<PAGE> 1
[AIM LOGO APPEARS HERE]
AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT
SEMIANNUAL REPORT SEPTEMBER 30, 1997
<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 AIM Tax-Exempt Bond Fund of Connecticut's performance figures are
historical and reflect reinvestment of all distributions and changes in net
asset value. Unless otherwise indicated, the Fund's performance is computed
at net asset value without a sales charge. When sales charges are included
in performance figures, performance reflects the maximum 4.75% sales
charge.
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 annualized distribution rate reflects the Fund's most recent
monthly dividend distribution multiplied by 12 and divided by the most
recent month-end net asset value.
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 particular security.
o Past performance cannot guarantee comparable future results.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE;
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS
OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
As the reporting period ended September 1997, the market
[PHOTO OF environment continued to be favorable for fixed-income
Charles T. investments. The course was not smooth;indeed, bond markets
Bauer, fluctuated widely during the six-month reporting period amid
Chairman of concerns that vigorous economic growth might accelerate
the Board of inflation. Only after subsequent reports indicated that
THE FUND, economic growth had moderated and that inflation was still
APPEARS HERE] low did bond markets recover.
On the following pages, your Fund's portfolio management
team offers a complete discussion of recent market activity
and how the Fund was affected. They also discuss the Fund's
portfolio strategy, why they believe the portfolio is well-
positioned for attractive current income, and why they are
confident that the reasons for investing in the Fund
remain as compelling as ever. These discussions are offered
to help you better understand the relative performance of your Fund.
The point we want to emphasize most is that market volatility has become the
norm rather than the exception. Those of you who are long-time investors, and
those who are new shareholders in The AIM Family of Funds--Registered
Trademark--, should recognize that periods of falling prices in both stock and
bond markets are inevitable. Indeed, we can learn important lessons about
investing in periods of market uncertainty.
That's why it is a good idea to reassess your financial goals periodically
with your financial consultant. Managing your investments in changing markets
can be challenging. But your financial consultant knows a few time-tested
investment strategies that can help. Diversification, for example, can help you
cushion the effects of volatility and reduce your risk exposure in any type of
security.
In our experience, we have observed that the best action to take is to stay
focused--not on the market, but on your long-term goals. The market can change
from day to day. Those who try to "time" the market, over time, tend to be less
successful than those who continue to follow a disciplined investment strategy.
It's also important to maintain realistic expectations about investing.
Short-term volatility in financial markets may tempt some investors to
liquidate investments regardless of their personal financial objectives.
Remember that time is the best medicine for uncertain markets. The market's
performance earlier in the reporting period was driven by concerns about the
possibility of rising inflation. Yet, no evidence of significant inflation has
materialized.
We appreciate the trust you have placed in us and we look forward to our
continued close association. If you have any questions or comments about this
report, we invite you to call Client Services at 800-246-5463. We also invite
you to visit AIM's Internet Web site at www.aimfunds.com.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
------------------------------
In rapidly changing markets,
you need an investment
professional on your side
who can explain
what is happening and how your
portfolio may be affected.
------------------------------
<PAGE> 4
The Managers' Overview
MUNICIPAL BONDS WEATHER STORMY MARKET, PROVIDE SOLID INCOME
A roundtable discussion with the Fund management team for AIM Tax-Exempt Bond
Fund of Connecticut for the six-month period ended September 30, 1997.
- --------------------------------------------------------------------------------
Q. IT WAS A TURBULENT SIX MONTHS FOR THE BOND MARKET. HOW DID THE FUND PERFORM
DURING THE REPORTING PERIOD?
A. The period was indeed marked by frequent and often dramatic fluctuations in
the bond market. On August 8, 1997, for example, the yield on the benchmark
30-year U.S. Treasury bond rose 14 basis points (a basis point is one one-
hundredth of 1%) while on September 16, it dropped 17 basis points--its
second-largest, single-day decline in the 1990's. Despite the volatility,
however, your Fund continued to provide attractive current income, exempt
from federal and Connecticut state income taxes, while maintaining relative
share-price stability.
As of September 30, 1997, the Fund's 30-day distribution rate at net
asset value was 5.01%. Translated into its taxable equivalent, the Fund's
30-day distribution rate at net asset value was 8.69%, assuming the highest
marginal federal tax rate of 39.6% and the Connecticut rate of 4.5%. The
Fund's 30-day yield, as defined by the SEC, was 3.89%, when calculated at
maximum offering price. Its 30-day taxable-equivalent yield was 6.74%,
assuming the highest marginal federal tax rate of 39.6% and the Connecticut
rate of 4.5%. Six-month total return was 4.84%.
Net asset value per share remained within a relatively narrow range of
$10.73 to $11.05, thus continuing the Fund's history of relative price
stability as illustrated by the accompanying chart.
Q. WHAT IGNITED THE VOLATILITY IN THE BOND MARKET?
A. Investors were concerned that the rapidly growing economy would prompt the
Federal Reserve Board (the Fed) to tighten monetary policy to keep inflation
in check and that perpetuated volatility. However, inflation remained modest
despite strong economic growth. For the 12-month period ended September 30,
1997, consumer prices rose just 2.2%, compared to a 3.3% increase for all of
1996. The absence of inflationary pressures caused the Fed to leave interest
rates unchanged during the reporting period.
