<PAGE> 1
S E M I A N N U A L R E P O R T / S E P T E M B E R 3 0 1 9 9 9
A I M T A X - E X E M P T B O N D F U N D
O F C O N N E C T I C U T
(Cover image)
[AIM LOGO APPEARS HERE]
<PAGE> 2
(Cover Image) CONNECTICUT LANDSCAPE BY HORACE WOLCOTT ROBBINS
(1842-1904, AMERICAN)
ROBBINS CAPTURES THE PICTURESQUE BEAUTY OF THE CONNECTICUT
LANDSCAPE IN THIS ELEGANT PAINTING. CONNECTICUT MUNICIPAL
BONDS, IN WHICH THE FUND INVESTS, PROVIDE CAPITAL FOR THE
STATE'S CONTINUING IMPROVEMENT.
AIM Tax-Exempt Bond Fund of Connecticut is for shareholders who seek to earn a
high level of income that is free of both federal and Connecticut taxes.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Tax-Exempt Bond Fund of Connecticut's performance figures are historical
and reflect reinvestment of all distributions and changes in net asset
value.
o When sales charges are included in performance figures, those figures
reflect the maximum 4.75% sales charge.
o The 30-day yield is calculated on the basis of a formula defined by the SEC.
The formula is based on the portfolio's potential earnings from dividends,
interest, yield-to-maturity or yield-to-call of the bonds in the portfolio,
net of all expenses and expressed on an annualized basis.
o The taxable-equivalent yield is calculated in the same manner as the 30-day
yield with an adjustment for a stated, assumed tax rate.
o The fund's annualized distribution rate reflects the fund's most recent
monthly dividend distribution multiplied by 12 and divided by the most
recent month-end net asset value.
o The fund's investment return and principal value will fluctuate, so 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. It is
compiled by Lehman Brothers, a well-known global investment bank.
o Lipper, Inc. is an independent mutual fund 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 any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
As of 9/30/99, including sales charges
Inception (10/31/89) 5.94%
5 years 4.22
1 year -4.78*
*0.01%, excluding sales charges
Past performance is no guarantee of comparable future results.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
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 SOME 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.
A I M T A X - E X E M P T B O N D F U N D O F C O N N E C T I C U T
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S E M I A N N U A L R E P O R T / C H A I R M A N ' S L E T T E R
Dear Fellow Shareholder:
[PHOTO OF With only a short time remaining in 1999, the question on
Charles T. many of your minds may be, "How will the year 2000 computer
Bauer, issue affect AIM and my investments?" We would like you to
Chairman of feel comfortable. We are pleased to be able to report to
the Board of you that as of June 1999 we achieved a major milestone
THE FUND toward year 2000 compliance status: we have successfully
APPEARS HERE] completed the testing of all of our mission-critical
systems.
Earlier this year, AIM participated in an industrywide
test that gave us a chance to see how our technology
systems might be affected by the changeover to the year
2000 (Y2K). Everything went as well as we had hoped; in
general, the industry sailed through the testing process
with flying colors. The financial industry has been seen as
a leader in planning for year 2000 concerns. Thus, it was
no surprise to most participants that the test was an overwhelming success.
The general purpose of the process was to test electronic interfaces among
financial industry members in the United States and to follow transactions
through a typical trading cycle--from order entry to the settlement process.
Investment banks, broker-dealers, custodian banks and mutual fund companies all
worked together to make this possible. Approximately 400 firms were involved in
the testing; AIM was one of 70 asset managers.
During the testing process, thousands of transactions were submitted and
approximately 260,000 steps were tested. Of those, only a handful experienced
minor glitches--just 0.02% of the total number of transactions. All problems
were worked through quickly before the hypothetical trades were settled. Of
course, AIM will keep testing and planning throughout 1999 as a precaution.
AIM'S INTERNAL EFFORTS CONTINUE
As you know from our previous communications to you, AIM has been addressing the
year 2000 issue for several years. Now that we have finished adjusting our
applications and systems, our focus for the rest of 1999 is to continue
monitoring the year 2000 readiness status of outside sources we're linked to
electronically. On the investment side, our portfolio management staff is
continually evaluating the Y2K preparedness of the domestic and foreign
companies in which we invest.
We feel that our preparations for 2000 are very comprehensive, and the
industrywide testing showed that our colleagues in the financial industry are
also working hard to be ready for the new year. We do not think shareholders
need to take any extraordinary measures with their investments to prepare for
2000. However, if you have any lingering concerns, it may reassure you to know
that AIM is finalizing contingency plans that will be ready if necessary. Our
plans will give AIM employees guidelines to follow for a wide variety of
situations.
For a more comprehensive discussion of our Y2K efforts and for periodic
updates, please visit our Web site, www.aimfunds.com.
We are pleased to send you this report covering your fund's performance over
the reporting period.
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
automated AIM Investor Line at 800-246-5463 or at our Web site.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--. We appreciate your business.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
A I M Advisors, Inc.
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS LETTER IS DEEMED
AIM'S YEAR 2000 READINESS DISCLOSURE.
A I M T A X - E X E M P T B O N D F U N D O F C O N N E C T I C U T
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S E M I A N N U A L R E P O R T / M A N A G E R S ' O V E R V I E W
F U N D F I N D S O P P O R T U N I T I E S I N M A R K E T D O W N T U R N
HOW DID AIM TAX-EXEMPT BOND FUND OF CONNECTICUT PERFORM DURING THE REPORTING
PERIOD?
In the midst of the second-worst bond market on record, and the worst since
1994, AIM Tax-Exempt Bond Fund of Connecticut finished the reporting period in
slightly negative territory. For the six-month reporting period ended September
30, 1999, AIM Tax-Exempt Bond Fund of Connecticut returned -1.21% at net asset
value, that is, without sales charges. Fund performance, although disappointing,
was better than the municipal market's overall performance and compared
favorably against its peers. The Lehman Municipal Bond Index--an index of
approximately 50,000 investment-grade tax-exempt bonds--sank 2.16% for the same
period, while the average Connecticut municipal debt fund tracked by Lipper,
Inc. returned a 2.96% loss.
