Custodian.
EACH OF THE FUNDS LISTED ON
SCHEDULE A HERETO
By:
------------------------------------
Title:
---------------------------------
-5-
<PAGE> 6
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed this 9th day of September, 1994.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
(as Subcustodian)
By:
------------------------------------
Title:
---------------------------------
STATE STREET BANK AND TRUST COMPANY
(as Custodian)
By: /s/ Nancy Grady
------------------------------------
Title: Vice President
---------------------------------
A I M FUND SERVICES, INC.
(as Transfer Agent)
By:
------------------------------------
Title:
---------------------------------
Each of the Funds hereby consents and agrees to the terms of the
foregoing Subcustodian Agreement; provided, however, that the same shall not
relieve the Custodian of any of its responsibilities to the Fund as set forth
in the Custodian Agreements between the Funds and the Custodian.
EACH OF THE FUNDS LISTED ON
SCHEDULE A HERETO
By:
------------------------------------
Title:
---------------------------------
<PAGE> 7
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed this 9th day of September, 1994.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
(as Subcustodian)
By:
-------------------------------------
Title:
----------------------------------
STATE STREET BANK AND TRUST COMPANY
(as Custodian)
By:
-------------------------------------
Title:
----------------------------------
A I M FUND SERVICES, INC.
(as Transfer Agent)
By: /s/ RICHARD J. SNYDER
-------------------------------------
Title: Senior Vice President
----------------------------------
Each of the Funds hereby consents and agrees to the terms of the
foregoing Subcustodian Agreement; provided, however, that the same shall not
relieve the Custodian of any of its responsibilities to the Fund as set forth
in the Custodian Agreements between the Funds and the Custodian.
EACH OF THE FUNDS LISTED ON
SCHEDULE A HERETO
By: /s/ JOHN J. ARTHUR
-------------------------------------
Title: Senior Vice President & Treasurer
----------------------------------
<PAGE> 8
SCHEDULE A
AIM Equity Funds, Inc.
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds
AIM Tax-Exempt Funds, Inc.
<PAGE> 9
Schedule I
<TABLE>
<CAPTION>
TCB-HOUSTON ----------------------------------------------------
PRICES ARE GUARANTEED FOR 90 DAYS FROM: 6/09/94
PRO-FORMA ACCOUNT ANALYSIS STATEMENT
ANALYSIS PERIOD PAGE
AIM FUND SERVICES, INC. LEVEL ENDING NO.
ACCOUNT DETAIL 04/30/94 1 OF 1
CHECK PROCESSING
- ---------------------------------------------------------------------------------------------------------
EARNINGS RESERVE BALANCE
AVERAGE DEMAND BALANCES THIS PERIOD CREDIT REQUIREMENT MULTIPLIER
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LEDGER BALANCE $0.00
LESS UNCOLLECTED FUNDS $0.00 3.55% 10.00% 342.72
-----
COLLECTED BALANCE $0.00
LESS INTEREST BEARING BALANCE $0.00
-----
NET COLLECTED BALANCE $0.00
LESS RESERVE REQUIREMENT $0.00
-----
NET AVAILABLE BALANCE $0.00
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
WEIGHTED
SERVICES RENDERED UNIT PRICE ACTIVITY TOTAL PRICE BALANCE EQUIVALENT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUTOMATED CLEARING HOUSE
Night Cycle CR/DB - One Day 0.0750 2,200 $ 165.00 $ 56,548.80
Day Cycle CR/DB - Two Day 0.0750 26,000 $ 1,950.00 $ 668,304.00
ACH Data Transmission 10.0000 1 $ 10.00 $ 3,427.20
Monthly Maintenance-TaxID/Acct 50.0000 1 $ 50.00 $ 17,136.00
Return Items 2.5000 137 $ 342.50 $ 117,381.60
CUSTOMER ACCOUNTING
Account Maintenance 20.0000 9 $ 180.00 $ 61,689.60
Return Items - Received 2.5000 246 $ 615.00 $ 210,772.80
Return Items - Reclears 1.5000 492 $ 738.00 $ 252,927.36
FDIC Assessment $.16/$1000 Ledger 469.3300 1 $ 469.33 $ 160,848.78
Customer Research - per copy 2.0000 1 $ 2.00 $ 685.44
ITEM PROCESSING
Tier I/Local City 0.0300 560 $ 16.80 $ 5,757.70
Tier II/Local RCPC 0.0450 124 $ 5.58 $ 1,912.38
Tier III/Texas Fed Cities 0.0550 628 $ 34.54 $ 11,837.55
Tier IV/Other Texas 0.0600 1,118 $ 67.08 $ 22,989.66
Tier V/Other Transit 0.0600 34,050 $ 2,043.00 $ 700,176.96
MICROLINK
APC Transactions 0.1000 2,200 $ 220.00 $ 75,398.40
APC Maintenance w/ Cash Manager 25.0000 1 $ 25.00 8,568.00
Cash Manager Software Maintenance 35.0000 1 $ 35.00 $ 11,995.20
Bank Account - TCB 20.5500 9 $ 184.95 $ 63,386.06
Bank Account - Other Banks 28.3300 15 $ 424.95 $ 145,638.86
Previous Day Items 0.1500 26,039 $ 3,905.85 $ 1,338,612.91
TEX-COM
TX Corp. DX TCB Accounts 25.5600 9 $ 230.04 $ 78,839.31
TX Corp. DX TCB Accts DB/CR Items 0.2000 3,039 $ 607.80 $ 208,305.22
WIRE TRANSFER
Incoming transfer - Autopost 4.5000 660 $ 2,970.00 $ 1,017,878.40
Account Maintenance 5.0000 1 $ 5.00 $ 1,713.60
TDA Repetitive - Outgoing 6.0000 22 $ 132.00 $ 45,239.04
- ---------------------------------------------------------------------------------------------------------
TOTALS BEFORE RESERVES $ 15,429.42 $ 5,287,970.82
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------
SUMMARY ANALYSIS
-----------------------------------------------
<S> <C>
NET AVAILABLE BALANCE $ 0.00
LESS BALANCES REQUIRED
TO SUPPORT SERVICES $5,287,970.82
-------------
BALANCES AVAILABLE FOR
OTHER SERVICES ($5,287,970.82)
COLLECTED BALANCE REQUIRED $5,875,523.14
OR
FEES DUE FOR COLLECTED
BALANCE DEFICIENCY $ 17,143.80
-----------------------------------------------
</TABLE>
<PAGE> 10
Average Demand Balances This Period
- Ledger Balance - The average gross balance that includes all collected
and uncollected funds. It is the sum of each day's ending ledger
inclusive of aggregate adjustments divided by the number of days in the
reporting month.
- Less Funds in Process of Collection - The average float incurred for
the reporting month calculated by subtracting average collected balance
from the average ledger balance.
- Collected Balance - The sum of each day's ending collected balance
inclusive of aggregate adjustments divided by the number of days in the
reporting month.
- Less Interest Bearing Balance - The average collected balance
maintained in interest bearing accounts.
- Net Collected Balance - Collected balance minus interest bearing
balance.
- Less Reserve Requirement - The amount of every dollar of collected
balances that must be held in reserve. Net collected balance multiplied
by the reserve requirement rate.
- Net Available Balance - The balance available to apply towards
compensation for services rendered. Net collected balance minus the
reserve requirement.
Earnings Credit - The percent approximates the value of the alternative use of
cash in short term investments. The rate is adjusted monthly to reflect market
trends during the period.
Reserve Requirement - This percentage is determined by state or federal
regulations. This percentage of every dollar of collected balances must be held
in reserve by the bank.
Balance Multiplier - This shows the available balance required to compensate for
$1.00 of service activity for one month. It is calculated by applying the
earnings credit rate to $1.00 of services as follows:
<TABLE>
<S> <C>
$ 1.00 Days in the Year
--------------- X -----------------
Earnings Credit Days in the Month
</TABLE>
Services Rendered - The Description of services provided during the reporting
month.
Weighted Unit Price - Total price divided by total activity.
Activity - The total number of units rendered for each service.
Total Price - The unit price multiplied by the activity.
Balance Equivalent - The available balance required to compensate for services
rendered. Total price multiplied by the balance multiplier.
Summary Analysis
- Balance Available for Other Services - This represents the difference
between the net available balance and the balances required to support
services rendered.
- Collected Balance Equivalent - This represents the collected balance
equivalent that is available to support additional services. The
formula for calculation is:
Balances Available for Other Services
-------------------------------------
1-Reserve Requirement
- Collected Balance Required - This represents the collected balance
required to compensate for a current month deficient available balance.
The formula for calculation is:
Balances Available for Other Services
-------------------------------------
1-Reserve Requirement
- Fees Due for Collected Balance Deficiency - The amount due in fees for
a collected balance deficiency. The formula for calculation is:
Collected Balance Required
-------------------------------------
Balance Multiplier
<PAGE> 11
June 2, 1994
PRO-FORMA ACCOUNT ANALYSIS ADDENDA Page 1
ATM Fund Services, Inc.
<TABLE>
<CAPTION>
BANK/PRODUCT/ACTIVITY UNIT PRICE MINIMUM
<S> <C> <C>
TCB-Houston
MICROLINK
Cash Manager Software Setup $325.00 0.00
Automated Payments and Collections (APC)
Software and Setup $225.00 0.00
ACH Transmission Setup $200.00 0.00
</TABLE>
<PAGE> 12
SCHEDULE 2
AUTHORIZED OFFICERS
Jack Caldwell President
Ira Cohen Vice President
Mary Corcoran Vice President
Sidney M. Dilgren Vice President
Robert A. Frazer Assistant Vice President
Mary Gentempo Vice President
Richard Snyder Senior Vice President
AUTHORIZED REPRESENTATIVES
Torri Evans
Debi Folse
Ann Marie Mahoney
Tim McDonough
Robert Thompson
<PAGE> 1
EXHIBIT 9(a)(3)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM TAX-EXEMPT FUNDS, INC.
AND
A I M FUND SERVICES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 5 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 6 COVENANTS OF THE FUND AND THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 7 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 8 ADDITIONAL FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 9 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 10 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 11 TEXAS LAW TO APPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 12 MERGER OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 13 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of November, 1994, by and between AIM
TAX-EXEMPT FUNDS, INC., a Maryland corporation, having its principal office and
place of business at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046 (the
"Fund"), and A I M Fund Services, Inc., a Delaware corporation having its
principal office and place of business at 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046 (the "Transfer Agent").
WHEREAS, the Transfer Agent is registered as such with the Securities
and Exchange Commission (the "SEC"); and
WHEREAS, the Fund is authorized to issue shares in separate series and
classes, with each such series representing interests in a separate portfolio of
securities and other assets and each such class having different distribution
arrangements; and
WHEREAS, the Fund on behalf of the Retail Class of each of the
Portfolios thereof (the "Portfolios") desires to appoint the Transfer Agent as
its transfer agent, and agent in connection with certain other activities, with
respect to the Portfolios, and the Transfer Agent desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE 1
TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT
1.01 Subject to the terms and conditions set forth in this Agreement,
the Fund hereby employs and appoints the Transfer Agent to act as, and the
Transfer Agent agrees to act as, its transfer agent for the authorized and
issued shares of common stock of the Fund representing interests in the Retail
Class of each of the respective Portfolios ("Shares"), dividend disbursing
agent, and agent in connection with any accumulation or similar plans provided
to shareholders of each of the Portfolios (the "Shareholders"), including
without limitation any periodic investment plan or periodic withdrawal program,
as provided in the currently effective prospectus and statement of additional
information (the "Prospectus") of the Fund on behalf of the Portfolios.
1.02 The Transfer Agent agrees that it will perform the following
services:
(a) The Transfer Agent shall, in accordance with procedures established
from time to time by agreement between the Fund on behalf of each of the
Portfolios, as applicable, and the Transfer Agent:
(i) receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation thereof to the Custodian of the Fund
authorized pursuant to the Charter of the Fund (the
"Custodian");
(ii) pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the
appropriate Shareholder account;
1
<PAGE> 4
(iii) receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(iv) at the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the
Fund;
(v) effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the
Shares;
(vii) maintain records of account for and advise the Fund
and its Shareholders as to the foregoing; and
(viii) record the issuance of Shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total
number of Shares which are authorized, based upon data
provided to it by the Fund, and issued and
outstanding.
