<PAGE> 1
[AIM LOGO APPEARS HERE]
[COLLAGE OF FINANCIAL IMAGES APPEARS HERE]
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
ANNUAL REPORT
MARCH 31, 1996
<PAGE> 2
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
For shareholders who seek to earn a high level of current income that is free
of both federal and Connecticut taxes.
ABOUT FUND PERFORMANCE DATA THROUGHOUT THIS REPORT:
o The Fund's performance is historical and reflects reinvestment of all
distributions. Unless otherwise indicated, Fund results were computed
without a sales charge. When sales charges are included, the Fund's
performance reflects the 4.75% maximum sales charge.
o For the year ended March 31, 1996, the Fund paid distributions of $0.558
per share.
o The distribution rate is equal to the actual distributions from investment
income declared for the prior 30-day period, expressed as an annual
percentage. Distribution rates may include daily dividends and short-term
capital gains. Distribution rates shown in this report are based on
maximum offering price.
o The 30-day yield is calculated on the basis of a formula defined by the
SEC. The formula is based on the portfolio's potential earnings from
dividends, interest, yield-to-maturity or yield-to-call of the bonds in
the portfolio, net of all expenses and expressed on an annualized basis.
o The taxable-equivalent yield is calculated in the same manner as the
30-day yield with an adjustment for a stated, assumed tax rate.
o 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.
o The Fund's portfolio composition is subject to change and there is no
assurance the Fund will continue to hold any one particular security.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Lehman Municipal Bond Index is an unmanaged composite representing an
approximation of the performance of investment-grade municipal bonds.
o The Bond Buyer 40 Index is a group of 40 unmanaged municipal securities
widely regarded by investors to be representative of the long-term
municipal securities market. The average price of the index represents the
simple average dollar price of the 40 bonds; the average maturity of the
index is approximately 29 years.
o An investment cannot be made in the indexes listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
A Message from
the Chairman
Dear Shareholder:
AIM Tax-Exempt Bond Fund of Connecticut extended its record
[PHOTO OF of providing shareholders with attractive tax-exempt
Charles T. Bauer, current income plus low volatility during the fiscal year
Chairman of ended March 31, 1996. The Fund's total return for the
the Board of period was 6.24%.
the Fund, As of March 31, 1996, the Fund produced a 30-day
APPEARS HERE] distribution rate of 4.86% and an 30-day yield of 4.52%.
Translated to taxable-equivalent yields, the Fund's 30-day
distribution rate was 8.05% and the 30-day yield was 7.48%, when adjusted for
the highest marginal federal tax rate of 39.6%.
For Connecticut residents, the taxable-equivalent on the distribution rate
was 8.43% and the 30-day yield was 7.84%, when adjusted for the combined
highest marginal federal and Connecticut state tax rates.
From an investment perspective, your Fund's taxable-equivalent yield
compared favorably to yields on such taxable securities as five- and 10-year
U.S. Treasury notes and 30-year U.S. Treasury bonds, which yielded 6.08%, 6.32%
and 6.67%, respectively, as of March 31, 1996.
AIM was pleased to participate in efforts by the mutual fund industry and
the Securities and Exchange Commission during the year to improve the quality
of information provided to shareholders. We also share the industry's
commitment to create more "user-friendly" language in communications for
shareholders.
Such measures may help you understand your investments more clearly. Still,
no publication can replace the personal service provided by your professional
financial consultant. In times of increased volatility in financial markets,
such as we have seen in recent months, it is important to remain committed to
clearly defined long-term investment goals. Many investment professionals
recommend a broadly diversified portfolio to cushion the effects of uncertain
markets.
As the complexity of investing grows, we encourage you to rely on your
professional financial consultant to help you understand changing financial
markets. Even more important, your financial consultant can help you manage a
financial plan to meet your personal investment goals as your objectives evolve
with changes in your life.
We are pleased to send you this report on the performance of AIM Tax-Exempt
Bond Fund of Connecticut. As always, we are ready to respond to your questions
or comments about this report. You may reach us by calling 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
---------------------
As the complexity of
investing grows, we
encourage you to
rely on your
professional
financial consultant
to help you
understand changing
financial markets.
---------------------
<PAGE> 4
Management's
Discussion & Analysis
-----------------------
Market watchers decided
that the reaction to tax-
reform speculation had
been overdone and the
municipal market
improved, particularly
for higher-quality,
intermediate-term issues.
-----------------------
A YEAR OF TRANSITION FOR MUNICIPAL SECURITIES
The reporting year that ended on March 31, 1996 was marked by changing
perspectives. For much of 1995, fixed-income markets conditions were ideal--the
economy had slowed considerably and inflation posed no threat. By the summer,
the U.S. dollar had regained its footing against major world currencies and was
climbing from record lows.
