<PAGE> 1
[AIM LOGO APPEARS HERE]
AIM TAX-EXEMPT CASH FUND
Semiannual Report
September 30, 1996
<PAGE> 2
The Chairman's Letter
- ---------------------------
AIM Tax-Exempt
Cash Fund's
4.43% taxable-equivalent
effective yield
compared favorably to
popular
bank money market
deposit accounts.
- ---------------------------
Dear Fellow Shareholder:
AIM Tax-Exempt Cash Fund continued to produce attractive,
[PHOTO OF tax-free income during the six-month period ended September
Charles T. Bauer, 30, 1996. At the close of this period, the Fund posted a
Chairman of the seven-day effective annualized yield of 3.05%. Translated to
Board of the taxable-equivalent yield, the Fund's seven-day effective
Fund, APPEARS annualized yield was 4.43% based on net asset value, and
HERE.] adjusted for the highest marginal federal tax rate of 39.6%.
The taxable-equivalent yield is calculated in the same
manner as the standard yield with an adjustment for the
stated, assumed tax rate.
The Fund's 4.43% taxable-equivalent effective yield compared favorably to
popular bank money market deposit accounts. The Bank Rate Monitor, which tracks
yields on bank money market deposit accounts, reported the seven-day average
yield on those accounts stood at 2.64% as of September 30, 1996. Bank money
market deposit accounts are insured by the FDIC as to interest and principal.
As with any money market mutual fund, an investment in the Fund is neither
insured nor guaranteed by the U.S. government, the FDIC, or a bank, and there
can be no assurance that the Fund will be able to maintain a stable net asset
value of $1.00 per share.
The Fund maintained its strict adherence to an investment discipline of
purchasing only securities of superior credit quality. Specifically, the Fund
invests only in "Eligible Securities" as defined in Rule 2a-7 under the
Investment Company Act of 1940. "Eligible Securities" are securities rated in
one of the two highest categories by two nationally recognized statistical
rating organizations, or if unrated, are determined by the Fund's Board of
Directors to be of comparable quality to a rated security that meets such
quality standards.
The reporting period ended September 30, 1996, was difficult for
fixed-income investors. Uncertainty dominated the fixed-income markets as
investors became concerned that rapid economic growth would accelerate
inflation. The rate of growth of the gross domestic product (GDP) rose to 2.0%
in the first quarter of 1996 and 4.7% in the second quarter, its highest level
since 1994.
The primary concern was that the Federal Reserve Board would nudge interest
rates higher, and that sent fixed-income markets reeling. However, money market
securities resisted the volatility, and short-term interest rates remained
stable. Subsequent economic reports suggested that inflation was not
threatening. When the Fed met in July, August, and September, it left interest
rates unchanged each time.
OUTLOOK
Mounting evidence that the U.S. economy is growing at a reasonable rate and
that inflation pressures remain modest has calmed investor concerns, at least
for the near term. Recent reports showed that GDP slowed to 2.2% from 4.7% in
the second quarter. Many analysts, and the Fed as well, anticipate that the
economy will continue to slow in the months ahead.
While tax reform remains an important issue for municipal securities, we
don't believe tax reform will be a factor for several reasons. First, there are
no tax-reform bills under consideration by Congress. If a bill is presented, we
anticipate lobbying groups will muster an all-out assault on it. Second, the
reform most mentioned--a flat tax--actually may result in many lower- and
middle-income workers paying higher taxes--hardly a favorable outcome. Third,
we think it unlikely that the federal government will raise taxes at the same
time it is shifting more of the spending burden to the states.