The Transfer Agent shall also provide the Fund on a regular basis with
the total number of Shares which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to the issue
or sale of such Shares, which function shall be the sole responsibility of the
Fund.
(b) In addition to the services set forth in the above paragraph (a),
the Transfer Agent shall: (i) perform the customary services of a transfer
agent, including but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and prospectuses to current Shareholders, preparing
and mailing confirmation forms and statements of accounts to Shareholders for
all purchases and redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information.
(c) Procedures as to who shall provide certain of these services in
Article 1 may be established from time to time by agreement between the Fund on
behalf of each Portfolio and the Transfer Agent. The Transfer Agent may at times
perform only a portion of these services and the Fund or its agent may perform
these services on the Fund's behalf.
ARTICLE 2
FEES AND EXPENSES
2.01 For performance by the Transfer Agent pursuant to this Agreement,
the Fund agrees on behalf of each of the Portfolios to pay the Transfer Agent
fees as set out in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed from time to time subject to mutual written agreement between the Fund
and the Transfer Agent.
2
<PAGE> 5
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse the Transfer Agent for out-of-pocket expenses or advances
incurred by the Transfer Agent for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by the Transfer Agent
at the request or with the consent of the Fund, will be reimbursed by the Fund
on behalf of the applicable Shares.
2.03 The Fund agrees on behalf of each of the Portfolios to pay all
fees and reimbursable expenses following the mailing of the respective billing
notice. Postage for mailing of dividends, proxies, Fund reports and other
mailings to all Shareholder accounts shall be advanced to the Transfer Agent by
the Fund at least seven (7) days prior to the mailing date of such materials.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
The Transfer Agent represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of the state of Delaware.
3.02 It is duly qualified to carry on its business in Delaware and in
Texas.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 It is registered as a Transfer Agent as required by the federal
securities laws.
3.07 This Agreement is a legal, valid and binding obligation to it.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Transfer Agent that:
4.01 It is a business corporation duly organized and existing and in
good standing under the laws of Maryland.
4.02 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform this Agreement.
3
<PAGE> 6
4.04 It is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently effective and will
remain effective, with respect to all Shares of the Fund being offered for sale.
ARTICLE 5
INDEMNIFICATION
5.01 The Transfer Agent shall not be responsible for, and the Fund
shall on behalf of the applicable Portfolio, indemnify and hold the Transfer
Agent harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) all actions of the Transfer Agent or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct;
(b) the Fund's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty of the Fund
hereunder;
(c) the reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents or services which (i) are
received or relied upon by the Transfer Agent or its agents or subcontractors
and/or furnished to it or performed by on behalf of the Fund, and (ii) have been
prepared, maintained and/or performed by the Fund or any other person or firm on
behalf of the Fund; provided such actions are taken in good faith and without
negligence or willful misconduct;
(d) the reliance on, or the carrying out by the Transfer Agent or its
agents or subcontractors of any instructions or requests of the Fund on behalf
of the applicable Portfolio; provided such actions are taken in good faith and
without negligence or willful misconduct; or
(e) the offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 The Transfer Agent shall indemnify and hold the Fund harmless from
and against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by the Transfer Agent as result of the Transfer Agent's lack
of good faith, negligence or willful misconduct.
5.03 At any time the Transfer Agent may apply to any officer of the
Fund for instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the Transfer
Agent under this Agreement, and the Transfer Agent and its agents or
subcontractors shall not be liable to and shall be indemnified by the Fund on
behalf of the applicable Portfolio for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The
Transfer Agent shall be protected and
4
<PAGE> 7
indemnified in acting upon any paper or document furnished by or on behalf of
the Fund, reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data, records or
documents provided to the Transfer Agent or its agents or subcontractors by
machine readable input, telex, CRT data entry or other similar means authorized
by the Fund, and shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the Fund.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
ARTICLE 6
COVENANTS OF THE FUND AND THE TRANSFER AGENT
6.01 The Fund shall, upon request, on behalf of each of the Portfolios
promptly furnish to the Transfer Agent the following:
(a) a certified copy of the resolution of the Board of Directors of the
Fund authorizing the appointment of the Transfer Agent and the execution and
delivery of this Agreement; and
(b) a copy of the Charter and By-Laws of the Fund and all amendments
thereto.
6.02 The Transfer Agent shall keep records relating to the services to
be performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Transfer Agent agrees that all such records
prepared or maintained by the Transfer Agent relating to the services to be
performed by the Transfer Agent hereunder are the property of the Fund and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in accordance with
its request.
6.03 The Transfer Agent and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
5
<PAGE> 8
6.04 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Transfer Agent will endeavor to notify the
Fund and to secure instructions from an authorized officer of the Fund as to
such inspection. The Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
ARTICLE 7
TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon sixty (60)
days written notice to the other.
7.02 Should the Fund exercise its right to terminate this Agreement,
all out-of-pocket expenses associated with the movement of records and material
will be borne by the Fund on behalf of the applicable Portfolios. Additionally,
the Transfer Agent reserves the right to charge for any other reasonable
expenses associated with such termination and/or a charge equivalent to the
average of three (3) months' fees.
ARTICLE 8
ADDITIONAL FUNDS
8.01 In the event that the Fund establishes one or more series of
Shares in addition to the Portfolios with respect to which it desires to have
the Transfer Agent render services as transfer agent under the terms hereof, it
shall so notify the Transfer Agent in writing, and if the Transfer Agent agrees
in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
ARTICLE 9
ASSIGNMENT
9.01 Except as provided in Section 9.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
9.03 The Transfer Agent may, without further consent on the part of the
Fund, subcontract for the performance hereof with any entity which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934 as amended ("Section 17A(c)(1)"); provided, however, that
the Transfer Agent shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
ARTICLE 10
AMENDMENT
10.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
6
<PAGE> 9
ARTICLE 11
TEXAS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Texas.
ARTICLE 12
MERGER OF AGREEMENT
12.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
ARTICLE 13
COUNTERPARTS
13.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
7
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
AIM TAX-EXEMPT FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
-----------------------
President
ATTEST:
/s/ NANCY L. MARTIN
- ----------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By: /s/ JOHN CALDWELL
-----------------------
President
ATTEST:
/s/ NANCY L. MARTIN
- ----------------------
Assistant Secretary
8
<PAGE> 11
FEE SCHEDULE
1. For performance by the Transfer Agent pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Transfer Agent an
annualized fee for shareholder accounts that are open during any monthly
period as set forth below, and an annualized fee of $.70 per shareholder
account that is closed during any monthly period. Both fees shall be billed
by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of the
annualized fee for all such accounts.
<TABLE>
<CAPTION>
Per Account Fee
Fund Type Annualized
--------- ----------
<S> <C>
Class A Annual/Semi-Annual Dividends $15.15
Class A Quarterly & Monthly Dividend 17.15
Class A Daily Accrual 19.65
Class B 19.65
</TABLE>
2. The Transfer Agent shall provide the AIM Funds with an annualized credit to
the monthly billings of (a) $1.50 for each open account in excess of
100,000 open AIM Funds Accounts up to and including 125,000 open AIM Funds
Accounts; (b) $1.75 for each open account in excess of 125,000 open AIM
Funds Accounts up to and including 150,000 open AIM Funds Accounts; (c)
$2.00 for each open AIM Funds Account in excess of 150,000 open AIM Funds
Accounts up to and including 200,000 open AIM Funds Accounts; (d) $2.25 for
each open AIM Funds Account in excess of 200,000 open AIM Funds Accounts up
to and including 500,000 open AIM Funds Accounts; (e) $2.50 for each open
AIM Funds Account in excess of 500,000 open AIM Funds Accounts up to and
including 1,000,000 open AIM Funds Accounts; and (f) $3.00 for each open
AIM Funds Account in excess of 1,000,000 open AIM Funds Accounts.
3. In addition, beginning on the anniversary date of the execution of the
Remote Services Agreement with The Shareholder Services Group, Inc., and on
each subsequent anniversary date, the per account fees shall each be
increased by a percentage amount equal to the percentage increase in the
then current Consumer Price Index (all urban consumers) or its successor
index, though in no event shall such increase be greater than a 7% increase
over the previous fees.
4. Other Fees
<TABLE>
<S> <C>
IRA Annual Maintenance Fee $10 per IRA account per year (paid by
investor per tax I.D. number).
Balance Credit The total fees due to the Transfer
Agent from all funds affiliated with
the Fund shall be reduced by an
amount equal to one half of
investment income earned by the
Transfer Agent on the DDA balances
of the disbursement accounts for
those funds.
Remote Services Fee $3.60 per open account per year,
payable monthly and $1.80 per closed
account per year, payable monthly.
</TABLE>
9
<PAGE> 12
5. OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production & equipment
- Magnetic media tapes and freight
- Printing costs, including, without limitation, certificates,
envelopes, checks, stationery, confirmations and statements
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct
pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
- Duplicating services
- Courier services
- Banking charges, including without limitation incoming and
outgoing wire charges @ $8.00 per wire
- Rendering fees as billed
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including, but
not limited to exit fees charged by third party record keeping
vendors
- Third party audit reviews
- All client specific Systems enhancements will be at the Funds'
cost.
- Certificate Insurance
- Such other miscellaneous expenses reasonably incurred by the
Transfer Agent in performing its duties and responsibilities under
this Agreement
- Checkwriting fee of $.75 per check redemption.
The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing. In addition, the Fund will promptly reimburse the
Transfer Agent for any other unscheduled expenses incurred by the Transfer
Agent whenever the Fund and the Transfer Agent mutually agree that such
expenses are not otherwise properly borne by the Transfer Agent as part of
its duties and obligations under the Agreement.
10
<PAGE> 1
EXHIBIT 9(a)(3)
REMOTE ACCESS
AND
RELATED SERVICES AGREEMENT
AGREEMENT dated as December 23, 1994 between each registered investment
company listed on the signature pages hereof, either for itself or, with respect
to each such company that is a series investment company, on behalf of each of
the series or class named on the signature pages hereof (the "Fund") and THE
SHAREHOLDER SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with
principal offices at One Exchange Place, Boston, Massachusetts 02109.
W I T N E S S E T H
That for and in consideration of the mutual promises hereinafter set
forth, the Fund and TSSG agree as follows:
1. Appointment of TSSG. The Fund appoints TSSG as servicing agent to
provide and support remote terminal access through dedicated
transmission lines to its computerized data processing record keeping
system for Fund shareholder accounting more fully described on the
attached Schedule A (the "TSSG System) installed on TSSG computer
hardware and using TSSG software ("TSSG Facilities") to provide and
support remote terminal access to the TSSG System and the TSSG
Facilities for the maintenance of Fund shareholder records, processing
of information and generation of information with respect thereto.
TSSG hereby accepts such appointment for the compensation described
below.
2. Oral and Written Instructions. "Written Instructions" shall mean a
written communication signed by a person reasonably believed by TSSG to
be a person named on the list of authorized persons as it may be
amended by amendment provided by the Fund to TSSG from time to time
("Schedule B"). "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by TSSG from a person
reasonably believed by TSSG to be an Authorized Person listed on
Schedule B. Written communication shall include manually executed
originals and authorized electronic transmissions, including
telefacsimile of a manually executed original or other process.
3. Compensation.
(a) The Fund will compensate TSSG for the performance of its
obligations hereunder in accordance with the Fee Schedule
attached hereto as Schedule C. Such fees may be adjusted from
time to time by attaching to or substituting for Schedule C a
revised Fee Schedule, dated and signed by an authorized officer
of each party hereto.
