<PAGE> 1
STATEMENT OF
ADDITIONAL INFORMATION
AIM FUNDS GROUP
AIM BALANCED FUND AIM INCOME FUND
AIM GLOBAL UTILITIES FUND AIM MONEY MARKET FUND
AIM GOVERNMENT SECURITIES FUND AIM MUNICIPAL BOND FUND
AIM GROWTH FUND AIM VALUE FUND
AIM HIGH YIELD FUND
11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
(713) 626-1919
_________________________
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD BE
READ IN CONJUNCTION WITH A PROSPECTUS FOR THE ABOVE-NAMED FUNDS, A COPY OF
WHICH MAY BE OBTAINED FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TEXAS 77210-4739, OR BY
CALLING (713) 626-1919 (IN HOUSTON) OR (800) 347-4246 (ELSEWHERE)
_________________________
Statement of Additional Information Dated: May 1, 1995 (as
revised August 22, 1995) Relating to the Prospectus
Dated: May 1, 1995 (as revised June 26, 1995)
<PAGE> 2
T A B L E O F C O N T E N T S
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Trust and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Total Return Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Yield Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
All Funds except AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
AIM Municipal Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
AIM Global Utilities Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Lending Portfolio Securities: All Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Covered Call Options: All Funds except AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . 14
Short Sales: AIM Balanced Fund and AIM High Yield Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Futures Contracts: All Funds except AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . 15
Options on Futures Contracts: All Funds except AIM Money Market Fund . . . . . . . . . . . . . . . . . . . 17
Risks as to Futures Contracts and Related Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Delayed Delivery Agreements: All Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
When-Issued Securities: All Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
AIM Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
AIM Global Utilities Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
AIM Government Securities Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
AIM Growth Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
AIM Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
AIM Municipal Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
AIM Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
QUALIFYING FOR A REDUCED FRONT-END SALES CHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
PROGRAMS AND SERVICES FOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Dividend Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
REDEMPTIONS PAID IN CASH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
DESCRIPTION OF MONEY MARKET INSTRUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Money Market Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
RATINGS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
ii
<PAGE> 4
INTRODUCTION
AIM Funds Group (the "Trust") is a series mutual fund. The rules and
regulations of the Securities and Exchange Commission (the "SEC") require all
mutual funds to furnish prospective investors certain information concerning
the activities of a fund being considered for investment. This information is
included in a Prospectus (the "Prospectus"), dated May 1, 1995 (as revised June
26, 1995), which relates to all nine of the Trust's portfolios (collectively,
the "Funds" and each separately a "Fund"). Copies of the Prospectus and
additional copies of this Statement of Additional Information may be obtained
without charge by writing the principal distributor of the Funds' shares, A I M
Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, Texas
77210-4739, or by calling (713) 626-1919 (in Houston) or (800) 347-4246
(elsewhere). Investors must receive a Prospectus before they invest in any
Fund.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds. Some of
the information required to be in this Statement of Additional Information is
also included in the Funds' current Prospectus, and in order to avoid
repetition, reference will be made herein to sections of the Prospectus.
Additionally, the Prospectus and this Statement of Additional Information omit
certain information contained in the Trust's Registration Statement filed with
the SEC. Copies of the Registration Statement, including items omitted from the
Prospectus and this Statement of Additional Information, may be obtained from
the SEC by paying the charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE TRUST
THE TRUST AND ITS SHARES
The Trust was previously organized as a Massachusetts business trust
pursuant to a Master Trust Agreement, dated October 30, 1984, as amended.
Pursuant to agreements and plans of reorganization, the Funds were reorganized
on October 15, 1993 as portfolios of AIM Funds Group, a Delaware business
trust. The Trust currently is organized under an Agreement and Declaration of
Trust, dated May 5, 1993, as amended (the "Trust Agreement"). Each Fund is a
series of shares of the Trust. Under the Trust Agreement, the Board of Trustees
is authorized to create new series of shares without the necessity of a vote of
shareholders of the Trust.
On October 15, 1993, the Funds (other than AIM BALANCED FUND and AIM
MONEY MARKET FUND) succeeded to the assets and assumed the liabilities of the
funds with corresponding names (the "Predecessor Funds") of AIM Funds Group, a
Massachusetts business trust ("AFG"), pursuant to an Agreement and Plan of
Reorganization between the Trust and AFG. Also on October 15, 1993, AIM
BALANCED FUND succeeded to the assets and assumed the liabilities of AIM
Convertible Securities, Inc., a Maryland corporation ("ACS"), pursuant to an
Agreement and Plan of Reorganization between the Trust and ACS. Finally, on
October 16, 1993, AIM MONEY MARKET FUND succeeded to the assets and assumed the
liabilities of the AIM Cash Fund and AIM Money Market Fund(C) portfolios of AFG
and the AIM Money Market Fund portfolio of Short-Term Investments Co., a
Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of
Reorganization among the Trust, AFG and STIC. All historical financial and
other information contained in this Statement of Additional Information for
periods prior to October 15, 1993 relating to the Funds (or a class thereof) is
that of the Predecessor Funds (or the corresponding class thereof) or ACS.
However, the historical financial and other information relating to AIM MONEY
MARKET FUND does not reflect information prior to October 16, 1993. Pursuant
to an Amendment to the Trust Agreement, dated May 1, 1995 AIM UTILITIES FUND
changed its name to AIM GLOBAL UTILITIES FUND. Shares of beneficial interest of
the Trust are redeemable at their net asset value at the option of the
shareholder or at the option of the Trust in certain circumstances. For
information concerning the methods of
1
<PAGE> 5
redemption and the rights of share ownership, investors should consult the
Prospectus under the captions "Organization of the Trust" and "How to Redeem
Shares."
The assets received by the Trust from the issue or sale of shares of
each of its series of shares, and all income, earnings, profits and proceeds
thereof, subject only to the rights of creditors, are specifically allocated to
the appropriate Fund. They constitute the underlying assets of each Fund, are
required to be segregated on the Trust's books of account, and are to be
charged with the expenses with respect to such Fund and its respective classes.
Any general expenses of the Trust not readily identifiable as belonging to a
particular Fund are allocated by or under the direction of the Board of
Trustees, primarily on the basis of relative net assets, or other relevant
factors.
Each share of each Fund represents an equal proportionate interest in
that Fund with each other share and is entitled to such dividends and
distributions out of the income belonging to such Fund as are declared by the
Board. Each Fund, except AIM MONEY MARKET FUND, offers two separate classes of
shares: Class A shares and Class B shares. AIM MONEY MARKET FUND offers three
separate classes of shares: Class A shares, Class B shares and Class C shares.
Each such class represents interests in the same portfolio of investments but,
as further described in the Prospectus, each such class is subject to differing
sales charges and expenses, which differences will result in differing net
asset values and dividends and distributions. Upon any liquidation of the
Trust, shareholders of each class are entitled to share pro rata in the net
assets belonging to the applicable Fund available for distribution.
PERFORMANCE INFORMATION
Total return and yield figures for the Funds are neither fixed nor
guaranteed, and no Fund's principal is insured. Performance quotations reflect
historical information and should not be considered representative of a Fund's
performance for any period in the future. Performance is a function of a
number of factors which can be expected to fluctuate. The Funds may provide
performance information in reports, sales literature and advertisements. The
Funds may also, from time to time, quote information about the Funds published
or aired by publications or other media entities which contain articles or
segments relating to investment results or other data about one or more of the
Funds. The following is a list of such publications or media entities:
<TABLE>
<S> <C> <C>
Advertising Age Forbes Nation's Business
Barron's Fortune New York Times
Best's Review Hartford Courant Pension World
Broker World Inc. Pensions & Investments
Business Week Institutional Investor Personal Investor
Changing Times Insurance Forum Philadelphia Inquirer
Christian Science Monitor Insurance Week USA Today
Consumer Reports Investor's Daily U.S. News & World Report
Economist Journal of the American Wall Street Journal
FACS of the Week Society of CLU & ChFC Washington Post
Financial Planning Kiplinger Letter CNN
Financial Product News Money CNBC
Financial Services Week Mutual Fund Forecaster PBS
Financial World
</TABLE>
2
<PAGE> 6
Each Fund may also compare its performance to performance data of
similar mutual funds as published by the following services:
<TABLE>
<S> <C>
Bank Rate Monitor Stanger
Donoghue's Weisenberger
Mutual Fund Values (Morningstar) Lipper Analytical Services
</TABLE>
Each Fund's performance may also be compared in advertising to the
performance of comparative benchmarks such as the following:
<TABLE>
<S> <C>
Standard & Poor's 400 Index
Standard & Poor's 500 Stock Index Bond Buyer Index
Dow Jones Industrial Average NASDAQ
EAFE Index COFI
Consumer Price Index First Boston High Yield Index
Lehman Bond Indices
</TABLE>
Each Fund may also compare its performance to rates on Certificates of
Deposit and other fixed rate investments such as the following:
10 year Treasuries
30 year Treasuries
90 day Treasury Bills
Advertising for AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND and AIM
VALUE FUND may from time to time include discussions of general economic
conditions and interest rates. Advertising for such Funds and for AIM BALANCED
FUND may also include references to the use of those Funds as part of an
individual's overall retirement investment program. From time to time, sales
literature and/or advertisements for any of the Funds may disclose the largest
holdings in the Fund's portfolio.
From time to time, the Funds' sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. This
includes, but is not limited to, literature addressing general information
about mutual funds, variable annuities, dollar-cost averaging, stocks, bonds,
money markets, certificates of deposit, retirement, retirement plans, asset
allocation, tax-free investing, college planning, inflation.
Although performance data may be useful to prospective investors when
comparing a Fund's performance with other funds and other potential
investments, investors should note that the methods of computing performance of
other potential investments are not necessarily comparable to the methods
employed by a Fund.
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
P(1+T)n=ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable
maximum sales load is deducted at the beginning of the
1, 5, or 10 year periods).
n = number of years.
3
<PAGE> 7
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the 1, 5, or 10 year periods (or
fractional portion of such period).
The average annual total returns for each of the named Funds, with
respect to its Class A shares, for the one, five and ten year periods (or since
inception, if shorter) ended December 31, 1994 were as follows:
<TABLE>
<CAPTION>
PERIODS ENDED DECEMBER 31, 1994
---------------------------------------
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS
-------------- ------ ------- --------
<S> <C> <C> <C>
AIM Balanced Fund (formerly ACS) . . . . . . . . . . . . . -9.92% 9.38% 8.23%
AIM Global Utilities Fund . . . . . . . . . . . . . . . . -16.43% 3.98% 9.93%*
AIM Government Securities Fund . . . . . . . . . . . . . . -8.02% 5.29% 6.28%*
AIM Growth Fund . . . . . . . . . . . . . . . . . . . . . -10.23% 3.94% 9.90%
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . -6.34% 11.20% 11.45%
AIM Income Fund . . . . . . . . . . . . . . . . . . . . . -12.02% 5.92% 9.31%
AIM Municipal Bond Fund . . . . . . . . . . . . . . . . . -8.37% 5.89% 9.09%
AIM Value Fund . . . . . . . . . . . . . . . . . . . . . . -2.40% 14.53% 16.03%
</TABLE>
* The inception dates of the Class A shares of AIM GOVERNMENT
SECURITIES FUND and AIM GLOBAL UTILITIES FUND were April 28, 1987 and
January 18, 1988, respectively.
The average annual total returns for each of the named Funds, with
respect to its Class B shares, for the periods ended December 31, 1994 were as
follows:
<TABLE>
<CAPTION>
CLASS B SHARES: PERIODS ENDED DECEMBER 31, 1994
--------------- -------------------------------
1 YEAR SINCE INCEPTION**
------ -----------------
<S> <C> <C>
AIM Balanced Fund . . . . . . . . . . . . . . . . -10.77% -10.76%
AIM Global Utilities Fund . . . . . . . . . . . . -16.56% -15.53%
AIM Government Securities Fund . . . . . . . . . . -8.61% -5.79%
AIM Growth Fund . . . . . . . . . . . . . . . . . -10.39% -7.56%
AIM High Yield Fund . . . . . . . . . . . . . . . -6.92% -1.63%
AIM Income Fund . . . . . . . . . . . . . . . . . -12.72% -9.47%
AIM Municipal Bond Fund . . . . . . . . . . . . . -9.09% -4.77%
AIM Value Fund . . . . . . . . . . . . . . . . . . -2.54% -1.82%
</TABLE>
** The inception date of the Class B shares of AIM GLOBAL UTILITIES
FUND, AIM GOVERNMENT SECURITIES FUND, AIM GROWTH FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND and AIM MUNICIPAL BOND FUND and was September 1,
1993; and the inception date of the Class B shares of AIM BALANCED
FUND and AIM VALUE FUND was October 18, 1993.
The average annual total returns for AIM MONEY MARKET FUND, with
respect to its Class A shares, Class B shares and Class C shares, for the year
ended December 31, 1994 were -2.43%, -2.38% and 3.42%, respectively; and since
inception (October 18, 1993) were -1.62%, -0.87% and 3.22%, respectively.
Standard total return quotes may be accompanied by total return
figures calculated by alternative methods. For example, average annual total
return may be calculated without assuming payment of the full sales load
according to the following formula:
P(1+U)n=ERV
4
<PAGE> 8
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of only a
stated portion of, or none of, the applicable maximum
sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
Cumulative total return across a stated period may be calculated as
follows:
P(1+V)n=ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a
stated portion of, or none of, the applicable maximum
sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
YIELD QUOTATIONS
The standard formula for calculating yield (including tax-equivalent
yield for AIM MUNICIPAL BOND FUND) for each Fund except AIM MONEY MARKET FUND,
as described in the Prospectus, is as follows:
YIELD = 2[((a-b)/(c x d) + 1)6-1]
Where a = dividends and interest earned during a stated 30-day
period. For purposes of this calculation, dividends
are accrued rather than recorded on the ex-dividend
date. Interest earned under this formula must
generally be calculated based on the yield to maturity
of each obligation (or, if more appropriate, based on
yield to call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during
the period.
d = the maximum offering price per share on the last day of
the period.
Tax-equivalent yield for AIM MUNICIPAL BOND FUND will be calculated by
dividing that portion of the yield of the Fund (as determined above) which is
tax-exempt by one minus a stated income tax rate and adding the product to that
portion of the yield that is not tax-exempt.
5
<PAGE> 9
The yields for each of the named Funds were as follows:
<TABLE>
<CAPTION>
30 DAYS ENDED DECEMBER 31, 1994
---------------------------------
CLASS A SHARES CLASS B SHARES
-------------- --------------
<S> <C> <C>
AIM Balanced Fund . . . . . . . . . . . . . . . . . . 3.45% 2.80%
AIM Global Utilities Fund . . . . . . . . . . . . . . 3.92% 3.23%
AIM Government Securities Fund . . . . . . . . . . . . 7.16% 6.62%
AIM High Yield Fund . . . . . . . . . . . . . . . . . 11.30%* 11.02%*
AIM Income Fund . . . . . . . . . . . . . . . . . . . 7.86% 7.36%
AIM Municipal Bond Fund . . . . . . . . . . . . . . . 5.21%** 4.64%**
</TABLE>
* The relatively high yields in this Fund, like that of other junk
bond funds, reflect a substantial premium for the high default
risk perceived by the market. Investors should not consider these
yields a measure of income potential.
** The tax-equivalent yield, assuming a tax rate of 36%, for the
Class A shares and Class B shares of AIM MUNICIPAL BOND FUND was
8.14% and 7.25%, respectively.
The standard formula for calculating annualized yield for AIM MONEY
MARKET FUND, as described in the Prospectus, is as follows:
Y = V1 - V0 X 365
------- ---
V0 7
Where Y = annualized yield.
V0 = the value of a hypothetical pre-existing account in
the Fund having a balance of one share at the
beginning of a stated seven-day period.
V1 = the value of such an account at the end of the stated
period.
The annualized yield for each of the Class A, Class B and Class C shares
of AIM MONEY MARKET FUND for the 7 days ended December 31, 1994 was 4.87%,
4.04% and 4.85%, respectively.
The standard formula for calculating effective annualized yield for AIM
MONEY MARKET FUND, as described in the Prospectus, is as follows:
EY = (Y+1) 365/7 -1
Where EY = effective annualized yield.
Y = annualized yield, as determined above.
The effective annualized yield for each of the Class A, Class B and
Class C shares of AIM MONEY MARKET FUND for the 7 days ended December 31, 1994
was 4.99%, 4.12% and 4.97%, respectively.
For the purpose of the annualized yield and effective annualized yield,
the net change in the value of the hypothetical AIM MONEY MARKET FUND account
reflects the value of additional shares purchased with dividends from the
original shares and any such additional shares, and all fees charged, other
than non-recurring account or sales charges, to all shareholder accounts in
proportion to the length of the base period and the Fund's average account
size, but does not include realized gains and losses or unrealized appreciation
and depreciation.
6
<PAGE> 10
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
Subject to policies established by the Board of Trustees of the Trust,
A I M Advisors, Inc. ("AIM") is responsible for decisions to buy and sell
securities for each Fund, for the selection of broker-dealers, for the
execution of each Fund's investment portfolio transactions, for the allocation
of brokerage fees in connection with such transactions, and where applicable,
for the negotiation of commissions and spreads on transactions. AIM's primary
consideration in effecting a security transaction is to obtain the best net
price and the most favorable execution of the order. While AIM generally seeks
reasonably competitive commission rates, a Fund does not necessarily pay the
lowest commission or spread available.
A portion of the securities in which each Fund invests may be traded in
over-the-counter ("OTC") markets, and in such transactions, the Fund deals
directly with the dealers who make markets in the securities involved, except
in those circumstances where better prices and executions are available
elsewhere. Portfolio transactions placed through dealers serving as primary
market makers are effected at net prices, without commissions as such, but
which include compensation in the form of mark up or mark down.
Foreign equity securities may be held by the Fund in the form of
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") or
other securities representing underlying securities of foreign issuers, or
securities convertible into foreign equity securities. These securities may
not necessarily be denominated in the same currency as the securities into
which they may be converted. ADRs are receipts typically issued by a United
States bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs are receipts issued in Europe which
evidence a similar ownership arrangement. Generally, ADRs, in registered
form, are designed for use in the United States securities markets, and EDRs,
in bearer form, are designed for use in European securities markets. ADRs and
EDRs may be listed on stock exchanges, or traded in OTC markets in the United
States or Europe, as the case may be. ADRs, like other securities traded in
the United States, will be subject to negotiated commission rates.
AIM may from time to time determine target levels of commission business
for AIM to transact with various brokers on behalf of its clients (including
the Funds) over a certain time period. The target levels will be determined
based upon the following factors, among others: (1) the execution services
provided by the broker; (2) the research services provided by the broker; and
(3) the broker's attitude toward and interest in mutual funds in general and in
the Funds and other mutual funds advised by AIM (collectively, the "AIM Funds")
in particular. No specific formula will be used in connection with any of the
foregoing considerations in determining the target levels. However, if a
broker has indicated a certain level of desired commissions in return for
certain research services provided by the broker, this factor will be taken
into consideration by AIM.
Subject to the overall objective of obtaining best price and execution
for the Funds, AIM may also consider sales of shares of the Funds and of the
other AIM Funds as a factor in the selection of broker-dealers to execute
portfolio transactions for the Funds.
AIM will seek, whenever possible, to recapture for the benefit of each
Fund any commissions, fees, brokerage or similar payments paid by such Fund on
portfolio transactions. Normally, the only fees which may be recaptured are
the soliciting dealer fees on the tender of an account's portfolio securities
in a tender or exchange offer.
The Funds are not under any obligation to deal with any broker or group
of brokers in the execution of transactions in portfolio securities. Brokers
who provide supplemental investment research to AIM may
7
<PAGE> 11
receive orders for transactions by the Funds. Information so received will be
in addition to and not in lieu of the services required to be performed by AIM
under its agreements with the Trust, on behalf of each Fund, and the expenses
of AIM will not necessarily be reduced as a result of the receipt of such
supplemental information. Certain research services furnished by
broker-dealers may be useful to AIM in connection with its services to other
advisory clients, including the other AIM Funds. Also, each Fund may pay a
higher price for securities or higher commissions in recognition of research
services furnished by broker-dealers.
For the year ended December 31, 1994, AIM BALANCED FUND, AIM GLOBAL
UTILITIES FUND, AIM GROWTH FUND, AIM INCOME FUND and AIM VALUE FUND directed
certain brokerage transactions to broker-dealers that provided AIM with
research, statistical and other information: $4,602,745, $17,012,734,
$35,033,004, $1,718,799 and $212,717,697, respectfully. For the same period,
AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM INCOME FUND
and AIM VALUE FUND paid the following in related brokerage commissions:
$7,677, $34,792, $67,451, $3,494 and $412,146, respectively.
AIM and its affiliates manage several other investment accounts, some of
which may have investment objectives similar to those of one or more of the
Funds. It is possible that, at times, identical securities will be appropriate
for investment by one or more of the Funds and by one or more of such
investment accounts. The position of each account, however, in the securities
of the same issue may vary and the length of time that each account may choose
to hold its investment in the securities of the same issue may likewise vary.
The timing and amount of purchase by each account will also be determined by
its cash position. If the purchase or sale of securities is consistent with
the investment policies of a Fund and one or more of these accounts, and is
considered at or about the same time, transactions in such securities will be
allocated among the Fund and such accounts in a manner deemed equitable by AIM.
AIM may combine such transactions, in accordance with applicable laws and
regulations, in order to obtain the best net price and most favorable
execution. Simultaneous transactions could, however, adversely affect the
ability of a Fund to obtain or dispose of the full amount of a security which
it seeks to purchase or sell.
In some cases the procedure for allocating portfolio transactions among
the various investment accounts advised by AIM could have an adverse effect on
the price or amount of securities available to a Fund. In making such
allocations, the main factors considered by AIM are the respective investment
objectives and policies of its advisory clients, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash for
investment, the size of investment commitments generally held and the judgments
of the persons responsible for recommending the investment.
From time to time, an identical security may be sold by an AIM Fund or
another investment account advised by AIM or A I M Capital Management, Inc.
("AIM Capital") and simultaneously purchased by another investment account
advised by AIM or AIM Capital, when such transactions comply with applicable
rules and regulations and are deemed consistent with the investment
objective(s) and policies of the investment accounts involved. Procedures
pursuant or Rule 17a-7 under the Investment Company Act of 1940, as amended
(the "1940 Act") regarding transactions between investment accounts advised by
AIM or AIM Capital have been adopted by the Boards of Directors/Trustees of the
various AIM Funds including the Trust. Although such transactions may result
in custodian, tax or other related expenses, no brokerage commissions or other
direct transaction costs are generated by transactions among the investment
accounts advised by AIM or AIM Capital.
The increase in the portfolio turnover rate for AIM INCOME FUND from
1993 to 1994 was in response to increases in the prevailing market interest
rates, and resulted from AIM's attempt to shorten the Fund's average duration
and increase investments in the foreign sector and non-investment grade debt
securities. The decrease in the portfolio turnover rate for AIM MUNICIPAL BOND
FUND from 1992 to 1993 was due to a change in the investment advisor during
1993.
8
<PAGE> 12
SECTION 28(e) STANDARDS
Under Section 28(e) of the Securities Exchange Act of 1934, AIM shall
not be deemed to have acted unlawfully or to have breached its fiduciary duty
solely because under certain circumstances it has caused an account to pay a
higher commission than the lowest available. To obtain the benefit of Section
28(e), AIM must make a good faith determination that the commissions paid are
"reasonable in relation to the value of the brokerage and research services
provided . . . viewed in terms of either that particular transaction or
[AIM's] overall responsibilities with respect to the accounts as to which it
exercises investment discretion," and that the services provided by a broker
provide AIM with lawful and appropriate assistance in the performance of its
investment decision-making responsibilities. Accordingly, the price to a Fund
in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered.
Broker-dealers utilized by AIM may furnish statistical, research and
other information or services which are deemed by AIM to be beneficial to the
Funds' investment programs. Research services received from brokers supplement
AIM's own research (and the research of sub-advisors to other clients of AIM),
and may include the following types of information: statistical and background
information on industry groups and individual companies; forecasts and
interpretations with respect to U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
political developments; portfolio management strategies; performance
information on securities and information concerning prices of securities; and
information supplied by specialized services to AIM and to the Trust's trustees
with respect to the performance, investment activities and fees and expenses of
other mutual funds. Such information may be communicated electronically,
orally or in written form. Research services may also include the providing of
equipment used to communicate research information, the arranging of meetings
with management of companies and the providing of access to consultants who
supply research information.
The outside research assistance is useful to AIM since the brokers
utilized by AIM as a group tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, this research provides
AIM with a diverse perspective on financial markets. Research services which
are provided to AIM by brokers are available for the benefit of all accounts
managed or advised by AIM or by sub-advisors to accounts managed or advised by
AIM. In some cases, the research services are available only from the broker
providing such services. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM is of the
opinion that because the broker research supplements rather than replaces its
research, the receipt of such research does not tend to decrease its expenses,
but tends to improve the quality of its investment advice. However, to the
extent that AIM would have purchased any such research services had such
services not been provided by brokers, the expenses of such services to AIM
could be considered to have been reduced accordingly. Certain research
services furnished by broker-dealers may be useful to AIM in advising clients
other than the Funds. Similarly, any research services received by AIM through
the placement of portfolio transactions of other clients may be of value to AIM
in fulfilling its obligations to the Funds. AIM is of the opinion that this
material is beneficial in supplementing AIM's research and analysis and
therefore it may benefit the Funds by improving the quality of AIM's investment
advice. The advisory fees paid by the Funds are not reduced because AIM
receives such services.
Some broker-dealers may indicate that the provision of research services
is dependent upon the generation of certain specified levels of commissions and
underwriting concessions by AIM's clients, including the Funds.
With respect to AIM GOVERNMENT SECURITIES FUND, AIM HIGH YIELD FUND, AIM
INCOME FUND, AIM MONEY MARKET FUND and AIM MUNICIPAL BOND FUND, purchases and
sales of portfolio securities are generally transacted with the issuer or a
primary market maker for the securities on a net basis, without
9
<PAGE> 13
any brokerage commission being paid by the Funds for such purchases. Purchases
and sales of certain portfolio securities for AIM BALANCED FUND are transacted
on a net basis, without any brokerage commission being paid by the Fund.
Purchases from dealers serving as primary market makers reflect the spread
between the bid and asked prices. Purchases and sales for AIM GLOBAL UTILITIES
FUND, AIM GROWTH FUND and AIM VALUE FUND generally involve a broker, and
purchases and sales for AIM BALANCED FUND often involve a broker, and
consequently involve the payment of commissions.
Due to the beneficial ownership of CIGNA Corporation ("CIGNA") voting
stock by Sanford C. Bernstein & Co., Inc. ("SCB"), CIGNA may be deemed to be
an affiliated person of SCB pursuant to the provisions of the 1940 Act. As
long as CIGNA may be deemed to be an affiliated person of SCB and as long as
CIGNA Investments, Inc. ("CII") serves as investment sub-advisor, AIM HIGH
YIELD FUND will not engage in any transaction with SCB when it is acting for
its own account and will engage in brokerage transactions with SCB only under
circumstances where the commission, spread or profit received by SCB is fair
and reasonable pursuant to rules established by the SEC and procedures adopted
and monitored by the Board of Trustees of the Trust. Except as described
below, during 1994 none of the Funds paid brokerage commissions to SCB.
During 1994, AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH
FUND and AIM VALUE FUND paid brokerage commissions of $985, $3,600, $4,638 and
$97,051, respectively, to SCB. This amount of brokerage commissions
represented 1.15%, 0.45%, 0.58% and 1.47%, respectively, of the aggregate of
brokerage and underwriting commissions paid by the Funds in 1994 and
represented less than 0.01% of the total value of each Fund's portfolio
transactions which involved brokerage or underwriting commissions.
No dealer affiliated with CII, other than CIGNA Securities, Inc. and
CIGNA Capital Brokerage, Inc., sold shares of the Funds during 1994, and
neither CIGNA Securities, Inc., CIGNA Capital Brokerage, Inc. nor CII received
any compensation, either directly or indirectly, arising from portfolio
transactions of the Funds.
As of December 31, 1994, AIM MONEY MARKET FUND held an amount of
commercial paper issued by Merrill Lynch & Co. Inc. which represented 5.06% of
the Fund's assets. Merrill Lynch & Co. Inc. is a regular broker of the Trust,
as defined in Rule 10b-1 under the 1940 Act.
Except as noted, the Trust does not utilize an affiliated broker or
dealer in effecting portfolio transactions and does not recapture commissions
paid in such transactions. Brokerage commissions or underwriting concessions
(or both) paid by each of the Funds listed below were as follows for the years
ended December 31, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
DECEMBER 31, JUNE 30,
FUND 1994 1993 1992 1992
---- ---- ---- ------------ ----------
(000) (000) (000) (000)
<S> <C> <C> <C> <C>
AIM Global Utilities Fund . . . . . . . . . $ 799 $ 729 $ 573 $ 62
AIM Government Securities Fund . . . . . . -0- -0- -0- -0-
AIM Growth Fund . . . . . . . . . . . . . . 803 880 442 203
AIM High Yield Fund . . . . . . . . . . . . -0- -0- -0- -0-
AIM Income Fund . . . . . . . . . . . . . . 106 -0- -0- -0-
AIM Municipal Bond Fund . . . . . . . . . . -0- -0- -0- -0-
AIM Value Fund . . . . . . . . . . . . . . 6,611 3,075 820 163
</TABLE>
10
<PAGE> 14
AIM BALANCED FUND (formerly ACS) paid brokerage commissions or
underwriting commissions (or both) for the year ended December 31, 1994 in the
amount of $85,610 for the four-month period ended December 31, 1993 in the
aggregate amount of $10,867, and for the years ended August 31, 1993 and 1992
in the amounts of $38,185 and $37,039, respectively.
Provisions of the 1940 Act and rules and regulations thereunder have
been construed to prohibit the Funds from purchasing securities or instruments
from, or selling securities or instruments to, any holder of 5% or more of the
voting securities of any investment company managed or advised by AIM. The
Funds have obtained an order of exemption from the SEC which permits them to
engage in certain transactions with such 5% holder if the Funds comply with
conditions and procedures designed to ensure that such transactions are
executed at fair market value and present no conflict of interest.
INVESTMENT OBJECTIVES AND POLICIES
For a general discussion of the investment objective(s) and policies
of each Fund, see the sections entitled "Investment Objectives" and "Investment
Programs" in the Prospectus.
ALL FUNDS EXCEPT AIM MONEY MARKET FUND
AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND and AIM VALUE FUND invest
in securities traded in the over-the-counter market or listed on a national
securities exchange, while AIM GOVERNMENT SECURITIES FUND, AIM HIGH YIELD FUND,
AIM INCOME FUND and AIM MUNICIPAL BOND FUND generally acquire bonds in new
offerings or in principal trades with broker-dealers. AIM BALANCED FUND,
investing in both equity and debt securities, acquires securities in the over-
the-counter market and those traded on national securities exchanges, and
acquires bonds in new offerings or in principal trades with broker-dealers.
Ordinarily, the Funds do not purchase securities with the intention of engaging
in short-term trading. However, any particular security will be sold, and the
proceeds reinvested, whenever such action is deemed prudent from the viewpoint
of a Fund's investment objectives, regardless of the holding period of that
security.
The Funds may invest in high quality, short-term money market
instruments such as certificates of deposit, commercial paper, bankers'
acceptances, short-term U.S. Government obligations and repurchase agreements,
pending investment in portfolio securities or to meet anticipated short-term
cash needs such as dividend payments or redemptions of shares. Such
investments generally are the type in which AIM MONEY MARKET FUND invests,
generally will have maturities of 60 days or less and normally are held to
maturity. See "Description of Money Market Instruments." The underlying
securities that are subject to a repurchase agreement will be
"marked-to-market" on a daily basis so that the Fund's investment advisor can
determine the value of the securities in relation to the amount of the
repurchase agreement.
U.S. Government securities may take the form of participation
interests in, and may be evidenced by, deposit or safekeeping receipts.
Participation interests are pro rata interests in U.S. Government securities.
A Fund may acquire participation interests in pools of mortgages sold by the
Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association ("FNMA") and the Federal Home Loan Banks. Instruments
evidencing deposit or safekeeping are documentary receipts for such original
securities held in custody by others.
U.S. Government securities, including those that are guaranteed by
federal agencies or instrumentalities, may or may not be backed by the "full
faith and credit" of the United States. Some securities issued by federal
agencies or instrumentalities are only supported by the credit of the agency or
instrumentality (such as the Federal Home Loan Banks) while others have an
additional line of credit with the U.S. Treasury (such as the Federal National
Mortgage Association). In the case of securities not
11
<PAGE> 15
backed by the full faith and credit of the United States, the Funds must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment and may not be able to assert a claim against the United States
itself in the event the agency or instrumentality does not meet its
commitments.
AIM MONEY MARKET FUND
The types of money market instruments in which the Fund presently
invests are listed under "Description of Money Market Instruments" in the
Prospectus and this Statement of Additional Information. If the trustees
determine that it may be advantageous to invest in other types of money market
instruments, the Fund may invest in such instruments, if it is permitted to do
so by its investment objectives, policies and restrictions.
The rating applied to a security at the time the security is purchased
by the Fund may be changed while the Fund holds such security in its portfolio.
This change may affect, but will not necessarily compel, a decision to dispose
of a security. If the major rating services used by the Fund were to alter
their standards or systems for rating, the Fund would then employ ratings under
the revised standards or systems that would be comparable to those specified in
its current investment objectives, policies and restrictions.
The Board of Trustees has established procedures in compliance with
Rule 2a-7 under the 1940 Act that include reviews of portfolio holdings by the
trustees at such intervals as they may deem appropriate to determine whether
net asset value, calculated by using available market quotations, deviates from
$1.00 per share and, if so, whether such deviation may result in material
dilution or is otherwise unfair to investors or existing shareholders. In the
event the trustees determine that a deviation having such a result exists, they
intend to take such corrective action as they deem necessary and appropriate,
including the following: the sale of portfolio instruments prior to maturity in
order to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends; authorizing redemption of shares in kind; or
establishing a net asset value per share by using available market quotations,
in which case, the net asset value could possibly be greater or less than $1.00
per share. If the trustees deem it inadvisable to continue the practice of
maintaining a net asset value of $1.00 per share, they may alter this
procedure. The shareholders of the Fund will be notified promptly after any
such change.
Any increase in the value of a shareholder's investment in the Fund
resulting from the reinvestment of dividend income is reflected by an increase
in the number of shares in the shareholder's account.
AIM MUNICIPAL BOND FUND
The two principal classifications of municipal bonds are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable only from the revenues
derived from a particular facility or class of facilities or, in some cases,
from the proceeds of a special excise or other specific revenue source.
Industrial development bonds, which are municipal bonds, are in most cases
revenue bonds and do not generally constitute the pledge of the credit of the
issuer of such bonds.
The Fund invests in securities representing a number of different
investment classifications. In addition, there are variations in the security
of municipal bonds, both within a particular classification and between
classifications, depending on various factors.
AIM HIGH YIELD FUND
The Fund will not acquire equity securities, other than preferred
stocks, except when (a) attached to or included in a unit with
income-generating securities that otherwise would be attractive to the Fund;
(b) acquired through the exercise of equity features accompanying convertible
securities held by the Fund,
12
<PAGE> 16
such as conversion or exchange privileges or warrants for the acquisition of
stock or equity interests of the same or a different issuer; or (c) in the case
of an exchange offer whereby the equity security would be acquired with the
intention of exchanging it for a debt security issued on a "when-issued" basis.
The Fund does not expect to invest more than 5% of the value of its total
assets in issues, other than preferred stocks, of the type discussed in this
paragraph.
AIM GLOBAL UTILITIES FUND
The Fund does not currently intend to invest in warrants.
DESCRIPTION OF THE UTILITIES INDUSTRY
Electric Utility Industry. Electric utilities are heavily regulated.
Local rates are subject to the review of state commissions, and sales either
between companies or that cross state lines are subject to review by the
Federal Energy Regulatory Commission. The industry is also subject to
regulation by the SEC under the Public Utility Holding Company Act of 1935. In
addition, companies constructing or operating nuclear powered generating
stations are subject to extensive regulation by the Nuclear Regulatory
Commission.
Electric utility companies are also subject to extensive local
regulation in environmental and site location matters. Future legislation with
regard to the issues of acid rain and toxic and radioactive wastes could have a
significant impact on the manner in which utility companies conduct their
business, and the costs that they incur. Since the late 1970s, investor-owned
utilities have experienced a number of unfavorable regulatory trends, including
increased regulatory resistance to price increases and new legislation
encouraging competition.
Natural Gas Industry. The natural gas industry is comprised primarily
of many small distribution companies and a few large interstate pipeline
companies. The Public Utility Holding Company Act of 1935 has generally acted
as a bar to the consolidation of pipeline and distribution companies.
Regulation of these companies is similar to that of electric companies. The
performance of natural gas utilities may also be substantially affected by
fluctuations in energy prices.
Communications Industry. Most of the communications industry capacity
is concentrated in the hands of a few very large publicly-held companies,
unlike the situation in the electric and gas industries. Significant risks for
the investor to overcome still exist, however, including risk relating to
pricing at marginal versus embedded cost. New entrants may have lower costs of
material due to newer technologies or lower standards of reliability than those
heretofore imposed by American Telephone & Telegraph ("AT&T") on the industry.
Accordingly, the marginal cost of incremental service is much lower than the
costs embedded in an existing network. Communications companies are not
subject to the Public Utility Holding Company Act of 1935.
Interstate communications service may be subject to Federal
Communications Commission regulation. Local service may be regulated by the
states. In addition, AT&T and its former subsidiaries are still subject to
judicial review pursuant to the settlement of the antitrust case brought
against them by the Department of Justice.
Water Utility Industry. The water utility industry is composed of
regulated public utilities that are involved in the distribution of drinking
water to densely populated areas. The industry is geographically diverse and
subject to the same rate base and rate of return regulations as are other
public utilities. Demand for water is most heavily influenced by the local
weather, population growth in the service area and new construction. Supplies
of clean, drinkable water are limited and are primarily a function of the
amount of past rainfall.
13
<PAGE> 17
Other. In addition to the particular types of utilities industries
described above, the Fund may invest in developing utility technology companies
(such as cellular telephone, fiber optics and satellite communications firms)
and in holding companies which derive a substantial portion of their revenues
from utility-related activities. Generally, a holding company will be
considered to derive a substantial portion of its revenues from utility-related
activities if such activities account for at least 40% of its revenues.
LENDING PORTFOLIO SECURITIES: ALL FUNDS
Consistent with applicable regulatory requirements, the Funds may lend
their portfolio securities (principally to broker-dealers) to the extent of
one-third of their respective total assets. Such loans would be callable at
any time and would be continuously secured by collateral equal to no less than
the market value, determined daily, of the loaned securities. Such collateral
will be cash or debt securities issued or guaranteed by the U.S. Government or
any of its agencies. The Funds would continue to receive the income on loaned
securities and would, at the same time, earn interest on the loan collateral or
on the investment of the loan collateral if it were cash. Any cash collateral
pursuant to these loans would be invested in short-term money market
instruments. Where voting or consent rights with respect to loaned securities
pass to the borrower, the Funds will follow the policy of calling the loan, in
whole or in part as may be appropriate, to permit the exercise of such voting
or consent rights if the matters involved are expected to have a material
effect on the Funds' investment in the loaned securities. Lending securities
entails a risk of loss to the Funds if and to the extent that the market value
of the securities loaned were to increase and the lender did not increase the
collateral accordingly.
COVERED CALL OPTIONS: ALL FUNDS EXCEPT AIM MONEY MARKET FUND
Each Fund may write call options, but only on a covered basis; that
is, the Fund will own the underlying security. Options written by a Fund
normally will have expiration dates between three and nine months from the date
written. The exercise price of a call option may be below, equal to, or above
the current market value of the underlying security at the time the option is
written. When a Fund writes a covered call option, an amount equal to the
premium received by the Fund is recorded as an asset and an equivalent
liability. The amount of the liability is subsequently "marked-to-market" to
reflect the current market value of the option written. The current market
value of a written option is the last sale price, or in the absence of a sale,
the last offering price. If a written call option expires on the stipulated
expiration date, or if the Fund enters into a closing purchase transaction, the
Fund realizes a gain (or a loss if the closing purchase transaction exceeds the
premium received when the option was written) without regard to any unrealized
gain or loss on the underlying security, and the liability related to such
option is extinguished. If a written option is exercised, the Fund realizes a
gain or a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call option
owns or has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, a Fund has given up
the opportunity for capital appreciation above the exercise price should the
market price of the underlying security increase, but has retained the risk of
loss should the price of the underlying security decline. During the option
period, a Fund may be required at any time to deliver the underlying security
against payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time at which a Fund effects
a closing purchase transaction by purchasing (at a price which may be higher
than was received when the call option was written) a call option identical to
the one originally written. A Fund will not write a covered call option if,
immediately thereafter, the aggregate value of the securities underlying all
such options, determined as of the dates such options were written, would
exceed 5% of the net assets of the Fund.
14
<PAGE> 18
SHORT SALES: AIM BALANCED FUND AND AIM HIGH YIELD FUND
Each of AIM BALANCED FUND and AIM HIGH YIELD FUND may from time to
time make short sales of securities which it owns or which it has the right to
acquire through the conversion or exchange of other securities it owns. In a
short sale, a Fund does not immediately deliver the securities sold and does
not receive the proceeds from the sale. A Fund is said to have a short
position in the securities sold until it delivers the securities sold, at which
time it receives the proceeds of the sale. A Fund will neither make short
sales of securities nor maintain a short position unless, at all times when a
short position is open, the Fund owns an equal amount of such securities or
securities convertible into or exchangeable, without payment of any further
consideration, for securities of the same issue as, and equal in amount to, the
securities sold short. This is a technique known as selling short "against the
box." To secure its obligation to deliver the securities sold short, a Fund
will deposit in escrow in a separate account with State Street Bank and Trust
Company ("State Street") an equal amount of the securities sold short or
securities convertible into or exchangeable for such securities.
Since a Fund ordinarily will want to continue to receive interest and
dividend payments on securities in its portfolio which are convertible into the
securities sold short, the Fund will normally close out a short position by
purchasing and delivering an equal amount of the securities sold short, rather
than by delivering securities which it already holds.
A Fund will make a short sale, as a hedge, when it believes that the
price of a security may decline, causing a decline in the value of a security
owned by the Fund or a security convertible into or exchangeable for such
security, or when the Fund does not want to sell the security it owns, because,
among other reasons, it wishes to defer recognition of gain or loss for federal
income tax purposes. In such case, any future losses in a Fund's long position
should be reduced by a gain in the short position. Conversely, any gain in the
long position should be reduced by a loss in the short position. The extent to
which such gains or losses are reduced will depend upon the amount of the
security sold short relative to the amount a Fund owns, either directly or
indirectly, and, in the case where the Fund owns convertible securities,
changes in the conversion premium. In determining the number of shares to be
sold short against a Fund's position in a convertible security, the anticipated
fluctuation in the conversion premium is considered. A Fund may also make
short sales to generate additional income from the investment of the cash
proceeds of short sales.
FUTURES CONTRACTS: ALL FUNDS EXCEPT AIM MONEY MARKET FUND
In cases of purchases of futures contracts, an amount of cash and cash
equivalents, equal to the market value of the futures contracts (less any
related margin deposits), will be deposited in a segregated account with a
Fund's custodian to collateralize the position and ensure that the use of such
futures contracts is unleveraged. Unlike when a Fund purchases or sells a
security, no price is paid or received by a Fund upon the purchase or sale of a
futures contract. Initially, a Fund will be required to deposit with the
custodian for the Fund for the account of the broker a stated amount, as called
for by the particular contract, of cash or U.S. Treasury bills. This amount is
known as "initial margin." The nature of initial margin in futures
transactions is different from that of margin in securities transactions in
that futures contract margin does not involve the borrowing of funds by the
customer to finance the transactions.
Rather, the initial margin is in the nature of a performance bond or
good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract assuming all contractual obligations have
been satisfied. Subsequent payments, called "variation margin," to and from
the broker will be made on a daily basis as the price of the futures contract
fluctuates, making the long and short positions in the futures contract more or
less valuable. This process is known as "marking-to-market." For example, when
a Fund has purchased a stock index futures contract and the price of the
underlying stock index has risen, that position will have increased in value
and the Fund will receive from the broker a
15
<PAGE> 19
variation margin payment with respect to that increase in value. Conversely,
where a Fund has purchased a stock index futures contract and the price of the
underlying stock index has declined, that position would be less valuable and
the Fund would be required to make a variation margin payment to the broker.
Variation margin payments would be made in a similar fashion when a Fund has
purchased an interest rate futures contract. At any time prior to expiration
of the futures contract, a Fund may elect to close the position by taking an
opposite position which will operate to terminate the Fund's position in the
futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund and the Fund
realizes a loss or a gain.
A Fund may also sell stock index futures contracts and interest rate
futures contracts as a hedge against adverse changes in the market value of its
portfolio securities as described below. A Fund may sell futures contracts in
anticipation of or during a market decline to attempt to offset the decrease in
market value of a Fund's securities portfolio that might otherwise result.
A description of the various types of futures contracts utilized by
certain Funds and the identification of those Funds whose investment policies
permit such investments is as follows:
Stock Index Futures Contracts - AIM BALANCED FUND, AIM GLOBAL
UTILITIES FUND, AIM GROWTH FUND and AIM VALUE FUND ("Equity Funds")
A stock index assigns relative values to the common stocks included in
the index and the index fluctuates with changes in the market values of the
common stocks so included. A stock index futures contract is an agreement
pursuant to which two parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the stock
index value at the close of the last trading day of the contract and the price
at which the futures contract is originally struck. No physical delivery of
the underlying stocks in the index is made. Currently, stock index futures
contracts can be purchased or sold primarily with respect to broad based stock
indices such as the Standard & Poor's 500 Stock Index, the New York Stock
Exchange Composite Index, the American Stock Exchange Major Market Index, the
NASDAQ - 100 Stock Index and the Value Line Stock Index.
The stock indices listed above consist of a spectrum of stocks not
limited to any one industry such as utility stocks. Utility stocks, at most,
would be expected to comprise a minority of the stocks comprising the portfolio
of an index.
An Equity Fund will only enter into stock index futures contracts as a
hedge against changes resulting from market conditions in the values of the
securities held or which an Equity Fund intends to purchase. When an Equity
Fund anticipates a significant market or market sector advance, the purchase of
a stock index futures contract affords a hedge against not participating in
such advance. Conversely, in anticipation of or in a general market or market
sector decline that adversely affects the market values of an Equity Fund's
portfolio of securities, the Fund may sell stock index futures contracts.
Interest Rate Futures Contracts - AIM BALANCED FUND, AIM GOVERNMENT
SECURITIES FUND, AIM HIGH YIELD FUND, AIM INCOME FUND and AIM MUNICIPAL BOND
FUND ("Debt Funds")
An interest rate futures contract is an agreement between two parties
to buy and sell a debt security for a set price on a future date. Currently,
there are futures contracts based on long-term U.S. Treasury bonds, U.S.
Treasury notes, U.S. Treasury bills, Eurodollars and the Bond Buyer Municipal
Bond Index.
A Debt Fund will only enter into interest rate futures contracts for
the purpose of hedging debt securities in its portfolio or the value of debt
securities which the Fund intends to purchase. For example, if the Debt Fund
owned long-term debt securities and interest rates were expected to increase,
it might sell
16
<PAGE> 20
interest rate futures contracts. If, on the other hand, the Debt Fund held
cash reserves and interest rates were expected to decline, the Debt Fund might
purchase interest rate futures contracts.
Foreign Currency Futures Contracts - All Funds (except AIM GOVERNMENT
SECURITIES FUND, AIM MONEY MARKET FUND and AIM MUNICIPAL BOND FUND)
Futures contracts may also be used to hedge the risk of changes in the
exchange rate of foreign currencies.
OPTIONS ON FUTURES CONTRACTS: ALL FUNDS EXCEPT AIM MONEY MARKET FUND
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put)
at a specified exercise price at any time during the option exercise period.
The writer of the option is required upon exercise to assume an offsetting
futures position (a short position if the option is a call and a long position
if the option is a put) at a specified exercise price at any time during the
period of the option. Upon exercise of the option, the assumption of
offsetting futures positions by the writer and holder of the option will be
accompanied by delivery of the accumulated cash balance in the writer's futures
margin account which represents the amount by which the market price of the
futures contract, at exercise, exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option on the futures contract.
If an option on a futures contract is exercised on the last trading date prior
to the expiration date of the option, the settlement will be made entirely in
cash equal to the difference between the exercise price of the option and the
closing price of the futures contract on the expiration date.
A Fund may purchase and sell put and call options on futures contracts
to hedge against adverse changes in the market value of its portfolio
securities. Options on futures contracts may also be used to hedge the risks
of changes in the exchange rate of foreign currencies. Depending on the
pricing of the option compared to either the price of the futures contract upon
which it is based or the price of the underlying securities or currency, it may
or may not be less risky than ownership of the futures contract or underlying
securities or currency.
RISKS AS TO FUTURES CONTRACTS AND RELATED OPTIONS
The use of futures contracts and related options as hedging devices
presents several risks. One risk arises because of the imperfect correlation
between movements in the price of hedging instruments and movements in the
price of the stock, debt securities or foreign currency which are the subject
of the hedge. If the price of a hedging instrument moves less than the price
of the stocks, debt securities or foreign currency which are the subject of the
hedge, the hedge will not be fully effective. If the price of a hedging
instrument moves more than the price of the stock, debt securities or foreign
currency, a Fund will experience either a loss or a gain on the hedging
instrument which will not be completely offset by movements in the price of the
stock, debt securities or foreign currency which are the subject of the hedge.
The use of options on futures contracts involves the additional risk that
changes in the value of the underlying futures contract will not be fully
reflected in the value of the option.
Successful use of hedging instruments by a Fund is also subject to
AIM's ability to predict correctly movements in the direction of the stock
market (Equity Funds), of interest rates (Debt Funds) or of foreign exchange
rates (foreign currencies). Because of possible price distortions in the
futures and options markets, and because of the imperfect correlation between
movements in the prices of hedging instruments and the investments being
hedged, even a correct forecast by AIM of general market trends may not result
in a completely successful hedging transaction.
17
<PAGE> 21
It is also possible that where a Fund has sold futures contracts to
hedge its portfolio against a decline in the market, the market may advance and
the value of stocks or debt securities held in a Fund's portfolio may decline.
If this occurred, a Fund would lose money on the futures contracts and also
experience a decline in the value of its portfolio securities. Similar risks
exist with respect to foreign currency hedges.
Positions in futures contracts or options may be closed out only on an
exchange on which such contracts are traded. Although the Funds intend to
purchase or sell futures contracts or purchase options only on exchanges or
boards of trade where there appears to be an active market, there is no
assurance that a liquid market on an exchange or board of trade will exist for
any particular contract or at any particular time. If there is not a liquid
market at a particular time, it may not be possible to close a futures position
or purchase an option at such time. In the event of adverse price movements
under those circumstances, the Fund would continue to be required to make daily
cash payments of maintenance margin on its futures positions. The extent to
which the Fund may engage in futures contracts or related options will be
limited by Internal Revenue Code requirements for qualification as a regulated
investment company and the Funds' intent to continue to qualify as such. The
result of a hedging program cannot be foreseen and may cause a Fund to suffer
losses which it would not otherwise sustain.
DELAYED DELIVERY AGREEMENTS: ALL FUNDS
Delayed delivery agreements involve commitments by a Fund to dealers
or issuers to acquire securities or instruments at a specified future date
beyond the customary same-day settlement for such securities or instruments.
These commitments may fix the payment price and interest rate to be received on
the investment. Delayed delivery agreements will not be used as a speculative
or leverage technique. Rather, from time to time, AIM can anticipate that cash
for investment purposes will result from, among other things, scheduled
maturities of existing portfolio instruments or from net sales of shares of a
Fund. To assure that a Fund will be as fully invested as possible in
instruments meeting the Fund's investment objective, the Fund may enter into
delayed delivery agreements, but only to the extent of anticipated funds
available for investment during a period of not more than five business days.
Until the settlement date, a Fund will segregate high-quality debt securities
of a dollar value sufficient at all times to make payment for the delayed
delivery securities. No more than 25% of a Fund's total assets will be
committed to delayed delivery agreements and when-issued securities, as
described below. The delayed delivery securities, which will not begin to
accrue interest or dividends until the settlement date, will be recorded as an
asset of a Fund and will be subject to the risks of market fluctuation. The
purchase price of the delayed delivery securities is a liability of a Fund
until settlement. Absent extraordinary circumstances, a Fund will not sell or
otherwise transfer the delayed delivery securities prior to settlement. If
cash is not available to a Fund at the time of settlement, the Fund may be
required to dispose of portfolio securities that it would otherwise hold to
maturity in order to meet its obligation to accept delivery under a delayed
delivery agreement. The Board of Trustees has determined that entering into
delayed delivery agreements does not present a materially increased risk of
loss to shareholders, but the Board of Trustees may restrict the use of delayed
delivery agreements if the risk of loss is determined to be material, or if it
affects the stable net asset value of AIM MONEY MARKET FUND.
WHEN-ISSUED SECURITIES: ALL FUNDS
Many new issues of securities are offered on a "when-issued" basis,
that is, the date for delivery of and payment for the securities is not fixed
at the date of purchase, but is set after the securities are issued (normally
within forty-five days after the date of the transaction). The payment
obligation and, if applicable, the interest rate that will be received on the
securities are fixed at the time the buyer enters into the commitment. A Fund
will only make commitments to purchase such securities with the intention of
actually acquiring such securities, but the Fund may sell these securities
before the settlement date if it is deemed advisable. No additional
when-issued commitments will be made if as a result more than 25% of
18
<PAGE> 22
a Fund's total assets would become committed to purchases of when-issued
securities and delayed delivery agreements.
If a Fund purchases a when-issued security, it will direct its
custodian bank to collateralize the when-issued commitment by segregating
assets in the same fashion as required for a delayed delivery agreement. Such
segregated assets will likewise be marked-to-market, and the amount segregated
will be increased if necessary to maintain adequate coverage of the when-issued
commitments.
Securities purchased on a when-issued basis and the securities held in
a Fund's portfolio are subject to changes in market value based upon the
public's perception of the creditworthiness of the issuer and, if applicable,
changes in the level of interest rates. Therefore, if a Fund is to remain
substantially fully invested at the same time that it has purchased securities
on a when-issued basis, there will be a possibility that the market value of
the Fund's assets will fluctuate to a greater degree. Furthermore, when the
time comes for the Fund to meet its obligations under when-issued commitments,
the Fund will do so by using then-available cash flow, by sale of the
segregated assets, by sale of other securities or, although it would not
normally expect to do so, by directing the sale of the when-issued securities
themselves (which may have a market value greater or less than the Fund's
payment obligation).
A sale of securities to meet such obligations carries with it a
greater potential for the realization of net short-term capital gains, which
are not exempt from federal income taxes. The value of when-issued securities
on the settlement date may be more or less than the purchase price.
INVESTMENT RESTRICTIONS
Each Fund is subject to the following restrictions which may not be
changed without approval of the lesser of (i) 67% or more of the Fund's shares
present at a meeting if the holders of more than 50% of the outstanding shares
are present in person or represented by proxy, or (ii) more than 50% of the
Fund's outstanding shares. Any investment restriction that involves a maximum
or minimum percentage of securities or assets shall not be considered to be
violated unless an excess over or a deficiency under the percentage occurs
immediately after, and is caused by, an acquisition or disposition of
securities or utilization of assets by the Fund.
AIM BALANCED FUND
The Fund may not:
1. With respect to 75% of its total assets, purchase the
securities of any issuer if such purchase would cause more than 5% of
the value of its total assets to be invested in the securities of such
issuer (except U.S. Government securities or securities issued by its
agencies and instrumentalities).
2. Concentrate 25% or more of its investments in a
particular industry.
3. Make short sales of securities or maintain a short
position in securities unless at all times when a short position is
open, it owns at least an equal amount of such securities or owns
securities comparable to or exchangeable for at least an equal amount
of such securities.
4. Purchase or sell commodity contracts, except that the Fund
may, as appropriate and consistent with its investment policies and
other investment restrictions, for hedging purposes, write, purchase
or sell options (including puts, calls and combinations thereof),
write covered call options, enter into futures contracts on
securities, securities indices and currencies, options on such
19
<PAGE> 23
futures contracts, forward foreign currency exchange contracts,
forward commitments and repurchase agreements.
5. Purchase or sell real estate (except that this restriction
does not preclude investments in companies engaged in real estate
activities or in real estate investment trusts or in securities
secured by real estate).
6. Borrow money or pledge its assets except that the Fund may
enter into reverse repurchase agreements and except, as a temporary
measure for extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow from banks (including the Fund's
custodian bank) amounts of up to 33-1/3% of the value of its total
assets (including the amount of such borrowings) less its liabilities
(excluding the amount of such borrowings) and may pledge amounts of up
to 33-1/3% of its total assets to secure such borrowings. The Fund
will not purchase securities while borrowings in an amount in excess
of 5% of its total assets are outstanding. The Fund may not issue
senior securities, except to the extent permitted by the 1940 Act,
including permitted borrowings.
7. Make loans, except (a) through the purchase of a portion
of an issue of bonds or other obligations of types commonly offered
publicly and purchased by financial institutions, (b) through the
purchase of short- term obligations (maturing within a year),
including repurchase agreements, and (c) the Fund may lend its
portfolio securities, provided that the value of the securities loaned
does not exceed 33-1/3% of the Fund's total assets.
8. Acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets and except for the investment
in such securities of funds representing compensation otherwise
payable to its trustees pursuant to any deferred compensation plan
existing at any time between the Trust and its trustees.
AIM GLOBAL UTILITIES FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase
would cause more than 5% of the value of its assets to be invested in
the securities of such issuer.
2. Purchase the securities of any issuer if such purchase
would cause more than 5% of the voting securities, or more than 10% of
the securities of any class of such issuer, to be held by the Fund.
3. Make short sales of securities or purchase securities on
margin, but it may obtain such short-term credits as are necessary for
the clearance of purchases and sales of securities and may make margin
payments in connection with transactions in financial futures
contracts and options thereon.
4. Act as a securities underwriter.
5. Make loans, except (a) through the purchase of a portion
of an issue of bonds or other obligations of types commonly offered
publicly and purchased by financial institutions, and (b) through the
purchase of short-term obligations (maturing within a year), including
repurchase agreements, and (c) the Fund may lend its portfolio
securities, provided that the value of the securities loaned does not
exceed 33-1/3% of the Fund's total assets.
20
<PAGE> 24
6. Borrow money or mortgage, pledge, or hypothecate its
assets, except that the Fund may enter into financial futures
contracts, and except that the Fund may borrow from banks to pay for
redemptions and for temporary purposes in an amount not exceeding
one-third of the value of its total assets (including the amount of
such borrowings) less its liabilities (excluding the amount of such
borrowings) and may secure such borrowings by pledging up to one-third
of the value of its total assets. For the purpose of this
restriction, collateral arrangements with respect to margin for a
financial futures contract are not deemed to be a pledge of assets.
The Fund will not purchase securities while borrowings in an amount in
excess of 5% of its total assets are outstanding.
7. Invest in puts, straddles, spreads or any combination
thereof, except, however, that the Fund may write covered call options
and purchase and sell options on stock index futures contracts and
options on stock indices.
8. Buy or sell commodities or commodity contracts, although
the Fund may purchase and sell financial futures contracts and options
thereon for hedging purposes.
9. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate.
10. Acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets and except for the investment
in such securities of funds representing compensation otherwise
payable to its trustees pursuant to any deferred compensation plan
existing at any time between the Trust and its trustees.
AIM GOVERNMENT SECURITIES FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase
would cause more than 5% of the value of its assets to be invested in
the securities of such issuer (except U.S. Government securities,
including securities issued by its agencies and instrumentalities, as
described under "Investment Objectives" in the Prospectus).
2. Purchase the securities of any issuer if such purchase
would cause more than 5% of the voting securities, or more than 10% of
the securities of any class of such issuer, to be held by the Fund
(except U.S. Government securities including securities issued by its
agencies and instrumentalities, as described under "Investment
Objectives" in the Prospectus).
3. Concentrate 25% or more of its investments in a
particular industry.
4. Make short sales of securities or purchase securities on
margin, but it may obtain such short-term credits as are necessary for
the clearance of purchases and sales of securities and may make margin
payments in connection with transactions in financial futures
contracts and options thereon.