We are pleased to send you this report on the performance of AIM Tax-Exempt
Cash Fund. As always, we welcome your comments about this report or about this
Fund. You may reach us by calling Client Services at 800-959-4246 during normal
business hours. For automated account information 24 hours a day, call the AIM
Investor Line toll-free at 800-246-5463.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 3
Financials
SCHEDULE OF INVESTMENTS
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES-84.19%
ALABAMA-4.54%
Alabama Industrial Development Board (Industrial
Partners Project); Variable/Fixed Rate Refunding
Series 1989 RB
4.00%, 01/01/07(b)(c) -- VMIG-1 $ 1,400 $ 1,400,000
- -----------------------------------------------------------------------------------------
COLORADO-2.60%
Colorado Housing Finance Authority (Grant Plaza
Project);
Multi-Family Mortgage Series 1991 A RB
3.925%, 11/01/09(b)(c) A-1+ Aaa 800 800,000
- -----------------------------------------------------------------------------------------
FLORIDA-1.35%
Dade (County of) Health Facilities Authority
Hospital
(Baptist Hospital Miami Project); RB
7.375%, 05/01/97(d)(e) AAA -- 400 415,426
- -----------------------------------------------------------------------------------------
ILLINOIS-7.05%
Calumet (City of) (Corporate Purpose Bonds);
Series 1996 C GO
6.00%, 01/01/97(f) -- Aaa 350 352,092
- -----------------------------------------------------------------------------------------
Chicago (City of); Series 1996 GO
3.10%, 02/04/97(b)(d) SP-1+ MIG-1 400 399,658
- -----------------------------------------------------------------------------------------
Illinois Health Facilities Authority (Franciscan
Eldercare Project); Adjustable Rate Refunding
Series 1996 C RB
3.85%, 05/15/26(b)(c) AA- -- 1,420 1,420,000
- -----------------------------------------------------------------------------------------
2,171,750
- -----------------------------------------------------------------------------------------
INDIANA-4.54%
Indianapolis (City of) (Children's Museum Project);
Economic Development Floating Rate Series 1995 RB
3.80%, 10/01/25(b)(c) AA- -- 1,400 1,400,000
- -----------------------------------------------------------------------------------------
IOWA-3.25%
Iowa (State of) School Corporations
(Corporations of Iowa School Cash Anticipation
Program);
Warrant Certificates Series 1995-1996 B TRAN
4.25%, 01/30/97(f) SP-1+ MIG-1 1,000 1,001,256
- -----------------------------------------------------------------------------------------
MAINE-3.26%
Maine (State of); TAN
4.50%, 06/27/97 SP-1+ MIG-1 1,000 1,004,300
- -----------------------------------------------------------------------------------------
MARYLAND-6.81%
Maryland Industrial Development Financing Authority
(Liberty Medical Center); Variable Rate
Demand/Fixed Rate 1989 Issue Refunding RB
3.85%, 07/01/18(b)(c) -- VMIG-1 700 700,000
- -----------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 4
Financials
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MARYLAND-(CONTINUED)
Maryland (State of) Health and Higher Educational
Facilities
Authority (Kaiser Permanente); Series 1995 A RB
3.90%, 07/01/15(c) A-1+ VMIG-1 $ 1,400 $ 1,400,000
- -----------------------------------------------------------------------------------------
2,100,000
- -----------------------------------------------------------------------------------------
MICHIGAN-3.57%
Michigan State Hospital Finance Authority
(Hospital Equipment Loan Program);
Adjustable Series 1995 A RB
3.90%, 12/01/23(b)(c) -- VMIG-1 900 900,000
- -----------------------------------------------------------------------------------------
Plymouth (Township of) Economic Development Corp.
(Key International Project);
Variable Rate Demand Series 1984 RB
3.70%, 07/01/04(b)(c)(g) -- -- 200 200,000
- -----------------------------------------------------------------------------------------
1,100,000
- -----------------------------------------------------------------------------------------
MINNESOTA-1.62%
Mankato (City of) (Northern States Power Co.
