<PAGE> 1
SEMIANNUAL REPORT / SEPTEMBER 30 1999
A I M T A X - E X E M P T C A S H F U N D
[PHOTO]
[AIM LOGO APPEARS HERE]
<PAGE> 2
Dear Fellow Shareholder:
AIM Tax-Exempt Cash Fund continued to provide attractive
[PHOTO OF tax-free income during the six-month period ended September
Charles T. 30, 1999. At the end of the reporting period, the fund
Bauer, posted a seven-day effective yield of 3.30% and a seven-day
Chairman of yield of 3.25%. Translated to its taxable equivalent, the
the Board of fund's seven-day effective yield was 5.46% based on net
THE FUND asset value and adjusted for the highest marginal federal
APPEARS HERE] 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 5.46% taxable-equivalent seven-day effective
yield compared quite 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 2.06% as
of September 30, 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 $49.4 million at the end of the
fiscal year.
MARKET ENVIRONMENT
As the end of the reporting period arrived, the U.S. economy sustained its brisk
pace. During the six months since our last report, the U.S. economy reflected an
unusual combination of strong growth and low inflation. However, this scenario
would change slightly as some economic indicators pointed to inflationary
tendencies, particularly in a number of commodity prices.
These factors, along with the unwinding of the 1998 global financial
crisis-evident in the stabilization of foreign markets-compelled the Federal
Reserve Board (the Fed) to boost short-term interest rates twice during the
reporting period. The Fed raised the federal funds rate by 25 basis points
(0.25%) at both its June 30 and August 24 meetings, making the rate 5.25%. On
August 24, the Fed also increased the discount rate by 25 basis points to 4.75%.
In recent months, many investors felt that the Fed wanted to increase rates
before the fourth quarter of 1999 to stabilize U.S. markets in preparation for
2000.
The municipal note market saw improved financial conditions in local
governments; many municipalities reduced or eliminated their note issuance from
the past year. As a result, overall municipal note issuance was down 10%
compared to last year. Texas was the only major municipal note issuer to
increase issuance due to the timing of revenues, expenses and tobacco settlement
money.
Yield spreads between municipal notes and Treasury bills remained wide
for much of the note season. Economic uncertainty, the changing Fed policy and
the $3.9 billion note issuance from Texas in late August contributed to the rise
in the one-year note's yield from 3.10% (62% of T-bills) at the beginning of the
note season in June to 3.70% (71% of T-bills) by the end of the reporting
period. Although the municipal yield curve remained relatively flat, the curve
steepened somewhat, much as did the Treasury yield curve.
OUTLOOK
Although annualized U.S. gross domestic product growth (GDP) fell from 2.3% to
1.8% at the end of the second quarter of 1999, anticipated GDP growth for the
third quarter is 3.5%. While the Fed's two rate increases have weighed on
financial markets, they have had a minimal effect on the U.S. economy, which
continues full steam ahead. At its October 5 meeting, the Fed opted to leave
interest unchanged. However, there is speculation that another Fed tightening
could happen before the end of the year. Another rate increase would position
the federal funds rate exactly where it was before the global financial crisis
hit in 1998.
As 2000 draws closer, liquidity is perhaps the primary concern. Although no
one knows what will happen to the direction of cash flows at year-end, some
money managers are anticipating a high volume of withdrawals from financial
institutions by investors. The Fed will provide up to $50 billion in cash to
banks at year-end, along with special liquidity facilities to brokers to finance
their inventories.
We are pleased to send you this report on the performance of AIM Tax-Exempt
Cash Fund for the previous six months. As always, we welcome your questions or
comments. You may reach us by calling our Client Services department at
800-959-4246, or e-mail your inquiry to us at [email protected]. You can
access information about your account through the AIM Investor Line at
800-426-5463 or on our Web site at www.aimfunds.com.
