<PAGE> 1
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R)
AIM BALANCED FUND
AIM GLOBAL UTILITIES FUND
AIM GROWTH FUND
AIM HIGH YIELD FUND
AIM INCOME FUND
AIM INTERMEDIATE GOVERNMENT FUND
AIM MONEY MARKET FUND
AIM MUNICIPAL BOND FUND
AIM VALUE FUND
(SERIES PORTFOLIOS OF AIM FUNDS GROUP)
PROSPECTUS
MAY 1, 1996
This Prospectus contains information about the nine mutual
funds listed above (the "Funds") which are separate series
portfolios of AIM Funds Group (the "Trust"), a Delaware
business trust. The investment objectives of the Funds are
listed on the inside cover page.
This Prospectus sets forth basic information about the
Funds that prospective investors should know before
investing. It should be read and retained for future
reference. A Statement of Additional Information, dated
May 1, 1996, has been filed with the United States
Securities and Exchange Commission ("SEC") and is
incorporated herein by reference. The Statement of
Additional Information is available without charge upon
written request to the Trust at P.O. Box 4739, Houston,
Texas 77210-4739 or by calling (800) 347-4246.
AIM HIGH YIELD FUND MAY INVEST UP TO 100% OF ITS NET ASSETS
IN NON-INVESTMENT GRADE DEBT SECURITIES, COMMONLY REFERRED
TO AS "JUNK BONDS." JUNK BONDS ARE CONSIDERED TO BE
SPECULATIVE, AND ENTAIL GREATER RISKS, INCLUDING DEFAULT
RISKS, THAN THOSE FOUND IN HIGHER RATED SECURITIES.
PURCHASERS SHOULD CAREFULLY CONSIDER THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THIS FUND PRIOR TO INVESTING. SEE
"INVESTMENT PROGRAMS -- AIM HIGH YIELD FUND," "CERTAIN
INVESTMENT STRATEGIES AND POLICIES -- RISK FACTORS
REGARDING NON-INVESTMENT GRADE DEBT SECURITIES" AND
"APPENDIX C -- DESCRIPTIONS OF RATING CATEGORIES."
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND THE FUNDS' SHARES
ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE
FUNDS INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
THERE CAN BE NO ASSURANCE THAT AIM MONEY MARKET FUND WILL
BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
INVESTMENT OBJECTIVES
- --------------------------------------------------------------------------------
The investment objectives of the Funds are as follows:
AIM BALANCED FUND: To achieve as high a total return as possible, consistent
with preservation of capital, by investing in a broadly diversified portfolio of
high-yielding securities, including common stocks, preferred stocks, convertible
securities and bonds.
AIM GLOBAL UTILITIES FUND: To achieve a high level of current income, and as a
secondary objective to achieve capital appreciation, by investing primarily in
the common and preferred stocks of public utility companies.
AIM GROWTH FUND: To achieve long-term growth of capital by investing primarily
in the common stocks of established medium-to-large size companies with
prospects for above-average, long-term earnings growth.
AIM HIGH YIELD FUND: To achieve a high level of current income by investing
primarily in publicly traded debt securities of less than investment grade.
AIM INCOME FUND: To achieve a high level of current income consistent with
reasonable concern for safety of principal by investing primarily in fixed rate
corporate debt and U.S. Government obligations.
AIM INTERMEDIATE GOVERNMENT FUND: To achieve a high level of current income
consistent with reasonable concern for safety of principal by investing in debt
securities issued, guaranteed or otherwise backed by the United States
Government.
AIM MONEY MARKET FUND: To provide as high a level of current income as is
consistent with the preservation of capital and liquidity.
AIM MUNICIPAL BOND FUND: To achieve a high level of current income exempt from
federal income taxes consistent with the preservation of principal by investing
in a diversified portfolio of municipal bonds.
AIM VALUE FUND: To achieve long-term growth of capital by investing primarily
in equity securities judged by the Fund's investment advisor to be undervalued
relative to the investment advisor's appraisal of the current or projected
earnings of the companies issuing the securities, or relative to current market
values of assets owned by the companies issuing the securities or relative to
the equity market generally. Income is a secondary objective.
SUMMARY
- --------------------------------------------------------------------------------
THE FUNDS. AIM Funds Group (the "Trust") is a Delaware business trust
organized as an open-end, series, management investment company. Currently the
Trust offers nine separate series portfolios, each of which pursues unique
investment objectives. This Prospectus relates to all of such portfolios (the
"Funds"), which are listed on the cover.
THE ADVISOR. A I M Advisors, Inc. ("AIM") serves as each Fund's investment
advisor pursuant to a Master Investment Advisory Agreement (the "Advisory
Agreement").
AIM, together with its affiliates, manages or advises 43 investment company
portfolios. As of April 1, 1996, the total assets of the investment company
portfolios advised or managed by AIM or its affiliates were approximately $48.2
billion. Under the terms of the Advisory Agreement, AIM supervises all aspects
of each Fund's operations and provides investment advisory services to each
Fund. As compensation for these services AIM receives a fee based on each Fund's
average daily net assets. Under a Master Administrative Services Agreement, AIM
may be reimbursed by each Fund for its costs of performing, or arranging for the
performance of, certain accounting, shareholder servicing and other
administrative services for the Funds.
MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A or Class B shares
of each Fund and, in the case of AIM MONEY MARKET FUND, Class C shares, all of
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions."
Class A Shares -- Shares are offered at net asset value plus any
applicable initial sales charge.
Class B Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a maximum contingent deferred
sales charge of 5% on certain redemptions made within six years from the
date such shares were purchased. Class B shares automatically convert to
Class A shares of the same Fund eight years following the end of the
calendar month in which a purchase was made. Class B shares are subject to
higher expenses than Class A shares.
Class C Shares (AIM MONEY MARKET FUND only) -- Shares are offered at
net asset value, without an initial sales charge and without contingent
deferred sales charges.
SUITABILITY FOR INVESTORS. The Multiple Distribution System permits an
investor to choose the method of purchasing shares that is most beneficial given
the amount of the purchase, the length of time the shares are expected to be
held, whether dividends will be
2
<PAGE> 3
paid in cash or reinvested in additional shares of a Fund and other
circumstances. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares of AIM MONEY MARKET FUND are exchanged for
shares of other funds advised by AIM that are sold with an initial sales charge.
Investors should consider whether, during the anticipated life of their
investment in a Fund, the accumulated distribution fees and any applicable
contingent deferred sales charges on Class B shares prior to conversion would be
less than the initial sales charge and accumulated distribution fees on Class A
shares purchased at the same time, and to what extent such differential would be
offset by the higher return on Class A shares. To assist investors in making
this determination, the table under the caption "Table of Fees and Expenses"
sets forth examples of the charges applicable to each class of shares. Class A
shares will normally be more beneficial than Class B shares to the investor who
qualifies for reduced initial sales charges, as described below. Therefore,
A I M Distributors, Inc. will reject any order for purchase of more than
$250,000 for Class B shares.
PURCHASING SHARES. Initial investments in any class of shares must be at least
$500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the Funds' shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, Texas 77210-4739. See "How to Purchase
Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Funds are among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C shares of the Funds may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set
forth herein. See "Exchange Privilege."
REDEEMING SHARES. Holders of Class A shares may redeem all or a portion of
their shares at net asset value on any business day, generally without charge. A
contingent deferred sales charge of 1% may apply to certain redemptions of Class
A shares, where purchases of $1 million or more were made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
Holders of Class B shares may redeem all or a portion of their shares at net
asset value on any business day, less a contingent deferred sales charge for
redemptions made within six years from the date such shares were purchased.
Class B shares redeemed after six years from the date such shares were purchased
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Holders of Class C shares of AIM MONEY MARKET FUND may redeem all or a portion
of their shares at net asset value on any business day, without charge.
DISTRIBUTIONS. AIM GLOBAL UTILITIES FUND, AIM HIGH YIELD FUND, AIM INCOME
FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MONEY MARKET FUND and AIM MUNICIPAL
BOND FUND currently declare dividends from net investment income on a daily
basis and pay such dividends on a monthly basis. AIM BALANCED FUND currently
declares and pays dividends from net investment income on a quarterly basis. AIM
GROWTH FUND and AIM VALUE FUND currently declare and pay dividends from net
investment income, if any, on an annual basis. All of the Funds make
distributions of realized capital gains, if any, on an annual basis, although
AIM MONEY MARKET FUND may distribute net realized short-term capital gains more
frequently. Dividends and distributions paid with respect to Class A shares of a
Fund may be paid by check, reinvested in additional Class A shares of the Fund
or reinvested in shares of another fund in The AIM Family of Funds, subject to
certain conditions. Dividends and distributions paid with respect to Class B
shares of a Fund may be paid by check or reinvested in additional Class B shares
of other funds in The AIM Family of Funds at net asset value. Dividends and
distributions paid with respect to Class C shares of AIM MONEY MARKET FUND may
be paid by check, reinvested in additional Class C shares of the Fund, or
reinvested in shares of another fund in The AIM Family of Funds, subject to
certain conditions. See "Dividends, Distributions and Tax Matters" and "Special
Plans."
RISK FACTORS. Subject to certain restrictions designed to reduce any
associated risks, AIM MONEY MARKET FUND may invest in securities such as money
market instruments which are not rated (but are determined by AIM to be of
comparable quality to securities which have received the highest ratings),
certain repurchase agreements, and U.S. dollar-denominated obligations issued by
foreign banks. Accordingly, an investment in AIM MONEY MARKET FUND may entail
somewhat different risks from an investment in an investment company which does
not engage in such investment practices. See "Investment Programs."
AIM HIGH YIELD FUND, and to a lesser extent AIM BALANCED FUND, AIM GLOBAL
UTILITIES FUND, AIM INCOME FUND and AIM MUNICIPAL BOND FUND, seek to meet their
respective investment objectives by investing in non-investment grade debt
securities, commonly known as "junk bonds." Investments in junk bonds, while
generally providing greater income and opportunity for gain, may be subject to
greater risks than higher rated securities. Such risks may include: greater
market fluctuations and risk of loss of income and principal, limited liquidity
and secondary market support, greater sensitivity to economic and business
downturns, and certain other risks. See "Certain Investment Strategies and
Policies -- Risk Factors Regarding Non-Investment Grade Debt Securities."
Investors should carefully consider the relative risks and rewards of investing
in each of the above-named Funds prior to investing, and should not consider an
investment in any of those Funds to represent a complete investment program.
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered
service marks and La Familia AIM de Fondos is a service mark of A I M Management
Group Inc.
3
<PAGE> 4
THE FUNDS
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Funds understand
the various costs that an investor will bear, both directly and indirectly.
Except where noted, the fees and expenses set forth in the table are based on
the expenses of the Fund's for the most recent fiscal year.
<TABLE>
<CAPTION>
AIM
AIM GLOBAL AIM AIM AIM
BALANCED UTILITIES GROWTH HIGH YIELD INCOME
FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B A B A B A B A B
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum sales load imposed
on purchase of shares
(as a % of the offering
price)................................ 4.75% None 5.50% None 5.50% None 4.75% None 4.75% None
Maximum sales load on
reinvested dividends.................. None None None None None None None None None None
Deferred sales load (as a
% of original purchase price
or redemption proceeds,
whichever is lower)................... None* 5.0% None* 5.0% None* 5.0% None* 5.0% None* 5.0%
Redemption fees.......................... None None None None None None None None None None
Exchange fee**........................... None None None None None None None None None None
Annual Fund Operating
Expenses (as a % of average net assets)
Management fees(1)....................... 0.75% 0.75% 0.59% 0.59% 0.74% 0.74% 0.53% 0.53% 0.48% 0.48%
Rule 12b-1 distribution
plan payments......................... 0.25% 1.00% 0.25% 1.00% 0.25% 1.00% 0.25% 1.00% 0.25% 1.00%
All other expenses....................... 0.46% 0.48% 0.37% 0.38% 0.29% 0.39% 0.18% 0.20% 0.25% 0.31%
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total fund
operating
expenses....................... 1.46% 2.23% 1.21% 1.97% 1.28% 2.13% 0.96% 1.73% 0.98% 1.79%
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
AIM
INTERMEDIATE AIM AIM AIM
GOVERNMENT MONEY MUNICIPAL VALUE
FUND MARKET FUND BOND FUND FUND
------------ -------------------- ------------ ------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B A B C A B A B
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on
purchase of shares (as a % of
the offering price)........... 4.75% None 5.50% None None 4.75% None 5.50% None
Maximum sales load on reinvested
dividends..................... None None None None None None None None None
Deferred sales load (as a % of
original purchase price or
redemption proceeds, whichever
is lower)..................... None* 5.0% None* 5.0% None None* 5.0% None* 5.0%
Redemption fees.................. None None None None None None None None None
Exchange fee**................... None None None None None None None None None
Annual Fund Operating Expenses (as
a % of average net assets)
Management fees (after fee
waivers)...................... 0.50% 0.50% 0.55% 0.55% 0.55% 0.47% 0.47% 0.62%(2)0.62%(2)
Rule 12b-1 distribution plan
payments...................... 0.25% 1.00% 0.25% 1.00% 0.25% 0.25% 1.00% 0.25% 1.00%
All other expenses(1)............ 0.33% 0.36% 0.23% 0.23% 0.24% 0.16% 0.30% 0.25% 0.32%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total fund operating
expenses............... 1.08% 1.86% 1.03% 1.78% 1.04% 0.88% 1.77% 1.12% 1.94%
===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
- ------------------------
(1) "Management fees" for both classes of AIM BALANCED FUND have been restated
to reflect the current level of such fees. "Other expenses" for Class B
shares of AIM MUNICIPAL BOND FUND have been restated to reflect the
current level of such expenses. In addition, the rules of the SEC require
that the maximum sales charge be reflected in the table even though
certain investors may qualify for reduced sales charges. See "How to
Purchase Shares."
(2) After fee waivers. If management fees were not being waived, they would be
0.63% on both classes of AIM VALUE FUND.
* Purchases of $1 million or more are not subject to an initial sales charge.
However, a contingent deferred sales charge of 1% applies to certain
redemptions made within 18 months from the date such shares were purchased.
See the Investor's Guide, under the caption "How to Redeem Shares --
Contingent Deferred Sales Charge Program for Large Purchases."
** No fee will be charged for exchanges among The AIM Family of Funds; however,
a $5 service fee may be charged for exchanges by accounts of market timers.
4
<PAGE> 5
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EXAMPLES. You would pay the following expenses on a $1,000 investment in Class
A shares of the Funds, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
AIM AIM AIM AIM AIM
AIM GLOBAL AIM HIGH AIM INTERMEDIATE MONEY MUNICIPAL AIM
BALANCED UTILITIES GROWTH YIELD INCOME GOVERNMENT MARKET BOND VALUE
FUND FUND FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year...... $ 62 $ 67 $ 67 $ 57 $ 57 $ 58 $ 65 $ 56 $ 66
3 years..... 91 91 93 77 77 80 86 74 89
5 years..... 123 118 121 98 99 104 109 94 113
10 years.... 214 194 201 160 162 173 174 151 184
</TABLE>
The above examples assume payment of a sales charge at the time of purchase;
actual expenses may vary for purchases of $1 million or more, which are made at
net asset value and are subject to a contingent deferred sales charge for 18
months from the date such shares were purchased.
You would pay the following expenses on a $1,000 investment in Class B shares
of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
AIM AIM AIM AIM AIM
AIM GLOBAL AIM HIGH AIM INTERMEDIATE MONEY MUNICIPAL AIM
BALANCED UTILITIES GROWTH YIELD INCOME GOVERNMENT MARKET BOND VALUE
FUND FUND FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year...... $ 73 $ 70 $ 72 $ 68 $ 68 $ 69 $ 68 $ 68 $ 70
3 years..... 100 92 97 84 86 88 86 86 91
5 years..... 139 126 134 114 117 121 116 116 125
10 years*... 237 210 225 184 189 198 190 185 205
</TABLE>
You would pay the following expenses on the same $1,000 investment in Class B
shares, assuming no redemption at the end of each time period:
<TABLE>
<CAPTION>
AIM AIM AIM AIM AIM
AIM GLOBAL AIM HIGH AIM INTERMEDIATE MONEY MUNICIPAL AIM
BALANCED UTILITIES GROWTH YIELD INCOME GOVERNMENT MARKET BOND VALUE
FUND FUND FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year...... $ 23 $ 20 $ 22 $ 18 $ 18 $ 19 $ 18 $ 18 $ 20
3 years..... 70 62 67 54 56 58 56 56 61
5 years..... 119 106 114 94 97 101 96 96 105
10 years*... 237 210 225 184 189 198 190 185 205
</TABLE>
You would pay the following expenses on a $1,000 investment in Class C shares
of AIM MONEY MARKET FUND, assuming (1) a 5% annual return and (2) redemption at
the end of each time period:
<TABLE>
<CAPTION>
AIM
MONEY
MARKET
FUND
----
<S> <C>
1 year.................................. $ 11
3 years................................. 33
5 years................................. 57
10 years................................ 127
</TABLE>
As a result of 12b-1 distribution plan payments, a long-term shareholder of
the Funds may pay more than the economic equivalent of the maximum front-end
sales charges permitted by rules of the National Association of Securities
Dealers, Inc. Given the maximum front-end and contingent deferred sales charges
and the 12b-1 distribution plan payments applicable to Class A shares and Class
B shares of the Funds, it is estimated that it would require a substantial
number of years to exceed the maximum permissible front-end sales charges.
The above examples should not be considered to be representative of the Funds'
actual or future expenses, which may be greater or less than those shown. In
addition, while the examples assume a 5% annual return, each Fund's actual
performance will vary and may result in an actual return that is greater or less
than 5%. The examples assume reinvestment of all dividends and distributions and
that the percentage amounts for total fund operating expenses remain the same
for each year.
- ---------------
* Reflects the conversion to Class A shares eight years following the end of
the calendar month in which a purchase was made; therefore years nine and ten
reflect Class A expenses.
5
<PAGE> 6
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following per share data, ratios and supplemental data for the Class A
shares of AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND (formerly,
AIM Government Securities Fund), AIM MUNICIPAL BOND FUND and AIM VALUE FUND for
(i) all periods presented for AIM BALANCED FUND and (ii) the years ended
December 31, 1995 and 1994, and the period ended December 31, 1993 for the Funds
other than AIM BALANCED FUND have been audited by KPMG Peat Marwick
LLP,independent auditors, whose reports thereon were unqualified. The per share
data, ratios and supplemental data for the Class A shares of AIM GLOBAL
UTILITIES FUND, AIM GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM VALUE FUND for
each of the periods presented other than those described above have been derived
from financial statements audited by Price Waterhouse LLP, independent
accountants, whose reports thereon were also unqualified. This information
should be read in conjunction with the Funds' financial statements included in
the Statement of Additional Information. The investment advisor to the
above-named Funds, other than AIM BALANCED FUND, changed on June 30, 1992.+
(PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM BALANCED FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 1,
DECEMBER 31, 1993 TO YEAR ENDED AUGUST 31,
------------------- DECEMBER 31, ------------------------------------------
1995 1994 1993 1993 1992 1991 1990
------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 14.62 $ 16.10 $ 15.97 $ 12.77 $ 12.04 $ 9.73 $ 10.67
Income from investment operations:
Net investment income............................ 0.49 0.44 0.10 0.32 0.29 0.28 0.32
Net gains or losses on securities (both realized
and unrealized)................................ 4.57 (1.31) 0.18 3.18 0.74 2.33 (0.91)
------- ------- ------- ------- ------- -------- --------
Total from investment operations................. 5.06 (0.87) 0.28 3.50 1.03 2.61 (0.59)
------- ------- ------- ------- ------- -------- --------
Less distributions:
Dividends from net investment income............. (0.46) (0.39) (0.15) (0.30) (0.30) (0.30) (0.35)
Distributions from net realized capital gains.... -- (0.22) -- -- -- -- --
------- ------- ------- ------- ------- -------- --------
Total distributions.............................. (0.46) (0.61) (0.15) (0.30) (0.30) (0.30) (0.35)
------- ------- ------- ------- ------- -------- --------
Net asset value, end of period.................... $ 19.22 $ 14.62 $ 16.10 $ 15.97 $ 12.77 $ 12.04 $ 9.73
======= ======= ======= ======= ======= ========= =========
Total return(a)................................... 34.97% (5.44)% 1.76% 27.75% 8.66% 27.41% (5.67)%
======= ======= ======= ======= ======= ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted)......... $92,241 $37,572 $23,520 $19,497 $11,796 $ 11,750 $ 10,965
======= ======= ======= ======= ======= ========= =========
Ratio of expenses to average net assets.......... 1.43%(b) 1.25%(c) 2.17%(d) 2.07% 2.12% 2.39% 2.15%
======= ======= ======= ======= ======= ========= =========
Ratio of net investment income to average net
assets......................................... 2.81%(b) 3.07%(c) 1.81%(d) 2.23% 2.32% 2.74% 3.18%
======= ======= ======= ======= ======= ========= =========
Portfolio turnover rate.......................... 76.63% 76% 233% 154% 166% 208% 307%
======= ======= ======= ======= ======= ========= =========
Borrowings for the period:
Amount of debt outstanding at end of period...... -- -- -- -- -- -- --
Average amount of debt outstanding during the
period(e)...................................... -- -- -- -- -- -- $138,181
Average number of shares outstanding during the
period (000s omitted)(e)....................... 3,173 2,061 1,305 1,046 939 1,051 1,238
Average amount of debt per share during the
period......................................... -- -- -- -- -- -- $ 0.110
<CAPTION>
YEAR ENDED
AUGUST 31,
------------------------------
1989 1988 1987
-------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period.............. $ 9.08 $ 11.89 $ 12.89
Income from investment operations:
Net investment income............................ 0.39 0.42 0.55
Net gains or losses on securities (both realized
and unrealized)................................ 1.63 (2.65) 0.15
-------- ------- -------
Total from investment operations................. 2.02 (2.23) 0.70
-------- ------- -------
Less distributions:
Dividends from net investment income............. (0.43) (0.50) (0.66)
Distributions from net realized capital gains.... -- (0.08) (1.04)
-------- ------- -------
Total distributions.............................. (0.43) (0.58) (1.70)
-------- ------- -------
Net asset value, end of period.................... $ 10.67 $ 9.08 $ 11.89
========= ======= =======
Total return(a)................................... 22.96% (18.57)% 5.78%
========= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)......... $ 14,405 $16,789 $27,973
========= ======= =======
Ratio of expenses to average net assets.......... 1.94% 2.31% 1.87%
========= ======= =======
Ratio of net investment income to average net
assets......................................... 3.99% 4.50% 4.54%
========= ======= =======
Portfolio turnover rate.......................... 149% 118% 250%
========= ======= =======
Borrowings for the period:
Amount of debt outstanding at end of period...... $260,000 -- --
Average amount of debt outstanding during the
period(e)...................................... $ 83,195 -- --
Average number of shares outstanding during the
period (000s omitted)(e)....................... 1,589 2,131 2,010
Average amount of debt per share during the
period......................................... $ 0.052 -- --
</TABLE>
- ---------------
(a) Total returns do not deduct sales charges and are not annualized for periods
of less than one year.
(b) Ratios are based on average daily net assets of $53,819,848. Ratios of
expenses and net investment income to average daily net assets prior to
waiver of advisory fees are 1.46% and 2.78%, respectively.
(c) After reduction of advisory fees. Ratios of expenses and net investment
income to average net assets prior to reduction of advisory fees are 1.68%
and 2.64%, respectively.
(d) Annualized.
(e) Averages computed on a daily basis.
6
<PAGE> 7
AIM GLOBAL UTILITIES FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
JANUARY 18,
YEAR ENDED DECEMBER 31, TO
------------------------------------------------------------------------------- DECEMBER 31,
1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period... $ 11.85 $ 14.09 $ 13.31 $ 13.75 $ 12.45 $ 13.73 $ 10.99 $ 10.00
Income from investment
operations:
Net investment
income.............. 0.55 0.59 0.60 0.67 0.70 0.66 0.77 0.82
Net gains or losses on
securities (both
realized and
unrealized)......... 2.71 (2.20) 1.02 0.36 2.12 (1.10) 3.06 0.83
-------- -------- -------- -------- ------- ------- ------- -------
Total from investment
operations.......... 3.26 (1.61) 1.62 1.03 2.82 (0.44) 3.83 1.65
-------- -------- -------- -------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income... (0.52) (0.60) (0.61) (0.68) (0.66) (0.70) (0.69) (0.66)
Distributions from net
realized capital
gains............... -- -- (0.23) (0.79) (0.86) (0.14) (0.40) --
Returns of capital.... -- (0.03) -- -- -- -- -- --
-------- -------- -------- -------- ------- ------- ------- -------
Total distributions... (0.52) (0.63) (0.84) (1.47) (1.52) (0.84) (1.09) (0.66)
-------- -------- -------- -------- ------- ------- ------- -------
Net asset value, end of
period................ $ 14.59 $ 11.85 $ 14.09 $ 13.31 $ 13.75 $ 12.45 $ 13.73 $ 10.99
========== ========== ========= ========= ======== ======== ======== ========
Total return(a)......... 28.07% (11.57)% 12.32% 7.92% 23.65% (2.98)% 36.11% 17.03%
========== ========== ========= ========= ======== ======== ======== ========
Ratios/supplemental
data:
Net assets, end of
period (000s
omitted)............ $170,624 $150,515 $200,016 $111,771 $91,939 $69,541 $58,307 $20,104
========== ========== ========= ========= ======== ======== ======== ========
Ratio of expenses to
average net
assets.............. 1.21%(b) 1.18% 1.16% 1.17% 1.23% 1.21%(c) 1.05%(c) 1.22%(c)(e)
========== ========== ========= ========= ======== ======== ======== ========
Ratio of net
investment income to
average net
assets.............. 4.20%(b) 4.67% 4.21% 4.96% 5.36% 5.21%(d) 6.13%(d) 7.63%(d)(e)
========== ========== ========= ========= ======== ======== ======== ========
Portfolio turnover
rate................ 88% 101% 76% 148% 169% 123% 115% 87%
========== ========== ========= ========= ======== ======== ======== ========
</TABLE>
- ---------------
(a) Total returns do not deduct sales charges and are not annualized for periods
of less than one year.
(b) Ratios are based on average daily net assets of $157,394,436.
(c) Ratios of expenses to average net assets prior to reduction of advisory fees
were 1.22%, 1.11% and 1.69% (annualized) for 1990-1988, respectively.
(d) 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 1990-1988,
respectively.
(e) Annualized.
AIM GROWTH FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $ 10.32 $ 11.32 $ 12.28 $ 14.73 $ 12.35 $ 13.92 $ 11.93
Income from investment operations:
Net investment income................. 0.02 -- -- 0.06 0.11 0.21 0.25
Net gains or losses on securities
(both realized and unrealized)...... 3.50 (0.57) 0.41 (0.04) 4.33 (0.91) 3.16
-------- -------- -------- -------- -------- -------- --------
Total from investment operations...... 3.52 (0.57) 0.41 0.02 4.44 (0.70) 3.41
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income.............................. -- -- -- (0.06) (0.13) (0.20) (0.27)
Distributions from net realized
capital gains....................... (0.79) (0.43) (1.37) (2.41) (1.93) (0.67) (1.15)
-------- -------- -------- -------- -------- -------- --------
Total distributions................... (0.79) (0.43) (1.37) (2.47) (2.06) (0.87) (1.42)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period......... $ 13.05 $ 10.32 $ 11.32 $ 12.28 $ 14.73 $ 12.35 $ 13.92
========= ========= ========= ========= ========= ========= =========
Total return(a)........................ 34.31% (4.99)% 3.64% 0.19% 37.05% (5.04)% 28.87%
========= ========= ========= ========= ========= ========= =========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)............................ $168,217 $123,271 $146,723 $168,395 $185,461 $153,245 $187,805
========= ========= ========= ========= ========= ========= =========
Ratio of expenses to average net
assets.............................. 1.28%(b) 1.22% 1.17% 1.17% 1.21% 1.16% 1.00%
========= ========= ========= ========= ========= ========= =========
Ratio of net investment income to
average net assets.................. 0.20%(b) 0.02% 0.02% 0.42% 0.73% 1.41% 1.62%
========= ========= ========= ========= ========= ========= =========
Portfolio turnover rate............... 87% 201% 192% 133% 73% 61% 53%
========= ========= ========= ========= ========= ========= =========
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1988 1987 1986
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period... $ 11.04 $ 12.91 $ 14.95
Income from investment operations:
Net investment income................. 0.23 0.24 0.26
Net gains or losses on securities
(both realized and unrealized)...... 0.89 0.30 1.57
-------- -------- --------
Total from investment operations...... 1.12 0.54 1.83
-------- -------- --------
Less distributions:
Dividends from net investment
income.............................. (0.23) (0.31) (0.35)
Distributions from net realized
capital gains....................... -- (2.10) (3.52)
-------- -------- --------
Total distributions................... (0.23) (2.41) (3.87)
-------- -------- --------
Net asset value, end of period......... $ 11.93 $ 11.04 $ 12.91
========= ========= =========
Total return(a)........................ 10.13% 3.62% 12.85%
========= ========= =========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)............................ $180,793 $203,329 $213,346
========= ========= =========
Ratio of expenses to average net
assets.............................. 0.98% 0.84% 0.85%
========= ========= =========
Ratio of net investment income to
average net assets.................. 1.73% 1.51% 1.82%
========= ========= =========
Portfolio turnover rate............... 38% 78% 66%
========= ========= =========
</TABLE>
- ---------------
(a) Total returns do not deduct sales charges.
(b) Ratios are based on average net assets of $149,642,693.
7
<PAGE> 8
AIM HIGH YIELD FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................... $ 8.93 $ 10.05 $ 9.40 $ 8.86 $ 7.07 $ 8.94 $ 10.01
Income from investment operations:
Net investment income................ 0.93 0.96 0.97 1.04 1.02 1.09 1.21
Net gains or losses on securities
(both realized and unrealized)..... 0.52 (1.12) 0.69 0.55 1.81 (1.84) (1.07)
-------- -------- -------- -------- -------- -------- --------
Total from investment operations..... 1.45 (0.16) 1.66 1.59 2.83 (0.75) 0.14
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income............................. (0.95) (0.96) (1.01) (1.05) (1.04) (1.12) (1.21)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period........ $ 9.43 $ 8.93 $ 10.05 $ 9.40 $ 8.86 $ 7.07 $ 8.94
======== ======== ======== ======== ======== ======== ========
Total return(a)....................... 16.86% (1.67)% 18.40% 18.60% 42.18% (9.03)% 1.18%
======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)..................... $886,106 $578,959 $550,760 $324,518 $259,677 $204,932 $261,920
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets............................. 0.96%(b) 1.00% 1.12% 1.15% 1.22% 1.21%(c) 0.99%
======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets................. 9.95%(b) 10.07% 9.82% 11.00% 12.67% 13.59%(d) 12.40%
======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate.............. 61% 53% 53% 56% 61% 27% 36%
======== ======== ======== ======== ======== ======== ========
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1988 1987 1986
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of
period............................... $ 9.67 $ 10.54 $ 10.21
Income from investment operations:
Net investment income................ 1.18 1.16 1.26
Net gains or losses on securities
(both realized and unrealized)..... 0.34 (0.83) 0.31
-------- -------- --------
Total from investment operations..... 1.52 0.33 1.57
-------- -------- --------
Less distributions:
Dividends from net investment
income............................. (1.18) (1.20) (1.24)
-------- -------- --------
Net asset value, end of period........ $ 10.01 $ 9.67 $ 10.54
======== ======== ========
Total return(a)....................... 16.41% 3.07% 15.97%
======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)..................... $274,631 $242,858 $246,865
======== ======== ========
Ratio of expenses to average net
assets............................. 0.96%(c) 0.92% 0.92%
======== ======== ========
Ratio of net investment income to
average net assets................. 11.84%(d) 11.21% 11.84%
======== ======== ========
Portfolio turnover rate.............. 76% 81% 86%
======== ======== ========
</TABLE>
- ---------------
(a) Total returns do not deduct sales charges.
(b) Ratios are based on average net assets of $722,145,319.
(c) Ratios of expenses to average net assets prior to reduction of advisory fees
were 1.22% and 1.00% for 1990 and 1988, respectively.
(d) Ratios of net investment income to average net assets prior to reduction of
advisory fees were 13.58% and 11.80% for 1990 and 1988, respectively.
AIM INCOME FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $ 7.20 $ 8.45 $ 8.03 $ 8.07 $ 7.41 $ 7.80 $ 7.53
Income from investment operations:
Net investment income................. 0.58 0.58 0.60 0.60 0.61 0.65 0.66
Net gains or losses on securities
(both realized and unrealized)...... 1.00 (1.22) 0.61 (0.03) 0.66 (0.39) 0.32
-------- -------- -------- -------- -------- -------- --------
Total from investment operations...... 1.58 (0.64) 1.21 0.57 1.27 0.26 0.98
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income.............................. (0.61) (0.49) (0.60) (0.61) (0.61) (0.65) (0.71)
Distributions from net realized
capital gains....................... -- (0.01) (0.19) -- -- -- --
Returns of capital.................... -- (0.11) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total distributions................... (0.61) (0.61) (0.79) (0.61) (0.61) (0.65) (0.71)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period......... $ 8.17 $ 7.20 $ 8.45 $ 8.03 $ 8.07 $ 7.41 $ 7.80
======== ======== ======== ======== ======== ======== ========
Total return(a)........................ 22.77% (7.65)% 15.38% 7.42% 18.00% 3.65% 13.56%
======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)...................... $251,280 $201,677 $244,168 $218,848 $231,798 $215,987 $229,222
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets.............................. 0.98%(b) 0.98% 0.98% 0.99%(c) 1.00%(c) 1.00% 0.96%
======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets.................. 7.52%(b) 7.53% 7.01% 7.54%(c) 7.97%(c) 8.73% 8.56%
======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate............... 227% 185% 99% 82% 67% 106% 222%
======== ======== ======== ======== ======== ======== ========
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1988 1987 1986
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period... $ 7.55 $ 8.20 $ 7.53
Income from investment operations:
Net investment income................. 0.68 0.67 0.71
Net gains or losses on securities
(both realized and unrealized)...... (0.02) (0.63) 0.60
-------- -------- --------
Total from investment operations...... 0.66 0.04 1.31
-------- -------- --------
Less distributions:
Dividends from net investment
income.............................. (0.68) (0.69) (0.64)
Distributions from net realized
capital gains....................... -- -- --
Returns of capital.................... -- -- --
-------- -------- --------
Total distributions................... (0.68) (0.69) (0.64)
-------- -------- --------
Net asset value, end of period......... $ 7.53 $ 7.55 $ 8.20
======== ======== ========
Total return(a)........................ 9.01% 0.56% 18.04%
======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)...................... $218,946 $237,466 $273,121
======== ======== ========
Ratio of expenses to average net
assets.............................. 0.95% 0.84% 0.82%
======== ======== ========
Ratio of net investment income to
average net assets.................. 8.81% 8.64% 8.93%
======== ======== ========
Portfolio turnover rate............... 361% 195% 85%
======== ======== ========
</TABLE>
- ---------------
(a) Total returns do not deduct sales charges.
(b) Ratios are based on average net assets of $220,320,889.
(c) 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 and 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 and 1991,
respectively.
8
<PAGE> 9
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
APRIL 28,
1987*
YEAR ENDED DECEMBER 31, TO
------------------------------------------------------------------------------------------- DECEMBER 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987
-------- -------- -------- -------- -------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period............... $ 8.99 $ 10.05 $ 10.19 $ 10.34 $ 9.95 $ 9.91 $ 9.70 $ 9.92 $ 10.00
Income from investment
operations:
Net investment
income............. 0.69 0.68 0.74 0.77 0.82 0.87 0.90 0.89 0.55
Net gains or losses
on securities (both
realized and
unrealized)........ 0.73 (1.02) (0.04) (0.15) 0.41 0.01 0.15 (0.27) (0.14)
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total from investment
operations......... 1.42 (0.34) 0.70 0.62 1.23 0.88 1.05 0.62 0.41
-------- -------- -------- -------- -------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income............. (0.67) (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) -- -- -- -- --
Returns of
capital............ (0.04) (0.10) -- -- -- -- -- -- --
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total
distributions...... (0.71) (0.72) (0.84) (0.77) (0.84) (0.84) (0.84) (0.84) (0.49)
-------- -------- -------- -------- -------- ------- ------- ------- -------
Net asset value, end of
period............... $ 9.70 $ 8.99 $ 10.05 $ 10.19 $ 10.34 $ 9.95 $ 9.91 $ 9.70 $ 9.92
========== ========== ========== ========== ========== ======== ======== ======== ========
Total return(a)........ 16.28% (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)..... $176,318 $158,341 $139,586 $123,484 $101,409 $61,463 $57,077 $48,372 $28,052
========== ========== ========== ========== ========== ======== ======== ======== ========
Ratio of expenses to
average net assets
(exclusive of
interest
expense)(c)........ 1.08%(b) 1.04% 1.00% 0.98% 1.00% 1.00% 1.00% 1.00% 1.20%(e)
========== ========== ========== ========== ========== ======== ======== ======== ========
Ratio of net
investment income
to average net
assets(d).......... 7.36%(b) 7.34% 7.08% 7.53% 8.15% 8.85% 9.10% 9.11% 8.64%(e)
========== ========== ========== ========== ========== ======== ======== ======== ========
Portfolio turnover
rate............... 140% 109% 110% 42% 26% 16% 15% 15% 35%
========== ========== ========== ========== ========== ======== ======== ======== ========
</TABLE>
- ---------------
(a) Total returns do not deduct sales charges and are not annualized for periods
of less than one year.
(b) Ratios are based on average net assets of $161,543,053.
(c) 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 1994-1988, respectively.
(d) 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 1994-1988, respectively.
(e) Annualized.
AIM MUNICIPAL BOND FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...... $ 7.78 $ 8.61 $ 8.27 $ 8.13 $ 7.66 $ 7.81 $ 7.64
Income from investment operations:
Net investment income.................... 0.43 0.46 0.48 0.51 0.52 0.53 0.54
Net gains or losses on securities (both
realized and unrealized)............... 0.56 (0.78) 0.46 0.21 0.46 (0.14) 0.18
-------- -------- -------- -------- -------- -------- --------
Total from investment operations......... 0.99 (0.32) 0.94 0.72 0.98 0.39 0.72
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income..... (0.43) (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) (0.03) (0.01) -- -- (0.01) --
-------- -------- -------- -------- -------- -------- --------
Total distributions...................... (0.46) (0.51) (0.60) (0.58) (0.51) (0.54) (0.55)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period............ $ 8.31 $ 7.78 $ 8.61 $ 8.27 $ 8.13 $ 7.66 $ 7.81
========= ========= ========= ========= ========= ========= =========
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1988 1987 1986
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period...... $ 7.32 $ 8.41 7.69
Income from investment operations:
Net investment income.................... 0.53 0.51 0.58
Net gains or losses on securities (both
realized and unrealized)............... 0.34 (0.65) 1.00
-------- -------- --------
Total from investment operations......... 0.87 (0.14) 1.58
-------- -------- --------
Less distributions:
Dividends from net investment income..... (0.55) (0.49) (0.60)
Distributions from net realized capital
gains.................................. -- (0.46) (0.26)
Returns of capital....................... -- -- --
-------- -------- --------
Total distributions...................... (0.55) (0.95) (0.86)
-------- -------- --------
Net asset value, end of period............ $ 7.64 $ 7.32 $ 8.41
========= ========= =========
</TABLE>
<TABLE>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Total return(a)........................... 13.05% (3.79)% 11.66% 9.10% 13.30% 5.27% 9.70%
========= ========= ========= ========= ========= ========= =========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)......................... $284,803 $257,456 $294,209 $271,205 $273,037 $258,194 $262,997
========= ========= ========= ========= ========= ========= =========
Ratio of expenses to average net
assets................................. 0.88%(b) 0.89% 0.91% 0.90% 0.94% 0.91% 0.89%
========= ========= ========= ========= ========= ========= =========
Ratio of net investment income to average
net assets............................. 5.26%(b) 5.61% 5.65% 6.15% 6.58% 6.91% 6.97%
========= ========= ========= ========= ========= ========= =========
Portfolio turnover rate.................. 36% 43% 24% 160% 289% 230% 305%
========= ========= ========= ========= ========= ========= =========
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1988 1987 1986
-------- -------- --------
<S> <C> <C> <C>
Total return(a)........................... 12.33% (1.88)% 21.19%
========= ========= =========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)......................... $243,480 $237,225 $281,575
========= ========= =========
Ratio of expenses to average net
assets................................. 0.87% 0.80% 0.78%
========= ========= =========
Ratio of net investment income to average
net assets............................. 7.11% 6.71% 6.99%
========= ========= =========
Portfolio turnover rate.................. 381% 392% 249%
========= ========= =========
</TABLE>
- ---------------
(a) Total returns do not deduct sales charges.
(b) Ratios are based on average net assets of $274,523,268.
9
<PAGE> 10
AIM VALUE FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
--------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $ 21.14 $ 20.82 $ 18.24 $ 17.55 $ 13.75 $ 14.53 $ 12.79
Income from investment
operations:
Net investment income.... 0.14 0.16 0.04 0.12 0.13 0.26 0.40
Net gains on securities
(both realized and
unrealized)............ 7.21 0.52 3.34 2.68 5.73 0.01 3.58
--------- --------- -------- -------- -------- -------- --------
Total from investment
operations............. 7.35 0.68 3.38 2.80 5.86 0.27 3.98
--------- --------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income...... (0.09) (0.16) (0.03) (0.12) (0.14) (0.26) (0.43)
Distributions from net
realized capital
gains.................. (1.59) (0.20) (0.77) (1.99) (1.92) (0.79) (1.81)
--------- --------- -------- -------- -------- -------- --------
Total distributions...... (1.68) (0.36) (0.80) (2.11) (2.06) (1.05) (2.24)
--------- --------- -------- -------- -------- -------- --------
Net asset value, end
of period................ $ 26.81 $ 21.14 $ 20.82 $ 18.24 $ 17.55 $ 13.75 $ 14.53
========== ========== ========= ========= ========= ========= =========
Total return(a)........... 34.85% 3.28% 18.71% 16.39% 43.45% 1.88% 31.54%
========== ========== ========= ========= ========= ========= =========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)......... $3,408,952 $1,358,725 $765,305 $239,663 $152,149 $ 86,565 $ 76,444
========== ========== ========= ========= ========= ========= =========
Ratio of expenses to
average net assets..... 1.12%(b)(c) 0.98% 1.09% 1.16% 1.22% 1.21%(c) 1.00%(c)
========== ========== ========= ========= ========= ========= =========
Ratio of net investment
income to average net
assets................. 0.74%(b)(d) 0.92% 0.30% 0.75% 0.89% 1.87%(d) 2.65%(d)
========== ========== ========= ========= ========= ========= =========
Portfolio turnover
rate................... 151% 127% 177% 170% 135% 131% 152%
========== ========== ========= ========= ========= ========= =========
<CAPTION>
YEAR ENDED DECEMBER
--------------------------------
1988 1987 1986
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning
of period................ $ 11.47 $ 12.26 $ 12.90
Income from investment
operations:
Net investment income.... 0.26 0.25 0.36
Net gains on securities
(both realized and
unrealized)............ 2.07 0.53 0.75
-------- -------- --------
Total from investment
operations............. 2.33 0.78 1.11
-------- -------- --------
Less distributions:
Dividends from net
investment income...... (0.26) (0.39) (0.43)
Distributions from net
realized capital
gains.................. (0.75) (1.18) (1.32)
-------- -------- --------
Total distributions...... (1.01) (1.57) (1.75)
-------- -------- --------
Net asset value, end
of period................ $ 12.79 $ 11.47 $ 12.26
========= ========= =========
Total return(a)........... 20.61% 5.96% 8.80%
========= ========= =========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)......... $ 60,076 $ 55,527 $ 46,642
========= ========= =========
Ratio of expenses to
average net assets..... 1.00%(c) 1.00% 1.00%(c)
========= ========= =========
Ratio of net investment
income to average net
assets................. 1.98%(d) 1.91% 3.15%(d)
========= ========= =========
Portfolio turnover
rate................... 124% 219% 134%
========= ========= =========
</TABLE>
- ---------------
(a) Total returns do not deduct sales charges.
(b) Ratios are based on average net assets of $2,364,597,465.
(c) Ratios of expenses to average net assets prior to reduction of advisory
fees were 1.13%, 1.23%, 1.09%, 1.08% and 1.05% for 1995, 1990-1988 and
1986, respectively.
(d) Ratios of net investment income to average net assets prior to reduction of
advisory fees were 0.73%, 1.85%, 2.56%, 1.90% and 3.14% for 1995, 1990-1988
and 1986, respectively.
+ Each of the Funds is a separate series of shares of AIM Funds Group, a
Delaware business trust established May 5, 1993 (the "Trust"). The
shareholders of the applicable Funds separately approved a plan of
reorganization pursuant to which, effective October 15, 1993, each of the
predecessor funds to AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM
MUNICIPAL BOND FUND and AIM VALUE FUND, organized as separate series
portfolios of AIM Funds Group, a Massachusetts business trust ("AFG(MA)"),
and to AIM BALANCED FUND, organized as AIM Convertible Securities, Inc., a
Maryland corporation, was reorganized as a separate series portfolio of the
Trust. AIM Convertible Securities, Inc. had investment objectives and
policies that differed from those of AIM BALANCED FUND. Certain information
reported in these statements pertains to such Funds as separate series
portfolios of AFG(MA) and as a corporation, as applicable, rather than
separate series of the Trust.
In addition, on April 24, 1987, the shareholders of AIM HIGH YIELD FUND
approved a plan of reorganization pursuant to which the Fund, organized as
a Maryland corporation, was reorganized as a separate series portfolio of
AFG(MA). The information reported in these statements prior to 1987 for AIM
HIGH YIELD FUND pertains to that Fund as a corporation rather than as a
series of the Trust.
* Commencement of operations.
10
<PAGE> 11
The following per share data, ratios and supplemental data for the Class B
shares of AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND (formerly,
AIM Government Securities Fund), AIM MUNICIPAL BOND FUND and AIM VALUE FUND for
the periods indicated have been audited by KPMG Peat Marwick LLP, independent
auditors, whose reports thereon were unqualified. This information should be
read in conjunction with the Funds' financial statements included in the
Statement of Additional Information.
AIM BALANCED FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, OCTOBER 18, 1993*
------------------------------- TO
1995 1994 DECEMBER 31, 1993
------------ ------------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period.................. $ 14.62 $ 16.11 $ 16.69
Income from investment operations:
Net investment income............................... 0.31 0.31 0.04
Net gains (losses) on securities (both realized and
unrealized)...................................... 4.61 (1.31) (0.58)
---------- ------- ------
Total from investment operations.................... 4.92 (1.00) (0.54)
---------- ------- ------
Less distributions:
Dividends from net investment income................ (0.32) (0.27) (0.04)
Distributions from net realized capital gains....... -- (0.22) --
---------- ------- ------
Total distributions................................. (0.32) (0.49) (0.04)
---------- ------- ------
Net asset value, end of period........................ $ 19.22 $ 14.62 $ 16.11
========== ======== =======
Total return(a)....................................... 33.93% (6.23)% (3.23)%
========== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)............ $ 72,634 $ 20,245 $ 2,754
========== ======== =======
Ratio of expenses to average net assets............. 2.21%(b) 1.98%(c) 2.83%(d)
========= ======== =======
Ratio of net investment income to average net
assets........................................... 2.03%(b) 2.34%(c) 1.15%(d)
========= ======== ======
Portfolio turnover rate............................. 76.63% 76% 233%
========= ========== =======
</TABLE>
- ---------------
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods of less than one year.
(b) Ratios are based on average net assets of $38,286,051. Ratios of expenses
and net investment income prior to waiver of advisory fees are 2.23% and
2.01%, respectively.
(c) 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.
(d) Annualized.
AIM GLOBAL UTILITIES FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
SEPTEMBER 1,
YEAR ENDED 1993*
DECEMBER 31, TO
--------------------- DECEMBER 31,
1995 1994 1993
------- ------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period.......................... $ 11.84 $ 14.08 $ 15.30
Income from investment operations:
Net investment income....................................... 0.44 0.47 0.17
Net gains (losses) on securities (both realized and
unrealized).............................................. 2.73 (2.19) (0.98)
------- ------- -------
Total from investment operations............................ 3.17 (1.72) (0.81)
------- ------- -------
Less distributions:
Dividends from net investment income........................ (0.41) (0.49) (0.17)
Distributions from net realized capital gains............... -- -- (0.24)
Returns of capital.......................................... -- (0.03) --
------- ------- -------
Total distributions......................................... (0.41) (0.52) (0.41)
------- ------- -------
Net asset value, end of period................................ $ 14.60 $ 11.84 $ 14.08
======== ======== ========
Total return(a)............................................... 27.16% (12.35)% (5.32)%
======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted).................... $70,693 $42,568 $23,892
======== ======== ========
Ratio of expenses to average net assets..................... 1.97%(b) 2.07% 1.99%(c)
======== ======== ========
Ratio of net investment income to average net assets........ 3.44%(b) 3.78% 3.38%(c)
======== ======== ========
Portfolio turnover rate..................................... 88% 101% 76%
======== ======== ========
</TABLE>
- ---------------
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods of less than one year.
(b) Ratios are based on average net assets of $53,847,853.
(c) Annualized.
11
<PAGE> 12
AIM GROWTH FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SEPTEMBER 1, 1993*
------------------------ TO
1995 1994 DECEMBER 31, 1993
-------- ------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period.................. $ 10.21 $ 11.31 $ 12.83
Income from investment operations:
Net investment income (loss)........................ (0.08)(a) (0.06) (0.01)
Net gains (losses) on securities (both realized and
unrealized)...................................... 3.43(a) (0.61) (0.14)
-------- ------- --------
Total from investment operations.................... 3.35 (0.67) (0.15)
-------- ------- --------
Less distributions:
Distributions from net realized capital gains....... (0.79) (0.43) (1.37)
-------- ------- --------
Total distributions................................. (0.79) (0.43) (1.37)
-------- ------- --------
Net asset value, end of period........................ $ 12.77 $ 10.21 $ 11.31
========= ======== ========
Total return(b)....................................... 33.00% (5.88)% (0.92)%
========= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted)............ $138,034 $38,448 $ 11,053
========= ======== ========
Ratio of expenses to average net assets............. 2.13%(c) 2.18% 1.91%(d)
========= ======== ========
Ratio of net investment income (loss) to average net
assets........................................... (0.65)%(c) (0.94)% (0.72)%(d)
========= ======== ========
Portfolio turnover rate............................. 87% 201% 192%
========= ======== ========
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods of less than one year.
(c) Ratios are based on average net assets of $82,822,307.
(d) Annualized.
AIM HIGH YIELD FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SEPTEMBER 1, 1993*
------------------------- TO
1995 1994 DECEMBER 31, 1993
-------- -------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period................. $ 8.92 $ 10.04 $ 9.96
Income from investment operations:
Net investment income.............................. 0.85 0.87 0.32
Net gains (losses) on securities (both realized and
unrealized)..................................... 0.52 (1.10) 0.07
-------- -------- --------
Total from investment operations................... 1.37 (0.23) 0.39
-------- -------- --------
Less distributions:
Dividends from net investment income............... (0.87) (0.89) (0.31)
-------- -------- --------
Net asset value, end of period....................... $ 9.42 $ 8.92 $ 10.04
========= ========= =========
Total return(a)...................................... 15.91% (2.48)% 4.00%
========= ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted)........... $557,926 $191,338 $ 31,264
========= ========= =========
Ratio of expenses to average net assets............ 1.73(b) 1.80% 1.93%(c)
========= ========= =========
Ratio of net investment income to average net
assets.......................................... 9.18%(b) 9.27% 8.99%(c)
========= ========= =========
Portfolio turnover rate............................ 61% 53% 53%
========= ========= =========
</TABLE>
- ---------------
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods of less than one year.
(b) Ratios are based on average net assets of $348,366,442.
(c) Annualized.
12
<PAGE> 13
AIM INCOME FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SEPTEMBER 1, 1993*
----------------------- TO
1995 1994 DECEMBER 31, 1993
------- ------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period.................. $ 7.18 $ 8.43 $ 8.95
Income from investment operations:
Net investment income............................... 0.53 0.52 0.19
Net gains (losses) on securities (both realized and
unrealized)...................................... 0.98 (1.23) (0.34)
------- ------- --------
Total from investment operations.................... 1.51 (0.71) (0.15)
------- ------- --------
Less distributions:
Dividends from net investment income................ (0.54) (0.42) (0.18)
Distributions from net realized capital gains....... -- (0.01) (0.19)
Returns of capital.................................. -- (0.11) --
------- ------- --------
Total distributions................................. (0.54) (0.54) (0.37)
------- ------- --------
Net asset value, end of period........................ $ 8.15 $ 7.18 $ 8.43
======== ======== =========
Total return(b)....................................... 21.72% (8.46)% (0.75)%
======== ======== =========
Ratios/supplemental data:
Net assets, end of period (000s omitted)............ $44,304 $12,321 $ 3,602
======== ======== =========
Ratio of expenses to average net assets............. 1.79%(b) 1.83%(c) 1.75%(c)
======== ======== =========
Ratio of net investment income to average net
assets........................................... 6.71%(b) 6.69%(c) 6.24%(c)
======== ======== =========
Portfolio turnover rate............................. 227% 185% 99%
======== ======== =========
</TABLE>
- ---------------
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods of less than one year.
(b) Ratios are based on average net assets of $23,741,406.
(c) After expense reimbursements. Ratios of expenses and net investment income
to average net assets prior to expense reimbursements were 2.04% and 2.50%
(annualized) and 6.48% and 5.49% (annualized) for 1994 and 1993,
respectively.
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SEPTEMBER 7, 1993*
----------------------- TO
1995 1994 DECEMBER 31, 1993
------- ------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period.................. $ 8.99 $ 10.04 $ 10.44
Income from investment operations:
Net investment income............................... 0.63 0.61 0.21
Net gains (losses) on securities (both realized and
unrealized)...................................... 0.70 (1.02) (0.27)
------- ------- --------
Total from investment operations.................... 1.33 (0.41) (0.06)
------- ------- --------
Less distributions:
Dividends from net investment income................ (0.59) (0.50) (0.20)
Distributions from net realized capital gains....... -- (0.04) (0.14)
Returns of capital.................................. (0.04) (0.10) --
------- ------- --------
Total distributions................................. (0.63) (0.64) (0.34)
------- ------- --------
Net asset value, end of period........................ $ 9.69 $ 8.99 $ 10.04
======== ======== =========
Total return(a)....................................... 15.22% (4.13)% (0.52)%
======== ======== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted)............ $61,300 $23,415 $ 6,160
======== ======== =========
Ratio of expenses to average net assets (exclusive
of interest expense)(c).......................... 1.86%(b) 1.82% 1.71%(e)
======== ======== =========
Ratio of net investment income to average net
assets(d)........................................ 6.58%((b) 6.56% 6.37%(e)
======== ======== =========
Portfolio turnover rate............................. 140% 109% 110%
======== ======== =========
</TABLE>
- ---------------
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods of less than one year.
(b) Ratios are based on average net assets of $37,793,057.
(c) Ratio of expenses to average net assets prior to reduction of advisory fee
and expense reimbursement for 1994 and 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 1994 and 1993 were 6.50% and
5.90% (annualized), respectively.
(e) Annualized.
13
<PAGE> 14
AIM MUNICIPAL BOND FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SEPTEMBER 1, 1993*
----------------------- TO
1995 1994 DECEMBER 31, 1993
------- ------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period.................. $ 7.78 $ 8.61 $ 8.71
Income from investment operations:
Net investment income............................... 0.39 0.39 0.14
Net gains (losses) on securities (both realized and
unrealized)...................................... 0.54 (0.78) 0.01
------- ------- --------
Total from investment operations.................... 0.93 (0.39) 0.15
------- ------- --------
Less distributions:
Dividends from net investment income................ (0.37) (0.38) (0.13)
Distributions from net realized capital gains....... -- (0.03) (0.11)
Returns of capital.................................. (0.03) (0.03) (0.01)
------- ------- --------
Total distributions................................. (0.40) (0.44) (0.25)
------- ------- --------
Net asset value, end of period........................ $ 8.31 $ 7.78 $ 8.61
======== ======== =========
Total return(a)....................................... 12.14% (4.57)% 1.95%
======== ======== =========
Ratios/supplemental data:
Net assets, end of period (000s omitted)............ $21,478 $ 9,175 $ 2,319
======== ======== =========
Ratio of expenses to average net assets(c).......... 1.68%(b) 1.67% 1.65%(d)
======== ======== =========
Ratio of net investment income to average net
assets(c)........................................ 4.46%(b) 4.83% 4.91%(d)
======== ======== =========
Portfolio turnover rate............................. 36% 43% 24%
======== ======== =========
</TABLE>
- ---------------
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods of less than one year.
(b) Ratios are based on average net assets of $14,533,031.
(c) Ratios of expenses and net investment income to average daily net assets
prior to expense reimbursements are 1.77%, 1.84% and 3.08% (annualized) and
4.37%, 4.66% and 3.48% (annualized) for 1995-1993, respectively.
(d) Annualized.
AIM VALUE FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, OCTOBER 18, 1993*
--------------------------- TO
1995 1994 DECEMBER 31, 1993
---------- -------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 21.13 $ 20.82 $ 21.80
Income from investment operations:
Net investment income............................ (0.01) -- 0.02
Net gains (losses) on securities (both realized
and unrealized)............................... 7.12 0.51 (0.21)
---------- -------- --------
Total from investment operations................. 7.11 0.51 (0.19)
---------- -------- --------
Less distributions:
Dividends from net investment income............. -- -- (0.02)
Distributions from net realized capital gains.... (1.59) (0.20) (0.77)
---------- -------- --------
Total distributions.............................. (1.59) (0.20) (0.79)
---------- -------- --------
Net asset value, end of period..................... $ 26.65 $ 21.13 $ 20.82
=========== ========= =========
Total return(a).................................... 33.73% 2.46% (0.74)%
=========== ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted)......... $2,860,531 $680,119 $ 63,215
=========== ========= =========
Ratio of expenses to average net assets.......... 1.94%(b) 1.90% 1.85%(c)
=========== ========= =========
Ratio of net investment income (loss) to average
net assets.................................... (0.08)%(b) 0.00% (0.46)%(c)
=========== ========= ==========
Portfolio turnover rate.......................... 151% 127% 177%
=========== ========= =========
</TABLE>
- ---------------
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods of less than one year.
(b) Ratios are based on average net assets of $1,646,600,430. The ratios of
expenses and net investment income to average net assets prior to reduction
of advisory fees were 1.96% and (0.09)% for 1995, respectively.
(c) Annualized.
* Date sales commenced.
14
<PAGE> 15
The following per share data, ratios and supplemental data for the Class A,
Class B and Class C shares of AIM MONEY MARKET FUND for the years ended December
31, 1995 and 1994 and the period October 16, 1993 (date operations commenced)
through December 31, 1993 have been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon was unqualified. This information
should be read in conjunction with the financial statements of AIM MONEY MARKET
FUND included in the Statement of Additional Information.
AIM MONEY MARKET FUND -- CLASS A, CLASS B AND CLASS C SHARES
<TABLE>
<CAPTION>
Class A Shares Class B Shares
-------------------------------------- --------------------------------------
October 16, October 16,
Year Ended 1993 Year Ended 1993
December 31, to December 31, to
--------------------- December 31, ---------------------- December 31,
1995 1994 1993 1995 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............ 0.0495 0.0337 0.0048 0.0419 0.0259 0.0032
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income.............. (0.0495) (0.0337) (0.0048) (0.0419) (0.0259) (0.0032)
-------- -------- -------- -------- -------- --------
Net asset value, end of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return(a).................... 5.06% 3.43% 2.27% 4.27% 2.62% 1.51%
======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)................. $221,487 $148,886 $ 81,460 $ 69,857 $ 33,999 $ 1,289
======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets............. 1.03%(b) 0.97%(c) 1.00%(c)(d) 1.78%(b) 1.78%(e) 1.75%(d)(e)
======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets......................... 4.91%(b) 3.53%(c) 2.27%(c)(d) 4.14%(b) 3.14%(e) 1.54%(d)(e)
======== ======== ======== ======== ======== ========
<CAPTION>
Class C Shares
-------------------------------------
October 16,
Year Ended 1993
December 31, to
---------------------- December 31,
1995 1994 1993
-------- -------- ------------
<S> <C> <C> <C>
Net asset value, beginning
of period......................... $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income............. 0.0493 0.0337 0.0048
-------- -------- --------
Less distributions:
Dividends from net
investment income............... (0.0493) (0.0337) (0.0048)
-------- -------- --------
Net asset value, end of period...... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return(a)..................... 5.04% 3.42% 2.27%
======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted).................. $293,450 $359,952 $241,778
======== ======== ========
Ratio of expenses to
average net assets.............. 1.04%(b) 0.99%(f) 1.00%(d)(f)
======== ======== ========
Ratio of net investment
income to average net
assets.......................... 4.92%(b) 3.49%(f) 2.27%(d)(f)
======== ======== ========
</TABLE>
- ---------------
(a) Does not deduct sales charges or contingent deferred sales charges, where
applicable.
(b) Ratios are based on average daily net assets as follows: Class A
Shares - $164,281,243, Class B Shares - $38,140,475 and Class C Shares -
$268,454,942.
(c) Ratios of expenses and net investment income to average daily net assets
prior to waiver of advisory fees are 1.06% and 3.44% for 1994 and 1.20%
(annualized) and 2.07% (annualized) for 1993.
(d) Annualized.
(e) Ratios of expenses and net investment income to average daily net assets
prior to waiver of advisory fees are 1.87% and 3.05% for 1994 and 1.95%
(annualized) and 1.34% (annualized) for 1993.
(f) Ratios of expenses and net investment income to average daily net assets
prior to waiver of advisory fees are 1.08% and 3.40% for 1994 and 1.20%
(annualized) and 2.07% (annualized) for 1993.
15
<PAGE> 16
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Funds will disclose the maximum sales charge
(including deferred sales charges) to which investments in a Fund's shares may
be subject. Each Fund will also include performance data on Class A and Class B
shares, and, as applicable, Class C shares in any advertisement or promotional
material which includes Fund performance data. If any advertised performance
data does not reflect the maximum sales charge (if any), such advertisement
will disclose that the sales charge has not been deducted in computing the
performance data, and that, if reflected, the maximum sales charge would reduce
the performance quoted. See the Statement of Additional Information for further
details concerning performance comparisons used in advertisements by the Funds.
Further information regarding each Fund's performance is contained in that
Fund's annual report to shareholders, which is available upon request and
without charge.
Each Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return. Standardized total return
for Class A shares reflects the deduction of a Fund's maximum initial sales
charge at the time of purchase. Standardized total return for Class B shares
reflects the deduction of the maximum applicable contingent deferred sales
charge on a redemption of shares held for the period.
A Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-
BY-YEAR RESULTS. To illustrate the components of overall performance, a Fund may
separate its cumulative and average annual returns into income results and
capital gains or losses.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, the
yield information may not provide a basis for comparison with investments which
pay a fixed rate of interest for a stated period of time. Yield reflects
investment income net of expenses over the relevant period attributable to a
Fund share, expressed as an annualized percentage of the maximum offering price
per share for Class A shares, net asset value per share for Class B shares and
net asset value per share for Class C shares of AIM MONEY MARKET FUND.
Yield is a function of the type and quality of a Fund's investments, the
maturity of the securities held in a Fund's portfolio and the operating expense
ratio of the Fund. A shareholder's investment in a Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in a Fund. A tax-equivalent yield is calculated in the same
manner as the standard yield with an adjustment for a stated, assumed tax rate.
AIM MUNICIPAL BOND FUND may also demonstrate the effect of such tax-equivalent
adjustments generally by comparing various yield levels with their corresponding
tax-equivalent yields, given a stated tax rate.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of any Fund. Such practices will
have the effect of increasing that Fund's yield and total return. The
performance of each Fund will vary from time to time and past results are not
necessarily representative of future results. A Fund's performance is a function
of its portfolio management in selecting the type and quality of portfolio
securities and is affected by operating expenses of the Fund as well as by
general market conditions.
- --------------------------------------------------------------------------------
ABOUT THE FUNDS
The Funds are separate series of shares of the Trust, a Delaware business
trust established on May 5, 1993 and registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end management investment
company (see "Organization of the Trust"). Each Fund has its own investment
objective(s) and policies designed to meet specific investment goals, operates
as a diversified portfolio and intends to be treated as a regulated investment
company for federal income tax purposes.
Each Fund invests in securities of different issuers and industry
classifications (with the exception of AIM GLOBAL UTILITIES FUND which
concentrates its investments in the utilities industry) in an attempt to spread
and reduce the risks inherent in all investing. Each Fund continuously offers
new shares for sale to the public, and stands ready to redeem its outstanding
shares for cash at net asset value (subject, in certain circumstances, to a
contingent deferred sales charge). See "How to Redeem Shares." AIM, the
investment advisor for each Fund, continuously reviews and, from time to time,
changes the portfolio holdings of each of the Funds in pursuit of each Fund's
objective(s).
16
<PAGE> 17
- --------------------------------------------------------------------------------
INVESTMENT PROGRAMS
The investment objective(s) of each Fund, except AIM HIGH YIELD FUND, are
deemed to be fundamental policies which may not be changed without the approval
of a majority of the Fund's outstanding shares (within the meaning of the 1940
Act). The Board of Trustees on behalf of AIM HIGH YIELD FUND is permitted to
change the investment objective of that Fund without shareholder approval.
