<PAGE> 1
AIM Tax-Free Intermediate Fund
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT SEPTEMBER 30, 1998
<PAGE> 2
-------------------------------------
AIM Tax-Free
Intermediate Fund
For shareholders who seek
a high level of income
exempt from federal taxes.
The Fund purchases
high-quality municipal bonds
maturing in 10 1/2 years or less.
-------------------------------------
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Tax-Free Intermediate Fund'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, those figures reflect the maximum 1.00% 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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Government securities, such as U.S. Treasury bills, notes, and bonds, offer
a high degree of safety and are guaranteed as to the timely payment of
principal and interest if held to maturity. Fund shares are not insured and
their value and yield will vary with market conditions.
o An investment cannot be made in the indexes listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
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 AFLIATE;
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:
The economic and political uncertainty during the six-month
[PHOTO OF period ended September 30, 1998, affected various financial
Charles T. markets differently. The stock market, for example, was
Bauer, especially volatile. Uncertainty in stocks bolstered certain
Chairman of segments of the bond market--U.S. Treasury issues in
the Board of particular, whose safety has been a magnet for investors in
THE FUND uncertain times.
APPEARS HERE] This environment made municipal bonds especially
attractive. By the end of the reporting period, high-grade
municipal bonds were favorably priced in comparison to
federally taxable Treasury issues and were offering nearly
equivalent yields while high-yield municipal bonds were
offering greater yields in many instances. Moreover,
developments overseas had little impact on the ability of
municipal bond issuers--state and local governments, school
districts, hospitals and other entities--to meet their debt obligations.
Despite the recent market volatility, we see several reasons for optimism,
particularly for municipal-bond investors. For one, the worst uncertainties are
overseas and are not likely to have much impact on municipal securities.
Secondly, there is much fundamental strength in the U.S. economy. As a result,
state and local governments are generating more revenue through taxes and user
fees to support municipal-bond issues. Lower interest rates also are making it
easier for the issuers of municipal securities to meet their debt obligations.
And while there has been much discussion about a flat tax or national sales tax
that would eliminate the tax-exempt status of municipal bonds, we believe the
chances of either plan being adopted are slim.
We continue to follow our disciplined fixed-income and equity investing
strategies. We believe that uncertain times underscore the need to think long
term. The fundamental principles of investing have not changed: broadly
diversify your portfolio, develop realistic expectations, and always check with
your financial consultant before making any investment decisions.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Prior to the close of the reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds.
This transaction gives you, our shareholders, access to a greater variety
of investment choices through the expanded lineup of AIM funds. We encourage you
to discuss with your financial consultant how these funds may fit into your
portfolio.
YOUR FUND MANAGERS' COMMENTS
On the pages that follow, the managers of your AIM Fund discuss how the Fund
performed during the six months covered by this report and give their near-term
market outlook. We hope you will find their discussion informative.
We are pleased to send you this report on your Fund. If you have any
questions or comments, please contact our Client Services department at
800-959-4246 or visit our Web site at www.aimfunds.com. You can access
information about your account on our Web site and also on our automated AIM
Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
CHAIRMAN
------------------------------------
... state and local governments
are generating
more revenue
through taxes and user fees
to support municipal-bond issues.
Lower interest rates also
are making it easier
for the issuers
of municipal securities to
meet their debt obligations.
------------------------------------
<PAGE> 4
The Managers' Overview
MUNICIPAL BONDS A BARGAIN FOR INVESTORS
A roundtable discussion with the Fund management team for AIM Tax-Free
Intermediate Fund for the six months ended September 30, 1998.
- --------------------------------------------------------------------------------
Q. Prices of higher-quality bonds, particularly U.S. Treasury issues, soared
during the reporting period. How did the Fund perform?
A. During the reporting period, municipal bonds emerged as one of the best
bargains in the fixed-income market. Largely because of a significant surge
in new-issue supply, municipal bonds were favorably priced in comparison to
federally taxable U.S. Treasury securities. At the same time, high-quality
municipal bonds offered more than 95% of the yield of U.S. Treasury
issues--the highest level in 12 years. In conjunction with these trends,
your Fund continued to provide attractive current income (see chart below),
exempt from federal taxes, while maintaining share-price stability.
For the six months ended September 30, 1998, total return was 3.63%. Net
asset value per share remained within a relatively narrow range of $10.92 to
$11.20, extending the Fund's track record of relative price stability as
illustrated by the accompanying chart.
================================================================================
FUND OFFERS SOLID INCOME
As of 9/30/98
- --------------------------------------------------------------------------------
[BAR CHART]
30-DAY DISTRIBUTION RATE AT NAV 4.39%
TAXABLE EQUIVALENT DISTRIBUTION RATE* 7.27%
30-DAY SEC YIELD AT MAXIMUM OFFERING PRICE 3.64%
TAXABLE EQUIVALENT 30-DAY SEC YIELD* 6.03%
* Assumes highest marginal federal tax rate of 39.6%
================================================================================
Q. What was the major theme in the bond market during the reporting period?
A. Severe economic dislocations in Asia, Russia, and Latin America, combined
with political controversy in the U.S., precipitated a sharp drop in the
stock market and ignited a strong rally in the bond market. The rally,
however, was largely confined to higher-rated bonds, specifically U.S.
Treasury securities. In the unsettled market environment, investors flocked
to Treasury issues because of their relative safety and liquidity.
Treasury securities soared in price, sending their yields to historic
lows. For example, the yield of the benchmark 30-year Treasury bond fell
from 5.93% on March 31, 1998, to 4.97% at the end of the reporting
period--its lowest level since this issue came into existence in 1977. But
while the Treasury market soared, lower-rated bonds appreciated less
dramatically in value or actually dropped in price. That caused the yield
differentials between higher- and lower-rated bonds to widen substantially.
The bond market was given a boost at the end of September when the
Federal Reserve Board (the Fed) decided to lower interest rates. This marked
the first Fed easing of monetary policy in more than two years.
Q. What were the major trends in the municipal bond market?
A. Unlike U.S. Treasury securities, municipal bonds appreciated only modestly
in price during the reporting period. Foreign investors, who helped
================================================================================
HISTORY OF NET ASSET VALUE STABILITY
- --------------------------------------------------------------------------------
5/11/87 - 9/30/98
10.00 5/11/87 10.67 3/95
9.89 3/88 10.79 3/96
9.69 3/89 10.73 3/97
9.89 3/90 10.86 6/97
10.07 3/91 10.97 9/97
10.27 3/92 11.06 12/97
10.74 3/93 11.05 3/98
10.62 3/94 11.13 9/98
================================================================================
Source: Towers Data Systems HYPO--Registration Mark--. 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.
================================================================================
2
<PAGE> 5
PORTFOLIO COMPOSITION
As of 9/30/98, based on total net assets
<TABLE>
<CAPTION>
=======================================================================================================================
Top Five Bond Holdings Coupon Maturity %
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Louisiana (State of) 6.00% 04/15/07 2.70 [PIE CHART]
2. Hawaii (State of) 6.00% 03/01/07 2.70 GENERAL OBLIGATION BONDS 34%
REVENUE BONDS 66%
3. New York (City of) 5.60% 11/01/05 2.60
4. Nassau (County of) 5.15% 03/01/07 2.50
5. Snohomish (County of) 5.70% 01/01/06 2.10
Public Utilities District
NUMBER OF HOLDINGS 186 WEIGHTED AVERAGE MATURITY 5.7 YEARS
DURATION 4.4 YEARS
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>
drive up the price of Treasury issues, generally did not buy municipal
bonds since they don't receive tax advantages from owning municipal
securities.
A significant increase in new-issue supply also kept municipal-bond
prices relatively subdued. During the nine months ended September 30, more
than $200 billion in new municipal debt entered the market. At this pace,
1998 is on course to be the second-largest year in terms of new issue
volume, according to THE BOND BUYER, a newspaper that tracks the municipal
bond market. Falling interest rates prompted many state and local
governments to refinance existing debt or to issue bonds to finance new
projects.
At the same time municipal-bond supply was increasing, a budget surplus
was allowing the federal government to cut back on the issuance of Treasury
securities, further enhancing their value. As a result, municipal-bond
prices were relatively low-and yields high-in comparison to Treasury issues.
