<PAGE> 1
[AIM LOGO APPEARS HERE]
(GRAPHIC COLLAGE APPEARS HERE)
AIM GOVERNMENT
SECURITIES FUND
SEMIANNUAL REPORT
JUNE 30, 1995
<PAGE> 2
AIM GOVERNMENT SECURITIES FUND
For shareholders who seek a high level of current income and relative
price stability by investing in a portfolio of U.S. government securities.
ABOUT FUND PERFORMANCE DATA THROUGHOUT THIS REPORT:
o AIM Government Securities Fund's performance figures are historical and
reflect reinvestment of all distributions and changes in net asset value.
Unless otherwise indicated, Fund results were computed without a sales
charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B share
performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from
5% to 0% over seven years. The performance of the Fund's Class B shares
will differ from that of Class A shares. Total return reflects
reinvestment of all distributions.
o The Fund's investment return and principal value will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
o The Fund's portfolio composition may change and there is no assurance the
Fund will continue to hold these same securities.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o An investment cannot be made in any indexes listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
for periods ended June 30, 1995
<TABLE>
<CAPTION>
Without With
Sales Charge Sales Charge
------------ ------------
<S> <C> <C>
CLASS A SHARES
Inception (4/28/87) 7.72% 7.08%
5 Years 7.61 6.57
1 Year 9.95 4.78
6 Months 9.62 4.39
CLASS B SHARES
Inception (9/7/93) 2.44% 0.47%
1 Year 8.92 3.92
6 Months 9.05 4.05
</TABLE>
Six-month performance includes reinvested distributions of $0.36 and $0.321 for
Class A and Class B shares, respectively.
- --------------------------------------------------------------------------------
<PAGE> 3
CHAIRMAN'S LETTER
Dear Shareholder:
Following a dramatic rally in bond prices, AIM Government
Securities Fund closed the six months ended June 30, 1995,
[PHOTO of with an impressive total return of 9.62% for Class A shares,
Charles T. Bauer, and 9.05% for Class B shares.
Chairman of Even within a strong market, skilled investment
the Board of management was still the distinguishing factor among bond
the Fund, funds. The Fund managed to provide a higher yield than the
APPEARS HERE] benchmark 30-year U.S. Treasury bond--which yielded 6.62%
as of June 30, 1995--with less price volatility than the
five-year U.S. Treasury note.
The Fund's 30-day yield was 6.17% for Class A shares and 5.63% for Class B
shares, based on maximum offering price as of June 30, 1995. The yield
calculation reflects the yield to maturity of the securities in the portfolio,
and includes both interest and amortization of any discount or premium to the
face value of the securities.
The Fund's net assets increased by almost 9% to $197.6 million during the
six months ended June 30, 1995. Net asset value per Class A share increased to
$9.48 from $8.99. Class B shares increased to $9.47 from $8.99 per share.
We remain committed to managing your Fund according to AIM's
research-based, quality-oriented, investment discipline. We believe our
faithful application of this philosophy has been a major contributor to AIM's
growth. In the first six months of this year, total assets under AIM's
management increased by more than 18% to approximately $32.5 billion. While
part of this growth can be attributed to favorable market conditions, it also
reflects the addition of more than 320,000 shareholder accounts during the
period.
AIM Government Securities Fund has achieved positive total returns in seven
of the last eight calendar years. While the Fund has fluctuated with changing
markets during those years, and past performance cannot guarantee future
results, shareholders who have retained a long-term perspective have enjoyed
the greatest returns on their investment.
We appreciate your continued confidence in AIM Government Securities Fund.
As always, we are ready to respond to your questions or comments about this
report. Please call Client Services at 800-959-4246 during normal business
hours. For automated account information 24 hours a day, call the AIM Investor
Line toll-free at 800-246-5463.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 4
DISCUSSION & ANALYSIS
---------
Long-term
government bonds
actually outper-
formed stocks
for most of the first
six months of 1995.
---------
BOND PERFORMANCE IMPROVES IN 1995
Following 1994, when bonds had one of their worst years on record, investors
were more than ready for good news.
