<PAGE> 1
[AIM LOGO APPEARS HERE]
[GRAPHIC COLLAGE APPEARS HERE]
AIM BALANCED FUND
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE> 2
AIM BALANCED FUND
For shareholders who seek a high total return consistent with preservation of
capital by investing in a broadly diversified portfolio consisting of stocks
and bonds.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Balanced Fund performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value.
Unless otherwise indicated, Fund results were computed at net asset
value 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 become 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. Total return reflects reinvestment of all
distributions.
o In 1995, the Fund paid distributions of $0.455 and $0.32 for Class A
and Class B shares, respectively.
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 Past performance cannot guarantee comparable future results.
o The Fund's portfolio composition is subject to change, and there is no
assurance the Fund will continue to hold these same securities.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Industrial Average is a price-weighted average of 30
actively traded primarily industrial stocks.
o The Standard & Poor's 500 (S&P 500) is a group of unmanaged securities
widely regarded by investors to be representative of the stock market
in general.
o The Lehman Brothers Aggregate Bond Index is an unmanaged index
generally considered representative of intermediate and long-term
government and investment-grade corporate debt securities.
o The Lipper Balanced Funds Index is a net asset value weighted index of
the 30 largest funds within the balanced fund investment objective.
It is calculated daily with adjustments for distributions as of the
ex-dividend dates. It is compiled by Lipper Analytical Services,
Inc., an independent mutual fund performance monitor.
o An investment cannot be made in an index. 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 propsectus of the Fund.
<PAGE> 3
A Message from
the Chairman
Dear Fellow Shareholder:
Capitalizing on market rallies in both stocks and bonds, AIM
Balanced Fund delivered excellent total returns for the fiscal
[PHOTO OF year ended December 31, 1995. The Fund's performance was
Charles T. recognized in such major financial publications as The Wall
Bauer, Street Journal and Investor's Business Daily.
Chairman of We are pleased to report that total return during the
the Board of 12 months ended December 31, 1995, was 34.97% for Class A
the Fund, shares and 33.93% for Class B shares. Such performance
APPEARS HERE] contributed to the Fund's considerable growth in assets under
management during 1995. At the close of the fiscal year,
combined net assets of the Fund's Class A and B shares were
$164.9 million, up from $57.8 million when the year opened.
The number of Fund shareholders approximately doubled.
Indeed, 1995 was memorable for AIM overall as well as for your Fund.
AIM's net assets under management grew from $27 billion to approximately $42
billion. AIM now serves more than 2 million shareholders like you who continue
to count on our expertise and diligence in investment management.
However, like many market watchers, we are mindful that excellent
performance by both equities and bonds in a given year, as occurred in 1995, is
relatively unusual. Market cycles come and go, and the type of performance
experienced by stocks and bonds last year is unlikely to continue
uninterrupted. AIM, along with many analysts, cautions investors to keep in
mind that those who have retained a long-term perspective have generally
enjoyed the greatest returns on their investments.
Our more detailed discussion of the year's markets, your Fund's
strategies, and our outlook for the future appears in the Management's
Discussion & Analysis that begins on the following page.
On a personal level, 1996 has important investment implications for
all of us. The Washington budget debate over such retirement benefits as
Medicare and Social Security brings home the need to build your own retirement
nest egg independent of any benefits that may--or may not--be available to you
when the time comes. For many baby boomers, that is just 10 years away.
We appreciate your confidence in AIM Balanced Fund to provide income
and to help build your financial future. If you have any questions or
comments, please call Client Services at 800-959-4246 during normal business
hours. For automated account information 24 hours a day, dial the AIM Investor
Line toll-free at 800-246-5463.
Respectfully submitted,
/s/ Charles T. Bauer
Charles T. Bauer
Chairman
GROWTH IN ASSETS
$164.9 million 12/31/95
$57.8 million 12/31/94
<PAGE> 4
Management's
Discussion & Analysis
- ---------------------
. . .it was
the consensus
of economists and
other market
watchers
that interest rates
should remain stable
or decline and
that inflation should
remain under
control . . .
- ---------------------
FUND THRIVES AS STOCK AND BOND MARKETS SURGE
1995 was a dramatic year in financial markets. Continued strong earnings
reports by U.S. corporations, moderate economic growth, restrained inflation,
and declining interest rates all combined to fuel a bull market for both
equities and bonds.
Spearheaded by technology stocks, equities markets produced striking
results. The Dow Jones Industrial Average was up 36.83% for the year; the
broader Standard & Poor's Composite Index of 500 Stocks rose 37.45%. Your
Fund's total return very nearly matched these stock indexes' returns with a
balanced asset allocation of approximately 60% equities and 40% bonds during
1995. Total return for Class A shares of AIM Balanced Fund was 34.97%; for
Class B shares, 33.93%.