5. Act as a securities underwriter.
6. Make loans, except (a) through the purchase of a portion
of an issue of bonds or other obligations of types commonly offered
publicly and purchased by financial institutions, and (b) through the
purchase of short-term obligations (maturing within a year), including
repurchase agreements, and (c) the Fund may lend its portfolio
securities provided that the value of the securities loaned does not
exceed 33-1/3% of the Fund's total assets.
21
<PAGE> 25
7. Borrow money or mortgage, pledge, or hypothecate its
assets, except that the Fund may enter into financial futures
contracts, and except that the Fund may borrow from banks to pay for
redemptions and for temporary purposes in an amount not exceeding
one-third of the value of its total assets (including the amount of
such borrowings) less its liabilities (excluding the amount of such
borrowings) and may secure such borrowings by pledging up to one-third
of the value of its total assets. For the purpose of this
restriction, collateral arrangements with respect to margin for a
financial futures contract are not deemed to be a pledge of assets.
The Fund will not purchase securities while borrowings in an amount in
excess of 5% of its total assets are outstanding.
8. Invest in puts, calls, straddles, spreads or any
combination thereof, except, however, that the Fund may purchase and
sell options on financial futures contracts and may sell covered call
options.
9. Buy or sell commodities or commodity contracts, although
the Fund may purchase and sell financial futures contracts and options
thereon.
10. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate.
11. Acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets and except for the investment
in such securities of funds representing compensation otherwise
payable to its trustees pursuant to any deferred compensation plan
existing at any time between the Trust and its trustees.
AIM GROWTH FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase
would cause more than 5% of the value of its assets to be invested in
the securities of such issuer (except U.S. Government securities,
including securities issued by its agencies and instrumentalities).
2. Purchase the securities of any issuer if such purchase
would cause more than 5% of the voting securities, or more than 10% of
the securities of any class of such issuer, to be held by the Fund.
3. Concentrate 25% or more of its investments in a
particular industry.
4. Make short sales of securities or purchase securities on
margin, but it may obtain such short-term credits as are necessary for
the clearance of purchases and sales of securities and may make margin
payments in connection with transactions in stock index futures
contracts and options thereon.
5. Act as a securities underwriter.
6. Make loans, except (a) through the purchase of a portion
of an issue of bonds or other obligations of types commonly offered
publicly and purchased by financial institutions, (b) through the
purchase of short-term obligations (maturing within a year), including
repurchase agreements, and (c) the Fund may lend its portfolio
securities, provided that the value of the securities loaned does not
exceed 33-1/3% of the Fund's total assets.
22
<PAGE> 26
7. Borrow, except that the Fund may enter into stock index
futures contracts and that the right is reserved to borrow from banks,
provided that no borrowing may exceed one-third of the value of its
total assets (including the amount of such borrowings) less its
liabilities (excluding the amount of such borrowings) and may secure
such borrowings by pledging up to one-third of the value of its total
assets. For the purposes of this restriction, collateral arrangements
with respect to margin for a stock index futures contract are not
deemed to be a pledge of assets. The Fund will not purchase
securities while borrowings in excess of 5% of its total assets are
outstanding.
8. Invest in puts, calls, straddles, spreads or any
combination thereof, except, however, that the Fund may invest in
financial futures and options thereon for hedging purposes and may
sell covered call options.
9. Buy or sell commodities or commodity contracts, although
the Fund may invest in financial futures and options thereon for
hedging purposes.
10. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate.
11. Acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets and except for the investment
in such securities of funds representing compensation otherwise
payable to its trustees pursuant to any deferred compensation plan
existing at any time between the Trust and its trustees.
AIM HIGH YIELD FUND
The Fund may not:
1. Borrow money or issue senior securities or mortgage,
pledge, or hypothecate its assets, except that the Fund may enter into
financial futures contracts, and borrow from banks to pay for
redemptions and for temporary purposes in an amount not exceeding
one-third of the value of its total assets (including the amount of
such borrowings) less its liabilities (excluding the amount of such
borrowings) and may secure such borrowings by pledging up to one-third
of the value of its total assets. For the purpose of this
restriction, collateral arrangements with respect to margin for a
financial futures contract are not deemed to be a pledge of assets.
Secured temporary borrowings may take the form of reverse repurchase
agreements, pursuant to which the Fund would sell portfolio securities
for cash and simultaneously agree to repurchase them at a specified
date for the same amount of cash plus an interest component. The Fund
will not purchase securities while borrowings in excess of 5% of its
total assets are outstanding.
2. Make short sales of securities or maintain short
positions, unless, at all times when a short position is open, the
Fund owns at least an equal amount of the securities sold short or
owns securities convertible into or exchangeable for at least an equal
amount of such securities sold short, without the payment of further
consideration.
3. Purchase or sell real estate or interests therein, but the
Fund may purchase and sell (a) securities which are secured by real
estate, and (b) the securities of companies which invest or deal in
real estate or interests therein, including real estate investment
trusts.
4. Act as a securities underwriter.
5. Purchase or sell commodities or commodity contracts, other
than financial futures contracts and options thereon.
23
<PAGE> 27
6. With respect to 75% of the value of its total assets,
invest more than 5% of the market value of its total assets in the
securities of any one issuer, other than obligations of or guaranteed
by the U.S. Government or any of its agencies or instrumentalities.
7. Concentrate 25% or more of the value of its total assets
in the securities of issuers which conduct their principal business
activities in the same industry. Gas, electric, water and telephone
companies as well as banks, credit institutions, and insurance
companies will be considered to be in separate industries.
8. Make loans, except that the Fund may lend its portfolio
securities provided that the value of the securities loaned does not
exceed 33-1/3% of its total assets, and except that the Fund may enter
into repurchase agreements.
9. Purchase securities on margin, except that the Fund may
obtain such short-term credits as may be necessary for the clearance
of purchases and sales of securities and may make margin payments in
connection with transactions in financial futures contracts and
options thereon.
10. Invest in puts, calls, or any combinations thereof,
except, however, that the Fund may invest in financial futures
contracts, purchase and sell options on financial futures contracts,
may acquire and hold puts which relate to equity securities acquired
by the Fund when such puts are attached to or included in a unit with
such equity securities, and may sell covered call options.
11. Acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets and except for the investment
in such securities of funds representing compensation otherwise
payable to its trustees pursuant to any deferred compensation plan
existing at any time between the Trust and its trustees.
AIM INCOME FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase
would cause more than 5% of the value of its assets to be invested in
the securities of such issuer (except U.S. Government securities,
including securities issued by its agencies and instrumentalities).
2. Purchase the securities of any issuer if such purchase
would cause more than 5% of the voting securities, or more than 10% of
the securities of any class of such issuer, to be held by the Fund.
3. Concentrate 25% or more of its investments in a
particular industry.
4. Make short sales of securities or purchase securities on
margin, but it may obtain such short-term credits as are necessary for
the clearance of purchases and sales of securities and may make margin
payments in connection with transactions in financial futures
contracts and options thereon.
5. Act as a securities underwriter.
6. Make loans, except (a) through the purchase of a portion
of an issue of bonds or other obligations of types commonly offered
publicly and purchased by financial institutions, (b) through the
purchase of short-term obligations (maturing within a year), including
repurchase agreements, and (c) the Fund may lend its portfolio
securities, provided that the value of the securities loaned does not
exceed 33-1/3% of the Fund's total assets.
24
<PAGE> 28
7. Borrow, except that the Fund may enter into financial
futures contracts and that the right is reserved to borrow from banks,
provided that no borrowing may exceed one-third of the value of its
total assets (including the amount of such borrowings) less its
liabilities (excluding the amount of such borrowings) and may secure
such borrowings by pledging up to one-third of the value of its total
assets. (For the purposes of this restriction, collateral
arrangements with respect to margin for a financial futures contract
are not deemed to be a pledge of assets.) The Fund will not purchase
securities while borrowings in an amount in excess of 5% of its total
assets are outstanding.
8. Invest in puts, calls, straddles, spreads or any
combination thereof, except, however, that the Fund may purchase and
sell options on financial futures contracts and may sell covered call
options.
9. Buy or sell commodities or commodity contracts, although
the Fund may purchase and sell financial futures contracts and options
thereon.
10. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate.
11. Acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets and except for the investment
in such securities of funds representing compensation otherwise
payable to its trustees pursuant to any deferred compensation plan
existing at any time between the Trust and its trustees.
12. Invest in securities with unlimited liability except for
assessability allowed by statutes with respect to wages.
AIM MONEY MARKET FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase
would cause more than 5% of the value of its assets to be invested in
the securities of such issuer, except U.S. Government securities,
including securities issued by its agencies and instrumentalities, and
except to the extent permitted by Rule 2a-7 under the 1940 Act, as
amended from time to time.
2. Concentrate 25% or more of its investments in a particular
industry, provided that this limitation does not apply to securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and obligations of domestic banks.
3. Pledge, mortgage or hypothecate more than 33-1/3% of the
total assets of the Fund, except that reverse repurchase agreements
and loans of portfolio securities are not deemed to involve pledging,
mortgaging or hypothecating assets.
4. Purchase securities on margin or make short sales of
securities, except as is necessary for the clearance of purchases and
sales of securities.
5. Underwrite securities (except to the extent that the
purchase of securities either directly from the issuer or from an
underwriter for an issuer and the later disposition of such securities
may be deemed an underwriting).
25
<PAGE> 29
6. Make loans, except it may purchase instruments and
securities permitted by the investment objectives and policies, it may
invest in reverse repurchase agreements, and it may loan portfolio
securities in an amount equal to one-third of its total assets.
7. Borrow money or issue senior securities (which term shall
not include delayed delivery and when- issued securities) except as a
temporary measure for extraordinary or emergency purposes and except
that the Fund may enter into reverse repurchase agreements in amounts,
inclusive of all borrowings, up to one-third of the value of the
Fund's total assets (including the amount of such borrowings) less its
liabilities (excluding the amount of such borrowings) at the time it
enters into such agreements. The Fund will not purchase portfolio
securities while borrowings in an amount in excess of 5% of its total
assets are outstanding.
8. Invest in puts or calls or engage in arbitrage
transactions.
9. Buy or sell commodities or commodity futures contracts.
10. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate or interests therein.
11. Acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets and except for the investment
in such securities of funds representing compensation otherwise
payable to its trustees pursuant to any deferred compensation plan
existing at any time between the Trust and its trustees.
AIM MUNICIPAL BOND FUND
The Fund may not:
1. Invest less than 65% of its total assets in securities
other than municipal bonds.
2. Purchase the securities of any issuer if such purchase
would cause more than 5% of the value of its assets to be invested in
the securities of such issuer (except U.S. Government securities,
including securities issued by its agencies and instrumentalities).
For the purpose of this restriction and that set forth in restriction
3, the Fund will regard each state and each political subdivision,
agency or instrumentality of such state and each multi-state agency of
which such state is a member as a separate issuer.
3. Purchase the securities of any issuer if such purchase
would cause more than 10% of the debt obligations of such issuer to be
held by the Fund.
4. Purchase securities if such purchase would cause, at the
time of purchase, 25% or more of total Fund assets to be invested in
any one industry. Investment in municipal bonds and obligations
issued or guaranteed by the U.S. Government, its agencies, authorities
or instrumentalities does not involve investment in any industry.
5. Make short sales of securities or purchase securities on
margin, but it may obtain such short-term credits as are necessary for
the clearance of purchases and sales of securities and may make margin
payments in connection with transactions in financial futures
contracts and options thereon and municipal bond index futures
contracts.
6. Act as a securities underwriter except to the extent that
it may be deemed to be an underwriter under the Securities Act of 1933
when purchasing or selling a portfolio security.
26
<PAGE> 30
7. Make loans, except that it may purchase debt instruments,
including repurchase agreements maturing within seven days, as
permitted by the investment objective and policies of the Fund, and
except that it may lend its portfolio securities provided that the
value of the securities loaned does not exceed 33-1/3% of its total
assets.
8. Borrow, except that the Fund may enter into financial
futures contracts and municipal bond index futures contracts and that
the right is reserved to borrow from banks, provided that no borrowing
may exceed one-third of the value of its total assets (including the
amount of such borrowings) less its liabilities (excluding the amount
of such borrowings) and may secure such borrowings by pledging up to
one-third of the value of its total assets. (For the purposes of this
restriction, collateral arrangements with respect to margin for a
financial or a municipal bond index futures contract are not deemed to
be a pledge of assets.) The Fund will not purchase securities while
borrowings in excess of 5% of its total assets are outstanding.
9. Invest in puts, calls, straddles, spreads or any
combination thereof, except, however, that the Fund may purchase and
sell options on financial futures contracts and may sell covered call
options.
10. Buy or sell commodities or commodity contracts, although
the Fund may purchase and sell financial futures contracts and options
thereon and municipal bond index futures contracts.
11. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate.
12. Acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets and except for the investment
in such securities of funds representing compensation otherwise
payable to its trustees pursuant to any deferred compensation plan
existing at any time between the Trust and its trustees.
AIM VALUE FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase
would cause more than 5% of the value of its assets to be invested in
the securities of such issuer (except U.S. Government securities,
including securities issued by its agencies and instrumentalities).
2. Purchase the securities of any issuer if such purchase
would cause more than 5% of the voting securities, or more than 10% of
the securities of any class of such issuer, to be held by the Fund.
3. Concentrate 25% or more of its investments in a
particular industry.
4. Make short sales of securities or purchase securities on
margin, but it may obtain such short-term credits as are necessary for
the clearance of purchases and sales of securities and may make margin
payments in connection with transactions in stock index futures
contracts and options thereon.
5. Act as a securities underwriter.
6. Make loans, except (a) through the purchase of a portion
of an issue of bonds or other obligations of types commonly offered
publicly and purchased by financial institutions, (b) through the
purchase of short-term obligations (maturing within a year), including
repurchase agreements,
27
<PAGE> 31
and (c) the Fund may lend its portfolio securities, provided that the
value of the securities loaned does not exceed 33-1/3% of the Fund's
total assets.
7. Borrow, except that the Fund may enter into stock index
futures contracts and that the right is reserved to borrow from banks,
provided that no borrowing may exceed one-third of the value of its
total assets (including the amount of such borrowings) less its
liabilities (excluding the amount of such borrowings) and may secure
such borrowings by pledging up to one-third of the value of its total
assets. (For the purposes of this restriction, collateral
arrangements with respect to margin for a stock index futures contract
are not deemed to be a pledge of assets.) The Fund will not purchase
securities while borrowings in an amount in excess of 5% of its total
assets are outstanding.
8. Invest in puts, calls, straddles, spreads or any
combination thereof, except, however, that the Fund may invest in
financial futures and options thereon for hedging purposes and may
sell covered call options.
9. Buy or sell commodities or commodity contracts, although
the Fund may invest in financial futures and options thereon for
hedging purposes.
10. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate.
11. Acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets and except for the investment
in such securities of funds representing compensation otherwise
payable to its trustees pursuant to any deferred compensation plan
existing at any time between the Trust and its trustees.
In order to permit the sale of the Funds' shares in certain states,
the Funds may from time to time make commitments that are more restrictive than
the restrictions described above. For example, as of the date of this Statement
of Additional Information, (1) each of the Funds has undertaken that it will
not invest more than 15% of its average net assets at the time of purchase in
investments which are not readily marketable (Texas); (2) AIM BALANCED FUND,
AIM GROWTH FUND and AIM VALUE FUND have undertaken that each Fund's investments
in warrants, valued at the lower of cost or market, may not exceed 5% of its
net assets, and that included within that amount (but not to exceed 2% of the
value of net assets) may be warrants which are not listed on the New York or
American stock exchanges (Texas); (3) AIM HIGH YIELD FUND has undertaken that
it will notify shareholders in writing at least 30 days prior to any change in
its investment objective (Arizona, Kentucky and South Dakota); (4) each of the
Funds will comply with California Rule 260.140.85(b) by purchasing and selling
only financial futures contracts, options on financial futures contracts and
municipal bond index futures contracts which are listed on national securities
or commodities exchanges, by limiting the aggregate premiums paid on all such
options held at any one time to less than 20% of each Fund's net assets and by
limiting the aggregate margin deposits required on all such futures contracts
or options thereon to less than 5% of each Fund's total assets; (5) no Fund
will exercise its right to redeem shareholder accounts of less than $500 unless
the account balance falls below $500 as a result of shareholder action and not
as a result of market fluctuation (Texas); (6) AIM BALANCED FUND and AIM VALUE
FUND will comply with Texas Rule 123.2(6), and follow SEC guidelines, that
provide that loans of their portfolio securities will be fully collateralized;
and (7) each of the Funds will comply with Texas Rule 123.2(4) and not issue
shares for any consideration other than cash. These restrictions are not
fundamental and may be changed by the trustees without shareholder approval.
In accordance with the requirements of the Texas State Securities
Board, the Funds will not purchase or sell real estate (including limited
partnership interests) and shall not invest in oil, gas or mineral leases. In
addition, none of the Funds intends to: (1) purchase securities of any company
with a record
28
<PAGE> 32
of less than three years' continuous operation (including that of predecessors)
if such purchase would cause the Fund's aggregate investments in all such
companies taken at cost to exceed 5% of the Fund's total assets taken at market
value; (2) invest for the purpose of influencing management or exercising
control; or (3) purchase or retain the securities of any issuer if those
officers and trustees of the Trust or officers and directors of its investment
advisor who own beneficially more than 1/2 of 1% of the securities of such
issuer together own more than 5% of the securities of such issuer. These
restrictions are not fundamental and may be changed by the trustees without
shareholder approval.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of February 8, 1995, the trustees and officers of the Trust as a
group owned less than 1% of all classes of outstanding shares of the Trust;
except that the trustees and officers as a group owned 1.03% of the outstanding
Class C shares of AIM MONEY MARKET FUND.
To the best knowledge of the Trust, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of the Trust's
equity securities as of January 31, 1995 and the amount of the outstanding
shares held by such holders are set forth below:
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address Owned of and
Fund of Owner Record* Beneficially
- ---- --------------------- -------- ------------
<S> <C> <C> <C>
AIM Balanced Fund - Merrill Lynch, Pierce, 7.7% -0-%
Class A shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
Class B shares Merrill Lynch, Pierce, 6.0% -0-%
Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Global Utilities Fund - Merrill Lynch, Pierce, 7.0% -0-%
Class B shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
</TABLE>
__________________________________
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
29
<PAGE> 33
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address Owned of and
Fund of Owner Record* Beneficially
- ---- --------------------- -------- ------------
<S> <C> <C> <C>
AIM Government Securities Fund - Merrill Lynch, Pierce, 6.0% -0-%
Class A shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
Class B shares Merrill Lynch, Pierce, 5.2% -0-%
Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Growth Fund - Merrill Lynch, Pierce, 13.0% -0-%
Class B shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM High Yield Fund - Merrill Lynch, Pierce, 5.6% -0-%
Class A shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
Class B shares Merrill Lynch, Pierce, 10.9% -0-%
Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Income Fund - Merrill Lynch, Pierce, 7.2% -0-%
Class B shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Value Fund - Merrill Lynch, Pierce, 13.4% -0-%
Class A shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
</TABLE>
____________________________
* The Trust has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
30
<PAGE> 34
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address Owned of and
Fund of Owner Record* Beneficially
- ---- --------------------- -------- ------------
<S> <C> <C> <C>
Class B shares Merrill Lynch, Pierce, 14.9% -0-%
Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
</TABLE>
__________________________________
* The Trust has no knowledge as to whether all or any portion of
the shares owned of record only are also owned beneficially.
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations
during the last five years are set forth below. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046.
*CHARLES T. BAUER, Trustee and Chairman (76)
Director, Chairman and Chief Executive Officer, A I M Management Group
Inc.; Chairman of the Board of Directors, A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company; and Director, AIM Global Advisors
Limited, A I M Global Management Company Limited and AIM Global Ventures Co.
BRUCE L. CROCKETT, Trustee (51)
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Director, President and Chief Executive Officer, COMSAT Corporation
(includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises, COMSAT RSI and COMSAT International Ventures). Previously,
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT; (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services company).
__________________________________
* A trustee who is an "interested person" of the Trust and A I M
Advisors, Inc. as defined in the 1940 Act.
31
<PAGE> 35
OWEN DALY II, Trustee (70)
6 Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly,
Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the Board of Equitable
Bancorporation.
**CARL FRISCHLING, Trustee (58)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel (law firm).
Formerly Partner, Reid & Priest (law firm); and prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling (law firm).
*ROBERT H. GRAHAM, Trustee and President (48)
Director, President and Chief Operating Officer, A I M Management Group
Inc.; Director and President, A I M Advisors, Inc.; Director and Executive Vice
President, A I M Distributors, Inc.; Director and Senior Vice President, A I M
Capital Management, Inc., A I M Fund Services, Inc., A I M Global Associates,
Inc., A I M Global Holdings, Inc., AIM Global Ventures Co., A I M Institutional
Fund Services, Inc. and Fund Management Company; and Senior Vice President, AIM
Global Advisors Limited.
JOHN F. KROEGER, Trustee (71)
24875 Swan Road -- Martingham
Box 464
St. Michaels, MD 21663
Director, Flag Investors International Fund, Inc., Flag Investors
Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag
Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund,
Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities
Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government
Bond Fund, Inc. (investment companies). Formerly, Consultant, Wendell &
Stockel Associates, Inc. (consulting firm).
LEWIS F. PENNOCK, Trustee (52)
6363 Woodway, Suite 825
Houston, TX 77057
Attorney in private practice in Houston, Texas.
__________________________
* A trustee who is an "interested person" of the Trust and
A I M Advisors, Inc. as defined in the 1940 Act.
** A trustee who is an "interested person" of the Trust as defined in the
1940 Act.
32
<PAGE> 36
IAN W. ROBINSON, Trustee (72)
183 River Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Services, Inc. (provider of centralized management
services to telephone companies); Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of Pennsylvania and Diamond State
Telephone Company.
LOUIS S. SKLAR, Trustee (55)
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
***JOHN J. ARTHUR, Senior Vice President and Treasurer (50)
Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice
President and Treasurer, A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company; and Vice President, AIM
Global Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings,
Inc., and AIM Global Ventures Co.
GARY T. CRUM, Senior Vice President (47)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc.,
A I M Global Associates, Inc., A I M Global Holdings, Inc., AIM Global Ventures
Co.; Director, A I M Distributors, Inc.; Senior Vice President, AIM Global
Advisors Limited.
***CAROL F. RELIHAN, Vice President and Secretary (40)
Vice President, General Counsel and Secretary, A I M Management Group
Inc., A I M Advisors, Inc., A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company; Vice President and
Secretary, A I M Distributors, Inc., A I M Global Associates, Inc., and A I M
Global Holdings, Inc.; Vice President and Assistant Secretary, AIM Global
Advisors Limited and AIM Global Ventures Co.; and Secretary, A I M Capital
Management, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (36)
Vice President and Fund Controller, A I M Advisors, Inc.; and
Assistant Vice President and Assistant Treasurer, Fund Management Company.
_______________________
*** Mr. Arthur and Ms. Relihan are married.
33
<PAGE> 37
ROBERT G. ALLEY, Vice President (46)
Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc. Formerly, Senior Fixed Income Money Manager,
Waddell and Reed, Inc.
STUART W. COCO, Vice President (39)
Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc.
MELVILLE B. COX, Vice President (51)
Vice President, A I M Advisors, Inc., A I M Capital Management, Inc.,
A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc.; and
Assistant Vice President, A I M Distributors, Inc. and Fund Management Company.
Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary,
Charles Schwab Family of Funds and Schwab Investments; Chief Compliance
Officer, Charles Schwab Investment Management, Inc.; and Vice President,
Integrated Resources Life Insurance Co. and Capitol Life Insurance Co.
KAREN DUNN KELLEY, Vice President (34)
Director, A I M Global Management Company Limited; Senior Vice
President, A I M Capital Management, Inc. and AIM Global Advisors Limited;
and Vice President, A I M Advisors, Inc. and AIM Global Ventures Co.
JONATHAN C. SCHOOLAR, Vice President (33)
Director and Senior Vice President, A I M Capital Management, Inc.;
and Vice President, A I M Advisors, Inc.
The standing committees of the Board of Trustees are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger
(Chairman), Pennock and Robinson. The Audit Committee is responsible for
meeting with the Funds' auditors to review audit procedures and results and to
consider any matters arising from an audit to be brought to the attention of
the trustees as a whole with respect to the Funds' fund accounting or its
internal accounting controls, and for considering such matters as may from time
to time be set forth in a charter adopted by the Board of Trustees and such
committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible
for reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Trustees and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating
individuals to stand for election as trustees who are not interested persons as
long as the Trust maintains a distribution plan pursuant to Rule 12b-1 under
the 1940 Act, reviewing from time to time the compensation payable to the
disinterested trustees, and considering such matters as may from time to time
be set forth in a charter adopted by the Board of Trustees and such committee.
34
<PAGE> 38
Remuneration of Trustees
Each trustee is reimbursed for expenses incurred in connection with
each meeting of the Board of Trustees or any Committee attended. The Trustees
of the Trust who do not serve as officers of the Trust are compensated for
their services according to a fee schedule which recognizes the fact that they
also serve as directors or trustees of certain other investment companies
advised or managed by AIM. Each such trustee receives a fee, allocated among
the AIM Funds for which he serves as a director or trustee, which consists of
an annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended December 31, 1994 for each trustee of the Trust:
<TABLE>
<CAPTION>
============================================================================================
RETIREMENT
BENEFITS TOTAL
AGGREGATE ACCRUED COMPENSATION
COMPENSATION BY ALL AIM FROM ALL AIM
Trustee FROM TRUST(1) FUNDS(2) FUNDS(3)
------- ------------- -------- --------
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------------------
Bruce L. Crockett 9,063.56 2,814.00 45,093.75
- --------------------------------------------------------------------------------------------
Owen Daly II 9,033.43 14,375.00 45,843.75
- --------------------------------------------------------------------------------------------
Carl Frischling 9,064.64 7,542.00 45,093.75(4)
- --------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- --------------------------------------------------------------------------------------------
John F. Kroeger 9,033.32 20,517.00 45,843.75
- --------------------------------------------------------------------------------------------
Lewis F. Pennock 9,032.72 5,093.00 45,843.75
- --------------------------------------------------------------------------------------------
Ian W. Robinson 9,070.20 10,396.00 45,093.75
- --------------------------------------------------------------------------------------------
Louis S. Sklar 9,064.63 4,682.00 45,093.75
============================================================================================
</TABLE>
__________________________________
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended December 31, 1994, including amounts
earned thereon, was $39,291.39.
(2) During the fiscal year ended December 31, 1994, the total amount of
expenses allocated to the Trust in respect of such retirement
benefits was $9,211.17.
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as a
Director or Trustee of a total of 11 AIM Funds. Messrs. Crockett,
Frischling, Robinson and Sklar each serves as a Director or Trustee
of a total of 10 AIM Funds. The information reflects compensation
earned for the calendar year ended December 31, 1994.
(4) See also page 37 regarding fees earned by Mr. Frischling's former law
firm.
35
<PAGE> 39
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each trustee (who is not an employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Trustees.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible trustee has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "AIM
Funds"). Each eligible trustee is entitled to receive an annual benefit from
the AIM Funds commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to 5% of such Trustee's
compensation paid by the AIM Funds multiplied by the number of such Trustee's
years of service (not in excess of 10 years of service) completed with respect
to any of the AIM Funds. Such benefit is payable to each eligible trustee in
quarterly installments for a period of no more than five years. If an eligible
trustee dies after attaining the normal retirement date but before receipt of
any benefits under the Plan commences, the trustee's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased trustee, for no more than five years beginning the first day of
the calendar quarter following the date of the trustee's death. Payments under
the Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible trustee upon retirement assuming various compensation
and years of service classifications. The estimated credited years of service
(as of December 31, 1994) for Messrs. Crockett, Daly, Frischling, Kroeger,
Pennock, Robinson and Sklar are 7, 8, 17, 17, 13, 7 and 5 years, respectively.
<TABLE>
<CAPTION>
Annual Compensation Paid By All AIM Funds
$40,000 $45,000 $50,000 $55,000
==============================================================================
<S> <C> <C> <C> <C> <C>
Number of 10 $20,000 $22,500 $25,000 $27,500
Years of ------------------------------------------------------------------------------
Service With 9 $18,000 $20,250 $22,500 $24,750
AIM Funds ------------------------------------------------------------------------------
8 $16,000 $18,000 $20,000 $22,000
------------------------------------------------------------------------------
7 $14,000 $15,750 $17,500 $19,250
------------------------------------------------------------------------------
6 $12,000 $13,500 $15,000 $16,500
------------------------------------------------------------------------------
5 $10,000 $11,250 $12,500 $13,750
==============================================================================
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring trustees") have each executed a Deferred
Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant
to the Agreements, the deferring trustees may elect to defer receipt of up to
100% of their compensation payable by the Trust, and such amounts are placed
into a deferral account. Currently, the deferring trustees may select various
AIM Funds in which all or part of his deferral account shall be deemed to be
invested. Distributions from the deferring trustees' deferral accounts will be
paid in cash, in generally equal quarterly installments over a period of five
years beginning on the date the deferring trustee's retirement benefits
commence under the Plan. The Trust's Board of Trustees, in its sole
discretion, may accelerate or extend the distribution of such deferral accounts
after the deferring trustee's termination of service as a trustee of the Trust.
If a deferring trustee dies prior to the distribution of amounts in his
deferral account, the balance of the deferral account will be distributed to
his designated beneficiary in a single lump sum payment as soon as practicable
after such deferring trustee's
36
<PAGE> 40
death. The Compensation Agreements are not funded and, with respect to the
payments of amounts held in the deferral accounts, the deferring trustees have
the status of unsecured creditors of the Trust and of each other AIM Fund from
which they are deferring compensation.
AIM and the Trust have adopted a Code of Ethics which requires
investment personnel (a) to pre-clear all personal securities transactions, (b)
to file reports regarding such transactions, and (c) to refrain from personally
engaging in (i) short-term trading of a security, (ii) transactions involving a
security within seven days of an AIM Fund transaction involving the same
security, and (iii) transactions involving securities being considered for
investment by an AIM Fund. The Code of Ethics also prohibits investment
personnel from purchasing securities in an initial public offering. Personal
trading reports are reviewed periodically by AIM, and the Board of Trustees
reviews annually such reports (including information on any substantial
violations of the Code of Ethics). Violations of the Code of Ethics may result
in censure, monetary penalties, suspension or termination of employment.
During the year ended December 31, 1994, AIM BALANCED FUND, AIM GLOBAL
UTILITIES FUND, AIM GOVERNMENT SECURITIES FUND, AIM GROWTH FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND and AIM
VALUE FUND each paid $3,018, $1,638, $3,146, $3,301, $1,665, $1,140, $4,238,
$1,016, and $2,858, respectively, in legal fees to Reid & Priest, the law firm
in which Mr. Frischling, a trustee of the Trust, is a partner, as counsel to
the Board of Trustees. Effective September 1994, Kramer, Levin, Naftalis,
Nessen, Kamin & Frankel was appointed as counsel to the Board of Trustees. A
member of the Funds' new counsel is also a Trustee. Each of these funds paid
the following legal fees to Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
for services rendered: AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM
GOVERNMENT SECURITIES FUND, AIM GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND and AIM VALUE FUND paid
$194, $239, $223, $227, $389, $233, $303, $259, and $658, respectively.
INVESTMENT ADVISORY AND OTHER SERVICES
The Trust, on behalf of each Fund, has entered into a Master
Investment Advisory Agreement and a Master Administrative Services Agreement
with AIM. With respect to AIM HIGH YIELD FUND, the Trust and AIM have entered
into a Sub-Advisory Agreement with CII, which formerly served as investment
advisor to certain of the Funds.
Each of the Master Investment Advisory Agreement and the Sub-Advisory
Agreement provides that it will continue in effect from year to year only if
such continuance is specifically approved at least annually by the Trust's
Board of Trustees and by the affirmative vote of a majority of the trustees who
are not parties to the agreement or "interested persons" of any such party (the
"Qualified Trustees") by votes cast in person at a meeting called for such
purpose. The Master Investment Advisory Agreement and the Sub-Advisory
Agreement were initially approved by the Trust's Board of Trustees (including
the affirmative vote of all the Qualified Trustees) on July 19, 1993. Both the
Master Investment Advisory Agreement and the Sub-Advisory Agreement were
approved by the applicable Funds' initial shareholder on August 6, 1993. The
agreements became effective as of October 18, 1993. Each agreement provides
that any of the parties thereto may terminate such agreement on 60 days'
written notice without penalty. Each agreement terminates automatically in the
event of its assignment.
AIM is a direct, wholly-owned subsidiary of A I M Management Group
Inc. ("AIM Management"), and is the sole shareholder of the Funds' principal
underwriter, A I M Distributors, Inc. ("AIM Distributors").
Subject to the control and periodic review of the Board of Trustees,
AIM determines what investments shall be purchased, held, sold or exchanged for
the account of the Funds and what portion, if any, of the assets of the Funds
shall be held in cash and other temporary investments. Accordingly, the
37
<PAGE> 41
role of the trustees is not to approve specific investments, but rather to
exercise a control and review function.
For its services as sub-advisor to AIM HIGH YIELD FUND, CII assists
AIM in providing a continuous investment management program for that Fund,
including the provision of investment research and advice with respect to
securities purchased, sold or held by the Fund and the placement of orders for
the purchase or sale of portfolio securities on behalf of the Fund.
Pursuant to the Master Investment Advisory Agreement, AIM receives a
fee from each of AIM GOVERNMENT SECURITIES FUND, AIM INCOME FUND and AIM
MUNICIPAL BOND FUND calculated at the following annual rates, based on the
average daily net assets of the Fund during the year:
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $200 million 0.50%
Next $300 million 0.40%
Next $500 million 0.35%
Amount over $1 billion 0.30%
</TABLE>
Pursuant to the Master Investment Advisory Agreement, AIM receives a fee
from AIM MONEY MARKET FUND calculated at the following annual rates, based on
the average daily net assets of the Fund during the year:
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $1 billion 0.55%
Amount over $1 billion 0.50%
</TABLE>
Pursuant to the Master Investment Advisory Agreement, AIM receives a fee
from AIM BALANCED FUND calculated at the following annual rates, based on the
average daily net assets of the Fund during the year:
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $150 million 0.75%
Amount over $150 million 0.50%
</TABLE>
Pursuant to the Master Investment Advisory Agreement, AIM receives a fee
from AIM HIGH YIELD FUND calculated at the following annual rates, based on the
average daily net assets of the Fund during the year:
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $200 million 0.625%
Next $300 million 0.550%
Next $500 million 0.500%
Amount over $1 billion 0.450%
</TABLE>
38
<PAGE> 42
As compensation for its services as sub-advisor to AIM HIGH YIELD FUND,
CII receives an annual fee from AIM, payable monthly, based upon the following
annual rates, based on the average daily net assets of the Fund during the year
(provided, however, that the minimum annual fee shall be $280,000):
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $300 million 0.15%
Over $300 million 0.10%
</TABLE>
Pursuant to the Master Investment Advisory Agreement, AIM receives a fee
from AIM GROWTH FUND and AIM VALUE FUND calculated at the following annual
rates, based on the average net assets of the Fund during the year:
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $150 million 0.80%
Amount over $150 million 0.625%
</TABLE>
Pursuant to the Master Investment Advisory Agreement, AIM receives
a fee from AIM GLOBAL UTILITIES FUND calculated at the following annual rates,
based on the average daily net assets of the Fund during the year:
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $200 million 0.60%
Next $300 million 0.50%
Next $500 million 0.40%
Amount over $1 billion 0.30%
</TABLE>
The Master Investment Advisory Agreement provides that if, for any
fiscal year, the total of all ordinary business expenses of each Fund,
including all investment advisory fees, but excluding brokerage commissions and
fees, taxes, interest and extraordinary expenses, such as litigation costs,
exceed the applicable expense limitations imposed by state securities
regulations in any state in which the Fund's shares are qualified for sale, as
such limitations may be raised or lowered from time to time, the aggregate of
all such investment advisory fees shall be reduced by the amount of such
excess. The amount of any such reduction to be borne by AIM shall be deducted
from the monthly investment advisory fee otherwise payable to AIM during such
fiscal year. If required pursuant to such state securities regulations, AIM
will reimburse the Fund no later than the last day of the first month of the
next succeeding fiscal year, for any such annual operating expenses (after
reduction of all investment advisory fees in excess of such limitation).
Each Fund (other than AIM BALANCED FUND) paid to AIM the following
management fees net of any expense limitations for the years ended December 31,
1994 and 1993, and for the six-month period ended December 31, 1992:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
AIM Global Utilities Fund . . . . . . $1,226,429 $ 961,659 $318,467
AIM Government Securities Fund . . . . 734,086 686,539 305,031
AIM Growth Fund . . . . . . . . . . . 1,012,632 918,416 498,976
AIM High Yield Fund . . . . . . . . . 3,881,526 2,574,933 906,421
</TABLE>
39
<PAGE> 43
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
AIM Income Fund . . . . . . . . . . . 1,110,855 1,157,555 554,086
AIM Money Market Fund . . . . . . . . 2,057,756 214,124* N/A
AIM Municipal Bond Fund . . . . . . . 1,327,611 1,348,764 647,661
AIM Value Fund . . . . . . . . . . . . 6,674,684 2,570,113 586,747
</TABLE>
* Fee paid by AIM MONEY MARKET FUND was for period October 16,
1993 through December 31, 1993.
For the years ended December 31, 1994 and 1993, and for the six-month
period ended December 31, 1992, AIM paid CII, as sub-advisor to AIM HIGH YIELD
FUND, a sub-advisory fee of $846,305, $590,897 and $226,613, respectively.
AIM BALANCED FUND (formerly ACS) paid to AIM management fees net of
any expense limitations for the year ended December 31, 1994, in the amount of
$137,235, the four-month period ended December 31, 1993 in the amount of
$54,454, and for the years ended August 31, 1993 and 1992 in the amounts of
$112,306 and $88,578, respectively.
Each Fund formerly advised by CII paid to CII a management fee net of
the expense limitation for the six-month period ended June 30, 1992 as follows:
<TABLE>
<CAPTION>
FUND 1992
---- ----
<S> <C>
AIM Global Utilities Fund . . . . . . $273,345
AIM Government Securities Fund . . . . 278,428
AIM Growth Fund . . . . . . . . . . . 523,836
AIM High Yield Fund . . . . . . . . . 837,548
AIM Income Fund . . . . . . . . . . . 543,203
AIM Municipal Bond Fund . . . . . . . 634,403
AIM Value Fund . . . . . . . . . . . . 509,282
</TABLE>
The Trust pays all expenses not specifically assumed by AIM or AIM
Distributors including compensation and expenses of trustees who are not
directors, officers or employees of AIM, AIM Distributors or any other
affiliates of AIM Management; registration, filing and other fees in connection
with filings with regulatory authorities; the fees and expenses of independent
accountants; costs of printing and mailing registration statements,
prospectuses, proxy statements, and annual and periodic reports to
shareholders; custodian and transfer agent fees; brokerage commissions and
securities transactions costs incurred by the Funds; taxes and corporate fees;
legal fees incurred in connection with the affairs of the Funds; and expenses
of meetings of shareholders and trustees.
AIM, at its own expense, furnishes to the Trust office space and
facilities. AIM furnishes to the Trust all personnel for managing the affairs
of the Trust and each of its series of shares and is reimbursed under the
Master Administrative Services Agreement for the services of a principal
financial officer of the Trust and his staff. The Master Administrative
Services Agreement between the Trust and AIM provides that AIM may perform or
arrange for the provision of certain accounting, shareholder service and other
administrative services to each Fund which are not required to be performed by
AIM under the Master Investment Advisory Agreement. The Master Administrative
Services Agreement provides that such agreement will continue in effect from
year to year only if such continuance is specifically approved at least
annually by the Trust's Board of Trustees, including the Qualified Trustees, by
votes cast in person at a meeting called for such purpose. The Master
Administrative Services Agreement was initially approved by the Trust's Board
of Trustees (including the Qualified Trustees) on July 19, 1993, and became
effective as of October 18, 1993.
40
<PAGE> 44
The Funds (other than AIM BALANCED FUND) paid AIM the following amounts,
which represented the indicated annualized percentage of average net assets for
such period, as reimbursement of administrative services costs for the years
ended December 31, 1994 and 1993, and for the six-month period ended December
31, 1992.
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
AVERAGE AVERAGE AVERAGE
AMOUNT PAID NET ASSETS AMOUNT PAID NET ASSETS AMOUNT PAID NET ASSETS
----------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
AIM Global Utilities Fund . . . . $171,972 .08% $ 91,549 .06% $18,765 .04%
AIM Government Securities Fund . 92,487 .06% 59,584 .04% 11,856 .02%
AIM Growth Fund . . . . . . . . . 134,789 .09% 97,029 .06% 19,307 .02%
AIM High Yield Fund . . . . . . . 313,218 .04% 172,279 .04% 40,607 .03%
AIM Income Fund . . . . . . . . . 154,517 .07% 86,396 .04% 25,107 .02%
AIM Money Market Fund* . . . . . $209,642 .05% $ 39,325 .06% N/A N/A
AIM Municipal Bond Fund . . . . . 103,945 .04% 65,114 .02% $28,800 .02%
AIM Value Fund . . . . . . . . . 884,123 .06% 220,898 .05% 20,202 .02%
</TABLE>
_________________________
* Amount paid by AIM MONEY MARKET FUND was for period October 16, 1993
through December 31, 1993.
For the six-month period ended June 30, 1992, the reimbursed costs for
the Office of the Treasurer and the Office of the Secretary, payable to CII
pursuant to the master investment advisory agreement previously in effect, were
as follows:
<TABLE>
<CAPTION>
OFFICE OF OFFICE OF
THE TREASURER THE SECRETARY
-------------- -------------
<S> <C> <C>
AIM Global Utilities Fund . . . . . . . $18,098 $ 4,734
AIM Government Securities Fund . . . . . 20,983 5,099
AIM Growth Fund . . . . . . . . . . . . 31,877 8,342
AIM High Yield Fund . . . . . . . . . . 42,754 11,201
AIM Income Fund . . . . . . . . . . . . 38,763 10,127
AIM Municipal Bond Fund . . . . . . . . 44,856 11,717
AIM Value Fund . . . . . . . . . . . . . 26,847 7,055
</TABLE>
AIM BALANCED FUND (formerly ACS) reimbursed AIM for administrative
services costs incurred by AIM, for the year ended December 31, 1994 in the
amount of $81,734, which represented 0.18% of the Fund's average net assets;
for the four-month period ended December 31, 1993 in the amount of $14,083,
which represented .19% of the Fund's average net assets; and for the years
ended August 31, 1993 and 1992 in the amounts of $36,641 and $38,164,
respectively, which represented .24% and .32%, respectively, of the Fund's
average net assets.
THE DISTRIBUTION PLANS
THE CLASS A AND CLASS C PLAN. The Trust has adopted a Master
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to the
Class A shares of the Funds and the Class C shares of AIM MONEY MARKET FUND
(collectively, the "Covered Classes"). Such plan (the "Class A and Class C
Plan") provides that each Covered Class pays 0.25% per annum of its average
daily net assets as compensation to AIM Distributors for the purpose of
financing any activity which is primarily intended to result in the sale of
shares of the Covered Class. Activities appropriate for financing under the
Class A and Class C Plan include, but are not limited to, the following:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders; overhead; preparation and distribution of
advertising material and sales literature; expenses of organizing and
conducting sales seminars;
41
<PAGE> 45
supplemental payments to dealers and other institutions such as asset-based
sales charges or as payments of service fees under shareholder service
arrangements; and costs of administering the Class A and Class C Plan.
THE CLASS B PLAN. The Trust has also adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of
the Funds (the "Class B Plan", and collectively with the Class A and Class C
Plan, the "Plans"). Under the Class B Plan, each Fund pays compensation to AIM
Distributors at an annual rate of 1.00% of the average daily net assets
attributable to Class B shares. Of such amount, each Fund pays a service fee of
0.25% of the average daily net assets attributable to Class B shares to
selected dealers and other institutions which furnish continuing personal
shareholder services to their customers who purchase and own Class B shares.
Amounts paid in accordance with the Class B Plan may be used to finance any
activity primarily intended to result in the sale of Class B shares, including
but not limited to printing of prospectuses and statements of additional
information and reports for other than existing shareholders; overhead;
preparation and distribution of advertising material and sales literature;
expenses of organizing and conducting sales seminars; supplemental payments to
dealers and other institutions such as asset-based sales charges or as payments
of service fees under shareholder service arrangements; and costs of
administering the Class B Plan. AIM Distributors may transfer and sell its
rights to payments under the Class B Plan in order to finance distribution
expenditures in respect of Class B shares.
BOTH PLANS. Pursuant to an incentive program, AIM Distributors may
enter into agreements ("Shareholder Service Agreements") with investment
dealers selected from time to time by AIM Distributors for the provision of
distribution assistance in connection with the sale of the Funds' shares to
such dealers' customers, and for the provision of continuing personal
shareholder services to customers who may from time to time directly or
beneficially own shares of the Funds. The distribution assistance and
continuing personal shareholder services to be rendered by dealers under the
Shareholder Service Agreements may include, but shall not be limited to, the
following: distributing sales literature; answering routine customer inquiries
concerning the Funds; assisting customers in changing dividend options, account
designations and addresses, and in enrolling in any of several special
investment plans offered in connection with the purchase of the Funds' shares;
assisting in the establishment and maintenance of customer accounts and records
and in the processing of purchase and redemption transactions; investing
dividends and any capital gains distributions automatically in the Funds'
shares; and providing such other information and services as the Funds or the
customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding a Fund and
the Trust; performing sub-accounting; establishing and maintaining shareholder
accounts and records; processing customer purchase and redemption transactions;
providing periodic statements showing a shareholder's account balance and the
integration of such statements with those of other transactions and balances in
the shareholder's other accounts serviced by the bank; forwarding applicable
prospectuses, proxy statements, reports and notices to bank clients who hold
Fund shares; and such other administrative services as a Fund reasonably may
request, to the extent permitted by applicable statute, rule or regulation.
Similar agreements may be permitted under the Plans for institutions which
provide recordkeeping for and administrative services to 401(k) plans.
Financial intermediaries and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
selling shares of one particular class over another.
42
<PAGE> 46
Under a Shareholder Service Agreement, a Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement will be calculated at the end of each payment period for each
business day of the Funds during such period at the annual rate of 0.25% of the
average daily net asset value of the Funds' shares purchased or acquired
through exchange. Fees calculated in this manner shall be paid only to those
selected dealers or other institutions who are dealers or institutions of
record at the close of business on the last business day of the applicable
payment period for the account in which such Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the National Association of Securities Dealers,
Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments
made to dealers and other financial institutions who provide continuing
personal shareholder services to their customers who purchase and own shares of
the Funds to no more than 0.25% per annum of the average daily net assets of
the funds attributable to the customers of such dealers or financial
institutions, and by imposing a cap on the total sales charges, including asset
based sales charges, that may be paid by the Funds and their respective
classes.
AIM Distributors does not act as principal, but rather as agent for
the Funds, in making dealer incentive and shareholder servicing payments under
the Plans. These payments are an obligation of the Funds and not of AIM
Distributors.
For the year ended December 31, 1994, the various classes of the Funds
(other than AIM MONEY MARKET FUND) paid to AIM Distributors the following
amounts pursuant to the Plans:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
-------------- --------------
<S> <C> <C>
AIM Balanced Fund . . . . . . . . . . . . . . . . . . . . $ 79,663 $ 127,368
AIM Global Utilities Fund . . . . . . . . . . . . . . . . 422,862 361,395
AIM Government Securities Fund . . . . . . . . . . . . . 327,060 159,848
AIM Growth Fund . . . . . . . . . . . . . . . . . . . . . 327,254 247,715
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . 1,446,888 1,173,408
AIM Income Fund . . . . . . . . . . . . . . . . . . . . . 547,787 85,988
AIM Municipal Bond Fund . . . . . . . . . . . . . . . . . 690,578 56,949
AIM Value Fund . . . . . . . . . . . . . . . . . . . . . 2,712,116 3,596,079
</TABLE>
The amounts for the Class A shares were spent as follows:
<TABLE>
<CAPTION>
PRINTING AND SHAREHOLDER SERVICE
ADVERTISING MAILING AGREEMENTS
----------- ------------- ------------
<S> <C> <C> <C>
AIM Balanced Fund . . . . . . . . . . . . . . . . . . $ 2,474 $22,269 $ 54,920
AIM Global Utilities Fund . . . . . . . . . . . . . . 2,795 11,915 408,152
AIM Government Securities Fund . . . . . . . . . . . 2,184 9,950 314,926
AIM Growth Fund . . . . . . . . . . . . . . . . . . . 1,617 6,085 319,552
AIM High Yield Fund . . . . . . . . . . . . . . . . . 22,677 58,312 1,365,899
AIM Income Fund . . . . . . . . . . . . . . . . . . . 1,937 7,288 538,562
AIM Municipal Bond Fund . . . . . . . . . . . . . . . 2,966 10,514 677,098
AIM Value Fund . . . . . . . . . . . . . . . . . . . 30,063 90,189 2,591,864
</TABLE>
43
<PAGE> 47
The amounts for the Class B shares were spent as follows:
<TABLE>
<CAPTION>
SALES SHAREHOLDER SERVICE
COMMISSIONS AGREEMENTS
------------- ------------
<S> <C> <C>
AIM Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . $ 95,526 $ 31,842
AIM Global Utilities Fund . . . . . . . . . . . . . . . . . . . 271,046 90,349
AIM Government Securities Fund . . . . . . . . . . . . . . . . 119,886 39,962
AIM Growth Fund . . . . . . . . . . . . . . . . . . . . . . . . 185,786 61,929
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . . . . 880,056 293,352
AIM Income Fund . . . . . . . . . . . . . . . . . . . . . . . . 64,491 21,497
AIM Municipal Bond Fund . . . . . . . . . . . . . . . . . . . . 42,712 14,237
AIM Value Fund . . . . . . . . . . . . . . . . . . . . . . . . 2,697,059 899,020
</TABLE>
For the year ended December 31, 1994, the Class A shares of AIM MONEY
MARKET FUND paid $227,607 to AIM Distributors pursuant to the Class A and Class
C Plan, of which $11,193 was spent on advertising, $24,186 was spent on
printing and mailing and $241,508 was spent pursuant to Shareholder Service
Agreements. For the year ended December 31, 1994, the Class B shares of AIM
MONEY MARKET FUND paid $191,213 to AIM Distributors pursuant to the Class B
Plan, of which $143,410 was spent on sales commissions and $47,803 was spent
pursuant to Shareholder Service Agreements. For the year ended December 31,
1994, the Class C shares of AIM MONEY MARKET FUND paid $785,906 to AIM
Distributors pursuant to the Class A and Class C Plan, of which $56,740 was
spent on advertising, $88,746 was spent on printing and mailing and $640,420
was spent pursuant to Shareholder Service Agreements.
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Trustees, including a majority
of the trustees who are not "interested persons" (as defined in the 1940 Act)
of the Trust and who have no direct or indirect financial interest in the
operation of the Plans or in any agreements related to the Plans (the
"Independent Trustees"). In approving the Plans in accordance with the
requirements of Rule 12b-1, the trustees considered various factors and
determined that there is a reasonable likelihood that the Plans would benefit
each class of the Funds and its respective shareholders.
The Plans do not obligate the Funds to reimburse AIM Distributors for
the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Plans. Thus, even if AIM Distributors' actual expenses exceed the
fee payable to AIM Distributors thereunder at any given time, the Funds will
not be obligated to pay more than that fee. If AIM Distributors' expenses are
less than the fee it receives, AIM Distributors will retain the full amount of
the fee.
The Plans require AIM Distributors to provide the Board of Trustees at
least quarterly with a written report of the amounts expended pursuant to the
Plans and the purposes for which such expenditures were made. The Board of
Trustees reviews these reports in connection with their decisions with respect
to the Plans.
Unless terminated earlier in accordance with their terms, the Plans
continue in effect until June 30, 1995 and thereafter, as long as such
continuance is specifically approved at least annually by the Board of
Trustees, including a majority of the Independent Trustees.
The Plans may be terminated by the vote of a majority of the
Independent Trustees, or, with respect to a particular class, by the vote of a
majority of the outstanding voting securities of that class.
Any change in the Plans that would increase materially the
distribution expenses paid by the applicable class requires shareholder
approval; otherwise, it may be amended by the trustees, including a majority of
the Independent Trustees, by votes cast in person at a meeting called for the
purpose of
44
<PAGE> 48
voting upon such amendment. As long as the Plans are in effect, the selection
or nomination of the Independent Trustees is committed to the discretion of the
Independent Trustees.
The principal differences between the Class A and Class C Plan and the
Class B Plan are: The Class A and Class C Plan allows payment to AIM
Distributors or to dealers or financial institutions of up to 0.25% of average
daily net assets of each Fund's Class A and Class C shares as compared to 1.00%
of such assets of each Fund's Class B shares; (ii) the Class B Plan obligates
Class B shares to continue to make payments to AIM Distributors following
termination of the Class B shares Distribution Agreement with respect to Class
B shares sold by or attributable to the distribution efforts of AIM
Distributors unless there has been a complete termination of the Class B Plan
(as defined in such Plan); and (iii) the Class B Plan expressly authorizes AIM
Distributors to assign, transfer or pledge its rights to payments pursuant to
the Class B Plan.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Funds' shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A
Master Distribution Agreement with AIM Distributors relating to the Class A
shares of the Funds and the Class C shares of AIM MONEY MARKET FUND was
approved by the Board of Trustees on July 19, 1993. A Master Distribution
Agreement with AIM Distributors relating to the Class B shares of the Funds was
also approved by the Board of Trustees on July 19, 1993. Both such Master
Distribution Agreements are hereinafter collectively referred to as the
"Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear
the expenses of printing from the final proof and distributing the Funds'
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Funds), and any promotional or
sales literature used by AIM Distributors or furnished by AIM Distributors to
dealers in connection with the public offering of the Funds' shares, including
expenses of advertising in connection with such public offerings. AIM
Distributors has not undertaken to sell any specified number of shares of any
classes of the Funds.
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B shares of the Funds at
the time of such sales. Payments with respect to Class B shares will equal
4.0% of the purchase price of the Class B shares sold by the dealer or
institution, and will consist of a sales commission equal to 3.75% of the
purchase price of the Class B shares sold plus an advance of the first year
service fee os 0.25% with respect to such shares. The portions of the payments
to AIM Distributors under the Class B Plan which constitutes an asset-based
sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a
portion of such sales commissions plus financing costs. AIM Distributors
anticipates that it requires a number of years to recoup from Class B Plan
payments the sales commissions paid to dealers and institutions in connection
with sales of Class B shares. In the future, if multiple distributors serve a
Fund, each such distributor (or its assignee or transferee) would receive a
share of the payments under the Class B Plan based on the portion of the Fund's
Class B shares sold by or attributable to the distribution efforts of that
distributor.
The Trust (on behalf of any class of any Fund) or AIM Distributors may
terminate the Distribution Agreements on sixty (60) days' written notice
without penalty. The Distribution Agreements will terminate automatically in
the event of their assignment. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based distribution fees in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors; provided,
however, that a complete termination of the Class B Plan (as defined in such
Plan) would terminate all
45
<PAGE> 49
payments to AIM Distributors. Termination of the Class B Plan or Distribution
Agreement does not affect the obligation of the Fund and its Class B
shareholders to pay Contingent Deferred Sales Charges.
The following chart reflects the total sales charges paid in
connection with the sale of Class A shares of each Fund (other than AIM
BALANCED FUND) and the amount retained by AIM Distributors for the years ended
December 31, 1994 and 1993 and for the six-month period ended December 31,
1992:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
AIM Global Utilities Fund . . . . $ 1,198,533 $ 168,696 $ 3,474,558 $ 477,431 $ 419,870 $72,184
AIM Government Securities Fund . 644,604 108,048 904,645 156,795 357,101 67,273
AIM Growth Fund . . . . . . . . . 255,624 37,866 183,096 29,279 67,059 11,316
AIM High Yield Fund . . . . . . . 5,149,515 808,554 6,526,992 1,062,165 1,378,476 54,266
AIM Income Fund . . . . . . . . . 554,349 94,637 770,766 134,790 214,074 38,272
AIM Money Market Fund . . . . . . 996,876 182,129 78,035 14,644 N/A N/A
AIM Municipal Bond Fund . . . . . 527,008 82,774 710,819 124,164 173,597 30,536
AIM Value Fund . . . . . . . . . 22,815,744 3,063,899 14,439,158 2,057,628 1,569,988 58,126
</TABLE>
The total sales charges paid in connection with the sale of Class A
shares of AIM BALANCED FUND for the year ended December 31, 1994 was $379,087,
of which A I M Distributors retained $63,481, and for the four-month period
ended December 31, 1993 was $85,265, of which AIM Distributors retained
$14,333. For the years ended August 31, 1993 and 1992, the total sales charges
paid in connection with the sale of shares of ACS were $96,742 and $78,909,
respectively; and the amounts AIM Distributors retained for the same periods
were $19,211 and $14,912, respectively.
The following chart reflects the total sales charges paid in
connection with the sale of shares of each Fund and the amount CIGNA Capital
Brokerage, Inc. (the previous principal underwriter) retained for the six-month
period ended June 30, 1992:
<TABLE>
<CAPTION>
SALES AMOUNT
CHARGES RETAINED
------- --------
<S> <C> <C>
AIM Global Utilities Fund . . . . . . . . $333,038 $ 38,099
AIM Government Securities Fund . . . . . . 643,892 71,603
AIM Growth Fund . . . . . . . . . . . . . 93,705 10,633
AIM High Yield Fund . . . . . . . . . . . 351,959 38,520
AIM Income Fund . . . . . . . . . . . . . 215,851 24,077
AIM Municipal Bond Fund . . . . . . . . . 187,836 21,621
AIM Value Fund . . . . . . . . . . . . . . 941,735 110,802
</TABLE>
The following chart reflects the contingent deferred sales charges
paid by Class B shareholders for the year ended December 31, 1994 and the
period ended December 31 1993:
<TABLE>
<CAPTION>
1994 1993*
---- ----
<S> <C> <C>
AIM Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,532 $ 6
AIM Global Utilities Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,127 3,301
AIM Government Securities Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 70,431 42
AIM Growth Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,475 3,970
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391,108 1,799
AIM Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,712 2,339
</TABLE>
46
<PAGE> 50
<TABLE>
<CAPTION>
1994 1993*
---- ----
<S> <C> <C>
AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,600 37
AIM Municipal Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,017 -0-
AIM Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 584,611 3,425
</TABLE>
___________________________
* The inception date of the Class B shares of AIM GLOBAL
UTILITIES FUND, AIM GROWTH FUND, AIM HIGH YIELD FUND, and AIM
MUNICIPAL BOND FUND was September 1, 1993; the inception date
of the Class B shares of AIM GOVERNMENT SECURITIES FUND and
AIM INCOME FUND was September 7, 1993; the inception date of
the Class B shares of AIM MONEY MARKET FUND was October 16,
1993: and the inception date of the Class B shares of AIM
BALANCED FUND and AIM VALUE FUND was October 18, 1993.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner in which shares of the Funds may
be purchased appears in the Prospectus under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
The sales charge normally deducted on purchases of Class A shares is
used to compensate AIM Distributors and participating dealers for their
expenses incurred in connection with the distribution of the Funds' Class A
shares. Since there is little expense associated with unsolicited orders
placed directly with AIM Distributors by persons who, because of their
relationship with the Funds or with AIM and its affiliates, are familiar with
the Funds, or whose programs for purchase involve little expense (e.g., because
of the size of the transaction and shareholder records required), AIM
Distributors believes that it is appropriate and in the Funds' best interest
that such persons, and certain other persons whose purchases result in
relatively low expenses of distribution, be permitted to purchase Class A
shares of the Funds through AIM Distributors without payment of a sales charge.
The persons who may purchase Class A shares of the Funds without a sales charge
are set forth in the Prospectus.
Complete information concerning the method of exchanging shares of the
Funds for shares of the other AIM Funds is set forth in the Prospectus under
the heading "Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in
the Prospectus under the heading "How to Redeem Shares." In addition to the
Funds' obligation to redeem shares, AIM Distributors may also repurchase shares
as an accommodation to shareholders. To effect a repurchase, those dealers who
have executed Selected Dealer Agreements with AIM Distributors must phone
orders to the order desk of the Funds (Telephone: (713) 626-1919 (in Houston)
or (800) 959-4246 (elsewhere)) and guarantee delivery of all required documents
in good order. A repurchase is effected at the net asset value per share of
the applicable Fund next determined after the repurchase order is received.