Project);
Series 1985 Floating Collateralized Bonds
3.95%, 03/01/11(c) AA- A1 500 500,000
- -----------------------------------------------------------------------------------------
MONTANA-3.57%
Missoula (County of) (Washington Corp. Project);
Floating Rate Monthly Demand Series 1984 IDR
3.72%, 11/01/04(b)(c)(g) -- -- 1,100 1,100,000
- -----------------------------------------------------------------------------------------
NEVADA-3.25%
Clark (County of) (Nevada Power Co. Project);
Refunding Series 1995C IDR
3.95%, 10/01/30(b)(c) A-1+ -- 1,000 1,000,000
- -----------------------------------------------------------------------------------------
NEW HAMPSHIRE-4.54%
New Hampshire (State of) (Higher Education and
Health Facilities); Variable Rate Hospital Series
1985 C RB
3.85%, 12/01/25(c)(f) A-1 Aaa 1,400 1,400,000
- -----------------------------------------------------------------------------------------
NORTH CAROLINA-4.22%
New Hanover County Industrial Facilities and
Pollution Control Financing Authority (Gang-Nail
Systems, Inc. Project);
Series 1984 IDR
3.50%, 12/01/99(b)(c) -- P-1 1,300 1,300,000
- -----------------------------------------------------------------------------------------
OHIO-0.97%
Delaware (County of) (Radiation Sterilizers, Inc.);
Series 1984 IDR
3.65%, 12/01/04(b)(c) A -- 300 300,000
- -----------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 5
Financials
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
PENNSYLVANIA-6.81%
Delaware (County of) Industrial Development
Authority
(Scotfoam Corp. Project);
Variable Rate Demand Series 1985 IDR
3.70%, 10/01/05(b)(c)(g) -- -- $ 1,000 $ 1,000,000
- -----------------------------------------------------------------------------------------
Lehigh (County of) General Purpose Authority
(Hospital Services Capital Asset Finance
Program);
Variable Rate Demand Series A RB
3.80%, 01/13/97(d)(f) A-1 Aaa 900 900,000
- -----------------------------------------------------------------------------------------
Pittsburgh (City of) Pennsylvania Public Parking
Authority; Series 1992 A RB
4.60%, 12/01/96(f) AAA Aaa 200 200,179
- -----------------------------------------------------------------------------------------
2,100,179
- -----------------------------------------------------------------------------------------
RHODE ISLAND-3.25%
Rhode Island (State of) Industrial Facilities
Authority (Blackstone Valley Electric Company);
Variable Rate Series 1984 RB
3.85%, 12/01/14(b)(c) A+ -- 1,000 1,000,000
- -----------------------------------------------------------------------------------------
TENNESSEE-4.12%
Industrial Development Board of the Metropolitan
Government of Nashville & Davidson County
(Amberwood, Ltd. Project);
Multi-family Housing Series 1993 A RB
4.15%, 07/01/13(b)(c) -- VMIG-1 1,270 1,270,000
- -----------------------------------------------------------------------------------------
TEXAS-9.35%
Houston (City of); Water and Sewer Series 1986 RB
8.20%, 12/01/96(d)(e) AAA Aaa 300 308,030
- -----------------------------------------------------------------------------------------
Lower Colorado River Authority; Fifth Supplemental
Junior Lien Refunding Series RB
4.10%, 01/01/97(f) AAA Aaa 610 610,144
- -----------------------------------------------------------------------------------------
Texas (State of); Series 1996 TRAN
4.75%, 08/29/97 SP-1+ MIG-1 560 563,820
- -----------------------------------------------------------------------------------------
Trinity River Industrial Development Authority
(Radiation Sterilizers, Inc. Project); Variable
Rate Demand IDR
3.65%, 11/01/05(b)(c) A-1 -- 1,400 1,400,000
- -----------------------------------------------------------------------------------------
2,881,994
- -----------------------------------------------------------------------------------------
VIRGINIA-2.60%
Henrico (County of) Virginia Industrial Development
Authority (Hermitage Project); Variable Rate
Health Facilities
Series 1994 IDR
4.10%, 05/01/24(b)(c) -- VMIG-1 800 800,000
- -----------------------------------------------------------------------------------------
WASHINGTON-1.62%
Industrial Development Corp. of Port Townsend
(Port Townsend Paper Corp. Project);
Series 1988 A Refunding RB
3.85%, 03/01/09(b)(c) -- Aa2 500 500,000
- -----------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 6
Financials
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WISCONSIN-1.30%
Wisconsin (State of); Operating GO
4.50%, 06/16/97 SP-1+ MIG-1 $ 400 $ 401,758
- ---------------------------------------------------------------------------------------
Total Short-Term Municipal Securities 25,946,663
- ---------------------------------------------------------------------------------------
Total Investments (excluding Repurchase Agreement) 25,946,663
- ---------------------------------------------------------------------------------------
REPURCHASE AGREEMENT(h)-15.35%
Goldman, Sachs & Co.
