<PAGE> 1
ANNUAL REPORT / MARCH 31 1999
AIM TAX-EXEMPT CASH FUND
[COVER IMAGE]
[AIM LOGO APPEARS]
<PAGE> 2
[PHOTO OF Charles T. Bauer,
Chairman of the Board of
the Fund APPEARS HERE]
Dear Fellow Shareholder:
AIM Tax-Exempt Cash Fund continued to provide attractive, tax-free income during
the fiscal year ended March 31, 1999, posting a seven-day effective yield of
2.64% and a seven-day yield of 2.61%. Translated to its taxable equivalent, the
Fund's seven-day effective yield was 3.87% 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 3.87% taxable-equivalent seven-day effective yield compared
favorably to popular bank money market deposit accounts. According to the Bank
Rate Monitor, which tracks yields on bank money market deposit accounts, the
seven-day average yield on those accounts stood at 2.08% as of March 31, 1999.
Bank money market deposit accounts are insured by the Federal Deposit Insurance
Corporation (FDIC) as to interest and principal. An investment in this Fund is
not insured or guaranteed by the FDIC or any other government agency. Although a
money market fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money investing in the Fund.
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. Net assets in the Fund stood at $61.2 million at the end of
the fiscal year.
MARKET ENVIRONMENT
As the end of the reporting period arrived, the U.S. economy continued to move
ahead at a brisk pace. After growing in the final quarter of 1998 at the fastest
rate in two-and-a-half years, total gross domestic product (GDP) growth results
for 1998 remained at 3.9%. Throughout the second half of 1998, markets around
the globe experienced economic turmoil, financial instability and increased
credit concerns. Certain regions, particularly Asia, Russia and Latin America,
suffered from a severe downturn as their economies fought to stay afloat.
Financial markets in the United States and Europe were also affected by the
downturn, but surprisingly strong growth continued in both economies.
As a result of the global meltdown, the Federal Reserve Board (the Fed)
reduced the federal funds rate from 5.5% to 4.75%. A 25 basis point rate cut was
approved at both the September and November Fed policy meetings, as well as an
unexpected 25 basis point cut between those two regularly scheduled meetings.
(One basis point is .01%.) The discount rate was also reduced from 5% to 4.5%
during that period. The lowering of interest rates was not done solely to
stimulate an already strong U.S. economy, but also to minimize the impact of the
international economic crisis upon the U.S. economy, to decrease volatility, and
to calm the financial markets.
The yield on the one-year Treasury bill, which was as high as 5.32% in early
July of 1998, dropped to 4.37% in early December. The yield dropped because of
an increase in the one-year Treasury bill's price. The price increase was due to
investors' increased demand for Treasury securities in a "flight to quality"
investment environment resulting from the international crises and credit
concerns.
The municipal market continued to suffer from a lack of supply over the last
six months of the reporting period because the strong financial position of
local governments reduced their need to issue new securities. Demand remained
strong, causing prices to increase, and as a result yields in the tax-free
market dropped into the 3% range for one-year notes. (Yield and price move in
opposite directions.) Yield spreads between tax-free securities and Treasury
bills widened as Treasury bill prices went down and their yields went up. The
tax-free yield curve remained flat, meaning there was little difference between
interest rates on short-term and long-term securities, and investors expected a
steady Fed policy.
OUTLOOK
As the first quarter of 1999 came to a close, the U.S. economy showed strong
growth with little or no inflationary pressures. GDP growth for the first
quarter was expected to weaken from the 6% level posted in the fourth quarter of
1998 but still remain in the solid 3% to 4% range. Although oil prices surged
about $5 per barrel during the closing weeks of the fiscal year, there is little
evidence of inflationary tendencies. Therefore, the markets have adjusted their
expectations to a steady Fed policy over the next few months. Tax-free yields
have backed up during the tax season but are expected to level out in the 3%
range in the near future.
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 800-426-5463.