Q. How did you manage the Fund?
A. At the end of the reporting period, revenue bonds comprised 66% of the
Fund's holdings while general obligation bonds comprised 34%--roughly the
same percentages as six months ago. Revenue bonds are paid with income
generated by various projects while general obligation bonds are paid with
tax dollars. State and local governments have found it difficult to raise
taxes to support general-obligation bond issues because of public
opposition.
We like revenue bonds because their creditworthiness tends to be less
sensitive to the political environment than that of general obligation
bonds.
We focused on revenue bonds for essential services, such as solid waste
disposal and water and sewer service. The demand for essential services
tends to be less affected by economic trends.
Q. Are you still maintaining a high-quality portfolio?
A. Yes, as of September 30, 1998, 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. (Moody's), 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.
Approximately 69% of the portfolio's holdings were securities rated AAA,
and 100% of the portfolio was rated A or better. Credit-enhanced
securities--those backed by insurance or escrowed with U.S. Treasury
securities--comprised about 62% of the portfolio.
Q. How tax efficient is the Fund?
A. For more than four years, the Fund has paid no taxable capital gains
distributions or ordinary income distributions. We make every effort to
avoid transactions that would result in capital gains that are not offset by
capital losses.
Q. What is your outlook for the immediate future?
A. Overall, the environment for bonds appears to be favorable. The inflation
rate has remained low despite strong economic growth over the past few
years. Now that economic growth is slowing, inflation appears to be even
less of a threat. Fed Chairman Alan Greenspan has indicated that the Fed may
further cut interest rates to prevent the economic situation from
deteriorating. Indeed, in mid-October, after the reporting period ended, the
Fed further eased monetary policy. Additional rate cuts could prove
beneficial for bonds.
We are particularly optimistic about municipal bonds because of their
relatively attractive prices and yields in comparison to U.S. Treasury
issues. Near term, we expect the yields of municipal bonds to remain
comparable to those of Treasuries. We also believe tax-exempt funds could
continue to gain in popularity as more Americans become subject to the
higher tax brackets.
3
<PAGE> 6
FOR CONSIDERATION
AIM PREPARES FOR THE YEAR 2000
THE YEAR 2000. THE WORDS STIR THE IMAGINATION, MAKING US WONDER WHAT THE NEXT
MILLENNIUM WILL BRING. BUT THE WORDS ARE ALSO STARTING TO MAKE SOME PEOPLE
WORRY, SINCE THERE'S BEEN SO MUCH TALK LATELY ABOUT A COMPUTER GLITCH CALLED
"THE YEAR 2000 PROBLEM." BECAUSE THIS IS A PROBLEM THAT COULD AFFECT MOST
AMERICAN INDUSTRIES, INCLUDING THE MUTUAL FUND INDUSTRY, WE WANT TO BRING YOU
THIS UPDATE TO LET YOU KNOW HOW AIM IS GETTING READY.
- --------------------------------------------------------------------------------
WHAT IS THE YEAR 2000 PROBLEM?
It has to do with the way that computers understand dates. Most computers were
programmed to recognize only the last two digits of a four-digit date ("98" for
1998). When the year 2000 hits, the computer will read "00"--but it may
interpret that as the year 1900. So, if the computer makes a calculation
involving a date of January 1, 2000, or later, it could be processed
incorrectly. Date-sensitive calculations are found in all kinds of places--from
elevators to air traffic control systems--but they are especially prevalent in
the financial services industry.
- --------------------------------------------------------------------------------
AIM'S YEAR 2000 COMPLIANCE
AIM's technology team has been addressing Year 2000 issues for some time now.
Our internal team, together with an independent technology consultant, are
implementing a comprehensive Year 2000 Compliance Project for A I M Management
Group Inc. and its subsidiaries.
So far, we've inventoried all software applications that we rely on, and
we've identified the applications that might need adjustments to function
properly when the year 2000 arrives. We are now in the final phase of the
project, making corrections and testing applications that need adjustment. We
plan to complete this phase during the fourth quarter of 1998.
- --------------------------------------------------------------------------------
AN INDUSTRY-WIDE TEST
In the spring of 1999, AIM intends to participate in industry-wide testing that
should simulate the arrival of the year 2000. This should allow mutual fund
companies, banks, exchanges, and other players in the financial community to
test various kinds of transactions and to determine if any further adjustments
need to be made before the end of the year.
We believe our plans are quite comprehensive, and we're committed to
monitoring all software applications through the critical period, extending as
far as needed into the 21st century.
[Graphic]
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MUNICIPAL OBLIGATIONS-99.50%
ALABAMA-1.67%
Alabama State Municipal
Electric Authority; Power
Supply Series A RB
6.30%, 09/01/01(b) AAA Aaa $ 400 $ 429,068
- ------------------------------------------------------------------
Birmingham (City of) Special
Care Facilities Financing
Authority (Charity
Obligation Group);
Hospital Series 1997 D RB
4.95% 11/01/07(c) AA+ Aa2 1,000 1,041,500
- ------------------------------------------------------------------
McIntosh Alabama Industrial
Development Board;
Environmental Improvement
RB
5.00%, 06/01/08 AA- Aaa 1,950 2,056,320
- ------------------------------------------------------------------
3,526,888
- ------------------------------------------------------------------
ALASKA-3.01%
Alaska State Housing
Financing Corp.; Series A
RB
3.60%, 06/01/26(d) A1+ VMIG-1 4,211 4,211,000
- ------------------------------------------------------------------
Anchorage (City of); School
Series 1994 GO
5.50%, 07/01/06(b) AAA Aaa 1,950 2,132,772
- ------------------------------------------------------------------
6,343,772
- ------------------------------------------------------------------
ARIZONA-5.38%
Arizona (State of)
(Educational Loan
Marketing Corp.);
Refunding Series A RB
6.55%, 03/01/99 - Aa2 1,000 1,010,730
- ------------------------------------------------------------------
Maricopa County (Gilbert
Unified School District
#41 Project of 1988);
School Improvement Series
1992 E GO
6.20%, 07/01/02(e) AAA Aaa 1,250 1,363,113
- ------------------------------------------------------------------
Maricopa County (Peoria
Unified School District
#11 Project of 1996);
School Improvement Series
C GO
4.00%, 07/01/03(b) AAA Aaa 500 500,620
- ------------------------------------------------------------------
Maricopa County (Phoenix
Unified High School
District #210 Project of
1995); School Improvement
Series C GO
4.00%, 07/01/00 AA Aa3 2,500 2,518,700
- ------------------------------------------------------------------
Maricopa County School
District #90 (Ruth Fisher
Elementary); Series 1997
GO
4.70%, 07/01/99 - A2 1,300 1,311,687
- ------------------------------------------------------------------
Mesa Industrial Development
Authority (Western Health
Network-Mesa Lutheran
Project); Health Care
Facilities Refunding
Series 1988 B1 RB
7.50%, 01/01/04(b) AAA Aaa 620 637,875
- ------------------------------------------------------------------
Mohave County Unified School
District #1 (Lake Havasu);
Series A GO
5.40%, 07/01/06(b) AAA Aaa 200 219,162
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ARIZONA-(CONTINUED)
Navajo County Unified School
District; Series 1997 A GO
5.00%, 07/01/07(b) AAA Aaa $ 450 $ 482,886
- ------------------------------------------------------------------
Phoenix (City of); Senior
Lien Street and Highway
User Refunding Series 1992
RB
6.20%, 07/01/02 AA A1 1,000 1,086,480
- ------------------------------------------------------------------
Pima County (Unified School
District #6 Marana);
Refunding Series 1992 RB
4.375%; 07/01/08(b) AAA Aaa 400 401,552
- ------------------------------------------------------------------
Yuma County School District
#13 (Crane Elementary);
Refunding Series GO
5.25%; 07/01/01(b) - Aaa 675 703,586
- ------------------------------------------------------------------
Yuma Industrial Development
Authority (Yuma Regional
Medical Center Project);
Health Care Facilities
Series 1997 Refunding RB
5.70%, 08/01/06(b) AAA Aaa 1,000 1,106,080
- ------------------------------------------------------------------
11,342,471
- ------------------------------------------------------------------
ARKANSAS-3.17%
Arkansas State Development
Financial Authority;
Correction Facility Series
1996 RB
6.25%, 10/01/06(b) AAA Aaa 1,800 2,074,608
- ------------------------------------------------------------------
Conway (City of); Sales and
Use Tax Capital
Improvement Series 1997 A
RB
4.80%, 12/01/07(b) AAA Aaa 825 859,707
- ------------------------------------------------------------------
Little Rock (City of)
(Baptist Medical Center);
Health Facility Hospital
Series RB
6.70%, 11/01/04(b) AAA Aaa 1,400 1,581,818
- ------------------------------------------------------------------
North Little Rock (City of);
Electric System Refunding
Series 1992 A RB
6.00%, 07/01/01(b) AAA Aaa 500 532,075
- ------------------------------------------------------------------
Sebastian (County of)
(Arkansas Community Jr.
