<PAGE> 1
[AIM LOGO]
[GRAPHIC COLLAGE]
AIM TAX-FREE
INTERMEDIATE SHARES
ANNUAL REPORT
MARCH 31, 1995
<PAGE> 2
FUNDAMENTALS
FUND OBJECTIVE
AIM Tax-Free Intermediate Shares seeks 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
10 1/2 years or less.
--------------------------------------------------------------------------------
PORTFOLIO DATA
PORTFOLIO COMPOSITION TOP 5 BOND HOLDINGS
Revenue 69% 1. Southern Oklahoma Memorial Hospital Auth.
Rev. Bond
General Obligations 31 2. Lucas County Ohio Hospital Revenue Bond
3. Georgia State General Obligation Bond
Credit Enhanced 41% 4. Michigan State Building Auth. Refg. Revenue
Bond
AMT 0 5. Franklin County Ohio General Obligation Bond
Number of Holdings 121
Average Maturity 5.1 Years
Duration 3.7 Years
--------------------------------------------------------------------------------
This table represents a summary of the Fund's portfolio as of March 31, 1995,
the close of its fiscal year. The portfolio's composition may change and there
is no assurance the Fund will continue to hold the same securities.
GROWTH OF A
HYPOTHETICAL
$10,000
INVESTMENT
AVERAGE ANNUAL
TOTAL RETURNS
(at maximum offering price)
Since Inception (5/11/87) 6.48%
Five Years 6.84
One Year 4.09*
*5.17% excluding maximum sales charge
-----------------------------------------------------
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Measurement Period AIM Tax-Free Intermediate Lipper Intermediate Municipal
5-11-87 - 3-31-95 Shares Debt Category
(In Dollars) (In Dollars)
<S> <C> <C>
5/11/87 9901 10000
3/88 10307 10627
3/89 10745 11180
3/90 11670 12111
3/91 12643 13131
3/92 13706 14227
3/93 15077 15766
3/94 15601 16212
3/95 16407 17091
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Past performance cannot guarantee comparable future results.
</TABLE>
AIM Tax-Free Intermediate Shares figures are historical and reflect
reinvestment of all distributions, changes in the net asset value, and
deduction of the 1.00% maximum sales charge. The Fund's investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Source: Towers Data Systems
HYPO(R).
Lipper Analytical Services, Inc., is an independent mutual fund
performance monitor. The unmanaged Lipper Intermediate Municipal Debt Category
represents an average of the performance of all municipal bond funds. Source:
Lipper Analytical Services, Inc.
An investment cannot be made in the indexes listed. Index results do
not reflect sales charges.
<PAGE> 3
CHAIRMAN'S LETTER
Dear Shareholder:
It is during difficult periods that a disciplined
investment strategy can demonstrate its merit. AIM Tax-Free
[PHOTO of Intermediate Shares's focus on investing in high-quality,
Charles T. intermediate-term municipal securities proved an effective
Bauer defensive posture as interest rates increased sharply during
Chairman of the year ended March 31, 1995.
the Board of The result was an attractive increase in one-year
the Fund] total return performance to 5.17%, compared to the 3.47%
one-year return recorded in the Fund's previous annual report.
Performance includes reinvested dividends of 48.32 cents per
share without deducting the maximum sales charge of 1.00%.
When compared to similar funds, the Fund closely tracked the Lipper
Intermediate Municipal Debt Category which posted a total return of 5.59% for
the year ended March 31, 1995. The category is a representative average of the
performance of all intermediate municipal bond mutual funds tracked by Lipper
Analytical Services, Inc., an independent mutual fund performance monitor.
We are pleased to note the Fund's SEC yield over the 30 days ended
March 31, 1995, based on maximum offering price, was 4.51% -- a significant
increase from 3.91% one year ago. The taxable equivalent on the SEC 30-day
effective yield was 7.47%, when adjusted for the highest marginal tax rate of
39.6% for federal income taxes. The SEC yield calculation reflects the yield to
maturity of the bonds in the portfolio, and includes both interest and
amortization of any discount or premium to the face value of the bonds. The
taxable equivalent yield is calculated in the same manner as the SEC yield with
an adjustment for a stated, assumed tax rate.