Further information is available in the Statement of Additional Information.
Individuals considering the purchase of shares of any Fund should recognize that
there are risks in the ownership of any security and that no assurance can be
given that any particular Fund will attain its investment objective(s).
AIM BALANCED FUND. The Fund's objective is to achieve as high a total return
to investors as possible, consistent with preservation of capital, by investing
in a broadly diversified portfolio of high-yielding securities, including common
stocks, preferred stocks, convertible securities and bonds. Although equity
securities will be purchased primarily for capital appreciation and fixed income
securities will be purchased primarily for income purposes, income and capital
appreciation potential will be considered in connection with all investments.
The Fund normally will have a minimum of 30% and a maximum of 70% of its assets
invested in equity securities and a minimum of 30% and a maximum of 70% of its
assets invested in fixed income securities. Most of such fixed income securities
will be rated Baa or better by Moody's Investors Service, Inc. ("Moody's") or
BBB or better by Standard & Poor's Corporation ("S&P") or, if unrated, deemed to
be of comparable quality by AIM, although the Fund may invest to a limited
extent in lower-rated securities. The fixed income securities in which the Fund
invests may include U.S. Government obligations, mortgage-backed securities,
asset-backed securities, bank obligations, corporate debt obligations and
unrated obligations, including those of foreign issuers. The Fund may, in
pursuit of its objective, invest up to 10% of its total assets in debt
securities rated lower than Baa by Moody's or BBB by S&P, which are commonly
known as "junk bonds." During 1995, the Fund invested less than 5% of its net
assets in below investment grade debt securities. See "Certain Investment
Strategies and Policies -- Risk Factors Regarding Non-Investment Grade Debt
Securities" for more information concerning the risk factors associated with
investing in such securities.
Compliance with such percentage requirements may limit the ability of the Fund
to maximize total return. Only that portion of the value of convertible senior
securities that is attributable to their fixed income characteristics will be
used for purposes of determining the percentage of the assets of the Fund that
are invested in fixed income senior securities. The actual percentage of the
assets invested in equity and fixed income securities will vary from time to
time, depending on the judgment of AIM as to general market and economic
conditions and trends, yields and interest rates and changes in fiscal and
monetary policies.
AIM GLOBAL UTILITIES FUND. The Fund's objective is to achieve a high level of
current income, and as a secondary objective the Fund seeks to achieve capital
appreciation, by investing primarily in the common and preferred stocks of
public utility companies. Under normal circumstances, at least 65% of the Fund's
total assets will be invested in securities of public utility companies (either
domestic or foreign). Public utility companies include companies that provide
electricity, natural gas or water and other sanitary services to the public, and
telephone or telegraph companies, and other companies providing public
communications services. The Fund may also invest in developing utility
technology companies 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. When AIM deems it appropriate, the Fund may also purchase bonds of any
such companies. Investments in bonds, however, will not exceed 25% of the Fund's
total assets. The Fund may invest up to 10% of its total assets in bonds rated
lower than Baa by Moody's or BBB by S&P (or comparable ratings by other
nationally recognized statistical rating organizations "NRSROs") or unrated
bonds which AIM determines to be of comparable quality. During 1995, the Fund
invested less than 5% of its net assets in below investment grade debt
securities. See "Certain Investment Strategies and Policies -- Risk Factors
Regarding Non-Investment Grade Debt Securities" for more information concerning
the risk factors associated with investing in such securities.
The Fund may invest up to 80% of its total assets in foreign securities,
including investments in American Depositary Receipts, European Depositary
Receipts and other securities representing underlying securities of foreign
issuers. Under normal market conditions, the Fund will be invested in securities
of issuers located in at least four countries, one of which will be the United
States, although for temporary defensive purposes it may invest 100% of its
total assets in securities of United States issuers. In some foreign countries,
utility companies are partially owned by government agencies. In some cases,
foreign government agencies may have significant investments in businesses other
than utility companies. Also, investments in securities of foreign issuers may
involve other risks which are not ordinarily associated with investments in
domestic issuers (see "Certain Investment Strategies and Policies -- Investments
in Foreign Securities").
In addition, investors should also be aware that the Fund may invest in
companies located within emerging or developing countries. An "emerging or
developing country" is a country in the initial stages of its industrial cycle.
Investments in emerging or developing countries involve exposure to economic
structures that are generally less diverse and mature and to political systems
which can be expected to have less stability than those of more developed
countries. Such countries may have relatively unstable governments,
17
<PAGE> 18
economies based on only a few industries, and securities markets which trade
only a small number of securities. Historical experience indicates that markets
of emerging or developing countries have been more volatile than the markets of
more mature economies; such markets have also from time to time provided higher
rates of return and greater risks to investors. AIM believes that these
characteristics of emerging or developing countries can be expected to continue
in the future.
A portfolio of utility company securities is subject to a different degree of
volatility than a more broadly diversified portfolio. Economic, operational or
regulatory changes that affect utility companies will have a material impact
upon the value of the securities that the Fund owns. Events that have no direct
connection with companies whose securities are owned by the Fund may affect the
prices of those securities, such as emergencies involving nuclear power plants.
Moreover, a portfolio of utilities industry securities is subject to the risks
unique to that industry, such as inflationary or other cost increases in fuel
and operating expenses, possible increases in the interest costs of loans needed
for capital construction programs, compliance with environmental regulations,
possible adverse changes in the regulatory climate and availability of fuel
sources. A description of the utilities industry is contained in the Statement
of Additional Information.
AIM GROWTH FUND. The Fund's objective is to achieve long-term growth of
capital by investing primarily in the common stocks of established medium-to
large-size companies with prospects for above-average, long-term earnings
growth. Realization of current income is an incidental consideration.
It is anticipated that common stocks will be the principal form of investment
by the Fund. The Fund's portfolio is primarily comprised of securities of two
basic categories of companies: (1) "core" companies, which the Fund's management
considers to have experienced above-average and consistent long-term growth in
earnings and to have excellent prospects for outstanding future growth, and (2)
"earnings acceleration" companies, which the Fund's management believes are
currently enjoying a dramatic increase in profits.
AIM HIGH YIELD FUND. The Fund's objective is to achieve a high level of
current income by investing primarily in publicly traded non-investment grade
debt securities. The Fund will also consider the possibility of capital growth
when it purchases and sells securities. Debt securities of less than investment
grade are considered "high risk" securities (commonly referred to as junk
bonds).
The Fund seeks high income principally by purchasing securities that are rated
Baa, Ba or B by Moody's or BBB, BB or B by S&P, or securities of comparable
quality in the opinion of AIM that are either unrated or rated by other NRSROs.
The Fund may also hold, from time to time, securities rated Caa by Moody's or
CCC by S&P, or, if unrated or rated by other NRSROs securities of comparable
quality as determined by AIM. It should be noted, however, that achieving the
Fund's investment objective may be more dependent on the credit analysis of AIM,
and less on that of credit rating agencies, than may be the case for funds that
invest in more highly rated bonds. At least 80% of the value of the Fund's total
assets will be invested in debt securities, including convertible debt
securities, and/or cash and cash equivalents. The Fund may also invest in
preferred stocks.
For a breakdown of the quality ratings of the Fund's investments as of
December 31, 1995, see the chart on page 21.
While the securities held by the Fund are expected to provide greater income
and, possibly, opportunity for greater gain than investments in more highly
rated securities, they may be subject to greater risk of loss of income and
principal and are more speculative in nature. The Fund's yield and the net asset
value of its shares may be expected to fluctuate over time. Therefore, an
investment in the Fund may not be appropriate for some investors and should not
constitute a complete investment program for others. See "Certain Investment
Strategies and Policies -- Risk Factors Regarding Non-Investment Grade Debt
Securities."
The Fund may invest in both illiquid securities and securities which are
subject to restrictions on resale because they have not been registered under
the Securities Act of 1933. See "Certain Investment Strategies and
Policies -- Illiquid Securities" for further information regarding such
investments.
AIM INCOME FUND. The Fund's objective is to achieve a high level of current
income consistent with reasonable concern for safety of principal, by investing
primarily in fixed rate corporate debt, U.S. Government obligations and U.S.
Government Agency Mortgage-Backed Securities. The Fund may also invest in
preferred stock issues and convertible corporate debt. In selecting portfolio
securities the Fund will, in accordance with its concern for safety of
principal, consider individual credit risks, but shareholders should recognize
that the market value of even high quality long-term fixed rate securities will
fluctuate with changes in interest rate levels. The percent of the Fund's assets
in various types of securities will vary in light of the Fund's investment
objective and existing market conditions.
The Fund may invest up to 40% of its total assets in securities issued by
foreign entities. Purchases of foreign securities which are payable in foreign
currencies will be affected either favorably or unfavorably by changes in the
value of the foreign currencies against the U.S. dollar. Investing in foreign
securities payable in foreign currencies carries increased risk to the Fund (see
"Certain Investment Strategies and Policies -- Investments in Foreign
Securities" and " -- Foreign Exchange Transactions"). The Fund will maintain
less than 35% of its net assets in debt securities rated below Baa/BBB, which
are commonly known as "junk bonds." See "Certain Investment Strategies and
Policies -- Risk Factors Regarding Non-Investment Grade Debt Securities."
18
<PAGE> 19
For a breakdown of the quality ratings of the Fund's investments as of
December 31, 1995, see the chart on page 21.
Ordinarily, the Fund does 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 in light of
the Fund's investment objectives, regardless of the holding period of that
security. The Fund will not necessarily dispose of a security because of a
reduction in rating. A higher rate of portfolio turnover may result in higher
transaction costs, including brokerage commissions. Also, to the extent that
higher portfolio turnover results in a higher rate of net realized capital gains
to a Fund, the portion of the Fund's distributions constituting taxable capital
gains may increase. See "Dividends, Distributions and Tax Matters."
AIM INTERMEDIATE GOVERNMENT FUND. The Fund's objective is to achieve a high
level of current income consistent with reasonable concern for safety of
principal by investing, under normal circumstances, at least 65% of its total
assets in debt securities issued, guaranteed or otherwise backed by the United
States Government. The Government securities which may be purchased by the Fund
include but are not limited to (1) U.S. Treasury obligations such as Treasury
Bills (maturities of one year or less), Treasury Notes (maturities of one to ten
years) and Treasury Bonds (generally maturities of greater than ten years) and
(2) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities ("Agency Securities") which are supported by any of the
following: (a) the full faith and credit of the U.S. Treasury, such as
obligations of the Government National Mortgage Association ("GNMA"), (b) the
right of the issuer to borrow an amount limited to a specific line of credit
from the U.S. Treasury, such as obligations of the Federal National Mortgage
Association ("FNMA"), the Federal Home Loan Bank and the U.S. Postal Service, or
(c) the credit of the agency or instrumentality, such as obligations of the
Federal Home Loan Mortgage Corporation ("FHLMC") and Federal Farm Credit System.
Although their close relationship with the U.S. Government is believed to make
them high-quality securities with minimal credit risks, the U.S. Government is
not obligated by law to support either FNMA or FHLMC. Accordingly, such
securities may involve risk of loss of principal and interest; however,
historically there have not been any defaults of such issues. For a listing of
some of the types of Agency Securities in which the Fund may invest, see
Appendix B to this Prospectus. The Fund may also invest in U.S. Government
Agency Mortgage-Backed Securities. Mortgage-backed securities consist of
interests in underlying mortgages with maturities of up to thirty years.
The Fund purchases primarily fixed-rate securities, including but not limited
to high coupon U.S. Government Agency Mortgage-Backed Securities, which provide
a higher coupon at the time of purchase than the then prevailing market rate
yield. The prices of high coupon U.S. Government Agency Mortgage-Backed
Securities do not tend to rise as rapidly as those of traditional fixed-rate
securities at times when interest rates are decreasing, and tend to decline more
slowly at times when interest rates are increasing. The Fund may purchase such
securities at a premium, which means that a faster principal prepayment rate
than expected will reduce the market value of and income from such securities,
while a slower prepayment rate will tend to increase the market value of and
income from such securities.
The composition and weighted average maturity of the Fund's portfolio will
vary from time to time, based upon AIM's determination of how best to achieve
the Fund's investment objective. The Fund may invest in Government securities of
all maturities, short-term, intermediate-term and long-term. The Fund will
maintain a dollar-weighted average portfolio maturity of between three and ten
years. This policy regarding portfolio maturity is a non-fundamental policy of
the Fund.
AIM MONEY MARKET FUND. The Fund's objective is to provide as high a level of
current income as is consistent with the preservation of capital and liquidity.
The Fund intends to invest in money market instruments such as bankers'
acceptances, certificates of deposit, repurchase agreements, master notes, time
deposits and commercial paper, all of which will be denominated in U.S. dollars
(referred to collectively as "Money Market Instruments") and U.S. Government
direct obligations and U.S. Government agencies' securities. Bankers'
acceptances, certificates of deposit and time deposits may be purchased from
U.S. or foreign banks. Certain types of Money Market Instruments are briefly
described in Appendix A to this Prospectus and are described more fully in the
Statement of Additional Information.
The Fund may invest in other types of Money Market Instruments not prohibited
by its investment restrictions, if approved by the trustees. The Fund will not
invest in instruments maturing more than 397 days from the date of investment,
and will maintain a dollar-weighted average portfolio maturity of 90 days or
less.
The Fund will limit investments in Money Market Instruments to those which at
the date 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. Generally, "First
Tier" securities are securities that are rated in the highest rating category by
two NRSROs, or, if only rated by one NRSRO, are rated in the highest rating
category by that NRSRO, or, if unrated, are determined by AIM (under the
supervision of and pursuant to guidelines established by the Board of Trustees)
to be of comparable quality to a rated security that meets the foregoing quality
standards. For a complete definition of a "First Tier" security, see the
definition set forth in the Statement of Additional Information.
The Fund must also comply with the requirements of Rule 2a-7 under the 1940
Act, which governs the operations of money market funds and may be more
restrictive than the Fund's restrictions. If any of the Fund's policies and
restrictions are more restrictive than Rule 2a-7, such policies and restrictions
will be followed.
19
<PAGE> 20
The Fund will normally hold portfolio securities to maturity but may dispose
of such securities prior to maturity if AIM believes such disposition advisable.
Investing in Money Market Instruments of short maturity and/or actively managing
its portfolio will result in a large number of transactions, but since the costs
of these transactions are small, they are not expected to have a significant
effect on net asset value or yield.
AIM MUNICIPAL BOND FUND. The Fund's objective is to achieve a high level of
current income exempt from federal income taxes consistent with the preservation
of principal by investing in a diversified portfolio of municipal bonds. These
investments may include obligations issued by or on behalf of states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies, authorities and instrumentalities,
the interest from which, in the opinion of bond counsel, is exempt from federal
income tax.
Municipal bonds include debt obligations of varying maturities issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities, the refunding of outstanding obligations, the
obtaining of funds for general operating expenses and the lending of such funds
to other public institutions and facilities. In addition, certain types of
industrial development bonds are issued by or on behalf of public authorities to
obtain funds to provide for the construction, equipment, repair or improvement
of privately operated facilities ("private activity bonds"). Such obligations
are considered to be municipal bonds appropriate for investment by the Fund,
provided that the interest paid thereon, in the opinion of bond counsel, is
exempt from federal income taxes. As used in this Prospectus and the Statement
of Additional Information, interest which is "tax-exempt" or "exempt from
federal income taxes" means interest on municipal bonds which is excluded from
gross income for federal income tax purposes, but which may give rise to federal
alternative minimum tax liability. The principal and interest payments on
private activity bonds (such as industrial development or pollution control
bonds) are the responsibility of the industrial user and, therefore, are not
backed by the taxing power of the issuing municipality. Such obligations are
included within the term municipal bonds if the interest paid thereon qualifies
for exemption from federal income tax, but the interest on private activity
bonds will be considered to be an item of preference for purposes of alternative
minimum tax liability under the Internal Revenue Code of 1986, as amended (the
"Code"). See "Tax Matters" in the Statement of Additional Information. The Fund
will invest at least 80% of its total invested assets in securities that do not
pay interest subject to federal income taxes and that do not constitute an item
of preference for purposes of the alternative minimum tax.
In addition, the Fund will invest at least 80% of its total invested assets in
municipal bonds. At least 80% of the municipal securities purchased by the Fund
will be rated within the four highest ratings, or will be obligations of issuers
having an issue of outstanding municipal bonds rated within the four highest
ratings of Moody's, S&P or any other NRSRO. However, up to 20% of the Fund's
total assets may be invested in unrated municipal bonds if in the judgment of
AIM, after considering available information regarding the creditworthiness of
the issuer, such bonds are similar in quality to those bonds rated within the
four highest ratings mentioned above. The Fund will maintain less than 20% of
its total assets in securities rated below Baa/BBB (or a comparable rating of
any other NRSRO). For purposes of the foregoing percentage limitations,
municipal securities (i) which have been collateralized with U.S. Government
securities held in escrow until the municipal securities' refunding date or
final maturity, but (ii) which have not been re-rated by a NRSRO, will be
treated by the Fund as the equivalent of Aaa/AAA rated securities. During 1995,
the Fund invested less than 5% of its net assets in below investment grade debt
securities. See "Certain Investment Strategies and Policies -- Risk Factors
Regarding Non-Investment Grade Debt Securities" for more information concerning
the risk factors associated with investing in such securities.
Since the Fund invests primarily in municipal obligations, the marketability
and market value of these obligations may be affected by certain constitutional
amendments, legislative measures, executive orders, administrative regulations
and voter initiatives as well as regional economies. The ability of the Fund to
achieve its objective is affected by the ability of municipal issuers to meet
their payment obligations. Problems which may arise in the foregoing areas and
which are not resolved could adversely affect the various municipal issuers'
abilities to meet their financial obligations.
The Fund may invest in short-term obligations, including taxable investments,
to establish a defensive position in anticipation of a market decline with a
corresponding rise in interest rates. Such short-term obligations include notes
issued by or on behalf of municipal issuers, obligations of the U.S. Government,
its agencies or instrumentalities, instruments of domestic banks, domestic
commercial paper and other cash equivalent investments. Interest income from
certain short-term holdings may be taxable to shareholders as ordinary income.
AIM VALUE FUND. The Fund's objective is to achieve long-term growth of capital
by investing primarily in equity securities judged by the Fund's investment
advisor to be undervalued relative to the investment advisor's appraisal of the
current or projected earnings of the companies issuing the securities, or
relative to current market values of assets owned by the companies issuing the
securities or relative to the equity market generally. Income is a secondary
objective and would be satisfied principally from the income (interest and
dividends) generated by the common stocks, convertible bonds and convertible
preferred stocks that make up the Fund's portfolio. The Fund should not be
purchased by those who seek income as their primary investment objective.
20
<PAGE> 21
In addition to the securities described above, the Fund may also acquire
preferred stocks and debt instruments having prospects for growth of capital.
Although these different types of securities can be expected to generate amounts
of income to satisfy the Fund's secondary objective, they will be purchased for
their potential for growth of capital.
The primary emphasis of AIM's search for undervalued equity securities is in
four categories: (1) out-of-favor cyclical growth companies; (2) established
growth companies that are undervalued compared to historical relative valuation
parameters; (3) companies where there is early but tangible evidence of
improving prospects which are not yet reflected in the price of the company's
equity securities; and (4) companies whose equity securities are selling at
prices that do not reflect the current market value of their assets and where
there is reason to expect realization of this potential in the form of increased
equity values.
Because AIM VALUE FUND invests in equity securities judged by the Fund's
investment advisor to be undervalued relative to the investment advisor's
appraisal of the current or projected earnings of the companies issuing such
securities, investors should carefully assess the risks associated with an
investment in the Fund.
PORTFOLIO RATINGS. During 1995, the percentage of average annual assets of AIM
HIGH YIELD FUND and AIM INCOME FUND, calculated on a dollar weighted basis,
which was invested in securities within the various rating categories (based on
the higher of Standard and Poor's Corporation and Moody's Investors Service,
Inc. ratings as described in Appendix C), and in unrated securities determined
to be of comparable quality, was as follows:
<TABLE>
<CAPTION>
AIM
HIGH AIM
YIELD INCOME
FUND FUND
----- -----
<S> <C> <C>
AAA/Aaa................................................................... 0% 28.03%
AA/Aa..................................................................... 0% 4.97%
A/A....................................................................... 0% 11.97%
BBB/Baa................................................................... 0% 24.67%
BB/Ba..................................................................... 11.52% 10.59%
B/B....................................................................... 75.82% 18.45%
CCC/Caa................................................................... 7.60% 1.08%
CC/Ca..................................................................... 0% 0%
C/C....................................................................... 0% 0%
Unrated................................................................... 5.06% 0.24%
----- -----
Total Average Annual Assets.......................................... 100% 100%
</TABLE>
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CERTAIN INVESTMENT STRATEGIES AND POLICIES
In pursuit of its objectives and policies, one or more of the Funds may employ
one or more of the following strategies in order to enhance investment results:
MONEY MARKET INSTRUMENTS. (All Funds). When deemed appropriate for temporary
or defensive purposes, each of the Funds may hold substantially all of its
assets in the form of cash or cash equivalent Money Market Instruments. Of
course, AIM MONEY MARKET FUND invests exclusively in Money Market Instruments.
None of the Funds, other than AIM MONEY MARKET FUND, is required to limit such
investments to those which, at the date of purchase, are "First Tier" securities
as that term is defined in Rule 2a-7 under the 1940 Act.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. (All Funds).
Each Fund may purchase securities on a "when-issued" basis, that is, 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). Each Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. A Fund will only make commitments to purchase
when-issued or delayed delivery 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.
Investment in securities on a when-issued or delayed delivery basis may
increase a Fund's exposure to market fluctuation and may increase the
possibility that the Fund will incur short-term gains subject to federal
taxation or short-term losses if the Fund must engage in portfolio transactions
in order to honor a when-issued or delayed delivery commitment. In a delayed
delivery transaction, the Fund relies on the other party to complete the
transaction. If the transaction is not completed, the Fund may miss a price or
yield considered to be advantageous. A Fund will employ techniques designed to
reduce such risks. If a Fund purchases a when-issued security, the Fund's
custodian bank will segregate cash or other high grade securities (including
temporary investments and Municipal Securities) in an amount equal to the
when-issued commitment. If the market value of such securities declines,
additional cash or securities will be segregated on a daily basis so that the
market value of the segregated assets will equal the amount of the Fund's
21
<PAGE> 22
when-issued commitments. To the extent cash and securities are segregated, they
will not be available for new investments or to meet redemptions. Securities
purchased on a delayed delivery basis may require a similar segregation of cash
or other high grade securities. For a more complete description of when-issued
securities and delayed delivery transactions see the Statement of Additional
Information.
DOLLAR ROLL TRANSACTIONS. AIM INCOME FUND and AIM INTERMEDIATE GOVERNMENT FUND
only. In order to enhance portfolio returns and manage prepayment risks, AIM
INCOME FUND and AIM INTERMEDIATE GOVERNMENT FUND may engage in dollar roll
transactions with respect to mortgage securities issued by GNMA, FNMA and FHLMC.
In a dollar roll transaction, a 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, a 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 a Fund
exceeding the yield on the sold security.
Dollar roll transactions involve the risk that the market value of the
securities retained by a 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. AIM INCOME FUND and AIM INTERMEDIATE GOVERNMENT FUND will limit
their respective borrowings from banks, reverse repurchase agreements and dollar
roll transactions to an aggregate of 33-1/3% of their respective total assets at
the time of investment. A Fund will not purchase additional securities when any
borrowings from banks exceed 5% of the Fund's total assets. For further
information regarding reverse repurchase agreements see the Statement of
Additional Information.
STOCK INDEX FUTURES CONTRACTS AND RELATED OPTIONS. (AIM BALANCED FUND, AIM
GLOBAL UTILITIES FUND, AIM GROWTH FUND and AIM VALUE FUND ("Equity Funds")).
INTEREST RATE FUTURES CONTRACTS AND RELATED OPTIONS. (AIM BALANCED FUND, AIM
HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND and AIM
MUNICIPAL BOND FUND ("Debt Funds")). Each of the Equity Funds may purchase and
sell stock index futures contracts or purchase and sell options thereon in order
to hedge the value of their respective portfolios against changes in market
conditions. Similarly, each of the Debt Funds may purchase and sell interest
rate futures contracts or purchase and sell options thereon in order to hedge
the value of their respective portfolios against changes in market conditions. 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 or
other currency 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. 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.
Generally, a Fund may elect to close a position in a futures contract by taking
an opposite position which will operate to terminate the Fund's position in the
futures contract.
There are risks associated with investments in stock index futures contracts,
interest rate futures contracts, and options on such contracts. During certain
market conditions, purchases and sales of futures contracts may not completely
offset a decline or rise in the value of a Fund's portfolio. In the futures
markets, it may not always be possible to execute a buy or sell order at the
desired price, or to close out an open position due to market conditions, limits
on open positions and/or daily price fluctuations. Changes in the market value
of a Fund's portfolio may differ substantially from the changes anticipated by
the Fund when hedged positions were established and unanticipated price
movements in a futures contract may result in a loss substantially greater than
a Fund's initial investment in such contract. Successful use of futures
contracts and related options is dependent upon AIM's ability to predict
correctly movements in the direction of the applicable markets. No assurance can
be given that AIM's judgment in this respect will be correct.
No Fund may purchase or sell futures contracts or purchase or sell related
options if, immediately thereafter, the sum of the amount of margin deposits and
premiums on open positions with respect to futures contracts and related options
would exceed 5% of the market value of a Fund's total assets. See the Statement
of Additional Information for a description of a Fund's investments in futures
contracts and options on futures contracts, including certain additional risks.
ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net assets (10% of
the net assets of AIM MONEY MARKET FUND) in securities that are illiquid.
Illiquid securities include securities that have no readily available market
quotations and cannot be disposed of promptly (within seven days) in the normal
course of business at a price at which they are valued. Illiquid securities may
include securities that are subject to restrictions on resale because they have
not been registered under the Securities Act of 1933. Restricted securities may,
in certain circumstances, be resold pursuant to Rule 144A, and thus may or may
not constitute illiquid securities. Limitations on the resale of restricted
securities may have an adverse effect on their marketability, which may prevent
the Fund from disposing of them promptly at reasonable prices. The Fund may have
to bear the expense of registering such securities for resale, and the risk of
substantial delays in effecting such registrations. The Trust's Board of
Trustees is responsible for developing and estab-
22
<PAGE> 23
lishing guidelines and procedures for determining the liquidity of Rule 144A
restricted securities on behalf of the Funds and monitoring AIM's implementation
of the guidelines and procedures.
RISK FACTORS REGARDING NON-INVESTMENT GRADE DEBT SECURITIES. AIM HIGH YIELD
FUND, and to a lesser extent AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM
INCOME FUND and AIM MUNICIPAL BOND FUND, seek to meet their respective
investment objectives by investing in non-investment grade debt securities,
commonly known as "junk bonds." While generally providing greater income and
opportunity for gain, non-investment grade debt securities may be subject to
greater risks than higher-rated securities. Economic downturns tend to disrupt
the market for junk bonds and adversely affect their values. Such economic
downturns may be expected to result in increased price volatility for junk bonds
and of the value of shares of the above-named Funds, and increased issuer
defaults on junk bonds.
In addition, many issuers of junk bonds are substantially leveraged, which may
impair their ability to meet their obligations. In some cases, junk bonds are
subordinated to the prior payment of senior indebtedness, which potentially
limits a Fund's ability to fully recover principal or to receive payments when
senior securities are subject to a default.
The credit rating of a junk bond does not necessarily address its market value
risk, and ratings may from time to time change to reflect developments regarding
the issuer's financial condition. Junk bonds have speculative characteristics
which are likely to increase in number and significance with each successive
lower rating category.
When the secondary market for junk bonds becomes more illiquid, or in the
absence of readily available market quotations for such securities, the relative
lack of reliable objective data makes it more difficult for the trustees to
value a Fund's securities, and judgment plays a more important role in
determining such valuations. Increased illiquidity in the junk bond market also
may affect a Fund's ability to dispose of such securities at desirable prices.
In the event a Fund experiences an unexpected level of net redemptions, the
Fund could be forced to sell its junk bonds without regard to their investment
merits, thereby decreasing the asset base upon which the Fund's expenses can be
spread and possibly reducing the Fund's rate of return. Prices of junk bonds
have been found to be less sensitive to fluctuations in interest rates, and more
sensitive to adverse economic changes and individual corporate developments than
those of higher-rated debt securities.
INVESTMENTS IN FOREIGN SECURITIES. (All Funds except AIM INTERMEDIATE
GOVERNMENT FUND and AIM MUNICIPAL BOND FUND). Each Fund may invest up to 25% of
its total assets (up to 20% for AIM BALANCED FUND, 40% for AIM INCOME FUND, 50%
for AIM MONEY MARKET FUND and 80% for AIM GLOBAL UTILITIES FUND) in foreign
securities, although AIM MONEY MARKET FUND may only invest in foreign securities
denominated in U.S. dollars. To the extent it invests in securities denominated
in foreign currencies, each Fund bears the risks of changes in the exchange
rates between U.S. currency and the foreign currency, as well as the
availability and status of foreign securities markets. Each Fund (other than AIM
MONEY MARKET FUND) may invest in securities of foreign issuers which are in the
form of American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), or other securities representing underlying securities of foreign
issuers, and such investments are treated as foreign securities for purposes of
percentage limitations on investments in foreign securities. For a discussion of
the risks pertaining to investments in foreign securities. See "Risk Factors
Regarding Foreign Securities" below.
FOREIGN EXCHANGE TRANSACTIONS. (All Funds except AIM INTERMEDIATE GOVERNMENT
FUND, AIM MONEY MARKET FUND and AIM MUNICIPAL BOND FUND). Each Fund has
authority to deal in foreign exchange between currencies of the different
countries in which it will invest as a hedge against possible variations in the
foreign exchange rates between those countries. This may be accomplished through
direct purchases or sales of foreign currency, purchases of options on futures
contracts with respect to foreign currency, and contractual agreements to
purchase or sell a specified currency at a specified future date (up to one
year) at a price set at the time of the contract. Such contractual commitments
may be forward contracts entered into directly with another party or exchange
traded futures contracts.
The Funds may purchase and sell options on futures contracts, forward
contracts or futures contracts which are denominated in a particular foreign
currency to hedge the risk of fluctuations in the value of another currency.
Each Fund's dealings in foreign exchange will be limited to hedging involving
either specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of foreign currency with respect to specific receivables or
payables of the Fund accruing in connection with the purchase or sale of its
portfolio securities, the sale and redemption of shares of the Fund, or the
payment of dividends and distributions by the Fund. Position hedging is the
purchase or sale of foreign currency with respect to portfolio security
positions denominated or quoted in a foreign currency. The Funds will not
speculate in foreign exchange. No Fund will commit a larger percentage of its
total assets to foreign exchange hedges than the percentage of its total assets
which it could invest in foreign securities. Further information concerning
futures contracts and related options is set forth above.
RISK FACTORS REGARDING FOREIGN SECURITIES. Investments by a Fund in foreign
securities, whether denominated in U.S. dollars or foreign currencies, may
entail all of the risks set forth below. Investments by a Fund in ADRs, EDRs or
similar securities also may entail some or all of the risks described below.
23
<PAGE> 24
Currency Risk. The value of the Funds' foreign investments will be affected by
changes in currency exchange rates. The U.S. dollar value of a foreign security
decreases when the value of the U.S. dollar rises against the foreign currency
in which the security is denominated, and increases when the value of the U.S.
dollar falls against such currency.
Political and Economic Risk. The economies of many of the countries in which
the Funds may invest may not be as developed as the United States' economy and
may be subject to significantly different forces. Political or social
instability, expropriation or confiscatory taxation, and limitations on the
removal of funds or other assets could also adversely affect the value of the
Funds' investments.
Regulatory Risk. Foreign companies are not registered with the Securities and
Exchange Commission and are generally not subject to the regulatory controls
imposed on United States issuers and, as a consequence, there is generally less
publicly available information about foreign securities than is available about
domestic securities. Foreign companies are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic companies. Income from foreign
securities owned by the Funds may be reduced by a withholding tax at the source,
which tax would reduce dividend income payable to the Fund's shareholders.
Market Risk. The securities markets in many of the countries in which the
Funds invest will have substantially less trading volume than the major United
States markets. As a result, the securities of some foreign companies may be
less liquid and experience more price volatility than comparable domestic
securities. Increased custodian costs as well as administrative costs (such as
the need to use foreign custodians) may be associated with the maintenance of
assets in foreign jurisdictions. There is generally less government regulation
and supervision of foreign stock exchanges, brokers and issuers which may make
it difficult to enforce contractual obligations. In addition, transaction costs
in foreign securities markets are likely to be higher, since brokerage
commission rates in foreign countries are likely to be higher than in the United
States.
PORTFOLIO TURNOVER. (All Funds except AIM MONEY MARKET FUND). 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. Each Fund's historical portfolio
turnover rates are included in the Financial Highlights tables above. A higher
rate of portfolio turnover may result in higher transaction costs, including
brokerage commissions. Also, to the extent that higher portfolio turnover
results in a higher rate of net realized capital gains to a Fund, the portion of
the Fund's distributions constituting taxable capital gains may increase. See
"Dividends, Distributions and Tax Matters."
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Funds is vested in
the Trust's Board of Trustees. The Board of Trustees approves all significant
agreements between the Trust, on behalf of one or more of the Funds, and persons
or companies furnishing services to the Funds, including the investment advisory
agreement and administrative services agreement with AIM, the agreements with
AIM Distributors regarding distribution of each Fund's shares, the agreements
with State Street Bank and Trust Company and The Bank of New York as the
custodians and the transfer agency agreement with A I M Fund Services, Inc., a
wholly-owned subsidiary of AIM. The day-to-day operations of each Fund are
delegated to the officers of the Trust and to AIM, subject always to the
objective and policies of the applicable Fund and to the general supervision of
the Board of Trustees. Certain trustees and officers of the Trust are affiliated
with AIM and A I M Management Group Inc. ("AIM Management"), the parent
corporation of AIM. AIM Management is a holding company engaged in the financial
services business. Information concerning the Board of Trustees may be found in
the Statement of Additional Information.
INVESTMENT ADVISOR. A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite
1919, Houston, Texas 77046, serves as the investment advisor to each Fund
pursuant to a Master Investment Advisory Agreement, dated as of October 18, 1993
(the "Advisory Agreement"). AIM was organized in 1976 and, together with its
affiliates, manages or advises 43 investment company portfolios. As of April 1,
1996, the total assets of such investment company portfolios were approximately
$48.2 billion.
Under the terms of the Advisory Agreement, AIM supervises all aspects of each
Fund's operations and provides investment advisory services to the Funds. AIM
obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Funds. The Advisory
Agreement also provides that, upon the request of the Board of Trustees, AIM may
perform or arrange for certain accounting and other administrative services for
the Funds which are not required to be performed by AIM under the Advisory
Agreement. The Board of Trustees has made such a request. As a result, AIM and
the Trust have entered into a Master Administrative Services Agreement, dated as
of October 18, 1993, pursuant to which AIM is entitled to receive from each Fund
reimbursement of its costs or such reasonable compensation as may be approved by
the Board of Trustees. Currently, AIM is reimbursed for the services of the
Funds' principal financial officer and his staff, and any expenses related to
fund accounting services. In addition, pursuant to the terms of a Transfer
Agency and Service Agreement, A I M Fund Services, Inc. ("AFS"), a wholly-owned
subsidiary of AIM and registered transfer agent, receives a fee for its
provision of transfer agency, dividend distribution and disbursement and
shareholder services to the Funds. AFS' principal address is P.O. Box 4739,
Houston, Texas 77210-4739.
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<PAGE> 25
For a discussion of AIM's brokerage allocation policies and practices, see
"Portfolio Transactions and Brokerage" in the Statement of Additional
Information. In accordance with policies established by the Board of Trustees,
AIM may take into account sales of shares of the Funds and other funds advised
by AIM in selecting broker-dealers to effect portfolio transactions on behalf of
the Funds.
PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Funds. AIM's investment staff consists of 85 individuals. While
individual members of AIM's investment staff are assigned primary responsibility
for the day-to-day management of each of AIM's accounts, all accounts are
reviewed on a regular basis by AIM's Investment Policy Committee to ensure that
they are being invested in accordance with the accounts' and AIM's investment
policies. The individuals on the investment team who are primarily responsible
for the day-to-day management of each of the Funds (other than AIM MONEY MARKET
FUND) and their titles, if any, with AIM or its affiliates and the Trust, the
length of time they have been responsible for the management of the Funds, their
years of investment experience and prior experience (if they have been with AIM
for less than five years) are described below:
AIM Balanced Fund. Claude C. Cody IV is Vice President of A I M Capital
Management, Inc. ("AIM Capital"), a wholly-owned subsidiary of AIM; and has been
responsible for the Fund since its investment objective and policies were
changed to that of a balanced fund in 1993. Mr. Cody has been associated with
AIM since 1992 and has a total of 20 years of experience as an investment
professional. Prior to joining AIM in 1992, he was an Independent Consultant
(from 1990-1992), and Senior Vice President of America Savings and Loan (from
1988-1990) and Senior Vice President of Western Reserve Life (1988-1990) (both
subsidiaries of Kinder-Care Inc.), where he established an investment management
operation and managed three portfolios. Robert G. Alley is Senior Vice President
of AIM Capital; Vice President of AIM and of the Trust; and also has been
responsible for the Fund since 1993. Mr. Alley has been associated with AIM
since 1992 and has a total of 24 years of experience as an investment
professional. Prior to joining AIM, he was Senior Fixed Income Manager for
Waddell and Reed, Inc. Craig A. Smith is Vice President of AIM Capital and also
has been responsible for the Fund since January 1996. Mr. Smith has been
associated with AIM since 1989 and has a total of six years of experience as an
investment professional.
AIM Global Utilities Fund. Claude C. Cody IV and Robert G. Alley have been
responsible for the management of the Fund since 1992. Craig A. Smith has been
responsible for the management of the Fund since January 1996. Background
information for Mr. Cody, Mr. Alley and Mr. Smith is discussed above with
respect to the management of AIM BALANCED FUND.
AIM Growth Fund. Jonathan C. Schoolar is Senior Vice President and Director of
AIM Capital, Vice President of AIM and the Trust, and has been responsible for
the Fund since 1994. He has been associated with AIM and/or its affiliates since
1986 and has 11 years of experience as an investment professional. Robert M.
Kippes is Vice President of AIM Capital and has been responsible for the Fund
since 1994. Mr. Kippes has been associated with AIM and/or its affiliates since
1989 and has over five years of experience as an investment professional. David
P. Barnard is Vice President of AIM Capital and has been responsible for the
Fund since 1992. Mr. Barnard has been associated with AIM since 1982 and has 21
years of experience as an investment professional.
AIM High Yield Fund. John L. Pessarra is Vice President of AIM Capital and has
been responsible for the Fund since 1992. Mr. Pessarra has been associated with
AIM since 1990 and has a total of 12 years of experience as an investment
professional. Kevin E. Rogers is Vice President of AIM Capital and has been
responsible for the Fund since 1995. Mr. Rogers has been associated with AIM
since 1991 and has over nine years of experience as an investment professional.
AIM Income Fund. Robert G. Alley and John L. Pessarra have been responsible
for the management of the Fund since 1992. Mr. Alley's background is discussed
above with respect to the management of AIM BALANCED FUND, and Mr. Pessarra's
background is discussed above with respect to the management of AIM HIGH YIELD
FUND. Carolyn L. Gibbs is Assistant Vice President of AIM Capital and has been
responsible for the Fund since 1995. Ms. Gibbs has been associated with AIM
since 1992 and has over 11 years of experience as an investment professional.
Prior to 1992, Ms. Gibbs was a financial analyst with Northwest Airlines.
AIM Intermediate Government Fund. Karen Dunn Kelley is Senior Vice President
of AIM Capital, Vice President of AIM and of the Trust and has been responsible
for the Fund since 1992. Ms. Kelley has been associated with AIM since 1989 and
has a total of 12 years of experience as an investment professional. Meggan
Walsh is Vice President of AIM Capital and has been responsible for the Fund
since 1992. Ms. Walsh has been associated with AIM since 1991 and has over eight
years of experience as an investment professional.
AIM Municipal Bond Fund. Richard A. Berry is Vice President of AIM Capital and
has been responsible for the Fund since 1992. Mr. Berry has been associated with
AIM since 1987 and has a total of 28 years of experience as an investment
professional. Stephen D. Turman is Vice President of AIM Capital and has been
responsible for the Fund since 1992. Mr. Turman has been associated with AIM
since 1985 and has a total of 15 years of experience as an investment
professional.
AIM Value Fund. Joel E. Dobberpuhl is Vice President of AIM Capital and has
been responsible for the Fund since 1992. Mr. Dobberpuhl has been associated
with AIM since 1990 and has a total of seven years of experience as an
investment professional. Claude C. Cody IV has been responsible for the
management of the Fund since 1992. Mr. Cody's background is discussed above with
respect to the management of AIM BALANCED FUND.
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<PAGE> 26
FEES AND EXPENSES. For the year ended December 31, 1995, each Fund (other than
AIM MONEY MARKET FUND) paid the following compensation to AIM for its advisory
services, and the total expenses of each such Fund's class were, stated as a
percentage of that Class' average daily net assets, as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
COMPENSATION EXPENSE EXPENSE
TO AIM RATIO RATIO
------------ ------- -------
<S> <C> <C> <C>
AIM Balanced Fund............................ 0.72% 1.43% 2.21%
AIM Global Utilities Fund.................... 0.59% 1.21% 1.97%
AIM Growth Fund.............................. 0.74% 1.28% 2.13%
AIM High Yield Fund.......................... 0.53% 0.96% 1.73%
AIM Income Fund.............................. 0.48% 0.98% 1.79%
AIM Intermediate Government Fund............. 0.50% 1.08% 1.86%
AIM Municipal Bond Fund...................... 0.47% 0.88% 1.68%
AIM Value Fund............................... 0.62% 1.12% 1.94%
</TABLE>
For the year ended December 31, 1995, AIM MONEY MARKET FUND paid 0.55% of its
average daily net assets to AIM as compensation for its advisory services, and
the Class A shares', Class B shares' and Class C shares' total expenses for such
period were 1.03%, 1.78% and 1.04% of the Class' average daily net assets,
respectively.
For the year ended December 31, 1995, each Fund reimbursed AIM for
administrative services in the following amounts, stated as a percentage of the
Funds' average daily net assets:
<TABLE>
<CAPTION>
REIMBURSEMENT
PAYMENTS
-------------
<S> <C>
AIM Balanced Fund................................................ .07%
AIM Global Utilities Fund........................................ .03%
AIM Growth Fund.................................................. .03%
AIM High Yield Fund.............................................. .01%
AIM Income Fund.................................................. .03%
AIM Intermediate Government Fund................................. .04%
AIM Money Market Fund............................................ .01%
AIM Municipal Bond Fund.......................................... .02%
AIM Value Fund................................................... .003%
</TABLE>
FEE WAIVERS. In order to increase the return to investors, AIM may from time
to time voluntarily waive or reduce its fee, while retaining its ability to be
reimbursed for such fee prior to the end of each fiscal year. AIM is currently
voluntarily waiving a portion of its advisory fees payable by AIM VALUE FUND as
follows: 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 to
and including $2 billion, plus 0.60% of the Fund's average daily net assets in
excess of $2 billion. Fee waivers or reductions, other than those set forth in
the Advisory Agreement, may be rescinded at any time and without notice to
investors.
DISTRIBUTOR. The Trust has entered into Master Distribution Agreements
relating to the Funds (the "Distribution Agreements") with A I M Distributors,
Inc. ("AIM Distributors"), a registered broker-dealer and a wholly-owned
subsidiary of AIM, pursuant to which AIM Distributors acts as the distributor of
Class A and Class B shares of the Funds and Class C shares of AIM MONEY MARKET
FUND. The address of AIM Distributors is P.O. Box 4739, Houston, Texas
77210-4739. Certain trustees and officers of the Trust are affiliated with AIM
Distributors and AIM Management.
The Distribution Agreements provide AIM Distributors with the exclusive right
to distribute shares of the Funds directly and through institutions with whom
AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
institutions through whom Class B shares are sold a sales commission under
schedules established by AIM Distributors. The Distribution Agreement for the
Class B shares provides that AIM Distributors (or its assignee or transferee)
will receive 0.75% (of the total 1.00% payable under the distribution plan
applicable to Class B shares) of each Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges in respect of the outstanding Class B shares attributable to the
distribution efforts of AIM Distributors; provided, however, that
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<PAGE> 27
a complete termination of the Class B shares master distribution plan (as
defined in the plan) would terminate all payments to AIM Distributors.
Termination of the Class B shares distribution plan or Distribution Agreement
does not affect the obligation of Class B shareholders to pay contingent
deferred sales charges.
DISTRIBUTION PLANS. The Trust has adopted a master distribution plan
applicable to Class A shares of the Funds and Class C shares of AIM MONEY MARKET
FUND (the "Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act. Under
the Class A and C Plan, each Fund pays compensation of 0.25% per annum of the
average daily net assets attributable to such Fund's Class A shares or Class C
shares, respectively, to AIM Distributors for the purpose of financing any
activity which is primarily intended to result in the sale of Class A shares or
Class C shares of the Fund. 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 selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own shares of the Funds.
The Trust has also adopted a master distribution plan applicable to Class B
shares of the Funds (the "Class B Plan"). Under the Class B Plan, each Fund pays
distribution expenses at an annual rate of 1.00% of the average daily net assets
attributable to such Fund's Class B shares. Of such amount, the Fund pays a
service fee of 0.25% of the average daily net assets attributable to such Fund's
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 would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to any Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of such Fund.
Activities that may be financed under the Class A and C Plan and the Class B
Plan (collectively, the "Plans") include, but are 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, supplemental payments to dealers and other
institutions such as asset-based sales charges or as payments of service fees
under shareholder service arrangements, and the cost of administering the Plans.
These amounts payable by a Fund under the Plans need not be directly related to
the expenses actually incurred by AIM Distributors on behalf of each Fund. Thus,
even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Trust will not be obligated to
pay more than that fee, and if AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee. Payments
pursuant to the Plans are subject to any applicable limitations imposed by the
rules of the National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its fee that has not been
assigned or transferred, while retaining its ability to be reimbursed for such
fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Funds on an agency basis, may
receive payments from the Funds pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent, for the Funds in
making such payments. The Funds will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust is organized as a Delaware business trust pursuant to an Agreement
and Declaration of Trust dated May 5, 1993, as amended (the "Trust Agreement").
The Trust is an open-end series management investment company, and may consist
of one or more series portfolios as authorized from time to time by the Board of
Trustees. The Trust currently consists of nine separate series, and each of the
Funds represents one series.
Class A shares, Class B shares and, in the case of AIM MONEY MARKET FUND,
Class C shares, of the same Fund represent interests in that Fund's assets and
have identical voting, dividend, liquidation and other rights on the same terms
and conditions, except that each class of shares bears differing class-specific
expenses, is subject to differing sales loads, conversion features and exchange
privileges, and has exclusive voting rights on matters pertaining to that class'
distribution plan (although both Class A and C shareholders and Class B
shareholders of a given portfolio must approve any material increase in fees
payable with respect to such portfolio under the Class A and C Plan).
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<PAGE> 28
The Trust is not required to hold annual or regular meetings of shareholders.
Meetings of shareholders of a Fund will be held from time to time to consider
matters requiring a vote of such shareholders in accordance with the
requirements of the 1940 Act, state law or the provisions of the Trust
Agreement. It is not expected that shareholder meetings will be held annually.
Except as specifically noted above, shareholders of each Fund are entitled to
one vote per share (with proportionate voting for fractional shares),
irrespective of the relative net asset value of the shares of a Fund. However,
on matters affecting an individual Fund or class of shares, a separate vote of
shareholders of that Fund or class is required. Shareholders of a Fund or class
are not entitled to vote on any matter which does not affect that Fund or class
but which requires a separate vote of another Fund or class. An example of a
matter which would be voted on separately by shareholders of each Fund is the
approval of the Advisory Agreement, and an example of a matter which would be
voted on separately by shareholders of each class of shares is approval of the
distribution plans. When issued, shares of each Fund are fully paid and
nonassessable, have no preemptive or subscription rights, and are fully
transferable. Other than the automatic conversion of Class B shares to Class A
shares, there are no conversion rights. Shares do not have cumulative voting
rights, which means that in situations in which shareholders elect trustees,
holders of more than 50% of the shares voting for the election of trustees can
elect all of the trustees of the Trust, and the holders of less than 50% of the
shares voting for the election of trustees will not be able to elect any
trustees.
The Trust Agreement provides that the trustees of the Trust shall hold office
during the existence of the Trust, except as follows: (a) any trustee may resign
or retire; (b) any trustee may be removed by a vote of the majority of the
outstanding shares of the Trust, or at any time by written instrument signed by
at least two-thirds of the trustees and specifying when such removal becomes
effective; or (c) any trustee who has died or become incapacitated and is unable
to serve may be removed by a written instrument signed by a majority of the
trustees.
Under Delaware law, the shareholders of the Trust enjoy the same limitations
of liability extended to shareholders of private, for-profit corporations. There
is a remote possibility, however, that under certain circumstances shareholders
of the Trust may be held personally liable for the Trust's obligations. However,
the Trust Agreement disclaims shareholder liability for acts or obligations of
the Trust and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Trust or a
trustee. The Trust Agreement provides for indemnification from the Trust
property for all losses and expenses of any shareholder held personally liable
for the Trust's obligations. Thus, the risk of a shareholder incurring financial
loss on account of such liability is limited to circumstances in which the Trust
itself would be unable to meet its obligations and where the other party was
held not to be bound by the disclaimer.
28
<PAGE> 29
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 5:30 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS(R)
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM CHARTER FUND AIM LIMITED MATURITY TREASURY SHARES
AIM CONSTELLATION FUND AIM MONEY MARKET FUND*
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM MUNICIPAL BOND FUND
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL INCOME FUND AIM TAX-EXEMPT CASH FUND*
AIM GLOBAL UTILITIES FUND AIM TAX-FREE INTERMEDIATE SHARES
AIM GROWTH FUND AIM VALUE FUND
AIM HIGH YIELD FUND AIM WEINGARTEN FUND
AIM INCOME FUND
</TABLE>
* Shares of AIM TAX-EXEMPT CASH FUND, and Class C shares of AIM MONEY MARKET
FUND, are offered to investors at net asset value, without payment of a sales
charge, as described below. Other funds, including the Class A and Class B
shares of AIM MONEY MARKET FUND, are sold with an initial sales charge or
subject to a contingent deferred sales charge upon redemption, as described
below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Account ("IRA") is $250. There are no
minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
MCF 04/96*
A-1
<PAGE> 30
HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: AIM Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM AGGRESSIVE GROWTH FUND, AIM BALANCED FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM VALUE FUND and
AIM WEINGARTEN FUND (other than AIM AGGRESSIVE GROWTH FUND, and AIM
CONSTELLATION FUND, collectively, the "Multiple Class Funds") may be purchased
at their respective net asset value plus a sales charge as indicated below,
except that shares of AIM TAX-EXEMPT CASH FUND and Class C shares (the "Class C
shares") of AIM MONEY MARKET FUND are sold without a sales charge and Class B
shares (the "Class B shares") of the Multiple Class Funds are sold at net asset
value subject to a contingent deferred sales charge payable upon certain
redemptions. These contingent deferred sales charges are described under the
caption "How to Redeem Shares -- Multiple Distribution System." Securities
dealers and other persons entitled to receive compensation for selling or
servicing shares of a Multiple Class Fund may receive different compensation for
selling or servicing one particular class of shares over another class in the
same Multiple Class Fund. Factors an investor should consider prior to
purchasing Class A or Class B shares (or, if applicable, Class C shares) of a
Multiple Class Fund are described below under "Special Information Relating to
Multiple Class Funds." For information on purchasing any of the AIM Funds and to
receive a prospectus, please call (800) 347-4246. As described below, the sales
charge otherwise applicable to a purchase of shares of a fund may be reduced if
certain conditions are met. In order to take advantage of a reduced sales
charge, the prospective investor or his dealer must advise AIM Distributors that
the conditions for obtaining a reduced sales charge have been met. Net asset
value is determined in the manner described under the caption "Determination of
Net Asset Value." The following tables show the sales charge and dealer
concession at various investment levels for the AIM Funds.
MCF 04/96*
A-2
<PAGE> 31
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM AGGRESSIVE GROWTH FUND, AIM
CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH
FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and
AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ----------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." Purchases of $1,000,000 or more are
at net asset value, subject to a contingent deferred sales charge of 1% if
shares are redeemed prior to 18 months from the date such shares were purchased,
as described under the caption "How to Redeem Shares -- Contingent Deferred
Sales Charge Program for Large Purchases."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: AIM TAX-EXEMPT BOND FUND OF CONNECTICUT; and the Class A
shares of each of AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME
FUND, AIM INTERMEDIATE GOVERNMENT FUND and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ----------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." Purchases of $1,000,000 or more are
at net asset value, subject to a contingent deferred sales charge of 1% if
shares are redeemed prior to 18 months from the date such shares were purchased,
as described under the caption "How to Redeem Shares -- Contingent Deferred
Sales Charge Program for Large Purchases."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE
INTERMEDIATE SHARES.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ----------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
MCF 04/96*
A-3
<PAGE> 32
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE
SHARES as follows: 1% of the first $2 million of such purchases, plus 0.80% of
the next $1 million of such purchases, plus 0.50% of the next $17 million of
such purchases, plus 0.25% of amounts in excess of $20 million of such
purchases. See "Contingent Deferred Sales Charge Program for Large Purchases."
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of shares which normally involve
payment of initial sales charges, and which are sold at net asset value and are
not subject to a contingent deferred sales charge, in an amount up to 0.10% of
such purchases of shares of AIM LIMITED MATURITY TREASURY SHARES, and in an
amount up to 0.25% of such purchases of shares of AIM TAX-FREE INTERMEDIATE
SHARES.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM 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 of 0.25% with respect to such shares. The portion
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.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds, other than AIM MONEY MARKET FUND, currently offer two classes of shares,
and AIM MONEY MARKET FUND currently offers three classes of shares, through
separate distribution systems (the "Multiple Distribution System"). Although the
Class A and Class B shares (and with respect to AIM MONEY MARKET FUND, Class C
shares) of a particular Multiple Class Fund represent an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by Class A or Class B shares and, if applicable, Class C shares,
and other relevant factors, such as whether his or her investment goals are
long-term or short-term.
MCF 04/96*
A-4
<PAGE> 33
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Class B Plan payments of 1.00% per
annum on the average daily net assets of a Multiple Class Fund attributable
to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Class B Plan payments associated
with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES of AIM MONEY MARKET FUND are sold without an initial sales
charge and are not subject to a contingent deferred sales charge. Such
shares are, however, subject to the other fees and expenses described in
the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon or NYSE Close on any business day of
the Fund will be confirmed at the price next determined. Net asset value is
normally determined at 12:00 noon and NYSE Close on each business day of AIM
MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that either Money Market Fund can maintain a
$1.00 net asset value per share. In order to earn dividends with respect to AIM
MONEY MARKET FUND on the same day that a purchase is made, purchase payments in
the form of federal funds must be received by the Transfer Agent before 12:00
noon Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position. Class B shares of AIM MONEY MARKET
FUND are designed for temporary investment as part of an investment program in
the Class B shares and, unlike shares of most money market funds, are subject to
a contingent deferred sales charge as well as Rule 12b-1 distribution fees and
service fees.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of shares of AIM
TAX-EXEMPT CASH FUND, Class C shares of AIM MONEY MARKET FUND and Class B shares
of the Multiple Class Funds will not be taken into account in determining
whether a purchase qualifies for a reduction in initial sales charges.
MCF 04/96*
A-5
<PAGE> 34
The term "purchaser" means:
o an individual and his or her spouse and minor children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
o a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
o a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code and 457 plans, although more than one beneficiary or participant is
involved;
o a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP") where the employer has
notified AIM Distributors in writing that all of its related employee SEP
or SARSEP accounts should be linked;
o any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
o the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for (i) AIM
TAX-EXEMPT CASH FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class
B shares of the Multiple Class Funds) within the following 13 consecutive
months. By marking the LOI section on the account application and by signing the
account application, the purchaser indicates that he understands and agrees to
the terms of the LOI and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does
MCF 04/96*
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<PAGE> 35
not pay such difference within 20 days of the expiration date, he irrevocably
constitutes and appoints the Transfer Agent as his attorney to surrender for
redemption any or all shares, to make up such difference within 60 days of the
expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) AIM TAX-EXEMPT CASH
FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the
Multiple Class Funds) at the time of the proposed purchase. Rights of
Accumulation are also available to holders of the Connecticut General Guaranteed
Account, established for tax-qualified group annuities, for contracts purchased
on or before June 30, 1992. To determine whether or not a reduced initial sales
charge applies to a proposed purchase, AIM Distributors takes into account not
only the money which is invested upon such proposed purchase, but also the value
of all shares of the AIM Funds (except for (i) AIM TAX-EXEMPT CASH FUND and
Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the Multiple
Class Funds) owned by such purchaser, calculated at their then current public
offering price. If a purchaser so qualifies for a reduced sales charge, the
reduced sales charge applies to the total amount of money then being invested by
such purchaser and not just to the portion that exceeds the breakpoint above
which a reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund with a maximum initial sales charge of 5.50%,
the reduced initial sales charge of 5.25% will apply to the full $20,000
purchase and not just to the $15,000 in excess of the $25,000 breakpoint. To
qualify for obtaining the discount applicable to a particular purchase, the
purchaser or his dealer must furnish AFS with a list of the account numbers and
the names in which such accounts of the purchaser are registered at the time the
purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, minor children, parents and parents of spouse) of any
such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM, or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of the immediate family
(including spouse, minor children, parents and parents of spouse) of any such
person, or of CIGNA Corporation or of any of its affiliated companies, or of
First Data Investor Services Group (formerly The Shareholders Services Group,
Inc.); (e) any investment company sponsored by CIGNA Investments, Inc. or any of
its affiliated companies for the benefit of its directors' deferred compensation
plans; (f) discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, minor children, parents and parents of
spouse) of any such person, provided that purchases at net asset value are
permitted by the policies of such person's employer; and (h) certain
broker-dealers, investment advisers or bank trust departments that provide asset
allocation, similar specialized investment services or investment company
transaction services for their customers, that charge a minimum annual fee for
such services, and that have entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the initial amount invested in
the fund(s) is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3)
such shares are purchased by an employer-sponsored plan with at least 100
eligible employees, or (4) all of the plan's transactions are executed through a
single om-
MCF 04/96*
A-7
<PAGE> 36
nibus account per fund and the financial institution or service organization has
entered into an agreement with AIM Distributors with respect to their use of the
AIM Funds in connection with such accounts. Section 403(b) plans sponsored by
public educational institutions will not be eligible for net asset value
purchases based on the aggregate investment made by the plan or the number of
eligible employees. Participants in such plans will be eligible for reduced
sales charges based solely on the aggregate value of their individual
investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE
NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay investment
dealers or other financial service firms up to 1.00% of the net asset value of
any shares of the Load Funds (as defined on page A-10 herein) up to 0.10% of the
net asset value of any shares of AIM LIMITED MATURITY TREASURY SHARES, and up to
0.25% of the net asset value of any shares of all other AIM Funds sold at net
asset value to an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns Class A shares of a Multiple Class Fund, Class C shares of AIM Money
Market Fund, or shares of another AIM Fund can arrange for monthly, quarterly or
annual checks in any amount (but not less than $50) to be drawn against the
balance of his account in the designated AIM Fund. Shareholders who own Class B
shares of a Multiple Class Fund can only arrange for monthly or quarterly
withdrawals under a Systematic Withdrawal Plan. Payment of this amount is
normally made on or about the tenth or the twenty-fifth day of each month in
which a payment is to be made. A minimum account balance of $5,000 is required
to establish a Systematic Withdrawal Plan, but there is no requirement
thereafter to maintain any minimum investment. No contingent deferred sales
charge with respect to Class B shares of a Multiple Class Fund will be imposed
on withdrawals made under a Systematic Withdrawal Plan, provided that the
amounts withdrawn under such a plan do not exceed on an annual basis 12% of the
account value at the time the shareholder elects to participate in the
Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to Class B
shares that exceed on an annual basis 12% of such account will be subject to a
contingent deferred sales charge on the amounts exceeding 12% of the initial
account value.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic With-
MCF 04/96*
A-8
<PAGE> 37
drawal Plan, the Transfer Agent redeems sufficient full and fractional shares at
their net asset value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B Shares and Class C Shares of the Multiple Class Funds), it
is disadvantageous to effect such purchases while a Systematic Withdrawal Plan
is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly or quarterly
investments may establish an Automatic Investment Plan. Under this plan, on or
about the tenth and/or twenty-fifth day of the applicable month, a draft is
drawn on the shareholder's bank account in the amount specified by the
shareholder (minimum $50 per investment, per account). The proceeds of the draft
are invested in shares of the designated AIM Fund at the applicable offering
price determined on the date of the draft. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; and dividends and distributions attributable to
Class C shares of AIM MONEY MARKET FUND may be reinvested in additional shares
of such fund, in Class A shares of another Multiple Class Fund or in shares of
another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype
retirement plans available to corporations, individuals and employees of
non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; and SEP plans
(collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).
MCF 04/96*
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<PAGE> 38
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, referred to
herein as the "Load Funds," are sold at a public offering price that includes a
maximum sales charge of 5.50% or 4.75% of the public offering price of such
shares; shares of certain of the AIM Funds, referred to herein as the "Lower
Load Funds," are sold at a public offering price that includes a maximum sales
charge of 1.00% of the public offering price of such shares; and shares of
certain other funds, including the Class C shares of AIM MONEY MARKET FUND,
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
<TABLE>
LOAD FUNDS: LOWER LOAD FUNDS:
----------- -----------------
<S> <C> <C>
AIM AGGRESSIVE GROWTH AIM HIGH YIELD FUND -- CLASS A AIM LIMITED MATURITY TREASURY SHARES
FUND -- CLASS A AIM INCOME FUND -- CLASS A AIM TAX-FREE INTERMEDIATE SHARES
AIM BALANCED FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM CHARTER FUND -- CLASS A FUND -- CLASS A NO LOAD FUNDS:
AIM CONSTELLATION AIM INTERNATIONAL EQUITY --------------
FUND -- CLASS A FUND -- CLASS A AIM MONEY MARKET FUND
AIM GLOBAL AGGRESSIVE GROWTH AIM MONEY MARKET -- CLASS C
FUND -- CLASS A FUND -- CLASS A AIM TAX-EXEMPT CASH FUND
AIM GLOBAL GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL INCOME AIM TAX-EXEMPT BOND FUND
FUND -- CLASS A OF CONNECTICUT
AIM GLOBAL UTILITIES AIM VALUE FUND -- CLASS A
FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A
AIM GROWTH FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund,
except that (i) Load Fund share purchases of $1,000,000 or more which are
subject to a contingent deferred sales charge may not be exchanged for Lower
Load Funds or for AIM TAX-EXEMPT CASH FUND; (ii) Lower Load Fund share purchases
of $1,000,000 or more and No Load Fund purchases may be exchanged for Load Fund
shares in amounts of $1,000,000 or more which will then be subject to a
contingent deferred sales charge; however, for purposes of calculating the
contingent deferred sales charge on the Load Fund shares acquired, the 18-month
period shall be computed from the date of such exchange; (iii) Class A shares
and shares of all other AIM Funds may not be exchanged for Class B shares; (iv)
Class B shares may be exchanged only for Class B shares; and (v) Class C shares
of AIM MONEY MARKET FUND may not be exchanged for Class A shares of AIM MONEY
MARKET FUND or for Class B shares. DEPENDING UPON THE FUND FROM WHICH AND INTO
WHICH AN EXCHANGE IS BEING MADE, SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE
ACQUIRED AT THEIR OFFERING PRICE OR AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF
A SALES CHARGE) AS SET FORTH IN THE TABLE BELOW FOR SHARES INITIALLY PURCHASED
PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS
LOWER LOAD NO LOAD FUNDS:
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B
----- ----------------- ---------- ------- -----------
<S> <C> <C> <C> <C>
Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not
Applicable
Lower Load Net Asset Value if shares were held Net Asset Value Net Asset Value Not
Funds......... for at least 30 days; or if shares Applicable
were acquired upon exchange of any
Load Fund; or if shares were acquired
upon exchange from any Lower Load
Fund and such shares were held for at
least 30 days. (No exchange privilege
is available for the first 30 days
following the purchase of the Lower
Load Fund shares.)
</TABLE>
(Table continued on following page)
MCF 04/96*
A-10
<PAGE> 39
<TABLE>
<CAPTION>
MULTIPLE
CLASS
LOWER LOAD NO LOAD FUNDS:
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B
----- ----------------- ---------- ------- --------
<S> <C> <C> <C> <C>
No Load Funds... Offering Price if No Load shares were Net Asset Value if No Net Asset Value Not
directly purchased. Net Asset Value Load shares were Applicable
if No Load shares were acquired upon acquired upon
exchange of shares of any Load Fund exchange of shares of
or any Lower Load Fund; Net Asset any Load Fund or any
Value if No Load shares were acquired Lower Load Fund;
upon exchange of Lower Load Fund otherwise,
shares and were held for at least 30 Offering Price.
days following the purchase of the
Lower Load Fund shares. (No exchange
privilege is available for the first
30 days following the acquisition of
the Lower Load Fund shares.)
Multiple Class
Funds:
Class B....... Not Applicable Not Applicable Not Applicable Net Asset
Value
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not
Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not
Funds......... acquired upon exchange of any Load Applicable
Fund. Otherwise, difference in sales
charge will apply.