The fund's net asset value per share moved within a relatively narrow range of
$10.61 to $11.02 during the reporting period, continuing the fund's history of
relative price stability. Despite the market turbulence in 1999, your fund
continued to provide solid current income (see chart below), exempt from federal
taxes. The fund's net assets under management totaled $40 million at the
reporting period's close.
WHAT WERE THE MAJOR TRENDS IN FIXED-INCOME MARKETS DURING THE REPORTING PERIOD?
It has been a challenging year for fixed-income securities. We are in the middle
of a bear market that started in the fall of 1998. Tighter Federal Reserve Board
(Fed) monetary policy, Y2K concerns and a weak U.S. dollar contributed to the
downward pressure on bond prices in 1999. Bond markets struggled early in the
reporting period as investors anticipated that the Fed might increase interest
rates to slow the booming U.S. economy and fight the threat of inflation. U.S.
Treasury bond yields rose steadily through early 1999, while municipal bond
yields held fast. However, beginning in April, municipal bond yields started to
increase dramatically. At the same time, while the supply of municipal bonds was
light during the period--particularly compared to 1998's near-record levels of
issuance--the demand was similarly muted. Spurred by two interest-rate hikes in
the second quarter, most market interest rates also began to climb. Bond prices
move in the opposite direction of market interest rates, and this year's move
has dramatically affected most sectors of the bond markets. However, rates on
the benchmark 30-year Treasury bond began to buck this
FUND PERFORMANCE
As of 9/30/99
FUND PROVIDES SOLID INCOME
30-DAY DISTRIBUTION RATE AT NAV 4.86%
TAXABLE EQUIVALENT DISTRIBUTION RATE* 8.43
30-DAY SEC YIELD AT MAXIMUM OFFERING PRICE 3.69
TAXABLE EQUIVALENT 30-DAY SEC YIELD* 6.40
30-YEAR U.S. TREASURY BOND YIELD 6.05
*Assumes highest marginal federal income tax rate of
39.6% and Connecticut state tax rate of 4.5%.
Sources: Bloomberg, Lehman Brothers.
FUND VS. 30-YEAR U.S. TREASURY BOND
TAXABLE EQUIVALENT DISTRIBUTION RATE* 8.43%
TAXABLE EQUIVALENT 30-DAY SEC YIELD* 6.40%
30-YEAR TREASURY BOND YIELD 6.05%
HISTORY OF NET ASSET VALUE STABILITY
10/3/89-9/30/99
(Graph)
10 10/3/89 10.55 6/92 10.71 3/95 11.09 12/97
10.05 10/89 10.66 9/92 10.77 6/95 11.04 3/98
9.99 3/90 10.65 12/92 10.86 9/95 11.04 6/98
10.02 6/90 10.88 3/93 11.01 12/95 11.13 9/98
9.77 9/90 11.08 6/93 10.81 3/96 11.07 12/98
10.07 12/90 11.33 9/93 10.76 6/96 11 3/99
10.11 3/91 11.29 12/93 10.8 9/96 10.77 6/99
10.19 6/91 10.51 3/94 10.88 12/96 10.61 9/99
10.4 9/91 10.63 6/94 10.77 3/97
10.52 12/91 10.58 9/94 10.9 6/97
10.31 3/92 10.34 12/94 11.01 9/97
Source: Towers Data Systems HYPO--Registered Trademark--. There is no guarantee
that the fund will maintain a constant NAV. Investment return will vary, so you
may have a gain or a loss when you sell shares. Past performance cannot
guarantee comparable future results.
BOND PRICES MOVE IN THE OPPOSITE DIRECTION
OF MARKET INTEREST RATES, AND THIS
YEAR'S MOVE HAS DRAMATICALLY AFFECTED
MOST SECTORS OF THE BOND MARKETS.
See important fund and index disclosures inside front cover.
A I M T A X - E X E M P T B O N D F U N D O F C O N N E C T I C U T
2
<PAGE> 5
S E M I A N N U A L R E P O R T / M A N A G E R S ' O V E R V I E W
PORTFOLIO COMPOSITION
As of 9/30/99, based on total net assets
TOP FIVE BOND HOLDINGS
% OF
COUPON MATURITY PORTFOLIO
Connecticut 6.50% 10/01/12 4.19%
State Special Tax
Obligation-B
Connecticut 7.25% 10/15/99 4.08%
State
Development
Authority
Pollution Control
Connecticut 6.80% 06/01/03 3.38%
State Special
Tax Obligation
Guam Power 5.25% 10/01/34 3.32%
Authority
Connecticut 6.30% 11/15/17 3.31%
State Housing
Mortgage
Finance Program
PORTFOLIO CREDIT QUALITY
(Pie chart)
AAA 51.73%
AA 31.93%
A 9.97%
BBB/NON-RATED 6.37%
AVERAGE QUALITY RATING AA-
NUMBER OF HOLDINGS 68
AVERAGE MATURITY 12.57 YEARS
DURATION 5.70 YEARS
The fund's portfolio is subject to change, and
there is no assurance that the fund will
continue to hold any particular security.
trend by inching down slightly toward the end of the third quarter. Some
analysts believe that this could be an early sign that investors, fearing
increased stock market volatility and financial market disruptions caused by
Y2K, may already be taking flight to safety. Typically, bonds get a second look
when stocks falter, because investors believe they can earn competitive returns
and because bonds generally are better than stocks at reducing downside risk.
GIVEN CURRENT ECONOMIC CONDITIONS, HOW HAVE YOU MANAGED THE PORTFOLIO?