5.75%, 10/01/96(i)(j) 4,729,226
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.54% 30,675,889(k)
- ---------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.46% 142,480
- ---------------------------------------------------------------------------------------
NET ASSETS-100.00% $30,818,369
=======================================================================================
</TABLE>
Abbreviations:
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue Bonds
RB -- Revenue Bonds
TAN -- Tax Anticipation Notes
TRAN -- Tax and Revenue Anticipation Notes
Notes to Schedule of Investments:
(a) Ratings assigned by Standard & Poor's Corporation ("S&P") and Moody's
Investors Service, Inc. ("Moody's").
(b) Secured by a letter of credit.
(c) Demand security; payable upon demand by the Fund at specified time
intervals no greater than thirteen months. Interest rate is redetermined
periodically. Rate shown is the rate in effect on 09/30/96.
(d) Subject to an irrevocable call or mandatory put by the issuer. Maturity
date and value reflect such call or put.
(e) Secured by an escrow fund of U.S. Treasury obligations.
(f) Secured by bond insurance.
(g) Unrated; determined by the investment advisor to be of comparable quality
to the rated securities in which the Fund may invest, pursuant to
guidelines for the determination of quality adopted by the Board of
Directors and followed by the investment advisor.
(h) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(i) Interest does not qualify as exempt interest for federal tax purposes.
(j) Joint repurchase agreement entered into 09/30/96 with a maturing value of
$15,287,969. Collateralized by $15,548,000 U.S. Treasury obligations,
5.875% to 6.00% due 08/15/98 to 02/15/26.
(k) Cost for Federal income tax purposes is $30,675,312.
See Notes to Financial Statements
5
<PAGE> 7
Financials
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreement, at value (amortized cost) $ 25,946,663
- -----------------------------------------------------------------------------------------
Repurchase agreement 4,729,226
- -----------------------------------------------------------------------------------------
Interest receivable 153,138
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 15,432
- -----------------------------------------------------------------------------------------
Other assets 27,196
- -----------------------------------------------------------------------------------------
Total assets 30,871,655
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 3,431
- -----------------------------------------------------------------------------------------
Deferred compensation 15,432
- -----------------------------------------------------------------------------------------
Accrued advisory fees 8,915
- -----------------------------------------------------------------------------------------
Accrued distribution fees 7,661
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 1,004
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 3,991
- -----------------------------------------------------------------------------------------
Accrued operating expenses 12,852
- -----------------------------------------------------------------------------------------
Total liabilities 53,286
- -----------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 30,818,369
=========================================================================================
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- -----------------------------------------------------------------------------------------
Outstanding 30,823,142
=========================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 1.00
=========================================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 8
Financials
STATEMENT OF OPERATIONS
For the six months ended September 30, 1996
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $581,541
- ---------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 52,979
- ---------------------------------------------------------------------------------------
Custodian fees 4,982
- ---------------------------------------------------------------------------------------
Administrative service fees 15,289
- ---------------------------------------------------------------------------------------
Directors' fees and expenses 2,816
- ---------------------------------------------------------------------------------------
Transfer agent fees 35,643
- ---------------------------------------------------------------------------------------
Distribution fees 37,842
- ---------------------------------------------------------------------------------------
Registration and filing fees 6,246
- ---------------------------------------------------------------------------------------
Other 25,729
- ---------------------------------------------------------------------------------------
Total expenses 181,526
- ---------------------------------------------------------------------------------------
Less fee waived by advisor (22,705)
- ---------------------------------------------------------------------------------------
Net expenses 158,821
- ---------------------------------------------------------------------------------------
Net investment income 422,720
- ---------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain on sales of investment securities 1,593
- ---------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities (164)
- ---------------------------------------------------------------------------------------
Net gain on investment securities 1,429
