<PAGE> 1
ANNUAL REPORT / MARCH 31 1999
AIM TAX-FREE INTERMEDIATE FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
--------------------------------------------------
THE LIBRARY BY FELIX EDOUARD VALLOTTON
(1865-1925, SWISS)
VALLOTTON'S WORK IS WIDELY DIVERSIFIED AND COMPRISES MORE
THAN 200 ENGRAVINGS, INNUMERABLE DRAWINGS, SOME 1700
PAINTINGS, A FEW SCULPTURES, AS WELL AS A COLLECTION OF
WRITINGS. HIS QUIET PAINTING OF THE LIBRARY REFLECTS THE ORDER,
DIVERSITY, AND PATIENCE OF LONG-TERM INVESTING.
--------------------------------------------------
AIM Tax-Free Intermediate Fund is 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 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 3/31/99, the Fund paid distributions of $0.492
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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Lehman Municipal Bond Index is an unmanaged composite representing an
approximation of the performance of investment-grade municipal bonds.
o The unmanaged Lipper Intermediate Municipal Funds Index represents an average
of the performance of the 30 largest intermediate-term municipal bond funds
tracked by Lipper, 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, Inc.
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 any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THERE IS
A RISK THAT YOU COULD LOSE A PORTION OR
ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
AIM TAX-FREE INTERMEDIATE FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
For much of the fiscal year, bond markets were both
[PHOTO OF turbulent and narrow. These conditions stemmed from a
Charles T. succession of economic crises overseas as well as ongoing
Bauer, political debate in the United States. In this environment,
Chairman of investors favored the safest asset classes, particularly
the Board of U.S. Treasury securities, and shunned lower-rated bonds.
THE FUND Toward the end of the year, however, the performance of
APPEARS HERE] bonds other than Treasury issues began to improve as it
became increasingly apparent that robust economic growth in
the United States had been largely unaffected by crises in
developing nations.
Despite volatility in other segments of the
fixed-income market, municipal bonds remained relatively
stable in value during the fiscal year. Supply tended to
match demand, and that kept municipal-bond prices from
fluctuating significantly.
We remain optimistic about the long-term prospects for municipal bonds. As
incomes rise and more Americans become subject to the higher tax brackets,
municipal bonds could become increasingly attractive as an investment option.
And despite considerable political rhetoric about replacing the current federal
tax system with a flat tax or a national sales tax, we believe the prospects
that this will actually occur are remote.
On the pages that follow, your Fund's managers offer more detailed
discussion of how markets behaved, how they managed the portfolio in light of
recent volatility, and what they foresee for markets and your Fund. We hope you
find their discussion informative.
HOW SHOULD INVESTORS RESPOND?
We understood how unnerving recent uncertainty could have been. Of course, our
repeated message to you is to keep a long-term outlook on investments rather
than responding to short-term fluctuations. And we are pleased to note that most
mutual fund shareholders remained cool headed and did not pull out of the
markets. In the end, most were rewarded for their long-term perspective.
In view of recent volatility and the divergent performance of market
sectors, this may be a very good time to meet with your financial consultant to
review your current asset allocation and the diversification of your portfolio.
Broad portfolio diversification remains one of the most fundamental principles
of investing, along with long-term thinking and realistic expectations.
YEAR 2000 CONCERN
Many of our shareholders have asked us about AIM's year 2000 readiness status.
We appreciate these concerns, and we take the year 2000 issue seriously. AIM has
devoted considerable effort to creating a comprehensive plan for assessing,
correcting and testing our in-house systems. We also participated in an
industrywide testing effort in March. But no matter how well we prepare and
test, no one can know for sure what the year 2000 will bring. Our industry's
systems are connected in complex ways to many third parties, and there may be
unforeseen problems when the year 2000 actually arrives. Though we cannot
predict what all these problems might be, we are working with our business
recovery team to develop contingency plans appropriate for a variety of year
2000 scenarios.
We are pleased to send you this report on your Fund's recent performance. If
you have any questions or comments, please contact our Client Services
department at 800-959-4246, or e-mail your inquiry to us at
[email protected]. You can access information about your account through our
AIM Investor Line at 800-246-5463 or at our Web site, www.aimfunds.com. We often
post market updates on our Web site.
We thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
-------------------------------
WE REMAIN OPTIMISTIC
ABOUT THE LONG-TERM
PROSPECTS FOR
MUNICIPAL BONDS.
-------------------------------
AIM TAX-FREE INTERMEDIATE FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
MUNICIPAL BONDS COMPETE FAVORABLY
WITH TREASURIES
-----------------------------------
NEAR THE END OF 1998 MUNICIPAL
BONDS WERE YIELDING ABOUT 90% TO
95% OF TREASURY YIELDS.
-----------------------------------
HOW DID AIM TAX-FREE INTERMEDIATE FUND PERFORM DURING THE REPORTING PERIOD?
Through the end of 1998, municipal bonds were yielding close to and, at times,
more than the comparable Treasury bond. As a result, municipal bond investors
have enjoyed tax-free income at yields close to the yields of taxable
securities. Although municipal bond yields were still competitive with Treasury
yields in early 1999, the yield spread has widened. Near the end of 1998
municipal bonds were yielding about 90% to 95% of Treasury yields. Due to a
recent spike in Treasury yields in early 1999, municipal bond yields have moved
back to the more traditional level of 80% to 85% of Treasury yields.
For the year ended March 31, 1999, AIM Tax-Free Intermediate Fund returned
5.27% at net asset value, that is, without sales charges. This outpaced the
5.20% return for the Lipper Intermediate Municipal Funds Index and the 4.76%
total return for the Lipper Short-Intermediate Municipal Debt Index. During the
fiscal year, net asset value per share moved with in a relatively narrow range
of $10.92 to $11.27, continuing the Fund's history of relative price stability.
Despite the market turbulence during the reporting period, your Fund continued
to provide solid current income (see chart below), exempt from federal taxes.
The Fund's net assets under management grew to more than $244 million at the
close of the fiscal year.
WHAT WERE THE MAJOR DEVELOPMENTS IN THE MUNICIPAL BOND MARKET DURING THE FISCAL
YEAR?
Historically low interest rates and healthy budgets led municipalities to issue
debt at a near record pace during 1998. Total municipal bond issuance surged to
$284 billion vs. $221 billion in 1997, up 28% for the year. This lofty issuance
was the second highest total, just $8 billion shy of the record established in
1993. The large increase in new-issue supply helped to curb price volatility of
municipal bonds.
Global economic uncertainty in the third quarter of 1998 caused investors to
seek the relative safety of Treasury issues, leaving the municipal bond market
relatively untouched. As investors flooded the Treasury market, the yield spread
between Treasuries and municipal bonds narrowed. Municipal bond prices remained
flat and yields high, allowing municipal bonds to compare favorably to taxable
Treasury securities. For the first time since 1986, the yields of both types of
securities were comparable.
Stabilization in world markets during the first quarter of 1999 eased the
flight-to-quality bid seen on Treasury securities during the third quarter.
Credit spreads narrowed and Treasury yields slowly rose in early 1999.
Municipals outperformed Treasuries on a percentage basis during this time due
to more stable market conditions.
FUND PROVIDES SOLID INCOME
As Of 3/31/99
================================================================================
30-Day Distribution
Rate at NAV 4.42%
Taxable Equivalent
Distribution Rate* 7.32%
30-Day SEC Yield at
Maximum Offering Price 3.46%
Taxable Equivalent
30-Day SEC Yield* 5.73%
*Assumes highest marginal federal tax rate of 39.6%.
