<PAGE> 1
[AIM LOGO APPEARS HERE]
AIM TAX-FREE INTERMEDIATE FUND
ANNUAL REPORT MARCH 31, 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 During the fiscal year ended 3/31/98, the Fund paid distributions of $0.501
per share.
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 The Lehman Brothers Municipal Bond Index is an unmanaged composite
representing an approximation of the performance of investment-grade
municipal bonds.
o The unmanaged Lipper Intermediate Municipal Fund Index represents an average
of the performance of the 30 largest intermediate-term municipal bond funds
tracked by Lipper Analytical Services, Inc., an independent mutual funds
performance monitor.
o The unmanaged Lipper Short-Intermediate Municipal Debt Index represents an
average of the performance of the 30 largest short-intermediate municipal
bond funds tracked by Lipper Analytical Services, Inc., an independent
mutual funds performance monitor.
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 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:
The fiscal year ended March 31, 1998, turned out to be a good
[PHOTO OF one for bonds, including tax-exempt municipal bonds. While
Charles T. yields were low enough to make the market inviting for bond
Bauer, issuers, they were still attractive to investors given the
Chairman of continued low rate of inflation.
the Board of During the first part of the year, concern about the
THE FUND inflationary potential of vigorous economic growth rendered
APPEARS HERE] bond market participants relatively cautious, as investors
expected the Federal Reserve Board (the Fed) to raise
interest rates to cool the expansion. Late in 1997, the focus
turned to the potential negative impact of Asia's financial
crisis in the U.S. and abroad. Expectations performed an
about face, and fixed-income markets rallied in anticipation
that the Fed would lower rates to counteract the dampening
effects from the Far East situation. The rally in
fixed-income markets was reflected in the yield on the
benchmark 30-year U.S. Treasury Bond, which fell from 6.27% just prior to the
Hong Kong stock market plunge on October 27 to 5.92% on December 31, 1997.
Municipal bonds participated in the rally and finished strongly in 1997. As
interest rates fell, more new municipal bonds entered the market, ending a
long-standing drought in new-issue supply and increasing liquidity.
By the close of the fiscal year, the much-anticipated economic slowdown had
yet to arrive. Municipal-bond and Treasury yields, which had continued their
downward spiral in January, headed upward in February as the chance of the Fed's
lowering rates was pushed further into the future. Just as the reporting period
closed, the Fed chose to leave the benchmark federal funds rate at 5.50%,
unchanged for a full 12 months. The yield on the 30-year U.S. Treasury Bond
stood at 5.93%, about the same as at the beginning of the quarter.
The following pages feature an interview with your Fund's managers. They
discuss their investment strategies, how your Fund performed in this context,
and their outlook for the future.
---------------------------------------------------
While yields were low enough
to make the market inviting
for bond issuers,
they were still attractive
to investors given the continued
low rate of inflation.
---------------------------------------------------
EDUCATION EVENT WILL OFFER INVESTORS A REVIEW OF INVESTMENT POSSIBILITIES
AIM has always championed investor education, convinced that a more
knowledgeable shareholder is a better customer. At AIM, we strongly believe
every investor is well served by fundamental information about the saving and
investing choices offered by the marketplace. A great deal of investment
information will be available during an upcoming event that we hope our
shareholders will participate in and learn from to the greatest extent possible.
The event concerns citizens' financial planning for retirement, a subject of
growing urgency as the population ages and the solvency of the Social Security
system is increasingly debatable.
The first National Summit on Retirement Savings will be held at the White
House in June. Under the auspices of the Department of Labor working through
public/private partnership, the summit's goal is to advance the public's
knowledge of retirement savings through development of a broad-based education
program and to develop recommendations for public/private action that would
promote private retirement savings among American workers. We encourage you to
look for further information on this White House summit in the national and
local press.
We are pleased to send you this report on your AIM Fund. Please contact our
Client Services department at 800-959-4246 if you have any questions or
comments. Remember that automated information about your account is available 24
hours a day on the AIM Investor Line, 800-246-5463. Account information and much
more can be accessed through our Web site, at www.aimfunds.com.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 4
The Managers' Overview
MUNICIPAL BONDS ENJOY GOOD YEAR
A roundtable discussion with the Fund management team for AIM Tax-Free
Intermediate Fund for the fiscal year ended March 31, 1998.
- --------------------------------------------------------------------------------
Q. IT WAS GENERALLY A GOOD YEAR FOR BONDS. HOW DID THE FUND PERFORM?
A. Although the strong rally in the bond market lost some of its momentum
toward the end of the reporting period, it was still a good year for
fixed-income investments, including municipal issues. And while bond yields
dropped to their lowest levels in decades, they were still attractive
considering the low rate of inflation. In line with this trend, your Fund
continued to provide solid current income (see chart below), exempt from
federal taxes, while preserving relative stability of net asset value.
For the year ended March 31, 1998, total return was 7.79%, competitive
with the 8.12% total return for the Lipper Intermediate Municipal Fund Index
and the 5.76% total return for the Lipper Short-Intermediate Municipal Debt
Index. During the final quarter of the reporting period, when municipal bond
prices were basically flat, the income generated by the Fund enabled it to
outperform its peer group. For the three-month period ended March 31, 1998,
the Fund posted a total return of 1.02% compared to 0.89% for the Lipper
Intermediate Municipal Fund Index and 0.87% for the Lipper
Short-Intermediate Municipal Debt Index. During the fiscal year, net asset
value per share remained within a relatively narrow range of $10.69 to
$11.16, continuing the Fund's history of relative price stability as
illustrated by the accompanying chart. The Fund's net assets rose from
$173.3 million to $201 million.
================================================================================
FUND PROVIDES ATTRACTIVE INCOME
- --------------------------------------------------------------------------------
As of 3/31/98
4.45% 7.37% 3.88% 6.42%
30-DAY TAXABLE 30-DAY TAXABLE
DISTRIBU- EQUIVALENT SEC YIELD EQUIVALENT
TION RATE DISTRIBU- AT 30-DAY
AT NAV TION RATE* MAXIMUM SEC YIELD*
OFFERING
PRICE
* Assumes highest marginal federal tax rate of 39.6%
================================================================================
Q. WHAT WAS THE IMPACT OF THE LOW-INFLATION ENVIRONMENT ON FIXED-INCOME
SECURITIES?
A. Most types of bonds, including municipal issues, tended to appreciate in
value as the fiscal year progressed because of low inflation and falling
interest rates. For the 12-month period ended March 31, 1998, consumer
prices rose just 1.4% and the Federal Reserve Board (the Fed) left interest
rates unchanged.
Bonds also were given a boost by last summer's agreement to balance the
federal budget and the turmoil that hit world stock markets in the fall.
Investors began shifting more assets into bonds, especially U.S. Treasury
securities, after global stock markets plunged in October following the
Asian currency devaluations. Early in 1998, however, the bond rally began to
lose some of its vigor as the economy continued to grow at a healthy pace,
dampening prospects that the Fed would lower interest rates in the immediate
future.
