<PAGE> 1
[AIM LOGO APPEARS HERE]
AIM TAX-EXEMPT
CASH FUND
ANNUAL REPORT
MARCH 31, 1997
<PAGE> 2
The Chairman's Letter
Dear Fellow Shareholder:
AIM Tax-Exempt Cash Fund continued to provide attractive,
[PHOTO OF tax-free income during the fiscal year ended March 31,
Charles T. 1997. At the close of the period, the Fund posted a
Bauer, seven-day effective annualized yield of 2.89% and a
Chairman of seven-day SEC yield of 2.85%. The seven-day yield is
the Board of calculated on the basis of a formula defined by the SEC.
THE FUND, The formula is based on the portfolio's potential
APPEARS HERE] 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. Translated to its
taxable-equivalent, the Fund's seven-day effective
annualized yield was 4.25% based on net asset value and
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 4.25% taxable-equivalent seven-day effective annualized 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 2.60% as of March 31,
1997. 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 fiscal year ended March 31, 1997, was dominated by concerns that the
Federal Reserve Board would raise interest rates to slow rapid economic growth
and contain inflation. Despite strong economic growth in the last three
quarters of 1996, there was little evidence of inflationary pressures. As a
result, the central bank left interest rates unchanged in the second half of
1996.
But early in 1997, there were heightened concerns that wage pressures--the
product of a tight job market--might ignite inflation. During the fiscal year
ended March 31, 1997, the average hourly wage increased at an annualized rate
of 4.0%. In congressional testimony, Fed Chairman Alan Greenspan stressed the
"importance of acting promptly--ideally pre-emptively--to keep inflation low."
On March 25, the Fed increased the federal funds rate--the rate banks charge
each other for overnight loans--from 5.25% to 5.50%. Immediately, investors
began speculating whether this was the first in a series of rate increases and
that perpetuated market volatility.
OUTLOOK
Although the economy continues to grow at a healthy pace, inflation
remains moderate. Consumer prices rose just 2.8% for the year ended March 31,
1997, according to the U.S. Department of Labor. If such an environment can be
sustained, it should prove favorable for the financial markets.
However, some analysts warn that if economic growth doesn't decelerate, it
could ultimately lead to inflation and that could cause the Fed to further
tighten monetary policy. Market observers will be closely watching leading
economic indicators over the next few months in an attempt to predict whether
the Fed will raise interest rates again. The release of key data, such as
employment information, could cause dramatic, short-term fluctuations in the
market. In such a scenario, investors should remain focused on their long-term
objectives.
AIM/INVESCO MERGER FINALIZED
We are pleased to announce that the merger of A I M Management Group Inc.
and INVESCO plc was concluded on February 28, 1997. AIM is now part of one of
the world's largest independent investment management groups with approximately
$160 billion in assets under management as of March 31, 1997.
---------------------------
AIM Tax-Exempt Cash Fund
continued to provide
attractive, tax-free income
during the
fiscal year
ended March 31, 1997.
---------------------------
<PAGE> 3
The merger creates a company with the financial strength necessary to meet
your needs in an increasingly competitive financial services environment, both
in the United States and worldwide. Though now under one holding company, AIM
and INVESCO will continue to operate as separate entities. Therefore, this
merger will not change the portfolio management, investment style, or name of
any of the AIM funds you own. The merger's completion begins a new and
promising era for AIM, one we believe will yield exciting opportunities.
We appreciate the trust you have placed in us and we look forward to our
continued close association. If you have any questions or comments about this
report, we invite you to call Client Services at 800-959-4246 during normal
business hours. For automated account information 24 hours a day, call the AIM
Investor Line at 800-246-5463. We also invite you to visit AIM's award-winning
Web site at http://www.aimfunds.com.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
----------------------------------------------------------------------
The annual shareholder meeting of AIM Tax-Exempt Funds, Inc., and AIM
Tax-Exempt Cash Fund was held on February 7, 1997. For details of the
business transacted at that meeting, please see Supplementary Proxy
Information Shareholder Meeting after the Financial Statements in this
report.