No Load Funds... Offering Price if No Load shares were Net Asset Value if No Net Asset Value Not
directly purchased. Net Asset Value Load shares were Applicable
if No Load shares were acquired upon acquired upon
exchange of shares of any Load Fund. exchange of shares of
Difference in sales charge will apply any Load Fund or any
if No Load shares were acquired upon Lower Load Fund;
exchange of Lower Load Fund shares. otherwise, Offering
Price.
Multiple Class
Funds:
Class B....... Not Applicable Not Applicable Not Applicable Net Asset
Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A and Class B shares of a Multiple Class Fund cannot be
exchanged for each other), except that Class C shares of AIM MONEY MARKET FUND
may be exchanged for Class A shares of another Multiple Class Fund; (b) the
dollar amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the fund acquired through such exchange; (c) the
shares of the fund acquired through exchange must be qualified for sale in the
state in which the shareholder resides; (d) the exchange must be made between
accounts having identical registrations and addresses; (e) the full amount of
the purchase price for the shares being exchanged must have already been
received by the fund; (f) the account from which shares have been exchanged must
be coded as having a certified taxpayer identification number on file or, in the
alternative, an appropriate Internal Revenue Service ("IRS") Form W-8
(certificate of foreign status) or Form W-9 (certifying exempt status) must have
been received by the fund; (g) newly acquired shares (through either an initial
or subsequent investment) are held in an account for at least ten business days,
and all other shares are held in an account for at least one day, prior to the
exchange; and (h) certificates representing shares must be returned before
shares can be exchanged.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
There is no fee for exchanges among the AIM Funds. A service fee of $5 per
transaction may, however, be charged by AIM Distributors on accounts of market
timing investment firms to help to defray the costs of maintaining an automated
exchange service. This service fee will be charged against the market timing
account from which shares are being exchanged.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is
MCF 04/96*
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<PAGE> 40
determined that a fund would be materially disadvantaged by an immediate
transfer of the proceeds of the exchange. If a shareholder is exchanging into a
fund paying daily dividends (See "Dividends, Distributions and Tax
Matters -- Dividends and Distributions," below), and the release of the exchange
proceeds is delayed for the foregoing five-day period, such shareholder will not
begin to accrue dividends until the sixth business day after the exchange.
Shares purchased by check may not be exchanged until it is determined that the
check has cleared, which may take up to ten business days from the date that the
check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B SHARES. A contingent deferred sales charge will not be
imposed in connection with exchanges among Class B shares of Multiple Class
Funds. For purposes of determining a shareholder's holding period of Class B
shares in the calculation of the applicable contingent deferred sales charge,
the period of time during which Class B shares were held prior to an exchange
will be added to the holding period of Class B shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares purchased under the Multiple
Distribution System may be redeemed on any business day of a Multiple Class Fund
at the net asset value per share next determined following receipt of the
redemption order, as described under the caption "Timing and Pricing of
Redemption Orders," less the applicable contingent deferred sales charge shown
in the table below. No deferred sales charge will be imposed (i) on redemptions
of Class B shares following six years from the date such shares were purchased,
(ii) on Class B shares acquired through reinvestments of dividends and
distributions attributable to Class B shares or (iii) on amounts that represent
capital appreciation in the shareholder's account above the purchase price of
the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
MCF 04/96*
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<PAGE> 41
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Contingent deferred sales charges on Class B shares will be waived on
redemptions (1) following the registered shareholder's (or in the case of joint
accounts, all registered joint owners') death or disability, as defined in
Section 72(m)(7) of the Code (provided AIM Distributors is notified of such
death or disability at the time of the redemption request and is provided with
satisfactory evidence of such death or disability), (2) in connection with
certain distributions from individual retirement accounts, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B shares at the
time the shareholder elects to participate in the Systematic Withdrawal Plan,
(4) effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund and (5) effected by AIM of its investment
in Class B shares. Waiver category (1) above applies only to redemptions: (i)
made within one year following death or initial determination of disability and
(ii) of Class B shares held at the time of death or initial determination of
disability. Waiver category (2) above applies only to redemptions resulting
from: (i) required minimum distributions to plan participants or beneficiaries
who are age 70-1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value; (ii) in kind transfers of assets where the
participant or beneficiary notifies AIM Distributors of such transfer no later
than the time such transfer occurs; (iii) tax-free rollovers or transfers of
assets to another Retirement Plan invested in Class B shares of one or more
Multiple Class Funds; (iv) tax-free returns of excess contributions or returns
of excess deferral amounts; and (v) distributions upon the death or disability
(as defined in the Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B shares of a Multiple Class Fund and purchases of shares of
the No Load Funds and Lower Load Funds, a contingent deferred sales charge of 1%
applies to purchases of $1,000,000 or more that are redeemed within 18 months of
the date of purchase. For a description of the AIM Funds participating in this
program, see "Terms and Conditions of Purchase of the AIM Funds -- Sales Charges
and Dealer Concessions." This charge will be 1% of the lesser of the value of
the shares redeemed (excluding reinvested dividends and capital gain
distributions) or the total original cost of such shares. In determining whether
a contingent deferred sales charge is payable, and the amount of any such
charge, shares not subject to the contingent deferred sales charge are redeemed
first (including shares purchased by reinvested dividends and capital gains
distributions and amounts representing increases from capital appreciation), and
then other shares are redeemed in the order of purchase. No such charge will be
imposed upon exchanges unless the shares acquired by exchange are redeemed
within 18 months of the date the shares were originally purchased. For purposes
of computing this 18-month period (i) shares of any Load Fund or Class C shares
of AIM MONEY MARKET FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load
Fund or a No Load Fund which previously were not subject to the 1% contingent
deferred sales charge will not be credited with the period of time such
exchanged shares were held. The charge will be waived in the following
circumstances: (1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under Section
403(b) of the Code and sponsored by nonprofit organizations as defined under
Section 501(c)(3) of the Code, where (a) the initial amount invested by a Plan
in one or more of the AIM Funds is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the registered
shareholder's (or in the case of joint accounts, all registered joint owners')
death or disability, as defined in Section 72(m)(7) of the Code; (3) redemptions
of shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; and (4) redemptions
of shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
MCF 04/96*
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<PAGE> 42
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59-1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information; and (e) the proceeds
of the redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth at that item of the account application if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and Class C Shares of AIM MONEY
MARKET FUND). After completing the appropriate authorization form, shareholders
may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND and the Class
C Shares of AIM MONEY MARKET FUND. This privilege does not apply to retirement
accounts or qualified plans. Checks may be drawn in any amount of $250 or more.
Checks drawn against insufficient shares in the account, against shares held
less than ten business days, or in amounts of less than the applicable minimum
will be returned to the payee. The payee of the check may cash or deposit it in
the same way as an ordinary bank check. When a check is presented to the
Transfer Agent for payment, the Transfer Agent will cause a sufficient number of
shares of such fund to be redeemed to cover the amount of the check.
Shareholders are entitled to dividends on the shares redeemed through the day on
which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that Class B shares of the Multiple Class Funds,
and Class A shares of the Multiple Class Funds and shares of the other AIM Funds
that are subject to the contingent deferred sales charge program for large
purchases described above, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may
MCF 04/96*
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<PAGE> 43
not be suspended or the date of payment upon redemption postponed except under
unusual circumstances such as when trading on the NYSE is restricted or
suspended. Payment of the proceeds of redemptions relating to shares for which
checks sent in payment have not yet cleared will be delayed until it is
determined that the check has cleared, which may take up to ten business days
from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in shares of the
AIM Fund from which the redemption was made at the net asset value next computed
after receipt by the Transfer Agent of the funds to be reinvested. The
shareholder must ask the Transfer Agent for such privilege at the time of
reinvestment. A realized gain on the redemption is taxable, and reinvestment
will not alter any capital gains payable. If there has been a loss on the
redemption, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in (or exchanged for) shares of
the same fund within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption. Each AIM Fund may amend, suspend or cease
offering this privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation. This privilege may only be exercised once
each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares of the Multiple Class Funds or shares of
any other AIM Fund, and who subsequently reinvest a portion or all of the value
of the redeemed shares in shares of the same AIM Fund within 90 days after such
redemption may do so at net asset value if such privilege is claimed at the time
of reinvestment. Such reinvested proceeds will not be subject to either a
front-end sales charge at the time of reinvestment or an additional contingent
deferred sales charge upon subsequent redemption. In order to exercise this
reinvestment privilege, the shareholder must notify the Transfer Agent of his or
her intent to do so at the time of reinvestment. This reinvestment privilege
does not apply to Class B shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon and 4:00 p.m. Eastern Time with respect
to AIM MONEY MARKET FUND), on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of determining
net asset value per share, futures and options contract closing prices which are
available 15 minutes after the close of trading of the NYSE will generally be
used. The net asset value per share is calculated by subtracting a class'
liabilities from its assets and dividing the result by the total number of class
shares outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. 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 fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the Money Market Funds, are valued at amortized cost as
reflecting fair value. AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE SHARES value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
MCF 04/96*
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<PAGE> 44
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 NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- ----------------------- --------------- ---------------
<S> <C> <C> <C>
AIM AGGRESSIVE GROWTH FUND.............. declared and paid annually annually
annually
AIM BALANCED FUND....................... declared and paid annually annually
quarterly
AIM CHARTER FUND........................ declared and paid annually annually
quarterly
AIM CONSTELLATION FUND.................. declared and paid annually annually
annually
AIM GLOBAL AGGRESSIVE GROWTH FUND....... declared and paid annually annually
annually
AIM GLOBAL GROWTH FUND.................. declared and paid annually annually
annually
AIM GLOBAL INCOME FUND.................. declared daily; paid annually annually
monthly
AIM GLOBAL UTILITIES FUND............... declared daily; paid annually annually
monthly
AIM GROWTH FUND......................... declared and paid annually annually
annually
AIM HIGH YIELD FUND..................... declared daily; paid annually annually
monthly
AIM INCOME FUND......................... declared daily; paid annually annually
monthly
AIM INTERMEDIATE GOVERNMENT FUND........ declared daily; paid annually annually
monthly
AIM INTERNATIONAL EQUITY FUND........... declared and paid annually annually
annually
AIM LIMITED MATURITY TREASURY SHARES.... declared daily; paid quarterly annually
monthly
AIM MONEY MARKET FUND................... declared daily; paid at least annually
monthly annually
AIM MUNICIPAL BOND FUND................. declared daily; paid annually annually
monthly
AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT........................... declared daily; paid annually annually
monthly
AIM TAX-EXEMPT CASH FUND................ declared daily; paid at least annually
monthly annually
AIM TAX-FREE INTERMEDIATE SHARES........ declared daily; paid annually annually
monthly
AIM VALUE FUND.......................... declared and paid annually annually
annually
AIM WEINGARTEN FUND..................... declared and paid annually annually
annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Class A, Class B or Class C shares
are reinvested in additional shares of such Class, absent an election by a
shareholder to receive cash or to have such dividends and distributions
reinvested in Class A or Class B shares of another Multiple Class Fund, to the
extent permitted. For funds that do not declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the ex-dividend date. For funds that declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the payable date. Shareholders may elect, by written notice to the Transfer
Agent, to receive such distributions, or the dividend portion thereof, in cash,
or to invest such dividends and distributions in shares of another fund in the
AIM Funds; provided that (i) dividends and distributions attributable to Class B
shares may only be reinvested in Class B shares, (ii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B
shares, and (iii) dividends and distributions attributable to the Class C shares
of AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that
Fund or in any Class B shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
MCF 04/96*
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<PAGE> 45
Dividends on Class B shares are expected to be lower than those for Class A or
Class C shares because of higher distribution fees paid by Class B shares.
Dividends on Class A, Class B and Class C shares may also be affected by other
class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE
INTERMEDIATE SHARES (the "Tax-Exempt Funds") which are exempt from federal tax.
Dividends paid by a fund (other than capital gain distributions) may qualify for
the federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM LIMITED MATURITY TREASURY SHARES, AIM MONEY MARKET FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND or AIM TAX-FREE INTERMEDIATE SHARES will qualify for this dividends
received deduction. Shortly after the end of each year, shareholders will
receive information regarding the amount and federal income tax treatment of all
distributions paid during the year. No gain or loss will be recognized by
shareholders upon the automatic conversion of Class B shares of a Multiple Class
Fund into Class A shares of such Fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on income dividends and distributions (other than
exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and
MCF 04/96*
A-17
<PAGE> 46
other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
SHARES -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. Government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX
INFORMATION. For taxable years in which it is eligible to do so, each of these
funds may elect to pass through to shareholders credits for foreign taxes paid.
If the fund makes such an election, a shareholder who receives a distribution
(1) will be required to include in gross income his proportionate share of
foreign taxes allocable to the distribution and (2) may claim a credit or
deduction for such share for his taxable year in which the distribution is
received, subject to the general limitations imposed on the allowance of foreign
tax credits and deductions. Shareholders should also note that certain gains or
losses attributable to fluctuations in exchange rates or foreign currency
forward contracts may increase or decrease the amount of income of the fund
available for distribution to shareholders, and should note that if such losses
exceed other income during a taxable year, the fund would not be able to pay
ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM MUNICIPAL BOND
FUND and AIM LIMITED MATURITY TREASURY SHARES, for which The Bank of New York,
110 Washington Street, New York, New York 10286, serves as custodian. Texas
Commerce Bank National Association, P.O. Box 2558, Houston, Texas 77252-8084,
serves as Sub-Custodian for retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and has passed
upon the legality of the shares offered pursuant to this Prospectus.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. A Statement of Additional Information has been filed with the SEC and is
available upon request and without charge, by writing or calling AIM
Distributors. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
MCF 04/96*
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<PAGE> 47
APPENDIX A
- --------------------------------------------------------------------------------
DESCRIPTION OF MONEY MARKET INSTRUMENTS
The following list does not purport to be an exhaustive list of all Money
Market Instruments, and the Funds reserve the right to invest in Money Market
Instruments other than those listed below:
U.S. GOVERNMENT DIRECT OBLIGATIONS -- Bills, notes and bonds issued by the U.S.
Treasury.
U.S. GOVERNMENT AGENCIES SECURITIES -- Certain federal agencies such as the
Government National Mortgage Association have been established as
instrumentalities of the U.S. Government to supervise and finance certain types
of activities. Issues of these agencies, while not direct obligations of the
U.S. Government, are either backed by the full faith and credit of the United
States or are guaranteed by the Treasury or supported by the issuing agencies'
right to borrow from the Treasury.
BANKERS' ACCEPTANCES -- A bill of exchange or time draft drawn on and accepted
by a commercial bank. It is used by corporations to finance the shipment and
storage of goods and to furnish dollar exchange. Maturities are generally six
months or less.
CERTIFICATES OF DEPOSIT -- A negotiable interest-bearing instrument with a
specific maturity. Certificates of deposit are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market, prior to maturity.
TIME DEPOSITS -- A non-negotiable receipt issued by a bank in exchange for the
deposit of funds. Like a certificate of deposit, it earns a specified rate of
interest over a definite period of time; however, it cannot be traded in the
secondary market.
COMMERCIAL PAPER -- The term used to designate unsecured short-term promissory
notes issued by corporations and other entities. Maturities on these issues vary
from a few days to nine months.
REPURCHASE AGREEMENTS -- A repurchase agreement is a contractual undertaking
whereby the seller of securities (limited to U.S. Government securities,
including securities issued or guaranteed by the U.S. Treasury or the various
agencies and instrumentalities of the U.S. Government, including mortgage-backed
securities issued by U.S. Government agencies) agrees to repurchase the
securities at a specified price on a future date determined by negotiations.
MASTER NOTES -- Unsecured demand notes that permit investment of fluctuating
amounts of money at varying rates of interest pursuant to arrangements with
issuers who meet the quality criteria of a Fund. The interest rate on a master
note may fluctuate based upon changes in specified interest rates or be reset
periodically according to a prescribed formula or may be a set rate. Although
there is no secondary market in master notes, if such notes have a demand
feature, the payee may demand payment of the principal amount of the note on
relatively short notice.
VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain instruments issued, guaranteed
or sponsored by the U.S. Government or its agencies, state and local government
issuers, and certain debt instruments issued by domestic banks or corporations,
may carry variable or floating rates of interest. Such instruments bear interest
at rates which are not fixed, but which vary with changes in specified market
rates or indices, such as a Federal Reserve composite index.
A-19
<PAGE> 48
APPENDIX B
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DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED
BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES
AIM INTERMEDIATE GOVERNMENT FUND may invest in "Agency Securities," as defined
in the Prospectus, including some or all of those listed below. The following
list does not purport to be an exhaustive list of all Agency Securities, and the
Fund reserves the right to invest in Agency Securities other than those listed
below.
EXPORT-IMPORT BANK CERTIFICATES -- are certificates of beneficial interest and
participation certificates issued and guaranteed by the Export-Import Bank of
the United States.
FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS -- are bonds issued by a
cooperatively owned, nationwide system of banks and associations supervised by
the Farm Credit Administration, an independent agency of the U.S. Government.
FEDERAL HOME LOAN BANK NOTES AND BONDS -- are notes and bonds issued by the
Federal Home Loan Bank System.
FHA DEBENTURES -- are debentures issued by the Federal Housing Administration
of the U.S. Government.
FHA INSURED NOTES -- are bonds issued by the Farmers Home Administration of
the U.S. Government.
FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS -- are bonds issued and
guaranteed by FHLMC, a corporate instrumentality of the U.S. Government. The
Federal Home Loan Banks own all the capital stock of FHLMC, which obtains its
funds by selling mortgages (as well as participation interests in the mortgages)
and by borrowing funds through the issuance of debentures and otherwise.
FHLMC PARTICIPATION CERTIFICATES OR "FREDDIE MACS" -- represent undivided
interests in specified groups of conventional mortgage loans (and/or
participation interests in those loans) underwritten and owned by FHLMC. At
least 95% of the aggregate principal balance of the whole mortgage loans and/or
participations in a group formed by FHLMC typically consist of single-family
mortgage loans, and not more than 5% consists of multi-family loans. FHLMC
Participation Certificates are not guaranteed by, and do not constitute a debt
or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC
Participation Certificates are issued in fully registered form only, in original
unpaid principal balances of $25,000, $100,000, $200,000, $500,000, $1 million
and $5 million. FHLMC guarantees to each registered holder of a Participation
Certificate, to the extent of such holder's pro rata share (i) the timely
payment of interest accruing at the applicable certificate rate on the unpaid
principal balance outstanding on the mortgage loans, and (ii) collection of all
principal on the mortgage loans without any offset or deductions. Pursuant to
these guaranties, FHLMC indemnifies holders of Participation Certificates
against any reduction in principal by reason of charges for property repairs,
maintenance, and foreclosure.
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") BONDS -- are bonds issued and
guaranteed by the Federal National Mortgage Association, a federally chartered
and privately-owned corporation.
FNMA PASS-THROUGH CERTIFICATES OR "FANNIE MAES" -- are mortgage pass-through
certificates issued and guaranteed by FNMA. FNMA Certificates represent a
fractional undivided ownership interest in a pool of mortgage loans either
provided from FNMA's own portfolio or purchased from primary lenders. The
mortgage loans included in the pool are conventional, insured by the Federal
Housing Administration or guaranteed by the Veterans Administration. FNMA
Certificates are not backed by, nor entitled to, the full faith and credit of
the U.S. Government.
Loans not provided from FNMA's own portfolio are purchased only from primary
lenders that satisfy certain criteria developed by FNMA, including depth of
mortgage origination experience, servicing experience and financial capacity.
FNMA may purchase an entire loan pool from a single lender, and issue
Certificates backed by that loan pool alone, or may package a pool made up of
loans purchased from various lenders.
Various types of mortgage loans, and loans with varying interest rates, may be
included in a single pool, although each pool will consist of mortgage loans
related to one-family or two-to-four family residential properties.
Substantially all FNMA mortgage pools currently consist of fixed interest rate
and growing equity mortgage loans, although FNMA mortgage pools may also consist
of adjustable interest rate mortgage loans or other types of mortgage loans.
Each mortgage loans must conform to FNMA's published requirements or guidelines
with respect to maximum principal amount, loan-to-value ratio, loan term,
underwriting standards and insurance coverage.
All mortgage loans are held by FNMA as trustee pursuant to a trust indenture
for the benefit of Certificate holders. The trust indenture gives FNMA
responsibility for servicing or administering the loans in a pool. FNMA
contracts with the lenders or other servicing institutions to perform all
services and duties customary to the servicing of mortgages, as well as duties
specifically prescribed by FNMA, and under FNMA supervision. FNMA may remove
service providers for cause.
The pass-through rate on FNMA Certificates is the lowest annual interest rate
borne by an underlying mortgage loan in the pool, less a fee to FNMA as
compensation for servicing and for FNMA's guarantee. Lenders servicing the
underlying mortgage loans receive as
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<PAGE> 49
compensation a portion of the fee paid to FNMA, the excess yields on pooled
loans with coupon rates above the lowest rate borne by any mortgage loan in the
pool and certain other amounts collected, such as late charges.
The minimum size of a FNMA pool is $1 million of mortgage loans. Registered
holders purchase Certificates in amounts not less than $25,000.
FNMA Certificates are marketed by the servicing lender banks, usually through
securities dealers. The lender of a single lender pool typically markets all
Certificates based on that pool, and lenders of multiple lender pools market
Certificates based on a pro rata interest in the aggregate pool. The amounts of
FNMA Certificates currently outstanding is limited.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR "GINNIE
MAES" -- are mortgage-backed securities which represent a partial ownership
interest in a pool of mortgage loans issued by lenders such as mortgage bankers,
commercial banks and savings and loan associations. Each mortgage loan included
in the pool is either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled, and, after being approved by GNMA, is offered to investors through
securities dealers. GNMA is a U.S. Government corporation within the Department
of Housing and Urban Development.
The Portfolio will purchase only GNMA Certificates of the "modified
pass-through" type, which entitle the holder to receive its proportionate share
of all interest and principal payments owed on the mortgage pool, net of fees
paid to the issuer and GNMA, regardless of whether or not the mortgagor actually
makes the payment. GNMA Certificates differ from bonds in that the principal is
paid back monthly by the borrower over the term of the loan rather than returned
in a lump sum at maturity. Payment of principal of and interest on GNMA
Certificates of the "modified pass-through" type is guaranteed by GNMA and
backed by the full faith and credit of the U.S. Government.
The average life of a GNMA Certificate is likely to be substantially less than
the original maturity of the mortgage pools underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return on the greater part of principal invested far in advance of
the maturity of the mortgages in the pool. Foreclosures impose no risk to
principal investment because of the GNMA guarantee.
As the prepayment rates of individual mortgage pools will vary widely, it is
not possible to accurately predict the average life of a particular issue of
GNMA Certificates. However, statistics published by the FHA indicate that the
average life of a single-family dwelling mortgage with 25- to 30-year maturity,
the type of mortgage which backs the vast majority of GNMA Certificates, is
approximately 12 years. It is therefore customary practice to treat GNMA
Certificates as 30-year mortgage-backed securities which prepay fully in the
twelfth year.
As a consequence of the fees paid to GNMA and the issuer of GNMA Certificates,
the coupon rate of interest of GNMA Certificates is lower than the interest paid
on the VA-guaranteed or FHA-insured mortgages underlying the Certificates.
The yield which will be earned on GNMA Certificates may vary from their coupon
rates for the following reasons: (i) Certificates may be issued at a premium or
discount, rather than at par; (ii) Certificates may trade in the secondary
market at a premium or discount after issuance; (iii) interest is earned and
compounded monthly which has the effect of raising the effective yield earned on
the Certificates; and (iv) the actual yield of each Certificate is affected by
the prepayment of mortgages included in the mortgage pool underlying the
Certificates and the rate at which principal so prepaid is reinvested. In
addition, prepayment of mortgages included in the mortgage pool underlying a
GNMA Certificate purchased at a premium may result in a loss to the Portfolio.
Due to the large amount of GNMA Certificates outstanding and active
participation in the secondary market by securities dealers and investors, GNMA
Certificates are highly liquid instruments. Prices of GNMA Certificates are
readily available from securities dealers and depend on, among other things, the
level of market rates, the Certificate's coupon rate and the prepayment
experience of the pool of mortgages backing each Certificate.
GENERAL SERVICES ADMINISTRATION PARTICIPATION CERTIFICATES -- are
participation certificates issued by the General Services Administration of the
U.S. Government.
MARITIME ADMINISTRATION BONDS -- are bonds issued and provided by the
Department of Transportation of the U.S. Government.
NEW COMMUNITIES DEBENTURES -- are debentures issued in accordance with the
provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which is guaranteed by the U.S. Government.
PUBLIC HOUSING NOTES AND BONDS -- are short-term project notes and long-term
bonds issued by public housing and urban renewal agencies in connection with
programs administered by the Department of Housing and Urban Development of the
U.S. Government, the payment of which is secured by the U.S. Government.
SBA DEBENTURES -- are debentures fully guaranteed as to principal and interest
by the Small Business Administration of the U.S. Government.
SLMA DEBENTURES -- are debentures backed by the Student Loan Marketing
Association.
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<PAGE> 50
TITLE XI BONDS -- are bonds issued in accordance with the provisions of Title
XI of the Merchant Marine Act of 1936, as amended, the payment of which is
guaranteed by the U.S. Government.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BONDS -- are bonds issued by
the Washington Metropolitan Area Transit Authority and are guaranteed by the
Secretary of Transportation of the U.S. Government.
A-22
<PAGE> 51
APPENDIX C
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DESCRIPTIONS OF RATING CATEGORIES
The following are descriptions of ratings assigned by Moody's Investors
Service, Inc. ("Moody's") and Standard and Poor's Corporation ("S&P") to certain
debt securities in which AIM HIGH YIELD FUND and AIM INCOME FUND may invest. See
the Statement of Additional Information for descriptions of other Moody's and
S&P rating categories and those of other rating agencies.
MOODY'S: 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. 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 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.
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.
S&P: 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 highest 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, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest 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 of major risk exposures to adverse conditions.
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<PAGE> 52
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ ----------------------- ------------ -------------------
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for Form W-9 (which can be obtained from the IRS)
and includes, among others, the following:
o a corporation
o an organization exempt from tax under Section 501(a), an individual
retirement plan (IRA), or a custodial account under Section 403(b)(7)
o the United States or any of its agencies or instrumentalities
o a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
o a foreign government or any of its political subdivisions, agencies or
instrumentalities
o an international organization or any of its agencies or instrumentalities
o a foreign central bank of issue
o a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
o a futures commission merchant registered with the Commodity Futures Trading
Commission
o a real estate investment trust
o an entity registered at all times during the tax year under the Investment
Company Act of 1940
o a common trust fund operated by a bank under Section 584(a)
o a financial institution
o a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
o a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES - Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF 04/96*
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<PAGE> 53
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney to surrender for redemption any and all unissued shares held
by the Transfer Agent in the designated account(s), or in any other account with
any of the AIM Funds, present or future, which has the identical registration as
the designated account(s), with full power of substitution in the premises. The
Transfer Agent and AIM Distributors are thereby authorized and directed to
accept and act upon any telephone redemptions of shares held in any of the
account(s) listed, from any person who requests the redemption proceeds to be
applied to purchase shares in any one or more of the AIM Funds, provided that
such fund is available for sale and provided that the registration and mailing
address of the shares to be purchased are identical to the registration of the
shares being redeemed. An investor acknowledges by signing the form that he
understands and agrees that the Transfer Agent and AIM Distributors may not be
liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as agent subject to this appointment, and AIM
Distributors reserves the right to modify or terminate the telephone exchange
privilege at any time without notice.
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney to surrender for redemption any and all unissued shares
held by the Transfer Agent in the designated account(s), present or future, with
full power of substitution in the premises. The Transfer Agent and AIM
Distributors are thereby authorized and directed to accept and act upon any
telephone redemptions of shares held in any of the account(s) listed, from any
person who requests the redemption. An investor acknowledges by signing the form
that he understands and agrees that the Transfer Agent and AIM Distributors may
not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as agent subject to this appointment,
and AIM Distributors reserves the right to modify or terminate the telephone
redemption privilege at any time without notice. An investor may elect not to
have this privilege by marking the appropriate box on the application. Then any
exchanges must be effected in writing by the investor (see the applicable Fund's
prospectus under the caption "Exchange Privilege -- Exchanges by Mail").
MCF 04/96*
B-2
<PAGE> 54
[AIM LOGO APPEARS HERE]
THE AIM FAMILY OF FUNDS(R)
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
Investment Advisor INVESTMENT OBJECTIVES.................... 2
A I M Advisors, Inc. SUMMARY.................................. 2
11 Greenway Plaza, Suite 1919 THE FUNDS................................ 4
Houston, TX 77046-1173 Table of Fees and Expenses............. 4
Financial Highlights................... 6
Transfer Agent Performance............................ 16
A I M Fund Services, Inc. About the Funds........................ 16
P.O. Box 4739 Investment Programs.................... 17
Houston, TX 77210-4739 Certain Investment Strategies and
Policies............................... 21
Custodian Management............................. 24
State Street Bank and Trust Organization of the Trust.............. 27
Company INVESTOR'S GUIDE TO THE AIM FAMILY OF
225 Franklin Street FUNDS(R)............................... A-1
Boston, MA 02110 Introduction to The AIM Family of
Funds.................................. A-1
The Bank of New York How to Purchase Shares................. A-1
90 Washington Street, 11th Floor Terms and Conditions of Purchase of the
New York, New York 10286 AIM Funds........................... A-2
[AIM Municipal Bond Fund only] Special Plans.......................... A-8
Exchange Privilege..................... A-10
Principal Underwriter How to Redeem Shares................... A-12
A I M Distributors, Inc. Determination of Net Asset Value....... A-15
P.O. Box 4739 Dividends, Distributions and Tax
Houston, TX 77210-4739 Matters................................ A-16
General Information.................... A-18
Independent Accountants Appendix A............................. A-19
KPMG Peat Marwick LLP Appendix B............................. A-20
700 Louisiana Appendix C............................. A-23
NationsBank Bldg. Application Instructions................. B-1
Houston, Texas 77002
</TABLE>
For more complete information about any other fund in The AIM Family of Funds,
including charges and expenses, please call (800) 347-4246 or write to A I M
Distributors, Inc. and request a free prospectus. Please read the prospectus
carefully before you invest or send money.
<PAGE> 55
STATEMENT OF
ADDITIONAL INFORMATION
AIM FUNDS GROUP
AIM BALANCED FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM GLOBAL UTILITIES FUND AIM MONEY MARKET FUND
AIM GROWTH FUND AIM MUNICIPAL BOND FUND
AIM HIGH YIELD FUND AIM VALUE FUND
AIM INCOME 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 (800) 347-4246
_________________________
Statement of Additional Information Dated: May 1, 1996
Relating to the Prospectus Dated: May 1, 1996
<PAGE> 56
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
All Funds except AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
AIM Municipal Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
AIM Global Utilities Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Lending Portfolio Securities: All Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Covered Call Options: All Funds except AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . 13
Short Sales: AIM Balanced Fund and AIM High Yield Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Futures Contracts: All Funds except AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . 14
Options on Futures Contracts: All Funds except AIM Money Market Fund . . . . . . . . . . . . . . . . . . . 15
Risks as to Futures Contracts and Related Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Delayed Delivery Agreements: All Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
When-Issued Securities: All Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
AIM Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
AIM Global Utilities Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
AIM Growth Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
AIM Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
AIM Intermediate Government Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
AIM Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
AIM Municipal Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
AIM Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
i
<PAGE> 57
<TABLE>
<S> <C>
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
QUALIFYING FOR A REDUCED FRONT-END SALES CHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
PROGRAMS AND SERVICES FOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Dividend Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
REDEMPTIONS PAID IN CASH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
DESCRIPTION OF MONEY MARKET INSTRUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Money Market Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Custodians and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
RATINGS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS-1
</TABLE>
ii
<PAGE> 58
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, 1996, 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 (800)
347-4246. 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. Also, the Trust Agreement was
amended on September 25, 1995, to reflect a name change of AIM Government
Securities Fund to AIM INTERMEDIATE GOVERNMENT 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 redemption and the rights of share
ownership, investors should consult the Prospectus under the captions
"Organization of the Trust" and "How to Redeem Shares."
1
<PAGE> 59
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>
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>
2
<PAGE> 60
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 (i) the
largest holdings in the Fund's portfolio, (ii) certain selling group members
and/or (iii) certain institutional shareholders.
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:
n
P(1+T) =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.
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, 1995 were as follows:
3
<PAGE> 61
<TABLE>
<CAPTION>
PERIODS ENDED DECEMBER 31, 1995
--------------------------------------
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS
-------------- ------ ------- --------
<S> <C> <C> <C>
AIM Balanced Fund . . . . . . . . . . . . . . . . . . . . 28.56% 17.10% 9.40%
AIM Global Utilities Fund . . . . . . . . . . . . . . . . 21.02% 9.92% N/A
AIM Growth Fund . . . . . . . . . . . . . . . . . . . . . 26.93% 11.40% 10.46%
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . 11.26% 16.93% 10.84%
AIM Income Fund . . . . . . . . . . . . . . . . . . . . . 16.93% 9.57% 9.17%
AIM Intermediate Government Fund . . . . . . . . . . . . . 10.74% 6.56% N/A
AIM Municipal Bond Fund . . . . . . . . . . . . . . . . . 7.65% 7.42% 8.24%
AIM Value Fund . . . . . . . . . . . . . . . . . . . . . . 27.43% 21.14% 17.13%
</TABLE>
* The inception dates of the Class A shares of AIM GLOBAL UTILITIES
FUND and AIM INTERMEDIATE GOVERNMENT FUND were January 18, 1988 and
April 28, 1987, 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, 1995, were as
follows:
<TABLE>
<CAPTION>
CLASS B SHARES: PERIODS ENDED DECEMBER 31, 1995
-------------- -------------------------------
1 YEAR SINCE INCEPTION**
-------- -------------------
<S> <C> <C>
AIM Balanced Fund . . . . . . . . . . . . . . . . 28.92% 8.03%
AIM Global Utilities Fund . . . . . . . . . . . . 22.16% 1.13%
AIM Growth Fund . . . . . . . . . . . . . . . . . 28.00% 8.54%
AIM High Yield Fund . . . . . . . . . . . . . . . 10.91% 6.07%
AIM Income Fund . . . . . . . . . . . . . . . . . 16.72% 3.29%
AIM Intermediate Government Fund . . . . . . . . . 10.22% 3.20%
AIM Municipal Bond Fund . . . . . . . . . . . . . 7.14% 2.63%
AIM Value Fund . . . . . . . . . . . . . . . . . . 28.73% 13.84%
</TABLE>
** The inception date of the Class B shares of AIM GLOBAL UTILITIES
FUND, AIM GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND and AIM MUNICIPAL BOND FUND 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, 1995 were -0.88%, -0.73% and 5.04%, respectively; and since
inception (October 16, 1993) were 1.35%, 1.94% and 4.04%, 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:
n
P(1+U) =ERV
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.
4
<PAGE> 62
Cumulative total return across a stated period may be calculated
as follows:
n
P(1+V) =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:
6
YIELD = 2[((a-b)/(c x d) + 1) -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.
The yields for each of the named Funds were as follows:
<TABLE>
<CAPTION>
30 DAYS ENDED DECEMBER 31, 1995
---------------------------------
CLASS A SHARES CLASS B SHARES
-------------- --------------
<S> <C> <C>
AIM Balanced Fund . . . . . . . . . . . . . . . . . . 2.33% 1.60%
AIM Global Utilities Fund . . . . . . . . . . . . . . 2.95% 2.48%
AIM High Yield Fund . . . . . . . . . . . . . . . . . 10.39%* 10.26%*
AIM Income Fund . . . . . . . . . . . . . . . . . . . 6.83% 6.47%
AIM Intermediate Government Fund . . . . . . . . . . . 5.05% 4.92%
AIM Municipal Bond Fund . . . . . . . . . . . . . . . 4.22%** 3.61%**
</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
6.59% and 5.64%, respectively.
The standard formula for calculating annualized yield for AIM MONEY
MARKET FUND, as described in the Prospectus, is as follows:
5
<PAGE> 63
V - V
1 0 365
Y = ------- X ---
V 7
0
Where Y = annualized yield.
V = the value of a hypothetical pre-existing account in
0 the Fund having a balance of one share at the
beginning of a stated seven-day period.
V = the value of such an account at the end of the stated
1 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, 1995, was 4.71%,
4.00% and 4.69%, respectively.
The standard formula for calculating effective annualized yield for AIM
MONEY MARKET FUND, as described in the Prospectus, is as follows:
365/7
EY = (Y+1) -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, 1995
was 4.82%, 4.08% and 4.80%, respectively.
For the purpose of determining 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.
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 a 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
6
<PAGE> 64
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 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, 1995, AIM BALANCED FUND, AIM GLOBAL
UTILITIES FUND, AIM GROWTH FUND and AIM VALUE FUND directed certain brokerage
transactions to broker-dealers that provided AIM with research, statistical and
other information: $4,535,522, $11,696,495, $21,954,975 and $753,201,273,
respectively. For the same period, AIM BALANCED FUND, AIM GLOBAL UTILITIES
FUND, AIM GROWTH FUND and AIM VALUE FUND paid the following in related
brokerage commissions: $7,039, $20,758, $35,253 and $1,146,015, 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 such 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.
7
<PAGE> 65
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 GROWTH FUND
from 1994 to 1995 was a result of the completion of AIM's realignment of the
Fund's portfolio investments.
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
8
<PAGE> 66
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 HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT 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 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.
As of December 31, 1995, AIM BALANCED FUND held an amount of common
stock issued by Merrill Lynch & Co. Inc. having a market value of
$357,000. As of December 31, 1995, AIM MONEY MARKET FUND had entered into
a repurchase agreement with Goldman, Sachs & Co. having a market value of
$135,000,000. Goldman, Sachs & Co. and Merrill Lynch & Co. Inc. are regular
brokers 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, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
FUND 1995 1994 1993
---- ------------ ------ -------
(000) (000) (000)
<S> <C> <C> <C>
AIM Global Utilities Fund . . . . . . . . . $ 596 $ 799 $ 729
AIM Growth Fund . . . . . . . . . . . . . . 520 803 880
AIM High Yield Fund . . . . . . . . . . . . -0- -0- -0-
AIM Income Fund . . . . . . . . . . . . . . 4 106 -0-
AIM Intermediate Government Fund . . . . . -0- -0- -0-
AIM Municipal Bond Fund . . . . . . . . . . -0- -0- -0-
AIM Value Fund . . . . . . . . . . . . . . 17,964 6,611 3,075
----------
</TABLE>
AIM BALANCED FUND paid brokerage commissions or underwriting
commissions (or both) for the years ended December 31, 1995 and 1994 in the
amounts of $116,541 and $85,610, respectively, for the four-month
period ended December 31, 1993 in the amount of $10,867, and for the year ended
August 31, 1993 in the amount of $38,185.
9
<PAGE> 67
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 a 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 HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT 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 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, to meet anticipated short-term cash
needs such as dividend payments or redemptions of shares, or for temporary
defensive purposes. 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 AIM 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 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
10
<PAGE> 68
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 ratings, 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, but not limited to, 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, 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
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
11
<PAGE> 69
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 related 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
imposed in the past 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.
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
12
<PAGE> 70
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. 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.
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 its custodian, 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.
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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 cost of the futures contracts (less any related
margin deposits), will be segregated 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 its custodian 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 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 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
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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.
Interest Rate Futures Contracts - AIM BALANCED FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT 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.
Foreign Currency Futures Contracts - All Funds (except AIM
INTERMEDIATE GOVERNMENT 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 rates 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
in order to hedge the value of their respective portfolios against changes in
market conditions. 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
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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.
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 risk 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.
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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 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.
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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 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.
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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.
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 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)
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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 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.
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5. Purchase or sell commodities or commodity contracts, other
than financial futures contracts and options thereon.
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)
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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 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.
13. Issue senior securities except to the extent permitted by
the 1940 Act, including permitted borrowing.
AIM INTERMEDIATE GOVERNMENT 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.
22
<PAGE> 80
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.
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 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).
23
<PAGE> 81
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.
24
<PAGE> 82
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, and (c)
25
<PAGE> 83
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 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 AIM who
26
<PAGE> 84
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 April 1, 1996, 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 1.46% and 1.62% of the
outstanding Class C shares of AIM MONEY MARKET FUND and the outstanding Class A
shares of AIM MUNICIPAL BOND FUND, respectively.
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 April 1, 1996, and the percentage 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, 7.46% -0-
Class A shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
Class B shares Merrill Lynch, Pierce, 11.77% -0-
Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Global Utilities Fund - Merrill Lynch, Pierce, 6.87% -0-
Class B shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Growth Fund - Merrill Lynch, Pierce, 16.92% -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.
27
<PAGE> 85
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address Owned of and
Fund of Owner Record* Beneficially
- ---- --------------------- -------- ------------
<S> <C> <C> <C>
AIM High Yield Fund - Merrill Lynch, Pierce, 6.30% -0-
Class A shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
Class B shares Merrill Lynch, Pierce, 15.46% -0-
Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Income Fund - Merrill Lynch, Pierce, 5.54% -0-
Class A shares Fenner & Smith
Mutual Fund Operations
P.O. Box 45286
Jacksonville, FL 32232-5286
Class B shares Merrill Lynch, Pierce, 9.17% -0-
Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Intermediate Government Fund - Merrill Lynch, Pierce, 5.84% -0-
Class A shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
Class B shares Merrill Lynch, Pierce, 12.22% -0-
Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Money Market Fund - A I M Advisors, Inc. 6.95% -0-
Class C shares 11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
</TABLE>
________________________
* The Trust has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
28
<PAGE> 86
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address Owned of and
Fund of Owner Record* Beneficially
- ---- --------------------- -------- ------------
<S> <C> <C> <C>
AIM Municipal Bond Fund - Merrill Lynch, Pierce 6.12% -0-
Class B shares Fenner Smith
Mutual Fund Operations
P.O. Box 45286
Jacksonville, FL 32232-5286
AIM Value Fund - Merrill Lynch, Pierce, 12.06% -0-
Class A shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
Class B shares Merrill Lynch, Pierce, 16.91% -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 (77)
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
Institutional Fund Services, Inc. and Fund Management Company.
BRUCE L. CROCKETT, Trustee (52)
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
__________________________________
* A trustee who is an "interested person" of the Trust and A I M
Advisors, Inc. as defined in the 1940 Act.
29
<PAGE> 87
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).
OWEN DALY II, Trustee (71)
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 (59)
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 (49)
Director, President and Chief Operating Officer, A I M Management
Group Inc.; Director and President, A I M Advisors, Inc.; Director and Senior
Vice President, 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.
JOHN F. KROEGER, Trustee (71)
37 Pippins Way
Morristown, NJ 07960
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 (53)
6363 Woodway, Suite 825
Houston, TX 77057
Attorney in private practice in Houston, Texas.
__________________________________
* A trustee who is an interested person of the Trust as defined in the
1940 Act.
** A trustee who is an "interested person" of the Trust and A I M
Advisors, Inc. as defined in the 1940 Act.
30
<PAGE> 88
IAN W. ROBINSON, Trustee (73)
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 (56)
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 (51)
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.
GARY T. CRUM, Senior Vice President (48)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc. and A I M Advisors, Inc.;
and Director, A I M Distributors, Inc.
SCOTT G. LUCAS, Senior Vice President (36)
Director and Senior Vice President, A I M Capital Management, Inc.;
and Vice President, A I M Management Group Inc. and A I M Advisors, Inc.
***CAROL F. RELIHAN, Senior Vice President and Secretary (41)
Senior Vice President, General Counsel and Secretary, A I M Advisors,
Inc.; Vice President, General Counsel and Secretary, A I M Management Group
Inc.; Vice President and General Counsel, Fund Management Company; and Vice
President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and A I M Institutional Fund Services, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (37)
Vice President and Fund Controller, A I M Advisors, Inc.; and
Assistant Vice President and Assistant Treasurer, Fund Management Company.
ROBERT G. ALLEY, Vice President (47)
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.
__________________________________
*** Mr. Arthur and Ms. Relihan are married to each other.
31
<PAGE> 89
STUART W. COCO, Vice President (40)
Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc.
MELVILLE B. COX, Vice President (52)
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 (35)
Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc.
JONATHAN C. SCHOOLAR, Vice President (34)
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
dis-interested 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.
Remuneration of Trustees
Each trustee is reimbursed for expenses incurred in connection with
each meeting of the Board of Trustees or any committee thereof. Each Trustee
who is not also an officer of the Trust is compensated for his or her services
according to a fee schedule which recognizes the fact that such trustee also
serves as a director or trustee of other AIM Funds. 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.
32
<PAGE> 90
Set forth below is information regarding compensation paid or accrued 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 12,982 3,655 57,750
- -------------------------------------------------------------------------------------------
Owen Daly II 14,754 18,662 58,125
- -------------------------------------------------------------------------------------------
Carl Frischling 14,385 11,323 57,250(4)
- -------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- -------------------------------------------------------------------------------------------
John F. Kroeger 14,061 22,313 58,125
- -------------------------------------------------------------------------------------------
Lewis F. Pennock 12,857 5,067 58,125
- -------------------------------------------------------------------------------------------
Ian W. Robinson 13,073 15,381 56,750
- -------------------------------------------------------------------------------------------
Louis S. Sklar 14,507 6,632 57,250
===========================================================================================
</TABLE>
________________
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended December 31, 1995, including amounts earned
thereon, was $54,147.
(2) During the fiscal year ended December 31, 1995, the total amount of
expenses allocated to the Trust in respect of such retirement benefits was
$16,588. Data reflects compensation estimated for the calendar year ended
December 31, 1995.
(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. Data reflect total compensation estimated for the calendar year ended
December 31, 1995.
(4) See also page 34 regarding fees earned by Mr. Frischling's former law
firm.
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 "Applicable
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 75% of the
retainer paid or accrued by the AIM Funds for such trustee during the
twelve-month period immediately preceding the trustee's retirement (including
amounts deferred under a separate agreement between the AIM Funds and the
trustee) for the number of such
33
<PAGE> 91
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. 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 ten 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
for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar
are 8, 9, 18, 18, 14, 8 and 6 years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
Annual Compensation Paid By All AIM Funds
<TABLE>
<CAPTION>
$55,000 $60,000 $65,000
============================================================
<S> <C> <C> <C> <C>
10 $41,250 $45,000 $48,750
------------------------------------------------------------
Number of 9 $37,125 $40,500 $38,875
Years of ------------------------------------------------------------
Service With 8 $33,000 $36,000 $39,000
AIM Funds ------------------------------------------------------------
7 $28,875 $31,500 $34,125
------------------------------------------------------------
6 $24,750 $27,000 $29,250
------------------------------------------------------------
5 $20,625 $22,500 $24,375
============================================================
</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 their deferral accounts shall be deemed to be
invested. Distributions from the deferring trustees' deferral accounts will be
paid in cash, generally in equal quarterly installments over a period of ten
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 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.
During the year ended December 31, 1995, AIM BALANCED FUND, AIM GLOBAL
UTILITIES FUND, AIM GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND
and AIM VALUE FUND each paid $3,091, $3,232, $3,215, $5,572, $3,278, $3,146,
$3,973, $3,370, and $14,950, respectively, in legal fees to Mr. Frischling's
law firm, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel for services
rendered.
34
<PAGE> 92
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.
AIM and the Trust have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear personal
securities transactions subject to the Code of Ethics, (b) to file reports or
duplicate confirmations regarding such transactions, (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, and (d) to abide by certain other provisions under
the Code of Ethics. The Code of Ethics also prohibits investment personnel and
all other AIM employees from purchasing securities in an initial public
offering. Personal trading reports are reviewed periodically by AIM, and the
Board of Trustees reviews quarterly and annual reports (including information
on any substantial violations of the Code of Ethics). Sanctions for violations
of the Code of Ethics may include censure, monetary penalties, suspension or
termination of employment.
The Master Investment 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 was initially approved by the Trust's Board of Trustees (including
the affirmative vote of all the Qualified Trustees) on July 19, 1993. The
Master Investment Advisory Agreement was approved by the Funds' initial
shareholder on August 6, 1993. The agreement became effective as of
October 18, 1993 and provides that either party may terminate such agreement
on 60 days' written notice without penalty. The 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 role of the
trustees is not to approve specific investments, but rather to exercise a
control and review function.
Pursuant to the Master Investment Advisory Agreement, AIM receives a fee
from each of AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT 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>
35
<PAGE> 93
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>
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 a 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 paid by such Fund shall be reduced by the amount
of such excess. The amount of any such reduction
36
<PAGE> 94
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,
1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
AIM Global Utilities Fund . . . . . $1,256,220 $1,226,429 $ 961,659
AIM Growth Fund . . . . . . . . . . 1,715,406 1,012,632 918,416
AIM High Yield Fund . . . . . . . . 5,717,303 3,881,526 2,574,933
AIM Income Fund . . . . . . . . . . 1,176,249 1,110,855 1,157,555
AIM Intermediate Government Fund . . 996,681 734,086 686,539
AIM Money Market Fund . . . . . . . 2,589,822 2,057,756 214,124*
AIM Municipal Bond Fund . . . . . . 1,356,225 1,327,611 1,348,764
AIM Value Fund . . . . . . . . . . . 25,332,486 6,674,684 2,570,113
</TABLE>
* Fee paid by AIM MONEY MARKET FUND was for the period October
16, 1993 through December 31, 1993.
AIM BALANCED FUND paid to AIM management fees net of any expense
limitations for the years ended December 31, 1995 and 1994, in the amounts of
$666,619 and $137,235, respectively, the four-month period ended December 31,
1993 in the amount of $54,454, and for the year ended August 31, 1993, in the
amount of $112,306.
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, 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.
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, 1995, 1994 and 1993:
37
<PAGE> 95
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
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 . . . . . $69,813 .03% $171,972 .08% $ 91,549 .06%
AIM Growth Fund . . . . . . . . . . 67,618 .03% 134,789 .09% 97,029 .06%
AIM High Yield Fund . . . . . . . . 82,116 .01% 313,218 .04% 172,279 .04%
AIM Income Fund . . . . . . . . . . 82,185 .03% 154,517 .07% 86,396 .04%
AIM Intermediate Government Fund . 71,765 .04% 92,487 .06% 59,584 .04%
AIM Money Market Fund* . . . . . . 55,020 .01% 209,642 .05% 39,325 .06%
AIM Municipal Bond Fund . . . . . . 65,899 .02% 103,945 .04% 65,114 .02%
AIM Value Fund . . . . . . . . . . 137,307 .003% 884,123 .06% 220,898 .05%
</TABLE>
* Amount paid by AIM MONEY MARKET FUND was for period October 16, 1993
through December 31, 1993.
AIM BALANCED FUND reimbursed AIM for administrative services costs
incurred by AIM, for the years ended December 31, 1995 and 1994, in the amounts
of $67,928 and $81,734, respectively, which represented .07% and 0.18%,
respectively, 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 year ended August 31, 1993, in the
amount of $36,641, which represented .24% of the Fund's average net assets.
In addition, the Transfer Agency and Service Agreement between the
Trust and A I M Fund Services, Inc. ("AFS"), a registered transfer agent and
wholly-owned subsidiary of AIM, provides that AFS will perform certain
shareholder services for the Funds for a fee per account serviced. The
Transfer Agency and Service Agreement provides that AFS will receive a per
account fee plus out-of-pocket expenses to process orders for purchases,
redemptions and exchanges of shares; prepare and transmit payments for
dividends and distributions declared by the Funds; maintain shareholder
accounts and provide shareholders with information regarding the Funds and
their accounts. The Transfer Agency and Service Agreement became effective on
November 1, 1994.
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; 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
38
<PAGE> 96
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.
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.
39
<PAGE> 97
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, 1995, 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 . . . . . . . . . . . . . . . . . . . . $ 134,550 $ 382,860
AIM Global Utilities Fund . . . . . . . . . . . . . . . . 393,486 538,479
AIM Growth Fund . . . . . . . . . . . . . . . . . . . . . 374,107 828,223
AIM High Yield Fund . . . . . . . . . . . . . . . . . . . 1,805,363 3,483,665
AIM Income Fund . . . . . . . . . . . . . . . . . . . . . 550,802 237,414
AIM Intermediate Government Fund . . . . . . . . . . . . 403,858 377,931
AIM Municipal Bond Fund . . . . . . . . . . . . . . . . . 686,308 145,330
AIM Value Fund . . . . . . . . . . . . . . . . . . . . . 5,911,494 16,466,004
</TABLE>
Actual fees paid under the Class A and Class C Plan during the year
ended December 31, 1995 were allocated as follows:
<TABLE>
<CAPTION>
PRINTING COMPENSATION
ADVERTISING AND MAILING SEMINARS TO DEALERS
----------- ----------- -------- ------------
<S> <C> <C> <C> <C>
AIM Balanced Fund . . . . . . . . . . . . . $ 6,791 $ 1,132 $ 2,264 $ 124,363
AIM Global Utilities Fund . . . . . . . . . 7,124 1,018 2,035 383,309
AIM Growth Fund . . . . . . . . . . . . . . 2,846 948 948 369,365
AIM High Yield Fund . . . . . . . . . . . . 43,238 7,039 16,089 1,738,997
AIM Income Fund . . . . . . . . . . . . . . 4,333 867 1,733 543,869
AIM Intermediate Government Fund . . . . . 4,962 992 1,985 395,919
AIM Municipal Bond Fund . . . . . . . . . . 15,581 2,921 5,843 661,963
AIM Value Fund . . . . . . . . . . . . . . 129,306 21,882 47,743 5,712,563
</TABLE>
Actual fees paid under the Class B Plan during the year ended December
31, 1995 were allocated as follows:
<TABLE>
<CAPTION>
COMPENSATION COMPENSATION
PRINTING AND TO TO
ADVERTISING MAILING SEMINARS UNDERWRITERS DEALERS
----------- ------------ -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
AIM Balanced Fund . . . . . . . . . $ 23,552 $ 4,096 $ 7,168 $ 287,145 $ 60,899
AIM Global Utilities Fund . . . . . 50,441 8,071 21,186 403,859 54,922
AIM Growth Fund . . . . . . . . . . 44,551 7,088 17,213 621,167 138,204
AIM High Yield Fund . . . . . . . . 181,814 29,969 65,932 2,612,748 593,202
AIM Income Fund . . . . . . . . . . 13,997 2,000 4,999 178,061 38,357
AIM Intermediate Government Fund . 23,098 4,017 9,039 283,448 58,329
AIM Municipal Bond Fund . . . . . . 8,434 1,874 3,748 108,998 22,276
AIM Value Fund . . . . . . . . . . 710,527 119,088 258,191 12,349,503 3,028,695
</TABLE>
For the year ended December 31, 1995, the Class A shares of AIM MONEY
MARKET FUND paid $410,703 to AIM Distributors pursuant to the Class A and Class
C Plan, of which $8,911 was spent on advertising, $1,980 was spent on printing
and mailing, $2,970 was spent on seminars and $396,842 was spent on
compensation to Dealers. For the year ended December 31, 1995, the Class B
shares of AIM MONEY
40
<PAGE> 98
MARKET FUND paid $381,405 to AIM Distributors pursuant to the Class B Plan, of
which $25,127 was spent on advertising, $4,020 was spent on printing and
mailing, $9,045 was spent on seminars, $286,054 was spent on compensation to
Underwriters and $57,159 was spent on compensation to Dealers. For the year
ended December 31, 1995, the Class C shares of AIM MONEY MARKET FUND paid
$671,137 to AIM Distributors pursuant to the Class A and Class C Plan, of which
$98,678 was spent on advertising, $16,945 was spent on printing and mailing,
$36,880 was spent on seminars and $518,635 was spent on compensation to
Dealers.
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 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,
41
<PAGE> 99
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 of 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 payments to AIM Distributors. Termination of the
Class B Plan or Distribution Agreement would not affect the obligation of a
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, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
AIM Global Utilities Fund . . . . . $ 745,539 $ 106,920 $ 1,198,533 $ 168,696 $ 3,474,558 $ 477,431
AIM Growth Fund . . . . . . . . . . 892,904 146,533 255,624 37,866 183,096 29,279
AIM High Yield Fund . . . . . . . . 8,338,447 1,388,106 5,149,515 808,554 6,526,992 1,062,165
AIM Income Fund . . . . . . . . . . 914,135 154,679 554,349 94,637 770,766 134,790
AIM Intermediate Government Fund . 876,411 144,669 644,604 108,048 904,645 156,795
AIM Money Market Fund . . . . . . . 2,845,276 494,184 996,876 182,129 78,035 14,644
AIM Municipal Bond Fund . . . . . . 684,242 116,667 527,008 82,774 710,819 124,164
AIM Value Fund . . . . . . . . . . 52,075,064 7,659,031 22,815,744 3,063,899 14,439,158 2,057,628
</TABLE>
The total sales charges paid in connection with the sale of Class A
shares of AIM BALANCED FUND for the years ended December 31, 1995 and 1994 were
$979,475 and $379,087, of which A I M Distributors retained $165,692 and
$63,481, and for the four-month period ended December 31, 1993 was $85,265, of
which AIM Distributors retained $14,333. For the year ended August 31, 1993,
the total sales charges paid
42
<PAGE> 100
in connection with the sale of shares of ACS was $96,742, and the amounts AIM
Distributors retained for the same period was $19,211.
The following chart reflects the contingent deferred sales charges
paid by Class A and Class B shareholders for the years ended December 31, 1995
and 1994, and the period ended December 31 1993:
<TABLE>
<CAPTION>
1995 1994 1993*
---- ---- ----
<S> <C> <C> <C>
AIM Balanced Fund $ 92,409 $ 28,532 $ 6
AIM Global Utilities Fund 167,444 107,127 3,301
AIM Growth Fund 169,092 51,475 3,970
AIM High Yield Fund 655,591 391,108 1,799
AIM Income Fund 48,320 16,712 2,339
AIM Intermediate Government Fund 101,233 70,431 42
AIM Money Market Fund 256,618 81,600 37
AIM Municipal Bond Fund 31,956 18,017 -0-
AIM Value Fund 2,052,439 584,611 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 INCOME FUND and AIM INTERMEDIATE
GOVERNMENT 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 interests
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 at (800) 959-4246) 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
43
<PAGE> 101
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 ("NYSE") is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the NYSE 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 making disposition of portfolio securities or the
valuation of the net assets of a 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, 1995, AIM VALUE
FUND - Class A shares had 127,137,684 shares outstanding, net assets of
$3,408,952,023 and a net asset value per share of $26.81. The offering price,
therefore, was $28.37.
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.
44
<PAGE> 102
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 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 the close of trading on the NYSE
(generally 4:00 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)
attributable to a particular class, less all its liabilities (including accrued
expenses and dividends payable) attributable to that class, by the number of
shares outstanding of that Class and rounding the resulting per share net asset
value to the nearest one cent. Determination of the 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
minimal credit risk to the Fund. For the definition of "Eligible Securities"
see the caption "Description of Money Market Instruments."
45
<PAGE> 103
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 the close of trading of the NYSE (generally
4:00 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) attributable to a
particular class, less all its liabilities (including accrued expenses and
dividends payable) attributable to that class, by the total number of shares
outstanding of that class. 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 or a comparable alternative, such as Bloomberg or Telerate.
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 or absent
a last sales price, at the mean between the closing bid and asked prices on
that day. 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. For purposes of determining net
asset value per share, futures and options contracts generally will be valued
15 minutes after the close of trading of the NYSE.
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 NYSE. 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 NYSE. 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 NYSE 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 will be valued at their fair value as determined in good faith by or
under the supervision of the Board of Trustees.
46
<PAGE> 104
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 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.
47
<PAGE> 105
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, 1995, detail the amount of capital loss
carryover for FIT purposes to which the Fund is entitled, subject to certain
limitations. 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 1995, none of the dividends paid from
income was taxable as ordinary income; however, this 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
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.
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<PAGE> 106
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
Fund 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 Fund Services, Inc., P.O. Box 4739, Houston, Texas
77210-4739, toll free at (800) 959-4246.
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 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 Fund Services, 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
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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 NRSROs* 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 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** that is of comparable quality
to a security meeting the requirements of clauses (i) and (ii) above,
as determined by the Board of Trustees.
__________________________________
* "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 itsaffiliate, IBCA Inc. Subcategories or gradations in
ratings (such as a "+" or "") do not count as rating categories.
** 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.
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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
(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; however, 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
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<PAGE> 109
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 that security, provided that the Fund may invest more than 5% 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 for temporary or emergency purposes, such as 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 only when the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction. Reverse repurchase agreements are considered
borrowings by a Fund under the 1940 Act.
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,
700 Louisiana, NationsBank Building, Houston, Texas 77002, 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.
CUSTODIANS 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, except for AIM MUNICIPAL BOND FUND, for which the Bank of New
York, 90 Washington Street, 11th Floor, New York, New York 10286, is the
custodian. Under its respective contract with the Trust, each 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
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include any supervisory function over management or provide any protection
against any possible depreciation of assets. The Funds pay the Custodians and
the Transfer Agent such compensation as may be agreed upon from time to time.
Texas Commerce Bank National Association, 712 Main, Houston, Texas
77002, 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.
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.
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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: 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.
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.
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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.
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.
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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:
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+).
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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:
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.
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.
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<PAGE> 115
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.
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.
58
<PAGE> 116
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 +
Stable =
Declining -
Uncertain ?
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.
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.
59
<PAGE> 117
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.
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.
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.
60
<PAGE> 118
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.
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.