(b) In addition to the fees payable pursuant to Schedule C, the
Fund will pay all out-of-pocket expenses incurred by TSSG in
performing its duties hereunder. Out-of-pocket expenses shall
include the items specified in the written schedule of
out-of-pocket charges attached hereto as Schedule D. Upon
written approval of the Fund, Schedule D may be modified by
TSSG. The Fund agrees to approve all reasonable changes in
Schedule D. Unscheduled out-of-pocket expenses shall
<PAGE> 2
be limited to those out-of-pocket expenses directly related
to TSSG's performance of its obligations hereunder.
(c) TSSG will provide an invoice as soon as practicable after the
end of each calendar month detailed in accordance with Schedule
C and Schedule D. The Fund will pay to TSSG the amount so
billed within fifteen (15) days after the Fund's receipt of the
invoice.
4. Duties of TSSG.
(a) Subject to the provisions of this Agreement, the Fund hereby
agrees to use or employ the TSSG System and the TSSG Facilities
to maintain certain Fund shareholder records and generate
output with respect to the Fund's shareholders, and subject to
the provisions of this Agreement, TSSG will provide the use of
the TSSG System and the TSSG Facilities to maintain Fund
shareholder records and generate such output with respect to
the Fund's shareholders.
(b) TSSG agrees to provide to the Fund at its facility located at
Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046 or at
such other location as may be mutually agreed upon in writing
by TSSG and the Fund (the "Fund Facility") remote access to the
use of information processing capabilities of the TSSG System
as it may be modified from time to time by TSSG.
5. Changes and Modifications.
(a) During the term of this Agreement, TSSG will make available for
Fund use, without additional costs, all modifications and
improvements to the TSSG System (excluding those modifications
and improvements TSSG views as additional products and/or those
developed exclusively for other TSSG clients) made in the
ordinary course of business. In addition, TSSG will use its
best efforts to make reasonable changes to the TSSG System
requested by the Fund, subject to payment of additional fees as
mutually agreed upon in writing and as reflected in Schedule C.
(b) TSSG shall have the right, at any time, and from time to time,
to alter and modify any systems, programs, procedures or
facilities used or employed in performing its duties and
obligations hereunder (a "System Modification"), provided that
no System Modification shall, without the consent of the Fund,
materially adversely change or affect the operations and
procedures of the Fund in using or employing the TSSG System or
the TSSG Facilities hereunder. TSSG will use it best efforts to
notify the Fund in writing at least five business days prior to
implementing any System Modification which impacts or effects
AFS' day to day operations, and in any event by 8 a.m. CST the
following business day.
(c) TSSG agrees to make any System Modifications necessary to meet
federal, state or local government or self-regulatory
organization requirements ("Regulatory Adherence Enhancements")
in a timely fashion. TSSG agrees to advise the Fund promptly
upon notification of any change in or receipt of any
information or advice concerning any change in the
requirements of any federal, state, local or self-
2
<PAGE> 3
regulatory organization which might require such System
Modifications. The Fund shall obtain any additional software
required to comply with such changes in federal, state, and
local government or self regulatory organization requirements.
Regulatory Adherence Enhancements shall be limited to
technically and commercially practical System modifications
which are within the scope of the functions, capabilities and
any database of the TSSG System. TSSG will provide Regulatory
Adherence Enhancements only after final specification, agreed
upon by TSSG, the Fund and affected third parties, have been
established and delivered to TSSG.
(d) During the term of this Agreement TSSG shall expend no less
than $1,000,000 (one million dollars) per calendar year for the
enhancement and maintenance of TSSG's recordkeeping and
associated system that are utilized by TSSG to provide services
to the Fund under this Agreement (or a successor Remote
Service Agreement). At least once each calendar year, TSSG
shall provide the Fund with a schedule of the enhancements
planned by the TSSG for the succeeding 12 month period.
6. Duties of the Fund.
(a) The Fund will transmit all information and data required by
TSSG hereunder to the TSSG Facilities in the format and form
specified by TSSG, so that the output produced by the Fund
shall be complete and accurate when it is generated by the TSSG
System and the TSSG Facilities. The Fund shall be responsible
and liable for the costs and expenses of regenerating any
output if the Fund provides nonconforming or erroneous data or
shall have failed to transmit any such data or information or
verify any such data and information when it is generated by
the TSSG System and the TSSG Facilities.
(b) In the event the Fund shall erroneously transmit information or
shall transmit incorrect information or data to the TSSG System
or the TSSG Facilities, the Fund shall correct such information
and data and retransmit the same to the TSSG System or to the
TSSG Facilities. Upon consent of the Fund, which shall not be
unreasonably withheld, TSSG shall take the necessary steps at
Fund expense to correct any files affected by the original
incorrect transmission.
(c) In the event the TSSG System malfunctions or a TSSG programming
error (other than programming changes made pursuant to
paragraph 5(a) above), causes an error or mistake in any of the
output generated by the TSSG System under the terms of this
Agreement, TSSG will, at its expense, correct and retransmit
such output so long as the Fund has notified TSSG of such error
or mistake within five (5) business days of its discovery and
the data used to generate such output is available as set forth
in Schedule E attached hereto.
If such data is available as set forth in Schedule E, the Fund
shall take reasonable necessary steps to manually correct any
records due to a TSSG system malfunction or programming error
that TSSG is unable to correct systematically and the parties
shall mutually agree upon the allocation of expenses related to
such manual processing.
3
<PAGE> 4
7. System Access and Training.
(a) TSSG shall provide the Fund on-line access as provided for and
set forth in the attached Schedule F, and agrees to meet the
performance standards set forth therein. Additional access to
the TSSG System may be arranged by mutual agreement of the
parties.
(b) The Fund will reimburse TSSG for any reasonable costs and
expenses incurred for training hereunder. All travel and other
out-of-pocket expenses incurred by Fund personnel in connection
with and during the training periods shall be borne by the
Fund.
8. Indemnification. TSSG shall not be responsible for and the Fund shall
indemnify and hold TSSG harmless from and against any and all claims,
costs, expenses (including reasonable attorneys' fees), losses,
damages, charges, payments and liabilities of any sort or kind which
may be asserted against TSSG or for which TSSG may be held to be liable
(a "Claim") arising out of or attributable to any of the following:
(a) Any actions of TSSG required to be taken pursuant to this
Agreement unless such Claim resulted from a negligent act or
omission to act or bad faith by TSSG in the performance of its
duties hereunder.
(b) The Fund's failure to use and employ the TSSG System and the
TSSG Facilities in accordance with the procedures set forth in
any on-line documentation made available to the Fund, the
Fund's failure to utilize the control procedures set forth and
described in the on-line user documentation, or the Fund's
failure to verify promptly reports or output received through
use to the TSSG System and the TSSG Facilities.
(c) The Fund's errors and mistakes in the use of the TSSG System,
TSSG Facilities and control procedures.
(d) TSSG's reasonable reliance on, or reasonable use of
information, data, records and documents received by TSSG from
the Fund in the performance of TSSG's duties and obligations
hereunder.
(e) The reliance on, or the implementation of, any Written or Oral
Instructions or any other instructions or requests of the Fund.
(f) The Fund's refusal or failure to comply with the terms of this
Agreement, or any Claim which arises out of the Fund's
negligence or misconduct or the breach of any representation or
warranty of the Fund made herein.
(g) Unavailability of communications or utilities facilities or
other equipment failures provided TSSG has maintained such
equipment appropriately, Acts of God, acts of the public enemy,
governmentally-mandated priorities in allocating its services,
labor disputes, fires, floods, strikes, riots or war or other
causes beyond its control.
4
<PAGE> 5
9. Standard of Care.
(a) TSSG shall at all times act in good faith and agrees to use its
best efforts within commercially reasonable standards to insure
the accuracy of all services performed under this Agreement,
but assumes no responsibility and shall not be liable for loss
or damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct or that of its
employees.
(b) Notwithstanding the foregoing Section 9(a) or anything else
contained in this Agreement to the contrary, TSSG's liability
hereunder shall, in no event exceed four million dollars
($4,000,000.00).
The parties agree to review the limitation of liability
provision set forth in this Section 9(b) on an annual basis.
10. Instructions. TSSG may apply at any time to a person listed as an
Authorized Person identified on Schedule B for instructions with
respect to any matter arising in connection with this Agreement. TSSG
may also consult with legal counsel for the Fund or, at TSSG's expense,
its own legal counsel with respect to actions to be taken hereunder.
TSSG shall not be liable for, and shall be indemnified by the Fund
against, any Claim arising from any action taken or omitted to be taken
by TSSG in good faith in reliance upon such instruction from the Fund
or upon the advice of such legal counsel.
11. Consequential Damages. In no event and under no circumstances shall
either party under this Agreement be liable to the other party for
consequential or indirect loss of profits, reputation or business or
any other special damages under any provision of this Agreement or for
any act of failure to act hereunder.
12. Covenants of TSSG.
(a) TSSG shall maintain the appropriate computer files of all
required information and data transmitted to the TSSG
Facilities by the Fund, provided, however, that TSSG shall not
be responsible or liable for any damage, alterations,
modifications thereto or failure to maintain the same if the
Fund made, or TSSG made at the Fund's request, such changes,
alterations or modifications or if the Fund causes the failure.
It is expressly understood that all such shareholder records
transmitted by the Fund and maintained by TSSG remain the
exclusive property of the Fund.
(b) All information furnished by the Fund to TSSG is confidential
and TSSG agrees that it shall not disclose such information to
any third party except pursuant to Written or Oral Instructions
received from the Fund or to the extent that TSSG is required
by law to make such disclosure.
13. Covenants of the Fund. The Fund shall utilize and employ all reasonable
control procedures available under the TSSG System of which the Fund
may be advised. The Fund will promptly advise TSSG of any errors or
mistakes in the data or information transmitted to the TSSG Facilities
or in the records maintained by TSSG or output generated hereunder. The
Fund will verify the accuracy of all output it receives consistent with
industry custom and practice by utilizing proper auditing procedures.
5
<PAGE> 6
All information furnished to or obtained by the Fund pertaining to the
TSSG Facilities, the TSSG System, or TSSG procedures, data bases and
programs is confidential and proprietary to TSSG. The Fund shall not
disclose such information to any third party except to the extent that
the Fund is required by law to make such disclosures.
14. Term and Termination.
(a) This Agreement shall become effective on the date first set
forth above and shall continue in effect through December 31,
1997 ("Initial Term").
(b) Unless it is the intention of either party for this Agreement
to terminate upon the expiration of the Initial Term, within
six (6) months prior to the end of the Initial Term but no
later than such date, AIM and TSSG will negotiate diligently
and in good faith and either (i) enter into an agreement
extending the term of this Agreement; or (ii) enter into a new
agreement for TSSG to provide remote services substantially
similar to those contemplated hereunder.
(c) Notwithstanding the foregoing, if a party hereto is guilty of a
material failure to perform its duties and obligations
hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the
Defaulting Party, and if such material breach shall not have
been remedied within thirty (30) days after such written notice
is given, then the Non-Defaulting Party may terminate this
Agreement by giving thirty (30) days written notice of such
termination to the Defaulting Party. If TSSG is the
Non-Defaulting Party, its termination of this Agreement shall
not constitute a waiver of any other rights or remedies of TSSG
with respect to services performed prior to such termination or
rights of TSSG to be reimbursed for out-of-pocket expenses. In
all cases, termination by the Non-Defaulting Party shall not
constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against
the Defaulting Party.
15. Post-Termination Procedures. Upon termination for any reason by either
party to this Agreement TSSG shall promptly, at the Fund's expense,
provide immediate and full access to the Fund data files on magnetic
tape in machine readable form and shall cooperate with the Fund in its
efforts to transfer all such data files to another person chosen by the
Fund. In addition, TSSG agrees to return, at the expense of the
terminating party, all backup tapes and other storage media upon which
Fund data is then stored.
16. Amendment. This Agreement may only be amended or modified by written
agreement executed by both parties.