================================================================================
HISTORY OF NET ASSET VALUE STABILITY
5/11/87-3/31/99
================================================================================
10.00 5/11/87 10.07 6/91 10.84 9/95
9.93 6/87 10.2 9/91 10.92 12/95
9.59 9/87 10.33 12/91 10.79 3/96
9.79 12/87 10.27 3/92 10.72 6/96
9.89 3/88 10.43 6/92 10.74 9/96
9.82 6/88 10.55 9/92 10.8 12/96
9.86 9/88 10.58 12/92 10.73 3/97
9.81 12/88 10.74 3/93 10.86 6/97
9.69 3/89 10.87 6/93 10.97 9/97
9.94 6/89 11.03 9/93 11.06 12/97
9.77 9/89 11.02 12/93 11.05 3/98
9.99 12/89 10.62 3/94 11.04 6/98
9.89 3/90 10.61 6/94 11.2 9/98
9.93 6/90 10.56 9/94 11.16 12/98
9.88 9/90 10.38 12/94 11.13 3/99
10.01 12/90 10.67 3/95
10.07 3/91 10.76 6/95
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.
================================================================================
30-YEAR U.S. TREASURY VS. MUNICIPAL BOND YIELDS
3/31/98-3/31/99
================================================================================
30-YR LEHMAN
U.S. MUNI
TREASURY BOND INDEX
BOND
- --------------------------------------------------------------------------------
3/98 5.93 5.19
4/98 5.95 5.3
5/98 5.8 5.14
6/98 5.63 5.12
7/98 5.71 5.16
8/98 5.26 5.00
9/98 4.97 4.88
10/98 5.15 4.97
11/98 5.07 4.96
12/98 5.09 5.00
1/99 5.09 4.93
2/99 5.58 5.03
3/99 5.62 5.05
Sources: Bloomberg, Lehman Brothers.
================================================================================
See important Fund and index disclosures inside front cover.
AIM TAX-FREE INTERMEDIATE FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 3/31/99, based on total net assets
================================================================================
TOP FIVE BOND HOLDINGS
- --------------------------------------------------------------------------------
COUPON MATURITY % OF PORTFOLIO
- --------------------------------------------------------------------------------
1. Chicago (City of) 5.10% 06/01/04 4.30%
2. Louisiana (State of) 6.00% 04/15/07 2.28%
3. Hawaii (State of) 6.00% 03/01/07 2.27%
4. New York (City of) 5.60% 11/01/05 2.20%
5. Nassau (County of) 5.15% 03/01/07 2.16%
================================================================================
================================================================================
BOND-TYPE DIVERSIFICATION PORTFOLIO CREDIT QUALITY
- --------------------------------------------------------------------------------
Revenue Bonds 64% A 15%
General Obligation Bonds 30% AA 12%
Escrow & Prerefunding 6% AAA 73%
================================================================================
================================================================================
Number of Holdings 197
Average Maturity 4.5 years
Duration 4.5 years
Average Quality Rating AA+
================================================================================
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
Through early 1999, investor interest in fixed-income securities continued
as renewed market volatility drove investors to seek the relative safety of bond
funds. January saw strong asset inflows to municipal bond mutual funds, with
portfolios gaining more than $2.5 billion. The so-called January effect, when
investor demand is great but supply is scant, pushed tax-exempt prices higher,
disturbing the attractive ratio of municipals to Treasury issues.
GIVEN CURRENT ECONOMIC CONDITIONS, HOW HAVE YOU MANAGED THE PORTFOLIO?
We continued to emphasize revenue bonds, as opposed to general obligation bonds,
in the Fund's portfolio. Revenue bonds tend to be less sensitive to political
and economic changes because they are issued by state and city agencies to fund
projects that are public necessities, so their demand should remain constant
regardless of economic conditions. Shareholders may benefit from their
consistent payout in the event of an economic slowdown. As of March 31, 1999,
the Fund had 64% of its portfolio in revenue bonds. General obligation bonds,
which are used to raise funds for municipal capital improvements,
accounted for 30% of the Fund's total net assets. At the reporting period's
close, the Fund remained well diversified across 197 holdings.
WHAT WAS THE CREDIT QUALITY OF THE FUND'S PORTFOLIO?
As of March 31, 1999, the average credit quality in the Fund's portfolio was AA+
as rated by Standard & Poor's, Moody's, and Fitch--all widely known
credit-rating agencies. The ratings are historical and are based on analysis of
the bond's investment qualities. The Fund continued to focus on high-quality
debt issues, with 73% of its portfolio in AAA-rated bonds. Credit-enhanced
securities--those backed by insurance or escrowed with U.S. Treasury
securities--composed about 6% of the portfolio.
HOW DO YOU MANAGE FOR TAX EFFICIENCY?
We make every effort to avoid transactions that would result in capital gains
that are not offset by capital losses.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
At the close of the fiscal year, we remain optimistic about fixed-income
investments, including municipal bonds. The current low-inflation climate and
steady growth rate of the U.S. economy should bode well for the municipal bond
market in the coming months. Moreover, the yields and prices of municipal bonds
remained competitive with U.S. Treasury issues. Given these conditions as well
as their tax advantage, municipal bonds may prove to be increasingly attractive
in comparison to their Treasury counterparts.
-----------------------------------------
WE CONTINUED TO EMPHASIZE REVENUE
BONDS, AS OPPOSED TO GENERAL OBLIGATION
BONDS, IN THE FUND'S PORTFOLIO.
-----------------------------------------
See important Fund and index disclosures inside front cover.
AIM TAX-FREE INTERMEDIATE FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM TAX-FREE INTERMEDIATE FUND VS. BENCHMARK INDEX
3/31/89-3/31/99
================================================================================
AIM TAX-FREE LEHMAN MUNICIPAL
INTERMEDIATE FUND BOND INDEX
3/31/89 $ 9,898 $10,000
3/90 10,750 11,055
3/91 11,646 12,075
3/92 12,625 13,281
3/93 13,888 14,944
3/94 14,371 15,291
3/95 15,113 16,427
3/96 16,028 17,804
3/97 16,723 18,774
3/98 18,026 20,785
3/99 18,976 22,074
================================================================================
PAST PERFORMANCE IS NO GUARANTEE OF COMPARABLE FUTURE RESULTS.
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
AS OF 3/31/99, INCLUDING SALES CHARGES
10 Years 6.62%
5 Years 5.50
1 Year 4.24*
*5.27%, excluding sales charges
================================================================================
Source: Towers Data Systems HYPO--Registered Trademark--.
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.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
ABOUT THIS CHART
The chart 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 3/31/89-3/31/99. 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 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 of your investment.
