<PAGE> 1
[AIM LOGO APPEARS HERE]
[COLLAGE OF FINANCIAL IMAGES APPEARS HERE]
AIM TAX-EXEMPT CASH FUND
ANNUAL REPORT
MARCH 31, 1996
<PAGE> 2
A Message from
the Chairman
Dear Shareholder:
AIM Tax-Exempt Cash Fund continued to produce attractive
tax-free income during the year that ended March 31, 1996.
[PHOTO OF At the close of its fiscal year, the Fund posted a
Charles T. Bauer, seven-day effective annualized yield of 2.82%. Translated
Chairman of to taxable-equivalent yield, the Fund's seven-day effective
the Board of annualized yield was 3.98% based on net asset value, and
the Fund, adjusted for the highest marginal federal tax rate of 39.6%.
APPEARS HERE] The taxable-equivalent yield is calculated in the same
manner as the standard yield with an adjustment for a
stated, assumed tax rate.
The Fund's taxable-equivalent yield of 3.98% 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 2.68% as of March 29, 1996. Keep in mind, bank
money market deposit accounts are insured by the FDIC as to interest and
principal.
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. As with any money market mutual fund, your investment in the
Fund is neither insured nor guaranteed by the U.S. government, and there can be
no assurance that the Fund will be able to maintain a stable net asset value of
$1.00 per share.
OUTLOOK
For much of 1995, fixed-income market conditions were ideal--the economy had
slowed considerably and inflation posed no threat. Such conditions encouraged
the Fed to reverse its strict monetary policy and ease short-term interest rates
in July, December, and again in January 1996. The moves were widely anticipated,
particularly late in 1995, and yields on money market securities had declined
accordingly.
The turbulent first quarter of 1996 tried the patience of fixed-income
investors. Reports over the last two months of unexpected improvement in such
economic indicators as employment, retail sales, and industrial production sent
fixed-income markets reeling. While the pace of economic growth was certainly
moderate and sustainable, reports of stronger-than-expected performance
diminished the likelihood that the Fed would cut interest rates again in the
near future.
While the economy has rebounded nicely from its slowdown in the latter half
of 1995, there has been no indication that it is growing too rapidly. Speaking
before Congress in March, Federal Reserve Chairman Alan Greenspan said "the
economy has weathered recent sluggishness and is back on track for steady growth
with low inflation." A market watcher quoted recently in The Wall Street Journal
described it as a "Goldilocks economy-not too hot and not too cold."
To date, there is still no tax-reform legislation pending before Congress,
though it continues to prompt considerable debate. Many analysts maintain that
any drastic proposals by Congress that severely diminish the tax advantages of
municipal securities would be strongly challenged by the issuers and investors.
By all appearances, any meaningful action in that direction could be years away.
As the complexity of investing grows, remember to rely on your professional
financial consultant to help you understand the changing financial markets. Your
financial consultant can help you manage a financial plan that may help you keep
pace with changes in your life.
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
================================================================================
CURRENT YIELD ADVANTAGE
Yields as of 3/31/96
[BAR CHART]
*Bank Money Market Deposit
7-day Average Yield 2.68%
AIM Tax-Exempt Cash Fund
7-day Effective
Annualized Yield 2.82%
**AIM Tax-Exempt Cash Fund
7-day Tax-Equivalent Yield 3.98%
*Bank money market deposit accounts are insured by the FDIC as to interest and
principal. Fund shares are not insured and their value and yield will vary
with market conditions.
**Taxable-equivalent yields assume the highest marginal federal income tax
rate of 39.6%. Source: IRS, 1995.