Respectfully submitted,
Cover Art:
/s/ CHARLES T. BAUER Summer Solstice III
by Allison Watson,
Charles T. Bauer American
Chairman
AIM TAX-EXEMPT CASH FUND
<PAGE> 3
SCHEDULE OF INVESTMENTS
March 31, 1999
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL
OBLIGATIONS-89.50%
ALABAMA-2.49%
Alabama Industrial
Development Board
(Industrial Partners
Project); Variable/Fixed
Rate Refunding Series
1989 RB
3.25%, 01/01/07(b)(c) -- VMIG-1 $1,525 $ 1,525,000
- ------------------------------------------------------------------
ALASKA-1.80%
Alaska Housing Finance
Corp.; General Mortgage
Series 1991 A RB
2.95%, 06/01/26(c) A-1+ VMIG-1 1,100 1,100,000
- ------------------------------------------------------------------
ARIZONA-1.64%
Arizona (State of)
Transportation Board;
Highway Series A RB
5.90%, 07/01/99 AA Aa 1,000 1,005,848
- ------------------------------------------------------------------
CALIFORNIA-3.60%
Huntington Beach (City of)
(Seabridge Villas
Project); Floating Rate
Multifamily Housing
Series 1985 A RB
4.00%, 02/01/10(b)(c) -- VMIG-1 2,200 2,200,000
- ------------------------------------------------------------------
COLORADO-0.33%
Arapahoe (County of) (E-470
Project); Capital
Improvement Trust Fund
Highway Series 1986 RB
4.40%, 08/31/99(b) AAA Aaa 200 200,896
- ------------------------------------------------------------------
CONNECTICUT-0.16%
Connecticut (State of)
(Infrastructure Purpose
S-1); Special Tax
Obligation Transportation
RB
2.90%, 12/01/10(b)(c) A-1+ VMIG-1 100 100,000
- ------------------------------------------------------------------
DELAWARE-0.71%
Delaware (University of)
Variable Rate Demand
Series 1998 RB
3.00%, 11/01/23(c) A-1+ -- 433 433,000
- ------------------------------------------------------------------
FLORIDA-13.41%
Gulf Breeze (City of)
(Florida Municipal Bond
Fund); Variable Rate
Demand Series 1996 A RB
3.10%, 03/31/21(b)(c) A-1+ -- 900 900,000
- ------------------------------------------------------------------
Hillsborough (County of)
Industrial Development
Authority (Tampa Electric
Co. Gannon Coal
Conversion Project);
Pollution Control Series
1992 RB
3.30%, 05/15/18(c) A-1+ VMIG-1 2,700 2,700,000
- ------------------------------------------------------------------
Lee (County of) Housing
Finance Authority
(Forestwood Apartments
Project); Housing Series
1995 A RB
3.00%, 06/15/25(b)(c) A-1+ -- 3,200 3,200,000
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
FLORIDA-(CONTINUED)
Orange (County of) Florida
Health Finance Authority;
Pooled Hospital Loan
Refunding Series 1985 RB
2.85%, 06/16/99(b)(c) A-1+ VMIG-1 $1,400 $ 1,400,000
- ------------------------------------------------------------------
8,200,000
- ------------------------------------------------------------------
GEORGIA-3.11%
Dekalb Private Hospital
Authority (Egleston
Children's Hospital at
Emory University);
Variable Rate Demand
Revenue Anticipation
Certificates Series 1994
A
2.90%, 03/01/24(b)(c) A-1+ VMIG-1 900 900,000
- ------------------------------------------------------------------
Elbert & Bowman (Counties
of) Industrial
Development Authority;
(Seaboard Farms of
Elberton); Series 1985
IDR
3.10%, 07/01/05(b)(c) A-1 -- 1,000 1,000,000
- ------------------------------------------------------------------
1,900,000
- ------------------------------------------------------------------
ILLINOIS-6.25%
Illinois Development
Finance Authority
(American College of
Surgeons Project); Tax
Exempt Series 1996 RB
3.10%, 08/01/26(b)(c) A-1+ -- 772 772,000
- ------------------------------------------------------------------
Illinois Health Facilities
Authority; Revolving Fund
Pooled Series D RB
2.95%, 08/01/15(b)(c) A-1+ VMIG-1 1,630 1,630,000
- ------------------------------------------------------------------
Illinois Health Facilities
Authority (Franciscan
Eldercare Project);
Adjustable Rate Refunding
Series 1996 C RB
3.05%, 05/15/26(b)(c) A-1+ -- 1,420 1,420,000
- ------------------------------------------------------------------
3,822,000