Q. WHAT WAS THE IMPACT OF THE LOW-INFLATION ENVIRONMENT ON THE BOND MARKET?
A. Generally, it was positive. After a selloff in the first half of April, the
bond market staged a strong rally that persisted through the end of July.
The rally was interrupted in August when inflation concerns resurfaced,
sending bond prices lower and yields higher. But the market recouped most of
its late-summer losses in September amid mounting evidence that inflation
was not a serious threat. The rally in the bond market was reflected in the
yield on the 30-year U.S. Treasury bond which fell from 7.10% at the
beginning of the reporting period to 6.40% at its close.
Q. HOW DID MUNICIPAL BONDS PERFORM DURING THE REPORTING PERIOD?
A. The municipal bond market tended to reflect trends in the U.S. Treasury
security market. However, price and yield swings were less pronounced in the
municipal bond market than in the U.S. Treasury security market.
Consequently, municipal bonds tended to be more stable in value in the
volatile market environment.
A continuing lack of new issues also enhanced the relative price stability
of municipal bonds. One of the factors contributing to the new issue
shortage has been the healthy economy, which has bolstered the tax receipts
of state and
<TABLE>
<CAPTION>
================================================================================
TOP FIVE BOND HOLDINGS
- --------------------------------------------------------------------------------
As of 9/30/97, based on total net assets
Coupon Maturity %
<S > <C> <C> <C>
1. Connecticut State Special 6.50% 10/01/12 4.49
Tax Obligation
2. Connecticut Development Authority 7.25% 10/15/15 4.43
Pollution Control
3. Connecticut Health and Educational 6.875% 07/01/09 4.01
Facilities Authority
4. Connecticut State Special 6.80% 06/01/03 3.61
Tax Obligation
5. Connecticut State Housing 6.30% 11/15/17 3.53
Finance Authority
================================================================================
Please keep in mind the Fund's portfolio is subject to change and there is no
assurance the Fund will continue to hold any particular security.
</TABLE>
2
<PAGE> 5
================================================================================
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
As of 9/30/97, based on total assets
<TABLE>
<S> <C>
General Obligation Bonds 32%
Revenue Bonds 68%
Number of Holdings 64
Average Maturity 11.6 Years
Duration 4.1 Years
================================================================================
</TABLE>
local governments and made it less necessary for these entities to issue new
municipal bonds.
Q. HOW DID YOU TAKE ADVANTAGE OF MARKET TRENDS?
A. We maintained our emphasis on revenue bonds whose creditworthiness tends to
be less sensitive to the political environment than general obligation
bonds. Revenue bonds are paid off with funds generated by various projects
while general obligation bonds are paid off with tax dollars. State and
local governments are finding it increasingly difficult to raise taxes to
support the issuance of general obligation bonds because of taxpayer
opposition.
As of September 30, 1997, the Fund was 68% invested in revenue bonds
and 32% invested in general obligation bonds. The Fund had a weighted
average maturity of 11.6 years and a duration of 4.1 years. Funds with
shorter duration and weighted average maturity tend to be less sensitive to
market fluctuations.
Q. DID YOU CONTINUE TO EMPHASIZE HIGHER-QUALITY MUNICIPAL BONDS IN THE
PORTFOLIO?
A. Yes, we continued our focus on higher-quality issues with good liquidity.
During the reporting period, we observed that the yield differentials
between higher- and lower-quality bonds were unusually narrow. Consequently,
there was little advantage in assuming greater risk by holding lower-rated
bonds when their yields were not significantly greater than higher-quality
issues.
As of September 30, 1997, approximately 43% of the portfolio's holdings
were securities rated AAA, and 93% of the portfolio securities were rated A
or better. Credit-enhanced securities--those backed by insurance or escrowed
with U.S. Treasuries --comprised about 36% of the portfolio.
The Fund had an average portfolio quality rating of AA-/Aa- as measured
by Standard & Poor's Corporation (S&P) and Moody's Investors Service, Inc.,
two widely known credit rating agencies. S&P and Moody's ratings are
historical and are based on analysis of the credit quality of the individual
municipal securities in the Fund's portfolio.
Q. ISN'T THE FUND ALSO MANAGED FOR TAX EFFICIENCY?
A. Yes, we make every effort to avoid transactions that would result in capital
gains that are not offset by capital losses. For more than four years, the
Fund has paid no taxable capital gains distributions or ordinary income
distributions.
CALCULATING YOUR TAXABLE-EQUIVALENT DISTRIBUTION RATE AND YIELD
In this report, we discuss your Fund's taxable-equivalent distribution rate and
yield. These figures represent the annualized distribution rate and yield a
taxable bond fund would have to provide to equal the distribution rate and
yield of your tax-exempt Fund.
It's easy to calculate the taxable-equivalent yield and distribution rate of
a municipal bond fund. Simply divide the fund's tax-free distribution rate
and/or yield by 1 minus your federal income tax bracket, then by 1 minus your
Connecticut state income tax bracket. If you are in the 28% federal income tax
bracket and the 4.5% Connecticut state income tax bracket and the tax-free
distribution rate of your Fund is 5.0%, you would use the following formula to
determine your taxable equivalent distribution rate.