The Fund's investment focus on certain less-volatile municipal
securities helped increase its SEC yield even as relative stability in share
price was maintained throughout the year. By March 31, 1995, net asset value
had increased to $10.67 from $10.62 at the beginning of the period. Total
assets were $82.6 million.
Such performance has not gone unnoticed. Morningstar Inc., an
independent mutual fund performance monitor, gave the Fund its highest rating
of five stars for performance overall and for performance in municipal fund
categories during the five-year period ended March 31, 1995. The Fund received
Morningstar's four-star rating for three-year performance ended the same date.
Municipal fund categories include 638 funds tracked over three years, and 458
funds tracked over five years. Morningstar's rating system of one (lowest) to
five (highest) stars is based on risk and return ratios for three-, five-, and
10-year periods and considers all loads, expenses, and fees. Ratings compare
funds of similar investment objectives and represent past performance, which is
no guarantee of comparable future results.
As of March 31, 1995, the Fund had posted an average annual total
return of 5.17% for one year, 7.05% for five years, and 6.61% since its
inception on May 11, 1987. Performance includes reinvestment of all
distributions without deducting the maximum applicable sales charge.
We are pleased with the Fund's performance during a period of extreme
volatility for fixed-income investments. As always, we are ready to respond to
your questions or comments about this report. Please call Client Services at
(800) 959-4246 during normal business hours. For automated account information
24 hours a day, call the AIM Investor Line toll-free at (800) 246-5463.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 4
DISCUSSION & ANALYSIS
----------
The drop in
issue supply
helped support
prices of tax-exempt
debt compared to
taxable debt.
----------
MANAGEMENT'S DISCUSSION AND ANALYSIS
By most measures, the year ended March 31, 1995, strained the patience of
fixed-income investors. The Federal Reserve Board's aggressive monetary policy
aimed at engineering a "soft landing" for the resurgent economy -- slowing
growth but not to the point of recession -- drove up short-term interest rates
to almost double the levels of a year ago. The last interest rate increase
positioned the target rate for federal funds at 6% and the discount rate
at 5.25%.
Predictably, the Fed's action had a profound impact on fixed-income
securities, which delivered their most disappointing performance in recent
memory. Municipal securities fared somewhat better relative to taxable
securities during most of the year as strong, stable demand coupled with
sharply falling supply helped cushion price volatility. Overall new issue
supply of municipal bonds fell to approximately $160 billion, the lowest level
since 1990, and almost one-half of 1993's $300 billion.
The drop in new issue supply helped support prices of tax-exempt debt
compared to taxable debt. By midsummer, some analysts even considered municipal
bonds too expensive relative to U.S. Treasury bonds. The relatively high
prices, along with the news in November of Orange County, California's
derivatives-related losses and subsequent bankruptcy filing, initiated a sharp
decline in prices of all tax-exempt securities in the last quarter of 1994.
Lower bond prices and encouraging economic reports in the first
quarter of 1995 fueled a bond rally led by the municipal sectors. By March 31,
1995, yields on long-term municipal bonds as measured by the Bond Buyer
Municipal Bond Index stood at 6.34% -- roughly the same level seen at the
beginning of April 1994.
Unfortunately, inflation concerns could not be completely arrested as
long as the dollar continued to test new lows against major world currencies.
The dollar's persistent weakness led some analysts to speculate that inflation
remains a near term possibility, prompting renewed concerns that interest rates
would have to rise again in the coming months.
YOUR INVESTMENT PORTFOLIO
The Fund focused on quality and defensive characteristics in positioning its
portfolio during the last year. Premium bonds, bonds with short calls, and
pre-refunded bonds, all of which are less sensitive to rising interest rates,
were emphasized to reduce price volatility. Attractive issues in sectors such
as housing, transportation, and health care helped to enhance yield. Of course,
Fund holdings are subject to change as market conditions warrant.