----------------------------------------------------------------------
<PAGE> 4
SCHEDULE OF INVESTMENTS
MARCH 31, 1997
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MUNICIPAL SECURITIES-81.70%
ALABAMA-2.28%
Alabama Industrial
Development Board
(Industrial Partners
Project); Variable/Fixed
Rate Refunding Series 1989
RB
3.60%, 01/01/07(b)(c) -- VMIG-1 $1,295 $ 1,295,000
- --------------------------------------------------------------------
ALASKA-0.80%
Fairbanks North Star
(Borough of) Alaska; GO
8.00%, 11/01/97(d) AAA Aaa 445 455,065
- --------------------------------------------------------------------
ARIZONA-1.06%
Maricopa (County of) Union
High School District No.
210; Series 1989 B GO
6.55%, 07/01/97 AA Aa 600 604,114
- --------------------------------------------------------------------
COLORADO-7.12%
Colorado Housing Finance
Authority (Grant Plaza
Project); Multifamily
Mortgage Series 1991 A RB
3.525%, 11/01/09(b)(c) -- VMIG-1 800 800,000
- --------------------------------------------------------------------
Denver (City of) (Helen
Bonfils Theatre Complex
Project); Adjustable Rate
Series 1997 A RB
3.61%, 01/01/17(b)(c)(e) -- -- 1,000 1,000,000
- --------------------------------------------------------------------
Eagle (County of) Smith
Creek Metropolitan
District; Variable Rate
Series 1997 RB
3.15%, 10/01/35(b)(c) A-1+ -- 2,250 2,250,000
- --------------------------------------------------------------------
4,050,000
- --------------------------------------------------------------------
DISTRICT OF COLUMBIA-1.93%
District of Columbia;
Georgetown University
Issue Series 1988 B RB
3.40%, 04/01/17(b)(c) A-1+ VMIG-1 1,100 1,100,000
- --------------------------------------------------------------------
FLORIDA-2.49%
Dade (County of) Health
Facilities Authority
Hospital (Baptist Hospital
Miami Project); RB
7.375%, 05/01/97(f)(g) AAA -- 400 409,051
- --------------------------------------------------------------------
Okalusa (County of) School
Board; Sales Tax RB
5.00%, 09/01/97(d) AAA Aaa 1,000 1,005,754
- --------------------------------------------------------------------
1,414,805
- --------------------------------------------------------------------
GEORGIA-9.15%
Dekalb (County of) Private
Hospital Authority
(Egleston Children's
Hospital at Emory
University); Variable Rate
Demand Series 1994 A RAN
3.45%, 03/01/24(b)(c) A-1+ VMIG-1 2,200 2,200,000
- --------------------------------------------------------------------
Elbert & Bowman (Counties
of) (Seaboard Farms of
Elberton); Series 1985 IDR
3.55%, 07/01/05(b)(c) A-1 -- 1,000 1,000,000
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GEORGIA-(CONTINUED)
Monroe (County of) Georgia
Development Authority
(Oglethorpe Power Corp.);
Pollution Control Series A
RB
5.35%, 01/01/98(d) AAA Aaa $ 500 $ 505,076
- --------------------------------------------------------------------
Roswell (City of) Georgia
Housing Development
Authority (Azalea
Project); Multifamily
Housing Series 1996 RB
3.45%, 06/15/25(b)(c) A-1+ -- 1,500 1,500,000
- --------------------------------------------------------------------
5,205,076
- --------------------------------------------------------------------
ILLINOIS-9.44%
Illinois Development Finance
Authority (Chicago
Symphony Orchestra
Project); Variable/Fixed
Rate Demand Series 1996 RB
3.50%, 06/01/31(b)(c) A-1+ VMIG-1 2,000 2,000,000
- --------------------------------------------------------------------
Illinois Health Facilities
Authority (Children's
Memorial Hospital
Project); RB
3.50%, 11/01/15(b)(c)(e) -- -- 1,950 1,950,000
- --------------------------------------------------------------------
Illinois Health Facilities
Authority (Franciscan
Eldercare Project);
Adjustable Rate Refunding
Series 1996 C RB
3.50%, 05/15/26(b)(c) A-1+ -- 1,420 1,420,000
- --------------------------------------------------------------------
5,370,000
- --------------------------------------------------------------------
INDIANA-3.69%
Indianapolis (City of)
(Children's Museum
Project); Economic
Development Floating Rate
Series 1995 RB
3.45%, 10/01/25(b)(c) A-1+ -- 1,400 1,400,000
- --------------------------------------------------------------------
Indianapolis (City of)
(Local Public Improvement
Bond Bank Notes); Series
1996 F RB
4.125%, 07/10/97(c) SP-1+ -- 700 701,117
- --------------------------------------------------------------------
2,101,117
- --------------------------------------------------------------------
MARYLAND-1.23%
Maryland Industrial
Development Financing
Authority (Liberty Medical
Center); Variable Rate
Demand/Fixed Rate 1989
Issue Refunding RB
3.55%, 07/01/18(b)(c) -- VMIG-1 700 700,000
- --------------------------------------------------------------------
MICHIGAN-2.73%
Michigan State Hospital
Finance Authority
(Hospital Equipment Loan
Program); Adjustable
Series 1995 A RB
3.55%, 12/01/23(b)(c) -- VMIG-1 800 800,000
- --------------------------------------------------------------------
Michigan (State of) Housing
Development Authority
Rental Housing; Series
1994 C RB
3.45%, 04/01/19(b)(c) A-1+ -- 550 550,000
- --------------------------------------------------------------------
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MICHIGAN-(CONTINUED)
Plymouth (Township of)
Economic Development Corp.