================================================================================
HISTORY OF NET ASSET VALUE STABILITY
- --------------------------------------------------------------------------------
5/11/87 - 3/31/98
10.00 5/11/87
9.93 6/87
9.59 9/87
9.79 12/87
9.89 3/88
9.82 6/88
9.86 9/88
9.81 12/88
9.69 3/89
9.94 6/89
9.77 9/89
9.99 12/89
9.89 3/90
9.93 6/90
9.88 9/90
10.01 12/90
10.07 3/91
10.07 6/91
10.2 9/91
10.33 12/91
10.27 3/92
10.43 6/92
10.55 9/92
10.58 12/92
10.74 3/93
10.87 6/93
11.03 9/93
11.02 12/93
10.62 3/94
10.61 6/94
10.56 9/94
10.38 12/94
10.67 3/95
10.76 6/95
10.84 9/95
10.92 12/95
10.79 3/96
10.72 6/96
10.74 9/96
10.8 12/96
10.73 3/97
10.86 6/97
10.97 9/97
11.06 12/97
11.05 3/98
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.
================================================================================
Q. WHAT WERE THE MAJOR TRENDS IN THE MUNICIPAL BOND MARKET?
A. The municipal-bond market tended to mirror the U.S. Treasury market. When
the
2
<PAGE> 5
U.S. Treasury market rallied strongly in the second half of 1997, municipal
bonds also appreciated in value, although not quite as dramatically as
Treasury issues.
The fiscal year also witnessed an increase in new-issue supply as many
state and local governments rushed to refinance existing debt to take
advantage of falling interest rates. Approximately $267 billion in new
municipal bonds entered the market in 1997, the largest amount in three
years. And some analysts are predicting that $240 billion in new municipal
securities could be issued in 1998. We believe the increase in supply will
enhance liquidity.
TOP FIVE BOND HOLDINGS
================================================================================
As of 3/31/98, based on total net assets
- --------------------------------------------------------------------------------
COUPON MATURITY %
- --------------------------------------------------------------------------------
1. New York (City of) Municipal 5.25% 07/01/03 2.87
Assistance Corp.
2. Louisiana (State of) 6.00% 04/15/07 2.78
3. Hawaii (State of) 6.00% 03/01/07 2.77
4. New York (City of) 5.60% 11/01/05 2.64
5. Nassau (County of) 5.15% 03/01/07 2.59
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.
================================================================================
Q. HOW WAS THE FUND POSITIONED AT THE END OF THE REPORTING PERIOD?
A. We emphasized revenue bonds, which are paid with income generated by
various projects such as hospitals, highways, and housing. The
creditworthiness of revenue bonds tends to be less sensitive to the
political environment than that of general obligation bonds, which are paid
with tax dollars. Public opposition to tax hikes is making it increasingly
difficult for state and local governments to raise taxes to support general
obligation bond issues.
We particularly liked revenue bonds for essential services, such as
water and sewer service, gas and electric service, and solid waste disposal.
The demand for these services tends to remain constant regardless of
economic trends.
Q. ARE YOU CONTINUING TO MAINTAIN A HIGH-QUALITY PORTFOLIO?
A. Yes, as of March 31, 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., 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 60% of the portfolio's holdings were securities rated AAA.
Credit-enhanced securities' those backed by insurance or escrowed with U.S.
Treasury securities comprised about 60% of the portfolio.
Q. HOW DO YOU MANAGE FOR TAX EFFICIENCY?
A. We make every effort to avoid transactions that would result in capital
gains that are not offset by capital losses. For the past four years, the
Fund has paid no taxable capital gains distributions or ordinary income
distributions.
Q. DO YOU BELIEVE A FLAT TAX OR A NATIONAL SALES TAX WILL BE ADOPTED?
A. We believe that tax reform will not resurface as a serious issue until
the presidential election campaign in the year 2000. While there has been
much discussion about such far-reaching proposals as a flat tax or a
national sales tax two plans that would eliminate the tax-exempt status of
municipal bonds we don't think either will be adopted for several reasons.
For one, a flat tax could mean higher taxes for most Americans. We also
don't believe Washington would eliminate the tax-advantaged status of
municipal debt at a time when more public spending responsibilities are
being transferred to the state and local level.
Q. WHAT IS YOUR OUTLOOK FOR THE FUTURE?
A. We remain optimistic about bonds, including municipal issues. If the
economy continues to grow at a steady pace and inflation remains low, it
should bode well for fixed-income securities. Moreover, the yields and
prices of municipal bonds are attractive relative to taxable U.S. Treasury
securities. Consequently, as Treasury supply diminishes in response to a
shrinking federal deficit and more Americans become subject to higher tax
brackets, municipal bonds could gain in popularity.
If the Fed leaves monetary policy unchanged in the months ahead, we
expect bond yields to remain within a relatively narrow range around their
current levels. If yields rise, however, we are prepared to take advantage
of such a trend by investing in higher income-generating securities.
================================================================================
Portfolio Composition
As of 3/31/98, based on total assets
- --------------------------------------------------------------------------------
Revenue Bonds
68%
General Obligation Bonds
31%
Other
1%
Number of Holdings 182
Average Maturity 6.1 Years
Duration 4.8 Years
================================================================================
3
<PAGE> 6
Long-Term Performance
AIM TAX-FREE INTERMEDIATE FUND VS. BENCHMARK INDEX
The chart below compares your Fund to a benchmark index. It is intended to give
you a general idea of how your Fund performed compared to the bond market over
the period 3/31/88 - 3/31/98. It is important to understand the difference
between your Fund and an index. Your Fund's total return is shown with a sales
charge and includes Fund expenses and management fees. An index measures the
performance of a hypothetical portfolio, in this case the Lehman Brothers
Municipal Bond Index. Unlike your Fund, the index is not managed; therefore,
there are no sales charges, expenses or fees. You cannot invest in an index. But
if you could buy all the securities that make up a particular index, you would
incur expenses that would affect the return on your investment.
GROWTH OF A $10,000 INVESTMENT
3/31/88 - 3/31/98
- --------------------------------------------------------------------------------
AIM TAX-FREE INTERMEDIATE Lehman Muni Bond
Year FD $18,794 Index Trust $22,289
- --------------------------------------------------------------------------------
3/31/88 9,900 10,000
3/31/89 10,321 10,719
3/31/90 11,209 11,851
3/31/91 12,143 12,943
3/31/92 13,164 14,238
3/31/93 14,481 16,022
3/31/94 14,984 16,393
3/31/95 15,758 17,611
3/31/96 16,713 19,088
3/31/97 17,437 20,129
3/31/98 18,794 22,289
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 3/31/98, including sales charges
10 Years 6.51%
5 Years 5.14
1 Year 6.70*
*7.79% excluding sales charges
================================================================================
Your Fund's total return includes sales charges, expenses, and management fees.
For Fund performance calculations and descriptions of indexes cited on this
page, please refer to the inside front cover.
Past performance cannot guarantee comparable future results.