5.0% divided by (1 - 0.28) divided by (1 - 0.045)=
5.0% divided by (0.72) divided by (0.955)=
7.3% Taxable-Equivalent
Distribution Rate
In this example, a tax-exempt bond fund with a 5.0% distribution rate would
be equal to a taxable bond fund with a 7.3% distribution rate if you are in the
28% federal income tax bracket and the 4.5% Connecticut state income tax
bracket.
3
<PAGE> 6
-------------------------------------
We don't expect the Taxpayers' Relief
Act to diminish the popularity of
municipal bonds as an attractive
tax-free investment.
-------------------------------------
Q. WHAT IMPACT DO YOU EXPECT THE TAXPAYERS' RELIEF ACT OF 1997 TO HAVE ON THE
MUNICIPAL BOND MARKET?
A. We don't expect the Taxpayers' Relief Act to diminish the popularity of
municipal bonds as an attractive tax-free investment. While the act creates
the new Roth Individual Retirement Account, which will also pay tax-free
distributions, only individuals earning less than $110,000 annually in
adjusted gross income will be eligible to invest in Roth IRAs. For couples,
the phase-out occurs when annual adjusted gross income is between $150,000
and $160,000. Moreover, the yearly contribution an individual investor will
be able to make to a Roth IRA will be limited to $2,000.
The act may lead to a slight increase in municipal bond supply as it
removes the limits on the amount of tax- exempt bonds private colleges and
other non-hospital 501(c)(3) organizations can issue.
Q. DO YOU EXPECT THE TAX CODE TO BE SIMPLIFIED?
A. Simplification of the tax code is likely to be a key issue in the 1998
election campaign with much of the attention focusing on two far-reaching
proposals: a flat tax and a national sales tax. We believe the prospects
that either of these plans will be adopted are fairly remote for a number of
reasons. For one, both plans would eliminate most tax writeoffs--a move that
would likely generate strong opposition.
If there is a more modest simplification of the tax code, we don't expect
municipal bonds to lose their tax- exempt status. If municipal bonds were
subject to federal taxes like other fixed-income securities, their interest
rates would have to be higher than their current levels to attract potential
buyers. That would mean that state and local governments might have to raise
taxes to support bond issues. We don't believe Washington would put state
and local governments in such a predicament at a time when more and more
spending responsibilities are being shifted to the state and local levels.
Q. WHAT IS YOUR MARKET OUTLOOK?
A. As 1997 draws to a close, economic growth appears to be moderating and
inflation remains low. In Connecticut, the General Assembly has approved
cuts in state taxes and the economy continues to recover from the 1989
recession. Such an environment, if it persists, should prove beneficial for
municipal bonds and other investments.
In October, shortly after the reporting period ended, Fed Chairman
Alan Greenspan raised the specter of an interest-rate hike by suggesting in
congressional testimony that economic growth had been on an "unsustainable
track" and that financial markets reflected an "optimistic outlook." Later
in the month, world financial markets were jolted by currency devaluations
in Southeast Asia and a dramatic decline in equity markets both here and
abroad. The consensus of market watchers was that this market turmoil
probably had significantly reduced any potential near-term rate hike, as the
Fed would probably not take any action that could destabilize the markets
further.
Regardless of market and interest-rate trends, we will continue to manage
your Fund to provide attractive current income, exempt from federal and
Connecticut state taxes, while maintaining relative stability of net asset
value.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
As of 9/30/97, including sales charges
Inception (10/3/89) 6.67%
5 Years 5.15%
1 Year 2.12%*
*7.23% excluding sales charges
================================================================================
<TABLE>
<CAPTION>
================================================================================
History of Net Asset Value Stability
- --------------------------------------------------------------------------------
10/3/89 - 9/30/97
<S> <C> <S> <C> <S> <C>
10 10/3/89 10.55 6/92 10.71 3/95
10.05 10/89 10.66 9/92 10.77 6/95
9.99 3/90 10.65 12/92 10.86 9/95
10.03 2/90 10.88 3/93 11.01 12/95
9.77 9/90 11.08 6/93 10.81 3/96
10.07 12/90 11.33 9/93 10.76 6/96
10.11 3/91 11.29 12/93 10.8 9/96
10.19 6/91 10.69 3/94 10.88 12/96
10.4 9/91 10.63 6/94 10.77 3/97
10.52 12/91 10.58 9/94 10.9 6/97
10.31 3/92 10.34 12/94 11.01 9/97
Source: Towers Data Systems HYPO --Registered Trademark--. There is no guarantee
the Fund will maintain a constant NAV. Investment return will vary so that you
may have a gain or a loss when you sell shares. Past performance cannot
guarantee comparable future results.
================================================================================
</TABLE>
4
<PAGE> 7
For Consideration
MARKETS LOOK TO INDICATORS TO SEE WHICH WAY THE ECONOMIC WIND BLOWS
Every month, the government releases reports of key economic indicators--the
harbingers of the business cycle considered so vital to financial markets. Have
you ever wondered why economic indicators are so important? We asked Gary
Beauchamp, AIM's Economic Strategist, to discuss a few widely followed
indicators that may be of interest to investors.
GROSS DOMESTIC PRODUCT (GDP)
GDP measures the final output of goods and services produced in the United
States in one year, which makes it the broadest measure of economic
performance. Initial estimates are released about a month after the close of
each quarter.