61
<PAGE> 119
FINANCIAL STATEMENTS
FS-1
<PAGE> 120
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, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the two-year period then ended, the four-month period ended
December 31, 1993, and each of the years in the seven-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, 1995, 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, 1995, the results of its operations for the
year then ended, the changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
two-year period then ended, the four-month period ended December 31, 1993, and
each of the years in the seven-year period ended August 31, 1993, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1996
FS-2
<PAGE> 121
Financials
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
BONDS & NOTES-20.64%
ADVERTISING/BROADCASTING-0.60%
$ 925,000 Time Warner Inc., Deb., 8.18%, 08/15/07 $ 993,570
- ---------------------------------------------------------------------------------------------
AUTOMOBILE-(MANUFACTURERS)-0.90%
150,000 Chrysler Financial Corp., Deb., 8.50%, 02/01/18 161,217
- ---------------------------------------------------------------------------------------------
800,000 Ford Motor Credit Co., Notes, 6.75%, 08/15/08 821,512
- ---------------------------------------------------------------------------------------------
400,000 General Motors Corp., Putable Notes, 8.80%, 03/01/21 493,012
- ---------------------------------------------------------------------------------------------
1,475,741
- ---------------------------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.57%
500,000 Exide Corp., Sr. Conv. Sub. Notes, 2.90%, 12/15/05(a)
(Acquired 12/11/95; Cost $362,018) 360,000
- ---------------------------------------------------------------------------------------------
300,000 Magna International Inc., Conv. Sub. Deb., 5.00%, 10/15/02 307,500
- ---------------------------------------------------------------------------------------------
200,000 Titan Wheel International Inc., Conv. Sub. Notes, 4.75%,
12/01/00 266,000
- ---------------------------------------------------------------------------------------------
933,500
- ---------------------------------------------------------------------------------------------
BANKING-1.73%
800,000 First Union Corp., Sub. Notes, 6.375%, 01/15/09 772,000
- ---------------------------------------------------------------------------------------------
500,000 MBL International Finance Bermuda, Conv. Bonds, 3.00%,
11/30/02 580,000
- ---------------------------------------------------------------------------------------------
700,000 Mercantile Bank, Sub. Notes, 6.375%, 01/15/04 702,184
- ---------------------------------------------------------------------------------------------
800,000 Wachovia Corp., Sub. Notes, 6.375%, 02/01/09 796,488
- ---------------------------------------------------------------------------------------------
2,850,672
- ---------------------------------------------------------------------------------------------
BUSINESS SERVICES-0.32%
250,000 Career Horizons Inc., Conv. Bonds, 7.00%, 11/01/02(a)
(Acquired 10/16/95; Cost $250,000) 280,000
- ---------------------------------------------------------------------------------------------
200,000 Olsten Corp., Conv. Sub. Deb., 4.875%, 05/15/03 237,940
- ---------------------------------------------------------------------------------------------
517,940
- ---------------------------------------------------------------------------------------------
CABLE TV-0.48%
750,000 Viacom, Inc., Sr. Gtd. Notes, 7.75%, 06/01/05 796,477
- ---------------------------------------------------------------------------------------------
COMPUTER NETWORKING-0.49%
500,000 3Com Corp., Conv. Sub. Notes, 10.25%, 11/01/01(a)
(Acquired 11/08/94-11/14/95; Cost $663,437) 802,500
- ---------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-0.50%
250,000 Sanmina Corp., Conv. Sub. Notes, 5.50%, 08/15/02(a)
(Acquired 08/10/95; Cost $250,000) 276,250
- ---------------------------------------------------------------------------------------------
300,000 Seagate Technology, Conv. Sub. Deb., 5.00%, 11/01/03(a)
(Acquired 04/13/94-11/7/95; Cost $383,750) 551,790
- ---------------------------------------------------------------------------------------------
828,040
- ---------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-0.56%
196,000 Network Equipment Technologies, Inc., Conv. Sub. Deb., 7.25%,
05/15/14 200,743
- ---------------------------------------------------------------------------------------------
950,000 SoftKey International Inc., Conv. Notes, 5.50%, 11/01/00(a)
(Acquired 10/17/95-10/20/95; Cost $943,000) 717,250
- ---------------------------------------------------------------------------------------------
917,993
- ---------------------------------------------------------------------------------------------
ELECTRIC POWER-0.36%
451,303 Indiana Michigan Power Co., Secured Lease Obligation Bonds,
9.82%, 12/07/22 596,660
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 122
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
ENERGY ALTERNATE SOURCES-0.39%
$ 630,000 California Energy Company, Inc., Conv. Sub. Deb., 5.00%,
07/31/00(a)
(Acquired 04/26/95-10/19/95; Cost $594,025) $ 634,914
- ---------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-1.31%
650,000 Associates Corp. of North America, Series B Sr. Deb., 7.95%,
02/15/10 739,746
- ---------------------------------------------------------------------------------------------
500,000 Countrywide Funding Corp., Sub. Notes, 8.25%, 07/15/02 546,505
- ---------------------------------------------------------------------------------------------
750,000 General Motors Acceptance Corp., Putable Step Up Notes, 9.00%,
10/15/02 867,397
- ---------------------------------------------------------------------------------------------
2,153,648
- ---------------------------------------------------------------------------------------------
FOREIGN GOVERNMENTS-1.55%
1,500,000 Manitoba (Province of), Yankee Bonds, 7.75%, 07/17/16 1,665,705
- ---------------------------------------------------------------------------------------------
CAD 500,000 New Brunswick (Province of), Deb., 8.94%, 01/15/05 380,355
- ---------------------------------------------------------------------------------------------
500,000 United Mexican States, Deb., 11.1875%, 07/21/97(a)
(Acquired 07/12/95; Cost $500,000) 512,190
- ---------------------------------------------------------------------------------------------
2,558,250
- ---------------------------------------------------------------------------------------------
HOTELS/MOTELS-0.47%
750,000 ITT Corp., Gtd. Deb., 7.375%, 11/15/15 774,844
- ---------------------------------------------------------------------------------------------
INSURANCE-LIFE & HEALTH-0.33%
400,000 American Travellers Corp., Conv. Sub. Deb., 6.50%, 10/01/05 544,000
- ---------------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.13%
200,000 Thermo Electron Corp., Conv. Sub. Notes, 4.25%, 01/01/03(a)
(Acquired 11/28/95; Cost $200,000) 219,000
- ---------------------------------------------------------------------------------------------
MEDICAL (DRUGS)-0.47%
300,000 ICN Pharmaceuticals Inc., Conv. Sub. Notes, 8.50%, 11/15/99 335,250
- ---------------------------------------------------------------------------------------------
1,000,000 Roche Holdings Inc., Liquid Yield Option Notes, 7.00%,
04/20/10(a)(b)
(Acquired 04/12/95; Cost $356,280) 442,500
- ---------------------------------------------------------------------------------------------
777,750
- ---------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-0.80%
150,000 Genesis Health Ventures, Sr. Conv. Sub. Deb., 6.00%, 11/30/03 247,312
- ---------------------------------------------------------------------------------------------
300,000 Healthsouth Corp., Conv. Sub. Deb., 5.00%, 04/01/01 484,890
- ---------------------------------------------------------------------------------------------
175,000 Integrated Health Services Inc., Conv. Sub. Deb., 6.00%,
01/01/03 174,213
- ---------------------------------------------------------------------------------------------
400,000 Prime Hospitality Corp., Conv. Sub. Notes, 7.00%, 04/15/02 418,000
- ---------------------------------------------------------------------------------------------
1,324,415
- ---------------------------------------------------------------------------------------------
NATURAL GAS (PIPELINE & DISTRIBUTORS)-1.00%
800,000 Enron Corp., Sr. Sub. Deb., 6.75%, 07/01/05 817,576
- ---------------------------------------------------------------------------------------------
750,000 Panhandle Eastern Pipe Line Co., Notes, 7.875%, 08/15/04 827,197
- ---------------------------------------------------------------------------------------------
1,644,773
- ---------------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.25%
300,000 Danka Business Systems, Conv. Sub. Deb., 6.75%, 04/01/02(a)
(Acquired 03/06/95; Cost $300,000) 419,250
- ---------------------------------------------------------------------------------------------
OIL & GAS-EXPLORATION & PRODUCTION-0.95%
1,500,000 Talisman Energy, Inc., Yankee Bonds, 7.125%, 06/01/07 1,574,040
- ---------------------------------------------------------------------------------------------
POLLUTION CONTROL-0.20%
280,000 U.S. Filter Corp., Conv. Sub. Notes, 6.00%, 09/15/05(a)
(Acquired 09/13/95; Cost $280,000) 323,400
- ---------------------------------------------------------------------------------------------
PUBLISHING-0.64%
900,000 News America Holdings, Sr. Gtd. Deb., 9.25%, 02/01/13 1,060,056
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-4
<PAGE> 123
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
RESTAURANTS-0.26%
$ 1,500,000 Boston Chicken Inc., Liquid Yield Option Notes, 8.00%,
06/01/15(b) $ 436,875
- ---------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUGS)-0.31%
500,000 Great Atlantic & Pacific, Gtd. Notes, 7.78%, 11/01/00(a)
(Acquired 10/18/95; Cost $500,000) 507,005
- ---------------------------------------------------------------------------------------------
RETAIL (STORES)-1.20%
250,000 Baby Superstore Inc., Conv. Sub. Notes, 4.875%, 10/01/00 295,000
- ---------------------------------------------------------------------------------------------
500,000 Federated Department Stores, Conv. Notes, 5.00%, 10/01/03 502,500
- ---------------------------------------------------------------------------------------------
700,000 Office Depot Inc., Liquid Yield Option Sub. Notes, 4.00%,
11/01/08(b) 402,500
- ---------------------------------------------------------------------------------------------
300,000 Pep Boys-Manny, Moe & Jack, Conv. Sub. Notes, 4.00%, 09/01/99 288,616
- ---------------------------------------------------------------------------------------------
500,000 Staples Inc., Conv. Sub. Deb., 4.50%, 10/01/00(a)
(Acquired 09/12/95; Cost $500,000) 495,000
- ---------------------------------------------------------------------------------------------
1,983,616
- ---------------------------------------------------------------------------------------------
SEMICONDUCTORS-1.83%
600,000 Altera Corp., Conv. Sub. Notes, 5.75%, 06/15/02(a)
(Acquired 06/16/95-12/13/95; Cost $696,375) 699,000
- ---------------------------------------------------------------------------------------------
600,000 Analog Devices Inc., Conv. Sub. Notes, 3.50%, 12/01/00 639,000
- ---------------------------------------------------------------------------------------------
250,000 Cypress Semiconductor Corp., Conv. Sub. Notes, 3.15%,
03/15/01(a)
(Acquired 04/06/95; Cost $263,125) 254,063
- ---------------------------------------------------------------------------------------------
100,000 LSI Logic Corp., Conv. Sub. Notes, 5.50%, 03/15/01(a)
(Acquired 12/04/95; Cost $370,090) 275,500
- ---------------------------------------------------------------------------------------------
300,000 National Semiconductor Corp., Conv. Deb., 6.50%, 10/01/02(a)
(Acquired 09/21/95; Cost $300,000) 281,250
- ---------------------------------------------------------------------------------------------
200,000 VLSI Technology Inc., Conv. Sub. Notes, 8.25%, 10/01/05 183,000
- ---------------------------------------------------------------------------------------------
750,000 XILINX Inc., Conv. Sub. Notes, 5.25%, 11/01/02(a)
(Acquired 11/07/95; Cost $750,000) 682,500
- ---------------------------------------------------------------------------------------------
3,014,313
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-1.25%
1,000,000 TCI Communications Inc., Sr. Notes, 8.00%, 08/01/05 1,061,490
- ---------------------------------------------------------------------------------------------
1,300,000 U.S. Cellular Corp., Sub. Liquid Yield Option Notes, 6.00%,
06/15/15(b) 463,125
- ---------------------------------------------------------------------------------------------
500,000 World Communications Inc., Conv. Sub. Notes, 5.00%, 08/15/03 532,500
- ---------------------------------------------------------------------------------------------
2,057,115
- ---------------------------------------------------------------------------------------------
TRANSPORTATION (MISCELLANEOUS)-0.79%
703,835 Delta Air Lines Inc., Series 92-E Notes, 8.54%, 01/02/07 771,530
- ---------------------------------------------------------------------------------------------
500,000 Telxon Corp., Conv. Deb., 5.75%, 01/01/03(a)
(Acquired 12/07/95; Cost $501,000) 530,000
- ---------------------------------------------------------------------------------------------
1,301,530
- ---------------------------------------------------------------------------------------------
Total Bonds & Notes 34,021,887
- ---------------------------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
COMMON STOCKS-42.95%
ADVERTISING/BROADCASTING-0.43%
6,500 British Sky Broadcasting Group PLC 244,564
- ---------------------------------------------------------------------------------------------
11,000 Meredith Corp. 460,625
- ---------------------------------------------------------------------------------------------
705,189
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-5
<PAGE> 124
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
AEROSPACE/DEFENSE-0.70%
4,000 Boeing Co. (The) $ 313,500
- ---------------------------------------------------------------------------------------------
7,000 Rockwell International Corp. 370,125
- ---------------------------------------------------------------------------------------------
5,000 United Technologies Corp. 474,375
- ---------------------------------------------------------------------------------------------
1,158,000
- ---------------------------------------------------------------------------------------------
APPLIANCES-0.12%
4,000 Premark International Inc. 202,500
- ---------------------------------------------------------------------------------------------
BANKING-0.39%
14,000 Bank of Boston 647,500
- ---------------------------------------------------------------------------------------------
BANKING (MONEY CENTER)-0.76%
6,000 Chase Manhattan Corp. 363,750
- ---------------------------------------------------------------------------------------------
7,000 Chemical Banking Corp. 411,250
- ---------------------------------------------------------------------------------------------
7,000 Citicorp 470,750
- ---------------------------------------------------------------------------------------------
1,245,750
- ---------------------------------------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.44%
64,349 Bass PLC 718,054
- ---------------------------------------------------------------------------------------------
BEVERAGES (SOFT DRINKS)-0.49%
10,000 Pepsi-Cola Puerto Rico Bottling Co. 115,000
- ---------------------------------------------------------------------------------------------
12,500 PepsiCo Inc. 698,438
- ---------------------------------------------------------------------------------------------
813,438
- ---------------------------------------------------------------------------------------------
BUILDING MATERIALS-0.13%
6,200 Black & Decker Corp. 218,550
- ---------------------------------------------------------------------------------------------
BUSINESS SERVICES-1.53%
19,500 Corestaff, Inc.(c) 711,750
- ---------------------------------------------------------------------------------------------
9,500 Diebold, Inc. 526,064
- ---------------------------------------------------------------------------------------------
24,000 Equifax, Inc. 513,000
- ---------------------------------------------------------------------------------------------
6,000 Healthcare COMPARE Corp.(c) 261,000
- ---------------------------------------------------------------------------------------------
32,700 Learning Tree International, Inc.(c) 510,938
- ---------------------------------------------------------------------------------------------
2,522,752
- ---------------------------------------------------------------------------------------------
CHEMICALS-0.09%
10,800 Carbide/Graphite Group, Inc. (The)(c) 155,250
- ---------------------------------------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.37%
10,000 IMC Global, Inc. 408,750
- ---------------------------------------------------------------------------------------------
6,000 Praxair, Inc. 201,750
- ---------------------------------------------------------------------------------------------
610,500
- ---------------------------------------------------------------------------------------------
COMPUTER MAINFRAMES-0.83%
15,000 International Business Machines Corp. 1,376,250
- ---------------------------------------------------------------------------------------------
COMPUTER MINI/PCS-1.06%
9,000 COMPAQ Computer Corp.(c) 432,000
- ---------------------------------------------------------------------------------------------
10,000 Dell Computer Corp.(c) 346,250
- ---------------------------------------------------------------------------------------------
4,000 Hewlett-Packard Co. 335,000
- ---------------------------------------------------------------------------------------------
14,000 Sun Microsystems, Inc.(c) 638,750
- ---------------------------------------------------------------------------------------------
1,752,000
- ---------------------------------------------------------------------------------------------
COMPUTER NETWORKING-1.57%
6,900 Ascend Communications, Inc.(c) 559,764
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-6
<PAGE> 125
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER NETWORKING (continued)
15,000 Bay Networks, Inc.(c) $ 616,875
- ---------------------------------------------------------------------------------------------
4,500 Cabletron Systems, Inc.(c) 364,500
- ---------------------------------------------------------------------------------------------
7,000 Cisco Systems, Inc.(c) 522,375
- ---------------------------------------------------------------------------------------------
15,000 ECI Telecommunications Ltd. 342,186
- ---------------------------------------------------------------------------------------------
6,476 Network Equipment Technologies, Inc.(c) 177,285
- ---------------------------------------------------------------------------------------------
2,582,985
- ---------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-0.75%
6,500 Adaptec Inc.(c) 266,500
- ---------------------------------------------------------------------------------------------
34,000 EMC Corp.(c) 522,750
- ---------------------------------------------------------------------------------------------
10,500 Oracle Systems Corp.(c) 444,938
- ---------------------------------------------------------------------------------------------
1,234,188
- ---------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-4.19%
4,000 Adobe Systems, Inc. 248,000
- ---------------------------------------------------------------------------------------------
13,400 Arbor Software Corp.(c) 633,150
- ---------------------------------------------------------------------------------------------
7,000 Computer Associates International, Inc. 398,125
- ---------------------------------------------------------------------------------------------
11,800 DST Systems, Inc.(c) 336,300
- ---------------------------------------------------------------------------------------------
17,000 MetaTools Inc.(c) 442,000
- ---------------------------------------------------------------------------------------------
5,000 Microsoft Corp.(c) 438,750
- ---------------------------------------------------------------------------------------------
15,400 Objective Systems Integrators, Inc.(c) 843,150
- ---------------------------------------------------------------------------------------------
12,900 Pixar, Inc.(c) 372,487
- ---------------------------------------------------------------------------------------------
13,000 RadiSys Corp.(c) 152,750
- ---------------------------------------------------------------------------------------------
32,000 Sandisk Corp.(c) 480,000
- ---------------------------------------------------------------------------------------------
18,400 Scopus Technology, Inc.(c) 464,600
- ---------------------------------------------------------------------------------------------
8,100 Secure Computing Corp.(c) 453,600
- ---------------------------------------------------------------------------------------------
16,100 Seer Technologies, Inc.(c) 201,250
- ---------------------------------------------------------------------------------------------
6,400 Smith Micro Software, Inc.(c) 43,200
- ---------------------------------------------------------------------------------------------
18,800 Verity, Inc.(c) 831,900
- ---------------------------------------------------------------------------------------------
25,400 Visioneer, Inc.(c) 565,150
- ---------------------------------------------------------------------------------------------
6,904,412
- ---------------------------------------------------------------------------------------------
CONGLOMERATES-0.20%
7,000 Allied-Signal, Inc. 332,500
- ---------------------------------------------------------------------------------------------
CONTAINERS-0.07%
4,000 Ball Corp. 110,000
- ---------------------------------------------------------------------------------------------
COSMETICS/TOILETRIES-1.15%
10,000 Colgate-Palmolive Co. 702,500
- ---------------------------------------------------------------------------------------------
10,400 Estee Lauder Companies(c) 362,700
- ---------------------------------------------------------------------------------------------
10,000 Procter & Gamble Co. 830,000
- ---------------------------------------------------------------------------------------------
1,895,200
- ---------------------------------------------------------------------------------------------
ELECTRIC POWER-0.41%
8,000 National Power PLC 74,000
- ---------------------------------------------------------------------------------------------
11,000 PowerGen PLC 144,375
- ---------------------------------------------------------------------------------------------
10,750 Veba AG 456,378
- ---------------------------------------------------------------------------------------------
674,753
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-7
<PAGE> 126
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.73%
50,000 ElectroStar, Inc.(c) $ 431,250
- ---------------------------------------------------------------------------------------------
20,300 General Scanning, Inc.(c) 203,000
- ---------------------------------------------------------------------------------------------
5,500 Tektronix, Inc. 270,186
- ---------------------------------------------------------------------------------------------
12,000 Teradyne, Inc.(c) 300,000
- ---------------------------------------------------------------------------------------------
1,204,436
- ---------------------------------------------------------------------------------------------
ELECTRONIC/DEFENSE-0.44%
6,000 Sundstrand Corp. 422,250
- ---------------------------------------------------------------------------------------------
7,000 Watkins-Johnson Co. 306,250
- ---------------------------------------------------------------------------------------------
728,500
- ---------------------------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS-0.35%
6,000 Arrow Electronics, Inc.(c) 258,750
- ---------------------------------------------------------------------------------------------
7,000 Avnet, Inc. 313,250
- ---------------------------------------------------------------------------------------------
572,000
- ---------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.41%
7,000 Merrill Lynch & Co., Inc. 357,000
- ---------------------------------------------------------------------------------------------
4,000 Morgan Stanley Group, Inc. 322,500
- ---------------------------------------------------------------------------------------------
679,500
- ---------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-2.00%
10,000 American Express Co. 413,750
- ---------------------------------------------------------------------------------------------
6,000 Federal Home Loan Mortgage Corp. 501,000
- ---------------------------------------------------------------------------------------------
7,000 Federal National Mortgage Association 868,875
- ---------------------------------------------------------------------------------------------
24,000 Green Tree Financial Corp. 633,000
- ---------------------------------------------------------------------------------------------
15,000 MBNA Corp. 553,125
- ---------------------------------------------------------------------------------------------
5,000 Student Loan Marketing Association 329,375
- ---------------------------------------------------------------------------------------------
3,299,125
- ---------------------------------------------------------------------------------------------
FOOD/PROCESSING-0.32%
4,000 IBP, Inc. 202,000
- ---------------------------------------------------------------------------------------------
10,000 Nabisco Holdings Corp. 326,250
- ---------------------------------------------------------------------------------------------
528,250
- ---------------------------------------------------------------------------------------------
HOMEBUILDING-0.15%
7,000 Centex Corp. 243,250
- ---------------------------------------------------------------------------------------------
HOTELS/MOTELS-0.40%
24,000 Extended Stay America, Inc.(c) 660,000
- ---------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.23%
24,000 Guarantee Life Companies, Inc.(c) 378,000
- ---------------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-2.33%
9,000 Aetna Life & Casualty Co. 623,250
- ---------------------------------------------------------------------------------------------
32,200 Amerin Corp.(c) 861,350
- ---------------------------------------------------------------------------------------------
26,200 Capmac Holdings Inc.(c) 658,275
- ---------------------------------------------------------------------------------------------
6,000 CIGNA Corp. 619,500
- ---------------------------------------------------------------------------------------------
30,000 GCR Holdings Ltd.(c) 675,000
- ---------------------------------------------------------------------------------------------
4,000 Prudential Reinsurance Holdings, Inc. 93,500
- ---------------------------------------------------------------------------------------------
5,000 Travelers Group, Inc. 314,375
- ---------------------------------------------------------------------------------------------
3,845,250
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-8
<PAGE> 127
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
LEISURE & RECREATION-0.16%
4,500 Walt Disney Co. (The) $ 265,500
- ---------------------------------------------------------------------------------------------
MACHINERY (HEAVY)-0.25%
9,000 Case Corp. 411,750
- ---------------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.28%
9,000 Thermo Electron Corp.(c) 468,000
- ---------------------------------------------------------------------------------------------
MEDICAL (DRUGS)-3.06%
10,000 Abbott Laboratories 417,500
- ---------------------------------------------------------------------------------------------
7,000 American Home Products Corp. 679,000
- ---------------------------------------------------------------------------------------------
6,000 Cardinal Health Inc. 328,500
- ---------------------------------------------------------------------------------------------
6,000 Johnson & Johnson 513,750
- ---------------------------------------------------------------------------------------------
10,000 Lilly (Eli) & Co. 562,500
- ---------------------------------------------------------------------------------------------
4,000 Merck & Co., Inc. 263,000
- ---------------------------------------------------------------------------------------------
14,000 Pfizer Inc. 882,000
- ---------------------------------------------------------------------------------------------
10,000 Schering-Plough Corp. 547,500
- ---------------------------------------------------------------------------------------------
7,000 SmithKline Beecham PLC-ADR 388,500
- ---------------------------------------------------------------------------------------------
10,000 Teva Pharmaceutical Industries, Inc.-ADR 463,750
- ---------------------------------------------------------------------------------------------
5,046,000
- ---------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-0.44%
3,000 Medtronic, Inc. 167,625
- ---------------------------------------------------------------------------------------------
15,200 Neuromedical Systems Inc.(c) 305,900
- ---------------------------------------------------------------------------------------------
5,700 St. Jude Medical Inc.(c) 245,100
- ---------------------------------------------------------------------------------------------
718,625
- ---------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-0.44%
10,000 Baxter International, Inc. 418,750
- ---------------------------------------------------------------------------------------------
6,000 Columbia/HCA Healthcare Corp. 304,500
- ---------------------------------------------------------------------------------------------
723,250
- ---------------------------------------------------------------------------------------------
NATURAL GAS PIPELINE-1.58%
7,000 Columbia Gas Systems, Inc.(c) 307,125
- ---------------------------------------------------------------------------------------------
22,000 Enron Corp. 838,750
- ---------------------------------------------------------------------------------------------
13,000 KN Energy, Inc. 378,625
- ---------------------------------------------------------------------------------------------
17,000 Sonat, Inc. 605,625
- ---------------------------------------------------------------------------------------------
11,000 Williams Companies, Inc. 482,625
- ---------------------------------------------------------------------------------------------
2,612,750
- ---------------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.91%
11,000 Xerox Corp. 1,507,000
- ---------------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.18%
6,000 Avery-Dennison Corp. 300,750
- ---------------------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.18%
15,000 USX-Marathon Group 292,500
- ---------------------------------------------------------------------------------------------
OIL & GAS SERVICES-0.89%
4,500 Exxon Corp. 360,564
- ---------------------------------------------------------------------------------------------
8,000 Mobil Corp. 896,000
- ---------------------------------------------------------------------------------------------
1,500 Royal Dutch Petroleum Co.-ADR 211,687
- ---------------------------------------------------------------------------------------------
1,468,251
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-9
<PAGE> 128
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
PAPER & FOREST PRODUCTS-0.42%
6,000 Kimberly-Clark Corp. $ 496,500
- ---------------------------------------------------------------------------------------------
3,500 Mead Corp. (The) 182,875
- ---------------------------------------------------------------------------------------------
400 Schweitzer-Mauduit International, Inc.(c) 9,250
- ---------------------------------------------------------------------------------------------
688,625
- ---------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-1.66%
13,000 Bay Apartment Communities(c) 315,250
- ---------------------------------------------------------------------------------------------
15,000 Felcor Suite Hotels, Inc. 416,250
- ---------------------------------------------------------------------------------------------
12,000 Meditrust 418,500
- ---------------------------------------------------------------------------------------------
9,000 National Health Investors, Inc. 298,125
- ---------------------------------------------------------------------------------------------
4,500 Nationwide Health Properties, Inc. 189,000
- ---------------------------------------------------------------------------------------------
14,000 Oasis Residential Inc. 318,500
- ---------------------------------------------------------------------------------------------
16,500 Patriot American Hospitality, Inc.(c) 424,875
- ---------------------------------------------------------------------------------------------
14,000 Public Storage, Inc. 266,000
- ---------------------------------------------------------------------------------------------
5,600 RFS Hotel Investors Inc. 86,100
- ---------------------------------------------------------------------------------------------
2,732,600
- ---------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.19%
6,000 Safeway Inc.(c) 309,000
- ---------------------------------------------------------------------------------------------
RETAIL (STORES)-0.54%
35,000 Intimate Brands, Inc. 525,000
- ---------------------------------------------------------------------------------------------
15,000 Staples, Inc.(c) 365,625
- ---------------------------------------------------------------------------------------------
890,625
- ---------------------------------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.29%
10,000 Varian Associates, Inc. 477,500
- ---------------------------------------------------------------------------------------------
SEMICONDUCTORS-2.19%
20,000 Applied Materials, Inc.(c) 787,500
- ---------------------------------------------------------------------------------------------
15,000 ESS Technology, Inc.(c) 345,000
- ---------------------------------------------------------------------------------------------
9,000 Integrated Device Technology, Inc.(c) 115,875
- ---------------------------------------------------------------------------------------------
10,000 Intel Corp. 567,500
- ---------------------------------------------------------------------------------------------
7,000 LSI Logic Corp.(c) 229,250
- ---------------------------------------------------------------------------------------------
26,000 Texas Instruments, Inc. 1,345,500
- ---------------------------------------------------------------------------------------------
12,000 VLSI Technology, Inc.(c) 217,500
- ---------------------------------------------------------------------------------------------
3,608,125
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-3.34%
39,700 Amper S.A.(c) 469,658
- ---------------------------------------------------------------------------------------------
17,000 A T & T Corp. 1,100,750
- ---------------------------------------------------------------------------------------------
20,000 Frontier Corp. 600,000
- ---------------------------------------------------------------------------------------------
17,000 Nera AS-ADR(c) 552,500
- ---------------------------------------------------------------------------------------------
17,300 Nynex CableComms Group-ADR 300,588
- ---------------------------------------------------------------------------------------------
11,400 Portugal Telecom S.A.(c) 216,600
- ---------------------------------------------------------------------------------------------
5,400 Royal PTT Nederland N.V.-ADR(a)
(Acquired 06/13/94; Cost $144,442) 195,750
- ---------------------------------------------------------------------------------------------
2,500 Telecom Corp. of New Zealand Ltd.-ADR 173,438
- ---------------------------------------------------------------------------------------------
8,000 Telecomunicacoes Brasileiras S.A.-Telebras-ADR 379,000
- ---------------------------------------------------------------------------------------------
4,700 Tele Danmark A/S-ADR 129,838
- ---------------------------------------------------------------------------------------------
32,120 Telefonaktiebolaget L.M. Ericsson-ADR(c) 626,340
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-10
<PAGE> 129
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
TELECOMMUNICATIONS (continued)
1,080 Telefonaktiebolaget L.M. Ericsson Class B $ 21,145
- ---------------------------------------------------------------------------------------------
15,300 Tel-Save Holdings, Inc.(c) 212,288
- ---------------------------------------------------------------------------------------------
15,000 Vodafone Group PLC 528,750
- ---------------------------------------------------------------------------------------------
5,506,645
- ---------------------------------------------------------------------------------------------
TELEPHONE-1.22%
5,000 Ameritech Corp. 295,000
- ---------------------------------------------------------------------------------------------
7,100 Century Telephone Enterprises, Inc. 225,425
- ---------------------------------------------------------------------------------------------
10,500 NYNEX Corp.(c) 567,000
- ---------------------------------------------------------------------------------------------
5,500 SBC Communications, Inc. 316,250
- ---------------------------------------------------------------------------------------------
7,500 US West Media Group(c) 142,500
- ---------------------------------------------------------------------------------------------
13,000 US West, Inc. 464,750
- ---------------------------------------------------------------------------------------------
2,010,925
- ---------------------------------------------------------------------------------------------
TEXTILES-0.98%
34,200 Gucci Group(c) 1,329,525
- ---------------------------------------------------------------------------------------------
10,200 Liz Claiborne, Inc. 283,050
- ---------------------------------------------------------------------------------------------
1,612,575
- ---------------------------------------------------------------------------------------------
TOBACCO-0.71%
13,000 Philip Morris Companies Inc. 1,176,500
- ---------------------------------------------------------------------------------------------
Total Common Stocks 70,825,578
- ---------------------------------------------------------------------------------------------
PREFERRED STOCKS-3.10%
AUTOMOBILE (MANUFACTURERS)-0.18%
4,000 General Motors Corp., Series C, $3.25 Conv. Dep. Pfd. 293,000
- ---------------------------------------------------------------------------------------------
BANKING (MONEY CENTER)-0.17%
1,500 Citicorp, $5.375 Conv. Pfd. 276,426
- ---------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS (MISCELLANEOUS)-0.35%
11,500 Elsag Bailey Process Automation-N.V., $2.75 Conv. Pfd.(a)
(Acquired 12/14/95; Cost $575,000) 576,437
- ---------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-0.56%
7,000 First USA, $1.9922 Conv. Pfd. PRIDES 276,500
- ---------------------------------------------------------------------------------------------
10,000 SunAmerica, Inc.-Series E, $3.10 Conv. Dep. Pfd. 655,000
- ---------------------------------------------------------------------------------------------
931,500
- ---------------------------------------------------------------------------------------------
FUNERAL SERVICES-0.31%
7,000 SCI Financial LLC-Series A, $3.125 Conv. Pfd. 518,000
- ---------------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-0.10%
4,000 Allstate Inc., $2.30 Conv. Pfd. 164,000
- ---------------------------------------------------------------------------------------------
LEISURE & RECREATION-0.17%
20,000 Bally Entertainment Corp., $0.89 Conv. Pfd. PRIDES 272,500
- ---------------------------------------------------------------------------------------------
OIL & GAS SERVICES-0.29%
20,000 Enron Corp., $1.36 Conv. Pfd. 480,000
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-0.52%
17,500 MFS Communications Co., Inc., $2.68 Conv. Dep. Pfd. 852,030
- ---------------------------------------------------------------------------------------------
TELEPHONE-0.13%
4,000 Philippine Long Distance Telephone Co., $3.50 Conv. Pfd. 208,250
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-11
<PAGE> 130
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
TRANSPORTATION (MISCELLANEOUS)-0.32%
10,000 Continental Airlines Finance Trust, $4.25 Conv. Pfd.(a)
(Acquired 11/21/95-11/22/95; Cost $500,350) $ 536,250
- ---------------------------------------------------------------------------------------------
Total Preferred Stocks 5,108,393
- ---------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-23.24%
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. Treasury Notes
$ 2,500,000(d) 7.50%, 12/31/96 2,555,550
- ---------------------------------------------------------------------------------------------
12,000,000 6.50%, 04/30/99 12,441,000
- ---------------------------------------------------------------------------------------------
2,500,000 7.125%, 02/29/00 2,662,500
- ---------------------------------------------------------------------------------------------
3,000,000(d) 6.25%, 08/31/00 3,105,900
- ---------------------------------------------------------------------------------------------
2,500,000 7.25%, 08/15/04 2,782,500
- ---------------------------------------------------------------------------------------------
10,650,000(d) 6.50%, 02/15/05 11,358,012
- ---------------------------------------------------------------------------------------------
3,000,000 7.50%, 02/15/05 3,404,610
- ---------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 38,310,072
- ---------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT-6.35%(e)
10,475,294 Daiwa Securities America Inc., 5.92%, 01/02/96(f) 10,475,294
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES-96.28% 158,741,224
- ---------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-3.72% 6,133,132
- ---------------------------------------------------------------------------------------------
NET ASSETS-100.00% $164,874,356
=============================================================================================
</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, 1995, was
$10,571,799, which represented 6.41% 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) A portion of the principal balance was pledged to cover margin requirements
for open futures contracts. See Note 7.
(e) 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. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(f) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
Investment Abbreviations:
<TABLE>
<S> <C>
ADR - American Depositary Receipt
CAD - Canadian dollars
Conv. - Convertible
Deb. - Debentures
Dep. - Depositary
Gtd. - Guaranteed
Pfd. - Preferred
PRIDES - Preferred Redeemable
Increased Dividend
Equity Securities
Sr. - Senior
Sub. - Subordinated
See Notes to Financial Statements.
</TABLE>
FS-12
<PAGE> 131
Financials
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $139,477,389) $158,741,224
- ----------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $329,708) 324,194
- ----------------------------------------------------------------------------------------
Receivables for:
Investments sold 2,410,523
- ----------------------------------------------------------------------------------------
Fund shares sold 2,564,581
- ----------------------------------------------------------------------------------------
Interest and dividends 1,499,778
- ----------------------------------------------------------------------------------------
Variation margin 8,750
- ----------------------------------------------------------------------------------------
Investment for deferred compensation plan 8,020
- ----------------------------------------------------------------------------------------
Other assets 20,344
- ----------------------------------------------------------------------------------------
Total assets 165,577,414
- ----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 200,000
- ----------------------------------------------------------------------------------------
Fund shares reacquired 175,567
- ----------------------------------------------------------------------------------------
Deferred compensation plan 8,020
- ----------------------------------------------------------------------------------------
Accrued advisory fees 99,049
- ----------------------------------------------------------------------------------------
Accrued administrative service fees 9,157
- ----------------------------------------------------------------------------------------
Accrued distribution fees 111,265
- ----------------------------------------------------------------------------------------
Accrued transfer agent fees 25,100
- ----------------------------------------------------------------------------------------
Accrued trustees' fees 2,181
- ----------------------------------------------------------------------------------------
Accrued operating expenses 72,719
- ----------------------------------------------------------------------------------------
Total liabilities 703,058
- ----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $164,874,356
========================================================================================
NET ASSETS:
Class A $ 92,240,539
========================================================================================
Class B $ 72,633,817
========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 4,799,638
========================================================================================
Class B 3,778,862
========================================================================================
Class A:
Net asset value and redemption price per share $ 19.22
========================================================================================
Offering price per share:
(Net asset value of $19.22 divided by 95.25%) $ 20.18
========================================================================================
Class B:
Net asset value and offering price per share $ 19.22
========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-13
<PAGE> 132
Financials
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 2,900,624
- ----------------------------------------------------------------------------------------
Dividends 1,006,926
- ----------------------------------------------------------------------------------------
Total investment income 3,907,550
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 690,795
- ----------------------------------------------------------------------------------------
Custodian fees 27,595
- ----------------------------------------------------------------------------------------
Distribution fees-Class A 134,550
- ----------------------------------------------------------------------------------------
Distribution fees-Class B 382,860
- ----------------------------------------------------------------------------------------
Administrative service fees 67,928
- ----------------------------------------------------------------------------------------
Trustees' fees 6,424
- ----------------------------------------------------------------------------------------
Transfer agent fees-Class A 94,851
- ----------------------------------------------------------------------------------------
Transfer agent fees-Class B 90,073
- ----------------------------------------------------------------------------------------
Other 143,276
- ----------------------------------------------------------------------------------------
Total expenses 1,638,352
- ----------------------------------------------------------------------------------------
Less advisory fees waived (24,176)
- ----------------------------------------------------------------------------------------
Net expenses 1,614,176
- ----------------------------------------------------------------------------------------
Net investment income 2,293,374
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FOREIGN
CURRENCY TRANSACTIONS AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities 3,763,100
- ----------------------------------------------------------------------------------------
Foreign currency transactions (2,185)
- ----------------------------------------------------------------------------------------
Futures contracts 59,049
- ----------------------------------------------------------------------------------------
3,819,964
- ----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities 20,151,948
- ----------------------------------------------------------------------------------------
Foreign currencies (5,374)
- ----------------------------------------------------------------------------------------
Futures contracts 15,850
- ----------------------------------------------------------------------------------------
20,162,424
- ----------------------------------------------------------------------------------------
Net gain from investment securities, foreign currencies and futures
contracts 23,982,388
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $26,275,762
========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-14
<PAGE> 133
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,293,374 $ 1,292,749
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currency transactions and futures contracts 3,819,964 (1,546,962)
- ------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and futures contracts 20,162,424 (2,365,487)
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 26,275,762 (2,619,700)
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (1,509,535) (841,828)
- ------------------------------------------------------------------------------------------
Class B (772,889) (264,264)
- ------------------------------------------------------------------------------------------
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 1,435,649 516,289
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A 39,846,397 17,028,360
- ------------------------------------------------------------------------------------------
Class B 41,781,556 18,575,216
- ------------------------------------------------------------------------------------------
Net increase in net assets 107,056,940 31,543,521
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 57,817,416 26,273,895
- ------------------------------------------------------------------------------------------
End of period $164,874,356 $57,817,416
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $140,831,795 $59,203,842
- ------------------------------------------------------------------------------------------
Undistributed net investment income 2,564,987 1,062,305
- ------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currency transactions and futures
contracts 2,203,395 (1,560,486)
- ------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and futures contracts 19,274,179 (888,245)
- ------------------------------------------------------------------------------------------
$164,874,356 $57,817,416
==========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-15
<PAGE> 134
Financials
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
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 Fund's objective is to achieve as high a total
return to investors as possible, consistent with preservation of capital, by
investing in a broadly diversified portfolio of high-yielding securities,
including common stocks, preferred stocks, convertible securities and bonds.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations - Except as provided in the next sentence, 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. If a mean is not available, as is the case in
some foreign markets, the closing bid will be used absent a last sales price.
Exchange listed convertible bonds are valued at the mean between the closing
bid and asked prices obtained from a broker-dealer. 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 or absent a last sales
price, at the closing bid and asked prices. 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 either are not readily available or are
questionable 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.
Generally, trading in foreign securities 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 the Fund's
shares are determined as of such times. Foreign currency exchange rates are
also generally determined prior to 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 they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
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, 1995,
undistributed net investment income was increased and undistributed net
realized gains reduced by $56,083 in order to comply with the requirements of
the American Institute of Certified Public Accountants Statement of Position
93-2. Net assets of the Fund were unaffected by the reclassification
discussed above.
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.
FS-16
<PAGE> 135
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
G. 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.
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 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.
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. During the two months ended February 28, 1995, AIM
voluntarily waived advisory fees in the amount of $24,176. This voluntary waiver
was discontinued on February 28, 1995.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended December 31,
1995, AIM was reimbursed $67,928 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 1995, AFS
was paid $121,853 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 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 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. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more assignees, its rights to all or a designated
portion (a) compensation received by AIM Distributors from the Fund pursuant to
the Class B Plan (but not AIM Distributors' duties and obligations pursuant to
the Class B Plan) and (b) contingent deferred sales charges payable to AIM
Distributors related to the Class B shares. During the year ended December 31,
1995, the Class A shares and the Class B shares paid AIM Distributors $134,550
and $382,860, respectively, as compensation under the Plans.
FS-17
<PAGE> 136
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
AIM Distributors received commissions of $165,692 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1995,
AIM Distributors received $92,409 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 year ended December 31, 1995, the Fund paid legal fees of $3,091
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 AIM. 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 - BANK BORROWINGS
The Fund has a $1,100,000 committed line of credit with Chemical Bank of New
York. Interest on borrowings under the line of credit is payable on maturity or
prepayment date. During the period July 20, 1995 (effective date of line of
credit agreement) through December 31, 1995, the Fund did not borrow under the
line of credit agreement. The Fund is charged an administrative fee, payable
quarterly, at the annual rate of $1,100.
NOTE 5 - 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, 1995 was
$137,730,558 and $66,445,219, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of December 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $20,639,054
- -----------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,390,240)
- -----------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $19,248,814
===========================================================================================================
</TABLE>
Cost of investments for tax purposes is $139,492,410.
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------- ------------------------
SHARES VALUE SHARES VALUE
--------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 2,972,256 $ 52,107,491 1,622,265 $24,865,959
- ---------------------------------------------------------------------------------------------------------------------
Class B 2,739,743 47,601,025 1,362,158 20,837,893
- ---------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 76,297 1,334,447 76,775 1,081,610
- ---------------------------------------------------------------------------------------------------------------------
Class B 38,541 678,897 33,584 459,716
- ---------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (819,551) (13,595,541) (589,475) (8,919,209)
- ---------------------------------------------------------------------------------------------------------------------
Class B (384,332) (6,498,366) (181,713) (2,722,393)
- ---------------------------------------------------------------------------------------------------------------------
4,622,954 $ 81,627,953 2,323,594 $35,603,576
=====================================================================================================================
</TABLE>
FS-18
<PAGE> 137
Financials
NOTE 7 - OPEN FUTURES CONTRACTS
On December 31, 1995, $307,000 principal amount of U.S. Treasury notes were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT NO. OF CONTRACTS/MONTH/COMMITMENT APPRECIATION
<S> <C> <C>
S&P 500 Index 25 contracts/March 96/Buy $15,850
- ------------------------------------------------------------------- ------------------------------------- ------------------
</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 two-year period ended December 31,
1995, the four months ended December 31, 1993 and each of the years in the
seven-year period ended August 31, 1993 and for a Class B share outstanding
during each of the years in the two-year period ended December 31, 1995 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: 1995 1994 1993 1993 1992 1991
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.62 $ 16.10 $ 15.97 $ 12.77 $ 12.04 $ 9.73
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.49 0.44 0.10 0.32 0.29 0.28
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized
and unrealized) 4.57 (1.31) 0.18 3.18 0.74 2.33
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Total from investment operations 5.06 (0.87) 0.28 3.50 1.03 2.61
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.46) (0.39) (0.15) (0.30) (0.30) (0.30)
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Distributions from net realized capital gains -- (0.22) -- -- -- --
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Total distributions (0.46) (0.61) (0.15) (0.30) (0.30) (0.30)
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 19.22 $ 14.62 $ 16.10 $ 15.97 $ 12.77 $ 12.04
=================================================== ======== ======== ======== ======== ======== ========
Total return(a) 34.97% (5.44)% 1.76% 27.75% 8.66% 27.41%
=================================================== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $92,241 $ 37,572 $ 23,520 $ 19,497 $ 11,796 $ 11,750
=================================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.43%(b) 1.25%(c) 2.17%(d) 2.07% 2.12% 2.39%
=================================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets 2.81%(b) 3.07%(c) 1.81%(d) 2.23% 2.32% 2.74%
=================================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 76.63% 76.18% 233.10% 154.47% 165.53% 208.11%
=================================================== ======== ======== ======== ======== ======== ========
Borrowings for the period:
Amount of debt outstanding at end of period -- -- -- -- -- --
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Average amount of debt outstanding during the
period(e) -- -- -- -- -- --
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Average number of shares outstanding during the
period (000s omitted)(e) 3,173 2,061 1,305 1,046 939 1,051
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Average amount of debt per share during the period -- -- -- -- -- --
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
<CAPTION>
AUGUST 31,
--------------------------------------------
CLASS A: 1990 1989 1988 1987
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.67 $ 9.08 $ 11.89 $ 12.89
- --------------------------------------------------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.32 0.39 0.42 0.55
- --------------------------------------------------- -------- -------- -------- --------
Net gains (losses) on securities (both realized
and unrealized) (0.91) 1.63 (2.65) 0.15
- --------------------------------------------------- -------- -------- -------- --------
Total from investment operations (0.59) 2.02 (2.23) 0.70
- --------------------------------------------------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.35) (0.43) (0.50) (0.66)
- --------------------------------------------------- -------- -------- -------- --------
Distributions from net realized capital gains -- -- (0.08) (1.04)
- --------------------------------------------------- -------- -------- -------- --------
Total distributions (0.35) (0.43) (0.58) (1.70)
- --------------------------------------------------- -------- -------- -------- --------
Net asset value, end of period $ 9.73 $ 10.67 $ 9.08 $ 11.89
=================================================== ======== ======== ======== ========
Total return(a) (5.67)% 22.96% (18.57)% 5.78%
=================================================== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10,965 $ 14,405 $ 16,789 $ 27,973
=================================================== ======== ======== ======== ========
Ratio of expenses to average net assets 2.15% 1.94% 2.31% 1.87%
=================================================== ======== ======== ======== ========
Ratio of net investment income to average net
assets 3.18% 3.99% 4.50% 4.54%
=================================================== ======== ======== ======== ========
Portfolio turnover rate 307.08% 149.42% 117.73% 249.93%
=================================================== ======== ======== ======== ========
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) 1,238 1,589 2,131 2,010
- --------------------------------------------------- -------- -------- -------- --------
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 daily net assets of $53,819,848. Ratios of
expenses and net investment income to average daily net assets prior to
waiver of advisory fees are 1.46% and 2.78%, respectively.
(c) After waiver of advisory fees. Ratios of expenses and net investment income
to average daily net assets prior to waiver of advisory fees are 1.68% and
2.64%, respectively.
(d) Annualized.
(e) Averages computed on a daily basis.
FS-19
<PAGE> 138
Financials
NOTE 8 - FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B: 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 14.62 $ 16.11 $ 16.69
- -------------------------------------------------------------------------------------- -------- -------- --------
Income from investment operations:
Net investment income 0.31 0.31 0.04
- -------------------------------------------------------------------------------------- -------- -------- --------
Net gains (losses) on securities (both realized and unrealized) 4.61 (1.31) (0.58)
- -------------------------------------------------------------------------------------- -------- -------- --------
Total from investment operations 4.92 (1.00) (0.54)
- -------------------------------------------------------------------------------------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.32) (0.27) (0.04)
- -------------------------------------------------------------------------------------- -------- -------- --------
Distributions from net realized capital gains -- (0.22) --
- -------------------------------------------------------------------------------------- -------- -------- --------
Total distributions (0.32) (0.49) (0.04)
- -------------------------------------------------------------------------------------- -------- -------- --------
Net asset value, end of period $ 19.22 $ 14.62 $ 16.11
====================================================================================== ======== ======== ========
Total return(a) 33.93% (6.23)% (3.23)%
====================================================================================== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $72,634 $ 20,245 $ 2,754
====================================================================================== ======== ======== ========
Ratio of expenses to average net assets 2.21%(b) 1.98%(c) 2.83%(d)
====================================================================================== ======== ======== ========
Ratio of net investment income to average net assets 2.03%(b) 2.34%(c) 1.15%(d)
====================================================================================== ======== ======== ========
Portfolio turnover rate 76.63% 76.18% 233.10%
====================================================================================== ======== ======== ========
</TABLE>
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods less than one year.
(b) Ratios are based on average net assets of $38,286,051. Ratios of expenses
and net investment income prior to waiver of advisory fees are 2.23% and
2.01%, respectively.
(c) 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.
(d) Annualized.
FS-20
<PAGE> 139
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Global Utilities Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Global Utilities Fund (a portfolio of AIM Funds Group), including the schedule
of investments, as of December 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended and the financial highlights for each of
the years in the three-year period then ended. 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, 1995, 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
Global Utilities Fund as of December 31, 1995, the results of its operations for
the year then ended, the statement of changes in its net assets for each of the
years in the two-year period then ended and financial highlights for each of the
years in the three-year period then ended, in conformity with generally accepted
accounting principles.
Houston, Texas KPMG Peat Marwick LLP
February 7, 1996
FS-21
<PAGE> 140
Financials
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-56.32%
COMPUTER NETWORKING-0.58%
12,400 Ascend Communications, Inc.(a) $ 1,005,950
- ---------------------------------------------------------------------------------------------
14,571 Network Equipment Technologies, Inc.(a) 398,893
- ---------------------------------------------------------------------------------------------
1,404,843
- ---------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-0.53%
23,200 Objective Systems Integrators, Inc.(a) 1,270,200
- ---------------------------------------------------------------------------------------------
1,300 Smith Micro Software, Inc.(a) 8,776
- ---------------------------------------------------------------------------------------------
1,278,976
- ---------------------------------------------------------------------------------------------
CONGLOMERATES-0.41%
20,000 Tenneco Inc. 992,500
- ---------------------------------------------------------------------------------------------
ELECTRIC SERVICES-28.81%
45,000 Allegheny Power System, Inc. 1,288,127
- ---------------------------------------------------------------------------------------------
56,600 Boston Edison Co. 1,669,700
- ---------------------------------------------------------------------------------------------
35,000 Carolina Power & Light Co. 1,207,500
- ---------------------------------------------------------------------------------------------
16,200 CMS Energy Corp. 483,976
- ---------------------------------------------------------------------------------------------
35,400 Consolidated Edison Co. of New York, Inc. 1,132,802
- ---------------------------------------------------------------------------------------------
54,000 Detroit Edison Co. 1,863,000
- ---------------------------------------------------------------------------------------------
188,700 DPL Inc. 4,670,325
- ---------------------------------------------------------------------------------------------
129,500 DQE, Inc. 3,982,125
- ---------------------------------------------------------------------------------------------
106,400 Duke Power Co. 5,040,700
- ---------------------------------------------------------------------------------------------
147,600 FPL Group, Inc. 6,844,950
- ---------------------------------------------------------------------------------------------
136,500 General Public Utilities Corp. 4,641,000
- ---------------------------------------------------------------------------------------------
253,000 Houston Industries, Inc. 6,135,250
- ---------------------------------------------------------------------------------------------
163,500 Illinova Corp. 4,905,000
- ---------------------------------------------------------------------------------------------
10,800 LG & E Energy Corp. 456,300
- ---------------------------------------------------------------------------------------------
95,500 NIPSCO Industries, Inc. 3,652,875
- ---------------------------------------------------------------------------------------------
134,600 Northern States Power Co. 6,612,225
- ---------------------------------------------------------------------------------------------
143,000 Pinnacle West Capital Corp. 4,111,250
- ---------------------------------------------------------------------------------------------
199,700 Southern Co. (The) 4,917,613
- ---------------------------------------------------------------------------------------------
95,000 Teco Energy, Inc. 2,434,375
- ---------------------------------------------------------------------------------------------
75,000 Unicom Corp. 2,456,250
- ---------------------------------------------------------------------------------------------
33,300 Wisconsin Energy Corp. 1,019,813
- ---------------------------------------------------------------------------------------------
69,525,156
- ---------------------------------------------------------------------------------------------
GAS DISTRIBUTION-1.39%
95,200 Public Service Co. of Colorado 3,367,700
- ---------------------------------------------------------------------------------------------
NATURAL GAS PIPELINE-6.07%
36,000 Columbia Gas System, Inc.(a) 1,579,500
- ---------------------------------------------------------------------------------------------
100,000 Enron Corp. 3,812,500
- ---------------------------------------------------------------------------------------------
31,600 KN Energy, Inc. 920,350
- ---------------------------------------------------------------------------------------------
17,600 Pacific Enterprises 497,200
- ---------------------------------------------------------------------------------------------
93,300 Panhandle Eastern Corp. 2,600,738
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-22
<PAGE> 141
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
NATURAL GAS PIPELINE (continued)
35,000 Sonat Inc. $ 1,246,877
- ---------------------------------------------------------------------------------------------
91,000 Williams Companies Inc. (The) 3,992,625
- ---------------------------------------------------------------------------------------------
14,649,790
- ---------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-2.01%
44,300 Bay Apartment Communities 1,074,275
- ---------------------------------------------------------------------------------------------
21,300 Meditrust 742,839
- ---------------------------------------------------------------------------------------------
15,000 National Health Investors, Inc. 496,876
- ---------------------------------------------------------------------------------------------
5,500 Nationwide Health Properties, Inc. 231,000
- ---------------------------------------------------------------------------------------------
26,700 Oasis Residential Inc. 607,426
- ---------------------------------------------------------------------------------------------
32,000 Patriot American Hospitality, Inc. 824,000
- ---------------------------------------------------------------------------------------------
32,000 Public Storage, Inc. 608,000
- ---------------------------------------------------------------------------------------------
16,500 RFS Hotel Investors Inc. 253,688
- ---------------------------------------------------------------------------------------------
4,838,104
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-2.49%
52,000 A T & T Corp. 3,367,000
- ---------------------------------------------------------------------------------------------
84,700 Frontier Corp. 2,541,000
- ---------------------------------------------------------------------------------------------
6,800 Tel-Save Holdings, Inc.(a) 94,350
- ---------------------------------------------------------------------------------------------
6,002,350
- ---------------------------------------------------------------------------------------------
TELEPHONE-14.03%
136,700 Ameritech Corp. 8,065,300
- ---------------------------------------------------------------------------------------------
18,700 Bell Atlantic Corp. 1,250,563
- ---------------------------------------------------------------------------------------------
145,800 BellSouth Corp. 6,342,300
- ---------------------------------------------------------------------------------------------
75,700 Century Telephone Enterprises, Inc. 2,403,474
- ---------------------------------------------------------------------------------------------
117,000 Cincinnati Bell, Inc. 4,065,750
- ---------------------------------------------------------------------------------------------
25,000 GTE Corp. 1,100,000
- ---------------------------------------------------------------------------------------------
47,000 NYNEX Corp. 2,538,000
- ---------------------------------------------------------------------------------------------
91,400 SBC Communications, Inc. 5,255,500
- ---------------------------------------------------------------------------------------------
30,000 Southern New England Telecommunications Corp. 1,192,500
- ---------------------------------------------------------------------------------------------
46,000 US West, Inc. 1,644,500
- ---------------------------------------------------------------------------------------------
33,857,887
- ---------------------------------------------------------------------------------------------
Total Domestic Common Stocks 135,917,306
- ---------------------------------------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS-0.87%
OIL & GAS-SERVICES-0.40%
40,000 Enron Corp.-$1.36 Conv. Pfd. 960,000
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-0.47%
23,500 MFS Communications Co., Inc.-$2.68 Conv. Pfd. 1,144,156
- ---------------------------------------------------------------------------------------------
Total Domestic Convertible Preferred Stocks 2,104,156
- ---------------------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-21.71%
ARGENTINA-1.13%
368,200 Central Costanera S.A.-Class B (Electric Services) 1,133,829
- ---------------------------------------------------------------------------------------------
98,800 Central Puerto S.A.-Class B (Electric Services) 375,364
- ---------------------------------------------------------------------------------------------
44,600 Telefonica de Argentina-ADR (Telephone) 1,215,350
- ---------------------------------------------------------------------------------------------
2,724,543
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-23
<PAGE> 142
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
AUSTRIA-0.31%
12,500 Oesterreichisch Elektrizitatswirtschafts-AG (Verbundgesellschaft)
Class A (Electric Services) $ 751,599
- ---------------------------------------------------------------------------------------------
BRAZIL-0.49%
25,000 Telecomunicacoes Brasileiras S/A-Telebras-ADR
(Telecommunications) 1,184,375
- ---------------------------------------------------------------------------------------------
CANADA-0.53%
87,800 Westcoast Energy, Inc. (Natural Gas Pipeline) 1,284,075
- ---------------------------------------------------------------------------------------------
CHILE-1.17%
17,600 Compania de Telecomunicaciones de Chile S.A.-ADR
(Telecommunications) 1,458,600
- ---------------------------------------------------------------------------------------------
47,800 Enersis S.A.-ADR (Electric Services) 1,362,300
- ---------------------------------------------------------------------------------------------
2,820,900
- ---------------------------------------------------------------------------------------------
DENMARK-0.38%
33,600 Tele Danmark A/S-ADR(a) (Telephone) 928,200
- ---------------------------------------------------------------------------------------------
GERMANY-0.82%
46,500 Veba A.G. (Electrical Services) 1,974,102
- ---------------------------------------------------------------------------------------------
HONG KONG-0.19%
25,500 Hong Kong Telecom Ltd.-ADR (Telephone) 452,625
- ---------------------------------------------------------------------------------------------
INDONESIA-0.42%
27,700 PT Indostat-ADR(a) (Telephone) 1,011,050
- ---------------------------------------------------------------------------------------------
ISRAEL-0.22%
23,200 ECI Telecom Ltd. (Telecommunications) 529,250
- ---------------------------------------------------------------------------------------------
ITALY-0.80%
578,300 Telecom Italia Mobile S.p.A.(Telephone) 1,015,950
- ---------------------------------------------------------------------------------------------
593,300 Telecom Italia S.p.A. (Telephone) 920,140
- ---------------------------------------------------------------------------------------------
1,936,090
- ---------------------------------------------------------------------------------------------
KOREA-0.55%
49,500 Korea Electric Power Corp.-ADR (Electric Services) 1,324,125
- ---------------------------------------------------------------------------------------------
NETHERLANDS-1.23%
20,000 Elsag Bailey Process Automation N.V.-ADR-$2.75 Conv. Pfd.
TOPRS(b) (Acquired 12/14/95-12/15/95; cost $1,000,250) (Electronic
Components-Miscellaneous) 1,002,500
- ---------------------------------------------------------------------------------------------
54,170 Royal PTT Nederland N.V.-ADR(b) (Acquired 06/13/94-10/23/95;
cost $1,575,432) (Telecommunications) 1,963,662
- ---------------------------------------------------------------------------------------------
2,966,162
- ---------------------------------------------------------------------------------------------
NEW ZEALAND-1.45%
50,600 Telecom Corp. of New Zealand Ltd.-ADR (Telephone) 3,510,375
- ---------------------------------------------------------------------------------------------
NORWAY-0.61%
45,000 Nera AS-ADR(a) (Telecommunications) 1,462,500
- ---------------------------------------------------------------------------------------------
PERU-0.76%
850,300 CPT Telefonica Del Peru-Class B (Telephone) 1,821,282
- ---------------------------------------------------------------------------------------------
PORTUGAL-0.52%
65,700 Portugal Telecom, S.A.-ADR(a) (Telecommunications) 1,248,300
- ---------------------------------------------------------------------------------------------
SPAIN-2.91%
86,500 Amper S.A.(Electrical Equipment)(a) 1,023,309
- ---------------------------------------------------------------------------------------------
24,000 Empresa Nacional de Electricidad S.A. (Electric Services) 1,374,000
- ---------------------------------------------------------------------------------------------
29,800 Empresa Nacional de Electricidad S.A.-ADR (Electric Services) 677,950
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-24
<PAGE> 143
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
SPAIN (continued)
11,000 Gas Natural SDG-E S.A. (Natural Gas Pipeline) $ 1,713,932
- ---------------------------------------------------------------------------------------------
141,000 Iberdrola S.A. (Electric Services) 1,290,272
- ---------------------------------------------------------------------------------------------
22,200 Telefonica de Espana, S.A. (Telecommunications) 929,625
- ---------------------------------------------------------------------------------------------
7,009,088
- ---------------------------------------------------------------------------------------------
SWEDEN-1.16%
10,808 Telefonaktiebolaget L.M. Ericsson (Telecommunications) 211,611
- ---------------------------------------------------------------------------------------------
133,232 Telefonaktiebolaget L.M. Ericsson-ADR (Telecommunications) 2,598,024
- ---------------------------------------------------------------------------------------------
2,809,635
- ---------------------------------------------------------------------------------------------
UNITED KINGDOM-6.06%
265,600 British Gas PLC (Natural Gas Pipeline) 1,047,715
- ---------------------------------------------------------------------------------------------
10,000 British Sky Broadcasting Group PLC-ADR
(Advertising/Broadcasting) 376,250
- ---------------------------------------------------------------------------------------------
47,900 London Electricity PLC (Electric Services) 426,629
- ---------------------------------------------------------------------------------------------
74,700 Midlands Electricity PLC (Electric Services) 881,689
- ---------------------------------------------------------------------------------------------
205,075 National Grid Group PLC(a) (Electric Services) 635,388
- ---------------------------------------------------------------------------------------------
175,000 National Power PLC (Electric Services) 1,221,657
- ---------------------------------------------------------------------------------------------
40,000 National Power PLC-ADR (Electric Services) 370,000
- ---------------------------------------------------------------------------------------------
197,100 North West Water PLC (Water Supply) 1,885,597
- ---------------------------------------------------------------------------------------------
45,500 NYNEX CableComms Group(a) (Telecommunications) 790,562
- ---------------------------------------------------------------------------------------------
119,000 PowerGen PLC (Electric Services) 984,120
- ---------------------------------------------------------------------------------------------
40,900 PowerGen PLC-ADR (Electric Services) 536,812
- ---------------------------------------------------------------------------------------------
138,550 Scottish Power PLC (Electric Services) 796,140
- ---------------------------------------------------------------------------------------------
47,925 Seeboard PLC (Electric Services) 391,497
- ---------------------------------------------------------------------------------------------
49,775 South Wales Electricity PLC (Electric Services) 721,231
- ---------------------------------------------------------------------------------------------
40,000 Southern Electric PLC (Electric Services) 561,577
- ---------------------------------------------------------------------------------------------
20,000 Vodafone Group PLC-ADR (Telecommunications) 705,000
- ---------------------------------------------------------------------------------------------
73,750 Wessex Water PLC (Water Supply) 399,732
- ---------------------------------------------------------------------------------------------
88,500 Wessex Water Preference (Water Supply) 70,096
- ---------------------------------------------------------------------------------------------
46,730 Yorkshire Electricity PLC (Electric Services) 484,790
- ---------------------------------------------------------------------------------------------
145,800 Yorkshire Water PLC (Water Supply) 1,340,481
- ---------------------------------------------------------------------------------------------
14,626,963
- ---------------------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 52,375,239
- ---------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
DOMESTIC CONVERTIBLE BONDS-2.64%
COMPUTER SOFTWARE/SERVICES-0.19%
$ 441,000 Network Equipment Technologies, Conv. Sub. Deb.,
7.25%, 05/15/14 451,672
- ---------------------------------------------------------------------------------------------
ELECTRIC SERVICES-0.46%
1,100,000 California Energy Co., Inc., Conv. Sub. Deb.,
5.00%, 07/31/00(b) (Acquired 04/26/95; cost $988,625) 1,108,580
- ---------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.41%
850,000 Altera Corp., Conv. Sub. Notes,
5.75%, 06/15/02(b) (Acquired 06/16/95-12/13/95; cost $870,400) 990,250
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-25
<PAGE> 144
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
SEMICONDUCTORS-0.75%
$ 750,000 Analog Devices, Conv. Sub. Notes, 3.50%, 12/01/00 $ 798,750
- ---------------------------------------------------------------------------------------------
1,125,000 Xilinx Inc., Conv. Sub. Notes,
5.25%, 11/01/02(b) (Acquired 11/07/95-11/08/95; cost
$1,125,000) 1,023,750
- ---------------------------------------------------------------------------------------------
1,822,500
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-0.83%
2,620,000 United States Cellular Corp., Conv. Liquid Yield Option Notes,
6.00%, 06/15/15(c) 933,375
- ---------------------------------------------------------------------------------------------
1,000,000 World Communications, Conv. Sub. Notes, 5.00%, 08/15/03 1,065,000
- ---------------------------------------------------------------------------------------------
1,998,375
- ---------------------------------------------------------------------------------------------
Total Domestic Convertible Bonds 6,371,377
- ---------------------------------------------------------------------------------------------
DOMESTIC NON-CONVERTIBLE BONDS-6.93%
ADVERTISING/BROADCASTING-0.51%
1,150,000 Time Warner Inc., Notes, 8.18%, 08/15/07 1,235,249
- ---------------------------------------------------------------------------------------------
ELECTRIC SERVICES-1.64%
127,000 Ohio Power Co., First Mortgage Bonds, 9.875%, 08/01/20 136,517
- ---------------------------------------------------------------------------------------------
1,750,000 Pennsylvania Power & Light Co., First Mortgage Bonds,
9.25%, 10/01/19 1,918,700
- ---------------------------------------------------------------------------------------------
1,640,000 San Diego Gas & Electric Co., First Mortgage Series JJ Bonds,
9.625%, 04/15/20 1,913,732
- ---------------------------------------------------------------------------------------------
3,968,949
- ---------------------------------------------------------------------------------------------
NATURAL GAS PIPELINE-2.60%
3,750,000 Enron Corp., Sr. Sub. Deb., 6.75%, 07/01/05 3,832,387
- ---------------------------------------------------------------------------------------------
2,205,000 Panhandle Eastern Pipeline, Deb., 7.875%, 08/15/04 2,431,960
- ---------------------------------------------------------------------------------------------
6,264,347
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-2.18%
1,850,000 A T & T Corp., Sr. Notes, 7.75%, 03/01/07 2,079,142
- ---------------------------------------------------------------------------------------------
3,000,000 TCI Communications Inc., Sr. Notes, 8.00%, 08/01/05 3,184,470
- ---------------------------------------------------------------------------------------------
5,263,612
- ---------------------------------------------------------------------------------------------
Total Domestic Non-Convertible Bonds 16,732,157
- ---------------------------------------------------------------------------------------------
FOREIGN NON-CONVERTIBLE BONDS-2.11%
CANADA-1.75%
CAD 1,800,000 Bell Canada, Deb., (Telecommunications)
8.80%, 08/17/05 753,530
- ---------------------------------------------------------------------------------------------
CAD 950,000 Bell Canada, Deb., (Telecommunications)
10.875%, 10/11/04 1,575,118
- ---------------------------------------------------------------------------------------------
CAD 2,350,000 IPL Energy, Deb. (Oil & Gas-Services)
9.67%, 02/23/00 1,882,323
- ---------------------------------------------------------------------------------------------
4,210,971
- ---------------------------------------------------------------------------------------------
MEXICO-0.36%
850,000 United Mexican States, Deb., (Foreign Government Securities)
11.1875%, 07/21/97(b) (Acquired 07/12/95; cost $850,000) 870,723
- ---------------------------------------------------------------------------------------------
Total Foreign Non-Convertible Bonds 5,081,694
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-26
<PAGE> 145
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-6.50%
U.S. TREASURY BONDS-2.84%
$ 3,000,000 7.125%, 02/29/00 $ 3,195,000
- ---------------------------------------------------------------------------------------------
3,000,000 7.625%, 02/15/25 3,666,900
- ---------------------------------------------------------------------------------------------
6,861,900
- ---------------------------------------------------------------------------------------------
U.S. TREASURY NOTES-3.66%
2,500,000 7.25%, 08/15/04 2,782,500
- ---------------------------------------------------------------------------------------------
2,500,000 7.50%, 02/15/05 2,837,175
- ---------------------------------------------------------------------------------------------
3,000,000 6.50%, 08/15/05 3,199,440
- ---------------------------------------------------------------------------------------------
8,819,115
- ---------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 15,681,015
- ---------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT-2.32%(d)
5,595,599 Daiwa Securities America Inc.,
5.92%, 01/02/96(e) 5,595,599
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.40% 239,858,543
- ---------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.60% 1,459,142
- ---------------------------------------------------------------------------------------------
NET ASSETS-100.00% $241,317,685
=============================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted securities. May be resold to qualified institutional buyers in
accordance with 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, 1995, was $6,959,465, which
represents 2.88% of net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of the
original issue discount.
(d) Collateral on repurchase agreement, 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. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(e) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
Abbreviations:
ADR -American Depositary Receipt
CAD -Canadian Dollars
Conv. -Convertible
Deb. -Debentures
Pfd. -Preferred
Sr. -Senior
Sub. -Subordinated
TOPRS -Trust Originated Preferred Securities
See Notes to Financial Statements.