Such an arrangement is subject to timely receipt by A I M Fund Services, Inc.,
the Funds' transfer agent, of all required documents in good order. If such
documents are not received within a reasonable time after the order is placed,
the order is subject to cancellation. While there is no charge imposed by a
Fund or by AIM Distributors (other than any applicable contingent deferred
sales charge) when shares are redeemed or repurchased, dealers may charge a
fair service fee for handling the transaction.
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the New York Stock Exchange is restricted, as
determined by applicable rules and regulations of the SEC, (b) the New York
Stock Exchange is closed for other than customary weekend and holiday closings,
(c) the SEC has by order permitted such suspension, or (d) an emergency as
determined by the SEC exists
47
<PAGE> 51
making disposition of portfolio securities or the valuation of the net assets
of the Fund not reasonably practicable.
A Fund's net asset value is calculated by dividing the number of
outstanding shares into the net assets of the Fund. Net assets are the excess
of a Fund's assets over its liabilities.
For AIM Money Market Fund: The Fund may use the amortized cost method
to determine its net asset value so long as the Fund does not (a) purchase any
instrument with a remaining maturity greater than 397 days (for these purposes,
repurchase agreements shall not be deemed to involve the purchase by the Fund
of the securities pledged as collateral in connection with such agreements) or
(b) maintain a dollar-weighted average portfolio maturity in excess of 90 days,
and otherwise complies with the terms of rules adopted by the SEC.
Under the amortized cost method, each investment is valued at its cost
and thereafter any discount or premium is amortized on a constant basis to
maturity. While this method provides certainty of valuation, it may result in
periods in which the amortized cost value of the Fund's investments is higher
or lower than the price that would be received if the investments were sold.
During periods of declining interest rates, use by the Fund of the amortized
cost method of valuing its portfolio may result in a lower value than the
market value of the portfolio, which could be an advantage to new investors
relative to existing shareholders. The converse would apply in a period of
rising interest rates.
The Board of Trustees has established procedures designed to stabilize
at $1.00, to the extent reasonably possible, the Fund's net asset value per
share. Such procedures include review of portfolio holdings by the trustees at
such intervals as they may deem appropriate to determine whether net asset
value, calculated by using available market quotations, deviates from $1.00 per
share and, if so, whether such deviation may result in material dilution or is
otherwise unfair to investors or existing shareholders. In the event the
trustees determine that a deviation having such a result exists, they intend to
take such corrective action as they deem necessary and appropriate, including
the sale of portfolio securities prior to maturity in order to realize capital
gains or losses or to shorten average portfolio maturity; withholding
dividends; redemption of shares in kind; or establishing a net asset value per
share by using available market quotations, in which case, the net asset value
could possibly be more or less than $1.00 per share.
For all other Funds: The following formula may be used to determine
the public offering price per Class A share of an investor's investment:
Net Asset Value / (1 - Sales Charge as % of Offering Price) = Offering
Price.
For example, at the close of business on December 31, 1994, AIM VALUE
FUND - Class A shares had 64,258,401 shares outstanding, net assets of
$1,358,724,515 and a net asset value per share of $21.14. The offering price,
therefore, was $22.37.
AIM HIGH YIELD FUND
Variable Annuity Contracts--Currently, shares of AIM HIGH YIELD FUND
may be purchased at net asset value by the Life Insurance Company of North
America ("LINA") under an arrangement whereby the shares will serve as an
underlying investment medium for certain variable annuity contracts previously
issued by LINA.
The basic objective of the variable annuity contracts is to provide
individuals with retirement benefits through net purchase payment accumulations
and annuity payments which are based upon the performance of AIM HIGH YIELD
FUND or other available funds. The contracts allow their owners and
participants to defer federal income tax ("FIT") payments on contract
investment accumulations until annuity
48
<PAGE> 52
payments begin. The annuity payment options generally provide for lifetime
annuity payments based upon the life of the named annuitant (and joint
annuitant, if applicable). Such payments may be made for a guaranteed minimum
number of years. Certain charges are made in connection with the sale of the
contracts.
The LINA contracts are no longer being issued except that existing
owners, participants and, in some cases, new participants under existing group
contracts under certain tax-qualified plans, may continue to make contributions
under the contract. Persons who wish to receive additional information
concerning investment in AIM HIGH YIELD FUND through LINA's variable annuity
contracts are urged to read the LINA prospectus which describes them. LINA
variable annuity information and a prospectus may be obtained by writing to INA
Security Corporation, 601 Walnut Street, Ninth Floor, Philadelphia,
Pennsylvania 19102, or by calling (215) 351-3121.
QUALIFYING FOR A REDUCED FRONT-END SALES CHARGE
As described in the Prospectus, the front-end sales charge for Class A
shares is calculated by multiplying an investor's total investment by the
applicable sales charge rate. The applicable rate varies with the amount
invested. The Funds offer programs such as Right of Accumulation and Letter of
Intent, which are described in the Prospectus, and are designed to permit
investors to aggregate purchases of different funds, or separate purchases over
time, in order to qualify for a lower sales charge rate. See "Terms and
Conditions of Purchase of the AIM Funds -- Reductions in Initial Sales Charges"
in the Prospectus.
DETERMINATION OF NET ASSET VALUE
For AIM Money Market Fund: The net asset value per share of the Fund
is determined daily as of 12:00 noon and 4:15 p.m. Eastern time on each
business day of the Fund. Net asset value per share is determined by dividing
the value of the Fund's securities, cash and other assets (including interest
accrued but not collected), less all its liabilities (including accrued
expenses and dividends payable), by the number of shares outstanding of the
Fund and rounding the resulting per share net asset value to the nearest one
cent. In the event the New York Stock Exchange closes early (i.e. before 4:00
p.m. Eastern Time) on a particular day, the net asset value of a Fund share is
determined 15 minutes following the close of the New York Stock Exchange on
such day. Determination of the Fund's net asset value per share is made in
accordance with generally accepted accounting principles.
The securities of the Fund are valued on the basis of amortized cost.
This method values a security at its cost on the date of purchase and
thereafter assumes a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the security. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Fund would receive if the security were
sold. During such periods, the daily yield on shares of the Fund computed as
described under "Performance Information" may differ somewhat from an identical
computation made by another investment company with identical investments
utilizing available indications as to the market value of its portfolio
securities.
The valuation of portfolio instruments based upon their amortized cost
and the concomitant maintenance of the net asset value per share of $1.00 for
the Fund is permitted in accordance with applicable rules and regulations of
the SEC which require the Fund to adhere to certain conditions. These rules
require, among other things, that the Fund maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of 397 calendar days or less and invest only in securities
determined by the Board of Trustees to be "Eligible Securities" and to present
49
<PAGE> 53
minimal credit risk to the Fund. For the definition of "Eligible Securities"
see the caption "Description of Money Market Instruments."
The Board of Trustees is required to establish procedures designed to
stabilize, to the extent reasonably practicable, the Fund's price per share at
$1.00, as computed for the purpose of sales and redemptions. Such procedures
include review of the Fund's holdings by the Board of Trustees at such
intervals as they may deem appropriate, to determine whether the net asset
value calculated by using available market quotations or other reputable
sources for the Fund deviates from $1.00 per share and, if so, whether such
deviation may result in material dilution or is otherwise unfair to existing
holders of the Fund's shares. In the event the Board of Trustees determines
that such a deviation exists for the Fund, it will take such corrective action
as the Board of Trustees deems necessary and appropriate with respect to the
Fund, including the sale of portfolio instruments prior to maturity to realize
capital gains or losses or to shorten the average portfolio maturity; the
withholding of dividends; redemption of shares in kind; or the establishment of
a net asset value per share by using available market quotations.
The Fund intends to comply with any amendments made to Rule 2a-7 which
may require corresponding changes in the Fund's procedures which are designed
to stabilize the Fund's price per share at $1.00.
For All Other Funds: The net asset value per share of each Fund is
normally determined daily as of 4:15 p.m. Eastern time on each business day of
the Fund. Net asset value per share is determined by dividing the value of a
Fund's securities, cash and other assets (including interest accrued but not
collected), less all its liabilities (including accrued expenses and dividends
payable), by the total number of Fund shares outstanding. In the event the New
York Stock Exchange closes early (i.e. before 4:00 p.m. Eastern Time) on a
particular day, the net asset value of a Fund share is determined 15 minutes
following the close of the New York Stock Exchange on such day. Determination
of a Fund's net asset value per share is made in accordance with generally
accepted accounting principles.
Each equity security held by a Fund is valued at its last sales price
on the exchange where the security is principally traded or, lacking any sales
on a particular day, the security is valued at the mean between the closing bid
and asked prices on that day. Exchange listed convertible debt securities are
valued at the mean between the last bid and asked prices obtained from
broker-dealers. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued
at the mean between the last bid and asked prices based upon quotes furnished
by market makers for such securities. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation date.
Non-convertible debt securities are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, yield, quality, coupon
rate, maturity, type of issue, individual trading characteristics and other
market data. Securities for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the
supervision of the Trust's officers in a manner specifically authorized by the
Board of Trustees. Short-term obligations having 60 days or less to maturity
are valued on the basis of amortized cost.
Generally, trading in foreign securities, corporate bonds, U.S.
Government securities and money market instruments is substantially completed
each day at various times prior to the close of the New York Stock Exchange.
The values of such securities used in computing the net asset value of each
Fund's shares are determined at such times. Foreign currency exchange rates
are also generally determined prior the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such exchange
rates may occur between the times at which such values are determined and the
close of the New York Stock Exchange which will not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities
50
<PAGE> 54
will be valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
TAX MATTERS
Each Fund is treated as a separate association taxable as a
corporation. Each Fund intends to qualify under the Internal Revenue Code of
1986, as amended (the "Code"), as a regulated investment company ("RIC") for
each taxable year. Accordingly, each Fund must, among other things, meet the
following requirements: (A) each Fund must generally derive at least 90% of
its gross income from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock, securities, foreign
currencies, or other income derived with respect to its business of investing
in such stock, securities or currencies; and (B) each Fund must derive less
than 30% of its gross income from the sale or disposition of any of the
following held less than three months: (i) stock or securities, (ii) options,
futures or forward contracts (other than options, futures or forward contracts
on foreign currencies), or (iii) foreign currencies (or options, futures or
forward contracts on foreign currencies) but only if such currencies are not
directly related to the Fund's business of investing in stock, securities or
options and futures thereon. There are exceptions to the 30% test when a Fund,
in certain circumstances, realizes gains to satisfy abnormal redemptions.
Abnormal redemptions occur on any day when net redemptions exceed one percent
of the Fund's net asset value. Accordingly, the extent to which the Funds may
engage in futures contracts and related options may be materially limited by
this 30% test, with the exception of AIM MONEY MARKET FUND which does not
engage in such transactions. Each Fund must diversify its holdings so that, at
the end of each fiscal quarter: (i) at least 50% of the market value of the
Fund's assets is represented by cash, U.S. Government securities and other
securities, with such other securities limited, with respect to any one issuer,
to an amount not greater than 5% of the Fund's assets and not more than 10% of
the outstanding voting securities of such issuer, and (ii) not more than 25% of
the value of its assets is invested in the securities of any one issuer (other
than U.S. Government securities).
As a RIC, each Fund will generally not be subject to FIT on its income
and gains distributed to shareholders if it currently distributes the sum of
(i) at least 90% of its investment company taxable income for the taxable year
and (ii) at least 90% of the excess of its tax-exempt interest income under
Code Section 103(a) over its deductions disallowed under Code Sections 265 and
171(a)(2) (the "Distribution Requirement"). Distributions made by a Fund
during its taxable year, or under certain circumstances within 12 months after
the end of its taxable year, will be considered distributions made during the
taxable year and will therefore satisfy the Distribution Requirement.
Each Fund is subject to a nondeductible 4% excise tax if it does not
meet certain distribution requirements under the Code. To avoid this excise
tax, during each calendar year, each Fund must distribute: (1) at least 98% of
its ordinary income (not taking into account any capital gains or losses) for
the calendar year (except that any foreign currency gain or loss occurring
after October 31 shall be taken into account the following year), (2) at least
98% of its capital gains in excess of its capital losses for the 12-month
period ending on October 31, and (3) all ordinary income and capital gains from
previous calendar years that were not distributed during such years. Dividends
declared to shareholders of record on a date in October, November or December
will be taxable to shareholders on December 31 in the year declared as long as
the Fund pays the dividends no later than January 31 of the following year.
All Funds except AIM MONEY MARKET FUND: Section 1092 of the Code
affects the taxation of certain transactions involving futures or options
contracts. If a futures or options contract is part of a "straddle" (which
could include another futures contract or underlying stock or securities), as
defined in Section 1092 of the Code, then, generally, losses are deferred first
to the extent that the modified "wash sale" rules of the Section 1092
regulations apply, and second to the extent of unrecognized gains on offsetting
positions. Further, the Funds may be required to capitalize, rather than
deduct currently, any
51
<PAGE> 55
interest expense on indebtedness incurred or continued to purchase or carry any
positions that are part of a straddle. Sections 1092 and 246 of the Code and
the Regulations thereunder also suspend the holding periods for straddle
positions with possible adverse effects regarding long-term capital gain
treatment and the corporate dividends received deduction.
Section 1256 of the Code generally requires that futures contracts and
options on future contracts be "marked-to-market" at the end of each year for
FIT purposes. Code Section 1256 further characterizes 60% of any capital gain
or loss with respect to such futures and options contracts as long-term capital
gain or loss and 40% as short-term capital gain or loss. If such a future or
option is held as an offsetting position and can be considered a straddle under
Section 1092 of the Code, such a straddle will constitute a mixed straddle. A
mixed straddle will be subject to both Section 1256 and Section 1092 unless
certain elections are made by the Fund.
The Funds may have invested in certain foreign currency transactions,
the gain or loss from which may be subject to taxation as ordinary income or
loss under Code Section 988.
AIM GLOBAL UTILITIES FUND: Pursuant to the investment
objectives of the Fund, the Fund may invest in foreign securities. Dividends
and interest received by the Fund with respect to these investments may give
rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. If more than 50% in value of the Fund's total assets at
the close of its taxable year consists of stock or securities of foreign
corporations, the Fund will be eligible, to file an election with the Internal
Revenue Service pursuant to which shareholders of the Fund will be required to
include their proportionate share of such withholding taxes in their United
States income tax returns as gross income, treat such proportionate share as
taxes paid by them, and deduct such proportionate share in computing their
taxable income or, alternatively, use them as foreign tax credits to the extent
allowed against their United States income taxes subject to certain provisions
and limitations contained in the Code. The Fund will report annually to its
shareholders the amount per share of such withholding taxes. Please note that
such foreign tax credits are non-refundable and therefore cannot be claimed by
certain retirement accounts and other persons not otherwise subject to United
States income taxation.
AIM HIGH YIELD FUND: The notes to the financial statements of the
Fund for the year ended December 31, 1994 detail the amount of capital loss
carryover for FIT purposes to which the Fund is entitled. To the extent losses
are used to offset any future capital gains realized during the carryover
period, no capital gains tax liability will be incurred for gains realized and
not distributed.
AIM MUNICIPAL BOND FUND: With respect to interest income that is
exempt from FIT, the Fund intends to comply with Section 852(b)(5) of the Code,
which enables distributions of tax-exempt income to retain their character when
distributed to shareholders as an exempt interest dividend. Each year, the
Fund provides shareholders a statement indicating the amount of distribution
that is exempt from FIT. This statement also provides a breakdown showing the
percentage of such income that came from each state. In addition, the Fund
reports for FIT purposes any net realized capital gains and any ordinary income
from the Fund's short-term holdings. In 1994, approximately 0% of the
dividends paid from income was taxable as ordinary income; however, this
percentage may change in future periods. Further, the Fund also reports
certain interest from "Qualified Private Activity Bonds" which shareholders may
be required to include in the alternative minimum tax calculation.
The Tax Reform Act of 1986 (the "1986 Act") divided municipal debt
obligations into three categories, only one of which ("Public Purpose Bonds")
bears interest which is exempt from both the regular income tax and the
alternative minimum tax as it applies to individuals. For corporations, some
or all of the income from Public Purpose Bonds would be includable in the
corporate alternative minimum tax base. Of the other two categories
("Qualified Private Activity Bonds" and "Private Activity Bonds"), for both
52
<PAGE> 56
individuals and corporations, Qualified Private Activity Bonds bear interest
which is excluded from income for purposes of the regular income tax but must
generally be included in the alternative minimum tax base, and Private Activity
Bonds are taxable under both the regular and alternative minimum taxes.
The 1986 Act also applied limitations on the issuance of bonds whose
proceeds are used by organizations exempt from tax under Code Section
501(c)(3), as well as general limitations on the amount of Qualified Private
Activity Bonds governmental units may issue.
The 1986 Act limitations on tax-exempt bonds apply generally to bonds
issued after August 16, 1986. The private activity bond rules are generally
applicable to bonds issued on or after September 1, 1986, with the alternative
minimum tax rules applicable generally to bonds issued on or after August 7,
1986. AIM MUNICIPAL BOND FUND intends to limit its investments in Qualified
Private Activity Bonds and taxable securities to no more than 20% of its total
assets in any given year, consistent with its stated investment objective.
Original issue discount on tax-exempt bonds is accrued as tax-exempt
interest (except for a portion thereof in the case of certain stripped
tax-exempt bonds), and is included in the tax basis of the security for capital
gain and loss computation purposes. Any gain or loss from the sale or other
disposition of a tax-exempt security is generally treated as either long-term
or short-term capital gain or loss, depending upon its holding period, and is
fully taxable. However, gain recognized from the sale or other disposition of
a tax-exempt security purchased after April 30, 1993, will be treated as
ordinary income to the extent of the accrued market discount on such security.
Interest on indebtedness incurred by shareholders (including financial
institutions) will not be deductible for FIT purposes to the extent that the
money was used to purchase or carry tax-exempt securities. The purchase of
shares may be considered to have been made with borrowed funds even though the
borrowed funds are not directly traceable to the purchase of Fund shares.
Further, persons who are "substantial users" (or persons related thereto) of
facilities financed by private activity bonds should consult their own tax
advisor before purchasing Fund shares.
The exemption of interest income for FIT purposes does not necessarily
result in exemption under state and local laws. Shareholders should consult
their tax advisors as to the treatment of such income under state and local
laws.
PROGRAMS AND SERVICES FOR SHAREHOLDERS
The Funds provide certain services for shareholders and certain
investment or redemption programs. See "Exchange Privilege" and "How to Redeem
Shares" in the Prospectus. All inquiries concerning these programs should be
made directly to A I M Distributors, Inc., P.O. Box 4739, Houston, Texas
77210-4739 toll free at (800) 572-4462.
DIVIDEND ORDER
Dividends may be paid to someone other than the registered owner, or
sent to an address other than the address of record. (Please note that
signature guarantees are required to effect this option). An investor also may
direct that his or her dividends be invested in one of the other Funds in the
Trust, provided however, that dividends attributable to Class A shares may not
be reinvested in Class B shares, dividends attributable to Class B shares may
only be reinvested in Class B shares and dividends attributable to Class C
shares may be reinvested in Class A shares or Class C shares. There is no
sales charge for these deposits; initial investment minimums apply. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" in
the Prospectus. To effect this option, please contact your
53
<PAGE> 57
authorized dealer. For more information concerning AIM Funds other than those
in the Trust, please obtain a current prospectus by contacting your authorized
dealer, by writing to A I M Distributors, Inc., P.O. Box 4739, Houston, Texas
77210-4739, or by calling toll free (800) 959-4246.
REDEMPTIONS PAID IN CASH
Pursuant to Rule 18f-1 under the 1940 Act, each Fund has committed to
pay in cash all requests for redemption by any shareholder of record, limited
in amount with respect to each shareholder during any 90-day period to the
lesser of $250,000 or 1% of the net assets of the Fund at the beginning of such
period. This election is irrevocable while such Rule is in effect unless the
SEC by order upon application permits the withdrawal of the Fund's notification
of election. Redemptions by any one shareholder during any 90-day period in
excess of $250,000 or 1% of the net assets of the Fund may be made in readily
marketable securities.
DESCRIPTION OF MONEY MARKET INSTRUMENTS
U.S. Government Obligations consist of marketable securities and
instruments issued or guaranteed by the United States Government or by certain
of its agencies or instrumentalities. Direct obligations are issued by the
United States Treasury and include bills, certificates of indebtedness, notes
and bonds. Obligations of United States Government agencies and
instrumentalities ("Agencies") are issued by government-sponsored agencies and
enterprises acting under authority of Congress. Certain Agencies are backed by
the full faith and credit of the United States Government, and others are not.
MONEY MARKET OBLIGATIONS
AIM MONEY MARKET FUND will limit its investments to those securities
which at the time of purchase are "First Tier" securities as defined in Rule
2a-7 under the 1940 Act, as such Rule may be amended from time to time. Rule
2a-7 defines a "First Tier" security as any "Eligible Security" that:
(i) is rated (or that has been issued by an issuer that is
rated with respect to a class of short-term debt obligations, or any
security within that class, that is comparable in priority and
security with the security) by the Requisite NRSRO(1) in the highest
rating category for short-term debt obligations (within which there
may be sub-categories or gradations indicating relative standing); or
(ii) is a security described in paragraph (a)(5)(ii) of Rule
2a-7 (i.e. a security that at the time of issuance was a long-term
security but has a remaining maturity of 397 days or less) whose
issuer has received from the Requisite NRSROs a rating, with respect
to a class of short-term debt obligations (or any security within that
class) that now is comparable in priority and security with
__________________________________
(1) "Requisite NRSRO" shall mean (a) any two nationally recognized
statistical rating organizations ("NRSROs") that have issued a rating
with respect to a security or class of debt obligations of an issuer,
or (b) if only one NRSRO has issued a rating with respect to such
security or issuer at the time the Fund purchases or rolls over the
security, that NRSRO. At present the NRSROs are: Standard & Poor's
Corp. ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff and
Phelps, Inc. ("Duff & Phelps"), Fitch Investors Services, Inc.
("Fitch") and, with respect to certain types of securities, IBCA
Limited and its affiliate, IBCA Inc. Subcategories or gradations in
ratings (such as a "+" or "") do not count as rating categories.
54
<PAGE> 58
the security, in the highest rating category for short-term debt
obligations (within which there may be sub-categories or gradations
indicating relative standing); or
(iii) is an Unrated Security(2) that is of comparable quality
to a security meeting the requirements of clauses (i) and (ii) above,
as determined by the Board of Trustees.
Subsequent to its purchase by AIM MONEY MARKET FUND, a security may
cease to be a First Tier security. Subject to certain exceptions set forth in
Rule 2a-7, such an event will not require the disposition of the security by
the Fund, but AIM will consider such an event to be relevant in its
determination of whether the Fund should continue to hold the security. To the
extent that the ratings applied by an NRSRO to a security may change as a
result of changes in these rating systems, the Funds will attempt to use
comparable ratings as standards for its investments in accordance with the
investment policies described herein.
Rule 2a-7 defines an "Eligible Security" as follows:
(i) a security with a remaining maturity of 397 days or less that
is rated (or that has been issued by an issuer that is rated
with respect to a class of short-term debt obligations, or any
security within that class, that is comparable in priority and
security with the security) by the Requisite NRSROs in one of
the two highest rating categories for short-term debt
obligations (within which there may be sub-categories or
gradations indicating relative standing); or
(ii) a security:
(A) that at the time of issuance was a long-term security
but that has a remaining maturity of 397 calendar
days or less; and
(B) whose issuer has received from the Requisite NRSROs a
rating, with respect to a class of short-term debt
obligations (or any security within that class) that
is now comparable in priority and security with the
security, in one of the two highest rating categories
for short-term debt obligations (within which there
may be sub-categories or gradations indicating
relative standing); or
(iii) an unrated security that is of comparable quality to a
security meeting the requirements of (i) or (ii) above, as
determined by the Trust's Board of Trustees; provided,
however, that:
(A) the Board of Trustees may base its determination that
a standby commitment is an Eligible Security upon a
finding that the issuer of the commitment presents a
minimal risk of default; and
__________________________________
(2) An "Unrated Security" is a security (i) issued by an issuer that does
not have a current short-term rating from any NRSRO, either as to the
particular security or as to any other short-term obligations of
comparable priority and security; (ii) that was a long-term security
at the time of issuance and whose issuer has not received from any
NRSRO a rating with respect to a class of short-term obligations now
comparable in priority and security; or (iii) that is rated but which
is the subject of an external credit support agreement not in effect
when the security was assigned its rating, provided that a security is
not an unrated security if any short-term debt obligation issued by
the issuer and comparable in priority and security is rated by any
NRSRO.
55
<PAGE> 59
(B) a security that at the time of issuance was a
long-term security but that has a remaining maturity
of 397 calendar days or less and that is an unrated
security is not an Eligible Security if the security
has a long-term rating from any NRSRO that is not
within the NRSRO's two highest categories (within
which there may be sub-categories or gradations
indicating relative standing).
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
Each of the Funds may engage in repurchase and reverse repurchase
agreement transactions involving the types of securities in which it is
permitted to invest.
REPURCHASE AGREEMENTS under which the purchaser (for example, a Fund)
acquires ownership of a security and the seller agrees, at the time of the
sale, to repurchase the security at a mutually agreed upon time and price,
thereby determining the yield during the purchaser's holding period. A Fund
may, however, enter into a "continuing contract" or "open" repurchase agreement
under which the seller is under a continuing obligation to repurchase the
underlying obligation from the Fund on demand and the effective interest rate
is negotiated on a daily basis. In general, a Fund will enter into repurchase
agreements only with domestic banks with total assets of at least $1 billion or
with primary dealers in U.S. Government securities, but total assets will not
be the sole determinative factor, and a Fund may enter into repurchase
agreements with other institutions which the Board of Trustees believes present
minimal credit risks. Nevertheless, if the seller of a repurchase agreement
fails to repurchase the debt instrument in accordance with the terms of the
agreement, the Fund which entered into the repurchase agreement may incur a
loss to the extent that the proceeds it realizes on the sale of the underlying
obligation are less than the repurchase price. Repurchase agreements are
considered to be loans by a Fund under the 1940 Act.
Rule 2a-7 under the 1940 Act provides that AIM MONEY MARKET FUND may
not invest more than 5% of its total assets in securities issued by the issuer
of the security, provided that the Fund may invest more than five percent of
its total assets in the First Tier securities of a single issuer for a period
of up to three business days after the purchase thereof, provided further, that
the Fund may not make more than one investment in accordance with the foregoing
proviso at any time. Under Rule 2a-7, for purposes of determining the
percentage of the Fund's total assets that are invested in securities of an
issuer, a repurchase agreement shall be deemed to be an acquisition of the
underlying securities, provided that the obligation of the seller to repurchase
the securities from the Fund is fully collateralized. To be fully
collateralized, the collateral must, among other things, consist entirely of
U.S. Government securities or securities that, at the time the repurchase
agreement is entered into, are rated in the highest rating category by the
Requisite NRSROs.
REVERSE REPURCHASE AGREEMENTS, which involve the sale of securities
held by a Fund, with an agreement that the Fund will repurchase the securities
at an agreed upon price and date. A Fund may employ reverse repurchase
agreements when necessary to meet unanticipated net redemptions so as to avoid
liquidating other portfolio securities during unfavorable market conditions.
At the time it enters into a reverse repurchase agreement, a Fund will
segregate cash or high-quality debt securities having a dollar value equal to
the repurchase price. A Fund will utilize reverse repurchase agreements when
the income to be earned from portfolio investments which would otherwise have
to be liquidated to meet redemptions is greater than the expense incurred as a
result of the reverse repurchase transactions. Reverse repurchase agreements
are considered borrowings by a Fund under the 1940 Act.
56
<PAGE> 60
MISCELLANEOUS INFORMATION
AUDIT REPORTS
The Board of Trustees will issue to shareholders at least
semi-annually the Funds' financial statements. Financial statements, audited
by independent auditors, will be issued annually. The firm of Price Waterhouse
LLP served as the auditors to the Funds other than AIM BALANCED FUND and AIM
MONEY MARKET FUND for the year ended December 31, 1992. The firm of KPMG Peat
Marwick LLP served as the auditors of ACS (the predecessor of AIM BALANCED
FUND) for the year ended August 31, 1993. The firm of KPMG Peat Marwick LLP
currently serves as the auditors of the Funds.
LEGAL MATTERS
Legal matters for the Trust have been passed upon by Ballard Spahr
Andrews & Ingersoll, Philadelphia, Pennsylvania.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin
Street, Boston, Massachusetts 02110 is custodian of all securities and cash of
the Funds. Under its contract with the Trust, the Custodian maintains the
portfolio securities of the Funds, administers the purchases and sales of
portfolio securities, collects interest and dividends and other distributions
made on the securities held in the portfolios of the Funds and performs other
ministerial duties. A I M Fund Services, Inc. (a wholly-owned subsidiary of
AIM) (the "Transfer Agent"), P.O. Box 4739, Houston, Texas 77210-4739 acts as
transfer and dividend disbursing agent for the Funds. These services do not
include any supervisory function over management or provide any protection
against any possible depreciation of assets. The Funds pay the Custodian and
the Transfer Agent such compensation as may be agreed upon from time to time.
Texas Commerce Bank National Association, P.O. Box 2558, Houston,
Texas 77252-8084, serves as Sub-Custodian for retail purchases of the AIM
Funds.
RATINGS OF SECURITIES
The following is a description of the factors underlying the
commercial paper and debt ratings of Moody's, S&P, Fitch and Duff & Phelps:
MOODY'S BOND RATINGS
Moody's describes its ratings for corporate bonds as follows:
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
57
<PAGE> 61
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. These are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than the Aaa
securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium- grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca
Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
58
<PAGE> 62
Note: Moody's applies numerical modifiers 1, 2, and 3 in the Aa and A
groups when assigning ratings to industrial development bonds and bonds secured
by either a letter of credit or bond insurance. The modifier 1 indicates that
the security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end of its generic rating category.
MOODY'S MUNICIPAL BOND RATINGS
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
59
<PAGE> 63
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca
Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols Aa1, A1, Baa1, Ba1 and B1.
MOODY'S SHORT-TERM LOAN RATINGS
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or (MIG). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in bond
risk, long-term secular trends for example, may be less important over the
short run.
A short-term rating may also be assigned on an issue having a demand
feature (i.e., a variable rate demand obligation or VRDO). Such ratings will
be designated as VMIG or, if the demand feature is not rated, as NR.
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. Additionally, the source of payment may be limited to the external
liquidity with no or limited legal recourse to the issuer in the event the
demand is not met.
A VMIG rating may also be assigned to commercial paper programs. Such
programs are characterized as having variable short-term maturities but having
neither a variable rate nor demand feature.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4.
Gradations of investment quality are indicated by rating symbols, with
each symbol representing a group in which the quality characteristics are
broadly the same.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
60
<PAGE> 64
MIG 3/VMIG 3
This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
MIG 4/VMIG 4
This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
MOODY'S COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issues
to repay punctually promissory obligations not having an original maturity in
excess of nine months.
PRIME-1
Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return
on funds employed; conservative capitalization structures with moderate
reliance on debt and ample asset protection; broad margins in earnings coverage
of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
PRIME-2
Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
PRIME-3
Issuers rated Prime-3 (or related supported institutions) have an
acceptable capacity for repayment of short- term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME
Issuers rated Not Prime do not fall within any of the Prime rating
categories.
S&P BOND RATINGS
S&P describes its ratings for corporate bonds as follows:
61
<PAGE> 65
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A
Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB
Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB-B-CCC-CC-C
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
S&P DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have, as part of
their structure, a put option or demand feature.
The first rating addresses the likelihood of repayment of principal
and interest as due, and the second rating addresses only the demand feature.
The long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols for the put option (e.g.,
AAA/A-1+). With short-term demand debt, the note rating symbols are used with
the commercial paper rating symbols (e.g., SP-1+/A-1+).
S&P MUNICIPAL NOTE RATINGS
An S&P note rating reflects the liquidity factors and market-access
risks unique to notes. Notes maturing in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in making
that assessment: amortization schedule (the larger the final maturity relative
to other maturities, the more likely the issue will be treated as a note); and
source of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
Note rating symbols and definitions are as follows:
62
<PAGE> 66
SP-1
Category denotes strong capacity to pay principal and interest. Those
issues determined to possess very strong characteristics are given a plus (+)
designation.
SP-2
Rating denotes satisfactory capacity to pay principal and interest,
with some vulnerability to adverse financial and economic changes over the term
of the notes.
SP-3
Speculative capacity to pay principal and interest.
S&P COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days.
Rating categories are as follows:
A-1
This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2
This rating indicates capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues designated
A-1.
A-3
This rating indicates adequate capacity for timely payment. However,
the relative degree of safety is not as high as for issues designated A-1.
B
This rating indicates only a speculative capacity for timely payment.
C
This rating indicates, for short-term debt, a doubtful capacity for
payment.
D
This rating indicates that payment is in default. The D rating
category is used when interest payments or principal payments are not made on
the date due, even if the applicable grace period has not expired, unless it is
believed that such payments will be made during such grace period.
63
<PAGE> 67
FITCH INVESTMENT GRADE BOND RATINGS
Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue or class of debt in a timely manner.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be
provided by insurance policies or financial guaranties unless otherwise
indicated.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any
security. Ratings do not comment on the adequacy of market price, the
suitability of any security for a particular investor, or the tax-exempt nature
or taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.
AAA
Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA
Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA." Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+."
A
Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB
Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
64
<PAGE> 68
PLUS (+) MINUS (-)
Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the "AAA" category.
NR
Indicates that Fitch does not rate the specific issue.
CONDITIONAL
A conditional rating is premised on the successful completion of a
project or the occurrence of a specific event.
SUSPENDED
A rating is suspended when Fitch deems the amount of information
available from the issuer to be inadequate for rating purposes.
WITHDRAWN
A rating will be withdrawn when an issue matures or is called or
refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper
and timely information.
FITCHALERT
Ratings are placed on FitchAlert to notify investors of an occurrence
that is likely to result in a rating change and the likely direction of such
change. These are designated as "Positive," indicating a potential upgrade,
"Negative," for potential downgrade, or "Evolving," where ratings may be raised
or lowered. FitchAlert is relatively short-term, and should be resolved within
12 months.
CREDIT TREND
Credit trend indicators show whether credit fundamentals are
improving, stable, declining, or uncertain, as follows:
Improving Up Arrow
Stable Horizontal Arrow
Declining Down Arrow
Uncertain Vertical Arrow
Credit trend indicators are not predictions that any rating change
will occur, and have a longer-term time frame than issues placed on FitchAlert.
FITCH SPECULATIVE GRADE BOND RATINGS
Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
("BB" to "C") represent Fitch's assessment of the likelihood of timely payment
of principal and interest in accordance with the terms of obligation for bond
issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an
assessment of the ultimate recovery value through reorganization or
liquidation.
65
<PAGE> 69
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since rating categories cannot fully reflect the
differences in degrees of credit risk.
BB
Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B
Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity throughout
the life of the issue.
CCC
Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC
Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C
Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D
Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D"
represents the lowest potential for recovery.
PLUS (+) MINUS (-)
Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the "DDD", "DD", or "D" categories.
66
<PAGE> 70
FITCH SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
The short-term rating places greater emphasis than a long-term rating
on the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
Fitch short-term ratings are as follows:
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."
F-2
Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as for issues assigned "F-1+" and "F-1" ratings.
F-3
Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate,
however, near-term adverse changes could cause these securities to be rated
below investment grade.
F-S
Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions.
D
Default. Issues assigned this rating are in actual or imminent payment
default.
LOC
The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
67
<PAGE> 71
DUFF & PHELPS LONG-TERM RATINGS
AAA
Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA AND AA-
High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.
A+, A AND A-
Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.
BBB+, BBB AND BBB-
Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic cycles.
BB+, BB AND BB-
Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may move up or down
frequently within this category.
B+, B AND B-
Below investment grade and possessing risk that obligations will not
be met when due. Financial protection factors will fluctuate widely according
to economic cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in the rating within this category or into a higher
or lower rating grade.
CCC
Well below investment grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
DD
Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP
Preferred stock with dividend arrearages.
68
<PAGE> 72
DUFF & PHELPS SHORT-TERM RATINGS
D - 1+
Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding and safety is just below risk-free U.S. Treasury short-term
obligations.
D - 1
Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors
are minor.
D - 1-
High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
D - 2
Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
D - 3
Satisfactory liquidity and other protection factors qualify issue as
to investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.
D - 4
Speculative investment characteristics. Liquidity is not sufficient
to insure against disruption in debt service. Operating factors and market
access may be subject to a high degree of variation.
D - 5
Issuer failed to meet scheduled principal and/or interest payments.
69
<PAGE> 73
FINANCIAL STATEMENTS
F-1
<PAGE> 74
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Balanced Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Balanced Fund (a portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1994, and the related statements of operations
for the year then ended, changes in its net assets for the year then ended and
the four-month period ended December 31, 1993, and the financial highlights for
the year then ended, the four-month period ended December 31, 1993, and each of
the years in the eight-year period ended August 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 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
December 31, 1994, 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
Balanced Fund as of December 31, 1994, the results of its operations for the
year then ended, changes in its net assets for the year then ended and the
four-month period ended December 31, 1993, and the financial highlights for the
year then ended, the four-month period ended December 31, 1993, and each of the
years in the eight-year period ended August 31, 1993, in conformity with
generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
February 3, 1995
F-2
<PAGE> 75
FINANCIALS
SCHEDULE OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<C> <S> <C>
BONDS & NOTES-19.64%
AUTOMOBILE-MANUFACTURERS-0.71%
$ 400,000 General Motors Corp., Pass-Through Deb., 8.80%, 03/01/21 $ 409,532
-------------------------------------------------------------------------------------------
BANKING-3.30%
800,000 First Union Corp., Sub. Notes, 6.375%, 01/15/09 643,016
-------------------------------------------------------------------------------------------
700,000 Mercantile Bank, Sub. Notes, 6.375%, 01/15/04 604,653
-------------------------------------------------------------------------------------------
800,000 Wachovia Corp., Sub. Notes, 6.375%, 02/01/09 660,592
-------------------------------------------------------------------------------------------
1,908,261
-------------------------------------------------------------------------------------------
BUSINESS SERVICES-0.52%
300,000 Olsten Corp., Conv. Sub. Deb., 4.875%, 05/15/03 301,500
-------------------------------------------------------------------------------------------
COMPUTER NETWORKING-0.37%
200,000 3 Com Corp., Conv. Sub. Notes, 10.25%, 11/01/01(a) 213,000
(Acquired 11/08/94; cost $200,000)
-------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-1.56%
100,000 EMC Corp., Conv. Sub. Deb., 6.25%, 04/01/02 698,212
-------------------------------------------------------------------------------------------
200,000 Seagate Technology, Conv. Sub. Deb., 5.00%, 11/01/03(a)
(Acquired 04/13/94; cost $209,500) 206,750
-------------------------------------------------------------------------------------------
904,962
-------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-0.31%
200,000 Network Equipment Technologies, Inc., Conv. Deb., 7.25%,
05/15/14 178,500
-------------------------------------------------------------------------------------------
CONGLOMERATES-1.05%
600,000 ITT Corp., Deb., 9.50%, 04/15/21 604,578
-------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-3.11%
150,000 Chrysler Financial Corp., Putable-Extendible Adjustable Rate
Notes, 8.50% 02/01/18 151,641
-------------------------------------------------------------------------------------------
500,000 Countrywide Funding Corp., Sub. Notes, 8.25%, 07/15/02 479,890
-------------------------------------------------------------------------------------------
800,000 Ford Motor Credit Co., Notes, 6.75%, 08/15/08 675,536
-------------------------------------------------------------------------------------------
500,000 GMAC, Putable Notes, 5.50%, 10/15/02 492,220
-------------------------------------------------------------------------------------------
1,799,287
-------------------------------------------------------------------------------------------
FOREIGN GOVERNMENTS-0.60%
500,000 CAD New Brunswick (Province of), Deb., 8.94%, 01/15/05 351,083
-------------------------------------------------------------------------------------------
MEDICAL SERVICES-0.57%
300,000 Healthsouth Rehabilitation Corp., Conv. Sub. Deb., 5.00%,
04/01/01 329,625
-------------------------------------------------------------------------------------------
NATURAL GAS (PIPELINES & DISTRIBUTORS)-2.94%
800,000 Enron Corp., Sr. Sub. Deb., 6.75%, 07/01/05 692,920
-------------------------------------------------------------------------------------------
750,000 Panhandle Eastern Pipe Line Co., Notes, 7.875%, 08/15/04 715,275
-------------------------------------------------------------------------------------------
300,000 Pogo Producing Co., Conv. Sub. Notes, 5.50%, 03/15/04 287,250
-------------------------------------------------------------------------------------------
1,695,445
-------------------------------------------------------------------------------------------
</TABLE>
F-3
<PAGE> 76
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
RETAIL STORES-1.63%
$ 200,000 Home Depot, Inc., Conv. Deb., 4.50%, 02/15/97 $ 241,000
-------------------------------------------------------------------------------------------
500,000 Office Depot, Inc., Liquid Yield Option Notes, 4.00%,
11/01/08(b) 275,000
-------------------------------------------------------------------------------------------
300,000 Pep Boys-Manny, Moe & Jack, Conv. Sub. Notes, 4.00%, 09/01/99 285,000
-------------------------------------------------------------------------------------------
150,000 Pier 1 Imports Inc., Conv. Deb., 6.875%, 04/01/02 141,562
-------------------------------------------------------------------------------------------
942,562
-------------------------------------------------------------------------------------------
SEMICONDUCTORS-0.61%
Motorola, Inc.,
200,000 Liquid Yield Option Notes, 6.00%, 09/07/09(b) 212,202
-------------------------------------------------------------------------------------------
200,000 Liquid Yield Option Notes, 2.25%, 09/27/13(b) 140,750
-------------------------------------------------------------------------------------------
352,952
-------------------------------------------------------------------------------------------
UTILITIES-2.36%
125,000 Century Telephone Enterprises, Inc., Conv. Deb., 6.00%,
02/01/07(a) (Acquired 02/04/93; cost $159,375) 148,750
-------------------------------------------------------------------------------------------
750,000 Commonwealth Edison Co., Sr. Sub. Deb., 9.75%, 02/15/20 732,630
-------------------------------------------------------------------------------------------
453,542 Indiana-Michigan Power Co., Deb., 9.82%, 12/07/22 484,030
-------------------------------------------------------------------------------------------
1,365,410
-------------------------------------------------------------------------------------------
Total Bonds & Notes 11,356,697
-------------------------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
COMMON STOCKS-49.98%
ADVERTISING/BROADCASTING-0.36%
4,500 Meredith Corp. 209,812
-------------------------------------------------------------------------------------------
APPLIANCES-0.99%
15,000 Maytag Corp. 225,000
-------------------------------------------------------------------------------------------
8,000 Premark International Inc. 350,000
-------------------------------------------------------------------------------------------
575,000
-------------------------------------------------------------------------------------------
AUTOMOBILE MANUFACTURERS-0.39%
8,000 Ford Motor Co. 224,000
-------------------------------------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS & TIRES-1.17%
12,000 Dana Corp. 280,500
-------------------------------------------------------------------------------------------
8,000 Eaton Corp. 396,000
-------------------------------------------------------------------------------------------
676,500
-------------------------------------------------------------------------------------------
BANKING-2.28%
3,000 First American Corp. 80,625
-------------------------------------------------------------------------------------------
6,000 First Interstate Bancorp 405,750
-------------------------------------------------------------------------------------------
8,000 First Union Corp. 331,000
-------------------------------------------------------------------------------------------
4,500 Mellon Bank Corp. 137,812
-------------------------------------------------------------------------------------------
8,000 NationsBank Corp. 361,000
-------------------------------------------------------------------------------------------
1,316,187
-------------------------------------------------------------------------------------------
BANKING (MONEY CENTER)-0.36%
5,000 Citicorp(c) 206,875
-------------------------------------------------------------------------------------------
</TABLE>
F-4
<PAGE> 77
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
BEVERAGES-0.56%
9,000 PepsiCo Inc. 326,250
-------------------------------------------------------------------------------------------
BUILDING MATERIALS-0.81%
1,000 Armstrong World Industries, Inc. $ 38,500
-------------------------------------------------------------------------------------------
4,300 Black & Decker Corp.(c) 102,125
-------------------------------------------------------------------------------------------
4,000 Owens Corning Fiberglass Corp.(c) 128,000
-------------------------------------------------------------------------------------------
7,000 Toro Co. 201,250
-------------------------------------------------------------------------------------------
469,875
-------------------------------------------------------------------------------------------
BUSINESS SERVICES-1.35%
9,500 Diebold, Inc. 390,687
-------------------------------------------------------------------------------------------
7,000 Equifax, Inc. 184,625
-------------------------------------------------------------------------------------------
6,000 Healthcare Compare Corp.(c) 204,750
-------------------------------------------------------------------------------------------
780,062
-------------------------------------------------------------------------------------------
CHEMICALS-2.30%
6,200 Dow Chemical Co. 416,950
-------------------------------------------------------------------------------------------
4,000 Goodrich (B.F.) Co. (The) 173,500
-------------------------------------------------------------------------------------------
9,000 PPG Industries, Inc. 334,125
-------------------------------------------------------------------------------------------
3,000 Rohm & Haas Co. 171,375
-------------------------------------------------------------------------------------------
8,000 Union Carbide Corp. 235,000
-------------------------------------------------------------------------------------------
1,330,950
-------------------------------------------------------------------------------------------
CHEMICAL (SPECIALTY)-0.49%
4,000 Air Products & Chemicals, Inc. 178,500
-------------------------------------------------------------------------------------------
5,000 Praxair, Inc. 102,500
-------------------------------------------------------------------------------------------
281,000
-------------------------------------------------------------------------------------------
COMPUTER MAINFRAMES-0.76%
6,000 International Business Machines Corp. 441,000
-------------------------------------------------------------------------------------------
COMPUTER MINI/PCS-1.00%
7,000 COMPAQ Computer Corp.(c) 276,500
-------------------------------------------------------------------------------------------
3,000 Hewlett-Packard Co. 299,625
-------------------------------------------------------------------------------------------
576,125
-------------------------------------------------------------------------------------------
COMPUTER NETWORKING-0.88%
4,200 Bay Networks, Inc.(c) 123,900
-------------------------------------------------------------------------------------------
5,000 Cisco Systems, Inc.(c) 175,007
-------------------------------------------------------------------------------------------
6,000 DSC Communications Corp.(c) 215,250
-------------------------------------------------------------------------------------------
514,157
-------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-0.31%
4,000 Oracle Systems Corp. 176,500
-------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-0.86%
6,500 Adobe Systems, Inc. 193,375
-------------------------------------------------------------------------------------------
3,000 Microsoft Corp.(c) 183,375
-------------------------------------------------------------------------------------------
4,000 Silicon Graphics, Inc.(c) 123,500
-------------------------------------------------------------------------------------------
500,250
-------------------------------------------------------------------------------------------
</TABLE>
F-5
<PAGE> 78
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CONGLOMERATES-2.12%
7,000 Allied-Signal, Inc. $ 238,000
-------------------------------------------------------------------------------------------
7,000 Corning, Inc. 209,125
-------------------------------------------------------------------------------------------
4,000 Dial Corp. (The) 85,000
-------------------------------------------------------------------------------------------
3,500 Dupont (E.I.) de Nemours & Co. 196,875
-------------------------------------------------------------------------------------------
3,000 ITT Corp. 265,875
-------------------------------------------------------------------------------------------
3,500 TRW, Inc. 231,000
-------------------------------------------------------------------------------------------
1,225,875
-------------------------------------------------------------------------------------------
CONTAINERS-0.12%
2,300 Ball Corp. 72,450
-------------------------------------------------------------------------------------------
COSMETICS/TOILETRIES-0.97%
7,500 Gillette Co. (The) 560,625
-------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-1.78%
11,000 General Electric Co. 561,000
-------------------------------------------------------------------------------------------
16,000 Philips Electronics N.V.-New York Shares-ADR(c) 470,000
-------------------------------------------------------------------------------------------
1,031,000
-------------------------------------------------------------------------------------------
ELECTRONIC/DEFENSE-0.41%
2,500 General Motors Corp.-Class H 87,187
-------------------------------------------------------------------------------------------
5,000 Watkins-Johnson Co. 148,750
-------------------------------------------------------------------------------------------
235,937
-------------------------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS-0.76%
6,000 Arrow Electronics, Inc.(c) 215,250
-------------------------------------------------------------------------------------------
6,000 Avnet, Inc. 222,000
-------------------------------------------------------------------------------------------
437,250
-------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.36%
6,000 Schwab (Charles) Corp. 209,250
-------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-3.52%
8,000 American Express Co. 236,000
-------------------------------------------------------------------------------------------
4,000 Federal Home Loan Mortgage Association 202,000
-------------------------------------------------------------------------------------------
10,000 Federal National Mortgage Association 728,750
-------------------------------------------------------------------------------------------
8,600 Green Tree Financial Corp. 261,225
-------------------------------------------------------------------------------------------
15,000 MBNA Corp. 350,625
-------------------------------------------------------------------------------------------
4,000 Student Loan Marketing Association 130,000
-------------------------------------------------------------------------------------------
3,500 SunAmerica, Inc. 126,875
-------------------------------------------------------------------------------------------
2,035,475
-------------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-0.46%
6,000 St. Paul Companies, Inc. 268,500
-------------------------------------------------------------------------------------------
LEISURE & RECREATION-0.37%
11,500 Brunswick Corp. 217,062
-------------------------------------------------------------------------------------------
MACHINE TOOLS-0.20%
4,800 Cincinnati Milacron, Inc. 113,400
-------------------------------------------------------------------------------------------
</TABLE>
F-6
<PAGE> 79
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
MACHINERY (HEAVY)-1.09%
3,750 Agco Corp. 113,906
-------------------------------------------------------------------------------------------
4,000 Caterpillar, Inc. 220,500
-------------------------------------------------------------------------------------------
4,000 Foster Wheeler Corp. 119,000
-------------------------------------------------------------------------------------------
6,000 Trinova Corp. 176,250
-------------------------------------------------------------------------------------------
629,656
-------------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.47%
6,000 Thermo Electron Corp.(c) $ 269,283
-------------------------------------------------------------------------------------------
MEDICAL (DRUGS)-1.15%
12,000 Abbott Laboratories 391,500
-------------------------------------------------------------------------------------------
3,200 Johnson & Johnson 175,200
-------------------------------------------------------------------------------------------
4,000 Teva Pharmaceuticals Industries, Inc.-ADR(c) 96,750
-------------------------------------------------------------------------------------------
663,450
-------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-0.03%
1,100 Isolyser Co., Inc.(c) 19,800
-------------------------------------------------------------------------------------------
MEDICAL SERVICES-1.35%
9,000 Baxter International, Inc. 254,250
-------------------------------------------------------------------------------------------
4,500 Columbia/HCA Healthcare 164,250
-------------------------------------------------------------------------------------------
3,500 Foundation Health Corp.(c) 108,500
-------------------------------------------------------------------------------------------
4,500 Quantum Health Resources, Inc. 129,375
-------------------------------------------------------------------------------------------
3,000 US Healthcare Corp. 123,750
-------------------------------------------------------------------------------------------
780,125
-------------------------------------------------------------------------------------------
METAL-0.30%
4,000 Illinois Tool Works, Inc. 175,000
-------------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.50%
2,900 Xerox Corp. 287,100
-------------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.39%
6,300 Avery-Dennison Corp. 223,650
-------------------------------------------------------------------------------------------
OIL & GAS-0.35%
2,400 Mobil Corp. 202,200
-------------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.52%
4,000 Halliburton Co. 132,500
-------------------------------------------------------------------------------------------
10,000 Transco Energy Co. 166,250
-------------------------------------------------------------------------------------------
298,750
-------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.60%
6,000 Federal Paper Board Co., Inc. 174,000
-------------------------------------------------------------------------------------------
3,500 Mead Corp. (The) 170,187
-------------------------------------------------------------------------------------------
344,187
-------------------------------------------------------------------------------------------
REAL ESTATE-0.24%
8,000 Webb (Del) Corp. 141,000
-------------------------------------------------------------------------------------------
</TABLE>
F-7
<PAGE> 80
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS-3.29%
5,000 Avalon Properties, Inc. 115,000
-------------------------------------------------------------------------------------------
13,000 Bay Apartment Communities(c) 261,625
-------------------------------------------------------------------------------------------
25,000 Equity Inns, Inc. 275,000
-------------------------------------------------------------------------------------------
2,700 Felcor Suite Hotels Inc. 52,650
-------------------------------------------------------------------------------------------
25,000 Innkeepers USA Trust 181,250
-------------------------------------------------------------------------------------------
4,000 Meditrust 121,000
-------------------------------------------------------------------------------------------
2,200 Mid-America Apartment Communities 58,850
-------------------------------------------------------------------------------------------
9,500 National Health Investors, Inc. 248,187
-------------------------------------------------------------------------------------------
10,200 Oasis Residential Inc. 249,900
-------------------------------------------------------------------------------------------
14,900 RFS Hotel Investors Inc. 217,912
-------------------------------------------------------------------------------------------
10,000 South West Property Trust 122,500
-------------------------------------------------------------------------------------------
1,903,874
-------------------------------------------------------------------------------------------
RESTAURANTS-0.20%
4,500 Sbarro Inc. $ 117,000
-------------------------------------------------------------------------------------------
RETAIL STORES-1.77%
10,000 Circuit City Stores, Inc. 222,500
-------------------------------------------------------------------------------------------
5,000 Dayton Hudson Corp. 353,750
-------------------------------------------------------------------------------------------
12,000 Federated Department Stores(c) 231,000
-------------------------------------------------------------------------------------------
7,000 Toys 'R' Us Inc.(c) 213,500
-------------------------------------------------------------------------------------------
1,020,750
-------------------------------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.30%
5,000 Varian Associates, Inc. 175,000
-------------------------------------------------------------------------------------------
SEMICONDUCTORS-2.71%
4,600 Applied Materials Inc.(c) 194,350
-------------------------------------------------------------------------------------------
2,000 Intel Corp. 127,750
-------------------------------------------------------------------------------------------
10,000 National Semiconductor Corp.(c) 195,000
-------------------------------------------------------------------------------------------
14,000 Texas Instruments Inc. 1,048,250
-------------------------------------------------------------------------------------------
1,565,350
-------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-4.76%
10,000 ALC Communications Corp.(c) 311,250
-------------------------------------------------------------------------------------------
12,000 American Telephone & Telegraph Co. 603,000
-------------------------------------------------------------------------------------------
13,000 British Sky-ADR(c) 312,000
-------------------------------------------------------------------------------------------
6,000 Grupo Iusacell, S.A. de C.V.-ADR(c) 111,750
-------------------------------------------------------------------------------------------
4,500 Nokia Corp. ADR(c) 337,500
-------------------------------------------------------------------------------------------
3,800 PT Indostat-ADR 135,850
-------------------------------------------------------------------------------------------
5,000 Sprint Corp. 138,125
-------------------------------------------------------------------------------------------
4,700 Tele Danmark A/S-ADR(c) 119,850
-------------------------------------------------------------------------------------------
2,500 Telecom Corp. of New Zealand Limited-ADR 128,437
-------------------------------------------------------------------------------------------
2,700 Telefonaktiebolaget L.M. Ericsson 149,341
-------------------------------------------------------------------------------------------
7,300 Telefonaktiebolaget L.M. Ericsson-ADR 402,412
-------------------------------------------------------------------------------------------
2,749,515
-------------------------------------------------------------------------------------------
</TABLE>
F-8
<PAGE> 81
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
TEXTILES-0.35%
8,000 Fieldcrest Cannon Inc.(c) 204,000
-------------------------------------------------------------------------------------------
TOBACCO-0.70%
7,000 Philip Morris Companies Inc. 402,500
-------------------------------------------------------------------------------------------
UTILITIES-2.97%
7,000 ALLTEL Corp. 210,875
-------------------------------------------------------------------------------------------
5,000 Ameritech Corp. 201,875
-------------------------------------------------------------------------------------------
4,000 Bell Atlantic Corp. 199,000
-------------------------------------------------------------------------------------------
5,600 Chilgener S.A.-ADR 137,900
-------------------------------------------------------------------------------------------
5,100 Nynex Corp. 187,425
-------------------------------------------------------------------------------------------
5,400 Royal PTT Nederland N.V.-ADR(a)(c)
(Acquired 06/13/94; cost $144,443) 182,250
-------------------------------------------------------------------------------------------
5,500 Southwestern Bell Corp. 222,062
-------------------------------------------------------------------------------------------
1,075 Veba A.G. 374,588
-------------------------------------------------------------------------------------------
1,715,975
-------------------------------------------------------------------------------------------
Total Common Stocks 28,899,532
-------------------------------------------------------------------------------------------
PREFERRED STOCKS-5.70%
AUTOMOBILE/TRUCKS PARTS & TIRES-0.21%
2,000 Federal-Mogul Corp., Series D, $3.87 Conv. Pfd.(a)
(Acquired 04/19/94; cost $177,000) $ 122,806
-------------------------------------------------------------------------------------------
AUTOMOBILE MANUFACTURERS-1.35%
2,000 Chrysler Corp., Series A, $4.625 Conv. Dep. Pfd.(a)
(Acquired 07/28/92-09/11/92; cost $137,146) 272,119
-------------------------------------------------------------------------------------------
3,000 Ford Motor Co., Series A, $4.20 Conv. Pfd. 276,000
-------------------------------------------------------------------------------------------
4,000 General Motors Corp., Series C, $3.25 Conv. Dep. Pfd. 229,500
-------------------------------------------------------------------------------------------
777,619
-------------------------------------------------------------------------------------------
BANKING (MONEY CENTER)-0.66%
3,000 Chemical Banking Corp., $5.00 Conv. Pfd. 206,250
-------------------------------------------------------------------------------------------
1,500 Citicorp, $5.375 Conv. Pfd. 172,376
-------------------------------------------------------------------------------------------
378,626
-------------------------------------------------------------------------------------------
CHEMICALS-0.54%
12,000 Atlantic Richfield Co., $2.2275 Conv. Pfd. DECS 313,500
-------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-0.51%
22,000 Westinghouse Electric Corp.,-Series C, $1.30 Conv. Dep.
Pfd.(a) (Acquired 03/22/94; cost $317,680) 297,000
-------------------------------------------------------------------------------------------
FUNERAL SERVICES-0.63%
7,000 Service Corp. International, $3.125 Conv. Pfd. 364,000
-------------------------------------------------------------------------------------------
RETAIL STORES-0.22%
3,000 Best Buy Co., Inc., $3.24 Conv. Dep. Pfd., 128,625
-------------------------------------------------------------------------------------------
</TABLE>
F-9
<PAGE> 82
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
STEEL-1.20%
10,000 AK Steel, $2.15 Conv. Dep. Pfd. SAILS 312,500
-------------------------------------------------------------------------------------------
9,000 WHX Corp., $3.91 Conv. Dep. Pfd. 382,500
-------------------------------------------------------------------------------------------
695,000
-------------------------------------------------------------------------------------------
UTILITIES-0.38%
4,000 Philippine Long Distance Telephone Co., $3.50 Conv. Pfd. 216,500
-------------------------------------------------------------------------------------------
Total Preferred Stocks 3,293,676
-------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES-15.48%
U.S. Treasury Notes
$5,000,000 7.50%, 12/31/96 4,982,050
-------------------------------------------------------------------------------------------
1,800,000 5.75%, 08/15/03 1,565,676
-------------------------------------------------------------------------------------------
2,500,000 7.25%, 08/15/04 2,399,600
-------------------------------------------------------------------------------------------
3,965,276
-------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 8,947,326
-------------------------------------------------------------------------------------------
Total Investments (excluding Repurchase Agreement) 52,497,231
-------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT-16.92%(d)
9,780,425 Daiwa Securities America Inc., 3.50%, 01/03/95(e) 9,780,425
-------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES-107.72% 62,277,656
-------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(7.72%) (4,460,240)
-------------------------------------------------------------------------------------------
NET ASSETS-100.00% $57,817,416
===========================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Restricted security. May be resold to
qualified institutional buyers in
accordance with the provisions of Rule 144A
under the Securities Act of 1933, as
amended. The valuation of these securities
has been determined in accordance with
procedures established by the Board of
Trustees. The aggregate market value of
these securities at December 31, 1994, was
$1,442,675, which represented 2.50% of the
net assets.
(b) Zero coupon bonds. The interest rate shown
represents the rate of original issue
discount.
(c) Non-income producing security.
(d) 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 value as being 102 percent
of the sales price of the repurchase
agreement.