17. Assignment. This Agreement and any interest hereunder shall inure to
the benefit of and be binding upon the Parties and their respective
successors, legal representatives and permitted assigns including the
successor entity in any merger or reorganization of the Funds. Except
as otherwise expressly provided for in this Agreement, neither Party
may assign or delegate this Agreement or any of its rights or
obligations without the other Party's prior approval which shall not be
unreasonably withheld. Upon prior notice to the Fund, TSSG may assign
this Agreement to (i) any person in connection with the merger
6
<PAGE> 7
or consolidation of TSSG into such person, or the sale of all or
substantially all the assets of TSSG to such person or (ii) any direct
or indirect subsidiary of First Data Corporation in connection with any
corporate reorganization. Any attempt to assign, delegate or otherwise
transfer this Agreement in violation of this Section will be voidable
by the other party.
18. Subcontracting. TSSG may subcontract to agents the services required to
be performed pursuant to this Agreement and the Schedules hereto, if
any. The appointment of any such agent shall not relieve TSSG of its
responsibilities hereunder.
19. Use of TSSG's Name. The Fund shall not use TSSG's name in any
Prospectus, Statement of Additional Information, Shareholder's Report,
sales literature or other material relating to the Fund without TSSG's
prior written approval unless such use is required by law or merely
refers in accurate terms to the services rendered hereunder. Any
reference to TSSG shall include a statement to the effect that it is an
indirect, wholly owned subsidiary of First Data Corporation.
20. Use of the Fund's Name. Except as provided herein, TSSG shall not use
the name of the Fund, its Advisor or material relating to any of them
on any documents or forms (other than internal documents) without the
Fund's prior written approval unless such use is required by law or
merely refers in accurate terms to the services rendered hereunder.
21. Security.
(a) TSSG will provide the Fund with a User Identifier (also known
as "User I.D.") and a User Password. TSSG will also assign the
initial Operator Password to each of the Fund's employees who
are authorized to access the TSSG System. The Operator
Passwords may be changed at any time in the discretion of the
Fund without any notice to or knowledge of TSSG by using
procedures set forth in the user manual.
(b) The Fund agrees that it is responsible for selection, use and
protection of the confidentiality of passwords; however, TSSG
may for security reasons at any time and from time to time,
upon seven days written notice to the Fund (or immediately upon
notice by telephone, confirmed in writing, in the event of an
emergency), deny access to the TSSG System until one or more
User I.D.s is changed by the Fund.
(c) TSSG will provide the Fund with online procedures enabling the
Fund to reset passwords, correct password violations and
add/change/delete User I.D.s within existing security profiles.
(d) TSSG will use its best efforts to ensure that the Fund's data
files which are input into the TSSG System will remain
confidential and protected from unauthorized access by third
persons. Specifically, TSSG will adhere to its normal security
procedures for protection of computer-stored files or programs
from unauthorized access. It is agreed that such procedures
will be subject to review by the Fund and audit by its
independent accountants and that TSSG will take under
7
<PAGE> 8
advisement recommendations of such independent accountants
concerning changes to such procedures.
(e) The Fund or duly authorized independent auditors will have the
right upon 5 business days' notice under this Agreement to
perform on-site audits of records and accounts directly
pertaining to Fund shareholder accounts serviced by TSSG
facilities in accordance with reasonable procedures and at
reasonable frequencies.
(f) The parties agree that all tapes, books, user manuals,
instructions, records, information and data pertaining to the
business of the other party, the TSSG System and the Fund
clients serviced by the Fund which are exchanged or received
pursuant to the negotiation of or carrying out of this
Agreement shall remain confidential except to the extent
required by applicable laws, and shall not be voluntarily
disclosed to any other person and that all such tapes, books,
reference manuals, instructions, records, information and data
in the possession of each of the parties hereto shall be
returned to the party from whom it was obtained upon the
termination or expiration of this Agreement.
(g) The Fund acknowledges that TSSG has proprietary rights in and
to the TSSG System and any other TSSG programs, data bases,
supporting documentation or procedures ("TSSG Protected
Information") of which the Fund or its employees or agents
become aware as a result of the Fund's access to the TSSG
System or TSSG Facilities and that the TSSG Protected
Information constitutes confidential material and trade secrets
of TSSG. The Fund agrees to maintain the confidentiality of the
TSSG Protected Information. The Fund acknowledges that any
unauthorized use, misuse, disclosure or taking of TSSG
Protected Information which is confidential or which is a trade
secret, whether residing or existing internally or externally
to a computer, computer system or computer network, or the
knowing and unauthorized accessing or causing to be accessed of
any computer, computer system or computer network, may be
subject to civil liabilities and criminal penalties under
applicable law. The Fund will advise all of its employees and
agents who have access to any TSSG Protected Information or to
any computer equipment capable of accessing TSSG Facilities of
the foregoing.
22. Additional Funds. In the event that additional funds, within the same
family as the Funds, are established ("Additional Funds") and such
Additional Funds desire to avail themselves of the benefits of and
become a party to this Agreement, the Additional Funds shall notify
TSSG in writing, and if TSSG agrees in writing, such Additional Funds
shall become a party to this Agreement.
23. Miscellaneous.
(a) Notices. Any notice or other instrument authorized or required
by this Agreement to be given in writing to the Fund or TSSG
shall be sufficiently given if addressed to that party and
received by it at its office set forth below or at such other
place as it may from time to time designate in writing.
8
<PAGE> 9
To: AIM Family of Funds
c/o John Caldwell, President
AIM Fund Services, Inc.
Eleven Greenway Plaza, Suite 1919
Houston, Texas 77046
Attention: William Kleh, Secretary
with a copy to:
Fund Legal Department at the same address
Attention: Carol Relihan, VP and General Counsel
To: The Shareholder Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to:
General Counsel at the same address
(b) Successors. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors upon
the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement may not be
assigned without the written consent of the other party.
(c) Governing Law. This Agreement shall be governed exclusively by
and interpreted in accordance with the internal substantive
laws of the Commonwealth of Massachusetts without reference to
the choice of the law provisions thereof.
(d) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restriction of this Agreement
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but all of which together will constitute only one instrument.
(f) Captions. The captions of this Agreement are included for
convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their
construction or effect.
(g) Sole Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement
with respect to the subject matter hereof.
9
<PAGE> 10
(h) Specific Performance. Each of the parties hereto agrees that
the other party would be irreparably damaged by breaches of
this Agreement relating to confidential or proprietary
information and accordingly each agrees that each of them is
entitled, without bond or other security, to an injunction or
injunctions to prevent breaches of the provisions of this
Agreement relating to such information.
(i) It is understood and agreed that all services performed
hereunder by TSSG shall be as an independent contractor and not
as an employee, joint venturer, or partner of the Fund. This
Agreement is between the Fund and TSSG, and there are no third
party beneficiaries hereto.
(j) Limitation of Shareholder Liability. Notice is hereby given
that the Declaration of Trust of each Fund which is a Delaware
business trust, is on file with the Secretary of State of
Delaware, and this Agreement was executed on behalf of each
such Trust by a duly authorized officer thereof acting as such
and not individually. The obligations of this Agreement are not
binding upon any of the Trustees, officers or Shareholders of
any such Trust individually but are binding only upon the
assets and property of the respective portfolio of each such
Trust for the benefit of which the Trustees have caused this
Agreement to be executed.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
AIM EQUITY FUNDS, INC.
on behalf of the Retail Classes
of its AIM Charter Fund, AIM
Constellation Fund, AIM
Weingarten Fund and AIM
Aggressive Growth Fund
Portfolios
By: /s/ ROBERT H. GRAHAM
-----------------------------
Title: President
--------------------------
AIM FUNDS GROUP,
on behalf of the Class A and
Class B Shares of its AIM
Balanced Fund, AIM Government
Securities Fund, AIM Growth
Fund, AIM High Yield Fund, AIM
Income Fund, AIM Municipal Bond
Fund, AIM Utilities Fund and AIM
Value Fund portfolios and on
behalf of the Class A, Class B
and Class C Shares of its AIM
Money Market Fund Portfolio
By: /s/ ROBERT H. GRAHAM
-----------------------------
Title: President
--------------------------
AIM INTERNATIONAL FUNDS, INC.,
on behalf of the Class A and
Class B shares of its AIM
International Equity Fund, AIM
Global Aggressive Growth Fund,
AIM Global Growth Fund and AIM
Global Income Fund Portfolios
By: /s/ ROBERT H. GRAHAM
-----------------------------
Title: President
--------------------------
AIM INVESTMENT SECURITIES FUNDS,
on behalf of its AIM Adjustable
Rate Government Fund portfolio
and the AIM Limited Maturity
Treasury Shares class of its
Limited Maturity Treasury
Portfolio
By: /s/ ROBERT H. GRAHAM
-----------------------------
Title: President
--------------------------
11
<PAGE> 12
AIM TAX-EXEMPT FUNDS, INC.,
on behalf of its AIM Tax-Exempt Cash
Fund and AIM Tax-Exempt Bond Fund of
Connecticut portfolios and the AIM
Tax-Free Intermediate Shares class
of its Intermediate Portfolio
By: /s/ ROBERT H. GRAHAM
---------------------------------
Title: President
------------------------------
THE SHAREHOLDER SERVICES GROUP, INC.
By: /s/ JACK P. KUTNER
---------------------------------
Title: EVP - COO
------------------------------
12
<PAGE> 13
SCHEDULE A
SYSTEM FEATURES AND CAPABILITIES
The FSR System consists of computer hardware, operating system software and
application software which contains functions as defined below. The operating
environment configuration consists of IBM-compatible mainframe computers running
on an MVS operating system. The configuration includes controllers, direct
access storage devices, tape drives, security access software and other
operating system hardware and software that enable TSSG to meet the contractual
commitments herein.
The Transfer Agent Application includes Job Control Language (JCL), Catalog
Procedures (PROCS) and program modules written primarily in COBOL.
The FSR Transfer Agency System supports the following subsystems and third party
systems:
NSCC (National Securities Clearing Corporation) support:
- FundSERV
- Networking
- Commissions
- Exchanges
- ACATS (Automated Customer Account Transfer System)
- TNET
Cost basis accounting
UNISYS Interface
Sales file download
Price Waterhouse Blue Sky download
File downloads to support DDA (Demand Deposit Account) Reconciliation
Year-End Statements and Tax Reporting:
- 1099D
- 1099R
- 1042S
- 5498
- 1099B
Transmission send/receive functionality for broker/dealers and other third
parties
Electronic Funds Transfer processing to move in and out of funds using automated
clearing house facilities
KMS Microfilm Interface
<PAGE> 14
Third part interfaces with:
Applied Mailing Systems for print/mail support
Microdata for checkbook production
Mellon and Texas Commerce for banking services
Other third party software packages i.e. ACE/DISC
<PAGE> 15
SCHEDULE B
AIM FAMILY OF FUNDS - LIST OF AUTHORIZED PERSONS
/s/ ROBERT H. GRAHAM
------------------------------------------------
Robert Graham
President, A I M Management Group Inc.
/s/ JOHN CALDWELL (JACK)
------------------------------------------------
Jack Caldwell
President, A I M Fund Services, Inc.
/s/ CAROL F. RELIHAN
------------------------------------------------
Carol Relihan
Secretary and General Counsel,
A I M Management Group Inc.
/s/ NANCY MARTIN
------------------------------------------------
Nancy Martin
Counsel, A I M Management Group Inc.
<PAGE> 16
SCHEDULE C
FEE SCHEDULE
I. SHAREHOLDER ACCOUNT FEES. The Fund shall pay the following fees
("Shareholder Account Fees"):
For the period beginning on the date of this Agreement, and continuing through
December 31, 1997, the Fund shall pay TSSG an annualized fee of $3.60 per
shareholder account that is open during any monthly period ("Open Account Fee").
The Fund also shall pay TSSG an annualized fee of $1.80 per shareholder account
that is closed during any monthly period ("Closed Account Fee") (The Open
Account Fees and the Closed Account Fees hereafter collectively referred to as
"Shareholder Account Fees"). The Shareholder Account Fees shall be billed by
TSSG monthly in arrears on a prorated basis of 1/12 of the annualized fee for
all such accounts.
In addition, beginning on the one year anniversary date of this Agreement, and
on each yearly anniversary date thereafter, the Shareholder Account fees may be
increased by TSSG in an amount equal to the lesser of (i) the cumulative
percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U)
U.S. City Average, All Items (unadjusted -- (1982-84 + 100), published by the
U.S. Department of Labor, or (ii) seven percent (7%) of the Shareholder Account
Fees charged by TSSG to the Fund for the preceding twelve (12) month period.