Technology stocks lost a bit of their luster late in the year after
some big names, including Intel and Microsoft, reported earnings
disappointments. Nevertheless, the fundamentals remained strong for many U.S.
firms. 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, 14% on target, and 31% below expectations.
As of this writing, only a limited number of fourth-quarter earnings reports
were available, and predictions concerning fourth-quarter earnings were mixed.
While stock markets repeatedly pushed such benchmarks as the Dow to
new highs during 1995, bonds also thrived in an environment of declining
interest rates and negligible inflation. The yield on a 30-year Treasury bond,
for example, dropped almost 2% during the year, from 7.88% to 5.95%. One
benchmark of bond performance, the Lehman Brothers Aggregate Bond Index,
produced a return of 18.47%, the kind of double-digit performance thought more
typical of equities markets.
YOUR INVESTMENT PORTFOLIO
AIM Balanced Fund management continued to seek both growth and income. Equities
in the portfolio are chosen primarily for potential capital appreciation. Bonds
are selected chiefly for income-producing potential. However, both equity and
fixed-income components of the portfolio are managed for total return.
Fund management substantially increased the number of securities in
the Fund's well-diversified portfolio during the fiscal year. As of December
31, 1995, the portfolio held 246 securities, up from 171 a year earlier. Of
course, the portfolio's composition is subject to change, and there is no
guarantee it will continue to hold any particular security.
During a year when technology stocks led the market's rise, the equity
portion of the Fund profited from holdings in this sector. The portfolio
included household names like Xerox and IBM. Your Fund also held such lesser-
known companies as Ascend Communications, an Internet access provider, and
Pixar, Inc., a digital animation firm that became better known after it
produced the computer-generated characters in the film Toy Story.
Technology stocks constituted as much as 20% of the Fund's holdings
during the fiscal year, but that proportion was reduced by a fourth to
approximately 15% by year-end. The Fund increased its holdings of financial
firms, including brokerage houses, insurance companies, and banks. Holdings in
this sector included American Express and Merrill Lynch. Overall, financial
services businesses tend to pay higher dividends than many technology firms, an
important consideration for a fund with an income orientation. They also tend
to do well in a stable interest rate environment, which many observers
anticipate for the near term.
See important Fund disclosure on inside front cover.
2
<PAGE> 5
Management's
Discussion & Analysis
The fixed-income portion of the portfolio benefited from a strategic
move by Fund managers to increase holdings of government and corporate
securities while interest rates were still relatively high. As rates declined,
the value of these holdings increased, contributing attractive income and
significant capital appreciation.
OUTLOOK FOR THE FUTURE
As the fiscal year closed, it was the consensus of economists and other market
watchers that interest rates should remain stable or decline and that inflation
should remain under control during 1996, providing a favorable climate for
equity and bond investors. While the partial government shutdown during
December prevented release of economic data from some federal agencies, private
data and anecdotal evidence indicated a fairly sharp slowdown in economic
growth during the fourth quarter of 1995. Lagging Christmas sales, rapid growth
in consumer indebtedness, a continuing wave of restructurings and layoffs
among U.S. corporations, and flat wages were among the phenomena fostering
concern that economic growth could be more sluggish than desired. Many expected
that the Federal Reserve Board would further reduce short-term interest rates,
and, in fact, the Board did in late January 1996.
Some stock market analysts have predicted a continuous surge in the
Dow during 1996, while others consider a market correction overdue. Most bond
specialists consider moderate, noninflationary growth the most likely scenario
for the economy in 1996.
Rather than making projections and educated guesses about the shape of
future markets, AIM remains committed to its disciplined investment strategy,
which examines the merits of each security it may buy or sell without the
guesswork of market timing. In equities investing, this discipline stresses
earnings history while never losing sight of market valuation. In fixed-income
investing, management carefully scrutinizes the credit and structure of each
issue and its potential impact on the portfolio.
- --------------------------------------------------------------------------------
TOP 20 HOLDINGS (As of 12/31/95)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY HOLDINGS* FIXED-INCOME HOLDINGS
<S> <C> <C> <C>
1. Xerox Corp. 1. U.S. Treasury Notes
2. International Business Machines Corp. 2. Manitoba (Province of)
3. Texas Instruments Inc. 3. Talisman Energy, Inc.
4. Gucci Group 4. TCI Communications Inc.
5. Enron Corp. 5. News America Holdings
6. Philip Morris Companies, Inc. 6. Time Warner Inc.
7. AT&T Corp. 7. General Motors Corp.
8. Mobil Corp. 8. Panhandle Eastern Pipe Line Co.
9. Pfizer Inc. 9. Ford Motor Credit Co.
10. Federal National Mortgage 10. Enron Corp.
Association
* May include common stocks, preferred stocks, and convertible bonds.