(Key International
Project); Variable Rate
Demand Series 1984 RB
3.60%, 07/01/04(b)(c)(e) -- -- $ 200 $ 200,000
- --------------------------------------------------------------------
1,550,000
- --------------------------------------------------------------------
MINNESOTA-0.88%
Mankato (City of) (Northern
States Power Co. Project);
Floating Collateralized
Series 1985 PCR
3.55%, 03/01/11(c) AA- A1 500 500,000
- --------------------------------------------------------------------
MISSOURI-2.46%
Missouri (State of) Health
and Education Facilities
Authority Washington
University; Series 1996 A
RB
3.80%, 09/01/30(c) A-1+ VMIG-1 1,400 1,400,000
- --------------------------------------------------------------------
MONTANA-1.76%
Missoula (County of)
(Washington Corp.
Project); Floating Rate
Monthly Demand Series 1984
IDR
3.50%, 11/01/04(b)(c)(e) -- -- 1,000 1,000,000
- --------------------------------------------------------------------
NEVADA-4.75%
Clark (County of) (Nevada
Power Co. Project);
Refunding Series 1995 C
IDR
3.45%, 10/01/30(b)(c) A-1+ -- 1,000 1,000,000
- --------------------------------------------------------------------
Clark (County of) Airport
System; Series 1993 A RB
3.45%, 07/01/12(c)(d) A-1+ VMIG-1 1,700 1,700,000
- --------------------------------------------------------------------
2,700,000
- --------------------------------------------------------------------
NEW HAMPSHIRE-2.46%
New Hampshire Higher
Education and Health
Facilities Authority;
Variable Rate Hospital
Series 1985 C RB
3.45%, 12/01/25(c)(d) A-1 -- 1,400 1,400,000
- --------------------------------------------------------------------
NEW YORK-1.76%
New York (City of); General
Obligation Fiscal Series
1997 B RAN
4.50%, 06/30/97(b) SP-1+ MIG-1 1,000 1,002,672
- --------------------------------------------------------------------
NORTH CAROLINA-6.07%
Alamance (County of)
Industrial Facilities and
Pollution Control
Financing Authority
(Science Manufacturing,
Inc. Project); Series 1985
IDR
3.90%, 04/01/15(b)(c) -- P-1 1,400 1,400,000
- --------------------------------------------------------------------
New Hanover (County of)
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
- --------------------------------------------------------------------
Raleigh Durham Airport
Authority (American
Airlines Project); Series
1995 Refunding RB
3.80%, 11/01/15(b)(c) A-1 -- 750 750,000
- --------------------------------------------------------------------
3,450,000
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OHIO-4.92%
Delaware (County of)
(Radiation Sterilizers,
Inc.); Series 1984 IDR
3.60%, 12/01/04(b)(c) A-1 -- $ 300 $ 300,000
- --------------------------------------------------------------------
Lucus (County of) (Lutheran
Homes Society Project);
Adjustable Rate Demand
Health Care Facilities
1996 RB
3.45%, 11/01/19(b)(c) A-1+ -- 2,500 2,500,000
- --------------------------------------------------------------------
2,800,000
- --------------------------------------------------------------------
PENNSYLVANIA-2.20%
Allentown (City of) School
District; Series 1991 GO
6.00%, 08/01/07(d) AAA Aaa 250 251,638
- --------------------------------------------------------------------
Delaware (County of)
Industrial Development
Authority (Scotfoam Corp.