Financial markets react strongly to the GDP number because it indicates the
pace of economic activity. For instance, if the GDP is growing at a faster rate
than in previous periods, it's an indication that the economy may be heating
up. Rapid growth strains the economy, and that drives up prices and interest
rates. The resulting inflation erodes corporate profits and the value of
financial securities. Conversely, growth that is too slow causes prices and
profits to fall, and that drives up unemployment and dries up demand.
EMPLOYMENT DATA
When the various economic indicators are mixed, many analysts consider
employment data to be the most important. An increase in employment, a decrease
in initial jobless claims, or a decrease in unemployment can bode well for the
economy. However, an unexpectedly large surge in employment, such as the
non-farm payroll figures reported last February and March, can signal the
potential for inflation.
INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION
Monthly industrial production and capacity utilization indicators report the
efficiency of economic productivity. The index of industrial production
measures changes in the output of the mining, manufacturing, and gas and
electric utilities sectors of the economy. Capacity utilization is the rate at
which industrial production sectors operate--it is an indicator of industry's
current physical limits.
Together, these indicators can reveal expansion or contraction in the
economy before the GDP. High levels are positive; but maximum levels of
industrial production and capacity utilization can indicate inordinate strain
on the economy, which can lead to inflation. Conversely, low levels of capacity
utilization often generate increased productivity efficiency, and that can
signal an upturn in the economy from recession.
HOUSING STARTS
Released monthly by the U.S. Department of Commerce, the housing starts figure
is an estimate of the number of new homes and apartments under construction
within a stated period. The housing starts figure is sensitive to changes in
interest rates and reported levels of new home sales--another indicator of
consumer confidence. When consumers feel secure about the direction of the
economy, they are more likely to make long-term financial commitments like home
mortgages. Conversely, housing starts tend to fall well before the onset of
recession. One of the most volatile indicators, housing start figures often
vary widely from month to month and are sometimes substantially revised.
INDEX OF LEADING ECONOMIC INDICATORS
The U.S. Commerce Department tracks the performance of the economy by measuring
changes in the business cycle--the alternating progression of the economy from
periods of expansion when business is growing to periods of contraction when
business activity slows and unemployment increases.
Every month, the Commerce Department compiles its composite index of
leading economic indicators. Leading indicators are those factors that have
shown the tendency to signal change before the economy makes a major turn. The
index measures changes in such factors as stock prices, new orders for durable
goods, contracts and orders for plant and equipment, and average weekly claims
for state unemployment compensation. Positive changes in the index signal
improvement in the economy. Negative changes are understood to be warnings that
the economy might contract.
[ILLUSTRATION]
"The composite index of leading economic indicators is not the square root of
the universe. There is no single index or formula that provides all the answers
to the problems of business forecasting."
Michael B. Lehman, The Business One Irwin Guide to Using The Wall Street
Journal
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MUNICIPAL OBLIGATIONS-98.39%
EDUCATION-11.12%
Connecticut Health and
Education Facilities
Authority (Fairfield
University); Series F RB
6.875%, 07/01/09 BBB+ Baa1 $ 1,475 $ 1,552,378
- ------------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority
(Quinnipiac College); RB
4.90%, Series D,
07/01/98 BBB- - 100 100,108
- ------------------------------------------------------------------
7.25%, Series 1989 B,
07/01/99(b)(c) AAA NRR 450 482,922
- ------------------------------------------------------------------
Connecticut Regional
School District No. 5;
Series 1992 GO
6.00%, 03/01/12(d) AAA Aaa 335 354,169
- ------------------------------------------------------------------
Connecticut Regional
School District No. 5
(Towns of Bethany,
Orange and Woodbridge);
1993 Issue GO
5.50%, 02/15/07(d) AAA Aaa 500 529,235
- ------------------------------------------------------------------
Connecticut State Higher
Education Supplemental
Loan Authority (Family
Education Loan Program);
Series 1990 A RB
7.50%, 11/15/10(e) - A1 1,240 1,290,418
- ------------------------------------------------------------------
4,309,230
- ------------------------------------------------------------------
ELECTRIC-5.97%
Connecticut Development
Authority (Connecticut
Power & Light Co.);
Series 1993 A PCR
4.00%, 09/01/28(f)(g) A-1+ VMIG-1 595 595,000
- ------------------------------------------------------------------
Connecticut Development
Authority (New England