II. FEES FOR DEDICATED PROGRAMMING SUPPORT
TSSG and the Fund will jointly determine the level of dedicated system resources
required to meet the Fund's enhancement priorities. At the Fund's expense, TSSG
agrees to use reasonable efforts to make dedicated programming support available
for all projects required by the Fund. The amount of the resources required and
the projects to be worked on shall be determined jointly based upon joint
periodic review of project requirements; however, the Fund will decide the
priorities which will be assigned to each project and will determine what
projects the dedicated resources are to work on. Such resources will be charged
to the Fund at the rates set forth below. All enhancements, improvements,
modifications or new features added to the TSSG System shall be, and shall
remain, the confidential, exclusive property of, and proprietary to, TSSG.
Request for software changes may be initiated by those representatives of the
Fund identified in Exhibit 1 of this Schedule C. The Fund will use its best
efforts to notify TSSG in writing of requests for software changes within 72
hours of an initial verbal request. TSSG reserves the right to stop work on a
request for which written specifications have not been received.
a. SUPPORT TO BE PROVIDED TO THE FUND FREE OF CHARGE. TSSG will
provide the following support at no additional cost to the fund:
1. Coding to correct deficiencies in the system, unless such
deficiencies are included in item (II) (b) (9) below in which event
the Fund will be charged for such services. A system deficiency is
defined as a system process which does not operate according to the
design of the computer application or system specifications. To
correct system deficiencies, TSSG will, at its own expense, expend
whatever resources are necessary to analyze the deficiency and
apply an appropriate
1
<PAGE> 17
remedy, in the form of corrected application code as expeditiously
as possible. An alternate process, in the form of a functional
work around, may be a suitable substitute for the actual system
fix, if the level of effort to develop the system fix is deemed to
be impractical or the elapsed time to develop and apply the fix
extends beyond the reasonable time needed. For deficiencies
identified by the Fund, the use of a functional work around as an
alternate process shall be mutually agreed upon by the parties.
TSSG will evaluate all reported referrals, to validate deficiency
status or reclassify as a system enhancement, based on the above
definition.
2. Simple Maintenance determined to be core processing.
3. TSSG generated (i.e., internal) requests to extend system
functionality and ensure industry competitiveness.
4. Enhancements required to comply with regulatory changes; provided,
however, TSSG will only make such changes to the extent that they
are technically and commercially practical and are within the scope
of the software functions, capabilities and database.
b. SUPPORT TO BE PROVIDED TO THE FUND, BUT WHICH WILL BE BILLED AS
"DEDICATED PROGRAMMING SUPPORT": The following activities are
examples of "dedicated programming support" which will be billed to
the Fund:
1. Customized form output (i.e., statements, confirmation statements,
commission statements).
2. Customized reports.
3. Addition of new features (enhancements) requested by the Fund.
4. Addition of existing features not used by the Fund.
5. Addition of new funds to the fund group.
6. Customized year-end processing.
7. Conversions from other systems to FSR subsequent to initial funds
being live.
8. Clean-up/Recovery project resulting from Fund error or causes
beyond the reasonable control of either party.
9. System "fixes" - coding to correct errors attributable to code
developed, and currently maintained by the dedicated teams.
10. Customization of existing functions specific to the Fund.
11. Program documentation as requested by the Fund.
Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software developed by its dedicated programming staff. Such
exclusivity would extend for a period of nine (9) months from the date
the enhancement is placed into the production libraries. Software
exclusively would be waived if the Fund accepts either of the following
conditions:
a). If prior to implementation, TSSG or other TSSG clients agree to
share in the expense of the enhancements.
2
<PAGE> 18
b). At any time during the 9 months following implementation, TSSG or
other TSSG clients agree to share the expense for the enhancements.
Access and Capability. The Funds' dedicated programmers will have
access and capability to update any part of the System. However,
depending on the skill set of the programmers, as well as the scope of
the requested enhancement, it may be in the best interest of both the
Fund and TSSG to utilize non-dedicated programmers to address certain
enhancements. In addition, because many programs are shared by multiple
clients, some enhancements may require approval from those clients.
These enhancements should be handled on an item by item basis.
c. FEES FOR DEDICATED PERSONNEL WHICH WILL BE BILLED TO THE FUND. TSSG
will bill the Fund monthly in arrears on a prorated basis of 1/12 of
the following annualized charges for each person dedicated to the
following positions:
<TABLE>
<S> <C>
Manager $100,000
Programmer $ 90,000
Business System Analyst/Tester $ 85,000
Non-dedicated programmer-hourly charge $100 per hour
</TABLE>
TSSG may adjust these salaries on the anniversary date of this agreement to
reflect salary increases, provided that they do not exceed seven percent (7%) of
the fees charged to the Fund for the identical positions during the immediately
preceding twelve (12) month period.
3
<PAGE> 19
SCHEDULE C
EXHIBIT 1
AIM FAMILY OF FUNDS
AUTHORIZED PERSONS REQUESTING
SYSTEM MODIFICATIONS
/s/ JOHN CALDWELL
-----------------------------
John Caldwell
/s/ RICHARD SNYDER
-----------------------------
Richard Snyder
/s/ JOSEPH CHARPENTIER
-----------------------------
Joseph Charpentier
/s/ MARC VARGAS
-----------------------------
Marc Vargas
4
<PAGE> 20
SCHEDULED D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse TSSG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- NSCC transaction charges at $.15/per financial transaction
- Shipping, Certified and Overnight mail and insurance
- Year-End form production and mailings
- Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
- Duplicating services, as pre-approved by the Fund
- Courier services
- Due Diligence Mailings
- Rendering fees as billed
- Overtime, as pre-approved by the Fund
- Temporary staff, as pre-approved by the Fund
- Travel and entertainment, as pre-approved by the Fund
- Record retention, retrieval and destruction costs, including, but
not limited to exit fees charged by third party record keeping
vendors
- Third party audit review
- All conversion costs: including System start up costs, but
excluding costs associated with conversations between TSSG systems.
- Such other miscellaneous expenses reasonably incurred by TSSG in
performing its duties and responsibilities under this Agreement.
Such expenses incurred with consent of the Fund, not to be
unreasonably withheld.
- The costs associated with the Year-End Support Services set forth
on the attached Exhibit 1 of this Schedule D.
- The costs associated with the Broker Dealer Support Services set
forth on the attached Exhibit 2 of this Schedule D.
<PAGE> 21
EXHIBIT 1 OF SCHEDULE D
Year-End Support Services: Flat rate of $.12/per shareholder account open as of
December 31, 1994.
The services listed below will be performed by TSSG for the Fund in support of
reporting for tax year 1994 and compliance mailings for calendar year 1994. TSSG
assumes responsibility for performing the services in compliance with current
IRS rules and regulations.
(a) Up-front year-end planning and communication of year-end related system
modifications.
(b) Production of IRS required tax forms and amended/corrected tax forms as
requested by the Fund.
(c) Production of IRS required 1099 magnetic tape filings.
(d) Production of tax forms on microfiche.
(e) Maintenance of year-end data files and the handling of transaction code
updates to those files.
(f) Submission of year-end jobs.
(g) B-notice processing as follows:
- receipt of B-notice listing from IRS or AFS
- upload of data entry of all accounts to B-Notice subsystem
- execution and generation of B-Notice defense reports
- analysis of B-Notice Defense Reports to ensure accurate coding
- coordination of mailings with vendor, including generation of
vendor tapes
- notification to Client Services of anticipated and actual mailing
dates, including volume, sample letters and confirmation of the
date backup withholding will be imposed if no response is received
- systematic upload of W-9 responses as volumes warrant
(h) Correction processing resulting from the monthly review of the year-end
files - "balancing."
(i) Production of cost basis information on 1099B forms.
(j) All required state filing as requested by the Fund.
(k) All IRS required mailings requested by the Fund: B-Notice, Safe Harbor,
W-9 TEFRA election, IRS Penalty Notice, and TIN solicitation.
<PAGE> 22
EXHIBIT 1 OF SCHEDULED D (CONT'D)
(l) C-Notice processing as follows:
- receipt of C-Notice; imposition and release letters as received
from Fund or IRS
- performance of search function to identify all accounts associated
with the notice
- provide written instructions to Fund for proper account coding
(m) Initialization of Fund File in support of balancing tax reporting data
<PAGE> 23
EXHIBIT 2 OF SCHEDULE D
Broker/Dealer Support: Annualized fee of $.03/per shareholder account open
during any monthly period.
(a) NSCC Testing
(b) Back-up for NSCC redemption release
(c) Research and Problem Resolution
(d) Compliance and Support
<PAGE> 24
SCHEDULE E
DATA RETENTION AND RECOVERY STANDARDS
Data files included in the System are backed up according to a defined retention
schedule. This ensures availability of data for processing and application
recovery as well as compliance with regulatory requirements. Critical files that
are included in the retention process:
Shareholder Master
Shareholder History
Fund File
Dealer File
Global File
Certificate File
Broker/Client Cross Reference File
Additional Address File
Maintenance History File
Blue Sky Master
Price File
Rate File
Order Clearance File
These files are backed up as follows: daily and retained for six generations;
weekly and retained for 5 generations. The Shareholder Master, Shareholder
History and Fund Files are also backed up annually and retained for 7
generations.
In addition, the Acceptance File containing post-processing daily activity, and
the Daily File containing pre-processing transaction input, are backed up daily
and retained for six generations.
<PAGE> 25
SCHEDULE F
SYSTEM AVAILABILITY STANDARDS
These systems standards shall apply on business days.
- On-line systems availability between 7:00 a.m. and 7:00 p.m. CST -
95% measured monthly.
- Average response time (7:00 a.m. to 7:00 p.m. CST) of 3 seconds or
less, in response to the system employed by A I M Fund Services,
Inc. as of September 1, 1994 - 95% measured monthly.
- Daily report bundles in queue for transmission no later than 7:00
a.m. CST each business day - 95% measured monthly each bundle
measured separately.
- Daily job PFSRXOED containing the Acceptance File download in queue
for transmission no later than 4:00 a.m. CST each business day -
95% measured monthly.
- Daily job PFSRXCAD containing the Cap Stock File download in queue
for transmission no later than 6:30 a.m. CST each business day -
95% measured monthly.
- Weekly job PFSXOHW containing the Dealer File download in queue for
transmission no later than 9:00 a.m. CST each Saturday - 95%
measured quarterly.
<PAGE> 1
EXHIBIT 11(a)
CONSENT OF COUNSEL
AIM TAX-EXEMPT FUNDS, INC.
We hereby consent to the use of our name and to the references to our
firm under the captions "General Information - Legal Counsel" in the Prospectus
and "Miscellaneous Information - Legal Matters" in the Statement of Additional
Information, which are included in Post-Effective Amendment No. 3 to the
Registration Statement under the Securities Act of 1933 (No. 33-66242) and
Amendment No. 4 under the Investment Company Act of 1940 (No. 811-7890) on Form
N-1A of AIM Tax-Exempt Funds, Inc.
/s/ BALLARD SPAHR ANDREWS & INGERSOLL
-------------------------------------
Ballard Spahr Andrews & Ingersoll
Philadelphia, Pennsylvania
July 21, 1995
<PAGE> 1
EXHIBIT 11(b)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
AIM Tax-Exempt Funds, Inc.
We consent to the use of our reports on the Intermediate Portfolio, AIM
Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of Connecticut (portfolios of
AIM Tax-Exempt Funds, Inc.) dated May 5, 1995 included herein and to the
references to our firm under the headings "Financial Highlights" in the
Prospectus and "Audit Reports" in the Statement of Additional Information.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG Peat Marwick LLP
Houston, Texas
July 21, 1995
<PAGE> 1
EXHIBIT 11(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 3, Amendment No. 4 to the registration statement on Form N-1A of
AIM Tax-Exempt Funds, Inc. of our report dated February 16, 1993 relating to the
financial statements and financial highlights appearing in the March 31, 1995
Annual Report to Shareholders of AIM Tax-Exempt Cash Fund and AIM Tax-Exempt
Bond Fund of Connecticut. We also consent to the reference to us under the
heading "Financial Highlights" in the Prospectus.