It came in the form of positive evidence that the Federal Reserve Board's
long sought after "soft landing" for the economy--a strategy to slow growth,
but not to the point of recession--was working. More than a year after the Fed
began efforts to slow the economy to a more sustainable 2.5% annual pace, the
results were in--a 2.7% annual growth rate in the first quarter of 1995 showed
the economy had slowed decidedly from the 5.1% annual rate it logged in the
fourth quarter of 1994.
The news was a tonic for investors who could relax the inflation vigil and
take advantage of opportunity abounding in financial markets. Falling interest
rates boosted values of existing fixed-income securities, with higher quality
issues attracting the most investors.
For good reason: even though record-breaking levels in stock prices have
snatched the majority of media attention, long-term government bonds actually
outperformed stocks for most of the first six months of 1995. As of June 30,
1995, long-term government bonds returned almost 20%--compared to 20.15% for
the Standard & Poor's Composite Index of 500 stocks (S&P 500)--and about 12%
in the second quarter of 1995 compared to just over 9.5% for stocks. The
unmanaged S&P 500 is considered by investors to be representative of the stock
market in general.
Short- and intermediate-term U.S. Treasury notes also posted strong gains.
During the six months ended June 30, 1995, the U.S. Treasury two-year note
declined to a yield of 5.79% from 7.69% at the end of 1994; yield on the
five-year note declined to 5.97% from 7.83%.
During the second quarter of 1995, economic growth dropped back to an
annual rate of less than 1%. Government bonds, particularly the five-year and
10-year U.S. Treasury notes, rallied as investors began to anticipate that the
Fed would ease short-term interest rates. Mortgage-backed securities lagged the
performance of 10-year U.S. Treasury notes, which have a similar average life,
as investors anticipated that lower interest rates could encourage homeowners
to prepay mortgages.
================================================================================
CURRENT YIELD ADVANTAGE
30-DAY YIELD AS OF 6/30/95.
[BAR CHART APPEARS HERE DEPICTING 30-DAY YIELD AS OF JUNE 30, 1995 FOR
6-MONTH CDs (4.96%)* AND AIM GOVERNMENT SECURITIES FUND CLASS A (6.17%)]
5.63% is the 30-day yield for the Fund's Class B shares as of June 30, 1995.
*Bank certificates of deposit, which are insured by the FDIC for up to
$100,000, are short-term investments that pay fixed principal and interest, but
are subject to fluctuating rollover rates and early withdrawal penalties. CD
income is calculated using the six-month annualized average monthly CD rate
reported by the Federal Reserve. Fund shares are not insured and their value
will vary with market conditions.
The historical return of long-term government bonds has been about 5% per
year according to Ibbotson Associates. In the first six months of 1995, bonds
delivered almost four times that average.
Overall, the performance of government bond funds during the reporting
period helped investors to regain some of the performance given up in 1994. The
total return for AIM Government Securities Fund on Class A and Class B shares
was 9.95% and 8.92%, respectively, for the 12 months ended June 30, 1995.
See important Fund disclosure on inside front cover.
2
<PAGE> 5
YOUR INVESTMENT PORTFOLIO
The dramatic rise in prices for government securities contributed to the
six-month performance for AIM Government Securities Fund as of June 30, 1995.
As interest rates declined, the Fund was able to extend the average maturity on
its portfolio to about nine years, and duration to about five years.
The Fund increased positions in intermediate-term government securities,
with the greatest concentration invested in the three- and eight-year maturity
range. Intermediate-term notes turned out to be among the best performing
sectors among government securities during the reporting period.
Investment in mortgage-backed securities was reduced as prepayment concerns
and the seasonal increase in supply contributed to price pressures for those
securities.
As of June 30, 1995, the Fund had approximately 43% of its assets in
mortgage-backed securities, 36% in U.S. Treasury securities, and 17% in U.S.
agency securities. Using a balanced investment approach across all government
sectors, the Fund's portfolio achieved less price volatility than the five-year
U.S. Treasury note while providing a higher distribution yield than the 30-year
U.S. Treasury bond.