College District);
Refunding & Improvement
Series 1997 GO
5.10%, 04/01/06(b) - Aaa 500 540,325
- ------------------------------------------------------------------
5.20%, 04/01/07(b) - Aaa 1,000 1,093,180
- ------------------------------------------------------------------
6,681,713
- ------------------------------------------------------------------
CALIFORNIA-1.79%
California Health Care
Facilities Financing
Authority (Casa De Las
Campanas); Hospital Series
A RB
4.875%, 08/01/08 A+ - 700 732,501
- ------------------------------------------------------------------
California State Public
Works Board (Department of
Corrections) (State
Prison-Madera County);
Lease Series 1990 A RB
7.00%, 09/01/00 A A 100 106,203
- ------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
CALIFORNIA-(CONTINUED)
Folsom (City of) (School
Facilities Project);
Series 1994 B GO
6.00%, 08/01/02(b) AAA Aaa $ 500 $ 542,280
- ------------------------------------------------------------------
Inglewood (City of) (Daniel
Freeman Hospital Inc.);
Insured Hospital Series
1991 RB
6.50%, 05/01/01(e) NRR NRR 400 429,872
- ------------------------------------------------------------------
Orange (County of);
Refunding Recovery Series
A RB
5.50%, 06/01/06(b) AAA Aaa 1,000 1,104,270
- ------------------------------------------------------------------
Parking Authority of the
City and County of San
Francisco; Parking Meter
Series 1994 RB
6.75%, 06/01/05(b) AAA Aaa 500 584,070
- ------------------------------------------------------------------
West End Water Development,
Treatment, and
Conservation Joint Powers
Authority; Water
Facilities Series 1990
Certificate of
Participation
7.00%, 10/01/00(e) NRR NRR 250 266,173
- ------------------------------------------------------------------
3,765,369
- ------------------------------------------------------------------
COLORADO-0.58%
Colorado Student Obligation
Bond Authority; Student
Loan Series 1985 B RB
6.125%, 12/01/98 - A 25 25,075
- ------------------------------------------------------------------
Highlands Ranch Metropolitan
District #3; Refunding
Series B RB
4.50%, 12/01/04(b) A - 1,175 1,195,798
- ------------------------------------------------------------------
1,220,873
- ------------------------------------------------------------------
CONNECTICUT-1.10%
New Haven (City of); Series
1997 GO
6.00%, 02/15/06(b) AAA Aaa 2,050 2,323,060
- ------------------------------------------------------------------
DELAWARE-0.38%
Delaware Transportation
Authority; Senior Lien
Transportation System
Series 1991 RB
6.00%, 07/01/01(c)(e) AAA Aaa 750 794,490
- ------------------------------------------------------------------
DISTRICT OF COLUMBIA-5.29%
District of Columbia;
Refunding Unlimited Tax
Series B GO
6.75%, 06/01/99(b) AAA Aaa 695 708,844
- ------------------------------------------------------------------
6.125%, 06/01/02(c)(e) AAA Aaa 60 65,546
- ------------------------------------------------------------------
6.125%, 06/01/03(b) AAA Aaa 2,960 3,233,592
- ------------------------------------------------------------------
5.50%, 06/01/07(b) AAA Aaa 3,000 3,255,450
- ------------------------------------------------------------------
District of Columbia
(American Association
Advancement Science);
Series 1997 RB
5.00%, 01/01/05(b) AAA Aaa 800 840,584
- ------------------------------------------------------------------
District of Columbia
(Medlantic Healthcare
Group); Refunding Series
1993 A RB
5.50%, 08/15/06(b) AAA Aaa 500 544,155
- ------------------------------------------------------------------
Series 1996 A RB
6.00%, 08/15/06(b) AAA Aaa 1,550 1,738,372
- ------------------------------------------------------------------
6.00%, 08/15/07(b) AAA Aaa 500 565,200
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
DISTRICT OF COLUMBIA-(CONTINUED)
District of Columbia (The
Howard University Issue);
University Series 1990 A
RB
6.90%, 10/01/00(e) AAA NRR $ 200 $ 211,768
- ------------------------------------------------------------------
11,163,511
- ------------------------------------------------------------------
FLORIDA-2.05%
Broward (County of)
Expressway Authority;
Refunding Series A GO
6.50%, 07/01/04 AA+ Aa2 1,000 1,001,860
- ------------------------------------------------------------------
Palm Beach County Solid
Waste Authority; Refunding
Series 1997 A RB
5.50%, 10/01/06(b) AAA Aaa 3,000 3,324,570
- ------------------------------------------------------------------
4,326,430
- ------------------------------------------------------------------
GEORGIA-4.61%
Albany (City of); Sewer
System Series 1992 RB
6.30%, 07/01/02(e) AAA Aaa 500 544,060
- ------------------------------------------------------------------
De Kalb (County of) Private
Hospital Authority
(Egleston Childrens'
Hospital); Revenue
Anticipation Certificates
Series A RB
3.55%, 03/01/24(d) A1+ VMIG-1 3,700 3,700,000
- ------------------------------------------------------------------
Fulton (County of); Water
and Sewer Refunding Series
1992 RB
5.75%, 01/01/02(b) AAA Aaa 715 759,759
- ------------------------------------------------------------------
Georgia (State of); Series
1988 D GO
7.10%, 06/01/99 AAA Aaa 2,000 2,050,220
- ------------------------------------------------------------------
Georgia State Municipal
Electric Authority; Series
V RB
6.00%, 01/01/01(b) AAA Aaa 1,000 1,050,240
- ------------------------------------------------------------------
Metropolitan Atlanta Rapid
Transportation Authority;
Sales Tax Refunding Series
M RB
6.15%, 07/01/02 AA- A1 500 542,010
- ------------------------------------------------------------------
Savannah (City of) Hospital
Authority (St. Joseph's
Candler Health System);
Refunding Series A RB
5.25%, 07/01/08(b) - Aaa 1,000 1,080,660
- ------------------------------------------------------------------
9,726,949
- ------------------------------------------------------------------
HAWAII-2.69%
Hawaii (State of); Refunding
Series 1997 GO
6.00%, 03/01/07(b) AAA Aaa 5,000 5,661,900
- ------------------------------------------------------------------
ILLINOIS-3.73%
Chicago (City of); Series
1997 GO
6.00%, 01/01/06(b) AAA Aaa 500 559,945
- ------------------------------------------------------------------
Chicago (City of) (Central
Public Library Project);
Adjustable Rate Series
1988 C GO
6.10%, 01/01/99(b) AAA Aaa 500 503,340
- ------------------------------------------------------------------
Hoffman Estates Illinois
Multifamily Housing (Park
Place Apartments Project);
Refunding Series 1996 RB
5.75%, 06/01/06(c) AAA Aaa 1,250 1,336,300
- ------------------------------------------------------------------
Illinois Development
Financial Authority;
Series 1997 IDR
4.80%, 08/01/25 AA- - 1,000 1,027,450
- ------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ILLINOIS-(CONTINUED)
Illinois Educational
Facilities Authority
(Augustana College);
Series 1997 RB
4.80%, 10/01/99(b) AAA - $ 375 $ 380,719
- ------------------------------------------------------------------
Illinois Health Facilities
Authority (Edward
Obligated Group); Series
1997 A RB
4.90%, 02/15/08(b) AAA Aaa 835 872,575
- ------------------------------------------------------------------
Illinois Health Facilities
Authority (Highland Park
Hospital); Series 1991 A
RB
4.80%, 10/01/99(b) AAA Aaa 255 258,766
- ------------------------------------------------------------------
5.55%, 10/01/06(b) AAA Aaa 500 549,320
- ------------------------------------------------------------------
Illinois Health Facilities
Authority (Mercy Hospital
and Medical Center);
Refunding Series 1992 RB
6.20%, 01/01/00 A- Baa1 250 255,985
- ------------------------------------------------------------------
Illinois Regional Transit
Authority; Series B RB
6.30%, 06/01/04(c)(e) AAA Aaa 1,000 1,139,510
- ------------------------------------------------------------------
Joliet (City of); Waterworks
and Sewer Series 1991 RB
6.95%, 01/01/01(b) AAA Aaa 250 267,785
- ------------------------------------------------------------------
Kane (County of) Public
Building Commission;
Unlimited Tax Public
Building Series B GO
6.20%, 12/01/99(c)(e) NRR NRR 700 722,393
- ------------------------------------------------------------------
7,874,088
- ------------------------------------------------------------------
INDIANA-5.12%