- --------------------------------------------------------------------------------------
</TABLE>
NET ASSET COMPOSITION
<TABLE>
<S> <C>
Bonds & Notes 20.64%
Common Stocks 42.95%
Preferred Stocks 3.10%
U.S. Treasury Securities 23.24%
Cash 6.35%
Other 3.72%
</TABLE>
This represents a summary of the portfolio as of December 31, 1995. The
portfolio's composition is subject to change, and there is no guarantee the
Fund will continue to hold any particular security.
See important Fund disclosure on inside front cover.
3
<PAGE> 6
- ------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
For periods ended December 31, 1995
<TABLE>
<CAPTION>
WITHOUT WITH
SALES CHARGE SALES CHARGE
<S> <C> <C>
Class A Shares
1 Year 34.97% 28.56%
5 Years 18.24 17.10
10 Years 9.94 9.40
Class B Shares
1 Year 33.93% 28.93%
Inception (10/18/93) 9.26 8.03
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
10 YEARS ENDED 1995
AIM Balanced Fund AIM Balanced Fund
Class A Shares (w/o sales charge) Class A Shares (w/sales charge) Lipper Balanced Fund Index S&P 500
<S> <C> <C> <C> <C>
12/85 $10,000 9,526 10,000 10,000
12/86 10,463 9,967 11,843 11,862
12/87 9,177 8,743 12,331 12,487
12/88 10,122 9,642 13,710 14,534
12/89 11,624 11,073 16,411 19,125
12/90 11,159 10,630 16,518 18,530
12/91 15,951 15,196 20,784 24,151
12/92 17,489 16,661 22,292 25,988
12/93 20,206 19,249 24,900 28,596
12/94 19,106 18,201 24,279 28,984
12/95 25,789 24,567 30,255 39,837
Past performance cannot guarantee comparable future results.
Sources: Lipper Analytical Services and Towers Data Systems HYPO(R)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
5 YEARS ENDED 1995
AIM Balanced Fund AIM Balanced Fund
Class A Shares (w/o sales charge) Class A Shares (w/sales charge) Lipper Balanced Fund Index S&P 500
<S> <C> <C> <C> <C>
12/90 $10,000 $9,530 $10,000 $10,000
12/91 14,295 13,622 12,583 13,034
12/92 15,673 14,935 13,496 14,025
12/93 18,107 17,256 15,075 15,432
12/94 17,122 16,316 14,699 15,642
12/95 23,110 22,023 18,316 21,499
Past performance cannot guarantee comparable future results.
Sources: Lipper Analytical Services and Towers Data Systems HYPO(R)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
An investment cannot be made in any indexes 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
- ---------------------
AIM Balanced Fund
gives shareholders
an opportunity for
capital appreciation
and a steady stream
of income from the
same investments.
- ---------------------
SEEKING BOTH INCOME AND GROWTH
By investing in both stocks and bonds, AIM Balanced Fund gives shareholders an
opportunity for capital appreciation and a steady stream of income from the
same investment. Consider the experience of James and Edith Jones, a
hypothetical couple who retired and invested a lump-sum distribution of
$100,000 in Class A shares of AIM Balanced Fund on December 31, 1985.
HOW AIM BALANCED FUND GENERATES INCOME . . .
They elected to receive all the income distributions from the account in cash
to supplement their pensions. During the 10 years ended 12/31/95, they received
an average of $3,890 per year in income distributions.
- -------------------------------------------------------------------------------
INCOME FROM INCOME DISTRIBUTIONS
Total received 1986-1995: $38,907
<TABLE>
<CAPTION>
Income distributions
<S> <C>
12/85 $0
12/86 5,476
12/87 6,674
12/88 4,146
12/89 3,777
12/90 2,764
12/91 2,764
12/92 2,764
12/93 2,690
12/94 3,595
12/95 4,258
</TABLE>
Past performance cannot guarantee comparable future results
- -------------------------------------------------------------------------------
. . . AND GROWTH
While the Joneses were receiving this steady stream of income, the combination
of reinvested capital gains distributions plus appreciation in the portfolio's
holdings meant the value of their initial $100,000 investment almost doubled,
growing to $179,862 in 10 years.