AIM TAX-FREE INTERMEDIATE FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
March 31, 1999
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ALABAMA-1.41%
Alabama State Municipal
Electric Authority;
Power Supply Series A
RB
6.30%, 09/01/01(b) AAA Aaa $ 400 $ 425,200
- ----------------------------------------------------------------
Birmingham (City of)
Special Care Facilities
Financing Authority
(Charity Obligation
Group); Hospital Series
1997 D RB
4.95%, 11/01/07(c) AA+ Aa2 970 1,009,120
- ----------------------------------------------------------------
McIntosh Alabama
Industrial Development
Board Environmental
Improvement; RB
5.00%, 06/01/08 AA- A2 2,000 2,013,240
- ----------------------------------------------------------------
3,447,560
- ----------------------------------------------------------------
ALASKA-3.22%
Alaska State Housing
Financing Corp.; Series
A RB
2.95%, 06/01/26(d) A1+ VMIG-1 4,728 4,728,000
- ----------------------------------------------------------------
Anchorage (City of);
School Series 1994 GO
5.50%, 07/01/06(b) AAA Aaa 1,950 2,104,070
- ----------------------------------------------------------------
Matanuska-Susitna
Borough; School
District Series A GO
5.00%, 03/01/09(b) AAA Aaa 1,000 1,047,700
- ----------------------------------------------------------------
7,879,770
- ----------------------------------------------------------------
ARIZONA-4.27%
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 1,344,400
- ----------------------------------------------------------------
Maricopa County School
District #90 (Ruth
Fisher Elementary);
Series 1997 GO
4.70%, 07/01/99 -- A2 1,300 1,304,446
- ----------------------------------------------------------------
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 2,522,750
- ----------------------------------------------------------------
Mohave County Unified
School District #1
(Lake Havasu); Series A
GO
5.40%, 07/01/06(b) AAA Aaa 200 216,124
- ----------------------------------------------------------------
Navajo County Unified
School District; Series
1997 A GO
5.00%, 07/01/07(b) AAA Aaa 450 474,818
- ----------------------------------------------------------------
Nogales Municipal
Development Authority;
RB
4.20%, 06/01/08(b) AAA Aaa 710 701,998
- ----------------------------------------------------------------
4.30%, 06/01/09(b) AAA Aaa 530 527,387
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ARIZONA-(CONTINUED)
Phoenix (City of); Senior
Lien Street and Highway
User; Refunding Series
1992 RB
6.20%, 07/01/02 AA A1 $ 1,000 $ 1,075,520
- ----------------------------------------------------------------
Prescott (City of) Water
District; RB
4.25%, 01/01/09(b) AAA Aaa 500 492,525
- ----------------------------------------------------------------
Yuma County School
District #13 (Crane
Elementary); Refunding
Series GO
5.25%; 07/01/01(b) -- Aaa 675 700,157
- ----------------------------------------------------------------
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 1,090,330
- ----------------------------------------------------------------
10,450,455
- ----------------------------------------------------------------
ARKANSAS-3.14%
Arkansas State
Development Financial
Authority; Correction
Facility Series 1996 RB
6.25%, 10/01/06(b) AAA Aaa 1,800 2,042,334
- ----------------------------------------------------------------
Conway (City of); Sales
and Use Tax Capital
Improvement Series 1997
A RB
4.80%, 12/01/07(b) AAA Aaa 825 852,093
- ----------------------------------------------------------------
Little Rock (City of)
(Baptist Medical
Center); Health
Facility Hospital
Series RB
6.70%, 11/01/04(b) AAA Aaa 1,400 1,575,854
- ----------------------------------------------------------------
North Little Rock (City
of); Electric System
Refunding Series 1992 A
RB
6.00%, 07/01/01(b) AAA Aaa 500 526,630
- ----------------------------------------------------------------
Pulaski Special School
District; Refunding
Series GO
4.50%, 02/01/02 -- A3 1,065 1,086,417
- ----------------------------------------------------------------
Sebastian (County of)
(Arkansas Community Jr.
College District);
Refunding & Improvement
Series 1997 GO
5.10%, 04/01/06(b) -- Aaa 500 531,665
- ----------------------------------------------------------------
5.20%, 04/01/07(b) -- Aaa 1,000 1,070,750
- ----------------------------------------------------------------
7,685,743
- ----------------------------------------------------------------
CALIFORNIA-2.53%
California Health Care
Facilities Financing
Authority (Casa De Las
Campanas); Hospital
Series A RB
4.875%, 08/01/08 A+ -- 700 726,236
- ----------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
CALIFORNIA-(CONTINUED)
California Intercommunity
Hospital Financing
Authority; Certificates
of Participation
4.60%, 11/01/08(b) A -- $ 1,210 $ 1,211,815
- ----------------------------------------------------------------
California State Public
Works Board (Department
of Corrections) (State
Prison-Madera County);
Lease Series 1990 A RB
7.00%, 09/01/00 A A 100 104,985
- ----------------------------------------------------------------
Folsom (City of) (School
Facilities Project);
Series 1994 B GO
6.00%, 08/01/02(b) Aaa Aaa 500 539,150
- ----------------------------------------------------------------
Inglewood (City of)
(Daniel Freeman
Hospital Inc.); Insured
Hospital Series 1991 RB
6.50%, 05/01/01(e) NRR NRR 400 424,564
- ----------------------------------------------------------------
Orange (County of);
Refunding Recovery
Series A RB
5.50%, 06/01/06(b) AAA Aaa 1,000 1,093,100
- ----------------------------------------------------------------
Parking Authority of the
City and County of San
Francisco; Parking
Meter Series 1994 RB
6.75%, 06/01/05(b) AAA Aaa 500 577,545
- ----------------------------------------------------------------
South San Francisco
Capital Improvement
Financing Authority;
Redevelopment Series A
RB
4.30%, 09/01/08(b) A -- 1,255 1,242,513
- ----------------------------------------------------------------
West End Water
Development, Treatment,
and Conservation Joint
Powers Authority; Water
Facilities Series 1990
Certificates of
Participation
7.00%, 10/01/00(e) NRR NRR 250 263,007
- ----------------------------------------------------------------
6,182,915
- ----------------------------------------------------------------
COLORADO-0.49%
Highlands Ranch
Metropolitan District
#3; Refunding Series B
RB
4.50%; 12/01/04(b) A -- 1,175 1,199,628
- ----------------------------------------------------------------
CONNECTICUT-0.99%
Connecticut (State of);
Special Tax Obligation
RB
2.90%, 12/01/10(d) A1+ VMIG-1 20 20,000
- ----------------------------------------------------------------
Connecticut (State of)
Developing Authority
(Independent Living
Project); RB
2.80%, 07/01/15(d) -- VMIG-1 128 128,000
- ----------------------------------------------------------------
New Haven (City of);
Series 1997 GO
6.00%, 02/15/06(b) AAA Aaa 2,050 2,278,104
- ----------------------------------------------------------------
2,426,104
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
DELAWARE-1.63%
Delaware Transportation
Authority; Senior Lien
Transportation System
Series 1991 RB
6.00%, 07/01/01(c)(e) AAA Aaa $ 750 $ 789,945
- ----------------------------------------------------------------
University of Delaware;
RB
3.00%, 11/23/23(d) -- A-1+ 3,187 3,187,000
- ----------------------------------------------------------------
3,976,945
- ----------------------------------------------------------------
DISTRICT OF
COLUMBIA-4.24%
District of Columbia;
Refunding Unlimited Tax
Series B GO
6.125%, 06/01/02(c)(e) AAA Aaa 60 65,264
- ----------------------------------------------------------------
6.125%, 06/01/03(b) AAA Aaa 2,960 3,201,240
- ----------------------------------------------------------------
5.50%, 06/01/07(b) AAA Aaa 3,000 3,221,730
- ----------------------------------------------------------------
District of Columbia
(American Association
Advancement Science);
Series 1997 RB
5.00%, 01/01/05(b) AAA Aaa 800 837,256
- ----------------------------------------------------------------
District of Columbia
(Medlantic Healthcare
Group); RB
5.50%, Refunding Series
1993 A, 08/15/06(e) AAA Aaa 500 541,410
- ----------------------------------------------------------------
6.00%, Series 1996 A,
08/15/06(e) AAA Aaa 1,550 1,727,025
- ----------------------------------------------------------------
6.00%, Series 1996 A,
08/15/07(e) AAA Aaa 500 559,865
- ----------------------------------------------------------------
District of Columbia (The
Howard University
Issue); University
Series 1990 A RB
6.90%, 10/01/00(e) AAA NRR 200 209,762
- ----------------------------------------------------------------
10,363,552
- ----------------------------------------------------------------
FLORIDA-2.19%
Broward (County of)
Expressway Authority;
Refunding Series A GO
6.50%, 07/01/04 AA+ Aa2 1,000 1,001,740
- ----------------------------------------------------------------
Lee (County of) Housing
Financial Authority
(Forestwood Apartments
Project); Series A RB
2.90%, 06/15/25(d) AAA -- 58 58,000
- ----------------------------------------------------------------
Miami Beach (City of)
Health Facilities
Authority (South
Shore); Hospital Series
A RB
4.80%, 08/01/08 A -- 1,000 1,022,570
- ----------------------------------------------------------------
Palm Beach County Solid
Waste Authority;
Refunding Series 1997 A
RB
5.50%, 10/01/06(b) AAA Aaa 3,000 3,272,430
- ----------------------------------------------------------------
5,354,740
- ----------------------------------------------------------------
GEORGIA-3.76%
Albany (City of); Sewer
System Series 1992 RB
6.30%, 07/01/02(e) AAA Aaa 500 539,270
- ----------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GEORGIA-(CONTINUED)
De Kalb (County of)
Private Hospital
Authority (Egleston
Childrens' Hospital);
Revenue Anticipation
Certificates Series A
RB
2.90%, 03/01/24(d) A1+ VMIG-1 $ 141 $ 141,000
- ----------------------------------------------------------------
Fulton (County of); Water
and Sewer Refunding
Series 1992 RB
5.75%, 01/01/02(b) AAA Aaa 715 753,145
- ----------------------------------------------------------------
Georgia (State of);
Series 1988 D GO
7.10%, 06/01/99 AAA Aaa 2,000 2,012,240
- ----------------------------------------------------------------
Georgia State Municipal
Electric Authority; RB
4.75%, Refunding Sub-
Series A, 01/01/08(b) AAA Aaa 3,000 3,099,480
- ----------------------------------------------------------------
6.00%, Series V,
01/01/01(b) AAA Aaa 1,000 1,040,830
- ----------------------------------------------------------------
Metropolitan Atlanta
Rapid Transportation
Authority; Sales Tax
Refunding Series M RB
6.15%, 07/01/02 AA- A1 500 535,235
- ----------------------------------------------------------------
Savannah (City of)
Hospital Authority (St.