Frankfort Middle School
Building Corp.; Refunding
Series 1996 RB
5.20%, 01/10/07(b) AAA Aaa 295 315,399
- ------------------------------------------------------------------
Hamilton (County of);
Optional Income Tax
Revenue Series 1998 RB
5.00%, 07/10/08(b) AAA Aaa 1,095 1,144,844
- ------------------------------------------------------------------
Indiana Health Facilities
Financing Authority
(Charity Obligated Group);
Series 1997 D RB
5.00%, 11/01/07(c) AA+ Aa2 2,500 2,599,750
- ------------------------------------------------------------------
Indiana Municipal Power
Agency (Power Supply
System); Refunding Special
Obligation 1st-Crossover B
RB
4.80%, 01/01/09(b) AAA Aaa 2,000 2,042,580
- ------------------------------------------------------------------
Indiana Transportation
Finance Authority; Airport
Facilities Lease Series A
RB
6.00%, 11/01/01 A A1 500 532,345
- ------------------------------------------------------------------
Indiana Transportation
Finance Authority; Highway
Series A RB
5.50%, 06/01/07(b) AAA Aaa 1,000 1,097,270
- ------------------------------------------------------------------
Warren (City of) School
Building Corp; Refunding
First Mortgage RB
4.30%, 01/05/01(b) AAA Aaa 1,500 1,518,540
- ------------------------------------------------------------------
4.50%, 01/05/03(b) AAA Aaa 1,500 1,537,815
- ------------------------------------------------------------------
10,788,543
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
IOWA-1.60%
Iowa Student Loan Liquidity
Corp.; Student Loan Series
1992 A RB
6.25%, 03/01/00 - Aa1 $ 500 $ 515,620
- ------------------------------------------------------------------
Muscatine Iowa Electric;
Refunding Series RB
5.00%, 01/01/08 A A3 2,855 2,858,397
- ------------------------------------------------------------------
3,374,017
- ------------------------------------------------------------------
KANSAS-1.56%
Burlington (City of)
Environmental Improvement
(Power and Lighting
Project); Refunding Series
K PCR
4.35%, Project D
09/01/01(c) A1 A2 1,250 1,260,488
- ------------------------------------------------------------------
4.50%, Project C
09/01/03(c) A1 A2 2,000 2,027,160
- ------------------------------------------------------------------
3,287,648
- ------------------------------------------------------------------
KENTUCKY-0.54%
Kentucky Economic
Development Finance
Authority (Ashland
Hospital Corp); Medical
Center Refunding and
Improvement Series RB
4.50%, 02/01/02(b) AAA Aaa 850 868,632
- ------------------------------------------------------------------
Kentucky State Turnpike
Authority (Economic
Development Road
Revitalization Project);
RB
7.125%, 05/15/00(c)(e) AAA Aaa 260 277,891
- ------------------------------------------------------------------
1,146,523
- ------------------------------------------------------------------
LOUISIANA-6.10%
Jefferson Parish School
Board; Sales and Use Tax
RB
6.00%, 02/01/04(b) AAA Aaa 1,720 1,891,983
- ------------------------------------------------------------------
Louisiana (State of); Series
A GO
6.00%, 04/15/07(b) AAA Aaa 5,000 5,666,250
- ------------------------------------------------------------------
Louisiana Offshore Terminal
Authority (Loop, Inc.);
Deepwater Port Refunding
Series 1992 RB
6.00%, 09/01/01 A A3 1,000 1,055,990
- ------------------------------------------------------------------
6.20%, 09/01/03 A A3 1,000 1,092,880
- ------------------------------------------------------------------
Louisiana Public Facilities
Authority (Tulane
University of Louisiana);
Series 1987 C RB
7.30%, 08/15/99 A+ A1 270 276,361
- ------------------------------------------------------------------
New Orleans (City of);
Refunding Certificates of
Indebtedness Series A GO
4.15%, 08/01/01(b) AAA Aaa 2,000 2,023,280
- ------------------------------------------------------------------
Ouachita (Parish of)
Hospital Service District
#1 (Glenwood Regional
Medical Center); Hospital
Refunding Series 1996 RB
5.00%, 05/15/99 A - 850 856,171
- ------------------------------------------------------------------
12,862,915
- ------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MAINE-1.99%
Maine Financial Authority;
Electric Rate
Stabilization Refunding
Series A RB
4.10%, 07/01/02(b) AAA Aaa $1,000 $ 1,009,970
- ------------------------------------------------------------------
4.50%, 07/01/08(b) AAA Aaa 2,080 2,122,661
- ------------------------------------------------------------------
Regional Waste System Inc.;
Solid Waste Resource
Recovery Series P RB
5.25%, 07/01/03 AA - 1,000 1,060,060
- ------------------------------------------------------------------
4,192,691
- ------------------------------------------------------------------
MASSACHUSETTS-0.69%
Massachusetts State Health
and Educational Facilities
Authority (Eye and Ear
Infirmary); Series B RB
5.00%, 07/01/05 A - 1,000 1,046,470
- ------------------------------------------------------------------
New England Education Loan
Marketing Corp.; Student
Loan Refunding Senior
Issue 1992 D RB
6.20%, 09/01/00 - Aaa 400 416,720
- ------------------------------------------------------------------
1,463,190
- ------------------------------------------------------------------
MICHIGAN-1.94%
Dearborn (City of) Economic
Development Corp. (Oakwood
Obligated Group); Hospital
Series 1991 A RB
6.95%, 08/15/01(c)(e) AAA Aaa 1,000 1,105,410
- ------------------------------------------------------------------
Detroit (City of) School
District; GO
5.60%, 05/01/01 AA+ Aa2 765 802,630
- ------------------------------------------------------------------
Michigan State Building
Authority; Refunding
Series I RB
6.40%, 10/01/04 AA Aa2 2,000 2,184,320
- ------------------------------------------------------------------
4,092,360
- ------------------------------------------------------------------
MINNESOTA-0.38%
Southern Minnesota Municipal
Power Agency; Power Supply
System Series A RB
5.60%, 01/01/04 A+ A2 745 795,347
- ------------------------------------------------------------------
MISSISSIPPI-0.72%
Gulfport (City of);
Refunding GO
5.00%, 05/01/01(b) - Aaa 405 418,195
- ------------------------------------------------------------------
4.55%, 05/01/07(b) - Aaa 515 527,875
- ------------------------------------------------------------------
4.55%, 05/01/08(b) - Aaa 550 561,979
- ------------------------------------------------------------------
1,508,049
- ------------------------------------------------------------------
MISSOURI-1.18%
Fort Osage Reorganization
School District #1
(Missouri School District
Direct Deposit Program);
Series 1997 GO
4.95%, 03/01/06 AA Aa2 405 430,770
- ------------------------------------------------------------------
Missouri State Health and
Educational Facilities
Authority (Freeman Health
Systems Project); Hospital
Series RB
4.85%, 02/15/07(b) A - 1,000 1,027,620
- ------------------------------------------------------------------
5.00%, 02/15/08(b) A - 515 533,669
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MISSOURI-(CONTINUED)
State Environmental
Improvement and Energy
Resource Authority (City
of Branson Project) (State
Revolving Fund Program);
Water Series 1995 A PCR
5.00%, 07/01/99(b) AAA Aaa $ 500 $ 506,200
- ------------------------------------------------------------------
2,498,259
- ------------------------------------------------------------------
MONTANA-0.21%
Montana Higher Education
Assistance Corp.; Student
Loan Series 1992 A RB
6.60%, 12/01/00 - A 420 440,979
- ------------------------------------------------------------------
NEVADA-0.23%
Clark County Improvement
District No. 65 (Lamb
Boulevard III); Series
1992 GO
6.20%, 12/01/02 AA- A1 120 124,031
- ------------------------------------------------------------------
Nevada (State of) (Nevada
Municipal Bond Bank
Project Nos. 38-39);
Limited Tax Series 1992 A
GO
6.00%, 07/01/01(e) NRR NRR 350 369,828
- ------------------------------------------------------------------
493,859
- ------------------------------------------------------------------
NEW JERSEY-1.34%
Gloucester County Utilities
Authority; Sewer Refunding
Series 1991 RB
6.10%, 01/01/00 AA- A1 225 232,101
- ------------------------------------------------------------------
Jersey City (City of)
(Qualified School Bond);
GO
6.40%, 02/15/00 AA Aa3 1,000 1,037,760