Project); Variable Rate
Demand Series 1985 IDR
3.60%, 10/01/05(b)(c)(e) -- -- 1,000 1,000,000
- --------------------------------------------------------------------
1,251,638
- --------------------------------------------------------------------
RHODE ISLAND-1.76%
Rhode Island (State of)
Industrial Facilities
Authority (Blackstone
Valley Electric Company);
Variable Rate Series 1984
RB
3.50%, 12/01/14(b)(c) A-1 -- 1,000 1,000,000
- --------------------------------------------------------------------
TENNESSEE-2.23%
Industrial Development Board
of the Metropolitan
Government of Nashville &
Davidson County
(Amberwood, Ltd. Project);
Multifamily Housing Series
1993 A RB
3.76%, 07/01/13(b)(c) -- VMIG-1 1,270 1,270,000
- --------------------------------------------------------------------
TEXAS-4.66%
Harris (County of) Sub Lien
Toll Road Series D RB
3.30%, 08/01/15(b)(c) A-1+ VMIG-1 1,000 1,000,000
- --------------------------------------------------------------------
Richardson (City of)
Independent School
District; Series 1993
Refunding GO
4.10%, 08/15/97 AA Aa1 250 250,410
- --------------------------------------------------------------------
Trinity River Industrial
Development Authority
(Radiation Sterilizers,
Inc. Project); Variable
Rate Demand Series 1985 A
IDR
3.60%, 11/01/05(b)(c) A-1 -- 1,400 1,400,000
- --------------------------------------------------------------------
2,650,410
- --------------------------------------------------------------------
UTAH-2.29%
Salt Lake (County of);
Series 1992 GO
5.00%, 06/15/97 AA+ Aaa 500 501,474
- --------------------------------------------------------------------
Salt Lake (County of)
(Service Station Holdings
Inc. Project-The British
Petroleum Co. plc); Series
1994 Refunding RB
3.80%, 02/01/08(c) A-1+ P-1 800 800,000
- --------------------------------------------------------------------
1,301,474
- --------------------------------------------------------------------
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WASHINGTON-0.88%
Industrial Development Corp.
of Port Townsend (Port
Townsend Paper Corp.
Project); Series 1988 A
Refunding RB
3.55%, 03/01/09(b)(c) VMIG-1 $ 500 $ 500,000
- --------------------------------------------------------------------
WISCONSIN-0.70%
Wisconsin (State of); GO
4.50%, 06/16/97 SP-1+ MIG-1 400 400,519
- --------------------------------------------------------------------
Total Municipal
Securities 46,471,890
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) MARKET
S&P Moody's PAR VALUE
<S> <C> <C> <C> <C>
TAXABLE COMMERCIAL PAPER(H)(I)-9.17%
Cargill Financial Services
Corp.-(Food Processing),
5.35%, 08/26/97 A-1+ P-1 $2,000 $ 1,956,308
- --------------------------------------------------------------------
Merrill Lynch & Co.
Inc.-(Broker-Dealer),
5.32%, 08/12/97 A-1+ P-1 1,800 1,764,622
- --------------------------------------------------------------------
Receivables Capital
Corp.-(Receivable Pools),
5.37%, 05/28/97 A-1+ P-1 1,507 1,494,187
- --------------------------------------------------------------------
Total Taxable Commercial Paper 5,215,117
- --------------------------------------------------------------------
REPURCHASE AGREEMENT(i)(j)-6.33%
Goldman, Sachs & Co., Inc.
6.50% 04/01/97(k) 3,598,070
- --------------------------------------------------------------------
TOTAL INVESTMENTS- 97.20% 55,285,077(l)
- --------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-2.80% 1,595,115
- --------------------------------------------------------------------
NET ASSETS-100.00% $ 56,880,192
- --------------------------------------------------------------------
</TABLE>
ABBREVIATIONS:
<TABLE>
<S> <C>
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue Bonds
PCR -- Pollution Control Revenue Bonds
RAN -- Revenue Anticipation Notes
RB -- Revenue Bonds
</TABLE>
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 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 thirteen months. Interest rate is redetermined periodically.
