<PAGE> 1
[PHOTO OF PEN, DESK TOP, AND SECTION OF CHECK.]
AIM HIGH
YIELD FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT JUNE 30, 1996
<PAGE> 2
AIM HIGH YIELD FUND
For shareholders who seek a high level of current income. The Fund invests in a
portfolio consisting primarily of high-yielding, lower-rated corporate bonds.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM High Yield Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed without a sales
charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B share
performance reflects the applicable contingent deferred sales charge (CDSC)
for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The performance of the Fund's Class B shares will differ from that of
Class A shares due to differences in sales charge structure and Fund
expenses.
o The 30-day yield is calculated on the basis of a formula defined by the
SEC. The formula is based on the portfolio's potential earnings from
dividends, interest, yield-to-maturity or yield-to-call of the bonds in the
portfolio, net of all expenses and expressed on an annualized basis.
o The Fund invests primarily in higher-yielding, lower-rated corporate bonds,
commonly known as "junk bonds." These bonds have a greater risk of price
fluctuation and loss of principal and income than U.S. government
securities, such as U.S. Treasury bonds and bills, which offer a government
guarantee as to the repayment of principal and interest if held to
maturity.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o The Fund's portfolio composition is subject to change and there is no
assurance the Fund will continue to hold any particular security.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Lipper Analytical Services, Inc., is an independent mutual fund performance
monitor. The unmanaged Lipper High Current Yield Funds Index represents an
average of the performance of the 30 largest high-yield funds.
o The First Boston High Yield Index tracks more than 270 segments within the
high-yield universe and includes credit quality, industry, security type,
and maturity.
o The Fund had an average quality rating of Bf as evaluated by Standard &
Poor's Corporation (S&P), a widely known credit-rating agency. S&P's
ratings are historical and are based on an annual analysis of the Fund's
credit quality, composition, and management.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE FDIC OR
ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE; AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
During periods of market volatility, I am reminded of a
[PHOTO OF story. When asked what the market was going to do, J.P.
Charles T. Bauer, Morgan reportedly replied, "It will fluctuate."
Chairman of Fixed-income investors can certainly agree with that
the Board of statement: Bond markets have undergone major shifts in
the Fund, momentum at least twice in the first six months of 1996 as
APPEARS HERE] investors worried first about the possibility of recession
and then about rising inflation.
Those of you who are long-time investors, and those who
are brand-new shareholders in The AIM Family of Funds--Registered Trademark--,
should recognize that periods of falling prices in both the stock and bond
markets are inevitable. Indeed, we can learn important lessons about investing
in periods of market uncertainty.
In our experience, we have observed that the best action to take is to stay
focused--not on the market, but on your own long-term goals. The market can
change from day to day. Those who try to "time" the market, over time, tend to
be less successful than those who continue to follow a disciplined investment
strategy.
Short-term volatility in financial markets may tempt some investors to
liquidate stock and bond investments, regardless of their personal financial
objectives. Remember that time is the best medicine for uncertain markets. The
market's performance in recent months has been driven by concerns about the
possibility of an overheated economy and rising inflation. However, the latest
economic data suggest conditions that prompted 1995's strong market performance
should continue: Corporate earnings are healthy and economic growth is
moderate, without significant inflation. You may cushion the effects of
changing markets and reduce your risk exposure in any one type of security by
diversification--spreading your assets across several kinds of investments.
Prudent investors maintain a balanced portfolio of stock and bond investments,
with due consideration for their personal financial objectives, risk tolerance,
and investment time horizon.
There is one constant you can count on, regardless of changing
markets--AIM's commitment to you, our shareholders. At AIM, we take our
responsibility to you very seriously in managing a well-conceived and
significantly diversified menu of mutual funds. AIM investment management teams
provide a blend of skills, education, experience, and maturity that produces a
balanced, thoughtful approach to decision-making and quality investment
products. Consistent performance, coupled with outstanding customer service and
a highly professional staff, has helped AIM build relationships with 3 million
shareholders over the past 20 years.
Thank you for continuing to rely on AIM High Yield Fund. If you have any
questions or comments about this report, please call Client Services at
800-959-4246 during normal business hours. For automated account information 24
hours a day, call the AIM Investor Line toll-free at 800-246-5463.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
---------------------
... the best action
to take
is to stay
focused--not on
the market, but on
your own
long-term goals.
---------------------
<PAGE> 4
The Managers' Overview
MARKET VOLATILITY CHALLENGES INVESTORS IN 1996
A roundtable discussion with the fund management team for AIM High Yield Fund
about the six-month reporting period ended June 30, 1996.