(e) Joint repurchase agreement entered into
12/30/94 with a maturing value of
$391,353,115. Collateralized by
$426,987,000 U.S. Treasury obligations,
4.75% to 9.25% due 01/15/96 to 11/15/24. The
aggregate market value of the collateral at
12/30/94 was $399,025,510. The Fund's
pro-rata interest in the collateral at
12/31/94 was $9,976,046.
Abbreviations:
ADR-American Depositary Receipt
CAD-Canadian dollars
Conv.-Convertible
Deb.-Debenture
DECS-Debt Exchangeable for Common Stock
Dep.-Depository
Pfd.-Preferred
SAILS-Stock Appreciation Income Linked
Securities
Sr.-Senior
Sub.-Subordinated
See Notes to Financial Statements.
F-10
<PAGE> 83
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $53,385,344) $52,497,231
- ---------------------------------------------------------------------------------------
Repurchase agreements (cost $9,780,425) 9,780,425
- ---------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $344) 342
- ---------------------------------------------------------------------------------------
Receivables for:
Investments sold 128,537
- ---------------------------------------------------------------------------------------
Fund shares sold 387,818
- ---------------------------------------------------------------------------------------
Interest and dividends 470,519
- ---------------------------------------------------------------------------------------
Investment for deferred compensation plan 3,542
- ---------------------------------------------------------------------------------------
Other assets 14,767
- ---------------------------------------------------------------------------------------
Total assets 63,283,181
- ---------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 5,102,147
- ---------------------------------------------------------------------------------------
Fund shares reacquired 244,924
- ---------------------------------------------------------------------------------------
Deferred compensation plan 3,542
- ---------------------------------------------------------------------------------------
Accrued advisory fees 36,168
- ---------------------------------------------------------------------------------------
Accrued administrative service fees 4,667
- ---------------------------------------------------------------------------------------
Accrued distribution fees 35,483
- ---------------------------------------------------------------------------------------
Accrued trustees' fees 1,101
- ---------------------------------------------------------------------------------------
Accrued operating expenses 37,733
- ---------------------------------------------------------------------------------------
Total liabilities 5,465,765
- ---------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $57,817,416
=======================================================================================
NET ASSETS:
Class A $37,572,016
=======================================================================================
Class B $20,245,400
=======================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 2,570,636
=======================================================================================
Class B 1,384,910
=======================================================================================
Class A:
Net asset value and redemption price per share $ 14.62
=======================================================================================
Offering price per share:
(Net asset value of $14.62 / 95.25%) $ 15.35
=======================================================================================
Class B:
Net asset value and offering price per share $ 14.62
=======================================================================================
</TABLE>
See Notes to Financial Statements.
F-11
<PAGE> 84
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended December 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 1,261,270
- ---------------------------------------------------------------------------------------
Dividends 692,416
- ---------------------------------------------------------------------------------------
Total investment income 1,953,686
- ---------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 137,235
- ---------------------------------------------------------------------------------------
Custodian fees 32,746
- ---------------------------------------------------------------------------------------
Distribution fees-Class A 79,663
- ---------------------------------------------------------------------------------------
Distribution fees-Class B 127,368
- ---------------------------------------------------------------------------------------
Administrative service fees 81,734
- ---------------------------------------------------------------------------------------
Trustees' fees 5,251
- ---------------------------------------------------------------------------------------
Transfer agent fees-Class A 58,429
- ---------------------------------------------------------------------------------------
Transfer agent fees-Class B 31,941
- ---------------------------------------------------------------------------------------
Printing expenses 33,149
- ---------------------------------------------------------------------------------------
Other 73,421
- ---------------------------------------------------------------------------------------
Total expenses 660,937
- ---------------------------------------------------------------------------------------
Net investment income 1,292,749
- ---------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) on sales of:
- ---------------------------------------------------------------------------------------
Investment securities (1,545,230)
- ---------------------------------------------------------------------------------------
Foreign currencies (1,732)
- ---------------------------------------------------------------------------------------
(1,546,962)
- ---------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
- ---------------------------------------------------------------------------------------
Investment securities (2,365,355)
- ---------------------------------------------------------------------------------------
Foreign currencies (132)
- ---------------------------------------------------------------------------------------
(2,365,487)
- ---------------------------------------------------------------------------------------
Net gain (loss) on investment securities and foreign currencies (3,912,449)
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(2,619,700)
=======================================================================================
</TABLE>
See Notes to Financial Statements.
F-12
<PAGE> 85
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 1994 and the four months ended December 31, 1993
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,292,749 $ 129,784
- -----------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities
and foreign currencies (1,546,962) 1,763,877
- -----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (2,365,487) (1,568,080)
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (2,619,700) 325,581
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (841,828) (191,513)
- -----------------------------------------------------------------------------------------
Class B (264,264) (5,226)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (542,894) --
- -----------------------------------------------------------------------------------------
Class B (294,134) --
- -----------------------------------------------------------------------------------------
Distributions to shareholders in excess of net realized
capital gains:
Class A (8,772) --
- -----------------------------------------------------------------------------------------
Class B (4,752) --
- -----------------------------------------------------------------------------------------
Net equalization credits 516,289 92,746
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 17,028,360 3,824,848
- -----------------------------------------------------------------------------------------
Class B 18,575,216 2,730,566
- -----------------------------------------------------------------------------------------
Net increase in net assets 31,543,521 6,777,002
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 26,273,895 19,496,893
- -----------------------------------------------------------------------------------------
End of period $57,817,416 $26,273,895
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $59,203,842 $23,600,266
- -----------------------------------------------------------------------------------------
Undistributed net investment income 1,062,305 359,359
- -----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities and foreign currencies (1,560,486) 837,028
- -----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (888,245) 1,477,242
- -----------------------------------------------------------------------------------------
$57,817,416 $26,273,895
=========================================================================================
</TABLE>
See Notes to Financial Statements.
F-13
<PAGE> 86
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Balanced Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate series portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers two different classes of shares: the Class A shares and the
Class B shares. Class A shares are sold with a front-end sales charge. Class B
shares are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange is valued at
its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date. Non-convertible bonds
and notes are valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as institution-size trading in similar groups of securities,
developments related to special securities, yield, quality, coupon, rate,
maturity, type of issue, individual trading characteristics and other market
data. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision
of the Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value.
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
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. Bond Premiums and Discounts-It is the policy of the Fund not to amortize
market discounts and premiums on bonds for financial reporting purposes.
D. 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
$1,337,796 (which may be carried forward to offset future taxable capital
gains, if any) which expires, if not previously utilized, in the year 2002.
E. Equalization-The Fund follows the accounting practice known as equalization
by which a portion of the proceeds from sales and the costs of repurchases of
Fund shares, equivalent on a per share basis to the amount of undistributed
net investment income, is credited or charged to undistributed income when
the transaction is recorded so the undistributed net investment income per
share is unaffected by sales or redemptions of Fund shares.
F. Expenses-Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them. Expenses of the
Trust which are not directly attributable to the operations of any class of
shares or portfolio of the Trust are prorated among the classes to which the
expense relates based upon the relative net assets of each class.
G. Foreign Currency Translation-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
H. Foreign Currency Contracts-A forward currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a forward contract to attempt to minimize the
risk to the Fund from adverse changes in the relationship between securities.
The Fund may also enter into a forward contract for the purchase or sale of a
security denominated in a foreign currency in order to "lock in" the U.S.
dollar price of that security. The Fund could be exposed to risk if
counterparties
F-14
<PAGE> 87
FINANCIALS
to the contracts are unable to meet the terms of their contracts or if the
value of the foreign currency changes unfavorably.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays AIM an advisory fee at an annual rate of 0.75% of the
first $150 million of the Fund's average daily net assets plus 0.50% of the
Fund's average daily net assets in excess of $150 million. This agreement
requires AIM to reduce its fees or, if necessary, make payments to the Fund to
the extent required to satisfy any expense limitations imposed by the securities
laws or regulations thereunder of any state in which the Fund's shares are
qualified for sale. AIM agreed to voluntarily waive advisory fees of 0.50% of
the Fund's average daily net assets during 1994. During the year ended December
31, 1994, AIM waived advisory fees of $201,586. Effective January 1995, AIM has
agreed to voluntarily waive advisory fees of 0.25% of the Fund's average daily
net assets. The waiver is voluntary and can be discontinued at any time.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting and shareholder services to the Fund. During the year ended December
31, 1994, AIM was reimbursed $81,734 for such services. Effective November 1,
1994, A I M Fund Services, Inc. ("AFS") became the transfer agent for the Fund
and was paid $10,700 for such services during the two months ended December 31,
1994.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares (the
"Class B Plan")(collectively, the "Plans"). The Fund, pursuant to the Class A
Plan, pays AIM Distributors compensation at an annual rate of 0.25% of the
average daily net assets attributable to the Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs, and to implement a program which provides periodic payments to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class A shares of
the Fund. The Fund, pursuant to the Class B Plan, pays AIM Distributors
compensation at an annual rate of 1.00% of the average daily net assets
attributable to the Class B shares. Of this amount, the Fund may pay a service
fee of 0.25% of the average daily net assets of the Class B shares to selected
dealers and financial institutions who furnish continuing personal shareholder
services to their customers who purchase and own Class B shares of the Fund. Any
amounts not paid as a service fee under such Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges, that may be paid by the respective
classes. During the year ended December 31, 1994, the Class A shares and the
Class B shares paid AIM Distributors $79,663 and $127,368, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $63,481 from sales of the Class A
shares of the Fund during the year ended December 31, 1994. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1994,
AIM Distributors received $28,532 in contingent deferred sales charges imposed
on redemptions of Class B shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AIM Distributors and AFS.
During the year ended December 31, 1994, the Fund paid legal fees of $3,018
for services rendered by Reid & Priest as counsel to the Board of Trustees.
Effective September 1994, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed as counsel to the Board of Trustees. The Fund paid legal fees of $194
for services rendered by that firm as counsel. A member of that firm is a
trustee of the Trust.
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of the Trust. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1994 was
$61,228,478 and $29,484,378, respectively.
F-15
<PAGE> 88
FINANCIALS
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 2,389,863
- ----------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (3,337,732)
- ----------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities $ (947,869)
==================================================================================
</TABLE>
Cost of investments for tax purposes is $53,445,100.
NOTE 5-SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 1994 and the
four months ended December 31, 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
------------------------ -----------------------
SHARES VALUE SHARES VALUE
--------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 1,622,265 $24,865,959 341,507 $ 5,454,065
- -----------------------------------------------------------------------------------------
Class B* 1,362,158 20,837,893 175,555 2,804,614
- -----------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 76,775 1,081,610 8,104 127,654
- -----------------------------------------------------------------------------------------
Class B* 33,584 459,716 293 4,612
- -----------------------------------------------------------------------------------------
Reacquired:
Class A (589,475) (8,919,209) (109,571) (1,756,871)
- -----------------------------------------------------------------------------------------
Class B* (181,713) (2,722,393) (4,968) (78,660)
- -----------------------------------------------------------------------------------------
2,323,594 $35,603,576 410,920 $ 6,555,414
=========================================================================================
</TABLE>
* Sales of Class B shares commenced on October 18, 1993.
F-16
<PAGE> 89
FINANCIALS
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during the year ended December 31, 1994, the four months ended
December 31, 1993 and each of the years in the eight-year period ended August
31, 1993 and for a Class B share outstanding during the year ended December 31,
1994, and the period October 18, 1993 (date sales commenced) through December
31, 1993. Prior to October 15, 1993, the Fund was known as AIM Convertible
Securities, Inc. and had a different investment objective.
<TABLE>
<CAPTION>
DECEMBER 31, AUGUST 31,
----------------------- --------------------------------------------------------------------------
CLASS A: 1994 1993 1993 1992 1991 1990 1989 1988 1987 1986
- ---------------------- ------- ------- ------- ------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 16.10 $ 15.97 $ 12.77 $ 12.04 $ 9.73 $ 10.67 $ 9.08 $ 11.89 $ 12.89 $ 11.82
- ---------------------- ------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Income from investment
operations:
Net investment income 0.44 0.10 0.32 0.29 0.28 0.32 0.39 0.42 0.55 0.67
- ---------------------- ------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Net gains (losses)
on securities
(both realized
and unrealized) (1.31) 0.18 3.18 0.74 2.33 (0.91) 1.63 (2.65) 0.15 1.65
- ---------------------- ------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Total from
investment
operations (0.87) 0.28 3.50 1.03 2.61 (0.59) 2.02 (2.23) 0.70 2.32
- ---------------------- ------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.39) (0.15) (0.30) (0.30) (0.30) (0.35) (0.43) (0.50) (0.66) (0.72)
- ---------------------- ------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Distributions from
net realized
capital gains (0.22) -- -- -- -- -- -- (0.08) (1.04) (0.53)
- ---------------------- ------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Total distributions (0.61) (0.15) (0.30) (0.30) (0.30) (0.35) (0.43) (0.58) (1.70) (1.25)
- ---------------------- ------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Net asset value,
end of period $ 14.62 $ 16.10 $ 15.97 $ 12.77 $ 12.04 $ 9.73 $ 10.67 $ 9.08 $ 11.89 $ 12.89
====================== ======= ======= ======= ======= ======== ======== ======= ======= ======= =======
Total return(a) (5.44)% 1.76% 27.75% 8.66% 27.41% (5.67)% 22.96% (18.57)% 5.78% 20.33%
====================== ======= ======= ======= ======= ======== ======== ======= ======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000s
omitted) $37,572 $23,520 $19,497 $11,796 $ 11,750 $ 10,965 $14,405 $16,789 $27,973 $20,376
====================== ======= ======= ======= ======= ======== ======== ======= ======= ======= =======
Ratio of expenses to
average net assets 1.25%(b)(c) 2.17%(d) 2.07% 2.12% 2.39% 2.15% 1.94% 2.31% 1.87% 1.50%
====================== ======= ======= ======= ======= ======== ======== ======= ======= ======= =======
Ratio of net
investment income
to average net
assets 3.07%(b)(c) 1.81%(d) 2.23% 2.32% 2.74% 3.18% 3.99% 4.50% 4.54% 5.43%
====================== ======= ======= ======= ======= ======== ======== ======= ======= ======= =======
Portfolio
turnover rate 76.18% 233.10% 154.47% 165.53% 208.11% 307.08% 149.42% 117.73% 249.93% 192.35%
====================== ======= ======= ======= ======= ======== ======== ======= ======= ======= =======
Borrowings for
the period:
Amount of debt
outstanding at
end of period -- -- -- -- -- -- $260,000 -- -- --
- ---------------------- ------- ------- ------- ------- -------- -------- -------- ------ ------- -------
Average amount of
debt outstanding
during the period(e) -- -- -- -- -- $138,181 $ 83,195 -- -- --
- ---------------------- ------- ------- ------- ------- -------- -------- -------- ------ ------- -------
Average number of
shares outstanding
during the period
(000s omitted)(e) 2,061 1,305 1,046 939 1,051 1,238 1,589 2,131 2,010 1,709
- ---------------------- ------- ------- ------- ------- -------- -------- -------- ------ ------- -------
Average amount of
debt per share
during the period -- -- -- -- -- $ 0.110 $ 0.052 -- -- --
- ---------------------- ------- ------- ------- ------- -------- -------- -------- ------ ------- -------
</TABLE>
(a) Total returns do not deduct sales charges and are not annualized for periods
less than one year.
(b) Ratios are based on average net assets of $31,893,214.
(c) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees are 1.68% and 2.64%,
respectively.
(d) Annualized.
(e) Averages computed on a daily basis.
<TABLE>
<CAPTION>
CLASS B: 1994 1993
- ----------------------------------------------------------------------------------------------- ------- -------
<S> <C> <C>
Net asset value, beginning of period $ 16.11 $ 16.69
- ----------------------------------------------------------------------------------------------- ------- -------
Income from investment operations:
- ----------------------------------------------------------------------------------------------- ------- -------
Net investment income 0.31 0.04
- ----------------------------------------------------------------------------------------------- ------- -------
Net gains (losses) on securities (both realized and unrealized) (1.31) (0.58)
- ----------------------------------------------------------------------------------------------- ------- -------
Total from investment operations (1.00) (0.54)
- ----------------------------------------------------------------------------------------------- ------- -------
Less distributions:
Dividends from net investment income (0.27) (0.04)
- ----------------------------------------------------------------------------------------------- ------- -------
Distributions from net realized capital gains (0.22) --
- ----------------------------------------------------------------------------------------------- ------- -------
Total distributions (0.49) (0.04)
- ----------------------------------------------------------------------------------------------- ------- -------
Net asset value, end of period $ 14.62 $ 16.11
=============================================================================================== ====== =======
Total return(a) (6.23)% (3.23)%(b)
=============================================================================================== ====== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,245 $ 2,754
=============================================================================================== ====== =======
Ratio of expenses to average net assets 1.98%(c)(d) 2.83%(e)
=============================================================================================== ====== =======
Ratio of net investment income to average net assets 2.34%(c)(d) 1.15%(e)
=============================================================================================== ====== =======
Portfolio turnover rate 76.18% 233.10%
=============================================================================================== ====== =======
</TABLE>
(a) Does not deduct contingent deferred sales charge.
(b) Total return is not annualized.
(c) Ratios are based on average net assets of $13,282,960.
(d) After waiver of advisory fees. Ratios of expenses and net investment income
prior to waiver of advisory fees are 2.45% and 1.87%, respectively.
(e) Annualized.
F-17
<PAGE> 90
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Government Securities Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Government Securities Fund (a portfolio of AIM Funds Group), including the
schedule of investments, as of December 31, 1994, and the related statements of
operations for the year then ended, the changes in its net assets and the
financial highlights for each of the years in the two-year period then ended.
These financial statements and the 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
December 31, 1994, 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 the financial highlights
referred to above present fairly, in all material respects, the financial
position of AIM Government Securities Fund as of December 31, 1994, the results
of its operations for the year then ended, the changes in its net assets and
the financial highlights for each of the years in the two-year period then
ended, in conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
February 3, 1995
F-18
<PAGE> 91
FINANCIALS
SCHEDULE OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCIES-83.77%
FEDERAL HOME LOAN BANK BOARD-5.61%
Medium term notes
$ 3,000,000 7.69%, 12/16/96 $ 2,994,060
- ------------------------------------------------------------------------------------------------
4,000,000 7.15%, 07/22/99 3,851,840
- ------------------------------------------------------------------------------------------------
3,300,000 8.375%, 10/25/99 3,343,593
- ------------------------------------------------------------------------------------------------
10,189,493
- ------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION-15.38%
Debentures
1,000,000 7.125%, 11/18/02 945,360
- ------------------------------------------------------------------------------------------------
4,500,000 10.50%, 06/01/17 4,755,870
- ------------------------------------------------------------------------------------------------
Pass through certificates
5,109,899 8.00%, 07/01/06 to 11/01/09 5,002,278
- ------------------------------------------------------------------------------------------------
45,436 12.00%, 02/01/13 49,525
- ------------------------------------------------------------------------------------------------
89,068 10.00%, 11/01/11 to 02/01/16 92,964
- ------------------------------------------------------------------------------------------------
11,752,685 9.00%, 12/01/05 to 09/01/20 11,936,327
- ------------------------------------------------------------------------------------------------
5,229,065 8.50%, 12/01/05 to 08/01/24 5,165,477
- ------------------------------------------------------------------------------------------------
27,947,801
- ------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-35.14%
Debentures
4,100,000 11.50%, 02/10/95 4,124,108
- ------------------------------------------------------------------------------------------------
4,000,000 8.20%, 03/10/98 4,017,080
- ------------------------------------------------------------------------------------------------
2,000,000 7.05%, 12/10/98 1,933,960
- ------------------------------------------------------------------------------------------------
5,500,000 8.625%, 11/10/04 5,569,795
- ------------------------------------------------------------------------------------------------
Medium term notes
3,500,000 7.68%, 12/01/97 3,462,690
- ------------------------------------------------------------------------------------------------
2,500,000 7.24%, 09/02/99 2,409,400
- ------------------------------------------------------------------------------------------------
2,000,000 7.65%, 10/20/99 1,957,220
- ------------------------------------------------------------------------------------------------
Pass through certificates
1,511,270 9.00%, 11/01/06 1,535,328
- ------------------------------------------------------------------------------------------------
1,914,811 7.50%, 07/01/09 1,833,413
- ------------------------------------------------------------------------------------------------
20,000,000 8.00%, 01/18/10 TBA(a) 19,637,500
- ------------------------------------------------------------------------------------------------
1,049,643 10.50%, 03/01/14 1,118,510
- ------------------------------------------------------------------------------------------------
5,711,286 9.50%, 07/01/16 to 12/01/23 5,896,788
- ------------------------------------------------------------------------------------------------
10,419,795 8.50%, 03/01/06 TO 05/01/24 10,383,824
- ------------------------------------------------------------------------------------------------
63,879,616
- ------------------------------------------------------------------------------------------------
</TABLE>
F-19
<PAGE> 92
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-26.24%
Pass through certificates
$ 402,357 12.50%, 11/15/10 $ 453,021
- ------------------------------------------------------------------------------------------------
791,997 13.50%, 07/15/10 to 04/15/15 902,615
- ------------------------------------------------------------------------------------------------
782,886 13.00%, 01/15/11 to 05/15/15 889,295
- ------------------------------------------------------------------------------------------------
1,216,585 12.00%, 01/15/13 to 07/15/15 1,357,234
- ------------------------------------------------------------------------------------------------
405,503 11.00%, 12/15/09 to 12/15/15 441,865
- ------------------------------------------------------------------------------------------------
347,648 10.50%, 07/15/13 to 02/15/16 371,654
- ------------------------------------------------------------------------------------------------
12,114,404 9.50%, 06/15/09 to 02/15/21 12,530,945
- ------------------------------------------------------------------------------------------------
10,142,813 9.00%, 10/15/08 to 11/15/21 10,262,563
- ------------------------------------------------------------------------------------------------
3,812,987 8.00%, 04/15/17 to 07/15/22 3,675,607
- ------------------------------------------------------------------------------------------------
10,206,491 10.00%, 11/15/09 to 12/01/24 10,743,056
- ------------------------------------------------------------------------------------------------
6,000,000 9.00%, 01/19/25 TBA(a) 6,067,500
- ------------------------------------------------------------------------------------------------
47,695,355
- ------------------------------------------------------------------------------------------------
PRIVATE EXPORT FUNDING COMPANY-1.40%
Debentures
2,500,000 8.40%, 07/31/01 2,545,825
- ------------------------------------------------------------------------------------------------
2,545,825
- ------------------------------------------------------------------------------------------------
Total U.S. Government Agencies 152,258,090
- ------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-18.04%
U.S. TREASURY BONDS AND NOTES-17.32%
5,000,000 12.625%, 05/15/95 5,116,300
- ------------------------------------------------------------------------------------------------
3,000,000 7.50%, 01/31/96 3,005,910
- ------------------------------------------------------------------------------------------------
3,000,000 9.375%, 04/15/96 3,067,680
- ------------------------------------------------------------------------------------------------
4,000,000 7.25%, 11/15/96 3,970,480
- ------------------------------------------------------------------------------------------------
2,000,000 8.875%, 11/15/97 2,053,140
- ------------------------------------------------------------------------------------------------
3,000,000 7.875%, 04/15/98 3,003,450
- ------------------------------------------------------------------------------------------------
5,000,000 9.25%, 01/15/96 to 08/15/98 5,192,480
- ------------------------------------------------------------------------------------------------
3,000,000 7.75%, 11/30/99 2,989,260
- ------------------------------------------------------------------------------------------------
3,000,000 8.50%, 02/15/00 3,081,840
- ------------------------------------------------------------------------------------------------
31,480,540
- ------------------------------------------------------------------------------------------------
</TABLE>
F-20
<PAGE> 93
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY STRIPS-0.72%(b)
$ 1,000,000 8.06% 02/15/12 $ 258,600
- ------------------------------------------------------------------------------------------------
7,000,000 8.04% 02/15/19 1,045,800
- ------------------------------------------------------------------------------------------------
1,304,400
- ------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 32,784,940
- ------------------------------------------------------------------------------------------------
Total Investments (excluding repurchase agreements) 185,043,030
- ------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT 11.15%(c)
Goldman, Sachs & Co.
20,265,342 5.75%, 01/03/95(d) 20,265,342
- ------------------------------------------------------------------------------------------------
Total Repurchase Agreements 20,265,342
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-112.96% 205,308,372
- ------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITES-(12.96%) (23,552,524)
- ------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $181,755,848
================================================================================================
</TABLE>
F-21
<PAGE> 94
FINANCIALS
NOTES TO SCHEDULE OF INVESTMENTS:
(a) At 12/31/94, cost of securities purchased on a when-issued basis
totaled $25,758,438.
(b) U.S. Treasury STRIPS are 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.
(c) 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 value as being 102% of
the sales price of the repurchase agreement.
(d) Joint repurchase agreement entered into 12/30/94 with a maturing value
of $52,570,761. Collateralized by $53,268,000 U.S. Treasury
obligations, 0.00% to 11.25% due 02/15/95 to 05/15/97. The aggregate
market value of collateral at 12/31/94 was $53,647,034. The Fund's
pro-rata interest in the collateral was $20,693,444.
See Notes to Financial Statements.
F-22
<PAGE> 95
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at market value
(cost $190,790,188) $185,043,030
- ----------------------------------------------------------------------------------------
Repurchase agreements (cost $20,265,342) 20,265,342
- ----------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 1,055,894
- ----------------------------------------------------------------------------------------
Interest 2,092,544
- ----------------------------------------------------------------------------------------
Investment for deferred compensation plan 10,378
- ----------------------------------------------------------------------------------------
Other assets 192,420
- ----------------------------------------------------------------------------------------
Total assets 208,659,608
- ----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 25,758,438
- ----------------------------------------------------------------------------------------
Fund shares redeemed 533,259
- ----------------------------------------------------------------------------------------
Dividends 334,355
- ----------------------------------------------------------------------------------------
Deferred compensation plan 10,378
- ----------------------------------------------------------------------------------------
Accrued advisory fees 77,211
- ----------------------------------------------------------------------------------------
Accrued administrative service fees 254
- ----------------------------------------------------------------------------------------
Accrued distribution fees 105,534
- ----------------------------------------------------------------------------------------
Accrued printing fees 40,520
- ----------------------------------------------------------------------------------------
Accrued professional fees 14,421
- ----------------------------------------------------------------------------------------
Accrued operating expenses 29,390
- ----------------------------------------------------------------------------------------
Total liabilities 26,903,760
- ----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $181,755,848
========================================================================================
NET ASSETS:
Class A $158,341,194
========================================================================================
Class B $ 23,414,654
========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 17,603,509
========================================================================================
Class B 2,605,423
========================================================================================
CLASS A:
Net asset value and redemption price per share $ 8.99
========================================================================================
Offering price per share (Net asset value of $8.99/95.25%) $ 9.44
========================================================================================
CLASS B:
Net asset value and offering price per share $ 8.99
========================================================================================
</TABLE>
See Notes to Financial Statements.
F-23
<PAGE> 96
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended December 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 12,296,175
- ---------------------------------------------------------------------------------------------------------
Total investment income 12,296,175
- ---------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 734,086
- ---------------------------------------------------------------------------------------------------------
Custodian fees 44,788
- ---------------------------------------------------------------------------------------------------------
Distribution fees-Class A 327,060
- ---------------------------------------------------------------------------------------------------------
Distribution fees-Class B 159,848
- ---------------------------------------------------------------------------------------------------------
Administrative service fees 92,487
- ---------------------------------------------------------------------------------------------------------
Filing fees 36,557
- ---------------------------------------------------------------------------------------------------------
Printing fees 92,523
- ---------------------------------------------------------------------------------------------------------
Professional fees 40,079
- ---------------------------------------------------------------------------------------------------------
Transfer agent fees-Class A 97,063
- ---------------------------------------------------------------------------------------------------------
Transfer agent fees-Class B 16,276
- ---------------------------------------------------------------------------------------------------------
Trustees' fees 5,416
- ---------------------------------------------------------------------------------------------------------
Other 31,846
- ---------------------------------------------------------------------------------------------------------
Total expenses 1,678,029
- ---------------------------------------------------------------------------------------------------------
Less expenses assumed by advisor (31,200)
- ---------------------------------------------------------------------------------------------------------
Net expenses 1,646,829
- ---------------------------------------------------------------------------------------------------------
Net investment income 10,649,346
- ---------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities (10,486,627)
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (5,639,126)
- ---------------------------------------------------------------------------------------------------------
Net gain (loss) on investment securities (16,125,753)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (5,476,407)
=========================================================================================================
</TABLE>
See Notes to Financial Statements.
F-24
<PAGE> 97
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
OPERATIONS:
Net investment income $ 10,649,346 $ 9,721,880
- ---------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (10,486,627) 2,029,819
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (5,639,126) (2,637,549)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (5,476,407) 9,114,150
- ---------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (7,962,122) (9,266,777)
- ---------------------------------------------------------------------------------------------------------
Class B (834,681) (48,922)
- ---------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (652,519) (1,937,810)
- ---------------------------------------------------------------------------------------------------------
Class B (80,521) (73,815)
- ---------------------------------------------------------------------------------------------------------
Return of capital:
Class A (1,369,875) --
- ---------------------------------------------------------------------------------------------------------
Class B (165,673) --
- ---------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 33,619,200 18,180,881
- ---------------------------------------------------------------------------------------------------------
Class B 18,932,857 6,294,249
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets 36,010,259 22,261,956
- ---------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 145,745,589 123,483,633
- ---------------------------------------------------------------------------------------------------------
End of period $181,755,848 $145,745,589
=========================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $196,716,205 $145,699,696
- ---------------------------------------------------------------------------------------------------------
Undistributed net investment income 159,155 (684,640)
- ---------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (9,372,354) 838,565
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (5,747,158) (108,032)
- ---------------------------------------------------------------------------------------------------------
$181,755,848 $145,745,589
=========================================================================================================
</TABLE>
See Notes to Financial Statements.
F-25
<PAGE> 98
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Government Securities Fund (the "Fund") is a series portfolio of AIM Funds
Group (the "Trust"). The Trust is a Delaware business trust registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate series
portfolios, each having an unlimited number of shares of beneficial
interest. The Fund currently offers two different classes of shares: the Class A
shares and the Class B shares. Class A shares are sold with a front-end sales
charge. Class B shares are sold with a contingent deferred sales charge. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Debt obligations that are issued or guaranteed by
the U.S. Government, its agencies, authorities, and instrumentalities are
valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate, maturity and seasoning differential.
Securities for which market prices are not provided by the
pricing service are valued at the mean between last bid and asked prices
based upon quotes furnished by independent sources. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value.
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 and is recorded on the accrual basis. Dividends to shareholders are
declared daily and are paid monthly. On December 31, 1994 $1,008,748, was
reclassified from undistributed net realized gain (loss) to undistributed
net investment income as a result of permanent book/tax differences due to
the differing book/tax treatment for principal paydown losses on mortgage-
backed securities. In addition, $1,535,548 was reclassified from
undistributed net investment income to paid-in-capital, consisting of
$1,008,748 mentioned above and $526,800 of distributions in excess of net
investment income. Net assets of the Fund were unaffected by the
reclassifications discussed above. As of the close of business on November
18, 1994, all of the assets and liabilities ($48,718,113) of AIM
Adjustable Rate Government Fund ("AIM Adjustable") were transferred to the
Fund under an Agreement and Plan of Reorganization. As a result of this
transfer, the Fund will be entitled to utilize the capital loss
carryforward of AIM Adjustable subject to certain limitations. Paid-in
capital has been decreased $2,667,651 with an offset to undistributed net
realized gain (loss) on investment securities to reflect this capital loss
carryforward.
C. Reverse Repurchase Agreements and Dollar Roll Transactions - A reverse
repurchase agreement involves the sale of securities held by the Fund,
with an agreement that the Fund will repurchase such securities at an
agreed-upon price and date. Proceeds from reverse repurchase agreements
are treated as borrowings. The agreements are collateralized by the
underlying securities and are carried at the amount at which the
securities will subsequently be repurchased as specified in the
agreements.
The Fund may also engage in dollar roll transactions with respect
to mortgage securities issued by GNMA, FNMA and FHLMC. In a dollar
roll transaction, the Fund sells a mortgage security held in the portfolio
to a financial institution such as a bank or broker-dealer, and
simultaneously agrees to repurchase a substantially similar security (same
type, coupon and maturity) from the institution at a later date at an
agreed upon price. The mortgage securities that are repurchased will bear
the same interest rate as those sold, but generally will be collateralized
by different pools of mortgages with different prepayment histories.
During the period between the sale and repurchase, the Fund will not be
entitled to receive interest and principal payments on the securities
sold. Proceeds of the sale will be invested in short-term instruments, and
the income from these investments, together with any additional fee income
received on the sale, could generate income for the Fund exceeding the
yield on the security sold.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the
securities that the Fund has sold but is obligated to repurchase under the
agreement. In the event the buyer of securities in a dollar roll
transaction files for bankruptcy or becomes insolvent, the Fund's use of
the proceeds from the sale of the securities may be restricted pending a
determination by the other party, or its trustee or receiver, whether to
enforce the Fund's obligation to repurchase the securities. The Fund will
limit its borrowings from banks, reverse repurchase agreements and
F-26
<PAGE> 99
FINANCIALS
NOTE 1 - CONTINUED
dollar roll transactions to an aggregate of 33 1/3% of its total assets at
the time of investment. The Fund will not purchase additional securities
when any borrowings from banks exceed 5% of the Fund's total assets.
D. 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 $6,617,343 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2001. The Fund cannot distribute capital gains to
shareholders until the tax loss carryforwards have been utilized.
E. Expenses - Operating expenses directly attributable to a class of shares
are charged to that class' operations. Expenses which are applicable to
both classes, e.g. advisory fees, are allocated between them. Expenses of
the Trust which are not directly attributable to the operations of any
class of shares or portfolio of the Trust are prorated among the classes
to which the expense relates based upon the relative net assets of each
class.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays AIM an advisory fee at an annual rate of 0.50% of the
first $200 million of the Fund's average daily net assets, plus 0.40% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.35% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion. The advisory agreement requires AIM to reduce
its fees or, if necessary, make payments to the Fund to the extent required to
satisfy any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale. AIM
voluntarily reimbursed expenses of $23,000 with respect to Class A Shares of
the Fund and $8,200 with respect to Class B Shares of the Fund during the year
ended December 31, 1994.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting and shareholder services to the Fund. During the year
ended December 31, 1994, AIM was reimbursed $92,487 for such services.
Effective November 1,1994, AIM Fund Services, Inc. ("AFS") became the transfer
agent for the Fund and was paid $20,734 for such services during the two months
ended December 31,1994.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares
(the "Class B Plan") (collectively, the "Plans"). The Fund, pursuant to the
Class A Plan, pays AIM Distributors compensation at an annual rate of 0.25% of
the average daily net assets attributable to the Class A shares. The Class A
Plan is designed to compensate AIM Distributors for certain promotional and
other sales related costs, and to implement a program which provides periodic
payments to selected dealers and other financial institutions who furnish
continuing personal shareholder services to their customers who purchase and
own Class A shares of the Fund. The Fund, pursuant to the Class B Plan, pays
AIM Distributors compensation at an annual rate of 1.00% of the average daily
net assets attributable to the Class B shares. Of this amount, the Fund may pay
a service fee of 0.25% of the average daily net assets of the Class B shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class B shares of
the Fund. Any amounts not paid as a service fee under such Plans would
constitute an asset-based sales charge. The Plans also impose a cap on the
total sales charges, including asset-based sales charges, that may be paid by
the respective classes. During the year ended December 31, 1994, the Class A
shares and the Class B shares paid AIM Distributors $327,060 and $159,848,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $108,048 from sales of the Class
A shares of the Fund during the year ended December 31, 1994. Such commissions
are not an expense of the Fund. They are deducted from, and are not included
in, the proceeds from sales of Class A shares. During the year ended December
31, 1994, AIM Distributors received $70,431 in contingent deferred sales
charges imposed on redemptions of Class B shares. Certain officers and trustees
of the Trust are officers and directors of AIM, AIM Distributors and AFS.
During the year ended December 31, 1994, the Fund paid legal fees of
$3,146 for services rendered by Reid & Priest as counsel to the Board of
Trustees. Effective September 1994, Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel was appointed as counsel to the Board of Trustees. The Fund paid legal
fees of $223 for services rendered by that firm as counsel. A member of that
firm is a trustee of the Trust.
F-27
<PAGE> 100
FINANCIALS
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is
not an "interested person" of the Trust. The Trust may invest trustees' fees,
if so elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December
31, 1994 was $202,407,796 and $149,381,138, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 295,649
- -----------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (6,042,807)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities $ (5,747,158)
===============================================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 5 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31,1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES VALUE SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold:
Class A 9,095,532 $ 84,555,557 4,740,102 $48,869,160
- ---------------------------------------------------------------------------------------------------------------------------------
Class B* 2,442,865 23,125,558 624,925 6,408,966
- ---------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 815,446 7,649,630 811,506 8,318,804
- ---------------------------------------------------------------------------------------------------------------------------------
Class B* 72,145 670,468 933 9,576
- ---------------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (6,202,526) (58,585,987) (3,777,211) (39,007,083)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B* (523,327) (4,863,169) (12,118) (124,293)
- ---------------------------------------------------------------------------------------------------------------------------------
5,700,135 $ 52,552,057 2,388,137 $ 24,475,130
=================================================================================================================================
</TABLE>
*Sales of Class B shares commenced on September 7, 1993.
F-28
<PAGE> 101
FINANCIALS
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during the seven-year period ended December 31, 1994 and the period
April 28, 1987 (date operations commenced) through December 31, 1987 and for a
Class B share outstanding during the year ended December 31, 1994 and the
period September 7, 1993 (date sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
1994 1993 1992(a) 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $10.05 $10.19 $10.34 $9.95 $9.91 $9.70 $9.92 $10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.68 0.74 0.77 0.82 0.87 0.90 0.89 0.55
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) (1.02) (0.04) (0.15) 0.41 0.01 0.15 (0.27) (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.34) 0.70 0.62 1.23 0.88 1.05 0.62 0.41
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.58) (0.70) (0.74) (0.84) (0.84) (0.84) (0.84) (0.49)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized capital gains (0.04) (0.14) (0.03) -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from capital (0.10) -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.72) (0.84) (0.77) (0.84) (0.84) (0.84) (0.84) (0.49)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.99 $10.05 $10.19 $10.34 $9.95 $9.91 $9.70 $9.92
=================================================================================================================================
Total return(b) (3.44)% 7.07% 6.26% 12.98% 9.39% 11.28% 6.43% 4.18%
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $158,341 $139,586 $123,484 $101,409 $61,463 $57,077 $48,372 $28,052
=================================================================================================================================
Ratio of expenses to average net assets(d) 1.04%(c) 1.00% 0.98% 1.00% 1.00% 1.00% 1.00% 1.20%(f)
=================================================================================================================================
Ratio of net investment income to average
net assets(e) 7.34%(c) 7.08% 7.53% 8.15% 8.85% 9.10% 9.11% 8.64%(f)
=================================================================================================================================
Portfolio turnover rate 109% 110% 42% 26% 16% 15% 15% 35%
=================================================================================================================================
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charge and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average net assets
of $130,824,143.
(d) Ratios of expenses to average net assets prior to reduction of advisory
fee and expense reimbursement were 1.05%, 1.04%, 1.04%, 1.10%, 1.13%,
1.08% and 1.08% for 1994-88, respectively.
(e) Ratios of net investment income to average net assets prior to reduction
of advisory fee and expense reimbursement were 7.32%, 7.04%, 7.48%, 8.05%,
8.72%, 9.03% and 9.03% for 1994-88, respectively.
(f) Annualized.
F-29
<PAGE> 102
FINANCIALS
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
CLASS B
Net asset value, beginning of period $10.04 $10.44
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.61 0.21
- -------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (1.02) (0.27)
- -------------------------------------------------------------------------------------------------
Total from investment operations (0.41) (0.06)
- -------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.50) (0.20)
- -------------------------------------------------------------------------------------------------
Distributions from net realized capital gains (0.04) (0.14)
- -------------------------------------------------------------------------------------------------
Distributions from capital (0.10) -
- -------------------------------------------------------------------------------------------------
Total distributions (0.64) (0.34)
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $8.99 $10.04
=================================================================================================
Total return(a) (4.13)% (0.52)%
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) 23,415 $6,160
=================================================================================================
Ratio of expenses to average net assets(c) 1.82%(b) 1.71%(e)
=================================================================================================
Ratio of net investment income to average net assets(d) 6.56%(b) 6.37%(e)
=================================================================================================
Portfolio turnover rate 109% 110%
=================================================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year and do not
deduct contingent deferred sales charges.
(b) Ratios are annualized and based on average net assets of $15,993,012.
(c) Ratio of expenses to average net assets prior to reduction of advisory fee
and expense reimbursement for the year ended December 31,1994 and the
period ended December 31, 1993 were 1.87% and 2.18% (annualized),
respectively.
(d) Ratio of net investment income to average net assets prior to reduction of
advisory fee and expense reimbursement for the year ended December 31,
1994 and the period ended December 31, 1993 were 6.50% and 5.90%
(annualized), respectively.
(e) Annualized.
F-30
<PAGE> 103
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Growth Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Growth Fund (a portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1994, and the related statements of operations
for the year then ended, and the changes in its net assets and the financial
highlights for each of the years in the two-year period then ended. These
financial statements and the 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
December 31, 1994, 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 the financial highlights
referred to above present fairly, in all material respects, the financial
position of AIM Growth Fund as of December 31, 1994, the results of its
operations for the year then ended, and the changes in its net assets and the
financial highlights for each of the years in the two-year period then ended,
in conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
February 3, 1995
F-31
<PAGE> 104
FINANCIALS
SCHEDULE OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-79.95%
ADVERTISING/BROADCASTING-0.42%
400 Belo (A.H.) Corp. $ 22,600
- -------------------------------------------------------------------
8,400 British Sky Broadcasting-ADR(a) 201,600
- -------------------------------------------------------------------
2,500 Capital Cities/ABC, Inc. 213,125
- -------------------------------------------------------------------
7,600 Infinity Broadcasting Corp.-Class A(a) 239,400
- -------------------------------------------------------------------
676,725
- -------------------------------------------------------------------
AIRLINES-0.19%
19,200 Northwest Airlines Corp.(a) 302,400
- -------------------------------------------------------------------
APPLIANCES-1.09%
26,000 Newell Co. 546,000
- -------------------------------------------------------------------
20,000 Premark International Inc. 875,000
- -------------------------------------------------------------------
13,000 Sunbeam-Oster Co., Inc. 334,750
- -------------------------------------------------------------------
1,755,750
- -------------------------------------------------------------------
AUTOMOBILE MANUFACTURERS-0.26%
8,400 Ford Motor Co. 235,200
- -------------------------------------------------------------------
10,000 Volvo AB-ADR 187,500
- -------------------------------------------------------------------
422,700
- -------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.42%
3,900 Eaton Corp. 193,050
- -------------------------------------------------------------------
700 Echlin Inc. 21,000
- -------------------------------------------------------------------
6,000 Superior Industries International, Inc. 158,250
- -------------------------------------------------------------------
8,600 Varity Corp.(a) 311,750
- -------------------------------------------------------------------
684,050
- -------------------------------------------------------------------
BANKING-0.72%
14,700 Bank of Boston Corp. 380,362
- -------------------------------------------------------------------
14,100 Bank of New York Co., Inc. 408,900
- -------------------------------------------------------------------
5,600 First Interstate Bancorp 378,700
- -------------------------------------------------------------------
1,167,962
- -------------------------------------------------------------------
BANKING (MONEY CENTER)-0.48%
6,500 Chase Manhattan Corp. 223,437
- -------------------------------------------------------------------
13,400 Citicorp 554,425
- -------------------------------------------------------------------
777,862
- -------------------------------------------------------------------
</TABLE>
F-32
<PAGE> 105
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BEVERAGES-0.26%
4,000 Coca-Cola Co. (The) $ 206,000
- ---------------------------------------------------------
5,900 PepsiCo Inc. 213,875
- ---------------------------------------------------------
419,875
- ---------------------------------------------------------
BIOTECHNOLOGY-0.52%
14,000 Amgen Inc.(a) 826,000
- ---------------------------------------------------------
BUILDING MATERIALS-0.44%
30,200 Black & Decker Corp. 717,250
- ---------------------------------------------------------
BUSINESS SERVICES-2.16%
4,400 Diebold, Inc. 180,950
- ---------------------------------------------------------
9,100 Equifax Inc. 240,012
- ---------------------------------------------------------
24,700 Healthcare Compare Corp.(a) 842,887
- ---------------------------------------------------------
14,800 Manpower Inc. 416,250
- ---------------------------------------------------------
27,800 Olsten Corp. 882,650
- ---------------------------------------------------------
7,600 Pittston Co. (The) 201,400
- ---------------------------------------------------------
11,000 Sensormatic Electronics Corp. 396,000
- ---------------------------------------------------------
9,000 Value Health, Inc.(a) 335,250
- ---------------------------------------------------------
3,495,399
- ---------------------------------------------------------
CHEMICALS-1.23%
4,700 Dow Chemical Co. 316,075
- ---------------------------------------------------------
7,100 Geon Co. 194,362
- ---------------------------------------------------------
2,700 Goodrich (B.F.) Co. 117,112
- ---------------------------------------------------------
6,000 Hanna (M.A.) Co. 142,500
- ---------------------------------------------------------
5,700 PPG Industries, Inc. 211,612
- ---------------------------------------------------------
10,200 Rohm & Haas Co. 582,675
- ---------------------------------------------------------
5,600 Union Carbide Corp. 164,500
- ---------------------------------------------------------
9,000 Wellman Inc. 254,250
- ---------------------------------------------------------
1,983,086
- ---------------------------------------------------------
CHEMICALS (SPECIALTY)-0.78%
8,400 Airgas Inc.(a) 178,500
- ---------------------------------------------------------
7,800 Georgia Gulf Corp.(a) 303,225
- ---------------------------------------------------------
7,800 IMC Global Inc. 337,350
- ---------------------------------------------------------
4,500 Loctite Corp. 209,250
- ---------------------------------------------------------
11,300 Praxair, Inc. 231,650
- ---------------------------------------------------------
1,259,975
- ---------------------------------------------------------
</TABLE>
F-33
<PAGE> 106
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER MAINFRAMES-0.75%
30,100 Amdahl Corp.(a) $ 331,100
- -------------------------------------------------------------------
8,700 International Business Machines Corp. 639,450
- -------------------------------------------------------------------
12,500 Sequent Computer Systems, Inc.(a) 246,875
- -------------------------------------------------------------------
1,217,425
- -------------------------------------------------------------------
COMPUTER MINI/PCS-3.25%
23,300 Apple Computer, Inc. 908,700
- -------------------------------------------------------------------
39,700 COMPAQ Computer Corp.(a) 1,568,150
- -------------------------------------------------------------------
5,000 Dell Computer Corp.(a) 205,000
- -------------------------------------------------------------------
4,900 Hewlett-Packard Co. 489,387
- -------------------------------------------------------------------
10,500 Stratus Computer, Inc.(a) 399,000
- -------------------------------------------------------------------
40,300 Sun Microsystems, Inc.(a) 1,430,650
- -------------------------------------------------------------------
15,000 Tandem Computers Inc.(a) 256,875
- -------------------------------------------------------------------
5,257,762
- -------------------------------------------------------------------
COMPUTER NETWORKING-6.35%
5,000 ADC Telecommunications, Inc.(a) 250,000
- -------------------------------------------------------------------
8,400 Allen Group Inc. 200,550
- -------------------------------------------------------------------
5,000 Andrew Corp.(a) 261,250
- -------------------------------------------------------------------
6,500 Aspect Telecommunications Corp.(a) 217,750
- -------------------------------------------------------------------
22,700 Cabletron Systems, Inc.(a) 1,055,550
- -------------------------------------------------------------------
6,000 California Microwave, Inc.(a) 219,000
- -------------------------------------------------------------------
15,000 Chipcom Corp.(a) 750,000
- -------------------------------------------------------------------
25,000 Cisco Systems, Inc.(a) 878,125
- -------------------------------------------------------------------
44,000 DSC Communications Corp.(a) 1,578,500
- -------------------------------------------------------------------
27,000 General Instrument Corp.(a) 810,000
- -------------------------------------------------------------------
900 Madge N.V.(a) 10,631
- -------------------------------------------------------------------
4,500 Network Equipment Technologies, Inc.(a) 108,000
- -------------------------------------------------------------------
12,000 Northern Telecom Ltd. 400,500
- -------------------------------------------------------------------
38,000 Scientific-Atlantic Inc. 798,000
- -------------------------------------------------------------------
19,000 Tellabs, Inc.(a) 1,059,250
- -------------------------------------------------------------------
32,400 3Com Corp.(a) 1,670,647
- -------------------------------------------------------------------
10,267,753
- -------------------------------------------------------------------
</TABLE>
F-34
<PAGE> 107
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER PERIPHERALS-3.67%
24,700 Adaptec Inc.(a) $ 583,537
- -------------------------------------------------------------------
6,400 Alliance Semiconductor Corp.(a) 200,000
- -------------------------------------------------------------------
28,000 American Power Conversion Corp.(a) 458,500
- -------------------------------------------------------------------
68,600 EMC Corp.(a) 1,483,475
- -------------------------------------------------------------------
10,000 Exabyte Corp.(a) 213,750
- -------------------------------------------------------------------
11,000 Komag, Inc.(a) 287,375
- -------------------------------------------------------------------
11,000 Microchip Technology, Corp.(a) 302,500
- -------------------------------------------------------------------
34,800 Oracle Systems Corp.(a) 1,535,550
- -------------------------------------------------------------------
16,000 Read Rite Corp.(a) 297,000
- -------------------------------------------------------------------
4,100 Storage Technology Corp.(a) 118,900
- -------------------------------------------------------------------
8,000 U.S. Robotics, Inc.(a) 346,000
- -------------------------------------------------------------------
6,600 Western Digital Corp.(a) 110,550
- -------------------------------------------------------------------
5,937,137
- -------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES-6.37%
39,300 Adobe System, Inc. 1,169,175
- -------------------------------------------------------------------
7,500 American Management Systems, Inc.(a) 144,375
- -------------------------------------------------------------------
21,100 Autodesk Inc. 836,087
- -------------------------------------------------------------------
11,200 Bay Networks, Inc. 330,400
- -------------------------------------------------------------------
5,200 BMC Software, Inc.(a) 295,750
- -------------------------------------------------------------------
31,200 Cadence Design Systems, Inc.(a) 643,500
- -------------------------------------------------------------------
3,000 Ceridian Corp.(a) 80,625
- -------------------------------------------------------------------
29,800 Computer Associates International, Inc. 1,445,300
- -------------------------------------------------------------------
4,000 Computer Sciences Corp.(a) 204,000
- -------------------------------------------------------------------
11,400 Corel Corp.(a) 157,462
- -------------------------------------------------------------------
12,000 Fiserv, Inc.(a) 258,000
- -------------------------------------------------------------------
13,400 HBO & Co. 462,300
- -------------------------------------------------------------------
6,200 Microsoft Corp.(a) 378,975
- -------------------------------------------------------------------
8,400 Network General Corp.(a) 215,775
- -------------------------------------------------------------------
16,000 Parametric Technology Corp.(a) 552,000
- -------------------------------------------------------------------
30,000 Silicon Graphics, Inc.(a) 926,250
- -------------------------------------------------------------------
7,000 Sterling Software, Inc.(a) 257,250
- -------------------------------------------------------------------
28,000 Sybase, Inc.(a) 1,456,000
- -------------------------------------------------------------------
11,200 Synopsys, Inc.(a) 490,000
- -------------------------------------------------------------------
10,303,224
- -------------------------------------------------------------------
</TABLE>
F-35
<PAGE> 108
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONGLOMERATES-0.26%
4,000 Johnson Controls, Inc. $ 196,000
- ----------------------------------------------------------------------------
3,300 TRW Inc. 217,800
- ----------------------------------------------------------------------------
413,800
- ----------------------------------------------------------------------------
CONTAINERS-0.32%
4,700 Ball Corp. 148,050
- ----------------------------------------------------------------------------
9,700 Crown Cork & Seal Co., Inc.(a) 366,175
- ----------------------------------------------------------------------------
514,225
- ----------------------------------------------------------------------------
COSMETICS & TOILETRIES-0.28%
2,100 Colgate-Palmolive Co. 133,087
- ----------------------------------------------------------------------------
4,200 Gillette Co. (The) 313,950
- ----------------------------------------------------------------------------
447,037
- ----------------------------------------------------------------------------
ELECTRONIC COMPONENTS-2.47%
7,000 Amphenol Corp.(a) 168,000
- ----------------------------------------------------------------------------
9,100 Augat Inc. 171,762
- ----------------------------------------------------------------------------
15,200 KLA Instruments Corp.(a) 744,800
- ----------------------------------------------------------------------------
3,750 Molex, Inc. 129,375
- ----------------------------------------------------------------------------
5,500 Parker-Hannifin Corp. 250,250
- ----------------------------------------------------------------------------
47,000 Phillips Electronics N.V.-New York Shares-ADR(a) 1,380,625
- ----------------------------------------------------------------------------
8,800 Tektronix, Inc. 301,400
- ----------------------------------------------------------------------------
25,000 Teradyne, Inc.(a) 846,875
- ----------------------------------------------------------------------------
3,993,087
- ----------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS-0.38%
17,100 Arrow Electronics, Inc.(a) 613,462
- ----------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.25%
7,700 Charles Schwab Corp. 268,537
- ----------------------------------------------------------------------------
3,000 XTRA Corp. 135,000
- ----------------------------------------------------------------------------
403,537
- ----------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-2.16%
3,000 ADVANTA Corp.-Class A 75,750
- ----------------------------------------------------------------------------
4,800 ADVANTA Corp.-Class B 126,000
- ----------------------------------------------------------------------------
16,000 Federal National Mortgage Association 1,166,000
- ----------------------------------------------------------------------------
14,400 First USA, Inc. 473,400
- ----------------------------------------------------------------------------
26,300 Green Tree Acceptance, Inc. 798,862
- ----------------------------------------------------------------------------
26,400 MBNA Corp. 617,100
- ----------------------------------------------------------------------------
6,700 SunAmerica, Inc. 242,875
- ----------------------------------------------------------------------------
3,499,987
- ----------------------------------------------------------------------------
</TABLE>
F-36
<PAGE> 109
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCE (SAVINGS & LOAN)-0.12%
9,300 G. P. Financial Corp. $ 191,812
- -----------------------------------------------------------------
FOOD PROCESSING-0.66%
13,650 Archer Daniels Midland Co. 281,531
- -----------------------------------------------------------------
8,000 ConAgra, Inc. 250,000
- -----------------------------------------------------------------
13,500 Lancaster Colony Corp. 396,562
- -----------------------------------------------------------------
6,000 Ralcorp Holdings Inc.(a) 133,500
- -----------------------------------------------------------------
1,061,593
- -----------------------------------------------------------------
GAMING-0.27%
7,000 Autotote Corp.(a) 79,625
- -----------------------------------------------------------------
6,500 MGM Grand, Inc.(a) 156,812
- -----------------------------------------------------------------
10,000 Mirage Resorts, Inc.(a) 205,000
- -----------------------------------------------------------------
441,437
- -----------------------------------------------------------------
HOME BUILDING-0.19%
50 Clayton Homes Inc.(a) 787
- -----------------------------------------------------------------
10,500 Fleetwood Enterprises, Inc. 196,875
- -----------------------------------------------------------------
4,500 Oakwood Homes Corp. 109,687
- -----------------------------------------------------------------
307,349
- -----------------------------------------------------------------
HOTELS/MOTELS-0.66%
24,000 Hospitality Franchise Systems Inc.(a) 636,000
- -----------------------------------------------------------------
20,200 La Quinta Motor Inns Inc. 431,775
- -----------------------------------------------------------------
1,067,775
- -----------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.26%
6,400 AFLAC Inc. 204,800
- -----------------------------------------------------------------
11,000 Bankers Life Holding Corp. 209,000
- -----------------------------------------------------------------
413,800
- -----------------------------------------------------------------
LEISURE & RECREATION-2.19%
12,000 Aldila, Inc.(a) 138,000
- -----------------------------------------------------------------
26,000 Brunswick Corp. 490,750
- -----------------------------------------------------------------
26,200 Callaway Golf Co. 867,875
- -----------------------------------------------------------------
24,000 Carnival Cruise Lines, Inc.-Class A 510,000
- -----------------------------------------------------------------
15,300 Harley-Davidson Inc. 428,400
- -----------------------------------------------------------------
27,000 Mattel, Inc. 678,375
- -----------------------------------------------------------------
5,600 Royal Caribbean Cruises Ltd. 159,600
- -----------------------------------------------------------------
5,900 Walt Disney Co. (The) 272,137
- -----------------------------------------------------------------
3,545,137
- -----------------------------------------------------------------
</TABLE>
F-37
<PAGE> 110
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MACHINE TOOLS-0.20%
8,700 Cincinnati Milacron, Inc. $ 205,537
- --------------------------------------------------------------
4,500 Kennametal Inc. 110,250
- --------------------------------------------------------------
315,787
- --------------------------------------------------------------
MACHINERY (HEAVY)-0.93%
6,000 AGCO Corp. 182,250
- --------------------------------------------------------------
24,200 Case Corp. 520,300
- --------------------------------------------------------------
6,800 Caterpillar Inc. 374,850
- --------------------------------------------------------------
5,000 Clark Equipment Co.(a) 271,250
- --------------------------------------------------------------
5,500 Trinova Corp. 161,562
- --------------------------------------------------------------
1,510,212
- --------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.74%
26,800 Thermo Electron Corp.(a) 1,202,650
- --------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-1.74%
4,100 Becton, Dickinson and Co. 196,800
- --------------------------------------------------------------
32,000 Biomet, Inc.(a) 448,000
- --------------------------------------------------------------
8,000 Cordis Corp.(a) 484,000
- --------------------------------------------------------------
5,300 Medtronic, Inc. 294,812
- --------------------------------------------------------------
4,000 Nellcor Inc.(a) 132,000
- --------------------------------------------------------------
12,200 St. Jude Medical, Inc. 484,950
- --------------------------------------------------------------
10,000 Stryker Corp. 367,500
- --------------------------------------------------------------
15,000 Ventritex, Inc.(a) 405,000
- --------------------------------------------------------------
2,813,062
- --------------------------------------------------------------
MEDICAL (DRUGS)-2.18%
200 Bergen Brunswig Corp. 4,175
- --------------------------------------------------------------
10,000 Cardinal Health Inc. 463,750
- --------------------------------------------------------------
11,000 Elan Corp. PLC(a) 391,875
- --------------------------------------------------------------
18,500 Forest Laboratories, Inc.(a) 862,562
- --------------------------------------------------------------
4,000 Johnson & Johnson 219,000
- --------------------------------------------------------------
14,000 Mylan Laboratories, Inc. 378,000
- --------------------------------------------------------------
5,100 Pfizer Inc. 393,975
- --------------------------------------------------------------
10,900 Schering-Plough Corp. 806,600
- --------------------------------------------------------------
3,519,937
- --------------------------------------------------------------
MEDICAL (SERVICES)-7.20%
5,000 Charter Medical Corp.(a) 107,500
- --------------------------------------------------------------
25,000 Columbia Healthcare Corp. 912,500
- --------------------------------------------------------------
</TABLE>
F-38
<PAGE> 111
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
Medical (Services) (continued)
5,700 Coventry Corp.(a) $ 139,650
- ----------------------------------------------------------------------
15,500 Foundation Health Corp.(a) 480,500
- ----------------------------------------------------------------------
13,000 Health Care & Retirement Corp.(a) 391,625
- ----------------------------------------------------------------------
14,000 Health Management Associates, Inc.(a) 350,000
- ----------------------------------------------------------------------
10,000 Health Systems International Inc.(a) 303,750
- ----------------------------------------------------------------------
14,000 Health Trust, Inc.-The Hospital Co.(a) 444,500
- ----------------------------------------------------------------------
12,500 Healthsource, Inc.(a) 510,937
- ----------------------------------------------------------------------
19,500 Healthsouth Rehabilitation Corp.(a) 721,500
- ----------------------------------------------------------------------
6,700 Homedco Group Inc.(a) 252,087
- ----------------------------------------------------------------------
14,000 Horizon Healthcare Corp.(a) 392,000
- ----------------------------------------------------------------------
68,400 Humana Inc.(a) 1,547,550
- ----------------------------------------------------------------------
6,300 Integrated Health Services, Inc. 248,850
- ----------------------------------------------------------------------
6,000 Mariner Health Group Inc.(a) 129,750
- ----------------------------------------------------------------------
36,900 Mid Atlantic Medical Services, Inc.(a) 844,087
- ----------------------------------------------------------------------
4,200 Oxford Health Plans, Inc.(a) 332,850
- ----------------------------------------------------------------------
3,700 Pacificare Health Systems, Inc.-Class A(a) 240,962
- ----------------------------------------------------------------------
3,400 Pacificare Health Systems, Inc.-Class B(a) 224,400
- ----------------------------------------------------------------------
11,200 Sun Healthcare Group Inc.(a) 284,200
- ----------------------------------------------------------------------
22,000 United Healthcare Corp. 992,750
- ----------------------------------------------------------------------
33,400 U.S. Healthcare, Inc. 1,377,750
- ----------------------------------------------------------------------
15,000 Vencor, Inc.(a) 418,125
- ----------------------------------------------------------------------
11,647,823
- ----------------------------------------------------------------------
METALS-0.72%
15,400 Alcan Aluminum Ltd. 390,775
- ----------------------------------------------------------------------
9,100 Alumax, Inc.(a) 258,212
- ----------------------------------------------------------------------
2,300 Aluminum Company of America 199,237
- ----------------------------------------------------------------------
9,200 ASARCO Inc. 262,200
- ----------------------------------------------------------------------
1,300 Illinois Tool Works, Inc. 56,875
- ----------------------------------------------------------------------
1,167,299
- ----------------------------------------------------------------------
OFFICE AUTOMATION-0.30%
9,600 Danka Business Systems-PLC 207,600
- ----------------------------------------------------------------------
2,800 Xerox Corp. 277,200
- ----------------------------------------------------------------------
484,800
- ----------------------------------------------------------------------
</TABLE>
F-39
<PAGE> 112
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OFFICE PRODUCTS-0.62%
12,600 Avery Dennison Corp. $ 447,300
- -----------------------------------------------------------
22,400 Reynolds & Reynolds Co.-Class A 560,000
- -----------------------------------------------------------
1,007,300
- -----------------------------------------------------------
OIL & GAS-0.10%
6,100 Lyondell Petrochemical Co. 157,837
- -----------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.38%
14,300 Halliburton Co. 473,687
- -----------------------------------------------------------
11,500 Smith International, Inc.(a) 143,750
- -----------------------------------------------------------
617,437
- -----------------------------------------------------------
PAPER & FOREST PRODUCTS-0.57%
5,100 Boise Cascade Corp. 136,425
- -----------------------------------------------------------
5,100 Champion International Corp. 186,150
- -----------------------------------------------------------
7,600 Federal Paper Board Co., Inc. 220,400
- -----------------------------------------------------------
3,000 Georgia-Pacific Corp. 214,500
- -----------------------------------------------------------
3,600 Union Camp Corp. 169,650
- -----------------------------------------------------------
927,125
- -----------------------------------------------------------
PUBLISHING-0.09%
600 Washington Post Co. 145,500
- -----------------------------------------------------------
RESTAURANTS-0.32%
4,500 McDonald's Corp. 131,625
- -----------------------------------------------------------
6,000 Outback Steakhouse, Inc.(a) 141,000
- -----------------------------------------------------------
17,000 Wendy's International, Inc. 244,375
- -----------------------------------------------------------
517,000
- -----------------------------------------------------------
RETAIL (FOOD & DRUGS)-2.78%
8,400 Albertson's Inc. 243,600
- -----------------------------------------------------------
10,000 American Stores Co. 268,750
- -----------------------------------------------------------
6,000 Casey's General Stores, Inc. 90,000
- -----------------------------------------------------------
13,800 Hannaford Bros. Co. 350,175
- -----------------------------------------------------------
19,500 Jack Eckerd Corp.(a) 582,562
- -----------------------------------------------------------
21,300 Kroger Co.(a) 513,862
- -----------------------------------------------------------
14,000 Revco D.S., Inc.(a) 330,750
- -----------------------------------------------------------
18,000 Rite Aid Corp. 420,750
- -----------------------------------------------------------
</TABLE>
F-40
<PAGE> 113
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
Retail (Food & Drugs) (continued)
32,400 Safeway Inc.(a) $ 1,032,750
- ----------------------------------------------------------------
16,600 Stop & Shop Cos.(a) 423,300
- ----------------------------------------------------------------
9,100 Sysco Corp. 234,325
- ----------------------------------------------------------------
4,490,824
- ----------------------------------------------------------------
RETAIL (STORES)-6.56%
9,700 Ann Taylor Stores Corp.(a) 333,437
- ----------------------------------------------------------------
6,000 Bed Bath & Beyond, Inc.(a) 181,500
- ----------------------------------------------------------------
6,800 Caldor Corp. (The)(a) 151,300
- ----------------------------------------------------------------
37,000 Circuit City Stores, Inc. 823,250
- ----------------------------------------------------------------
5,900 Dayton-Hudson Corp. 417,425
- ----------------------------------------------------------------
11,500 Dillard Department Stores, Inc. 307,625
- ----------------------------------------------------------------
19,000 Dollar General Corp. 570,000
- ----------------------------------------------------------------
13,300 Federated Department Stores, Inc.(a) 256,025
- ----------------------------------------------------------------
20,000 Gateway 2000 Inc.(a) 432,500
- ----------------------------------------------------------------
11,300 General Nutrition, Inc.(a) 327,700
- ----------------------------------------------------------------
10,000 Gymboree Corp.(a) 287,500
- ----------------------------------------------------------------
8,800 Hechinger Co. 102,300
- ----------------------------------------------------------------
11,000 Home Depot, Inc. 506,000
- ----------------------------------------------------------------
41,000 Lowe's Companies, Inc. 1,424,750
- ----------------------------------------------------------------
22,700 Michaels Stores, Inc.(a) 788,825
- ----------------------------------------------------------------
31,000 Office Depot, Inc.(a) 744,000
- ----------------------------------------------------------------
15,700 Pep Boys-Manny, Moe & Jack 486,700
- ----------------------------------------------------------------
11,000 Pier 1 Imports Inc. 103,125
- ----------------------------------------------------------------
34,500 Staples, Inc.(a) 853,875
- ----------------------------------------------------------------
3,000 Sunglass Hut International(a) 69,000
- ----------------------------------------------------------------
18,200 Tech Data Corp.(a) 309,400
- ----------------------------------------------------------------
2,000 Tiffany & Co. 78,000
- ----------------------------------------------------------------
14,600 Toys "R" Us, Inc.(a) 445,300
- ----------------------------------------------------------------
16,000 Viking Office Products Inc.(a) 490,000
- ----------------------------------------------------------------
7,000 Waban Inc.(a) 124,250
- ----------------------------------------------------------------
10,613,787
- ----------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.52%
24,000 Varian Associates, Inc. 840,000
- ----------------------------------------------------------------
</TABLE>
F-41
<PAGE> 114
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SEMICONDUCTORS-10.27%
16,400 Altera Corp.(a) $ 686,750
- -----------------------------------------------------------------
30,000 Analog Devices, Inc.(a) 1,053,750
- -----------------------------------------------------------------
34,000 Applied Materials, Inc.(a) 1,436,500
- -----------------------------------------------------------------
32,900 Atmel Corp.(a) 1,102,150
- -----------------------------------------------------------------
31,100 Cypress Semiconductor Corp.(a) 719,187
- -----------------------------------------------------------------
6,000 Electroglas Inc.(a) 200,250
- -----------------------------------------------------------------
17,000 Integrated Device Technology, Inc.(a) 501,500
- -----------------------------------------------------------------
15,800 Intel Corp. 1,009,225
- -----------------------------------------------------------------
30,900 Lam Research Corp.(a) 1,151,025
- -----------------------------------------------------------------
7,900 Lattice Semiconductor Corp.(a) 132,325
- -----------------------------------------------------------------
13,300 Linear Technology Corp. 658,350
- -----------------------------------------------------------------
27,000 LSI Logic Corp.(a) 1,090,125
- -----------------------------------------------------------------
29,500 Micron Technology Inc. 1,301,687
- -----------------------------------------------------------------
26,400 Motorola, Inc. 1,527,900
- -----------------------------------------------------------------
16,600 National Semiconductor Corp.(a) 323,700
- -----------------------------------------------------------------
21,500 Novellus Systems, Inc.(a) 1,075,000
- -----------------------------------------------------------------
7,000 SCI Systems, Inc.(a) 126,000
- -----------------------------------------------------------------
27,100 Texas Instruments Inc. 2,029,112
- -----------------------------------------------------------------
10,000 Vishay Intertechnology, Inc.(a) 490,000
- -----------------------------------------------------------------
16,614,536
- -----------------------------------------------------------------
SHOES & RELATED APPAREL-0.48%
16,500 Reebok International, Ltd. 651,750
- -----------------------------------------------------------------
5,000 Wolverine World Wide, Inc. 128,750
- -----------------------------------------------------------------
780,500
- -----------------------------------------------------------------
STEEL-0.10%
9,900 LTV Corp.(a) 160,875
- -----------------------------------------------------------------
TELECOMMUNICATIONS-2.23%
24,800 ALC Communications Corp.(a) 771,900
- -----------------------------------------------------------------
17,400 Nokia Corp.-ADR(a) 1,305,000
- -----------------------------------------------------------------
27,600 Telefonaktiebolaget L.M. Ericsson-ADR 1,521,450
- -----------------------------------------------------------------
3,598,350
- -----------------------------------------------------------------
</TABLE>
F-42
<PAGE> 115
FINANCIALS
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TOBACCO-0.57%
7,000 Philip Morris Companies, Inc. $ 402,500
- -----------------------------------------------------------------------------
19,000 UST, Inc. 527,250
- -----------------------------------------------------------------------------
929,750
- -----------------------------------------------------------------------------
TRUCKERS-0.15%
9,500 TNT Freightways Corp. 243,437
- -----------------------------------------------------------------------------
UTILITIES-0.37%
12,500 Century Telephone Enterprises, Inc. 368,750
- -----------------------------------------------------------------------------
5,000 Telephone and Data Systems, Inc. 230,625
- -----------------------------------------------------------------------------
599,375
- -----------------------------------------------------------------------------
Total Common Stocks 129,291,576
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES-9.84%
$ 7,118,000 U.S. Treasury Bill, 4.68%(b), 1/05/95 7,116,718
- -----------------------------------------------------------------------------
8,815,000 U.S. Treasury Bill, 4.94%(b), 1/12/95 8,806,185
- -----------------------------------------------------------------------------
Total U.S. Treasury Securities 15,922,903
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENT-8.46%(c)
13,678,281 Daiwa Securities America Inc., 3.50%, 01/03/95(d) 13,678,281
- -----------------------------------------------------------------------------
Total Repurchase Agreement 13,678,281
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS-98.25% 158,892,760
- -----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.75% 2,826,565
- -----------------------------------------------------------------------------
NET ASSETS - 100.00% $161,719,325
=============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) U.S. Treasury Bills are 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.