Rate shown is the rate in effect on 03/31/97.
(d) Secured by bond insurance.
(e) 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.
(f) Secured by an escrow fund of U.S. Treasury obligations.
(g) Subject to an irrevocable call or mandatory put by the issuer. Maturity date
and value reflect such call or put.
(h) Some commercial paper is traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(i) Interest does not qualify as exempt interest for federal tax purposes.
(j) 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.
(k) Joint repurchase agreement entered into 03/31/97 with a maturing value of
$575,103,819. Collateralized by U.S. Treasury obligations, 0% to 9.25% due
07/24/97 to 02/15/16 with an aggregate market value at March 31, 1997 of
$587,066,889.
(l) Also represents costs for federal income tax purposes.
See Notes to Financial Statements
4
<PAGE> 7
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $ 55,285,077
- ------------------------------------------------------------
Receivables for:
Fund shares sold 1,573,139
- ------------------------------------------------------------
Interest 216,636
- ------------------------------------------------------------
Investment for deferred compensation plan 17,708
- ------------------------------------------------------------
Other assets 15,190
- ------------------------------------------------------------
Total assets 57,107,750
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 2,450
- ------------------------------------------------------------
Deferred compensation 17,708
- ------------------------------------------------------------
Fund shares reacquired 133,479
- ------------------------------------------------------------
Accrued advisory fees 16,004
- ------------------------------------------------------------
Accrued distribution fees 11,162
- ------------------------------------------------------------
Accrued administrative service fees 5,768
- ------------------------------------------------------------
Accrued transfer agent fees 11,718
- ------------------------------------------------------------
Accrued operating expenses 29,269
- ------------------------------------------------------------
Total liabilities 227,558
- ------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 56,880,192
============================================================
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- ------------------------------------------------------------
Outstanding 56,877,041
============================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 1.00
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended March 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $1,370,128
- -----------------------------------------------------------
EXPENSES:
Advisory fees 125,537
- -----------------------------------------------------------
Custodian fees 9,962
- -----------------------------------------------------------
Administrative service fees 34,329
- -----------------------------------------------------------
Directors' fees and expenses 6,846
- -----------------------------------------------------------
Transfer agent fees 71,297
- -----------------------------------------------------------
Distribution fees 89,659
- -----------------------------------------------------------
Registration and filing fees 29,153
- -----------------------------------------------------------
Other 58,376
- -----------------------------------------------------------
Total expenses 425,159
- -----------------------------------------------------------
Less: Fees waived by advisor (53,795)
- -----------------------------------------------------------
Net expenses 371,364
- -----------------------------------------------------------
Net investment income 998,764
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Net realized gain on sales of investment
securities 7,711
- -----------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities (741)
- -----------------------------------------------------------
Net gain on investment securities 6,970
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $1,005,734
============================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 8
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 998,764 $ 861,666
- ---------------------------------------------------------------------------------------
Net realized gain on sales of investment securities 7,711 12,256
- ---------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (741) (1,694)
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,005,734 872,228
- ---------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (996,476) (838,861)
- ---------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions 26,856,591 (383,580)
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets 26,865,849 (350,213)
- ---------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 30,014,343 30,364,556
- ---------------------------------------------------------------------------------------
End of period $56,880,192 $30,014,343
=======================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $56,877,041 $30,020,450
=======================================================================================
Undistributed net investment income 34,005 31,717
=======================================================================================
Undistributed realized gain (loss) on sales of investment
securities (30,854) (38,565)
=======================================================================================
Unrealized appreciation of investment securities -- 741
=======================================================================================
$56,880,192 $30,014,343
=======================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
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. It is
the policy of the Fund to declare daily dividends from net investment income.
Such dividends 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 $33,594
(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.
6
<PAGE> 9
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.
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 year ended March 31, 1997, the Fund
reimbursed AIM $34,329 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, 1997, the Fund paid AFS
$39,534 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 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. During the year ended March 31, 1997, AIM
Distributors waived $53,795. 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, 1997, the Fund paid AIM Distributors $35,864 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 $3,973 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.