- ------------------------------------------------------------------
New Jersey Transportation
Trust Fund Authority;
Transportation System
Series 1992 A RB
5.90%, 06/15/99(e) NRR Aaa 1,000 1,018,340
- ------------------------------------------------------------------
Trenton (City of); Fiscal
Year Adjustment GO
6.10%, 08/15/02(b) AAA Aaa 500 544,470
- ------------------------------------------------------------------
2,832,671
- ------------------------------------------------------------------
NEW MEXICO-1.24%
Albuquerque (City of); Joint
Water and Sewer Series
1990 A RB
6.00%, 07/01/00(c)(e) AAA NRR 1,000 1,039,180
- ------------------------------------------------------------------
Farmington (City of) (San
Juan Regional Medical
Center); Hospital Series A
RB
5.00% 06/01/01(b) - Aaa 1,015 1,048,810
- ------------------------------------------------------------------
Santa Fe (City of); Series
1994 A RB
5.50%, 06/01/03(e) AAA Aaa 500 534,830
- ------------------------------------------------------------------
2,622,820
- ------------------------------------------------------------------
NEW YORK-9.55%
Long Island Power Authority
(New York Electrical
Systems); Series A RB
5.25%, 12/01/02 A- Baa1 1,250 1,319,000
- ------------------------------------------------------------------
Nassau (County of); General
Improvement Series V GO
5.15%, 03/01/07(b) AAA Aaa 5,000 5,377,300
- ------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW YORK-(CONTINUED)
New York (City of);
Refunding Series D GO
5.60%, 11/01/05 A- A3 $5,000 $ 5,433,850
- ------------------------------------------------------------------
New York (City of); Series G
GO
5.90%, 02/01/05 A- A3 1,150 1,259,492
- ------------------------------------------------------------------
New York (State of)
Dormitory Authority;
Mental Health Facilities
Series A RB
6.00%, 02/15/05 A- A3 1,000 1,101,270
- ------------------------------------------------------------------
6.00%, 08/15/07 A- A3 1,775 1,998,082
- ------------------------------------------------------------------
New York (State of)
Dormitory Authority (Pace
University Issue); Series
1997 RB
6.00%, 07/01/07(b) AAA Aaa 1,275 1,456,356
- ------------------------------------------------------------------
New York (State of) Medical
Care Facilities Financing
Agency; Hospital & Nursing
Home Series 1995 A RB
5.60%, 02/15/05(b) AAA - 1,315 1,391,928
- ------------------------------------------------------------------
Syracuse (City of); Public
Improvement Series B GO
4.30%, 10/01/03(b) AAA Aaa 775 792,104
- ------------------------------------------------------------------
20,129,382
- ------------------------------------------------------------------
NORTH CAROLINA-0.51%
North Carolina Municipal
Power Agency No. 1
(Catawba Electric);
Electrical Refunding
Series RB
5.25%, 01/01/07(b) AAA Aaa 1,000 1,072,420
- ------------------------------------------------------------------
NORTH DAKOTA-0.70%
Bismarck (City of); Lodging
and Restaurant Tax Series
RB
4.375%, 12/01/03 - A3 470 485,369
- ------------------------------------------------------------------
Fargo (City of); Refunding
Water Series 1997 RB
5.50%, 01/01/08(b) AAA Aaa 905 994,984
- ------------------------------------------------------------------
1,480,353
- ------------------------------------------------------------------
OHIO-3.23%
Franklin (County of); 1991
Issue GO
6.30%, 12/01/01(c)(e) NRR NRR 1,500 1,639,425
- ------------------------------------------------------------------
Greene (County of); Water
System Series A RB
5.45%, 12/01/06(b) AAA Aaa 585 643,927
- ------------------------------------------------------------------
Hilliard City School
District; School
Improvement Refunding
Series 1992 GO
6.05%, 12/01/00(b) AAA Aaa 500 525,160
- ------------------------------------------------------------------
6.15%, 12/01/01(b) AAA Aaa 250 268,378
- ------------------------------------------------------------------
Lucas County (St. Vincent's
Medical Center); Hospital
Series A RB
6.75%, 08/15/20(b) AAA Aaa 2,000 2,133,600
- ------------------------------------------------------------------
Ohio (State of) (Elementary
& Secondary Education
Facilities); Series 1997
RB
5.10%, 12/01/05 AA- Aa3 1,500 1,608,465
- ------------------------------------------------------------------
6,818,955
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OKLAHOMA-1.38%
Norman (City of) Hospital
Authority; Refunding
Series A RB
5.20%, 09/01/06(b) AAA Aaa $ 310 $ 333,901
- ------------------------------------------------------------------
5.30%, 09/01/07(b) AAA Aaa 1,090 1,186,727
- ------------------------------------------------------------------
Oklahoma Housing Finance
Agency; Single Family
Mortgage Series A RB
6.55%, 03/01/00(b) AAA Aaa 105 108,473
- ------------------------------------------------------------------
Southern Oklahoma Memorial
Hospital Authority;
Hospital Series 1993 A RB
5.60%, 02/01/00(e) NRR NRR 1,250 1,281,925
- ------------------------------------------------------------------
2,911,026
- ------------------------------------------------------------------
OREGON-1.99%
Cow Creek Band (Umpqua Tribe
of Indians); Series B RB
4.25%, 07/01/03(b) AAA Aaa 1,265 1,285,569
- ------------------------------------------------------------------
Grande Ronde (City of)
Community Confederated
Tribes (Governmental
Facilities and
Infrastructure); Unlimited
Tax Series 1997 GO
5.00%, 12/01/07(b) AAA Aaa 1,145 1,217,547
- ------------------------------------------------------------------
Portland (City of); Sewer
System Series 1994 A RB
5.45%, 06/01/03 A+ A1 1,065 1,141,627
- ------------------------------------------------------------------
5.55%, 06/01/04 A+ A1 500 544,125
- ------------------------------------------------------------------
4,188,868
- ------------------------------------------------------------------
PENNSYLVANIA-0.49%
Fayette County Hospital
Authority (Union Town
Hospital); Refunding
Series RB
4.85%, 06/15/01(b) AAA - 1,000 1,028,660
- ------------------------------------------------------------------
RHODE ISLAND-0.52%
Rhode Island (State of);
Refunding Series 1992 A GO
6.10%, 06/15/03(b) AAA Aaa 1,000 1,094,100
- ------------------------------------------------------------------
SOUTH DAKOTA-0.99%
Rapid City (City of); Sales
Tax Series 1995 A RB
5.60%, 06/01/05(b) AAA Aaa 255 279,398
- ------------------------------------------------------------------
South Dakota Health and
Education Facility
(McKennan Hospital);
Refunding Series 1996 RB
5.40%, 07/01/06(b) AAA Aaa 1,680 1,817,676
- ------------------------------------------------------------------
2,097,074
- ------------------------------------------------------------------
TENNESSEE-3.03%
Monroe (County of); High
School Refunding Series GO
4.25%, 05/01/03(b) - Aaa 500 509,980
- ------------------------------------------------------------------
Nashville and Davidson
(County of) Health and
Education Facilities Board
(Meharry Medical College);
RB
7.875%, 12/01/04(e) NRR Aaa 955 1,075,693
- ------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TENNESSEE-(CONTINUED)
Nashville and Davidson
(County of) Health and
Education Facilities Board
(Multifamily Housing
Project); Series 1996 RB
5.50%, 01/01/07(c) AAA - $2,700 $ 2,878,227
- ------------------------------------------------------------------
Tennessee Housing
Development Agency;
Mortgage Financing
Refunding Series 1993 A RB
5.65%, 01/01/07 A+ A1 1,360 1,433,780
- ------------------------------------------------------------------
Tennessee School Board
Authority; College and
University Improvement
Series RB
5.75%, 05/01/06 AA Aa2 500 500,574
- ------------------------------------------------------------------
6,398,254
- ------------------------------------------------------------------
TEXAS-7.44%
Alamo Community College
District; Series 1990 GO
6.90%, 02/15/00(c)(e) NRR Aaa 500 521,695
- ------------------------------------------------------------------
Clint Independent School
District; Unlimited Tax
Refunding Series 1991 GO
6.30%, 03/01/99(c)(e) NRR Aaa 30 30,364
- ------------------------------------------------------------------
6.30%, 03/01/00(b) - Aaa 155 156,660
- ------------------------------------------------------------------
Comal County Industrial
Development Authority (The
Coleman Company, Inc.