Joseph's Candler Health
System); Refunding
Series A RB
5.25%, 07/01/08(b) -- Aaa 1,000 1,068,570
- ----------------------------------------------------------------
9,189,770
- ----------------------------------------------------------------
HAWAII-3.39%
Hawaii (State of);
Refunding Series 1997
GO
6.00%, 03/01/07(b) AAA Aaa 5,000 5,553,550
- ----------------------------------------------------------------
Hawaii (State of)
(Kapolei State Office
Building); Series A
Certificates of
Participation
4.50%, 05/01/09(b) AAA Aaa 2,725 2,735,873
- ----------------------------------------------------------------
8,289,423
- ----------------------------------------------------------------
ILLINOIS-7.76%
Chicago (City of); Series
1997 GO
6.00%, 01/01/06(b) AAA Aaa 500 552,290
- ----------------------------------------------------------------
Chicago (City of) School
Financial Authority;
Refunding Series A GO
5.10%, 06/01/04(b) AAA Aaa 10,000 10,516,600
- ----------------------------------------------------------------
Hoffman Estates Illinois
Multifamily Housing
(Park Place Apartments
Project); Refunding
Series 1996 RB
5.75%, 06/01/06(c) AAA Aaa 1,250 1,327,813
- ----------------------------------------------------------------
Illinois Development
Financial Authority
(American College
Surgeons); Series 1996
RB
3.10%, 08/01/26(d) A1+ -- 53 53,000
- ----------------------------------------------------------------
Illinois Development
Financial Authority;
Series 1997 IDR
4.80%, 08/01/25 AA- -- 1,000 1,027,560
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(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 $ 378,139
- ----------------------------------------------------------------
Illinois Health
Facilities Authority;
Series D RB
2.95%, 08/01/15(d) A1+ VMIG-1 315 315,000
- ----------------------------------------------------------------
Illinois Health
Facilities Authority
(Alexian Brothers
Health System); RB
5.00%, 01/01/06(b) AAA Aaa 1,000 1,041,680
- ----------------------------------------------------------------
Illinois Health
Facilities Authority
(Edward Obligated
Group); Series 1997 A
RB
4.90%, 02/15/08(b) AAA Aaa 835 863,448
- ----------------------------------------------------------------
Illinois Health
Facilities Authority
(Highland Park
Hospital); Series 1991
A RB
4.80%, 10/01/99(b) AAA Aaa 255 257,134
- ----------------------------------------------------------------
5.55%, 10/01/06(b) AAA Aaa 500 540,305
- ----------------------------------------------------------------
Illinois Regional Transit
Authority; Series B RB
6.30%, 06/01/04(c)(e) AAA Aaa 1,000 1,128,390
- ----------------------------------------------------------------
Joliet (City of);
Waterworks and Sewer
Series 1991 RB
6.95%, 01/01/01(b) AAA Aaa 250 263,998
- ----------------------------------------------------------------
Kane (County of) Public
Building Commission;
Unlimited Tax Public
Building Series B GO
6.20%, 12/01/99(c)(e) NRR NRR 700 713,881
- ----------------------------------------------------------------
18,979,238
- ----------------------------------------------------------------
INDIANA-4.39%
Frankfort Middle School
Building Corp.;
Refunding Series 1996
RB
5.20%, 01/10/07(b) AAA Aaa 295 313,143
- ----------------------------------------------------------------
Hamilton (County of);
Optional Income Tax
Revenue Series 1998 RB
5.00%, 07/10/08(b) AAA Aaa 1,095 1,152,126
- ----------------------------------------------------------------
Indiana Health Facilities
Financing Authority
(Charity Obligated
Group); Series 1997 D
RB
5.00%, 11/01/07(c) AA+ Aa2 2,470 2,565,836
- ----------------------------------------------------------------
Indiana Municipal Power
Agency (Power Supply
System); Refunding
Special Obligation
1st-Crossover B RB
4.80%, 01/01/09(b) AAA Aaa 2,000 2,027,760
- ----------------------------------------------------------------
Indiana Transportation
Finance Authority;
Airport Facilities
Lease Series A RB
6.00%, 11/01/01 A A1 500 527,925
- ----------------------------------------------------------------
Indiana Transportation
Finance Authority;
Highway Series A RB
5.50%, 06/01/07(b) AAA Aaa 1,000 1,084,590
- ----------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
INDIANA-(CONTINUED)
Warren (City of) School
Building Corp;
Refunding First
Mortgage RB
4.30%, 01/05/01(b) AAA Aaa $ 1,500 $ 1,519,590
- ----------------------------------------------------------------
4.50%, 01/05/03(b) AAA Aaa 1,500 1,536,270
- ----------------------------------------------------------------
10,727,240
- ----------------------------------------------------------------
IOWA-1.38%
Iowa Student Loan
Liquidity Corp.;
Student Loan Series
1992 A RB
6.25%, 03/01/00 -- Aa1 500 510,970
- ----------------------------------------------------------------
Muscatine Iowa Electric;
Refunding Series RB
5.00%, 01/01/08 A A3 2,855 2,857,398
- ----------------------------------------------------------------
3,368,368
- ----------------------------------------------------------------
KANSAS-1.34%
Burlington (City of)
Environmental
Improvement (Power and
Lighting Project);
Refunding Series K PCR
4.35%, 09/01/01(c) A- A2 1,250 1,253,913
- ----------------------------------------------------------------
4.50%, 09/01/03(c) A- A2 2,000 2,019,020
- ----------------------------------------------------------------
3,272,933
- ----------------------------------------------------------------
KENTUCKY-0.88%
Carrollton & Henderson
Public Energy
Authority; Gas Series B
RB
4.20%, 01/01/06(b) AAA Aaa 1,000 1,002,280
- ----------------------------------------------------------------
Kentucky Economic
Development Finance
Authority (Ashland
Hospital Corp); Medical
Center Refunding and
Improvement Series RB
4.50%, 02/01/02(b) AAA Aaa 850 866,864
- ----------------------------------------------------------------
Kentucky State Turnpike
Authority (Economic
Development Road
Revitalization
Project); RB
7.125%, 05/15/00(c)(e) AAA Aaa 260 274,485
- ----------------------------------------------------------------
2,143,629
- ----------------------------------------------------------------
LOUISIANA-4.74%
Jefferson Parish School
Board; Sales and Use
Tax RB
6.00%, 02/01/04(b) AAA Aaa 1,720 1,872,461
- ----------------------------------------------------------------
Louisiana (State of);
Series A GO
6.00%, 04/15/07(b) AAA Aaa 5,000 5,582,450
- ----------------------------------------------------------------
Louisiana Offshore
Terminal Authority
(Loop, Inc.); Deepwater
Port Refunding Series
1992 RB
6.00%, 09/01/01 A A3 1,000 1,041,380
- ----------------------------------------------------------------
6.20%, 09/01/03 A A3 1,000 1,072,530
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
LOUISIANA-(CONTINUED)
New Orleans (City of);
Refunding Certificates
of Indebtedness Series
A GO
4.15%, 08/01/01(b) AAA Aaa $ 2,000 $ 2,028,640
- ----------------------------------------------------------------
11,597,461
- ----------------------------------------------------------------
MAINE-1.19%
Maine Financial
Authority; Electric
Rate Stabilization
Refunding Series A RB
4.50%, 07/01/08(b) AAA Aaa 1,830 1,850,588
- ----------------------------------------------------------------
Regional Waste System
Inc.; Solid Waste
Resource Recovery
Series P RB
5.25%, 07/01/03 AA -- 1,000 1,052,580