- ------------------------------------------------------------------
INDIANA-2.46%
Indiana Development Finance
Authority (USX
Corporation Project);
Variable Rate Refunding
Series 1998 RB
3.00%, 08/05/99(b)(d) A-1+ -- 1,000 1,000,000
- ------------------------------------------------------------------
New Albany (City of) School
Board First Meeting;
Series 1998 RB
4.10%, 01/15/00(b) AAA Aaa 500 503,863
- ------------------------------------------------------------------
1,503,863
- ------------------------------------------------------------------
IOWA-4.10%
Iowa School Corporations
(Iowa School Cash
Anticipation Program);
Warrant Certificate
Series 1998-1999 A TRAN
4.50%, 06/25/99(b) SP-1+ MIG-1 2,500 2,506,054
- ------------------------------------------------------------------
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
KENTUCKY-6.96%
Kentucky Asset/Liability
Commission; Series 1998 B
General Fund TRAN
4.00%, 06/25/99 SP-1+ MIG-1 $1,000 $ 1,001,524
- ------------------------------------------------------------------
Kentucky Asset/Liability
Commission; General Fund
Series 1998 A Commercial
Paper Notes
2.90%, 08/12/99(b)(c) -- VMIG-1 1,000 1,000,000
- ------------------------------------------------------------------
Kentucky Interlocal School
Transport Association;
Series 1998 TRAN
3.90%, 06/30/99 SP-1+ -- 2,250 2,254,454
- ------------------------------------------------------------------
4,255,978
- ------------------------------------------------------------------
MAINE-1.31%
Regional Waste System
Industrial Maine; Solid
Waste Residential Series
P RB
5.25%, 07/01/99 AA -- 800 803,607
- ------------------------------------------------------------------
MICHIGAN-1.14%
Michigan State Hospital
Finance Authority
(Hospital Equipment Loan
Program); Adjustable
Series 1995 A RB
3.15%, 12/01/23(b)(c) -- VMIG-1 500 500,000
- ------------------------------------------------------------------
Plymouth (Township of)
Economic Development
Corp. (Key International
Project); Variable Rate
Demand Series 1984 RB
2.95%, 07/01/04(b)(c)(e) -- -- 200 200,000
- ------------------------------------------------------------------
700,000
- ------------------------------------------------------------------
MINNESOTA-7.72%
Northern Municipal Power
Agency; Electric System
Refunding Series 1998 RB
3.08%, 01/01/16(b)(c) A-1C -- 3,245 3,245,000
- ------------------------------------------------------------------
Owatonna (City of) (The
Health Central System
Project); Hospital Series
1985 RB
3.05%, 08/01/14(b)(c) A-1+ -- 1,480 1,480,000
- ------------------------------------------------------------------
4,725,000
- ------------------------------------------------------------------
MISSISSIPPI-3.11%
Perry (County of) Leaf
River Forest Products;
Series PCR
3.15%, 03/01/02(b)(c) -- P-1 1,900 1,900,000
- ------------------------------------------------------------------
MONTANA-1.14%
Missoula (County of)
(Washington Corp.
Project); Floating Rate
Monthly Demand Series
1984 IDR
2.91%, 11/01/04(b)(c)(e) -- -- 700 700,000
- ------------------------------------------------------------------
NEVADA-2.20%
Reno (City of) St. Mary's
Regional Medical Center;
Hospital Series 1998 A RB
4.375%, 05/15/99(b) AAA Aaa 1,345 1,347,124
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW HAMPSHIRE-2.29%
New Hampshire Higher
Education and Health
Facilities Authority;
Variable Rate Hospital
Series 1985 C RB
3.15%, 12/01/25(c)(g) A-1 -- $1,400 $ 1,400,000
- ------------------------------------------------------------------
NEW YORK-2.12%
Eagle Tax Exempt Trust;
Class A Series 943802 COP
3.11%, 05/01/07(c)(f)(g) A-1+C -- 1,295 1,295,000
- ------------------------------------------------------------------
OHIO-0.49%
Delaware (County of)
(Radiation Sterilizers,
Inc.); Series 1984 IDR
3.00%, 12/01/04(b)(c) A-1 -- 300 300,000
- ------------------------------------------------------------------
PENNSYLVANIA-5.20%
Delaware (County of)
Industrial Development
Authority (Scotfoam Corp.