================================================================================
<PAGE> 3
Financials
SCHEDULE OF INVESTMENTS
March 31, 1996
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES-77.73%
ARIZONA-5.93%
Arizona State Transportation Board
(Maricopa County Regional Area Road A); Excise
Tax RB
5.70%, 07/01/96 AA- Aa $ 250 $ 251,155
- -----------------------------------------------------------------------------------------
Maricopa (County of) High School
District No. 210; Series A GO
3.75%, 07/01/96 AA Aa 230 229,926
- -----------------------------------------------------------------------------------------
Maricopa (County of) Pollution Control Corporation
(Arizona Public Services Company
Palo Verde Project); Series 1994 E PCR
3.75%, 05/01/29(b)(c) A-1+ P-1 1,300 1,300,000
- -----------------------------------------------------------------------------------------
1,781,081
- -----------------------------------------------------------------------------------------
ARKANSAS-1.25%
Arkansas State; College Savings GO
3.65%, 06/01/96 AA Aa 375 374,776
- -----------------------------------------------------------------------------------------
COLORADO-2.67%
Colorado Housing Finance Authority (Grant Plaza
Project); Multi-Family Mortgage Series 1991 A RB
3.425%, 11/01/09(b)(c) A-1+ Aaa 800 800,000
- -----------------------------------------------------------------------------------------
CONNECTICUT-2.67%
Connecticut Development Authority
(Connecticut Power & Light); Series 1993 A RB
3.30%, 09/01/28(b)(c) A-1+ VMIG-1 800 800,000
- -----------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA-3.00%
District of Columbia (American Association
for the Advancement of Science); Series 1995 RB
3.75%, 10/01/22(b)(c) A-1 VMIG-1 900 900,000
- -----------------------------------------------------------------------------------------
ILLINOIS-3.35%
Calumet (City of) (Corporate Purpose Bonds);
Series 1996 C GO
6.00%, 01/01/97(b) -- Aaa 350 356,253
- -----------------------------------------------------------------------------------------
Chicago (City of); Series 1996 GO
3.10%, 02/04/97(b)(d) SP-1+ MIG-1 400 399,160
- -----------------------------------------------------------------------------------------
Illinois Development Finance Authority
(Olin Corporation); Variable Rate
Refunding Series 1993 D RB
3.70%, 03/01/16(c)(e) A-1+ -- 250 250,000
- -----------------------------------------------------------------------------------------
1,005,413
- -----------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 4
Financials
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
KANSAS-1.00%
Shawnee (City of) (Hampton Woods
Apartment Project); Multifamily Housing
Series 1985 RB
3.40%, 12/01/09(b)(c) -- VMIG-1 $ 300 $ 300,000
- -----------------------------------------------------------------------------------------
LOUISIANA-4.67%
Plaquemine Port Harbor and Terminal Authority
(TECO Energy, Inc.); Marine Terminal Facility
Series B Refunding RB
3.45%, 04/01/96(d) -- P-1 1,400 1,400,000
- -----------------------------------------------------------------------------------------
MARYLAND-2.33%
Maryland Industrial Development Financing Authority
(Liberty Medical Center); Variable Rate
Demand/Fixed Rate 1989 Issue Refunding RB
3.50%, 07/01/18(b)(c) -- A-1 700 700,000
- -----------------------------------------------------------------------------------------
MICHIGAN-5.33%
Michigan State Hospital Finance Authority
(Hospital Equipment Loan Program);
Adjustable Series 1995 A RB
3.55%, 12/01/23(b)(c) -- VMIG-1 900 900,000
- -----------------------------------------------------------------------------------------
Michigan Strategic Fund (Consumer's Power
Corporation); Pollution Control Variable Rate
Demand Series 1988 A RB
3.70%, 04/15/18(b)(c) -- P-1 500 500,000
- -----------------------------------------------------------------------------------------
Plymouth (Township of) Economic Development
Corporation
(Key International Project); Variable Rate Demand
Series 1984 RB
3.55%, 07/01/04(b)(c)(f) -- -- 200 200,000
- -----------------------------------------------------------------------------------------
1,600,000
- -----------------------------------------------------------------------------------------
MISSISSIPPI-5.16%
Jackson (City of) Public School District;
Refunding Series 1995 GO
4.10%, 04/01/96(e) AAA Aaa 350 350,000
- -----------------------------------------------------------------------------------------