/s/ Price Waterhouse LLP
- -----------------------
PRICE WATERHOUSE LLP
1201 Louisiana
Houston, Texas
July 20, 1995
<PAGE> 1
EXHIBIT 15(b)
AMENDED
DISTRIBUTION PLAN
OF
AIM TAX-EXEMPT FUNDS, INC.
(AIM Tax-Exempt Cash Fund)
(AIM Tax-Exempt Bond Fund of Connecticut)
Section 1. AIM Tax-Exempt Funds, Inc. (the "Fund") may act as a
distributor of shares of the AIM Tax-Exempt Cash Fund, and AIM Tax-Exempt Bond
Fund of Connecticut series portfolios (the "Shares") of which the Fund is the
issuer, pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"), according to the terms of this Distribution Plan (the "Plan").
Section 2. The Fund may incur as a distributor of the Shares, expenses
of up to twenty-five one-hundredths of one percent (0.25%) per annum of the
average daily net assets of the Fund attributable to the Shares, subject to any
applicable limitations imposed from time to time by applicable rules of the
National Association of Securities Dealers, Inc.
Section 3. Amounts set forth in Section 2 may be expended when and if
authorized in advance by the Fund's Board of Directors. Such amounts may be used
to finance any activity which is primarily intended to result in the sale of the
Shares, including, but not limited to, expenses of organizing and conducting
sales seminars, advertising programs, finders fees, printing of prospectuses and
statements of additional information (and supplements thereto) and reports for
other than existing shareholders, preparation and distribution of advertising
material and sales literature, supplemental payments to dealers and other
institutions as asset-based sales charges or as payments of service fees under a
shareholder service arrangement to be established by A I M Distributors, Inc.
("Distributors") as the Fund's distributor in accordance with Section 4, and the
costs of administering the Plan. To the extent that amounts paid hereunder are
not used specifically to reimburse Distributors for any such expense, such
amounts may be treated as compensation for Distributors' distribution-related
services. All amounts expended pursuant to the Plan shall be paid to
Distributors and are the legal obligation of the Fund and not of Distributors.
That portion of the amounts paid under the Plan that is not paid or advanced by
Distributors to dealers or other institutions that provide personal continuing
shareholder service as a service fee pursuant to Section 4 shall be deemed an
asset-based sales charge.
Section 4.
(a) Amounts expended by the Fund under the Plan shall be
used in part for the implementation by Distributors of shareholder service
arrangements with respect to the Shares. The maximum service fee paid to any
service provider shall be twenty-five one-hundredths of one percent (0.25%) per
annum of the average daily net assets of the Fund attributable to the Shares
owned by the customers of such service provider.
-1-
<PAGE> 2
(b) Pursuant to this program Distributors may enter into
agreements substantially in the form attached hereto as Exhibit A ("Service
Agreements") with such broker-dealers ("Dealers") as may be selected from time
to time by Distributors for the provision of distribution-related personal
shareholder services in connection with the sale of Shares to the Dealers'
clients and customers ("Customers") to Customers who may from time to time
directly or beneficially own Shares. The distribution-related personal
continuing shareholder services to be rendered by Dealers under the Service
Agreements may include, but shall not be limited to, the following: distributing
sales literature; answering routine Customer inquiries concerning the Fund and
the Shares; assisting Customers in changing dividend options, account
designations and addresses, and in enrolling into any of several retirement
plans offered in connection with the purchase of Shares; assisting in the
establishment and maintenance of customer accounts and records and in the
processing of purchase and redemption transactions; investing dividends and
capital gains distributions automatically in Shares and providing such other
information and services as the Fund or the Customer may reasonably request.
(c) Distributors may also enter into Bank Shareholder
Service Agreements substantially in the form attached hereto as Exhibit B ("Bank
Agreements") with selected banks acting in an agency capacity for their
customers ("Banks"). Banks acting in such capacity will provide shareholder
services to their customers as set forth in the Bank Agreements from time to
time.
(d) Distributors may also enter into Shareholder Service
Agreements substantially in the form attached hereto as Exhibit C ("Bank Trust
Department Agreements") with selected bank trust departments. Such bank trust
departments will provide shareholder services to their customers as set forth in
the Bank Trust Department Agreements.
Section 5. This Plan has been approved by a vote of at least a
"majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Shares.
Section 6. This Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority of both (a) the
Board of Directors of the Fund and (b) those directors of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no direct
or indirect financial interest in the operation of this Plan or any agreements
related to it (the "Dis-interested Directors"), cast in person at a meeting
called for the purpose of voting on this Plan or such agreements.
Section 7. Unless sooner terminated pursuant to Section 9, this Plan
shall continue in effect for a period of one year from the date it takes effect
and thereafter shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in Section 6.
Section 8. Distributors shall provide to the Fund's Board of Directors
and the Board of Directors shall review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
Section 9. This Plan may be terminated at any time by vote of a
majority of the Dis-interested Directors, or by vote of a majority of the
outstanding voting securities of the Shares. If this Plan is terminated, the
obligation of the Fund to make payments pursuant to this
-2-
<PAGE> 3
Plan will also cease and the Fund will not be required to make any payments
beyond the termination date even with respect to expenses incurred prior to the
termination date.
Section 10. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Dis-interested
Directors or by a vote of the outstanding voting securities of the Fund
attributable to the Shares, on not more than sixty (60) days' written notice to
any other party to the agreement; and
(b) that such agreement shall terminate automatically in the
event of its assignment.
Section 11. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 5 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 6 hereof.
AIM TAX-EXEMPT FUNDS, INC.
on behalf of its AIM Tax-Exempt Cash
Fund, and AIM Tax-Exempt Bond
Fund of Connecticut
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
____________________________ _________________________________
Assistant Secretary President
Plan in effect as of August 6, 1993, as amended as of September 10, 1994.
-3-
<PAGE> 4
[AIM LOGO APPEARS HERE]
AIM DISTRIBUTORS, INC.
EXHIBIT A
SHAREHOLDER SERVICE AGREEMENT
FOR SALE OF SHARES
OF THE AIM MUTUAL FUNDS
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each
of the Aim-managed mutual funds (or designated classes of such funds) listed on
Schedule A to this Agreement (the "Funds"), under a Distribution Plan (the
"Plan") adopted pursuant to said Rule. This Agreement, being made between AIM
Distributors, Inc. ("Distributors"), solely as agent for the Funds, and the
undersigned authorized dealer, defines the services to be provided by the
authorized dealer for which it is to receive payments pursuant to the Plan
adopted by each of the Funds. The Plan and the Agreement have been approved by
a majority of the directors of each of the Funds, including a majority of the
directors who are not interested persons of such Funds, and who have no direct
or indirect financial interest in the operation of the Plan or related
agreements (the "Dis-interested Directors"), by votes cast in person at a
meeting called for the purpose of voting on the Plan. Such approval included a
determination that in the exercise of their reasonable business judgement and
in light of their fiduciary duties, there is a reasonable likelihood that the
Plan will benefit such Fund and its shareholders. The Plan has also been
approved by a vote of at least a majority of each of such Funds' (or applicable
class of such Funds) outstanding securities, as defined in the 1940 Act.
(1) To the extent that you provide distribution-related continuing personal
shareholder services to customers who may, from time to time, directly or
beneficially own shares of the Funds, including but not limited to,
distributing sales literature, answering routine customer inquiries
regarding the Funds, assisting customers in changing dividend options,
accounting designation and addresses, and in enrolling into any of several
special investment plans offered in connection with the purchase of the
Funds' shares, assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions, investing dividends and capital gains distributions
automatically in shares and providing such other services as the Funds
or the customer may reasonably request, we, solely as agent for the Funds,
shall pay you a fee periodically or arrange for such fee to be paid to you.
(2) The fee paid with respect to each Fund will be calculated at the end of
each payment period (as indicated in Schedule A) for each business day
of the Fund during such payment period at the annual rate set forth in
Schedule A as applied to the average net asset value of the shares of such
Fund purchased or acquired through exchange on or after the Plan
Calculation Date shown for such Fund on Schedule A. Fees calculated in
this manner shall be paid to you only if your firm is the dealer of record
at the close of business on the last business day of the applicable payment
period, for the account in which such shares are held (the "Subject
Shares"). In cases where Distributors has advanced payment to you of the
first year's fee for shares sold at net asset value and subject to a
contingent deferred sales charge, no additional payments will be made to
you during the first year the Subject Shares are held.
(3) The total of the fees calculated for all of the Funds listed on Schedule A
for any period with respect to which calculations are made shall be paid to
you within 45 days after the close of such period.
(4) We reserve the right to withhold payment with respect to the Subject Shares
purchased by you and redeemed or repurchased by the Fund or by us as
Agent within seven (7) business days after the date of our confirmation of
such purchase. We reserve the right at any time to impose minimum fee
payment requirements before any periodic payments will be made to you
hereunder.
(5) This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
(6) You shall furnish us and the Funds with such information as shall
reasonably be requested either by the directors of the Funds or by us with
respect to the fees paid to you pursuant to this Agreement.
(7) We shall furnish the directors of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under the Plan
by us and the purposes for which such expenditures were made.
<PAGE> 5
(8) Neither you nor any of your employees or agents are authorized to make any
representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds, and you shall have no authority
to act as agent for the Funds or for Distributors.
(9) We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
(10) This Agreement and Schedule A may be amended at any time without your
consent by Distributors mailing a copy of an amendment to you at the
address set forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this Agreement
within thirty (30) days of your receipt of such amendment.
(11) This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty by the vote of a majority of the directors
of such Fund who are Dis-interested Directors or by a vote of a majority
of the Fund's outstanding shares, on sixty (60) days' written notice. It
will be terminated by any act which terminates either the Fund's
Distribution Agreement with us, the Selected Dealer Agreement between
your firm and us or the Fund's Distribution Plan, and in any event, it
shall terminate automatically in the event of its assignment as that term
is defined in the 1940 Act.
(12) The provisions of the Distribution Agreement between any Fund and us,
insofar as they relate to the Plan, are incorporated herein by reference.
This Agreement shall become effective upon execution and delivery hereof
and shall continue in full force and effect as long as the continuance of
the Plan and this related Agreement are approved at least annually by a
vote of the directors, including a majority of the Dis-interested
Directors, cast in person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to the address of
Distributors as shown at the bottom of this Agreement. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
(13) You represent that you provide to your customers who own shares of the
Funds personal services as defined from time to time in applicable
regulations of the National Association of Securities Dealers, Inc., and
that you will continue to accept payments under this Agreement only so
long as you provide such services.
(14) This Agreement shall be construed in accordance with the laws of the State
of Texas.
A I M DISTRIBUTORS INC.
Date: By:X /s/ Michael J. Cemo
----------------------- ------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By:X
---------------------- ------------------------------------
Signature
------------------------------------
Print Name Title
------------------------------------
Dealer's Name
------------------------------------
Address
-------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 6
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC. SCHEDULE "A"
SHAREHOLDER SERVICE AGREEMENT
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Charter Fund 0.25 November 18, 1986
AIM Constellation Fund 0.25 September 9, 1986
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund A Shares 0.50 September 15, 1994
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Government Securities Fund A Shares 0.25 July 1, 1992
AIM Government Securities Fund B Shares 0.25 September 1, 1993
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Tax-Exempt Bond Fund of Connecticut 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund 0.10 July 1, 1992
AIM Utilities Fund A Shares 0.25 July 1, 1992
AIM Utilities Fund B Shares 0.25 September 1, 1993
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Weingarten Fund 0.25 September 9, 1986
</TABLE>
*Frequency of Payments: Quarterly, B share payments begin after an initial 12
month holding period.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or more,
at no load, in cases where A I M Distributors, Inc. has advanced the service fee
to the dealer, bank or other service provider.