(c) 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 value as being 102 percent of the sales price of
the repurchase agreement.
(d) Joint repurchase agreement entered into on 12/30/94 with a maturing value
of $391,353,115. Collateralized by $426,987,000 U.S. Treasury obligations,
4.75% to 9.25% due 01/15/96 to 11/15/24. The aggregate market value of the
collateral at 12/31/94 was $399,025,510. The Fund's pro-rata interest in
the collateral at 12/31/94 was $13,951,894.
See Notes to Financial Statements.
F-43
<PAGE> 116
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $148,077,864) $158,892,760
- --------------------------------------------------------------
Receivables for:
Investments sold 4,382,952
- --------------------------------------------------------------
Fund shares sold 1,102,478
- --------------------------------------------------------------
Dividends and interest 78,579
- --------------------------------------------------------------
Options written 1,660
- --------------------------------------------------------------
Investment for deferred compensation plan 58,651
- --------------------------------------------------------------
Other assets 8,120
- --------------------------------------------------------------
Total assets 164,525,200
- --------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,657,888
- --------------------------------------------------------------
Fund shares reacquired 657,443
- --------------------------------------------------------------
Deferred compensation plan 58,651
- --------------------------------------------------------------
Variation margin 58,500
- --------------------------------------------------------------
Options written 69,313
- --------------------------------------------------------------
Accrued advisory fees 105,871
- --------------------------------------------------------------
Accrued administrative service fees 4,774
- --------------------------------------------------------------
Accrued distribution fees 110,689
- --------------------------------------------------------------
Accrued trustees' fees 1,735
- --------------------------------------------------------------
Accrued operating expenses 81,011
- --------------------------------------------------------------
Total liabilities 2,805,875
- --------------------------------------------------------------
Net assets applicable to shares outstanding $161,719,325
==============================================================
NET ASSETS:
Class A $123,271,214
==============================================================
Class B $ 38,448,111
==============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 11,940,136
- --------------------------------------------------------------
Class B 3,766,821
==============================================================
CLASS A:
Net asset value and redemption price per share $10.32
==============================================================
Offering price per share:
(Net asset value of $10.32/94.50%) $10.92
==============================================================
CLASS B:
Net asset value and offering price per share $10.21
==============================================================
</TABLE>
See Notes to Financial Statements.
F-44
<PAGE> 117
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended December 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 1,071,798
- -----------------------------------------------------------------------------
Interest 853,551
- -----------------------------------------------------------------------------
Total investment income 1,925,349
- -----------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,012,632
- -----------------------------------------------------------------------------
Custodian fees 59,195
- -----------------------------------------------------------------------------
Transfer agent fees-Class A 136,192
- -----------------------------------------------------------------------------
Transfer agent fees-Class B 48,093
- -----------------------------------------------------------------------------
Administrative service fees 134,789
- -----------------------------------------------------------------------------
Trustees' fees 5,876
- -----------------------------------------------------------------------------
Distribution fees-Class A 327,254
- -----------------------------------------------------------------------------
Distribution fees-Class B 247,715
- -----------------------------------------------------------------------------
Other 165,989
- -----------------------------------------------------------------------------
Total expenses 2,137,735
- -----------------------------------------------------------------------------
Net investment income (loss) (212,386)
- -----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FUTURES AND OPTIONS CONTRACTS:
Net realized gain (loss) on sales of:
- -----------------------------------------------------------------------------
Investment securities 3,141,425
- -----------------------------------------------------------------------------
Futures contracts (371,545)
- -----------------------------------------------------------------------------
Options contracts --
- -----------------------------------------------------------------------------
2,769,880
- -----------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
- -----------------------------------------------------------------------------
Investment securities (10,579,166)
- -----------------------------------------------------------------------------
Futures contracts 123,500
- -----------------------------------------------------------------------------
Options contracts 57,701
- -----------------------------------------------------------------------------
(10,397,965)
- -----------------------------------------------------------------------------
Net gain (loss) on investment securities, futures and options
contracts (7,628,085)
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(7,840,471)
=============================================================================
</TABLE>
See Notes to Financial Statements.
F-45
<PAGE> 118
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (212,386) $ 8,526
- -------------------------------------------------------------------------------
Net realized gain on sales of investment
securities and futures contracts 2,769,880 18,089,738
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities, futures and options
contracts (10,397,965) (13,487,671)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (7,840,471) 4,610,593
- -------------------------------------------------------------------------------
Distributions to shareholders from net investment
income-Class A (1,847) (46,067)
- -------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains on investment securities:
Class A (4,927,563) (15,777,862)
- -------------------------------------------------------------------------------
Class B (1,473,126) (1,023,398)
- -------------------------------------------------------------------------------
Share transactions-net:
Class A (12,166,631) (10,440,662)
- -------------------------------------------------------------------------------
Class B 30,353,095 12,058,687
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets 3,943,457 (10,618,709)
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 157,775,868 168,394,577
- -------------------------------------------------------------------------------
End of period $161,719,325 $157,775,868
===============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $152,816,015 $134,807,576
- -------------------------------------------------------------------------------
Undistributed net investment income (loss) (54,924) (18,716)
- -------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales
of investment securities and futures contracts (2,037,863) 1,592,946
- -------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
futures and options contracts 10,996,097 21,394,062
- -------------------------------------------------------------------------------
$161,719,325 $157,775,868
===============================================================================
</TABLE>
See Notes to Financial Statements.
F-46
<PAGE> 119
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Growth Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate series
portfolios, each having an unlimited number of shares of beneficial interest.
The Fund currently offers two different classes of shares: the Class A shares
and the Class B shares. Class A shares are sold with a front-end sales charge.
Class B shares are sold with a contingent deferred sales charge. Matters
affecting each portfolio or class are voted on exclusively by the shareholders
of such portfolio or class. The assets, liabilities and operations of each
portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - A security listed or traded on an exchange is valued
at its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the Trust's officers
in a manner specifically authorized by the Board of Trustees. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value.
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
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On December 31, 1994,
$178,025 was reclassified from undistributed net investment income (loss) to
paid-in capital as result of a permanent book/tax differences.
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.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them. Expenses of the
Trust which are not directly attributable to the operations of any class of
shares or portfolio of the Trust are prorated among the classes to which the
expense relates based upon the relative net assets of each class.
E. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the
Fund's basis in the contract. Risks include the possibility of an illiquid
market and the change in the value of the contracts may not correlate with
changes in the value of the securities being hedged.
F. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the last
sale price, or in the absence of a sale, the mean between the last bid and
asked prices on that day. If a written call option expires on the stipulated
expiration date, or if the Fund enters into a closing purchase transaction,
the Fund realizes a gain (or a loss if the closing purchase transaction
F-47
<PAGE> 120
FINANCIALS
exceeds the premium received when the option was written) without regard to
any unrealized gain or loss on the underlying security, and the liability
related to such option is extinguished. If a written option is exercised,
the Fund realizes a gain or a loss from the sale of the underlying security
and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the stated
exercise price during the option period. The purchaser of a call option has the
right to acquire the security which is the subject of the call option at any
time during the option period. During the option period, in return for the
premium paid by the purchaser of the option, the Fund has given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security increase, but has retained the risk of loss
should the price of the underlying security decline. During the option period,
the Fund may be required at any time to deliver the underlying security against
payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time at which the Fund
effects a closing purchase transaction by purchasing (at a price which may be
higher than that received when the call option was written) a call option
identical to the one originally written. The Fund will not write a covered call
option if, immediately thereafter, the aggregate value of the securities
underlying all such options, determined as of the dates such options were
written, would exceed 5% of the net assets of the Fund.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. This agreement
requires AIM to reduce its fees or, if necessary, make payments to the Fund to
the extent required to satisfy any expense limitations imposed by the
securities laws or regulations thereunder of any state in which the Fund's
shares are qualified for sale. The master investment advisory agreement was
amended on September 28, 1994 with respect to the Fund. The amendment to the
master investment advisory agreement was approved by the Fund's shareholders at
a special meeting held on September 28, 1994. Of the 8,621,401 shares voted at
the meeting, 5,930,464 shares voted for the amendment, 2,251,185 shares voted
against the amendment, and 439,752 shares abstained. Under the previous terms,
the Fund paid an advisory fee to AIM at the annual rate of 0.60% of the first
$200 million of the Fund's average daily net assets, plus 0.50% of the Fund's
average daily net assets in excess of $200 million to and including $500
million, plus 0.40% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting and shareholder services to the Fund. During the year ended December
31, 1994, AIM was reimbursed $134,789 for such services. Effective November 1,
1994, A I M Fund Services, Inc. ("AFS") became the transfer agent for the Fund
and was paid $26,617 for such services during the two months ended December 31,
1994.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares (the
"Class B Plan")(collectively, the "Plans"). The Fund, pursuant to the Class A
Plan, pays AIM Distributors compensation at an annual rate of 0.25% of the
average daily net assets attributable to the Class A shares. The Class A Plan
is designed to compensate AIM Distributors for certain promotional and other
sales related costs, and to implement a program which provides periodic
payments to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own Class A
shares of the Fund. The Fund, pursuant to the Class B Plan, pays AIM
Distributors compensation at an annual rate of 1.00% of the average daily net
assets attributable to the Class B shares. Of this amount, the Fund may pay a
service fee of 0.25% of the average daily net assets of the Class B shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class B shares of
the Fund. Any amounts not paid as a service fee under such Plans would
constitute an asset-based sales charge. The Plans also impose a cap on the
total sales charges, including asset-based sales charges, that may be paid by
the respective classes. During the year ended December 31, 1994, the Class A
shares and the Class B shares paid AIM Distributors $327,254 and $247,715,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $37,866 from sales of the Class A
shares of the Fund during the year ended December 31, 1994. Such commissions
are not an expense of the Fund. They are deducted from, and are not included
in, the proceeds from sales of Class A shares. During the year ended December
31, 1994, AIM Distributors received $51,475 in contingent deferred sales
charges imposed on redemptions of Class B shares. Certain officers and trustees
of the Trust are officers and directors of AIM, AIM Distributors and AFS.
F-48
<PAGE> 121
FINANCIALS
During the year ended December 31, 1994, the Fund paid legal fees of $3,301
for services rendered by Reid & Priest as counsel to the Board of Trustees.
Effective September 1994, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed as counsel to the Board of Trustees. The Fund paid legal fees of $227
for services rendered by that firm as counsel. A member of that firm is a
trustee of the Trust.
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is
not an "interested person" of the Trust. The Trust may invest trustees' fees,
if so elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
1994 was $288,727,400 and $305,934,601, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $13,680,179
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (3,601,422)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $10,078,757
==========================================================================
</TABLE>
Cost of investments for tax purposes is $148,817,003.
NOTE 5 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1994 1993
------------------------ -------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 4,669,279 $ 49,954,762 1,224,133 $ 14,715,788
- ------------------------------------------------------------------------------
Class B* 3,113,829 33,848,039 934,224 11,632,389
- ------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 467,584 4,717,930 1,367,591 15,125,482
- ------------------------------------------------------------------------------
Class B* 135,261 1,349,902 72,754 803,528
- ------------------------------------------------------------------------------
Reacquired:
Class A (6,154,491) (66,839,323) (3,348,833) (40,281,932)
- ------------------------------------------------------------------------------
Class B* (459,392) (4,844,846) (29,855) (377,230)
- ------------------------------------------------------------------------------
1,772,070 $ 18,186,464 220,014 $ 1,618,025
==============================================================================
</TABLE>
* Sales of Class B shares commenced on September 1, 1993.
NOTE 6 - OPEN FUTURES CONTRACTS
On December 31, 1994, $8,181,000 principal amount of U.S. Treasury Bills were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts at December 31, 1994 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT NO. OF CONTRACTS/MONTH/COMMITMENT APPRECIATION
- -------- --------------------------------- ------------
<S> <C> <C>
S&P 500 Index 36 contracts/March/Buy $123,500
- -------------------------------------------------------------
</TABLE>
F-49
<PAGE> 122
FINANCIALS
NOTE 7 - OPEN OPTION CONTRACTS WRITTEN
Open call option contracts written at December 31, 1994 were as follows:
<TABLE>
<CAPTION>
MARKET
NUMBER VALUE
OF PREMIUM DECEMBER UNREALIZED
ISSUER CONTRACT CONRACTS RECEIVED 31, 1994 APPRECIATION
- ------ ----------------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Applied Materials, Inc. April 50 calls 93 $ 17,103 $16,275 $ 828
- ----------------------- ----------------- --- -------- ------- -------
Cabletron Systems, Inc. April 50 calls 102 36,121 27,413 8,708
- ----------------------- ----------------- --- -------- ------- -------
Cabletron Systems, Inc. April 55 calls 8 1,576 950 626
- ----------------------- ----------------- --- -------- ------- -------
Coca-Cola Co. May 55 calls 40 5,422 4,250 1,172
- ----------------------- ----------------- --- -------- ------- -------
Federal National
Mortgage Association January 75 calls 160 37,466 7,000 30,466
- ----------------------- ----------------- --- -------- ------- -------
Gillette Co. (The) March 75 calls 42 11,287 9,450 1,837
- ----------------------- ----------------- --- -------- ------- -------
Home Depot, Inc. February 50 calls 45 5,048 1,688 3,360
- ----------------------- ----------------- --- -------- ------- -------
Texas Instruments, Inc. January 80 calls 61 12,991 2,287 10,704
- ----------------------- ----------------- --- -------- ------- -------
551 $127,014 $69,313 $57,701
=== ======= ======= =======
</TABLE>
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during each of the years in the ten-year period ended December 31,
1994 and for a Class B share outstanding during the year ended December 31,
1994 and the period September 1, 1993 (date sales commenced) through December
31, 1993.
<TABLE>
<CAPTION>
1994 1993 1992(A) 1991 1990 1989 1988 1987 1986 1985
CLASS A: -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.32 $12.28 $14.73 $12.35 $13.92 $11.93 $11.04 $12.91 $14.95 $12.82
- ----------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income -- -- 0.06 0.11 0.21 0.25 0.23 0.24 0.26 0.39
- ----------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on
securities (both
realized and
unrealized) (0.57) 0.41 (0.04) 4.33 (0.91) 3.16 0.89 0.30 1.57 2.98
- ----------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations (0.57) 0.41 0.02 4.44 (0.70) 3.41 1.12 0.54 1.83 3.37
- ----------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income -- -- (0.06) (0.13) (0.20) (0.27) (0.23) (0.31) (0.35) (0.44)
- ----------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Distributions from
capital gains (0.43) (1.37) (2.41) (1.93) (0.67) (1.15) -- (2.10) (3.52) (0.80)
- ----------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.43) (1.37) (2.47) (2.06) (0.87) (1.42) (0.23) (2.41) (3.87) (1.24)
- ----------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 10.32 $11.32 $12.28 $14.73 $12.35 $13.92 $11.93 $11.04 $12.91 $14.95
======================= ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total return(b) (4.99)% 3.64% 0.19% 37.05% (5.04)% 28.87% 10.13% 3.62% 12.85% 27.65%
======================= ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $123,271 $146,723 $168,395 $185,461 $153,245 $187,805 $180,793 $203,329 $213,346 $202,425
======================= ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets 1.22%(c) 1.17% 1.17% 1.21% 1.16% 1.00% 0.98% 0.84% 0.85% 0.79%
======================= ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets 0.02%(c) 0.02% 0.42% 0.73% 1.41% 1.62% 1.73% 1.51% 1.82% 2.80%
======================= ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 201% 192% 133% 73% 61% 53% 38% 78% 66% 39%
======================= ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Total returns do not deduct sales charges.
(c) Ratios are based on average net assets of $130,884,825.
F-50
<PAGE> 123
FINANCIALS
NOTE 8-CONTINUED
<TABLE>
<CAPTION>
1994 1993
CLASS B: ------- -------
<S> <C> <C>
Net asset value,
beginning of period $11.31 $12.83
- ----------------------- ------- -------
Income from investment
operations:
Net investment income
(loss) (0.06) (0.01)
- ----------------------- ------- -------
Net gains (losses) on
securities (both
realized and
unrealized) (0.61) (0.14)
- ----------------------- ------- -------
Total from investment
operations (0.67) (0.15)
- ----------------------- ------- -------
Less distributions:
Distributions from
capital gains (0.43) (1.37)
- ----------------------- ------- -------
Total distributions (0.43) (1.37)
- ----------------------- ------- -------
Net asset value, end of
period $10.21 $11.31
======================= ======= =======
Total return(a) (5.88)% (0.92)%(b)
======================= ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $38,448 $11,053
======================= ======= =======
Ratio of expenses to
average net assets 2.18 %(c) 1.91 %(d)
======================= ======= =======
Ratio of net investment
income (loss) to
average net assets (0.94)%(c) (0.72)%(d)
======================= ======= =======
Portfolio turnover rate 201% 192%
======================= ======= =======
</TABLE>
(a) Does not deduct contingent deferred sales charges.
(b) Total return is not annualized.
(c) Ratios are based on average net assets of $24,770,061.
(d) Annualized.
F-51
<PAGE> 124
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM High Yield Fund:
We have audited the accompanying statement of assets and liabilities of AIM
High Yield Fund (a portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1994, and the related statements of operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended and the financial highlights for each of the
years in the two-year period then ended. 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
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
December 31, 1994, 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
High Yield Fund as of December 31, 1994, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the two-year period then ended, in conformity with generally accepted
accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
February 3, 1995
F-52
<PAGE> 125
FINANCIALS
SCHEDULE OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
NON-CONVERTIBLE BONDS AND NOTES-93.27%
ADVERTISING/BROADCASTING-2.71%
$ 9,500,000 Ackerley Communication Inc., Sr. Secured Series A
Notes, 10.75%, 10/01/03 $ 9,048,750
- -------------------------------------------------------------------------------
6,750,000 Katz Corp., Sr. Sub. Notes, 12.75%, 11/15/02 7,020,000
- -------------------------------------------------------------------------------
5,000,000 Lamar Advertising Co., Sr. Secured Notes, 11.00%,
05/15/03 4,800,000
- -------------------------------------------------------------------------------
20,868,750
- -------------------------------------------------------------------------------
AEROSPACE/DEFENSE-2.16%
18,525,000 K & F Industries Inc., Sr. Sub. Deb., 13.75%,
08/01/01 16,672,500
- -------------------------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS & TIRES-3.68%
7,000,000 Aftermarket Technology Corp., Sr. Sub. Notes,
12.00%, 08/01/04(a) (Acquired 07/21/94-08/02/94;
Cost $7,032,500) 7,227,500
- -------------------------------------------------------------------------------
8,700,000 JPS Automotive Products, Sr. Notes, 11.125%,
06/15/01 8,352,000
- -------------------------------------------------------------------------------
5,690,000 SPX Corp., Sr. Sub. Notes, 11.75%, 06/01/02 5,661,550
- -------------------------------------------------------------------------------
6,750,000 Truck Components, Inc., Sr. Series A Notes, 12.25%,
06/30/01 7,087,500
- -------------------------------------------------------------------------------
28,328,550
- -------------------------------------------------------------------------------
BEVERAGES-1.53%
9,500,000 Heileman Acquisition Co., Sr. Sub. Notes, 9.625%,
01/31/04 6,175,000
- -------------------------------------------------------------------------------
6,650,000 Seven Up/RC Bottling Co., Sr. Secured Notes,
11.50%, 08/01/99 5,586,000
- -------------------------------------------------------------------------------
11,761,000
- -------------------------------------------------------------------------------
BUSINESS SERVICES-5.49%
6,500,000 Americold Corp., First Mortgage Series B Deb.,
11.50%, 03/01/05 5,850,000
- -------------------------------------------------------------------------------
11,010,000 Americold Corp., Sr. Sub. Deb., 11.00%, 05/01/97 9,633,750
- -------------------------------------------------------------------------------
1,050,000 Comdata Network, Inc., Gtd. Sr. Notes, 12.50%,
12/15/99 1,123,500
- -------------------------------------------------------------------------------
5,875,000 Comdata Network, Inc., Sr. Sub. Deb., 13.25%,
12/15/02 6,462,500
- -------------------------------------------------------------------------------
15,500,000 Neodata Services Inc., Sr. Deferred Coupon Notes,
12.00%, 05/01/03(b) 12,090,000
- -------------------------------------------------------------------------------
7,500,000 Solon Automated Services, Inc., Sr. Notes, 12.75%,
07/15/01 7,125,000
- -------------------------------------------------------------------------------
42,284,750
- -------------------------------------------------------------------------------
</TABLE>
F-53
<PAGE> 126
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CABLE TV-5.80%
$ 5,000,000 Adelphia Communications Corp., Sr. Deb., 11.875%,
09/15/04 $ 4,450,000
- ------------------------------------------------------------------------------
4,250,000 Adelphia Communications Corp., Sr. Notes, 12.50%,
05/15/02 3,973,750
- ------------------------------------------------------------------------------
8,800,000 American Media Operations, Sr. Sub. Notes,
11.625%, 11/15/04 9,020,000
- ------------------------------------------------------------------------------
10,000,000 Century Communications, Sr. Sub. Deb., 11.875%,
10/15/03 10,425,000
- ------------------------------------------------------------------------------
9,000,000 Continental Cablevision, Inc., Sr. Sub. Deb.,
11.00%, 06/01/07 9,135,000
- ------------------------------------------------------------------------------
8,525,000 Marcus Cable Co., Sr. Deb., 11.875%, 10/01/05 7,672,500
- ------------------------------------------------------------------------------
44,676,250
- ------------------------------------------------------------------------------
CHEMICALS-4.55%
6,500,000 Arcadian Partners, L.P., Sr. Series B Notes,
10.75%, 05/01/05 6,272,500
- ------------------------------------------------------------------------------
9,000,000 Huntsman Corp., First Mortgage Notes, 11.00%,
04/15/04 9,360,000
- ------------------------------------------------------------------------------
10,235,000 Indspec Chemical, Sr. Sub. Disc. Notes, 11.50%,
12/01/03(b) 5,629,250
- ------------------------------------------------------------------------------
4,500,000 Laroche Industries, Inc., Sr. Sub. Notes, 13.00%,
08/15/04 4,162,500
- ------------------------------------------------------------------------------
10,000,000 Polymer Group, Inc., Sr. Notes, 12.25%,
07/15/02(a) (Acquired 06/17/94-06/21/94;
Cost $10,098,750) 9,650,000
- ------------------------------------------------------------------------------
35,074,250
- ------------------------------------------------------------------------------
CHEMICALS (SPECIALTY)-3.58%
8,000,000 Agricultural Minerals & Chemicals, Sr. Notes,
10.75%, 09/30/03 8,080,000
- ------------------------------------------------------------------------------
9,000,000 Applied Extrusion Technologies, Inc., Sr. Notes,
11.50%, 04/01/02 8,910,000
- ------------------------------------------------------------------------------
11,400,000 Harris Chemical Corp., Gtd. Sr. Sub. Notes,
10.75%, 10/15/03 10,559,250
- ------------------------------------------------------------------------------
27,549,250
- ------------------------------------------------------------------------------
CONGLOMERATES-1.68%
6,000,000 Berry Plastics Corp., Sr. Sub. Notes, 12.25%,
04/15/04 5,820,000
- ------------------------------------------------------------------------------
7,000,000 Tjiwi Kimia International Global Co., Gtd. Notes,
13.25%, 08/01/01 7,087,500
- ------------------------------------------------------------------------------
12,907,500
- ------------------------------------------------------------------------------
CONTAINERS-6.45%
16,000,000 Ivex Holdings Corp., Disc. Series B Deb., 13.25%,
03/15/05(b) 6,400,000
- ------------------------------------------------------------------------------
6,500,000 Ivex Packaging Corp., Sr. Sub. Notes, 12.50%,
12/15/02 6,467,500
- ------------------------------------------------------------------------------
7,000,000 Owens-Illinois, Inc., Sr. Deb., 11.00% 12/01/03 7,262,500
- ------------------------------------------------------------------------------
21,750,000 Silgan Holdings Inc., Sr. Disc. Deb., 13.25%,
12/15/02(b) 18,270,000
- ------------------------------------------------------------------------------
7,300,000 Stone Container Corp., Sr. Sub. Notes, 11.00%,
08/15/99 7,190,500
- ------------------------------------------------------------------------------
3,750,000 U.S. Can Co., Sr. Sub. Notes, 13.50%, 01/15/02 4,106,250
- ------------------------------------------------------------------------------
49,696,750
- ------------------------------------------------------------------------------
ENERGY ALTERNATE SOURCES-2.35%
9,680,000 Foamex L.P., Sr. Sub. Deb., 11.875%, 10/01/04 9,196,000
- ------------------------------------------------------------------------------
8,500,000 Kenetech Corp., Sr. Secured Notes, 12.75%,
12/15/02 8,925,000
- ------------------------------------------------------------------------------
18,121,000
- ------------------------------------------------------------------------------
</TABLE>
F-54
<PAGE> 127
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
FINANCE ASSET MANAGEMENT-0.95%
Indah Kiat International Finance Co., Sr. Secured
Notes,
- -------------------------------------------------------------------------------
$ 2,500,000 11.875%, 06/15/02 $ 2,425,000
- -------------------------------------------------------------------------------
5,000,000 12.50%, 06/15/06 4,862,500
- -------------------------------------------------------------------------------
7,287,500
- -------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-2.76%
19,500,000 GPA Delaware, Deb., 8.75%, 12/15/98 14,820,000
- -------------------------------------------------------------------------------
7,125,000 Grupo Industrial Durango, Sr. Notes, 12.00%
07/15/01 6,412,500
- -------------------------------------------------------------------------------
21,232,500
- -------------------------------------------------------------------------------
FOOD & DRUG-3.76%
6,500,000 Fleming Co. Inc., Sr. Notes, 10.625%, 12/15/01 6,500,000
- -------------------------------------------------------------------------------
8,025,000 Pathmark Stores, Inc., Sub. Notes, 11.625%,
06/15/02 7,704,000
- -------------------------------------------------------------------------------
7,500,000 Star Markets Co., Inc., Sr. Sub. Notes, 13.00%,
11/01/04(a) (Acquired 10/26/94-11/10/94;
Cost $7,509,375) 7,650,000
- -------------------------------------------------------------------------------
Thrifty Payless Inc., Sr. Sub. Notes,
- -------------------------------------------------------------------------------
1,000,000 11.75%, 04/15/03 990,000
- -------------------------------------------------------------------------------
6,500,000 12.25%, 04/15/04 6,110,000
- -------------------------------------------------------------------------------
28,954,000
- -------------------------------------------------------------------------------
FOOD/PROCESSING-1.15%
8,800,000 PF Acquisition Corp., Sr. Sub. Notes, 12.75%,
02/01/05(a) (Acquired 10/21/94-11/28/94;
Cost $8,815,750) 8,844,000
- -------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-2.50%
7,650,000 American Life Holding Co., Sr. Sub. Notes, 11.25%,
09/15/04 7,497,000
- -------------------------------------------------------------------------------
5,045,000 Bankers Life Holding Corp., Sr. Sub. Series A
Deb., 13.00% 11/01/02 5,599,950
- -------------------------------------------------------------------------------
5,745,000 Life Partners Group Inc., Sr. Sub. Notes, 12.75%,
07/15/02 6,204,600
- -------------------------------------------------------------------------------
19,301,550
- -------------------------------------------------------------------------------
LEISURE & RECREATION-5.29%
8,375,000 Affinity Group, Sr. Sub. Notes, 11.50%, 10/15/03 7,956,250
- -------------------------------------------------------------------------------
10,000,000 Bally's Grand Inc., First Mortgage Notes, 10.375%,
12/15/03 8,700,000
- -------------------------------------------------------------------------------
9,700,000 Harrah's Jazz Co., First Mortgage Notes, 14.25%,
11/15/01 10,185,000
- -------------------------------------------------------------------------------
8,000,000 IHF Holdings, Inc., Sr. Sub. Disc. Notes, 15.00%,
11/15/04(a)(b)(c) (Acquired 11/04/94;
Cost $3,879,920) 3,920,000
- -------------------------------------------------------------------------------
4,000,000 Icon Health & Fitness, Sr. Sub. Notes, 13.00%,
07/15/02(a)(d) (Acquired 11/04/94-11/15/94;
Cost $3,954,380) 3,960,000
- -------------------------------------------------------------------------------
6,500,000 Plitt Theaters, Inc., Sr. Sub. Notes, 10.875%,
06/15/04 6,045,000
- -------------------------------------------------------------------------------
40,766,250
- -------------------------------------------------------------------------------
</TABLE>
F-55
<PAGE> 128
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
MACHINERY-3.36%
$12,000,000 Calmar Spraying Systems, Sr. Sub. Disc. Notes,
14.00%, 02/15/99 $ 11,940,000
- ------------------------------------------------------------------------------
9,525,000 Interlake Corp., Sr. Sub. Deb., 12.125%, 03/01/02 8,858,250
- ------------------------------------------------------------------------------
5,000,000 Waters Corp., Sr. Sub. Notes, 12.75%, 09/30/04 5,075,000
- ------------------------------------------------------------------------------
25,873,250
- ------------------------------------------------------------------------------
MEDICAL SERVICES-3.59%
5,800,000 General Medical Corp., Sr. Sub. Notes, 10.875%,
08/15/03 5,684,000
- ------------------------------------------------------------------------------
Ornda Healthcorp, Sr. Sub. Notes,
- ------------------------------------------------------------------------------
4,500,000 12.25%, 05/15/02 4,815,000
- ------------------------------------------------------------------------------
5,250,000 11.375%, 08/15/04 5,381,250
- ------------------------------------------------------------------------------
8,285,000 Quorum Health Group, Sr. Sub. Notes, 11.875%,
12/15/02 8,782,100
- ------------------------------------------------------------------------------
4,000,000 Total Renal Care, Sr. Sub. Disc. Notes, 12.00%,
08/15/04(b)(e) 3,020,000
- ------------------------------------------------------------------------------
27,682,350
- ------------------------------------------------------------------------------
METALS-1.24%
9,500,000 Kaiser Aluminum, Sr. Sub. Notes, 12.75%, 02/01/03 9,571,250
- ------------------------------------------------------------------------------
OIL & GAS-0.51%
4,000,000 Ferrell Gas Inc., Sr. Sub. Deb., 10.00% 08/01/01 3,940,000
- ------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.62%
5,055,000 Energy Ventures, Inc., Sr. Notes, 10.25%, 03/15/04 4,776,975
- ------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-3.90%
7,000,000 Container Corp. of America, Gtd. Sr. Series A
Notes, 11.25%, 05/01/04 7,175,000
- ------------------------------------------------------------------------------
8,100,000 Domtar Inc., Sr. Notes, 12.00%, 04/15/01 8,424,000
- ------------------------------------------------------------------------------
3,925,000 Riverwood International Corp., Sr. Sub. Notes,
10.375%, 06/30/04 3,895,563
- ------------------------------------------------------------------------------
6,000,000 S.D. Warren Co., Sr. Sub. Notes, 12.00%,
12/15/04(a) (Acquired 12/13/94-12/14/94;
Cost $6,016,250) 6,135,000
- ------------------------------------------------------------------------------
4,500,000 Stone Consolidated Corp., Sr. Secured Notes,
10.25%, 12/15/00 4,432,500
- ------------------------------------------------------------------------------
30,062,063
- ------------------------------------------------------------------------------
POLLUTION CONTROL-2.20%
9,500,000 Allied Waste Industries, Inc., Sr. Sub. Notes,
10.75%, 02/01/04 8,930,000
- ------------------------------------------------------------------------------
8,000,000 Mid-American Waste Systems, Inc., Sr. Sub. Notes,
12.25%, 02/15/03 8,000,000
- ------------------------------------------------------------------------------
16,930,000
- ------------------------------------------------------------------------------
</TABLE>
F-56
<PAGE> 129
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
PUBLISHING-2.02%
$13,826,000 Affiliated Newspaper Investments, Inc., Sr. Disc.
Notes, 13.25%, 07/01/06(b) $ 7,051,260
- -----------------------------------------------------------------------------
8,500,000 Garden State Newspapers, Sr. Sub. Notes, 12.00%,
07/01/04 8,500,000
- -----------------------------------------------------------------------------
15,551,260
- -----------------------------------------------------------------------------
RESTAURANTS-1.61%
15,000,000 Flagstar Corp., Sr. Sub. Notes, 11.25%, 11/01/04 12,375,000
- -----------------------------------------------------------------------------
STEEL-2.96%
6,925,000 Earle Jorgensen Co., Sr. Notes, 10.75%, 03/01/00 6,648,000
- -----------------------------------------------------------------------------
8,505,000 Geneva Steel Co., Sr. Notes, 11.125%, 03/15/01 7,994,700
- -----------------------------------------------------------------------------
8,250,000 GS Technologies Operating Co., Sr. Notes, 12.00%,
09/01/04 8,167,500
- -----------------------------------------------------------------------------
22,810,200
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES-10.72%
8,000,000 Celcaribe S.A., Sr. Secured Notes, 13.50%,
03/15/04(a)(b)(f)(Acquired 05/17/94-05/26/94;
Cost $6,429,128) 6,700,000
- -----------------------------------------------------------------------------
16,000,000 Cellular Inc., Sr. Sub. Disc. Notes, 11.75%,
09/01/03(b) 10,560,000
- -----------------------------------------------------------------------------
9,000,000 Centennial Cellular, Sr. Notes, 8.875%, 11/01/01 7,965,000
- -----------------------------------------------------------------------------
20,200,000 Horizon Cellular Telephone, Sr. Sub. Disc. Notes,
11.375%, 10/01/00(b) 14,695,500
- -----------------------------------------------------------------------------
3,500,000 K-III Communications Corp., Sr. Notes, 10.25%,
06/01/04 3,342,500
- -----------------------------------------------------------------------------
7,550,000 MobileMedia Communications, Inc., Sr. Sub. Notes,
10.50%, 12/01/03(b) 4,303,500
- -----------------------------------------------------------------------------
3,100,000 Paging Network, Sr. Sub. Notes, 11.75%, 05/15/02 3,069,000
- -----------------------------------------------------------------------------
10,500,000 PriCellular Wireless Corp., Sr. Sub. Disc. Notes,
14.00%, 11/15/01(a) (Acquired 11/17/94;
Cost $7,017,570) 6,982,500
- -----------------------------------------------------------------------------
6,655,000 Rogers Cantel Mobile Inc., Sr. Sub. Gtd. Notes,
11.125%, 07/15/02 6,788,100
- -----------------------------------------------------------------------------
8,500,000 Telex Communications, Inc., Sr. Notes, 12.00%,
07/15/04 8,415,000
- -----------------------------------------------------------------------------
12,000,000 USA Mobile Communications, Sr. Notes, 9.50%,
02/01/04 9,720,000
- -----------------------------------------------------------------------------
82,541,100
- -----------------------------------------------------------------------------
TEXTILES-2.08%
10,465,000 Dan River Inc., Sr. Sub. Notes, 10.125%, 12/15/03 9,418,500
- -----------------------------------------------------------------------------
7,400,000 Synthetic Industries Inc., Sr. Sub. Deb., 12.75%,
12/01/02 6,586,000
- -----------------------------------------------------------------------------
16,004,500
- -----------------------------------------------------------------------------
TRANSPORTATION-1.38%
3,000,000 Dade International Inc., Sr. Sub. Notes, 13.00%,
02/01/05(a)(Acquired 12/09/94; Cost $3,000,000) 3,015,000
- -----------------------------------------------------------------------------
Sea Container Ltd., Sr. Sub. Deb.,
- -----------------------------------------------------------------------------
5,350,000 Series A, 12.50%, 12/01/04 5,350,000
- -----------------------------------------------------------------------------
2,250,000 Series B, 12.50%, 12/01/04 2,283,750
- -----------------------------------------------------------------------------
10,648,750
- -----------------------------------------------------------------------------
</TABLE>
F-57
<PAGE> 130
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
UTILITIES-0.69%
$ 5,400,000 Southeastern Public Services, Sr. Sub. Deb.,
11.875%, 02/01/98 $ 5,346,000
- -----------------------------------------------------------------------------
Total Non-Convertible Bonds and Notes 718,439,048
- -----------------------------------------------------------------------------
SHARES
COMMON STOCKS-0.30%
AUTOMOBILE/TRUCKS PARTS & TIRES-0.19%
72,600 Lear Seating Corp.(g) 1,442,925
- -----------------------------------------------------------------------------
BUSINESS SERVICES-0.04%
13,826 Affiliated Newspaper Investments, Inc.(g) 345,650
- -----------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.07%
123,500 Thrifty Payless Holdings-Class C(g) 540,312
- -----------------------------------------------------------------------------
Total Common Stocks 2,328,887
- -----------------------------------------------------------------------------
PRINCIPAL AMOUNT
REPURCHASE AGREEMENTS(h)-4.41%
$33,945,984 Daiwa Securities America Inc., 3.50%,
01/03/95(i) 33,945,984
- -----------------------------------------------------------------------------
Total Repurchase Agreements 33,945,984
- -----------------------------------------------------------------------------
SHARES
WARRANTS-0.01%
BUILDING MATERIALS-0.00%
3,000 Payless Cashways, Inc., expiring 11/01/96(g) 7,125
- -----------------------------------------------------------------------------
CONGLOMERATES-0.01%
6,000 Berry Plastics Holdings, expiring 04/15/04(g) 82,500
- -----------------------------------------------------------------------------
Total Warrants 89,625
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS - 97.99% 754,803,544
- -----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 2.01% 15,493,715
- -----------------------------------------------------------------------------
NET ASSETS - 100.00% $770,297,259
=============================================================================
</TABLE>
F-58
<PAGE> 131
FINANCIALS
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at December 31, 1994, was
$64,084,000, which represented 8.32% of the net assets.
(b) Discounted bond at purchase. Interest rate shown represents coupon rate at
which the bond will accrue at a specified future date.
(c) Issued as a unit. This unit also includes 8,000 warrants to purchase
0.64673 shares of Class L common stock at $0.01 per share and 6.4673 shares
of Class A common stock at $0.01 per share per warrant.
(d) Issued as a unit. This unit also includes 4 warrants to purchase 0.19753
shares of Class L common stock and 1.9753 shares of Class A common stock
per warrant.
(e) Issued as a unit. This unit also includes 36 Class B common shares.
(f) Issued as a unit. This unit also includes 1,300,800 Celcaribe Ordinary
Trust Certificates.
(g) Non-income producing security.
(h) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 percent of the sales price of
the repurchase agreement.
(i) Joint repurchase agreement entered into 12/30/94 with a maturing value of
$391,353,115. Collateralized by $426,987,000 U.S. Treasury obligations,
4.75% to 9.25% due 01/15/96 to 11/15/24. The aggregate market value of the
collateral at 12/31/94 was $399,025,510. The Fund's pro-rata interest in
the collateral at 12/31/94 was $34,624,948.
Abbreviations:
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
Sr. - Senior
Sub. - Subordinated
See Notes to Financial Statements.
F-59
<PAGE> 132
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $782,302,194) $754,803,544
- --------------------------------------------------------------
Receivables for:
- --------------------------------------------------------------
Fund shares sold 4,554,737
- --------------------------------------------------------------
Interest 18,242,846
- --------------------------------------------------------------
Investment for deferred compensation plan 27,048
- --------------------------------------------------------------
Other assets 26,056
- --------------------------------------------------------------
Total assets 777,654,231
- --------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 826,354
- --------------------------------------------------------------
Fund shares reacquired 1,955,370
- --------------------------------------------------------------
Dividends 3,412,802
- --------------------------------------------------------------
Deferred compensation plan 27,048
- --------------------------------------------------------------
Accrued advisory fees 351,473
- --------------------------------------------------------------
Accrued administrative service fees 5,847
- --------------------------------------------------------------
Accrued distribution fees 494,838
- --------------------------------------------------------------
Accrued trustees' fees 2,017
- --------------------------------------------------------------
Accrued operating expenses 281,223
- --------------------------------------------------------------
Total liabilities 7,356,972
- --------------------------------------------------------------
Net assets applicable to shares outstanding $770,297,259
==============================================================
NET ASSETS:
Class A $578,958,950
==============================================================
Class B $191,338,309
==============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 64,862,396
==============================================================
Class B 21,448,584
==============================================================
CLASS A:
Net asset value and redemption price per share $8.93
==============================================================
Offering price per share:
(Net asset value of $8.93 / 95.25%) $9.38
==============================================================
CLASS B:
Net asset value and offering price per share $8.92
==============================================================
</TABLE>
See Notes to Financial Statements.
F-60
<PAGE> 133
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended December 31, 1994
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest $ 77,046,979
- ------------------------------------------------------------------------------
EXPENSES:
Advisory fees 3,881,526
- ------------------------------------------------------------------------------
Custodian fees 78,258
- ------------------------------------------------------------------------------
Transfer agent fees-Class A 636,119
- ------------------------------------------------------------------------------
Transfer agent fees-Class B 140,063
- ------------------------------------------------------------------------------
Administrative service fees 313,218
- ------------------------------------------------------------------------------
Trustees' fees 11,260
- ------------------------------------------------------------------------------
Distribution fees-Class A 1,446,888
- ------------------------------------------------------------------------------
Distribution fees-Class B 1,173,408
- ------------------------------------------------------------------------------
Other 242,018
- ------------------------------------------------------------------------------
Total expenses 7,922,758
- ------------------------------------------------------------------------------
Net investment income 69,124,221
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Realized gain (loss) on sales of investment securities (26,898,895)
- ------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (57,089,748)
- ------------------------------------------------------------------------------
Net gain (loss) on investment securities (83,988,643)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(14,864,422)
==============================================================================
</TABLE>
See Notes to Financial Statements.
F-61
<PAGE> 134
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
OPERATIONS:
Net investment income $ 69,124,221 $ 43,165,298
- -------------------------------------------------------------------------------
Net realized gain (loss) on sales of
investment securities (26,898,895) 21,110,401
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities (57,089,748) 8,730,979
- -------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations (14,864,422) 73,006,678
- -------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
- -------------------------------------------------------------------------------
Class A (58,337,288) (42,939,509)
- -------------------------------------------------------------------------------
Class B (10,971,364) (298,341)
- -------------------------------------------------------------------------------
Distributions in excess of net investment income:
- -------------------------------------------------------------------------------
Class A (91,900) (1,354,416)
- -------------------------------------------------------------------------------
Class B (16,331) (9,410)
- -------------------------------------------------------------------------------
Share transactions-net:
- -------------------------------------------------------------------------------
Class A 97,407,253 197,980,549
- -------------------------------------------------------------------------------
Class B 175,148,092 31,120,047
- -------------------------------------------------------------------------------
Net increase in net assets 188,274,040 257,505,598
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 582,023,219 324,517,621
- -------------------------------------------------------------------------------
End of period $770,297,259 $582,023,219
===============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $888,574,587 $616,826,638
- -------------------------------------------------------------------------------
Undistributed net investment income 949,305 184,431
- -------------------------------------------------------------------------------
Undistributed net realized gain (loss)
on sales of investment securities (91,727,983) (64,578,948)
- -------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities (27,498,650) 29,591,098
- -------------------------------------------------------------------------------
$770,297,259 $582,023,219
===============================================================================
</TABLE>
See Notes to Financial Statements.
F-62
<PAGE> 135
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM High Yield Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate series
portfolios, each having an unlimited number of shares of beneficial interest.
The Fund currently offers two different classes of shares: the Class A shares
and the Class B shares. Class A shares are sold with a front-end sales charge.
Class B shares are sold with a contingent deferred sales charge. Matters
affecting each portfolio or class are voted on exclusively by the shareholders
of such portfolio or class. 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 invests primarily in
high yield bonds. These bonds may involve special risks in addition to the
risks associated with investment in higher rated debt securities. High yield
bonds may be more susceptible to real or perceived adverse economic and
competitive industry conditions than higher grade bonds. Also, the secondary
market in which high yield bonds are traded may be less liquid than the market
for higher grade bonds. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations - Non-convertible bonds and notes are valued on the
basis of prices provided by an independent pricing service. Prices provided
by the pricing service may be determined without exclusive reliance on
quoted prices, and may reflect appropriate factors such as institution-size
trading in similar groups of securities, developments related to special
securities, yield, quality, coupon rate, maturity, type of issue, individual
trading characteristics and other market data. Investment securities for
which prices are not provided by the pricing service and which are listed or
traded on an exchange are valued at the last sales price on the exchange
where principally traded or, lacking any sales on a particular day, at the
mean between the closing bid and asked prices on that day unless the Board
of Trustees, or persons designated by the Board of Trustees, determines that
the over-the-counter quotations more closely reflect the current market
value of the security. Securities traded in the over-the-counter market,
except (i) securities priced by the pricing service, (ii) securities for
which representative exchange prices are available, and (iii) securities
reported in the NASDAQ National Market System, are valued at the mean
between representative last bid and asked prices obtained from an electronic
quotation reporting system, if such prices are available, or from
established market makers. Each security reported in the NASDAQ National
Market System is valued at the last sales price on the valuation date.
Securities for which market quotations are not readily available and
"restricted securities" are valued at fair value as determined in good faith
by or under the supervision of the Trust's officers in accordance with
methods which are specifically authorized by the Board of Trustees. Short-
term obligations having 60 days or less to maturity are valued at amortized
cost which approximates market value.
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
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. It is the policy of the Fund to declare daily dividends
from net investment income. Such dividends are paid monthly. Distributions
from net realized capital gains, if any, are recorded on ex-dividend date
and are paid annually subject to restrictions noted in section "C" below. On
December 31, 1994, $1,057,536 was reclassified from undistributed net
realized gain (loss) to undistributed net investment income as a result of
permanent book/tax differences. In addition, paid-in capital was reduced by
$807,396 with an equivalent offset to undistributed gain (loss) on sales of
investment securities due to the expiration of a portion of the capital loss
carryforward. Net assets of the Fund were unaffected by the
reclassifications discussed above.
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 $76,729,687 (which may be carried forward to offset future
taxable capital gains/losses) which expires, if not previously utilized,
through the year 2002.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them. Expenses of the
Trust which are not directly attributable to the operations of any class of
shares or portfolio of the Trust are prorated among the classes to which the
expense relates based upon the relative net assets of each class.
F-63
<PAGE> 136
FINANCIALS
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.625% of
the first $200 million of the Fund's average daily net assets, plus 0.55% of
the Fund's average daily net assets in excess of $200 million to and including
$500 million, plus 0.50% of the Fund's average daily net assets in excess of
$500 million to and including $1 billion, plus 0.45% of the Fund's average
daily net assets in excess of $1 billion. Under the terms of a sub-advisory
agreement between AIM and CIGNA Investments, Inc. ("CII"), AIM pays CII 0.15%
of the first $300 million of the Fund's average daily net assets, plus 0.10% of
the Fund's average daily net assets in excess of $300 million. The advisory
agreement requires AIM to reduce its fees or, if necessary, make payments to
the Fund to the extent required to satisfy any expense limitations imposed by
the securities laws or regulations thereunder of any state in which the Fund's
shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting and shareholder services to the Fund. During the year ended December
31, 1994, AIM was reimbursed $313,218 for such services. Effective November 1,
1994, A I M Fund Services, Inc. ("AFS") became the transfer agent for the Fund
and was paid $92,451 for such services during the two months ended December 31,
1994.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares (the
"Class B Plan") (collectively, the "Plans"). The Fund, pursuant to the Class A
Plan, pays AIM Distributors compensation at an annual rate of 0.25% of the
average daily net assets attributable to the Class A shares. The Class A Plan
is designed to compensate AIM Distributors for certain promotional and other
sales related costs, and to implement a program which provides periodic
payments to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own Class A
shares of the Fund. The Fund, pursuant to the Class B Plan, pays AIM
Distributors compensation at an annual rate of 1.00% of the average daily net
assets attributable to the Class B shares. Of this amount, the Fund may pay a
service fee of 0.25% of the average daily net assets of the Class B shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class B shares of
the Fund. Any amounts not paid as a service fee under such Plans would
constitute an asset-based sales charge. The Plans also impose a cap on the
total sales charges, including asset-based sales charges, that may be paid by
the respective classes. During the year ended December 31, 1994, the Class A
shares and the Class B shares paid AIM Distributors $1,446,888 and $1,173,408,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $808,554 from sales of the Class A
shares of the Fund during the year ended December 31, 1994. Such commissions
are not an expense of the Fund. They are deducted from, and are not included
in, the proceeds from sales of Class A shares. During the year ended December
31, 1994, AIM Distributors received $391,108 in contingent deferred sales
charges imposed on redemptions of Class B shares. Certain officers and trustees
of the Trust are officers and directors of AIM, AIM Distributors and AFS.
During the year ended December 31, 1994, the Fund paid legal fees of $1,665
for services rendered by Reid & Priest as counsel to the Board of Trustees.
Effective September 1994, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed as counsel to the Board of Trustees. The Fund paid legal fees of $389
for services rendered by that firm as counsel. A member of that firm is a
trustee of the Trust.
F-64
<PAGE> 137
FINANCIALS
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is
not an "interested person" of the Trust. The Trust may invest trustees' fees,
if so elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short- term
securities) purchased and sold by the Fund during the year ended December 31,
1994 was $598,636,324 and $348,321,786, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 16,257,702
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (43,807,602)
- ---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(27,549,900)
===========================================================================
</TABLE>
Cost of investments for tax purposes is $782,353,444.
NOTE 5 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1994 1993
-------------------------- ---------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 25,855,410 $ 248,478,420 28,591,005 $ 280,639,899
- -------------------------------------------------------------------------------
Class B* 23,795,476 226,709,226 3,124,915 31,240,320
- -------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Class A 3,794,971 35,880,387 2,927,197 28,804,993
- -------------------------------------------------------------------------------
Class B* 470,871 4,424,592 11,218 112,418
- -------------------------------------------------------------------------------
Reacquired:
Class A (19,578,260) (186,951,554) (11,249,858) (111,464,343)
- -------------------------------------------------------------------------------
Class B* (5,930,666) (55,985,726) (23,230) (232,691)
- -------------------------------------------------------------------------------
28,407,802 $ 272,555,345 23,381,247 $ 229,100,596
===============================================================================
</TABLE>
* Sales of Class B shares commenced on September 1, 1993.