- ----------------------------------------------------------------
2,903,168
- ----------------------------------------------------------------
MASSACHUSETTS-1.03%
Massachusetts State
Health and Educational
Facilities Authority
(Eye and Ear
Infirmary); Series B RB
5.00%, 07/01/05 A -- 1,000 1,037,870
- ----------------------------------------------------------------
Massachusetts Turnpike
Authority; Metropolitan
Highway System
Sub-Series A RB
5.125%, 01/01/09(b) -- Aaa 1,000 1,058,470
- ----------------------------------------------------------------
New England Education
Loan Marketing Corp.;
Student Loan Refunding
Senior Issue 1992 D RB
6.20%, 09/01/00 -- Aaa 400 413,864
- ----------------------------------------------------------------
2,510,204
- ----------------------------------------------------------------
MICHIGAN-1.65%
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 1,094,620
- ----------------------------------------------------------------
Detroit (City of) School
District; GO
5.60%, 05/01/01 AA+ Aa2 765 796,778
- ----------------------------------------------------------------
Michigan State Building
Authority; Refunding
Series I RB
6.40%, 10/01/04 AA Aa2 2,000 2,157,180
- ----------------------------------------------------------------
4,048,578
- ----------------------------------------------------------------
MINNESOTA-0.32%
Southern Minnesota
Municipal Power Agency;
Power Supply System
Series A RB
5.60%, 01/01/04 A+ A2 745 793,604
- ----------------------------------------------------------------
MISSISSIPPI-0.44%
Gulfport (City of);
Refunding GO
4.50%, 05/01/07(b) -- Aaa 515 523,704
- ----------------------------------------------------------------
4.55%, 05/01/08(b) -- Aaa 550 560,219
- ----------------------------------------------------------------
1,083,923
- ----------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MISSOURI-0.80%
Fort Osage Reorganization
School District #1
(Missouri School
District Direct Deposit
Program); Series 1997
GO
4.95%, 03/01/06 AA Aa2 $ 405 $ 424,505
- ----------------------------------------------------------------
Missouri State Health and
Educational Facilities
Authority (Freeman
Health Systems
Project); Hospital
Series RB
4.85%, 02/15/07(b) A -- 1,000 1,011,670
- ----------------------------------------------------------------
5.00%, 02/15/08(b) A -- 515 525,310
- ----------------------------------------------------------------
1,961,485
- ----------------------------------------------------------------
MONTANA-0.18%
Montana Higher Education
Assistance Corp.;
Student Loan Series
1992 A RB
6.60%, 12/01/00 -- A 420 436,859
- ----------------------------------------------------------------
NEVADA-0.20%
Clark County Improvement
District No. 65 (Lamb
Boulevard III); Series
1992 GO
6.20%, 12/01/02 AA- A1 120 124,015
- ----------------------------------------------------------------
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 350 368,256
- ----------------------------------------------------------------
492,271
- ----------------------------------------------------------------
NEW JERSEY-1.75%
Gloucester County
Utilities Authority;
Sewer Refunding Series
1991 RB
6.10%, 01/01/00 AA- A1 225 229,696
- ----------------------------------------------------------------
Jersey City (City of)
(Qualified School
Bond); GO
6.40%, 02/15/00 AA Aa3 1,000 1,027,690
- ----------------------------------------------------------------
New Jersey Transportation
Trust Fund Authority;
Transportation System
Series 1992 A RB
5.90%, 06/15/99(e) NRR Aaa 1,000 1,005,330
- ----------------------------------------------------------------
Ocean City (City of); GO
5.00%, 04/01/09(b) AAA Aaa 1,400 1,473,066
- ----------------------------------------------------------------
Trenton (City of); Fiscal
Year Adjustment GO
6.10%, 08/15/02(b) AAA Aaa 500 538,360
- ----------------------------------------------------------------
4,274,142
- ----------------------------------------------------------------
NEW MEXICO-1.07%
Albuquerque (City of);
Joint Water and Sewer
Series 1990 A RB
6.00%, 07/01/00(c)(e) AAA -- 1,000 1,032,380
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW MEXICO-(CONTINUED)
Farmington (City of) (San
Juan Regional Medical
Center); Hospital
Series A RB
5.00%, 06/01/01(b) -- Aaa $ 1,015 $ 1,044,983
- ----------------------------------------------------------------
Santa Fe (City of);
Series 1994 A RB
5.50%, 06/01/03(e) AAA Aaa 500 533,335
- ----------------------------------------------------------------
2,610,698
- ----------------------------------------------------------------
NEW YORK-8.49%
Long Island Power
Authority (New York
Electrical Systems);
Series A RB
5.25%, 12/01/02 A- Baa1 1,250 1,306,875
- ----------------------------------------------------------------
Nassau (County of);
General Improvement
Series V GO
5.15%, 03/01/07(b) AAA Aaa 5,000 5,282,000
- ----------------------------------------------------------------
New York (City of);
Refunding Series D GO
5.60%, 11/01/05 A- A3 5,000 5,389,150
- ----------------------------------------------------------------
New York (City of);
Series G GO
5.90%, 02/01/05 A- A3 1,150 1,248,072
- ----------------------------------------------------------------
New York (State of)
Dormitory Authority;
Mental Health
Facilities Series A RB
6.00%, 02/15/05 A- A3 1,000 1,093,650
- ----------------------------------------------------------------
6.00%, 08/15/07 A- A3 1,775 1,973,037
- ----------------------------------------------------------------
New York (State of)
Dormitory Authority
(Pace University
Issue); Series 1997 RB
6.00%, 07/01/07(b) AAA Aaa 1,275 1,428,586
- ----------------------------------------------------------------
New York (State of)
Dormitory Authority
(Upstate Community
Colleges); Series A RB
4.375%, 07/01/09(b) AAA Aaa 1,000 997,900
- ----------------------------------------------------------------
New York (State of)
Medical Care Facilities
(Hospital & Nursing
Home); Financial Agency
Series 1995 A RB
5.60%, 02/15/05(b) AAA -- 1,190 1,251,059
- ----------------------------------------------------------------
Syracuse (City of);
Public Improvement
Series B GO
4.30%, 10/01/03(b) AAA Aaa 775 790,841
- ----------------------------------------------------------------
20,761,170
- ----------------------------------------------------------------
NORTH CAROLINA-0.43%
North Carolina Municipal
Power Agency No. 1
(Catawba Electric);
Electrical Refunding
Series RB
5.25%, 01/01/07(b) AAA Aaa 1,000 1,059,860
- ----------------------------------------------------------------
NORTH DAKOTA-0.40%
Fargo (City of);
Refunding Water Series
1997 RB
5.50%, 01/01/08(b) AAA Aaa 905 979,907
- ----------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OHIO-2.77%
Franklin (County of);
1991 Issue GO
6.30%, 12/01/01(c)(e) NRR NRR $ 1,500 $ 1,630,800
- ----------------------------------------------------------------
Greene (County of); Water
System Series A RB
5.45%, 12/01/06(b) AAA Aaa 585 634,795
- ----------------------------------------------------------------
Hilliard City School
District; School
Improvement Refunding
Series 1992 GO
6.05%, 12/01/00(b) AAA Aaa 500 521,670
- ----------------------------------------------------------------
6.15%, 12/01/01(b) AAA Aaa 250 266,305
- ----------------------------------------------------------------
Lucas County (St.