Thank you for your continued participation in The AIM Family of Funds
- --Registered Trademark--. We appreciate your business.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
COVER ART:
SUMMER SOLSTICE III
BY ALLISON WATSON,
AMERICAN
AIM TAX-EXEMPT CASH FUND
<PAGE> 3
SCHEDULE OF INVESTMENTS
September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL
OBLIGATIONS-88.57%
ALABAMA-3.09%
Alabama Industrial
Development Board
(Industrial Partners
Project);
Variable/Fixed Rate
Refunding Series 1989
RB (LOC-Wachovia Bank
of Georgia)
4.05%, 01/01/07(b) -- VMIG-1 $1,525 $ 1,525,000
- -----------------------------------------------------------------
CALIFORNIA-4.46%
Huntington Beach (City
of) (Seabridge Villas
Project); Floating Rate
Multifamily Housing
Series 1985 A RB
4.00%, 02/01/10(b) -- VMIG-1 2,200 2,200,000
- -----------------------------------------------------------------
COLORADO-1.12%
Arapahoe (County of);
Capital Improvement
Trust Law Enforcement
Series 1999 RB
4.00%, 12/01/99 AA- Aa3 555 555,652
- -----------------------------------------------------------------
CONNECTICUT-0.42%
Connecticut (State of)
(Infrastructure Purpose
S-1); Special Tax
Obligation
Transportation Series
RB
3.75%, 12/01/10(b) A-1+ VMIG-1 155 155,000
- -----------------------------------------------------------------
Connecticut (State of)
Development Authority
(Corporate Independent
Living Project); Health
Care Series RB
(LOC-Chase Manhattan
Bank)
3.65%, 07/01/15(b) -- VMIG-1 20 20,000
- -----------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Yale
University); Series T-2
RB
3.70%, 07/01/29(b) A-1+ VMIG-1 32 32,000
- -----------------------------------------------------------------
207,000
- -----------------------------------------------------------------
DELAWARE-3.27%
Delaware (University of);
Variable Rate Demand
Series 1998 RB
(LOC-Bank of America
NT)
3.75%, 11/01/23(b) A-1+ -- 1,615 1,615,000
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
FLORIDA-13.12%
Gulf Breeze (City of)
(Florida Municipal Bond
Fund); Variable Rate
Demand Series 1996 A RB
(LOC-Bank of America
N.A.)
3.85%, 03/31/21(b) A-1+ -- $ 900 $ 900,000
- -----------------------------------------------------------------
Hillsborough (County of)
Industrial Development
Authority (Tampa
Electric Co. Gannon
Coal Conversion
Project); Series 1992
PCR
3.95%, 05/15/18(b) A-1+ VMIG-1 2,500 2,500,000
- -----------------------------------------------------------------
Hillsborough (County of)
Industrial Development
Authority (Leslie
Controls Inc.);
Refunding Series IDR
(LOC-First Union
National Bank)
3.85%, 08/01/19(b)(c) -- -- 1,300 1,300,000
- -----------------------------------------------------------------
Lee (County of) Housing
Finance Authority
(Forestwood Apartments
Project); Housing
Series 1995 A RB
3.75%, 06/15/25(b) A-1+ -- 1,777 1,777,000
- -----------------------------------------------------------------
6,477,000
- -----------------------------------------------------------------
GEORGIA-4.06%
Cobb (County of);
Refunding Unlimited Tax
Series GO
5.10%, 01/01/00 AAA Aaa 1,000 1,002,590
- -----------------------------------------------------------------
Dekalb Private Hospital
Authority (Egleston
Children's Hospital at
Emory University);
Variable Rate Demand
Revenue Anticipation
Certificates Series
1994 A (LOC-Suntrust
Bank) 3.65%,
03/01/24(b) A-1+ VMIG-1 3 3,000