Project); Variable Rate
Demand Series 1985 IDR
2.95%, 10/01/05(b)(c)(e) -- -- 1,000 1,000,000
- ------------------------------------------------------------------
Harrisburg (City of)
Authority School; Series
A RB
5.00%, 09/01/99(e) AAA Aaa 1,000 1,008,222
- ------------------------------------------------------------------
Philadelphia (City of)
School District; Series
1998-1999 A TRAN
4.25%, 06/30/99(b) SP-1 MIG-1 1,000 1,001,476
- ------------------------------------------------------------------
York (City of) General
Authority; Adjustable
Rate Pooled Financing
Series 1996 RB
3.10%, 09/01/26(b)(c) A-1 -- 168 168,000
- ------------------------------------------------------------------
3,177,698
- ------------------------------------------------------------------
RHODE ISLAND-0.83%
Providence (City of);
General Obligation Bonds
4.60%, 01/15/00(b) AAA Aaa 500 505,210
- ------------------------------------------------------------------
TENNESSEE-1.94%
Nashville and Davidson
(Counties of) (Amberwood
Ltd. Project); Metro
Government Multifamily
Housing Refunding Series
1993 A IDR
3.31%, 07/01/13(b)(c) -- VMIG-1 1,185 1,185,000
- ------------------------------------------------------------------
TEXAS-11.35%
Bexar (County of) Texas
Housing Finance Authority
(Fountainhead Apts.
Project); Multifamily RB
3.00%, 09/15/26(b)(c) A-1+ -- 300 300,000
- ------------------------------------------------------------------
Harris (County of); General
Obligation Series A
Commercial Paper Notes
3.05%, 08/13/99 A-1+ P-1 715 715,000
- ------------------------------------------------------------------
Houston (City of) Water and
Sewer; Series A
Commercial Paper Notes
2.65%, 05/11/99 A-1 P-1 1,000 1,000,000
- ------------------------------------------------------------------
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
Lubbock (City of)
Waterworks System Sub
Lien Certificates of
Obligation; Ltd. General
Obligation Series 1991 RB
8.60%, 02/15/00 AA As2 $ 500 $ 522,499
- ------------------------------------------------------------------
San Antonio (City of)
Electric and Gas System;
Series A Commercial Paper
3.00%, 04/07/99 A-1+ P-1 2,000 2,000,000
- ------------------------------------------------------------------
Texas (State of); Series
1998 TRAN
4.50%, 08/31/99 SP-1+ MIG-1 1,000 1,004,347
- ------------------------------------------------------------------
Trinity River Industrial
Development Authority
(Radiation Sterilizers,
Inc. Project); Variable
Rate Demand Series 1985 A
IDR
3.00%, 11/01/05(b)(c) A-1 -- 1,400 1,400,000
- ------------------------------------------------------------------
6,941,846
- ------------------------------------------------------------------
VIRGINIA-0.82%
Arlington (County of);
General Obligation Bond
Series 1993
5.00%, 07/15/99 AAA Aaa 500 502,586
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WASHINGTON-0.82%
Industrial Development
Corp. of Port Townsend
(Port Townsend Paper
Corp. Project); Variable
Rate Refunding Series
1988 A RB
3.00%, 03/01/09(b)(c) -- VMIG-1 $ 500 $ 500,000
- ------------------------------------------------------------------
Total Short-Term
Municipal Obligations
(Cost $54,735,710) 54,735,710
- ------------------------------------------------------------------
MASTER NOTE AGREEMENTS(h)-5.72%
Broker/Dealer-5.72%
Merrill Lynch Mortgage
Capital, Inc.
5.405%, 08/16/99(e)(i)
(Cost $3,500,000) -- -- 3,500 3,500,000
- ------------------------------------------------------------------
REPURCHASE AGREEMENT(h)(j)-7.45%
Goldman, Sachs & Co.