Jackson (County of) (Chevron U.S.A. Inc. Project);
Port Facility Refunding Series 1993 RB
3.70%, 06/01/23(c) -- P-1 1,200 1,200,000
- -----------------------------------------------------------------------------------------
1,550,000
- -----------------------------------------------------------------------------------------
MONTANA-3.66%
Missoula (County of) (Washington Corporations
Project);
Floating Rate Monthly Demand Series 1984 IDR
3.53%, 11/01/04(b)(c)(f) -- -- 1,100 1,100,000
- -----------------------------------------------------------------------------------------
NEVADA-5.00%
Clark (County of) (Nevada Power Company Project);
Refunding Series 1995C IDR
3.40%, 10/01/30(b)(c) A-1+ -- 1,000 1,000,000
- -----------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 5
Financials
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEVADA-(CONTINUED)
Nevada (State of) (FMC Corporation Project);
State Department of Commerce Series 1985 IDR
4.00%, 09/15/96(b)(d) -- VMIG-1 $ 500 $ 500,000
- -----------------------------------------------------------------------------------------
1,500,000
- -----------------------------------------------------------------------------------------
NEW JERSEY-2.18%
Morris (Township of); Series 1991 GO
6.55%, 07/01/96 AA Aa 450 452,793
- -----------------------------------------------------------------------------------------
New Jersey (State of) (Wastewater Treatment Trust);
Series 1991 RB
6.50%, 07/01/96 AA Aa 200 201,169
- -----------------------------------------------------------------------------------------
653,962
- -----------------------------------------------------------------------------------------
NEW YORK-4.20%
Merrill Lynch Group Float Program;
Power Supply System Series 1993 A RB
3.40%, 01/01/16(c)(e)(g) -- VMIG-1 1,260 1,260,000
- -----------------------------------------------------------------------------------------
NORTH CAROLINA-0.33%
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-1 100 100,000
- -----------------------------------------------------------------------------------------
OHIO-1.51%
Cleveland (City of) (Waterfront Transit Line
Project);
Regional Transit Authority of Ohio
Certificates of Participation
9.10%, 07/01/96(e) AAA Aaa 150 151,815
- -----------------------------------------------------------------------------------------
Delaware (County of) (Radiation Sterilizers, Inc.);
Series 1984 IDR
3.50%, 12/01/04(b)(c) A-1 -- 300 300,000
- -----------------------------------------------------------------------------------------
451,815
- -----------------------------------------------------------------------------------------
PENNSYLVANIA-4.00%
Delaware (County of) Industrial Development
Authority (Scotfoam Corporation Project);
Variable Rate Demand Series 1985 IDR
3.55%, 10/01/05(b)(c)(f) -- -- 1,000 1,000,000
- -----------------------------------------------------------------------------------------
Pittsburgh (City of) Pennsylvania Public Parking
Authority; Series 1992 A RB
4.60%, 12/01/96(e) AAA Aaa 200 200,710
- -----------------------------------------------------------------------------------------
1,200,710
- -----------------------------------------------------------------------------------------
SOUTH CAROLINA-1.67%
South Carolina State Education; Guaranteed
Student Loan Senior Lien Series A-2
4.75%, 09/01/96 AAA -- 500 502,141
- -----------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 6
Financials
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TENNESSEE-4.33%
Industrial Development Board of the Metropolitan
Government of Nashville & Davidson County
(Amberwood, Ltd. Project); Multi-family Housing
Series RB
3.67%, 07/01/13(b)(c) -- VMIG-1 $ 1,300 $ 1,300,000
- -----------------------------------------------------------------------------------------
TEXAS-6.01%
Hockley (County of) Industrial Development
Corporation (Amoco Project); Adjustable-Rate
Series 1983 PCR
3.30%, 09/01/96(d) A-1+ Aa1 1,300 1,300,000
- -----------------------------------------------------------------------------------------
Texas A&M University; Reserves Combined Fee RB
7.625%, 07/01/96(b)(d)(h) AAA Aaa 500 504,867
- -----------------------------------------------------------------------------------------
1,804,867
- -----------------------------------------------------------------------------------------
WASHINGTON-1.84%
Industrial Development Corporation of Port
Townsend (Port Townsend Paper Corp.