<PAGE> 7
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
EXHIBIT B
BANK SHAREHOLDER
SERVICE AGREEMENT
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms
and conditions of this Agreement shall be as follows:
(1) We shall provide continuing personal shareholder and administration services
for holders of the Shares who are also our clients. Such services to our
clients may include, without limitation, some or all of the following:
answering shareholder inquiries regarding the Shares and the AIM Funds;
performing subaccounting; establishing and maintaining shareholder accounts
and records; processing and bunching customer purchase and redemption
transactions; providing periodic statements showing a shareholder's account
balance and the integration of such statements with those of other
transactions and balances in the shareholder's other accounts serviced by
us; forwarding applicable AIM Funds prospectuses, proxy statements, reports
and notices to our clients who are holders of Shares; and such other
administrative services as you reasonably may request, to the extent we are
permitted by applicable statute, rule or regulations to provide such
services. We represent that we shall accept fees hereunder only so long as
we continue to provide personal shareholder services to our clients.
(2) Shares purchased by us as agents for our clients will be registered (choose
one) (in our name or in the name of our nominee) (in the names of our
clients). The client will be the beneficial owner of the Shares purchased
and held by us in accordance with the client's instructions and the client
may exercise all applicable rights of a holder of such Shares. We agree to
transmit to the AIM Funds' transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each client
any proxy statements, periodic shareholder reports and other communications
received from the Company by us on behalf of our clients. The Company
agrees to pay all out-of-pocket expenses actually incurred by us in
connection with the transfer by us of such proxy statements and reports to
our clients as required by applicable law or regulation. We agree to
transfer record ownership of a client's Shares to the client promptly upon
the request of a client. In addition, record ownership will be promptly
transferred to the client in the event that the person or entity ceases to
be our client.
(3) Within five (5) business days of placing a purchase order we agree to send
(i) a cashiers check to the Company, or (ii) a wire transfer to the AIM
Funds' transfer agent, in an amount equal to the amount of all purchase
orders placed by us on behalf of our clients and accepted by the Company.
(4) We agree to make available to the Company, upon the Company's request, such
information relating to our clients who are beneficial owners of Shares and
their transactions in such Shares as may be required by applicable laws and
regulations or as may be reasonably requested by the Company. The names of
our customers shall remain our sole property and shall not be used by the
Company for any other purpose except as needed for servicing and information
mailings in the normal course of business to holders of the Shares.
(5) We shall provide such facilities and personnel (which may be all or any part
of the facilities currently used in our business, or all or any personnel
employed by us) as may be necessary or beneficial in carrying out the
purposes of this Agreement.
(6) Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are authorized
to assist in distribution of any of the AIM Funds' shares except those
contained in the then current Prospectus applicable to the Shares; and we
shall have no authority to act as agent for the Company or the AIM Funds.
Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors, Inc.
will be a party, nor will they be represented as a party, to any agreement
that we may enter into with our clients.
<PAGE> 8
(7) In consideration of the services and facilities described herein, we shall
receive from the Company on behalf of the AIM Funds an annual service fee,
payable at such intervals as may be set forth in Schedule A hereto, of a
percentage of the aggregate average net asset value of the Shares owned
beneficially by our clients during each payment period, as set forth in
Schedule A hereto. We understand that this Agreement and the payment of
such service fees has been authorized and approved by the Boards of
Directors/Trustees of the AIM Funds, and is subject to limitations imposed
by the National Association of Securities Dealers, Inc. In cases where the
Company has advanced payments to us of the first year's fee for shares sold
with a contingent deferred sales charge, no payments will be made to us
during the first year the subject Shares are held.
(8) The AIM Funds reserve the right, at their discretion and without notice, to
suspend the sale of any Shares or withdraw the sale of Shares.
(9) We understand that the Company reserves the right to amend this Agreement
or Schedule A hereto at any time without our consent by mailing a copy of
an amendment to us at the address set forth below. Such amendment shall
become effective on the date specified in such amendment unless we elect to
terminate this Agreement within thirty (30) days of our receipt of such
amendment.
(10) This Agreement may be terminated at any time by the Company on not less
than 15 days' written notice to us at our principal place of business.
We, on 15 days' written notice addressed to the Company at its principal
place of business, may terminate this Agreement, said termination to
become effective on the date of mailing notice to use of such termination.
The Company's failure to terminate for any cause shall not constitute a
waiver of the Company's right to terminate at a later date for any such
cause. This Agreement shall terminate automatically in the event of its
assignment, the term "assignment" for this purpose having the meaning
defined in Section 2(a)(4) of the Investment Company Act of 1940, as
amended.
(11) All communications to the Company shall be sent to it at Eleven Greenway
Plaza, Suite 1919, Houston, Texas, 77046-1173. Any notice to us shall be
duly given if mailed or telegraphed to us at this address shown on this
Agreement.
(12) This Agreement shall become effective as of the date when it is executed
and dated below by the Company. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ Michael J. Cemo
------------------ ----------------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By: X
------------------ ----------------------------------------------
Signature
----------------------------------------------
Print Name Title
----------------------------------------------
Dealer's Name
----------------------------------------------
Address
----------------------------------------------
City State Zip
Please sign both copies and return one copy of each
to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 9
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO BANK
SHAREHOLDER SERVICE AGREEMENT
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -----------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Charter Fund 0.25 November 18, 1986
AIM Constellation Fund 0.25 September 9, 1986
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund A Shares 0.50 September 15, 1994
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Government Securities Fund A Shares 0.25 July 1, 1992
AIM Government Securities Fund B Shares 0.25 September 1, 1993
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1994
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Tax-Exempt Bond Fund of Connecticut 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund 0.10 July 1, 1992
AIM Utilities Fund A Shares 0.25 July 1, 1992
AIM Utilities Fund B Shares 0.25 September 1, 1993
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Weingarten Fund 0.25 September 9, 1986
</TABLE>
* Frequency of Payments: Quarterly, B share payments begin after an initial 12
month holding period.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or more,
at no load, in cases where A I M Distributors, Inc. has advanced the service fee
to the dealer, bank or other service provider.
<PAGE> 10
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
EXHIBIT C
AGREEMENT FOR PURCHASE OF SHARES
OF THE AIM FAMILY OF FUNDS(R)
(BANK OF TRUST DEPARTMENTS)
,19
-------------------- ----
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an agreement with A I M Distributors, Inc. ("AIM
Distributors"), the distributor of the shares of common stock or
beneficial interest of the registered investment companies (the "Funds") listed
on Schedule A hereto, which may be amended by AIM Distributors from time to
time. This Agreement defines the terms pursuant to which we may purchase shares
of common stock or of beneficial interest, as the case may be, of the Funds (the
"Shares") from AIM Distributors in connection with the fee-based program made
available by us to our clients (the "Fee-Based Program"). In consideration of
the mutual covenants stated below, we and AIM Distributors hereby agree as
follows:
1. In every transaction, AIM Distributors will act as agent for the Fund and
we will act as principal for our own account. We have no authority
whatsoever to act as AIM Distributors' agent or as agent for the Funds,
Fund Management Company, any other bank or selected dealer or the Funds'
transfer agent, and nothing in this Agreement shall serve to appoint us as
an agent of any of the foregoing in connection with transactions with our
customers or otherwise.
2. By accepting this Agreement, we agree:
a. that we will purchase Shares only from AIM Distributors;
b. that we will purchase Shares from AIM Distributors only for the
purpose of covering purchase orders already received from our
customers;
c. that we will not withhold placing with AIM Distributors orders
received from our customers so as to profit ourselves as a result of
such withholdings; and
d. that we are responsible for determining whether Shares are suitable
investments for our customers, and that AIM Distributors and Fund
Management Company are not responsible for such determination.
3. We agree that our transactions in Shares will be limited to (a) the
purchase of Shares from AIM Distributors for resale to our customers, (b)
exchanges of Shares between Funds, as permitted by the Funds' then current
registration statements (which include the prospectuses) and in accordance
with procedures as they may be modified by AIM Distributors from time to
time, and (c) transactions involving the redemption of Shares by a Fund or
the repurchase of Shares by AIM Distributors as an accommodation to
shareholders. Redemptions by a Fund and repurchases by AIM Distributors
will be effected
<PAGE> 11
Agreement for Purchase of Shares of Page 2
The AIM Family of Funds(R)
in the manner and upon the terms described in the then effective
prospectus used in connection with the offer and sale of Shares (the
"prospectus"). AIM Distributors will, upon our request, assist us in
processing such orders for redemptions or repurchases.
4. The procedures relating to the handling of orders shall be subject to
instructions which AIM Distributors will forward from time to time to all
selected dealers and banks with whom AIM Distributors has entered into a
Selected Dealer Agreement or similar agreement. The minimum initial order
shall be specified in the Funds' then current prospectuses. All purchase
orders are subject to AIM Distributors' receipt of Shares from the
appropriate Fund and AIM Distributors' acceptance of such orders.
5. We will purchase Shares from AIM Distributors in connection with the
Fee-Based Program at the net asset value of the Shares, and will charge our
customers an annual fee as set forth on Schedule B hereto for the asset
allocation and similar specialized investment services that we provide to
our customers. We will earn no concession or commission from AIM
Distributors or the Funds on any sale of Shares. We waive our right to
receive service fees on Shares held in any Fee-Based Program customer
account.
6. AIM Distributors shall accept orders only on the basis of the current net
asset value of the Shares. We agree to place orders in respect of Shares
immediately upon the receipt of order from our customers for the same
number of shares. Orders which we receive from our customers shall be
deemed to be placed with AIM Distributors when received by AIM
Distributors. Orders which we receive prior to the close of business, as
defined in the applicable prospectus, and place with AIM Distributors
within the time frame set forth in the applicable prospectus shall be
priced at the net asset value next computed after they are received by AIM
Distributors. AIM Distributors will not accept a conditional order for
Shares from us on any basis. All orders shall be subject to confirmation
by AIM Distributors and are subject to acceptance or rejection by AIM
Distributors in its sole discretion. Following receipt from us of any
order to purchase Shares, AIM Distributors shall confirm such order to us
in writing.
7. We agree to transfer to AIM Distributors in a timely manner as set forth in
the applicable prospectus, federal funds in an amount equal to the amount
of all purchase orders placed by us and accepted by AIM Distributors. In
the event that AIM Distributors fails to receive such federal funds on such
date (other than through the fault of AIM Distributors), we shall indemnify
the applicable Fund and AIM Distributors against any expense (including
overdraft charges) incurred by the applicable Fund and/or AIM Distributors
as a result of the failure to receive such federal funds.
8. If payment is not received within ten (10) business days of AIM
Distributors' acceptance of the order, AIM Distributors reserves the right
to cancel the sale or, at its option, to sell the Shares to the Funds at
the then prevailing net asset value. In this event, or in the event that
we cancel the trade for any reason, we agree to be responsible for any loss
resulting to the Funds or AIM Distributors from our failure to make payment
as aforesaid. We shall not be entitled to any gains generated thereby.
<PAGE> 12
Agreement for Purchase of Shares of Page 3
The AIM Family of Funds(R)
9. In consideration of A I M Fund Services, Inc. ("AFS") honoring redemption
requests for shares having a value equal to or greater than $50,000
received by telephone without an accompanying signature guarantee letter of
instructions from us, we hereby agree to indemnify and hold harmless A I M
Management Group Inc., its affiliates and each investment company which
receives services from, or is advised by, A I M Management Group Inc. or
its affiliates against losses, including reasonable attorneys' fees, that
may arise from the redemption of shares based on instructions received by
AFS by telephone that are not accompanied by a signature guarantee letter
of instructions as described in the applicable prospectus. Attached hereto
as Exhibit A is a certified copy of the resolutions of our Board of
Directors/Trustees that authorize certain, specified individuals to make
such redemption requests, as well as true and correct specimens of such
specified individuals' signatures.
10. Any order placed by us for the repurchase of Shares is subject to the
timely receipt by the Fund's transfer agent of all required documents in
good order. If such documents are not received within a reasonable time
after the order is placed, the order is subject to cancellation, in which
case we agree to be responsible for any loss resulting to the Fund or to
AIM Distributors from such cancellation.
