<PAGE> 1
[AIM LOGO APPEARS HERE]
[GRAPHIC COLLAGE APPEARS HERE]
AIM HIGH YIELD FUND
ANNUAL REPORT
December 31, 1995
<PAGE> 2
AIM HIGH YIELD FUND
For shareholders who seek a high level of current income. The Fund invests
in a portfolio consisting primarily of high-yielding, lower-rated corporate
bonds.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM High Yield Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed without a sales
charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B share
performance reflects the applicable contingent deferred sales charge (CDSC)
for the period involved. The CDSC on Class B shares declines from 5% to 0%
at the beginning of the seventh year. The performance of the Fund's
Class B shares will differ from that of Class A shares.
o In 1995, the Fund paid distributions for Class A and Class B shares of
$0.948 and $0.87 per share, respectively.
o The Fund invests primarily in higher-yielding, lower-rated corporate bonds,
commonly known as "junk bonds." These bonds have a greater risk of price
fluctuation and loss of principal and income than U.S. government
securities, such as U.S. Treasury bonds and bills, which offer a government
guarantee as to the repayment of principal and interest if held to maturity.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o The Fund's portfolio composition is subject to change and there is no
assurance the Fund will continue to hold any one particular security.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Lipper Analytical Services, Inc., is an independent mutual fund performance
monitor. The unmanaged Lipper High Current Yield Funds Index represents an
average of the performance of the 30 largest high-yield funds. The unmanaged
Lipper General Bond Funds Index represents an average of the performance of
the 10 largest general bond funds. The unmanaged Lipper General U.S.
Treasury Index represents an average of the performance of the 10 largest
U.S. Treasury funds. The unmanaged Lipper BBB-Rated Funds Index represents
an average of the performance of the 30 largest BBB-rated funds. The
unmanaged Lipper Fixed-Income Funds Average represents an average of the
performance of all fixed-income funds Lipper tracks. The unmanaged Lipper
General Equity Funds Average represents an average of the performance of all
equity funds Lipper tracks.
o The First Boston High Yield Index tracks more than 270 segments within the
high-yield universe and includes credit quality, industry, security type,
and maturity.
o An investment cannot be made in any indexes listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
GROWTH IN ASSETS
1/ 1/95 $770.3 million
12/31/95 $1.44 billion
[BAR CHART]
A Message from
the Chairman
Dear Fellow Shareholder:
In one of the best years for bonds on record, AIM High Yield
Fund delivered solid total returns for Class A and Class B
shares of 16.86% and 15.91%, respectively, for the 12 months
ended December 31, 1995. The Fund closely tracked the 16.92%
one-year return logged for the Lipper High Current Yield
[PHOTO Funds Index.
Charles T. The Fund managed its strong showing in a record-breaking
Bauer, market that, for much of 1995, was favored by ideal conditions
Chairman of for high-yield bonds: declining interest rates, moderate
the Board of economic growth, and mild inflation. The keys to the Fund's
the Fund, performance were disciplined issue selection and a diversified
APPEARS HERE] portfolio of approximately 150 holdings. A complete
discussion of market conditions during the reporting period
and the Fund's investment strategy appears on page 2 of
this report.
One important reason investors choose a high-yield fund is to
seek to achieve higher current income. The Fund's attractive 30-day yield was
10.39% for Class A shares and 10.26% for Class B shares, based on maximum
offering price as of December 31, 1995. The yield calculation reflects the yield
to maturity of the securities in the portfolio, and includes both interest and
amortization of any discount or premium to the face value of the securities.
Net assets in the Fund increased dramatically during the year to $1.4
billion as of December 31, 1995. While the Fund's favorable market performance
was largely responsible, significant credit for this increase goes to our
shareholders who paid AIM the highest compliment with their continued support.
On September 20, 1995, the Fund's Sub-Advisory Agreement with CIGNA
Investments, Inc. (CII) ended. On that date, all investment management
responsibilities formerly held jointly with CII were assumed by A I M Advisors,
Inc. AIM has committed additional staff and resources as needed to perform as
sole investment advisor for the Fund going forward.
Although it has been a good year for AIM High Yield Fund, it is but one year.
From a historic perspective, a repeat of the year's impressive performance by
bond markets is unlikely. Therefore, even as we relish the success of a good
year, we are already looking ahead.
On a personal level, 1996 has important investment implications for all of
us. Clouds on the horizon in the form of the budget debate over retirement
benefits such as Medicare and Social Security programs accentuate the need to
build your own retirement nest egg, independent of any benefits which may--or
may not--be available to you when the time comes. For many in the baby boomer
generation, that's just 10 years away.