We have been making some changes to the fund's portfolio to take advantage of
the market downturn. Many of the bonds that we bought 12 to 18 months ago have
incurred some losses as interest rates have risen. We decided to realize these
losses, knowing that we can use them in the future to offset realized capital
gains. Since the fund is managed for tax-free income and not total return, we
try to avoid any distribution that would result in a taxable event for our
shareholders. At the same time, proceeds from the sales can be reinvested in
bonds with significantly higher yields. As a result, the average maturity of the
fund's holdings has increased slightly from six months ago. As of September 30,
the average maturity was 12.57 years, up from 10.77 years on March 31.
WHAT WAS THE CREDIT QUALITY OF THE FUND'S PORTFOLIO?
The average credit quality of the fund's portfolio remained AA- as rated by
Standard & Poor's, Moody's and Fitch--all widely known credit-rating agencies.
Although the fund continued to focus on high-quality debt issues, with more than
83% of its holdings in AAA and AA bonds, we also found attractive opportunities
in the yield spreads between bond-quality sectors. In the past, yield spreads
between bond-quality sectors had been very narrow. However, during the last six
months they have widened to the point where there was significant incentive to
step down in quality to take advantage of the increased yields. At the reporting
period's close, the fund had increased its BBB/non-rated bond holdings to 6.37%
of total net assets, up from 4% six months ago.
Credit-enhanced securities--those backed by insurance or escrowed with U.S.
Treasury securities--composed about 49% of the portfolio on September 30.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
Although there seems to be a great deal of fear in the fixed-income markets
presently, we believe this market environment provides a good buying
opportunity. Interest rates have risen to attractive levels and the ratio
between municipal bond yields and U.S. Treasury yields is compelling. Even after
gaining some ground, municipal bonds remain relatively cheap alternatives to
U.S. Treasuries. We believe that current yields are likely to offer investors
good returns.
Shortly after the close of the fund's reporting period, Fed policy makers
opted to leave interest rates unchanged at their October 5 meeting but signaled
to financial markets that they are leaning toward raising rates in the future if
they spot any sign of faster inflation. If the Fed does raise rates again, we
believe that it may improve the outlook for the bond markets because the move
will indicate that the Fed is serious about heading off any inflationary
pressures, which can erode the income potential of bonds.
DO YOU FORESEE ANY OTHER IMPROVEMENTS FOR FIXED-INCOME MARKETS?
Every ten seconds, a baby boomer in the United States turns 50. With about 80
million baby boomers within 10 to 15 years of retirement, we believe that we may
begin to see a subtle shift of assets to fixed-income investments as investors
move toward preservation of capital and away from growth-oriented vehicles. The
financial markets have been very good to investors in the last 20 years, so
there's an incentive to lock in gains. We believe that in the near future there
may be a renewed interest in fixed-income securities and in particular municipal
bonds as they remain the only tax-free vehicles for investors.
See important fund and index disclosures inside front cover.
A I M T A X - E X E M P T B O N D F U N D O F C O N N E C T I C U T
3
<PAGE> 6
S E M I A N N U A L R E P O R T / F O R C O N S I D E R A T I O N
WHAT DO BOND RATINGS MEAN?
The preceding discussion of your fund's performance mentions the quality of the
bonds in the fund's portfolio. Just what are bond quality ratings?
Two well-known rating agencies, Moody's and Standard & Poor's (S&P), assign
ratings to bond issues. The chart shows a summary of the definitions of these
ratings.
HOW BONDS ARE RATED
Bond ratings are essentially based on the issuer's risk of default, or
nonpayment of principal and/or interest, on the bond. How does a bond rating
come about? Say a company wants to raise $5 million for expansion by issuing a
five-year bond, meaning that in five years, the company will repay $5 million
plus interest to the investor(s) in the bond issue. The company, or issuer, pays
a fee to have its bond rated by a qualified rating agency. The selected rating
agency sends representatives to the company to meet with management and evaluate
the company's short- and long-term risk profile--the company's ability and
willingness to pay the principal and interest of the bond issue at its maturity,
in this case five years. Other rating factors include:
o the make-up and terms of the particular issue;
o the level and predictability of the issuer's cash flow;
o how well-protected the issue is in the event of bankruptcy, reorganization
or other arrangement;
o possible adverse economic conditions both in general and in the company's
sector; and
o currency risk in the case of foreign issues.
After considering these and other factors deemed necessary by agency
representatives, the rating agency assigns a rating, such as "A," to the issue.
The rating is made public before the issue is offered to investors so they know
the relative quality of the bond. Investors can then decide for themselves if
they wish to invest in a particular bond issue.
MOODY'S DEFINITION S&P
INVESTMENT GRADE
Aaa Bonds of the highest quality, with the lowest AAA
degree of long-term investment risk. Issuers'
ability to repay is very high.
Aa Bonds of high quality with slightly greater AA
long-term investment risk.
A Bonds with favorable investment attributes A
but elements making them more susceptible
to adversity.
Baa Medium-grade bonds that are currently secure BBB
but may be unreliable over time.
NON-INVESTMENT GRADE (High-Yield or Junk)
Ba Bonds with speculative elements that make BB
them not well safeguarded and uncertain.
B Bonds with low long-term assurance of payment. B
Caa Bonds of poor standing that may be in CCC
default or in danger of default.
Ca Bonds of highly speculative quality that are CC
often in default.
C Lowest-rated bonds with poor prospects of ever C
being upgraded to investment standing.
- - Bonds in default. Issuer cannot repay. D
A I M T A X - E X E M P T B O N D F U N D O F C O N N E C T I C U T
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S E M I A N N U A L R E P O R T / F O R C O N S I D E R A T I O N
WHAT BOND RATINGS MEAN
Although the rating systems of the two agencies differ slightly, their hierarchy
is essentially the same: the highest rated bonds, Aaa for Moody's and AAA for
S&P, are those which show the best capacity for repayment of the principal (face
value) plus interest to the bondholder. These high-rated bonds have a lower
return because they are a lower-risk investment. In other words, rating and
risk/return move conversely for bonds--the lower the rating, the higher the
potential risk and return, and vice versa. So although investment-grade bonds
such as U.S. Treasury issues are one of the safest investments around, more
speculative junk bonds can yield significantly higher returns if an investor can
tolerate the risk.