Power Co.); Series 1985
Fixed Rate PCR
7.25%, 10/15/15 A A2 1,600 1,717,024
- ------------------------------------------------------------------
2,312,024
- ------------------------------------------------------------------
GENERAL OBLIGATION-12.30%
Bridgeport (Town of),
Connecticut; Series A
Unlimited GO
6.00%, 09/01/06(d) AAA Aaa 875 963,681
- ------------------------------------------------------------------
Brooklyn (City of),
Connecticut; Unlimited
Tax GO
5.50%, 05/01/06(d) AAA Aaa 250 265,425
- ------------------------------------------------------------------
5.70%, 05/01/08(d) AAA Aaa 250 268,693
- ------------------------------------------------------------------
Chester (Town of),
Connecticut; Series 1989
GO
7.00%, 10/01/05 - A 190 202,027
- ------------------------------------------------------------------
Connecticut (State of);
Series 1991 A GO
6.75%, 03/01/01(b)(c) NRR NRR 480 526,507
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GENERAL OBLIGATION-(CONTINUED)
Connecticut (State of)
(General Purpose Public
Improvement); GO
6.75%, Series 1991 A,
03/01/01(b)(c) NRR NRR $ 200 $ 219,378
- -----------------------------------------------------------------
6.50%, Series 1992 A,
03/15/02(b)(c) NRR NRR 300 331,170
- -----------------------------------------------------------------
Mansfield (City of),
Connecticut; Series 1990
GO
6.00%, 06/15/07 - A1 100 109,454
- -----------------------------------------------------------------
6.00%, 06/15/08 - A1 100 109,328
- -----------------------------------------------------------------
6.00%, 06/15/09 - A1 100 110,450
- -----------------------------------------------------------------
New Britain (City of),
Connecticut; Series 1992
Various Purpose GO
6.00%, 02/01/11(d) AAA Aaa 400 443,072
- -----------------------------------------------------------------
North Canaan (City of),
Connecticut; Series 1991
GO
6.50%, 01/15/08 - A 125 142,294
- -----------------------------------------------------------------
6.50%, 01/15/09 - A 125 142,399
- -----------------------------------------------------------------
6.50%, 01/15/10 - A 125 142,289
- -----------------------------------------------------------------
6.50%, 01/15/11 - A 125 141,984
- -----------------------------------------------------------------
Somers (City of),
Connecticut; Series 1990
Various Purpose GO
6.00%, 12/01/10 - A1 190 209,887
- -----------------------------------------------------------------
Westbrook (City of),
Connecticut; Series 1992
GO
6.40%, 03/15/10(d) AAA Aaa 380 437,635
- -----------------------------------------------------------------
4,765,673
- -----------------------------------------------------------------
HEALTH CARE-13.39%
Connecticut Health and
Education Facilities
Authority
(Bridgeport Hospital);
1992 Series A RB
6.625%, 07/01/18(d) AAA Aaa 500 542,685
- -----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority
(Capital Asset);
Series 1989 B RB
7.00%, 01/01/00(f) A A1 200 210,454
- -----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority
(Danbury Hospital); 1991
Series E RB
6.50%, 07/01/14(d) AAA Aaa 750 808,657
- -----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority
(Middlesex Hospital);
1992 Series G RB
6.25%, 07/01/12(d) AAA Aaa 1,100 1,181,510
- -----------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
HEALTH CARE-(CONTINUED)
Connecticut Health and
Education Facilities
Authority
(New Britain Memorial
Hospital); Series 1991 A
RB
7.75%, 07/01/22 BBB- - $ 500 $ 548,585
- -----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Stamford
Hospital); Series F RB
5.40%, 07/01/09(d) AAA Aaa 1,000 1,048,110
- -----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Yale-New
Haven Hospital); Series
1990 F RB
7.10%, 07/01/00(b)(c) AAA Aaa 775 849,206
- -----------------------------------------------------------------
5,189,207
- -----------------------------------------------------------------
HOUSING-14.07%
Connecticut Housing
Development Authority
(Housing Mortgage
Finance Program); RB
7.00%, Series 1991 A-1,
11/15/09 AA Aa 450 482,414
- -----------------------------------------------------------------
6.55%, Series 1991 C,
Sub-Series C-3,
11/15/13 AA Aa 310 331,455
- -----------------------------------------------------------------
7.00%, Series C,
11/15/99(e) AA Aa 320 332,678
- -----------------------------------------------------------------
Connecticut (State of)
(Housing
Mortgage Finance Program); RB
6.00%, Series 1993 E-1,
05/15/17 AA Aa 675 702,182
- -----------------------------------------------------------------
5.95%, Series E-1,
05/15/17 AA Aa 500 525,715
- -----------------------------------------------------------------
6.30%, Series C-1,
11/15/17 AA Aa 1,270 1,368,806
- -----------------------------------------------------------------
6.25%, Series C-2,
11/15/18 AA Aa 750 802,200
- -----------------------------------------------------------------
6.70%, Series C-2,
11/15/22(e) AA Aa 380 403,541
- -----------------------------------------------------------------
5.85%, Series C-2,
11/15/28(e) AA Aa3 500 506,025
- -----------------------------------------------------------------
5,455,016
- -----------------------------------------------------------------