NOTE 4-CAPITAL STOCK
Changes in capital stock outstanding during the years ended March 31, 1997 and
1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------- --------------------------
SHARES VALUE SHARES VALUE
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold 96,643,811 $ 96,643,811 42,892,892 $ 42,892,892
- ------------------------------------------------------------------------------
Issued as
reinvestment of
dividends 948,679 948,679 808,372 808,372
- ------------------------------------------------------------------------------
Reacquired (70,735,899) (70,735,899) (44,084,844) (44,084,844)
- ------------------------------------------------------------------------------
26,856,591 $ 26,856,591 (383,580) $ (383,580)
==============================================================================
</TABLE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the three-year period ended March 31,
1997, the three months ended March 31, 1994 and each of the years in the
six-year period ended December 31, 1993.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------------------------------------------- --------------------------------
1997 1996 1995 1994 1993 1992(A) 1991
-------- -------- -------- -------- -------- -------- --------
<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 0.03 0.03 0.03 0.004 0.02 0.02 0.04
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.03) (0.03) (0.03) (0.004) (0.02) (0.02) (0.04)
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Total return 2.82% 2.92% 2.54% 1.73%(b) 1.78% 2.42% 3.91%
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $ 56,880 $ 30,014 $ 30,365 $ 33,658 $ 35,230 $ 41,291 $ 43,366
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Ratio of expenses to average net assets 1.04%(c)(d) 1.05%(d) 1.01%(d) 1.00%(b)(d) 1.00%(d) 0.98%(d) 0.98%
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Ratio of net investment income to average
net assets 2.78%(c)(e) 2.97%(e) 2.53%(e) 1.75%(b)(e) 1.76%(e) 2.42%(e) 3.87%
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
<CAPTION>
DECEMBER 31,
------------------------------
1990 1989 1988
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ -------- -------- --------
Income from investment operations:
Net investment income 0.05 0.05 0.05
- ------------------------------------------ -------- -------- --------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05)
- ------------------------------------------ -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ -------- -------- --------
Total return 5.17% 5.62% 4.65%
- ------------------------------------------ -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $ 43,302 $ 45,995 $ 51,597
- ------------------------------------------ -------- -------- --------
Ratio of expenses to average net assets 0.99% 0.93% 0.83%
- ------------------------------------------ -------- -------- --------
Ratio of net investment income to average
net assets 5.05% 5.48% 4.54%
- ------------------------------------------ -------- -------- --------
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Annualized.
(c) Ratios are based on average daily net assets of $35,863,626.
(d) After waiver of fees and/or expense reimbursements. Ratios of expenses to
average net assets prior to waiver of fees and/or expense reimbursements
were 1.19%, 1.20%, 1.16%, 1.14% (annualized), 1.36% and 1.00% for the
periods 1997 - 1992, respectively.
(e) After waiver of fees and/or expense reimbursements. Ratios of income to
average net assets prior to waiver of fees and/or expense reimbursements
were 2.63%, 2.82%, 2.38, 1.61% (annualized), 1.40% and 2.40% for the periods
1997-1992, respectively.
7
<PAGE> 10
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, 1997, 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 three-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, 1997, 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, 1997, 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 three-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 2, 1997
- --------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION -- SHAREHOLDER MEETING
An annual meeting of shareholders of Tax-Exempt Funds, Inc. the ("Company"), was
held on February 7, 1997. The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and AIM.
(3) To approve the elimination of the fundamental investment policy prohibiting
or restricting investments in other investment companies and/or the
amendment of certain related fundamental investment policies.
(4) To ratify KPMG Peat Marwick LLP as independent accountants for the Company's
fiscal year ended March 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
Votes
Director/Matter Votes for Against Abstentions
--------------- --------- ------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer............................................ 29,429,450 0 563,009
Bruce L. Crockett........................................... 29,437,312 0 555,147
Owen Daly II................................................ 29,429,450 0 563,009
Carl Frischling............................................. 29,437,312 0 555,147
Robert H. Graham............................................ 29,437,312 0 555,147
John F. Kroeger............................................. 29,432,862 0 559,597
Lewis F. Pennock............................................ 29,449,040 0 543,419
Ian W. Robinson............................................. 29,431,702 0 560,757
Louis Sklar................................................. 29,436,693 0 555,766
(2) Approval of the new Investment Advisory Agreement........... 21,459,339 346,964 669,537
(3) Elimination of Fundamental Investment Policy................ 20,409,794 1,159,287 727,403
(4) Ratification of KPMG Peat Marwick LLP....................... 28,993,167 98,416 900,876
</TABLE>
8
<PAGE> 11
Directors & Officers
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer
Chairman Charles T. Bauer 11 Greenway Plaza
A I M Management Group Inc. Chairman Suite 100
Houston, TX 77046
Bruce L. Crockett Robert H. Graham http://www.aimfunds.com
Formerly Director, President, and President
Chief Executive Officer INVESTMENT ADVISOR
COMSAT Corporation John J. Arthur
Senior Vice President and Treasurer A I M Advisors, Inc.