As another defensive measure, the Fund had lowered its weighted
average maturity by year-end to 5.1 years, and duration was reduced to 3.7
years.
In keeping with the Fund's strategy of investing in quality, the
portfolio weighting as of March 31, 1995 was approximately 53% in securities
rated AAA, and 100% of the portfolio was rated A or better. The Fund maintained
an average portfolio quality rating of AA+ as measured by Standard & Poor's
Corporation (S&P) and Moody's Investors Service (Moody's), two widely known
credit rating agencies. S&P and Moody ratings are historical and are based on
analysis of the credit quality of the individual municipal securities in the
Fund's portfolio.
OUTLOOK FOR THE FUTURE
Leading economic indicators continue to suggest healthy economic conditions and
low inflation, and the economy is widely expected to slow in the second half of
1995. The direction of the dollar remains a significant uncertainty that could
precipitate renewed inflation concerns and higher interest rates.
For the near term, however, significant increases in interest rates
appear unlikely. Without the constant specter of rising interest rates on the
immediate horizon, the Fund is prepared to redirect its strategy from a
defensive posture to one more focused on generating income.
2
<PAGE> 5
FOR CONSIDERATION
Investing According to
Your Personal
Financial Objectives
ASSET ALLOCATION
Every mutual fund investor would like to invest in a market that only goes
up--a tide that floats all ships. The truth is, markets also decline. This year,
concerns about inflation, higher interest rates, higher taxes, and a weak U.S.
dollar have taken a toll on financial markets. But market changes do not affect
all investments the same way--some investments may benefit from a market trend
when others do not.
And market changes are not the only factors an investor must manage.
There are a number of important considerations with every investment including
investment risk, and investment risk takes many forms:
- The prices of some investments will fluctuate according to changes in
the market.
- The value of some investments, such as fixed-income securities, will
rise and fall as interest rates change.
- When interest rates fall, investors face the possibility that
investment income cannot be reinvested at higher rates previously
available.
- Inflation can cause the value of some investments to erode as the cost
of living increases.
- Investments valued in U.S. dollars will rise and fall according to the
dollar's value against other world currencies. This is easily
discernible in direct foreign investments. However, the changing value
of the U.S. dollar, in fact, affects all investments.
To manage these changing conditions, investors have learned to
diversify their assets across a wide variety of investments. For most
investors, mutual funds offer convenient and affordable methods to diversify
their assets. For as little as $500, an investor has access to a portfolio of
hundreds of professionally selected securities.
When you invest in more than one fund, you increase the level of
diversification. You also gain another important benefit. Since mutual funds
are managed according to specific investment objectives, such as growth or
income, you can invest in mutual funds with different investment objectives to
create a personalized investment plan which suits your unique financial
objectives. This investment strategy is called asset allocation.
Mutual fund investors tend to seek growth, or current income, or some
combination of both. Generally, investors who choose to assume more investment
risk get the potential for a higher return. With asset allocation, you can
fine-tune your investment plan to be more conservative, or more aggressive,
depending on your personal financial goals and risk tolerances.
Your investment consultant can assist you in developing an asset
allocation strategy and select the appropriate investments to help you meet
your long-term investment goals. Your financial consultant is familiar with
your particular situation and is your best source with important investment
decisions.
3
<PAGE> 6
FOR CONSIDERATION
HOW TO READ A MUTUAL FUND PROSPECTUS
The prospectus. It is the most comprehensive document about your
mutual fund--but do you know how to read it? The prospectus states a
fund's goals, investment strategies, historical performance, the
services offered, and the fees charged. Only by studying and
understanding a fund's prospectus can an investor determine if a
particular fund may be suitable for his or her investment goals.
In the following outline, we use the structure of a typical
AIM fund prospectus to briefly describe key elements common to every
mutual fund prospectus. An AIM fund prospectus may detail this
information for one fund or for a specific group of funds.
This discussion is for illustrative purposes only: it is not
intended to be a comprehensive representation of a mutual fund
prospectus. Prospective investors should request a current fund
prospectus and read it carefully before investing in any fund.