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
March 31, 1998
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
MUNICIPAL OBLIGATIONS-98.54%
ALABAMA-0.71%
Alabama State Municipal
Electric Authority; Power
Supply
Series A RB
6.30%, 09/01/01(b) AAA Aaa $ 400 $ 428,387
- ------------------------------------------------------------------
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 1,016,740
- ------------------------------------------------------------------
1,445,127
- ------------------------------------------------------------------
ALASKA-1.03%
Anchorage (City of); School
Series 1994 GO
5.50%, 07/01/06(b) AAA Aaa 1,950 2,088,470
- ------------------------------------------------------------------
ARIZONA-3.57%
Arizona (State of)
(Educational Loan
Marketing Corp.);
Refunding Series A RB
6.55%, 03/01/99 - Aa2 1,000 1,021,910
- ------------------------------------------------------------------
Maricopa County (Gilbert
Unified School District
#41 Project of 1988);
School Improvement Series
1992 E GO
6.20%, 07/01/02(d) AAA Aaa 1,250 1,358,313
- ------------------------------------------------------------------
Maricopa County School
District #90 (Ruth Fisher
Elementary); Series 1997
GO
4.70%, 07/01/99 - A2 1,300 1,307,878
- ------------------------------------------------------------------
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 620 647,602
- ------------------------------------------------------------------
Mohave County Unified School
District #1 (Lake Havasu);
Series A GO
5.40%, 07/01/06(b) AAA Aaa 200 211,704
- ------------------------------------------------------------------
Navajo County Unified School
District; Series 1997 A GO
5.00%, 07/01/07(b) AAA Aaa 450 467,176
- ------------------------------------------------------------------
Phoenix (City of); Senior
Lien Street and Highway
User Refunding Series 1992
RB
6.20%, 07/01/02 AA A1 1,000 1,085,020
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
ARIZONA-(CONTINUED)
Yuma Industrial Development
Authority (Yuma Regional
Medical Center Project);
Health Care Facilities
Refunding Series 1997 RB
5.70%, 08/01/06(b) AAA Aaa $1,000 $ 1,086,120
- ------------------------------------------------------------------
7,185,723
- ------------------------------------------------------------------
ARKANSAS-4.36%
Arkansas State Development
Financial Authority;
Correction Facility Series
1996 RB
6.25%, 10/01/06(b) AAA Aaa 1,800 2,047,554
- ------------------------------------------------------------------
Conway (City of); Sales and
Use Tax Capital
Improvement Series 1997 A
RB
4.80%, 12/01/07(b) AAA Aaa 825 841,574
- ------------------------------------------------------------------
Little Rock (City of)
(Baptist Medical Center);
Health Facility Hospital
Series RB
6.70%, 11/01/04(b) AAA Aaa 1,400 1,569,385
- ------------------------------------------------------------------
North Little Rock (City of);
Electric System Refunding
Series 1992 A RB
6.00%, 07/01/01(b) AAA Aaa 500 531,670
- ------------------------------------------------------------------
Pine Bluff (City of)
Pollution Control
Facilities (International
Paper Company); Refunding
Series 1997 A RB 4.90%,
12/01/06 A- A3 2,185 2,204,818
- ------------------------------------------------------------------
Sebastian (County of)
(Arkansas Community Jr.
College District);
Refunding & Improvement
Series 1997 GO
5.10%, 04/01/06(b) - Aaa 500 523,370
- ------------------------------------------------------------------
5.20%, 04/01/07(b) - Aaa 1,000 1,055,850
- ------------------------------------------------------------------
8,774,221
- ------------------------------------------------------------------
CALIFORNIA-1.49%
California State Public
Works Board (Department of
Corrections) (State
Prison-Madera County);
Lease Series 1990 A RB
7.00%, 09/01/00 A A 100 107,110
- ------------------------------------------------------------------
Folsom (City of) (School
Facilities Project);
Series 1994 B GO 6.00%,
08/01/02(b) AAA Aaa 500 539,345
- ------------------------------------------------------------------
Inglewood (City of) (Daniel
Freeman Hospital Inc.);
Insured Hospital Series
1991 RB 6.50%, 05/01/01(d) NRR NRR 400 427,476
- ------------------------------------------------------------------
Orange (County of);
Refunding Recovery Series
A RB 5.50%, 06/01/06(b) AAA Aaa 1,000 1,078,230
- ------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
CALIFORNIA-(CONTINUED)
Parking Authority of the
City and County of San
Francisco; Parking Meter
Series 1994 RB 6.75%,
06/01/05(b) AAA Aaa $ 500 $ 573,120
- ------------------------------------------------------------------
West End Water Development,
Treatment, and
Conservation Joint Powers
Authority; Water
Facilities Series 1990
Certificates of
Participation 7.00%,
10/01/00 BBB+ A 250 265,500
- ------------------------------------------------------------------
2,990,781
- ------------------------------------------------------------------
COLORADO-0.01%
Colorado Student Obligation
Bond Authority; Student
Loan Series 1985 B RB
6.125%, 12/01/98 - A 25 25,315
- ------------------------------------------------------------------
CONNECTICUT-1.53%
Berlin (City of); Unlimited
Tax Series 1997 GO 5.00%,
06/15/00(b) AAA Aaa 350 358,243
- ------------------------------------------------------------------
Connecticut (State of);
Series B GO 5.25%,
07/01/02 AA- Aa3 250 250,215
- ------------------------------------------------------------------
Connecticut (State of)
Development Authority
(Light and Power Company);
Refunding Series A PCR
3.65%, 09/01/28(e) A1+ VMIG1 200 200,000
- ------------------------------------------------------------------
New Haven (City of); Series
1997 GO 6.00%, 02/15/06(b) AAA Aaa 2,050 2,261,683
- ------------------------------------------------------------------
3,070,141
- ------------------------------------------------------------------
DELAWARE-0.39%
Delaware Transportation
Authority; Senior Lien
Transportation System
Series 1991 RB 6.00%,
07/01/01(c)(d) AAA Aaa 750 792,818
- ------------------------------------------------------------------
DISTRICT OF COLUMBIA-6.16%
District of Columbia;
Refunding Unlimited Tax
Series B GO 6.75%,
06/01/99(b) AAA Aaa 750 764,655
- ------------------------------------------------------------------
6.125%, 06/01/03(b) AAA Aaa 3,020 3,276,821
- ------------------------------------------------------------------
5.50%, 06/01/07(b) AAA Aaa 3,000 3,206,730
- ------------------------------------------------------------------
District of Columbia
(American Association
Advancement Science);
Series 1997 RB 5.00%,
01/01/05(b) AAA Aaa 800 825,336
- ------------------------------------------------------------------
5.50%, 01/01/06(b) AAA Aaa 1,235 1,314,905
- ------------------------------------------------------------------
District of Columbia
(Medlantic Healthcare
Group); Refunding Series
1993 A RB 5.50%,
08/15/06(b) AAA Aaa 500 530,930
- ------------------------------------------------------------------
District of Columbia
(Medlantic Healthcare
Group); Series 1996 A RB
6.00%, 08/15/06(b) AAA Aaa 1,550 1,699,187
- ------------------------------------------------------------------
6.00%, 08/15/07(b) AAA Aaa 500 550,750
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <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 A+ A3 $ 200 $ 212,418
- ------------------------------------------------------------------
12,381,732
- ------------------------------------------------------------------
FLORIDA-1.61%
Palm Beach County Solid
Waste Authority; Refunding
Series 1997 A RB 5.50%,
10/01/06(b) AAA Aaa 3,000 3,229,560
- ------------------------------------------------------------------
GEORGIA-3.03%
Albany (City of); Sewer
System Series 1992 RB
6.30%, 07/01/02(d) AAA Aaa 500 541,400
- ------------------------------------------------------------------
Fulton (County of); Water
and Sewer Refunding Series
1992 RB 5.75%, 01/01/02(b) AAA Aaa 715 754,747