Owen Daly II 11 Greenway Plaza
Director Gary T. Crum Suite 100
Cortland Trust Inc. Senior Vice President Houston, TX 77046
Jack Fields Carol F. Relihan TRANSFER AGENT
Formerly Member of the Senior Vice President and Secretary
U.S. House of Representatives A I M Fund Services, Inc.
Dana R. Sutton P.O. Box 4739
Carl Frischling Vice President Houston, TX 77210-4739
Partner and Assistant Treasurer
Kramer, Levin, Naftalis & Frankel CUSTODIAN
Stuart W. Coco
Robert H. Graham Vice President The Bank of New York
President and Chief Executive Officer 90 Washington Street, 11th Floor
A I M Management Group Inc. Melville B. Cox New York, NY 10286
Vice President
John F. Kroeger COUNSEL TO THE FUND
Formerly Consultant Karen Dunn Kelley
Wendell & Stockel Associates, Inc. Vice President Ballard Spahr
Andrews & Ingersoll
Lewis F. Pennock P. Michelle Grace 1735 Market Street
Attorney Assistant Secretary Philadelphia, PA 19103
Ian W. Robinson David L. Kite COUNSEL TO THE DIRECTORS
Consultant; Former Executive Assistant Secretary
Vice President and Kramer, Levin, Naftalis & Frankel
Chief Financial Officer Nancy L. Martin 919 Third Avenue
Bell Atlantic Management Assistant Secretary New York, NY 10022
Services, Inc.
Ofelia M. Mayo DISTRIBUTOR
Louis S. Sklar Assistant Secretary
Executive Vice President A I M Distributors, Inc.
Hines Interests Kathleen J. Pflueger 11 Greenway Plaza
Limited Partnership Assistant Secretary Suite 100 Houston, TX 77046
Samuel D. Sirko AUDITORS
Assistant Secretary
KPMG Peat Marwick LLP
Stephen I. Winer 700 Louisiana
Assistant Secretary NationsBank Bldg.
Houston, TX 77002
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Tax-Exempt Cash Fund paid ordinary dividends in the amount of $0.0279 per
share to shareholders during the Fund's tax year ended March 31, 1997. Of this
amount, 80.92% qualified as exempt-interest dividends for federal income tax
purposes.
For the purpose of preparing your annual federal income tax returns,
however, you should report the amounts as reflected on the appropriate Form
1099-DIV
<PAGE> 12
<TABLE>
<S> <C>
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
[PHOTO OF AIM Blue Chip Fund
11 Greenway Plaza AIM Global Growth Fund
APPEARS HERE] 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
A I M Management Group Inc. has provided leadership in STABILITY, LIQUIDITY, AND CURRENT TAX-FREE INCOME
the mutual fund industry since 1976 and managed AIM Tax-Exempt Cash Fund
approximately $70 billion in assets for more
than 3.5 million shareholders, including individual *AIM Aggressive Growth Fund was closed to new investors
investors, corporate clients, and financial on July 18, 1995. For more complete information about
institutions, as of May 12, 1997. The AIM Family of any AIM Fund(s), including sales charges and expenses,
Funds--Registered Trademark-- is distributed ask your financial consultant or securities dealer for
nationwide, and AIM today ranks among the nation's a free prospectus(es). Please read the prospectus(es)
top 15 mutual fund companies in assets under carefully before you invest or send money.
management, according to Lipper Analytical Services, Inc.
[AIM LOGO APPEARS HERE] ----------------
BULK RATE
A I M Distributors, Inc. U.S. POSTAGE
11 Greenway Plaza, Suite 100 PAID
Houston, TX 77046 HOUSTON, TX
Permit No. 1919
----------------
</TABLE>