Moody's and S&P sometimes use modifiers with their standard ratings. Moody's
may add a 1, 2 or 3 to a rating (e.g., Aa2), with a 1 denoting an issue ranking
in the higher end of its category, a 2 denoting a mid-range ranking and a 3
denoting a lower-end ranking. Similarly, S&P may add a plus (+) or minus (-) to
show an issue's relative standing within a category (e.g., B+).
Once assigned, bond ratings are not often altered. However, if major changes
occur in an issuer's short- or long-term credit outlook, a rating agency may
review the rating for possible modification. Contributing factors may include
shifts in industry demand, new technologies, government intervention, regulatory
changes or changes in macroeconomic variables such as oil prices. Events such as
these are weighed to determine how much they will affect the issuer's operations
and future direction.
UNRATED BONDS
What about unrated bonds? The fact that a bond is unrated does not make it a
"bad" bond. Some organizations simply choose not to pay to have their bonds
rated. Often the issuer of an unrated bond is a small entity such as a town or
district that does not have extra money to pay for a rating. In those cases,
independent research is necessary on the part of the investor to put together a
risk profile of the issuer.
(Photo)
YOUR FUND'S PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION SHOW THE
MAXIMUM PERCENTAGE, IF ANY, THAT YOUR FUND CAN INVEST IN NON-INVESTMENT
GRADE BONDS. MANY BOND FUNDS MAINTAIN DIVERSITY ACROSS BOND RATINGS BY
HOLDING SHARES IN BOTH INVESTMENT GRADE AND NON-INVESTMENT GRADE BONDS.
BECAUSE OF THIS DIVERSIFICATION, INVESTMENT IN SUCH A FUND MAY ENTAIL LESS
RISK AND GREATER POTENTIAL REWARD THAN INVESTMENT IN AN INDIVIDUAL HIGH-YIELD
SECURITY. SEE YOUR FINANCIAL CONSULTANT TO DETERMINE WHAT KINDS OF BOND
FUNDS ARE APPROPRIATE FOR YOUR FINANCIAL OBJECTIVES AND RISK TOLERANCE.
A I M T A X - E X E M P T B O N D F U N D O F C O N N E C T I C U T
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<PAGE> 8
SCHEDULE OF INVESTMENTS
September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MUNICIPAL
OBLIGATIONS-98.00%
EDUCATION-5.54%
Connecticut Health and
Education Facilities
Authority (Fairfield
University);
Series I RB
5.375%, 07/01/22(b) AAA Aaa $ 250 $ 241,548
- ----------------------------------------------------------------
Connecticut Regional
School District No. 5;
Unlimited Tax Series
1992 GO
6.00%, 03/01/02(c)(d) AAA Aaa 335 354,470
- ----------------------------------------------------------------
Connecticut Regional
School District No. 5
(Towns of Bethany,
Orange, and
Woodbridge);
Unlimited Tax Series
1993 GO
5.50%, 02/15/07(b) AAA Aaa 500 518,605
- ----------------------------------------------------------------
Connecticut State Higher
Education Supplemental
Loan Authority (Family
Education Loan
Program);
Series 1990 A RB
7.50%, 11/15/10(e) -- A1 1,085 1,099,441
- ----------------------------------------------------------------
2,214,064
- ----------------------------------------------------------------
ELECTRIC-4.09%
Connecticut Development
Authority (New England
Power Co.);
Series 1985 Fixed Rate
PCR
7.25%, 10/15/99(c)(d) A A1 1,600 1,633,504
- ----------------------------------------------------------------
GENERAL OBLIGATION-11.58%
Bridgeport (Town of),
Connecticut;
Unlimited Tax Series A
GO
6.00%, 09/01/06(b) AAA Aaa 875 942,978
- ----------------------------------------------------------------
Brooklyn (City of),
Connecticut;
Unlimited Tax Series GO
5.50%, 05/01/06(b) AAA Aaa 250 260,612
- ----------------------------------------------------------------
5.70%, 05/01/08(b) AAA Aaa 250 262,033
- ----------------------------------------------------------------
Chester (Town of),
Connecticut;
Unlimited Tax Series
1989 GO
7.00%, 10/01/05 -- A2 190 196,372
- ----------------------------------------------------------------
Connecticut (State of)
(General Purpose Public
Improvement);
Unlimited Tax Series
1991 A GO
6.75%, 03/01/01(c)(d) AA -- 200 210,850
- ----------------------------------------------------------------
Unlimited Tax Series
1992 A GO
6.50%, 03/15/02(c)(d) AA -- 300 320,703
- ----------------------------------------------------------------
6.75%, 03/01/11(c)(d) AA -- 480 506,040
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GENERAL OBLIGATION-(CONTINUED)
Mansfield (City of),
Connecticut;
Unlimited Tax Series
1990 GO
6.00%, 06/15/07 -- A1 $ 100 $ 107,570
- ----------------------------------------------------------------
6.00%, 06/15/08 -- A1 100 107,630
- ----------------------------------------------------------------
6.00%, 06/15/09 -- A1 100 107,680
- ----------------------------------------------------------------
New Britain (City of),
Connecticut;
Unlimited Tax Series
1992 Various Purpose GO
6.00%, 02/01/11(b) AAA Aaa 400 429,572
- ----------------------------------------------------------------
North Canaan (City of),
Connecticut;
Unlimited Tax Series
1991 GO
6.50%, 01/15/08 -- A3 125 138,016
- ----------------------------------------------------------------
6.50%, 01/15/09 -- A3 125 138,478
- ----------------------------------------------------------------
6.50%, 01/15/10 -- A3 125 138,535
- ----------------------------------------------------------------
6.50%, 01/15/11 -- A3 125 138,835
- ----------------------------------------------------------------
Somers (City of),
Connecticut;
Unlimited Tax Series
1990 Various Purpose GO
6.00%, 12/01/10 -- A1 190 204,733
- ----------------------------------------------------------------
Westbrook (City of),
Connecticut;
Unlimited Tax Series
1992 GO
6.40%, 03/15/10(b) AAA Aaa 380 422,207
- ----------------------------------------------------------------
4,632,844
- ----------------------------------------------------------------
HEALTH CARE-19.58%
Connecticut Development
Authority (Elim Park
Baptist Home);
Refunding Series A RB
5.375%, 12/01/18 BBB+ -- 500 457,220
- ----------------------------------------------------------------
Connecticut Development
Authority (Life Care
Facility-Seabury);
Refunding Series RB
5.00%, 09/01/15(b) AA -- 500 463,195
- ----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Bridgeport
Hospital);
Series 1992 A RB
6.625%, 07/01/18(b) AAA Aaa 500 528,715
- ----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Capital
Asset);
Series 1989 B RB
7.00%, 01/01/00(c) AAA Aaa 200 201,546
- ----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Child Care
Facilities);
Series A RB
5.00%, 07/01/28(b) AAA -- 250 220,580
- ----------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
HEALTH CARE-(CONTINUED)
Connecticut Health and
Education Facilities
Authority (Danbury
Hospital);
Series 1991 E RB
6.50%, 07/01/14(b) AAA Aaa $ 750 $ 783,360
- ----------------------------------------------------------------