Such conditions encouraged the Fed to reverse its strict monetary policy in
July and ease interest rates for the first time since 1992. When interest rates
decline, the value of fixed-income securities increases. By the end of 1995,
bond yields had declined during the year by as much as 200 basis points. (A
basis point is one one-hundredth of a percentage point.)
The tax-exempt market also appreciated; however the performance on municipal
securities lagged that of taxable securities for most of the year, largely due
to the continuing debate over tax reform. Still, there were a number of
positive developments. Orange County, Calif., which had flagged market
performance since November 1994 with its pending bankruptcy, settled with its
creditors and was no longer a focus for investors. By the third quarter of
1995, market watchers decided that the reaction to tax-reform speculation had
been overdone and the municipal market improved, particularly for
higher-quality, intermediate-term issues.
The turbulent first quarter of 1996 tried the patience of fixed-income
investors. In a move widely anticipated by analysts for months, the Fed eased
interest rates in January. Within weeks, however, reports of unexpected
improvement in such economic indicators as employment, retail sales, and
industrial production sent bond markets reeling. While the pace of economic
growth was certainly moderate and sustainable, reports of
stronger-than-expected performance diminished the likelihood that the Fed would
cut interest rates again in the near future.
YOUR INVESTMENT PORTFOLIO
With 64 holdings as of March 31, 1996, the Fund was invested across Connecticut
municipal sectors to minimize volatility caused by the changing interest rate
environment. Positions in pre-refunded and insured bonds were strong
performers. Overall, the portfolio comprised 72% revenue bonds and 28% general
obligation bonds. Premium bonds, insured bonds, and
================================================================================
PORTFOLIO COMPOSITION (As of 3/31/96)
================================================================================
TOP 5 BOND HOLDINGS Number of Holdings 64
1. Connecticut St. Housing FN Auth. 7.55
(11/15/08)
2. Connecticut St. Dev. Auth. Poll 7.25 GENERAL OBLIGATIONS 28%
(10/15/15) REVENUE 72%
3. Guam Airport Auth. Rev. 5.00
(10/01/96)
4. Connecticut St. Special Tax Obligation
6.50 (10/01/12)
Credit Enhanced 29%
5. Connecticut St. Health & Education 6.88 AMT 11
(7/01/09) Average Maturity 13.8 Years
Duration 4.7 Years
This table represents a summary of the Fund's portfolio as of March 31, 1996.
2
<PAGE> 5
Management's
Discussion & Analysis
pre-refunded bonds were emphasized to reduce price volatility. Attractive
issues in sectors such as housing, transportation, and health care helped
enhance yield. Of course, Fund holdings are subject to change as market
conditions warrant.
At the end of the reporting period, the Fund had a weighted average maturity
of 13.8 years, and a duration of 4.7 years. The Fund was heavily-weighted in
quality issues--the portfolio weighting as of March 31, 1996, comprised
approximately 34% in securities rated AAA, and 87% of the portfolio was rated A
or better. Credit-enhanced securities, which are backed by insurance or
escrowed with U.S. Treasuries, comprised about 29% of the portfolio.
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
As this election year unfolds, municipal bond investors have a number of
simmering pots to watch. Interest rates appear to have bottomed, at least for
the near term. Some analysts who were concerned just weeks ago about the
possibility of recession lately have begun to speculate about the renewed
strength in the economy.
While the economy has rebounded nicely from its slowdown in the latter half
of 1995, there has been no indication that it is growing too rapidly. This
outlook was supported by Federal Reserve Bank Board Chairman Alan Greenspan in
his testimony before Congress last March when he said "the economy has
weathered recent sluggishness and is back on track for steady growth with low
inflation." A market watcher quoted recently in The Wall Street Journal
described it as a "Goldilocks economy--not too hot and not too cold."
To date, there is still no tax-reform legislation pending before Congress,
though it continues to prompt considerable debate. Many analysts maintain that
any drastic proposals by Congress that severely diminish the tax advantages of
municipal securities would be strongly challenged by the issuers and investors.
By all appearances, any meaningful action in that direction could be years
away.
Hopefully, less time will pass before real and constructive progress is
achieved by Congress in passing a serviceable budget. This political debate no
doubt will intensify as the November election looms.
Like you, we are interested in such current events as the volatile political
climate, the changing economy, and the direction of interest rates. However, we
prefer to take a longer-term view. We believe the key to investing for the long
term is an ongoing focus on the Fund's primary investment philosophy, and that
is to generate optimal current tax-free income with reasonable risk.
TAX-REFORM DOUBTFUL
Dick Berry, co-manager of AIM Tax-Exempt Bond Fund of Connecticut, cites three
reasons why he believes major tax reform will not take place in the near
future:
"First, there are no bills being considered by Congress. And if a bill is
presented, lobbying groups will muster an all-out assault on it."