Thank you for continuing to rely on AIM High Yield Fund to help build your
financial future. We are ready to respond to any questions or comments you may
have about this report. Please call Client Services at 800-959-4246 during
normal business hours. For automated account information 24 hours a day, call
the AIM Investor Line toll-free at 800-246-5463.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 4
MANAGEMENT'S DISCUSSION & ANALYSIS
BONDS STAGE A DRAMATIC RECOVERY IN 1995
----------
Investors poured
almost $1.5
billion into
high-yield
funds in the
10 weeks ending
December 29, 1995.
----------
Healthy corporate profits, mild inflation, and moderate growth in the
economy mixed the powerful recipe that launched one of the strongest rallies in
bonds on record. The strength of the rally surprised many investors, coming on
the heels of the disappointing performance of bonds in 1994.
During 1995, general bond funds averaged total returns of 16.56%, as measured
by the Lipper General Bond Funds Index. Such performance would be a strong
showing for equity funds in a more typical year. Moreover, 1995 bond fund
returns outdistanced those achieved in 1993, a vintage year for bond investors
when interest rates fell to their lowest levels in a quarter-century.
Declining interest rates were the most visible catalyst driving bond markets
during the year. After boosting interest rates at a record clip in 1994,
the Federal Reserve Board reversed its policy and eased interest rates twice in
1995. It was the first time the central bank had lowered rates since 1992.
The bond market's rally was paced by a sharp drop in long-term yields, which
saw the benchmark 30-year U.S. Treasury fall to 5.95% by year-end, from
7.88% at the close of 1994. According to Lipper Analytical Services, Inc.,
general U.S. Treasury bond funds gained 20.89% for the year, closely followed
by corporate debt BBB-rated funds which rose 18.04%.
Prices of high-yield bonds, which tend to track economic cycles, lagged
behind other fixed-income classes amid concerns that a slowing economy would
impact rising corporate profits. Such concerns were not borne out as the year
progressed. With fourth-quarter earnings just coming in as of this writing,
Barron's estimated that corporate earnings were up 20% overall for the year,
thanks in particular to upside earnings surprises.
Of the companies reporting earnings in the third quarter of 1995, I/B/E/S
International Inc. reported in The Wall Street Journal that 55% were higher
than analysts' expectations, with 14% on target, and 31% below expectations.
These results compared favorably with second-quarter reports, of which 57%
exceeded expectations and 30% were below target.
In the final three months of the year, fixed-income funds actually
outperformed equity funds. The Lipper Fixed-Income Funds Average gained 3.53%
in the last quarter of 1995, compared to 3.05% for the Lipper General Equity
Funds Average.
As the year drew to a close, fixed-income markets were anticipating yet
another interest rate cut by the central bank and a credible budget compromise
in Congress. In December, the 30-year U.S. Treasury bond yield was pushed below
6% for the first time since late 1993. The further decline in interest rates
encouraged investors to direct funds to high-yield funds. Bloomberg recently
reported that investors poured almost $1.5 billion into high-yield funds in the
10 weeks ending December 29, 1995.
At year-end, economic conditions continued to favor bonds. Growth in the
economy was predicted at a 2.5% annual rate for the fourth quarter, with
inflation estimated at only 2.4%. Such modest growth lessens the demand for
borrowed funds and keeps interest rates down. It seemed a fitting finale for
1995, which ended triumphantly for investors with stocks at historic highs,
bond yields the lowest since 1993, and the U.S. dollar on solid ground.
YOUR INVESTMENT PORTFOLIO
A glance at the Fund's top 10 industry holdings confirms a successful
theme for AIM High Yield Fund during the reporting period--change. Seven of the
Fund's top 10 holdings were new to the list. The Fund's portfolio was dynamic
and broadly diversified during the reporting period. A rapidly changing market
calls for persistent diligence in credit analysis. Remember to keep in mind,
the Fund's portfolio composition is subject to change and there is no guarantee
the Fund will continue to hold any particular
2 See important Fund disclosure on inside front cover.
<PAGE> 5
Management's
Discussion & Analysis
security mentioned in this report.
Positions in telecommunications and cable TV companies--close to 20% of the
portfolio--comprised the largest weighting by year-end. Many of the Fund's
holdings reported strong earnings during the reporting period thanks to
expanding market penetration and increased sales, particularly overseas.
As the economy slowed during the year, the Fund sold issues in early cyclical
companies, including auto parts, steel, and selected paper and forest products.
The Fund reduced its position in chemical companies, and sold its specialty
chemical complement. Defensive positions in food and drug retailers, health
care, and established venue gaming companies were increased.
Among the new groups added to the portfolio during the year were oil and gas
services, consumer non-durables, and medical instruments/products.
The Fund had an average quality rating of Bf as evaluated by Standard &
Poor's Corporation (S&P), a widely known credit-rating agency. S&P's ratings are
historical and are based on an annual analysis of the Fund's credit quality,
composition, and management.