Project); Series 1988 A Refunding RB
3.45%, 03/01/09(b)(c) -- VMIG-1 500 500,000
- -----------------------------------------------------------------------------------------
Washington (State of) Public Power Supply
(Nuclear Power Project); Series C RB
10.25%, 07/01/96(b)(d)(h) AAA Aaa 50 51,754
- -----------------------------------------------------------------------------------------
551,754
- -----------------------------------------------------------------------------------------
WEST VIRGINIA-3.97%
Berkley (County of) West Virginia
Board of Education Public Schools;
Unlimited Tax Series 1995 GO
6.05%, 06/01/96(e) AAA Aaa 690 692,581
- -----------------------------------------------------------------------------------------
West Virginia Hospital Finance Authority
(VHA Mid-Atlantic States, Inc. Capital Asset
Financing Program); Series 1985 G RB
3.30%, 12/01/25(c)(e) A-1 Aaa 500 500,000
- -----------------------------------------------------------------------------------------
1,192,581
- -----------------------------------------------------------------------------------------
WISCONSIN-1.67%
Fox Valley (City of) Wisconsin Vocational
Technical & Adult Education Authority; Series
1991 GO
5.20%, 06/01/96 -- Aa1 500 501,083
- -----------------------------------------------------------------------------------------
Total Short-Term Municipal Securities 23,330,183
- -----------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 7
Financials
<TABLE>
<CAPTION>
PAR
(000) VALUE
<S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES-9.27%
U.S. Treasury Bills
4.79%, 08/29/96(i)(j) $ 1,400 $ 1,372,058
- -----------------------------------------------------------------------------------------
U.S. Treasury Notes
6.50%, 09/30/96(j) 1,400 1,410,201
- -----------------------------------------------------------------------------------------
Total U.S. Treasury Securities 2,782,259
- -----------------------------------------------------------------------------------------
Total Investments (excluding Repurchase Agreement) 26,112,442
- -----------------------------------------------------------------------------------------
REPURCHASE AGREEMENT(k)-10.40%
Daiwa Securities America, Inc.
5.45%, 04/01/96(j)(l) 3,120,687
- -----------------------------------------------------------------------------------------
TOTAL INVESTMENTS-97.40% 29,233,129(m)
- -----------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-2.60% 781,214
- -----------------------------------------------------------------------------------------
NET ASSETS-100.00% $30,014,343
- -----------------------------------------------------------------------------------------
</TABLE>
Abbreviations:
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue 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
Investors Service, Inc. ("Moody's"). Ratings are not covered by the
Independent Auditor's Report.
(b) Secured by a letter of credit.
(c) Demand security; payable upon demand by the Fund at specified time
intervals no greater than 13 months. Interest rate is redetermined
periodically. Rate shown was the rate in effect on March 31, 1996.
(d) Subject to an irrevocable call or mandatory put by the issuer. Maturity
date and value reflect such call or put.
(e) Secured by bond insurance.
(f) 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.
(g) The Fund may invest in synthetic municipal instruments the value of and
return on which are derived from underlying securities. The types of
synthetic municipal instruments in which the Fund may invest include
variable rate instruments. These instruments involve the deposit into a
trust of one or more long-term tax-exempt bonds or notes ("Underlying
Bonds"), and the sale of certificates evidencing interests in the trust to
investors such as the Fund. The trustee receives the long-term fixed rate
interest payments on the Underlying Bonds, and pays certificate holders
short-term floating or variable interest rates which are reset
periodically. A "variable rate trust certificate" evidences an interest in
a trust entitling the certificate holder to receive variable rate interest
based on prevailing short-term interest rates and also typically providing
the certificate holder with the conditional right to put its certificate at
par value plus accrued interest. Because synthetic municipal instruments
involve a trust and a third party conditional put feature, they involve
complexities and potential risks that may not be present where a municipal
security is owned directly.