"Second, the reform most mentioned --a flat tax-- actually would result in
many lower- and middle-income workers paying higher taxes."
"Third, it appears unlikely the federal government will raise taxes at the
same time it is shifting more and more of the spending burden to the states."
CURRENT YIELD ADVANTAGE
YIELDS AS OF 3/31/96
Bar Chart
5-Year U.S. Treasury Note* 6.08%
10-Year U.S. Treasury Note* 6.32%
30-Year U.S. Treasury Bond* 6.67%
AIM Tax-Exempt Bond Fund 7.84%
of Connecticut 30-day yield,
taxable-equivalent**
AIM Tax-Exempt Bond Fund 8.43%
of Connecticut
30-day distribution rate,
taxable-equivalent**
*Government securities, such as U.S. Treasury notes and bonds, offer a high
degree of safety and are guaranteed as to the timely payment of principal and
interest. Fund shares are not insured and their value and yield will vary with
market conditions. **Taxable-equivalent yields assume the highest marginal
federal income tax rate of 39.6% and the Connecticut tax rate of 4.5%. Source:
IRS, 1995.
3
<PAGE> 6
Long-Term
Performance
AVERAGE ANNUAL TOTAL
RETURNS (AS OF MARCH 31, 1996)
WITH SALES CHARGE
Since Inception (10/3/89) 6.71%
5 Years 6.46
1 Year 1.19*
*6.24% excluding sales charges.
GROWTH OF A $10,000 ILLUSTRATION
The chart below compares your Fund to a benchmark index. It is intended to give
you a general idea of how your Fund performed compared to the municipal bond
market. It is important to understand the difference between your Fund and an
index. Your Fund's total return includes Fund expenses and management fees. An
index measures the performance of a hypothetical portfolio. Unlike your Fund,
the index is not an actual investment; therefore there are no sales charges,
expenses, or fees. However, if you could buy all the securities that make up a
particular index, you would incur expenses that would affect the return on your
investment.
<TABLE>
<CAPTION>
AIM Tax-Exempt Bond Fund of Connecticut Lipper Connecticut Municipal Debt Category
<C> <C> <C>
10/3/89 $9,524 $10,000
3/90 9,789 10,304
3/91 10,613 11,254
3/92 11,622 12,380
3/93 13,082 13,931
3/94 13,560 14,254
3/95 14,345 15,313
3/96 15,240 16,596
</TABLE>
Past performance is no guarantee of future results.
Source: Towers Data Systems HYPO(R).
For Fund performance calculations and descriptions of indexes cited on this
page, please refer to the inside front cover.
A HISTORY OF RELATIVE STABILITY
In addition to tax efficiency, AIM Tax-Exempt Bond Fund of Connecticut
historically has achieved attractive yield with less share price volatility.*
Tax-Exempt Bond Fund of Connecticut Bond Buyer 40 Index
10/3/89 $10,000 $9,000
3/90 9,990 9,200
3/91 10,110 9,120
3/92 10,310 9,417
3/93 10,880 10,007
3/94 10,690 9,118
3/95 10,710 9,106
3/96 10,810 9,304
All values are month-end.
Sources: Lipper Analytical Services, Inc. and Bloomberg.
*The Fund's distribution rate at net asset value versus the average
distribution rate at net asset value of all general municipal bond funds ranked
by Lipper Analytical Services, Inc. since the Fund's inception. As of 3/31/96,
the Lipper universe comprised 240 general municipal bond funds, with average
portfolio maturities of approximately 14.20 years.