FS-27
<PAGE> 146
Financials
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $200,988,984) $239,858,543
- -----------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $76,411) 78,596
- -----------------------------------------------------------------------------------------
Receivables for:
Investments sold 14,300
- -----------------------------------------------------------------------------------------
Fund shares sold 940,967
- -----------------------------------------------------------------------------------------
Dividends and interest 1,876,536
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 6,301
- -----------------------------------------------------------------------------------------
Other assets 16,405
- -----------------------------------------------------------------------------------------
Total assets 242,791,648
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 384,923
- -----------------------------------------------------------------------------------------
Fund shares reacquired 443,166
- -----------------------------------------------------------------------------------------
Dividends 207,065
- -----------------------------------------------------------------------------------------
Deferred compensation 6,301
- -----------------------------------------------------------------------------------------
Accrued advisory fees 118,295
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 6,095
- -----------------------------------------------------------------------------------------
Accrued distribution fees 180,237
- -----------------------------------------------------------------------------------------
Accrued trustees' fees 1,749
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 59,966
- -----------------------------------------------------------------------------------------
Accrued operating expenses 66,166
- -----------------------------------------------------------------------------------------
Total liabilities 1,473,963
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $241,317,685
=========================================================================================
NET ASSETS:
Class A $170,624,327
=========================================================================================
Class B $ 70,693,358
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 11,692,658
=========================================================================================
Class B 4,841,504
=========================================================================================
Class A:
Net asset value and redemption price per share $ 14.59
=========================================================================================
Offering price per share:
(Net asset value of $14.59 divided by 94.50%) $ 15.44
=========================================================================================
Class B:
Net asset value and offering price per share $ 14.60
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-28
<PAGE> 147
Financials
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $171,262 foreign withholding tax) $ 8,322,065
- ----------------------------------------------------------------------------------------
Interest 3,112,023
- ----------------------------------------------------------------------------------------
Total investment income 11,434,088
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,256,220
- ----------------------------------------------------------------------------------------
Administrative service fees 69,813
- ----------------------------------------------------------------------------------------
Custodian fees 75,497
- ----------------------------------------------------------------------------------------
Trustees' fees 6,543
- ----------------------------------------------------------------------------------------
Distribution fees -- Class A 393,486
- ----------------------------------------------------------------------------------------
Distribution fees -- Class B 538,479
- ----------------------------------------------------------------------------------------
Transfer agent fees -- Class A 372,608
- ----------------------------------------------------------------------------------------
Transfer agent fees -- Class B 136,007
- ----------------------------------------------------------------------------------------
Other 115,422
- ----------------------------------------------------------------------------------------
Total expenses 2,964,075
- ----------------------------------------------------------------------------------------
Net investment income 8,470,013
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN
CURRENCY TRANSACTIONS:
NET REALIZED GAIN (LOSS) FROM:
Investment securities 1,019,826
- ----------------------------------------------------------------------------------------
Foreign currency transactions (82,071)
- ----------------------------------------------------------------------------------------
937,755
- ----------------------------------------------------------------------------------------
UNREALIZED APPRECIATION OF:
Investment securities 42,915,013
- ----------------------------------------------------------------------------------------
Foreign currencies 24,897
- ----------------------------------------------------------------------------------------
42,939,910
- ----------------------------------------------------------------------------------------
Net gain from investment securities and foreign currencies 43,877,665
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $52,347,678
========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-29
<PAGE> 148
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 8,470,013 $ 9,265,901
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities and foreign currencies 937,755 (19,935,052)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities and foreign currencies 42,939,910 (15,936,523)
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 52,347,678 (26,605,674)
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (6,295,577) (8,024,593)
- -------------------------------------------------------------------------------------------
Class B (1,690,557) (1,429,850)
- -------------------------------------------------------------------------------------------
Returns of capital:
Class A -- (407,762)
- -------------------------------------------------------------------------------------------
Class B -- (72,656)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A (12,765,899) (18,722,360)
- -------------------------------------------------------------------------------------------
Class B 16,638,939 24,437,899
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 48,234,584 (30,824,996)
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 193,083,101 223,908,097
- -------------------------------------------------------------------------------------------
End of period $241,317,685 $193,083,101
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $221,523,475 $217,650,435
- -------------------------------------------------------------------------------------------
Undistributed net investment income 404,516 --
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities and foreign currencies (19,477,538) (20,494,656)
- -------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies 38,867,232 (4,072,678)
- -------------------------------------------------------------------------------------------
$241,317,685 $193,083,101
===========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-30
<PAGE> 149
Financials
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Global 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 Fund's objective is to
achieve a high level of current income, and as a secondary objective the Fund
seeks to achieve capital appreciation, by investing primarily in the common and
preferred stocks of public utility companies.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations - Equity securities listed or traded on an exchange are
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. If a
mean is not available, as is the case in some foreign markets, the closing
bid will be used absent a last sales price. Exchange listed convertible bonds
are valued at the mean between the closing bid and asked prices obtained from
a broker-dealer. 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 or absent a last sales price, at the closing bid and asked prices. 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 either are not
readily available or are questionable 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. Generally, trading in foreign securities 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 the Fund's shares are determined as of such times. Foreign
currency exchange rates are also generally determined prior to 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
they are determined and the close of the New York Stock Exchange which will
not be reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during the period,
then these securities will be valued at their fair value as determined in
good faith by or under the supervision of the Board of Trustees.
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, 1995, undistributed net realized gain
(loss) was increased and undistributed net investment income reduced by
$79,363 in order to comply with the requirements of the American Institute of
Certified Public Accountants Statement of Position 93-2. Net assets of the
Fund were unaffected by the reclassification discussed above.
C. 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
FS-31
<PAGE> 150
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
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 $19,221,729 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized, in
the year 2002.
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.
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 services to the Fund. During the year ended December 31, 1995, AIM
was reimbursed $69,813 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 1995, AFS
was paid $356,054 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 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 provides for 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. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more assignees, its rights to all or a designated
portion of (a) compensation received by AIM Distributors from the Fund pursuant
to the Class B Plan (but not AIM Distributors' duties and obligations pursuant
to the Class B Plan) and (b) any contingent deferred sales charges payable to
AIM Distributors related to the Class B shares. During the year ended December
31, 1995, the Class A shares and the Class B shares paid AIM Distributors
$393,486 and $538,479, respectively, as compensation under the Plans.
FS-32
<PAGE> 151
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
AIM Distributors received commissions of $106,920 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1995,
AIM Distributors received $167,444 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 year ended December 31, 1995, the Fund paid legal fees of $3,232
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 AIM. 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 - BANK BORROWINGS
The Fund has a $3,600,000 committed line of credit with a financial institution
syndicate with Chemical Bank of New York as the administrative agent. Interest
on borrowings under the line of credit is payable on maturity or prepayment
date. During the period July 20, 1995 (effective date of line of credit
agreement) through December 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's committed
line.
NOTE 5 - 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, 1995 was
$188,852,283 and $178,842,299, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $40,760,598
- -----------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,119,248)
- -----------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $38,641,350
===========================================================================================================
</TABLE>
Cost of investments for tax purposes is $201,217,193.
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------ -----------------------
SHARES VALUE SHARES VALUE
--------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Sold:
Class A 3,040,993 $39,908,471 4,097,001 $52,451,904
- ------------------------------------------------------------------------------------------------------------
Class B 2,223,714 29,286,592 2,720,021 34,681,563
- ------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 417,851 5,505,279 572,553 7,178,342
- ------------------------------------------------------------------------------------------------------------
Class B 106,557 1,413,598 99,414 1,232,102
- ------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (4,470,353) (58,179,649) (6,158,134) (78,352,606)
- ------------------------------------------------------------------------------------------------------------
Class B (1,083,006) (14,061,251) (921,686) (11,475,766)
- ------------------------------------------------------------------------------------------------------------
235,756 $3,873,040 409,169 $5,715,539
============================================================================================================
</TABLE>
FS-33
<PAGE> 152
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 seven-year period ended December 31,
1995 and the period January 18, 1988 (date operations commenced) through
December 31, 1988 and for a Class B share outstanding during each of the years
in the two-year period ended December 31, 1995 and the period September 1, 1993
(date sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
CLASS A SHARES
------------------------------------------------------------------------------------
1995 1994 1993 1992(A) 1991 1990 1989
-------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.85 $ 14.09 $ 13.31 $ 13.75 $ 12.45 $ 13.73 $ 10.99
- ------------------------------------- -------- -------- -------- -------- -------- ------- -------
Income from investment operations:
Net investment income 0.55 0.59 0.60 0.67 0.70 0.66 0.77
- ------------------------------------- -------- -------- -------- -------- -------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 2.71 (2.20) 1.02 0.36 2.12 (1.10) 3.06
- ------------------------------------- -------- -------- -------- -------- -------- ------- -------
Total from investment operations 3.26 (1.61) 1.62 1.03 2.82 (0.44) 3.83
- ------------------------------------- -------- -------- -------- -------- -------- ------- -------
Less distributions:
Dividends from net investment income (0.52) (0.60) (0.61) (0.68) (0.66) (0.70) (0.69)
- ------------------------------------- -------- -------- -------- -------- -------- ------- -------
Distributions from net realized
capital gains -- -- (0.23) (0.79) (0.86) (0.14) (0.40)
- ------------------------------------- -------- -------- -------- -------- -------- ------- -------
Returns of capital -- (0.03) -- -- -- -- --
- ------------------------------------- -------- -------- -------- -------- -------- ------- -------
Total distributions (0.52) (0.63) (0.84) (1.47) (1.52) (0.84) (1.09)
- ------------------------------------- -------- -------- -------- -------- -------- ------- -------
Net asset value, end of period $ 14.59 $ 11.85 $ 14.09 $ 13.31 $ 13.75 $ 12.45 $ 13.73
===================================== ======== ======== ======== ======== ======== ======= =======
Total return(b) 28.07% (11.57)% 12.32% 7.92% 23.65% (2.98)% 36.11%
===================================== ======== ======== ======== ======== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $170,624 $150,515 $200,016 $111,771 $ 91,939 $69,541 $58,307
===================================== ======== ======== ======== ======== ======== ======= =======
Ratio of expenses to average net
assets 1.21%(c) 1.18% 1.16% 1.17% 1.23% 1.21%(d) 1.05%(d)
===================================== ======== ======== ======== ======== ======== ======= =======
Ratio of net investment income to
average net assets 4.20%(c) 4.67% 4.21% 4.96% 5.36% 5.21%(e) 6.13%(e)
===================================== ======== ======== ======== ======== ======== ======= =======
Portfolio turnover rate 88% 101% 76% 148% 169% 123% 115%
===================================== ======== ======== ======== ======== ======== ======= =======
<CAPTION>
CLASS B SHARES
--------------------------------
1988 1995 1994 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 11.84 $ 14.08 $ 15.30
- ------------------------------------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.82 0.44 0.47 0.17
- ------------------------------------- ------- ------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 0.83 2.73 (2.19) (0.98)
- ------------------------------------- ------- ------- ------- -------
Total from investment operations 1.65 3.17 (1.72) (0.81)
- ------------------------------------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.66) (0.41) (0.49) (0.17)
- ------------------------------------- ------- ------- ------- -------
Distributions from net realized
capital gains -- -- -- (0.24)
- ------------------------------------- ------- ------- ------- -------
Returns of capital -- -- (0.03) --
- ------------------------------------- ------- ------- ------- -------
Total distributions (0.66) (0.41) (0.52) (0.41)
- ------------------------------------- ------- ------- ------- -------
Net asset value, end of period $ 10.99 $ 14.60 $ 11.84 $ 14.08
===================================== ======= ======= ======= =======
Total return(b) 17.03% 27.16% (12.35)% (5.32)%
===================================== ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $20,104 $70,693 $42,568 $23,892
===================================== ======= ======= ======= =======
Ratio of expenses to average net
assets 1.22%(d)(f) 1.97%(c) 2.07% 1.99%(f)
===================================== ======= ======= ======= =======
Ratio of net investment income to
average net assets 7.63%(e)(f) 3.44%(c) 3.78% 3.38%(f)
===================================== ======= ======= ======= =======
Portfolio turnover rate 87% 88% 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 $157,394,436.
Ratios for Class B are based on average daily net assets of $53,847,853.
(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.
FS-34
<PAGE> 153
INDEPENDENT AUDITORS' REPORT
To 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, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended and the financial highlights for each of
the years in the three-year period then ended. 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, 1995, 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, 1995, the results of its operations for the year
then ended, the statement of changes in net assets for each of the years in the
two-year period then ended and the financial highlights for each of the years in
the three-year period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1996
FS-35
<PAGE> 154
Financials
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - 80.81%
ADVERTISING/BROADCASTING-0.14%
11,400 Infinity Broadcasting Corp.-Class A(a) $ 424,659
- -------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-0.41%
10,000 Boeing Co. 783,750
- -------------------------------------------------------------------------------------------
5,000 United Technologies Corp. 474,375
- -------------------------------------------------------------------------------------------
1,258,125
- -------------------------------------------------------------------------------------------
APPLIANCES-0.34%
25,000 Newell Co. 646,875
- -------------------------------------------------------------------------------------------
8,000 Premark International Inc. 405,000
- -------------------------------------------------------------------------------------------
1,051,875
- -------------------------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.46%
22,400 Echlin Inc. 817,600
- -------------------------------------------------------------------------------------------
30,000 Mark IV Industries, Inc. 592,500
- -------------------------------------------------------------------------------------------
1,410,100
- -------------------------------------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-0.15%
8,500 Chrysler Corp. 470,687
- -------------------------------------------------------------------------------------------
BANKING-0.60%
12,000 Corestates Financial Corp. 454,500
- -------------------------------------------------------------------------------------------
22,000 Norwest Bank Corp. 726,000
- -------------------------------------------------------------------------------------------
24,600 Southern National Corp. 645,750
- -------------------------------------------------------------------------------------------
1,826,250
- -------------------------------------------------------------------------------------------
BANKING (MONEY CENTER)-0.72%
13,000 BankAmerica Corp. 841,750
- -------------------------------------------------------------------------------------------
22,700 Chase Manhattan Corp. 1,376,187
- -------------------------------------------------------------------------------------------
2,217,937
- -------------------------------------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.10%
9,600 Canandaigua Wine Co., Inc.-Class A(a) 313,200
- -------------------------------------------------------------------------------------------
BEVERAGES (SOFT DRINKS)-0.46%
25,000 PepsiCo Inc. 1,396,875
- -------------------------------------------------------------------------------------------
BIOTECHNOLOGY-0.03%
2,300 Guidant Corp. 97,175
- -------------------------------------------------------------------------------------------
BUSINESS SERVICES-1.02%
21,400 Equifax Inc. 457,425
- -------------------------------------------------------------------------------------------
23,100 Healthcare COMPARE Corp.(a) 1,004,850
- -------------------------------------------------------------------------------------------
15,000 Manpower Inc. 421,875
- -------------------------------------------------------------------------------------------
26,000 Olsten Corp. 1,027,000
- -------------------------------------------------------------------------------------------
</TABLE>
FS-36
<PAGE> 155
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
BUSINESS SERVICES (continued)
8,225 Value Health, Inc.(a) $ 226,187
- -------------------------------------------------------------------------------------------
3,137,337
- -------------------------------------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.35%
18,600 Airgas Inc.(a) 618,450
- -------------------------------------------------------------------------------------------
7,800 W.R. Grace & Co. 461,175
- -------------------------------------------------------------------------------------------
1,079,625
- -------------------------------------------------------------------------------------------
COMPUTER MINI/PCS-2.94%
9,200 CDW Computer Centers, Inc.(a) 372,600
- -------------------------------------------------------------------------------------------
50,000 COMPAQ Computer Corp.(a) 2,400,000
- -------------------------------------------------------------------------------------------
78,400 Dell Computer Corp.(a) 2,714,600
- -------------------------------------------------------------------------------------------
12,000 Digital Equipment Corp.(a) 769,500
- -------------------------------------------------------------------------------------------
12,100 Hewlett-Packard Co. 1,013,375
- -------------------------------------------------------------------------------------------
38,000 Sun Microsystems Inc.(a) 1,733,750
- -------------------------------------------------------------------------------------------
9,003,825
- -------------------------------------------------------------------------------------------
COMPUTER NETWORKING-6.16%
13,300 ALANTEC Corp.(a) 774,725
- -------------------------------------------------------------------------------------------
11,400 Ascend Communications, Inc.(a) 924,825
- -------------------------------------------------------------------------------------------
68,550 Bay Networks, Inc.(a) 2,819,118
- -------------------------------------------------------------------------------------------
20,000 Cabletron Systems, Inc.(a) 1,620,000
- -------------------------------------------------------------------------------------------
10,600 Cascade Communications Corp. 903,650
- -------------------------------------------------------------------------------------------
33,000 Cheyenne Software, Inc.(a) 862,125
- -------------------------------------------------------------------------------------------
46,900 Cisco Systems, Inc.(a) 3,499,913
- -------------------------------------------------------------------------------------------
34,000 FORE Systems, Inc.(a) 2,023,000
- -------------------------------------------------------------------------------------------
29,140 Madge N.V.(a) 1,304,015
- -------------------------------------------------------------------------------------------
12,200 Network Equipment Technologies, Inc.(a) 333,975
- -------------------------------------------------------------------------------------------
9,800 Newbridge Networks Corp. 405,475
- -------------------------------------------------------------------------------------------
10,200 Optical Data Systems, Inc.(a) 257,550
- -------------------------------------------------------------------------------------------
7,700 Sync Research, Inc.(a) 348,425
- -------------------------------------------------------------------------------------------
59,800 3Com Corp.(a) 2,788,175
- -------------------------------------------------------------------------------------------
18,864,971
- -------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-2.99%
30,000 Adaptec, Inc.(a) 1,230,000
- -------------------------------------------------------------------------------------------
25,275 Alliance Semiconductor Corp.(a) 293,822
- -------------------------------------------------------------------------------------------
15,700 Cerner Corp. 321,850
- -------------------------------------------------------------------------------------------
12,300 Digi International, Inc.(a) 233,700
- -------------------------------------------------------------------------------------------
53,000 EMC Corp.(a) 814,875
- -------------------------------------------------------------------------------------------
5,100 Komag, Inc.(a) 235,237
- -------------------------------------------------------------------------------------------
20,300 Microchip Technology, Inc.(a) 740,950
- -------------------------------------------------------------------------------------------
6,400 Oak Technology, Inc.(a) 270,400
- -------------------------------------------------------------------------------------------
35,800 Oracle Systems Corp.(a) 1,517,025
- -------------------------------------------------------------------------------------------
16,000 Read Rite Corp.(a) 372,000
- -------------------------------------------------------------------------------------------
36,000 Seagate Technology Inc.(a) 1,710,000
- -------------------------------------------------------------------------------------------
</TABLE>
FS-37
<PAGE> 156
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER PERIPHERALS (continued)
16,000 U.S. Robotics Corp.(a) $ 1,404,000
- -------------------------------------------------------------------------------------------
9,143,859
- -------------------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES-8.02%
20,700 Adobe Systems, Inc. 1,283,400
- -------------------------------------------------------------------------------------------
36,800 BMC Software, Inc.(a) 1,573,200
- -------------------------------------------------------------------------------------------
15,100 Broderbund Software, Inc.(a) 917,325
- -------------------------------------------------------------------------------------------
52,200 Cadence Design Systems, Inc.(a) 2,192,400
- -------------------------------------------------------------------------------------------
15,000 Ceridian Corp.(a) 618,750
- -------------------------------------------------------------------------------------------
40,800 Computer Associates International, Inc. 2,320,500
- -------------------------------------------------------------------------------------------
40,000 Computervision Corp.(a) 615,000
- -------------------------------------------------------------------------------------------
15,300 Corel Corp.(a) 198,900
- -------------------------------------------------------------------------------------------
19,500 DST Systems Inc.(a) 555,750
- -------------------------------------------------------------------------------------------
22,800 Electronic Arts, Inc.(a) 595,650
- -------------------------------------------------------------------------------------------
12,000 Fiserv, Inc.(a) 360,000
- -------------------------------------------------------------------------------------------
18,800 FTP Software, Inc.(a) 545,200
- -------------------------------------------------------------------------------------------
13,400 HBO & Co. 1,026,775
- -------------------------------------------------------------------------------------------
28,500 Informix Corp.(a) 855,000
- -------------------------------------------------------------------------------------------
10,000 Intuit, Inc.(a) 780,000
- -------------------------------------------------------------------------------------------
16,500 Mentor Graphics Corp.(a) 301,125
- -------------------------------------------------------------------------------------------
22,500 Microsoft Corp.(a) 1,974,375
- -------------------------------------------------------------------------------------------
10,400 Network General Corp.(a) 347,100
- -------------------------------------------------------------------------------------------
13,800 Pairgain Technologies, Inc.(a) 755,550
- -------------------------------------------------------------------------------------------
20,000 Parametric Technology Corp.(a) 1,330,000
- -------------------------------------------------------------------------------------------
13,500 Policy Management Systems Corp.(a) 642,937
- -------------------------------------------------------------------------------------------
10,100 Rational Software Corp.(a) 225,988
- -------------------------------------------------------------------------------------------
10,000 S3, Inc.(a) 176,250
- -------------------------------------------------------------------------------------------
38,400 SoftKey International Inc.(a) 888,000
- -------------------------------------------------------------------------------------------
17,200 Sterling Software, Inc.(a) 1,072,850
- -------------------------------------------------------------------------------------------
60,000 Symantec Corp.(a) 1,395,000
- -------------------------------------------------------------------------------------------
26,700 Synopsys, Inc.(a) 1,014,600
- -------------------------------------------------------------------------------------------
24,561,625
- -------------------------------------------------------------------------------------------
CONGLOMERATES-0.76%
20,000 Loews Corp. 1,567,500
- -------------------------------------------------------------------------------------------
21,000 Tyco International Ltd. 748,125
- -------------------------------------------------------------------------------------------
2,315,625
- -------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES-0.07%
5,200 Department 56, Inc.(a) 199,550
- -------------------------------------------------------------------------------------------
CONTAINERS-0.15%
16,700 Ball Corp. 459,250
- -------------------------------------------------------------------------------------------
COSMETICS & TOILETRIES-0.53%
6,600 Alberto-Culver Co.-Class A 201,300
- -------------------------------------------------------------------------------------------
30,400 General Nutrition, Inc.(a) 699,200
- -------------------------------------------------------------------------------------------
</TABLE>
FS-38
<PAGE> 157
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COSMETICS & TOILETRIES (continued)
6,000 Gillette Co. (The) $ 312,750
- -------------------------------------------------------------------------------------------
5,000 Procter & Gamble Co. 415,000
- -------------------------------------------------------------------------------------------
1,628,250
- -------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-1.69%
12,500 Amphenol Corp.(a) 303,125
- -------------------------------------------------------------------------------------------
37,100 Anixter International Inc.(a) 690,988
- -------------------------------------------------------------------------------------------
2,800 AVX Corp. 74,200
- -------------------------------------------------------------------------------------------
4,687 Molex, Inc. 148,812
- -------------------------------------------------------------------------------------------
4,950 Parker-Hannifin Corp. 169,537
- -------------------------------------------------------------------------------------------
10,600 Symbol Technologies, Inc.(a) 418,700
- -------------------------------------------------------------------------------------------
17,900 Tektronix, Inc. 879,337
- -------------------------------------------------------------------------------------------
100,000 Teradyne, Inc.(a) 2,500,000
- -------------------------------------------------------------------------------------------
5,184,699
- -------------------------------------------------------------------------------------------
ELECTRONIC/DEFENSE-0.23%
10,000 Sundstrand Corp. 703,750
- -------------------------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTERS-1.19%
36,600 Arrow Electronics, Inc.(a) 1,578,375
- -------------------------------------------------------------------------------------------
46,200 Avnet, Inc. 2,067,450
- -------------------------------------------------------------------------------------------
3,645,825
- -------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.53%
40,000 Bear Stearns Companies, Inc. (The) 795,000
- -------------------------------------------------------------------------------------------
17,200 Finova Group, Inc. 829,900
- -------------------------------------------------------------------------------------------
1,624,900
- -------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-5.26%
17,000 ADVANTA Corp.-Class A 618,375
- -------------------------------------------------------------------------------------------
6,700 ADVANTA Corp.-Class B 256,275
- -------------------------------------------------------------------------------------------
40,000 Countrywide Credit Industries, Inc. 870,000
- -------------------------------------------------------------------------------------------
26,500 Credit Acceptance Corp.(a) 549,875
- -------------------------------------------------------------------------------------------
20,000 Dean Witter Discover and Co. 940,000
- -------------------------------------------------------------------------------------------
21,000 Federal Home Loan Mortgage Corp. 1,753,500
- -------------------------------------------------------------------------------------------
3,000 Federal National Mortgage Association 372,375
- -------------------------------------------------------------------------------------------
30,000 First USA, Inc. 1,331,250
- -------------------------------------------------------------------------------------------
57,400 Green Tree Acceptance, Inc. 1,513,925
- -------------------------------------------------------------------------------------------
20,300 Household International, Inc. 1,200,238
- -------------------------------------------------------------------------------------------
82,000 MBNA Corp. 3,023,750
- -------------------------------------------------------------------------------------------
25,300 Medaphis Corp.(a) 936,100
- -------------------------------------------------------------------------------------------
112,200 Mercury Finance Co. 1,486,650
- -------------------------------------------------------------------------------------------
14,000 PMI Group, Inc. (The) 633,500
- -------------------------------------------------------------------------------------------
9,500 Student Loan Marketing Association 625,812
- -------------------------------------------------------------------------------------------
16,111,625
- -------------------------------------------------------------------------------------------
FINANCE (SAVINGS & LOAN)-0.22%
25,000 Greenpoint Financial Corp. 668,750
- -------------------------------------------------------------------------------------------
</TABLE>
FS-39
<PAGE> 158
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FOOD PROCESSING-0.27%
9,500 ConAgra, Inc. $ 391,875
- -------------------------------------------------------------------------------------------
11,400 Lancaster Colony Corp. 424,650
- -------------------------------------------------------------------------------------------
816,525
- -------------------------------------------------------------------------------------------
FUNERAL SERVICES-0.76%
20,100 Loewen Group, Inc. 508,781
- -------------------------------------------------------------------------------------------
36,800 Service Corp. International 1,619,200
- -------------------------------------------------------------------------------------------
5,100 Stewart Enterprises, Inc. 188,700
- -------------------------------------------------------------------------------------------
2,316,681
- -------------------------------------------------------------------------------------------
GAMING-0.26%
17,000 Mirage Resorts, Inc.(a) 586,500
- -------------------------------------------------------------------------------------------
20,800 Players International, Inc.(a) 222,300
- -------------------------------------------------------------------------------------------
808,800
- -------------------------------------------------------------------------------------------
HOMEBUILDING-0.29%
36,250 Clayton Homes, Inc. 774,843
- -------------------------------------------------------------------------------------------
3,000 Oakwood Homes Corp. 115,125
- -------------------------------------------------------------------------------------------
889,968
- -------------------------------------------------------------------------------------------
HOTELS/MOTELS-0.84%
3,100 Doubletree Corp.(a) 81,375
- -------------------------------------------------------------------------------------------
14,000 Hospitality Franchise Systems, Inc.(a) 1,144,500
- -------------------------------------------------------------------------------------------
45,500 La Quinta Inns, Inc. 1,245,562
- -------------------------------------------------------------------------------------------
4,000 Promus Hotel Corp.(a) 89,000
- -------------------------------------------------------------------------------------------
2,560,437
- -------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.11%
13,000 United Companies Financial Corp. 342,875
- -------------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-0.84%
29,400 Ace, Ltd. 1,168,650
- -------------------------------------------------------------------------------------------
7,000 CIGNA Corp. 722,750
- -------------------------------------------------------------------------------------------
1,900 General Re Corp. 294,500
- -------------------------------------------------------------------------------------------
16,900 Prudential Reinsurance Holdings, Inc. 395,037
- -------------------------------------------------------------------------------------------
2,580,937
- -------------------------------------------------------------------------------------------
LEISURE & RECREATION-0.47%
29,200 Carnival Cruise Lines, Inc.-Class A 711,750
- -------------------------------------------------------------------------------------------
23,150 Mattel, Inc. 711,862
- -------------------------------------------------------------------------------------------
1,423,612
- -------------------------------------------------------------------------------------------
MACHINE TOOLS-0.09%
7,700 Kennametal Inc. 244,475
- -------------------------------------------------------------------------------------------
MACHINERY (HEAVY)-0.34%
3,000 AGCO Corp. 153,000
- -------------------------------------------------------------------------------------------
25,000 Deere & Co. 881,250
- -------------------------------------------------------------------------------------------
1,034,250
- -------------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.94%
50,000 American Standard Companies(a) 1,400,000
- -------------------------------------------------------------------------------------------
</TABLE>
FS-40
<PAGE> 159
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
MACHINERY (MISCELLANEOUS) (continued)
28,500 Thermo Electron Corp.(a) $ 1,482,000
- -------------------------------------------------------------------------------------------
2,882,000
- -------------------------------------------------------------------------------------------
MEDICAL (DRUGS)-5.38%
49,600 Abbott Laboratories 2,070,800
- -------------------------------------------------------------------------------------------
12,500 American Home Products Corp. 1,212,500
- -------------------------------------------------------------------------------------------
12,000 AmeriSource Health Corp.(a) 396,000
- -------------------------------------------------------------------------------------------
41,200 Astra AB-A Shares 1,644,351
- -------------------------------------------------------------------------------------------
40,900 Cardinal Health, Inc. 2,239,275
- -------------------------------------------------------------------------------------------
8,000 Elan Corp. PLC-ADR(a) 389,000
- -------------------------------------------------------------------------------------------
8,000 Johnson & Johnson 685,000
- -------------------------------------------------------------------------------------------
13,000 Merck & Co., Inc. 854,750
- -------------------------------------------------------------------------------------------
39,250 Mylan Laboratories, Inc. 922,375
- -------------------------------------------------------------------------------------------
11,400 Pfizer Inc. 718,200
- -------------------------------------------------------------------------------------------
40,000 Pharmacia & Upjohn, Inc. 1,550,000
- -------------------------------------------------------------------------------------------
40,400 Schering-Plough Corp. 2,211,900
- -------------------------------------------------------------------------------------------
18,500 Teva Pharmaceutical Industries Ltd.-ADR 857,937
- -------------------------------------------------------------------------------------------
15,000 Watson Pharmaceuticals, Inc.(a) 735,000
- -------------------------------------------------------------------------------------------
16,487,088
- -------------------------------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS)-2.59%
9,300 Baxter International Inc. 389,437
- -------------------------------------------------------------------------------------------
6,200 Becton, Dickinson & Co. 465,000
- -------------------------------------------------------------------------------------------
41,400 Biomet, Inc.(a) 740,025
- -------------------------------------------------------------------------------------------
36,700 Boston Scientific Corp.(a) 1,798,300
- -------------------------------------------------------------------------------------------
16,800 Heart Technology, Inc.(a) 552,300
- -------------------------------------------------------------------------------------------
7,600 Idexx Laboratories, Inc.(a) 357,200
- -------------------------------------------------------------------------------------------
14,600 Invacare Corp. 368,650
- -------------------------------------------------------------------------------------------
13,000 Medtronic, Inc. 726,375
- -------------------------------------------------------------------------------------------
10,200 Nellcor, Inc.(a) 591,600
- -------------------------------------------------------------------------------------------
40,450 St. Jude Medical, Inc.(a) 1,739,350
- -------------------------------------------------------------------------------------------
4,000 Stryker Corp. 210,000
- -------------------------------------------------------------------------------------------
7,938,237
- -------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-7.27%
51,000 Apria Heathcare Group, Inc.(a) 1,440,750
- -------------------------------------------------------------------------------------------
23,320 Columbia/HCA Healthcare Corp. 1,183,490
- -------------------------------------------------------------------------------------------
14,200 Community Health Systems, Inc.(a) 505,875
- -------------------------------------------------------------------------------------------
36,000 Foundation Health Corp.(a) 1,548,000
- -------------------------------------------------------------------------------------------
14,500 Genesis Health Ventures, Inc.(a) 529,250
- -------------------------------------------------------------------------------------------
30,900 Health Care & Retirement Corp.(a) 1,081,500
- -------------------------------------------------------------------------------------------
61,950 Health Management Associates, Inc.(a) 1,618,444
- -------------------------------------------------------------------------------------------
58,800 Healthsource, Inc.(a) 2,116,800
- -------------------------------------------------------------------------------------------
105,000 Healthsouth Corp.(a) 3,058,125
- -------------------------------------------------------------------------------------------
25,700 Horizon Healthcare Corp.(a) 648,925
- -------------------------------------------------------------------------------------------
</TABLE>
FS-41
<PAGE> 160
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES) (continued)
17,300 Integrated Health Services, Inc.(a) $ 432,500
- -------------------------------------------------------------------------------------------
37,000 Lincare Holdings, Inc.(a) 925,000
- -------------------------------------------------------------------------------------------
12,000 Living Centers Of America, Inc.(a) 420,000
- -------------------------------------------------------------------------------------------
20,500 Manor Care, Inc. 717,500
- -------------------------------------------------------------------------------------------
10,000 Omnicare, Inc. 447,500
- -------------------------------------------------------------------------------------------
27,500 OrNda Healthcorp(a) 639,375
- -------------------------------------------------------------------------------------------
10,300 Oxford Health Plans, Inc.(a) 760,912
- -------------------------------------------------------------------------------------------
3,700 Pacificare Health Systems, Inc.-Class A(a) 321,900
- -------------------------------------------------------------------------------------------
3,400 Pacificare Health Systems, Inc.-Class B(a) 295,800
- -------------------------------------------------------------------------------------------
11,000 Quorum Health Group, Inc.(a) 242,000
- -------------------------------------------------------------------------------------------
64,200 Sybron International Corp.(a) 1,524,750
- -------------------------------------------------------------------------------------------
6,700 Theratx, Inc.(a) 80,400
- -------------------------------------------------------------------------------------------
52,800 Vencor, Inc.(a) 1,716,000
- -------------------------------------------------------------------------------------------
22,254,796
- -------------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.98%
44,000 Danka Business Systems PLC-ADR 1,628,000
- -------------------------------------------------------------------------------------------
10,000 Xerox Corp. 1,370,000
- -------------------------------------------------------------------------------------------
2,998,000
- -------------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.45%
12,100 Avery Dennison Corp. 606,512
- -------------------------------------------------------------------------------------------
19,800 Reynolds & Reynolds Co.-Class A 769,725
- -------------------------------------------------------------------------------------------
1,376,237
- -------------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.06%
8,100 Smith International, Inc.(a) 190,350
- -------------------------------------------------------------------------------------------
POLLUTION CONTROL-0.06%
5,100 Asyst Technologies, Inc.(a) 179,775
- -------------------------------------------------------------------------------------------
RESTAURANTS-0.63%
16,600 Applebee's International, Inc. 377,650
- -------------------------------------------------------------------------------------------
10,700 Lone Star Steakhouse & Saloon(a) 410,612
- -------------------------------------------------------------------------------------------
23,700 Outback Steakhouse, Inc.(a) 850,238
- -------------------------------------------------------------------------------------------
14,300 Wendy's International, Inc. 303,875
- -------------------------------------------------------------------------------------------
1,942,375
- -------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUGS)-1.48%
6,000 Casey's General Stores, Inc. 131,250
- -------------------------------------------------------------------------------------------
18,900 Eckerd (Jack) Corp.(a) 843,412
- -------------------------------------------------------------------------------------------
17,000 Hannaford Bros. Co. 418,625
- -------------------------------------------------------------------------------------------
39,300 Kroger Co. (The)(a) 1,473,750
- -------------------------------------------------------------------------------------------
32,400 Safeway Inc.(a) 1,668,600
- -------------------------------------------------------------------------------------------
4,535,637
- -------------------------------------------------------------------------------------------
RETAIL (STORES)-4.75%
29,900 AutoZone, Inc.(a) 863,362
- -------------------------------------------------------------------------------------------
6,600 Baby Superstore, Inc.(a) 376,200
- -------------------------------------------------------------------------------------------
</TABLE>
FS-42
<PAGE> 161
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
RETAIL (STORES) (continued)
19,600 Bed Bath & Beyond, Inc.(a) $ 760,725
- -------------------------------------------------------------------------------------------
4,300 Boise Cascade Office Products Corp.(a) 183,825
- -------------------------------------------------------------------------------------------
16,000 Circuit City Stores, Inc. 442,000
- -------------------------------------------------------------------------------------------
49,000 Consolidated Stores Corp.(a) 1,065,750
- -------------------------------------------------------------------------------------------
28,100 Dollar General Corp. 583,075
- -------------------------------------------------------------------------------------------
17,000 Gap, Inc. (The) 714,000
- -------------------------------------------------------------------------------------------
22,300 Gymboree Corp.(a) 459,938
- -------------------------------------------------------------------------------------------
7,000 Kohl's Corp.(a) 367,500
- -------------------------------------------------------------------------------------------
9,000 Men's Wearhouse, Inc. (The)(a) 231,750
- -------------------------------------------------------------------------------------------
16,700 Micro Warehouse, Inc.(a) 722,275
- -------------------------------------------------------------------------------------------
5,200 Oakley, Inc.(a) 176,800
- -------------------------------------------------------------------------------------------
60,700 Office Depot, Inc.(a) 1,198,825
- -------------------------------------------------------------------------------------------
12,300 PetSmart, Inc.(a) 381,300
- -------------------------------------------------------------------------------------------
25,600 Sports Authority, Inc. (The)(a) 521,600
- -------------------------------------------------------------------------------------------
59,500 Staples, Inc.(a) 1,450,312
- -------------------------------------------------------------------------------------------
36,300 Sunglass Hut International, Inc.(a) 862,125
- -------------------------------------------------------------------------------------------
16,400 Talbots, Inc. 471,500
- -------------------------------------------------------------------------------------------
8,700 Tandy Corp. 361,050
- -------------------------------------------------------------------------------------------
10,500 Tech Data Corp. 157,500
- -------------------------------------------------------------------------------------------
47,000 Viking Office Products Inc.(a) 2,185,500
- -------------------------------------------------------------------------------------------
14,536,912
- -------------------------------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.77%
19,000 Millipore Corp. 781,375
- -------------------------------------------------------------------------------------------
33,000 Varian Associates, Inc. 1,575,750
- -------------------------------------------------------------------------------------------
2,357,125
- -------------------------------------------------------------------------------------------
SEMICONDUCTORS-9.63%
34,000 Altera Corp.(a) 1,691,500
- -------------------------------------------------------------------------------------------
62,100 Analog Devices, Inc.(a) 2,196,788
- -------------------------------------------------------------------------------------------
70,000 Applied Materials, Inc.(a) 2,756,250
- -------------------------------------------------------------------------------------------
8,200 ASM Lithography Holding(a) 272,650
- -------------------------------------------------------------------------------------------
85,000 Atmel Corp.(a) 1,901,875
- -------------------------------------------------------------------------------------------
64,100 Cypress Semiconductor Corp.(a) 817,275
- -------------------------------------------------------------------------------------------
12,600 Electroglas, Inc.(a) 308,700
- -------------------------------------------------------------------------------------------
67,100 Integrated Device Technology, Inc.(a) 863,913
- -------------------------------------------------------------------------------------------
23,000 Intel Corp. 1,305,250
- -------------------------------------------------------------------------------------------
39,600 International Rectifier Corp.(a) 990,000
- -------------------------------------------------------------------------------------------
41,000 KLA Instruments Corp.(a) 1,068,562
- -------------------------------------------------------------------------------------------
41,900 LAM Research Corp.(a) 1,916,925
- -------------------------------------------------------------------------------------------
20,900 Lattice Semiconductor Corp.(a) 681,862
- -------------------------------------------------------------------------------------------
44,200 Linear Technology Corp. 1,734,850
- -------------------------------------------------------------------------------------------
60,000 LSI Logic Corp.(a) 1,965,000
- -------------------------------------------------------------------------------------------
18,900 Maxim Integrated Products, Inc.(a) 727,650
- -------------------------------------------------------------------------------------------
</TABLE>
FS-43
<PAGE> 162
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
SEMICONDUCTORS (continued)
20,000 MEMC Electronic Materials, Inc.(a) $ 652,500
- -------------------------------------------------------------------------------------------
19,000 Novellus Systems, Inc.(a) 1,026,000
- -------------------------------------------------------------------------------------------
10,000 SCI Systems, Inc.(a) 310,000
- -------------------------------------------------------------------------------------------
26,200 Sierra Semiconductor Corp.(a) 363,525
- -------------------------------------------------------------------------------------------
8,100 Silicon Valley Group, Inc.(a) 204,525
- -------------------------------------------------------------------------------------------
37,800 Solectron Corp.(a) 1,667,925
- -------------------------------------------------------------------------------------------
7,400 Tencor Instruments(a) 180,375
- -------------------------------------------------------------------------------------------
23,000 Texas Instruments Inc. 1,190,250
- -------------------------------------------------------------------------------------------
12,300 Ultratech Stepper, Inc.(a) 316,725
- -------------------------------------------------------------------------------------------
30,400 Vishay Intertechnology, Inc.(a) 957,600
- -------------------------------------------------------------------------------------------
25,000 VLSI Technology, Inc.(a) 453,125
- -------------------------------------------------------------------------------------------
32,000 Xilinx, Inc.(a) 976,000
- -------------------------------------------------------------------------------------------
29,497,600
- -------------------------------------------------------------------------------------------
SHOES & RELATED APPAREL-0.21%
11,000 Nine West Group, Inc.(a) 412,500
- -------------------------------------------------------------------------------------------
7,500 Wolverine World Wide, Inc. 236,250
- -------------------------------------------------------------------------------------------
648,750
- -------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-4.62%
25,000 A T & T Corp. 1,618,750
- -------------------------------------------------------------------------------------------
10,000 ADC Telecommunications, Inc.(a) 365,000
- -------------------------------------------------------------------------------------------
16,000 Allen Group, Inc. 358,000
- -------------------------------------------------------------------------------------------
19,600 Andrew Corp.(a) 749,700
- -------------------------------------------------------------------------------------------
13,700 Aspect Telecommunications Corp.(a) 458,950
- -------------------------------------------------------------------------------------------
22,000 Glenayre Technologies, Inc.(a) 1,369,500
- -------------------------------------------------------------------------------------------
8,000 Nokia Corp.-ADR 311,000
- -------------------------------------------------------------------------------------------
20,400 Northern Telecom Ltd. 877,200
- -------------------------------------------------------------------------------------------
10,300 Octel Communications Corp.(a) 332,175
- -------------------------------------------------------------------------------------------
18,000 Premisys Communications, Inc.(a) 1,008,000
- -------------------------------------------------------------------------------------------
16,000 Scientific-Atlanta, Inc. 240,000
- -------------------------------------------------------------------------------------------
20,000 Sprint Corp. 797,500
- -------------------------------------------------------------------------------------------
12,100 StrataCom, Inc.(a) 889,350
- -------------------------------------------------------------------------------------------
130,840 Telefonaktiebolaget L.M. Ericsson-ADR 2,551,380
- -------------------------------------------------------------------------------------------
37,000 Tellabs, Inc.(a) 1,369,000
- -------------------------------------------------------------------------------------------
2,350 TransPro, Inc. 24,968
- -------------------------------------------------------------------------------------------
8,400 U.S. Long Distance Corp.(a) 117,600
- -------------------------------------------------------------------------------------------
20,000 WorldCom, Inc.(a) 705,000
- -------------------------------------------------------------------------------------------
14,143,073
- -------------------------------------------------------------------------------------------
TELEPHONE-0.02%
2,300 Century Telephone Enterprises, Inc. 73,025
- -------------------------------------------------------------------------------------------
TOBACCO-1.12%
38,000 Philip Morris Companies, Inc. 3,439,000
- -------------------------------------------------------------------------------------------
</TABLE>
FS-44
<PAGE> 163
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
TRUCKING-0.06%
8,600 TNT Freightways Corp. $ 173,075
- -------------------------------------------------------------------------------------------
Total Common Stocks 247,471,964
- -------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK-0.12%
FINANCE (CONSUMER CREDIT)-0.12%
6,000 SunAmerica Inc.-Series E, $3.10 Conv. Pfd. 393,000
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES-15.80%
U.S. Treasury Bills-15.46%(b)
$19,500,000(c) 5.38%, 04/04/96 19,252,935
- -------------------------------------------------------------------------------------------
8,700,000 5.32%, 04/11/96 8,582,811
- -------------------------------------------------------------------------------------------
20,000,000(c) 5.22%, 06/27/96 19,518,800
- -------------------------------------------------------------------------------------------
47,354,546
- -------------------------------------------------------------------------------------------
U.S. Treasury Notes-0.34%
1,030,000 4.625%, 02/29/96 1,029,454
- -------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 48,384,000
- -------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT-4.05%(d)
12,394,572 Daiwa Securities America Inc.
5.92%, 01/02/96(e) 12,394,572
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-100.78% 308,643,536
- -------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(0.78%) (2,393,472)
- -------------------------------------------------------------------------------------------
NET ASSETS-100.00% $306,250,064
- -------------------------------------------------------------------------------------------
</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) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(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. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(e) Joint repurchase agreement entered into on 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
Abbreviations:
ADR-American Depositary Receipts
Conv.-Convertible
Pfd.-Preferred
See Notes to Financial Statements.
FS-45
<PAGE> 164
Financials
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $261,339,114) $308,643,536
- -----------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $102,582) 102,632
- -----------------------------------------------------------------------------------------
Receivables for:
Investments sold 756,045
- -----------------------------------------------------------------------------------------
Fund shares sold 1,565,892
- -----------------------------------------------------------------------------------------
Dividends and interest 199,305
- -----------------------------------------------------------------------------------------
Variation margin 55,300
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 64,800
- -----------------------------------------------------------------------------------------
Other assets 19,202
- -----------------------------------------------------------------------------------------
Total assets 311,406,712
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 955,719
- -----------------------------------------------------------------------------------------
Fund shares reacquired 3,558,798
- -----------------------------------------------------------------------------------------
Deferred compensation plan 64,800
- -----------------------------------------------------------------------------------------
Accrued advisory fees 183,093
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 5,437
- -----------------------------------------------------------------------------------------
Accrued distribution fees 239,251
- -----------------------------------------------------------------------------------------
Accrued trustees' fees 2,041
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 65,793
- -----------------------------------------------------------------------------------------
Accrued operating expenses 81,716
- -----------------------------------------------------------------------------------------
Total liabilities 5,156,648
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $306,250,064
=========================================================================================
NET ASSETS:
Class A $168,216,501
=========================================================================================
Class B $138,033,563
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 12,890,025
=========================================================================================
Class B 10,805,746
=========================================================================================
Class A:
Net asset value and redemption price per share $ 13.05
=========================================================================================
Offering price per share:
(Net asset value of $13.05 divided by 94.50%) $ 13.81
=========================================================================================
Class B:
Net asset value and offering price per share $ 12.77
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-46
<PAGE> 165
Financials
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $1,763 foreign withholding tax) $ 1,135,898
- ----------------------------------------------------------------------------------------
Interest 2,307,909
- ----------------------------------------------------------------------------------------
Total investment income 3,443,807
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,715,406
- ----------------------------------------------------------------------------------------
Custodian fees 77,724
- ----------------------------------------------------------------------------------------
Transfer agent fees-Class A 225,613
- ----------------------------------------------------------------------------------------
Transfer agent fees-Class B 225,786
- ----------------------------------------------------------------------------------------
Administrative service fees 67,618
- ----------------------------------------------------------------------------------------
Trustees' fees 6,928
- ----------------------------------------------------------------------------------------
Distribution fees-Class A 374,107
- ----------------------------------------------------------------------------------------
Distribution fees-Class B 828,223
- ----------------------------------------------------------------------------------------
Other 167,548
- ----------------------------------------------------------------------------------------
Total expenses 3,688,953
- ----------------------------------------------------------------------------------------
Net investment income (loss) (245,146)
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTIONS CONTRACTS:
Net realized gain (loss) from:
Investment securities 16,472,814
- ----------------------------------------------------------------------------------------
Foreign currencies (1,357)
- ----------------------------------------------------------------------------------------
Futures contracts 6,650,615
- ----------------------------------------------------------------------------------------
Options contracts 51,299
- ----------------------------------------------------------------------------------------
23,173,371
- ----------------------------------------------------------------------------------------
Unrealized appreciation of:
Investment securities 36,431,825
- ----------------------------------------------------------------------------------------
Futures contracts 309,690
- ----------------------------------------------------------------------------------------
Foreign currencies 50
- ----------------------------------------------------------------------------------------
36,741,565
- ----------------------------------------------------------------------------------------
Net gain from investment securities, foreign currencies, futures and
options contracts 59,914,936
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $59,669,790
========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-47
<PAGE> 166
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (245,146) $ (212,386)
- ---------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and options contracts 23,173,371 2,769,880
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities, foreign currencies and futures contracts 36,741,565 (10,397,965)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 59,669,790 (7,840,471)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- Class A -- (1,847)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities, foreign currencies, futures and
options contracts:
Class A (9,550,061) (4,927,563)
- ---------------------------------------------------------------------------------------------
Class B (7,736,264) (1,473,126)
- ---------------------------------------------------------------------------------------------
Share transactions-net:
Class A 13,074,357 (12,166,631)
- ---------------------------------------------------------------------------------------------
Class B 89,072,917 30,353,095
- ---------------------------------------------------------------------------------------------
Net increase in net assets 144,530,739 3,943,457
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 161,719,325 157,775,868
- ---------------------------------------------------------------------------------------------
End of period $306,250,064 $161,719,325
=============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $254,963,289 $152,816,015
- ---------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (58,438) (54,924)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures and options
contracts 3,607,551 (2,037,863)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 47,737,662 10,996,097
- ---------------------------------------------------------------------------------------------
$306,250,064 $161,719,325
=============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-48
<PAGE> 167
Financials
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
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 Fund's objective is to achieve long-term growth
of capital by investing primarily in the common stocks of established medium- to
large-size companies with prospects for above-average, long-term earnings
growth. Realization of current income is an incidental consideration.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations - 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. If a mean is not available, as is the case in some foreign
markets, the closing bid will be used absent a last sales price. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the
closing bid and asked prices. Debt obligations that are issued or guaranteed
by the U.S. Treasury 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 and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued at the mean between last bid and asked prices based upon
quotes furnished by independent sources. Securities for which market
quotations either are not readily available or are questionable 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. Generally, trading
in foreign securities 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 the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to 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 they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
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, 1995,
undistributed net investment income (loss) was increased and undistributed
net realized gains reduced by $241,632 in order to comply with the
requirements of the American Institute of Certified Public Accountants of
Position 93-2. Net assets of the Fund were unaffected by the reclassification
discussed above.
FS-49
<PAGE> 168
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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 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 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.
FS-50
<PAGE> 169
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended December 31, 1995, AIM
was reimbursed $67,618 for such services.
The Fund, pursuant to a transfer agency and shareholder service agreement, has
agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer
agency and shareholder services to the Fund. During the year ended December 31,
1995, AFS was paid $260,147 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 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 provides for 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. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more assignees, its rights to all or a portion of
(a) compensation received by AIM Distributors from the Fund pursuant to the
Class B Plan (but not AIM Distributors' duties and obligations pursuant to Class
B Plan) and (b) any contingent deferred sales charges payable to AIM
Distributors related to Class B shares. During the year ended December 31, 1995,
the Class A shares and the Class B shares paid AIM Distributors $374,107 and
$828,223, respectively, as compensation under the Plans.
AIM Distributors received commissions of $146,533 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1995,
AIM Distributors received $169,092 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 year ended December 31, 1995, the Fund paid legal fees of $3,215
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 AIM. 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 - BANK BORROWINGS
The Fund has a $3,400,000 committed line of credit with a financial institution
syndicate with Chemical Bank of New York as the administrative agent. Interest
on borrowings under the line of credit is payable on maturity or prepayment
date. During the period July 20, 1995 (effective date of line of credit
agreement) through December 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's committed
line.
NOTE 5 - 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, 1995 was
$232,913,422 and $167,303,618, respectively.
FS-51
<PAGE> 170
Financials
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $54,056,194
- ----------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (7,076,101)
- ----------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $46,980,093
========================================================================================
Cost of investments for tax purposes is $261,663,443.
</TABLE>
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------ ----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 11,797,896 $ 152,090,445 4,669,279 $ 49,954,762
- -----------------------------------------------------------------------------------------------------
Class B 7,675,619 97,224,008 3,113,829 33,848,039
- -----------------------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 714,727 9,127,169 467,584 4,717,930
- -----------------------------------------------------------------------------------------------------
Class B 577,277 7,221,770 135,261 1,349,902
- -----------------------------------------------------------------------------------------------------
Reacquired:
Class A (11,562,734) (148,143,257) (6,154,491) (66,839,323)
- -----------------------------------------------------------------------------------------------------
Class B (1,213,971) (15,372,861) (459,392) (4,844,846)
- -----------------------------------------------------------------------------------------------------
7,988,814 $ 102,147,274 1,772,070 $ 18,186,464
=====================================================================================================
</TABLE>
NOTE 7 - OPEN FUTURES CONTRACTS
On December 31, 1995, $1,757,000 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, 1995 were as follows:
<TABLE>
<CAPTION>
NO. OF UNREALIZED
CONTRACT CONTRACTS/MONTH/COMMITMENT APPRECIATION
<S> <C> <C>
S&P 500 Index 158 contracts/Mar. 96/Buy $433,190
=============================================================================================
</TABLE>
NOTE 8 - OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended December 31, 1995 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Beginning of period 551 $127,014
- -----------------------------------------------------------------------------------------
Written 101 19,750
- -----------------------------------------------------------------------------------------
Closed (297) (76,789)
- -----------------------------------------------------------------------------------------
Exercised (81) (12,894)
- -----------------------------------------------------------------------------------------
Expired (274) (57,081)
- -----------------------------------------------------------------------------------------
End of period 0 $ 0
=========================================================================================
</TABLE>
FS-52
<PAGE> 171
Financials
NOTE 9 - 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,
1995 and for a Class B share outstanding during each of the years in the
two-year period ended December 31, 1995 and the period September 1, 1993 (date
sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
1995 1994 1993 1992(a) 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 10.32 $ 11.32 $ 12.28 $ 14.73 $ 12.35 $ 13.92 $ 11.93
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.02 -- -- 0.06 0.11 0.21 0.25
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 3.50 (0.57) 0.41 (0.04) 4.33 (0.91) 3.16
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Total from investment operations 3.52 (0.57) 0.41 0.02 4.44 (0.70) 3.41
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- (0.06) (0.13) (0.20) (0.27)
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Distributions from capital gains (0.79) (0.43) (1.37) (2.41) (1.93) (0.67) (1.15)
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Total distributions (0.79) (0.43) (1.37) (2.47) (2.06) (0.87) (1.42)
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 13.05 $ 10.32 $ 11.32 $ 12.28 $ 14.73 $ 12.35 $ 13.92
========================================== ======== ======== ======== ======== ======== ======== ========
Total return(b) 34.31% (4.99)% 3.64% 0.19% 37.05% (5.04)% 28.87%
========================================== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $168,217 $123,271 $146,723 $168,395 $185,461 $153,245 $187,805
========================================== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.28%(c) 1.22% 1.17% 1.17% 1.21% 1.16% 1.00%
========================================== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average
net assets 0.20%(c) 0.02% 0.02% 0.42% 0.73% 1.41% 1.62%
========================================== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 87% 201% 192% 133% 73% 61% 53%
========================================== ======== ======== ======== ======== ======== ======== ========
<CAPTION>
1988 1987 1986
-------- -------- --------
<S> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 11.04 $ 12.91 $ 14.95
- ------------------------------------------ -------- -------- --------
Income from investment operations:
Net investment income 0.23 0.24 0.26
- ------------------------------------------ -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 0.89 0.30 1.57
- ------------------------------------------ -------- -------- --------
Total from investment operations 1.12 0.54 1.83
- ------------------------------------------ -------- -------- --------
Less distributions:
Dividends from net investment income (0.23) (0.31) (0.35)
- ------------------------------------------ -------- -------- --------
Distributions from capital gains -- (2.10) (3.52)
- ------------------------------------------ -------- -------- --------
Total distributions (0.23) (2.41) (3.87)
- ------------------------------------------ -------- -------- --------
Net asset value, end of period $ 11.93 $ 11.04 $ 12.91
========================================== ======== ======== ========
Total return(b) 10.13% 3.62% 12.85%
========================================== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $180,793 $203,329 $213,346
========================================== ======== ======== ========
Ratio of expenses to average net assets 0.98% 0.84% 0.85%
========================================== ======== ======== ========
Ratio of net investment income to average
net assets 1.73% 1.51% 1.82%
========================================== ======== ======== ========
Portfolio turnover rate 38% 78% 66%
========================================== ======== ======== ========
</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 $149,642,693.
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 10.21 $ 11.31 $ 12.83
- ------------------------------------------------------------------------------------------- ------- ------- -------
Income from investment operations:
Net investment income (loss) (0.08)(a) (0.06) (0.01)
- ------------------------------------------------------------------------------------------- ------- ------- -------
Net gains (losses) on securities (both realized and unrealized) 3.43(a) (0.61) (0.14)
- ------------------------------------------------------------------------------------------- ------- ------- -------
Total from investment operations 3.35 (0.67) (0.15)
- ------------------------------------------------------------------------------------------- ------- ------- -------
Less distributions:
Distributions from capital gains (0.79) (0.43) (1.37)
- ------------------------------------------------------------------------------------------- ------- ------- -------
Total distributions (0.79) (0.43) (1.37)
- ------------------------------------------------------------------------------------------- ------- ------- -------
Net asset value, end of period $ 12.77 $ 10.21 $ 11.31
=========================================================================================== ======= ======= =======
Total return(b) 33.00% (5.88)% (0.92)%
=========================================================================================== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $138,034 $38,448 $11,053
=========================================================================================== ======= ======= =======
Ratio of expenses to average net assets 2.13%(c) 2.18% 1.91%(d)
=========================================================================================== ======= ======= =======
Ratio of net investment income (loss) to average net assets (0.65)%(c) (0.94)% (0.72)%(d)
=========================================================================================== ======= ======= =======
Portfolio turnover rate 87% 201% 192%
=========================================================================================== ======= ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Total returns do not reflect deduction of contingent deferred sales charges
and are not annualized for periods less than one year.
(c) Ratios are based on average net assets of $82,822,307.
(d) Annualized.