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $424,149
=======================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 9
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended September 30, 1996 and the year ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1996 1996
------------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 422,720 $ 861,666
- ---------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities 1,593 12,256
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (164) (1,694)
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 424,149 872,228
- ---------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (422,815) (838,861)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions 802,692 (383,580)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 804,026 (350,213)
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 30,014,343 30,364,556
- ---------------------------------------------------------------------------------------------
End of period $30,818,369 $30,014,343
=============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $30,823,142 $30,020,450
- ---------------------------------------------------------------------------------------------
Undistributed net investment income 31,622 31,717
- ---------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (36,972) (38,565)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 577 741
- ---------------------------------------------------------------------------------------------
$30,818,369 $30,014,343
=============================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 10
Financials
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Tax-Exempt Cash Fund (the "Fund") is a series portfolio of AIM Tax-Exempt
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of three separate
portfolios: AIM Tax-Exempt Cash Fund, AIM Tax-Exempt Bond Fund of Connecticut
and the Intermediate Portfolio. 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 the Fund. The Fund's investment
objective is to earn the highest level of current income free from federal
income taxes that is consistent with safety of principal and liquidity.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--The Fund invests only in securities which have
maturities of 397 days or less from the date of purchase. The securities are
valued on the basis of amortized cost which approximates market value. This
method values a security at its cost on the date of purchase and thereafter
assumes a constant amortization to maturity of premiums or original issue
discounts.
B. Securities Transactions, Investment Income and Distributions--Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date,
adjusted for amortization of premiums and discounts on investments, and is
recorded on the accrual basis. Discounts, other than original issue, are
amortized to unrealized appreciation for financial reporting purposes.
Dividends to shareholders are declared daily and are paid monthly.
C. 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 of $41,305
(which may be carried forward to offset future taxable capital gains, if any)
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.
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 investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.35% of the Fund's
average daily net assets. This agreement requires AIM to reduce its fees or, if
necessary, make payments to the Fund to the extent required to satisfy any
expense limitations imposed by the securities laws or regulations thereunder of
any state in which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with
AIM, has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the six months ended
September 30,1996, the Fund reimbursed AIM $15,289 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 agency
services to the Fund. During the six months ended September 30, 1996, the Fund
paid AFS $18,492 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
9
<PAGE> 11
Financials
will pay AIM Distributors up to a maximum annual rate of 0.25% of the Fund's
average daily net assets as compensation for services related to the sale and
distribution of the Fund's shares. Currently, AIM Distributors has voluntarily
elected to waive a portion of its compensation payable by the Fund such that the
compensation paid pursuant to the Plan equals 0.10% per annum of the Fund's
average daily net assets. This waiver may be rescinded by AIM Distributors at
any time without further notice to investors. The Plan provides that of the
aggregate amount payable under the Plan, payments to dealers and other financial
institutions that provide continuing personal shareholder services to their
customers who purchase and own shares of the Fund in amounts of up to 0.25% of
the average daily net assets of the Fund attributable to the customers of such
dealers or financial institutions may be characterized as a service fee, and
that payments to dealers and other financial institutions in excess of such
amount and payments to AIM Distributors would be characterized as an asset-based
sales charge. The Plan also imposes a cap on the total amount of sales charges,
including asset-based sales charges, that may be paid by the Company with
respect to the Fund. As a result of AIM Distributors' waiver of compensation due
from the Fund, payments to dealers and other financial institutions by that Fund
will be limited to 0.10% of the Fund's average daily net assets. During the six
months ended September 30, 1996, the Fund paid AIM Distributors $15,137 as
compensation pursuant to the Plan.