Series G RB
5.625%, 07/01/25(b) AAA Aaa 500 490,950
- ----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Hospital For
Special Care);
Series 1997 B RB
5.375%, 07/01/17 BBB Baa2 500 460,480
- ----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Middlesex
Hospital);
Series 1992 G RB
6.25%, 07/01/02(c)(d) AAA Aaa 1,100 1,176,428
- ----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (New Britain
Memorial Hospital);
Series 1991 A RB
7.75%, 07/01/02(c)(d) AAA -- 500 553,935
- ----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Stamford
Hospital);
Series F RB
5.40%, 07/01/09(b) AAA Aaa 1,000 1,030,100
- ----------------------------------------------------------------
Series G RB
5.00%, 07/01/24(b) AAA Aaa 200 178,380
- ----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Veteran
Memorial Medical
Center);
Series 1996 A RB
5.50%, 07/01/26(b) AAA Aaa 500 478,390
- ----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Yale-New
Haven Hospital);
Series 1990 F RB
7.10%, 07/01/00(c)(d) AAA NRR 775 809,231
- ----------------------------------------------------------------
7,832,510
- ----------------------------------------------------------------
HOUSING-20.86%
Connecticut Housing
Development Authority
(Housing Mortgage
Finance Program); RB
Series C,
7.00%, 11/15/99(e) AA Aa2 225 225,650
- ----------------------------------------------------------------
Series 1991 C,
Sub-Series C-3,
6.55%, 11/15/13 AA Aa2 310 325,314
- ----------------------------------------------------------------
Series D-2,
5.45%, 11/15/24(e) AA Aa2 1,250 1,181,400
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
HOUSING-(CONTINUED)
Connecticut (State of)
(Housing Mortgage
Finance Program); RB
Series A-1, 5.70%,
05/15/08 AA Aa2 $ 100 $ 102,347
- ----------------------------------------------------------------
Series A-1, 5.00%,
05/15/17 AA Aa2 250 235,463
- ----------------------------------------------------------------
Series E-1, 5.95%,
05/15/17 AA Aa2 500 512,680
- ----------------------------------------------------------------
Series 1993 E-1, 6.00%,
05/15/17 AA Aa2 675 687,015
- ----------------------------------------------------------------
Series C-1, 6.30%,
11/15/17 AA Aa2 1,270 1,325,587
- ----------------------------------------------------------------
Series C-2, 6.25%,
11/15/18 AA Aa2 750 780,293
- ----------------------------------------------------------------
Series C-2, 6.70%,
11/15/22(e) AA Aa2 280 290,110
- ----------------------------------------------------------------
Series C-2, 5.85%,
11/15/28(e)(f) AA Aa2 1,215 1,203,178
- ----------------------------------------------------------------
Series A-2, 5.20%,
11/15/29(e) AA Aa2 1,250 1,125,750
- ----------------------------------------------------------------
Waterburg (City of)
Connecticut Housing
Authority;
Refunding Series A RB
5.45%, 07/01/23(b) AAA Aaa 365 349,561
- ----------------------------------------------------------------
8,344,348
- ----------------------------------------------------------------
LEASE RENTAL-1.06%
Connecticut (State of)
(Middletown Courthouse
Facilities Project);
Series 1991
Lease-Rental Revenue
COP
6.25%, 12/15/01(c)(d) AAA Aaa 400 425,336
- ----------------------------------------------------------------
TRANSPORTATION-18.82%
Connecticut State Special
Tax Obligation (Second
Lien-Transportation
Infrastructure);
Series RB
3.75%, 12/01/10(f) A-1+ VMIG1 1,337 1,337,000
- ----------------------------------------------------------------
Connecticut State Special
Tax Obligation
(Transportation
Infrastructure);
Series 1991 B RB
6.25%, 10/01/01(c)(d) AA- NRR 1,000 1,059,500
- ----------------------------------------------------------------
Series A
6.80%, 06/01/03(c)(d) AA- A1 1,250 1,350,188
- ----------------------------------------------------------------
Series 1991 B
6.50%, 10/01/10 AA- A1 530 589,943
- ----------------------------------------------------------------
Connecticut State Special
Tax Obligation
(Transportation
Infrastructure Sales
and Excise Tax); RB
Series 1991 B
5.90%, 10/01/99(c) AA- NRR 1,000 1,000,000
- ----------------------------------------------------------------
Series 1989 C
6.80%, 12/01/99(c)(d) AAA -- 500 512,355
- ----------------------------------------------------------------
Series 1991 B
6.50%, 10/01/12 AA- A1 1,500 1,676,445
- ----------------------------------------------------------------
7,525,431
- ----------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WATER & SEWER-7.42%
Connecticut Development
Authority (Pfizer
Inc.);
Refunding Series 1982
PCR
6.55%, 02/15/13 AAA Aaa $ 250 $ 267,158
- ----------------------------------------------------------------
Connecticut Development
Authority Water
Facility (Bridgeport
Hydraulic Co. Project);
Refunding Series RB
7.25%, 06/01/20 AA- -- 800 827,360
- ----------------------------------------------------------------
6.15%, 04/01/35(e) AA- -- 250 252,873
- ----------------------------------------------------------------
Connecticut State Clean
Water Fund;
Series 1991 RB
7.00%, 01/01/11 AAA Aaa 1,100 1,157,882
- ----------------------------------------------------------------
Manchester (City of)
Connecticut Eighth
Utilities Fire
District;
Unlimited Tax Series
1991 GO
6.75%, 08/15/06 -- Aa3 180 201,303
- ----------------------------------------------------------------
South Central Connecticut
Regional Water
Authority;
Eighth Series 1990 A
Water System RB
6.60%, 08/01/00(c)(d) A+ A2 250 260,610
- ----------------------------------------------------------------
2,967,186
- ----------------------------------------------------------------
MISCELLANEOUS-9.05%
Connecticut Area
Cooperative Educational
Services (Staff
Development/Administration
Facilities);
Unlimited Tax Series GO
5.625%, 07/15/19(b) A -- 1,060 1,018,363
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MISCELLANEOUS-(CONTINUED)
Connecticut Development
Authority (Economic
Development Projects);
Refunding Series 1992 A
RB
6.00%, 11/15/08 AA Aa $ 500 $ 510,675
- ----------------------------------------------------------------
Guam (Government of);
Unlimited Tax Series
1995 A GO
5.375%, 09/01/00 BBB -- 250 250,980
- ----------------------------------------------------------------
Guam (Government of)
Power Authority;
Series A RB
5.25%, 10/01/34 BBB Baa3 1,500 1,328,250
- ----------------------------------------------------------------
Puerto Rico Commonwealth
(Highway and
Transportation
Authority);
Series X RB
5.20%, 07/01/03 A Baa1 500 511,885
- ----------------------------------------------------------------
3,620,153
- ----------------------------------------------------------------
TOTAL INVESTMENTS (Cost
$38,272,661)-98.00% 39,195,376
- ----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-2.00% 801,779
- ----------------------------------------------------------------