- ------------------------------------------------------------------
Georgia (State of); Series
1988 D GO 7.10%, 06/01/99 AAA Aaa 2,000 2,050,820
- ------------------------------------------------------------------
Georgia State Municipal
Electric Authority; Series
V RB 6.00%, 01/01/01(b) AAA Aaa 1,000 1,048,770
- ------------------------------------------------------------------
Marietta County School
District; Refunding Series
1993 GO 5.50%, 01/01/07 AA- A 1,110 1,162,114
- ------------------------------------------------------------------
Metropolitan Atlanta Rapid
Transit Authority; Sales
Tax Refunding Series M RB
6.15%, 07/01/02 AA- A1 500 540,364
- ------------------------------------------------------------------
6,098,215
- ------------------------------------------------------------------
HAWAII-2.77%
Hawaii (State of); Refunding
Series 1997 GO 6.00%,
03/01/07(b) AAA Aaa 5,000 5,564,750
- ------------------------------------------------------------------
ILLINOIS-5.63%
Chicago (City of); Series
1997 GO 6.00%, 01/01/06(b) AAA Aaa 500 548,885
- ------------------------------------------------------------------
Chicago (City of) (Central
Public Library Project);
Adjustable Rate Series
1988 C GO 6.10%,
01/01/99(b) AAA Aaa 500 508,915
- ------------------------------------------------------------------
Hoffman Estates Illinois
Multifamily Housing (Park
Place Apartments Project);
Refunding Series 1996 RB
5.75%, 06/01/06(c) AAA Aaa 1,250 1,324,250
- ------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
ILLINOIS-(CONTINUED)
Illinois Development
Financial Authority;
Series 1997 IDR 4.80%,
08/01/07(c) AA+ NRR $1,000 $ 1,000,130
- ------------------------------------------------------------------
Illinois Development
Financial Authority
(American College
Surgeons); Series 1996 RB
3.70%, 08/01/26(e) A1+ - 2,300 2,300,000
- ------------------------------------------------------------------
Illinois Educational
Facilities Authority
(Augustana College);
Series 1997 RB
4.80%, 10/01/99(b) AAA NRR 375 380,505
- ------------------------------------------------------------------
Illinois Health Facilities
Authority; Revolving
Pooled Financing Series D
RB
3.70%, 08/01/15(e) A1+ VMIG1 800 800,000
- ------------------------------------------------------------------
Illinois Health Facilities
Authority (Edward
Obligated Group); Series
1997 A RB
4.90%, 02/15/08(b) AAA Aaa 835 851,316
- ------------------------------------------------------------------
Illinois Health Facilities
Authority (Highland Park
Hospital); Series 1991 A
RB
4.80%, 10/01/99(b) AAA Aaa 500 506,975
- ------------------------------------------------------------------
5.55%, 10/01/06(b) AAA Aaa 500 534,900
- ------------------------------------------------------------------
Illinois Health Facilities
Authority (Mercy Hospital
and Medical Center);
Refunding Series 1992 RB
6.20%, 01/01/00 A- Baa1 250 257,285
- ------------------------------------------------------------------
Illinois Regional Transit
Authority; Series B RB
6.30%, 06/01/04(c)(d) AAA Aaa 1,000 1,125,460
- ------------------------------------------------------------------
Joliet (City of); Waterworks
and Sewer Series 1991 RB
6.95%, 01/01/01(b) AAA Aaa 250 267,957
- ------------------------------------------------------------------
Kane (County of) Public
Building Commission;
Unlimited Tax Public
Building Series B GO
6.20%, 12/01/99(c)(d) NRR NRR 700 725,032
- ------------------------------------------------------------------
Kane County School District
#131 (Aurora East Side
Project); Series 1998 A GO
7.10%, 12/01/98(c)(d) AAA Aaa 175 178,896
- ------------------------------------------------------------------
11,310,506
- ------------------------------------------------------------------
INDIANA-2.78%
Frankfort Middle School
Building Corp.; Refunding
Series 1996 RB
5.20%, 01/10/07(b) AAA Aaa 295 308,718
- ------------------------------------------------------------------
Hamilton (County of)
Optional Income Tax
Revenue Series 1998 RB
5.00%, 07/10/08(b) AAA Aaa 1,095 1,111,622
- ------------------------------------------------------------------
Indiana Health Facilities
Financing Authority
(Charity Obligated Group);
Series 1997 D RB
5.00%, 11/01/07(c) AA+ Aa2 2,500 2,564,975
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
INDIANA-(CONTINUED)
Indiana Transportation
Finance Authority; Airport
Facilities Lease Series A
RB
6.00%, 11/01/01 A A1 $ 500 $ 529,245
- ------------------------------------------------------------------
Indiana Transportation
Finance Authority; Highway
Series A RB
5.50%, 06/01/07(b) AAA Aaa 1,000 1,074,330
- ------------------------------------------------------------------
5,588,890
- ------------------------------------------------------------------
IOWA-0.26%
Iowa Student Loan Liquidity
Corp.; Student Loan Series
1992 A RB
6.25%, 03/01/00 - Aa1 500 517,495
- ------------------------------------------------------------------
KENTUCKY-0.34%
Kentucky State Turnpike
Authority (Economic
Development Road
Revitalization Project);
RB
7.125%, 05/15/00(c)(d) AAA Aaa 260 279,903
- ------------------------------------------------------------------
Western Kentucky University;
Consolidated Educational
Buildings Refunding Series
M RB
4.70%, 05/01/99(b) AAA Aaa 390 394,360
- ------------------------------------------------------------------
674,263
- ------------------------------------------------------------------
LOUISIANA-5.33%
Jefferson Parish School
Board; Sales and Use Tax
RB
6.00%, 02/01/04(b) AAA Aaa 1,720 1,864,583
- ------------------------------------------------------------------
Louisiana (State of); Series
A GO
6.00%, 04/15/07(b) AAA Aaa 5,000 5,579,100
- ------------------------------------------------------------------
Louisiana Offshore Terminal
Authority (Loop, Inc.);
Deepwater Port Refunding
Series 1992 RB
6.00%, 09/01/01 A Baa1 1,000 1,052,380
- ------------------------------------------------------------------
6.20%, 09/01/03 A Baa1 1,000 1,081,790
- ------------------------------------------------------------------
Louisiana Public Facilities
Authority (Tulane
University of Louisiana);
Series 1987 C RB
7.30%, 08/15/99 A+ A1 270 276,024
- ------------------------------------------------------------------
Ouachita (Parish of)
Hospital Service District
#1 (Glenwood Regional
Medical Center); Hospital
Refunding Series 1996 RB
5.00%, 05/15/99 A - 850 858,874
- ------------------------------------------------------------------
10,712,751
- ------------------------------------------------------------------
MASSACHUSETTS-0.21%
New England Education Loan
Marketing Corp.; Student
Loan Refunding Senior
Issue 1992 D RB
6.20%, 09/01/00 - Aaa 400 419,172
- ------------------------------------------------------------------
MICHIGAN-2.25%
Dearborn (City of) Economic
Development Corp. (Oakwood
Obligated Group); Hospital
Series 1991 A RB
6.95%, 08/15/01(c)(d) AAA Aaa 1,000 1,106,150
- ------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
MICHIGAN-(CONTINUED)
Detroit (City of) School
District; GO
5.60%, 05/01/01 AA+ Aa2 $ 765 $ 798,285
- ------------------------------------------------------------------
Michigan State Building
Authority; Refunding
Series I RB
6.40%, 10/01/04 AA Aa1 2,000 2,175,520
- ------------------------------------------------------------------
Michigan State Strategic
Fund; Refunding Series
1988 PCR
3.80%, 04/15/18(e) - P1 440 440,000
- ------------------------------------------------------------------
4,519,955
- ------------------------------------------------------------------
MINNESOTA-0.39%
Southern Minnesota Municipal
Power Agency; Power Supply
System Series A RB
5.60%, 01/01/04 A+ A2 745 786,020
- ------------------------------------------------------------------
MISSOURI-0.46%
Fort Osage Reorganization
School District #1
(Missouri School District
Direct Deposit Program);
Series 1997 GO
4.95%, 03/01/06 AA Aa2 405 420,000
- ------------------------------------------------------------------
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 500 507,925