FS-53
<PAGE> 172
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, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended and the financial highlights for each of
the years in the three-year period then ended. 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, 1995, 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, 1995, the results of its operations for the
year then ended, the statement of changes in net assets for each of the years in
the two-year period then ended and the financial highlights for each of the
years in the three-year period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1996
FS-54
<PAGE> 173
Financials
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
NON-CONVERTIBLE BONDS & NOTES-94.09%
ADVERTISING/BROADCASTING-5.35%
$ 9,500,000 Ackerley Communication Inc., Sr. Secured Series B Notes,
10.75%, 10/01/03 $10,188,750
- -------------------------------------------------------------------------------------------
30,500,000 Australis Media Ltd., Sr. Sub. Disc. Notes,
14.00%, 05/15/03(a)(b) 22,036,250
- -------------------------------------------------------------------------------------------
9,000,000 Granite Broadcasting Corp., Sr. Sub. Notes,
10.375%, 05/15/05 9,225,000
- -------------------------------------------------------------------------------------------
6,750,000 Katz Corp., Sr. Sub. Notes,
12.75%, 11/15/02 7,222,500
- -------------------------------------------------------------------------------------------
7,000,000 Lamar Advertising Co., Sr. Secured Notes,
11.00%, 05/15/03 7,280,000
- -------------------------------------------------------------------------------------------
9,500,000 Rogers Cable Systems, Sr. Secured Second Priority Notes,
10.00%, 03/15/05 10,212,500
- -------------------------------------------------------------------------------------------
Sinclair Broadcasting Group, Sr. Sub. Notes,
2,525,000 10.00%, 12/15/03 2,575,500
- -------------------------------------------------------------------------------------------
8,300,000 10.00%, 09/30/05 8,466,000
- -------------------------------------------------------------------------------------------
77,206,500
- -------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-1.14%
15,879,000 K & F Industries Inc., Sr. Sub. Deb.,
13.75%, 08/01/01 16,474,462
- -------------------------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-2.41%
9,000,000 Aftermarket Technology Corp., Sr. Sub. Notes,
12.00%, 08/01/04 9,540,000
- -------------------------------------------------------------------------------------------
15,000,000 Ameritruck Distribution Corp., Sr. Sub. Notes,
12.25%, 11/15/05(c) (Acquired 11/10/95; Cost $14,789,250) 14,887,500
- -------------------------------------------------------------------------------------------
8,400,000 Harvard Industries Inc., Sr. Notes,
11.125%, 08/01/05 8,400,000
- -------------------------------------------------------------------------------------------
1,950,000 JPS Automotive Products, Sr. Notes,
11.125%, 06/15/01 1,940,250
- -------------------------------------------------------------------------------------------
34,767,750
- -------------------------------------------------------------------------------------------
BUSINESS SERVICES-0.83%
13,000,000 Neodata Services Inc., Sr. Deferred Coupon Notes,
12.00%, 05/01/03(b) 11,960,000
- -------------------------------------------------------------------------------------------
CABLE TELEVISION-7.46%
8,800,000 American Media Operations, Sr. Sub. Notes,
11.625%, 11/15/04 8,888,000
- -------------------------------------------------------------------------------------------
10,900,000 Century Communications, Sr. Sub. Deb.,
11.875%, 10/15/03 11,744,750
- -------------------------------------------------------------------------------------------
Comcast Corp., Sr. Sub. Deb.,
2,200,000 10.25%, 10/15/01 2,381,500
- -------------------------------------------------------------------------------------------
6,500,000 10.625%, 07/15/12 7,280,000
- -------------------------------------------------------------------------------------------
30,100,000 Comcast UK Cable, Sr. Deb.,
11.20%, 11/15/07(b) 17,608,500
- -------------------------------------------------------------------------------------------
9,000,000 Continental Cablevision, Inc., Sr. Sub. Deb.,
11.00%, 06/01/07 10,057,500
- -------------------------------------------------------------------------------------------
</TABLE>
FS-55
<PAGE> 174
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
Cable Television-(continued)
$22,000,000 Diamond Cable Community Co., Sr. Disc. Notes,
11.75%, 12/15/05(b) $13,035,000
- -------------------------------------------------------------------------------------------
4,400,000 Fundy Cable Ltd., Sr. Secured Second Priority Notes,
11.00%, 11/15/05 4,598,000
- -------------------------------------------------------------------------------------------
10,500,000 Groupe Videotron Ltee, Sr. Notes,
10.625%, 02/15/05 11,261,250
- -------------------------------------------------------------------------------------------
8,525,000 Marcus Cable Co., Sr. Deb.,
11.875%, 10/01/05 9,164,375
- -------------------------------------------------------------------------------------------
1,000,000 Videotron Holdings PLC, Sr. Disc. Notes,
11.125%, 07/01/04(b) 697,500
- -------------------------------------------------------------------------------------------
2,300,000 Videotron Ltee, Sr. Sub. Notes,
10.25%, 10/15/02 2,412,125
- -------------------------------------------------------------------------------------------
8,160,000 Wireless One Inc., Sr. Notes,
13.00%, 10/15/03(d) 8,608,800
- -------------------------------------------------------------------------------------------
107,737,300
- -------------------------------------------------------------------------------------------
CHEMICALS-6.51%
9,600,000 Applied Extrusion Technologies, Inc., Sr. Series B Notes,
11.50%, 04/01/02 10,320,000
- -------------------------------------------------------------------------------------------
10,600,000 Arcadian Partners, L.P., Sr. Series B Notes,
10.75%, 05/01/05 11,713,000
- -------------------------------------------------------------------------------------------
9,000,000 Berry Plastics Corp., Sr. Sub. Notes,
12.25%, 04/15/04 9,652,500
- -------------------------------------------------------------------------------------------
11,000,000 Crain Industries, Inc., Sr. Sub. Notes,
13.50%, 08/15/05(c) (Acquired 08/22/95-09/21/95; Cost
$11,211,050) 11,165,000
- -------------------------------------------------------------------------------------------
2,500,000 Foamex L.P., Sr. Notes,
11.25% 10/01/02 2,500,000
- -------------------------------------------------------------------------------------------
7,180,000 Foamex L.P., Sr. Sub. Deb.,
11.875%, 10/01/04 7,036,400
- -------------------------------------------------------------------------------------------
10,235,000 Indspec Chemical, Sr. Sub. Disc. Notes,
11.50%, 12/01/03(b) 8,188,000
- -------------------------------------------------------------------------------------------
8,000,000 Laroche Industries, Inc., Sr. Sub. Notes,
13.00%, 08/15/04 8,500,000
- -------------------------------------------------------------------------------------------
13,250,000 Polymer Group, Inc., Sr. Notes,
12.75%, 07/15/02(c) (Acquired 06/17/94-07/10/95; Cost
$13,413,750) 13,713,750
- -------------------------------------------------------------------------------------------
11,370,000 RBX Corp., Sr. Sub. Notes,
11.25%, 10/15/05(c) (Acquired 10/06/95-11/07/95; Cost
$11,434,500) 11,171,025
- -------------------------------------------------------------------------------------------
93,959,675
- -------------------------------------------------------------------------------------------
CONGLOMERATES-0.37%
5,000,000 Tjiwi Kimia International Global Co., Sr. Gtd. Notes,
13.25%, 08/01/01 5,362,500
- -------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES-0.94%
12,930,000 Hines Horticulture, Sr. Sub. Notes,
11.75%, 10/15/05(c)(Acquired 10/16/95-12/06/95; Cost
$13,096,975) 13,511,850
- -------------------------------------------------------------------------------------------
CONTAINERS-3.83%
16,000,000 Ivex Holdings Corp.-Series B, Sr. Disc. Deb.,
13.25%, 03/15/05(b) 8,960,000
- -------------------------------------------------------------------------------------------
</TABLE>
FS-56
<PAGE> 175
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
CONTAINERS-(continued)
$ 6,500,000 Ivex Packaging Corp., Sr. Sub. Notes,
12.50%, 12/15/02 $ 6,890,000
- -------------------------------------------------------------------------------------------
10,000,000 MVE Inc., Sr. Notes,
12.50%, 02/15/02 9,875,000
- -------------------------------------------------------------------------------------------
1,750,000 MVE Inc., Sr. Secured Notes,
12.50%, 02/15/02(e) 1,754,375
- -------------------------------------------------------------------------------------------
15,200,000 Owens-Illinois, Inc., Sr. Deb.,
11.00% 12/01/03 17,176,000
- -------------------------------------------------------------------------------------------
11,250,000 Silgan Holdings Inc., Sr. Disc. Deb.,
13.25%, 12/15/02(b) 10,631,250
- -------------------------------------------------------------------------------------------
55,286,625
- -------------------------------------------------------------------------------------------
ENERGY (ALTERNATE SOURCES)-1.18%
15,500,000 Petroleum Heat & Power, Sub. Deb.,
12.25%, 02/01/05 17,088,750
- -------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-1.45%
13,000,000 GPA Delaware Inc., Gtd. Deb.,
8.75%, 12/15/98 12,220,000
- -------------------------------------------------------------------------------------------
9,200,000 Loehmann's Holdings, Sr. Sub. Notes,
13.75%, 02/15/99 8,648,000
- -------------------------------------------------------------------------------------------
20,868,000
- -------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-1.02%
13,500,000 Olympic Financial Ltd., Sr. Notes,
13.00%, 05/01/00 14,748,750
- -------------------------------------------------------------------------------------------
FINANCE (LEASING COMPANIES)-0.56%
Sea Containers Ltd., Sr. Sub. Deb.,
5,350,000 Series A, 12.50%, 12/01/04 5,778,000
- -------------------------------------------------------------------------------------------
2,250,000 Series B, 12.50%, 12/01/04 2,351,250
- -------------------------------------------------------------------------------------------
8,129,250
- -------------------------------------------------------------------------------------------
FOOD/PROCESSING-1.93%
11,263,000 American Rice Inc., Secured Mortgage Notes,
13.00%, 07/31/02 10,643,535
- -------------------------------------------------------------------------------------------
9,800,000 Curtice-Burns Foods Inc., Sr. Sub. Notes,
12.25%, 02/01/05 10,094,000
- -------------------------------------------------------------------------------------------
8,000,000 Pilgrim's Pride Corp., Sr. Sub. Notes,
10.875%, 08/01/03 7,080,000
- -------------------------------------------------------------------------------------------
27,817,535
- -------------------------------------------------------------------------------------------
GAMING-3.16%
Aztar Corp., Sr. Sub. Notes,
6,510,000 11.00%, 10/01/02 6,510,000
- -------------------------------------------------------------------------------------------
9,460,000 13.75%, 10/01/04 10,500,600
- -------------------------------------------------------------------------------------------
11,000,000 Bally's Grand Inc., First Mortgage Notes,
10.375%, 12/15/03 11,220,000
- -------------------------------------------------------------------------------------------
15,000,000 Grand Casinos Inc., First Mortgage Notes,
10.125%, 12/01/03 15,731,250
- -------------------------------------------------------------------------------------------
1,500,000 Showboat Inc., Sr. Sub. Notes,
13.00%, 08/01/09 1,687,500
- -------------------------------------------------------------------------------------------
45,649,350
- -------------------------------------------------------------------------------------------
</TABLE>
FS-57
<PAGE> 176
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
INSURANCE (LIFE & HEALTH)-0.65%
$ 8,970,000 American Life Holding Co., Sr. Sub. Notes,
11.25%, 09/15/04 $ 9,418,500
- -------------------------------------------------------------------------------------------
LEISURE & RECREATION-2.38%
10,000,000 GNF Corp., First Mortgage Notes,
10.625%, 04/01/03 9,325,000
- -------------------------------------------------------------------------------------------
15,500,000 IHF Holdings, Inc., Sr. Sub. Disc. Notes,
15.00%, 11/15/04(b) 9,803,750
- -------------------------------------------------------------------------------------------
7,250,000 Icon Health & Fitness, Sr. Sub. Notes,
13.00%, 07/15/02 7,848,125
- -------------------------------------------------------------------------------------------
6,490,000 Stratosphere Corp., First Mortgage Notes,
14.25%, 05/15/02 7,341,812
- -------------------------------------------------------------------------------------------
34,318,687
- -------------------------------------------------------------------------------------------
MACHINERY-2.98%
11,075,000 AM General Corp., Sr. Notes,
12.875%, 05/01/02 11,102,687
- -------------------------------------------------------------------------------------------
10,500,000 Calmar Spraying Systems, Sr. Sub. Notes,
11.50%, 08/15/05(c) (Acquired 08/03/95-09/11/95; Cost
$10,603,750) 10,631,250
- -------------------------------------------------------------------------------------------
8,300,000 Interlake Corp., Sr. Notes,
12.00%, 11/15/01 8,383,000
- -------------------------------------------------------------------------------------------
4,105,000 Interlake Corp., Sr. Sub. Deb.,
12.125%, 03/01/02 3,899,750
- -------------------------------------------------------------------------------------------
8,000,000 Waters Corp., Sr. Sub. Notes,
12.75%, 09/30/04 9,000,000
- -------------------------------------------------------------------------------------------
43,016,687
- -------------------------------------------------------------------------------------------
MACHINERY (HEAVY)-1.89%
13,725,000 Fairfield Manufacturing, Sr. Sub. Notes,
11.375%, 07/01/01 13,381,875
- -------------------------------------------------------------------------------------------
13,490,000 Primeco Inc., Sr. Sub Notes,
12.75%, 03/01/05 13,894,700
- -------------------------------------------------------------------------------------------
27,276,575
- -------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-0.58%
8,000,000 Graphic Controls Corp., Sr. Sub. Notes,
12.00%, 09/15/05(c) (Acquired 09/21/95; Cost $8,000,000) 8,320,000
- -------------------------------------------------------------------------------------------
MEDICAL SERVICES-1.76%
OrNda Healthcorp, Sr. Sub. Notes,
4,000,000 12.25%, 05/15/02 4,400,000
- -------------------------------------------------------------------------------------------
3,300,000 11.375%, 08/15/04 3,712,500
- -------------------------------------------------------------------------------------------
15,600,000 Tenet Healthcare Corp., Sr. Sub. Notes,
10.125%, 03/01/05 17,355,000
- -------------------------------------------------------------------------------------------
25,467,500
- -------------------------------------------------------------------------------------------
METALS-0.95%
8,525,000 GS Industries Inc., Sr. Notes,
12.25%, 10/01/05 8,509,058
- -------------------------------------------------------------------------------------------
5,250,000 GS Technologies Operation Co., Gtd. Sr. Notes,
12.00%, 09/01/04 5,210,625
- -------------------------------------------------------------------------------------------
13,719,683
- -------------------------------------------------------------------------------------------
</TABLE>
FS-58
<PAGE> 177
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
OIL & GAS (SERVICES)-3.49%
$11,650,000 HS Resources, Sr. Sub. Notes,
9.875%, 12/01/03 $11,504,375
- -------------------------------------------------------------------------------------------
12,200,000 Maxus Energy Corp., Deb.,
11.50%, 11/15/15 12,688,000
- -------------------------------------------------------------------------------------------
5,000,000 Petroleum Heat & Power Co., Sub. Deb.,
9.375%, 02/01/06 4,800,000
- -------------------------------------------------------------------------------------------
8,900,000 Plains Resources, Sr. Gtd. Sub. Notes,
12.00%, 10/01/99 9,233,750
- -------------------------------------------------------------------------------------------
1,130,000 United Meridian Corp., Sr. Sub. Notes,
10.375%, 10/15/05 1,194,975
- -------------------------------------------------------------------------------------------
11,415,000 Wainoco Oil Corp. Sr. Notes,
12.00%, 08/01/02 11,015,475
- -------------------------------------------------------------------------------------------
50,436,575
- -------------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.73%
5,055,000 Energy Ventures, Inc., Sr. Notes,
10.25%, 03/15/04 5,345,662
- -------------------------------------------------------------------------------------------
5,100,000 Falcon Drilling Co. Inc., Sr. Notes,
9.75%, 01/15/01 5,240,250
- -------------------------------------------------------------------------------------------
10,585,912
- -------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-5.73%
4,500,000 APP International Finance, Secured Notes,
11.75%, 10/01/05 4,410,000
- -------------------------------------------------------------------------------------------
10,410,000 Pacific Lumber, Sr. Notes,
10.50%, 03/01/03 9,863,475
- -------------------------------------------------------------------------------------------
13,920,000 RAPP International Finance, Secured Notes,
11.50%, 12/15/00 13,867,800
- -------------------------------------------------------------------------------------------
13,350,000 Repap New Brunswick, Second Priority Sr. Secured Notes,
10.625%, 04/15/05 13,083,000
- -------------------------------------------------------------------------------------------
8,000,000 S.D. Warren Co., Sr. Sub. Notes,
12.00%, 12/15/04 8,820,000
- -------------------------------------------------------------------------------------------
12,000,000 Stone Container Corp., First Mortgage Notes,
10.75%, 10/02/02 12,390,000
- -------------------------------------------------------------------------------------------
12,000,000 United Stationer Supply, Sr. Sub. Notes,
12.75%, 05/01/05 13,110,000
- -------------------------------------------------------------------------------------------
6,800,000 Williamhouse-Regency, Sr. Sub. Notes,
13.00%, 11/15/05(c) (Acquired 11/20/95; Cost $6,800,000) 7,174,000
- -------------------------------------------------------------------------------------------
82,718,275
- -------------------------------------------------------------------------------------------
POLLUTION CONTROL-1.23%
9,500,000 Allied Waste Industries, Inc., Sr. Sub. Notes,
12.00%, 02/01/04 10,117,500
- -------------------------------------------------------------------------------------------
8,000,000 Mid-American Waste Systems, Inc., Sr. Sub. Notes,
12.25%, 02/15/03 7,600,000
- -------------------------------------------------------------------------------------------
17,717,500
- -------------------------------------------------------------------------------------------
PUBLISHING-1.84%
13,826,000 Affiliated Newspaper Investments Inc., Sr. Disc. Notes,
13.25%, 07/01/06(b) 8,502,990
- -------------------------------------------------------------------------------------------
8,500,000 Garden State Newspapers, Sr. Sub. Secured Notes,
12.00%, 07/01/04 8,542,500
- -------------------------------------------------------------------------------------------
</TABLE>
FS-59
<PAGE> 178
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
PUBLISHING-(continued)
$ 2,500,000 K-III Communications Corp., Sr. Notes,
10.25%, 06/01/04 $ 2,675,000
- -------------------------------------------------------------------------------------------
6,430,000 K-III Communications Corp., Sr. Secured Notes,
10.625%, 05/01/02 6,831,875
- -------------------------------------------------------------------------------------------
26,552,365
- -------------------------------------------------------------------------------------------
RAILROADS-1.24%
9,870,000 Johnstown American Industries, Inc., Sr. Sub Notes,
11.75%, 08/15/05 8,981,700
- -------------------------------------------------------------------------------------------
13,000,000 Transtar Holdings L.P., Sr. Disc. Notes,
13.375%, 12/15/03(b) 8,872,500
- -------------------------------------------------------------------------------------------
17,854,200
- -------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUGS)-5.88%
12,400,000 Carr-Gottstein Foods Co., Sr. Sub. Notes,
12.00%, 11/15/05(c) (Acquired 11/09/95; Cost $12,400,000) 12,524,000
- -------------------------------------------------------------------------------------------
11,000,000 Dominick's Finer Food, Sr. Sub. Notes,
10.875%, 05/01/05 11,687,500
- -------------------------------------------------------------------------------------------
20,520,000 Grand Union Co., Sr. Notes,
12.00%, 09/01/04 17,749,800
- -------------------------------------------------------------------------------------------
10,825,000 Penn Traffic Co., Sr. Notes,
10.65%, 11/01/04 10,337,875
- -------------------------------------------------------------------------------------------
10,500,000 Ralph's Grocery Co., Sr. Gtd. Notes,
10.45%, 06/15/04 10,657,500
- -------------------------------------------------------------------------------------------
6,400,000 Ralph's Grocery Co., Sr. Gtd. Sub. Notes,
11.00%, 06/15/05 6,336,000
- -------------------------------------------------------------------------------------------
10,000,000 Thrifty Payless Inc., Sr. Notes,
11.75%, 04/15/03 10,800,000
- -------------------------------------------------------------------------------------------
4,500,000 Thrifty Payless Inc., Sr. Sub. Notes,
12.25%, 04/15/04 4,792,500
- -------------------------------------------------------------------------------------------
84,885,175
- -------------------------------------------------------------------------------------------
RETAIL (STORES)-3.25%
11,000,000 Apparel Retailers Inc., Sr. Disc. Deb.,
12.75%, 08/15/05(b) 6,710,000
- -------------------------------------------------------------------------------------------
3,500,000 County Seat Stores, Sr. Sub. Notes,
12.00%, 10/01/02 2,625,000
- -------------------------------------------------------------------------------------------
9,500,000 Fleming Co. Inc., Sr. Gtd. Notes,
10.625%, 12/15/01 9,215,000
- -------------------------------------------------------------------------------------------
11,000,000 Pamida Inc., Sr. Sub. Notes,
11.75%, 03/15/03 8,470,000
- -------------------------------------------------------------------------------------------
13,590,000 Samsonite Corp. Sr. Sub. Notes,
11.125%, 07/15/05 13,046,400
- -------------------------------------------------------------------------------------------
7,520,000 Specialty Retailers Inc., Sr. Sub. Notes,
11.00%, 08/15/03 6,843,200
- -------------------------------------------------------------------------------------------
46,909,600
- -------------------------------------------------------------------------------------------
SCHOOLS-0.46%
6,260,000 Herff Jones Inc., Sr. Sub. Notes,
11.00%, 08/15/05 6,713,850
- -------------------------------------------------------------------------------------------
</TABLE>
FS-60
<PAGE> 179
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
SECURITY (SAFETY SERVICES)-0.55%
$ 7,500,000 Cabot Safety Corp., Sr. Sub. Notes,
12.50%, 07/15/05(c) (Acquired 06/29/95-07/07/95; Cost
$7,567,500) $ 8,006,250
- -------------------------------------------------------------------------------------------
STEEL-1.30%
8,275,000 Earle M. Jorgensen Co., Sr. Notes,
10.75%, 03/01/00 7,592,312
- -------------------------------------------------------------------------------------------
12,500,000 Gulf States Steel, First Mortgage Notes,
13.50%, 04/15/03 11,250,000
- -------------------------------------------------------------------------------------------
18,842,312
- -------------------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES-11.66%
9,740,000 A+ Network Inc., Sr. Sub. Notes,
11.875%, 11/01/05 9,861,750
- -------------------------------------------------------------------------------------------
10,480,000 CAI Wireless Systems Inc., Sr. Notes,
12.25%, 09/15/02 11,187,400
- -------------------------------------------------------------------------------------------
8,000,000 Celcaribe S.A., Sr. Secured Notes,
13.50%, 03/15/04(b)(c)(f) (Acquired 05/17/94-05/26/94; Cost
$7,050,297) 7,200,000
- -------------------------------------------------------------------------------------------
6,500,000 Cellular Inc., Sr. Sub. Disc. Notes,
11.75%, 09/01/03(b) 5,167,500
- -------------------------------------------------------------------------------------------
10,000,000 Centennial Cellular, Sr. Notes,
10.125%, 05/15/05 10,525,000
- -------------------------------------------------------------------------------------------
28,770,000 Clearnet Communications, Sr. Disc. Notes,
14.75%, 12/15/05(b)(g) 14,960,400
- -------------------------------------------------------------------------------------------
9,750,000 Dictaphone Corp., Sr. Gtd. Sub. Notes,
11.75%, 08/01/05 9,652,500
- -------------------------------------------------------------------------------------------
9,000,000 Fonorola Inc., Yankee Sr. Notes,
12.50%, 08/15/02 9,472,500
- -------------------------------------------------------------------------------------------
12,000,000 Intelcom Group (USA) Inc., Sr. Disc. Notes,
13.50%, 9/15/05(b)(c)(h) (Acquired 08/07/95-09/06/95; Cost
$6,675,674) 6,960,000
- -------------------------------------------------------------------------------------------
1,500,000 Intermedia Communication of Florida, Sr. Notes,
13.50%, 06/01/05(c)(i) (Acquired 10/25/95; Cost $1,631,250) 1,680,000
- -------------------------------------------------------------------------------------------
8,720,000 MobileMedia Communications, Inc., Sr. Sub. Notes,
10.50%, 12/01/03(b) 6,801,600
- -------------------------------------------------------------------------------------------
6,000,000 Paging Network, Sr. Sub. Notes,
10.125%, 08/01/07 6,495,000
- -------------------------------------------------------------------------------------------
14,200,000 PriCellular Wireless Corp., Sr. Disc. Notes,
14.00%, 11/15/01(b) 12,513,750
- -------------------------------------------------------------------------------------------
8,500,000 Pronet Inc., Sr. Sub. Notes,
11.875%, 06/15/05 9,392,500
- -------------------------------------------------------------------------------------------
11,555,000 Rogers Cantel Mobile Inc., Sr. Gtd. Secured Notes,
10.75%, 11/01/01 12,161,637
- -------------------------------------------------------------------------------------------
22,720,000 Telewest PLC, Sr. Deb.,
11.00%, 10/01/07(b) 13,717,200
- -------------------------------------------------------------------------------------------
8,500,000 Telex Communication Inc., Sr. Notes,
12.00%, 07/15/04 8,776,250
- -------------------------------------------------------------------------------------------
12,000,000 USA Mobile Communications, Sr. Notes,
9.50%, 02/01/04 11,880,000
- -------------------------------------------------------------------------------------------
168,404,987
- -------------------------------------------------------------------------------------------
TEXTILES-3.77%
16,500,500 Coinmach Corp., Sr. Notes,
11.75%, 11/15/05(c) (Acquired 06/20/92-11/15/95; Cost
$16,269,875) 16,830,510
- -------------------------------------------------------------------------------------------
</TABLE>
FS-61
<PAGE> 180
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
Textiles-(continued)
$13,000,000 Consoltex Group, Sr. Sub. Notes,
11.00%, 10/01/03 $11,732,500
- -------------------------------------------------------------------------------------------
10,465,000 Dan River Inc., Sr. Sub. Notes,
10.125%, 12/15/03 9,523,150
- -------------------------------------------------------------------------------------------
8,400,000 Synthetic Industries Inc., Deb.,
12.75%, 12/01/02 8,232,000
- -------------------------------------------------------------------------------------------
8,000,000 Tultex Corp., Sr. Gtd. Notes,
10.625%, 03/15/05 8,200,000
- -------------------------------------------------------------------------------------------
54,518,160
- -------------------------------------------------------------------------------------------
TRANSPORTATION-2.93%
7,000,000 Dade International Inc.-Series B, Sr. Sub. Notes,
13.00%, 02/01/05 7,945,000
- -------------------------------------------------------------------------------------------
3,000,000 Gear Bulk Holding Ltd., Sr. Notes,
11.25%, 12/01/04 3,210,000
- -------------------------------------------------------------------------------------------
18,380,000 Stena AB, Sr. Notes,
10.50%, 12/15/05 18,816,525
- -------------------------------------------------------------------------------------------
6,000,000 Trans Ocean Container, Sr. Sub. Notes,
12.25%, 07/01/04 6,240,000
- -------------------------------------------------------------------------------------------
7,000,000 US Air Inc., Sr. Notes,
10.00%, 07/01/03 6,090,000
- -------------------------------------------------------------------------------------------
42,301,525
- -------------------------------------------------------------------------------------------
WATER SUPPLY-0.70%
10,000,000 CE Casecnan Water & Energy, Series A Sr. Notes,
11.45%, 11/15/05(c) (Acquired 11/21/95; Cost $10,000,000) 10,112,500
- -------------------------------------------------------------------------------------------
Total Non-Convertible Bonds & Notes 1,358,665,115
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
COMMON STOCKS-0.26%
AUTOMOBILE/TRUCK PARTS & TIRES-0.15%
72,600 Lear Seating Corp.(j) 2,105,400
- -------------------------------------------------------------------------------------------
CHEMICALS-0.00%
6,000 Berry Plastics Holdings 70,500
- -------------------------------------------------------------------------------------------
MEDICAL SERVICES-0.05%
24,000 Total Renal Care Holdings, Inc.(j) 708,000
- -------------------------------------------------------------------------------------------
PUBLISHING-0.03%
13,826 Affiliated Newspaper Investments Inc.(j) 414,780
- -------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUGS)-0.03%
123,500 Thrifty Payless Holdings-Class C(j) 524,878
- -------------------------------------------------------------------------------------------
Total Common Stocks 3,823,558
- -------------------------------------------------------------------------------------------
WARRANTS-0.06%
BUILDING MATERIALS-0.00%
3,000 Payless Cashways, Inc., expiring 11/01/96(j) 300
- -------------------------------------------------------------------------------------------
LEISURE & RECREATION-0.06%
8,000 IHF Capital Inc.-Series H, expiring 11/14/99(j) 640,000
- -------------------------------------------------------------------------------------------
7,250 IHF Capital Inc.-Series I, expiring 11/14/99(j) 181,250
- -------------------------------------------------------------------------------------------
821,250
- -------------------------------------------------------------------------------------------
</TABLE>
FS-62
<PAGE> 181
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
RETAIL (STORES)-0.00%
3,500 County Seat Stores, expiring 10/15/98(j) $ 17,500
- ---------------------------------------------------------------------------------------------
STEEL-0.00%
9,000 Gulf States Steel Acquisition Corp., expiring 04/15/03(j) 45,000
- ---------------------------------------------------------------------------------------------
Total Warrants 884,050
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT-3.38%
$48,773,338 Daiwa Securities America Inc.,
5.92%, 01/02/96(l) 48,773,338
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 97.79% 1,412,146,061
- ---------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 2.21% 31,886,511
- ---------------------------------------------------------------------------------------------
NET ASSETS -- 100.00% $1,444,032,572
=============================================================================================
</TABLE>
Notes to Schedule of Investments:
<TABLE>
<S> <C>
(a) Issued as a unit. This unit also includes 30,500 warrants to purchase 57.721
shares of common stock each at $0.01 per share.
(b) Discounted bond at purchase. Interest rate shown represents coupon rate at which
the bond will accrue at a specified future date.
(c) 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
the securities at December 31, 1995 was $153,887,635, which represented 10.66% of
net assets.
(d) Issued as a unit. This unit also includes 24,480 warrants to purchase one share
of common stock each at $11.55 per share.
(e) Issued as a unit. This unit also includes 1,750 warrants to purchase 0.24 shares
of common stock each.
(f) Issued as a unit. This unit also includes 1,300,800 Celcaribe Ordinary Trust
Certificates.
(g) Issued as a unit. This unit also includes 949,410 warrants to purchase shares of
common stock.
(h) Issued as a unit. This unit also includes 396,000 warrants to purchase one share
of common stock each.
(i) Issued as a unit. This unit also includes 1,500 warrants to purchase 2.19 shares
of common stock each at $10.86 per share.
(j) Non-income producing security.
(k) 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. The investments in some repurchase agreements are through
participation in joint accounts with other mutual funds managed by the investment
advisor.
(l) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations, 7.875% to
11.25% due 11/15/07 to 02/15/15.
</TABLE>
Abbreviations:
Deb. -- Debentures
Disc. -- Discounted
Gtd. -- Guaranteed
Sr. -- Senior
Sub. -- Subordinated
See Notes to Financial Statements.
FS-63
<PAGE> 182
Financials
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $1,375,281,357) $1,412,146,061
- -----------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 11,769,794
- -----------------------------------------------------------------------------------------
Interest 33,388,296
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 36,255
- -----------------------------------------------------------------------------------------
Other assets 37,629
- -----------------------------------------------------------------------------------------
Total assets 1,457,378,035
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 4,290,444
- -----------------------------------------------------------------------------------------
Fund shares reacquired 2,002,088
- -----------------------------------------------------------------------------------------
Dividends 5,129,464
- -----------------------------------------------------------------------------------------
Deferred compensation plan 36,255
- -----------------------------------------------------------------------------------------
Accrued advisory fees 613,975
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 6,756
- -----------------------------------------------------------------------------------------
Accrued distribution fees 1,033,189
- -----------------------------------------------------------------------------------------
Accrued trustees' fees 3,305
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 74,468
- -----------------------------------------------------------------------------------------
Accrued operating expenses 155,519
- -----------------------------------------------------------------------------------------
Total liabilities 13,345,463
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,444,032,572
=========================================================================================
NET ASSETS:
Class A $ 886,105,932
=========================================================================================
Class B $ 557,926,640
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 94,012,039
=========================================================================================
Class B 59,233,836
=========================================================================================
Class A:
Net asset value and redemption price per share $ 9.43
=========================================================================================
Offering price per share:
(Net asset value of $9.43 divided by 95.25%) $ 9.90
=========================================================================================
Class B:
Net asset value and offering price per share $ 9.42
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-64
<PAGE> 183
Financials
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $116,832,514
- --------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 5,717,303
- --------------------------------------------------------------------------------------------
Custodian fees 81,271
- --------------------------------------------------------------------------------------------
Transfer agent fees -- Class A 747,381
- --------------------------------------------------------------------------------------------
Transfer agent fees -- Class B 422,056
- --------------------------------------------------------------------------------------------
Administrative service fees 82,116
- --------------------------------------------------------------------------------------------
Trustees' fees 13,069
- --------------------------------------------------------------------------------------------
Distribution fees -- Class A 1,805,363
- --------------------------------------------------------------------------------------------
Distribution fees -- Class B 3,483,665
- --------------------------------------------------------------------------------------------
Other 613,879
- --------------------------------------------------------------------------------------------
Total expenses 12,966,103
- --------------------------------------------------------------------------------------------
Net investment income 103,866,411
- --------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities (13,744,221)
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 64,363,354
- --------------------------------------------------------------------------------------------
Net gain on investment securities 50,619,133
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $154,485,544
============================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 103,866,411 $ 69,124,221
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities (13,744,221) (26,898,895)
- --------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities 64,363,354 (57,089,748)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 154,485,544 (14,864,422)
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (72,863,770) (58,337,288)
- --------------------------------------------------------------------------------------------
Class B (31,951,946) (10,971,364)
- --------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A (436,906) (91,900)
- --------------------------------------------------------------------------------------------
Class B (191,590) (16,331)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A 271,933,588 97,407,253
- --------------------------------------------------------------------------------------------
Class B 352,760,393 175,148,092
- --------------------------------------------------------------------------------------------
Net increase in net assets 673,735,313 188,274,040
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 770,297,259 582,023,219
- --------------------------------------------------------------------------------------------
End of period $1,444,032,572 $770,297,259
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,505,053,545 $888,574,587
- --------------------------------------------------------------------------------------------
Undistributed net investment income 1,688,456 949,305
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (99,574,133) (91,727,983)
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities 36,864,704 (27,498,650)
- --------------------------------------------------------------------------------------------
$1,444,032,572 $770,297,259
============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-65
<PAGE> 184
Financials
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
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's objective is to achieve a high level of
current income by investing primarily in publicly traded non-investment grade
debt securities. The Fund will also consider the possibility of capital growth
when it purchases and sells securities. Debt securities of less than investment
grade are considered "high risk" securities (commonly referred to as junk
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. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations - 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 or absent a last sales
price, at the mean between the closing bid and asked prices. Securities for
which market quotations either are not readily available or are questionable
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 subject to restrictions noted in section "C" below. On
December 31, 1995, $2,316,952 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
$8,215,023 with an equivalent offset to undistributed gain (loss) on sales of
investment
FS-66
<PAGE> 185
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
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 $99,250,199 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2003.
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.
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. The sub-advisory agreement between AIM and CIGNA
Investments, Inc. ("CII") was terminated on September 20, 1995. Prior to the
termination, AIM paid 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 services to the Fund. During the year ended December 31, 1995, AIM
was reimbursed $82,116 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 1995, the
Fund paid AFS $724,482 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 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 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. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more assignees, its rights to all or a designated
portion of (a) compensation received by AIM Distributors from the Fund pursuant
to the Class B Plan (but not AIM Distributors' duties and obligations pursuant
to the Class B Plan) and (b) any contingent deferred sales charges payable to
AIM Distributors related to the Class B shares. During the year ended December
31, 1995, the Class A shares and the Class B shares paid AIM Distributors
$1,805,363 and $3,483,665, respectively, as compensation under the Plans.
FS-67
<PAGE> 186
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
AIM Distributors received commissions of $1,388,106 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1995,
AIM Distributors received $655,591 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 year ended December 31, 1995, the Fund paid legal fees of $5,572
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 AIM. 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 - BANK BORROWINGS
The Fund has a $17,000,000 committed line of credit with a financial institution
syndicate with Chemical Bank of New York as the administrative agent. Interest
on borrowings under the line of credit is payable on maturity or prepayment
date. During the period July 20, 1995 (effective date of line of credit
agreement) through December 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's committed
line.
NOTE 5 - 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, 1995 was
$1,217,770,180 and $609,700,905, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of December 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $51,302,353
- -----------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (14,499,524)
- -----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $36,802,829
=================================================================================================================
Cost of investments for tax purposes is $1,375,343,232.
</TABLE>
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------- ------------------------------
SHARES VALUE SHARES VALUE
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 49,241,443 $458,547,804 25,855,410 $ 248,478,420
- --------------------------------------------------- ----------------------------- ------------------------------
Class B 42,866,225 400,172,189 23,795,476 226,709,226
- --------------------------------------------------- ----------------------------- ------------------------------
Issued as reinvestment of dividends:
Class A 4,955,465 46,216,100 3,794,971 35,880,387
- --------------------------------------------------- ----------------------------- ------------------------------
Class B 1,597,343 14,918,822 470,871 4,424,592
- --------------------------------------------------- ----------------------------- ------------------------------
Reacquired:
Class A (25,047,265) (232,830,316) (19,578,260) (186,951,554)
- --------------------------------------------------- ----------------------------- ------------------------------
Class B (6,678,316) (62,330,618) (5,930,666) (55,985,726)
- --------------------------------------------------- ----------------------------- ------------------------------
66,934,895 $624,693,981 28,407,802 $ 272,555,345
=================================================== ============================= ==============================
</TABLE>
FS-68
<PAGE> 187
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,
1995 and for a Class B share outstanding during each of the years in the
two-year period ended December 31, 1995 and the period September 1, 1993 (date
sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
1995 1994 1993 1992(A) 1991 1990
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 8.93 $ 10.05 $ 9.40 $ 8.86 $ 7.07 $ 8.94
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.93 0.96 0.97 1.04 1.02 1.09
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 0.52 (1.12) 0.69 0.55 1.81 (1.84)
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Total from investment operations 1.45 (0.16) 1.66 1.59 2.83 (0.75)
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.95) (0.96) (1.01) (1.05) (1.04) (1.12)
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 9.43 $ 8.93 $ 10.05 $ 9.40 $ 8.86 $ 7.07
=========================================== ======== ======== ======== ======== ======== ========
Total return(b) 16.86% (1.67)% 18.40% 18.60% 42.18% (9.03)%
=========================================== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $886,106 $578,959 $550,760 $324,518 $259,677 $204,932
=========================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.96%(c) 1.00% 1.12% 1.15% 1.22% 1.21%(d)
=========================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average
net assets 9.95%(c) 10.07% 9.82% 11.00% 12.67% 13.59%(e)
=========================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 61% 53% 53% 56% 61% 27%
=========================================== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1989 1988 1987 1986
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 10.01 $ 9.67 $ 10.54 $ 10.21
- ------------------------------------------- -------- -------- -------- --------
Income from investment operations:
Net investment income 1.21 1.18 1.16 1.26
- ------------------------------------------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) (1.07) 0.34 (0.83) 0.31
- ------------------------------------------- -------- -------- -------- --------
Total from investment operations 0.14 1.52 0.33 1.57
- ------------------------------------------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (1.21) (1.18) (1.20) (1.24)
- ------------------------------------------- -------- -------- -------- --------
Net asset value, end of period $ 8.94 $ 10.01 $ 9.67 $ 10.54
=========================================== ======== ======== ======== ========
Total return(b) 1.18% 16.41% 3.07% 15.97%
=========================================== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $261,920 $274,631 $242,858 $246,865
=========================================== ======== ======== ======== ========
Ratio of expenses to average net assets 0.99% 0.96%(d) 0.92% 0.92%
=========================================== ======== ======== ======== ========
Ratio of net investment income to average
net assets 12.40% 11.84%(e) 11.21% 11.84%
=========================================== ======== ======== ======== ========
Portfolio turnover rate 36% 76% 81% 86%
=========================================== ======== ======== ======== ========
</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 $722,145,319.
(d) Ratios of expenses to average net assets prior to reduction of advisory fees
were 1.22% and 1.00% for years 1990 and 1988, respectively.
(e) Ratios of net investment income to average net assets prior to reduction of
advisory fees were 13.58% and 11.80% for years 1990 and 1988, respectively.
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- -------
<S> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 8.92 $ 10.04 $ 9.96
- ----------------------------------------------------------------------------------- -------- -------- -------
Income from investment operations:
Net investment income 0.85 0.87 0.32
- ----------------------------------------------------------------------------------- -------- -------- -------
Net gains (losses) on securities (both realized and unrealized) 0.52 (1.10) 0.07
- ----------------------------------------------------------------------------------- -------- -------- -------
Total from investment operations 1.37 (0.23) 0.39
- ----------------------------------------------------------------------------------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.87) (0.89) (0.31)
- ----------------------------------------------------------------------------------- -------- -------- -------
Net asset value, end of period $ 9.42 $ 8.92 $ 10.04
=================================================================================== ======== ======== =======
Total return(a) 15.91% (2.48)% 4.00%(b)
=================================================================================== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $557,926 $191,338 $31,264
=================================================================================== ======== ======== =======
Ratio of expenses to average net assets 1.73%(c) 1.80% 1.93%(d)
=================================================================================== ======== ======== =======
Ratio of net investment income to average net assets 9.18%(c) 9.27% 8.99%(d)
=================================================================================== ======== ======== =======
Portfolio turnover rate 61% 53% 53%
=================================================================================== ======== ======== =======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Total return is not annualized.
(c) Ratios are based on average net assets of $348,366,442.
(d) Annualized.
FS-69
<PAGE> 188
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, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the three-year period then ended. 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, 1995, 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
Income Fund as of December 31, 1995, 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
three-year period then ended, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1996
FS-70
<PAGE> 189
Financials
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS
& NOTES-62.30%
ADVERTISING/BROADCASTING-0.36%
Comcast Corp.,
Sr. Sub. Deb., 9.50% 01/15/08 $ 1,000,000 $ 1,060,000
- ------------------------------------------------------------------------------------------------
AIRLINES-2.77%
Delta Air Lines,
Deb., 10.375% 02/01/11 1,500,000 1,876,215
- ------------------------------------------------------------------------------------------------
Equipment Trust Certificates, 10.50% 04/30/16 5,000,000 6,303,250
- ------------------------------------------------------------------------------------------------
8,179,465
- ------------------------------------------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-2.79%
General Motors Corp.,
Deb., 8.80% 03/01/21 6,700,000 8,257,951
- ------------------------------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.21%
Harvard Industries Inc.,
Sr. Notes, 11.125% 08/01/05 610,000 610,000
- ------------------------------------------------------------------------------------------------
CABLE TELEVISION-3.77%
CAI Wireless Systems Inc.,
Sr. Notes, 12.25% 09/15/02 990,000 1,056,825
- ------------------------------------------------------------------------------------------------
Comcast UK Cable,
Sr. Unsecured Disc. Deb., 11.20%(b) 11/15/07 5,000,000 2,925,000
- ------------------------------------------------------------------------------------------------
Marcus Cable Operating Co.,
Sr. Disc. Notes, 13.50%(b) 08/01/04 1,690,000 1,271,725
- ------------------------------------------------------------------------------------------------
Viacom, Inc.,
Sr. Notes, 7.75% 06/01/05 3,650,000 3,876,191
- ------------------------------------------------------------------------------------------------
Videotron, Ltd.,
Yankee Sr. Sub. Notes, 10.625% 02/15/05 1,000,000 1,072,500
- ------------------------------------------------------------------------------------------------
Wireless One Inc.,
Units, 13.00%(c) 10/15/03 890,000 938,950
- ------------------------------------------------------------------------------------------------
11,141,191
- ------------------------------------------------------------------------------------------------
CHEMICALS-0.70%
Crain Industries,
Sr. Sub. Notes, 13.50%
(acquired 08/22/95; cost $1,070,000)(d) 08/15/05 1,070,000 1,086,050
- ------------------------------------------------------------------------------------------------
RBX Corp.,
Sr. Sub. Notes, 11.25%
(acquired 10/06/95-11/07/95; cost
$1,006,638)(d) 10/15/05 1,000,000 982,500
- ------------------------------------------------------------------------------------------------
2,068,550
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES-0.30%
Hines Horticulture,
Sr. Sub. Notes, 11.75%
(acquired 10/16/95-10/20/95; cost $858,550)(d) 10/15/05 850,000 888,250
- ------------------------------------------------------------------------------------------------
CONTAINERS-1.25%
Ivex Packaging,
Sr. Sub. Notes, 12.50% 12/15/02 1,500,000 1,590,000
- ------------------------------------------------------------------------------------------------
Owens-Illinois Inc.,
Sr. Sub. Notes, 10.00% 08/01/02 2,000,000 2,100,000
- ------------------------------------------------------------------------------------------------
3,690,000
- ------------------------------------------------------------------------------------------------
</TABLE>
FS-71
<PAGE> 190
Financials
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
FINANCE (CONSUMER CREDIT)-6.53%
Associates Corp.,
Deb., 7.95% 02/15/10 $ 6,000,000 $ 6,828,420
- ------------------------------------------------------------------------------------------------
GMAC,
Notes, 9.00% 10/15/02 3,425,000 3,961,115
- ------------------------------------------------------------------------------------------------
GPA Delaware Inc.,
Deb., 8.75% 12/15/98 1,240,000 1,165,600
- ------------------------------------------------------------------------------------------------
ITT Corp.,
Deb., 7.375% 11/15/15 3,350,000 3,460,972
- ------------------------------------------------------------------------------------------------
Loehmann's Holdings,
Sr. Sub. Deb., 13.75% 02/15/99 1,235,000 1,160,900
- ------------------------------------------------------------------------------------------------
Olympic Financial Ltd.,
Deb., 13.00% 05/01/00 700,000 764,750
- ------------------------------------------------------------------------------------------------
Sea Containers,
Sr. Sub. Deb., 12.50% 12/01/04 1,825,000 1,971,000
- ------------------------------------------------------------------------------------------------
19,312,757
- ------------------------------------------------------------------------------------------------
FOOD PROCESSING-1.34%
American Rice Inc.,
Sec. Notes, 13.00% 07/31/02 1,830,000 1,729,350
- ------------------------------------------------------------------------------------------------
Curtice-Burns Foods, Inc.,
Sr. Sub. Notes, 12.25% 02/01/05 1,300,000 1,339,000
- ------------------------------------------------------------------------------------------------
Pilgrim's Pride Corp.,
Sr. Sub. Notes, 10.875% 08/01/03 1,000,000 885,000
- ------------------------------------------------------------------------------------------------
3,953,350
- ------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT-3.16%
Province of Manitoba,
Yankee Bonds 7.75% 07/17/16 7,500,000 8,328,525
- ------------------------------------------------------------------------------------------------
United Mexican States,
Deb., 11.1875%
(acquired 07/12/95; cost $1,000,000)(d) 07/21/97 1,000,000 1,024,380
- ------------------------------------------------------------------------------------------------
9,352,905
- ------------------------------------------------------------------------------------------------
GAMING-1.59%
Aztar Corp.,
Sr. Sub. Notes, 11.00% 10/01/02 690,000 690,000
- ------------------------------------------------------------------------------------------------
Showboat, Inc.,
First Mortgage Notes, 9.25% 05/01/08 4,000,000 4,020,000
- ------------------------------------------------------------------------------------------------
4,710,000
- ------------------------------------------------------------------------------------------------
HOTELS/MOTELS-1.29%
John Q. Hammons Hotels Inc.,
Gtd. First Mortgage Notes, 9.75%
(acquired 10/06/95-11/16/95; cost
$3,808,125)(d) 10/01/05 3,800,000 3,828,500
- ------------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-1.43%
American Life Holding Co.,
Sr. Sub. Notes, 11.25% 09/15/04 1,300,000 1,365,000
- ------------------------------------------------------------------------------------------------
Americo Life Inc.,
Sr. Sub. Notes, 9.25% 06/01/05 3,000,000 2,857,500
- ------------------------------------------------------------------------------------------------
4,222,500
- ------------------------------------------------------------------------------------------------
LEISURE & RECREATION-0.70%
Icon Health & Fitness Inc.,
Sr. Sub. Notes, 13.00% 07/15/02 1,200,000 1,299,000
- ------------------------------------------------------------------------------------------------
</TABLE>
FS-72
<PAGE> 191
Financials
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
LEISURE & RECREATION (continued)
Stratosphere Corp.,
First Mortgage Notes, 14.25% 05/15/02 $ 670,000 $ 757,938
- ------------------------------------------------------------------------------------------------
2,056,938
- ------------------------------------------------------------------------------------------------
MACHINERY (HEAVY)-2.81%
Caterpillar Inc.,
Deb., 9.375% 08/15/11 5,000,000 6,368,750
- ------------------------------------------------------------------------------------------------
Fairfield Manufacturing,
Sr. Sub. Notes, 11.375% 07/01/01 1,000,000 975,000
- ------------------------------------------------------------------------------------------------
Primeco Inc.,
Sr. Sub. Notes, 12.75% 03/01/05 940,000 968,200
- ------------------------------------------------------------------------------------------------
8,311,950
- ------------------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-1.19%
AM General Corp.,
Sr. Notes, 12.875% 05/01/02 1,500,000 1,503,750
- ------------------------------------------------------------------------------------------------
Interlake Corp.,
Sr. Notes, 12.00% 11/15/01 1,000,000 1,010,000
- ------------------------------------------------------------------------------------------------
MVE Inc.,
Sr. Sec. Notes, 12.50% 02/15/02 1,000,000 1,002,500
- ------------------------------------------------------------------------------------------------
3,516,250
- ------------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-0.21%
Graphic Controls Corp.,
Sr. Sub. Notes, 12.00% (acquired 09/21/95;
cost $600,000)(d) 09/15/05 600,000 624,000
- ------------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-0.38%
OrNda Healthcorp,
Sr. Sub. Notes, 11.375% 08/15/04 1,000,000 1,125,000
- ------------------------------------------------------------------------------------------------
METALS (MISCELLANEOUS)-0.86%
Rio Algom Ltd.,
Yankee Deb., 7.05% 11/01/05 2,500,000 2,544,250
- ------------------------------------------------------------------------------------------------
NATURAL GAS PIPELINE-3.11%
Talisman Energy Inc.,
Yankee Deb., 7.125% 06/01/07 3,750,000 3,935,100
- ------------------------------------------------------------------------------------------------
Transco Energy Co.,
Deb., 9.875%, 06/15/20 4,000,000 5,254,760
- ------------------------------------------------------------------------------------------------
9,189,860
- ------------------------------------------------------------------------------------------------
OIL & GAS-2.82%
HS Resources Inc.,
Sr. Sub. Notes, 9.875% 12/01/03 1,190,000 1,175,125
- ------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co. Inc.,
Sub. Deb., 12.25% 02/01/05 1,370,000 1,510,425
- ------------------------------------------------------------------------------------------------
Sun Company,
Deb., 9.00% 11/01/24 4,000,000 4,870,360
- ------------------------------------------------------------------------------------------------
United Meridian Corp.,
Gtd. Sr. Sub. Notes, 10.375% 10/15/05 270,000 285,526
- ------------------------------------------------------------------------------------------------
Wainoco Oil Corp.,
Sr. Notes, 12.00% 08/01/02 500,000 482,500
- ------------------------------------------------------------------------------------------------
8,323,936
- ------------------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.14%
Falcon Drilling Co. Inc.
Sr. Notes, 9.75% 01/15/01 410,000 421,275
- ------------------------------------------------------------------------------------------------
</TABLE>
FS-73
<PAGE> 192
Financials
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
PAPER & FOREST PRODUCTS-0.52%
Pacific Lumber Co.,
Sr. Notes, 10.50% 03/01/03 $ 600,000 $ 568,500
- ------------------------------------------------------------------------------------------------
Rapp International Finance,
Gtd. Yankee Sec. Notes, 11.50% 12/15/00 970,000 966,363
- ------------------------------------------------------------------------------------------------
1,534,863
- ------------------------------------------------------------------------------------------------
PUBLISHING-6.09%
News America Holdings,
Gtd. Sr. Deb., 9.25% 02/01/13 7,100,000 8,362,664
- ------------------------------------------------------------------------------------------------
Time Warner Inc.,
Deb., 9.15% 02/01/23 8,500,000 9,639,340
- ------------------------------------------------------------------------------------------------
18,002,004
- ------------------------------------------------------------------------------------------------
RAILROADS-0.34%
Johnstown American Industries Inc.,
Sr. Sub. Notes, 11.75% 08/15/05 1,100,000 1,001,000
- ------------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-2.61%
Grand Union Co.,
Sr. Notes, 12.00% 09/01/04 1,210,000 1,046,650
- ------------------------------------------------------------------------------------------------
Great Atlantic & Pacific,
Yankee Notes, 7.78%
(acquired 10/18/95; cost $3,900,000)(d) 11/01/00 3,900,000 3,954,639
- ------------------------------------------------------------------------------------------------
Penn Traffic Co.,
Sr. Notes, 10.65% 11/01/04 1,580,000 1,508,901
- ------------------------------------------------------------------------------------------------
Ralph's Grocery Co.,
Sr. Notes, 11.00% 06/15/05 1,210,000 1,197,900
- ------------------------------------------------------------------------------------------------
7,708,090
- ------------------------------------------------------------------------------------------------
RETAIL (STORES)-1.87%
Fleming Companies Inc.,
Sr. Notes, 10.625% 12/15/01 1,000,000 970,000
- ------------------------------------------------------------------------------------------------
Pamida Inc.,
Sr. Sub. Notes, 11.75% 03/15/03 1,000,000 770,000
- ------------------------------------------------------------------------------------------------
Samsonite Corp.,
Sr. Sub. Notes, 11.125% 07/15/05 900,000 864,000
- ------------------------------------------------------------------------------------------------
Specialty Retailers, Inc.,
Sr. Sub. Notes, 11.00% 08/15/03 2,000,000 1,820,000
- ------------------------------------------------------------------------------------------------
United Stationer Supply,
Sr. Sub. Notes, 12.75% 05/01/05 1,000,000 1,092,500
- ------------------------------------------------------------------------------------------------
5,516,500
- ------------------------------------------------------------------------------------------------
SCHOOLS-0.12%
Herff Jones Inc.,
Sr. Sub. Notes, 11.00% 08/15/05 330,000 353,925
- ------------------------------------------------------------------------------------------------
STEEL-0.75%
GS Technologies Inc.,
Sr. Notes, 12.00% 09/01/04 1,000,000 992,500
- ------------------------------------------------------------------------------------------------
Gulf States Steel Corp.,
First Mortgage Notes, 13.50% 04/15/03 1,360,000 1,224,000
- ------------------------------------------------------------------------------------------------
2,216,500
- ------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-3.50%
A+ Network Inc.,
Sr. Sub. Notes, 11.875% 11/01/05 930,000 941,625
- ------------------------------------------------------------------------------------------------
</TABLE>
FS-74
<PAGE> 193
Financials
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
TELECOMMUNICATIONS (continued)
Clearnet Communications,
Yankee Units, 14.75%(b)(e) 12/15/05 $ 700,000 $ 364,000
- ------------------------------------------------------------------------------------------------
Dictaphone Corp.,
Gtd. Sr. Sub. Notes, 11.75% 08/01/05 610,000 603,900
- ------------------------------------------------------------------------------------------------
Pronet Inc.,
Sr. Sub. Notes, 11.875% 06/15/05 1,000,000 1,105,000
- ------------------------------------------------------------------------------------------------
TCI Communications Inc.,
Sr. Notes, 8.75% 08/01/15 6,000,000 6,652,020
- ------------------------------------------------------------------------------------------------
Telewest PLC,
Yankee Sr. Disc. Deb. 11.00%(b) 10/01/07 1,100,000 664,125
- ------------------------------------------------------------------------------------------------
10,330,670
- ------------------------------------------------------------------------------------------------
TEXTILES-1.06%
Consoltex Group,
Sr. Sub. Notes, 11.00% 10/01/03 1,700,000 1,534,250
- ------------------------------------------------------------------------------------------------
Tarkett International,
Sr. Sub. Notes, 9.00% 03/01/02 1,500,000 1,601,250
- ------------------------------------------------------------------------------------------------
3,135,500
- ------------------------------------------------------------------------------------------------
TRANSPORTATION (MISCELLANEOUS)-1.23%
Gearbulk Holdings Ltd,
Sr. Notes, 11.25% 12/01/04 1,000,000 1,070,000
- ------------------------------------------------------------------------------------------------
Stena AB,
Yankee Sr. Notes, 10.50% 12/15/05 1,500,000 1,535,625
- ------------------------------------------------------------------------------------------------
Trans Ocean Container,
Sr. Sub. Notes, 12.25% 07/01/04 1,000,000 1,040,000
- ------------------------------------------------------------------------------------------------
3,645,625
- ------------------------------------------------------------------------------------------------
UTILITIES-4.50%
California Energy Company, Inc.,
Sr. Disc. Notes, 10.25%(b) 01/15/04 1,500,000 1,417,500
- ------------------------------------------------------------------------------------------------
Indiana-Michigan Power Co.,
Sec. Lease Obligation Bonds, 9.82% 12/07/22 8,992,275 11,888,508
- ------------------------------------------------------------------------------------------------
13,306,008
- ------------------------------------------------------------------------------------------------
Total U.S. Dollar Denominated
Non-Convertible Bonds & Notes 184,139,563
- ------------------------------------------------------------------------------------------------
U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS &
NOTES-1.02%
COMPUTER NETWORKING-0.43%
3COM Corp.,
Conv. Sub. Notes, 10.25%
(acquired 11/08/94; cost $800,000)(d) 11/01/01 800,000 1,284,000
- ------------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-0.59%
Henderson Capital,
Conv. Bonds, 4.50% 10/27/96 1,700,000 1,746,750
- ------------------------------------------------------------------------------------------------
Total U.S. Dollar Denominated Convertible
Bonds & Notes 3,030,750
- ------------------------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED NON-CONVERTIBLE
BONDS & NOTES(f)-7.19%
CANADA-3.00%
Bell Canada (Telecommunications),
Deb., 10.875% 10/11/04 CAD 3,000,000 2,625,192
- ------------------------------------------------------------------------------------------------
Canadian Oil Debco Inc. (Oil & Gas),
Deb., 11.00% 10/31/00 3,200,000 2,679,047
- ------------------------------------------------------------------------------------------------
</TABLE>
FS-75
<PAGE> 194
Financials
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT(a) MARKET VALUE
<S> <C> <C> <C>
CANADA (continued)
IPL Energy Inc. (Oil Equipment & Supplies),
Deb., Series A, 9.67% 02/23/00 CAD 3,100,000 $ 2,483,065
- ------------------------------------------------------------------------------------------------
Rogers Cablesystem, Inc. (Cable Television),
Sr. Sec. 2nd Priority Deb., 9.65% 01/15/14 1,750,000 1,082,937
- ------------------------------------------------------------------------------------------------
8,870,241
- ------------------------------------------------------------------------------------------------
GERMANY-3.87%
International Bank for Reconstruction &
Development (Supranational Organization),
Unsub. Global Bonds, 5.875% 11/10/03 DEM 7,000,000 4,901,952
- ------------------------------------------------------------------------------------------------
Unsub. Global Bonds, 7.125% 04/12/05 8,800,000 6,534,821
- ------------------------------------------------------------------------------------------------
11,436,773
- ------------------------------------------------------------------------------------------------
ITALY-0.32%
KFW International Finance Inc. (Finance-Consumer
Credit), Gtd. Notes, 11.625% 11/27/98 ITL 1,430,000,000 936,225
- ------------------------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated
Non-Convertible Bonds & Notes 21,243,239
- ------------------------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS &
NOTES(f)-3.27%
UNITED KINGDOM-3.27%
ELF Enterprise Finance PLC (Finance-Consumer
Credit), Gtd. Conv. Bonds, 8.75% 06/27/06 BPS 2,900,000 4,481,285
- ------------------------------------------------------------------------------------------------
Lasmo PLC (Oil Equipment & Supplies),
Conv. Deb., 7.75% 10/04/05 3,700,000 5,193,159
- ------------------------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated
Convertible Bonds & Notes 9,674,444
- ------------------------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED GOVERNMENT BONDS &
NOTES(f)-10.36%
AUSTRALIA-3.98%
Australian Government,
Gtd. Deb., 9.00% 09/15/04 AUD 2,500,000 1,957,299
- ------------------------------------------------------------------------------------------------
Queensland Treasury Corp.,
Gtd. Notes, 6.50% 06/14/05 10,400,000 6,786,437
- ------------------------------------------------------------------------------------------------
Western Australia Treasury Corp.,
Gtd. Notes, 9.00% 04/15/99 3,900,000 3,017,470
- ------------------------------------------------------------------------------------------------
11,761,206
- ------------------------------------------------------------------------------------------------
CANADA-0.90%
New Brunswick (Province of),
Deb., 8.94% 01/15/05 CAD 3,500,000 2,662,486
- ------------------------------------------------------------------------------------------------
DENMARK-0.98%
Kingdom of Denmark,
Deb., 8.00% 11/15/01 DKK 15,000,000 2,895,722
- ------------------------------------------------------------------------------------------------
FRANCE-1.05%
French Treasury Bill,
Notes, 5.75% 11/12/98 FRF 15,000,000 3,094,649
- ------------------------------------------------------------------------------------------------
GERMANY-3.45%
Bundesrepublik Deutschland,
Deb., 6.75% 07/15/04 DEM 5,250,000 3,846,462
- ------------------------------------------------------------------------------------------------
Deb., 6.875% 05/12/05 8,600,000 6,349,731
- ------------------------------------------------------------------------------------------------
10,196,193
- ------------------------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated
Government Bonds & Notes 30,610,256
- ------------------------------------------------------------------------------------------------
</TABLE>
FS-76
<PAGE> 195
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
EQUITY SECURITIES-0.16%
COMMON STOCKS-0.15%
UTILITIES-0.15%
National Power PLC-ADR 24,300 $ 224,775
- ------------------------------------------------------------------------------------------------
PowerGen PLC-ADR 17,300 227,063
- ------------------------------------------------------------------------------------------------
Total Common Stocks 451,838
- ------------------------------------------------------------------------------------------------
WARRANTS-0.01%
LEISURE & RECREATION-0.01%
IHF Holdings-Wt., expiring 11/14/99(g) 1,200 30,000
- ------------------------------------------------------------------------------------------------
STEEL-0.00%
Gulf States Steel Corp.-Wt., expiring
04/15/03(g) 1,360 6,800
- ------------------------------------------------------------------------------------------------
Total Warrants 36,800
- ------------------------------------------------------------------------------------------------
Total Equity Securities 488,638
- ------------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
MATURITY AMOUNT
<S> <C> <C> <C>
U.S. TREASURY SECURITIES-13.33%
U.S. Treasury Notes, 6.50% 04/30/99 $ 38,000,000 39,396,500
- ------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 39,396,500
- ------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT(h)-0.25%
Daiwa Securities America, Inc. 5.92%(i) 01/02/96 733,341 733,341
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-97.88% 289,316,731
- ------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-2.12% 6,266,965
- ------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $295,583,696
================================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Principal amount is in U.S. Dollars, except as indicated by note (f).
(b) Discounted bond at purchase. Interest rate represents coupon rate at
which the bond will accrue at a specified future date.
(c) Issued as a unit. This unit consists of $1,000,000 Sr. Notes plus 3
warrants to purchase one share of common stock each at $11.55 per share.
(d) Restricted securities. May be resold to qualified institutional buyers in
accordance with 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, 1995 was
$13,672,319 which represented 4.63% of the Fund's net assets.
(e) Issued as a unit. This unit consists of ten $1,000,000 Sr. Disc. Notes
plus 33 warrants to purchase shares of common stock.
(f) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(g) Non-income producing security acquired as part of a unit with or in
exchange for other securities.
(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% 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.
(i) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
<TABLE>
<CAPTION>
Abbreviations:
<S> <C> <C>
AUD - Australian Dollar Disc. - Discounted Sec. - Secured
BPS - British Pound Sterling DKK - Danish Krone Sr. - Senior
CAD - Canadian Dollar FRF - French Franc Sub. - Subordinated
Conv. - Convertible Gtd. - Guaranteed Unsub. - Unsubordinated
Deb. - Debentures ITL - Italian Lire Wt. - Warrant
DEM - German Deutschemark Pfd. - Preferred
</TABLE>
See Notes to Financial Statements.
FS-77
<PAGE> 196
Financials
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $277,224,608) $289,316,731
- ---------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $299,615) 302,561
- ---------------------------------------------------------------------------------------
Receivables for:
Forward contracts 105,029
- ---------------------------------------------------------------------------------------
Fund shares sold 991,585
- ---------------------------------------------------------------------------------------
Interest 6,013,360
- ---------------------------------------------------------------------------------------
Investment for deferred compensation plan 67,591
- ---------------------------------------------------------------------------------------
Other assets 44,789
- ---------------------------------------------------------------------------------------
Total assets 296,841,646
- ---------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 251,222
- ---------------------------------------------------------------------------------------
Dividends to shareholders 497,048
- ---------------------------------------------------------------------------------------
Deferred compensation plan 67,591
- ---------------------------------------------------------------------------------------
Accrued advisory fees 114,823
- ---------------------------------------------------------------------------------------
Accrued distribution fees 191,505
- ---------------------------------------------------------------------------------------
Accrued administrative service fees 12,413
- ---------------------------------------------------------------------------------------
Accrued transfer agent fees 39,684
- ---------------------------------------------------------------------------------------
Accrued trustees' fees 1,800
- ---------------------------------------------------------------------------------------
Accrued operating expenses 81,864
- ---------------------------------------------------------------------------------------
Total liabilities 1,257,950
- ---------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $295,583,696
=======================================================================================
NET ASSETS:
Class A $251,279,503
=======================================================================================
Class B $44,304,193
=======================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE
Class A 30,771,741
=======================================================================================
Class B 5,434,354
=======================================================================================
CLASS A:
Net asset value and redemption price per share $ 8.17
=======================================================================================
Offering price per share:
(Net asset value of $8.17 divided by 95.25%) $ 8.58
=======================================================================================
CLASS B:
Net asset value and offering price per share $ 8.15
=======================================================================================
</TABLE>
See Notes to Financial Statements.
FS-78
<PAGE> 197
Financials
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $20,643,014
- ----------------------------------------------------------------------------------------
Dividends 112,212
- ----------------------------------------------------------------------------------------
Total investment income 20,755,226
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,176,249
- ----------------------------------------------------------------------------------------
Custodian fees 68,276
- ----------------------------------------------------------------------------------------
Distribution fees -- Class A 550,802
- ----------------------------------------------------------------------------------------
Distribution fees -- Class B 237,414
- ----------------------------------------------------------------------------------------
Trustees' fees 6,846
- ----------------------------------------------------------------------------------------
Transfer agent fees -- Class A 265,784
- ----------------------------------------------------------------------------------------
Transfer agent fees -- Class B 39,720
- ----------------------------------------------------------------------------------------
Administrative service fees 82,185
- ----------------------------------------------------------------------------------------
Other 171,661
- ----------------------------------------------------------------------------------------
Total expenses 2,598,937
- ----------------------------------------------------------------------------------------
Net investment income 18,156,289
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FOREIGN
CURRENCIES AND FORWARD CONTRACT TRANSACTIONS:
Net realized gain (loss) from:
Investment securities 8,393,768
- ----------------------------------------------------------------------------------------
Foreign currencies 1,752,428
- ----------------------------------------------------------------------------------------
Forward contracts (274,598)
- ----------------------------------------------------------------------------------------
9,871,598
- ----------------------------------------------------------------------------------------
Unrealized appreciation of:
Investment securities 21,219,140
- ----------------------------------------------------------------------------------------
Foreign currencies 75,365
- ----------------------------------------------------------------------------------------
Forward contracts 140,338
- ----------------------------------------------------------------------------------------
21,434,843
- ----------------------------------------------------------------------------------------
Net realized and unrealized gain from investment securities, foreign
currencies and forward contract transactions 31,306,441
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $49,462,730
========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-79
<PAGE> 198
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 18,156,289 $ 17,083,355
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and forward contract transactions 9,871,598 (18,454,102)
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities, foreign currencies and forward contract
transactions 21,434,843 (18,072,358)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 49,462,730 (19,443,105)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (16,600,806) (14,029,228)
- ---------------------------------------------------------------------------------------------
Class B (1,555,483) (478,570)
- ---------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A (889,987) --
- ---------------------------------------------------------------------------------------------
Class B (95,903) --
- ---------------------------------------------------------------------------------------------
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)
- ---------------------------------------------------------------------------------------------
Class B -- (20,562)
- ---------------------------------------------------------------------------------------------
Share transactions-net:
Class A 22,105,318 (6,155,618)
- ---------------------------------------------------------------------------------------------
Class B 29,160,108 9,961,208
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 81,585,977 (33,772,755)
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 213,997,719 247,770,474
- ---------------------------------------------------------------------------------------------
End of period $295,583,696 $213,997,719
=============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $290,272,299 $239,006,873
- ---------------------------------------------------------------------------------------------
Undistributed net investment income 846,817 (60,059)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from sales of
investment securities, foreign currencies and forward
contract transactions (7,799,206) (15,778,038)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and forward contract
transactions 12,263,786 (9,171,057)
- ---------------------------------------------------------------------------------------------
$295,583,696 $213,997,719
=============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-80
<PAGE> 199
Financials
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
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. The Fund's investment objective is to seek to achieve
a high level of current income consistent with reasonable concern for safety of
principal by investing primarily in fixed rate corporate debt and U.S.
Government obligations. 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. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations - 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 (except convertible bonds) 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. Exchange listed convertible
bonds are valued based at the mean between the closing bid and asked prices
obtained from a broker-dealer. 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 or absent a last sales
price, at the mean of the closing bid and asked prices. Securities for which
market quotations are either not readily available or are questionable 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. Generally, trading
in foreign securities 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 the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to 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 they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
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.
FS-81
<PAGE> 200
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Outstanding contracts at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
Contract to
Settlement ----------------------------- Unrealized
Date Receive Deliver Appreciation
--------- -------------- ---------- ------------
<S> <C> <C> <C>
01/25/96 DEM 7,800,000 $5,443,019 $ 105,029
</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 accrual basis. Dividend income is recorded on the
ex-dividend date. Dividends to shareholders are declared daily and are paid
monthly. On December 31, 1995 $1,892,766 was reclassified from undistributed
net realized gain to undistributed net investment income as a result of
permanent book/tax differences due to the differing book/tax treatment for
foreign currency gains incurred by the Fund. Net assets of the Fund were
unaffected by the reclassification 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 $7,557,727 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2003. 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.
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 reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended December 31,
1995, AIM was reimbursed $82,185 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 1995, the
Fund paid AFS $193,500 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 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 which provides periodic payments to selected dealers and
financial
FS-82
<PAGE> 201
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
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. AIM Distributors may, from
time to time, assign, transfer or pledge to one or more assignees, its rights to
all or a portion of (a) compensation received by AIM Distributors from the Fund
pursuant to the Class B Plan (but not AIM Distributors' duties and obligations
pursuant to the Class B Plan) and (b) any contingent deferred sales charges
payable to AIM Distributors related to the Class B shares. 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, 1995, the
Class A shares and the Class B shares paid AIM Distributors $550,802 and
$237,414, respectively, as compensation under the Plans.
AIM Distributors received commissions of $154,679 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1995,
AIM Distributors received $48,320 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 year ended December 31, 1995 the Fund paid legal fees of $3,278
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 AIM. 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 - BANK BORROWINGS
The Fund has a $4,000,000 committed line of credit with a financial institution
syndicate with Chemical Bank of New York as the administrative agent. Interest
on borrowings under the line of credit is payable on maturity or prepayment
date. During the period July 20, 1995 (effective date of line of credit
agreement) through December 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's committed
line.