4
<PAGE> 7
Financials
SCHEDULE OF INVESTMENTS
March 31, 1996
<TABLE>
<CAPTION>
RATING(a) MARKET
S&P MOODY'S PAR VALUE
<S> <C> <C> <C> <C>
MUNICIPAL OBLIGATIONS-98.51%
EDUCATION-11.35%
Connecticut Health and Education Facilities Authority
(Fairfield University); Series F RB
6.875%, 07/01/09 BBB+ Baa1 $1,475,000 $ 1,565,417
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(Quinnipiac College); RB
4.90%, Series D, 07/01/98 BBB- - 150,000 149,015
- ------------------------------------------------------------------------------------------------
7.25%, Series 1989 B, 07/01/99(b)(c) AAA NRR 450,000 497,597
- ------------------------------------------------------------------------------------------------
Connecticut Regional School District No. 5;
Series 1992 GO
6.00%, 03/01/12(d) AAA Aaa 335,000 345,579
- ------------------------------------------------------------------------------------------------
Connecticut Regional School District No. 5
(Towns of Bethany, Orange and Woodbridge); 1993
Issue GO
5.50%, 02/15/07(d) AAA Aaa 500,000 515,650
- ------------------------------------------------------------------------------------------------
Connecticut State Higher Education Supplemental
Loan Authority (Family Education Loan
Program); Series 1990 A RB
7.50%, 11/15/10(e) - A1 1,320,000 1,391,742
- ------------------------------------------------------------------------------------------------
4,465,000
- ------------------------------------------------------------------------------------------------
ELECTRIC-6.13%
Connecticut Development Authority (Connecticut Power &
Light Co.); Series 1993 A PCR
3.30%, 09/01/28(f)(g) A-1+ VMIG-1 700,000 700,000
- ------------------------------------------------------------------------------------------------
Connecticut Development Authority (New England Power
Co.); Series 1985 Fixed Rate PCR
7.25%, 10/15/15 A+ A1 1,600,000 1,713,040
- ------------------------------------------------------------------------------------------------
2,413,040
- ------------------------------------------------------------------------------------------------
GENERAL OBLIGATION-9.93%
Brooklyn (City of), Connecticut; Unlimited Tax GO
5.50%, 05/01/06(d) AAA Aaa 250,000 257,793
- ------------------------------------------------------------------------------------------------
5.70%, 05/01/08(d) AAA Aaa 250,000 259,345
- ------------------------------------------------------------------------------------------------
Cheshire (Town of), Connecticut; Series 1993 GO
5.25%, 08/15/12 - Aa 200,000 192,340
- ------------------------------------------------------------------------------------------------
Chester (Town of), Connecticut; Series 1989 GO
7.00%, 10/01/05 - A 190,000 204,670
- ------------------------------------------------------------------------------------------------
Connecticut (State of); Series 1991 A GO
6.75%, 03/01/01(b)(c) NRR NRR 480,000 531,437
- ------------------------------------------------------------------------------------------------
Connecticut (State of) (General Purpose Public
Improvement); GO
6.75%, Series 1991 A, 03/01/01(b)(c) NRR NRR 200,000 221,432
- ------------------------------------------------------------------------------------------------
6.50%, Series 1992 A, 03/15/02(b)(c) NRR NRR 300,000 331,461
- ------------------------------------------------------------------------------------------------
Mansfield (City of), Connecticut; Series 1990 GO
6.00%, 06/15/07 - A1 100,000 106,718
- ------------------------------------------------------------------------------------------------
6.00%, 06/15/08 - A1 100,000 105,760
- ------------------------------------------------------------------------------------------------
6.00%, 06/15/09 - A1 100,000 106,576
- ------------------------------------------------------------------------------------------------
New Britain (City of), Connecticut; Series 1992
Various Purpose GO
6.00%, 02/01/11(d) AAA Aaa 400,000 420,060
- ------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
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 $ 138,588
- ------------------------------------------------------------------------------------------------
6.50%, 01/15/09 - A 125,000 138,663
- ------------------------------------------------------------------------------------------------
6.50%, 01/15/10 - A 125,000 138,361
- ------------------------------------------------------------------------------------------------
6.50%, 01/15/11 - A 125,000 137,656
- ------------------------------------------------------------------------------------------------
Somers (City of), Connecticut; Series 1990 Various
Purpose GO
6.00%, 12/01/10 - A1 190,000 201,626
- ------------------------------------------------------------------------------------------------
Westbrook (City of), Connecticut; Series 1992 GO
6.40%, 03/15/10(d) AAA Aaa 380,000 414,545
- ------------------------------------------------------------------------------------------------
3,907,031
- ------------------------------------------------------------------------------------------------
HEALTH CARE-11.54%
Connecticut Health and Education Facilities Authority
(Bridgeport Hospital); 1992 Series A RB
6.625%, 07/01/18(d) AAA Aaa 500,000 529,355
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(Capital Asset); Series 1989 B RB
7.00%, 01/01/00(f) A A1 200,000 214,188
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(Danbury Hospital); 1991 Series E RB
6.50%, 07/01/14(d) AAA Aaa 750,000 788,745
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(Middlesex Hospital); 1992 Series G RB
6.25%, 07/01/12(d) AAA Aaa 1,100,000 1,145,837
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(New Britain Memorial Hospital); Series 1991 A RB
7.75%, 07/01/22 BBB- - 500,000 527,910
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(St. Raphael Hospital); 1993 Series H RB
5.00%, 07/01/05(d) AAA Aaa 500,000 501,430
- ------------------------------------------------------------------------------------------------
Connecticut Health and Education Facilities Authority
(Yale-New Haven Hospital);
Series 1990 F RB
7.10%, 07/01/25(d) AAA Aaa 775,000 836,039
- ------------------------------------------------------------------------------------------------
4,543,504
- ------------------------------------------------------------------------------------------------
HOUSING-13.43%
Connecticut Housing Development Authority
(Housing Mortgage Finance Program); RB
7.55%, Series 1990 B-1, 11/15/08 AA Aa 2,760,000 2,808,355