OUTLOOK FOR THE FUTURE
Most analysts and market watchers agree: 1995 will be a hard act to
follow. To trigger similar returns in 1996, the yield on the bellwether 30-year
U.S. Treasury bond would have to decline to just over 4%, a level not seen in
30 years. However, a decline to 5.75% for that same bond would generate a solid
total return of about 12%.
The pace of growth in corporate earnings, one of the strongest drivers for
the high-yield market, appeared to have slowed by year-end. Still, certain
positives remain. By pouring more than $1.5 billion into high-yield funds
during the 10 weeks ended December 29, investors have demonstrated phenomenal
demand for higher current income. By year-end, six-month certificates of
deposit yielded just 4.78%, compared to the more than 10% average yield from
high-yield funds.
Rather than make any projections of future market performance, AIM High Yield
Fund continues to look for value, one company at a time. By confining the scope
of our analysis to individual companies, we can maintain our focus on credit
fundamentals. We believe our commitment to this time-tested, quality-driven
strategy will best serve our shareholders over the long term.
- -------------------------------------------------------------------------------
CURRENT YIELDS
(30-day yields as of 12/31/95)
AIM HIGH YIELD FUND
Class A shares 10.39%
10-year U.S.
Treasury Note** 5.57%
6-month CDs* 4.78%
[BAR CHART]
10.26% was the 30-day yield for the Fund's Class B shares as of December 31,
1995. *Bank certificates of deposit, which are insured by the FDIC for up to
$100,000, are short-term investments that pay fixed principal and interest,
but are subject to fluctuating rollover rates and early withdrawal penalties.
CD income is calculated using the six-month annualized average monthly CD rate
reported by the Bank Rate Monitor. Fund shares are not insured and their value
will vary with market conditions. **Government securities, such as U.S.
Treasury bills and bonds, offer a high degree of safety and are guaranteed as
to the timely payment of principal and interest. Fund shares are not insured
and their value will vary with market conditions.
TOP 10 INDUSTRIES
(As of 12/31/95)
1. Telecommunications
2. Cable Television
3. Chemicals
4. Retail (Food & Drugs)
5. Paper & Forest Products
6. Advertising/Broadcasting
7. Textiles
8. Oil & Gas (Services)
9. Retail (Stores)
10. Gaming
MORNINGSTAR RATINGS
(As of 12/31/95)
AIM HIGH YIELD FUND CLASS A SHARES
Funds
in Hybrid
Period Rating Category
Overall **** NA
10 Years **** 756
5 Years ***** 1609
3 Years **** 2466
Morningstar's rating system of one (lowest) to five (highest) stars is
based on risk and total return ratios for three-, five-, and 10-year periods and
considers all loads, expenses, and fees. Ratings compare funds of similar
investment objectives and represent past performance, which is no guarantee of
comparable future results.
See important Fund disclosure on inside front cover. 3
<PAGE> 6
GROWTH OF A $10,000 INVESTMENT
AVERAGE ANNUAL TOTAL RETURNS
For periods ended December 31, 1995
<TABLE>
<CAPTION>
WITHOUT WITH
SALES CHARGE SALES CHARGE
<S> <C> <C>
CLASS A SHARES
1 Year 16.86% 11.26%
5 Years 18.07 16.93
10 Years 11.38 10.84
CLASS B SHARES
1 Year 15.91% 10.91%
Inception (9/1/93) 7.19 6.07
</TABLE>
<TABLE>
<CAPTION>
AIM High Yield Class A Shares AIM High Yield Class A Shares First
(w/o sales charge) (w/sales charge) Boston High Yield
<S> <C> <C> <C>
12/85 $10,000 $9,524 $10,000
12/86 $11,597 $11,046 $11,564
12/87 $11,953 $11,384 $12,318
12/88 $13,914 $13,252 $14,000
12/89 $14,078 $13,408 $14,055
12/90 $12,806 $12,197 $13,158
12/91 $18,208 $17,342 $18,916
12/92 $21,596 $20,568 $22,066
12/93 $25,569 $24,353 $26,239
12/94 $25,141 $23,945 $25,983
12/95 $29,380 $27,982 $30,500
</TABLE>
Past performance cannot guarantee comparable future results.
Source: Towers Data Systems HYPO(R).
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
The performance of Class B shares will differ from that of Class A shares due
to differing fees and expenses. For Fund performance calculations and
descriptions of indexes cited on this page, please refer to the inside front
cover of this report.
4
<PAGE> 7
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>
5
<PAGE> 8
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>
6
<PAGE> 9
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>
7
<PAGE> 10
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>
8
<PAGE> 11
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>
9
<PAGE> 12
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>
10
<PAGE> 13
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>
11
<PAGE> 14
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>
12
<PAGE> 15
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.