NOTE 5 - 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, 1995 was
$596,557,985 and $526,613,903, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $14,468,630
- ------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,376,507)
- ------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $12,092,123
====================================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
FS-83
<PAGE> 202
Financials
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
SHARES VALUE SHARES VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Sold:
Class A 7,497,108 $58,558,530 4,265,341 $33,272,800
- ----------------------------------------------------------------------------------- ----------------------
Class B 4,199,186 32,900,136 1,696,358 13,014,930
- ----------------------------------------------------------------------------------- ----------------------
Issued as reinvestment of dividends:
Class A 1,859,312 14,431,705 1,895,928 14,388,718
- ----------------------------------------------------------------------------------- ----------------------
Class B 131,455 1,024,904 54,029 403,397
- ----------------------------------------------------------------------------------- ----------------------
Reacquired:
Class A (6,603,107) (50,884,917) (7,025,819) (53,817,136)
- ----------------------------------------------------------------------------------- ----------------------
Class B (611,547) (4,764,932) (462,198) (3,457,119)
- ----------------------------------------------------------------------------------- ----------------------
6,472,407 $51,265,426 423,639 $ 3,805,590
=================================================================================== ======================
</TABLE>
NOTE 7 - 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, 1995
and for a Class B share outstanding for each of the years in the two-year period
ended December 31, 1995, and the period September 7, 1993 (date sales commenced)
through December 31, 1993.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------------------------------
CLASS A: 1995 1994 1993 1992(a) 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 7.20 $ 8.45 $ 8.03 $ 8.07 $ 7.41 $ 7.80 $ 7.53
- --------------------------------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 0.58 0.58 0.60 0.60 0.61 0.65 0.66
- --------------------------------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) 1.00 (1.22) 0.61 (0.03) 0.66 (0.39) 0.32
- --------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 1.58 (0.64) 1.21 0.57 1.27 0.26 0.98
- --------------------------------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.61) (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) (0.61) (0.79) (0.61) (0.61) (0.65) (0.71)
- --------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 8.17 $ 7.20 $ 8.45 $ 8.03 $ 8.07 $ 7.41 $ 7.80
================================= ======== ======== ======== ======== ======== ======== ========
Total return(b) 22.77% (7.65)% 15.38% 7.42% 18.00% 3.65% 13.56%
================================= ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $251,280 $201,677 $244,168 $218,848 $231,798 $215,987 $229,222
================================= ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets 0.98%(c) 0.98% 0.98% 0.99%(d) 1.00%(d) 1.00% 0.96%
================================= ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 7.52%(c) 7.53% 7.01% 7.54%(d) 7.97%(d) 8.73% 8.56%
================================= ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 227% 185% 99% 82% 67% 106% 222%
================================= ======== ======== ======== ======== ======== ======== ========
<CAPTION>
CLASS A: 1988 1987 1986
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 7.55 $ 8.20 $ 7.53
- --------------------------------- -------- -------- --------
Income from investment
operations:
Net investment income 0.68 0.67 0.71
- --------------------------------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) (0.02) (0.63) 0.60
- --------------------------------- -------- -------- --------
Total from investment
operations 0.66 0.04 1.31
- --------------------------------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.68) (0.69) (0.64)
- --------------------------------- -------- -------- --------
Distributions from net realized
capital gains -- -- --
- --------------------------------- -------- -------- --------
Distributions from capital -- -- --
- --------------------------------- -------- -------- --------
Total distributions (0.68) (0.69) (0.64)
- --------------------------------- -------- -------- --------
Net asset value, end of period $ 7.53 $ 7.55 $ 8.20
================================= ======== ======== ========
Total return(b) 9.01% 0.56% 18.04%
================================= ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $218,946 $237,466 $273,121
================================= ======== ======== ========
Ratio of expenses to average net
assets 0.95% 0.84% 0.82%
================================= ======== ======== ========
Ratio of net investment income to
average net assets 8.81% 8.64% 8.93%
================================= ======== ======== ========
Portfolio turnover rate 361% 195% 85%
================================= ======== ======== ========
</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 $220,320,889.
(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.
FS-84
<PAGE> 203
Financials
NOTE 7 - FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
CLASS B: 1995 1994 1993
-------- ------- ------
<S> <C> <C> <C>
Net asset value, beginning of period $ 7.18 $ 8.43 $ 8.95
- ------------------------------------------------------------------------------------------- -------- ------- ------
Income from investment operations:
Net investment income 0.53 0.52 0.19
- ------------------------------------------------------------------------------------------- -------- ------- ------
Net gains (losses) on securities (both realized and unrealized) 0.98 (1.23) (0.34)
- ------------------------------------------------------------------------------------------- -------- ------- ------
Total from investment operations 1.51 (0.71) (0.15)
- ------------------------------------------------------------------------------------------- -------- ------- ------
Less distributions:
Dividends from net investment income (0.54) (0.42) (0.18)
- ------------------------------------------------------------------------------------------- -------- ------- ------
Distributions from net realized capital gains -- (0.01) (0.19)
- ------------------------------------------------------------------------------------------- -------- ------- ------
Distributions from capital -- (0.11) --
- ------------------------------------------------------------------------------------------- -------- ------- ------
Total distributions (0.54) (0.54) (0.37)
- ------------------------------------------------------------------------------------------- -------- ------- ------
Net asset value, end of period $ 8.15 $ 7.18 $ 8.43
=========================================================================================== ======== ======= ======
Total return(a) 21.72% (8.46)% (0.75)%
=========================================================================================== ======== ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $44,304 $12,321 $3,602
=========================================================================================== ======== ======= ======
Ratio of expenses to average net assets 1.79%(b) 1.83%(c) 1.75%(c)
=========================================================================================== ======== ======= ======
Ratio of net investment income to average net assets 6.71%(b) 6.69%(c) 6.24%(c)
=========================================================================================== ======== ======= ======
Portfolio turnover rate 227 % 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 $23,741,406.
(c) After expense reimbursements. Ratios of expenses to average net assets prior
to expense reimbursements were 2.04% and 2.50% (annualized) for 1994 and
1993, respectively. Ratios of net investment income to average net assets
prior to expense reimbursements were 6.48% and 5.49% (annualized) for 1994
and 1993, respectively.
FS-85
<PAGE> 204
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Intermediate Government Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Intermediate Government Fund (a portfolio of AIM Funds Group), including the
schedule of investments, as of December 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in its net assets
for the two-year period then ended and the financial highlights for each of the
years in the three-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, 1995, 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
Intermediate Government Fund as of December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for the
two-year period then ended and the financial highlights for each of the years in
the three-year period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1996
FS-86
<PAGE> 205
Financials
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCIES-70.46%
FEDERAL FARM CREDIT BANK-2.81%
$ 6,000,000 11.90%, 10/20/97 $ 6,673,800
- ---------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK-4.27%
Medium term notes
4,000,000 7.31%, 07/06/01 4,304,200
- ---------------------------------------------------------------------------------------------
2,500,000 7.78%, 10/19/01 2,765,850
- ---------------------------------------------------------------------------------------------
2,800,000 7.36%, 07/01/04 3,074,092
- ---------------------------------------------------------------------------------------------
10,144,142
- ---------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION-15.00%
Pass through certificates
9,675,526 9.00%, 12/01/05 to 09/01/20 10,167,149
- ---------------------------------------------------------------------------------------------
46,522 8.00%, 07/01/06 to 12/01/06 48,281
- ---------------------------------------------------------------------------------------------
3,132,104 8.50%, 07/01/07 to 04/01/25 3,269,961
- ---------------------------------------------------------------------------------------------
4,732,089 10.50%, 09/01/09 to 01/01/21 5,186,750
- ---------------------------------------------------------------------------------------------
71,263 10.00%, 11/01/11 to 02/01/16 77,586
- ---------------------------------------------------------------------------------------------
39,457 12.00%, 02/01/13 44,055
- ---------------------------------------------------------------------------------------------
3,000,097 7.00%, 06/01/24 3,029,108
- ---------------------------------------------------------------------------------------------
12,974,513 9.50%, 04/01/25 13,809,552
- ---------------------------------------------------------------------------------------------
35,632,442
- ---------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-37.27%
Debentures
3,000,000 9.35%, 02/12/96 3,014,430
- ---------------------------------------------------------------------------------------------
5,000,000 9.55%, 11/10/97 5,371,650
- ---------------------------------------------------------------------------------------------
4,000,000 8.20%, 03/10/98 4,236,920
- ---------------------------------------------------------------------------------------------
3,500,000 8.625%, 11/10/04 3,827,390
- ---------------------------------------------------------------------------------------------
4,500,000 8.50%, 02/01/05 4,926,780
- ---------------------------------------------------------------------------------------------
3,000,000 7.875%, 02/24/05 3,422,130
- ---------------------------------------------------------------------------------------------
Pass through certificates
55,403 8.50%, 01/01/07 to 03/01/07 57,844
- ---------------------------------------------------------------------------------------------
2,935,647 7.00%, 09/01/25 2,961,276
- ---------------------------------------------------------------------------------------------
2,939,425 7.50%, 06/01/25 3,013,793
- ---------------------------------------------------------------------------------------------
4,018,870 9.00%, 04/01/25 to 05/01/25 4,234,804
- ---------------------------------------------------------------------------------------------
12,652,613 10.00%, 07/01/20 to 08/01/20 13,897,883
- ---------------------------------------------------------------------------------------------
2,115,052 10.50%, 03/01/14 to 07/01/19 2,336,434
- ---------------------------------------------------------------------------------------------
4,746,563 9.50%, 07/01/16 to 08/01/22 5,086,179
- ---------------------------------------------------------------------------------------------
934,115 8.00%, 03/01/25 967,667
- ---------------------------------------------------------------------------------------------
15,000,000 8.00%, 01/16/26 TBA(a) 15,548,438
- ---------------------------------------------------------------------------------------------
15,000,000 8.50%, 01/18/26 TBA(a) 15,665,625
- ---------------------------------------------------------------------------------------------
88,569,243
- ---------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-11.11%
Pass through certificates
4,292,410 9.00%, 10/15/08 to 11/15/21 4,573,885
- ---------------------------------------------------------------------------------------------
3,169,596 9.50%, 06/15/09 to 12/15/20 3,430,149
- ---------------------------------------------------------------------------------------------
9,233,277 10.00%, 11/15/09 to 07/15/24 10,176,302
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-87
<PAGE> 206
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
Pass through certificates (continued)
$ 345,649 11.00%, 12/15/09 to 12/15/15 $ 388,095
- --------------------------------------------------------------------------------------------
585,603 13.50%, 07/15/10 to 04/15/15 681,671
- --------------------------------------------------------------------------------------------
305,460 12.50%, 11/15/10 351,654
- --------------------------------------------------------------------------------------------
637,065 13.00%, 01/15/11 to 05/15/15 738,185
- --------------------------------------------------------------------------------------------
1,074,738 12.00%, 01/15/13 to 07/15/15 1,226,523
- --------------------------------------------------------------------------------------------
2,679,547 10.50%, 07/15/13 to 10/15/21 2,977,251
- --------------------------------------------------------------------------------------------
1,784,715 8.00%, 03/15/23 1,863,885
- --------------------------------------------------------------------------------------------
26,407,600
- --------------------------------------------------------------------------------------------
Total U.S. Government Agencies 167,427,227
- --------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-34.77%
U.S. TREASURY NOTES & BONDS-33.97%
5,000,000 9.375%, 04/15/96 5,057,600
- --------------------------------------------------------------------------------------------
1,000,000 8.625%, 08/15/97 1,052,970
- --------------------------------------------------------------------------------------------
7,000,000 8.875%, 11/15/97 7,451,080
- --------------------------------------------------------------------------------------------
6,000,000 9.25%, 08/15/98 6,581,580
- --------------------------------------------------------------------------------------------
3,000,000 7.75%, 11/30/99 3,251,580
- --------------------------------------------------------------------------------------------
10,000,000 6.50%, 05/15/05 10,653,900
- --------------------------------------------------------------------------------------------
13,500,000 7.25, 05/15/16 to 08/15/22 15,536,155
- --------------------------------------------------------------------------------------------
16,000,000 7.50%, 11/15/16 to 11/15/24 18,951,560
- --------------------------------------------------------------------------------------------
4,000,000 8.125%, 08/15/19 5,035,720
- --------------------------------------------------------------------------------------------
4,000,000 7.625%, 02/15/25 4,889,200
- --------------------------------------------------------------------------------------------
2,000,000 6.875%, 08/15/25 2,257,620
- --------------------------------------------------------------------------------------------
80,718,965
- --------------------------------------------------------------------------------------------
U.S. TREASURY STRIPS-0.80%(b)
1,000,000 6.80%, 11/15/18 241,000
- --------------------------------------------------------------------------------------------
7,000,000 6.71%, 02/15/19 1,660,400
- --------------------------------------------------------------------------------------------
1,901,400
- --------------------------------------------------------------------------------------------
Total U. S. Treasury Securities 82,620,365
- --------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT-6.35%(c)
Daiwa Securities America Inc.
15,076,782 5.92%, 01/02/96(d) 15,076,782
- --------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-111.58% 265,124,374
- --------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(11.58%) (27,506,669)
- --------------------------------------------------------------------------------------------
NET ASSETS-100.00% $237,617,705
============================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) At 12/31/95, cost of securities purchased on a when-issued basis totalled
$31,117,969. 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 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
Abbreviations:
TBA-To Be Announced
See Notes to Financial Statements.
FS-88
<PAGE> 207
Financials
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $254,158,535) $265,124,374
- -----------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 1,506,965
- -----------------------------------------------------------------------------------------
Interest 3,050,406
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 16,279
- -----------------------------------------------------------------------------------------
Other assets 117,790
- -----------------------------------------------------------------------------------------
Total assets 269,815,814
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 31,117,969
- -----------------------------------------------------------------------------------------
Fund shares redeemed 352,050
- -----------------------------------------------------------------------------------------
Dividends 344,882
- -----------------------------------------------------------------------------------------
Deferred compensation plan 16,279
- -----------------------------------------------------------------------------------------
Accrued advisory fees 98,006
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 4,767
- -----------------------------------------------------------------------------------------
Accrued distribution fees 164,601
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 38,089
- -----------------------------------------------------------------------------------------
Accrued operating expenses 61,466
- -----------------------------------------------------------------------------------------
Total liabilities 32,198,109
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $237,617,705
=========================================================================================
NET ASSETS:
Class A $176,318,099
=========================================================================================
Class B $ 61,299,606
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 18,174,801
=========================================================================================
Class B 6,324,677
=========================================================================================
Class A:
Net asset value and redemption price per share $ 9.70
=========================================================================================
Offering price per share:
(Net asset value of $9.70 divided by 95.25%) $ 10.18
=========================================================================================
Class B:
Net asset value and offering price per share $ 9.69
=========================================================================================
See Notes to Financial Statements.
9
</TABLE>
FS-89
<PAGE> 208
Financials
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $17,039,564
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 996,681
- ----------------------------------------------------------------------------------------
Custodian fees 62,116
- ----------------------------------------------------------------------------------------
Distribution fees -- Class A 403,858
- ----------------------------------------------------------------------------------------
Distribution fees -- Class B 377,931
- ----------------------------------------------------------------------------------------
Administrative service fees 71,765
- ----------------------------------------------------------------------------------------
Interest 215,956
- ----------------------------------------------------------------------------------------
Professional fees 98,885
- ----------------------------------------------------------------------------------------
Transfer agent fees -- Class A 251,364
- ----------------------------------------------------------------------------------------
Transfer agent fees -- Class B 66,583
- ----------------------------------------------------------------------------------------
Trustees' fees 7,461
- ----------------------------------------------------------------------------------------
Other 118,064
- ----------------------------------------------------------------------------------------
Total expenses 2,670,664
- ----------------------------------------------------------------------------------------
Net investment income 14,368,900
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities (1,382,949)
- ----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 16,712,997
- ----------------------------------------------------------------------------------------
Net gain on investment securities 15,330,048
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $29,698,948
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-90
<PAGE> 209
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 14,368,900 $10,649,346
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities (1,382,949) (10,486,627)
- -------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities 16,712,997 (5,639,126)
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 29,698,948 (5,476,407)
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (11,460,957) (7,962,122)
- -------------------------------------------------------------------------------------------
Class B (2,319,847) (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 (693,899) (1,369,875)
- -------------------------------------------------------------------------------------------
Class B (162,343) (165,673)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 5,708,304 33,619,200
- -------------------------------------------------------------------------------------------
Class B 35,091,651 18,932,857
- -------------------------------------------------------------------------------------------
Net increase in net assets 55,861,857 36,010,259
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 181,755,848 145,745,589
- -------------------------------------------------------------------------------------------
End of period $237,617,705 $181,755,848
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $239,433,094 $196,716,205
- -------------------------------------------------------------------------------------------
Undistributed net investment income (12,778) 159,155
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (12,768,450) (9,372,354)
- -------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities 10,965,839 (5,747,158)
- -------------------------------------------------------------------------------------------
$237,617,705 $181,755,848
===========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-91
<PAGE> 210
Financials
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Intermediate Government Fund (the "Fund") (formerly AIM Government
Securities 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. The Fund's investment objective is to seek to achieve a high level
of current income consistent with reasonable concern for safety of principal by
investing in debt securities issued, guaranteed or otherwise backed by the
United States Government. Information presented in these financial statements
pertains only to the Fund.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of 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 either not
readily available or are questionable 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, 1995, $760,029 was reclassified from undistributed net
realized gain 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, $856,242 was
reclassified from undistributed net investment income to paid-in capital,
consisting of $760,029 mentioned above and $96,213 of distributions in excess
of net investment income. On December 31, 1995, undistributed net realized
loss was increased and shares of beneficial interest increased by $2,773,176
in order to comply with the requirements of the American Institute of
Certified Public Accountants Statement of Position 93-2. Net assets of the
Fund were unaffected by the reclassifications discussed above.
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
FS-92
<PAGE> 211
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
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 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 $12,521,212 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2003. 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 reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended December 31,
1995, AIM was reimbursed $71,765 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 1995, the
Fund paid AFS $185,603 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 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
FS-93
<PAGE> 212
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
respective classes. AIM Distributors may, from time to time, assign, transfer or
pledge to one or more designees, its rights to all or a designated portion of
(a) compensation received by AIM Distributors from the Fund pursuant to the
Class B Plan (but not AIM Distributors' duties and obligations pursuant to the
Class B Plan) and (b) any contingent deferred sales charges received by AIM
Distributors related to the Class B shares. During the year ended December 31,
1995, the Class A shares and the Class B shares paid AIM Distributors $403,858
and $377,931, respectively, as compensation under the Plans.
AIM Distributors received commissions of $144,669 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1995,
AIM Distributors received $101,233 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 year ended December 31, 1995, the Fund paid legal fees of $3,146
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 AIM. 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 - BANK BORROWINGS
The Fund has a $3,200,000 committed line of credit with a financial institution
syndicate with Chemical Bank of New York as the administrative agent. Interest
on borrowings under the line of credit is payable on maturity or prepayment
date. During the period July 20, 1995 (effective date of line of credit
agreement) through December 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's commitment
line.
NOTE 5 - 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, 1995 was
$322,679,539 and $263,743,534, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $10,864,062
- -----------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (80,427)
- -----------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $10,783,635
===================================================================================
</TABLE>
Cost of investments for tax purposes is $254,340,739.
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
SHARES VALUE SHARES VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Sold:
Class A 5,766,866 $54,292,965 9,095,532 $84,555,557
- ---------------------------------- ------------------------------------------------
Class B 4,740,977 44,702,493 2,442,865 23,125,558
- ---------------------------------- ------------------------------------------------
Issued as reinvestment of
dividends:
Class A 993,993 9,337,931 815,446 7,649,630
- ---------------------------------- ------------------------------------------------
Class B 172,523 1,627,255 72,145 670,468
- ---------------------------------- ------------------------------------------------
Reacquired:
Class A (6,189,567) (57,922,592) (6,202,526) (58,585,987)
- ---------------------------------- ------------------------------------------------
Class B (1,194,246) (11,238,097) (523,327) (4,863,169)
- ---------------------------------- ------------------------------------------------
4,290,546 $40,799,955 5,700,135 $52,552,057
================================== ================================================
</TABLE>
FS-94
<PAGE> 213
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during the eight-year period ended December 31, 1995 and the period
April 28, 1987 (date operations commenced) through December 31, 1987 and for a
Class B share outstanding during the two-year period ended December 31, 1995 and
the period September 7, 1993 (date sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
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 0.69 0.68 0.74 0.77 0.82 0.87
- ---------------------------------------------- -------- -------- -------- -------- -------- -------
Net gains (losses) on securities (both
realized and unrealized) 0.73 (1.02) (0.04) (0.15) 0.41 0.01
- ---------------------------------------------- -------- -------- -------- -------- -------- -------
Total from investment operations 1.42 (0.34) 0.70 0.62 1.23 0.88
- ---------------------------------------------- -------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.67) (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 (0.04) (0.10) -- -- -- --
- ---------------------------------------------- -------- -------- -------- -------- -------- -------
Total distributions (0.71) (0.72) (0.84) (0.77) (0.84) (0.84)
- ---------------------------------------------- -------- -------- -------- -------- -------- -------
Net asset value, end of period $ 9.70 $ 8.99 $ 10.05 $ 10.19 $ 10.34 $ 9.95
============================================== ======== ======== ======== ======== ======== =======
Total return(b) 16.28% (3.44)% 7.07% 6.26% 12.98% 9.39%
============================================== ======== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $176,318 $158,341 $139,586 $123,484 $101,409 $61,463
============================================== ======== ======== ======== ======== ======== =======
Ratio of expenses to average net assets
(exclusive of interest expense)(d) 1.08%(c) 1.04% 1.00% 0.98% 1.00% 1.00%
============================================== ======== ======== ======== ======== ======== =======
Ratio of net investment income to average net
assets(e) 7.36%(c) 7.34% 7.08% 7.53% 8.15% 8.85%
============================================== ======== ======== ======== ======== ======== =======
Portfolio turnover rate 140% 109% 110% 42% 26% 16%
============================================== ======== ======== ======== ======== ======== =======
<CAPTION>
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
(exclusive of interest expense)(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 based on average net assets of $161,543,053.
(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.
<TABLE>
<CAPTION>
CLASS B: 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 8.99 $ 10.04 $ 10.44
- ------------------------------------------------------------------------------------------- ------- ------- -------
Income from investment operations:
Net investment income 0.63 0.61 0.21
- ------------------------------------------------------------------------------------------- ------- ------- -------
Net gains (losses) on securities (both realized and unrealized) 0.70 (1.02) (0.27)
- ------------------------------------------------------------------------------------------- ------- ------- -------
Total from investment operations 1.33 (0.41) (0.06)
- ------------------------------------------------------------------------------------------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.59) (0.50) (0.20)
- ------------------------------------------------------------------------------------------- ------- ------- -------
Distributions from net realized capital gains -- (0.04) (0.14)
- ------------------------------------------------------------------------------------------- ------- ------- -------
Distributions from capital (0.04) (0.10) --
- ------------------------------------------------------------------------------------------- ------- ------- -------
Total distributions (0.63) (0.64) (0.34)
- ------------------------------------------------------------------------------------------- ------- ------- -------
Net asset value, end of period $ 9.69 $ 8.99 $ 10.04
=========================================================================================== ======= ======= =======
Total return(a) 15.22% (4.13)% (0.52)%
=========================================================================================== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $61,300 $23,415 $ 6,160
=========================================================================================== ======= ======= =======
Ratio of expenses to average net assets (exclusive of interest expense)(c) 1.86%(b) 1.82% 1.71%(e)
=========================================================================================== ======= ======= =======
Ratio of net investment income to average net assets(d) 6.58%(b) 6.56% 6.37%(e)
=========================================================================================== ======= ======= =======
Portfolio turnover rate 140% 109% 110%
=========================================================================================== ======= ======= =======
</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 $37,793,057.
(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.
FS-95
<PAGE> 214
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, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended and the financial highlights for each of
the years in the two-year period 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, 1995, 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, 1995, the results of its operations for the
year then ended, the changes in net assets for each of the years in the two-year
period then ended and financial highlights for each of the years in the two-year
period then ended, and the period October 16, 1993 (date operations commenced)
through December 31, 1993, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1996
FS-96
<PAGE> 215
Financials
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER-47.34%(a)
ASSET-BACKED SECURITIES-18.02%
Asset Securitization Cooperative Corp.
5.65% 02/08/96 $ 28,500 $ 28,330,029
- ----------------------------------------------------------------------------------------------
Delaware Funding Corp.
5.71% 02/07/96 26,500 26,344,482
- ----------------------------------------------------------------------------------------------
Eiger Capital Corp.
5.83% 01/30/96 29,000 28,863,805
- ----------------------------------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.65% 02/26/96 22,000 21,806,644
- ----------------------------------------------------------------------------------------------
105,344,960
- ----------------------------------------------------------------------------------------------
BROKER/DEALER-4.44%
Goldman Sachs Group, L.P.(The)
6.05% 01/11/96 26,000 25,956,306
- ----------------------------------------------------------------------------------------------
FINANCE (PERSONAL CREDIT)-7.12%
Associates Corp. of North America
5.59% 03/18/96 22,000 21,736,959
- ----------------------------------------------------------------------------------------------
Transamerica Finance Corp.
5.52% 01/31/96 19,963 19,871,170
- ----------------------------------------------------------------------------------------------
41,608,129
- ----------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS-2.53%
Colgate-Palmolive Co.
5.27% 06/21/96 15,200 14,817,281
- ----------------------------------------------------------------------------------------------
INSURANCE (LIFE)-3.77%
Cargill Financial Services Corp.
5.47% 01/08/96 18,000 17,980,855
- ----------------------------------------------------------------------------------------------
Lincoln National Corp.
5.62% 03/08/96 4,100 4,057,116
- ----------------------------------------------------------------------------------------------
22,037,971
- ----------------------------------------------------------------------------------------------
INSURANCE (OTHER)-2.35%
Marsh & McLennan Companies, Inc.
5.62% 04/25/96 14,000 13,748,662
- ----------------------------------------------------------------------------------------------
OIL & GAS-4.22%
ARCO Coal Australia Inc.
5.60% 03/18/96 25,000 24,700,556
- ----------------------------------------------------------------------------------------------
POLLUTION CONTROL-0.83%
WMX Technologies Inc.
5.51% 06/11/96 5,000 4,876,025
- ----------------------------------------------------------------------------------------------
TELEPHONE-4.06%
American Telephone & Telegraph Co.
5.60% 03/12/96 24,000 23,734,933
- ----------------------------------------------------------------------------------------------
Total Commercial Paper 276,824,823
- ----------------------------------------------------------------------------------------------
</TABLE>
FS-97
<PAGE> 216
Financials
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
MASTER NOTE AGREEMENT-3.59%
Citicorp Securities, Inc.(b)
6.25% 03/11/96 $ 21,000 $ 21,000,000
- ----------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-1.00%
U.S. Treasury Bills(c)
5.04% 06/27/96 6,000 5,850,480
- ----------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-8.83%
Federal Home Loan Bank
5.90% 10/11/96 5,000 5,000,000
- ----------------------------------------------------------------------------------------------
Federal National Mortgage Association
5.26%(d) 06/02/99 32,000 32,000,000
- ----------------------------------------------------------------------------------------------
6.86% 02/28/96 2,000 2,003,021
- ----------------------------------------------------------------------------------------------
Student Loan Marketing Association
5.24%(d) 08/20/98 2,600 2,600,000
- ----------------------------------------------------------------------------------------------
5.26%(d) 02/08/99 10,000 10,005,254
- ----------------------------------------------------------------------------------------------
Total U.S. Government Agency Securities 51,608,275
- ----------------------------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 355,283,578
- ----------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS(e)-35.91%
Daiwa Securities America Inc.(f)
5.92% 01/02/96 75,010 75,009,763
- ----------------------------------------------------------------------------------------------
Goldman Sachs & Co.(g)
5.92% 01/02/96 135,000 135,000,000
- ----------------------------------------------------------------------------------------------
Total Repurchase Agreements 210,009,763
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 96.67% 565,293,341(h)
- ----------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 3.33% 19,500,339
- ----------------------------------------------------------------------------------------------
NET ASSETS -- 100.00% $584,793,680
==============================================================================================
</TABLE>
Notes to Schedule of Investments:
(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) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon notice to the issuer. Interest rate on the
master note is redetermined periodically. Rate shown is the rate in
effect on December 31, 1995.
(c) 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 purchase by the Fund.
(d) Interest rates are redetermined weekly. Rates shown are in effect on
December 31, 1995.
(e) 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. The investments in some
repurchase agreements are through participation in joint accounts with
other mutual funds managed by the investment advisor.
(f) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
(g) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$1,195,786,044. Collateralized by $1,106,121,000 U.S. Treasury
obligations, 5.50% to 11.25% due 01/31/98 to 02/15/23.
(h) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-98
<PAGE> 217
Financials
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value (amortized cost) $355,283,578
- -----------------------------------------------------------------------------------------
Repurchase agreements 210,009,763
- -----------------------------------------------------------------------------------------
Receivables for:
Capital stock sold 40,213,522
- -----------------------------------------------------------------------------------------
Interest 566,974
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 83,541
- -----------------------------------------------------------------------------------------
Other assets 74,878
- -----------------------------------------------------------------------------------------
Total assets 606,232,256
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 20,517,335
- -----------------------------------------------------------------------------------------
Dividends 168,489
- -----------------------------------------------------------------------------------------
Deferred compensation plan 83,541
- -----------------------------------------------------------------------------------------
Accrued advisory fees 267,751
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 4,337
- -----------------------------------------------------------------------------------------
Accrued distribution fees 393,684
- -----------------------------------------------------------------------------------------
Accrued operating expenses 3,439
- -----------------------------------------------------------------------------------------
Total liabilities 21,438,576
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $584,793,680
=========================================================================================
NET ASSETS:
Class A $221,487,213
=========================================================================================
Class B $ 69,856,594
=========================================================================================
Class C $293,449,873
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 221,519,702
=========================================================================================
Class B 69,864,136
=========================================================================================
Class C 293,502,963
=========================================================================================
Class A:
Net asset value and redemption price per share $ 1.00
=========================================================================================
Offering price per share:
(Net asset value of $1.00 divided by 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.
FS-99
<PAGE> 218
Financials
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest $28,031,456
- -------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 2,589,822
- -------------------------------------------------------------------------------------------
Custodian fees 42,019
- -------------------------------------------------------------------------------------------
Distribution fees -- Class A 410,703
- -------------------------------------------------------------------------------------------
Distribution fees -- Class B 381,405
- -------------------------------------------------------------------------------------------
Distribution fees -- Class C 671,137
- -------------------------------------------------------------------------------------------
Trustees' fees 8,896
- -------------------------------------------------------------------------------------------
Transfer agent fees -- Class A 251,325
- -------------------------------------------------------------------------------------------
Transfer agent fees -- Class B 58,270
- -------------------------------------------------------------------------------------------
Transfer agent fees -- Class C 398,344
- -------------------------------------------------------------------------------------------
Administrative service fees 55,020
- -------------------------------------------------------------------------------------------
Other 300,209
- -------------------------------------------------------------------------------------------
Total expenses 5,167,150
- -------------------------------------------------------------------------------------------
Net investment income 22,864,306
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investments (93,121)
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $22,771,185
===========================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 22,864,306 $ 15,485,684
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (93,121) --
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 22,771,185 15,485,684
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (8,071,868) (3,918,606)
- -------------------------------------------------------------------------------------------
Class B (1,577,348) (600,466)
- -------------------------------------------------------------------------------------------
Class C (13,215,090) (10,966,612)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 72,633,973 67,425,582
- -------------------------------------------------------------------------------------------
Class B 35,865,178 32,709,856
- -------------------------------------------------------------------------------------------
Class C (66,448,589) 118,173,709
- -------------------------------------------------------------------------------------------
Net increase in net assets 41,957,441 218,309,147
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 542,836,239 324,527,092
- -------------------------------------------------------------------------------------------
End of period $584,793,680 $542,836,239
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $584,886,801 $542,836,239
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investments (93,121) --
- -------------------------------------------------------------------------------------------
$584,793,680 $542,836,239
===========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-100
<PAGE> 219
Financials
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
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 Fund's objective is to provide as high a level of current
income as is consistent with preservation of capital and liquidity.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations - The Fund invests only in securities which have
maturities of 397 days or less from the date of purchase. The securities are
valued on the basis of amortized cost which approximates market value. This
method values a security at its cost on the date of purchase and thereafter
assumes a constant amortization to maturity of 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. The Fund has a capital loss
carryforward of $93,121 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized, in
the year 2003.
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.
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.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended December 31,
1995, AIM was reimbursed $55,020 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency and shareholder services to the Fund. During the year ended
December 31, 1995, the Fund paid AFS $363,275 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, 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
FS-101
<PAGE> 220
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
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 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 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. AIM Distributors may, from time to time, assign, transfer or
pledge to one or more assignees, its rights to all or a portion of (a)
compensation received by AIM Distributors from the Fund pursuant to the Class B
Plan (but not AIM Distributors' duties and obligations pursuant to the Class B
Plan) and (b) any contingent deferred sales charges payable to AIM Distributors
related to the Class B Plan. During the year ended December 31, 1995, the Class
A shares, the Class B shares and the Class C shares paid AIM Distributors
$410,703, $381,405 and $671,137, respectively, as compensation under the Plans.
AIM Distributors received commissions of $494,184 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1995,
AIM Distributors received $256,618 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 year ended December 31, 1995, the Fund paid legal fees of $3,973
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 AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
FS-102
<PAGE> 221
Financials
NOTE 4 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 1,236,115,617 $ 1,236,115,617 607,113,357 $ 607,113,357
- ------------------------------------------------ ----------------------------------- -----------------------------------
Class B 150,618,548 150,618,548 94,699,624 94,699,624
- ------------------------------------------------ ----------------------------------- -----------------------------------
Class C 3,387,330,655 3,387,330,655 2,084,342,014 2,084,342,014
- ------------------------------------------------ ----------------------------------- -----------------------------------
Issued as reinvestment of dividends:
Class A 7,057,740 7,057,740 3,420,397 3,420,397
- ------------------------------------------------ ----------------------------------- -----------------------------------
Class B 1,412,061 1,412,061 503,240 503,240
- ------------------------------------------------ ----------------------------------- -----------------------------------
Class C 10,700,895 10,700,895 9,396,978 9,396,978
- ------------------------------------------------ ----------------------------------- -----------------------------------
Reacquired:
Class A (1,170,539,384) (1,170,539,384) (543,108,172) (543,108,172)
- ------------------------------------------------ ----------------------------------- -----------------------------------
Class B (116,165,431) (116,165,431) (62,493,008) (62,493,008)
- ------------------------------------------------ ----------------------------------- -----------------------------------
Class C (3,464,480,139) (3,464,480,139) (1,975,565,283) (1,975,565,283)
- ------------------------------------------------ ----------------------------------- -----------------------------------
42,050,562 $ 42,050,562 218,309,147 $ 218,309,147
================================================ =================================== ===================================
</TABLE>
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 each of the years in the two-year
period ended December 31, 1995 and the period October 16, 1993 (date operations
commenced) through December 31, 1993.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
------------------------------------ -----------------------------------
1995 1994 1993 1995 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 0.0495 0.0337 0.0048 0.0419 0.0259 0.0032
- -------------------------------------------- -------- -------- -------- -------- ------- --------
Less distributions:
Dividends from net investment income (0.0495) (0.0337) (0.0048) (0.0419) (0.0259) (0.0032)
- -------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================================ ======== ======== ======== ======== ======== ========
Total return(a) 5.06% 3.43% 2.27% 4.27% 2.62% 1.51%
============================================ ======== ======== ======== ======== ======= ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $221,487 $148,886 $ 81,460 $69,857 $33,999 $ 1,289
============================================ ======== ======== ======== ======== ======= ========
Ratio of expenses to average net assets 1.03%(b) 0.97%(c) 1.00%(c)(d) 1.78%(b) 1.78%(e) 1.75%(d)(e)
============================================ ======== ======== ======== ======== ======= ========
Ratio of net investment income to average
net assets 4.91 %(b) 3.53%(c) 2.27%(c)(d) 4.14%(b) 3.14%(e) 1.54%(d)(e)
============================================ ======== ======== ======== ======== ======= ========
<CAPTION>
CLASS C SHARES
------------------------------------
1995 1994 1993
-------- -------- --------
<S> <<C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------- -------- -------- --------
Income from investment operations:
Net investment income 0.0493 0.0337 0.0048
- -------------------------------------------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.0493) (0.0337) (0.0048)
- -------------------------------------------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
============================================ ======== ======== ========
Total return(a) 5.04% 3.42% 2.27%
============================================ ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $293,450 $359,952 $241,778
============================================ ======== ======== ========
Ratio of expenses to average net assets 1.04%(b) 0.99%(f) 1.00%(d)(f)
============================================ ======== ======== ========
Ratio of net investment income to average
net assets 4.92%(b) 3.49%(f) 2.27%(d)(f)
============================================ ======== ======== ========
</TABLE>
(a) Does not deduct sales charges or contingent deferred sales charges, where
applicable.
(b) Ratios are based on average daily net assets as follows: Class A Shares -
$164,281,243, Class B Shares - $38,140,475 and Class C Shares -
$268,454,942.
(c) Ratios of expenses and net investment income to average daily net assets
prior to waiver of advisory fees are 1.06% and 3.44% for 1994 and 1.20%
(annualized) and 2.07% (annualized) for 1993.
(d) Annualized.
(e) Ratios of expenses and net investment income to average daily net assets
prior to waiver of advisory fees are 1.87% and 3.05% for 1994 and 1.95%
(annualized) and 1.34% (annualized) for 1993.
(f) Ratios of expenses and net investment income to average daily net assets
prior to waiver of advisory fees are 1.08% and 3.40% for 1994 and 1.20%
(annualized) and 2.07% (annualized) for 1993.
FS-103
<PAGE> 222
INDEPENDENT AUDITORS' REPORT
To 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, 1995, and the related statements of operations
for the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended and the financial highlights for each of
the years in the three-year period then ended. 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, 1995, 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, 1995, the results of
its operations for the year then ended, the statement of changes in net assets
for each of the years in the two-year period then ended and the financial
highlights for each of the years in the three-year period then ended, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1996
FS-104
<PAGE> 223
Financials
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ALASKA-2.36%
Alaska (State of) Housing Finance Corp.;
Collateralized First Veterans' Home Mortgage
Series A-2 RB
6.75%, 12/01/24(b) AAA Aaa $ 3,755 $ 3,948,683
- --------------------------------------------------------------------------------------------------
Alaska (State of) Housing Finance Corp.;
Collateralized Mortgage Program First Series RB
6.875%, 06/01/33 AAA Aaa 2,050 2,173,451
- --------------------------------------------------------------------------------------------------
Alaska (State of) Housing Finance Corp.; Series A RB
6.375%, 12/01/02(c)(d) A+ Aa 1,000 1,109,150
- --------------------------------------------------------------------------------------------------
7,231,284
- --------------------------------------------------------------------------------------------------
ARKANSAS-2.04%
Fayetteville (City of); Water and Sewer Refunding
and Improvement Series 1992 RB
6.15%, 08/15/12 A A 2,000 2,145,960
- --------------------------------------------------------------------------------------------------
Little Rock (City of); Sewer Improvement Series B RB
5.75%, 02/01/06 AA+ Aa 2,000 2,081,480
- --------------------------------------------------------------------------------------------------
Little Rock (City of); Solid Waste Disposal Series
1995 RB
5.80%, 05/01/16 A- A1 1,000 1,015,730
- --------------------------------------------------------------------------------------------------
Little Rock (City of); Waste Disposal Series 1995 RB
5.65%, 05/01/11 A- A1 1,000 1,011,460
- --------------------------------------------------------------------------------------------------
6,254,630
- --------------------------------------------------------------------------------------------------
ARIZONA-1.80%
Arizona (State of) Educational Loan Marketing
Corp.; RB
6.125%, 09/01/02(b) -- Aa 1,900 2,026,274
- --------------------------------------------------------------------------------------------------
Pima (County of) Unified School District #10
(Amphitheater); School Improvement Series 1992 E GO
6.50%, 07/01/05 A+ A 3,100 3,495,467
- --------------------------------------------------------------------------------------------------
5,521,741
- --------------------------------------------------------------------------------------------------
CALIFORNIA-1.22%
California (State of); GO
6.00%, 08/01/19(e) AAA Aaa 1,000 1,054,400
- --------------------------------------------------------------------------------------------------
California (State of) Housing Finance Agency; RB
7.45%, 08/01/11 AA- Aa 910 970,042
- --------------------------------------------------------------------------------------------------
Sacramento (City of) California Cogeneration
Authority Procter & Gamble Project Series 1995 RB
7.00%, 07/01/04 BBB- -- 500 556,070
- --------------------------------------------------------------------------------------------------
San Francisco (City and County of) Parking
Authority; Parking Meter Series 1994 RB
7.00%, 06/01/13(e) AAA Aaa 1,000 1,167,750
- --------------------------------------------------------------------------------------------------
3,748,262
- --------------------------------------------------------------------------------------------------
COLORADO-0.92%
Adams County School District Number 1; Unlimited
Tax Building Series 1992-A GO
6.625%, 12/01/02(d)(e) AAA Aaa 500 567,730
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-105
<PAGE> 224
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
COLORADO (Continued)
Colorado (State of) Housing Finance Authority
(Single Family Residential Housing);
Series 1987 B RB
9.00%, 09/01/17 -- Aa $ 595 $ 621,561
- --------------------------------------------------------------------------------------------------
Mesa County School District #51; 1989 Series B
Certificates of Participation
6.875%, 12/01/05(e) AAA Aaa 1,465 1,635,555
- --------------------------------------------------------------------------------------------------
2,824,846
- --------------------------------------------------------------------------------------------------
CONNECTICUT-3.99%
Connecticut (State of); General Purpose Public
Improvement Series 1992-A GO
6.50%, 03/15/02(c)(d) NRR NRR 5,500 6,188,105
- --------------------------------------------------------------------------------------------------
Connecticut (State of) Development Authority
(Connecticut Power & Light); Series 1993 A RB
5.10%, 09/01/28(f)(g) A-1+ VMIG-1 2,000 2,000,000
- --------------------------------------------------------------------------------------------------
Connecticut Resource Recovery Authority (American
Ref-Fuel Co.) (Southeastern Connecticut Project);
Corporate Credit Series 1988 RB
8.10%, 11/15/15(b) A A2 925 1,031,495
- --------------------------------------------------------------------------------------------------
Connecticut Resource Recovery Authority (American
Ref-Fuel Co.) (Southeastern Connecticut Project);
Series 1988 A RB
7.875%, 11/15/06(b) AA- Baa1 1,700 1,885,113
- --------------------------------------------------------------------------------------------------
8.00%, 11/15/15(b) AA- Baa1 1,000 1,112,490
- --------------------------------------------------------------------------------------------------
12,217,203
- --------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA-0.87%
District of Columbia; Unlimited Tax Refunding
Series 1986 A GO
7.875%, 06/01/96(c)(d) AAA Aaa 1,000 1,035,960
- --------------------------------------------------------------------------------------------------
District of Columbia; Unlimited Tax Series D GO
6.60%, 06/01/96 B Ba 1,600 1,610,624
- --------------------------------------------------------------------------------------------------
2,646,584
- --------------------------------------------------------------------------------------------------
FLORIDA-2.54%
Escambia (County of) (Champion International Corp.
Project); PCR
6.90%, 08/01/22(b) BBB Baa1 1,125 1,207,001
- --------------------------------------------------------------------------------------------------
Florida (State of) Public Education Services (Board
of Education Capital Outlay); Series B RB
5.75%, 06/01/15 AA Aa 1,500 1,548,540
- --------------------------------------------------------------------------------------------------
Jacksonville (City of) (River City Renaissance
Project); Sales Tax RB
5.65%, 10/01/14(e) AAA Aaa 1,000 1,030,770
- --------------------------------------------------------------------------------------------------
Leon (County of); Certificates of Participation
Series A RB
5.875%, 01/01/98 -- Baa1 1,700 1,741,106
- --------------------------------------------------------------------------------------------------
Miami (City of) Parking System; Series 1992 A RB
6.70%, 10/01/06 A A 1,120 1,251,029
- --------------------------------------------------------------------------------------------------
Orange County Housing Authority (Smokewood/Sun Key
Apartments Project); Multi-Family Housing
Refunding Series 1992 A RB
5.25%, 12/01/22(f)(g) A-1 -- 1,000 1,000,000
- --------------------------------------------------------------------------------------------------
7,778,446
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-106
<PAGE> 225
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GEORGIA-1.42%
Georgia (State of) Housing and Finance Authority
(Home Ownership Opportunity Program); Series C RB
6.50%, 12/01/11 AA+ Aa $ 1,000 $ 1,056,640
- --------------------------------------------------------------------------------------------------
Georgia Municipal Electric Authority; Series P RB
8.00%, 01/01/98(c)(d) AAA Aaa 2,000 2,188,640
- --------------------------------------------------------------------------------------------------
Savannah (City of) Economic Developement Authority
(Hershey Foods Corp. Project); IDR
6.60%, 06/01/12 AA- -- 1,000 1,092,090
- --------------------------------------------------------------------------------------------------
4,337,370
- --------------------------------------------------------------------------------------------------
ILLINOIS-7.90%
Berwyn (City of) (Macneal Memorial Hospital
Association); Hospital Series 1991 RB
7.00%, 06/01/15(e) AAA Aaa 3,250 3,566,907
- --------------------------------------------------------------------------------------------------
Cook (County of); Series 1992 B GO
5.75%, 11/15/07(e) AAA Aaa 2,000 2,104,760
- --------------------------------------------------------------------------------------------------
Illinois (State of); Sales Tax Series 1993 B RB
6.50%, 06/15/13 AAA A1 1,500 1,638,780
- --------------------------------------------------------------------------------------------------
Illinois (State of) Development Finance Authority
(CPC International Project); PCR
6.75%, 05/01/16 -- A2 2,500 2,683,575
- --------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority (Evangelical
Hospital Corp.); RB
6.25%, Series A 04/15/22 AA- -- 1,000 1,019,930
- --------------------------------------------------------------------------------------------------
6.25%, Series 1992-C 04/15/22 AA- A1 1,150 1,172,919
- --------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority (Franciscan
Sisters Health Care); Refunding Series 1992 RB
6.40%, 09/01/04(e) AAA Aaa 2,475 2,725,346
- --------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority (Ravenswood
Hospital Medical Center); Refunding Series
1987 A RB
8.80%, 06/01/06 -- Baa1 1,000 1,063,700
- --------------------------------------------------------------------------------------------------
Joliet Regional Port District (Terminal Facilities
Project - The Dow Chemical Co.); Adjustable
Tender Industrial Building Series 1995 RB
6.10%, 07/15/13(g) -- P-1 700 700,000
- --------------------------------------------------------------------------------------------------
Metropolitan Fair and Exposition Authority; Series
1986 RB
6.00%, 06/01/14(e) AAA Aaa 2,500 2,505,675
- --------------------------------------------------------------------------------------------------
Peoria and Pekin and Waukegan (Cities of); GNMA
Collateralized Mortgage Series 1990 RB
7.875%, 08/01/22(b) AAA -- 160 170,645
- --------------------------------------------------------------------------------------------------
University of Illinois Auxiliary Facilities System;
Series 1991 RB
5.75%, 04/01/22 AA- Aa 4,750 4,850,938
- --------------------------------------------------------------------------------------------------
24,203,175
- --------------------------------------------------------------------------------------------------
KENTUCKY-0.68%
Trimble (County of) (Louisville Gas & Electric); PCR
7.25%, 12/01/16 AA Aa2 2,000 2,095,340
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-107
<PAGE> 226
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
LOUISIANA-1.82%
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(e) AAA -- $ 2,775 $ 2,936,061
- --------------------------------------------------------------------------------------------------
Louisiana Public Facilities Authority (Our Lady of
Lake Regional Hospital); Hospital Refunding
Series C RB
6.00%, 12/01/07(e) AAA Aaa 2,500 2,649,775
- --------------------------------------------------------------------------------------------------
5,585,836
- --------------------------------------------------------------------------------------------------
MAINE-0.37%
Maine (State of) Education Loan Authority;
Education Loan Series A-2 RB
6.95%, 12/01/07(b) -- A 1,045 1,122,894
- --------------------------------------------------------------------------------------------------
MARYLAND-0.39%
Maryland Health and Higher Education Facilities
Authority (Doctors Community Hospital Inc.);
Series 1990 RB
8.75%, 07/01/00(c)(d) AAA Aaa 1,000 1,198,800
- --------------------------------------------------------------------------------------------------
MASSACHUSETTS-6.09%
Massachusetts (State of); Consolidated Loan Series
1991 C GO
7.00%, 08/01/01(c)(d) NRR NRR 2,450 2,806,769
- --------------------------------------------------------------------------------------------------
Massachusetts Health and Education Facilities
Authority (Anna Jaques Hospital Issue);
Series B RB
6.875%, 10/01/12 -- Baa1 1,400 1,459,010
- --------------------------------------------------------------------------------------------------
Massachusetts Health and Education Facilities
Authority (Lowell General Hospital);
Series 1991 A RB
8.40%, 06/01/11 -- Baa1 3,550 4,003,868
- --------------------------------------------------------------------------------------------------
Massachusetts Health and Education Facilities
Authority (Sisters of Providence Health System);
Series A RB
6.625%, 11/15/22 BBB Baa1 3,500 3,467,100
- --------------------------------------------------------------------------------------------------
Massachusetts Health and Education Facilities
Authority (Valley Regional Health System Issue);
Series 1990 B RB
8.00%, 07/01/00(c)(d) NRR Aaa 3,000 3,505,260
- --------------------------------------------------------------------------------------------------
Massachusetts Municipal Wholesale Electric
Cooperative Power Supply; System Series 1992 A RB
6.75%, 07/01/08(e) AAA Aaa 3,000 3,408,540
- --------------------------------------------------------------------------------------------------
18,650,547
- --------------------------------------------------------------------------------------------------
MICHIGAN-2.98%
Detroit (City of) School District; School Building
and Site (Unlimited Tax) Series 1992 GO
6.00%, 05/01/05 AA Aa 1,000 1,070,760
- --------------------------------------------------------------------------------------------------
6.15%, 05/01/07 AA Aa 1,300 1,391,533
- --------------------------------------------------------------------------------------------------
Flat Rock (City of) Community School District;
Series 1995 GO
5.25%, 05/01/09(e) AAA Aaa 645 640,672
- --------------------------------------------------------------------------------------------------
Lake Orion Community School District; School
Building and Site (Unlimited Tax) Refunding
Series 1994 GO
7.00%, 05/01/05(e) AAA Aaa 2,500 2,956,500
- --------------------------------------------------------------------------------------------------
Michigan (State of) Housing Development Authority; RB
6.60%, 04/01/12 A+ -- 1,000 1,047,150
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-108
<PAGE> 227
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MICHIGAN (Continued)
Michigan (State of) Hospital Finance Authority
(Sinai Hospital); Series 1995 RB
6.625%, 01/01/16 -- Baa $ 1,250 $ 1,267,013
- --------------------------------------------------------------------------------------------------
Williamston Community School District; Unlimited
Tax Series 1996 GO
5.375%, 05/01/15(e) AAA -- 750 750,270
- --------------------------------------------------------------------------------------------------
9,123,898
- --------------------------------------------------------------------------------------------------
MISSISSIPPI-2.01%
Jackson (County of) (Chevron Corp.); Series 1992 PCR
4.90%, 12/01/16(g) -- P-1 700 700,000
- --------------------------------------------------------------------------------------------------
Mississippi Higher Education Assistance Corp.;
Student Loan Series 1994 C RB
7.50%, 09/01/09(b) -- A 5,000 5,454,300
- --------------------------------------------------------------------------------------------------
6,154,300
- --------------------------------------------------------------------------------------------------
MISSOURI-1.55%
Independence (City of) Industrial Development
Authority (The Independence Ridge Apartment
Project); Multi-Family Housing Series 1985 RB
5.25%, 12/01/15(f)(g) A-1+ -- 1,000 1,000,000
- --------------------------------------------------------------------------------------------------
Kansas City Industrial Development Authority
(General Motors Corp. Project); PCR
6.05%, 04/01/06 A- A3 1,435 1,500,149
- --------------------------------------------------------------------------------------------------
Kansas City Municipal Assistance Corp. (Truman
Medical Center Charitable Foundation);
Leasehold Improvement Series 1991 A RB
7.00%, 11/01/08 A A 605 667,684
- --------------------------------------------------------------------------------------------------
Missouri (State of) Environmental Improvement and
Energy Resources; Series 1995C PCR
5.25%, Series 1995E 07/01/07 -- Aa 500 517,905
- --------------------------------------------------------------------------------------------------
5.85%, Series 1995C 01/01/10 -- Aa 1,000 1,059,160
- --------------------------------------------------------------------------------------------------
4,744,898
- --------------------------------------------------------------------------------------------------
NEVADA-1.42%
Humboldt (County of) (Sierra Pacific Project);
Series 1987 PCR
6.55%, 10/01/13(e) AAA Aaa 3,000 3,272,610
- --------------------------------------------------------------------------------------------------
Las Vegas (City of); 1992 Limited Tax GO
6.50%, 10/01/08(e) AAA Aaa 1,000 1,090,250
- --------------------------------------------------------------------------------------------------
4,362,860
- --------------------------------------------------------------------------------------------------
NEW HAMPSHIRE-1.94%
New Hampshire Housing Finance Authority; Single
Family Residential Mortgage Series 1987 B RB
8.625%, 07/01/13(b) A+ Aa 1,505 1,574,998
- --------------------------------------------------------------------------------------------------
New Hampshire State Turnpike System; Series 1990 RB
7.40%, 04/01/00(c)(d) AAA Aaa 3,850 4,380,222
- --------------------------------------------------------------------------------------------------
5,955,220
- --------------------------------------------------------------------------------------------------
NEW JERSEY-2.50%
Camden (County of) Municipal Utilities Authority;
Series 1987 RB
8.25%, 12/01/17(e) AAA Aaa 2,000 2,190,860
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-109
<PAGE> 228
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW JERSEY (Continued)
Hudson County Correctional Facility; Certificate of
Participation Series 1992 RB
6.60%, 12/01/21(b) AAA Aaa $ 1,250 $ 1,354,912
- --------------------------------------------------------------------------------------------------
New Jersey City Economic Development Authority
(Atlantic City Sewer Co.); Sewer Facility Series
1991 RB
7.25%, 12/01/11(b)(h) -- -- 1,935 2,166,155
- --------------------------------------------------------------------------------------------------
New Jersey Health Care Facility Financing Authority
(St. Peters Medical Center); Series 1987 C RB
8.60%, 07/01/97(e) AAA Aaa 1,250 1,357,163
- --------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance
Agency; Home Buyer Series M RB
6.95%, 10/01/22(b)(e) AAA Aaa 550 584,144
- --------------------------------------------------------------------------------------------------
7,653,234
- --------------------------------------------------------------------------------------------------
NEW MEXICO-2.91%
Albuquerque (City of) (Albuquerque Academy
Project); Educational Facilities Series 1995 RB
5.75%, 10/15/15 AA- Aa 915 954,510
- --------------------------------------------------------------------------------------------------
Los Alamos (County of); Utility Series A RB
6.00%, 07/01/15(e) AAA Aaa 2,000 2,118,160
- --------------------------------------------------------------------------------------------------
Rio Rancho (City of); Water and Wastewater System
Series 1995 A RB
5.90%, 05/15/12(e) AAA Aaa 2,000 2,089,720
- --------------------------------------------------------------------------------------------------
Santa Fe (City of); Series 1994 A RB
6.25%, 06/01/15(e) AAA Aaa 2,100 2,238,201
- --------------------------------------------------------------------------------------------------
San Juan (County of) Central Consolidated School
District #22; School Building Series 1996 GO
5.40%, 08/15/11(e) AAA Aaa 1,500 1,512,210
- --------------------------------------------------------------------------------------------------
8,912,801
- --------------------------------------------------------------------------------------------------
NEW YORK-10.08%
New York (City of); GO
8.25%, Series 1991 F 11/15/01(c)(d) NRR Aaa 1,840 2,234,533
- --------------------------------------------------------------------------------------------------
7.65%, Series 1992 F 02/01/06 BBB+ Baa1 4,775 5,287,692
- --------------------------------------------------------------------------------------------------
7.70%, Series D 02/01/09 BBB+ Baa1 2,000 2,218,720
- --------------------------------------------------------------------------------------------------
7.20%, Series H 02/01/15 BBB+ Baa1 500 540,680
- --------------------------------------------------------------------------------------------------
8.25%, Series 1991 F 11/15/15 BBB+ Baa1 160 188,376
- --------------------------------------------------------------------------------------------------
7.00%, Series C, Sub-Series C-1 08/01/17 BBB+ Baa1 2,000 2,150,120
- --------------------------------------------------------------------------------------------------
7.00%, Series B 02/01/18(e) AAA Aaa 1,000 1,118,640
- --------------------------------------------------------------------------------------------------
7.00%, Series H 02/01/20 BBB+ Baa1 350 374,563
- --------------------------------------------------------------------------------------------------
New York City Industrial Development Agency (The
Lighthouse Inc. Project); Series 1992 RB
6.50%, 07/01/22(f) AA Aa2 1,500 1,613,130
- --------------------------------------------------------------------------------------------------
New York State Environmental Facility Corp.; Water
Revenue Series E PCR
6.875%, 06/15/10 A Aa 3,400 3,839,518
- --------------------------------------------------------------------------------------------------
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 1,030,832
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-110
<PAGE> 229
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW YORK (Continued)
New York State Urban Development Corp.; Capital
Facilities 1991 Series 3 RB
7.375%, 01/01/02(c)(d) NRR Aaa $ 7,850 $ 9,211,975
- --------------------------------------------------------------------------------------------------
New York State Urban Development Corp.; Higher
Education Technology Grants RB
5.90%, 04/01/09(e) AAA Aaa 1,000 1,070,370
- --------------------------------------------------------------------------------------------------
30,879,149
- --------------------------------------------------------------------------------------------------
NORTH CAROLINA-3.10%
North Carolina Eastern Municipal Power Agency;
Series 1988 A RB
8.00%, 01/01/98(c)(d) NRR Aaa 3,000 3,282,960
- --------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power Agency;
Series A RB
6.125%, 01/01/10(e) AAA Aaa 1,500 1,594,200
- --------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency (No. 1
Catawba Electric Project); Refunding RB
7.25%, 01/01/07 A A 2,750 3,140,555
- --------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency (No. 1
Catawba Electric Project); Series 1990 RB
6.50%, 01/01/10(e) AAA Aaa 1,115 1,179,826
- --------------------------------------------------------------------------------------------------
6.50%, 01/01/10(c) AAA Aaa 260 300,908
- --------------------------------------------------------------------------------------------------
9,498,449
- --------------------------------------------------------------------------------------------------
OHIO-2.84%
Akron Bath Copley Joint Township (Akron City
Hospital); Series 1987 RB
8.875%, 11/15/97(c)(d) NRR Aaa 1,610 1,780,934
- --------------------------------------------------------------------------------------------------
Butler (County of) Fairfield City School District;
Unlimited Tax Series 1995 GO
6.10%, 12/01/15(e) AAA Aaa 1,000 1,071,600
- --------------------------------------------------------------------------------------------------
Hamilton (County of); Electric System Mortgage RB
8.00%, Series 1998 B 10/15/98(c)(d) AAA Aaa 1,000 1,119,270
- --------------------------------------------------------------------------------------------------
6.00%, Series A 10/15/12(e) AAA Aaa 1,000 1,057,890
- --------------------------------------------------------------------------------------------------
Mason (City of) Health Care Facilities (MCV Health
Care Facilities, Inc.); Series 1990 RB
7.625%, 02/01/40 AAA -- 2,190 2,465,283
- --------------------------------------------------------------------------------------------------
Ohio Department of Transportation (Panhandle Rail
Line Project); Series 1992 Certificates of
Participation
6.50%, 04/15/12(e) AAA Aaa 1,100 1,194,699
- --------------------------------------------------------------------------------------------------
8,689,676
- --------------------------------------------------------------------------------------------------
OKLAHOMA-2.30%
McAlester (City of) Public Works Authority;
Refunding and Improvement Series 1995 RB
5.50%, 12/01/10(e) AAA Aaa 975 986,836
- --------------------------------------------------------------------------------------------------
Southern Oklahoma Memorial Hospital Authority;
Series 1993 A RB
5.60%, 02/01/00 A A 2,500 2,595,575
- --------------------------------------------------------------------------------------------------
Tulsa (City of) Industrial Authority (Medical
Center Project - St. Johns Hospital); RB
6.25%, 02/15/14 AA Aa 2,000 2,094,480
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-111
<PAGE> 230
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OKLAHOMA (Continued)
Tulsa Public Facilities Authority - Capital
Improvements - Water System; Series 1988 B RB
6.00%, 03/01/08 A+ -- $ 1,305 $ 1,370,485
- --------------------------------------------------------------------------------------------------
7,047,376
- --------------------------------------------------------------------------------------------------
OREGON-0.78%
Portland (City of) Sewer System; Series 1994 A RB
6.20%, 06/01/12 A+ A1 1,200 1,303,992
- --------------------------------------------------------------------------------------------------
6.25%, 06/01/15 A+ A1 1,000 1,082,900
- --------------------------------------------------------------------------------------------------
2,386,892
- --------------------------------------------------------------------------------------------------
PENNSYLVANIA-2.72%
Lancaster (County of) Solid Waste Management
Authority; Resource Recovery System Series
1988 A RB
8.50%, 12/15/10(b) BBB A 3,500 3,803,520
- --------------------------------------------------------------------------------------------------
Pennsylvania (State of); Third Series GO
6.75%, 11/15/13(e) AAA Aaa 1,250 1,401,788
- --------------------------------------------------------------------------------------------------
Pennsylvania Economic Development Finance Authority
(Colver Project); Resource Recovery Series
1994 D RB
7.05%, 12/01/10(b) BBB- -- 2,900 3,121,705
- --------------------------------------------------------------------------------------------------
8,327,013
- --------------------------------------------------------------------------------------------------
PUERTO RICO-1.83%
Puerto Rico (Commonwealth of) Electric Power
Authority; RB
7.00%, Series 1991 P 07/01/01(c)(d) A- Baa1 1,325 1,519,311
- --------------------------------------------------------------------------------------------------
6.00%, Series 1989 07/01/10 A- Baa1 4,000 4,088,160
- --------------------------------------------------------------------------------------------------
5,607,471
- --------------------------------------------------------------------------------------------------
RHODE ISLAND-0.82%
Rhode Island Depositors Economic Protection Corp.;
Special Obligation Series 1992 A RB
6.95%, 08/01/02(c)(d) AAA Aaa 1,250 1,445,100
- --------------------------------------------------------------------------------------------------
Rhode Island Housing and Mortgage Finance Agency;
Homeownership Opportunity Series 15 B RB
6.00%, 10/01/04 AA+ Aa 1,000 1,056,970
- --------------------------------------------------------------------------------------------------
2,502,070
- --------------------------------------------------------------------------------------------------
SOUTH CAROLINA-0.69%
South Carolina State Education Assistance
Authority; Guaranteed Student Loan Series 1990 RB
6.60%, 09/01/01(b) AA -- 500 531,980
- --------------------------------------------------------------------------------------------------
South Carolina State Housing Finance and
Development Authority; Homeownership Mortgage
Series 1990 C RB
7.50%, 07/01/05(b) AA Aa 500 541,335
- --------------------------------------------------------------------------------------------------
South Carolina (State of) Public Service Authority;
Electric Revenue & Electric System Series C RB
7.20%, 07/01/06 AA- Aa 1,000 1,037,970
- --------------------------------------------------------------------------------------------------
2,111,285
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-112
<PAGE> 231
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TENNESSEE-2.35%
Davidson (County of) Madison Suburban Utility
District; Water Refunding RB
5.70%, 02/01/11(e) AAA Aaa $ 1,180 $ 1,245,372
- --------------------------------------------------------------------------------------------------
Nashville and Davidson (Counties of) Metropolitan
Government; Water and Sewer Refunding
Series 1986 RB
7.25%, 01/01/96 A A1 325 333,899
- --------------------------------------------------------------------------------------------------
Shelby (County of); School Series 1994 GO
5.95%, 03/01/17 AA+ Aa 2,675 2,787,350
- --------------------------------------------------------------------------------------------------
Shelby (County of); Unlimited Tax School GO
6.00%, 03/01/17 AA+ Aa 2,695 2,816,652
- --------------------------------------------------------------------------------------------------
7,183,273
- --------------------------------------------------------------------------------------------------
TEXAS-15.64%
Arlington Independent School District; Refunding
Series 1995 GO
5.75%, 02/15/21(e) -- Aaa 1,000 1,026,310
- --------------------------------------------------------------------------------------------------
Austin (City of); Utility System RB
6.50%, 05/15/11(e) AAA Aaa 1,380 1,480,519
- --------------------------------------------------------------------------------------------------
Austin Community College District; Combined Fee
Revenue Building and Refunding Series 1995 RB
6.10%, 02/01/13(e) AAA Aaa 1,115 1,180,194
- --------------------------------------------------------------------------------------------------
Bellville Independent School District; Unlimited
Tax School Building and Refunding Series 1995 GO
6.125%, 02/01/20(e) -- Aaa 830 862,511
- --------------------------------------------------------------------------------------------------
Brazos Higher Education Loan Authority Inc.;
Student Loan Refunding RB
6.45%, Series 1992 C-1 11/01/02(b) -- Aa 1,150 1,254,328
- --------------------------------------------------------------------------------------------------
6.50%, Series 1994 B-1 06/01/04(b) -- A 700 751,443
- --------------------------------------------------------------------------------------------------
Brazos River Authority (Houston Lighting and Power
Project); Collateralized Series 1986 A RB
7.875%, 11/01/18(b)(e) AAA Aaa 2,825 2,955,543
- --------------------------------------------------------------------------------------------------
Brazos River Harbor Navigation District (Dow
Chemical Co.); Series 1993 PCR
5.25%, 05/01/23(b)(g) A-1 P-1 200 200,000
- --------------------------------------------------------------------------------------------------
Comal County Industrial Development Authority (The
Coleman Co., Inc. Project); Industrial
Development Series 1980 RB
9.25%, 08/01/00(c) NRR NRR 1,415 1,615,293
- --------------------------------------------------------------------------------------------------
Dallas (City of); Unlimited Tax GO
5.625%, 08/15/11 AAA Aaa 680 689,581
- --------------------------------------------------------------------------------------------------
Dallas (City of); Waterworks and Sewer System
Series 1994 A RB
6.00%, 10/01/14 AA Aa 2,030 2,145,669
- --------------------------------------------------------------------------------------------------
Dallas-Fort Worth Regional Airport Authority;
Airport Series 1985 RB
6.10%, 11/01/07(e) AAA Aaa 430 432,851
6.10%, 11/01/07 A A1 200 200,326
- --------------------------------------------------------------------------------------------------
Dallas Independent School District; Series 1995 GO
5.70%, 08/15/12(e) AAA Aaa 500 517,925
- --------------------------------------------------------------------------------------------------
Denison Hospital Authority (Texoma Medical Center
Project); Refunding RB
8.00%, 09/01/96 BBB -- 1,000 1,036,850
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-113
<PAGE> 232
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS (Continued)
Farmers Branch; Assessment and Utility System
Certificates of Obligation RB
5.40%, 11/01/14 A- A $ 1,000 $ 968,910
- --------------------------------------------------------------------------------------------------
Georgetown (City of); Utility System Series
1995 A RB
6.20%, 08/15/15(e) AAA Aaa 1,500 1,577,475
- --------------------------------------------------------------------------------------------------
Harris County; Toll Road Unlimited Tax General
Obligation and Subordinate Lien Refunding Series
1991 RB
6.75%, 08/01/14 AA Aa 3,850 4,232,690
- --------------------------------------------------------------------------------------------------
Harris County Health Facilities Development Corp.