F-65
<PAGE> 138
FINANCIALS
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during each of the years in the ten-year period ended December 31,
1994 and for a Class B share outstanding during the year ended December 31,
1994 and the period September 1, 1993 (date sales commenced) through December
31, 1993.
<TABLE>
<CAPTION>
1994 1993 1992(a) 1991 1990
CLASS A: -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.05 $9.40 $8.86 $7.07 $8.94
- ----------------------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 0.96 0.97 1.04 1.02 1.09
- ----------------------- -------- -------- -------- -------- --------
Net gains (losses) on
securities (both
realized and
unrealized) (1.12) 0.69 0.55 1.81 (1.84)
- ----------------------- -------- -------- -------- -------- --------
Total from investment
operations (0.16) 1.66 1.59 2.83 (0.75)
- ----------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.96) (1.01) (1.05) (1.04) (1.12)
- ----------------------- -------- -------- -------- -------- --------
Net asset value, end of
period $8.93 $10.05 $9.40 $8.86 $7.07
======================= ======== ======== ======== ======== ========
Total return(b) (1.67)% 18.40% 18.60% 42.18% (9.03)%
======================= ======== ======== ======== ======== ========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $578,959 $550,760 $324,518 $259,677 $204,932
======================= ======== ======== ======== ======== ========
Ratio of expenses to
average net assets 1.00 %(c) 1.12% 1.15% 1.22% 1.21%(d)
======================= ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets 10.07 %(c) 9.82% 11.00% 12.67% 13.59%(e)
======================= ======== ======== ======== ======== ========
Portfolio turnover rate 53 % 53% 56% 61% 27%
======================= ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985
CLASS A: -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.01 $9.67 $10.54 $10.21 $9.43
- ----------------------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 1.21 1.18 1.16 1.26 1.26
- ----------------------- -------- -------- -------- -------- --------
Net gains (losses) on
securities (both
realized and
unrealized) (1.07) 0.34 (0.83) 0.31 0.80
- ----------------------- -------- -------- -------- -------- --------
Total from investment
operations 0.14 1.52 0.33 1.57 2.06
- ----------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (1.21) (1.18) (1.20) (1.24) (1.28)
- ----------------------- -------- -------- -------- -------- --------
Net asset value, end of
period $8.94 $10.01 $9.67 $10.54 $10.21
======================= ======== ======== ======== ======== ========
Total return(b) 1.18% 16.41% 3.07% 15.97% 23.49%
======================= ======== ======== ======== ======== ========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $261,920 $274,631 $242,858 $246,865 $147,123
======================= ======== ======== ======== ======== ========
Ratio of expenses to
average net assets 0.99% 0.96%(d) 0.92% 0.92% 0.94%(d)
======================= ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets 12.40% 11.84%(e) 11.21% 11.84% 12.91%(e)
======================= ======== ======== ======== ======== ========
Portfolio turnover rate 36% 76% 81% 86% 79%
======================= ======== ======== ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Total returns do not deduct sales charges.
(c) Ratios are based on average net assets of $578,623,456.
(d) Ratios of expenses to average net assets prior to reduction of advisory
fees were 1.22%, 1.00% and 0.98% for years 1990, 1988 and 1985,
respectively.
(e) Ratios of net investment income to average net assets prior to reduction of
advisory fees were 13.58%, 11.80% and 12.87% for years 1990, 1988 and 1985,
respectively.
F-66
<PAGE> 139
FINANCIALS
<TABLE>
<CAPTION>
1994 1993
CLASS B: -------- -------
<S> <C> <C>
Net asset value,
beginning of period $ 10.04 $ 9.96
- ----------------------- -------- -------
Income from investment
operations:
Net investment income 0.87 0.32
- ----------------------- -------- -------
Net gains (losses) on
securities (both
realized and
unrealized) (1.10) 0.07
- ----------------------- -------- -------
Total from investment
operations (0.23) 0.39
- ----------------------- -------- -------
Less distributions:
Dividends from net
investment income (0.89) (0.31)
- ----------------------- -------- -------
Net asset value, end of
period $ 8.92 $ 10.04
======================= ======== =======
Total return(a) (2.48)% 4.00%(b)
======================= ======== =======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $191,338 $31,264
======================= ======== =======
Ratio of expenses to
average net assets 1.80%(c) 1.93%(d)
======================= ======== =======
Ratio of net investment
income to average net
assets 9.27%(c) 8.99%(d)
======================= ======== =======
Portfolio turnover rate 53% 53%
======================= ======== =======
</TABLE>
(a) Does not deduct contingent deferred sales charges.
(b) Total return is not annualized.
(c) Ratios are based on average net assets of $117,681,823.
(d) Annualized.
F-67
<PAGE> 140
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Income Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Income Fund (a portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1994, and the related statements of operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended and the financial highlights for each of the
years in the two-year period then ended. 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
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
December 31, 1994, 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
Income Fund as of December 31, 1994, the results of its operations for the year
then ended, the changes in its net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
two-year period then ended, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
February 3, 1995
F-68
<PAGE> 141
FINANCIALS
SCHEDULE OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
NON-CONVERTIBLE BONDS AND NOTES-67.16%
ADVERTISING/BROADCASTING-0.42%
Comcast Corp.,
Sr. Sub. Deb., 9.50% 01/15/08 $ 1,000,000 $ 905,000
---------------------------------------------------------------------------------------------
Total Advertising/Broadcasting 905,000
---------------------------------------------------------------------------------------------
AIRLINES-3.23%
Delta Air Lines Inc.,
Deb., 10.375% 02/01/11 1,500,000 1,466,505
Equipment Trust Certificates, 10.50% 04/30/16 5,000,000 4,907,550
---------------------------------------------------------------------------------------------
NWA Inc.,
Notes, 8.625% 08/01/96 550,000 528,000
---------------------------------------------------------------------------------------------
Total Airlines 6,902,055
---------------------------------------------------------------------------------------------
AUTOMOBILE-MANUFACTURERS-3.20%
General Motors Corp.,
Deb., 8.80% 03/01/21 6,700,000 6,859,661
---------------------------------------------------------------------------------------------
Total Automobile-Manufacturers 6,859,661
---------------------------------------------------------------------------------------------
AUTOMOBILE-PARTS-0.69%
Doehler Jarvis,
Sr. Notes, 11.875% 06/01/02 1,500,000 1,470,000
---------------------------------------------------------------------------------------------
Total Automobile-Parts 1,470,000
---------------------------------------------------------------------------------------------
BEVERAGES-0.50%
Lion Nathan Ltd. (Australia),
Sub. Deb., 12.00%(b) 09/30/00 1,490,300 1,070,810
---------------------------------------------------------------------------------------------
Total Beverages 1,070,810
---------------------------------------------------------------------------------------------
BUILDING MATERIALS-0.84%
Cemex SA DE C.V.,
Gtd. Deb., 9.50%(c) 09/20/01 2,200,000 1,793,000
---------------------------------------------------------------------------------------------
Total Building Materials 1,793,000
---------------------------------------------------------------------------------------------
CABLE TV-2.29%
Marcus Cable Operating Co.,
Sr. Disc. Notes, 13.50%(d) 08/01/04 5,000,000 2,650,000
---------------------------------------------------------------------------------------------
Rogers Cablesystem Inc. (Canada),
Sr. Secured 2nd Priority Deb., 9.65%(b) 01/15/04 1,750,000 1,035,423
---------------------------------------------------------------------------------------------
Videotron Ltd.,
Sr. Sub Notes, 10.25% 10/15/02 1,250,000 1,225,000
---------------------------------------------------------------------------------------------
Total Cable TV 4,910,423
---------------------------------------------------------------------------------------------
CONSUMER NONDURABLES-0.30%
Health O Meter,
Sr. Sub. Notes, 13.00% 08/15/02 710,000 646,100
---------------------------------------------------------------------------------------------
Total Consumer Nondurables 646,100
---------------------------------------------------------------------------------------------
</TABLE>
F-69
<PAGE> 142
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
CONTAINERS-2.05%
Container Corp. of America,
Gtd. Sr. Notes, 9.75% 04/01/03 $ 1,000,000 $ 947,500
---------------------------------------------------------------------------------------------
Ivex Packaging Inc.,
Sr. Sub. Notes, 12.50% 12/15/02 1,500,000 1,492,500
---------------------------------------------------------------------------------------------
Owens-Illinois Inc.,
Sr. Sub. Notes, 10.00% 08/01/02 2,000,000 1,955,000
---------------------------------------------------------------------------------------------
Total Containers 4,395,000
---------------------------------------------------------------------------------------------
FINANCE-CONSUMER CREDIT-3.20%
Ash Capital Finance (United Kingdom),
Gtd. Bonds, 9.50%(b) 07/15/06 2,850,000 2,965,510
---------------------------------------------------------------------------------------------
GMAC,
Notes, 5.50%(e) 10/15/02 1,500,000 1,476,660
---------------------------------------------------------------------------------------------
GPA Delaware Inc.,
Deb., 8.75% 12/15/98 2,000,000 1,520,000
---------------------------------------------------------------------------------------------
KFW International Finance (Italy),
Gtd. Notes, 11.625%(b) 11/27/98 1,430,000,000 888,831
---------------------------------------------------------------------------------------------
Total Finance-Consumer Credit 6,851,001
---------------------------------------------------------------------------------------------
FOOD/PROCESSING-3.99%
ConAgra Inc.,
Sub. Notes, 9.75% 03/01/21 5,000,000 5,285,650
---------------------------------------------------------------------------------------------
Fleming Companies Inc.,
Sr. Notes, 10.625% 12/15/01 1,000,000 1,000,000
---------------------------------------------------------------------------------------------
PF Acquisition Corp.,
Sr. Sub. Notes, 12.75%(c) 02/01/05 1,300,000 1,306,500
---------------------------------------------------------------------------------------------
Pilgrim's Pride Corp.,
Sr. Sub. Notes, 10.875% 08/01/03 1,000,000 942,500
---------------------------------------------------------------------------------------------
Total Food/Processing 8,534,650
---------------------------------------------------------------------------------------------
HOMEBUILDING-1.28%
Continental Homes Holdings,
Sr. Notes, 12.00% 08/01/99 1,000,000 940,000
---------------------------------------------------------------------------------------------
Ryland Group,
Sr. Sub. Notes, 10.50% 07/15/02 2,000,000 1,790,000
---------------------------------------------------------------------------------------------
Total Homebuilding 2,730,000
---------------------------------------------------------------------------------------------
HOTELS/MOTELS-1.11%
Four Seasons Hotel (Canada),
Deb., 11.05%(b) 03/25/96 1,750,000 1,241,275
---------------------------------------------------------------------------------------------
John Q. Hammons Hotels,
Gtd. First Mortgage Notes, 8.875% 02/15/04 1,300,000 1,124,500
---------------------------------------------------------------------------------------------
Total Hotels/Motels 2,365,775
---------------------------------------------------------------------------------------------
INSURANCE-LIFE AND HEALTH-1.78%
American Life Holding,
Sr. Sub. Notes, 11.25% 09/15/04 1,300,000 1,274,000
---------------------------------------------------------------------------------------------
Americo Life Inc.,
Sr. Sub. Notes, 9.25% 06/01/05 3,000,000 2,535,000
---------------------------------------------------------------------------------------------
Total Insurance-Life and Health 3,809,000
---------------------------------------------------------------------------------------------
</TABLE>
F-70
<PAGE> 143
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
LEISURE AND RECREATION-3.67%
Aztar Corp.,
Sr. Sub. Notes, 13.75% 10/01/04 $ 1,000,000 $ 1,020,000
---------------------------------------------------------------------------------------------
Harrah's Jazz Co.,
First Mortgage Notes, 14.25% 11/15/01 1,000,000 1,050,000
---------------------------------------------------------------------------------------------
Icon Health & Fitness,
Sr. Sub. Notes, 13.00%(c) 07/15/02 1,500,000 1,485,000
---------------------------------------------------------------------------------------------
Showboat, Inc.,
Gtd. First Mortgage Notes, 9.25% 05/01/08 4,000,000 3,340,000
Sr. Sub. Notes, 13.00% 08/01/09 1,000,000 950,000
---------------------------------------------------------------------------------------------
Total Leisure and Recreation 7,845,000
---------------------------------------------------------------------------------------------
MACHINERY-HEAVY-2.50%
Caterpillar Inc.,
Deb., 9.375% 08/15/11 5,000,000 5,348,400
---------------------------------------------------------------------------------------------
Total Machinery-Heavy 5,348,400
---------------------------------------------------------------------------------------------
MEDICAL SERVICES-0.48%
Ornda Healthcorp.,
Sr. Sub. Notes, 11.375% 08/15/04 1,000,000 1,025,000
---------------------------------------------------------------------------------------------
Total Medical Services 1,025,000
---------------------------------------------------------------------------------------------
NATURAL GAS-1.93%
Transco Energy Co.,
Deb., 9.875% 06/15/20 4,000,000 4,120,000
---------------------------------------------------------------------------------------------
Total Natural Gas 4,120,000
---------------------------------------------------------------------------------------------
OIL AND GAS-2.64%
Canadian Oil Debco Inc. (Canada),
Deb., 11.00%(b) 10/31/00 6,500,000 4,818,905
---------------------------------------------------------------------------------------------
Petroleum Heat & Power,
Sub. Deb., 9.375% 02/01/06 1,000,000 840,000
---------------------------------------------------------------------------------------------
Total Oil and Gas 5,658,905
---------------------------------------------------------------------------------------------
OIL EQUIPMENT AND SUPPLIES-0.42%
Centragas,
Sr. Asset Backed Notes, 10.65%(c) 12/01/10 950,000 907,250
---------------------------------------------------------------------------------------------
Total Oil Equipment and Supplies 907,250
---------------------------------------------------------------------------------------------
RESTAURANTS-0.86%
Carrols Corp.,
Sr. Notes, 11.50% 08/15/03 1,000,000 920,000
---------------------------------------------------------------------------------------------
Flagstar Corp.,
Sr. Notes, 10.875% 12/01/02 1,000,000 930,000
---------------------------------------------------------------------------------------------
Total Restaurants 1,850,000
---------------------------------------------------------------------------------------------
</TABLE>
F-71
<PAGE> 144
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
RETAIL-FOOD AND DRUG-1.18%
Food 4 Less Supermarkets,
Sr. Notes, 10.45% 04/15/00 $ 1,000,000 $ 980,000
---------------------------------------------------------------------------------------------
Penn Traffic Co.,
Sr. Notes, 10.65% 11/01/04 1,580,000 1,540,500
---------------------------------------------------------------------------------------------
Total Retail-Food and Drug 2,520,500
---------------------------------------------------------------------------------------------
RETAIL-STORES-1.93%
Pamida Inc.,
Sr. Sub. Notes, 11.75% 03/15/03 1,000,000 935,000
---------------------------------------------------------------------------------------------
Southland Corp.,
Sr. Sub. Deb., 4.50% 06/15/04 2,250,000 1,395,000
---------------------------------------------------------------------------------------------
Specialty Retail,
Sr. Sub. Notes, 11.00% 08/15/03 2,000,000 1,800,000
---------------------------------------------------------------------------------------------
Total Retail-Stores 4,130,000
---------------------------------------------------------------------------------------------
STEEL-0.46%
GS Technologies Inc.,
Sr. Notes, 12.00% 09/01/04 1,000,000 990,000
---------------------------------------------------------------------------------------------
Total Steel 990,000
---------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION-3.05%
International Bank for Reconstruction &
Development (Germany),
Unsub. Global Bonds, 5.875%(b) 11/10/03 7,000,000 3,965,920
Unsub. Global Bonds, 7.25%(b) 10/13/99 4,000,000 2,573,400
---------------------------------------------------------------------------------------------
Total Supranational Organization 6,539,320
---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-0.47%
Mobile Telecomm Technology,
Sr. Notes, 13.50% 12/15/02 1,000,000 1,008,750
---------------------------------------------------------------------------------------------
Total Telecommunications 1,008,750
---------------------------------------------------------------------------------------------
TEXTILES-2.22%
Consoltex Group,
Sr. Sub. Notes, 11.00% 10/01/03 1,500,000 1,387,500
---------------------------------------------------------------------------------------------
Fieldcrest Cannon Inc.,
Sr. Sub. Deb., 11.25% 06/15/04 2,000,000 2,000,000
---------------------------------------------------------------------------------------------
Tarkett International,
Sr. Sub. Notes, 9.00% 03/01/02 1,500,000 1,368,750
---------------------------------------------------------------------------------------------
Total Textiles 4,756,250
---------------------------------------------------------------------------------------------
TRANSPORTATION-MISCELLANEOUS-1.84%
Gearbulk Holding Ltd,
Sr. Notes, 11.25% 12/01/04 1,000,000 990,000
---------------------------------------------------------------------------------------------
Sea-Containers Ltd.,
Sr. Sub. Deb., 12.50% 12/01/04 2,000,000 2,000,000
---------------------------------------------------------------------------------------------
Trans Ocean Container,
Sr. Sub. Notes, 12.25% 07/01/04 1,000,000 940,000
---------------------------------------------------------------------------------------------
Total Transportation-Miscellaneous 3,930,000
---------------------------------------------------------------------------------------------
</TABLE>
F-72
<PAGE> 145
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
UTILITIES-8.65%
California Energy,
Sr. Disc. Notes, 10.25%(d) 01/15/04 $ 1,500,000 $ 1,065,000
---------------------------------------------------------------------------------------------
Indiana Michigan Power Co.,
Secured Lease Obligation Bonds, 9.82% 12/07/22 8,992,309 9,596,772
---------------------------------------------------------------------------------------------
Kansas Gas & Electric,
Secured Lease Obligation Bonds, 8.29% 03/29/16 5,000,000 4,642,500
---------------------------------------------------------------------------------------------
Ontario Hydro (Canada),
Gtd. Deb., 9.75%(b) 05/01/05 4,500,000 3,198,240
---------------------------------------------------------------------------------------------
Total Utilities 18,502,512
---------------------------------------------------------------------------------------------
FOREIGN GOVERNMENTS-9.98%
Australian Government (Australia),
Notes, 9.00%(b) 09/15/04 9,750,000 7,104,533
---------------------------------------------------------------------------------------------
New Brunswick (Province of) (Canada),
Deb, 8.94%(b) 01/15/05 3,500,000 2,457,595
---------------------------------------------------------------------------------------------
Queensland Treasury Corp. (Australia),
Gtd. Notes, 8.875%(b) 11/08/96 1,500,000 1,138,140
---------------------------------------------------------------------------------------------
Saskatchewan (Province of) (Canada),
Sr. Deb., 9.875% (b) 07/06/99 4,600,000 3,328,330
---------------------------------------------------------------------------------------------
U.K. Treasury Notes (United Kingdom),
8.00%,(b) 06/10/03 4,900,000 7,322,021
---------------------------------------------------------------------------------------------
Total Foreign Governments 21,350,619
---------------------------------------------------------------------------------------------
Total Non-Convertible Bonds and Notes 143,724,981
---------------------------------------------------------------------------------------------
CONVERTIBLE BONDS AND NOTES-6.52%
COMPUTER NETWORKING-0.40%
3Com Corp.,
Conv. Sub. Notes, 10.25%(c) 11/01/01 800,000 852,000
---------------------------------------------------------------------------------------------
Total Computer Networking 852,000
---------------------------------------------------------------------------------------------
FINANCE-CONSUMER CREDIT-2.86%
ELF Enterprise Finance PLC (United Kingdom),
Gtd. Conv. Bonds, 8.75%(b) 06/27/06 2,900,000 4,497,929
---------------------------------------------------------------------------------------------
Henderson Capital,
Conv. Bonds, 4.00% 10/27/96 1,700,000 1,627,750
---------------------------------------------------------------------------------------------
Total Finance-Consumer Credit 6,125,679
---------------------------------------------------------------------------------------------
OIL EQUIPMENT AND SUPPLIES-2.23%
Lasmo PLC (United Kingdom),
Conv. Deb., 7.75%(b) 10/04/05 3,700,000 4,776,256
---------------------------------------------------------------------------------------------
Total Oil Equipment and Supplies 4,776,256
---------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS-1.03%
Repap Enterprise (Canada),
Conv. Deb., 8.50%(b) 08/01/97 1,350,000 1,275,750
Conv. Deb., 9.00%(b) 06/30/98 1,500,000 919,590
---------------------------------------------------------------------------------------------
Total Paper and Forest Products 2,195,340
---------------------------------------------------------------------------------------------
Total Convertible Bonds and Notes 13,949,275
---------------------------------------------------------------------------------------------
</TABLE>
F-73
<PAGE> 146
FINANCIALS
<TABLE>
<S> <C> <C> <C>
MARKET
SHARES VALUE
CONVERTIBLE PREFERRED STOCKS-0.53%
CONGLOMERATES-0.26%
Sears Roebuck & Co.-Series A, $3.75 Dep. Conv.
Pfd. 10,000 $ 556,250
---------------------------------------------------------------------------------------------
Total Conglomerates 556,250
---------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-0.27%
Westinghouse Electric-Series C, $1.30 Conv.
Pfd.(c) 43,000 580,500
---------------------------------------------------------------------------------------------
Total Electronic Components 580,500
---------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks 1,136,750
---------------------------------------------------------------------------------------------
PRINCIPAL MARKET
MATURITY AMOUNT VALUE
U.S. TREASURY SECURITIES-12.57%
U.S. Treasury Notes, 7.50% 12/31/96 $15,000,000 14,946,150
---------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50% 11/15/24 12,500,000 11,957,000
---------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 26,903,150
---------------------------------------------------------------------------------------------
Total Investments (excluding
Repurchase Agreements) 185,714,156
---------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT-18.21%(f)
Daiwa Securities America Inc. 3.50%(g) 01/03/95 38,972,000 38,972,000
---------------------------------------------------------------------------------------------
Total Repurchase Agreements 38,972,000
---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-104.99% 224,686,156
---------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(4.99)% (10,688,437)
---------------------------------------------------------------------------------------------
NET ASSETS-100.00% $213,997,719
=============================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Principal amount is in U.S. Dollars, except as
indicated by note (b).
(b) Foreign denominated security. Par value and coupon
are denominated in currency of country indicated.
(c) Restricted securities. May be resold to qualified
institutional buyers in accordance with the
provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities
has been determined in accordance with procedures
established by the Board of Trustees. The aggregate
market value of these securities at December 31,
1994 was $6,924,250, which represented 3.24% of the
Fund's net assets.
(d) Discounted bond at purchase. Interest rate
represents coupon rate at which the bond will
accrue at a specified future date.
(e) Coupon steps up to 9.00%, effective 10/15/95.
(f) 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 value as being 102% of the sales price of
the repurchase agreement.
(g) Joint repurchase agreement entered into 12/30/94
with a maturing value of $391,353,115.
Collateralized by $426,987,000 U.S. Treasury
Obligations, 4.75% to 9.25% due 01/15/96 to
11/15/24. The aggregate market value of collateral
at 12/31/94 was $399,025,510. The Funds pro-rata
interest in the collateral was $39,751,491.
Abbreviations:
<TABLE>
<S> <C> <C> <C> <C> <C>
Conv. -Convertible Disc. -Discounted Sr. -Senior
Deb. -Debentures Gtd. -Guaranteed Sub. -Subordinated
Dep. -Depository Pfd. -Preferred Unsub. -Unsubordinated
</TABLE>
See Notes to Financial Statements.
F-74
<PAGE> 147
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at market value (cost
$194,841,173) $185,714,156
---------------------------------------------------------------------------------------
Repurchase agreements (cost $38,972,000) 38,972,000
---------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $2,314,693) 2,316,025
---------------------------------------------------------------------------------------
Receivables for:
Forward contracts 9,678
---------------------------------------------------------------------------------------
Fund shares sold 562,693
---------------------------------------------------------------------------------------
Interest 3,709,924
---------------------------------------------------------------------------------------
Reimbursement from advisor 6,600
---------------------------------------------------------------------------------------
Investment for deferred compensation plan 69,362
---------------------------------------------------------------------------------------
Other assets 51,052
---------------------------------------------------------------------------------------
Total assets 231,411,490
---------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 16,580,697
---------------------------------------------------------------------------------------
Fund shares reacquired 152,093
---------------------------------------------------------------------------------------
Dividends 287,744
---------------------------------------------------------------------------------------
Deferred compensation plan 69,362
---------------------------------------------------------------------------------------
Accrued advisory fees 89,081
---------------------------------------------------------------------------------------
Accrued distribution fees 137,649
---------------------------------------------------------------------------------------
Accrued administrative service fees 21,340
---------------------------------------------------------------------------------------
Accrued trustees' fees 1,989
---------------------------------------------------------------------------------------
Accrued operating expenses 73,816
---------------------------------------------------------------------------------------
Total liabilities 17,413,771
---------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $213,997,719
=======================================================================================
NET ASSETS:
Class A $201,676,654
=======================================================================================
Class B $12,321,065
=======================================================================================
SHARES OUTSTANDING, $.01 PAR VALUE PER SHARE
Class A 28,018,428
=======================================================================================
Class B 1,715,260
=======================================================================================
Class A:
Net asset value and redemption price per share $ 7.20
=======================================================================================
Offering price per share:
(Net asset value of $7.20 / 95.25%) $ 7.56
=======================================================================================
Class B:
Net asset value and offering price per share $ 7.18
=======================================================================================
</TABLE>
See Notes to Financial Statements.
F-75
<PAGE> 148
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended December 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 18,988,592
- ---------------------------------------------------------------------------------------
Dividends 395,439
- ---------------------------------------------------------------------------------------
Total investment income 19,384,031
- ---------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,110,855
- ---------------------------------------------------------------------------------------
Custodian fees 48,028
- ---------------------------------------------------------------------------------------
Distribution fees -- Class A 547,787
- ---------------------------------------------------------------------------------------
Distribution fees -- Class B 85,988
- ---------------------------------------------------------------------------------------
Printing fees 54,333
- ---------------------------------------------------------------------------------------
Trustees' fees 7,200
- ---------------------------------------------------------------------------------------
Transfer agent fees -- Class A 168,872
- ---------------------------------------------------------------------------------------
Transfer agent fees -- Class B 14,763
- ---------------------------------------------------------------------------------------
Administrative service fees 154,517
- ---------------------------------------------------------------------------------------
Other 126,533
- ---------------------------------------------------------------------------------------
Total expenses 2,318,876
- ---------------------------------------------------------------------------------------
Less expenses assumed by advisor (18,200)
- ---------------------------------------------------------------------------------------
Net expenses 2,300,676
- ---------------------------------------------------------------------------------------
Net investment income 17,083,355
- ---------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES, FOREIGN
CURRENCIES AND FORWARD CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities (15,577,011)
- ---------------------------------------------------------------------------------------
Foreign currencies (1,013,931)
- ---------------------------------------------------------------------------------------
Forward contracts (1,863,160)
- ---------------------------------------------------------------------------------------
(18,454,102)
- ---------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities (18,007,808)
- ---------------------------------------------------------------------------------------
Foreign currencies (8,230)
- ---------------------------------------------------------------------------------------
Forward contracts (56,320)
- ---------------------------------------------------------------------------------------
(18,072,358)
- ---------------------------------------------------------------------------------------
Net gain (loss) on investment securities, foreign currencies and
forward contracts (36,526,460)
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(19,443,105)
=======================================================================================
</TABLE>
See Notes to Financial Statements.
F-76
<PAGE> 149
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
OPERATIONS:
Net investment income $ 17,083,355 $ 16,803,637
- ------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities, foreign currencies and forward contracts (18,454,102) 13,829,680
- ------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities, foreign currencies and
forward contracts (18,072,358) 2,883,983
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (19,443,105) 33,517,300
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
Class A (14,029,228) (16,739,113)
- ------------------------------------------------------------------------------------------
Class B (478,570) (29,488)
- ------------------------------------------------------------------------------------------
Distributions to shareholders from capital:
Class A (3,123,648) --
- ------------------------------------------------------------------------------------------
Class B (122,674) --
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (360,558) (5,221,148)
- ------------------------------------------------------------------------------------------
Class B (20,562) (67,509)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A (6,155,618) 13,744,750
- ------------------------------------------------------------------------------------------
Class B 9,961,208 3,717,856
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (33,772,755) 28,922,648
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 247,770,474 218,847,826
- ------------------------------------------------------------------------------------------
End of period $213,997,719 $247,770,474
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $239,006,873 $238,447,605
- ------------------------------------------------------------------------------------------
Undistributed net investment income (60,059) 51,614
- ------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities, foreign currencies and
forward contracts (15,778,038) 369,954
- ------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and forward contracts (9,171,057) 8,901,301
- ------------------------------------------------------------------------------------------
$213,997,719 $247,770,474
==========================================================================================
</TABLE>
See Notes to Financial Statements.
F-77
<PAGE> 150
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Income Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate series portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers two different classes of shares: the Class A shares and the
Class B shares. Class A shares are sold with a front-end sales charge. Class B
shares are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations--Non-convertible bonds and notes are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as institution-size trading
in similar groups of securities, developments related to special securities,
yield, quality, coupon rate, maturity, type of issue, individual trading
characteristics and other market data. Investment securities for which prices
are not provided by the pricing service and which are listed or traded on an
exchange are valued at the last sales price on the exchange where the
security is principally traded or, lacking any sales on a particular day, at
the mean between the closing bid and asked prices on that day unless the
Board of Trustees, or persons designated by the Board of Trustees, determines
that the over-the-counter quotations more closely reflect the current market
value of the security. Securities traded in the over-the-counter market,
except (i) securities priced by the pricing service, (ii) securities for
which representative exchange prices are available, and (iii) securities
reported in the NASDAQ National Market System, are valued at the mean between
representative last bid and asked prices obtained from an electronic
quotation reporting system, if such prices are available, or from established
market makers. Each security reported in the NASDAQ National Market System is
valued at the last sales price on the valuation date. Securities for which
market quotations are not readily available and "restricted securities" are
valued at fair value as determined in good faith by or under the supervision
of the Trust's officers in accordance with methods which are specifically
authorized by the Board of Trustees. Short-term obligations having 60 days or
less to maturity are valued at amortized cost which approximates market
value.
B. Foreign Currency Translation--Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollars at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts--A forward currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a forward contract to attempt to minimize the
risk to the Fund from adverse changes in the relationship between currencies.
The Fund may also enter into a currency contract for the purchase or sale of
a security denominated in a foreign currency in order to "lock-in" the U.S.
dollar price of that security. The Fund could be exposed to risk if
counterparties to the contracts are unable to meet the terms of their
contracts or if the value of the foreign currency changes unfavorably.
Outstanding contracts at December 31, 1994 were as follows:
<TABLE>
<CAPTION>
Contract to Unrealized
Settlement ---------------------------------------- Appreciation
Date Receive Deliver (Depreciation)
--------- ------------------------- ---------- -------------
<S> <C> <C> <C>
02/28/95 DM 4,300,000 $2,780,292 $ (25,824)
02/28/95 Pound Sterling 5,580,000 $8,732,979 $ (9,486)
</TABLE>
D. 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
and is recorded on the
F-78
<PAGE> 151
FINANCIALS
NOTE 1-(continued)
accrual basis. Dividend income is recorded on the ex-dividend date. Dividends
to shareholders are declared daily and are paid monthly. On December 31, 1994
$2,687,230 was reclassified from undistributed net realized gain (loss) to
undistributed net investment income as a result of permanent book/tax
differences due to the differing book/tax treatment for the following: losses
on forward currency contracts, foreign currency losses on sales of foreign
denominated bonds, and reclassification of market discount on securities
sold. In addition, $3,246,322 was reclassified from undistributed net
investment income to paid in capital, consisting of the following: $1,818,172
of losses on forward currency contracts, $1,013,931 of foreign currency
losses on sales of foreign denominated bonds and $414,219 of distributions in
excess of net investment income. Net assets of the Fund were unaffected by
the reclassifications discussed above.
E. 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 $12,848,136 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2001. The Fund cannot distribute capital gains to
shareholders until the tax loss carryforwards have been utilized.
F. Expenses -- Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them. Expenses of the
Trust which are not directly attributable to the operations of any class of
shares or portfolio of the Trust are prorated among the classes to which the
expense relates based upon the relative net assets of each class.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays AIM an advisory fee at an annual rate of 0.50% of the
first $200 million of the Fund's average daily net assets, plus 0.40% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.35% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion. The advisory agreement requires AIM to reduce
its fees or, if necessary, make payments to the Fund to the extent required to
satisfy any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale. AIM
voluntarily paid expenses of $18,200 with respect to Class B shares during the
year ended December 31, 1994.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting and shareholder services to the Fund. During the year ended December
31, 1994, AIM was reimbursed $154,517 for such services. Effective November 1,
1994, A I M Fund Services, Inc. ("AFS") became transfer agent for the Fund and
was reimbursed $22,737 for such services during the two months ended December
31, 1994.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares (the
"Class B Plan")(collectively, the "Plans"). The Fund, pursuant to the Class A
Plan, pays to AIM Distributors compensation at an annual rate of 0.25% of the
average daily net assets attributable to the Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs, and to implement a program which provides periodic payments to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class A shares of
the Fund. The Fund, pursuant to the Class B Plan, pays AIM Distributors
compensation at an annual rate of 1.00% of the average daily net assets
attributable to the Class B shares. Of this amount, the Fund may pay a service
fee of 0.25% of the average daily net assets of the Class B shares to selected
dealers and financial institutions who furnish continuing personal shareholder
services to their customers who purchase and own Class B shares of the Fund. Any
amounts not paid as a service fee under such Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges, that may be paid by the respective
classes.
F-79
<PAGE> 152
FINANCIALS
During the year ended December 31, 1994, the Class A shares and the Class B
shares paid AIM Distributors $547,787 and $85,988, respectively, as compensation
under the Plans.
AIM Distributors received commissions of $94,637 from sales of the Class A
shares of the Fund during the year ended December 31, 1994. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1994,
AIM Distributors received $16,712 in contingent deferred sales charges imposed
on redemptions of Class B shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AIM Distributors and AFS.
During the year ended December 31, 1994 the Fund paid legal fees of $1,140 for
services rendered by Reid & Priest as counsel to the Board of Trustees.
Effective September 1994, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed as counsel to the Board of Trustees. A member of that firm is a
trustee of the Trust.
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of the Trust. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1994 was
$380,170,477 and $398,387,923, respectively.
The amount of unrealized appreciation (depreciation) of investment securities on
a tax basis as of December 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 701,363
- -----------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (9,937,318)
- -----------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities $(9,235,955)
===========================================================================================================
</TABLE>
Cost of investments for tax purposes is $194,950,111.
NOTE 5-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1994 1993
------------------------ ------------------------
Shares Value Shares Value
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 4,265,341 $33,272,800 4,747,133 $40,539,249
- ----------------------------------------------------------------------------------- ------------------------
Class B* 1,696,358 13,014,930 453,943 3,957,121
- ----------------------------------------------------------------------------------- ------------------------
Issued as reinvestment of dividends:
Class A 1,895,928 14,388,718 2,187,858 18,565,615
- ----------------------------------------------------------------------------------- ------------------------
Class B* 54,029 403,397 9,046 76,512
- ----------------------------------------------------------------------------------- ------------------------
Reacquired:
Class A (7,025,819) (53,817,136) (5,295,378) (45,360,114)
- ----------------------------------------------------------------------------------- ------------------------
Class B* (462,198) (3,457,119) (35,918) (315,777)
- ----------------------------------------------------------------------------------- ------------------------
423,639 $ 3,805,590 2,066,684 $17,462,606
=================================================================================== ========================
</TABLE>
* Sales of Class B shares commenced on September 7, 1993.
F-80
<PAGE> 153
FINANCIALS
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding for each of the years in the ten-year period ended December 31, 1994
and for a Class B share outstanding during the year ended December 31, 1994 and
the period September 7, 1993 (date sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
CLASS A: 1994 1993 1992(a) 1991 1990 1989
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.45 $ 8.03 $ 8.07 $ 7.41 $ 7.80 $ 7.53
- ------------------------------------------------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.58 0.60 0.60 0.61 0.65 0.66
- ------------------------------------------------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized
and unrealized) (1.22) 0.61 (0.03) 0.66 (0.39) 0.32
- ------------------------------------------------- -------- -------- -------- -------- -------- --------
Total from investment operations (0.64) 1.21 0.57 1.27 0.26 0.98
- ------------------------------------------------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.49) (0.60) (0.61) (0.61) (0.65) (0.71)
- ------------------------------------------------- -------- -------- -------- -------- -------- --------
Distributions from net realized capital gains (0.01) (0.19) -- -- -- --
- ------------------------------------------------- -------- -------- -------- -------- -------- --------
Distributions from capital (0.11) -- -- -- -- --
- ------------------------------------------------- -------- -------- -------- -------- -------- --------
Total distributions (0.61) (0.79) (0.61) (0.61) (0.65) (0.71)
- ------------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 7.20 $ 8.45 $ 8.03 $ 8.07 $ 7.41 $ 7.80
================================================= ======== ======== ======== ======== ======== ========
Total return(b) (7.65)% 15.38% 7.42% 18.00% 3.65% 13.56%
================================================= ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $201,677 $244,168 $218,848 $231,798 $215,987 $229,222
================================================= ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.98%(c) 0.98% 0.99%(d) 1.00%(d) 1.00% 0.96%
================================================= ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets 7.53%(c) 7.01% 7.54%(d) 7.97%(d) 8.73% 8.56%
================================================= ======== ======== ======== ======== ======== ========
Portfolio turnover rate 185% 99% 82% 67% 106% 222%
================================================= ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
CLASS A: 1988 1987 1986 1985
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.55 $ 8.20 $ 7.53 $ 6.74
- ------------------------------------------------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.68 0.67 0.71 0.74
- ------------------------------------------------- -------- -------- -------- --------
Net gains (losses) on securities (both realized
and unrealized) (0.02) (0.63) 0.60 0.80
- ------------------------------------------------- -------- -------- -------- --------
Total from investment operations 0.66 0.04 1.31 1.54
- ------------------------------------------------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.68) (0.69) (0.64) (0.75)
- ------------------------------------------------- -------- -------- -------- --------
Distributions from net realized capital gains -- -- -- --
- ------------------------------------------------- -------- -------- -------- --------
Distributions from capital -- -- -- --
- ------------------------------------------------- -------- -------- -------- --------
Total distributions (0.68) (0.69) (0.64) (0.75)
- ------------------------------------------------- -------- -------- -------- --------
Net asset value, end of period $ 7.53 $ 7.55 $ 8.20 $ 7.53
================================================= ======== ======== ======== ========
Total return(b) 9.01% 0.56% 18.04% 24.33%
================================================= ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $218,946 $237,466 $273,121 $216,725
================================================= ======== ======== ======== ========
Ratio of expenses to average net assets 0.95% 0.84% 0.82% 0.79%
================================================= ======== ======== ======== ========
Ratio of net investment income to average net
assets 8.81% 8.64% 8.93% 10.50%
================================================= ======== ======== ======== ========
Portfolio turnover rate 361% 195% 85% 38%
================================================= ======== ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $219,115,024.
(d) After waiver of advisory fees and expense reimbursements. Ratios of expenses
to average net assets prior to waiver of advisory fees and expense
reimbursements were 1.00% and 1.03% for 1992-1991, respectively. Ratios of
net investment income to average net assets prior to waiver of advisory fees
and expense reimbursements were 7.53% and 7.94% for 1992-1991, respectively.
<TABLE>
<CAPTION>
CLASS B: 1994 1993
------- ------
<S> <C> <C>
Net asset value, beginning of period $ 8.43 $ 8.95
- --------------------------------------------------------------------------------- ------- ------
Income from investment operations:
- --------------------------------------------------------------------------------- ------- ------
Net investment income 0.52 0.19
- --------------------------------------------------------------------------------- ------- ------
Net gains (losses) on securities (both realized and unrealized) (1.23) (0.34)
- --------------------------------------------------------------------------------- ------- ------
Total from investment operations (0.71) (0.15)
- --------------------------------------------------------------------------------- ------- ------
Less distributions:
Dividends from net investment income (0.42) (0.18)
- --------------------------------------------------------------------------------- ------- ------
Distributions from net realized capital gains (0.01) (0.19)
- --------------------------------------------------------------------------------- ------- ------
Distributions from capital (0.11) --
- --------------------------------------------------------------------------------- ------- ------
Total distributions (0.54) (0.37)
- --------------------------------------------------------------------------------- ------- ------
Net asset value, end of period $ 7.18 $ 8.43
================================================================================= ======= ======
Total return(a) (8.46)% (0.75)%
================================================================================= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,321 $3,602
================================================================================= ======= ======
Ratio of expenses to average net assets 1.83 (b)(c) 1.75 (c)(d)
================================================================================= ======= ======
Ratio of net investment income to average net assets 6.69 (b)(c) 6.24 (c)(d)
================================================================================= ======= ======
Portfolio turnover rate 185% 99%
================================================================================= ======= ======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average net assets of $8,598,712.
(c) After expense reimbursements. Annualized ratios of expenses and net
investment income to average net assets prior to expense reimbursements were
2.04% and 2.50% and 6.48% and 5.49% for 1994-1993, respectively.
(d) Annualized.
F-81
<PAGE> 154
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Money Market Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Money Market Fund (a portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1994, and the related statement of operations
for the year then ended, and the changes in its net assets and the financial
highlights for the year then ended and the period October 16, 1993 (date
operations commenced) through 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
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
December 31, 1994, 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
Money Market Fund as of December 31, 1994, the results of its operations for
the year then ended, and the changes in its net assets and financial highlights
for the year then ended, and the period October 16, 1993 (date operations
commenced) through December 31, 1993, in conformity with generally accepted
accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
February 3, 1995
F-82
<PAGE> 155
FINANCIALS
SCHEDULE OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER-36.20%(a)
ASSET-BACKED SECURITIES-8.36%
Asset Securitization Cooperative Corp.
5.60% 01/10/95 $27,000 $ 26,962,200
- ---------------------------------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.95% 01/20/95 18,500 18,441,905
- ---------------------------------------------------------------------------------------------
45,404,105
- ---------------------------------------------------------------------------------------------
AUTOMOBILE MANUFACTURERS-4.42%
Toyota Motor Credit Corp.
5.48% 01/03/95 24,000 23,992,693
- ---------------------------------------------------------------------------------------------
BEVERAGES-3.95%
Seagram (Joseph E.) & Sons, Inc.
6.07% 02/03/95 21,569 21,448,987
- ---------------------------------------------------------------------------------------------
BROKERAGE/INVESTMENT-5.06%
Merrill Lynch & Co. Inc.
5.80% 01/06/95 27,500 27,477,848
- ---------------------------------------------------------------------------------------------
FINANCE (BUSINESS CREDIT)-4.60%
General Electric Capital Corp.
5.50% 01/04/95 25,000 24,988,542
- ---------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-1.65%
Lincoln National Corp.
5.77% 02/14/95 9,000 8,936,530
- ---------------------------------------------------------------------------------------------
MACHINERY (HEAVY)-3.00%
Dover Corp.
6.03% 01/12/95 16,300 16,269,968
- ---------------------------------------------------------------------------------------------
OIL & GAS-5.16%
ARCO Coal Australia Inc.
5.40% 01/05/95 22,500 22,486,500
- ---------------------------------------------------------------------------------------------
Consolidated Natural Gas Company
5.53% 01/03/95 5,500 5,498,310
- ---------------------------------------------------------------------------------------------
27,984,810
- ---------------------------------------------------------------------------------------------
Total Commercial Paper 196,503,483
- ---------------------------------------------------------------------------------------------
BANK NOTE-3.68%
PNC Bank Corp.(b)
5.82% 04/21/95 20,000 19,995,769
- ---------------------------------------------------------------------------------------------
MASTER NOTE AGREEMENT-4.51%
Morgan (J.P.) & Co. Inc.(c)
6.20% 01/19/95 24,500 24,500,000
- ---------------------------------------------------------------------------------------------
PROMISSORY NOTE AGREEMENT-2.03%
Goldman Sachs Group, L.P. (The)(d)
6.48% 01/20/95 11,000 11,000,000
- ---------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES-12.46%
Federal National Mortgage Association
6.53%(b) 06/02/99 32,000 32,000,000
- ---------------------------------------------------------------------------------------------
</TABLE>
F-83
<PAGE> 156
FINANCIALS
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
Student Loan Marketing Association
5.91%(b) 08/20/98 $ 2,600 $ 2,600,000
- ---------------------------------------------------------------------------------------------
5.92%(b) 02/22/99 3,000 3,001,043
- ---------------------------------------------------------------------------------------------
5.93%(b) 01/13/99 10,000 10,000,000
- ---------------------------------------------------------------------------------------------
5.93%(b) 02/08/99 20,000 20,014,757
- ---------------------------------------------------------------------------------------------
Total U.S. Government Agencies 67,615,800
- ---------------------------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 319,615,052
- ---------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS(e)-41.11%
Goldman, Sachs & Co., Inc.(f)
5.75% 01/03/95 26,595 26,595,035
- ---------------------------------------------------------------------------------------------
Harris-Nesbitt Thomson Securities Inc.(g)
5.875% 01/03/95 99,785 99,785,000
- ---------------------------------------------------------------------------------------------
Swiss Bank Government Securities, Inc.(h)
6.10% 01/03/95 96,785 96,785,000
- ---------------------------------------------------------------------------------------------
Total Repurchase Agreements 223,165,035
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.99% 542,780,087
- ---------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.01% 56,152
- ---------------------------------------------------------------------------------------------
NET ASSETS-100.00% $542,836,239
=============================================================================================
(a) 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.
(b) Interest rates are redetermined weekly. Rates shown are the rates in effect on December
31, 1994.
(c) The Fund may demand prepayment of notes purchased under the Master Note Purchase
Agreement upon seven calendar days' telephonic notice. Interest rates are redetermined
periodically. Rate shown is the rate in effect on December 31, 1994.
(d) The Fund has the right to require prepayment of the promissory note upon thirty calendar
days' notice. Interest rates are redetermined periodically. Rate shown is the rate in
effect on December 31, 1994.
(e) Collateral on repurchase agreements, including the Portfolio'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 value
as being 102 percent of the sales price of the repurchase agreement.
(f) Joint repurchase agreement entered into 12/30/94 with a maturing value of $52,570,761.
Collaterized by $53,268,000 U.S. Treasury obligations, 0.00% to 11.25% due 02/15/95 to
05/15/97. The aggregate market value of the collateral at 12/31/94 was $53,657,741. The
Fund's pro-rata interest in the collateral at 12/31/94 was $27,162,270.
(g) Joint repurchase agreement entered into 12/30/94 with a maturing value of $100,065,278.
Collaterized by $109,170,000 U.S. Treasury obligations, 5.125% due 12/31/98 with a market
value at 12/31/94 of $101,910,195. The Fund's pro-rata interest in the collateral at
12/31/94 was $101,691,088.
(h) Joint repurchase agreement entered into 12/30/94 with a maturing value of $105,071,167.
Collaterized by $102,135,000 U.S. Treasury obligations, 3.875% to 12.00% due 09/30/95 to
08/15/23. The aggregate market value of the collateral at 12/31/94 was $107,300,661. The
Fund's pro-rata interest in the collateral at 12/31/94 was $98,905,662.
See Notes to Financial Statements.
</TABLE>
F-84
<PAGE> 157
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value (amortized cost) $319,615,052
- ---------------------------------------------------------------------------------------
Repurchase agreements 223,165,035
- ---------------------------------------------------------------------------------------
Interest receivable 1,051,039
- ---------------------------------------------------------------------------------------
Investment for deferred compensation plan 75,531
- ---------------------------------------------------------------------------------------
Other assets 130,770
- ---------------------------------------------------------------------------------------
Total assets 544,037,427
- ---------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
- ---------------------------------------------------------------------------------------
Dividends 265,845
- ---------------------------------------------------------------------------------------
Deferred compensation plan 75,531
- ---------------------------------------------------------------------------------------
Accrued advisory fees 270,058
- ---------------------------------------------------------------------------------------
Accrued distribution fees 352,093
- ---------------------------------------------------------------------------------------
Accrued administrative service fees 4,464
- ---------------------------------------------------------------------------------------
Accrued trustees' fees 1,642
- ---------------------------------------------------------------------------------------
Accrued operating expenses 231,555
- ---------------------------------------------------------------------------------------
Total liabilities 1,201,188
- ---------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $542,836,239
=======================================================================================
NET ASSETS:
Class A $148,885,729
=======================================================================================
Class B $ 33,998,958
=======================================================================================
Class C $359,951,552
=======================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 148,885,729
=======================================================================================
Class B 33,998,958
=======================================================================================
Class C 359,951,552
=======================================================================================
Class A:
Net asset value and redemption price per share $ 1.00
=======================================================================================
Offering price per share:
(Net asset value of $1.00/94.50%) $ 1.06
=======================================================================================
Class B:
Net asset value and offering price per share $ 1.00
=======================================================================================
Class C:
Net asset value, offering and redemption price per share $ 1.00
=======================================================================================
</TABLE>
See Notes to Financial Statements.
F-85
<PAGE> 158
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended December 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $20,015,403
- ---------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 2,057,756
- ---------------------------------------------------------------------------------------
Custodian fees 68,969
- ---------------------------------------------------------------------------------------
Distribution fees-Class A 277,607
- ---------------------------------------------------------------------------------------
Distribution fees-Class B 191,213
- ---------------------------------------------------------------------------------------
Distribution fees-Class C 785,906
- ---------------------------------------------------------------------------------------
Trustees' fees 7,472
- ---------------------------------------------------------------------------------------
Transfer agent fees-Class A 148,885
- ---------------------------------------------------------------------------------------
Transfer agent fees-Class B 10,369
- ---------------------------------------------------------------------------------------
Transfer agent fees-Class C 412,337
- ---------------------------------------------------------------------------------------
Administrative service fees 209,642
- ---------------------------------------------------------------------------------------
Registration and filing fees 247,371
- ---------------------------------------------------------------------------------------
Other 112,192
- ---------------------------------------------------------------------------------------
Total expenses 4,529,719
- ---------------------------------------------------------------------------------------
Net investment income 15,485,684
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $15,485,684
=======================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 1994 and the period October 16, 1993
(date operations commenced) through December 31, 1993
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
OPERATIONS:
Net investment income $ 15,485,684 $ 1,388,373
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 15,485,684 1,388,373
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (3,918,606) (364,494)
- ------------------------------------------------------------------------------------------
Class B (600,466) (1,784)
- ------------------------------------------------------------------------------------------
Class C (10,966,612) (1,022,095)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A 67,425,582 81,460,147
- ------------------------------------------------------------------------------------------
Class B 32,709,856 1,289,102
- ------------------------------------------------------------------------------------------
Class C 118,173,709 241,777,843
- ------------------------------------------------------------------------------------------
Net increase in net assets 218,309,147 324,527,092
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 324,527,092 --
- ------------------------------------------------------------------------------------------
End of period $542,836,239 $324,527,092
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $542,836,239 $324,527,092
==========================================================================================
</TABLE>
See Notes to Financial Statements.
F-86
<PAGE> 159
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Money Market Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate series portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: the Class A shares, the
Class B shares and the Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares are sold with a contingent deferred sales charge.
Class C shares are sold at net asset value. Matters affecting each portfolio or
class will be voted on exclusively by the shareholders of such portfolio or
class. The assets, liabilities and operations of each portfolio are accounted
for separately. Information presented in these financial statements pertains
only to the Fund. The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
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 any discount or premium.
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, adjusted for amortization of premiums and
discounts on investments, is recorded as earned from settlement date and is
recorded on the accrual basis. Dividends to shareholders are declared daily
and are paid monthly.
C. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to all
classes, e.g. advisory fees, are allocated among them. Expenses of the Trust
which are not directly attributable to the operations of any class of shares
or portfolio of the Trust are prorated among the classes to which the expense
relates based upon the relative net assets of each class.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.55% of
the first $1 billion of the Fund's average daily net assets plus 0.50% of the
Fund's average daily net assets in excess of $1 billion. This agreement requires
AIM to reduce its fees or, if necessary, make payments to the Fund to the extent
required to satisfy any expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Fund's shares are qualified for
sale. AIM voluntarily waived fees of $387,205 during the year ended December 31,
1994.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting and shareholder services to the Fund. During the year ended December
31, 1994, AIM was reimbursed $209,642 for such services. Effective November 1,
1994, A I M Fund Services, Inc. ("AFS") became the transfer agent for the Fund
and was paid $69,492 for such services during the two months ended December 31,
1994.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares, the Class B shares and the Class C shares of the Fund. The Trust
has adopted Plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan") and with
respect to the Fund's Class B shares (the "Class B Plan")(collectively, the
"Plans"). The Fund, pursuant to the Class A and C Plan, pays to AIM Distributors
compensation at an annual rate of 0.25% of the average daily net assets
attributable to the Class A shares and the Class C shares. The Class A and C
Plan is designed to compensate AIM Distributors for certain promotional and
other sales related costs, and to implement a program which provides periodic
payments to
F-87
<PAGE> 160
FINANCIALS
NOTE 2-(continued)
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class A shares or
Class C shares of the Fund. The Fund, pursuant to the Class B Plan, pays AIM
Distributors compensation at an annual rate of 1.00% of the average daily net
assets attributable to the Class B shares. Of this amount, the Fund may pay a
service fee of 0.25% of the average daily net assets of the Class B shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class B shares of
the Fund. Any amounts not paid as a service fee under such Plans would
constitute an asset-based sales charge. The Plans also impose a cap on the total
sales charges, including asset-based sales charges, that may be paid by the
respective classes. During the year ended December 31, 1994, the Class A shares,
the Class B shares and the Class C shares paid AIM Distributors $277,607,
$191,213 and $785,906, respectively, as compensation under the Plans.
AIM Distributors received commissions of $182,129 from sales of the Class A
shares of the Fund during the year ended December 31, 1994. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1994,
AIM Distributors received $81,600 in contingent deferred sales charges imposed
on redemptions of Class B shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AIM Distributors and AFS.
During the year ended December 31, 1994, the Fund paid legal fees of $4,238
for services rendered by Reid & Priest as counsel to the Board of Trustees.
Effective September 1994, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed as counsel to the Board of Trustees. The Fund paid legal fees of $303
for services rendered by that firm as counsel. A member of that firm is a
trustee of the Trust.
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of the Trust. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 1994 and the
period October 16, 1993 (date operations commenced) through December 31, 1993
were as follows:
<TABLE>
<CAPTION>
1994 1993*
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sold:
Class A 607,113,357 $ 607,113,357 130,014,360 $130,014,360
- ------------------------------------------------------------------------------------------------------------------------
Class B 94,699,624 94,699,624 2,358,066 2,358,066
- ------------------------------------------------------------------------------------------------------------------------
Class C 2,084,342,014 2,084,342,014 447,740,570 447,740,570
- ------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 3,420,397 3,420,397 400,927 400,927
- ------------------------------------------------------------------------------------------------------------------------
Class B 503,240 503,240 1,512 1,512
- ------------------------------------------------------------------------------------------------------------------------
Class C 9,396,978 9,396,978 1,079,471 1,079,471
- ------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (543,108,172) (543,108,172) (48,955,140) (48,955,140)
- ------------------------------------------------------------------------------------------------------------------------
Class B (62,493,008) (62,493,008) (1,070,476) (1,070,476)
- ------------------------------------------------------------------------------------------------------------------------
Class C (1,975,565,283) (1,975,565,283) (207,042,198) (207,042,198)
- ------------------------------------------------------------------------------------------------------------------------
218,309,147 $ 218,309,147 324,527,092 $324,527,092
========================================================================================================================
</TABLE>
* Includes shares issued in a reorganization of three former funds: the AIM
Money Market Fund(C) and AIM Cash Fund portfolios of AIM Funds Group and the
AIM Money Market Fund portfolio of Short-Term Investments Co.
F-88
<PAGE> 161
FINANCIALS
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share, a Class
B share and a Class C share outstanding during the year ended
December 31, 1994 and the period October 16, 1993 (date operations commenced)
through December 31, 1993.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
--------------------- -------------------- ----------------------
1994 1993 1994 1993 1994 1993
-------- -------- ------- -------- -------- --------
<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 .0337 0.0048 .0259 0.0032 .0337 0.0048
- ----------------------------------------- -------- -------- ------- -------- -------- --------
Less distributions:
Dividends from net investment income (.0337) (0.0048) (.0259) (0.0032) (.0337) (0.0048)
- ----------------------------------------- -------- -------- ------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================================= ======== ======== ======= ======== ======== ========
Total return(b) 3.43% 2.27%(a) 2.62% 1.51%(a) 3.42% 2.27%(a)
========================================= ======== ======== ======= ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $148,886 $ 81,460 $33,999 $ 1,289 $359,952 $241,778
========================================= ======== ======== ======= ======== ======== ========
Ratio of expenses to average net
assets(c) 0.97%(d) 1.00%(a) 1.78%(e) 1.75%(a) 0.99%(f) 1.00%(a)
========================================= ======== ======== ======= ======== ======== ========
Ratio of net investment income to average
net assets(c) 3.53%(d) 2.27%(a) 3.14%(e) 1.54%(a) 3.49%(f) 2.27%(a)
========================================= ======== ======== ======= ======== ======== ========
</TABLE>
(a) Annualized.
(b) Does not deduct sale charges or contingent deferral sales charges, where
applicable.
(c) After waiver of advisory fees.
(d) Ratios are based on average net assets of $111,042,610. Ratios of expenses
and net investment income to average net assets prior to waiver of advisory
fees are 1.06% and 3.44%, respectively.
(e) Ratios are based on average net assets of $19,121,318. Ratios of expenses
and net investment income to average net assets prior to waiver of advisory
fees are 1.87% and 3.05%, respectively.
(f) Ratios are based on average net assets of $314,362,619. Ratios of expenses
and net investment income to average net assets prior to waiver of advisory
fees are 1.08% and 3.40%, respectively.
F-89
<PAGE> 162
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Municipal Bond Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Municipal Bond Fund (a portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1994, and the related statements of operations
for the year then ended, and the changes in its net assets and the financial
highlights for each of the years in the two-year period then ended. These
financial statements and the 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
December 31, 1994, 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 the financial highlights
referred to above present fairly, in all material respects, the financial
position of AIM Municipal Bond Fund as of December 31, 1994, the results of
its operations for the year then ended, and the changes in its net assets and
the financial highlights for each of the years in the two-year period then
ended, in conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
February 3, 1995
F-90
<PAGE> 163
FINANCIALS
SCHEDULE OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ALASKA-2.02%
Alaska (State of) Housing Finance Corp.; Series A RB
6.375%, 12/01/12 A+ Aa $1,000 $ 1,026,880
- ------------------------------------------------------------------------------------------------------------------------
Alaska (State of) Housing Finance Corp.; Collateralized First Veterans' Home
Mortgage Series A-2 RB
6.75%, 12/01/24(b) AAA Aaa 2,150 2,034,137
- ------------------------------------------------------------------------------------------------------------------------
Alaska (State of) Housing Finance Corp.; Collateralized Mortgage Program
First Series RB
6.875%, 06/01/33 AAA Aaa 2,430 2,330,394
- ------------------------------------------------------------------------------------------------------------------------
5,391,411
- ------------------------------------------------------------------------------------------------------------------------
ARKANSAS-0.87%
Fayetteville (City of); Water and Sewer Refunding and Improvement
Series 1992 RB
6.15%, 08/15/12 A A 2,405 2,307,477
- ------------------------------------------------------------------------------------------------------------------------
ARIZONA-1.56%
Payson (County of) Unified School District #10; School Improvement
Series 1994 GO
5.50%, 07/01/06(c) AAA Aaa 1,000 955,680
- ------------------------------------------------------------------------------------------------------------------------
Pima (County of) Unified School District #10 (Amphitheater); School
Improvement Series 1992 E GO
6.50%, 07/01/05 A+ A 3,100 3,204,811
- ------------------------------------------------------------------------------------------------------------------------
4,160,491
- ------------------------------------------------------------------------------------------------------------------------
CALIFORNIA-0.82%
Palm Springs (City of) Financing Authority; Convention Center
Project Series A RB
6.75%, 11/01/21(c) AAA Aaa 1,150 1,155,923
- ------------------------------------------------------------------------------------------------------------------------
San Francisco (City and County of) Parking Authority; Parking Meter
Series 1994 RB
7.00%, 06/01/13(c) AAA Aaa 1,000 1,026,640
- ------------------------------------------------------------------------------------------------------------------------
2,182,563
- ------------------------------------------------------------------------------------------------------------------------
COLORADO-3.27%
Adams County School District Number 1; Unlimited Tax Building
Series 1992-A GO
6.625%, 12/01/02(c)(d) AAA Aaa 500 531,335
- ------------------------------------------------------------------------------------------------------------------------
Colorado (State of) Housing Finance Authority (Single Family Residential
Housing); Series 1987 B RB
9.00%, 09/01/17 - Aa 635 666,604
- ------------------------------------------------------------------------------------------------------------------------
Denver (City and County of) (Denver International Airport); Airport System
Series 1991 A RB
8.00%, 11/15/25(b) BB Baa 2,000 1,959,380
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-91
<PAGE> 164
FINANCIALS
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
COLORADO-CONTINUED
Denver (City and County of) (Stapleton International Airport); Airport System
Series 1985 RB
8.375%, 08/01/97 BB Baa $4,000 $ 4,025,040
- -----------------------------------------------------------------------------------------------------------------------
Mesa County School District #51; 1989 Series B Certificates of Participation
6.875%, 12/01/05(c) AAA Aaa 1,465 1,543,817
- ------------------------------------------------------------------------------------------------------------------------
8,726,176
- ------------------------------------------------------------------------------------------------------------------------
CONNECTICUT-4.59%
Connecticut (State of) Development Authority (Connecticut Power & Light);
Series 1993 A RB
5.40%, 09/01/28(e) A-1+ VMIG-1 500 500,000
- ------------------------------------------------------------------------------------------------------------------------
Connecticut (State of); General Purpose Public Improvement Series 1992-A GO
6.50%, 03/15/02(c)(d) AA- - 5,500 5,819,770
- ------------------------------------------------------------------------------------------------------------------------
Connecticut Resource Recovery Authority (American Ref-Fuel Company)
(Southeastern Connecticut Project); Corporate Credit 1988 RB
8.10%, 11/15/15(b) A A2 925 985,356
- ------------------------------------------------------------------------------------------------------------------------
Connecticut Resource Recovery Authority (American Ref-Fuel Company)
(Southeastern Connecticut Project); Series 1988 A RB
7.875%, 11/15/06(b) AA- A 1,700 1,789,760
- ------------------------------------------------------------------------------------------------------------------------
8.00%, 11/15/15(b) AA- A 1,000 1,054,180
- ------------------------------------------------------------------------------------------------------------------------
Connecticut Resource Recovery Authority (Bridgeport Resco Corp. Ltd.