LEASE RENTAL-1.11%
Connecticut (State of)
(Middletown Courthouse
Facilities Project);
1991 Issue Lease-Rental
Revenue Certificates of
Participation
6.25%, 12/15/10(d) AAA Aaa 400 431,044
- -----------------------------------------------------------------
RESOURCE RECOVERY-5.80%
Connecticut State Resource
Recovery Authority
(American Ref-Fuel
Co.-Southeastern
Connecticut Project);
Series 1988 A RB
8.00%, 11/15/15(e) AA- Baa1 500 533,025
- -----------------------------------------------------------------
Connecticut State Resource
Recovery Authority
(Bridgeport Resco
Corp.-Ltd. Partners);
1985 Issue RB
8.625%, Project B,
01/01/04 A A 670 684,653
- -----------------------------------------------------------------
7.625%, Project A,
01/01/09 A A 1,000 1,032,040
- -----------------------------------------------------------------
2,249,718
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TRANSPORTATION-21.23%
Connecticut State Special
Tax Obligation
(Transportation
Infrastructure); RB
5.10%, Series 1992 B,
09/01/99 AA- A1 $ 1,000 $ 1,018,160
- ------------------------------------------------------------------
6.25%, Series 1991 B,
10/01/01(b)(c) NRR Aaa 1,000 1,092,760
- ------------------------------------------------------------------
6.80%, Series A,
06/01/03(b)(c) NRR NRR 1,250 1,400,788
- ------------------------------------------------------------------
6.50%, Series 1991 B,
10/01/10 AA- A1 530 611,906
- ------------------------------------------------------------------
4.10%, Series 1990 I,
12/01/10(f)(g) A-1+ VMIG-1 795 795,000
- ------------------------------------------------------------------
Connecticut State Special
Tax Obligation
(Transportation
Infrastructure Sales and
Excise Tax); RB
5.90%, Series 1991 B,
10/01/99 AA- A1 1,000 1,034,710
- ------------------------------------------------------------------
6.80%, Series 1989 C,
12/01/99(b)(c) AAA NRR 500 538,070
- ------------------------------------------------------------------
6.50%, Series 1991 B,
10/01/12 AA- A1 1,500 1,738,845
- ------------------------------------------------------------------
8,230,239
- ------------------------------------------------------------------
WATER & SEWER-9.41%
Connecticut Development
Authority (Pfizer Inc.);
Series 1982 Refunding
PCR
6.55%, 02/15/13 AAA Aaa 250 274,695
- ------------------------------------------------------------------
Connecticut Development
Authority Water Facility
(Bridgeport Hydraulic
Co. Project); Refunding
RB
7.25%, Series 1990,
06/01/20 A+ - 800 865,376
- ------------------------------------------------------------------
6.15%, 04/01/35(e) A+ - 250 259,535
- ------------------------------------------------------------------
Connecticut State Clean
Water Fund; Series 1991
Clean Water RB
7.00%, 01/01/11 AAA Aaa 1,100 1,212,695
- ------------------------------------------------------------------
Manchester (City of)
Connecticut Eighth
Utilities Fire District;
Series 1991 GO
6.75%, 08/15/06 - A1 180 205,510
- ------------------------------------------------------------------
South Central Connecticut
Regional Water
Authority; Eighth Series
1990 A Water System RB
6.60%, 08/01/00(b)(c) NRR NRR 250 270,825
- ------------------------------------------------------------------
South Central Connecticut
Regional Water
Authority; Series 1988
Water System RB
6.80%, 08/01/98(b)(c) NRR NRR 535 558,513
- ------------------------------------------------------------------
3,647,149
- ------------------------------------------------------------------
MISCELLANEOUS-3.99%
Connecticut Development
Authority (Economic
Development Projects);
1992 Series Refunding
Bonds
6.00%, 11/15/08 AA- Aa 500 524,260
- ------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
</TABLE>
MISCELLANEOUS-(CONTINUED)
Guam (Government of);
Series 1995 A GO
5.25%, 09/01/99 BBB - $ 250 $ 252,253
- -----------------------------------------------------------------
5.375%, 09/01/00 BBB - 250 251,995
- -----------------------------------------------------------------
Puerto Rico Commonwealth
(Highway and
Transportation
Authority); Series X RB
5.20%, 07/01/03 A Baa1 500 518,275
- -----------------------------------------------------------------
1,546,783
- -----------------------------------------------------------------
TOTAL INVESTMENTS-98.39% 38,136,083
- -----------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.61% 622,510
- -----------------------------------------------------------------
NET ASSETS-100.00% $38,758,593
- -----------------------------------------------------------------
ABBREVIATIONS:
GO General Obligation Bonds
NRR Not re-rated
PCR Pollution Control Revenue Bonds
RB Revenue Bonds
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Ratings assigned by Standard & Poor's Corporation ("S&P") and Moody's
Investors Service, Inc. ("Moody's") . NRR indicates a security that
is not re-rated subsequent to funding of an escrow fund (consisting
of U.S. Treasury obligations); this funding is pursuant to an advance
refunding of the security.
(b) Secured by an escrow fund of U.S. Treasury obligations.
(c) Subject to an irrevocable call or mandatory put by the issuer. 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
09/30/97.