START AT THE The DATE indicates when the prospect was last revised.
BEGINNING Since a mutual fund stands ready to issue new shares and
to redeem existing shares on any business day the stock
market is open, it is said to be in continuous
registration with the Securities and Exchange Commission.
Therefore, investors should obtain the most recent fund
prospectus.
The SUMMARY provides an overview of information presented
in the prospectus, such as:
an introduction to the fund or funds
a statement of fund's investment objectives
the fund's management
purchasing and redeeming shares
the fund's exchange privilege
a brief description of distribution schedules
It also provides cross-references to more complete
discussions of the topics indicated, and serves as a
"road map" to the prospectus.
WHERE CAN I THE FUND sections provide a description of the fund's
FIND THE FUND'S expenses, financial performance, investment strategy, and
INVESTMENT STRATEGY? management.
The TABLE OF FEES AND EXPENSES is a schedule of the
various costs, such as sales charges and any 12-b-I fees,
that a shareholder in a particular fund will bear, both
directly and indirectly. Rule 12b-1 fees, for example, are
designed to compensate the fund's distributor for a
certain promotional and other sales-related costs.
WHAT ABOUT The FINANCIAL HIGHLIGHTS is a comparison of a fund's net
THE FUND'S assets, total distributions, total return, expenses as a
HISTORICAL percentage of assets, and portfolio turnover rate over
PERFORMANCE? several financial reporting periods.
PERFORMANCE describes how the fund's yield and total
return are calculated.
4
<PAGE> 7
The INVESTMENT PROGRAM presents each fund's investment
objectives and describes relevant investment policies and
strategies that may be used to manage the fund,
appropriate securities and assets that may be held in the
fund's portfolio, and certain investment restrictions
that may apply.
HOW IS THE FUND The MANAGEMENT section describes the functions of the
MANAGED AND INVESTED? fund company's Board of Directors (or the Board of
Trustees), the funds investment adviser, and the
portfolio management team. There is also discussion of
management fees and expenses and the fund's distribution
plan.
ORGANIZATION OF THE COMPANY reports the date and relevant
information regarding the establishment or the form of
organization of the fund.
CAN I EXCHANGE After detailed discussion of specific fund information, a
SHARES OF THE FUND? typical AIM retail fund prospectus follows with an
INVESTOR'S GUIDE TO THE AIM FAMILY OF FUNDS(R), including:
How to Purchase Shares
Sales Charges and Dealer Concessions
Letters of Intent and Rights of Accumulation
Special Plans: Systematic Withdrawal Plan, Automatic
Bank Draft Plan, Automatic Dividend Investment Plan,
Dollar-Cost Averaging,
Prototype Retirement Plans
Exchange Privilege
How to Redeem Shares
Reinstatement Privilege
In addition, investors are provided the following
discussions:
WHAT IS DETERMINATION OF NET ASSET VALUE explains how a fund's
NET ASSET VALUE? net asset value per share is calculated.
HOW ARE DIVIDEND, DISTRIBUTIONS, AND TAX MATTERS sections
DIVIDENDS PAID? describe each fund's dividend and distribution schedule.
There is a presentation of general tax considerations
related to owning fund shares, such as tax treatment of
distributions and capital gains.
Important: Investors should consult their personal tax
advisers to determine their actual tax considerations and
consequences as shareholders in any fund.
The APPENDIX provides useful definitions of many of the
terms, certain securities, and ratings used in the
prospectus.
Every mutual fund prospectus is packed full of important
information that concerns all the fund's shareholders. For this
reason, we advise all prospective investors to "please read the
prospectus carefully before you invest or send money." Simply
phrased, informed investors are better investors.
5
<PAGE> 8
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>
6
<PAGE> 9
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>
7
<PAGE> 10
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>
8
<PAGE> 11
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>
9
<PAGE> 12
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>
10
<PAGE> 13
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>
11
<PAGE> 14
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>
12
<PAGE> 15
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>
13
<PAGE> 16
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.
14
<PAGE> 17
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 / 99.00%) $10.78
=========================================================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE> 18
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.