5.10%, 04/01/99(k) (Cost
$4,557,238) -- -- 4,557 4,557,238
- ------------------------------------------------------------------
TOTAL INVESTMENTS-102.67% 62,792,948(l)
- ------------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(2.67%) (1,633,950)
- ------------------------------------------------------------------
NET ASSETS-100.00% $61,158,998
- ------------------------------------------------------------------
</TABLE>
Abbreviations:
COP - Certificates of Participation
IDR - Industrial Development Revenue Bonds
PCR - Pollution Control Revenue Bonds
RB - Revenue Bonds
TAN - Tax Anticipation Note
TRAN - Tax and Revenue Anticipation Notes
Notes to Schedule of Investments:
(a)Ratings assigned by Standard & Poor's Corporation ("S&P") and Moody's
Investors Service, Inc. ("Moody's"). Ratings are not covered by Independent
Auditors' 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 rates are redetermined
periodically. Rate shown is the rate in effect on 03/31/99.
(d)Subject to an irrevocable call or mandatory put by the issuer. Par value and
maturity date reflect such call or put.
(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)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.
(g)Secured by bond insurance.
(h)Interest does not qualify as exempt interest for federal tax purposes.
(i)The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon one business days' notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
03/31/99.
(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 03/31/99 with a maturing value of
$500,070,833. Collateralized by $508,704,317 U.S. Government obligations,
5.00% to 7.50% due 02/01/05 to 05/01/36 with an aggregate market value at
03/31/99 of $510,000,000.
(l)Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
3
<PAGE> 6
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $ 62,792,948
- ------------------------------------------------------------
Receivables for:
Investments sold 1,400,000
- ------------------------------------------------------------
Capital stock sold 389,278
- ------------------------------------------------------------
Interest 500,366
- ------------------------------------------------------------
Investment for deferred compensation plan 26,901
- ------------------------------------------------------------
Other assets 26,366
- ------------------------------------------------------------
Total assets 65,135,859
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 17,483
- ------------------------------------------------------------
Deferred compensation 26,901
- ------------------------------------------------------------
Capital stock reacquired 3,819,030
- ------------------------------------------------------------
Accrued administrative services fees 4,515
- ------------------------------------------------------------
Accrued advisory fees 22,129
- ------------------------------------------------------------
Accrued distribution fees 19,277
- ------------------------------------------------------------
Accrued transfer agent fees 14,993
- ------------------------------------------------------------
Accrued operating expenses 52,533
- ------------------------------------------------------------
Total liabilities 3,976,861
- ------------------------------------------------------------
Net assets applicable to shares outstanding $ 61,158,998
- ------------------------------------------------------------
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Authorized 1,000,000,000
- ------------------------------------------------------------
Outstanding 61,130,831
- ------------------------------------------------------------
Net asset value, offering and redemption
price per share $ 1.00
- ------------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
For the year ended March 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $2,590,171
- -----------------------------------------------------------
EXPENSES:
Advisory fees 250,445
- -----------------------------------------------------------
Administrative services fees 49,285
- -----------------------------------------------------------
Custodian fees 8,446
- -----------------------------------------------------------
Directors' fees and expenses 12,734
- -----------------------------------------------------------
Transfer agent fees 69,602
- -----------------------------------------------------------
Distribution fees 178,890
- -----------------------------------------------------------
Registration and filing fees 53,132
- -----------------------------------------------------------
Other 52,381
- -----------------------------------------------------------
Total expenses 674,915
- -----------------------------------------------------------
Less: Fees waived (107,334)
- -----------------------------------------------------------
Expenses paid indirectly (817)
- -----------------------------------------------------------
Net expenses 566,764
- -----------------------------------------------------------
Net investment income 2,023,407
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES:
Net realized gain on sales of investment
securities 11,634
- -----------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities (160)
- -----------------------------------------------------------
Net gain on investment securities 11,474
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $2,034,881
- -----------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 7
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,023,407 $ 1,600,784
- -----------------------------------------------------------------------------------------
Net realized gain on sales of investment securities 11,634 17,389
- -----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (160) 160
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,034,881 1,618,333
- -----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (2,029,841) (1,598,357)
- -----------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions 9,220,052 (4,966,262)
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets 9,225,092 (4,946,286)
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 51,933,906 56,880,192
- -----------------------------------------------------------------------------------------
End of period $61,158,998 $51,933,906
- -----------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $61,130,831 $51,910,779
- -----------------------------------------------------------------------------------------
Undistributed net investment income 29,998 36,432
- -----------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (1,831) (13,465)
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities -- 160
- -----------------------------------------------------------------------------------------
$61,158,998 $51,933,906
- -----------------------------------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Tax-Exempt Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Company is organized as a Maryland corporation
consisting of four separate portfolios: AIM Tax-Exempt Cash Fund, AIM High
Income Municipal Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free
Intermediate Fund. Matters affecting each portfolio are voted on exclusively by
the shareholders of such portfolio. The assets, liabilities and operations of
each portfolio are accounted for separately. Information presented in these
financial statements pertains only to AIM Tax-Exempt Cash Fund (the "Fund"). The
investment objective of the Fund is to earn the highest level of current income
free from federal income taxes that is consistent with safety of principal and
liquidity.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations--The Fund's 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 $4,570 (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
5
<PAGE> 8
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.