=================================================
PORTFOLIO COMPOSITION
(as of 6/30/95)
Mortgage Obligations 42.5%
U.S. Treasury Obligations 36.0
U.S. Agency Obligations 16.5
Cash Equivalents 5.0
As a percentage of total investments.
=================================================
MORTGAGE OBLIGATION BREAKDOWN
(as of 6/30/95)
FNMA 39.41%
FHLMC 30.62
GNMA 29.97
Of course, the Fund's portfolio composition is subject to change and there
is no guarantee the Fund will continue to hold any particular security.
Standard & Poor's Corporation, a widely known credit rating agency,
assigned the Fund their highest possible ratings of AAAf for credit quality and
a risk rating of aa. These ratings are historical and are based on an annual
analysis of the Fund's portfolio credit quality, composition, and management.
OUTLOOK FOR THE FUTURE
One important message revealed by the bond market's impressive performance so
far this year: investors believe inflation is not a problem, even with moderate
economic growth. As economic growth slowed in the second quarter to
significantly less than the Fed's targeted range for optimal economic growth,
the central bank demonstrated it also was a recession-fighter.
The Fed recently lowered the federal funds rate on overnight loans between
banks by 0.25%--the first such action by the central bank since September
1992. The move, though widely anticipated, was nonetheless celebrated in stock
and bond markets. Major banks such as Citibank, Chemical Bank, and Chase
Manhattan lowered their prime lending rates from the highest point in almost
four years.
While the steep decline in bond yields appears to be largely over, there
seems to be little concern over inflation, and confidence in the central
bank's monetary policy remains high. Further, analysts believe there could be
an additional reduction in interest rates later in the year given that the Fed
has not, in the past, refrained from a policy of easing after a single rate cut
of 0.25%.
Rather than try to determine the future direction of interest rates and
financial markets, AIM Government Securities Fund continues its focus on
generating optimal current income with reasonable risk. While past performance
is no guarantee of comparable future results, the Fund's disciplined approach
to security selection has enabled the Fund to deliver positive total returns in
all but one calendar year since its inception in 1987.
See important Fund disclosure on inside front cover.
3
<PAGE> 6
FINANCIALS
SCHEDULE OF INVESTMENTS
June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCIES-67.39%
FEDERAL HOME LOAN BANK BOARD-6.53%
Medium term notes
$ 3,000,000 8.32%, 12/13/99 $ 3,079,860
- --------------------------------------------------------------------------------------------
4,000,000 7.31%, 07/06/01 4,187,560
- --------------------------------------------------------------------------------------------
2,500,000 7.78%, 10/19/01 2,685,875
- --------------------------------------------------------------------------------------------
2,800,000 7.36%, 07/01/04 2,964,052
- --------------------------------------------------------------------------------------------
12,917,347
- --------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION-14.97%
Pass through certificates
10,837,753 9.00%, 12/01/05 to 09/01/20 11,313,601
- --------------------------------------------------------------------------------------------
53,382 8.00%, 07/01/06 to 12/01/06 54,965
- --------------------------------------------------------------------------------------------
5,832,203 8.50%, 07/01/07 to 04/01/25 6,019,075
- --------------------------------------------------------------------------------------------
5,280,553 10.50%, 09/01/09 to 01/01/21 5,739,221
- --------------------------------------------------------------------------------------------
79,343 10.00%, 11/01/11 to 02/01/16 85,168
- --------------------------------------------------------------------------------------------
43,230 12.00%, 02/01/13 48,200
- --------------------------------------------------------------------------------------------
6,019,568 9.50%, 04/01/25 6,327,952
- --------------------------------------------------------------------------------------------
29,588,182
- --------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-31.24%
Debentures
4,000,000 8.20%, 03/10/98 4,211,120
- --------------------------------------------------------------------------------------------
3,500,000 8.625%, 11/10/04 3,767,785
- --------------------------------------------------------------------------------------------
4,500,000 8.50%, 02/01/05 4,836,870
- --------------------------------------------------------------------------------------------
3,000,000 7.875%, 02/24/05 3,290,430
- --------------------------------------------------------------------------------------------
Medium term notes
3,500,000 7.68%, 12/01/97 3,620,260