Project); Series 1980 IDR
9.25%, 08/01/00(e) NRR NRR 315 329,903
- ------------------------------------------------------------------
Conroe (City of) Independent
School District; Unlimited
School Tax GO
7.375%, 02/01/01(b) AAA Aaa 115 124,286
- ------------------------------------------------------------------
Gatesville Independent
School District; Unlimited
Tax School Building and
Refunding Series 1995 RB
5.80%, 02/01/03(b) - Aaa 485 522,898
- ------------------------------------------------------------------
Harris (County of) (Port of
Houston Authority); RB
5.75%, 05/01/02 A A 1,070 1,087,388
- ------------------------------------------------------------------
5.75%, 05/01/02(b) AAA Aaa 1,055 1,072,661
- ------------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (Memorial Hospital
System Project); Hospital
Series 1992 RB
6.70%, 06/01/00(e) NRR NRR 1,000 1,047,680
- ------------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (School Health Care
System Project); Series B
RB
5.10%, 07/01/06 AA Aa3 1,000 1,048,100
- ------------------------------------------------------------------
Keller (City of) Independent
School District; Series
1994 Certificates of
Participation
5.75%, 08/15/01(b) AAA Aaa 915 966,450
- ------------------------------------------------------------------
Kerrville (City of);
Electric System Refunding
Series 1991 RB
6.375%, 11/01/01(b) AAA Aaa 185 199,687
- ------------------------------------------------------------------
La Marque Independent School
District; Unlimited
Schoolhouse Tax Series
1992 GO
7.50%, 08/15/99(b) AAA Aaa 575 594,608
- ------------------------------------------------------------------
7.50%, 08/15/02(b) AAA Aaa 750 849,885
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
Lubbock Health Facility
Development Corp.;
Methodist Hospital
Refunding Series 1993 B
5.40%, 12/01/05(b) AAA Aaa $ 500 $ 543,160
- ------------------------------------------------------------------
Pasadena Independent School
District; Public Property
Financed Contractual
Series GO
4.75%, 02/15/01 - Aa3 560 566,609
- ------------------------------------------------------------------
Plano Independent School
District; GO
5.80%, 02/15/05(b) AAA Aaa 2,025 2,204,294
- ------------------------------------------------------------------
San Antonio (City of);
Electric and Gas System
Prerefunding Series 1989 A
RB
7.00%, 02/01/99(c)(e) NRR Aaa 165 169,401
- ------------------------------------------------------------------
7.00%, 02/01/01 AA Aa1 235 241,028
- ------------------------------------------------------------------
Tarrant (County of) Housing
Finance Corp. (Arbors on
Park II); Multifamily
Housing Series RB
5.05%, 12/01/07 AAA - 1,485 1,522,942
- ------------------------------------------------------------------
Temple (City of) (Bell
County); Refunding Series
1992 GO
5.80%, 02/01/01(b) AAA Aaa 250 261,792
- ------------------------------------------------------------------
Texas Municipal Power
Agency; RB
5.75%, 09/01/02(c)(e) AAA Aaa 1,000 1,070,120
- ------------------------------------------------------------------
Texas Turnpike Authority
(Addison Airport Toll
Tunnel Project); Dallas
North Tollway Series 1994
RB
6.30%, 01/01/05(b) AAA Aaa 500 564,374
- ------------------------------------------------------------------
15,695,985
- ------------------------------------------------------------------
UTAH-1.03%
Intermountain Power Agency
(Utah Power Supply);
Refunding Series 1997 B RB
6.00%, 07/01/07(b) AAA Aaa 1,000 1,134,370
- ------------------------------------------------------------------
Utah (State of) (Board of
Water Resources Program);
Revolving Fund
Recapitalization Series
1992 B RB
6.10%, 04/01/02 AA - 500 540,470
- ------------------------------------------------------------------
Utah Municipal Finance
Cooperative (Pooled
Capital Improvement
Financing Program)
(University Hospital
Project); Local Government
Series 1991 RB
6.50%, 05/15/99(e) NRR NRR 475 484,101
- ------------------------------------------------------------------
2,158,941
- ------------------------------------------------------------------
VIRGINIA-1.22%
Medical College of Hampton
Roads; General Refunding
Series 1991 A RB
6.00%, 11/15/99 A- - 605 621,117
- ------------------------------------------------------------------
Norfolk (City of)
Redevelopment and Housing
Authority (State Board for
Community
Colleges-Tidewater);
Educational Facility
Series 1995 RB
5.30%, 11/01/04 AA Aa 535 576,634
- ------------------------------------------------------------------
5.40%, 11/01/05 AA Aa 500 544,340
- ------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
VIRGINIA-(CONTINUED)
Portsmouth (City of); Port
Improvement Unlimited Tax
Refunding GO
6.40%, 11/01/03 AA- A3 $ 300 $ 328,119
- ------------------------------------------------------------------
Portsmouth (City of); Public
Utility Refunding Series
1992 GO
5.90%, 11/01/01 AA- A3 450 480,240
- ------------------------------------------------------------------
2,550,450
- ------------------------------------------------------------------
WASHINGTON-2.96%
King (County of); Series A
RB
5.80%, 01/01/05 AA+ Aa1 1,000 1,105,420
- ------------------------------------------------------------------
Seattle (City of); Limited
Tax Refunding Series GO
6.40%, 10/01/01(e) NRR NRR 250 268,200
- ------------------------------------------------------------------
Seattle (Port of); Series
1992 A RB
6.00%, 11/01/01 AA- Aa3 500 534,440
- ------------------------------------------------------------------
Snohomish (County of) Public
Utilities District #1; RB
5.70%, 01/01/06(b) AAA Aaa 4,000 4,318,680
- ------------------------------------------------------------------
6,226,740
- ------------------------------------------------------------------
WISCONSIN-3.69%
Oak Creek (City of)
(Waterworks Systems); Bond
Anticipation Notes
3.90%, 09/01/00 - MIG1 1,000 1,004,200
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WISCONSIN-(CONTINUED)
Wisconsin (State of); Series
A GO
5.75%, 05/01/99 AA Aa2 $1,000 $ 1,014,090
- ------------------------------------------------------------------
Wisconsin (State of) Health
& Educational Facilities
Authority (Charity
Obligation Group);
Hospital Series 1997 D RB
4.90%, 11/01/05(c) AA+ VMIG-1 2,250 2,321,798
- ------------------------------------------------------------------
Wisconsin (State of) Health
& Educational Facilities
Authority (Marshfield
Clinic); RB
5.20%, 02/15/07(b) AAA Aaa 3,210 3,434,186
- ------------------------------------------------------------------
7,774,274
- ------------------------------------------------------------------
WYOMING-0.48%
Wyoming Building Corp; RB
4.25%, 10/01/01(b) AAA Aaa 1,000 1,016,560
- ------------------------------------------------------------------
TOTAL INVESTMENTS-99.50%
(Cost $200,299,104) 209,793,427
- ------------------------------------------------------------------
OTHER LIABILITIES LESS ASSETS-0.50% 1,048,492
- ------------------------------------------------------------------
NET ASSETS-100.00% $210,841,919
- ------------------------------------------------------------------
</TABLE>
Abbreviations:
GO - General Obligation Bonds
IDR - Industrial Development Revenue Bonds
NRR - Not re-rated
PCR - Pollution Control Revenue Bonds
RB - Revenue Bonds
Notes to Schedule of Investments:
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P"). NRR indicates a security that is not re-rated
subsequent to funding of an escrow fund (consisting of U.S. Treasury
obligations); this funding is pursuant to an advance refunding of the
security.