NET ASSETS-100.00% $39,997,155
================================================================
</TABLE>
Abbreviations:
COP - Certificates of Participation
GO - General Obligation Bonds
PCR - Pollution Control Revenue Bonds
RB - Revenue Bonds
Notes to Schedule of Investments:
(a) Ratings assigned by Standard & Poor's Corporation ("S&P") and Moody's
Service, Inc. ("Moody's"). NRR indicates a security that is not re-rated
subsequent to funding of an escrow fund (consisting of U.S. Treasury
obligations); this funding is pursuant to an advance refunding of the
security.
(b) Secured by bond insurance.
(c) Secured by an escrow fund of U.S. Treasury obligations.
(d) Security has an irrevocable call or mandatory put by the issuer. Maturity
date reflects such call or put.
(e) Security subject to the alternative minimum tax.
(f) Demand security; payable upon demand by the Fund at specified time intervals
usually no greater than thirteen months. Interest rate is redetermined
periodically. Rate shown is the rate in effect on 09/30/99.
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $38,272,661) $ 39,195,376
- ---------------------------------------------------------
Cash 144,397
- ---------------------------------------------------------
Receivables for:
Capital stock sold 115,228
- ---------------------------------------------------------
Interest 736,888
- ---------------------------------------------------------
Investment for deferred compensation plan 23,862
- ---------------------------------------------------------
Other assets 4,749
- ---------------------------------------------------------
Total assets 40,220,500
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 63,878
- ---------------------------------------------------------
Dividends 64,914
- ---------------------------------------------------------
Deferred compensation 23,862
- ---------------------------------------------------------
Accrued advisory fees 16,624
- ---------------------------------------------------------
Accrued administrative services fees 4,098
- ---------------------------------------------------------
Accrued transfer agent fees 1,955
- ---------------------------------------------------------
Accrued distribution fees 25,679
- ---------------------------------------------------------
Accrued operating expenses 22,335
- ---------------------------------------------------------
Total liabilities 223,345
- ---------------------------------------------------------
Net assets applicable to shares
outstanding $ 39,997,155
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER
SHARE:
Authorized 1,000,000,000
- ---------------------------------------------------------
Outstanding 3,768,613
=========================================================
Net asset value and redemption price per
share $ 10.61
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $10.61 divided
by 95.25%) $ 11.14
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended September 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 1,205,311
- ---------------------------------------------------------
EXPENSES:
Advisory fees 103,923
- ---------------------------------------------------------
Administrative services fees 24,944
- ---------------------------------------------------------
Custodian fees 1,049
- ---------------------------------------------------------
Transfer agent fees 11,058
- ---------------------------------------------------------
Professional fees 14,157
- ---------------------------------------------------------
Distribution fees 51,961
- ---------------------------------------------------------
Other 19,702
- ---------------------------------------------------------
Total expenses 226,794
- ---------------------------------------------------------
Less: Fees waived by advisor (7,570)
- ---------------------------------------------------------
Expenses paid indirectly (211)
- ---------------------------------------------------------
Net expenses 219,013
- ---------------------------------------------------------
Net investment income 986,298
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Net realized gain (loss) on sales of
investment securities (26,170)
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (1,477,444)
- ---------------------------------------------------------
Net gain (loss) on investment securities (1,503,614)
- ---------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ (517,316)
=========================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended September 30, 1999 and the year ended March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1999 1999
--------------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 986,298 $ 1,969,711
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (26,170) 8,698
- ---------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (1,477,444) (113,211)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (517,316) 1,865,198
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (988,354) (2,022,076)
- ---------------------------------------------------------------------------------------------
Net increase from capital stock transactions 63,023 1,030,126
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (1,442,647) 873,248
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 41,439,802 40,566,554
- ---------------------------------------------------------------------------------------------
End of period $39,997,155 $41,439,802
=============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $39,322,265 $39,259,242
- ---------------------------------------------------------------------------------------------
Undistributed net investment income (19,733) (17,677)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (228,093) (201,923)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 922,716 2,400,160
- ---------------------------------------------------------------------------------------------
$39,997,155 $41,439,802
=============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Tax-Exempt Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Company is organized as a Maryland corporation
consisting of four separate portfolios: AIM Tax-Exempt Bond Fund of Connecticut,
AIM High Income Municipal Fund, AIM Tax-Exempt Cash Fund and AIM Tax-Free
Intermediate Fund. Matters affecting each portfolio are voted on exclusively by
the shareholders of such portfolio. The assets, liabilities and operations of
each portfolio are accounted for separately. Information presented in these
financial statements pertains only to AIM Tax-Exempt Bond Fund of Connecticut
(the "Fund"). The investment objective of the Fund is to earn a high level of
income exempt from federal taxes and Connecticut taxes by investing at least 80%
of its net assets in municipal securities.