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, 1999, the Fund
reimbursed AIM $49,285 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, 1999, the Fund paid AFS
$39,222 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, 1999 AIM
Distributors waived fees of $107,334. 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, 1999, the Fund paid AIM Distributors
$71,556 as compensation pursuant to the Plan. Certain officers and directors of
the Company are officers and directors of AIM, AFS and AIM Distributors.
During the year ended March 31, 1999, the Fund paid legal fees of $3,479 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-INDIRECT EXPENSES
During the year ended March 31, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $817 under an expense offset
arrangement. The effect of the above arrangement resulted in a reduction of the
Fund's total expenses of $817 during the year ended March 31, 1999.
NOTE 5-CAPITAL STOCK
Changes in capital stock outstanding during the years ended March 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sold 365,487,367 $ 365,487,367 234,334,058 $ 234,334,058
- ----------------------------------------------------------------------------------
Issued as
reinvestment of
dividends 1,903,872 1,903,872 1,529,845 1,529,845
- ----------------------------------------------------------------------------------
Reacquired (358,171,187) (358,171,187) (240,830,165) (240,830,165)
- ----------------------------------------------------------------------------------
9,220,052 $ 9,220,052 (4,966,262) $ (4,966,262)
- ----------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the five-year period ended March 31,
1999.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.03 0.03 0.03 0.03 0.03
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Total return 2.90% 3.12% 2.82% 2.92% 2.54%
- ------------------------------------------------------------ ------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $61,159 $51,934 $56,880 $30,014 $30,365
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Ratio of expenses to average net assets(a) 0.79%(b) 0.83% 1.04% 1.05% 1.01%
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Ratio of net investment income to average net assets(c) 2.83%(b) 3.07% 2.78% 2.97% 2.53%
- ------------------------------------------------------------ ------- ------- ------- ------- -------
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.94%, 0.98%, 1.19%, 1.20% and 1.16% for the periods 1999-1995 respectively.
(b) Ratios are based on average net assets of $71,555,805.
(c) After fee waivers and/or expense reimbursements. Ratios of income to average
net assets prior to fee waivers and/or expense reimbursements were 2.68%,
2.92%, 2.63%, 2.82% and 2.38%, for the periods 1999-1995 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 Fund (a portfolio of AIM
Tax-Exempt Funds, Inc.), including the schedule of
investments, as of March 31, 1999, and the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended and the financial
highlights for each of the years in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and 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
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of March 31, 1999, by correspondence
with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM
Tax-Exempt Cash Fund as of March 31, 1999, the results of
its operations for the year then ended, changes in its
net assets for each of the years in the two-year period
then ended and the financial highlights for each of the
years in the five-year period then ended in conformity
with generally accepted accounting principles.
KPMG LLP
Houston, Texas
May 7, 1999
8
<PAGE> 11
BOARD OF DIRECTORS
Charles T. Bauer
Chairman
A I M Management Group Inc.
Bruce L. Crockett
Director
ACE Limited;
Formerly Director, President, and
Chief Executive Officer
COMSAT Corporation
Owen Daly II
Director
Cortland Trust Inc.
Edward K. Dunn Jr.
Chairman, Mercantile Mortgage Corp.;
Formerly Vice Chairman and President,
Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares
Jack Fields
Chief Executive Officer
Texana Global, Inc.;
Formerly Member
of the U.S. House of Representatives
Carl Frischling
Partner
Kramer, Levin, Naftalis & Frankel LLP
Robert H. Graham
President and Chief Executive Officer
A I M Management Group Inc.