- -----------------------------------------------------------------
Elbert & Bowman (Counties
of) Industrial
Development Authority;
(Seaboard Farms of
Elberton); Series 1985
IDR (LOC-Bank of New
York)
3.80%, 07/01/05(b) A-1+ -- 1,000 1,000,000
- -----------------------------------------------------------------
2,005,590
- -----------------------------------------------------------------
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ILLINOIS-9.16%
Illinois Development
Finance Authority
(American College of
Surgeons Project); Tax
Exempt Series 1996 RB
(LOC-First National
Bank)
3.85%, 08/01/26(b) A-1+ -- $1,753 $ 1,753,000
- -----------------------------------------------------------------
Illinois Health
Facilities Authority;
Revolving Fund Pooled
Series D RB (LOC-First
National Bank)
3.80%, 08/01/15(b) A-1+ VMIG-1 1,351 1,351,000
- -----------------------------------------------------------------
Illinois Health
Facilities Authority
(Franciscan Eldercare
Project); Adjustable
Rate Refunding Series
1996 C RB (LOC-Lasalle
National Bank)
3.80%, 05/15/26(b) A-1+ -- 1,420 1,420,000
- -----------------------------------------------------------------
4,524,000
- -----------------------------------------------------------------
INDIANA-1.02%
New Albany (City of)
(Floyd County
Independent School
Building Corp); Series
1998 RB
4.10%, 01/15/00(d) AAA -- 500 501,417
- -----------------------------------------------------------------
KENTUCKY-6.42%
Kentucky Asset/Liability
Commission; General
Fund Series 1998 A
Commercial Paper Notes
(LOC-Landesbank Hessen)
3.40%, 11/29/99(b) -- VMIG-1 2,000 2,000,000
- -----------------------------------------------------------------
Kentucky Interlocal
School Transportation
Association; Series
1999 TRAN
4.00%, 06/30/00 SP-1+ MIG-1 1,163 1,166,744
- -----------------------------------------------------------------
3,166,744
- -----------------------------------------------------------------
LOUISIANA-3.05%
Louisiana State Gas and
Fuels Tax Authority;
Series A RB
7.20%, 11/15/99(d) AAA Aaa 1,500 1,507,182
- -----------------------------------------------------------------
MICHIGAN-2.05%
Michigan State Hospital
Finance Authority
(Hospital Equipment
Loan Program); Series
1995 A RB (LOC-First of
America Bank)
3.85%, 12/01/23(b) -- VMIG-1 400 400,000
- -----------------------------------------------------------------
</TABLE>
<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
(LOC-Comerica Bank)
3.50%, 07/01/04(b)(c) -- -- $ 100 $ 100,000
- -----------------------------------------------------------------
Walled Lake Michigan
Consolidated School
District; Unlimited Tax
Series II GO
7.00%, 05/01/00(d) AA+ Aa 500 510,350
- -----------------------------------------------------------------
1,010,350
- -----------------------------------------------------------------
MINNESOTA-3.98%
Bloomington (City of)
Port Authority;
Refunding Unlimited Tax
Series GO
5.70%, 03/01/00 (e) AA+ Aa1 500 504,446
- -----------------------------------------------------------------
Owatonna (City of) (The
Health Central System
Project); Hospital
Series 1985 RB
(LOC-Norwest Bank
Minnesota)
3.90%, 08/01/14(b) A-1+ -- 1,460 1,460,000
- -----------------------------------------------------------------
1,964,446
- -----------------------------------------------------------------
MONTANA-1.42%
Missoula (County of)
(Washington Corp.