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$35,744,728) $ 38,136,083
- -----------------------------------------------------------
Receivables for:
Capital stock sold 62,129
- -----------------------------------------------------------
Interest 681,507
- -----------------------------------------------------------
Investment for deferred compensation plan 14,093
- -----------------------------------------------------------
Other assets 8,019
- -----------------------------------------------------------
Total assets 38,901,831
- -----------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 61,438
- -----------------------------------------------------------
Deferred compensation 14,093
- -----------------------------------------------------------
Accrued advisory fees 8,378
- -----------------------------------------------------------
Accrued administrative service fees 4,229
- -----------------------------------------------------------
Accrued distribution fees 24,195
- -----------------------------------------------------------
Accrued transfer agent fees 2,015
- -----------------------------------------------------------
Accrued operating expenses 28,890
- -----------------------------------------------------------
Total liabilities 143,238
===========================================================
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 38,758,593
- -----------------------------------------------------------
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- -----------------------------------------------------------
Outstanding 3,519,994
===========================================================
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 11.01
===========================================================
OFFERING PRICE PER SHARE:
(Net asset value of $11.01 divided by 95.25%) $ 11.56
===========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $1,135,817
- --------------------------------------------------------
EXPENSES:
Advisory fees 95,843
- --------------------------------------------------------
Custodian fees 1,761
- --------------------------------------------------------
Transfer agent fees 14,027
- --------------------------------------------------------
Directors' fees 4,166
- --------------------------------------------------------
Distribution fees 47,921
- --------------------------------------------------------
Administrative services fees 25,185
- --------------------------------------------------------
Other 21,678
- --------------------------------------------------------
Total expenses 210,581
- --------------------------------------------------------
Less fees waived by advisor (49,168)
- --------------------------------------------------------
Net expenses 161,413
- --------------------------------------------------------
Net investment income 974,404
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES:
Net realized gain on sales of investment
securities 42,734
- --------------------------------------------------------
Unrealized appreciation of investment
securities 799,433
- --------------------------------------------------------
Net gain on investment securities 842,167
- --------------------------------------------------------
Net increase in net assets resulting from
operations $1,816,571
- --------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND THE YEAR ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1997
<S> <C> <C>
OPERATIONS:
Net investment income $ 974,404 $ 2,015,395
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities 42,734 (111,639)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities 799,433 (75,618)
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,816,571 1,828,138
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (967,343) (1,983,768)
- -------------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions (209,110) (1,081,336)
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 640,118 (1,236,966)
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 38,118,475 39,355,441
- -------------------------------------------------------------------------------------------
End of period $38,758,593 $38,118,475
===========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $36,533,376 $36,742,486
- -------------------------------------------------------------------------------------------
Undistributed net investment income 43,765 36,704
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (209,903) (252,637)
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 2,391,355 1,591,922
- -------------------------------------------------------------------------------------------
$38,758,593 $38,118,475
===========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
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 AIM Tax-Free Intermediate Fund.
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 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
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 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
10
<PAGE> 13
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 $229,538, which
expires, if not previously utilized, through the year 2005. 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.
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. During the six months ended September 30,
1997, AIM voluntarily waived advisory fees of $49,168.
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 six months ended September 30, 1997, the Fund
reimbursed AIM $25,185 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 six months ended September 30,
1997, the Fund paid AFS $9,884 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 six months ended September 30, 1997, the Fund paid AIM
Distributors $47,921 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 $13,183 from sales of shares of the
Fund's capital stock during the six months ended September 30, 1997. 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 six months ended September 30, 1997, the Fund paid legal fees of
$845 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to
the Board of Directors. A member of that firm is a director of the Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of i) $325,000,000 or ii) the limits set
by its prospectus for borrowings. During the six months ended September 30,
1997, the Fund did not borrow under the line of credit agreement. The funds
which are parties to the line of credit are charged a commitment fee of 0.05% on
the unused balance of the committed line. The commitment fee is allocated among
such funds based on their respective average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the six months ended September 30, 1997 were $500,625
and $1,858,400, respectively. The amount of unrealized appreciation
(depreciation) of investment securities as of September 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $2,391,355
- ---------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities --
- ---------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $2,391,355
=======================================================================================
Investments have the same cost for tax and financial statement purposes.
</TABLE>
11
<PAGE> 14
NOTE 6-CAPITAL STOCK
Changes in capital stock outstanding for the six months ended September 30, 1997