(h) Secured by an escrow fund of U.S. Treasury obligations.
(i) U.S. Treasury bills are traded on a discount basis. In such case, the
interest shown represents the rate of discount paid or received at the time
of purchase by the Fund.
(j) Interest does not qualify as exempt interest for federal tax purposes.
(k) 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 managed by
the investment advisor.
(l) Joint repurchase agreement entered into 03/29/96 with a maturing value of
$502,369,667. Collateralized by $488,649,000 U.S. Treasury obligations,
0.00% to 12.00% due 04/04/96 to 11/15/16.
(m) Cost for Federal income tax purposes is $29,232,388.
See Notes to Financial Statements.
6
<PAGE> 8
Financials
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreement, at value (amortized cost) $ 26,112,442
- -----------------------------------------------------------------------------------------
Repurchase agreement 3,120,687
- -----------------------------------------------------------------------------------------
Receivable for investments called 600,000
- -----------------------------------------------------------------------------------------
Interest receivable 198,477
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 14,019
- -----------------------------------------------------------------------------------------
Other assets 13,793
- -----------------------------------------------------------------------------------------
Total assets 30,059,418
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 3,444
- -----------------------------------------------------------------------------------------
Deferred compensation 14,019
- -----------------------------------------------------------------------------------------
Accrued advisory fees 8,641
- -----------------------------------------------------------------------------------------
Accrued distribution fees 6,966
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 2,763
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 1,464
- -----------------------------------------------------------------------------------------
Accrued operating expenses 7,778
- -----------------------------------------------------------------------------------------
Total liabilities 45,075
- -----------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 30,014,343
=========================================================================================
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- -----------------------------------------------------------------------------------------
Outstanding 30,020,450
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 1.00
=========================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 9
Financials
STATEMENT OF OPERATIONS
For the year ended March 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 1,167,290
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 101,649
- ----------------------------------------------------------------------------------------
Custodian fees 9,167
- ----------------------------------------------------------------------------------------
Administrative service fees 34,220
- ----------------------------------------------------------------------------------------
Directors' fees and expenses 6,062
- ----------------------------------------------------------------------------------------
Transfer agent fees 62,766
- ----------------------------------------------------------------------------------------
Distribution fees 29,043
- ----------------------------------------------------------------------------------------
Registration and filing fees 18,135
- ----------------------------------------------------------------------------------------
Other 44,582
- ----------------------------------------------------------------------------------------
Total expenses 305,624
- ----------------------------------------------------------------------------------------
Net investment income 861,666
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain on sales of investment securities 12,256
- ----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities (1,694)
- ----------------------------------------------------------------------------------------
Net gain on investment securities 10,562
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 872,228
========================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 861,666 $ 862,516
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities 12,256 (52,241)
- --------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (1,694) 1,646
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 872,228 811,921
- --------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (838,861) (853,604)
- --------------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions (383,580) (3,251,715)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (350,213) (3,293,398)
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 30,364,556 33,657,954
- --------------------------------------------------------------------------------------------
End of period $30,014,343 $30,364,556
- --------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $30,020,450 $30,404,030
- --------------------------------------------------------------------------------------------
Undistributed net investment income 31,717 8,912
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (38,565) (50,821)
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 741 2,435
- --------------------------------------------------------------------------------------------
$30,014,343 $30,364,556
============================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 10
Financials
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
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 and shareholder services to the Fund. During the year
ended March 31, 1996, the Fund reimbursed AIM $34,220 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 year ended March 31, 1996, the Fund paid AFS
$40,165 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
9
<PAGE> 11
Financials
adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan") with
respect to the Fund whereby the Fund 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 year ended March 31, 1996, the Fund paid
AIM Distributors $29,043 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 $2,820 for services
rendered by Kramer, Levin, Naftalis, Nessen, Kamin & 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 years ended March 31, 1996 and
1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------------- ---------------------------
SHARES VALUE SHARES VALUE
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold 42,892,892 $ 42,892,892 57,113,755 $ 57,113,755
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends 808,372 808,372 813,463 813,463
- -----------------------------------------------------------------------------------------------------------------------
Reacquired (44,084,844) (44,084,844) (61,178,933) (61,178,933)
- -----------------------------------------------------------------------------------------------------------------------
(383,580) $ (383,580) (3,251,715) $ (3,251,715)
=======================================================================================================================
</TABLE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of capital stock
outstanding during 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
seven-year period ended December 31, 1993.