Project); Floating Rate
Monthly Demand Series
1984 IDR (LOC-Bank of
Montreal)
3.41%, 11/01/04(b) -- VMIG-1 700 700,000
- -----------------------------------------------------------------
NEW HAMPSHIRE-2.84%
New Hampshire Higher
Education and Health
Facilities Authority;
Variable Rate Hospital
Series 1985 C RB
3.85%, 12/01/25(b)(d) A-1 -- 1,400 1,400,000
- -----------------------------------------------------------------
NEW YORK-5.66%
Eagle Tax Exempt Trust;
Class A Series 943802
COP
3.84%,
05/01/07(b)(d)(f) A-1+C -- 1,295 1,295,000
- -----------------------------------------------------------------
New York (City of);
Unlimited Tax Series A4
GO (LOC-Chase Manhattan
Bank)
3.80%, 08/01/21(b) A-1+ VMIG-1 1,500 1,500,000
- -----------------------------------------------------------------
2,795,000
- -----------------------------------------------------------------
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OHIO-0.61%
Delaware (County of)
(Radiation Sterilizers,
Inc.); Series 1984 IDR
(LOC-Comerica Bank)
3.55%, 12/01/04(b) A-1 -- $ 300 $ 300,000
- -----------------------------------------------------------------
PENNSYLVANIA-0.00%
York (City of) General
Authority; Adjustable
Rate Pooled Financing
Series 1996 RB
(LOC-First Union
National Bank)
3.85%, 09/01/26(b) A-1 -- 1 1,000
- -----------------------------------------------------------------
RHODE ISLAND-2.14%
Providence (City of);
Unlimited Tax Series GO
4.60%, 01/15/00(d) AAA Aaa 500 501,911
- -----------------------------------------------------------------
Rhode Island Public
Buildings Authority
(State Project); Series
A RB
4.70%, 02/01/00(d) AAA Aaa 550 552,154
- -----------------------------------------------------------------
1,054,065
- -----------------------------------------------------------------
SOUTH DAKOTA-2.05%
South Dakota Housing
Development Authority
(Homeownership
Mortgage); Series C RB
4.90%, 05/01/00 AAA Aa1 1,005 1,012,662
- -----------------------------------------------------------------
TENNESSEE-2.35%
Nashville and Davidson
(Counties of)
(Amberwood Ltd.
Project); Metro
Government Multifamily
Housing Refunding
Series 1993 A IDR
(LOC-Commerzbank A.G.)
4.07%, 07/01/13(b) -- VMIG-1 1,160 1,160,000
- -----------------------------------------------------------------
TEXAS-15.27%
Bexar (County of) Texas
Housing Finance
Authority (Fountainhead
Apts. Project);
Multifamily Refunding
Series RB
3.75%, 09/15/26(b) A-1+ -- 2,412 2,412,000
- -----------------------------------------------------------------
Harris (County of) Texas
Health Facilities (St.
Lukes Episcopal
Hospital); Series A RB
3.80%, 02/15/27(b)(d) 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>
TEXAS-(CONTINUED)
Lubbock (City of)
Waterworks System Sub
Lien Certificates of
Obligation; Ltd.
General Obligation
Series 1991 RB
8.60%, 02/15/00 AA Aa2 $ 500 $ 509,632
- -----------------------------------------------------------------
Southwest Higher
Education Authority
(Southern Methodist
University); Series B
RB (LOC-Landesbank
Hessen)
3.75%, 10/01/29(b) A-1+ VMIG-1 200 200,000
- -----------------------------------------------------------------
Texas (State of); Series
1999 A TRAN
4.50%, 08/31/00 SP-1+ VMIG-1 2,000 2,013,804
- -----------------------------------------------------------------
Trinity River Industrial
Development Authority
(Radiation Sterilizers,
Inc. Project); Variable
Rate Demand Series 1985
A IDR (LOC-Comerica
Bank)
3.60%, 11/01/05(b) A-1 -- 1,400 1,400,000
- -----------------------------------------------------------------
7,535,436
- -----------------------------------------------------------------
WASHINGTON-1.01%
Industrial Development
Corp. of Port Townsend
(Port Townsend Paper
Corp. Project);
Variable Rate Series
1988 A RB
3.90%, 03/01/09(b) -- VMIG-1 500 500,000
- -----------------------------------------------------------------
Total Short-Term
Municipal
Obligations (Cost
$43,717,544) 43,717,544
- -----------------------------------------------------------------
COMMERCIAL PAPER(g)-1.98%
BROKERAGE/INVESTMENTS-1.98%
Credit Suisse First
Boston, Inc.
5.74%, 02/18/00 (Cost
$977,678)(h) A-1+ -- 1,000 977,678
- -----------------------------------------------------------------
MASTER NOTE
AGREEMENT(g)-5.22%
BROKER/DEALER-5.22%
Merrill Lynch Mortgage
Capital, Inc.
6.01%, 08/17/00(c)(i)
(Cost $2,575,000) -- -- 2,575 2,575,000
- -----------------------------------------------------------------
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
REPURCHASE
AGREEMENT(g)(j)-6.08%
Bank One Capital Markets,
Inc.