(b) Secured by bond insurance.
(c) Security has an outstanding irrevocable call or mandatory put by the issuer.
Market value and maturity date reflect such call or put.
(d) Payable on demand by the Fund at specified frequencies no greater than
thirteen months. Interest rate is redetermined periodically. Rate shown is
the rate in effect on 09/30/98.
(e) Secured by an escrow fund of U.S. Treasury obligations.
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$200,299,104) $ 209,793,427
- ---------------------------------------------------------
Receivables for:
Investments sold 1,165,248
- ---------------------------------------------------------
Capital stock sold 422,444
- ---------------------------------------------------------
Interest 2,787,695
- ---------------------------------------------------------
Investment for deferred compensation plan 20,150
- ---------------------------------------------------------
Other assets 55,357
- ---------------------------------------------------------
Total assets 214,244,321
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,869,659
- ---------------------------------------------------------
Capital stock reacquired 119,250
- ---------------------------------------------------------
Dividends 312,642
- ---------------------------------------------------------
Deferred compensation plan 20,150
- ---------------------------------------------------------
Accrued administrative services fees 4,027
- ---------------------------------------------------------
Accrued advisory fees 51,115
- ---------------------------------------------------------
Accrued directors' fees 2,000
- ---------------------------------------------------------
Accrued transfer agent fees 5,701
- ---------------------------------------------------------
Accrued operating expenses 17,858
- ---------------------------------------------------------
Total liabilities 3,402,402
- ---------------------------------------------------------
Net assets applicable to shares
outstanding $ 210,841,919
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Authorized 1,000,000,000
- ---------------------------------------------------------
Outstanding 18,828,331
=========================================================
Net asset value and redemption price per
share $ 11.20
=========================================================
Offering price per share:
(Net asset value of
$11.20 divided by 99.00%) $ 11.31
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $4,795,883
- --------------------------------------------------------
EXPENSES:
Advisory fees 290,992
- --------------------------------------------------------
Administrative services fees 24,432
- --------------------------------------------------------
Custodian fees 4,817
- --------------------------------------------------------
Transfer agent fees 31,111
- --------------------------------------------------------
Registration and filing fees 44,177
- --------------------------------------------------------
Directors' fees 3,740
- --------------------------------------------------------
Other 50,648
- --------------------------------------------------------
Total expenses 449,917
- --------------------------------------------------------
Net investment income 4,345,966
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES:
Net realized gain on sales of investment
securities 340,537
- --------------------------------------------------------
Net unrealized appreciation of investment
securities 2,455,859
- --------------------------------------------------------
Net gain on investment securities 2,796,396
- --------------------------------------------------------
Net increase in net assets resulting from
operations $7,142,362
========================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 15
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND THE YEAR ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1998 1998
-------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 4,345,966 $ 8,621,404
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities 340,537 (31,582)
- --------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 2,455,859 5,402,954
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 7,142,362 13,992,776
- --------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (4,352,316) (8,634,206)
- --------------------------------------------------------------------------------------------
Distributions from capital -- (3,932)
- --------------------------------------------------------------------------------------------
Net increase from capital stock transactions 7,082,899 22,272,556
- --------------------------------------------------------------------------------------------
Net increase in net assets 9,872,945 27,627,194
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 200,968,974 173,341,780
- --------------------------------------------------------------------------------------------
End of period $210,841,919 $200,968,974
============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $202,166,805 $195,083,906
- --------------------------------------------------------------------------------------------
Undistributed net investment income (23,835) (17,485)
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (795,374) (1,135,911)
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 9,494,323 7,038,464
- --------------------------------------------------------------------------------------------
$210,841,919 $200,968,974
============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Tax-Exempt Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Company is organized as a Maryland corporation consisting of four separate
portfolios: AIM Tax-Free Intermediate Fund, AIM High Income Municipal Fund, AIM
Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of Connecticut. Matters
affecting each portfolio are voted on exclusively by the shareholders of such
portfolio. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to AIM Tax-Free Intermediate Fund (the "Fund"). The investment
objective of the Fund is to generate as high a level of tax-exempt income as is
consistent with preservation of capital by investing in high quality,
intermediate-term municipal securities having a maturity of ten and one-half
years or less.
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. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations -- Portfolio securities are valued based on market
quotations or at fair value determined by a pricing service approved by the
Company's Board of Directors, provided that securities with a demand feature
exercisable within one to seven days are valued at par. Prices provided by
the pricing service represent valuations of the mean between current bid and
asked market prices which may be determined without exclusive reliance on
quoted prices and may reflect appropriate factors such as institution-size
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, individual trading characteristics and other market
data. Portfolio securities for which prices are not provided by the pricing
service are valued at the mean between the last available bid and asked
prices, unless the Board of Directors or its designees determines that the
mean between the last available bid and asked prices does not accurately
reflect the current market value of the security. Securities for which market
quotations 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.
13
<PAGE> 16
B. Securities Transactions and Investment Income -- Securities transactions are
recorded on a trade date basis. Realized gains and losses are computed on the
basis of specific identification of the securities sold. Interest income,
adjusted for amortization of premiums and original issue discounts, is 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 capital
gains, if any) of $1,129,032, which expires, if not previously utilized, in
the year 2006. 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 "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 0.30% of
the first $500 million of the Fund's average daily net assets, plus 0.25% of the
Fund's average daily net assets in excess of $500 million, but not in excess of
$1 billion, plus 0.20% of the Fund's average daily net assets in excess of $1
billion.
The 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, 1998, the Fund
reimbursed AIM $24,432 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,
1998, the Fund paid AFS $19,771 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") pursuant to which AIM Distributors
serves as the distributor for the Fund. AIM Distributors received commissions of
$12,851 from sales of capital stock during the six months ended September 30,
1998. Such commissions are not an expense of the Company. They are deducted
from, and are not included in, the proceeds from sales of capital stock. Certain
officers and directors of the Company are officers of AIM, AFS and AIM
Distributors.
During the six months ended September 30, 1998, the Fund paid legal fees of
$2,434 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) $1,000,000,000 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 May 1, 1998, the Fund was limited
to borrowings up to the lesser of i) $500,000,000 or ii) the limits set by its
prospectus for borrowings. During the six months ended September 30, 1998, the
fund did borrow minimal amounts under the line of credit agreement. Interest
expense for the period ended September 30, 1998 was $22,020. 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, 1998 was
$57,356,448 and $49,231,635, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of September 30, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $9,507,205
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (12,882)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $9,494,323
=========================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
14
<PAGE> 17
NOTE 6-CAPITAL STOCK
Changes in capital stock outstanding during the six months ended September 30,
1998 and the year ended March 31, 1998 were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1998 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 5,079,327 $ 56,125,725 4,891,415 $ 53,561,920
- ------------------------------------------------- ---------- ------------ ---------- ------------
Issued as reinvestment of dividends 232,513 2,573,515 411,422 4,509,891
- ------------------------------------------------- ---------- ------------ ---------- ------------
Reacquired (4,678,139) (51,616,341) (3,262,778) (35,799,255)
- ------------------------------------------------- ---------- ------------ ---------- ------------
633,701 $ 7,082,899 2,040,059 $ 22,272,556
================================================= ========== ============ ========== ============
</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, 1998 and each of the years
in the five-year period ended March 31, 1998.