- ------------------------------------------------------------------------------------------------
7.50%, Series 1990 A, 11/15/09(e) AA Aa 5,000 5,186
- ------------------------------------------------------------------------------------------------
7.00%, Series 1991 A-1, 11/15/09 AA Aa 450,000 470,992
- ------------------------------------------------------------------------------------------------
6.55%, Series 1991 C, Sub-Series C-3, 11/15/13 AA Aa 310,000 320,683
- ------------------------------------------------------------------------------------------------
7.125%, Series 1985 F, 11/15/18 AA Aa 190,000 194,921
- ------------------------------------------------------------------------------------------------
Connecticut (State of) (Housing Mortgage Finance
Program); RB
6.00%, Series 1993 E-1, 05/15/17 AA Aa 675,000 669,357
- ------------------------------------------------------------------------------------------------
6.00%, Series 1995 F-1, 05/15/17 AA Aa 310,000 308,506
- ------------------------------------------------------------------------------------------------
6.70%, Series C2, 11/15/22(e) AA Aa 500,000 507,125
- ------------------------------------------------------------------------------------------------
5,285,125
- ------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
Financials
<TABLE>
<CAPTION>
RATING(a) MARKET
S&P MOODY'S PAR VALUE
<S> <C> <C> <C> <C>
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) AAA Aaa $ 400,000 $ 425,288
- ------------------------------------------------------------------------------------------------
RESOURCE RECOVERY-5.78%
Connecticut State Resource Recovery Authority
(American Ref-Fuel Co.-Southeastern Connecticut
Project); Series 1988 A RB
8.00%, 11/15/15(e) AA- Baa1 500,000 543,045
- ------------------------------------------------------------------------------------------------
Connecticut State Resource Recovery Authority
(Bridgeport Resco Corp.-Ltd. Partners);
1985 Issue RB
8.625%, Project B, 01/01/04 A A 670,000 688,177
- ------------------------------------------------------------------------------------------------
7.625%, Project A, 01/01/09 A A 1,000,000 1,042,700
- ------------------------------------------------------------------------------------------------
2,273,922
- ------------------------------------------------------------------------------------------------
TRANSPORTATION-18.59%
Connecticut State Special Tax Obligation
(Transportation Infrastructure); RB
5.10%, Series 1992 B, 09/01/99 AA- A1 1,000,000 1,018,100
- ------------------------------------------------------------------------------------------------
6.80%, Series A, 06/01/03(b)(c) NRR NRR 1,250,000 1,395,875
- ------------------------------------------------------------------------------------------------
6.25%, Series 1991 B, 10/01/09 AA- A1 1,000,000 1,067,180
- ------------------------------------------------------------------------------------------------
6.50%, Series 1991 B, 10/01/10 AA- A1 530,000 594,347
- ------------------------------------------------------------------------------------------------
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 1,047,760
- ------------------------------------------------------------------------------------------------
6.80%, Series 1989 C, 12/01/99(b)(c) AAA NRR 500,000 548,655
- ------------------------------------------------------------------------------------------------
6.50%, Series 1991 B, 10/01/12 AA- A1 1,500,000 1,642,410
- ------------------------------------------------------------------------------------------------
7,314,327
- ------------------------------------------------------------------------------------------------
WATER & SEWER-8.65%
Connecticut Development Authority (Pfizer Inc.);
Series 1982 Refunding PCR
6.55%, 02/15/13 AAA Aaa 250,000 269,625
- ------------------------------------------------------------------------------------------------
Connecticut Development Authority Water Facility
(Bridgeport Hydraulic Co. Project); Series 1990
Refunding RB
7.25%, 06/01/20 A+ - 800,000 866,608
- ------------------------------------------------------------------------------------------------
Connecticut State Clean Water Fund; Series 1991
Clean Water RB
7.00%, 01/01/11 AA+ Aa 1,100,000 1,215,588
- ------------------------------------------------------------------------------------------------
Manchester (City of) Connecticut Eighth Utilities Fire
District; Series 1991 GO
6.75%, 08/15/06 - A1 180,000 202,896
- ------------------------------------------------------------------------------------------------
South Central Connecticut Regional Water
Authority; Eighth Series 1990 A Water System RB
6.60%, 08/01/00(b)(c) NRR NRR 250,000 274,023
- ------------------------------------------------------------------------------------------------
South Central Connecticut Regional Water
Authority; Series 1988 Water System RB
6.80%, 08/01/98(b)(c) NRR NRR 535,000 575,210
- ------------------------------------------------------------------------------------------------
3,403,950
- ------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
Financials
<TABLE>
<CAPTION>
RATING(a) MARKET
S&P MOODY'S PAR VALUE
<S> <C> <C> <C> <C>
MISCELLANEOUS-12.03%
Connecticut Development Authority (Economic
Development Projects); 1992 Series Refunding Bonds
6.00%, 11/15/08 AA- Aa $ 500,000 $ 525,365
- ------------------------------------------------------------------------------------------------
Guam (Government of); Series 1995 A GO
4.90%, 09/01/97 BBB - 500,000 500,110
- ------------------------------------------------------------------------------------------------
5.25%, 09/01/99 BBB - 250,000 250,788
- ------------------------------------------------------------------------------------------------
5.375%, 09/01/00 BBB - 250,000 250,953
- ------------------------------------------------------------------------------------------------
Guam (Government of); Series 1994 A GO
5.50%, 08/15/97 BBB - 500,000 504,675
- ------------------------------------------------------------------------------------------------
Guam Airport Authority; Series 1993 B RB
5.00%, 10/01/96(e) BBB - 1,700,000 1,701,547
- ------------------------------------------------------------------------------------------------
Puerto Rico Commonwealth (Highway and Transportation
Authority); Series X RB
5.20%, 07/01/03 A Baa1 1,000,000 1,005,910
- ------------------------------------------------------------------------------------------------