- --------------------------------------------------------------------------------------------
3,700,000 7.375%, 03/28/05 3,932,841
- --------------------------------------------------------------------------------------------
Pass through certificates
5,317,659 8.50%, 01/01/07 to 05/01/24 5,503,403
- --------------------------------------------------------------------------------------------
2,405,535 10.50%, 03/01/14 to 07/01/19 2,635,528
- --------------------------------------------------------------------------------------------
5,327,813 9.50%, 07/01/16 to 08/01/22 5,610,773
- --------------------------------------------------------------------------------------------
977,740 8.00%, 03/01/25 996,670
- --------------------------------------------------------------------------------------------
15,000,000 7.50%, 07/17/25 TBA(a) 15,065,625
- --------------------------------------------------------------------------------------------
8,000,000 8.50%, 07/17/25 TBA(a) 8,265,000
- --------------------------------------------------------------------------------------------
61,736,305
- --------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-14.65%
Pass through certificates
4,726,309 9.00%, 10/15/08 to 11/15/21 4,989,013
- --------------------------------------------------------------------------------------------
3,490,744 9.50%, 06/15/09 to 12/15/20 3,729,005
- --------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 7
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-(continued)
Pass through certificates-(continued)
$10,358,532 10.00%, 11/15/09 to 12/15/20 $11,293,534
- --------------------------------------------------------------------------------------------
379,354 11.00%, 12/15/09 to 12/15/15 421,078
- --------------------------------------------------------------------------------------------
665,641 13.50%, 07/15/10 to 04/15/15 771,305
- --------------------------------------------------------------------------------------------
344,359 12.50%, 11/15/10 393,965
- --------------------------------------------------------------------------------------------
669,409 13.00%, 01/15/11 to 05/15/15 772,109
- --------------------------------------------------------------------------------------------
1,141,200 12.00%, 01/15/13 to 07/15/15 1,290,971
- --------------------------------------------------------------------------------------------
3,034,419 10.50%, 07/15/13 to 10/15/21 3,343,110
- --------------------------------------------------------------------------------------------
1,900,225 8.00%, 03/15/23 1,945,926
- --------------------------------------------------------------------------------------------
28,950,016
- --------------------------------------------------------------------------------------------
Total U.S. Government Agencies 133,191,850
- --------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-37.27%
U.S. TREASURY NOTES & BONDS-36.40%
7,000,000 10.50%, 08/15/95 7,039,620
- --------------------------------------------------------------------------------------------
5,000,000 11.50%, 11/15/95 5,104,850
- --------------------------------------------------------------------------------------------
4,000,000 8.625%, 08/15/97 4,217,520
- --------------------------------------------------------------------------------------------
2,000,000 8.875%, 11/15/97 2,130,980
- --------------------------------------------------------------------------------------------
3,000,000 7.75%, 11/30/99 3,199,980
- --------------------------------------------------------------------------------------------
16,500,000 7.25%, 05/15/04 to 08/15/22 17,562,585
- --------------------------------------------------------------------------------------------
8,000,000 6.50%, 05/15/05 8,169,120
- --------------------------------------------------------------------------------------------
13,000,000 7.50%, 11/15/16 to 11/15/24 14,296,945
- --------------------------------------------------------------------------------------------
4,000,000 8.125%, 08/15/19 4,657,760
- --------------------------------------------------------------------------------------------
1,000,000 7.125%, 02/15/23 1,053,430
- --------------------------------------------------------------------------------------------
4,000,000 7.625%, 02/15/25 4,514,040
- --------------------------------------------------------------------------------------------
71,946,830
- --------------------------------------------------------------------------------------------
U.S. TREASURY STRIPS-0.87%
1,000,000 6.81%(b), 02/15/12 327,600
- --------------------------------------------------------------------------------------------
7,000,000 6.71%(b), 02/15/19 1,388,100
- --------------------------------------------------------------------------------------------
1,715,700
- --------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 73,662,530
- --------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
REPURCHASE AGREEMENT-5.43%(c)
Daiwa Securities America Inc.