11. We will not, without the prior written approval of AIM Distributors, make
public references to A I M Management Group Inc. or any of its
subsidiaries, or to the Funds or their availability at net asset value.
For purposes of this provision, the public does not include our
representatives who are actively engaged in promoting this product. This
prohibition shall not relate to our practice of distributing brochures to
the public which contain information about the Fee-Based Program; provided,
however, that any such brochure that mentions the Funds shall be submitted
to the compliance officer of AIM Distributors for his written approval
prior to our use. We shall provide copies of AIM Distributors' compliance
officer of any of our regulatory filings that include any reference to
A I M Management Group Inc. or its subsidiaries or the Funds. If we
should make unauthorized references or representations, we agree to
indemnify and hold harmless the Funds, A I M Management Group Inc. and
its subsidiaries from any claims, losses, expenses or liability arising
in any way out of or connected in any way with such references or
representations.
12. We agree that we will not make Shares available to our customers except
under circumstances that will result in compliance with the applicable
federal and stated securities and banking laws and that we will not use any
advertising or sales literature, as such terms are defined by the National
Association of Securities Dealers, Inc. (the "NASD"), of any kind
whatsoever with respect to the Funds or A I M Management Group Inc. or its
subsidiaries without AIM Distributors' prior written consent and the prior
written consent of the appropriate Fund.
13. Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. AIM Distributors agrees to advise us currently of the identity of
those states and jurisdictions in which the Shares are
<PAGE> 13
Agreement for Purchase of Shares of Page 4
The AIM Family of Funds(R)
registered or qualified for sale, and we agree to indemnify and hold
harmless AIM Distributors, Fund Management Company and/or the Funds from
any claims, losses, expenses or liability arising in any way out of or
connected in any way with a sale of Shares in any state or jurisdiction in
which such Shares are not so registered or qualified.
14. AIM Distributors reserves the right, in its discretion, without notice to
us, to suspend sales or withdraw any offering of Shares entirely or, upon
notice to us, to amend this Agreement. We agree that any order to purchase
Shares of the Funds placed by us after notice of any amendment to this
Agreement has been sent to us shall constitute our agreement to any such
amendment.
15. We shall maintain an omnibus account(s) solely for the clients of the
Fee-Based Program. We shall, among other things, be responsible for
forwarding tax reporting information, confirmation statements, proxies,
annual and semi-annual reports and other materials to each beneficial
owner. AIM Distributors will supply us with copies of the prospectuses and
statements of additional information of the Funds (including any amendments
thereto) in reasonable quantities upon request. We are not required to
provide our customers with a current prospectus prior to or at the time
such customers purchase Shares or provide any customer who so requests a
copy of a Fund's statement of additional information on file with the U.S.
Securities and Exchange Commission, or if we are so required, we will
provide all our customers with a current prospectus prior to or at the time
such customers purchase Shares and provide any customer who so requests a
copy of a Fund's statement of additional information on file with the U.S.
Securities and Exchange Commission.
16. We represent that we are not required to be registered as a broker-dealer
in any states in connection with our activities in such states on behalf of
our clients and pursuant to this Agreement, or with the NASD, or that if we
are required to be registered as a broker-dealer in any states or with the
NASD, that we are registered as such. We represent and warrant that no
requirements of the NASD are presently applicable to the Fee-Based Program,
and that if any requirements of the NASD become applicable to the Fee-Based
Program, it will comply with such requirements. We represent and warrant
that the Fee-Based Program will comply with all applicable requirements
under the Investment Advisors Act of 1940, as amended, and the prospectus
and delivery and other applicable requirements under the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended.
17. We and AIM Distributors agree to abide by the Rules of Fair Practice of the
NASD and all other federal and state rules and regulations that are now or
may become applicable to transactions hereunder. If we are or become a
member of the NASD, our expulsion from the NASD will automatically
terminate this Agreement without notice. Our suspension from the NASD or a
violation by us of applicable state and federal laws and rules and
regulations of authorized regulatory agencies will terminate this Agreement
effective upon notice received by us from AIM Distributors.
18. We shall bear all expenses incurred in connection with our activities
under the Agreement.
<PAGE> 14
Agreement for Purchase of Shares of Page 5
The AIM Family of Funds (R)
19. AIM Distributors and Fund Management Company are not endorsing,
recommending or otherwise involved in providing any of our investment
products (including but not limited to the Fee-Based Program). AIM
Distributors and Fund Management Company are merely affording us the
opportunity to use shares of certain Funds distributed by AIM Distributors
as an investment medium for the Fee-Based Program. Consequently, we shall
indemnify and hold harmless AIM Distributors, Fund Management Company, the
Funds and their affiliates from any claims, losses, expenses or liability
arising in any way out of or connected in any way with the use of the
Fee-Based Program by our customers.
20. AIM Distributors will coordinate the inclusion of provisions applicable to
sales of the Funds in connection with fee-based programs in the appropriate
prospectuses of the affected Funds and we will comply with all provisions
of the prospectus and statement of additional information of each Fund.
21. The Funds to which this Agreement pertains will be those designated by AIM
Distributors as set forth on Schedule A hereto, which may be amended by AIM
Distributors from time to time, subject to the provisions of each Fund's
then current prospectus and statement of additional information, state and
federal securities laws and regulations and applicable rules and
regulations of the NASD.
22. All communications sent to AIM Distributors shall be duly given if mailed
to A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
23. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to use at our principal place of
business. We, on 60 days' written notice to AIM Distributors, may terminate
this Agreement. AIM Distributors may also terminate this Agreement for
cause on violation by us of any of the provisions of this Agreement, said
termination to become effective on the date of mailing notice to us of
such termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate at
a later date for any such cause. This Agreement shall terminate
automatically in the event of its assignment by us, the term "assignment"
for this purpose having the meaning defined in Section 2(a)(4) of the
Investment Company Act of 1940, as amended.
24. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same instrument.
This Agreement shall not relieve us or AIM Distributors from any
obligations either may have under any other agreements between us.
25. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 15
Agreement for Purchase of Shares of Page 6
The AIM Family of Funds(R)
The undersigned agrees to abide by the foregoing terms and conditions.
The undersigned acknowledges receipt of prospectuses for use in connection with
offers and sales of Shares.
----------------------------------------
(Firm Name)
----------------------------------------
(Address)
----------------------------------------
City/State/Zip/County
By: -----------------------------------
Name: -----------------------------------
Title: ----------------------------------
Dated: ----------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By: -----------------------------------
Name: -----------------------------------
Title: ----------------------------------
Dated: ----------------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 16
Agreement for Purchase of Shares of
The AIM Family of Funds(R)
SCHEDULE A
AIM Equity Funds, Inc.
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
*AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Government Securities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Utilities Fund
AIM Value Fund
AIM International Funds, Inc.
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
AIM Adjustable Rate Government Fund
Limited Maturity Treasury Portfolio
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
- ---------------
*Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 17
Agreement for Purchase of Shares of
The AIM Family of Funds(R)
SCHEDULE B
<PAGE> 1
EXHIBIT 17
AIM TAX-EXEMPT FUNDS, INC.
SPECIMEN PRICE MAKE-UP SHEET
(AUDITED)
<TABLE>
<CAPTION>
Value of Registrant's
portfolio securities,
other assets and Total Offering
Fund liabilities Outstanding Securities Price Per Share
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Fund $30,364,556 30,404,030 $ 1.00
Bond Fund of
Connecticut 38,288,675 3,573,524 11.24
Intermediate Shares 82,354,664 7,718,206 10.78
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000909466
<NAME> TAX EXEMPT CASH FUND
<SERIES>
<NUMBER> 01
<NAME> Tax Exempt Cash Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 30,132,306
<INVESTMENTS-AT-VALUE> 30,134,741
<RECEIVABLES> 248,782
<ASSETS-OTHER> 20,355
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,403,878
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,322
<TOTAL-LIABILITIES> 39,322
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 30,404,030
<SHARES-COMMON-PRIOR> 33,655,745
<ACCUMULATED-NII-CURRENT> 8,912
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (50,821)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,435
<NET-ASSETS> 30,364,556
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,206,916
<OTHER-INCOME> 0
<EXPENSES-NET> 344,400
<NET-INVESTMENT-INCOME> 862,516
<REALIZED-GAINS-CURRENT> (52,241)
<APPREC-INCREASE-CURRENT> 1,646
<NET-CHANGE-FROM-OPS> 811,921
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (853,604)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 57,113,755
<NUMBER-OF-SHARES-REDEEMED> (61,178,933)
<SHARES-REINVESTED> 813,463
<NET-CHANGE-IN-ASSETS> (3,293,398)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,420
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 119,085
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 344,000
<AVERAGE-NET-ASSETS> 34,024,407
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000909466
<NAME> INTERMEDIATE PORTFOLIO
<SERIES>
<NUMBER> 02
<NAME> Intermediate Portfolio
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 79,443,041
<INVESTMENTS-AT-VALUE> 81,327,188
<RECEIVABLES> 1,216,700
<ASSETS-OTHER> 73,497
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 82,617,385
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 262,721
<TOTAL-LIABILITIES> 262,721
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 81,491,752
<SHARES-COMMON-STOCK> 7,718,206
<SHARES-COMMON-PRIOR> 9,395,175
<ACCUMULATED-NII-CURRENT> 84,281
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,105,517)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,884,148
<NET-ASSETS> 82,354,664
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,962,197
<OTHER-INCOME> 0
<EXPENSES-NET> 560,644
<NET-INVESTMENT-INCOME> 4,401,553
<REALIZED-GAINS-CURRENT> (1,102,920)
<APPREC-INCREASE-CURRENT> 1,255,198
<NET-CHANGE-FROM-OPS> 4,553,831
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,304,084)
<DISTRIBUTIONS-OF-GAINS> (28,666)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,622,139
<NUMBER-OF-SHARES-REDEEMED> (3,561,084)
<SHARES-REINVESTED> 261,976
<NET-CHANGE-IN-ASSETS> (17,402,349)
<ACCUMULATED-NII-PRIOR> (13,188)
<ACCUMULATED-GAINS-PRIOR> 26,069
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 283,990
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 560,644
<AVERAGE-NET-ASSETS> 94,663,178
<PER-SHARE-NAV-BEGIN> 10.62
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 0.04
<PER-SHARE-DIVIDEND> (0.48)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.67
<EXPENSE-RATIO> .59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000909466
<NAME> TAX EXEMPT BOND OF CONNECTICUT
<SERIES>
<NUMBER> 03
<NAME> Tax Exempt Bond of Connecticut
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 36,249,293
<INVESTMENTS-AT-VALUE> 37,554,064
<RECEIVABLES> 835,272
<ASSETS-OTHER> 37,016
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38,426,352
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 137,677
<TOTAL-LIABILITIES> 137,677
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37,094,637
<SHARES-COMMON-STOCK> 3,573,524
<SHARES-COMMON-PRIOR> 3,963,119
<ACCUMULATED-NII-CURRENT> (8,747)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (101,986)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,304,771
<NET-ASSETS> 38,288,675
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,314,035
<OTHER-INCOME> 0
<EXPENSES-NET> 216,651
<NET-INVESTMENT-INCOME> 2,097,384
<REALIZED-GAINS-CURRENT> (127,300)
<APPREC-INCREASE-CURRENT> 195,742
<NET-CHANGE-FROM-OPS> 2,165,826
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,111,073)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (19,319)
<NUMBER-OF-SHARES-SOLD> 370,407
<NUMBER-OF-SHARES-REDEEMED> (889,770)
<SHARES-REINVESTED> 129,768
<NET-CHANGE-IN-ASSETS> (4,071,957)
<ACCUMULATED-NII-PRIOR> 22,950
<ACCUMULATED-GAINS-PRIOR> (6,966)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 195,413
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 441,064
<AVERAGE-NET-ASSETS> 39,082,578
<PER-SHARE-NAV-BEGIN> 10.69
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 0.04
<PER-SHARE-DIVIDEND> (0.57)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> (0.01)
<PER-SHARE-NAV-END> 10.71
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