4,739,348
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.51% 38,770,535
- ------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.49% 584,906
- ------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $39,355,441
================================================================================================
</TABLE>
Abbreviations:
<TABLE>
<S> <C>
GO General Obligation Bonds
NRR Not re-rated
PCR Pollution Control Revenue Bonds
RB Revenue Bonds
</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, 1996.
See Notes to Financial Statements.
8
<PAGE> 11
Financials
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $37,102,995) $ 38,770,535
- -----------------------------------------------------------------------------------------
Receivables for:
Capital stock sold 49,322
- -----------------------------------------------------------------------------------------
Interest 743,229
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 9,092
- -----------------------------------------------------------------------------------------
Other assets 3,693
- -----------------------------------------------------------------------------------------
Total assets 39,575,871
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 16,767
- -----------------------------------------------------------------------------------------
Amount due to custodian bank 70,225
- -----------------------------------------------------------------------------------------
Deferred compensation 9,092
- -----------------------------------------------------------------------------------------
Dividends 64,683
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 3,721
- -----------------------------------------------------------------------------------------
Accrued distribution fees 24,647
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 2,841
- -----------------------------------------------------------------------------------------
Accrued operating expenses 28,454
- -----------------------------------------------------------------------------------------
Total liabilities 220,430
- -----------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 39,355,441
- -----------------------------------------------------------------------------------------
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- -----------------------------------------------------------------------------------------
Outstanding 3,641,266
- -----------------------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 10.81
- -----------------------------------------------------------------------------------------
OFFERING PRICE PER SHARE:
(Net asset value of $10.81 divided by 95.25%) $ 11.35
=========================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
Financials
STATEMENT OF OPERATIONS
For the year ended March 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $2,308,362
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 198,182
- ----------------------------------------------------------------------------------------
Custodian fees 10,438
- ----------------------------------------------------------------------------------------
Transfer agent fees 30,460
- ----------------------------------------------------------------------------------------
Directors' fees 6,242
- ----------------------------------------------------------------------------------------
Distribution fees 99,095
- ----------------------------------------------------------------------------------------
Administrative services fees 45,950
- ----------------------------------------------------------------------------------------
Other 69,546
- ----------------------------------------------------------------------------------------
Total expenses 459,913
- ----------------------------------------------------------------------------------------
Less expenses assumed by advisor (198,182)
- ----------------------------------------------------------------------------------------
Net expenses 261,731
- ----------------------------------------------------------------------------------------
Net investment income 2,046,631
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities (39,012)
- ----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 362,769
- ----------------------------------------------------------------------------------------
Net gain on investment securities 323,757
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $2,370,388
========================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,046,631 $ 2,097,384
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (39,012) (127,300)
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 362,769 195,742
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,370,388 2,165,826
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (2,032,807) (2,111,073)
- ---------------------------------------------------------------------------------------------
Return of capital -- (19,319)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions 729,185 (4,107,391)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 1,066,766 (4,071,957)
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 38,288,675 42,360,632
- ---------------------------------------------------------------------------------------------
End of period $39,355,441 $38,288,675
=============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $37,823,822 $37,094,637
- ---------------------------------------------------------------------------------------------
Undistributed net investment income 5,077 (8,747)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of investment
securities (140,998) (101,986)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 1,667,540 1,304,771
- ---------------------------------------------------------------------------------------------
$39,355,441 $38,288,675
=============================================================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
Financials
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
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
investment objective of the Fund is to earn a high level of income free from
federal taxes and Connecticut taxes by investing at least 80% of its net assets
in municipal bonds and other municipal securities.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. 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 either are not readily available or are questionable 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.