$10,724,034 6.20%, 07/03/95(d) $10,724,034
- --------------------------------------------------------------------------------------------
Total Repurchase Agreement 10,724,034
- --------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 110.09% 217,578,414
- --------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- (10.09%) (19,941,841)
- --------------------------------------------------------------------------------------------
NET ASSETS -- 100.00% $197,636,573
============================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) At 06/30/95, cost of securities purchased on a when-issued basis totaled
$23,333,906. These securities are also subject to dollar roll
transactions. See Note 1 Section C of Notes to Financial Statements.
(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. The investments in some
repurchase agreements are through participation in joint accounts with
other mutual funds managed by the investment advisor.
(d) Joint repurchase agreement entered into 06/30/95 with a maturing value
of $186,890,118. Collateralized by $195,572,000 U.S. Treasury
obligations, 0% to 8.375% due 06/27/96 to 08/15/08.
Abbreviations:
TBA - To Be Announced
See Notes to Financial Statements.
6
<PAGE> 9
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $211,448,320) $217,578,414
- ----------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 1,515,624
- ----------------------------------------------------------------------------------------
Interest 2,658,897
- ----------------------------------------------------------------------------------------
Investment for deferred compensation plan 12,058
- ----------------------------------------------------------------------------------------
Other assets 101,572
- ----------------------------------------------------------------------------------------
Total assets 221,866,565
- ----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 23,333,906
- ----------------------------------------------------------------------------------------
Fund shares redeemed 249,926
- ----------------------------------------------------------------------------------------
Dividends 387,662
- ----------------------------------------------------------------------------------------
Deferred compensation plan 12,058
- ----------------------------------------------------------------------------------------
Accrued advisory fees 79,957
- ----------------------------------------------------------------------------------------
Accrued administrative services fees 1,269
- ----------------------------------------------------------------------------------------
Accrued distribution fees 133,693
- ----------------------------------------------------------------------------------------
Accrued transfer agent fees 4,872
- ----------------------------------------------------------------------------------------
Accrued operating expenses 26,249
- ----------------------------------------------------------------------------------------
Total liabilities 24,229,992
- ----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $197,636,573
========================================================================================
NET ASSETS:
Class A $160,825,891
========================================================================================
Class B $ 36,810,682
========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE
Class A 16,957,672
========================================================================================
Class B 3,885,189
========================================================================================
Class A:
Net asset value and redemption price per share $ 9.48
========================================================================================
Offering price per share:
(Net asset value of $9.48 divided by 95.25%) $ 9.95
========================================================================================
Class B:
Net asset value and offering price per share $ 9.47
========================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 10
FINANCIALS
STATEMENT OF OPERATIONS
For the six months ended June 30, 1995
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 8,291,517
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 465,582
- ----------------------------------------------------------------------------------------
Custodian fees 23,275
- ----------------------------------------------------------------------------------------
Distribution fees -- Class A 197,445
- ----------------------------------------------------------------------------------------
Distribution fees -- Class B 141,383
- ----------------------------------------------------------------------------------------
Administrative services fees 35,643
- ----------------------------------------------------------------------------------------
Interest 58,417
- ----------------------------------------------------------------------------------------
Professional fees 41,283
- ----------------------------------------------------------------------------------------
Transfer agent fees -- Class A 113,396
- ----------------------------------------------------------------------------------------
Transfer agent fees -- Class B 23,162
- ----------------------------------------------------------------------------------------
Trustees' fees 3,639
- ----------------------------------------------------------------------------------------
Other 59,574
- ----------------------------------------------------------------------------------------
Total expenses 1,162,799
- ----------------------------------------------------------------------------------------
Net investment income 7,128,718
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities (1,790,016)
- ----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 11,877,252
- ----------------------------------------------------------------------------------------
Net gain on investment securities 10,087,236
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $17,215,954
========================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1995 and the year ended December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 7,128,718 $10,649,346
- ---------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (1,790,016) (10,486,627)
- ---------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities 11,877,252 (5,639,126)
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 17,215,954 (5,476,407)
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (6,282,755) (7,962,122)
- ---------------------------------------------------------------------------------------------------------------------
Class B (992,945) (834,681)
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on investment securities:
Class A -- (652,519)
- ---------------------------------------------------------------------------------------------------------------------
Class B -- (80,521)
- ---------------------------------------------------------------------------------------------------------------------
Return of capital:
Class A -- (1,369,875)
- ---------------------------------------------------------------------------------------------------------------------
Class B -- (165,673)
- ---------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (5,941,029) 33,619,200
- ---------------------------------------------------------------------------------------------------------------------
Class B 11,881,500 18,932,857
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets 15,880,725 36,010,259
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 181,755,848 145,745,589
- ---------------------------------------------------------------------------------------------------------------------
End of period $197,636,573 $181,755,848
=====================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $202,656,676 $196,716,205
- ---------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 12,173 159,155
- ---------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of investment securities (11,162,370) (9,372,354)
- ---------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities 6,130,094 (5,747,158)
- ---------------------------------------------------------------------------------------------------------------------
$197,636,573 $181,755,848
=====================================================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
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 the 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.