and the year ended March 31, 1997 were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1997
---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sold 194,991 $ 2,127,322 522,830 $ 5,656,859
- ------------------------------------------------------------------------------------ ------------------------
Issued as reinvestment of dividends 55,933 611,003 115,643 1,250,693
- ------------------------------------------------------------------------------------ ------------------------
Reacquired (270,787) (2,947,435) (739,882) (7,988,888)
- ------------------------------------------------------------------------------------ ------------------------
(19,863) $ (209,110) (101,409) $(1,081,336)
==================================================================================== ========================
</TABLE>
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during the six months ended September 30, 1997, each of the years in
the three-year period ended March 31, 1997, the three months ended March 31,
1994, and each of the years in the two-year period ended December 31, 1993.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
SEPTEMBER 30, ------------------------------------------------- ----------------------
1997 1997 1996 1995 1994 1993 1992(a)
------------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 10.77 $ 10.81 $ 10.71 $ 10.69 $ 11.29 $ 10.65 $ 10.52
- ------------------------------ ------- ------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 0.28 0.56 0.56 0.56 0.15 0.60 0.66
- ------------------------------ ------- ------- -------- -------- -------- -------- --------
Net gains (losses) on
securities (both
realized and unrealized) 0.24 (0.05) 0.10 0.04 (0.61) 0.65 0.17
============================== ======= ======= ======== ======== ======== ======== ========
Total from investment
operations 0.52 0.51 0.66 0.60 (0.46) 1.25 0.83
============================== ======= ======= ======== ======== ======== ======== ========
Less distributions:
Dividends from net
investment income (0.28) (0.55) (0.56) (0.57) (0.14) (0.60) (0.66)
- ------------------------------ ------- ------- -------- -------- -------- -------- --------
Distributions from net
realized capital gains -- -- -- -- -- (0.01) (0.04)
- ------------------------------ ------- ------- -------- -------- -------- -------- --------
Returns of capital -- -- -- (0.01) -- -- --
- ------------------------------ ------- ------- -------- -------- -------- -------- --------
Total distributions (0.28) (0.55) (0.56) (0.58) (0.14) (0.61) (0.70)
- ------------------------------ ------- ------- -------- -------- -------- -------- --------
Net asset value, end of period $ 11.01 $ 10.77 $ 10.81 $ 10.71 $ 10.69 $ 11.29 $ 10.65
============================== ======= ======= ======== ======== ======== ======== ========
Total return(b) 4.84% 4.84% 6.24% 5.78% (4.06)% 11.99% 8.22%
============================== ======= ======= ======== ======== ======== ======== ========
Ratio/supplemental data:
Net assets, end of period
(000s omitted) $38,759 $38,118 $ 39,355 $ 38,289 $ 42,361 $ 46,224 $ 33,110
============================== ======= ======= ======== ======== ======== ======== ========
Ratio of expenses to average
net assets(c) 0.84%(d) 0.72% 0.66% 0.55% 0.50%(e) 0.34% 0.25%
============================== ======= ======= ======== ======== ======== ======== ========
Ratio of net investment income
to average net assets(c) 5.08%(d) 5.18% 5.16% 5.37% 5.32%(e) 5.42% 6.25%
============================== ======= ======= ======== ======== ======== ======== ========
Portfolio turnover rate 1% 17% 17% 7% 2% 5% 43%
============================== ======= ======= ======== ======== ======== ======== ========
</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 fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements are
1.10% (annualized), 1.09%, 1.16%, 1.13%, 1.23% (annualized), 1.30%, and
1.12% for the period 1997-92, respectively. Ratios of net investment income
to average net assets prior to fee waivers and/or expense reimbursements are
4.83% (annualized), 4.81%, 4.66%, 4.79%, 4.59% (annualized), 4.45%, and
5.38%, for the period 1997-92, respectively.
(d) Ratios are annualized and based on average daily net assets of $38,232,250.
(e) Annualized.
12
<PAGE> 15
Directors & Officers
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director, ACE Limited
Formerly Director, President, and John J. Arthur A I M Advisors, Inc.
Chief Executive Officer Senior Vice President and Treasurer 11 Greenway Plaza
COMSAT Corporation Suite 100
Gary T. Crum Houston, TX 77046
Owen Daly II Senior Vice President
Director TRANSFER AGENT
Cortland Trust Inc. Carol F. Relihan
Senior Vice President A I M Fund Services, Inc.
Jack Fields and Secretary P.O. Box 4739
Formerly Member of the Houston, TX 77210-4739
U.S. House of Representatives Dana R. Sutton
Vice President and Assistant Treasurer CUSTODIAN
Carl Frischling
Partner Stuart W. Coco The Bank of New York
Kramer, Levin, Naftalis & Frankel Vice President 90 Washington Street, 11th Floor
New York, NY 10286
Robert H. Graham Melville B. Cox
President and Chief Executive Officer Vice President COUNSEL TO THE FUND
A I M Management Group Inc.
Karen Dunn Kelly Ballard Spahr
John F. Kroeger Vice President Andrews & Ingersoll
Formerly Consultant 1735 Market Street
Wendell & Stockel Associates, Inc. P. Michelle Grace Philadelphia, PA 19103
Assistant Secretary
Lewis F. Pennock COUNSEL TO THE DIRECTORS
Attorney Nancy L. Martin
Assistant Secretary Kramer, Levin, Naftalis & Frankel
Ian W. Robinson 919 Third Avenue
Consultant; Formerly Executive Ofelia M. Mayo New York, NY 10022
Vice President and Assistant Secretary
Chief Financial Officer DISTRIBUTOR
Bell Atlantic Management Kathleen J. Pflueger
Services, Inc. Assistant Secretary A I M Distributors, Inc.
11 Greenway Plaza
Louis S. Sklar Samuel D. Sirko Suite 100
Executive Vice President Assistant Secretary Houston, TX 77046
Hines Interests
Limited Partnership Stephen I. Winer
Assistant Secretary
</TABLE>
<PAGE> 16
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH OF CAPITAL
AIM Advisor International Value Fund
[PHOTO OF AIM Blue Chip Fund
11 GREENWAY PLAZA AIM Global Growth Fund
APPEARS HERE] AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Charter Fund
AIM Global Utilities Fund
HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Shares
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has provided leadership in the *AIM Aggressive Growth Fund was closed to new investors on
mutual fund industry since 1976 and managed approximately June 5, 1997. For more complete information about any AIM
$82 billion in assets for more than 3.6 million shareholders, Fund(s), including sales charges and expenses, ask your
including individual investors, corporate clients, and financial financial consultant or securities dealer for a free
institutions as of September 30, 1997. The AIM Family of prospectus(es). Please read the prospectus(es) carefully
Funds--Registered Trademark-- is distributed nationwide, and before you invest or send money.
AIM today ranks among the nation's top 15 mutual fund
companies in assets under management, according to Lipper INVEST WITH DISCIPLINE-SM-
Analytical Services, Inc.
[AIM LOGO APPEARS HERE] -----------------
BULK RATE
A I M Distributors, Inc. U.S. POSTAGE
11 Greenway Plaza, Suite 100 PAID
Houston, TX 77046 HOUSTON, TX
Permit No. 1919
-----------------
</TABLE>