- -------------------------------------------------------------------------------
CAPITAL APPRECIATION
12/31/85-12/31/95
<TABLE>
<CAPTION>
Cumulative Income Distributions
<S> <C> <C>
12/85 $0 $179,862
12/86 5,600
12/87 12,800
12/88 17,570
12/89 22,120
12/90 25,570
12/91 29,120
12/92 32,760
12/93 36,380
12/94 41,320
12/95 47,330
</TABLE>
Past performance cannot guarantee comparable future results.
- -------------------------------------------------------------------------------
See important Fund disclosure on inside front cover.
5
<PAGE> 8
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>
6
<PAGE> 9
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>
7
<PAGE> 10
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>
8
<PAGE> 11
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>
9
<PAGE> 12
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>
10
<PAGE> 13
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>
11
<PAGE> 14
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>
12
<PAGE> 15
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>
13
<PAGE> 16
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>
14
<PAGE> 17
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>
15
<PAGE> 18
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.
16
<PAGE> 19
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.
17
<PAGE> 20
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.
18
<PAGE> 21
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.
19
<PAGE> 22
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.
20
<PAGE> 23
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>
21
<PAGE> 24
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.
22
<PAGE> 25
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.
23
<PAGE> 26
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
24
<PAGE> 27
Trustees & Officers
<TABLE>
<S> <C> <C>
TRUSTEES OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chief Executive Officer Chairman Suite 1919
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director, President, and
Chief Executive Officer John J. Arthur A I M Advisors, Inc.
COMSAT Corporation Senior Vice President & Treasurer 11 Greenway Plaza
Suite 1919
Owen Daly II Gary T. Crum Houston, TX 77046
Director Senior Vice President
Cortland Trust Inc. DISTRIBUTOR
Carol F. Relihan
Carl Frischling Vice President & Secretary A I M Distributors, Inc.
Partner 11 Greenway Plaza
Kramer, Levin, Naftalis, Nessen, Dana R. Sutton Suite 1919
Kamin & Frankel Vice President & Assistant Treasurer Houston, TX 77046
Robert H. Graham Robert G. Alley CUSTODIAN
President and Chief Operating Officer Vice President
A I M Management Group Inc. State Street Bank and Trust Company
Stuart W. Coco 225 Franklin Street
John F. Kroeger Vice President Boston, MA 02110
Formerly, Consultant
Wendell & Stockel Associates, Inc. Melville B. Cox TRANSFER AGENT
Vice President
Lewis F. Pennock A I M Fund Services, Inc.
Attorney Karen Dunn Kelley P.O. Box 4739
Vice President Houston, TX 77210-4739
Ian W. Robinson
Consultant; Former Executive Vice Jonathan C. Schoolar AUDITORS
President and Chief Financial Officer Vice President
Bell Atlantic Management Services, Inc. KPMG Peat Marwick LLP
P. Michelle Grace 700 Louisiana
Louis S. Sklar Assistant Secretary NationsBank Bldg.
Executive Vice President Houston, TX 77002
Hines Interests David L. Kite
Limited Partnership Assistant Secretary LEGAL COUNSEL TO THE FUND
Nancy L. Martin Ballard Spahr Andrews & Ingersoll
Assistant Secretary 1735 Market Street
Philadelphia, PA 19103
Ofelia M. Mayo
Assistant Secretary LEGAL COUNSEL TO THE TRUSTEES
Kathleen J. Pflueger Kramer, Levin, Naftalis, Nessen
Assistant Secretary Kamin & Frankel
919 Third Avenue
Samuel D. Sirko New York, NY 10022
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Balanced Fund Class A and Class B shares paid ordinary dividends in the
amount of $0.455 and $0.32 per share, respectively, to shareholders during its
tax year ended December 31, 1995. Of these amounts, 32% is eligible for the
dividends received deduction for corporations. Missouri residents: During the
Fund's tax year ended December 31, 1995, 30% of the Fund's income was derived
from U.S. Treasury obligations.
<PAGE> 28
<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%
AIM Management Group has provided leadership in the of its total assets to be invested in foreign
mutual fund industry since 1976 and currently manages securities, and was renamed AIM Global Utilities Fund.
approximately $42 billion in assets for more than 2 ***On September 25, 1995, AIM Government Securities
million shareholders, including individual investors, Fund was renamed AIM Intermediate Government Fund. For
corporate clients, and financial institutions. The AIM more complete information about any AIM Fund(s),
Family of Funds(R) is distributed nationwide, and AIM including sales charges and expenses, ask your
today ranks among the nation's top 20 mutual fund financial consultant or securities dealer for a free
companies in assets under management, according to prospectus(es). Please read the prospectus(es)
Lipper Analytical Services, Inc. carefully before you invest or send money.
</TABLE>
---------------
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 ---------------