<TABLE>
<CAPTION>
MARCH 31,
SEPTEMBER 30, -----------------------------------------------------
1998 1998 1997 1996 1995 1994
-------------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.05 $ 10.73 $10.79 $10.67 $10.62 $10.74
- --------------------------------------------------------- -------- -------- -------- ------- ------- -------
Income from investment operations:
Net investment income 0.25 0.50 0.50 0.52 0.49 0.48
- --------------------------------------------------------- -------- -------- -------- ------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 0.15 0.32 (0.04) 0.12 0.04 (0.10)
- --------------------------------------------------------- -------- -------- -------- ------- ------- -------
Total from investment operations 0.40 0.82 0.46 0.64 0.53 0.38
- --------------------------------------------------------- -------- -------- -------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.25) (0.50) (0.52) (0.52) (0.48) (0.48)
- --------------------------------------------------------- -------- -------- -------- ------- ------- -------
Distributions from net realized gains -- -- -- -- -- (0.02)
- --------------------------------------------------------- -------- -------- -------- ------- ------- -------
Total distributions (0.25) (0.50) (0.52) (0.52) (0.48) (0.50)
- --------------------------------------------------------- -------- -------- -------- ------- ------- -------
Net asset value, end of period $ 11.20 $ 11.05 $10.73 $10.79 $10.67 $10.62
========================================================= ======== ======== ======== ======= ======= =======
Total return(a) 3.63% 7.79% 4.33% 6.06% 5.17% 3.47%
========================================================= ======== ======== ======== ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $210,842 $200,969 $173,342 $83,066 $82,355 $99,757
========================================================= ======== ======== ======== ======= ======= =======
Ratio of expenses (exclusive of interest) to average net
assets 0.44%(b) 0.45% 0.56% 0.65% 0.59% 0.61%(c)
========================================================= ======== ======== ======== ======= ======= =======
Ratio of net investment income to average net assets 4.50%(b) 4.56% 4.63% 4.81% 4.65% 4.37%(c)
========================================================= ======== ======== ======== ======= ======= =======
Portfolio turnover rate 27% 22% 26% 32% 75% 26%
========================================================= ======== ======== ======== ======= ======= =======
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets of $193,464,679.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
0.64%. Ratio of net investment income to average net assets prior to fee
waivers and/or expense reimbursements was 4.35%.
15
<PAGE> 18
Directors & Officers
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II TRANSFER AGENT
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Assistant Treasurer
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Stuart W. Coco
President, Mercantile Bankshares Vice President The Bank of New York
90 Washington Street
Jack Fields Melville B. Cox 11th Floor
Chief Executive Officer Vice President New York, NY 10286
Texana Global, Inc.;
Formerly Member Karen Dunn Kelley COUNSEL TO THE FUND
of the U.S. House of Representatives Vice President
Ballard Spahr
Carl Frischling Renee A. Friedli Andrews & Ingersoll, LLP
Partner Assistant Secretary 1735 Market Street
Kramer, Levin, Naftalis & Frankel Philadelphia, PA 19103
P. Michelle Grace
Robert H. Graham Assistant Secretary COUNSEL TO THE DIRECTORS
President and Chief Executive Officer
A I M Management Group Inc. Jeffrey H. Kupor Kramer, Levin, Naftalis & Frankel
Assistant Secretary 919 Third Avenue
Prema Mathai-Davis New York, NY 10022
Chief Executive Officer, YWCA of the U.S.A.; Nancy L. Martin
Commissioner, New York City Dept. for the Assistant Secretary DISTRIBUTOR
Aging; and member of the Board of Directors,
Metropolitan Transportation Authority of Ofelia M. Mayo A I M Distributors, Inc.
New York State Assistant Secretary 11 Greenway Plaza
Suite 100
Lewis F. Pennock Lisa A. Moss Houston, TX 77046
Attorney Assistant Secretary
Ian W. Robinson Kathleen J. Pflueger
Consultant; Formerly Executive Assistant Secretary
Vice President and
Chief Financial Officer Samuel D. Sirko
Bell Atlantic Management Assistant Secretary
Services, Inc.
Stephen I. Winer
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests
Limited Partnership
</TABLE>
16
<PAGE> 19
HOW AIM MAKES INVESTING
EASY FOR YOU
- --------------------------------------------------------------------------------
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds---Registered Trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds. Certain restrictions
apply.
o RETIREMENT PLANS. You may purchase shares of an AIM fund for your Individual
Retirement Account (IRA) or any other type of retirement plan, and earn
tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o www.aimfunds.com. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
-------------------------------------
Current shareholders
can call our
AIM Investor Line at
800-246-5463
for 24-hour-a-day
account information.
-------------------------------------
<PAGE> 20
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
GROWTH FUNDS
AIM Aggressive Growth Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM Mid Cap Equity Fund(1), (A)
[PHOTO OF AIM Select Growth Fund(2)
11 GREENWAY PLAZA AIM Small Cap Growth Fund(1), (B)
APPEARS HERE] AIM Small Cap Opportunities Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Basic Value Fund(1), (C)
AIM Charter Fund
INCOME FUNDS
AIM Floating Rate Fund(1)
AIM High Yield Fund
AIM High Yield Fund II
AIM Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
TAX-FREE INCOME FUNDS
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
MONEY MARKET FUNDS
AIM Dollar Fund(1)
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
INTERNATIONAL GROWTH FUNDS
AIM Advisor International Value Fund
AIM Asian Growth Fund
AIM Developing Markets Fund(1)
AIM Emerging Markets Fund(1)
AIM Europe Growth Fund(1)
AIM European Development Fund
AIM International Equity Fund
AIM International Growth Fund(1)
AIM Japan Growth Fund(1)
AIM Latin American Growth Fund(1)
AIM New Pacific Growth Fund(1)
GLOBAL GROWTH FUNDS
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Worldwide Growth Fund(1)
GLOBAL GROWTH & INCOME FUNDS
Global Growth & Income Funds
AIM Global Growth & Income Fund(1)
AIM Global Utilities Fund
GLOBAL INCOME FUNDS
AIM Emerging Markets Debt Fund(1), (D)
AIM Global Government Income Fund(1)
AIM Global Income Fund
AIM Strategic Income Fund(1)
THEME FUNDS
AIM Global Consumer Products and Services Fund(1)
AIM Global Financial Services Fund(1)
AIM Global Health Care Fund(1)
AIM Global Infrastructure Fund(1)
AIM Global Resources Fund(1)
AIM Global Telecommunications Fund(1)
AIM Global Trends Fund(1), (E)
A I M Management Group Inc. has provided (1) Effective May 29, 1998, A I M Advisors, Inc.
leadership in the mutual fund industry since 1976 became advisor to the former GT Global Funds. (2) On
and managed approximately $91 billion in assets May 1, 1998, AIM Growth Fund was renamed AIM
for more than 5.5 million shareholders, including Select Growth Fund. (A) On September 8, 1998, AIM
individual investors, corporate clients, and Mid Cap Growth Fund was renamed AIM Mid Cap Equity
financial institutions, as of September 30, 1998. Fund. (B) On September 8, 1998, AIM Small Cap
The AIM Family of Funds--Registered Trademark--is Equity Fund was renamed AIM Small Cap Growth Fund.
distributed nationwide, and AIM today is the (C) On September 8, 1998, AIM America Value Fund
11th-largest mutual fund complex in the U.S. in was renamed AIM Basic Value Fund. (D) On September
assets under management, according to Strategic 8, 1998, AIM Global High Income Fund was renamed
Insight, an independent mutual fund monitor. AIM Emerging Markets Debt Fund. (E) On September
8, 1998, AIM New Dimension Fund was renamed AIM
Global Trends Fund. For more complete information
about any AIM Fund(s), including sales charges and
expenses, ask your financial consultant or
securities dealer for a free prospectus(es).
Please read the prospectus(es) carefully before
you invest or send money.
INVEST WITH DISCIPLINE--Registered Trademark--
</TABLE>