Vincent's Medical
Center); Hospital
Series A RB
6.75%, 08/15/20(b) AAA Aaa 2,000 2,122,160
- ----------------------------------------------------------------
Ohio (State of)
(Elementary & Secondary
Education Facilities);
Series 1997 RB
5.10%, 12/01/05 AA- Aa3 1,500 1,593,660
- ----------------------------------------------------------------
6,769,390
- ----------------------------------------------------------------
OKLAHOMA-1.18%
Norman (City of) Hospital
Authority; Refunding
Series A RB
5.20%, 09/01/06(b) AAA Aaa 310 331,774
- ----------------------------------------------------------------
5.30%, 09/01/07(b) AAA Aaa 1,090 1,174,911
- ----------------------------------------------------------------
Oklahoma Housing Finance
Agency; Single Family
Mortgage Series A RB
6.55%, 03/01/00(b) AAA Aaa 95 97,634
- ----------------------------------------------------------------
Southern Oklahoma
Memorial Hospital
Authority; Hospital
Series 1993 A RB
5.60%, 02/01/00(e) NRR NRR 1,250 1,274,525
- ----------------------------------------------------------------
2,878,844
- ----------------------------------------------------------------
OREGON-2.11%
Cow Creek Band (Umpqua
Tribe of Indians);
Series B RB
4.25%, 07/01/03(b) AAA Aaa 1,265 1,288,504
- ----------------------------------------------------------------
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 1,211,673
- ----------------------------------------------------------------
Portland (City of); Sewer
System Series 1994 A RB
5.45%, 06/01/03 A+ A1 1,065 1,131,861
- ----------------------------------------------------------------
5.55%, 06/01/04 A+ A1 500 537,180
- ----------------------------------------------------------------
Salem Oregon Hospital
Facilities Authority
(Salem Hospital);
Series RB
4.20%, 08/15/08 AA- -- 1,000 988,520
- ----------------------------------------------------------------
5,157,738
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
PENNSYLVANIA-2.45%
Fayette County
Pennsylvania Hospital
Authority (Union Town
Hospital); Refunding
Series RB
4.85%, 06/15/01(b) AAA -- $ 1,000 $ 1,026,070
- ----------------------------------------------------------------
Lackawanna (County of);
Series A GO
4.40%, 01/01/09(b) AAA Aaa 510 509,969
- ----------------------------------------------------------------
Pennsylvania (State of)
Higher Educational
Facilities Authority
(UPMC Health System);
Series A RB
5.00%, 08/01/09(b) AAA Aaa 2,000 2,086,740
- ----------------------------------------------------------------
York (City of) General
Authority; RB
3.10%, 09/01/26(d) A1 -- 2,369 2,369,000
- ----------------------------------------------------------------
5,991,779
- ----------------------------------------------------------------
RHODE ISLAND-0.44%
Rhode Island (State of);
Refunding Series 1992 A
GO
6.10%, 06/15/03(b) AAA Aaa 1,000 1,084,610
- ----------------------------------------------------------------
SOUTH CAROLINA-1.24%
Charleston (County of)
(Care Alliance Health
Services); Series A RB
4.40%, 08/15/08(b) AAA Aaa 3,000 3,025,080
- ----------------------------------------------------------------
SOUTH DAKOTA-0.85%
Rapid City (City of);
Sales Tax Series 1995 A
RB
5.60%, 06/01/05(b) AAA Aaa 255 275,599
- ----------------------------------------------------------------
South Dakota Health and
Education Facility
(McKennan Hospital);
Refunding Series 1996
RB
5.40%, 07/01/06(b) AAA Aaa 1,680 1,799,146
- ----------------------------------------------------------------
2,074,745
- ----------------------------------------------------------------
TENNESSEE-2.36%
Monroe (County of); High
School Refunding Series
GO
4.25%, 05/01/03(b) -- Aaa 500 509,345
- ----------------------------------------------------------------
Nashville and Davidson
(County of) Health and
Education Facilities
Board (Meharry Medical
College); RB
7.875%, 12/01/04(e) NRR Aaa 890 993,694
- ----------------------------------------------------------------
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 2,847,474
- ----------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TENNESSEE-(CONTINUED)
Tennessee Housing
Development Agency;
Mortgage Financing
Refunding Series 1993 A
RB
5.65%, 01/01/07 A+ A1 $ 1,360 $ 1,415,610
- ----------------------------------------------------------------
5,766,123
- ----------------------------------------------------------------
TEXAS-7.72%
Alamo Community College
District; Series 1990
GO
6.90%, 02/15/00(c)(e) -- Aaa 500 515,730
- ----------------------------------------------------------------
Beaumont (City of)
Waterworks & Sewer
System; Refunding RB
5.25%, 09/01/08(b) AAA Aaa 1,280 1,368,077
- ----------------------------------------------------------------
Bexar (County of) Housing
Financial Authority;
Multifamily Refunding
Series RB
3.00%, 09/15/26(d) A1+ -- 374 374,000
- ----------------------------------------------------------------
Comal County Industrial
Development Authority
(The Coleman Company,
Inc. Project); Series
1980 IDR
9.25%, 08/01/00(e) NRR NRR 315 328,312
- ----------------------------------------------------------------
Conroe (City of)
Independent School
District; Unlimited
School Tax GO
7.375%, 02/01/01(b) -- Aaa 115 122,570
- ----------------------------------------------------------------
Gatesville Independent
School District;
Unlimited Tax School
Building and Refunding
Series 1995 RB
5.80%, 02/01/03(b) -- Aaa 485 517,733
- ----------------------------------------------------------------
Harris (County of) (Port
of Houston Authority);
RB
5.75%, 05/01/02 A A 1,070 1,081,973
- ----------------------------------------------------------------
5.75%, 05/01/02(b) AAA Aaa 1,055 1,067,312
- ----------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (Memorial
Hospital System
Project); Hospital
Series 1992 RB
6.70%, 06/01/00(e) NRR NRR 1,000 1,036,940
- ----------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (School Health
Care System Project);
Series B RB
5.10%, 07/01/06 AA Aa3 1,000 1,041,650
- ----------------------------------------------------------------
Katy (City of)
Independent School
District; Refunding
Series A GO
5.00%, 02/15/09(b) AAA Aaa 1,000 1,045,810
- ----------------------------------------------------------------
Keller (City of)
Independent School
District; Series 1994
Certificates of
Participation
5.75%, 08/15/01(b) AAA Aaa 915 959,048
- ----------------------------------------------------------------
Kerrville (City of);
Electric System
Refunding Series 1991
RB
6.375%, 11/01/01(b) AAA Aaa 185 197,909
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <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 $ 583,901
- ----------------------------------------------------------------
7.50%, 08/15/02(b) AAA Aaa 750 837,173
- ----------------------------------------------------------------
Lubbock Health Facility
Development Corp.;
Methodist Hospital
Refunding Series 1993 B
RB
5.40%, 12/01/05(b) AAA Aaa 500 541,115
- ----------------------------------------------------------------
Plano Independent School
District; GO
5.80%, 02/15/05(b) AAA Aaa 2,025 2,176,065
- ----------------------------------------------------------------
Tarrant (County of)
Housing Finance Corp.