Partners); Project A 1985 RB
7.625%, 01/01/09 A A 2,000 2,080,960
- ------------------------------------------------------------------------------------------------------------------------
12,230,026
- ------------------------------------------------------------------------------------------------------------------------
DELAWARE-0.20%
Delaware Housing Authority; Multifamily Housing Series 1982 RB
7.00%, 07/01/14 A+ A1 780 546,000
- ------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA-0.40%
District of Columbia; Unlimited Tax Refunding Series 1986 A GO
7.875%, 06/01/96(c)(d) AAA Aaa 1,000 1,054,390
- ------------------------------------------------------------------------------------------------------------------------
FLORIDA-0.43%
Miami (City of) Parking System; Series 1992 A RB
6.70%, 10/01/06 A A 1,120 1,149,646
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-92
<PAGE> 165
FINANCIALS
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GEORGIA-1.62%
Georgia Municipal Electric Authority; Series P RB
8.00%, 01/01/98(c)(d) AAA Aaa $2,000 $ 2,168,320
- ------------------------------------------------------------------------------------------------------------------------
Private Colleges and University Facilities Authority (Mercer University); RB
9.20%, 11/01/95(c)(d) AAA Aaa 250 263,600
- ------------------------------------------------------------------------------------------------------------------------
Savannah (City of) Economic Development Authority (Fuji Vegetable Oil
Company Project) General Obligation IDR
5.60%, 10/01/99(b)(e)(f) - - 1,900 1,900,000
- ------------------------------------------------------------------------------------------------------------------------
4,331,920
- ------------------------------------------------------------------------------------------------------------------------
GUAM-0.37%
Guam (Government of); Series 1994 A GO
5.50%, 08/15/97 BBB - 1,000 981,540
- ------------------------------------------------------------------------------------------------------------------------
IDAHO-0.53%
Student Loan Fund of Idaho Marketing Association, Inc.; Student Loan
Subordinate Series 2 RB
5.70%, 10/01/07(b) Aa - 1,500 1,400,565
- ------------------------------------------------------------------------------------------------------------------------
ILLINOIS-6.76%
Berwyn (City of) (Macneal Memorial Hospital Association); Hospital
Series 1991 RB
7.00%, 06/01/15(c) AAA Aaa 3,250 3,295,045
- ------------------------------------------------------------------------------------------------------------------------
Cook (County of); Series 1992 B GO
5.75%, 11/15/07(c) AAA Aaa 2,000 1,915,680
- ------------------------------------------------------------------------------------------------------------------------
Illinois (State of); Sales Tax Series 1993 B RB
6.50%, 06/15/13 AAA Aa 1,500 1,491,960
- ------------------------------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority (Evangelical Hospitals Corp.);
Series 1992-C RB
6.25%, 04/15/22 AA- A1 1,150 1,025,110
- ------------------------------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority (Franciscan Sisters Health Care);
Refunding Series 1992 RB
6.40%, 09/01/04(c) AAA Aaa 2,475 2,521,134
- ------------------------------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority (Ravenswood Hospital Medical Center);
Refunding Series 1987 A RB
8.80%, 06/01/06 - Baa1 1,000 1,071,020
- ------------------------------------------------------------------------------------------------------------------------
Metropolitan Fair and Exposition Authority; Refunding Series 1986 A RB
5.00%, 06/01/15(c) AAA Aaa 3,000 2,402,790
- ------------------------------------------------------------------------------------------------------------------------
Peoria and Pekin and Waukegan (Cities of); GNMA Collateralized Mortgage
Series 1990 RB
7.875%, 08/01/22(b) AAA - 180 188,953
- ------------------------------------------------------------------------------------------------------------------------
University of Illinois Auxiliary Facilities System; Series 1991 RB
5.75%, 04/01/22 AA- Aa 4,750 4,123,998
- ------------------------------------------------------------------------------------------------------------------------
18,035,690
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-93
<PAGE> 166
FINANCIALS
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
IOWA-0.36%
Salix (City of) (Illinois Gas and Electric); PCR
5.75%, 06/01/03 - Aa3 $1,000 $ 972,040
- ------------------------------------------------------------------------------------------------------------------------
KANSAS-1.02%
Kansas City (General Motors Corp. Project); Series 1984 PCR
5.45%, 04/01/06 BBB+ Baa1 3,000 2,728,650
- ------------------------------------------------------------------------------------------------------------------------
KENTUCKY-0.78%
Trimble (County of) (Louisville Gas & Electric); PCR
7.25%, 12/01/16 AA Aa2 2,000 2,067,720
- ------------------------------------------------------------------------------------------------------------------------
LOUISIANA-1.09%
Calcasieu (Parish of) Industrial Development Authority (Olin Corp.);
Refunding Series 1993 A RB
6.10%, 02/01/16(e) A-1+ - 200 200,000
- ------------------------------------------------------------------------------------------------------------------------
Louisiana Public Facilities Authority (Louisiana Department of Health
and Hospital Medical Center of Louisiana at New Orleans Project);
Series 1992 RB
6.125%, 10/15/07(c) AAA - 2,775 2,703,960
- ------------------------------------------------------------------------------------------------------------------------
2,903,960
- ------------------------------------------------------------------------------------------------------------------------
MAINE-0.56%
Maine (State of) Education Loan Authority; Education Loan Series A-2 RB
6.95%, 12/01/07(b) - A 1,465 1,481,437
- ------------------------------------------------------------------------------------------------------------------------
MARYLAND-0.44%
Maryland Health and Higher Education Facilities Authority (Doctors Community
Hospital Inc.); Series 1990 RB
8.75%, 07/01/00(c)(d) - Aaa 1,000 1,162,170
- ------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 6.71%
Massachusetts (State of); Consolidated Loan Series 1991 C GO
7.00%, 08/01/12 A+ A1 2,450 2,519,702
- ------------------------------------------------------------------------------------------------------------------------
Massachusetts (State of) Housing Finance Agency; Insured Rental Housing
Series 1994 A RB
6.00%, 07/01/04(b)(c) AAA Aaa 2,000 1,956,180
- ------------------------------------------------------------------------------------------------------------------------
Massachusetts Health and Education Facilities Authority (Anna Jacques
Hospital Issue); Series B RB
6.875%, 10/01/12 - Baa1 1,400 1,283,940
- ------------------------------------------------------------------------------------------------------------------------
Massachusetts Health and Education Facilities Authority (Lowell General
Hospital); Series 1991 A RB
8.40%, 06/01/11 - Baa1 3,550 3,735,133
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-94
<PAGE> 167
FINANCIALS
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MASSACHUSETTS-CONTINUED
Massachusetts Health and Education Facilities Authority (Valley Regional
Health System Issue); Series 1990 B RB
8.00%, 07/01/00(c)(d) - Aaa $3,000 $3,379,680
- ------------------------------------------------------------------------------------------------------------------------
Massachusetts Municipal Wholesale Electric Cooperative Power Supply; System
Series 1992 A RB
6.75%, 07/01/08(c) AAA Aaa 3,000 3,071,730
- ------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Resources Authority; General Revenue Refunding 1992
Series B RB
6.25%, 11/01/10 A A 2,000 1,939,260
- ------------------------------------------------------------------------------------------------------------------------
17,885,625
- ------------------------------------------------------------------------------------------------------------------------
MICHIGAN-4.92%
Detroit (City of) School District; School Building and Site (Unlimited Tax)
Series 1992 GO
6.00%, 05/01/05 AA A1 1,000 981,070
- ------------------------------------------------------------------------------------------------------------------------
6.15%, 05/01/07 AA A1 1,300 1,276,756
- ------------------------------------------------------------------------------------------------------------------------
Lake Orion Community School District; School Building and Site (Unlimited Tax)
Series 1994 GO
7.00%, 05/01/15(c) AAA Aaa 2,500 2,584,675
- ------------------------------------------------------------------------------------------------------------------------
Michigan State Hospital Finance Authority (Oakwood Hospital Obligated Group);
Refunding Series 1993 A RB
5.30%, 11/01/06(c) AAA Aaa 1,175 1,067,840
- ------------------------------------------------------------------------------------------------------------------------
Michigan Strategic Fund (General Motors Corp. Project); Refunding
Series 1987 PCR
6.625%, 03/01/07 BBB+ Baa1 1,000 983,110
- ------------------------------------------------------------------------------------------------------------------------
Monroe (County of) (Detroit Edison Co.); PCR
10.125%, Series 1985 I, 09/01/05 BBB+ A3 3,800 4,072,764
- ------------------------------------------------------------------------------------------------------------------------
10.50%, Series 1985 A, 12/01/16 BBB Baa1 2,000 2,143,840
- ------------------------------------------------------------------------------------------------------------------------
13,110,055
- ------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI-1.89%
Mississippi Higher Education Assistance Corp.; Student Loan
Series 1994 C RB
7.50%, 09/01/09(b) - A 5,000 5,033,300
- ------------------------------------------------------------------------------------------------------------------------
MISSOURI-0.75%
Kansas City Industrial Development Authority (General Motors Corp.
Project); PCR
6.05%, 04/01/06 BBB+ Baa1 1,435 1,382,737
- ------------------------------------------------------------------------------------------------------------------------
Kansas City Municipal Assistance Corp. (Truman Medical Center Charitable
Foundation); Leasehold Improvement Series 1991 A RB
7.00%, 11/01/08 A A 605 607,190
- ------------------------------------------------------------------------------------------------------------------------
1,989,927
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-95
<PAGE> 168
FINANCIALS
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEBRASKA-0.83%
Nebraska Higher Education Loan Program, Inc. (A-6 Junior Subordinate Bond);
Series 1993 A RB
5.90%, 06/01/03(b) - A $2,250 $ 2,224,935
- ------------------------------------------------------------------------------------------------------------------------
NEVADA-1.50%
Humboldt (County of) (Sierra Pacific Project); Series 1987 PCR
6.55%, 10/01/13(c) AAA Aaa 3,000 2,980,410
- ------------------------------------------------------------------------------------------------------------------------
Las Vegas (City of); 1992 Limited Tax GO
6.50%, 10/01/08(c) AAA Aaa 1,000 1,012,100
- ------------------------------------------------------------------------------------------------------------------------
3,992,510
- ------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE-2.17%
New Hampshire Housing Finance Authority; Single Family Residential Mortgage
Series 1987 B RB
8.625%, 07/01/13(b) A+ Aa 1,510 1,564,448
- ------------------------------------------------------------------------------------------------------------------------
New Hampshire State Turnpike System; Series 1990 RB
7.40%, 04/01/00(c)(d) AAA Aaa 3,850 4,211,361
- ------------------------------------------------------------------------------------------------------------------------
5,775,809
- ------------------------------------------------------------------------------------------------------------------------
NEW JERSEY-2.54%
Camden (County of) Municipal Utilities Authority; Series 1987 RB
8.25%, 12/01/17(c) AAA Aaa 2,000 2,169,180
- ------------------------------------------------------------------------------------------------------------------------
Hudson County Correctional Facility; Certificate of Participation
Series 1992 RB
6.60%, 12/01/21(c) AAA Aaa 1,250 1,250,838
- ------------------------------------------------------------------------------------------------------------------------
New Jersey City Economic Development Authority (Atlantic City Sewer Co.);
Sewer Facility Series 1991 RB
7.25%, 12/01/11(b)(f) - - 2,000 2,013,300
- ------------------------------------------------------------------------------------------------------------------------
New Jersey Health Care Facility Financing Authority (St. Peters
Medical Center); Series 1987 C RB
8.60%, 07/01/17(c) AAA Aaa 1,250 1,352,112
- ------------------------------------------------------------------------------------------------------------------------
6,785,430
- ------------------------------------------------------------------------------------------------------------------------
NEW MEXICO-1.06%
Los Alamos (County of); Utility Series A RB
6.00%, 07/01/15(c) AAA Aaa 2,000 1,870,440
- ------------------------------------------------------------------------------------------------------------------------
Santa Fe (City of); Series 1994 A RB
6.25%, 06/01/15(c) AAA Aaa 1,000 964,230
- ------------------------------------------------------------------------------------------------------------------------
2,834,670
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-96
<PAGE> 169
FINANCIALS
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW YORK-11.59%
New York (City of); GO
8.25%, Series F 11/15/01(c)(d) - Aaa $1,840 $ 2,130,334
- ------------------------------------------------------------------------------------------------------------------------
8.25%, Series F 11/15/01(d) A- Baa1 160 174,067
- ------------------------------------------------------------------------------------------------------------------------
7.65%, Series 1992 F 02/01/06 A- Baa1 4,775 5,047,127
- ------------------------------------------------------------------------------------------------------------------------
7.70%, Series D 02/01/09 A- Baa1 2,000 2,094,140
- ------------------------------------------------------------------------------------------------------------------------
7.20%, Series H 02/01/15 A- Baa1 500 502,430
- ------------------------------------------------------------------------------------------------------------------------
7.00%, Series C Sub-Series C-1 08/01/17 A- Baa1 2,000 1,971,940
- ------------------------------------------------------------------------------------------------------------------------
7.00%, Series B 02/01/18(c) AAA Aaa 1,000 1,019,400
- ------------------------------------------------------------------------------------------------------------------------
7.00%, Series H 02/01/20 A- Baa1 350 344,887
- ------------------------------------------------------------------------------------------------------------------------
5.85%, Series 1994 H-3 08/01/21(e) AAA Aaa 400 400,000
- -----------------------------------------------------------------------------------------------------------------------
New York City Housing Development Corp. (James Tower Development);
Multifamily Housing Series 1994 A RB
5.40%, 07/01/05(e) A-1 - 2,400 2,400,000
- -----------------------------------------------------------------------------------------------------------------------
New York City Industrial Development Agency (The Lighthouse Inc. Project);
Series 1992 RB
6.50%, 07/01/22 AA Aa2 1,500 1,385,055
- -----------------------------------------------------------------------------------------------------------------------
New York State Dormitory Authority (City University); Refunding Series T RB
10.25%, 07/01/12(c) BBB Baa1 2,435 2,549,055
- -----------------------------------------------------------------------------------------------------------------------
New York State Medical Care Facilities Authority (Mental Health Services);
Refunding Series 1987 A RB
8.875%, 08/15/97(c)(d) AAA Aaa 940 1,040,571
- ------------------------------------------------------------------------------------------------------------------------
8.875%, 08/15/07 BBB+ Baa1 1,060 1,143,772
- -----------------------------------------------------------------------------------------------------------------------
New York State Urban Development Corp.; Capital Facilities 1991 Series 3 RB
7.375%, 01/01/02(c)(d) BBB Baa1 7,850 8,716,011
- -----------------------------------------------------------------------------------------------------------------------
30,918,789
- -----------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA-2.28%
North Carolina Eastern Municipal Power Agency; Series 1988 A RB
8.00%, 01/01/98(c)(d) A1 Aaa 3,000 3,261,277
- -----------------------------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power Agency; Series A RB
6.125%, 01/01/10(c) AAA Aaa 1,500 1,447,980
- -----------------------------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency (No. 1 Catawba Electric Project);
Series 1990 RB
6.50%, 01/01/10(c) AAA Aaa 1,375 1,378,974
- -----------------------------------------------------------------------------------------------------------------------
6,088,231
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-97
<PAGE> 170
FINANCIALS
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OHIO-3.13%
Akron Bath Copley Joint Township (Akron City Hospital); Series 1987 RB
8.875%, 11/15/97(c)(d) - Aaa $1,610 $ 1,787,792
- ------------------------------------------------------------------------------------------------------------------------
Claremont (County of) (Mercy Health Care System-Province of Cincinnati);
Hospital Facilities Refunding Series 1985 A RB
9.75%, 09/01/13(c) AAA Aaa 775 814,145
- ------------------------------------------------------------------------------------------------------------------------
Columbus (City of); Unlimited Tax Series GO
5.50%, 05/15/08 AA+ Aa1 1,350 1,253,232
- ------------------------------------------------------------------------------------------------------------------------
Hamilton (County of); Electric System Mortgage Series 1988 B RB
8.00%, 10/15/98(c)(d) AAA Aaa 1,000 1,101,390
- ------------------------------------------------------------------------------------------------------------------------
Mason (City of) Health Care Facilities (MCV Health Care Facilities, Inc.);
Series 1990 RB
7.625%, 02/01/40 AAA - 2,215 2,279,744
- ------------------------------------------------------------------------------------------------------------------------
Ohio Department of Transportation (Panhandle Rail Line Project);
Series 1992 Certificates of Participation
6.50%, 04/15/12(c) AAA Aaa 1,100 1,112,078
- ------------------------------------------------------------------------------------------------------------------------
8,348,381
- ------------------------------------------------------------------------------------------------------------------------
OKLAHOMA-1.41%
Southern Oklahoma Memorial Hospital Authority; Hospital Series 1993 A RB
5.60%, 02/01/00 A A 2,500 2,465,150
- ------------------------------------------------------------------------------------------------------------------------
Tulsa Public Facilities Authority-Capital Improvements-Water System;
Series 1988 B RB
6.00%, 03/01/08 A+ - 1,305 1,283,898
- ------------------------------------------------------------------------------------------------------------------------
3,749,048
- ------------------------------------------------------------------------------------------------------------------------
OREGON-2.38%
Polk, Marion, and Benton (Counties of) School District #13J; GO
5.40%, 12/01/07(c) AAA Aaa 1,000 925,350
- ------------------------------------------------------------------------------------------------------------------------
Portland (City of) Multi-Family Housing (South Park Block Project);
Refunding Variable Rate Demand Series 1988 A RB
5.50%, 12/01/11(e) A-1+ - 3,300 3,300,000
- ------------------------------------------------------------------------------------------------------------------------
Portland (City of); Sewer System Series 1994 A RB
6.20%, 06/01/12 A+ A1 1,200 1,159,068
- ------------------------------------------------------------------------------------------------------------------------
6.20%, 06/01/15 A+ A1 1,000 964,230
- ------------------------------------------------------------------------------------------------------------------------
6,348,648
- ------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA-1.82%
Lancaster (County of) Solid Waste Management Authority; Resource
Recovery System Series 1988 A RB
8.50%, 12/15/10(b) BBB A1 2,000 2,039,880
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-98
<PAGE> 171
FINANCIALS
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
PENNSYLVANIA-CONTINUED
Pennsylvania Economic Development Finance Authority (Colver Project);
Resource Recovery Series 1994 D RB
7.05%, 12/01/10(b) BBB- - $2,900 $ 2,803,082
- -----------------------------------------------------------------------------------------------------------------------
4,842,962
- -----------------------------------------------------------------------------------------------------------------------
PUERTO RICO-1.91%
Puerto Rico (Commonwealth of) Electric Power Authority; RB
6.00%, Series 1989 07/01/10 A- Baa1 4,000 3,747,120
- ------------------------------------------------------------------------------------------------------------------------
7.00%, Series 1991 P 07/01/21 A- Baa1 1,325 1,342,742
- -----------------------------------------------------------------------------------------------------------------------
5,089,862
- -----------------------------------------------------------------------------------------------------------------------
RHODE ISLAND-0.87%
Rhode Island Depositors Economic Protection Corp.; Special Obligation
Series 1992 A RB
6.95%, 08/01/02(c)(d) AAA - 1,250 1,358,963
- -----------------------------------------------------------------------------------------------------------------------
Rhode Island Housing and Mortgage Finance Agency; Homeownership
Opportunity Series 15 B RB
6.00%, 10/01/04 AA+ Aa 1,000 972,600
- -----------------------------------------------------------------------------------------------------------------------
2,331,563
- -----------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA-0.38%
South Carolina State Education Assistance Authority; Guaranteed
Student Loan Series 1990 RB
6.60%, 09/01/01(b) AA - 500 503,950
- -----------------------------------------------------------------------------------------------------------------------
South Carolina State Housing Finance and Development Authority;
Homeownership Mortgage Series 1990 C RB
7.50%, 07/01/05(b) AA Aa 500 521,490
- -----------------------------------------------------------------------------------------------------------------------
1,025,440
- -----------------------------------------------------------------------------------------------------------------------
TENNESSEE-1.23%
Nashville and Davidson (Counties of) Metropolitan Government;
Water and Sewer Refunding Series 1986 RB
7.25%, 01/01/06 A A1 500 516,205
- -----------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency; Mortgage Finance Program 1993 Series A RB
5.50%, 07/01/05 A+ A1 3,000 2,769,900
- -----------------------------------------------------------------------------------------------------------------------
3,286,105
- -----------------------------------------------------------------------------------------------------------------------
TEXAS-16.89%
Brazos Higher Education Loan Authority Inc.; Student Loan Refunding RB
6.45%, Series 1992 C-1 11/01/02(b) - Aa 1,200 1,214,556
- ------------------------------------------------------------------------------------------------------------------------
6.50%, Series 1994 B-1 06/01/04(b) - A 700 696,549
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-99
<PAGE> 172
FINANCIALS
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS-CONTINUED
Brazos River Authority (Houston Lighting and Power Project);
Collateralized Series 1986 A RB
7.875%, 11/01/18(b)(c) AAA Aaa $2,825 $ 2,970,657
- ------------------------------------------------------------------------------------------------------------------------
Brazos River Authority (Texas Utilities Electric Company);
Collateralized Series 1988 A PCR
9.25%, 03/01/18(b) BBB Baa2 6,500 7,183,540
- ------------------------------------------------------------------------------------------------------------------------
Comal County Industrial Development Authority (The Coleman Co.,
Inc. Project); Industrial Development Series 1980 RB
9.25%, 08/01/00(f) - - 1,700 1,870,051
- ------------------------------------------------------------------------------------------------------------------------
Dallas (City of); Series 1994 GO
6.20%, 01/01/10 AAA Aa1 1,000 989,420
- ------------------------------------------------------------------------------------------------------------------------
Dallas (City of); Waterworks and Sewer System Series 1994 A RB
6.00%, 10/01/14 AA Aa 2,030 1,902,739
- ------------------------------------------------------------------------------------------------------------------------
Harris County Flood Control District; Limited Tax GO
5.60%, Series 1991 10/01/97 AA+ Aa 1,000 1,006,480
- ------------------------------------------------------------------------------------------------------------------------
Harris County Health Facilities Development Corp. (The Methodist Hospital);
Hospital Series 1994 RB
5.85%, 12/01/25(e) A-1+ - 2,600 2,600,000
- ------------------------------------------------------------------------------------------------------------------------
Harris County Health Facilities Development Corp. (Saint Luke's Episcopal
Hospital Project); Series 1991 RB
6.70%, 02/15/03 AA Aa 1,000 1,025,030
- ------------------------------------------------------------------------------------------------------------------------
Harris County Health Facility Development Corp. (Texas Medical Center
Project); Special Facility RB
7.375%, 05/15/20(c) AAA Aaa 2,745 2,847,910
- ------------------------------------------------------------------------------------------------------------------------
Harris County Mental Health and Mental Retardation Authority; Refunding
Series 1992 RB
6.25%, 09/15/10(c) AAA Aaa 4,500 4,402,710
- ------------------------------------------------------------------------------------------------------------------------
Harris County; Toll Road Unlimited Tax General Obligation and Subordinate
Lien Refunding Series 1991 RB
6.75%, 08/01/14 AA+ Aa 3,850 3,894,622
- ------------------------------------------------------------------------------------------------------------------------
Houston (City of); GO
6.25%, Series 1992 C, 03/01/02(c)(d) AA- Aa 1,470 1,511,675
- ------------------------------------------------------------------------------------------------------------------------
5.25%, Series 1987, 03/01/06 AA- Aa 2,205 2,024,411
- ------------------------------------------------------------------------------------------------------------------------
Keller (City of) Independent School District; Certificates of Participation
Series 1994 RB
6.00%, 08/15/05(c) AAA Aaa 1,000 964,930
- ------------------------------------------------------------------------------------------------------------------------
Plano (City of) Independent School District; Unlimited Tax Series 1991 B GO
5.625%, 02/15/01(c)(d) AAA Aaa 2,500 2,495,325
- ------------------------------------------------------------------------------------------------------------------------
Sherman (City of) Metro Health Facilities Development Corp. (The
Wilson N. Jones Memorial Hospital); Series 1993 RB
5.50%, 01/01/12(c) AAA - 500 436,440
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-100
<PAGE> 173
FINANCIALS
<TABLE>
<CAPTION>
RATING(a)
PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS-CONTINUED
Texas (State of) Housing Agency; Residential Development Mortgage
Series 1987 D RB
8.40%, 07/01/20(b) A+ Aa $4,050 $ 4,026,861
- ----------------------------------------------------------------------------------------------------------------------
Weatherford (City of) Independent School District; Refunding Series 1994 GO
6.40%, 02/15/12(c) AAA Aaa 1,000 988,640
- ----------------------------------------------------------------------------------------------------------------------
45,052,546
- ----------------------------------------------------------------------------------------------------------------------
UTAH-1.18%
Utah (State of) Housing Finance Agency; Federally Insured Term
Subordinate Single Family Mortgage RB
6.30%, Series 1994 E-1, 07/01/06 A+ A1 1,000 989,540
- -----------------------------------------------------------------------------------------------------------------------
7.15%, Series 1994 G-1, 07/01/06 A+ A1 1,150 1,164,375
- ----------------------------------------------------------------------------------------------------------------------
Utah (State of) Housing Finance Agency; Series 1994 C RB
6.05%, 07/01/06 - A1 1,000 984,560
- ----------------------------------------------------------------------------------------------------------------------
3,138,475
- ----------------------------------------------------------------------------------------------------------------------
VIRGIN ISLANDS-1.21%
Virgin Island Territory (Hugo Insurance Claims Fund);
Special Tax Bond Series 1991 GO
7.75%, 10/01/06(f) - - 3,070 3,214,198
- ----------------------------------------------------------------------------------------------------------------------
WASHINGTON-1.34%
Seattle (City of) Metropolitan Sewer District; Series T RB
6.80%, 01/01/11 AA- A1 1,780 1,800,684
- ----------------------------------------------------------------------------------------------------------------------
Washington (State of) Health Care Facility Authority (Highline
Community Hospital); Series 1993 RB
5.30%, 08/15/06(c) AAA - 1,000 905,340
- ----------------------------------------------------------------------------------------------------------------------
Washington State Public Power Supply (Nuclear Project No. 2);
Refunding Series 1994A RB
5.375%, 07/01/10 AA Aa 1,000 858,320
- ----------------------------------------------------------------------------------------------------------------------
3,564,344
- ----------------------------------------------------------------------------------------------------------------------
WISCONSIN-0.37%
Wisconsin Housing and Economic Development Authority; Home Ownership
Series 1990 E RB
8.00%, 03/01/21(b) A+ Aa 950 986,680
- ----------------------------------------------------------------------------------------------------------------------
WYOMING-0.19%
Lincoln (County of) (Exxon Project); Series 1984 C PCR
6.00%, 11/01/14(e) A-1+ - 500 500,000
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.24% 261,931,405
- -----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.76% 4,699,675
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $266,631,080
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
F-101
<PAGE> 174
FINANCIALS
NOTES TO SCHEDULE OF IINVESTMENTS:
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P"). Ratings are not covered by
independent auditors' report.
(b) Security subject to the alternative minimum tax.
(c) Security is secured by an escrow fund, bond insurance, or a letter of
credit.
(d) Security has an irrevocable call or mandatory put by the issuer.
Maturity date reflects such call or put.
(e) Demand security; payable upon demand by the Fund with usually no more
than seven calendar days' notice. Interest rates are
redetermined periodically. Rates shown are the rates in effect on
December 31, 1994.
(f) Unrated security.
Investment Abbreviations:
GO-General Obligation Bonds
IDR-Industrial Development Revenue Bonds
PCR-Pollution Control Revenue Bonds
RB-Revenue Bonds
See Notes to Financial Statements.
F-102
<PAGE> 175
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $259,864,885) $261,931,405
- -----------------------------------------------------------------------------------------------------------------------
Cash 17,584
- -----------------------------------------------------------------------------------------------------------------------
Receivables for:
Investments sold 2,135,819
- -----------------------------------------------------------------------------------------------------------------------
Fund shares sold 227,438
- -----------------------------------------------------------------------------------------------------------------------
Interest 5,311,845
- -----------------------------------------------------------------------------------------------------------------------
Investment for deferred compensation plan 53,165
- -----------------------------------------------------------------------------------------------------------------------
Other assets 22,727
- -----------------------------------------------------------------------------------------------------------------------
Total assets 269,699,983
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 980,283
- -----------------------------------------------------------------------------------------------------------------------
Fund shares reacquired 1,103,440
- -----------------------------------------------------------------------------------------------------------------------
Deferred compensation plan 53,165
- ----------------------------------------------------------------------------------------------------------------------
Dividends 556,833
- -----------------------------------------------------------------------------------------------------------------------
Accrued advisory fees 107,745
- -----------------------------------------------------------------------------------------------------------------------
Accrued administrative service fees 12,100
- -----------------------------------------------------------------------------------------------------------------------
Accrued distribution fees 172,450
- -----------------------------------------------------------------------------------------------------------------------
Accrued trustees' fees 1,553
- -----------------------------------------------------------------------------------------------------------------------
Accrued operating expenses 81,334
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities 3,068,903
- -----------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $266,631,080
=======================================================================================================================
NET ASSETS:
Class A $257,456,220
=======================================================================================================================
Class B $ 9,174,860
=======================================================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 33,084,335
=======================================================================================================================
Class B 1,179,161
=======================================================================================================================
CLASS A:
Net asset value and redemption price per share $7.78
=======================================================================================================================
Offering price per share:
(Net asset value of $7.78/95.25%) $8.17
=======================================================================================================================
CLASS B:
Net asset value and offering price per share $7.78
=======================================================================================================================
</TABLE>
See Notes to Financial Statements.
F-103
<PAGE> 176
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended December 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 18,324,727
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,327,611
- ------------------------------------------------------------------------------------------------------------------------
Custodian fees 48,508
- ------------------------------------------------------------------------------------------------------------------------
Transfer agent fees--Class A 107,037
- -----------------------------------------------------------------------------------------------------------------------
Transfer agent fees--Class B 147
- -----------------------------------------------------------------------------------------------------------------------
Administrative service fees 103,945
- -----------------------------------------------------------------------------------------------------------------------
Trustees' fees 6,857
- -----------------------------------------------------------------------------------------------------------------------
Distribution fees-Class A 690,578
- -----------------------------------------------------------------------------------------------------------------------
Distribution fees-Class B 56,949
- -----------------------------------------------------------------------------------------------------------------------
Other 215,848
- ------------------------------------------------------------------------------------------------------------------------
Total expenses 2,557,480
- -----------------------------------------------------------------------------------------------------------------------
Less expenses assumed by advisor (10,100)
- ------------------------------------------------------------------------------------------------------------------------
Net expenses 2,547,380
- -----------------------------------------------------------------------------------------------------------------------
Net investment income 15,777,347
- -----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Realized gain (loss) on sales of investment securities (2,668,737)
- -----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (24,480,672)
- -----------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investment securities (27,149,409)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(11,372,062)
=======================================================================================================================
</TABLE>
See Notes to Financial Statements.
F-104
<PAGE> 177
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the years ended December 31, 1994 and 1993
1994 1993
<S> <C> <C>
OPERATIONS:
Net investment income $ 15,777,347 $16,227,427
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (2,668,737) 3,839,835
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities (24,480,672) 11,594,432
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (11,372,062) 31,661,694
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (15,315,671) (16,062,560)
- ----------------------------------------------------------------------------------------------------------------------
Class B (269,520) (14,881)
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on investment securities:
Class A (934,223) (3,686,182)
- ----------------------------------------------------------------------------------------------------------------------
Class B (30,963) (25,851)
- ---------------------------------------------------------------------------------------------------------------------
Return of capital:
Class A (969,892) (358,169)
- ----------------------------------------------------------------------------------------------------------------------
Class B (17,068) (2,126)
- ---------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (8,364,063) 11,471,431
- ----------------------------------------------------------------------------------------------------------------------
Class B 7,376,340 2,339,574
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (29,897,122) 25,322,930
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 296,528,202 271,205,272
- ----------------------------------------------------------------------------------------------------------------------
End of period $266,631,080 $296,528,202
======================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $266,770,610 $268,745,293
- ----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 399,992 284,914
- ----------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on investment securities (2,606,042) 950,803
- ----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 2,066,520 26,547,192
- ----------------------------------------------------------------------------------------------------------------------
$266,631,080 $296,528,202
======================================================================================================================
</TABLE>
See Notes to Financial Statements.
F-105
<PAGE> 178
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Municipal Bond Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of nine separate series
portfolios, each having an unlimited number of shares of beneficial
interest. The Fund currently offers two different classes of shares: the Class A
shares and the Class B shares. Class A shares are sold with a front-end sales
charge. Class B shares are sold with a contingent deferred sales charge. Matters
affecting each portfolio or class are voted on exclusively by the share holders
of such portfolio or class. The assets, liabilities and operations of each
portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Portfolio securities are valued based on market
quotations or at fair value determined by a pricing service approved by the
Board of Trustees, provided that securities with a demand feature
exercisable within one to seven days will be valued at par. Prices provided
by the pricing service represent valuations of the mean between current bid
and asked market prices which may be determined without exclusive reliance
on quoted prices and may reflect appropriate factors such as institution
size trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, individual trading characteristics and other
market data. Portfolio securities for which prices are not provided by the
pricing service are valued at the mean between the last available bid and
asked prices, unless the Board of Trustees, or persons designated by the
Board of Trustees, determines that the mean between the last available bid
and asked prices does not accurately reflect the current market value of the
security. Securities for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the
supervision of the Trust's officers in accordance with methods which are
specifically authorized by the Board of Trustees. Not withstanding the a
bove, short-term obligations with maturities of 60 days or less are valued
at amortized cost.
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
and is recorded on the accrual basis. It is the policy of the Fund to
declare daily dividends from net investment income. Such dividends are paid
monthly. Distributions from net realized capital gains, if any, are
recorded on ex-dividend date and are paid annually. On December 31, 1994,
$77,078 was reclassified from undistributed net investment income to
realized gain (loss) on sales of investments as a result of differing
book/tax treatments for amortization of premiums on tax-exempt securities.
In addition, $986,960 was reclassified from undistributed net investment
income to paid-in capital as a result of a return of capital distribution.
Net assets ofthe Fund were unaffected by the reclassifications discussed
above.
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
carry forward of $458,030 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
in the year 2002.
D. Expenses - Operating expenses directly attributable to a class of shares
are charged to that class' operations. Expenses which are applicable to
both classes, e.g. advisory fees, are allocated between them. Expenses of
the Trust which are not directly attributable to the operations of any
class of shares or portfolio of the Trust are prorated among the classes to
which the expense relates based upon the relative net assets of each class.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.50% of
the first $200 million of the Fund's average daily net assets, plus 0.40% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.35% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion. This agreement requires AIM to reduce its fees
or, if necessary, make payments to the Fund to the extent required to satisfy
any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale.
During the year ended December 31, 1994, AIM reimbursed expenses of $10,100
with respect to the Class B shares.
F-106
<PAGE> 179
FINANCIALS
NOTE 2 - CONTINUED
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred
inproviding accounting and shareholder services to the Fund. During the year
ended December 31, 1994, AIM was reimbursed $103,945 for such services.
Effective November 1, 1994, A I M Fund Services, Inc. ("AFS") became the
transfer agent for the Fund and was paid $12,078 for such services during the
two months ended December 31, 1994.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares
(the "Class B Plan") (collectively, the "Plans"). The Fund, pursuant to the
Class A Plan, pays AIM Distributors compensation at an annual rate of 0.25% of
the average daily net assets attributable to the Class A shares. The Class A
Plan is designed to compensate AIM Distributors for certain promotional and
other sales related costs, and to implement a program which provides periodic
payments to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own Class A
shares of the Fund. The Fund, pursuant to the Class B Plan, pays AIM
Distributors compensation at at an annual rate of 1.00% of the average daily
net assets attributable to the Class B shares. Of this amount, the Fund may pay
a service fee of 0.25% of the average daily net assets of the Class B shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class B shares
ofthe Fund. Any amounts not paid as a service fee under such Plans would
constitute an asset-based sales charge. The Plans also impose a cap on the
total sales charges, including asset-based sales charges, that may be paid by
the respective classes. During the year ended December 31, 1994, the Class A
shares and the Class B shares paid AIM Distributors $690,578 and $56,949,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $82,774 from sales ofthe Class A
shares of the Fund during the year ended December 31, 1994. Such commissions
are not an expense of the Fund. They are deducted from, and are not included
in, the proceeds from sales of Class A shares. During the year ended December
31, 1994, AIM Distributors received $18,017 in contingent deferred sales
charges imposed on redemptions of Class B shares. Certain officers and trustees
of the Trust are officers and directors of AIM, AIM Distributors and AFS.
During the year ended December 31, 1994, the Fund paid legal fees of $1,016
for services rendered by Reid & Priest as counsel to the Board of Trustees.
Effective September 1994, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed as counsel to the Board of Trustees. The Fund paid legal fees of $259
for services rendered by that firm as counsel. A member of that firm is a
trustee of the Trust.
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is
not an "interested person" of the Trust. The Trust may invest trustees' fees,
if so elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short term
securities) purchased and sold by the Fund during the year ended December
31,1994 was $114,956,884 and $130,453,210, respectively.
The amount of unrealized appreciation (depreciation) of investment securities on
a tax basis as of December 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $5,957,650
- ----------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (3,526,670)
- ----------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $2,430,980
==================================================================================
</TABLE>
Cost of investments for tax purposes is $259,500,425.
F-107
<PAGE> 180
FINANCIALS
NOTE 5 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31,1994 and
1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
SHARES AMOUNT SHARES VALUE
<S> <C> <C> <C> <C>
Sold:
Class A 3,774,110 $30,827,309 4,092,807 $34,909,839
- -------------------------------------------------------------------------------------------------------------------------
Class B* 1,031,724 8,351,056 267,541 2,325,297
- -------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 1,275,719 10,304,397 1,473,760 12,587,503
- -------------------------------------------------------------------------------------------------------------------------
Class B* 24,242 193,390 2,767 23,752
- -------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (6,125,144) (49,495,769) (4,215,756) (36,025,911)
- -------------------------------------------------------------------------------------------------------------------------
Class B* (146,039) (1,168,106) (1,074) (9,475)
- -------------------------------------------------------------------------------------------------------------------------
(165,388) $(987,723) 1,620,045 $13,811,005
=========================================================================================================================
</TABLE>
*Sales of Class B shares commenced on September 1, 1993.
F-108
<PAGE> 181
FINANCIALS
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during each of the years in the ten year period ended December
31,1994.
<TABLE>
<CAPTION>
1994 1993 1992(A) 1991 1990 1989
-------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 8.61 $ 8.27 $ 8.13 $ 7.66 $ 7.81 $ 7.64
- ------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.46 0.48 0.51 0.52 0.53 0.54
- ------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) (0.78) 0.46 0.21 0.46 (0.14) 0.18
- ------------------------------------ -------- -------- -------- -------- -------- --------
Total from investment
operations (0.32) 0.94 0.72 0.98 0.39 0.72
- ------------------------------------ -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.45) (0.48) (0.51) (0.51) (0.53) (0.55)
- ------------------------------------ -------- -------- -------- -------- -------- --------
Distributions from net realized
capital gains (0.03) (0.11) (0.07) - - -
- ------------------------------------ -------- -------- -------- -------- -------- --------
Returns of capital (0.03) (0.01) - - (0.01) -
- ------------------------------------ -------- -------- -------- -------- -------- --------
Total distributions (0.51) (0.60) (0.58) (0.51) (0.54) (0.55)
- ------------------------------------ -------- -------- -------- -------- -------- --------
Net asset value, end of period $7.78 $ 8.61 $ 8.27 $ 8.13 $ 7.66 $ 7.81
==================================== ======== ======== ======== ======== ======== ========
Total return(b) (3.79)% 11.66% 9.10% 13.30% 5.27% 9.70%
==================================== ======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $257,456 $294,209 $271,205 $273,037 $258,194 $262,997
==================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets 0.89%(c) 0.91% 0.90% 0.94% 0.91% 0.89%
==================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 5.61%(c) 5.65% 6.15% 6.58% 6.91% 6.97%
==================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 43% 24% 160% 289% 230% 305%
==================================== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1988 1987 1986 1985
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 7.32 $ 8.41 $ 7.69 $ 6.89
- ------------------------------------ -------- -------- -------- --------
Income from investment operations:
Net investment income 0.53 0.51 0.58 0.63
- ------------------------------------ -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) 0.34 (0.65) 1.00 0.83
- ------------------------------------ -------- -------- -------- --------
Total from investment
operations 0.87 (0.14) 1.58 1.46
- ------------------------------------ -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.55) (0.49) (0.60) (0.66)
- ------------------------------------ -------- -------- -------- --------
Distributions from net realized
capital gains - (0.46) (0.26) -
- ------------------------------------ -------- -------- -------- --------
Returns of capital - - - -
- ------------------------------------ -------- -------- -------- --------
Total distributions (0.55) (0.95) (0.86) (0.66)
- ------------------------------------ -------- -------- -------- --------
Net asset value, end of period $ 7.64 $ 7.32 $ 8.41 $ 7.69
==================================== ======== ======== ======== ========
Total return(b) 12.33% (1.88)% 21.19% 22.29%
==================================== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $243,480 $237,225 $281,575 $198,892
==================================== ======== ======== ======== ========
Ratio of expenses to average
net assets 0.87% 0.80% 0.78% 0.75%
==================================== ======== ======== ======== ========
Ratio of net investment income to
average net assets 7.11% 6.71% 6.99% 8.75%
==================================== ======== ======== ======== ========
Portfolio turnover rate 381% 392% 249% 190%
==================================== ======== ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Total returns do not deduct sales charges.
(c) Ratios are based on average net assets of $276,209,259.
F-109
<PAGE> 182
FINANCIALS
NOTE 6 - CONTINUED
Shown below are the condensed financial highlights for a Class B share
outstanding during the year ended December 31, 1994 and the period September
1,1993 (date sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
CLASS B:
Net asset value, beginning of period $ 8.61 $ 8.71
- --------------------------------------------------------------------------------------- ------ -------
Income from investment operations:
Net investment income 0.39 0.14
- --------------------------------------------------------------------------------------- ------ -------
Net gains (losses) on securities (both realized and unrealized) (0.78) 0.01
- --------------------------------------------------------------------------------------- ------ -------
Total from investment operations (0.39) 0.15
- --------------------------------------------------------------------------------------- ------ -------
Less distributions:
Dividends from net investment income (0.38) (0.13)
- --------------------------------------------------------------------------------------- ------ -------
Distributions from net realized capital gains (0.03) (0.11)
- --------------------------------------------------------------------------------------- ------ -------
Returns of capital (0.03) (0.01)
- --------------------------------------------------------------------------------------- ------ -------
Total distributions (0.44) (0.25)
- --------------------------------------------------------------------------------------- ------ -------
Net asset value, end of period $ 7.78 $ 8.61
======================================================================================= ====== =======
Total return(a) (4.57)% 1.95%(b)
======================================================================================= ====== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $9,175 $ 2,319
======================================================================================= ====== =======
Ratio of expenses to average net assets 1.67%(c) 1.65%
======================================================================================= ====== =======
Ratio of net investment income to average net assets 4.83%(c) 4.91%
======================================================================================= ====== =======
Portfolio turnover rate 43% 24%
======================================================================================= ====== =======
</TABLE>
(a) Does not deduct contingent deferred sales charges.
(b) Total return is not annualized.
(c) Ratios are based on average net assets of $5,693,594. Ratios of expenses
and net investment income to average net assets prior toexpense
reimbursements are 1.84% and 4.66%, respectively.
F-110
<PAGE> 183
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Utilities Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Utilities Fund (a portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1994, and the related statements of operations
for the year then ended, and the changes in net assets and the financial
highlights for each of the years in the two-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 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
December 31, 1994, 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
Utilities Fund as of December 31, 1994, the results of its operations for the
year then ended, and the changes in its net assets and financial highlights for
each of the years in the two-year period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
February 3, 1995
F-111
<PAGE> 184
FINANCIALS
SCHEDULE OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS-80.04%
ADVERTISING/BROADCASTING-0.51%
41,100 British Sky Broadcasting-ADR(a) $ 986,400
------------------------------------------------------------------------------------------
CONGLOMERATES-0.55%
24,800 Tenneco Inc. 1,054,000
------------------------------------------------------------------------------------------
ELECTRIC SERVICES-32.03%
250,000 Boston Edison Co. 5,968,750
------------------------------------------------------------------------------------------
24,200 Chilgener S.A. ADR 595,925
------------------------------------------------------------------------------------------
50,000 Consolidated Edison Co. of New York, Inc. 1,287,500
------------------------------------------------------------------------------------------
12,000 DPL Inc. 246,000
------------------------------------------------------------------------------------------
60,500 Duke Power Co. 2,306,562
------------------------------------------------------------------------------------------
32,100 Eastern Group PLC 390,262
------------------------------------------------------------------------------------------
105,200 Eastern Utilities Associates 2,314,400
------------------------------------------------------------------------------------------
50,000 Empresa Nacional de Electricidad S.A.-ADR 2,025,000
------------------------------------------------------------------------------------------
40,000 Enersis S.A.-ADR 1,110,000
------------------------------------------------------------------------------------------
136,500 FPL Group, Inc. 4,794,562
------------------------------------------------------------------------------------------
40,000 General Public Utilities Corp. 1,050,000
------------------------------------------------------------------------------------------
25,000 Houston Industries, Inc. 890,625
------------------------------------------------------------------------------------------
100,000 Kansas City Power & Light Co. 2,337,500
------------------------------------------------------------------------------------------
49,500 Korea Electric Power Corp.-ADR 1,058,062
------------------------------------------------------------------------------------------
32,300 Midlands Electricity PLC 411,899
------------------------------------------------------------------------------------------
120,000 National Power PLC 920,043
------------------------------------------------------------------------------------------
32,200 New England Electric System 1,034,425
------------------------------------------------------------------------------------------
17,800 New Jersey Resources Corp. 402,725
------------------------------------------------------------------------------------------
80,000 Northeast Utilities 1,730,000
------------------------------------------------------------------------------------------
142,000 Northern States Power Co. 6,248,000
------------------------------------------------------------------------------------------
52,800 NYNEX Corp. 1,940,400
------------------------------------------------------------------------------------------
195,000 Oklahoma Gas & Electric Co. 6,459,375
------------------------------------------------------------------------------------------
178,000 Peco Energy Co. 4,361,000
------------------------------------------------------------------------------------------
50,000 Pinnacle West Capital Corp. 987,500
------------------------------------------------------------------------------------------
119,000 PowerGen PLC 998,030
------------------------------------------------------------------------------------------
70,000 Public Service Enterprise Group, Inc. 1,855,000
------------------------------------------------------------------------------------------
66,500 Shandong Huaneng Power Co. Ltd.-ADR(a) 640,062
------------------------------------------------------------------------------------------
20,000 Southern Co. (The) 400,000
------------------------------------------------------------------------------------------
15,000 Texas Utilities Co. 480,000
------------------------------------------------------------------------------------------
100,000 Tucson Electric Power Co.(a) 312,500
------------------------------------------------------------------------------------------
100,000 Unicom Corporation 2,400,000
------------------------------------------------------------------------------------------
25,000 Union Electric Co. 884,375
------------------------------------------------------------------------------------------
4,650 VEBA A.G. 1,620,316
------------------------------------------------------------------------------------------
</TABLE>
F-112
<PAGE> 185
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
ELECTRIC SERVICES-(continued)
30,000 Western Resources, Inc. $ 858,750
------------------------------------------------------------------------------------------
46,000 Yorkshire Electricity PLC 523,988
------------------------------------------------------------------------------------------
61,843,536
------------------------------------------------------------------------------------------
NATURAL GAS PIPELINE-13.82%
36,000 Columbia Gas System, Inc.(a) 846,000
------------------------------------------------------------------------------------------
69,700 El Paso Natural Gas Co. 2,125,850
------------------------------------------------------------------------------------------
75,000 Enron Corp. 2,287,500
------------------------------------------------------------------------------------------
200,200 MCN Corp. 3,628,625
------------------------------------------------------------------------------------------
45,000 National Fuel Gas Co. 1,147,500
------------------------------------------------------------------------------------------
150,000 NIPSCO Industries, Inc. 4,462,500
------------------------------------------------------------------------------------------
225,000 Panhandle Eastern Corp. 4,443,750
------------------------------------------------------------------------------------------
48,600 Sonat Inc. 1,360,800
------------------------------------------------------------------------------------------
270,300 Transco Energy Co. 4,493,737
------------------------------------------------------------------------------------------
87,800 Westcoast Energy, Inc. 1,393,825
------------------------------------------------------------------------------------------
20,000 Williams Companies Inc. (The) 502,500
------------------------------------------------------------------------------------------
26,692,587
------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-3.90%
30,300 Avalon Properties, Inc. 696,900
------------------------------------------------------------------------------------------
89,800 Bay Apartment Communities 1,807,225
------------------------------------------------------------------------------------------
22,100 Felcor Suite Hotels Inc. 430,950
------------------------------------------------------------------------------------------
100,000 Innkeepers USA Trust 725,000
------------------------------------------------------------------------------------------
12,000 Meditrust 363,000
------------------------------------------------------------------------------------------
11,000 Mid-America Apartment Communities Inc. 294,250
------------------------------------------------------------------------------------------
15,000 National Health Investors, Inc. 391,875
------------------------------------------------------------------------------------------
59,400 Oasis Residential Inc. 1,455,300
------------------------------------------------------------------------------------------
59,500 RFS Hotel Investors Inc. 870,187
------------------------------------------------------------------------------------------
40,000 South West Property Trust 490,000
------------------------------------------------------------------------------------------
7,524,687
------------------------------------------------------------------------------------------
TELEPHONE-25.34%
38,400 ALC Communications Corp(a) 1,195,200
------------------------------------------------------------------------------------------
10,000 ALLTEL Corp. 301,250
------------------------------------------------------------------------------------------
151,100 Ameritech Corp. 6,100,662
------------------------------------------------------------------------------------------
112,000 AT&T Corp. 5,628,000
------------------------------------------------------------------------------------------
95,000 Bell Atlantic Corp. 4,726,250
------------------------------------------------------------------------------------------
100,000 BellSouth Corp. 5,412,500
------------------------------------------------------------------------------------------
100,000 Century Telephone Enterprise, Inc. 2,950,000
------------------------------------------------------------------------------------------
95,400 Cincinnati Bell, Inc. 1,597,950
------------------------------------------------------------------------------------------
30,000 GTE Corp. 911,250
------------------------------------------------------------------------------------------
15,000 Grupo Iusacell S.A. de C.V.-ADR Series L(a) 279,375
------------------------------------------------------------------------------------------
51,000 Hong Kong Telecom Ltd.-ADR 975,375
------------------------------------------------------------------------------------------
18,700 PT Indosat-ADR(a) 668,525
------------------------------------------------------------------------------------------
85,100 Rochester Telephone Corp. 1,797,739
------------------------------------------------------------------------------------------
</TABLE>
F-113
<PAGE> 186
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
TELEPHONE-(continued)
74,100 Royal PTT Nederland N.V.-ADR(b) (Acquired 06/13/94; cost
$1,982,079) $ 2,500,875
------------------------------------------------------------------------------------------
60,000 Southern New England Telecommunications Corp. 1,927,500
------------------------------------------------------------------------------------------
135,000 Southwestern Bell Corp. 5,450,625
------------------------------------------------------------------------------------------
31,700 Sprint Corp. 875,712
------------------------------------------------------------------------------------------
33,600 Tele Danmark A/S-ADR(a) 856,800
------------------------------------------------------------------------------------------
55,000 Telecom Corp. of New Zealand Ltd.-ADR 2,825,625
------------------------------------------------------------------------------------------
383,300 Telecom Italia S.p.A. 997,705
------------------------------------------------------------------------------------------
18,000 Telefonica de Argentina-ADR 954,000
------------------------------------------------------------------------------------------
48,932,918
------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-3.04%
36,200 Nokia Corp.-ADR 2,715,000
------------------------------------------------------------------------------------------
27,020 Telefonaktiebolaget LM Ericsson 1,494,525
------------------------------------------------------------------------------------------
30,280 Telefonaktiebolaget LM Ericsson-ADR 1,669,185
------------------------------------------------------------------------------------------
5,878,710
------------------------------------------------------------------------------------------
WATER SUPPLY-0.85%
130,000 North West Water PLC 1,102,487
------------------------------------------------------------------------------------------
64,600 Yorkshire Water PLC 530,670
------------------------------------------------------------------------------------------
1,633,157
------------------------------------------------------------------------------------------
Total Common Stocks 154,545,995
------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE BONDS-0.46%
BUSINESS SERVICES-0.23%
$ 600,000 IDB Communications Group Inc., Convertible Subordinate Notes,
5.00%, 08/15/03 452,250
------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-0.23%
500,000 Network Equipment Technologies, Convertible Subordinate
Debentures, 7.25%, 05/15/14 446,250
------------------------------------------------------------------------------------------
Total Convertible Bonds 898,500
------------------------------------------------------------------------------------------
NON-CONVERTIBLE BONDS-10.39%
ELECTRIC SERVICES-6.03%
1,900,000 Central Power & Light Co., First Mortgage Series Z Bonds,
9.375%, 12/01/19 2,021,448
------------------------------------------------------------------------------------------
3,850,000 Commonwealth Edison Co., First Mortgage Series 74, Bonds,
9.75%, 02/15/20 3,760,834
------------------------------------------------------------------------------------------
2,308,000 Ohio Power Co., First Mortgage Bonds, 9.875%, 08/01/20 2,392,726
------------------------------------------------------------------------------------------
1,750,000 Pennsylvania Power & Light Co., First Mortgage Bonds, 9.25%,
10/01/19 1,770,195
------------------------------------------------------------------------------------------
1,640,000 San Diego Gas & Electric Co., First Mortgage Series JJ Bonds,
9.625%, 04/15/20 1,704,484
------------------------------------------------------------------------------------------
11,649,687
------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-1.24%
2,425,000 GMAC Step Up Notes, 5.50%, 10/15/02(c) 2,387,267
------------------------------------------------------------------------------------------
</TABLE>
F-114
<PAGE> 187
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
NATURAL GAS PIPELINE-3.12%
$ 700,000 Centragas, Asset-Backed Notes, 10.65%, 12/01/10(b) (Acquired
12/08/94; cost $698,670) $ 668,500
------------------------------------------------------------------------------------------
3,750,000 Enron Corp., Senior Subordinate Debentures, 6.75%, 07/01/05 3,248,062
------------------------------------------------------------------------------------------
6,019,470
------------------------------------------------------------------------------------------
Total Non-Convertible Bonds 20,056,424
------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-8.30%(d)
16,017,167 Daiwa Securities America Inc., 3.50%, 01/03/95(e) 16,017,167
------------------------------------------------------------------------------------------
Total Repurchase Agreements 16,017,167
------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-2.48%
2,400,000 U.S. Treasury Notes, 7.50%, 12/31/96 2,391,384
------------------------------------------------------------------------------------------
2,500,000 U.S. Treasury Notes, 7.25%, 08/15/04 2,399,600
------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 4,790,984
------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 101.67% 196,309,070
------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- (1.67)% (3,225,969)
------------------------------------------------------------------------------------------
NET ASSETS -- 100.00% $193,083,101
==========================================================================================
</TABLE>
Notes to Schedule of Investments
(a) Non-income producing security.
(b) Restricted securities. May be resold to
qualified institutional buyers in accordance
with the provisions of Rule 144A under the
Securities Act of 1933, as amended. The
valuation of these securities has been
determined in accordance with procedures
established by the Board of Trustees. The
aggregate market value of these securities at
December 31, 1994, was $3,169,375, which
represented 1.64% of net assets.
(c) Rate shown is the rate in effect on December 31,
1994. Interest rate steps up to 9.00% effective
October 15, 1995.
(d) 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 value as being 102 percent of the
sales price of the repurchase agreement.
(e) Joint repurchase agreement entered into 12/30/94
with a maturing value of $391,353,115.
Collateralized by $426,987,000. U.S. Treasury
obligations, 4.75% to 9.25% due 01/15/96 to
11/15/24. The aggregate market value of the
collateral at 12/31/94 was $399,025,510. The
Fund's pro-rata interest in the collateral at
12/31/94 was $16,337,531.
See Notes to Financial Statements.
F-115
<PAGE> 188
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $200,354,522) $196,309,070
- ---------------------------------------------------------------------------------------
Foreign currencies (cost $1,707,857) 1,680,306
- ---------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 364,152
- ---------------------------------------------------------------------------------------
Dividends and interest 1,349,895
- ---------------------------------------------------------------------------------------
Investment for deferred compensation plan 4,652
- ---------------------------------------------------------------------------------------
Other assets 12,213
- ---------------------------------------------------------------------------------------
Total assets 199,720,288
- ---------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 5,850,938
- ---------------------------------------------------------------------------------------
Fund shares reacquired 332,369
- ---------------------------------------------------------------------------------------
Dividends 131,806
- ---------------------------------------------------------------------------------------
Deferred compensation 4,652
- ---------------------------------------------------------------------------------------
Accrued advisory fees 99,374
- ---------------------------------------------------------------------------------------
Accrued administrative service fees 4,847
- ---------------------------------------------------------------------------------------
Accrued distribution fees 135,647
- ---------------------------------------------------------------------------------------
Accrued trustees' fees 1,560
- ---------------------------------------------------------------------------------------
Accrued operating expenses 75,994
- ---------------------------------------------------------------------------------------
Total liabilities 6,637,187
- ---------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $193,083,101
=======================================================================================
NET ASSETS:
Class A $150,515,390
=======================================================================================
Class B $ 42,567,711
=======================================================================================
SHARES OUTSTANDING, $.01 PAR VALUE PER SHARE:
Class A 12,704,167
=======================================================================================
Class B 3,594,239
=======================================================================================
CLASS A:
Net asset value and redemption price per share $ 11.85
=======================================================================================
Offering price per share:
(Net asset value of $11.85 divided by 94.50%) $ 12.54
=======================================================================================
CLASS B:
Net asset value and offering price per share $ 11.84
=======================================================================================
</TABLE>
See Notes to Financial Statements.