13
<PAGE> 16
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.
14
<PAGE> 17
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.
15
<PAGE> 18
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
16
<PAGE> 19
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.
17
<PAGE> 20
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>
18
<PAGE> 21
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.
19
<PAGE> 22
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
20
<PAGE> 23
Trustees
& Officers
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chairman Suite 1919
Chief Executive Officer Houston, TX 77046
A I M Management Group Inc. Robert H. Graham
President INVESTMENT ADVISOR
Bruce L. Crockett
Director, President, and John J. Arthur A I M Advisors, Inc.
Chief Executive Officer Senior Vice President 11 Greenway Plaza
COMSAT Corporation and Treasurer Suite 1919
Houston, TX 77046
Owen Daly II Gary T. Crum
Director Senior Vice President TRANSFER AGENT
Cortland Trust Inc.
Carol F. Relihan A I M Fund Services, Inc.
Carl Frischling Vice President and P.O. Box 4739
Partner Secretary Houston, TX 77210-4739
Kramer, Levin, Naftalis,
Nessen, Kamin & Frankel Dana R. Sutton CUSTODIAN
Vice President
Robert H. Graham and Assistant Treasurer State Street Bank & Trust Co.
President and Chief 225 Franklin Street
Operating Officer Robert G. Alley Boston, MA 02110
A I M Management Group Inc. Vice President
COUNSEL TO THE FUND
John F. Kroeger Stuart W. Coco
Formerly, Consultant Vice President Ballard Spahr
Wendell & Stockel Andrews & Ingersoll
Associates, Inc. Melville B. Cox 1735 Market Street
Vice President Philadelphia, PA 19103
Lewis F. Pennock
Attorney Karen Dunn Kelley COUNSEL TO THE TRUSTEES
Vice President
Ian W. Robinson Kramer, Levin, Naftalis,
Consultant; Former Executive Jonathan C. Schoolar Nessen, Kamin & Frankel
Vice President and Chief Vice President 919 Third Avenue
Financial Officer New York, NY 10022
Bell Atlantic Management P. Michelle Grace
Services, Inc. Assistant Secretary DISTRIBUTOR
Louis S. Sklar David L. Kite A I M Distributors, Inc.
Executive Vice President Assistant Secretary 11 Greenway Plaza
Hines Interests Suite 1919
Limited Partnership Nancy L. Martin Houston, TX 77046
Assistant Secretary
AUDITORS
Ofelia M. Mayo
Assistant Secretary KPMG Peat Marwick LLP
700 Louisiana
Kathleen J. Pflueger NationsBank Bldg.
Assistant Secretary Houston, TX 77002
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED TAX INFORMATION
AIM High Yield Fund Class A and Class B shares paid ordinary dividends in the
amounts of $0.948 and $0.87 per share, respectively, to shareholders during the
Fund's tax year ended December 31, 1995. Of these amounts, 0% is eligible for
the dividends received deduction for corporations. Missouri residents: During
the Fund's tax year ended December 31, 1995, 0% of the Fund's income was derived
from U.S. Treasury obligations.
<PAGE> 24
<TABLE>
<S> <C>
[PHOTO OF 11 GREENWAY PLAZA] THE AIM FAMILY OF FUNDS(R)
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund**
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE
OF SAFETY
AIM Intermediate Government Fund***
HIGH DEGREE OF SAFETY AND
CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND
CURRENT INCOME
AIM Money Market Fund
STABILITY, LIQUIDITY, AND
CURRENT TAX-FREE INCOME
AIM Tax-Exempt Cash Fund
*AIM Aggressive Growth Fund was closed to new
investors on July 18, 1995. **On May 1,
1995, AIM Utilities Fund broadened its
investment strategy to permit up to 80%
of its total assets to be invested in
AIM Management Group has provided leadership foreign securities, and was renamed AIM
in the mutual fund industry since 1976 and Global Utilities Fund. ***On September 25, 1995,
currently manages approximately $42 billion AIM Government Securities Fund was renamed
in assets for more than 2 million shareholders, AIM Intermediate Government Fund. For more
including individual investors, corporate clients, complete information about any AIM Fund(s),
and financial institutions. The AIM Family of including sales charges and expenses, ask
Funds(R) is distributed nationwide, and AIM your financial consultant or securities dealer
today ranks among the nation's top 20 mutual for a free prospectus(es). Please read the
fund companies in assets under management, prospectus(es) carefully before you invest or
according to Lipper Analytical Services, Inc. send money.
--------------
BULK RATE
[AIM LOGO APPEARS HERE] U.S. POSTAGE
PAID
A I M Distributors, Inc. HOUSTON, TX
11 Greenway Plaza, Suite 1919 Permit No.1919
Houston, TX 77046 --------------
</TABLE>