16
<PAGE> 19
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.
17
<PAGE> 20
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.
18
<PAGE> 21
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.
19
<PAGE> 22
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.
KPMG Peat Marwick LLP
Houston, Texas
May 5, 1995
<PAGE> 23
DIRECTORS & OFFICERS
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chief Executive Chairman Suite 1919
Officer Houston, TX 77046
A I M Management Group Inc. Robert H. Graham
President INVESTMENT ADVISOR
Bruce L. Crockett A I M Advisors, Inc.
Director, President, and Chief John J. Arthur 11 Greenway Plaza
Executive Officer Senior Vice President and Suite 1919
COMSAT Corporation Treasurer Houston, TX 77046
Owen Daly II Gary T. Crum TRANSFER AGENT
Director Senior Vice President A I M Fund Services, Inc.
Cortland Trust Inc. P.O. Box 4739
Carol F. Relihan Houston, TX 77210-4739
Carl Frischling Vice President and Secretary
Partner CUSTODIAN
Kramer, Levin, Naftalis, Nessen, Dana R. Sutton State Street Bank & Trust Co.
Kamin & Frankel Vice President 225 Franklin Street
and Assistant Treasurer Boston, MA 02110
Robert H. Graham
President Stuart W. Coco COUNSEL TO THE FUND
A I M Management Group Inc. Vice President Ballard Spahr
Andrews & Ingersoll
John F. Kroeger Melville B. Cox 1735 Market Street
Formerly, Consultant Vice President Philadelphia, PA 19103
Wendell & Stockel Associates, Inc.
Karen Dunn Kelley COUNSEL TO THE DIRECTORS
Lewis F. Pennock Vice President Kramer, Levin, Naftalis,
Attorney Nessen, Kamin & Frankel
P. Michelle Grace 919 Third Avenue
Ian W. Robinson Assistant Secretary New York, NY 10022
Consultant Former Executive
Vice President and Nancy L. Martin DISTRIBUTOR
Chief Financial Officer Assistant Secretary A I M Distributors, Inc.
Bell Atlantic Management 11 Greenway Plaza
Services, Inc. Ofelia M. Mayo Suite 1919
Assistant Secretary Houston, TX 77046
Louis S. Sklar
Executive Vice President Kathleen J. Pflueger AUDITORS
Hines Interests Assistant Secretary KPMG Peat Marwick LLP
Limited Partnership 700 Louisiana
Samuel D. Sirko NationsBank Bldg.
Assistant Secretary Houston, TX 77002
Stephen I. Winer
Assistant Secretary
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Tax-Free Intermediate Shares paid ordinary dividends in the amount of 48
cents per share during its tax year ended March 31, 1995. Of this amount, 100%
qualified as exempt-interest dividends for federal income tax purposes. The
Fund also distributed long-term capital gains of 0.0032 cents per share during
its tax year ended March 31, 1995.
21
<PAGE> 24
[AIM LOGO] A I M DISTRIBUTORS, INC. BULK RATE
11 Greenway Plaza, Suite 1919 U.S. POSTAGE
Houston, Texas 77046 PAID
Houston, TX
Permit No. 2332
THE AIM FAMILY OF FUNDS(R)
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Constellation Fund
Aim Global Aggressive Growth Fund
GROWTH
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund [FULL PAGE PHOTO OF
AIM Charter Fund AIM MANAGEMENT GROUP OFFICE BUILDING]
INCOME AND GROWTH
AIM Global Utilities Fund
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Conn.
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Government Securities Fund
HIGH DEGREE OF SAFETY AND CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND CURRENT INCOME
AIM Money Market Fund
STABILITY, LIQUIDITY, AND CURRENT TAX-FREE INCOME
AIM Tax-Exempt Cash Fund
*AIM Aggressive Growth Fund was closed to new investors on May 2, 1994. For
more complete information about any AIM Fund, including sales charges and
expenses, ask your investment broker or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money. This report may be distributed only to current shareholders or to
persons who have received a current prospectus of the Fund.