<TABLE>
<CAPTION>
MARCH 31,
--------------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
- ------------------------------------ ------- ------- -------
Income from investment operations:
Net investment income 0.03 0.03 0.004
- ------------------------------------ ------- ------- -------
Less distributions:
Dividends from net investment
income (0.03) (0.03) (0.004)
- ------------------------------------ ------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
==================================== ======= ======= =======
Total return 2.92% 2.54% 1.73%(d)
==================================== ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $30,014 $30,365 $33,658
==================================== ======= ======= =======
Ratio of expenses to average net
assets 1.05%(b)(c) 1.01%(c) 1.00%(c)(d)
==================================== ======= ======= =======
Ratio of net investment income to
average net assets 2.97%(b)(c) 2.53%(c) 1.75%(c)(d)
==================================== ======= ======= =======
<CAPTION>
DECEMBER 31,
-------------------------------------------------------------------------------------
1993 1992(a) 1991 1990 1989 1988 1987
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------ ------- ------- -------- -------- ------- ------- -------
Income from investment operations:
Net investment income 0.02 0.02 0.04 0.05 0.05 0.05 0.04
- ------------------------------------ ------- ------- -------- -------- ------- ------- -------
Less distributions:
Dividends from net investment
income (0.02) (0.02) (0.04) (0.05) (0.05) (0.05) (0.04)
- ------------------------------------ ------- ------- -------- -------- ------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================== ======= ======= ======= ======= ======= ======= =======
Total return 1.78% 2.42% 3.91% 5.17% 5.62% 4.65% 3.95%
==================================== ======= ======= ======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $35,230 $41,291 $43,366 $43,302 $45,995 $51,597 $54,616
==================================== ======= ======= ======= ======= ======= ======= =======
Ratio of expenses to average net
assets 1.00%(e) 0.98%(f) 0.98% 0.99% 0.93% 0.83% 0.72%
==================================== ======= ======= ======= ======= ======= ======= =======
Ratio of net investment income to
average net assets 1.76%(e) 2.42%(f) 3.87% 5.05% 5.48% 4.54% 3.87%
==================================== ======= ======= ======= ======= ======= ======= =======
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Ratios are based on average daily net assets of $29,042,556.
(c) 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 2.82%, respectively for 1996, 1.16% and 2.38%, respectively for 1995,
and 1.14% and 1.61%, respectively for 1994 (annualized).
(d) 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.
11
<PAGE> 13
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Tax-Exempt Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of AIM
Tax-Exempt Cash Fund (a portfolio of AIM Tax-Exempt Funds, Inc.), including the
schedule of investments, as of March 31, 1996, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the years in the two-year period then ended and the financial highlights
for each of the years in the two-year period then ended, the three-month period
ended March 31, 1994, and the year ended December 31, 1993. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Tax-Exempt Cash Fund as of March 31, 1996, the results of its operations for the
year then ended, changes in its net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
two-year period then ended, the three-month period ended March 31, 1994, and the
year ended December 31, 1993, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Houston, Texas
May 3, 1996
12
<PAGE> 14
Directors &
Officers
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
11 Greenway Plaza
Charles T. Bauer Charles T. Bauer Suite 1919
Chairman and Chief Executive Officer Chairman Houston, TX 77046
A I M Management Group Inc.