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 $130,061, which
expires, if not previously utilized, through the year 2004. The Fund cannot
distribute capital gains to shareholders until the tax loss carryforwards
have been utilized. In addition, the Fund intends to invest in such municipal
securities to allow it to qualify to pay to shareholders "exempt interest
dividends," as defined in the Internal Revenue Code.
12
<PAGE> 15
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. AIM will, if necessary, reduce its fee for
any fiscal year to the extent required so that the amount of ordinary expenses
of the Fund (excluding interest, taxes, brokerage commissions and extraordinary
expenses) paid or incurred by the Fund for such fiscal year does not exceed the
applicable expense limitations imposed by the state securities regulations in
any state in which the Fund's shares are qualified for sale. During the year
ended March 31, 1996, AIM voluntarily waived advisory fees of $198,182.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain costs incurred in providing accounting
services to the Fund. During the year ended March 31, 1996, the Fund reimbursed
AIM $45,950 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Fund. During the year ended March 31, 1996, the Fund
paid AFS $19,600 for such services.
Under the terms of a master distribution agreement between the Company and the
Fund, A I M Distributors, Inc. ("AIM Distributors") acts as the exclusive
distributor of the Fund's shares. 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 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 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, 1996, the Fund paid AIM Distributors
$99,095 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 $33,891 from sales of shares of the
Fund's capital stock during the year ended March 31, 1996. 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.
During the year ended March 31, 1996, the Fund paid legal fees of $2,959 for
services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as Counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended March 31, 1996 were $8,751,359 and
$6,205,837, respectively. The amount of unrealized appreciation (depreciation)
of investment securities as of March 31, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $1,723,654
- ----------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (56,114)
- ----------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $1,667,540
========================================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
13
<PAGE> 16
Financials
NOTE 5-CAPITAL STOCK
Changes in capital stock outstanding for the years ended March 31, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
1996 1995
----------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sold 555,351 $ 6,036,362 370,407 $ 3,925,610
- ---------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends 116,353 1,264,613 129,768 1,372,166
- ---------------------------------------------------------------------------------------------------------------------------
Reacquired (603,962) (6,571,790) (889,770) (9,405,167)
- ---------------------------------------------------------------------------------------------------------------------------
67,742 $ 729,185 (389,595) $(4,107,391)
===========================================================================================================================
</TABLE>
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of capital stock
outstanding during each of the years in the two-year period ended March 31,
1996, 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,
-------------------------------- ----------------------------------------------------------
1996 1995 1994 1993 1992(a) 1991 1990 1989
------- ------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 10.71 $ 10.69 $ 11.29 $ 10.65 $ 10.52 $ 10.07 $ 10.19 $10.00
- ------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income 0.56 0.56 0.15 0.60 0.66 0.69 0.67 0.14
- ------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Net gains (losses) on
securities (both
realized and unrealized) 0.10 0.04 (0.61) 0.65 0.17 0.50 (0.10) 0.16
- ------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations 0.66 0.60 (0.46) 1.25 0.83 1.19 0.57 0.30
- ------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.56) (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 (0.56) (0.58) (0.14) (0.61) (0.70) (0.74) (0.69) (0.11)
- ------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 10.81 $ 10.71 $ 10.69 $ 11.29 $ 10.65 $ 10.52 $ 10.07 $10.19
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Total return(b) 6.24% 5.78% (4.06)% 11.99% 8.22% 12.23% 5.88% 3.06%
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Ratio/supplemental data:
Net assets, end of period
(000s omitted) $39,355 $38,289 $42,361 $46,224 $33,110 $27,298 $16,685 $6,556
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Ratio of expenses to average
net assets(c) 0.66%(d) 0.55% 0.50%(e) 0.34% 0.25% 0.25% 0.25% 0.25%(e)
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Ratio of net investment income
to average net assets(c) 5.16%(d) 5.37% 5.32%(e) 5.42% 6.25% 6.73% 6.82% 6.21%(e)
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover rate 17% 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 1.16%, 1.13%, 1.23% (annualized), 1.30%, 1.12%, 1.26%,
1.33%, and 1.99% (annualized) for the period 1996-89, respectively. Ratios
of net investment income to average net assets prior to waiver of advisory
fees and expense reimbursements are 4.66%, 4.79%, 4.59% (annualized), 4.45%,
5.38%, 5.72%, 5.74%, and 4.48% (annualized) for the period 1996-89,
respectively.