5.50%, 10/01/99(k)
(Cost $2,999,678) -- -- $2,999 $ 2,999,678
- -----------------------------------------------------------------
TOTAL INVESTMENTS-101.85% 50,269,900(l)
- -----------------------------------------------------------------
OTHER LIABILITIES LESS
ASSETS-(1.85%) (913,332)
- -----------------------------------------------------------------
NET ASSETS-100.00% $49,356,568
=================================================================
</TABLE>
ABBREVIATIONS:
COP - Certificates of Participation
GO - General Obligation Bonds
IDR - Industrial Development Revenue Bonds
LOC - Letter of Credit
PCR - Pollution Control Revenue Bonds
RB - Revenue Bonds
TRAN - Tax and Revenue Anticipation Notes
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Ratings assigned by Standard & Poor's Corporation ("S&P") and Moody's
Investors Service, Inc. ("Moody's").
(b) 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 09/30/99.
(c) 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.
(d) Secured by bond insurance.
(e) Secured by an escrow fund of U.S. Treasury Obligations.
(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) Interest does not qualify as exempt interest for federal tax purposes.
(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) 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
9/30/99.
(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 is at least 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 09/30/99 with a maturing value of
$125,019,097. Collateralized by $128,075,000 U.S. Government obligations, 0%
to 8.02% due 10/01/99 to 04/15/28 with an aggregate market value at 09/30/99
of $127,500,581.
(l) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
4
<PAGE> 7
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $ 50,269,900
- ------------------------------------------------------------
Receivables for:
Capital stock sold 238,021
- ------------------------------------------------------------
Interest 272,215
- ------------------------------------------------------------
Investment for deferred compensation plan 27,523
- ------------------------------------------------------------
Other assets 18,667
- ------------------------------------------------------------
Total assets 50,826,326
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,015,340
- ------------------------------------------------------------
Dividends 3,027
- ------------------------------------------------------------
Deferred compensation 27,523
- ------------------------------------------------------------
Capital stock reacquired 340,772
- ------------------------------------------------------------
Accrued administrative services fees 4,224
- ------------------------------------------------------------
Accrued advisory fees 14,491
- ------------------------------------------------------------
Accrued distribution fees 13,053
- ------------------------------------------------------------
Accrued transfer agent fees 8,374
- ------------------------------------------------------------
Accrued operating expenses 42,954
- ------------------------------------------------------------
Total liabilities 1,469,758
- ------------------------------------------------------------
Net assets applicable to shares outstanding $ 49,356,568
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Authorized 1,000,000,000
- ------------------------------------------------------------
Outstanding 49,335,747
============================================================
Net asset value, offering and redemption
price per share $ 1.00
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended September 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $974,943
- -----------------------------------------------------------
EXPENSES:
Advisory fees 95,567
- -----------------------------------------------------------
Administrative services fees 25,169
- -----------------------------------------------------------
Custodian fees 4,112
- -----------------------------------------------------------
Directors' fees and expenses 445
- -----------------------------------------------------------
Transfer agent fees 22,457
- -----------------------------------------------------------
Distribution fees 68,262
- -----------------------------------------------------------
Filing fees 24,988
- -----------------------------------------------------------
Other 15,962
- -----------------------------------------------------------
Total expenses 256,962
- -----------------------------------------------------------
Less: Fees waived (40,957)
- -----------------------------------------------------------
Expenses paid indirectly (281)
- -----------------------------------------------------------
Net expenses 215,724
- -----------------------------------------------------------
Net investment income 759,219
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $759,219
============================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 8
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended September 30, 1999 and the year ended March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1999 1999
------------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 759,219 $ 2,023,407
- -----------------------------------------------------------------------------------------
Net realized gain on sales of investment securities -- 11,634
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities -- (160)
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 759,219 2,034,881
- -----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (766,565) (2,029,841)
- -----------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions (11,795,084) 9,220,052