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
10
<PAGE> 13
FINANCIALS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (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.
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. 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 pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended June 30, 1995, AIM
was reimbursed $35,643 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
reimburse A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the six months ended June 30, 1995, the Fund paid
AFS $80,924 for such services.
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 six months ended June 30, 1995, the Class A
shares and the Class B shares paid AIM Distributors $197,445 and $141,383,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $51,567 from sales of the Class A
shares of the Fund during the six months ended June 30, 1995. 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 six months ended June 30,
1995, AIM
11
<PAGE> 14
FINANCIALS
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
Distributors received $43,334 in contingent deferred sales charges imposed on
redemptions of Fund shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AIM Distributors and AFS.
During the six months ended June 30, 1995, the Fund paid legal fees of $667
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel 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 six months ended June 30, 1995 was
$192,312,357 and $172,389,123, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $6,217,334
- ------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (87,240)
- ------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $6,130,094
============================================================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 5 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 1995 and the
year ended December 31, 1994 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1995 DECEMBER 31, 1994
---------------------- -----------------------
SHARES VALUE SHARES VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Sold:
Class A 2,389,717 $22,120,238 9,095,532 $84,555,557
- ----------------------------------------------------------------------------------------------------------------
Class B 1,622,331 15,025,087 2,442,865 23,125,558
- ----------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 505,292 4,677,943 815,446 7,649,630
- ----------------------------------------------------------------------------------------------------------------
Class B 68,230 632,417 72,145 670,468
- ----------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (3,540,846) (32,739,210) (6,202,526) (58,585,987)
- ----------------------------------------------------------------------------------------------------------------
Class B (410,795) (3,776,004) (523,327) (4,863,169)
- ----------------------------------------------------------------------------------------------------------------
633,929 $5,940,471 5,700,135 $52,552,057
================================================================================================================
</TABLE>
12
<PAGE> 15
FINANCIALS
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during the six months ended June 30, 1995, 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 six months ended June 30, 1995, the year ended December 31, 1994 and the
period September 7, 1993 (date sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------------------------------------------------
CLASS A: 1995 1994 1993 1992(a) 1991 1990
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.99 $ 10.05 $ 10.19 $ 10.34 $ 9.95 $ 9.91
- ----------------------------------------------- -------- -------- -------- -------- -------- -------
Income from investment operations:
Net investment income 0.35 0.68 0.74 0.77 0.82 0.87
- ----------------------------------------------- -------- -------- -------- -------- -------- -------
Net gains (losses) on securities (both
realized and unrealized) 0.50 (1.02) (0.04) (0.15) 0.41 0.01
- ----------------------------------------------- -------- -------- -------- -------- -------- -------
Total from investment operations 0.85 (0.34) 0.70 0.62 1.23 0.88
- ----------------------------------------------- -------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.36) (0.58) (0.70) (0.74) (0.84) (0.84)
- ----------------------------------------------- -------- -------- -------- -------- -------- -------
Distributions from net realized capital gains -- (0.04) (0.14) (0.03) -- --
- ----------------------------------------------- -------- -------- -------- -------- -------- -------
Distributions from capital -- (0.10) -- -- -- --
- ----------------------------------------------- -------- -------- -------- -------- -------- -------
Total distributions (0.36) (0.72) (0.84) (0.77) (0.84) (0.84)
- ----------------------------------------------- -------- -------- -------- -------- -------- -------
Net asset value, end of period $ 9.48 $ 8.99 $ 10.05 $ 10.19 $ 10.34 $ 9.95
=============================================== ======== ======== ======== ======== ======== =======
Total return(b) 9.62% (3.44)% 7.07% 6.26% 12.98% 9.39%