(Arbors on Park II);
Multifamily Housing
Series RB
5.05%, 12/01/07 AAA -- 1,465 1,492,293
- ----------------------------------------------------------------
Temple (City of) (Bell
County); Refunding
Series 1992 GO
5.80%, 02/01/01(b) AAA Aaa 250 259,587
- ----------------------------------------------------------------
Texas Municipal Power
Agency; RB
5.75%, 09/01/02(c)(e) AAA Aaa 1,000 1,064,940
- ----------------------------------------------------------------
Texas Turnpike Authority
(Addison Airport Toll
Tunnel Project); Dallas
North Tollway Series
1994 RB
6.30%, 01/01/05(b) AAA Aaa 500 555,680
- ----------------------------------------------------------------
University Texas
(Financing System);
Series B RB
4.80%, 08/15/09 AAA Aa1 1,650 1,706,496
- ----------------------------------------------------------------
18,874,314
- ----------------------------------------------------------------
UTAH-0.87%
Intermountain Power
Agency (Utah Power
Supply); Refunding
Series 1997 B RB
6.00%, 07/01/07(b) AAA Aaa 1,000 1,116,780
- ----------------------------------------------------------------
Utah (State of) (Board of
Water Resources
Program); Revolving
Fund Recapitalization
Series 1992 B RB
6.10%, 04/01/02 AA -- 500 534,355
- ----------------------------------------------------------------
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 475 476,705
- ----------------------------------------------------------------
2,127,840
- ----------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
VIRGINIA-1.03%
Medical College of
Hampton Roads; General
Refunding Series 1991 A
RB
6.00%, 11/15/99 A- -- $ 605 $ 614,916
- ----------------------------------------------------------------
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 535 571,326
- ----------------------------------------------------------------
5.40%, 11/01/05 AA Aa 500 537,685
- ----------------------------------------------------------------
Portsmouth (City of);
Port Improvement
Unlimited Tax Refunding
GO
6.40%, 11/01/03 AA- A3 300 324,900
- ----------------------------------------------------------------
Portsmouth (City of);
Public Utility
Refunding Series 1992
GO
5.90%, 11/01/01 AA- A3 450 476,874
- ----------------------------------------------------------------
2,525,701
- ----------------------------------------------------------------
WASHINGTON-2.53%
King (County of); Series
A RB
5.80%, 01/01/04(c)(e) NRR NRR 1,000 1,096,660
- ----------------------------------------------------------------
Seattle (City of);
Limited Tax Refunding
Series GO
6.40%, 10/01/01(e) NRR NRR 250 266,810
- ----------------------------------------------------------------
Seattle (Port of); Series
1992 A RB
6.00%, 11/01/01 AA- Aa3 500 529,815
- ----------------------------------------------------------------
Snohomish (County of)
Public Utilities
District #1; RB
5.70%, 01/01/06(b) AAA Aaa 4,000 4,288,080
- ----------------------------------------------------------------
6,181,365
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WISCONSIN-3.14%
Oak Creek (City of)
(Waterworks Systems);
Bond Anticipation Notes
3.90%, 09/01/00 -- MIG-1 $ 1,000 $ 1,007,910
- ----------------------------------------------------------------
Wisconsin (State of);
Series A GO
5.75%, 05/01/99 AA Aa2 1,000 1,001,850
- ----------------------------------------------------------------
Wisconsin (State of)
Health & Educational
Facilities Authority
(Charity Obligation
Group); Hospital Series
1997 D RB
4.90%, 11/01/05(c) AA+ VMIG-1 2,190 2,269,519
- ----------------------------------------------------------------
Wisconsin (State of)
Health & Educational
Facilities Authority
(Marshfield Clinic); RB
5.20%, 02/15/07(b) AAA Aaa 3,210 3,394,157
- ----------------------------------------------------------------
7,673,436
- ----------------------------------------------------------------
WYOMING-0.42%
Wyoming Building Corp.;
RB,
4.25%, 10/01/01 AAA Aaa 1,000 1,018,660
- ----------------------------------------------------------------
TOTAL INVESTMENTS-98.81%
(Total Cost
$233,595,580) 241,600,968
- ----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.19% 2,898,501
- ----------------------------------------------------------------
NET ASSETS-100.00% $244,499,469
- ----------------------------------------------------------------
</TABLE>
Investment 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) 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 March 31, 1999.
(e) Secured by an escrow fund of U.S. Treasury obligations.
See Notes to Financial Statements.
12
<PAGE> 15
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$233,595,580) $ 241,600,968
- ---------------------------------------------------------
Receivables for:
Capital stock sold 1,917,967
- ---------------------------------------------------------
Interest 3,175,789
- ---------------------------------------------------------
Investment for deferred compensation plan 23,346
- ---------------------------------------------------------
Other assets 37,321
- ---------------------------------------------------------
Total assets 246,755,391
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,507,514
- ---------------------------------------------------------
Capital stock reacquired 239,462
- ---------------------------------------------------------
Dividends 389,802
- ---------------------------------------------------------
Deferred compensation plan 23,346
- ---------------------------------------------------------
Accrued administrative services fees 4,368
- ---------------------------------------------------------
Accrued advisory fees 60,336
- ---------------------------------------------------------
Accrued directors' fees 2,335
- ---------------------------------------------------------
Accrued transfer agent fees 5,793
- ---------------------------------------------------------
Accrued operating expenses 22,966
- ---------------------------------------------------------
Total liabilities 2,255,922
- ---------------------------------------------------------
Net assets applicable to shares
outstanding $ 244,499,469
- ---------------------------------------------------------
CAPITAL STOCK, $0.001 PAR VALUE PER
SHARE:
Authorized 1,000,000,000
- ---------------------------------------------------------
Outstanding 21,976,179
- ---------------------------------------------------------
Net asset value and redemption price per
share $ 11.13
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $11.13 divided
by 99.00%) $ 11.24
- ---------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $10,136,837
- --------------------------------------------------------
EXPENSES:
Advisory fees 623,357
- --------------------------------------------------------
Administrative services fees 50,951
- --------------------------------------------------------
Custodian fees 10,503
- --------------------------------------------------------
Transfer agent fees 64,498
- --------------------------------------------------------
Registration and filing fees 78,837
- --------------------------------------------------------
Directors' fees 11,207
- --------------------------------------------------------
Interest 22,020
- --------------------------------------------------------
Other 99,598
- --------------------------------------------------------
Total expenses 960,971
- --------------------------------------------------------
Less: Expenses paid indirectly (2,369)
- --------------------------------------------------------
Net expenses 958,602
- --------------------------------------------------------
Net investment income 9,178,235
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES:
Net realized gain on sales of investment
securities 409,752
- --------------------------------------------------------
Net unrealized appreciation of investment
securities 966,924
- --------------------------------------------------------
Net gain on investment securities 1,376,676
- --------------------------------------------------------
Net increase in net assets resulting from
operations $10,554,911
- --------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 16
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
-------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,178,235 $ 8,621,404
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities 409,752 (31,582)
- --------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 966,924 5,402,954
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 10,554,911 13,992,776
- --------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (9,191,201) (8,634,206)
- --------------------------------------------------------------------------------------------
Distributions in excess of net investment income (47,638) (3,932)
- --------------------------------------------------------------------------------------------
Net increase from capital stock transactions 42,214,423 22,272,556
- --------------------------------------------------------------------------------------------
Net increase in net assets 43,530,495 27,627,194
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 200,968,974 173,341,780
- --------------------------------------------------------------------------------------------
End of period $244,499,469 $200,968,974
- --------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $237,244,429 $195,083,906
- --------------------------------------------------------------------------------------------
Undistributed net investment income (24,189) (17,485)
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (726,159) (1,135,911)
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 8,005,388 7,038,464
- --------------------------------------------------------------------------------------------
$244,499,469 $200,968,974
- --------------------------------------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
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.