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets (11,802,430) 9,225,092
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 61,158,998 51,933,906
- -----------------------------------------------------------------------------------------
End of period $ 49,356,568 $61,158,998
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 49,335,747 $61,130,831
- -----------------------------------------------------------------------------------------
Undistributed net investment income 22,652 29,998
- -----------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (1,831) (1,831)
- -----------------------------------------------------------------------------------------
$ 49,356,658 $61,158,998
=========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Tax-Exempt Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Company is organized as a Maryland corporation
consisting of four separate portfolios: AIM Tax-Exempt 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 the preservation of
capital 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
6
<PAGE> 9
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 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 pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended September 30, 1999,
AIM was paid $25,169 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the six months ended September 30, 1999, AFS was
paid $19,667 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
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 six months ended September 30, 1999, AIM
Distributors waived fees of $40,957. The Plan provides that of the aggregate
amount payable under the Plan, payments to dealers and other financial
institutions that provide continuing personal shareholder services to their
customers who purchase and own shares of the Fund in amounts of up to 0.25% of
the average daily net assets of the Fund attributable to the customers of such
dealers or financial institutions may be characterized as a service fee, and
that payments to dealers and other financial institutions in excess of such
amount and payments to AIM Distributors would be characterized as an asset-based
sales charge. The Plan also imposes a cap on the total amount of sales charges,
including asset-based sales charges, that may be paid by the Company with
respect to the Fund. As a result of AIM Distributors' waiver of compensation due
from the Fund, payments to dealers and other financial institutions by that Fund
will be limited to 0.10% of the Fund's average daily net assets. During the six
months ended September 30, 1999, the Fund paid AIM Distributors $27,305 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 six months ended September 30, 1999, the Fund paid legal fees of
$2,009 for services rendered by Kramer, Levin, Naftalis & Frankel LLP 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 directors who are 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 six months ended September 30, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $281 under an expense
offset arrangement. The effect of the above arrangement resulted in a reduction
of the Fund's total expenses of $281 during the six months ended September 30,
1999.
NOTE 5-CAPITAL STOCK
Changes in capital stock outstanding during the six months ended September 30,
1999 and the year ended March 31, 1999 were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1999 1999
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Sold 49,112,052 $ 49,112,052 365,487,367 $ 365,487,367
- ---------------------------------------------------------------------------------
Issued as
reinvestment of
dividends 740,339 740,339 1,903,872 1,903,872
- ---------------------------------------------------------------------------------
Reacquired (61,647,475) (61,647,475) (358,171,187) (358,171,187)
- ---------------------------------------------------------------------------------
(11,795,084) $(11,795,084) 9,220,052 $ 9,220,052
=================================================================================
</TABLE>
7
<PAGE> 10
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during the six months ended September 30, 1999 and for each of the
years in the five-year period ended March 31, 1999.
<TABLE>
<CAPTION>
MARCH 31,
SEPTEMBER 30, ---------------------------------------------------
1999 1999 1998 1997 1996 1995
--------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.03
- --------------------------------------------------------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.01) (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 $ 1.00
========================================================= ======= ======= ======= ======= ======= =======
Total return 1.42% 2.90% 3.12% 2.82% 2.92% 2.54%
========================================================= ======= ======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $49,357 $61,159 $51,934 $56,880 $30,014 $30,365
========================================================= ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets(a) 0.79%(b) 0.79% 0.83% 1.04% 1.05% 1.01%
========================================================= ======= ======= ======= ======= ======= =======
Ratio of net investment income to average net assets(c) 2.78%(b) 2.83% 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% (annualized), 0.94%, 0.98%, 1.19%, 1.20% and 1.16% for the periods
1999-1995 respectively.
(b) Ratios are annualized and based on average net assets of $54,609,933.
(c) After fee waivers and/or expense reimbursements. Ratios of income to average
net assets prior to fee waivers and/or expense reimbursements were 2.63%
(annualized), 2.68%, 2.92%, 2.63%, 2.82% and 2.38%, for the periods
1999-1995 respectively.