=============================================== ======== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $160,826 $158,341 $139,586 $123,484 $101,409 $61,463
=============================================== ======== ======== ======== ======== ======== =======
Ratio of expenses to average net assets(d) 1.14%(c) 1.04% 1.00% 0.98% 1.00% 1.00%
=============================================== ======== ======== ======== ======== ======== =======
Ratio of net investment income to average net
assets(e) 7.77%(c) 7.34% 7.08% 7.53% 8.15% 8.85%
=============================================== ======== ======== ======== ======== ======== =======
Portfolio turnover rate 99% 109% 110% 42% 26% 16%
=============================================== ======== ======== ======== ======== ======== =======
<CAPTION>
DECEMBER 31,
---------------------------------
CLASS A: 1989 1988 1987
------- ------- -------
<S> <<C> <C> <C>
Net asset value, beginning of period $ 9.70 $ 9.92 $ 10.00
- ----------------------------------------------- ------- ------- -------
Income from investment operations:
Net investment income 0.90 0.89 0.55
- ----------------------------------------------- ------- ------- -------
Net gains (losses) on securities (both
realized and unrealized) 0.15 (0.27) (0.14)
- ----------------------------------------------- ------- ------- -------
Total from investment operations 1.05 0.62 0.41
- ----------------------------------------------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.84) (0.84) (0.49)
- ----------------------------------------------- ------- ------- -------
Distributions from net realized capital gains -- -- --
- ----------------------------------------------- ------- ------- -------
Distributions from capital -- -- --
- ----------------------------------------------- ------- ------- -------
Total distributions (0.84) (0.84) (0.49)
- ----------------------------------------------- ------- ------- -------
Net asset value, end of period $ 9.91 $ 9.70 $ 9.92
============================================== ======= ======= =======
Total return(b) 11.28% 6.43% 4.18%
============================================== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $57,077 $48,372 $28,052
============================================== ======= ======= =======
Ratio of expenses to average net assets(d) 1.00% 1.00% 1.20%(f)
============================================== ======= ======= =======
Ratio of net investment income to average net
assets(e) 9.10% 9.11% 8.64%(f)
============================================== ======= ======= =======
Portfolio turnover rate 15% 15% 35%
============================================== ======= ======= =======
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average net assets of $159,265,242.
(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.
13
<PAGE> 16
FINANCIALS
NOTE 6 - FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------
1995 1994 1993
-------- ------- ------
<S> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 8.99 $ 10.04 $10.44
- ----------------------------------------------------------------------------------- ------- ------- ------
Income from investment operations:
Net investment income 0.32 0.61 0.21
- ----------------------------------------------------------------------------------- ------- ------- ------
Net gains (losses) on securities (both realized and unrealized) 0.48 (1.02) (0.27)
- ----------------------------------------------------------------------------------- ------- ------- ------
Total from investment operations 0.80 (0.41) (0.06)
- ----------------------------------------------------------------------------------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.32) (0.50) (0.20)
- ----------------------------------------------------------------------------------- ------- ------- ------
Distributions from net realized capital gains -- (0.04) (0.14)
- ----------------------------------------------------------------------------------- ------- ------- ------
Distributions from capital -- (0.10) --
- ----------------------------------------------------------------------------------- ------- ------- ------
Total distributions (0.32) (0.64) (0.34)
- ----------------------------------------------------------------------------------- ------- ------- ------
Net asset value, end of period $ 9.47 $ 8.99 $10.04
=================================================================================== ======= ======= ======
Total return(a) 9.05% (4.13)% (0.52)%
=================================================================================== ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $36,811 $23,415 $6,160
=================================================================================== ======= ======= ======
Ratio of expenses to average net assets(c) 1.87%(b) 1.82% 1.71%(e)
=================================================================================== ======= ======= ======
Ratio of net investment income to average net assets(d) 7.03%(b) 6.56% 6.37%(e)
=================================================================================== ======= ======= ======
Portfolio turnover rate 99% 109% 110%
=================================================================================== ======= ======= ======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $28,510,961.