- ------------------------------------------------------------------
927,925
- ------------------------------------------------------------------
MONTANA-0.22%
Montana Higher Education
Assistance Corp.; Student
Loan Series
1992 A RB
6.60%, 12/01/00 - A 420 444,881
- ------------------------------------------------------------------
NEVADA-0.25%
Clark County Improvement
District No. 65 (Lamb
Boulevard III); Series
1992 GO
6.20%, 12/01/02 AA- A1 120 123,977
- ------------------------------------------------------------------
Nevada (State of) (Nevada
Municipal Bond Bank
Project Nos. 38-39);
Limited Tax Series 1992 A
GO 6.00%, 07/01/01(d) AA NRR 350 368,893
- ------------------------------------------------------------------
492,870
- ------------------------------------------------------------------
NEW JERSEY-1.41%
Gloucester County Utilities
Authority; Sewer Refunding
Series 1991 RB
6.10%, 01/01/00 AA- A1 225 233,561
- ------------------------------------------------------------------
Jersey City (City of)
(Qualified School Bond);
GO
6.40%, 02/15/00 AA A3 1,000 1,043,610
- ------------------------------------------------------------------
New Jersey Transportation
Trust Fund Authority;
Transportation System
Series 1992 A RB
5.90%, 06/15/99(d) NRR Aaa 1,000 1,024,930
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
NEW JERSEY-(CONTINUED)
Trenton (City of); Fiscal
Year Adjustment GO
6.10%, 08/15/02(b) AAA Aaa $ 500 $ 538,750
- ------------------------------------------------------------------
2,840,851
- ------------------------------------------------------------------
NEW MEXICO-0.78%
Albuquerque (City of); Joint
Water and Sewer Series
1990 A RB
6.00%, 07/01/00(c)(d) AAA NRR 1,000 1,041,360
- ------------------------------------------------------------------
Santa Fe (City of); Series
1994 A RB
5.50%, 06/01/03(d) AAA Aaa 500 528,660
- ------------------------------------------------------------------
1,570,020
- ------------------------------------------------------------------
NEW YORK-12.20%
Nassau (County of); GO
5.15%, 03/01/07(b) AAA Aaa 5,000 5,195,250
- ------------------------------------------------------------------
New York (City of);
Refunding
Series D GO
5.60%, 11/01/05 BBB+ A3 5,000 5,310,050
- ------------------------------------------------------------------
New York (City of); Series G
GO
5.90%, 02/01/05 BBB+ A3 1,150 1,235,273
- ------------------------------------------------------------------
New York (City of) Municipal
Assistance Corp.; Series I
RB
5.25%, 07/01/03 AA Aa2 5,500 5,774,175
- ------------------------------------------------------------------
New York (State of)
Dormitory Authority;
Mental Health Facilities
Series A RB
6.00%, 02/15/05 A- Baa1 1,000 1,077,900
- ------------------------------------------------------------------
6.00%, 08/15/07 A- Baa1 1,775 1,942,453
- ------------------------------------------------------------------
New York (State of)
Dormitory Authority (Beth
Israel Medical Center);
Series 1997 B RB
5.50%, 11/01/06(b) AAA Aaa 1,000 1,074,890
- ------------------------------------------------------------------
New York (State of)
Dormitory Authority (Pace
University Issue); Series
1997 RB
6.00%, 07/01/07(b) AAA Aaa 1,275 1,421,294
- ------------------------------------------------------------------
New York (State of) Medical
Care Facilities Financing
Agency; Hospital & Nursing
Home Series 1995 A RB
5.60%, 02/15/05(b) AAA - 1,425 1,492,616
- ------------------------------------------------------------------
24,523,901
- ------------------------------------------------------------------
NORTH DAKOTA-0.84%
Fargo (City of); Refunding
Water Series 1997 RB
5.50%, 01/01/08(b) AAA Aaa 905 971,997
- ------------------------------------------------------------------
Grand Forks Health Care
System (Altru Health
System Obligated Group);
Series 1997 RB
4.55%, 08/15/00(b) AAA Aaa 705 712,847
- ------------------------------------------------------------------
1,684,844
- ------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
OHIO-4.40%
Cleveland City School
District; Series 1997 RB
5.00%, 06/01/01(b) AAA Aaa $2,000 $ 2,055,120
- ------------------------------------------------------------------
Franklin (County of); 1991
Issue GO
6.30%, 12/01/01(c)(d) NRR - 1,500 1,634,205
- ------------------------------------------------------------------
Greene (County of); Water
System Series A RB
5.45%, 12/01/06(b) AAA Aaa 585 626,629
- ------------------------------------------------------------------
Hilliard City School
District; School
Improvement Refunding
Series 1992 GO
6.05%, 12/01/00(b) AAA Aaa 500 528,055
- ------------------------------------------------------------------
6.15%, 12/01/01(b) AAA Aaa 250 268,912
- ------------------------------------------------------------------
Lucas County (St. Vincent's
Medical Center); Hospital
Series A RB
6.75%, 08/15/20(b) AAA Aaa 2,000 2,146,580
- ------------------------------------------------------------------
Ohio (State of)(Elementary &
Secondary Education
Facilities); Series 1997
RB
5.10%, 12/01/05 AA- Aa3 1,500 1,573,530
- ------------------------------------------------------------------
8,833,031
- ------------------------------------------------------------------
OKLAHOMA-1.43%
Norman (City of) Hospital
Authority; Refunding
Series A RB
5.20%, 09/01/06(b) AAA Aaa 310 325,041
- ------------------------------------------------------------------
5.30%, 09/01/07(b) AAA Aaa 1,090 1,151,967
- ------------------------------------------------------------------
Oklahoma Housing Finance
Agency; Single Family
Mortgage
Series A RB
6.55%, 03/01/00(b) AAA Aaa 115 119,414
- ------------------------------------------------------------------
Southern Oklahoma Memorial
Hospital Authority;
Hospital Series 1993 A RB
5.60%, 02/01/00(d) NRR NRR 1,250 1,284,837
- ------------------------------------------------------------------
2,881,259
- ------------------------------------------------------------------
OREGON-2.46%
Grande Ronde (City of)
Community Confederated
Tribes (Governmental
Facilities and
Infrastructure); Unlimited
Tax Series 1997 GO
4.75%, 12/01/04(b) AAA Aaa 1,000 1,024,600
- ------------------------------------------------------------------
4.80%, 12/01/05(b) AAA Aaa 1,045 1,070,508
- ------------------------------------------------------------------
5.00%, 12/01/07(b) AAA Aaa 1,145 1,184,846
- ------------------------------------------------------------------
Portland (City of); Sewer
System Series 1994 A RB
5.45%, 06/01/03 A+ A1 1,065 1,129,677
- ------------------------------------------------------------------
5.55%, 06/01/04 A+ A1 500 535,436
- ------------------------------------------------------------------
4,945,067
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
PENNSYLVANIA-2.14%
Chester Upland School
Authority; Refunding
Series 1997 B RB
4.60%, 09/01/06(b) AAA Aaa $ 505 $ 509,540
- ------------------------------------------------------------------
4.70%, 09/01/07(b) AAA Aaa 535 542,292
- ------------------------------------------------------------------
Pennsylvania Industrial
Development Authority;
Economic Development
Series 1991 A RB
6.50%, 07/01/98(d) NRR NRR 150 151,065
- ------------------------------------------------------------------
York (City of); Pooled
Financing RB 3.80%,
09/01/26(e)(f) A1 - 3,085 3,085,000
- ------------------------------------------------------------------
4,287,897
- ------------------------------------------------------------------
RHODE ISLAND-1.26%
Rhode Island (State of);
Refunding Series 1992 A GO
6.10%, 06/15/03(b) AAA Aaa 1,000 1,089,800
- ------------------------------------------------------------------
Rhode Island State Turnpike
and Bridge Authority;
Refunding Series 1997 A RB
5.00%, 12/01/99 A - 1,395 1,419,817
- ------------------------------------------------------------------
2,509,617
- ------------------------------------------------------------------
SOUTH CAROLINA-0.48%
Beaufort (County of)