Prema Mathai-Davis
Chief Executive Officer, YWCA of the U.S.A.;
Commissioner, New York City Dept. for the
Aging; and member of the Board of Directors,
Metropolitan Transportation Authority of
New York State
Lewis F. Pennock
Attorney
Louis S. Sklar
Executive Vice President
Hines Interests
Limited Partnership
OFFICERS
Charles T. Bauer
Chairman
Robert H. Graham
President
Carol F. Relihan
Senior Vice President and Secretary
Gary T. Crum
Senior Vice President
Dana R. Sutton
Vice President and Treasurer
Stuart W. Coco
Vice President
Melville B. Cox
Vice President
Karen Dunn Kelley
Vice President
Mary J. Benson
Assistant Vice President
and Assistant Treasurer
Sheri Morris
Assistant Vice President
and Assistant Treasurer
Renee A. Friedli
Assistant Secretary
P. Michelle Grace
Assistant Secretary
Jeffrey H. Kupor
Assistant Secretary
Nancy L. Martin
Assistant Secretary
Ofelia M. Mayo
Assistant Secretary
Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
OFFICE OF THE FUND
11 Greenway Plaza
Suite 100
Houston, TX 77046
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
The Bank of New York
90 Washington Street
11th Floor
New York, NY 10286
COUNSEL TO THE FUND
Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE DIRECTORS
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
KPMG LLP
700 Louisiana
Houston, TX 77002
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Tax-Exempt Cash Fund paid ordinary dividends in the amount of $0.029 per
share to shareholders during the Fund's tax year ended March 31, 1999. Of this
amount, 82.33% 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.
This report may be distributed only to current shareholders
or to the persons who have received a current prospectus of the Fund.
<PAGE> 12
<TABLE>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund leadership in the mutual fund industry since
AIM Blue Chip Fund AIM Asian Growth Fund 1976 and managed approximately $112 billion
AIM Capital Development Fund AIM Developing Markets Fund(2) in assets for more than 6.3 million
AIM Constellation Fund AIM Europe Growth Fund(2) shareholders, including individual investors,
AIM Large Cap Growth Fund AIM European Development Fund corporate clients and financial institutions,
AIM Mid Cap Equity Fund(2), (A) AIM International Equity Fund as of March 31, 1999.
AIM Mid Cap Opportunities Fund AIM Japan Growth Fund(2) The AIM Family of Funds--Registered
AIM Select Growth Fund(3) AIM Latin American Growth Fund(2) Trademark-- is distributed nationwide, and AIM
AIM Small Cap Growth Fund(2), (B) AIM New Pacific Growth Fund(2) today is the 10th-largest mutual fund complex
AIM Small Cap Opportunities Fund in the U.S. in assets under management,
AIM Value Fund GLOBAL GROWTH FUNDS according to Strategic Insight, an independent
AIM Weingarten Fund AIM Global Aggressive Growth Fund mutual fund monitor.
AIM Global Growth Fund
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund GLOBAL GROWTH & INCOME FUNDS
AIM Advisor Large Cap Value Fund AIM Global Growth & Income Fund(2)
AIM Advisor MultiFlex Fund AIM Global Utilities Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund GLOBAL INCOME FUNDS
AIM Basic Value Fund(2), (C) AIM Emerging Markets Debt Fund(2), (D)
AIM Charter Fund AIM Global Government Income Fund(2)
AIM Global Income Fund
INCOME FUNDS AIM Strategic Income Fund(2)
AIM Floating Rate Fund(2)
AIM High Yield Fund THEME FUNDS
AIM High Yield Fund II AIM Global Consumer Products and Services Fund(2)
AIM Income Fund AIM Global Financial Services Fund(2)
AIM Intermediate Government Fund AIM Global Health Care Fund(2)
AIM Limited Maturity Treasury Fund AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
TAX-FREE INCOME FUNDS AIM Global Telecommunications Fund(2)
AIM High Income Municipal Fund AIM Global Trends Fund(2), (E)
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
MONEY MARKET FUNDS
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998. (2)
Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth
Fund. (A) On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C) On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D) On September 8, 1998, AIM Global High Income
Fund was renamed AIM Emerging Markets Debt Fund. (E) On September 8, 1998, AIM
New Dimension Fund was renamed AIM Global Trends Fund. For more complete
information about any AIM Fund(s), including sales charges and expenses, ask
your financial consultant or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money.
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Invest with DISCIPLINE--Registered Trademark--