F-116
<PAGE> 189
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended December 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 9,864,035
- ---------------------------------------------------------------------------------------
Interest 2,146,005
- ---------------------------------------------------------------------------------------
Total investment income 12,010,040
- ---------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,226,429
- ---------------------------------------------------------------------------------------
Administrative service fees 171,972
- ---------------------------------------------------------------------------------------
Custodian fees 42,566
- ---------------------------------------------------------------------------------------
Trustees' fees 6,718
- ---------------------------------------------------------------------------------------
Distribution fees-Class A 422,862
- ---------------------------------------------------------------------------------------
Distribution fees-Class B 361,395
- ---------------------------------------------------------------------------------------
Transfer agent fees-Class A 219,564
- ---------------------------------------------------------------------------------------
Transfer agent fees-Class B 83,494
- ---------------------------------------------------------------------------------------
Other 209,139
- ---------------------------------------------------------------------------------------
Total expenses 2,744,139
- ---------------------------------------------------------------------------------------
Net investment income 9,265,901
- ---------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) on sales of investment securities (19,970,200)
- ---------------------------------------------------------------------------------------
Net realized gain on foreign currencies 35,148
- ---------------------------------------------------------------------------------------
(19,935,052)
- ---------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (15,909,298)
- ---------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of foreign currencies (27,225)
- ---------------------------------------------------------------------------------------
(15,936,523)
- ---------------------------------------------------------------------------------------
Net gain (loss) on investment securities and foreign currencies (35,871,575)
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(26,605,674)
=======================================================================================
</TABLE>
See Notes to Financial Statements.
F-117
<PAGE> 190
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,265,901 $ 6,717,453
- ------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities and foreign currencies (19,935,052) 3,166,560
- ------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities and foreign currencies (15,936,523) 3,639,243
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (26,605,674) 13,523,256
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
- ------------------------------------------------------------------------------------------
Class A (8,024,593) (6,615,512)
- ------------------------------------------------------------------------------------------
Class B (1,429,850) (129,289)
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
- ------------------------------------------------------------------------------------------
Class A -- (2,735,517)
- ------------------------------------------------------------------------------------------
Class B -- (285,403)
- ------------------------------------------------------------------------------------------
Distributions to shareholders in excess of net realized
gains on investment securities:
- ------------------------------------------------------------------------------------------
Class A -- (506,735)
- ------------------------------------------------------------------------------------------
Class B -- (52,869)
- ------------------------------------------------------------------------------------------
Returns of capital:
Class A (407,762) --
- ------------------------------------------------------------------------------------------
Class B (72,656) --
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A (18,722,360) 84,157,474
- ------------------------------------------------------------------------------------------
Class B 24,437,899 24,781,256
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (30,824,996) 112,136,661
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 223,908,097 111,771,436
- ------------------------------------------------------------------------------------------
End of period $193,083,101 $223,908,097
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $217,650,435 $212,415,314
- ------------------------------------------------------------------------------------------
Undistributed net investment income -- 188,542
- ------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities and foreign currencies (20,494,656) (559,604)
- ------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (4,072,678) 11,863,845
- ------------------------------------------------------------------------------------------
$193,083,101 $223,908,097
==========================================================================================
</TABLE>
See Notes to Financial Statements.
F-118
<PAGE> 191
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Utilities Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate series portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers two different classes of shares: the Class A shares and the
Class B shares. Class A shares are sold with a front-end sales charge. Class B
shares are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange is valued at
its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date. Non-convertible bonds
and notes are valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as institution-size trading in similar groups of securities,
developments related to special securities, yield, quality, coupon rate,
maturity, type of issue, individual trading characteristics and other market
data. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision
of the Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value.
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
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. It is the policy of the Fund to declare daily dividends
from net investment income. Such dividends are paid monthly. Distributions
from net realized capital gains, if any, are recorded on ex-dividend date and
are paid annually. On December 31, 1994, $480,418 was reclassified from
undistributed net investment income to paid-in capital as a result of a
permanent book/tax difference. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Foreign Currency Translation-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amount at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
D. Foreign Currency Contracts-A forward currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a forward contract to attempt to minimize the
risk to the Fund from adverse changes in the relationship between currencies.
The Fund may also enter into a forward contract for the purchase or sale of a
security denominated in a foreign currency in order to "lock in" the U.S.
dollar price of that security. The Fund could be exposed to risk if
counterparties to the contracts are unable to meet the terms of their
contracts or if the value of the foreign currency changes unfavorably.
E. 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
$17,997,616 (which may be carried forward to offset future taxable capital
gains/losses) which expires, if not previously utilized, in the year 2002.
F-119
<PAGE> 192
FINANCIALS
F. Expenses-Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them. Expenses of the
Trust which are not directly attributable to the operations of any class of
shares or portfolio of the Trust are prorated among the classes to which the
expense relates based upon the relative net assets of each class.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.60% of
the first $200 million of the Fund's average daily net assets, plus 0.50% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.40% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion. This agreement requires AIM to reduce its fees
or, if necessary, make payments to the Fund to the extent required to satisfy
any expense limitations imposed by the securities laws or regulations thereunder
of any state in which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting and shareholder services to the Fund. During the year ended December
31, 1994, AIM was reimbursed $171,972 for such services. Effective November 1,
1994, A I M Fund Services, Inc. ("AFS") became the transfer agent for the Fund
and was paid $37,607 for such services during the two months ended December 31,
1994.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares (the
"Class B Plan")(collectively, the "Plans"). The Fund, pursuant to the Class A
Plan, pays AIM Distributors compensation at an annual rate of 0.25% of the
average daily net assets attributable to the Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs, and to implement a program which provides periodic payments to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class A shares of
the Fund. The Fund, pursuant to the Class B Plan, pays AIM Distributors
compensation at an annual rate of 1.00% of the average daily net assets
attributable to the Class B shares. Of this amount, the Fund may pay a service
fee of 0.25% of the average daily net assets of the Class B shares to selected
dealers and financial institutions who furnish continuing personal shareholder
services to their customers who purchase and own Class B shares of the Fund. Any
amounts not paid as a service fee under such Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges, that may be paid by the respective
classes. During the year ended December 31, 1994 the Class A shares and the
Class B shares paid AIM Distributors $422,862 and $361,395, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $168,696 from sales of the Class A
shares of the Fund during the year ended December 31, 1994. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1994,
AIM Distributors received $107,127 in contingent deferred sales charges imposed
on redemptions of Class B shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AIM Distributors and AFS.
During the year ended December 31, 1994, the Fund paid legal fees of $1,638
for services rendered by Reid & Priest as counsel to the Board of Trustees.
Effective September 1994, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed as counsel to the Board of Trustees. The Fund paid legal fees of $239
for services rendered by that firm as counsel. A member of that firm is a
trustee of the Trust.
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of the Trust. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
F-120
<PAGE> 193
FINANCIALS
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1994 was
$200,643,831 and $198,494,836, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 8,336,332
- ----------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (12,856,622)
- ----------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities $ (4,520,290)
==================================================================================
</TABLE>
Cost of investments for tax purposes is $200,829,360.
NOTE 5-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1994 1993
-------------------------- -------------------------
SHARES VALUE SHARES VALUE
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 4,097,001 $52,451,904 7,370,300 $107,023,142
- -------------------------------------------------------------------------------------
Class B* 2,720,021 34,681,563 1,713,157 25,037,131
- -------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 572,553 7,178,342 605,159 8,583,529
- -------------------------------------------------------------------------------------
Class B* 99,414 1,232,102 27,040 377,908
- -------------------------------------------------------------------------------------
Reacquired:
Class A (6,158,134) (78,352,606) (2,182,321) (31,449,197)
- -------------------------------------------------------------------------------------
Class B* (921,686) (11,475,766) (43,707) (633,783)
- -------------------------------------------------------------------------------------
409,169 $ 5,715,539 7,489,628 $108,938,730
=====================================================================================
</TABLE>
* Sales of Class B shares commenced on September 1, 1993.
F-121
<PAGE> 194
FINANCIALS
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during each of the years in the six-year period ended December 31,
1994 and the period January 18, 1988 (date operations commenced) through
December 31, 1988 and for a Class B share outstanding during the year ended
December 31, 1994 and the period September 1, 1993 (date sales commenced)
through December 31, 1993.
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------- -------------------
1994 1993 1992(a) 1991 1990 1989 1988 1994 1993
- ---------------------- -------- -------- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 14.09 $ 13.31 $ 13.75 $ 12.45 $ 13.73 $ 10.99 $ 10.00 $ 14.08 $ 15.30
- ---------------------- -------- -------- -------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income 0.59 0.60 0.67 0.70 0.66 0.77 0.82 0.47 0.17
- ---------------------- -------- -------- -------- ------- ------- ------- ------- ------- -------
Net gains (losses)
on securities
(both realized and
unrealized) (2.20) 1.02 0.36 2.12 (1.10) 3.06 0.83 (2.19) (0.98)
- ---------------------- -------- -------- -------- ------- ------- ------- ------- ------- -------
Total from
investment
operations (1.61) 1.62 1.03 2.82 (0.44) 3.83 1.65 (1.72) (0.81)
- ---------------------- -------- -------- -------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.60) (0.61) (0.68) (0.66) (0.70) (0.69) (0.66) (0.49) (0.17)
- ---------------------- -------- -------- -------- ------- ------- ------- ------- ------- -------
Distributions from
net realized
capital gains -- (0.23) (0.79) (0.86) (0.14) (0.40) -- -- (0.24)
- ---------------------- -------- -------- -------- ------- ------- ------- ------- ------- -------
Returns of capital (0.03) -- -- -- -- -- -- (0.03) --
- ---------------------- -------- -------- -------- ------- ------- ------- ------- ------- -------
Total
distributions (0.63) (0.84) (1.47) (1.52) (0.84) (1.09) (0.66) (0.52) (0.41)
- ---------------------- -------- -------- -------- ------- ------- ------- ------- ------- -------
Net asset value, end
of period $ 11.85 $ 14.09 $ 13.31 $ 13.75 $ 12.45 $ 13.73 $ 10.99 $ 11.84 $ 14.08
====================== ======== ======== ======== ======= ======= ======= ======= ======= =======
Total return(b) (11.57)% 12.32% 7.92% 23.65% (2.98)% 36.11% 17.03% (12.35)% (5.32)%
====================== ======== ======== ======== ======= ======= ======= ======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000s
omitted) $150,515 $200,016 $111,771 $91,939 $69,541 $58,307 $20,104 $42,568 $23,892
====================== ======== ======== ======== ======= ======= ======= ======= ======= =======
Ratio of expenses to
average net assets 1.18%(c) 1.16% 1.17% 1.23% 1.21%(d) 1.05%(d) 1.22%(d)(f) 2.07%(c) 1.99%(f)
====================== ======== ======== ======== ======= ======= ======= ======= ======= =======
Ratio of net
investment income to
average net assets 4.67%(c) 4.21% 4.96% 5.36% 5.21%(e) 6.13%(e) 7.63%(e)(f) 3.78%(c) 3.38%(f)
====================== ======== ======== ======== ======= ======= ======= ======= ======= =======
Portfolio turnover
rate 101% 76% 148% 169% 123% 115% 87% 101% 76%
====================== ======== ======== ======== ======= ======= ======= ======= ======= =======
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Total returns do not deduct sales charges and for periods less than one year
are not annualized.
(c) Ratios for Class A are based on average daily net assets of $169,146,295.
Ratios for Class B are based on average daily net assets of $36,139,508.
(d) Ratios of expenses to average net assets prior to reduction of advisory fees
were 1.22%, 1.11% and 1.69% (annualized) for 1990-88, respectively.
(e) Ratios of net investment income to average net assets prior to reduction of
advisory fees were 5.20%, 6.07% and 7.16% (annualized) for 1990-88,
respectively.
(f) Annualized.
NOTE 7-SUBSEQUENT EVENT
Effective May 1, 1995, the Fund will change its name to "AIM Global Utilities
Fund". The Fund may invest up to 80% of its total assets in foreign securities
and will maintain investments in at least four countries, one of which will be
the United States.
F-122
<PAGE> 195
AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Value Fund:
We have audited the accompanying statement of assets and liabilities of the AIM
Value Fund (a portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1994, and the related statements of operations
for the year then ended, and the changes in its net assets and financial
highlights for each of the years in the two-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 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
December 31, 1994, 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
Value Fund as of December 31, 1994, the results of its operations for the year
then ended, the changes in its net assets and the financial highlights for each
of the years in the two-year period then ended, in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
February 3, 1995
F-123
<PAGE> 196
FINANCIALS
SCHEDULE OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS-65.39%
ADVERTISING/BROADCASTING-0.26%
200,000 Heritage Media Corp.(a) $ 5,375,000
- -----------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-0.21%
100,000 Northrop Grumman Corp. 4,200,000
- -----------------------------------------------------------------------------------------
AIRLINES-0.23%
300,000 Northwest Airlines Corp.(a) 4,725,000
- -----------------------------------------------------------------------------------------
APPLIANCES-1.44%
350,000 Premark International Inc. 15,312,500
- -----------------------------------------------------------------------------------------
471,000 Singer Company N.V. (The) 14,071,125
- -----------------------------------------------------------------------------------------
29,383,625
- -----------------------------------------------------------------------------------------
AUTOMOBILE (MANUFACTURING)-2.33%
1,700,000 Ford Motor Co. 47,600,000
- -----------------------------------------------------------------------------------------
AUTO/TRUCKS-PARTS & TIRES-1.06%
500,000 Borg-Warner Automotive 12,562,500
- -----------------------------------------------------------------------------------------
180,000 Eaton Corp. 8,910,000
- -----------------------------------------------------------------------------------------
21,472,500
- -----------------------------------------------------------------------------------------
BANKING-0.71%
500,000 Bank of New York Co., Inc. 14,500,000
- -----------------------------------------------------------------------------------------
BEVERAGES-1.33%
800,000 Coca-Cola Enterprises Inc. 14,300,000
- -----------------------------------------------------------------------------------------
400,000 Dr. Pepper/Seven-Up Companies, Inc.(a) 10,250,000
- -----------------------------------------------------------------------------------------
220,000 Robert Mondavi Corp.-Class A(a) 2,530,000
- -----------------------------------------------------------------------------------------
27,080,000
- -----------------------------------------------------------------------------------------
BUILDING MATERIALS-0.27%
18,100 Armstrong World Industries, Inc. 696,850
- -----------------------------------------------------------------------------------------
19,600 Medusa Corp. 480,200
- -----------------------------------------------------------------------------------------
137,800 Owens-Corning Fiberglass Corp.(a) 4,409,600
- -----------------------------------------------------------------------------------------
5,586,650
- -----------------------------------------------------------------------------------------
CHEMICALS-1.90%
102,800 Dow Chemical Co. 6,913,300
- -----------------------------------------------------------------------------------------
200,000 Geon Co. 5,475,000
- -----------------------------------------------------------------------------------------
200,000 PPG Industries, Inc. 7,425,000
- -----------------------------------------------------------------------------------------
544,600 Sterling Chemicals, Inc.(a) 7,147,875
- -----------------------------------------------------------------------------------------
200,000 Terra Industries, Inc. 2,075,000
- -----------------------------------------------------------------------------------------
330,000 Union Carbide Corp. 9,693,750
- -----------------------------------------------------------------------------------------
38,729,925
- -----------------------------------------------------------------------------------------
</TABLE>
F-124
<PAGE> 197
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CHEMICALS (SPECIALTY)-1.72%
100,000 Arco Chemical Co. $ 4,400,000
- -----------------------------------------------------------------------------------------
150,000 Cytec Industries Inc.(a) 5,850,000
- -----------------------------------------------------------------------------------------
282,500 IMC Global, Inc. 12,218,125
- -----------------------------------------------------------------------------------------
270,000 OM Group Inc. 6,480,000
- -----------------------------------------------------------------------------------------
300,000 Praxair, Inc. 6,150,000
- -----------------------------------------------------------------------------------------
35,098,125
- -----------------------------------------------------------------------------------------
COMPUTER MAINFRAMES-2.55%
600,000 Amdahl Corp.(a) 6,600,000
- -----------------------------------------------------------------------------------------
550,000 International Business Machines Corp. 40,425,000
- -----------------------------------------------------------------------------------------
250,000 Sequent Computer Systems, Inc.(a) 4,937,500
- -----------------------------------------------------------------------------------------
51,962,500
- -----------------------------------------------------------------------------------------
COMPUTER MINIS/PCS-4.99%
260,000 Apple Computer, Inc.(a) 10,140,000
- -----------------------------------------------------------------------------------------
1,300,000 COMPAQ Computer Corp.(a) 51,350,000
- -----------------------------------------------------------------------------------------
200,000 Dell Computer Corp.(a) 8,200,000
- -----------------------------------------------------------------------------------------
193,600 Gateway 2000, Inc.(a) 4,186,600
- -----------------------------------------------------------------------------------------
100,000 Hewlett-Packard Co. 9,987,500
- -----------------------------------------------------------------------------------------
500,000 Sun Microsystems, Inc.(a) 17,750,000
- -----------------------------------------------------------------------------------------
101,614,100
- -----------------------------------------------------------------------------------------
COMPUTER NETWORKING-1.56%
400,000 Belden Inc. 8,900,000
- -----------------------------------------------------------------------------------------
300,000 Cisco Systems, Inc.(a) 10,537,500
- -----------------------------------------------------------------------------------------
287,800 Comverse Technology, Inc. 3,417,625
- -----------------------------------------------------------------------------------------
500,000 Madge N.V.(a) 5,906,250
- -----------------------------------------------------------------------------------------
100,000 Standard Microsystems Corp.(a) 3,000,000
- -----------------------------------------------------------------------------------------
31,761,375
- -----------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-2.93%
350,000 EMC Corp. 7,568,750
- -----------------------------------------------------------------------------------------
250,000 Komag, Inc.(a) 6,531,250
- -----------------------------------------------------------------------------------------
300,000 Read-Rite Corp.-Class A(a) 5,568,750
- -----------------------------------------------------------------------------------------
400,000 Seagate Technology(a) 9,600,000
- -----------------------------------------------------------------------------------------
217,300 Storage Technology Corp.(a) 6,301,700
- -----------------------------------------------------------------------------------------
325,000 U.S. Robotics, Inc.(a) 14,056,250
- -----------------------------------------------------------------------------------------
600,000 Western Digital Corp.(a) 10,050,000
- -----------------------------------------------------------------------------------------
59,676,700
- -----------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-2.56%
248,600 Ameridata Technologies, Inc.(a) 2,486,000
- -----------------------------------------------------------------------------------------
149,000 Bay Networks, Inc.(a) 4,395,500
- -----------------------------------------------------------------------------------------
150,000 Ceridian Corp.(a) 4,031,250
- -----------------------------------------------------------------------------------------
200,000 Computer Associates International, Inc. 9,700,000
- -----------------------------------------------------------------------------------------
200,000 Electronics for Imaging, Inc.(a) 5,500,000
- -----------------------------------------------------------------------------------------
16,000 National Data Corp. 412,000
- -----------------------------------------------------------------------------------------
</TABLE>
F-125
<PAGE> 198
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES-(continued)
400,000 Network General Corp.(a) $ 10,275,000
- -----------------------------------------------------------------------------------------
100,000 Silicon Graphics Inc.(a) 3,087,500
- -----------------------------------------------------------------------------------------
200,000 Sterling Software, Inc.(a) 7,350,000
- -----------------------------------------------------------------------------------------
317,700 S3, Inc.(a) 5,003,775
- -----------------------------------------------------------------------------------------
52,241,025
- -----------------------------------------------------------------------------------------
CONGLOMERATES-0.98%
180,000 Allied Products Corp.(a) 2,587,500
- -----------------------------------------------------------------------------------------
450,000 Corning, Inc. 13,443,750
- -----------------------------------------------------------------------------------------
84,165 Tyco Laboratories, Inc. 3,997,825
- -----------------------------------------------------------------------------------------
20,029,075
- -----------------------------------------------------------------------------------------
CONTAINERS-0.59%
180,000 Crown Cork & Seal Co., Inc.(a) 6,795,000
- -----------------------------------------------------------------------------------------
188,700 Stone Container Corp.(a) 3,255,075
- -----------------------------------------------------------------------------------------
100,000 U.S. Can Corp.(a) 1,900,000
- -----------------------------------------------------------------------------------------
11,950,075
- -----------------------------------------------------------------------------------------
COSMETICS AND TOILETRIES-0.00%
900 Helene Curtis Industries, Inc. 30,037
- -----------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISC.-3.05%
293,900 Harman International Industries, Inc. 10,874,300
- -----------------------------------------------------------------------------------------
600,000 Itel Corp.(a) 20,775,000
- -----------------------------------------------------------------------------------------
200,000 Oak Industries, Inc.(a) 4,575,000
- -----------------------------------------------------------------------------------------
300,000 Raychem Corporation 10,687,500
- -----------------------------------------------------------------------------------------
50,000 Tektronix, Inc. 1,712,500
- -----------------------------------------------------------------------------------------
400,000 Teradyne Inc.(a) 13,550,000
- -----------------------------------------------------------------------------------------
62,174,300
- -----------------------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS-1.54%
500,000 Arrow Electronics, Inc.(a) 17,937,500
- -----------------------------------------------------------------------------------------
282,300 Avnet, Inc. 10,445,100
- -----------------------------------------------------------------------------------------
150,000 Wyle Laboratories 2,925,000
- -----------------------------------------------------------------------------------------
31,307,600
- -----------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.18%
80,000 XTRA Corp. 3,600,000
- -----------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-3.00%
300,000 ADVANTA Corp.-Class A 7,575,000
- -----------------------------------------------------------------------------------------
50,000 ADVANTA Corp.-Class B 1,312,500
- -----------------------------------------------------------------------------------------
150,000 CMAC Investment Corp. 4,331,250
- -----------------------------------------------------------------------------------------
58,300 Federal Home Loan Mortgage Corp. 2,944,150
- -----------------------------------------------------------------------------------------
400,000 First USA, Inc. 13,150,000
- -----------------------------------------------------------------------------------------
90,000 Foothill Group, Inc. (The) 1,350,000
- -----------------------------------------------------------------------------------------
160,000 Green Tree Financial Corp. 4,860,000
- -----------------------------------------------------------------------------------------
250,000 Household International, Inc. 9,281,250
- -----------------------------------------------------------------------------------------
700,000 MBNA Corp. 16,362,500
- -----------------------------------------------------------------------------------------
61,166,650
- -----------------------------------------------------------------------------------------
</TABLE>
F-126
<PAGE> 199
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FINANCE-SAVINGS & LOAN-0.05%
66,000 First Financial Holdings, Inc. $ 1,056,000
- -----------------------------------------------------------------------------------------
FOOD/PROCESSING-0.66%
400,000 Hudson Foods, Inc.-Class A 10,050,000
- -----------------------------------------------------------------------------------------
144,600 International Multifoods Corp. 2,657,025
- -----------------------------------------------------------------------------------------
37,700 Ralcorp Holdings, Inc.(a) 838,825
- -----------------------------------------------------------------------------------------
13,545,850
- -----------------------------------------------------------------------------------------
GAMING-0.36%
360,000 Mirage Resort, Inc.(a) 7,380,000
- -----------------------------------------------------------------------------------------
HOMEBUILDING-0.13%
225,300 Beazer Homes USA Inc.(a) 2,619,113
- -----------------------------------------------------------------------------------------
14 Clayton Homes, Inc. 220
- -----------------------------------------------------------------------------------------
2,619,333
- -----------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-0.38%
175,000 St. Paul Companies, Inc. 7,831,250
- -----------------------------------------------------------------------------------------
MACHINE TOOLS-0.22%
180,000 Applied Power Inc. 4,567,500
- -----------------------------------------------------------------------------------------
MACHINERY-HEAVY-0.97%
500,000 Case Corp. 10,750,000
- -----------------------------------------------------------------------------------------
150,000 Caterpillar Inc. 8,268,750
- -----------------------------------------------------------------------------------------
41,100 Commercial Intertech Corp. 765,488
- -----------------------------------------------------------------------------------------
19,784,238
- -----------------------------------------------------------------------------------------
MEDICAL SERVICES-4.37%
300,000 Abbey Healthcare Group, Inc.(a) 6,975,000
- -----------------------------------------------------------------------------------------
122,900 Charter Medical Corp.(a) 2,642,350
- -----------------------------------------------------------------------------------------
200,000 Columbia Healthcare Corp. 7,300,000
- -----------------------------------------------------------------------------------------
112,500 Community Health Systems, Inc.(a) 3,065,625
- -----------------------------------------------------------------------------------------
200,000 Foundation Health Corp.(a) 6,200,000
- -----------------------------------------------------------------------------------------
200,000 Health Care and Retirement Corp.(a) 6,025,000
- -----------------------------------------------------------------------------------------
100,000 Healthcare Compare Corp.(a) 3,412,500
- -----------------------------------------------------------------------------------------
200,000 Health Systems International Inc.-Class A(a) 6,075,000
- -----------------------------------------------------------------------------------------
350,000 Healthtrust, Inc.-The Hospital Co.(a) 11,112,500
- -----------------------------------------------------------------------------------------
200,600 Humana Inc.(a) 4,538,575
- -----------------------------------------------------------------------------------------
100,000 Living Centers of America(a) 3,337,500
- -----------------------------------------------------------------------------------------
113,900 Mid-Atlantic Medical Services, Inc.(a) 2,605,463
- -----------------------------------------------------------------------------------------
190,000 Orthofix International N.V.(a) 2,185,000
- -----------------------------------------------------------------------------------------
97,700 Sierra Health Services, Inc.(a) 3,089,763
- -----------------------------------------------------------------------------------------
325,000 U.S. Healthcare, Inc. 13,406,250
- -----------------------------------------------------------------------------------------
200,000 United Wisconsin Services, Inc. 7,175,000
- -----------------------------------------------------------------------------------------
89,145,526
- -----------------------------------------------------------------------------------------
MEDICAL (DRUGS)-0.51%
501,800 Bergen Brunswig Corp. 10,475,075
- -----------------------------------------------------------------------------------------
</TABLE>
F-127
<PAGE> 200
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
METALS-1.68%
250,000 Alcan Aluminum Ltd. $ 6,343,750
- -----------------------------------------------------------------------------------------
200,000 Alumax, Inc.(a) 5,675,000
- -----------------------------------------------------------------------------------------
122,600 Mueller Industries, Inc.(a) 3,662,675
- -----------------------------------------------------------------------------------------
425,000 Olympic Steel, Inc.(a) 4,462,500
- -----------------------------------------------------------------------------------------
400,000 Timken Co. (The) 14,100,000
- -----------------------------------------------------------------------------------------
34,243,925
- -----------------------------------------------------------------------------------------
MINING-0.12%
200,000 Zeigler Coal Holdings Co. 2,350,000
- -----------------------------------------------------------------------------------------
NATURAL GAS PIPELINE-0.22%
175,000 Coastal Corp. 4,506,250
- -----------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.73%
150,000 Xerox Corp. 14,850,000
- -----------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.12%
100,000 Reynolds & Reynolds Co. 2,500,000
- -----------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS-1.82%
68,400 Boise Cascade Corp. 1,829,700
- -----------------------------------------------------------------------------------------
250,000 Champion International Corp. 9,125,000
- -----------------------------------------------------------------------------------------
200,000 Federal Paper Board Co., Inc. 5,800,000
- -----------------------------------------------------------------------------------------
150,000 Georgia-Pacific Corp. 10,725,000
- -----------------------------------------------------------------------------------------
200,000 Mead Corp. (The) 9,725,000
- -----------------------------------------------------------------------------------------
37,204,700
- -----------------------------------------------------------------------------------------
POLLUTION CONTROL-0.25%
888,700 Allwaste, Inc.(a) 4,998,937
- -----------------------------------------------------------------------------------------
PUBLISHING-0.72%
250,000 American Publishing Co. 2,750,000
- -----------------------------------------------------------------------------------------
100,000 Central Newspapers, Inc. 2,812,500
- -----------------------------------------------------------------------------------------
300,000 Scripps (E.W.) Co. 9,075,000
- -----------------------------------------------------------------------------------------
14,637,500
- -----------------------------------------------------------------------------------------
REAL ESTATE-0.09%
100,000 Del Webb Corp. 1,762,500
- -----------------------------------------------------------------------------------------
RETAIL-FOOD AND DRUG-0.82%
250,000 Eckerd Corp.(a) 7,468,750
- -----------------------------------------------------------------------------------------
150,000 Revco D.S., Inc.(a) 3,543,750
- -----------------------------------------------------------------------------------------
180,000 Safeway Inc.(a) 5,737,500
- -----------------------------------------------------------------------------------------
16,750,000
- -----------------------------------------------------------------------------------------
RETAIL-STORES-2.20%
118,700 Caldor Corp. (The)(a) 2,641,075
- -----------------------------------------------------------------------------------------
400,000 Carson Pirie Scott & Co.(a) 7,600,000
- -----------------------------------------------------------------------------------------
200,000 Dayton-Hudson Corp. 14,150,000
- -----------------------------------------------------------------------------------------
460,000 Federated Department Stores, Inc.(a) 8,855,000
- -----------------------------------------------------------------------------------------
108,100 Mac Frugals Bargains Close-Outs, Inc.(a) 2,162,000
- -----------------------------------------------------------------------------------------
</TABLE>
F-128
<PAGE> 201
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
RETAIL-STORES-(continued)
50,000 Maxim Group, Inc.(a) $ 631,250
- -----------------------------------------------------------------------------------------
500,000 Waban Inc.(a) 8,875,000
- -----------------------------------------------------------------------------------------
44,914,325
- -----------------------------------------------------------------------------------------
SEMICONDUCTORS-7.93%
400,000 Analog Devices, Inc.(a) 14,050,000
- -----------------------------------------------------------------------------------------
300,000 Cypress Semiconductor Corp.(a) 6,937,500
- -----------------------------------------------------------------------------------------
270,000 Exar Corp.(a) 6,615,000
- -----------------------------------------------------------------------------------------
200,000 Kemet Corp.(a) 5,925,000
- -----------------------------------------------------------------------------------------
250,000 Lam Research Corp.(a) 9,312,500
- -----------------------------------------------------------------------------------------
150,000 LSI Logic Corp.(a) 6,056,250
- -----------------------------------------------------------------------------------------
340,000 Micron Technology, Inc. 15,002,500
- -----------------------------------------------------------------------------------------
180,000 Motorola, Inc. 10,417,500
- -----------------------------------------------------------------------------------------
500,000 National Semiconductor Corp.(a) 9,750,000
- -----------------------------------------------------------------------------------------
200,000 Quickturn Design Systems, Inc.(a) 2,750,000
- -----------------------------------------------------------------------------------------
1,000,000 Texas Instruments Inc. 74,875,000
- -----------------------------------------------------------------------------------------
161,691,250
- -----------------------------------------------------------------------------------------
SHOES AND RELATED APPAREL-0.19%
97,400 Reebok International, Ltd. 3,847,300
- -----------------------------------------------------------------------------------------
STEEL-0.66%
650,000 LTV Corp.(a) 10,562,500
- -----------------------------------------------------------------------------------------
130,000 Quanex Corp. 2,973,750
- -----------------------------------------------------------------------------------------
13,536,250
- -----------------------------------------------------------------------------------------
TELECOMMUNICATIONS-0.22%
100,000 Airtouch Communications, Inc.(a) 2,912,500
- -----------------------------------------------------------------------------------------
48,000 US Cellular Corp.(a) 1,572,000
- -----------------------------------------------------------------------------------------
4,484,500
- -----------------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT-1.18%
450,000 Century Telephone Enterprises, Inc. 13,275,000
- -----------------------------------------------------------------------------------------
300,000 DSC Communications Corp.(a) 10,762,500
- -----------------------------------------------------------------------------------------
24,037,500
- -----------------------------------------------------------------------------------------
TEXTILES-0.31%
200,000 Fieldcrest Cannon, Inc.(a) 5,100,000
- -----------------------------------------------------------------------------------------
100,000 Quaker Fabric Corp.(a) 1,275,000
- -----------------------------------------------------------------------------------------
6,375,000
- -----------------------------------------------------------------------------------------
TOBACCO-1.95%
500,000 Philip Morris Companies, Inc. 28,750,000
- -----------------------------------------------------------------------------------------
2,000,000 RJR Nabisco Holdings Inc.(a) 11,000,000
- -----------------------------------------------------------------------------------------
39,750,000
- -----------------------------------------------------------------------------------------
UTILITIES-1.14%
500,000 Telephone & Data Systems, Inc. 23,062,500
- -----------------------------------------------------------------------------------------
Total Common Stocks 1,333,171,471
- -----------------------------------------------------------------------------------------
</TABLE>
F-129
<PAGE> 202
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FOREIGN COMMON STOCKS-7.02%
AUSTRALIA-0.29%
181,561 Broken Hill Proprietary Co. Ltd. (Conglomerate) $ 2,756,642
- -----------------------------------------------------------------------------------------
394,161 National Australia Bank Ltd. (Banking) 3,160,378
- -----------------------------------------------------------------------------------------
Total Australia 5,917,020
- -----------------------------------------------------------------------------------------
FINLAND-0.29%
80,000 Nokia Corp. ADR (Telecommunications)(a) 6,000,000
- -----------------------------------------------------------------------------------------
FRANCE-0.79%
18,000 Compagnie de Saint Gobain (Building Materials) 2,069,275
- -----------------------------------------------------------------------------------------
15,200 Docks De France S.A. (Retail-Food and Drug) 1,858,379
- -----------------------------------------------------------------------------------------
4,800 Essilor International-Compagnie Generale d'Optique 660,550
(Medical Services)
- -----------------------------------------------------------------------------------------
1,860 Legrand S.A. (Electronic Components/Misc.) 2,256,657
- -----------------------------------------------------------------------------------------
13,000 LVMH Moet Hennessy Louis Vuitton (Beverages) 2,051,862
- -----------------------------------------------------------------------------------------
7,260 Promodes S.A. (Retail-Stores) 1,351,140
- -----------------------------------------------------------------------------------------
14,000 PSA Peugeot Citroen S.A. (Automobile-Manufacturing)(a) 1,918,742
- -----------------------------------------------------------------------------------------
79,800 Rhone-Poulenc-A (Chemicals) 1,851,192
- -----------------------------------------------------------------------------------------
16,900 Roussel Uclaf (Medical-Drugs) 2,021,924
- -----------------------------------------------------------------------------------------
Total France 16,039,721
- -----------------------------------------------------------------------------------------
GERMANY-0.16%
8,300 Mannesmann A.G. (Machinery-Heavy) 2,260,180
- -----------------------------------------------------------------------------------------
3,150 VEBA A.G. (Electric Services) 1,097,632
- -----------------------------------------------------------------------------------------
Total Germany 3,357,812
- -----------------------------------------------------------------------------------------
HONG KONG-0.55%
700,000 Hutchinson Whampoa Ltd.(Conglomerate) 2,831,664
- -----------------------------------------------------------------------------------------
41,900 Shanghai Petrochemical Co. Ltd.-ADR (Chemicals) 1,209,863
- -----------------------------------------------------------------------------------------
6,200,000 Shanghai Petrochemical Co., Ltd. (Chemicals) 1,762,844
- -----------------------------------------------------------------------------------------
440,000 Sun Hung Kai Properties Ltd. (Real Estate) 2,627,205
- -----------------------------------------------------------------------------------------
700,000 Television Broadcast Ltd. (Advertising/Broadcasting) 2,795,476
- -----------------------------------------------------------------------------------------
Total Hong Kong 11,227,052
- -----------------------------------------------------------------------------------------
ITALY-0.10%
820,000 Societa Italiana Per L'Esercizio delle Telecommunicazioni, 2,134,403
P.A. (Telecommunications)(a)
- -----------------------------------------------------------------------------------------
MALAYSIA-0.29%
337,500 Genting Berhad (Leisure and Recreation) 2,894,557
- -----------------------------------------------------------------------------------------
400,000 Leader Universal Holdings (Electronic Components/Misc.)(a) 1,284,512
- -----------------------------------------------------------------------------------------
272,500 Malayan Banking Berhad (Banking) 1,643,430
- -----------------------------------------------------------------------------------------
Total Malaysia 5,822,499
- -----------------------------------------------------------------------------------------
NETHERLANDS-2.43%
20,000 AKZO N.V. (Conglomerate) 2,308,889
- -----------------------------------------------------------------------------------------
200,000 Elsag Bailey Process Automation N.V. (Electronic 4,925,000
Components)(a)
- -----------------------------------------------------------------------------------------
40,300 Koninklijke Nedlloyd Hoogovens CVA (Steel)(a) 1,829,392
- -----------------------------------------------------------------------------------------
26,000 Oce-Van Der Grinten N.V. (Office Automation) 1,163,777
- -----------------------------------------------------------------------------------------
1,200,000 Philips N.V. ADR (Electronic Components)(a) 35,250,000
- -----------------------------------------------------------------------------------------
</TABLE>
F-130
<PAGE> 203
FINANCIALS
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
NETHERLANDS-(continued)
10,900 Verenigde Nederlandse Utgevbedri Verigd Bezit $ 1,131,505
(Publishing)(a)
- -----------------------------------------------------------------------------------------
40,000 Wolters Kluwer N.V. (Publishing)(a) 2,958,695
- -----------------------------------------------------------------------------------------
Total Netherlands 49,567,258
- -----------------------------------------------------------------------------------------
NEW ZEALAND-0.15%
1,320,000 Fletcher Challenge Ltd. (Paper and Forest Products) 3,101,210
- -----------------------------------------------------------------------------------------
SINGAPORE-0.29%
250,000 Development Bank of Singapore Ltd. (Banking) 2,572,899
- -----------------------------------------------------------------------------------------
400,000 Keppel Corp. Ltd. (Transportation) 3,403,088
- -----------------------------------------------------------------------------------------
Total Singapore 5,975,987
- -----------------------------------------------------------------------------------------
SWEDEN-0.41%
100,000 Astra AB "B" Free (Medical-Drugs) 2,550,265
- -----------------------------------------------------------------------------------------
27,500 Electrolux AB "B" Free (Furniture) 1,395,244
- -----------------------------------------------------------------------------------------
127,000 Sandvik AB (Machine Tools) 2,042,433
- -----------------------------------------------------------------------------------------
118,500 Volvo AB "B" Free (Automobile Manufacturing)(a) 2,232,659
- -----------------------------------------------------------------------------------------
Total Sweden 8,220,601
- -----------------------------------------------------------------------------------------
SWITZERLAND-0.10%
2,350 BBC Brown Boveri Ltd. (Conglomerate)(a) 2,023,263
- -----------------------------------------------------------------------------------------
UNITED KINGDOM-1.17%
268,500 Barclays Bank PLC (Finance-Consumer Credit)(a) 2,566,945
- -----------------------------------------------------------------------------------------
93,400 BOC Group PLC (Chemicals-Specialty) 1,030,309
- -----------------------------------------------------------------------------------------
250,000 BPB Industries PLC (Building Materials) 1,157,879
- -----------------------------------------------------------------------------------------
1,800,000 Burton Group PLC (Retail-Stores) 1,929,275
- -----------------------------------------------------------------------------------------
200,000 Imperial Chemical Industries PLC (Chemicals) 9,300,000
- -----------------------------------------------------------------------------------------
1,100,000 Morrison (Wm.) Supermarkets PLC (Retail-Food and Drug) 2,426,850
- -----------------------------------------------------------------------------------------
126,000 Pearson PLC (Conglomerate) 1,098,139
- -----------------------------------------------------------------------------------------
96,000 Peninsular & Oriental Steam Navigation Co. (The) 916,288
(Transportation)
- -----------------------------------------------------------------------------------------
323,200 Rank Organisation PLC (Leisure and Recreation) 2,113,872
- -----------------------------------------------------------------------------------------
67,420 Thorn EMI PLC (Leisure and Recreation) 1,091,315
- -----------------------------------------------------------------------------------------
Total United Kingdom 23,630,872
- -----------------------------------------------------------------------------------------
Total Foreign Common Stocks 143,017,698
- -----------------------------------------------------------------------------------------
PREFERRED STOCKS-0.56%
OIL AND GAS-0.26%
200,000 Atlantic Richfield Co.-$2.2275 Conv. Pfd. DECS 5,225,000
- -----------------------------------------------------------------------------------------
FINLAND-0.30%
42,000 Nokia Corp., FIM Preferred (Telecommunications) 6,187,420
- -----------------------------------------------------------------------------------------
Total Preferred Stocks 11,412,420
- -----------------------------------------------------------------------------------------
Total Investments (excluding short-term investments) 1,487,601,589
- -----------------------------------------------------------------------------------------
</TABLE>
F-131
<PAGE> 204
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-15.73%
U.S. TREASURY BILLS-6.92%(b)
$ 17,000,000 4.94%, 01/12/95 $ 16,983,000
- -----------------------------------------------------------------------------------------
84,000,000 5.29%, 02/16/95 83,496,840
- -----------------------------------------------------------------------------------------
41,000,000 5.40%, 02/23/95 40,703,570
- -----------------------------------------------------------------------------------------
Total U.S. Treasury Bills 141,183,410
- -----------------------------------------------------------------------------------------
U.S. TREASURY NOTES-8.81%
28,000,000 7.75%, 2/15/95 28,074,480
- -----------------------------------------------------------------------------------------
100,000,000 3.875%, 02/28/95 99,750,000
- -----------------------------------------------------------------------------------------
52,000,000 3.875%, 03/31/95 51,813,320
- -----------------------------------------------------------------------------------------
Total U.S. Treasury Notes 179,637,800
- -----------------------------------------------------------------------------------------
Total U.S. Treasury Securities 320,821,210
- -----------------------------------------------------------------------------------------
MASTER NOTE AGREEMENT-3.61%
73,560,000 Morgan (J.P.) & Co. Inc., 6.20% 01/19/95 73,560,000
- -----------------------------------------------------------------------------------------
TIME DEPOSITS-4.02%
82,000,000 State Street Bank & Trust-Cayman, 4.625%, 01/03/95 82,000,000
- -----------------------------------------------------------------------------------------
Total Time Deposits 82,000,000
- -----------------------------------------------------------------------------------------
Total Investments (excluding repurchase agreements) 1,963,982,799
- -----------------------------------------------------------------------------------------
REPURCHASE AGREEMENT-0.51%(d)
10,464,200 Daiwa Securities America Inc., 3.50%, 01/03/95(e) 10,464,200
- -----------------------------------------------------------------------------------------
TOTAL INVESTMENTS-96.84% 1,974,446,999
- -----------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-3.16% 64,396,822
- -----------------------------------------------------------------------------------------
NET ASSETS-100.00% $2,038,843,821
=========================================================================================
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) U.S. Treasury Bills are 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.
(c) Master Note Purchase Agreement may be terminated by either party upon thirty business
days written notice. Interest rates on master notes are redetermined periodically.
Rate shown is the rate in effect on December 31, 1994.
(d) 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
value as being 102% of the sales price of the repurchase agreement.
(e) Joint repurchase agreement entered into 12/30/94 with a maturing value of
$391,353,115. Collateralized by $426,987,000 U.S. Treasury Obligations, 4.75% to
9.25% due 11/15/96 to 11/15/24. The aggregate market value of collateral at 12/31/94
was $399,025,510. The Fund's pro-rata interest in the collateral was $10,673,498.
</TABLE>
See Notes to Financial Statements.
F-132
<PAGE> 205
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $1,855,034,108) $1,963,982,799
- ----------------------------------------------------------------------------------------
Repurchase agreements (cost $10,464,200) 10,464,200
- ----------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $7,175,989) 7,188,288
- ----------------------------------------------------------------------------------------
Receivables for:
Investments sold 49,207,239
- ----------------------------------------------------------------------------------------
Fund shares sold 19,977,274
- ----------------------------------------------------------------------------------------
Dividends and interest 4,955,196
- ----------------------------------------------------------------------------------------
Investment for deferred compensation plan 12,127
- ----------------------------------------------------------------------------------------
Other assets 67,072
- ----------------------------------------------------------------------------------------
Total assets 2,055,854,195
- ----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 9,595,836
- ----------------------------------------------------------------------------------------
Fund shares reacquired 2,979,146
- ----------------------------------------------------------------------------------------
Deferred compensation plan 12,127
- ----------------------------------------------------------------------------------------
Variation margin 1,300,000
- ----------------------------------------------------------------------------------------
Accrued advisory fees 1,060,651
- ----------------------------------------------------------------------------------------
Accrued administrative service fees 11,455
- ----------------------------------------------------------------------------------------
Accrued distribution fees 1,367,540
- ----------------------------------------------------------------------------------------
Accrued filing fees 193,304
- ----------------------------------------------------------------------------------------
Accrued transfer agent fees 334,747
- ----------------------------------------------------------------------------------------
Accrued trustees' fees 3,255
- ----------------------------------------------------------------------------------------
Accrued operating expenses 152,313
- ----------------------------------------------------------------------------------------
Total liabilities 17,010,374
- ----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $2,038,843,821
========================================================================================
NET ASSETS:
Class A $1,358,724,515
========================================================================================
Class B $ 680,119,306
========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 64,258,401
========================================================================================
Class B 32,184,017
========================================================================================
CLASS A:
Net asset value and redemption price per share $ 21.14
========================================================================================
Offering price per share:
(Net asset value of $21.14 / 94.50%) $ 22.37
========================================================================================
CLASS B:
Net asset value and offering price per share $ 21.13
========================================================================================
</TABLE>
See Notes to Financial Statements.
F-133
<PAGE> 206
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended December 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 13,264,589
- ---------------------------------------------------------------------------------------
Interest 14,185,438
- ---------------------------------------------------------------------------------------
Total investment income 27,450,027
- ---------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 6,674,684
- ---------------------------------------------------------------------------------------
Custodian fees 298,874
- ---------------------------------------------------------------------------------------
Distribution fees-Class A 2,712,116
- ---------------------------------------------------------------------------------------
Distribution fees-Class B 3,596,079
- ---------------------------------------------------------------------------------------
Administrative service fees 884,123
- ---------------------------------------------------------------------------------------
Trustees' fees 17,321
- ---------------------------------------------------------------------------------------
Professional fees 72,555
- ---------------------------------------------------------------------------------------
Transfer agent fees-Class A 1,395,998
- ---------------------------------------------------------------------------------------
Transfer agent fees-Class B 866,880
- ---------------------------------------------------------------------------------------
Filing fees 344,071
- ---------------------------------------------------------------------------------------
Printing expenses 544,235
- ---------------------------------------------------------------------------------------
Other 101,660
- ---------------------------------------------------------------------------------------
Total expenses 17,508,596
- ---------------------------------------------------------------------------------------
Net investment income 9,941,431
- ---------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTIONS CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities (2,556,904)
- ---------------------------------------------------------------------------------------
Foreign currencies 81,427
- ---------------------------------------------------------------------------------------
Futures contracts (4,320,231)
- ---------------------------------------------------------------------------------------
Options contracts (7,377,140)
- ---------------------------------------------------------------------------------------
(14,172,848)
- ---------------------------------------------------------------------------------------
Unrealized appreciation of:
Investment securities 32,532,683
- ---------------------------------------------------------------------------------------
Foreign currencies 450,569
- ---------------------------------------------------------------------------------------
Futures contracts 3,874,718
- ---------------------------------------------------------------------------------------
36,857,970
- ---------------------------------------------------------------------------------------
Net gain on investment securities, foreign currencies, futures and
options contracts 22,685,122
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 32,626,553
=======================================================================================
</TABLE>
See Notes to Financial Statements.
F-134
<PAGE> 207
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
-------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,941,431 $ 1,372,604
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities, foreign currencies, futures and options
contracts (14,172,848) 38,340,252
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, and futures contracts 36,857,970 40,732,910
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 32,626,553 80,445,766
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
Class A (9,726,386) (1,150,611)
- -------------------------------------------------------------------------------------------
Class B -- (42,261)
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains
on investment securities:
Class A (12,282,372) (26,369,362)
- -------------------------------------------------------------------------------------------
Class B (6,028,782) (1,625,610)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 585,993,203 474,199,915
- -------------------------------------------------------------------------------------------
Class B 619,742,029 63,398,259
- -------------------------------------------------------------------------------------------
Net increase in net assets 1,210,324,245 588,856,096
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 828,519,576 239,663,480
- -------------------------------------------------------------------------------------------
End of period $2,038,843,821 $828,519,576
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,946,314,139 $740,578,907
- -------------------------------------------------------------------------------------------
Undistributed net investment income 243,165 28,120
- -------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies, futures and options
contracts (20,565,172) 11,918,830
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, and futures contracts 112,851,689 75,993,719
- -------------------------------------------------------------------------------------------
$2,038,843,821 $828,519,576
===========================================================================================
</TABLE>
See Notes to Financial Statements.
F-135
<PAGE> 208
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Value Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate series portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers two different classes of shares: the Class A shares and the
Class B shares. Class A shares are sold with a front-end sales charge. Class B
shares are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange is valued at
its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the Trust's officers
in a manner specifically authorized by the Board of Trustees. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value.
B. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts-A forward currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a forward contract to attempt to minimize the
risk to the Fund from adverse changes in the relationship between currencies.
The Fund may also enter into a forward contract for the purchase or sale of a
security denominated in a foreign currency in order to "lock in" the U.S.
dollar price of that security. The Fund could be exposed to risk if
counterparties to the contracts are unable to meet the terms of their
contracts or if the value of the foreign currency changes unfavorably.
D. 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
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
E. Stock Index Futures Contracts-The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash, and/or by securing a
standby letter of credit from a major commercial bank, as collateral, for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contract is open, changes in the value of the
contract are recognized as unrealized gains or losses by "marking to market"
on a daily basis to reflect the market value of the contract at the end of
each day's trading. Variation margin payments are made or received depending
upon whether unrealized gains or losses are incurred. When the contract is
closed, the Fund records a realized gain or loss equal to the difference
between the proceeds from (or cost of) the closing transaction and the Fund's
basis in the contract. Risks include the possibility of an illiquid market
and the change in the value of the contract may not correlate with changes in
the securities being hedged.
F. Covered Call Options-The Fund may write call options, but only on a covered
basis; that is, the Fund will own the underlying security. Options written by
the Fund normally will have expiration dates between three and nine months
from the date written. The exercise price of a call option may be below,
equal to, or above the current market value of the underlying security at the
time the option is written. When the Fund writes a
F-136
<PAGE> 209
FINANCIALS
NOTE 1-(continued)
covered call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the liability
is subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the last sale
price, or in the absence of a sale, the mean between the last bid and asked
prices on that day. If a written call option expires on the stipulated
expiration date, or if the Fund enters into a closing purchase transaction,
the Fund realizes a gain (or a loss if the closing purchase transaction
exceeds the premium received when the option was written) without regard to
any unrealized gain or loss on the underlying security, and the liability
related to such option is extinguished. If a written option is exercised, the
Fund realizes a gain or a loss from the sale of the underlying security and
the proceeds of the sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written. The Fund will
not write a covered call option if, immediately thereafter, the aggregate
value of the securities underlying all such options, determined as of the
dates such options were written, would exceed 5% of the net assets of the
Fund.
G. 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.
H. Expenses-Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them. Expenses of the
Trust which are not directly attributable to the operations of any class of
shares or portfolio of the Trust are prorated among the classes to which the
expense relates based upon the relative net assets of each class.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. This agreement
requires AIM to reduce its fees or, if necessary, make payments to the Fund to
the extent required to satisfy any expense limitations imposed by the securities
laws or regulations thereunder of any state in which the Fund's shares are
qualified for sale. The master investment advisory agreement was amended on
November 14, 1994 with respect to the Fund. The amendment to the master
investment advisory agreement was approved by the Fund's shareholders at a
special meeting which was originally scheduled for September 28, 1994, but which
was adjourned until November 14, 1994 due to lack of a quorum. Of the 37,410,248
shares voted at the meeting, 25,360,315 shares voted for the amendment,
9,686,807 voted against the amendment, and 2,363,126 shares abstained. Under the
previous terms, the Fund paid an advisory fee to AIM at the annual rate of 0.60%
of the first $200 million of the Fund's average daily net assets, plus 0.50% of
the Fund's average daily net assets in excess of $200 million to and including
$500 million, plus 0.40% of the Fund's average daily net assets in excess of
$500 million to and including $1 billion, plus 0.30% of the Fund's average daily
net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting and shareholder services to the Fund. During the year ended December
31, 1994, AIM was reimbursed $884,123 for such services. Effective November 1,
1994, A I M Fund Services, Inc. ("AFS") became the transfer agent for the Fund
and was paid $349,810 for such services during the two months ended December 31,
1994.
F-137
<PAGE> 210
FINANCIALS
NOTE 2-(continued)
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares (the
"Class B Plan")(collectively, the "Plans"). The Fund, pursuant to the Class A
Plan, pays AIM Distributors compensation at an annual rate of 0.25% of the
average daily net assets attributable to the Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs, and to implement a program which provides periodic payments to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class A shares of
the Fund. The Fund, pursuant to the Class B Plan, pays AIM Distributors
compensation at an annual rate of 1.00% of the average daily net assets
attributable to the Class B shares. Of this amount, the Fund may pay a service
fee of 0.25% of the average daily net assets of the Class B shares to selected
dealers and financial institutions who furnish continuing personal shareholder
services to their customers who purchase and own Class B shares of the Fund. Any
amounts not paid as a service fee under such Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges, that may be paid by the respective
classes. During the year ended December 31, 1994, the Class A shares and the
Class B shares paid AIM Distributors $2,712,116 and $3,596,079, respectively, as
compensation pursuant to the Plans.
AIM Distributors received commissions of $3,063,899 from sales of the Class A
shares of the Fund during the year ended December 31, 1994. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1994,
AIM Distributors received $584,611 in contingent deferred sales charges imposed
on redemptions of Class B shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AIM Distributors and AFS.
During the year ended December 31, 1994, the Fund paid legal fees of $2,858
for services rendered by Reid & Priest as counsel to the Board of Trustees.
Effective September 1994, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed as counsel to the Board of Trustees. The Fund paid legal fees of $658
for services rendered by that firm as counsel. A member of that firm is a
trustee of the Trust.
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of the Trust. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1994 was
$2,428,926,850 and $1,411,142,878, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $134,397,552
- --------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (28,233,398)
- --------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $106,164,154
======================================================================================
Cost of investments for tax purposes is $1,868,282,845.
</TABLE>
F-138
<PAGE> 211
FINANCIALS
NOTE 5-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1994 1993
----------------------------- ---------------------------
SHARES VALUE SHARES VALUE
---------- ------------- --------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 44,842,263 $ 956,547,274 28,361,322 $571,325,129
- -------------------------- ----------------------------- ---------------------------
Class B* 30,585,526 650,657,626 3,036,128 63,454,624
- -------------------------- ----------------------------- ---------------------------
Issued as reinvestment of
dividends:
Class A 1,002,453 20,670,601 1,080,088 21,661,686
- -------------------------- ----------------------------- ---------------------------
Class B* 289,906 5,707,603 64,488 1,294,270
- -------------------------- ----------------------------- ---------------------------
Reacquired:
Class A (18,339,133) (391,224,672) (5,826,056) (118,786,900)
- -------------------------- ----------------------------- ---------------------------
Class B* (1,727,299) (36,623,200) (64,732) (1,350,635)
- -------------------------- ------------------------------ ---------------------------
56,653,716 $1,205,735,232 26,651,238 $537,598,174
========================== ============================== ===========================
</TABLE>
* Sales of Class B shares commenced on October 18, 1993.
NOTE 6-OPEN FUTURES CONTRACTS
On December 31, 1994, $180,685,000 principal amount of U.S. Treasury securities
were pledged as collateral to cover margin requirements for open futures
contracts:
Open futures contracts at December 31, 1994 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT NO. OF CONTRACTS/MONTH/COMMITMENT APPRECIATION
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
S&P 500 Index 800 contracts/March/Buy $3,874,718
- -------------------------------------------------------------------------------------------------
</TABLE>
F-139
<PAGE> 212
FINANCIALS
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during each of the years in the ten-year period ended December 31,
1994 and for a Class B share outstanding during the year ended December 31, 1994
and the period October 18, 1993 (date sales commenced) through December 31,
1993.
<TABLE>
<CAPTION>
1994 1993 1992(a) 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 20.82 $ 18.24 $ 17.55 $ 13.75 $ 14.53
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.16 0.04 0.12 0.13 0.26
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net gains (losses) on securities (both realized
and unrealized) 0.52 3.34 2.68 5.73 0.01
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.68 3.38 2.80 5.86 0.27
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (0.16) (0.03) (0.12) (0.14) (0.26)
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Distributions from net realized capital gains (0.20) (0.77) (1.99) (1.92) (0.79)
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.36) (0.80) (2.11) (2.06) (1.05)
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 21.14 $ 20.82 $ 18.24 $ 17.55 $ 13.75
================================================= ========== ========== ========== ========== ==========
Total return(b) 3.28% 18.71% 16.39% 43.45% 1.88%
================================================= ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,358,725 $ 765,305 $ 239,663 $ 152,149 $ 86,565
================================================= ========== ========== ========== ========== ==========
Ratio of expenses to average net assets 0.98%(c) 1.09% 1.16% 1.22% 1.21%(d)
================================================= ========== ========== ========== ========== ==========
Ratio of net investment income to average net
assets 0.92%(c) 0.30% 0.75% 0.89% 1.87%(e)
================================================= ========== ========== ========== ========== ==========
Portfolio turnover rate 127% 177% 170% 135% 131%
================================================= ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 12.79 $ 11.47 $ 12.26 $ 12.90 $ 10.88
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.40 0.26 0.25 0.36 0.39
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net gains (losses) on securities (both realized
and unrealized) 3.58 2.07 0.53 0.75 2.04
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.98 2.33 0.78 1.11 2.43
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (0.43) (0.26) (0.39) (0.43) (0.34)
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Distributions from net realized capital gains (1.81) (0.75) (1.18) (1.32) (0.07)
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total distributions (2.24) (1.01) (1.57) (1.75) (0.41)
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 14.53 $ 12.79 $ 11.47 $ 12.26 $ 12.90
================================================= ========== ========== ========== ========== ==========
Total return(b) 31.54% 20.61% 5.96% 8.80% 22.71%
================================================= ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 76,444 $ 60,076 $ 55,527 $ 46,642 $ 30,684
================================================= ========== ========== ========== ========== ==========
Ratio of expenses to average net assets 1.00%(d) 1.00%(d) 1.00% 1.00%(d) 1.00%(d)
================================================= ========== ========== ========== ========== ==========
Ratio of net investment income to average net
assets 2.65%(e) 1.98%(e) 1.91% 3.15%(e) 4.67%(e)
================================================= ========== ========== ========== ========== ==========
Portfolio turnover rate 152% 124% 219% 134% 46%
================================================= ========== ========== ========== ========== ==========
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Total returns do not deduct sales charges.
(c) Ratios are based on average net assets of $1,084,846,358.
(d) Ratios of expenses to average net assets prior to reduction of advisory fees
were 1.23%, 1.09%, 1.08%, 1.05% and 1.25% for 1990-88 and 1986-85,
respectively.
(e) Ratios of net investment income to average net assets prior to reduction of
advisory fees were 1.85%, 2.56%, 1.90%, 3.14% and 4.47% for 1990-88 and
1986-85, respectively.
<TABLE>
<CAPTION>
<S> <C> <C>
CLASS B:
Net asset value, beginning of period $ 20.82 $ 21.80
- ---------------------------------------------------------------------------------------------------- -------- --------
Income from investment operations:
Net investment income -- 0.02
- ---------------------------------------------------------------------------------------------------- -------- --------
Net gains (losses) on securities (both realized and unrealized) 0.51 (0.21)
- ---------------------------------------------------------------------------------------------------- -------- --------
Total from investment operations 0.51 (0.19)
- ---------------------------------------------------------------------------------------------------- -------- --------
Less distributions:
Dividends from net investment income -- (0.02)
- ---------------------------------------------------------------------------------------------------- -------- --------
Distributions from net realized capital gains (0.20) (0.77)
- ---------------------------------------------------------------------------------------------------- -------- --------
Total Distributions (0.20) (0.79)
- ---------------------------------------------------------------------------------------------------- -------- --------
Net asset value, end of period $ 21.13 $ 20.82
==================================================================================================== ======== ========
Total return(a) 2.46% (0.74)%
==================================================================================================== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $680,119 $ 63,215
==================================================================================================== ======== ========
Ratio of expenses to average net assets 1.90%(b) 1.85%(c)
==================================================================================================== ======== ========
Ratio of net investment income (loss) to average net assets 0.00%(b) (0.46)%(c)
==================================================================================================== ======== ========
Portfolio turnover rate 127% 177%
==================================================================================================== ======== ========
</TABLE>
(a) Total returns do not deduct contingent deferred sales charges and for
periods less than one year are not annualized.
(b) Ratios are annualized and based on average net assets of $359,607,861.
(c) Annualized.
F-140