Hospital Facilities
(Beaufort County Memorial
Hospital); Refunding
Series 1997 RB
4.20%, 12/01/99 AAA Aaa 930 936,185
- ------------------------------------------------------------------
SOUTH DAKOTA-1.03%
Rapid City (City of); Sales
Tax Series 1995 A RB
5.60%, 06/01/05(b) AAA Aaa 255 275,229
- ------------------------------------------------------------------
South Dakota Health and
Education Facility
(McKennan Hospital);
Refunding Series 1996 RB
5.40%, 07/01/06(b) AAA Aaa 1,680 1,783,051
- ------------------------------------------------------------------
2,058,280
- ------------------------------------------------------------------
TENNESSEE-2.94%
Nashville and Davidson
(County of) Health and
Education Facilities Board
(Meharry Medical
College); RB
7.875%, 12/01/04(d) NRR Aaa 995 1,116,947
- ------------------------------------------------------------------
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 2,831,490
- ------------------------------------------------------------------
Tennessee Housing
Development Agency;
Mortgage Financing Series
1993 A RB
5.65%, 01/01/07 A+ A1 1,360 1,416,399
- ------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
TENNESSEE-(CONTINUED)
Tennessee School Board
Authority; College and
University Improvement
Series RB
5.75%, 05/01/06 AA A1 $ 550 $ 550,622
- ------------------------------------------------------------------
5,915,458
- ------------------------------------------------------------------
TEXAS-9.63%
Alamo Community College
District; Series 1990 GO
6.90%, 02/15/00(c)(d) NRR Aaa 500 525,795
- ------------------------------------------------------------------
Austin (City of); Combined
Utility System Refunding
Series 1986 RB
7.20%, 05/15/98(d) NRR NRR 25 25,100
- ------------------------------------------------------------------
7.20%, 05/15/98 A A2 175 175,780
- ------------------------------------------------------------------
Austin (City of); Utility
System Series 1998 A RB
7.50%, 11/15/98 A A2 750 767,723
- ------------------------------------------------------------------
Clint Independent School
District; Unlimited Tax
Refunding Series 1991 GO
6.30%, 03/01/00(b) - Aaa 185 189,144
- ------------------------------------------------------------------
Comal County Industrial
Development Authority (The
Coleman Company, Inc.
Project); Series 1980 IDR
9.25%, 08/01/00(d) NRR NRR 505 539,633
- ------------------------------------------------------------------
Conroe (City of) Independent
School District; Unlimited
School Tax GO
7.375%, 02/01/01(b) AAA Aaa 115 125,206
- ------------------------------------------------------------------
Dallas (City of); Waterwork
& Sewer System Series A RB
5.50%, 10/01/05 AA Aa2 1,000 1,008,920
- ------------------------------------------------------------------
Gatesville Independent
School District; Unlimited
Tax School Building and
Refunding Series 1995 RB
5.80%, 02/01/03(b) - Aaa 485 519,212
- ------------------------------------------------------------------
Harris (County of) (Port of
Houston Authority); RB
5.75%, 05/01/02 A A 1,320 1,341,093
- ------------------------------------------------------------------
5.75%, 05/01/02(b) AAA Aaa 1,295 1,316,354
- ------------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (Memorial Hospital
System Project); Hospital
Series 1992 RB
6.70%, 06/01/00(d) NRR NRR 1,000 1,053,170
- ------------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (School Health Care
System Project); Series B
RB
5.10%, 07/01/06 AA Aa3 1,000 1,039,480
- ------------------------------------------------------------------
Keller (City of) Independent
School District; Series
1994 Certificates of
Participation
5.75%, 08/15/01(b) AAA Aaa 915 964,327
- ------------------------------------------------------------------
Kerrville (City of);
Electric System Refunding
Series 1991 RB
6.375%, 11/01/01(b) AAA Aaa 185 198,866
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
TEXAS-(CONTINUED)
La Marque Independent School
District; Unlimited
Schoolhouse Tax Series
1992 GO
7.50%, 08/15/99(b) AAA Aaa $ 575 $ 603,900
- ------------------------------------------------------------------
7.50%, 08/15/02(b) AAA Aaa 750 850,305
- ------------------------------------------------------------------
Lubbock Health Facility
Development Corp.;
Methodist Hospital
Refunding Series 1993 B
5.40%, 12/01/05(b) AAA Aaa 500 530,515
- ------------------------------------------------------------------
Plano Independent School
District; GO
5.80%, 02/15/05(b) AAA Aaa 2,025 2,171,145
- ------------------------------------------------------------------
San Antonio (City of);
Electric and Gas System
Prerefunding Series 1989 A
RB
7.00%, 02/01/99(c)(d) - Aaa 165 171,786
- ------------------------------------------------------------------
7.00%, 02/01/01 AA Aa1 235 244,174
- ------------------------------------------------------------------
Tarrant (County of) Health
Facilities Development
Corp. (Texas Health
Resources System); Series
1997 A RB
5.50%, 02/15/05(b) AAA Aaa 1,000 1,061,480
- ------------------------------------------------------------------
5.50%, 02/15/06(b) AAA Aaa 500 532,785
- ------------------------------------------------------------------
Tarrant (County of) Housing
Finance Corp. (Arbors on
Park II); Multifamily
Housing Series RB
5.05%, 12/01/07 AAA - 1,500 1,516,965
- ------------------------------------------------------------------
Temple (City of) (Bell
County); Refunding Series
1992 GO
5.80%, 02/01/01(b) AAA Aaa 250 261,765
- ------------------------------------------------------------------
Texas Municipal Power
Agency; RB
5.75%, 09/01/02(c)(d) AAA Aaa 1,000 1,061,770
- ------------------------------------------------------------------
Texas Turnpike Authority
(Addison Airport Toll
Tunnel Project); Dallas
North Tollway Series 1994
RB
6.30%, 01/01/05(b) AAA Aaa 500 554,875
- ------------------------------------------------------------------
University of Texas System;
General Tuition Refunding
Series 1986 RB
7.75%, 08/15/98(d) AAA Aaa 10 10,148
- ------------------------------------------------------------------
19,361,416
- ------------------------------------------------------------------
UTAH-1.61%
Intermountain Power Agency
(Utah Power Supply);
Refunding Series 1997 B RB
6.00%, 07/01/07(b) AAA Aaa 1,000 1,112,341
- ------------------------------------------------------------------
Salt Lake (City of)
Municipal Building
Authority; Series A RB
6.50%, 10/15/00 A+ Aa3 570 590,737
- ------------------------------------------------------------------
Utah (State of) (Board of
Water Resources Program);
Revolving Fund
Recapitalization Series
1992 B RB
6.10%, 04/01/02 AA - 500 539,361
- ------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
UTAH-(CONTINUED)
Utah Municipal Finance
Cooperative (Pooled
Capital Improvement
Financing Program)
(University Hospital
Project); Local Government
Series
August 1, 1991 RB
6.50%, 05/15/99(d) NRR NRR $ 475 $ 488,599
- ------------------------------------------------------------------
Utah Water Financing Agency;
Series A RB
4.40%, 10/01/99(b) AAA Aaa 500 504,820
- ------------------------------------------------------------------
3,235,858
- ------------------------------------------------------------------
VIRGINIA-1.26%
Medical College of Hampton
Roads; General Refunding
Series 1991 A RB
6.00%, 11/15/99 A- - 605 624,493
- ------------------------------------------------------------------
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 535 570,711
- ------------------------------------------------------------------
5.40%, 11/01/05 AA Aa 500 538,916
- ------------------------------------------------------------------
Portsmouth (City of); Port
Improvement Unlimited Tax
Refunding GO
6.40%, 11/01/03 AA- A3 300 327,081
- ------------------------------------------------------------------
Portsmouth (City of); Public
Utility Refunding Series
1992 GO
5.90%, 11/01/01 AA- A3 450 477,914
- ------------------------------------------------------------------
2,539,115