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 the 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
Board of Directors, provided that securities with a demand feature
exercisable within one to seven days are valued at par. Prices provided by
the pricing service represent valuations of the mean between current bid and
asked market prices which may be determined without exclusive reliance on
quoted prices and may reflect appropriate factors such as institution-size
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, individual trading characteristics and other market
data. Portfolio securities for which prices are not provided by the pricing
service are valued at the mean between the last available bid and asked
prices, unless the Board of Directors or its designees determines that the
mean between the last available bid and asked prices does not accurately
reflect the current market value of the security. Securities for which market
quotations either are not readily available or are questionable are valued at
fair value as determined in good faith by or under the supervision of the
Company's officers in accordance with methods which are specifically
authorized by the Board of Directors. Notwithstanding the above, short-term
obligations with maturities of sixty days or less are valued at amortized
cost.
B. Securities Transactions and Investment Income--Securities transactions are
recorded on a trade date basis. Realized gains and losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income, adjusted for amortization of premiums and original issue
discounts, is recorded as earned from settlement date and is recorded on the
accrual basis.
C. Dividends and Distributions to Shareholders--It is the policy of the Fund to
declare daily dividends from net investment income. Such dividends are paid
monthly. Net realized capital
10
<PAGE> 13
gains (including net short-term capital gains and market discounts), if any,
are distributed annually.
D. Federal Income Taxes--The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements. The Fund has a capital loss carryforward (which may
be carried forward to offset future taxable gains, if any) of $195,298, which
expires, if not previously utilized, through the year 2004. The Fund cannot
distribute capital gains to shareholders until the tax loss carryforwards
have been utilized. In addition, the Fund intends to invest in such municipal
securities to allow it to qualify to pay to shareholders "exempt interest
dividends," as defined in the Internal Revenue Code.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.50% of
the Fund's average daily net assets. During the six months ended September 30,
1999, AIM waived advisory fees of $7,570.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended September 30, 1999,
AIM was paid $24,944 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Fund. During the six months ended September 30,
1999, AFS was paid $9,582 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. The Company has also adopted a plan
pursuant to Rule 12b-1 under the 1940 Act (the "Plan") with respect to the Fund,
whereby the Fund pays to AIM Distributors compensation at an annual rate of
0.25% of the Fund's average daily net assets. The Plan is designed to compensate
AIM Distributors for certain promotional and other sales related costs and
provides for periodic payments to selected dealers and financial institutions
who furnish continuing personal shareholder services to their customers who
purchase and own shares of the Fund. Any amounts not paid as a service fee under
such plan would constitute an asset-based sales charge. The Plan also imposes a
cap on the total sales charges, including asset-based sales charges, that may be
paid by the Fund. During the six months ended September 30, 1999, the Fund paid
AIM Distributors $51,961 as compensation under the Plan.
AIM Distributors received commissions of $13,045 from sales of shares of the
Fund's capital stock during the six months ended September 30, 1999. Such
commissions are not an expense of the Fund. They are deducted from, and are not
included in, the proceeds from sales of capital stock. Certain officers and
directors of the Company are officers of AIM, AFS and AIM Distributors.
During the six months ended September 30, 1999, the Fund paid legal fees of
$1,989 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
During the six months ended September 30, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $211 under an expense
offset arrangement. The effect of the above arrangement resulted in a reduction
of the Fund's total expenses of $211 during the six months ended September 30,
1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to directors who are 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. During the six
months ended September 30, 1999, 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 0.09% 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. Prior to May 28, 1999, the commitment fee rate was
0.05%.
11
<PAGE> 14
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the six months ended September 30, 1999 were
$5,343,543 and $5,727,550, respectively. The amount of unrealized appreciation
(depreciation) of investment securities as of September 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $1,422,574
- ------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (499,859)
- ------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 922,715
========================================================================
Investments have the same cost for tax and financial statement purposes.
</TABLE>
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the six months ended September 30,
1999 and the year ended March 31, 1999 were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1999 1999
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold 445,475 $ 4,835,209 634,272 $ 7,019,083
- --------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends 58,278 628,729 118,804 1,314,072
- --------------------------------------------------------------------------------------------------------------
Reacquired (501,272) (5,400,915) (660,290) (7,303,029)
- --------------------------------------------------------------------------------------------------------------
2,481 $ 63,023 92,786 $ 1,030,126
==============================================================================================================
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during the six months ended September 30, 1999 and for each of the
years in the five-year period ended March 31, 1999.