(Saint Luke's Episcopal Hospital Project); Series
1991 RB
6.70%, 02/15/03 AA Aa 1,000 1,106,160
- --------------------------------------------------------------------------------------------------
Harris County Mental Health and Mental Retardation
Authority; Refunding Series 1992 RB
6.25%, 9/15/10(e) AAA Aaa 4,500 4,714,695
- --------------------------------------------------------------------------------------------------
Harris County Municipal Utility District #208;
Water & Sewer System Unlimited Tax Refunding
Series 1995 RB
5.50%, 11/01/14(e) AAA Aaa 905 899,679
- --------------------------------------------------------------------------------------------------
Houston (City of); Refunding Series 1992 C GO
6.25%, 03/01/02(c)(d) NRR NRR 1,470 1,606,916
- --------------------------------------------------------------------------------------------------
Hurst, Euless, Bedford, Texas Independent School
District; Refunding RB
6.50%, 08/15/24(e) AAA Aaa 1,000 1,070,630
- --------------------------------------------------------------------------------------------------
Hurst, Euless, Bedford, Texas Independent School
District; Series 1987 GO
5.80%, 08/15/96 AA- A1 645 653,817
- --------------------------------------------------------------------------------------------------
Keller (City of) Independent School District;
Series 1994 Certificates of Participation
6.00%, 08/15/05(e) AAA Aaa 1,000 1,089,890
- --------------------------------------------------------------------------------------------------
North Central Texas Health Facilities Development
Corp. (Baylor Health Care Systems); Project A RB
6.00%, 05/15/13 AA Aa 500 515,525
- --------------------------------------------------------------------------------------------------
Plano (City of) Independent School District;
Unlimited Tax Series 1991 B GO
5.625%, 02/15/01(c)(d) AAA Aaa 2,500 2,644,600
- --------------------------------------------------------------------------------------------------
Richardson (City of) Hospital Authority (Richardson
Medical Center); Refunding RB
6.50%, 12/01/12 BBB- Baa 1,925 1,940,208
- --------------------------------------------------------------------------------------------------
Round Rock Independent School District; Series A GO
6.10%, 08/01/09(e) AAA Aaa 1,760 1,872,746
- --------------------------------------------------------------------------------------------------
Texas (State of) Housing Agency; Residential
Development Mortgage Series 1987 D RB
8.40%, 07/01/20(b) A+ Aa 3,615 3,818,163
- --------------------------------------------------------------------------------------------------
Texas National Research Laboratory Community
Financing Corp. (Superconducting Super Collider);
Lease RB
7.10%, 12/01/01(c)(d) AAA Aaa 600 694,428
- --------------------------------------------------------------------------------------------------
Victoria (County of) Texas Hospital Citizens
Medical Center; RB
6.20%, 01/01/10(e) AAA Aaa 1,000 1,067,510
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-114
<PAGE> 233
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS (Continued)
Weatherford (City of) Independent School District;
Refunding Series 1994 GO
6.40%, 02/15/12(e) AAA Aaa $ 1,000 $ 1,086,910
- --------------------------------------------------------------------------------------------------
47,910,295
- --------------------------------------------------------------------------------------------------
UTAH-2.38%
Salt Lake (County of) (Service Station Holdings
Inc. Project - The British Petroleum Co. PLC,
Guarantor); Refunding Series 1994 PCR
5.00%, 02/01/08(g) A-1+ Aa3 2,100 2,100,000
- --------------------------------------------------------------------------------------------------
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 975 1,036,542
- --------------------------------------------------------------------------------------------------
7.15%, Series 1994 G-1, 07/01/06 A+ A1 1,105 1,241,313
- --------------------------------------------------------------------------------------------------
Utah (State of) Housing Finance Agency; Series
1994 C RB
6.05%, 07/01/06 -- A1 975 1,017,305
- --------------------------------------------------------------------------------------------------
Utah (State of) Housing Finance Agency; Single
Family Mortgage RB
6.30%, Series 1995 G, 07/01/16 AAA Aaa 500 519,630
- --------------------------------------------------------------------------------------------------
6.45%, Series G2, 07/01/27(b) AAA Aaa 1,330 1,381,790
- --------------------------------------------------------------------------------------------------
7,296,580
- --------------------------------------------------------------------------------------------------
VIRGIN ISLANDS-1.07%
Virgin Islands Territory (Hugo Insurance Claims
Fund); Special Tax Bond Series 1991 GO
7.75%, 10/01/06(h) -- -- 2,905 3,262,199
- --------------------------------------------------------------------------------------------------
VIRGINIA-1.01%
Peninsula Ports Authority of Virginia (Shell Coal
and Terminal Co. Project); Unit Priced Demand
Adjustable Port Facility Refunding Series 1987 RB
4.95%, 12/01/05(g) AAA Aa2 500 500,000
- --------------------------------------------------------------------------------------------------
Richmond (City of); Public Improvement Refunding
Series B GO
6.25%, 01/15/18 AA A1 2,500 2,588,925
- --------------------------------------------------------------------------------------------------
3,088,925
- --------------------------------------------------------------------------------------------------
WASHINGTON-1.31%
Clark (County of) Gamas School District #117; GO
6.00%, 12/01/14(e) AAA Aaa 1,000 1,055,720
- --------------------------------------------------------------------------------------------------
King (County of); Unlimited Tax GO
6.50%, 12/01/11 AA+ Aa1 500 504,460
- --------------------------------------------------------------------------------------------------
Seattle (City of) Metropolitan Sewer District;
Series T RB
6.80%, 01/01/11 AA- A1 1,780 1,950,310
- --------------------------------------------------------------------------------------------------
Washington (State of) Health Care Facility
Authority (Sisters of Providence); Series 1995 RB
5.50%, 10/01/12(e) AAA Aaa 500 495,635
- --------------------------------------------------------------------------------------------------
4,006,125
- --------------------------------------------------------------------------------------------------
WISCONSIN-0.30%
Wisconsin Housing and Economic Development
Authority; Home Ownership Series 1990 E RB
8.00%, 03/01/21(b) A+ Aa 865 918,967
- --------------------------------------------------------------------------------------------------
</TABLE>
FS-115
<PAGE> 234
Financials
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WYOMING-0.54%
Lincoln (County of) (Exxon Project); Series
1984 C PCR
4.85%, 11/01/14(g) A-1+ -- $ 600 $ 600,000
- --------------------------------------------------------------------------------------------------
Natrona (County of) Wyoming Medical Center; RB
6.00%, 09/15/11(e) AAA Aaa 1,000 1,059,560
- --------------------------------------------------------------------------------------------------
1,659,560
- --------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.48% 304,699,474
- --------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.52% 1,580,855
- --------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $ 306,280,329
==================================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P"). NRR indicates a security that is not
re-rated subsequent to funding of an escrow fund (consisting of U.S.
Treasury obligations); this funding is pursuant to an advance refunding of
the security. Ratings are not covered by Independent Auditors' Report.
(b) Security subject to alternative minimum tax.
(c) Secured by an escrow fund of U.S. Treasury obligations.
(d) Security has an irrevocable call or mandatory put by the issuer. Maturity
date reflects such call or put.
(e) Secured by bond insurance.
(f) Secured by a letter of credit.
(g) 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, 1995.
(h) Unrated security; determined by the investment advisor to be of comparable
quality to the rated securities in which the Fund may invest, pursuant to
guidelines of quality adopted by the Board of Trustees and followed by the
investment advisor.
ABBREVIATIONS:
GO - General Obligation Bonds
IDR - Industrial Development Revenue Bonds
NRR - Not Re-Rated
PCR - Pollution Control Revenue Bonds
RB - Revenue Bonds
See Notes to Financial Statements.
FS-116
<PAGE> 235
Financials
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (amortized cost $282,622,016) $304,699,474
- -----------------------------------------------------------------------------------------
Receivables for:
Investments sold 1,333,981
- -----------------------------------------------------------------------------------------
Fund shares sold 468,495
- -----------------------------------------------------------------------------------------
Interest 5,414,913
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 59,754
- -----------------------------------------------------------------------------------------
Other assets 121,846
- -----------------------------------------------------------------------------------------
Total assets 312,098,463
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 4,206,124
- -----------------------------------------------------------------------------------------
Fund shares reacquired 510,689
- -----------------------------------------------------------------------------------------
Deferred compensation plan 59,754
- -----------------------------------------------------------------------------------------
Dividends 591,917
- -----------------------------------------------------------------------------------------
Accrued advisory fees 120,625
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 5,437
- -----------------------------------------------------------------------------------------
Accrued distribution fees 213,534
- -----------------------------------------------------------------------------------------
Accrued trustees' fees 2,096
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 39,926
- -----------------------------------------------------------------------------------------
Accrued operating expenses 68,032
- -----------------------------------------------------------------------------------------
Total liabilities 5,818,134
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $306,280,329
=========================================================================================
NET ASSETS:
Class A $284,802,514
=========================================================================================
Class B $ 21,477,815
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 34,274,253
=========================================================================================
Class B 2,584,697
=========================================================================================
Class A:
Net asset value and redemption price per share $ 8.31
=========================================================================================
Offering price per share:
(Net asset value of $8.31 plus 95.25%) $ 8.72
=========================================================================================
Class B:
Net asset value and offering price per share $ 8.31
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-117
<PAGE> 236
Financials
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $17,741,573
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,356,225
- ----------------------------------------------------------------------------------------
Custodian fees 53,826
- ----------------------------------------------------------------------------------------
Transfer agent fees - Class A 190,280
- ----------------------------------------------------------------------------------------
Transfer agent fees - Class B 22,920
- ----------------------------------------------------------------------------------------
Administrative service fees 65,899
- ----------------------------------------------------------------------------------------
Trustees' fees 10,069
- ----------------------------------------------------------------------------------------
Distribution fees - Class A 686,308
- ----------------------------------------------------------------------------------------
Distribution fees - Class B 145,330
- ----------------------------------------------------------------------------------------
Other 132,607
- ----------------------------------------------------------------------------------------
Total expenses 2,663,464
- ----------------------------------------------------------------------------------------
Less expenses assumed by advisor (13,200)
- ----------------------------------------------------------------------------------------
Net expenses 2,650,264
- ----------------------------------------------------------------------------------------
Net investment income 15,091,309
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT SECURITIES:
Realized gain on sales of investment securities 674,681
- ----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 19,230,259
- ----------------------------------------------------------------------------------------
Net gain on investment securities 19,904,940
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $34,996,249
========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-118
<PAGE> 237
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 15,091,309 $ 15,777,347
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities 674,681 (2,668,737)
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities 19,230,259 (24,480,672)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 34,996,249 (11,372,062)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (14,621,874) (15,315,671)
- ---------------------------------------------------------------------------------------------
Class B (654,391) (269,520)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A -- (934,223)
- ---------------------------------------------------------------------------------------------
Class B -- (30,963)
- ---------------------------------------------------------------------------------------------
Return of capital:
Class A (1,011,782) (969,892)
- ---------------------------------------------------------------------------------------------
Class B (45,282) (17,068)
- ---------------------------------------------------------------------------------------------
Share transactions-net:
Class A 9,550,157 (8,364,063)
- ---------------------------------------------------------------------------------------------
Class B 11,436,172 7,376,340
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 39,649,249 (29,897,122)
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 266,631,080 296,528,202
- ---------------------------------------------------------------------------------------------
End of period $306,280,329 $266,631,080
=============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $285,976,665 $266,770,610
- ---------------------------------------------------------------------------------------------
Undistributed net investment income (61,021) (380,687)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on investment
securities (1,712,773) (2,606,042)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 22,077,458 2,847,199
- ---------------------------------------------------------------------------------------------
$306,280,329 $266,631,080
=============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-119
<PAGE> 238
Financials
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
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 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's objective is to achieve a high
level of current income exempt from federal income taxes consistent with the
preservation of principal by investing in a diversified portfolio of municipal
bonds.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations - 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 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 either are not readily available or are
questionable 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. Notwithstanding the above, 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 January 1, 1995, the Fund adopted
the policy of amortizing premiums for book purposes. The cumulative effect of
the adjustment to prior periods was a decrease to ending undistributed net
investment income of $780,679 with an offsetting increase to unrealized
appreciation of investment securities. On December 31, 1995, undistributed
net investment income was increased by $504,622, undistributed net realized
gain (loss) increased by $218,588 and paid-in capital reduced by $723,210 in
order to comply with the requirements of the American Institute of Certified
Public Accountants Statement of Position 93-2. 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 $1,712,774 (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.
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
FS-120
<PAGE> 239
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
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,
1995, AIM reimbursed expenses of $13,200 with respect to the Class B shares.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended December 31,
1995, AIM was reimbursed $65,899 for such services.
The Fund, pursuant to a transfer agent and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 1995, AFS
was paid $141,963 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 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 provides for 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. AIM Distributors may,
from time to time, assign, transfer or pledge to one or more assignees, its
rights to all or a designated portion of (a) compensation payable to AIM
Distributors from the Fund pursuant to the Class B Plan (but not AIM
Distributors' duties and obligations pursuant to the Class B Plan) and (b) any
contingent deferred sales charges received by AIM Distributors related to the
Class B shares. During the year ended December 31, 1995, the Class A shares and
the Class B shares paid AIM Distributors $686,308 and $145,330, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $116,667 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1995,
AIM Distributors received $31,956 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 year ended December 31, 1995, the Fund paid legal fees of $3,370
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 AIM. 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 - BANK BORROWINGS
The Fund has a $4,900,000 committed line of credit with a financial institution
syndicate with Chemical Bank of New York as the administrative agent. Interest
on borrowings under the line of credit is payable on maturity or prepayment
date. During the period July 20, 1995 (effective date of line of credit
agreement) through December 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's committed
line.
NOTE 5 - 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, 1995 was
$120,288,332 and $97,620,202, respectively.
FS-121
<PAGE> 240
Financials
NOTE 5 - INVESTMENT SECURITIES (continued)
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of December 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $22,089,054
- ------------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (11,596)
- ------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $22,077,458
==================================================================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------- ----------------------------
SHARES VALUE SHARES VALUE
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 6,038,257 $ 48,938,165 3,774,110 $ 30,827,309
- ----------------------------------------------------------- ----------------------------- ----------------------------
Class B 1,963,653 15,985,997 1,031,724 8,351,056
- ----------------------------------------------------------- ----------------------------- ----------------------------
Issued as reinvestment of dividends:
Class A 1,117,182 9,074,834 1,275,719 10,304,397
- ----------------------------------------------------------- ----------------------------- ----------------------------
Class B 50,725 412,983 24,242 193,390
- ----------------------------------------------------------- ----------------------------- ----------------------------
Reacquired:
Class A (5,965,522) (48,462,842) (6,125,144) (49,495,769)
- ----------------------------------------------------------- ----------------------------- ----------------------------
Class B (608,842) (4,962,808) (146,039) (1,168,106)
- ----------------------------------------------------------- ----------------------------- ----------------------------
2,595,453 $ 20,986,329 (165,388) $ (987,723)
=========================================================== ============================= ============================
</TABLE>
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,
1995 and for a Class B share outstanding during each of the years in the
two-year period ended December 31, 1995 and the period September 1, 1993 (date
sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
1995 1994 1993 1992(a) 1991 1990
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 7.78 $ 8.61 $ 8.27 $ 8.13 $ 7.66 $ 7.81
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.43 0.46 0.48 0.51 0.52 0.53
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) 0.56 (0.78) 0.46 0.21 0.46 (0.14)
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Total from investment operations 0.99 (0.32) 0.94 0.72 0.98 0.39
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.43) (0.45) (0.48) (0.51) (0.51) (0.53)
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Distributions from net realized
capital gains -- (0.03) (0.11) (0.07) -- --
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Returns of capital (0.03) (0.03) (0.01) -- -- (0.01)
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Total distributions (0.46) (0.51) (0.60) (0.58) (0.51) (0.54)
- ------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 8.31 $ 7.78 $ 8.61 $ 8.27 $ 8.13 $ 7.66
=========================================== ======== ======== ======== ======== ======== ========
Total return(b) 13.05% (3.79)% 11.66% 9.10% 13.30% 5.27%
=========================================== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $284,803 $257,456 $294,209 $271,205 $273,037 $258,194
=========================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.88%(c) 0.89% 0.91% 0.90% 0.94% 0.91%
=========================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average
net assets 5.26%(c) 5.61% 5.65% 6.15% 6.58% 6.91%
=========================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 36% 43% 24% 160% 289% 230%
=========================================== ======== ======== ======== ======== ======== ========
<CAPTION>
1989 1988 1987 1986
-------- -------- -------- --------
CLASS A:
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.64 $ 7.32 $ 8.41 $ 7.69
- ------------------------------------------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.54 0.53 0.51 0.58
- ------------------------------------------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) 0.18 0.34 (0.65) 1.00
- ------------------------------------------- -------- -------- -------- --------
Total from investment operations 0.72 0.87 (0.14) 1.58
- ------------------------------------------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.55) (0.55) (0.49) (0.60)
- ------------------------------------------- -------- -------- -------- --------
Distributions from net realized
capital gains -- -- (0.46) (0.26)
- ------------------------------------------- -------- -------- -------- --------
Returns of capital -- -- -- --
- ------------------------------------------- -------- -------- -------- --------
Total distributions (0.55) (0.55) (0.95) (0.86)
- ------------------------------------------- -------- -------- -------- --------
Net asset value, end of period $ 7.81 $ 7.64 $ 7.32 $ 8.41
=========================================== ======== ======== ======== ========
Total return(b) 9.70% 12.33% (1.88)% 21.19%
=========================================== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $262,997 $243,480 $237,225 $281,575
=========================================== ======== ======== ======== ========
Ratio of expenses to average net assets 0.89% 0.87% 0.80% 0.78%
=========================================== ======== ======== ======== ========
Ratio of net investment income to average
net assets 6.97% 7.11% 6.71% 6.99%
=========================================== ======== ======== ======== ========
Portfolio turnover rate 305% 381% 392% 249%
=========================================== ======== ======== ======== ========
</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 daily net assets of $274,523,268.
FS-122
<PAGE> 241
Financials
NOTE 7 - FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------ ------
<S> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 7.78 $ 8.61 $ 8.71
- --------------------------------------------------------------------------------- -------- ------ ------
Income from investment operations:
Net investment income 0.39 0.39 0.14
- --------------------------------------------------------------------------------- -------- ------ ------
Net gains (losses) on securities (both realized and unrealized) 0.54 (0.78) 0.01
- --------------------------------------------------------------------------------- -------- ------ ------
Total from investment operations 0.93 (0.39) 0.15
- --------------------------------------------------------------------------------- -------- ------ ------
Less distributions:
Dividends from net investment income (0.37 ) (0.38) (0.13)
- --------------------------------------------------------------------------------- -------- ------ ------
Distributions from net realized capital gains -- (0.03) (0.11)
- --------------------------------------------------------------------------------- -------- ------ ------
Returns of capital (0.03 ) (0.03) (0.01)
- --------------------------------------------------------------------------------- -------- ------ ------
Total distributions (0.40 ) (0.44) (0.25)
- --------------------------------------------------------------------------------- -------- ------ ------
Net asset value, end of period $ 8.31 $ 7.78 $ 8.61
================================================================================= ======= ====== ======
Total return(a) 12.14 % (4.57)% 1.95%
================================================================================= ======= ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $21,478 $9,175 $2,319
================================================================================= ======= ====== ======
Ratio of expenses to average net assets(b) 1.68 %(d) 1.67% 1.65%(e)
================================================================================= ======= ====== ======
Ratio of net investment income to average net assets(c) 4.46 %(d) 4.83% 4.91%(e)
================================================================================= ======= ====== ======
Portfolio turnover rate 36 % 43% 24%
================================================================================= ======= ====== ======
</TABLE>
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods less than one year.
(b) Ratios of expenses to average daily net assets prior to expense
reimbursements are 1.77%, 1.84% and 3.08% (annualized) for the period
1995-1993, respectively.
(c) Ratios of net investment income to average daily net assets prior to expense
reimbursements are 4.37%, 4.66% and 3.48% (annualized) for the period
1995-1993, respectively.
(d) Ratios are based on average daily net assets of $14,533,031.
(e) Annualized.
FS-123
<PAGE> 242
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 AIM
Value Fund, (a portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended and financial highlights for each of the
years in the three-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, 1995, 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, 1995, the results of its operations for the year
then ended, the changes in net assets for each of the years in the two-year
period then ended and the financial highlights for each of the years in the
three-year period then ended, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1996
FS-124
<PAGE> 243
Financials
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-63.59%
ADVERTISING/BROADCASTING-0.08%
200,000 Heritage Media Corp.(a) $ 5,125,000
- ---------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-1.74%
861,300 Boeing Co. 67,504,388
- ---------------------------------------------------------------------------------------------
300,000 General Dynamics Corp. 17,737,500
- ---------------------------------------------------------------------------------------------
250,000 United Technologies Corp. 23,718,750
- ---------------------------------------------------------------------------------------------
108,960,638
- ---------------------------------------------------------------------------------------------
APPLIANCES-0.12%
150,400 Premark International Inc. 7,614,000
- ---------------------------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.51%
1,000,000 Borg-Warner Automotive, Inc. 32,000,000
- ---------------------------------------------------------------------------------------------
BANKING-2.34%
400,000 BankAmerica Corp. 25,900,000
- ---------------------------------------------------------------------------------------------
1,800,000 Citicorp 121,050,000
- ---------------------------------------------------------------------------------------------
146,950,000
- ---------------------------------------------------------------------------------------------
BIOTECHNOLOGY-0.34%
500,000 Guidant Corp. 21,125,000
- ---------------------------------------------------------------------------------------------
BUILDING MATERIALS-0.26%
358,800 Snap-On, Inc. 16,235,700
- ---------------------------------------------------------------------------------------------
CHEMICALS-0.23%
1,000,000 Terra Industries, Inc. 14,125,000
- ---------------------------------------------------------------------------------------------
CHEMICALS (SPECIALTY)-1.44%
400,000 Cabot Corp. 21,550,000
- ---------------------------------------------------------------------------------------------
800,000 IMC Global, Inc. 32,700,000
- ---------------------------------------------------------------------------------------------
270,000 OM Group Inc. 8,943,750
- ---------------------------------------------------------------------------------------------
800,000 Praxair, Inc. 26,900,000
- ---------------------------------------------------------------------------------------------
90,093,750
- ---------------------------------------------------------------------------------------------
COMPUTER MINI/PCS-3.48%
2,000,000 COMPAQ Computer Corp.(a) 96,000,000
- ---------------------------------------------------------------------------------------------
920,000 Dell Computer Corp.(a) 31,855,000
- ---------------------------------------------------------------------------------------------
500,000 Digital Equipment Corp.(a) 32,062,500
- ---------------------------------------------------------------------------------------------
500,000 Hewlett-Packard Co. 41,875,000
- ---------------------------------------------------------------------------------------------
1,000,000 Wang Laboratories, Inc.(a) 16,625,000
- ---------------------------------------------------------------------------------------------
218,417,500
- ---------------------------------------------------------------------------------------------
COMPUTER NETWORKING-2.37%
300,000 Bay Networks, Inc.(a) 12,337,500
- ---------------------------------------------------------------------------------------------
450,000 Belden Inc. 11,587,500
- ---------------------------------------------------------------------------------------------
1,400,000 Cheyenne Software, Inc.(a) 36,575,000
- ---------------------------------------------------------------------------------------------
600,000 Cisco Systems, Inc.(a) 44,775,000
- ---------------------------------------------------------------------------------------------
330,000 Comverse Technology, Inc. 6,600,000
- ---------------------------------------------------------------------------------------------
500,000 Network Equipment Technologies, Inc.(a) 13,687,500
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-125
<PAGE> 244
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER NETWORKING (continued)
500,000 3Com Corp.(a) $ 23,312,500
- ---------------------------------------------------------------------------------------------
148,875,000
- ---------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-3.25%
1,400,000 Adaptec, Inc.(a) 57,400,000
- ---------------------------------------------------------------------------------------------
302,900 Alliance Semiconductor Corp.(a) 3,521,213
- ---------------------------------------------------------------------------------------------
1,400,000 EMC Corp.(a) 21,525,000
- ---------------------------------------------------------------------------------------------
300,000 Lexmark International Group, Inc.(a) 5,475,000
- ---------------------------------------------------------------------------------------------
400,000 Read-Rite Corp.-Class A(a) 9,300,000
- ---------------------------------------------------------------------------------------------
1,600,000 Seagate Technology(a) 76,000,000
- ---------------------------------------------------------------------------------------------
200,000 U.S. Robotics, Inc.(a) 17,550,000
- ---------------------------------------------------------------------------------------------
700,000 Western Digital Corp.(a) 12,512,500
- ---------------------------------------------------------------------------------------------
203,283,713
- ---------------------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES-4.85%
220,000 Adobe Systems, Inc. 13,640,000
- ---------------------------------------------------------------------------------------------
400,000 BMC Software, Inc.(a) 17,100,000
- ---------------------------------------------------------------------------------------------
2,500,000 Computer Associates International, Inc. 142,187,500
- ---------------------------------------------------------------------------------------------
492,000 Computervision Corp.(a) 7,564,500
- ---------------------------------------------------------------------------------------------
100,000 Electronics for Imaging, Inc.(a) 4,375,000
- ---------------------------------------------------------------------------------------------
350,000 First Data Corp. 23,406,250
- ---------------------------------------------------------------------------------------------
383,200 FTP Software, Inc.(a) 11,112,800
- ---------------------------------------------------------------------------------------------
500,000 National Data Corp. 12,375,000
- ---------------------------------------------------------------------------------------------
523,000 NetManage, Inc.(a) 12,159,750
- ---------------------------------------------------------------------------------------------
400,000 Network General Corp.(a) 13,350,000
- ---------------------------------------------------------------------------------------------
680,000 SoftKey International, Inc.(a) 15,725,000
- ---------------------------------------------------------------------------------------------
150,000 Sterling Software, Inc.(a) 9,356,250
- ---------------------------------------------------------------------------------------------
1,200,000 S3, Inc.(a) 21,150,000
- ---------------------------------------------------------------------------------------------
303,502,050
- ---------------------------------------------------------------------------------------------
CONGLOMERATES-0.53%
200,000 Allied Products Corp. 4,800,000
- ---------------------------------------------------------------------------------------------
360,000 Loews Corp. 28,215,000
- ---------------------------------------------------------------------------------------------
33,015,000
- ---------------------------------------------------------------------------------------------
COSMETICS & TOILETRIES-0.45%
256,900 McKesson Corp. 13,005,563
- ---------------------------------------------------------------------------------------------
180,000 Procter & Gamble Co. 14,940,000
- ---------------------------------------------------------------------------------------------
27,945,563
- ---------------------------------------------------------------------------------------------
ELECTRIC SERVICES-1.42%
212,100 Allegheny Power System, Inc. 6,071,363
- ---------------------------------------------------------------------------------------------
168,000 American Electric Power Co. 6,804,000
- ---------------------------------------------------------------------------------------------
212,100 Consolidated Edison Co. of New York, Inc. 6,787,200
- ---------------------------------------------------------------------------------------------
358,800 Dominion Resources, Inc. 14,800,500
- ---------------------------------------------------------------------------------------------
268,900 DQE, Inc. 8,268,675
- ---------------------------------------------------------------------------------------------
500,000 Entergy Corp. 14,625,000
- ---------------------------------------------------------------------------------------------
169,200 FPL Group, Inc. 7,846,650
- ---------------------------------------------------------------------------------------------
459,900 Houston Industries, Inc. 11,152,575
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-126
<PAGE> 245
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
ELECTRIC SERVICES (continued)
415,200 Illinova Corp. $ 12,456,000
- ---------------------------------------------------------------------------------------------
88,811,963
- ---------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-2.27%
400,000 Amphenol Corp.(a) 9,700,000
- ---------------------------------------------------------------------------------------------
2,468,700 Anixter International, Inc.(a) 45,979,537
- ---------------------------------------------------------------------------------------------
117,000 AVX Corp. 3,100,500
- ---------------------------------------------------------------------------------------------
630,000 Harman International Industries, Inc. 25,278,750
- ---------------------------------------------------------------------------------------------
500,000 Parker-Hannifin Corp. 17,125,000
- ---------------------------------------------------------------------------------------------
66,500 Raychem Corp. 3,782,188
- ---------------------------------------------------------------------------------------------
300,000 Tektronix, Inc. 14,737,500
- ---------------------------------------------------------------------------------------------
900,000 Teradyne Inc.(a) 22,500,000
- ---------------------------------------------------------------------------------------------
142,203,475
- ---------------------------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS-0.94%
700,000 Arrow Electronics, Inc.(a) 30,187,500
- ---------------------------------------------------------------------------------------------
253,500 Avnet, Inc. 11,344,125
- ---------------------------------------------------------------------------------------------
500,000 Wyle Electronics 17,562,500
- ---------------------------------------------------------------------------------------------
59,094,125
- ---------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.23%
300,000 Finova Group, Inc. 14,475,000
- ---------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-3.28%
200,000 ADVANTA Corp.-Class A 7,650,000
- ---------------------------------------------------------------------------------------------
200,000 ADVANTA Corp.-Class B 7,275,000
- ---------------------------------------------------------------------------------------------
240,000 A T & T Capital Corp. 9,180,000
- ---------------------------------------------------------------------------------------------
235,700 CMAC Investment Corp. 10,370,800
- ---------------------------------------------------------------------------------------------
300,000 Countrywide Credit Industries, Inc. 6,525,000
- ---------------------------------------------------------------------------------------------
500,000 Federal Home Loan Mortgage Corp. 41,750,000
- ---------------------------------------------------------------------------------------------
300,000 Federal National Mortgage Association 37,237,500
- ---------------------------------------------------------------------------------------------
400,000 Green Tree Financial Corp. 10,550,000
- ---------------------------------------------------------------------------------------------
1,200,000 MBNA Corp. 44,250,000
- ---------------------------------------------------------------------------------------------
400,000 PMI Group, Inc. (The) 18,100,000
- ---------------------------------------------------------------------------------------------
144,200 Student Loan Marketing Association 9,499,175
- ---------------------------------------------------------------------------------------------
69,150 SunAmerica, Inc. 3,284,625
- ---------------------------------------------------------------------------------------------
205,672,100
- ---------------------------------------------------------------------------------------------
FINANCE (SAVINGS & LOAN)-0.21%
500,000 Ahmanson (H. F.) & Co. 13,250,000
- ---------------------------------------------------------------------------------------------
FOOD PROCESSING-1.21%
500,000 ConAgra, Inc. 20,625,000
- ---------------------------------------------------------------------------------------------
750,000 Hudson Foods, Inc.-Class A 12,937,500
- ---------------------------------------------------------------------------------------------
649,400 IBP, Inc. 32,794,700
- ---------------------------------------------------------------------------------------------
416,500 Interstate Bakeries Corp. 9,319,188
- ---------------------------------------------------------------------------------------------
75,676,388
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-127
<PAGE> 246
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FUNERAL SERVICES-0.94%
1,128,200 Service Corp. International $ 49,640,800
- ---------------------------------------------------------------------------------------------
258,300 Stewart Enterprises, Inc. 9,557,100
- ---------------------------------------------------------------------------------------------
59,197,900
- ---------------------------------------------------------------------------------------------
GAMING-0.33%
600,000 Mirage Resorts, Inc.(a) 20,700,000
- ---------------------------------------------------------------------------------------------
HOMEBUILDING-0.17%
504,750 Clayton Homes, Inc. 10,789,032
- ---------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.10%
97,500 Conseco Inc. 6,105,938
- ---------------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-1.80%
900,000 Allstate Corp. 37,012,500
- ---------------------------------------------------------------------------------------------
300,000 CIGNA Corp. 30,975,000
- ---------------------------------------------------------------------------------------------
400,000 ITT Hartford Group, Inc.(a) 19,350,000
- ---------------------------------------------------------------------------------------------
900,000 TIG Holdings, Inc. 25,650,000
- ---------------------------------------------------------------------------------------------
112,987,500
- ---------------------------------------------------------------------------------------------
MACHINE TOOLS-0.05%
100,000 Applied Power Inc.-Class A 3,000,000
- ---------------------------------------------------------------------------------------------
MACHINERY (HEAVY)-0.36%
500,000 Case Corp. 22,875,000
- ---------------------------------------------------------------------------------------------
MEDICAL (DRUGS)-4.26%
300,000 American Home Products Corp. 29,100,000
- ---------------------------------------------------------------------------------------------
800,000 Bergen Brunswig Corp. 19,900,000
- ---------------------------------------------------------------------------------------------
1,198,359 ICN Pharmaceuticals, Inc. 23,068,425
- ---------------------------------------------------------------------------------------------
150,000 Johnson & Johnson 12,843,750
- ---------------------------------------------------------------------------------------------
700,000 Mylan Laboratories 16,450,000
- ---------------------------------------------------------------------------------------------
500,000 Pfizer Inc. 31,500,000
- ---------------------------------------------------------------------------------------------
500,000 R.P. Scherer Corp.(a) 24,562,500
- ---------------------------------------------------------------------------------------------
2,000,000 Schering-Plough Corp. 109,500,000
- ---------------------------------------------------------------------------------------------
266,924,675
- ---------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-1.50%
160,000 Bausch & Lomb, Inc. 6,340,000
- ---------------------------------------------------------------------------------------------
1,500,000 Baxter International, Inc. 62,812,500
- ---------------------------------------------------------------------------------------------
250,300 Cordis Corp.(a) 25,155,150
- ---------------------------------------------------------------------------------------------
94,307,650
- ---------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-2.33%
250,000 Genesis Health Ventures, Inc.(a) 9,125,000
- ---------------------------------------------------------------------------------------------
550,000 Health Care and Retirement Corp.(a) 19,250,000
- ---------------------------------------------------------------------------------------------
530,000 Integrated Health Services, Inc. 13,250,000
- ---------------------------------------------------------------------------------------------
300,000 Living Centers of America, Inc.(a) 10,500,000
- ---------------------------------------------------------------------------------------------
640,000 Manor Care, Inc. 22,400,000
- ---------------------------------------------------------------------------------------------
750,000 OrNda Healthcorp(a) 17,437,500
- ---------------------------------------------------------------------------------------------
700,000 Quorum Health Group, Inc.(a) 15,400,000
- ---------------------------------------------------------------------------------------------
660,000 Sybron International Corp.(a) 15,675,000
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-128
<PAGE> 247
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES) (continued)
500,000 U.S. Healthcare, Inc. $ 23,250,000
- ---------------------------------------------------------------------------------------------
146,287,500
- ---------------------------------------------------------------------------------------------
METALS-0.08%
90,400 Harsco Corp. 5,254,500
- ---------------------------------------------------------------------------------------------
OFFICE AUTOMATION-2.21%
429,400 In Focus Systems, Inc.(a) 15,512,075
- ---------------------------------------------------------------------------------------------
900,000 Xerox Corp. 123,300,000
- ---------------------------------------------------------------------------------------------
138,812,075
- ---------------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.12%
200,000 Reynolds & Reynolds Co.-Class A 7,775,000
- ---------------------------------------------------------------------------------------------
OIL & GAS-0.51%
1,500,000 Occidental Petroleum Corp. 32,062,500
- ---------------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-1.03%
520,000 BJ Services Co.(a) 15,080,000
- ---------------------------------------------------------------------------------------------
300,000 Diamond Offshore Drilling, Inc.(a) 10,125,000
- ---------------------------------------------------------------------------------------------
400,000 Halliburton Co. 20,250,000
- ---------------------------------------------------------------------------------------------
600,000 Tidewater, Inc. 18,900,000
- ---------------------------------------------------------------------------------------------
64,355,000
- ---------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.56%
96,000 Bowater, Inc. 3,408,000
- ---------------------------------------------------------------------------------------------
455,800 James River Corp. of Virginia 10,996,175
- ---------------------------------------------------------------------------------------------
400,000 Mead Corp. 20,900,000
- ---------------------------------------------------------------------------------------------
35,304,175
- ---------------------------------------------------------------------------------------------
POLLUTION CONTROL-0.38%
800,000 WMX Technologies, Inc. 23,900,000
- ---------------------------------------------------------------------------------------------
PUBLISHING-0.25%
400,000 Scripps (E.W.) Co. 15,750,000
- ---------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.27%
667,100 Circle K Corp.(a) 16,927,663
- ---------------------------------------------------------------------------------------------
RETAIL STORES-0.07%
288,500 Intimate Brands, Inc. 4,327,500
- ---------------------------------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.88%
1,000,000 Millipore Corp. 41,125,000
- ---------------------------------------------------------------------------------------------
300,000 Varian Associates, Inc. 14,325,000
- ---------------------------------------------------------------------------------------------
55,450,000
- ---------------------------------------------------------------------------------------------
SEMICONDUCTORS-5.26%
700,000 Analog Devices, Inc.(a) 24,762,500
- ---------------------------------------------------------------------------------------------
1,800,000 Applied Materials, Inc.(a) 70,875,000
- ---------------------------------------------------------------------------------------------
1,400,000 Cypress Semiconductor Corp.(a) 17,850,000
- ---------------------------------------------------------------------------------------------
574,000 Electroglas, Inc.(a) 14,063,000
- ---------------------------------------------------------------------------------------------
350,000 Kemet Corp.(a) 8,356,250
- ---------------------------------------------------------------------------------------------
100,000 LAM Research Corp.(a) 4,575,000
- ---------------------------------------------------------------------------------------------
600,000 LSI Logic Corp.(a) 19,650,000
- ---------------------------------------------------------------------------------------------
360,000 Novellus Systems, Inc.(a) 19,440,000
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-129
<PAGE> 248
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
SEMICONDUCTORS (continued)
360,000 Sierra Semiconductor Corp.(a) $ 4,995,000
- ---------------------------------------------------------------------------------------------
2,800,000 Texas Instruments Inc. 144,900,000
- ---------------------------------------------------------------------------------------------
329,466,750
- ---------------------------------------------------------------------------------------------
SHOES & RELATED APPAREL-0.06%
50,000 Nike, Inc.-Class B 3,481,250
- ---------------------------------------------------------------------------------------------
STEEL-0.09%
121,900 J&L Specialty Steel, Inc. 2,285,625
- ---------------------------------------------------------------------------------------------
403,700 UNR Industries, Inc. 3,481,913
- ---------------------------------------------------------------------------------------------
5,767,538
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-2.85%
1,200,000 A T & T Corp. 77,700,000
- ---------------------------------------------------------------------------------------------
1,551,900 MFS Communications Co., Inc.(a) 82,638,675
- ---------------------------------------------------------------------------------------------
500,000 Tellabs, Inc.(a) 18,500,000
- ---------------------------------------------------------------------------------------------
178,838,675
- ---------------------------------------------------------------------------------------------
TELEPHONE-1.29%
1,000,000 Ameritech Corp. 59,000,000
- ---------------------------------------------------------------------------------------------
496,500 BellSouth Corp. 21,597,750
- ---------------------------------------------------------------------------------------------
80,597,750
- ---------------------------------------------------------------------------------------------
TOBACCO-3.82%
225,600 Dimon, Inc. 3,976,200
- ---------------------------------------------------------------------------------------------
2,600,000 Philip Morris Companies, Inc. 235,300,000
- ---------------------------------------------------------------------------------------------
239,276,200
- ---------------------------------------------------------------------------------------------
TRANSPORTATION-0.47%
647,600 CSX Corp. 29,546,750
- ---------------------------------------------------------------------------------------------
Total Domestic Common Stocks 3,986,519,486
- ---------------------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-6.88%
AUSTRALIA-0.35%
202,776 Broken Hill Proprietary Co. Ltd. (Conglomerates) 2,863,643
- ---------------------------------------------------------------------------------------------
1,000,000 News Corp. Ltd.-Preference Shares-ADR (Publishing) 19,250,000
- ---------------------------------------------------------------------------------------------
22,113,643
- ---------------------------------------------------------------------------------------------
CANADA-0.38%
500,000 Corel Corp. (Computer Software & Services)(a) 6,500,000
- ---------------------------------------------------------------------------------------------
402,100 Northern Telecom Ltd. (Telecommunications) 17,290,300
- ---------------------------------------------------------------------------------------------
23,790,300
- ---------------------------------------------------------------------------------------------
DENMARK-0.18%
233,000 Danisco A/S (Food Processing) 11,246,106
- ---------------------------------------------------------------------------------------------
FINLAND-0.06%
103,000 Nokia Corp.-Class A-ADR (Telecommuncations) 4,004,126
- ---------------------------------------------------------------------------------------------
FRANCE-0.94%
15,200 Docks De France S.A. (Retail-Food & Drug) 2,309,333
- ---------------------------------------------------------------------------------------------
4,800 Essilor International-Compagnie Generale d'Optique (Medical
Services) 917,459
- ---------------------------------------------------------------------------------------------
13,000 LVMH-Moet Hennessy Louis Vuitton (Beverages) 2,707,780
- ---------------------------------------------------------------------------------------------
7,260 Promodes S.A. (Retail Stores) 1,706,403
- ---------------------------------------------------------------------------------------------
16,900 Roussel Uclaf (Medical-Drugs) 2,864,406
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-130
<PAGE> 249
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FRANCE (continued)
1,200,000 SGS-Thomson Microelectronic N.V. (Semiconductors)(a) $ 48,300,000
- ---------------------------------------------------------------------------------------------
58,805,381
- ---------------------------------------------------------------------------------------------
GERMANY-0.06%
8,300 Mannesmann AG (Machinery-Heavy) 2,642,460
- ---------------------------------------------------------------------------------------------
31,500 VEBA A.G. (Electric Services) 1,337,296
- ---------------------------------------------------------------------------------------------
3,979,756
- ---------------------------------------------------------------------------------------------
HONG KONG-0.39%
1,080,000 HSBC Holdings PLC (Banking) 16,341,416
- ---------------------------------------------------------------------------------------------
700,000 Hutchison Whampoa Ltd.(Conglomerates) 4,263,821
- ---------------------------------------------------------------------------------------------
440,000 Sun Hung Kai Properties Ltd. (Real Estate) 3,599,094
- ---------------------------------------------------------------------------------------------
24,204,331
- ---------------------------------------------------------------------------------------------
ITALY-0.50%
156,800 Fila Holding S.p.A.-ADR (Retail Stores) 7,134,400
- ---------------------------------------------------------------------------------------------
7,620,000 Telecom Italia Mobile S.p.A. (Telecommunications)(a) 13,386,729
- ---------------------------------------------------------------------------------------------
7,020,000 Telecom Italia S.p.A. (Telecommunications) 10,887,216
- ---------------------------------------------------------------------------------------------
31,408,345
- ---------------------------------------------------------------------------------------------
MALAYSIA-0.05%
301,000 Leader Universal Holdings (Electronic
Components/Miscellaneous) 687,404
- ---------------------------------------------------------------------------------------------
272,000 Malayan Banking Berhad (Banking) 2,291,924
- ---------------------------------------------------------------------------------------------
2,979,328
- ---------------------------------------------------------------------------------------------
NETHERLANDS-0.44%
500,000 Madge Networks N.V. (Computer Networking)(a) 22,375,000
- ---------------------------------------------------------------------------------------------
10,900 Verenigde Nederlandse Utgevbedri Verigd Bezit (Publishing) 1,496,398
- ---------------------------------------------------------------------------------------------
40,000 Wolters Kluwer N.V. (Publishing) 3,783,884
- ---------------------------------------------------------------------------------------------
27,655,282
- ---------------------------------------------------------------------------------------------
NEW ZEALAND-0.44%
6,115,300 Telecom Corp. of New Zealand Ltd. (Telecommunications) 25,666,988
- ---------------------------------------------------------------------------------------------
29,800 Telecom Corp. of New Zealand Ltd.-ADR (Telecommunications) 2,067,375
- ---------------------------------------------------------------------------------------------
27,734,363
- ---------------------------------------------------------------------------------------------
NORWAY-0.34%
3,835,000 UNI Storebrand A/S-Class A (Insurance-Multi-Line
Property)(a) 21,190,855
- ---------------------------------------------------------------------------------------------
SWEDEN-1.56%
1,020,000 ASTRA AB "A" (Medical-Drugs) 40,709,670
- ---------------------------------------------------------------------------------------------
100,000 ASTRA AB "B" Free(Medical-Drugs) 3,961,022
- ---------------------------------------------------------------------------------------------
800,000 Skandia Forsakring AB (Insurance-Multi-Line Property) 21,627,484
- ---------------------------------------------------------------------------------------------
1,600,000 Telefonaktiebolaget L.M. Ericsson-ADR
(Telecommunications)(a) 31,200,000
- ---------------------------------------------------------------------------------------------
97,498,176
- ---------------------------------------------------------------------------------------------
SWITZERLAND-0.04%
2,350 BBC Brown Boveri A.G. (Conglomerates) 2,729,952
- ---------------------------------------------------------------------------------------------
UNITED KINGDOM-1.15%
93,400 BOC Group PLC (Chemicals-Specialty) 1,306,932
- ---------------------------------------------------------------------------------------------
1,800,000 Burton Group PLC (Retail-Stores) 3,759,900
- ---------------------------------------------------------------------------------------------
721,200 Invesco PLC (Finance-Asset Management) 2,839,325
- ---------------------------------------------------------------------------------------------
54,800 Invesco PLC-ADR (Finance-Asset Management) 2,123,500
- ---------------------------------------------------------------------------------------------
</TABLE>
FS-131
<PAGE> 250
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
UNITED KINGDOM (continued)
125,400 Orthofix International N.V. (Medical Services)(a) $ 924,825
- ---------------------------------------------------------------------------------------------
320,000 SmithKline Beecham-ADR (Medical-Drugs) 17,760,000
- ---------------------------------------------------------------------------------------------
3,982,300 Standard Chartered PLC (Finance-Asset Management) 33,891,914
- ---------------------------------------------------------------------------------------------
67,420 Thorn EMI PLC (Leisure & Recreation) 1,587,863
- ---------------------------------------------------------------------------------------------
720,100 Waste Management International PLC-ADR (Pollution
Control)(a) 7,741,075
- ---------------------------------------------------------------------------------------------
71,935,334
- ---------------------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 431,275,278
- ---------------------------------------------------------------------------------------------
PREFERRED STOCKS-0.07%
PUBLISHING-0.07%
150,000 Time Warner Financing-$1.24 Convertible Pfd. 4,687,500
- ---------------------------------------------------------------------------------------------
Total Preferred Stocks 4,687,500
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
U.S. TREASURY SECURITIES-13.91%
U.S. Treasury Bills-10.69%(b)
$189,000,000(c) 5.46%, 01/04/96 189,007,560
- ---------------------------------------------------------------------------------------------
94,000,000 5.41%, 01/11/96 93,955,820
- ---------------------------------------------------------------------------------------------
340,945,000(c) 5.38%, 04/04/96 336,625,226
- ---------------------------------------------------------------------------------------------
52,000,000 5.195%, 06/06/96 50,891,880
- ---------------------------------------------------------------------------------------------
Total U.S. Treasury Bills 670,480,486
- ---------------------------------------------------------------------------------------------
U.S. Treasury Notes-3.22%
193,000,000 6.75%, 05/31/99 201,594,531
- ---------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 872,075,017
- ---------------------------------------------------------------------------------------------
Total Investments (excluding Repurchase Agreements) 5,294,557,281
- ---------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-14.57%(d)
158,540,664 Daiwa Securities America Inc., 5.92% 01/02/96(e) 158,540,664
- ---------------------------------------------------------------------------------------------
615,000,000 Goldman, Sachs & Co., 5.92% 01/02/96(f) 615,000,000
- ---------------------------------------------------------------------------------------------
140,000,000 Morgan Stanley Group, Inc., 5.90% 01/02/96(g) 140,000,000
- ---------------------------------------------------------------------------------------------
Total Repurchase Agreements 913,540,664
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.02% 6,208,097,945
- ---------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.98% 61,385,301
- ---------------------------------------------------------------------------------------------
NET ASSETS-100.00% $6,269,483,246
=============================================================================================
</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) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(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. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(e) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
(f) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$1,195,786,044. Collateralized by $1,106,121,000 U.S. Treasury obligations,
5.50% to 11.25% due 01/31/98 to 02/15/23.
(g) Entered into 12/29/95 with a maturing value of $140,091,778. Collateralized
by $111,455,000 U.S. Treasury obligations, 8.125% due 08/15/19.
Abbreviations:
ADR - American Depositary Receipt
Pfd. - Preferred
See Notes to Financial Statements.
FS-132
<PAGE> 251
Financials
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $4,631,096,859) $5,294,557,281
- -----------------------------------------------------------------------------------------
Repurchase agreements (cost $913,540,664) 913,540,664
- -----------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $7,114,663) 7,150,218
- -----------------------------------------------------------------------------------------
Receivables for:
Investments sold 14,437,942
- -----------------------------------------------------------------------------------------
Fund shares sold 66,767,804
- -----------------------------------------------------------------------------------------
Dividends and interest 9,096,834
- -----------------------------------------------------------------------------------------
Variation margin 525,000
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 34,041
- -----------------------------------------------------------------------------------------
Other assets 249,239
- -----------------------------------------------------------------------------------------
Total assets 6,306,359,023
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 16,472,174
- -----------------------------------------------------------------------------------------
Fund shares reacquired 8,226,996
- -----------------------------------------------------------------------------------------
Deferred compensation plan 34,041
- -----------------------------------------------------------------------------------------
Options written 1,875,000
- -----------------------------------------------------------------------------------------
Accrued advisory fees 3,162,715
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 11,268
- -----------------------------------------------------------------------------------------
Accrued distribution fees 4,682,938
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 1,098,699
- -----------------------------------------------------------------------------------------
Accrued trustees' fees 8,295
- -----------------------------------------------------------------------------------------
Accrued operating expenses 1,303,651
- -----------------------------------------------------------------------------------------
Total liabilities 36,875,777
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $6,269,483,246
=========================================================================================
NET ASSETS:
Class A $3,408,952,023
=========================================================================================
Class B $2,860,531,223
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 127,137,684
=========================================================================================
Class B 107,329,577
=========================================================================================
Class A:
Net asset value and redemption price per share $ 26.81
=========================================================================================
Offering price per share:
(Net asset value of $26.81 divided by 94.50%) $ 28.37
=========================================================================================
Class B:
Net asset value and offering price per share $ 26.65
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-133
<PAGE> 252
Financials
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $504,254 foreign withholding tax) $ 41,169,729
- -----------------------------------------------------------------------------------------
Interest 33,567,137
- -----------------------------------------------------------------------------------------
Total investment income 74,736,866
- -----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 25,332,486
- -----------------------------------------------------------------------------------------
Custodian fees 412,698
- -----------------------------------------------------------------------------------------
Distribution fees -- Class A 5,911,494
- -----------------------------------------------------------------------------------------
Distribution fees -- Class B 16,466,004
- -----------------------------------------------------------------------------------------
Administrative service fees 137,307
- -----------------------------------------------------------------------------------------
Trustees' fees 30,524
- -----------------------------------------------------------------------------------------
Transfer agent fees -- Class A 4,038,205
- -----------------------------------------------------------------------------------------
Transfer agent fees -- Class B 4,161,427
- -----------------------------------------------------------------------------------------
Other 2,456,489
- -----------------------------------------------------------------------------------------
Total expenses 58,946,634
- -----------------------------------------------------------------------------------------
Less fees waived by advisor (502,799)
- -----------------------------------------------------------------------------------------
Net expenses 58,443,835
- -----------------------------------------------------------------------------------------
Net investment income 16,293,031
- -----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTIONS TRANSACTIONS:
Net realized gain (loss) from:
Investment securities 349,881,906
- -----------------------------------------------------------------------------------------
Foreign currencies 162,118
- -----------------------------------------------------------------------------------------
Futures contracts 61,002,538
- -----------------------------------------------------------------------------------------
Options contracts 1,111,099
- -----------------------------------------------------------------------------------------
412,157,661
- -----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities 554,511,731
- -----------------------------------------------------------------------------------------
Foreign currencies 84,524
- -----------------------------------------------------------------------------------------
Futures contracts 7,417,297
- -----------------------------------------------------------------------------------------
Options contracts (143,308)
- -----------------------------------------------------------------------------------------
561,870,244
- -----------------------------------------------------------------------------------------
Net gain from investment securities, foreign currencies, futures and
options transactions 974,027,905
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $990,320,936
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-134
<PAGE> 253
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 16,293,031 $ 9,941,431
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures and options transactions 412,157,661 (14,172,848)
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, futures and options contracts 561,870,244 36,857,970
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 990,320,936 32,626,553
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
Class A (10,460,381) (9,726,386)
- ----------------------------------------------------------------------------------------------
Class B -- --
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains
on investment securities:
Class A (183,638,497) (12,282,372)
- ----------------------------------------------------------------------------------------------
Class B (154,081,759) (6,028,782)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 1,629,870,392 585,993,203
- ----------------------------------------------------------------------------------------------
Class B 1,958,628,734 619,742,029
- ----------------------------------------------------------------------------------------------
Net increase in net assets 4,230,639,425 1,210,324,245
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,038,843,821 828,519,576
- ----------------------------------------------------------------------------------------------
End of period $6,269,483,246 $2,038,843,821
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $5,534,813,265 $1,946,314,139
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 6,075,815 243,165
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures and options
transactions 53,872,233 (20,565,172)
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, and futures and options
contracts 674,721,933 112,851,689
- ----------------------------------------------------------------------------------------------
$6,269,483,246 $2,038,843,821
==============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-135
<PAGE> 254
Financials
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
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 Fund's investment objective is to seek to achieve
long-term growth of capital by investing primarily in equity securities judged
by the Fund's investment advisor to be undervalued relative to the investment
advisor's appraisal of the current or projected earnings of the companies
issuing the securities, or relative to current market values of assets owned by
the companies issuing the securities or relative to the equity market generally.
Income is a secondary objective.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of 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. If a mean is not available, as is the case in some foreign
markets, the closing bid will be used absent a last sales price. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the mean
of the closing bid and asked prices. Debt obligations that are issued or
guaranteed by the U.S. Treasury 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 and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued at the mean between last bid and asked prices based upon
quotes furnished by independent sources. Securities for which market
quotations either are not readily available or are questionable 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. Generally, trading
in foreign securities 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 the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to 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 they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
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
FS-136
<PAGE> 255
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
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 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.
FS-137
<PAGE> 256
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 0.80% 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. AIM is currently
voluntarily waiving a portion of its advisory fees payable by the Fund to AIM to
the extent necessary to reduce the fees paid by the Fund at net asset levels
higher than those currently incorporated in the present advisory fee schedule.
AIM will receive a fee calculated at 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 to and including $2 billion, plus 0.60% of the
Fund's average daily net assets in excess of $2 billion. The waiver of fees is
entirely voluntary and the Board of Trustees would be advised of any decision by
AIM to discontinue the waiver. During the year ended December 31, 1995, AIM
voluntarily waived advisory fees in the amount of $502,799. The master
investment 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 services to the Fund. During the year ended December 31, 1995, AIM
was reimbursed $137,307 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the year ended December 31, 1995, AFS was paid
$4,741,201 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 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. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more assignees, its rights to all or a portion of
(a) compensation received by AIM Distributors from the Fund pursuant to the
Class B Plan (but not AIM Distributors' duties and obligations pursuant to the
Class B Plan) and (b) any contingent deferred sales charges payable to AIM
Distributors related to the Class B shares. During the year ended December 31,
1995, the Class A shares and the Class B shares paid AIM Distributors $5,911,494
and $16,466,004, respectively, as compensation pursuant to the Plans.
AIM Distributors received commissions of $7,659,031 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1995,
AIM Distributors received $2,052,439 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 year ended December 31, 1995, the Fund paid legal fees of $14,950
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 AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
FS-138
<PAGE> 257
Financials
NOTE 4 - BANK BORROWINGS
The Fund has a $56,800,000 committed line of credit with a financial institution
syndicate with Chemical Bank of New York as the administrative agent. Interest
on borrowings under the line of credit is payable on maturity or prepayment
date. During the period July 20, 1995 (effective date of line of credit
agreement) through December 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's committed
line.
NOTE 5 - 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, 1995 was
$7,344,684,429 and $5,108,145,003, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $724,875,156
- ------------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (68,891,499)
- ------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $655,983,657
==================================================================================================================
Cost of investments for tax purposes is $5,552,114,288.
</TABLE>
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------- -------------------------------
SHARES VALUE SHARES VALUE
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold:
Class A 79,351,992 $2,054,533,413 44,842,263 $ 956,547,274
- ------------------------------------------------------- ------------------------------- -------------------------------
Class B 75,466,438 1,966,370,940 30,585,526 650,657,626
- ------------------------------------------------------- ------------------------------- -------------------------------
Issued as reinvestment of dividends:
Class A 6,956,211 184,199,771 1,002,453 20,670,601
- ------------------------------------------------------- ------------------------------- -------------------------------
Class B 5,526,910 145,522,539 289,906 5,707,603
- ------------------------------------------------------- ------------------------------- -------------------------------
Reacquired:
Class A (23,428,920) (608,862,792) (18,339,133) (391,224,672)
- ------------------------------------------------------- ------------------------------- -------------------------------
Class B (5,847,788) (153,264,745) (1,727,299) (36,623,200)
- ------------------------------------------------------- ------------------------------- -------------------------------
138,024,843 $3,588,499,126 56,653,716 $1,205,735,232
======================================================= =========== ============== =========== ==============
</TABLE>
NOTE 7 - OPEN FUTURES CONTRACTS
At December 31, 1995, $16,669,000 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, 1995 were as follows:
<TABLE>
<CAPTION>
NUMBER
OF UNREALIZED
CONTRACT CONTRACTS MONTH/COMMITMENT APPRECIATION
- ------- ---------- --------------------- --------------
<S> <C> <C> <C>
S&P 500 Index 1500 contracts/March 96/Buy $ 11,292,015
================================================================================================================================
</TABLE>
NOTE 8 - OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended December 31, 1995 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
-------------------------
NUMBER
OF PREMIUMS
CONTRACTS RECEIVED
---------- -----------
<S> <C> <C>
Beginning of period -- --
- --------------------------------------------------------------------------------------------------------------------------
Written 27,850 $ 8,137,410
- --------------------------------------------------------------------------------------------------------------------------
Closed (2,000) (608,920)
- --------------------------------------------------------------------------------------------------------------------------
Exercised (18,250) (5,190,119)
- --------------------------------------------------------------------------------------------------------------------------
Expired (3,600) (606,679)
- --------------------------------------------------------------------------------------------------------------------------
End of period 4,000 $ 1,731,692
==========================================================================================================================
</TABLE>
FS-139
<PAGE> 258
Financials
Open call option contracts written at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUM 1995 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
----- -------- ------ --------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Boeing Co. Feb 70 2,000 $ 968,968 $(1,800,000) $ (831,032)
Computer Associates International, Inc. Jan 65 2,000 762,724 (75,000) 687,724
- ---------------------------------------------------------------------------------------------------------------------------------
4,000 $1,731,692 $(1,875,000) $ (143,308)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 9 - 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,
1995 and for a Class B share outstanding during each of the years in the
two-year period ended December 31, 1995 and the period October 18, 1993 (date
sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
1995 1994 1993 1992(a) 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 21.14 $ 20.82 $ 18.24 $ 17.55 $ 13.75
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Income from investment operations:
Net investment income 0.14 0.16 0.04 0.12 0.13
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Net gains on securities (both realized and
unrealized) 7.21 0.52 3.34 2.68 5.73
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Total from investment operations 7.35 0.68 3.38 2.80 5.86
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Less distributions:
Dividends from net investment income (0.09) (0.16) (0.03) (0.12) (0.14)
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Distributions from net realized capital gains (1.59) (0.20) (0.77) (1.99) (1.92)
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Total distributions (1.68) (0.36) (0.80) (2.11) (2.06)
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Net asset value, end of period $ 26.81 $ 21.14 $ 20.82 $ 18.24 $ 17.55
===================================================== ========== ========== ========= ========= =========
Total return(b) 34.85% 3.28% 18.71% 16.39% 43.45%
===================================================== ========== ========== ========= ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,408,952 $1,358,725 $ 765,305 $ 239,663 $ 152,149
===================================================== ========== ========== ========= ========= =========
Ratio of expenses to average net assets 1.12%(c)(d) 0.98% 1.09% 1.16% 1.22%
===================================================== ========== ========== ========= ========= =========
Ratio of net investment income to average net assets 0.74%(c)(e) 0.92% 0.30% 0.75% 0.89%
===================================================== ========== ========== ========= ========= =========
Portfolio turnover rate 151% 127% 177% 170% 135%
===================================================== ========== ========== ========= ========= =========
<CAPTION>
1990 1989 1988 1987 1986
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 14.53 $ 12.79 $ 11.47 $ 12.26 $ 12.90
- ---------------------------------------------------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.26 0.40 0.26 0.25 0.36
- ---------------------------------------------------- -------- -------- -------- -------- --------
Net gains on securities (both realized and
unrealized) 0.01 3.58 2.07 0.53 0.75
- ---------------------------------------------------- -------- -------- -------- -------- --------
Total from investment operations 0.27 3.98 2.33 0.78 1.11
- ---------------------------------------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.26) (0.43) (0.26) (0.39) (0.43)
- ---------------------------------------------------- -------- -------- -------- -------- --------
Distributions from net realized capital gains (0.79) (1.81) (0.75) (1.18) (1.32)
- ---------------------------------------------------- -------- -------- -------- -------- --------
Total distributions (1.05) (2.24) (1.01) (1.57) (1.75)
- ---------------------------------------------------- -------- -------- -------- -------- --------
Net asset value, end of period $ 13.75 $ 14.53 $ 12.79 $ 11.47 $ 12.26
==================================================== ======== ======== ======== ======== ========
Total return(b) 1.88% 31.54% 20.61% 5.96% 8.80%
==================================================== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 86,565 $ 76,444 $ 60,076 $ 55,527 $ 46,642
==================================================== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.21%(d) 1.00%(d) 1.00%(d) 1.00% 1.00%(d)
==================================================== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 1.87%(e) 2.65%(e) 1.98%(e) 1.91% 3.15%(e)
==================================================== ======== ======== ======== ======== ========
Portfolio turnover rate 131% 152% 124% 219% 134%
==================================================== ======== ======== ======== ======== ========
</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 $2,364,597,465.
(d) Ratios of expenses to average net assets prior to reduction of advisory fees
were 1.13%, 1.23%, 1.09%, 1.08% and 1.05% for 1995, 1990-88 and 1986,
respectively.
(e) Ratios of net investment income to average net assets prior to reduction of
advisory fees were 0.73%, 1.85%, 2.56%, 1.90% and 3.14% for 1995, 1990-88
and 1986, respectively.
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 21.13 $ 20.82 $ 21.80
- ---------------------------------------------------------------- ---------- -------- -------
Income from investment operations:
Net investment income (loss) (0.01) -- 0.02
- ---------------------------------------------------------------- ---------- -------- -------
Net gains (losses) on securities (both realized and unrealized) 7.12 0.51 (0.21)
- ---------------------------------------------------------------- ---------- -------- -------
Total from investment operations 7.11 0.51 (0.19)
- ---------------------------------------------------------------- ---------- -------- -------
Less distributions:
Dividends from net investment income -- -- (0.02)
- ---------------------------------------------------------------- ---------- -------- -------
Distributions from net realized capital gains (1.59) (0.20) (0.77)
- ---------------------------------------------------------------- ---------- -------- -------
Total distributions (1.59) (0.20) (0.79)
- ---------------------------------------------------------------- ---------- -------- -------
Net asset value, end of period $ 26.65 $ 21.13 $ 20.82
================================================================ ========== ======== =======
Total return(a) 33.73% 2.46% (0.74)%
================================================================ ========== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,860,531 $680,119 $63,215
================================================================ ========== ======== =======
Ratio of expenses to average net assets 1.94%(b) 1.90% 1.85%(c)
================================================================ ========== ======== =======
Ratio of net investment income (loss) to average net assets (0.08)%(b) 0.00% (0.46)%(c)
================================================================ ========== ======== =======
Portfolio turnover rate 151% 127% 177%
================================================================ ========== ======== =======
</TABLE>
(a) Total returns do not deduct contingent deferred sales charges and for
periods less than one year are not annualized.
(b) The ratios of expenses and net investment income to average net assets prior
to reduction of advisory fees were 1.96% and (0.09)% for 1995, respectively.
Ratios are based on average net assets of $1,646,600,430.
(c) Annualized.
FS-140