- ------------------------------------------------------------------
WASHINGTON-5.49%
King (County of); Series A
RB
5.80%, 01/01/05 AA+ Aa1 1,000 1,085,100
- ------------------------------------------------------------------
Seattle (City of) (West
Seattle Bridge); Limited
Tax Refunding Series 1991
GO
6.40%, 10/01/01 AA+ Aa1 250 267,703
- ------------------------------------------------------------------
Seattle (Port of); Series
1992 A RB
6.00%, 11/01/01 AA- Aa3 500 530,950
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C> <C>
WASHINGTON-(CONTINUED)
Snohomish (County of) Public
Utilities District #1; RB
5.70%, 01/01/06(b) AAA Aaa $4,000 $ 4,276,320
- ------------------------------------------------------------------
Washington Public Power
Supply System (Nuclear
Electric Project #1);
Refunding Series 1989 B RB
7.00%, 07/01/99 AA- Aa1 600 621,953
- ------------------------------------------------------------------
Washington Public Power
Supply System (Nuclear
Electric Project #2);
Refunding Series 1997 B RB
5.50%, 07/01/05 AA- Aa1 2,000 2,115,980
- ------------------------------------------------------------------
5.50%, 07/01/06 AA- Aa1 2,000 2,122,180
- ------------------------------------------------------------------
11,020,186
- ------------------------------------------------------------------
WISCONSIN-4.40%
Wisconsin (State of); Series
A GO
5.75%, 05/01/99 AA Aa2 1,000 1,021,960
- ------------------------------------------------------------------
Wisconsin (State of) Health
& Educational Facilities
Authority (Aurora Health
Care Inc.); Series 1997 RB
6.00%, 08/15/06(b) AAA Aaa 2,000 2,199,780
- ------------------------------------------------------------------
Wisconsin (State of) Health
& Educational Facilities
Authority (Charity
Obligation Group);
Hospital Series 1997 D RB
4.90%, 11/01/05(c) AA+ VMIG1 2,250 2,289,803
- ------------------------------------------------------------------
Wisconsin (State of) Health
& Educational Facilities
Authority (Marshfield
Clinic); RB
5.20%, 02/15/07(b) AAA Aaa 3,210 3,348,735
- ------------------------------------------------------------------
8,860,278
- ------------------------------------------------------------------
TOTAL INVESTMENTS-98.54% 198,044,844(g)
- ------------------------------------------------------------------
OTHER LIABILITIES LESS ASSETS-1.46% 2,924,130
- ------------------------------------------------------------------
NET ASSETS-100.00% $200,968,974
==================================================================
</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. Ratings are not covered by Independent Auditors' Report.
(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) Secured by an escrow fund of U.S. Treasury obligations.
(e) 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 03/31/98.
(f) Secured by a letter of credit.
(g) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$191,006,380) $ 198,044,844
- ---------------------------------------------------------
Cash 6,183
- ---------------------------------------------------------
Receivables for:
Capital stock sold 737,657
- ---------------------------------------------------------
Interest 2,837,086
- ---------------------------------------------------------
Investment for deferred compensation plan 18,008
- ---------------------------------------------------------
Other assets 32,484
- ---------------------------------------------------------
Total assets 201,676,262
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 236,704
- ---------------------------------------------------------
Dividends 364,211
- ---------------------------------------------------------
Deferred compensation plan 18,008
- ---------------------------------------------------------
Accrued administrative services fees 3,937
- ---------------------------------------------------------
Accrued advisory fees 50,321
- ---------------------------------------------------------
Accrued directors' fees 2,900
- ---------------------------------------------------------
Accrued transfer agent fees 6,153
- ---------------------------------------------------------
Accrued operating expenses 25,054
- ---------------------------------------------------------
Total liabilities 707,288
- ---------------------------------------------------------
Net assets applicable to shares
outstanding $ 200,968,974
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER
SHARE:
Authorized 1,000,000,000
- ---------------------------------------------------------
Outstanding 18,194,630
- ---------------------------------------------------------
Net asset value and redemption price per
share $ 11.05
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $11.05 divided
by 99.00%) $ 11.16
- ---------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 9,473,238
- --------------------------------------------------------
EXPENSES:
Advisory fees 566,927
- --------------------------------------------------------
Administrative services fees 46,097
- --------------------------------------------------------
Custodian fees 10,759
- --------------------------------------------------------
Transfer agent fees 53,072
- --------------------------------------------------------
Registration and filing fees 61,577
- --------------------------------------------------------
Directors' fees 9,279
- --------------------------------------------------------
Other 104,123
- --------------------------------------------------------
Total expenses 851,834
- --------------------------------------------------------
Net investment income 8,621,404
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Net realized gain (loss) on sales of
investment securities (31,582)
- --------------------------------------------------------
Net unrealized appreciation of investment
securities 5,402,954
- --------------------------------------------------------
Net gain on investment securities 5,371,372
- --------------------------------------------------------
Net increase in net assets resulting from
operations $13,992,776
========================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 15
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
-------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 8,621,404 $ 4,272,718
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (31,582) 7,036
- --------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities 5,402,954 (1,085,090)
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 13,992,776 3,194,664
- --------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (8,634,206) (4,406,557)
- --------------------------------------------------------------------------------------------
Distributions from capital (3,932) (21,485)
- --------------------------------------------------------------------------------------------
Net increase from capital stock transactions 22,272,556 91,508,711
- --------------------------------------------------------------------------------------------
Net increase in net assets 27,627,194 90,275,333
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 173,341,780 83,066,447
- --------------------------------------------------------------------------------------------
End of period $200,968,974 $173,341,780
============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $195,083,906 $172,821,545
- --------------------------------------------------------------------------------------------
Undistributed net investment income (17,485) (10,946)
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (1,135,911) (1,104,329)
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 7,038,464 1,635,510
- --------------------------------------------------------------------------------------------
$200,968,974 $173,341,780
- --------------------------------------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
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 (formerly the Intermediate
Portfolio), 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.