Certain officers and directors of the Company are officers and directors of
AIM, AFS and AIM Distributors. The Fund paid legal fees of $1,488 for services
rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Fund's Board of
Directors. A member of that firm is a director of the Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company invests directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
10
<PAGE> 12
Financials
NOTE 4-CAPITAL STOCK
Changes in capital stock outstanding during the six months ended September 30,
1996 and the year ended March 31, 1996 were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1996 1996
--------------------------- ---------------------------
SHARES VALUE SHARES VALUE
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold 20,275,351 $ 20,275,351 42,892,892 $ 42,892,892
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends 400,046 400,046 808,372 808,372
- -----------------------------------------------------------------------------------------------------------------------
Reacquired (19,872,705) (19,872,705) (44,084,844) (44,084,844)
- -----------------------------------------------------------------------------------------------------------------------
802,692 $ 802,692 (383,580) $ (383,580)
=======================================================================================================================
</TABLE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during the six months ended September 30, 1996, each of the years in
the two-year period ended March 31, 1996, the three months ended March 31, 1994
and each of the years in the six-year period ended December 31, 1993.
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31, DECEMBER 31,
------------- -------------------------------------------- ------------
1996 1996 1995 1994 1993
------------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------- ------- --------- -------- --------- ----------
Income from investment operations:
Net investment income 0.01 0.03 0.03 0.004 0.02
- -------------------------------------- ------- --------- -------- --------- ----------
Less distributions:
Dividends from net investment
income (0.01) (0.03) (0.03) (0.004) (0.02)
- -------------------------------------- ------- --------- -------- --------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====================================== ======= ========= ========= ========= ==========
Total return 2.81%(b) 2.92% 2.54% 1.73%(b) 1.78%
====================================== ======= ========= ========= ========= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s
omitted) $30,818 $ 30,014 $ 30,365 $ 33,658 $ 35,230
====================================== ======= ========= ========= ========= ==========
Ratio of expenses to average net
assets 1.05%(c)(d) 1.05%(d) 1.01%(d) 1.00%(b)(d) 1.00%(e)
====================================== ======= ========= ========= ========= ==========
Ratio of net investment income to
average net assets 2.79%(c)(d) 2.97%(d) 2.53%(d) 1.75%(b)(d) 1.76%(e)
====================================== ======= ========= ========= ========= ==========
<CAPTION>
DECEMBER 31,
-------------------------------------------------------------------------------
1992(a) 1991 1990 1989 1988
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.02 0.04 0.05 0.05 0.05
- -------------------------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment
income (0.02) (0.04) (0.05) (0.05) (0.05)
- -------------------------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====================================== ========== ========== ========== ========== ==========
Total return 2.42% 3.91% 5.17% 5.62% 4.65%
====================================== ========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s
omitted) $ 41,291 $ 43,366 $ 43,302 $ 45,995 $ 51,597
====================================== ========== ========== ========== ========== ==========
Ratio of expenses to average net
assets 0.98%(f) 0.98% 0.99% 0.93% 0.83%
====================================== ========== ========== ========== ========== ==========
Ratio of net investment income to
average net assets 2.42%(f) 3.87% 5.05% 5.48% 4.54%
====================================== ========== ========== ========== ========== ==========
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(a) The Fund changed investment advisors on June 30, 1992.
(b) Annualized.
(c) Ratios are annualized and based on average daily net assets of $30,190,772.
(d) After waiver of distribution fees. Ratios of expenses and net investment
income to average net assets prior to waiver of distribution fees were 1.20%
and 2.64%, respectively for the six months ended September 30, 1996, 1.20%
and 2.82%, respectively for 1996, 1.16% and 2.38%, respectively for 1995,
and 1.14% and 1.61%, respectively for 1994 (annualized).
(e) After waiver of advisory fees and expense reimbursements. Ratios of expenses
and net investment income to average net assets prior to waiver of advisory
fees and expense reimbursements were 1.36% and 1.40%, respectively.