8
<PAGE> 11
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Stuart W. Coco Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox
President, Mercantile Bankshares Vice President The Bank of New York
90 Washington Street
Jack Fields Karen Dunn Kelley 11th Floor
Chief Executive Officer Vice President New York, NY 10286
Texana Global, Inc.;
Formerly Member Mary J. Benson COUNSEL TO THE FUND
of the U.S. House of Representatives Assistant Vice President
and Assistant Treasurer Ballard Spahr
Carl Frischling Andrews & Ingersoll, LLP
Partner Sheri Morris 1735 Market Street
Kramer, Levin, Naftalis & Frankel LLP Assistant Vice President Philadelphia, PA 19103
and Assistant Treasurer
Robert H. Graham COUNSEL TO THE DIRECTORS
President and Chief Executive Officer Renee A. Friedli
A I M Management Group Inc. Assistant Secretary Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
Prema Mathai-Davis P. Michelle Grace New York, NY 10022
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary
Commissioner, New York City Dept. for the DISTRIBUTOR
Aging; and member of the Board of Directors, Jeffrey H. Kupor
Metropolitan Transportation Authority of Assistant Secretary A I M Distributors, Inc.
New York State 11 Greenway Plaza
Nancy L. Martin Suite 100
Lewis F. Pennock Assistant Secretary Houston, TX 77046
Attorney
Ofelia M. Mayo
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Lisa A. Moss
Limited Partnership Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
This report may be distributed only to current shareholders
or to the persons who have received a current prospectus of the Fund.
<PAGE> 12
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately
AIM Capital Development Fund $120 billion in assets for more than 6.4
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS million shareholders, including
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund individual investors, corporate-clients
AIM Large Cap Growth Fund AIM Asian Growth Fund and financial institutions, as of
AIM Mid Cap Equity Fund AIM Developing Markets Fund September 30, 1999.
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) The AIM Family of Funds--Registered
AIM Select Growth Fund AIM European Development Fund Trademark-- is distributed nationwide,
AIM Small Cap Growth Fund(2) AIM International Equity Fund and AIM today is the 10th-largest mutual
AIM Small Cap Opportunities Fund(3) AIM Japan Growth Fund fund complex in the United States in
AIM Value Fund AIM Latin American Growth Fund assets under management, according to
AIM Weingarten Fund AIM New Pacific Growth Fund Strategic Insight, an independent mutual
fund monitor.
GROWTH & INCOME FUNDS GLOBAL GROWTH FUNDS
AIM Advisor Flex Fund AIM Global Aggressive Growth Fund
AIM Advisor Large Cap Value Fund AIM Global Growth Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund GLOBAL GROWTH & INCOME FUNDS
AIM Basic Value Fund AIM Global Growth & Income Fund
AIM Charter Fund AIM Global Utilities Fund
INCOME FUNDS GLOBAL INCOME FUNDS
AIM Floating Rate Fund AIM Emerging Markets Debt Fund
AIM High Yield Fund AIM Global Government Income Fund
AIM High Yield Fund II AIM Global Income Fund
AIM Income Fund AIM Strategic Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund THEME FUNDS
AIM Global Consumer Products and Services Fund
TAX-FREE INCOME FUNDS AIM Global Financial Services Fund
AIM High Income Municipal Fund AIM Global Health Care Fund
AIM Municipal Bond Fund AIM Global Infrastructure Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Resources Fund
AIM Tax-Free Intermediate Fund AIM Global Telecommunications and Technology Fund(5)
AIM Global Trends Fund(6)
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998. (2)
AIM Small Cap Growth Fund closed to new investors on November 8, 1999. (3) AIM
Small Cap Opportunities Fund closed to new investors on November 4, 1999. (4) On
September 1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth Fund.
(5) On June 1, 1999, AIM Global Telecommunications Fund was renamed AIM Global
Telecommunications and Technology Fund. (6) Effective August 27, 1999, AIM
Global Trends Fund was restructured to operate as a traditional mutual fund.
Prior to August 27, 1999, the fund operated as a fund of funds. For more
complete information about any AIM fund(s), including sales charges and
expenses, ask your financial consultant or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money.
[AIM LOGO APPEARS HERE]
Invest with DISCIPLINE
--Registered Trademark--
A I M DISTRIBUTORS, INC. TEC-SAR-1