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
13
<PAGE> 16
of premiums and original issue discounts, is earned from settlement date and
is recorded on the accrual basis. On March 31, 1998, undistributed net
investment income was increased by $10,195 and paid-in capital reduced by
$10,195 in order to comply with the requirements of the American Institute of
Certified Public Accountants Statement of Position 93-2. Net assets of the
Fund were unaffected by the reclassifications discussed above.
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 year ended March 31, 1998, the Fund reimbursed
AIM $46,097 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Fund. During the year ended March 31, 1998, the Fund
paid AFS $34,481 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
$21,156 from sales of capital stock during the year ended March 31, 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 year ended March 31, 1998, the Fund paid legal fees of $3,294 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 borrowings up to the lesser of i) $325,000,000 or ii) the limits set
by its prospectus for borrowings. During the year ended March 31, 1998 , 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 year ended March 31, 1998 was $76,702,244 and
$39,281,760, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of March 31, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $7,048,177
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (9,713)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $7,038,464
=========================================================
</TABLE>
Investments have the same cost for tax and financial
statement purposes.
14
<PAGE> 17
NOTE 6-CAPITAL STOCK
Changes in capital stock outstanding for the years ended March 31, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 4,891,415 $ 53,561,920 11,037,256 $119,260,028
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends 411,422 4,509,891 277,497 2,985,870
- -------------------------------------------------------------------------------------------------------------------
Reacquired (3,262,778) (35,799,255) (2,855,695) (30,737,187)
- -------------------------------------------------------------------------------------------------------------------
2,040,059 $ 22,272,556 8,459,058 $ 91,508,711
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 7- FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the five-year period ended March 31,
1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.73 $10.79 $10.67 $10.62 $10.74
- ------------------------------------------------------------ -------- -------- ------- ------- -------
Income from investment operations:
Net investment income 0.50 0.50 0.52 0.49 0.48
- ------------------------------------------------------------ -------- -------- ------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 0.32 (0.04) 0.12 0.04 (0.10)
- ------------------------------------------------------------ -------- -------- ------- ------- -------
Total from investment operations 0.82 0.46 0.64 0.53 0.38
- ------------------------------------------------------------ -------- -------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.50) (0.52) (0.52) (0.48) (0.48)
- ------------------------------------------------------------ -------- -------- ------- ------- -------
Distributions from net realized gains -- -- -- -- (0.02)
- ------------------------------------------------------------ -------- -------- ------- ------- -------
Total distributions (0.50) (0.52) (0.52) (0.48) (0.50)
- ------------------------------------------------------------ -------- -------- ------- ------- -------
Net asset value, end of period $ 11.05 $10.73 $10.79 $10.67 $10.62
============================================================ ======== ======== ======= ======= =======
Total return(a) 7.79% 4.33% 6.06% 5.17% 3.47%
============================================================ ======== ======== ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $200,969 $173,342 $83,066 $82,355 $99,757
============================================================ ======== ======== ======= ======= =======
Ratio of expenses to average net assets 0.45%(b) 0.56% 0.65% 0.59% 0.61%(c)
============================================================ ======== ======== ======= ======= =======
Ratio of net investment income to average net assets 4.56%(b) 4.63% 4.81% 4.65% 4.37%(c)
============================================================ ======== ======== ======= ======= =======
Portfolio turnover rate 22% 26% 32% 75% 26%
============================================================ ======== ======== ======= ======= =======
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $188,975,800.
(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
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Tax-Exempt Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of AIM
Tax-Free Intermediate Fund (a portfolio of AIM Tax-Exempt Funds, Inc.),
including the schedule of investments, as of March 31, 1998, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the years in the two-year period then ended and the financial
highlights for each of the years in the five year-period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and the financial highlights. Our procedures included confirmation of
securities owned as of March 31, 1998, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Tax-Free Intermediate Fund as of March 31, 1998, the results of its operations
for the year then ended, changes in its net assets for each of the years in the
two-year period then ended and the financial highlights for each of the years in
the five-year period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
May 1, 1998
16
<PAGE> 19
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
Director, AEGEON USA; CUSTODIAN
Formerly Vice Chairman and President, Stuart W. Coco
Mercantile-Safe Deposit & Trust Co.; and Vice President The Bank of New York
President, Mercantile Bankshares 90 Washington Street
Melville B. Cox 11th Floor
Jack Fields Vice President New York, NY 10286
Chief Executive Officer
Texana Global, Inc.; Karen Dunn Kelley COUNSEL TO THE FUND
Formerly Member Vice President
of the U.S. House of Representatives Ballard Spahr
Renee A. Bamford Andrews & Ingersoll, LLP
Carl Frischling Assistant Secretary 1735 Market Street
Partner Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel P. Michelle Grace
Assistant Secretary COUNSEL TO THE DIRECTORS
Robert H. Graham
President and Chief Executive Officer Jeffrey H. Kupor Kramer, Levin, Naftalis & Frankel
A I M Management Group Inc. Assistant Secretary 919 Third Avenue
New York, NY 10022
John F. Kroeger Nancy L. Martin
Formerly Consultant Assistant Secretary DISTRIBUTOR
Wendell & Stockel Associates, Inc.
Ofelia M. Mayo A I M Distributors, Inc.
Lewis F. Pennock Assistant Secretary 11 Greenway Plaza
Attorney Suite 100
Lisa A. Moss Houston, TX 77046
Ian W. Robinson Assistant Secretary
Consultant; Formerly Executive AUDITORS
Vice President and Kathleen J. Pflueger
Chief Financial Officer Assistant Secretary KPMG Peat Marwick LLP
Bell Atlantic Management 700 Louisiana
Services, Inc. Samuel D. Sirko Houston, TX 77002
Assistant Secretary
Louis S. Sklar
Executive Vice President Stephen I. Winer
Hines Interests Assistant Secretary
Limited Partnership
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
We are required by Internal Revenue Code to advise you within 60 days of the
Fund's fiscal year end as to the federal tax status of dividends paid by the
Fund during its fiscal year ended March 31, 1998.
AIM Tax-Free Intermediate Fund paid ordinary dividends in the amount of $0.5008
per share during its fiscal year ended March 31, 1998. Of this amount, 100%
qualified as tax-exempt interest dividends for federal income tax
purposes.
For the purpose of preparing your annual federal income tax returns, however,
you should report the amounts as reflected on the appropriate Form 1099-DIV.
<PAGE> 20
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS --Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Asian Growth Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
GROWTH OF CAPITAL
[PHOTO OF AIM Advisor International Value Fund
11 GREENWAY PLAZA AIM Blue Chip Fund
APPEARS HERE] AIM Global Growth Fund
AIM International Equity Fund
AIM Select Growth 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 High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
CURRENT INCOME AND HIGH DEGREE OF SAFETY
A I M Management Group Inc. has provided leadership in the AIM Intermediate Government Fund
mutual fund industry since 1976 and managed approximately AIM Limited Maturity Treasury Fund
$89 billion in assets for more than 3.9 million shareholders, AIM Money Market Fund
including individual investors, corporate clients, and financial AIM Tax-Exempt Cash Fund
institutions as of March 31, 1998. The AIM Family of
Funds --Registered Trademark-- is distributed nationwide, and *AIM Aggressive Growth Fund was closed to new investors on
AIM today ranks among the nation's top 15 mutual fund June 5, 1997. For more complete information about any AIM
companies in assets under management, according to Lipper Fund(s), including sales charges and expenses, ask your
Analytical Services, Inc. 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-SM-
</TABLE>