Robert H. Graham INVESTMENT ADVISOR
Bruce L. Crockett President A I M Advisors, Inc.
Director, President, and Chief 11 Greenway Plaza
Executive Officer John J. Arthur Suite 1919
COMSAT Corporation Senior Vice President and Treasurer Houston, TX 77046
Owen Daly II Gary T. Crum TRANSFER AGENT
Director Senior Vice President A I M Fund Services, Inc.
Cortland Trust Inc. P.O. Box 4739
Carol F. Relihan Houston, TX 77210-4739
Carl Frischling Senior Vice President and Secretary
Partner CUSTODIAN
Kramer, Levin, Naftalis, Nessen, Dana R. Sutton The Bank of New York
Kamin & Frankel Vice President 110 Washington Street
and Assistant Treasurer New York, NY 10286
Robert H. Graham
President and Chief Operating Officer Stuart W. Coco COUNSEL TO THE FUND
A I M Management Group Inc. Vice President Ballard Spahr
Andrews & Ingersoll
John F. Kroeger Melville B. Cox 1735 Market Street
Formerly, Consultant Vice President Philadelphia, PA 19103
Wendell & Stockel Associates, Inc.
Karen Dunn Kelley COUNSEL TO THE DIRECTORS
Lewis F. Pennock Vice President Kramer, Levin, Naftalis,
Attorney Nessen, Kamin & Frankel
P. Michelle Grace 919 Third Avenue
Ian W. Robinson Assistant Secretary New York, NY 10022
Consultant; Former Executive
Vice President and David L. Kite DISTRIBUTOR
Chief Financial Officer Assistant Secretary A I M Distributors, Inc.
Bell Atlantic Management 11 Greenway Plaza
Services, Inc. Nancy L. Martin Suite 1919
Assistant Secretary Houston, TX 77046
Louis S. Sklar
Executive Vice President Ofelia M. Mayo AUDITORS
Hines Interests Assistant Secretary KPMG Peat Marwick LLP
Limited Partnership 700 Louisiana
Kathleen J. Pflueger NationsBank Bldg.
Assistant Secretary Houston, TX 77002
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Tax-Exempt Cash Fund paid ordinary dividends in the amounts of $0.0288 per
share to shareholders during the Fund's tax year ended March 31, 1996. Of this
amount, 87.40% qualified as exempt-interest dividends for federal income tax
purposes. Of the total interest dividends, alternative minimum taxable income
was 0.0%.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 15
THE AIM FAMILY OF FUNDS(R)
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
[PHOTO AIM Constellation Fund
OF AIM Global Aggressive Growth Fund
11 GREENWAY
PLAZA] GROWTH
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
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 has provided STABILITY, LIQUIDITY, AND
leadership in the mutual fund industry CURRENT TAX-FREE INCOME
since 1976 and currently manages more AIM Tax-Exempt Cash Fund
than $51 billion in assets for more
than 2.3 million shareholders, *AIM Aggressive Growth Fund was
including individual investors, closed to new investors on July
corporate clients, and financial 18, 1995. **On May 1, 1995, AIM
institutions. The AIM Family of Utilities Fund broadened its
Funds(R) is distributed nationwide, investment strategy to permit up
and AIM today ranks among the nation's to 80% of its total assets to be
top 20 mutual fund companies in assets invested in foreign securities,
under management, according to Lipper and was renamed AIM Global
Analytical Services, Inc. Utilities Fund. ***On September
25, 1995, AIM Government
Securities Fund was renamed AIM
Intermediate Government Fund.
For more complete information
about any AIM Fund(s), including
sales charges and expenses, ask
your financial consultant or
securities dealer for a free
prospectus(es). Please read the
prospectus(es) carefully before
you invest or send money.
---------------
[AIM LOGO APPEARS HERE] BULK RATE
U.S. POSTAGE
A I M Distributors, Inc. PAID
11 Greenway Plaza, Suite 1919 HOUSTON, TX
Houston, TX 77046 Permit No. 1919
---------------