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
14
<PAGE> 17
of premiums and original issue discounts, is earned from settlement date
and is recorded on the accrual basis. On March 31, 1999, undistributed
income was increased and paid-in capital was decreased by $53,900 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 reclassification 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 $717,161, 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, 1999, the Fund reimbursed
AIM $50,951 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, 1999, the Fund
paid AFS $41,409 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
$28,272 from sales of capital stock during the year ended March 31, 1999. 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, 1999, the Fund paid legal fees of $3,745 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-INDIRECT EXPENSES
For the year ended March 31, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $2,369, under an expense offset
arrangement. The effect of the above arrangement resulted in a reduction of the
Fund's total expenses of $2,369 for the year ended March 31, 1999.
NOTE 4-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 5-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 year ended March 31, 1999, the fund did
borrow minimal amounts under the line of credit agreement. Interest expense for
the year ended March 31, 1999 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 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended March 31, 1999 was $101,993,570 and
$63,844,331, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of March 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $8,027,965
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (22,577)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $8,005,388
- ---------------------------------------------------------
Investments have the same cost for tax and financial
statement purposes.
</TABLE>
15
<PAGE> 18
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended March 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 11,532,083 $128,215,321 4,891,415 $ 53,561,920
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends 488,076 5,429,472 411,422 4,509,891
- -------------------------------------------------------------------------------------------------------------------
Reacquired (8,238,608) (91,430,370) (3,262,778) (35,799,255)
- -------------------------------------------------------------------------------------------------------------------
3,781,551 $ 42,214,423 2,040,059 $ 22,272,556
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 8- FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during and each of the years in the five-year period ended March 31,
1999.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
-------------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.05 $ 10.73 $10.79 $10.67 $10.62
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Income from investment operations:
Net investment income 0.49 0.50 0.50 0.52 0.49
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 0.08 0.32 (0.04) 0.12 0.04
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Total from investment operations 0.57 0.82 0.46 0.64 0.53
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Less distributions:
Dividends from net investment income (0.49) (0.50) (0.52) (0.52) (0.48)
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Total distributions (0.49) (0.50) (0.52) (0.52) (0.48)
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Net asset value, end of period $ 11.13 $ 11.05 $10.73 $10.79 $10.67
============================================================ ======== ======== ======== ======= =======
Total return(a) 5.27% 7.79% 4.33% 6.06% 5.17%
============================================================ ======== ======== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $244,499 $200,969 $173,342 $83,066 $82,355
============================================================ ======== ======== ======== ======= =======
Ratio of expenses (exclusive of interest) to average net
assets 0.46% 0.45% 0.56% 0.65% 0.59%
============================================================ ======== ======== ======== ======= =======
Ratio of net investment income to average net assets 4.43% 4.56% 4.63% 4.81% 4.65%
============================================================ ======== ======== ======== ======= =======
Portfolio turnover rate 32% 22% 26% 32% 75%
============================================================ ======== ======== ======== ======= =======
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $207,785,779.
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Board of Trustees 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, 1999, 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
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 financial
highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of
March 31, 1999, by correspondence with the custodian and
brokers. 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, 1999, 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 LLP
Houston, Texas
May 7, 1999
16
<PAGE> 19
<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; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Stuart W. Coco Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox
President, Mercantile Bankshares Vice President The Bank of New York
90 Washington Street
Jack Fields Karen Dunn Kelley 11th Floor
Chief Executive Officer Vice President New York, NY 10286
Texana Global, Inc.;
Formerly Member J. Abott Sprague COUNSEL TO THE FUND
of the U.S. House of Representatives Vice President
Ballard Spahr
Carl Frischling Mary J. Benson Andrews & Ingersoll, LLP
Partner Assistant Vice President and 1735 Market Street
Kramer, Levin, Naftalis & Frankel LLP Assistant Treasurer Philadelphia, PA 19103
Robert H. Graham Sheri Morris COUNSEL TO THE DIRECTORS
President and Chief Executive Officer Assistant Vice President and
A I M Management Group Inc. Assistant Treasurer Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
Prema Mathai-Davis Renee A. Friedli New York, NY 10022
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary
Commissioner, New York City Dept. for the DISTRIBUTOR
Aging; and member of the Board of Directors, P. Michelle Grace
Metropolitan Transportation Authority of Assistant Secretary Fund Management Company
New York State 11 Greenway Plaza
Jeffrey H. Kupor Suite 100
Lewis F. Pennock Assistant Secretary Houston, TX 77046
Attorney
Nancy L. Martin AUDITORS
Louis S. Sklar Assistant Secretary
Executive Vice President KPMG LLP
Hines Interests Ofelia M. Mayo 700 Louisiana
Limited Partnership Assistant Secretary Houston, TX 77002
Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</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, 1999.
AIM Tax-Free Intermediate Fund paid ordinary dividends in the amounts of $0.492
per share during its tax year ended March 31, 1999. Of this amount, 99.50%
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>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund leadership in the mutual fund industry since
AIM Blue Chip Fund AIM Asian Growth Fund 1976 and managed approximately $112 billion
AIM Capital Development Fund AIM Developing Markets Fund(2) in assets for more than 6.3 million
AIM Constellation Fund AIM Europe Growth Fund(2) shareholders, including individual investors,
AIM Large Cap Growth Fund AIM European Development Fund corporate clients and financial institutions,
AIM Mid Cap Equity Fund(2), (A) AIM International Equity Fund as of March 31, 1999.
AIM Mid Cap Opportunities Fund AIM Japan Growth Fund(2) The AIM Family of Funds--Registered
AIM Select Growth Fund(3) AIM Latin American Growth Fund(2) Trademark--is distributed nationwide, and AIM
AIM Small Cap Growth Fund(2), (B) AIM New Pacific Growth Fund(2) today is the 10th-largest mutual fund complex
AIM Small Cap Opportunities Fund in the U.S. in assets under management,
AIM Value Fund GLOBAL GROWTH FUNDS according to Strategic Insight, an
AIM Weingarten Fund AIM Global Aggressive Growth Fund independent mutual fund monitor.
AIM Global Growth Fund
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund GLOBAL GROWTH & INCOME FUNDS
AIM Advisor Large Cap Value Fund AIM Global Growth & Income Fund(2)
AIM Advisor MultiFlex Fund AIM Global Utilities Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund GLOBAL INCOME FUNDS
AIM Basic Value Fund(2), (C) AIM Emerging Markets Debt Fund(2), (D)
AIM Charter Fund AIM Global Government Income Fund(2)
AIM Global Income Fund
INCOME FUNDS AIM Strategic Income Fund(2)
AIM Floating Rate Fund(2)
AIM High Yield Fund THEME FUNDS
AIM High Yield Fund II AIM Global Consumer Products and Services Fund(2)
AIM Income Fund AIM Global Financial Services Fund(2)
AIM Intermediate Government Fund AIM Global Health Care Fund(2)
AIM Limited Maturity Treasury Fund AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
TAX-FREE INCOME FUNDS AIM Global Telecommunications Fund(2)
AIM High Income Municipal Fund AIM Global Trends Fund(2), (E)
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
MONEY MARKET FUNDS
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998. (2)
Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth
Fund. (A) On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C) On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D) On September 8, 1998, AIM Global High Income
Fund was renamed 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.
[AIM LOGO APPEARS HERE]
Invest with DISCIPLINE--Registered Trademark--