(d) Ratios are based on average daily net assets of $39,637,920.
(e) Annualized.
14
<PAGE> 17
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, 1996, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the years in the two-year period then ended and the financial
highlights for each of the years in the two-year period 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, 1996, 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 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, 1996, 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 two-year period then ended, the three-month period ended March
31, 1994, and the year ended December 31, 1993, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
May 3, 1996
15
<PAGE> 18
This page intentionally left blank.
16
<PAGE> 19
Directors &
Officers
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
11 Greenway Plaza
Charles T. Bauer Charles T. Bauer Suite 1919
Chairman and Chairman Houston, TX 77046
Chief Executive Officer
A I M Management Group Inc. Robert H. Graham INVESTMENT ADVISOR
President A I M Advisors, Inc.
Bruce L. Crockett 11 Greenway Plaza
Director, President, and Chief John J. Arthur Suite 1919
Executive Officer Senior Vice President Houston, TX 77046
COMSAT Corporation and Treasurer
TRANSFER AGENT
Owen Daly II Gary T. Crum A I M Fund Services, Inc.
Director Senior Vice President P.O. Box 4739
Cortland Trust Inc. Houston, TX 77210-4739
Carol F. Relihan
Carl Frischling Senior Vice President CUSTODIAN
Partner and Secretary The Bank of New York
Kramer, Levin, Naftalis, 110 Washington Street
Nessen, Kamin & Frankel Dana R. Sutton New York, NY 10286
Vice President
Robert H. Graham and Assistant Treasurer COUNSEL TO THE FUND
President and Chief Ballard Spahr
Operating Officer Stuart W. Coco Andrews & Ingersoll
A I M Management Group Inc. Vice President 1735 Market Street
Philadelphia, PA 19103
John F. Kroeger Melville B. Cox
Formerly, Consultant Vice President COUNSEL TO THE DIRECTORS
Wendell & Stockel Kramer, Levin, Naftalis,
Associates, Inc. Karen Dunn Kelley Nessen, Kamin & Frankel
Vice President 919 Third Avenue
Lewis F. Pennock New York, NY 10022
Attorney P. Michelle Grace
Assistant Secretary DISTRIBUTOR
Ian W. Robinson A I M Distributors, Inc.
Consultant; Former Executive David L. Kite 11 Greenway Plaza
Vice President and Assistant Secretary Suite 1919
Chief Financial Officer Houston, TX 77046
Bell Atlantic Management Nancy L. Martin
Services, Inc. Assistant Secretary AUDITORS
KPMG Peat Marwick LLP
Louis S. Sklar Ofelia M. Mayo 700 Louisiana
Executive Vice President Assistant Secretary NationsBank Bldg.
Hines Interests Houston, TX 77002
Limited Partnership Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Tax-Exempt Bond Fund of Connecticut paid ordinary dividends in the amounts
of $0.558 per share to shareholders during the Fund's tax year ended March 31,
1996. Of this amount, 100% qualified as tax-exempt interest dividends for
federal income tax purposes.
IMPORTANT TAX INFORMATION
The state of Connecticut taxes corporations on exempt-interest dividends
received from AIM Tax-Exempt Bond Fund of Connecticut. Investors should consult
their tax advisor regarding their specific situation.
<PAGE> 20
<TABLE>
<S> <C>
[PHOTO OF 11 GREENWAY PLAZA APPEARS HERE] 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
AIM Charter Fund
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 CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE
OF SAFETY
AIM Intermediate Government 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 July 18, 1995. **On
May 1, 1995, AIM Utilities Fund
broadened its investment strategy to
AIM Management Group has provided permit up to 80% of its total assets to
leadership in the mutual fund industry be invested in foreign securities, and
since 1976 and currently manages more was renamed AIM Global Utilities Fund.
than $51 billion in assets for more ***On September 25, 1995, AIM
than 2.3 million shareholders, Government Securities Fund was renamed
including individual investors, AIM Intermediate Government Fund. For
corporate clients, and financial more complete information about any AIM
institutions. The AIM Family of Fund(s), including sales charges and
Funds(R) is distributed nationwide, and expenses, ask your financial consultant
AIM today ranks among the nation's top or securities dealer for a free
20 mutual fund companies in assets prospectus(es). Please read the
under management, according to Lipper prospectus(es) carefully before you
Analytical Services, Inc. invest or send money.
</TABLE>
[AIM LOGO APPEARS HERE] ---------------
BULK RATE
A I M Distributors, Inc. U.S. POSTAGE
11 Greenway Plaza, Suite 1919 PAID
Houston, TX 77046 HOUSTON, TX
Permit No. 1919
---------------