<TABLE>
<CAPTION>
MARCH 31,
SEPTEMBER 30, ---------------------------------------------------
1999 1999 1998 1997 1996 1995
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.00 $ 11.04 $ 10.77 $ 10.81 $ 10.71 $ 10.69
- ----------------------------------------------------------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.26 0.53 0.55 0.56 0.56 0.56
- ----------------------------------------------------------- ------- ------- ------- ------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) (0.39) (0.03) 0.27 (0.05) 0.10 0.04
- ----------------------------------------------------------- ------- ------- ------- ------- ------- -------
Total from investment operations (0.13) 0.50 0.82 0.51 0.66 0.60
- ----------------------------------------------------------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.26) (0.54) (0.55) (0.55) (0.56) (0.57)
- ----------------------------------------------------------- ------- ------- ------- ------- ------- -------
Returns of capital -- -- -- -- -- (0.01)
- ----------------------------------------------------------- ------- ------- ------- ------- ------- -------
Total distributions (0.26) (0.54) (0.55) (0.55) (0.56) (0.58)
- ----------------------------------------------------------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 10.61 $ 11.00 $ 11.04 $ 10.77 $ 10.81 $ 10.71
=========================================================== ======= ======= ======= ======= ======= =======
Total return(a) (1.21)% 4.64% 7.78% 4.84% 6.24% 5.78%
=========================================================== ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $39,997 $41,440 $40,567 $38,118 $39,355 $38,289
=========================================================== ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets(b) 1.05%(c) 0.99% 0.88% 0.72% 0.66% 0.55%
=========================================================== ======= ======= ======= ======= ======= =======
Ratio of net investment income to average net assets(d) 4.75%(c) 4.78% 5.02% 5.18% 5.16% 5.37%
=========================================================== ======= ======= ======= ======= ======= =======
Portfolio turnover rate 13% 7% 5% 17% 17% 7%
=========================================================== ======= ======= ======= ======= ======= =======
</TABLE>
(a) Does not deduct sales charges.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements are
1.09% (annualized), 1.11%, 1.11%, 1.09%, 1.16%, and 1.13%, for the periods
1999-1995, respectively.
(c) Ratios are annualized and based on average net assets of $41,455,569.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements are 4.70% (annualized), 4.66%, 4.79%, 4.81%, 4.66%, and
4.79%, for the periods 1999-1995, respectively.
12
<PAGE> 15
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; 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 Mary J. Benson COUNSEL TO THE FUND
of the U.S. House of Representatives Assistant Vice President
and Assistant Treasurer Ballard Spahr
Carl Frischling Andrews & Ingersoll, LLP
Partner Sheri Morris 1735 Market Street
Kramer, Levin, Naftalis & Frankel LLP Assistant Vice President Philadelphia, PA 19103
and Assistant Treasurer
Robert H. Graham COUNSEL TO THE DIRECTORS
President and Chief Executive Officer Renee A. Friedli
A I M Management Group Inc. Assistant Secretary Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
Prema Mathai-Davis P. Michelle Grace 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, Jeffrey H. Kupor
Metropolitan Transportation Authority of Assistant Secretary A I M Distributors, Inc.
New York State 11 Greenway Plaza
Nancy L. Martin Suite 100
Lewis F. Pennock Assistant Secretary Houston, TX 77046
Attorney
Ofelia M. Mayo
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Lisa A. Moss
Limited Partnership Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
<PAGE> 16
T H E A I M F A M I L Y O F F U N D S--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has
AIM Aggressive Growth Fund(1) AIM Money Market Fund provided leadership in the mutual
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund International Growth Funds fund industry since 1976 and
AIM Capital Development Fund AIM Advisor managed approximately $120 billion
AIM Constellation Fund in assets for more than 6.4
AIM Dent Demographic Trends Fund INTERNATIONAL VALUE FUND million shareholders, including
AIM Large Cap Growth Fund AIM Asian Growth Fund individual investors, corporate
AIM Mid Cap Equity Fund AIM Developing Markets Fund clients and financial institutions,
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(2) as of September 30, 1999.
AIM Mid Cap Opportunities Fund AIM European Development Fund The AIM Family of
AIM Select Growth Fund AIM International Equity Fund Funds--Registered Trademark-- is
AIM Small Cap Growth Fund(6) AIM Japan Growth Fund distributed nationwide, and AIM
AIM Small Cap Opportunities Fund(5) AIM Latin American Growth Fund today is the 10th-largest mutual
AIM Value Fund AIM New Pacific Growth Fund fund complex in the United States
AIM Weingarten Fund in assets under management,
GLOBAL GROWTH FUNDS according to Strategic Insight, an
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund independent mutual fund monitor.
AIM Advisor Flex Fund AIM Global Growth Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS
AIM Balanced Fund AIM Global Growth & Income Fund
AIM Basic Value Fund AIM Global Utilities Fund
AIM Charter Fund
GLOBAL INCOME FUNDS
INCOME FUNDS AIM Emerging Markets Debt Fund
AIM Floating Rate Fund AIM Global Government Income Fund
AIM High Yield Fund AIM Global Income Fund
AIM High Yield Fund II AIM Strategic Income Fund
AIM Income Fund
AIM Intermediate THEME FUNDS
Government Fund AIM Global Consumer Products and Services Fund
AIM Limited Maturity Treasury Fund AIM Global Financial Services Fund
AIM Global Health Care Fund
TAX-FREE INCOME FUNDS AIM Global Infrastructure Fund
AIM High Income Municipal Fund AIM Global Resources Fund
AIM Municipal Bond Fund AIM Global Telecommunications and Technology Fund(3)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Trends Fund(4)
AIM Tax-Free Intermediate Fund
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998.
(2) On September 1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth
Fund. (3) On June 1, 1999, AIM Global Telecommunications Fund was renamed AIM
Global Telecommunications and Technology Fund. (4) Effective August 27, 1999,
AIM Global Trends Fund was restructured to operate as a traditional mutual fund.
Prior to August 27, 1999, the fund operated as a fund of funds. (5) AIM Small
Cap Opportunities Fund closed to new investors on November 4, 1999. (6) AIM
Small Cap Growth Fund closed to new investors on November 8, 1999. 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. If used as sales material after January 20, 2000, this report must
be accompanied by a current Quarterly Review of Performance for AIM Funds.
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