(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.
14
<PAGE> 17
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15
<PAGE> 18
This page intentionally left blank.
16
<PAGE> 19
TRUSTEES & OFFICERS
<TABLE>
<S> <C> <C>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
11 Greenway Plaza
Charles T. Bauer Charles T. Bauer Suite 1919
Chairman and Chief Executive Officer Chairman Houston, TX 77046
A I M Management Group Inc.
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director, President, and
Chief Executive Officer John J. Arthur A I M Advisors, Inc.
COMSAT Corporation Senior Vice President and Treasurer 11 Greenway Plaza
Suite 1919
Owen Daly II Gary T. Crum Houston, TX 77046
Director Senior Vice President
Cortland Trust Inc.
Carol F. Relihan TRANSFER AGENT
Carl Frischling Vice President and Secretary
Partner A I M Fund Services, Inc.
Kramer, Levin, Naftalis, Nessen, Dana R. Sutton P.O. Box 4739
Kamin & Frankel Vice President Houston, TX 77210-4739
and Assistant Treasurer
Robert H. Graham
President Robert G. Alley CUSTODIAN
A I M Management Group Inc. Vice President
State Street Bank & Trust Co.
John F. Kroeger Stuart W. Coco 225 Franklin Street
Formerly, Consultant Vice President Boston, MA 02110
Wendell & Stockel Associates, Inc.
Melville B. Cox
Lewis F. Pennock Vice President COUNSEL TO THE FUND
Attorney
Karen Dunn Kelley Ballard Spahr
Ian W. Robinson Vice President Andrews & Ingersoll
Consultant; Former Executive 1735 Market Street
Vice President and Jonathan C. Schoolar Philadelphia, PA 19103
Chief Financial Officer Vice President
Bell Atlantic Management
Services, Inc. P. Michelle Grace COUNSEL TO THE TRUSTEES
Assistant Secretary
Louis S. Sklar Kramer, Levin, Naftalis,
Executive Vice President Nancy L. Martin Nessen, Kamin & Frankel
Hines Interests Assistant Secretary 919 Third Avenue
Limited Partnership New York, NY 10022
Ofelia M. Mayo
Assistant Secretary
DISTRIBUTOR
Kathleen J. Pflueger
Assistant Secretary A I M Distributors, Inc.
11 Greenway Plaza
Samuel D. Sirko Suite 1919
Assistant Secretary Houston, TX 77046
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
This report may be distributed only to current shareholders or to persons
who have received a current Fund prospectus.
17
<PAGE> 20
A I M Distributors, Inc. ---------------
[AIM LOGO 11 Greenway Plaza, Suite 1919 BULK RATE
APPEARS HERE] Houston, Texas 77046 U.S. POSTAGE
PAID
Houston, TX
THE AIM FAMILY OF FUNDS(R) Permit No. 2332
---------------
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH [FULL PAGE PHOTO OF
AIM Global Utilities Fund** AIM MANAGEMENT GROUP
HIGH CURRENT INCOME OFFICE BUILDING]
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Conn.
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Government Securities Fund
HIGH DEGREE OF SAFETY AND CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND CURRENT INCOME
AIM Money Market Fund
STABILITY, LIQUIDITY, AND CURRENT TAX-FREE INCOME
AIM Tax-Exempt Cash Fund
*AIM Aggressive Growth Fund was closed to new investors on
July 18, 1995. **On May 1, 1995, AIM Utilities Fund broadened its investment
strategy to permit up to 80% of its total assets to be invested in foreign
securities, and was renamed AIM Global Utilities Fund. For more complete
information about any AIM Fund(s), including sales charges and expenses,
ask your financial consultant or securities dealer for a free prospectus(es).
Please read the prospectus(es) carefully before you invest or send money.