(f) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees were 1.00% and 2.40%,
respectively.
NOTE 6-SUBSEQUENT EVENT
On November 4, 1996, A I M Management Group Inc. ("AIM Management") and INVESCO
PLC announced the execution of an agreement and plan of merger pursuant to which
AIM Management will be merged with and into a direct wholly-owned subsidiary of
INVESCO PLC. AIM Management is the parent company of the Fund's advisor. The
merger is conditional on, among other things, approval by the shareholders of
INVESCO PLC and AIM Management and the shareholders of the AIM funds and the
mutual funds managed by INVESCO PLC, and is expected to take place during the
first quarter of 1997.
11
<PAGE> 13
Management's
Discussion & Analysis
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BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chief Executive Officer Chairman Suite 1919
A I M Management Group Inc. Houston, TX 77046-1173
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Formerly Director, President, and
Chief Executive Officer John J. Arthur A I M Advisors, Inc.
COMSAT Corporation Senior Vice President and Treasurer 11 Greenway Plaza
Suite 1919
Owen Daly II Gary T. Crum Houston, TX 77046-1173
Director Senior Vice President
Cortland Trust Inc. TRANSFER AGENT
Carol F. Relihan
Carl Frischling Senior Vice President and Secretary A I M Fund Services, Inc.
Partner P.O. Box 4739
Kramer, Levin, Naftalis & Frankel Dana R. Sutton Houston, TX 77210-4739
Vice President
Robert H. Graham and Assistant Treasurer CUSTODIAN
President and Chief Operating Officer
A I M Management Group Inc. Stuart W. Coco The Bank of New York
Vice President 110 Washington Street
John F. Kroeger New York, NY 10286
Formerly Consultant Melville B. Cox
Wendell & Stockel Associates, Inc. Vice President COUNSEL TO THE FUND
Lewis F. Pennock Karen Dunn Kelley Ballard Spahr
Attorney Vice President Andrews & Ingersoll
1735 Market Street
Ian W. Robinson P. Michelle Grace Philadelphia, PA 19103
Consultant; Former Executive Assistant Secretary
Vice President and COUNSEL TO THE DIRECTORS
Chief Financial Officer David L. Kite
Bell Atlantic Management Assistant Secretary Kramer, Levin, Naftalis & Frankel
Services, Inc. 919 Third Avenue
Nancy L. Martin New York, NY 10022
Louis S. Sklar Assistant Secretary
Executive Vice President DISTRIBUTOR
Hines Interests Ofelia M. Mayo
Limited Partnership Assistant Secretary A I M Distributors, Inc.
11 Greenway Plaza
Kathleen J. Pflueger Suite 1919
Assistant Secretary Houston, TX 77046-1173
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
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<PAGE> 14
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THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Blue Chip Fund
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
[PHOTO OF 11 GREENWAY PLAZA GROWTH AND INCOME
APPEARS HERE] AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE
OF SAFETY
AIM Intermediate Government Fund
HIGH DEGREE OF SAFETY AND
CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND
CURRENT INCOME
AIM Money Market Fund
AIM Management Group Inc. has provided leadership in STABILITY, LIQUIDITY, AND
the mutual fund industry since 1976 and currently CURRENT TAX-FREE INCOME
manages approximately $59 billion in assets for more AIM Tax-Exempt Cash Fund
than 3.5 million shareholders, including individual
investors, corporate clients, and financial institutions. *AIM Aggressive Growth Fund was closed to new
The AIM Family of Funds--Registered Trademark-- is investors on July 18, 1995. For more complete
distributed nationwide, and AIM today ranks among the information about any AIM Fund(s), including
nation's top 15 mutual fund companies in assets under sales charges and expenses, ask your financial
management, according to Lipper Analytical Services, Inc. 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] ---------------
BULK RATE
A I M Distributors, Inc. U.S. POSTAGE
11 Greenway Plaza, Suite 1919 PAID
Houston, TX 77046 HOUSTON, TX
Permit No. 1919
---------------
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