- --------------------------------------------------------------------------------
Q. HOW DID AIM HIGH YIELD FUND PERFORM DURING THE REPORTING PERIOD?
A: It was a difficult period for fixed-income investors, although lower-grade
bonds outperformed higher-grade bonds. The Fund finished the six-month
period with total returns of 5.16% and 4.86% for Class A and Class B
shares, respectively, outperforming the 4.27% return logged for the Lipper
High Current Yield Funds Index and the 3.77% return for the First Boston
High Yield Index. Net assets in the Fund rose to $1.8 billion as of June
30, 1996.
We know investors in high-yield funds are most attracted by current
income potential, and the Fund continued to deliver a competitive return.
The Fund's 30-day SEC yield was 9.70% for Class A shares and 9.42% for
Class B shares, based on maximum offering price as of June 30, 1996.
Q. WHAT WERE CONDITIONS LIKE IN THE BOND MARKET THE PAST SIX MONTHS?
A: Uncertainty dominated bond markets as investors became increasingly
concerned about the possibility of rising inflation. The rate of growth of
the gross domestic product shot up to 2.0% in the first quarter of 1996,
and growth in the second quarter had been predicted at 3.5% to 5%.
The foremost concern was that the Federal Reserve Board would nudge
interest rates higher to slow economic growth and forestall inflation, and
that drove most bond yields higher--and prices lower--during most of the
reporting period. High-yield bonds, by comparison, reacted more positively
to news of a stronger economy. Investors poured approximately $5 billion
into high-yield bond funds in the first six months of 1996, according to
The Investment Company Institute, a mutual fund industry trade group.
Q. WHY DID HIGH-YIELD BONDS PERFORM BETTER?
A: The most significant influence on the performance of high-yield bonds is
the general level of economic activity. When economic growth is
accelerating, as was indicated during the reporting period, investors in
high-yield bonds tend to behave differently from investors in high-grade
bonds. Investors in high-grade bonds tend to regard higher economic growth
as potentially inflationary, and that can exert downward pressure on the
value of the bonds and send bond yields higher.
Investors in high-yield bonds welcome a lively economy. Healthy
economic growth
===========================================
CURRENT YIELDS
30-DAY YIELDS AS OF 6/30/96
10-YEAR U.S. TREASURY NOTE 6.71%
AIM HIGH YIELD FUND (A) 9.70%
9.42% was the 30-day yield for the Fund's
Class B shares as of 6/30/96. Government
securities, such as U.S. Treasury bills,
notes, and bonds offer a high degree of
safety and are guaranteed as to the timely
payment of principal and interest if held
to maturity. Fund shares are not insured
and their value and yield will vary with
market conditions.
===========================================
===========================================
AVERAGE ANNUAL
TOTAL RETURNS
INCLUDING SALES CHARGES.
FOR PERIODS ENDED 6/30/96.
CLASS A SHARES
10 Years 10.12%
5 Years 13.11
1 Year 6.00*
CLASS B SHARES
Inception (9/1/93) 6.74%
1 Year 5.51**
*11.28% excluding sales charge. **10.51%
excluding sales charge. Past performance is
no guarantee of comparable future results.
===========================================
2
<PAGE> 5
tends to improve the earnings capacity of the bond-issuing companies and
ease credit concerns for lower-quality debt issuers. As a result,
high-yield bonds tend to track the performance of stocks more closely than
high-grade bonds in this type of economic environment. During the six
months covered by this report, high-yield bonds were the top-performing
domestic fixed-income sector, according to The Wall Street Journal.
Q. WHAT CHANGES WERE MADE IN THE FUND?
A: During the first half of 1996, the Fund continued to increase its exposure
in sectors that previously had been under-weighted or absent in the
portfolio, including retail and leisure--two of the three top-performing
sectors in the high-yield market thus far this year.
The Fund's largest concentrations continued to be in the media
sector--telecommunications, cable television, and broadcasting--which
comprised approximately 25% of the portfolio. After a strong performance in
1995, the media sector has lagged somewhat this year, reflecting the
greater interest rate sensitivity of deferred-interest securities more than
the group's underlying credit fundamentals. The outlook for the media
sector is positive, thanks to favorable telecommunications legislation
enacted in 1995 and prospects for further consolidations among regional
telephone companies, smaller wireless companies, and cellular operators.
The portfolio remained positioned in the single "B" credit-quality
sector of the market, as rated by Standard & Poor's. We feel that this
quality sector offers the most attractive risk/return trade-off between
interest rate risk and credit risk in the high-yield market.
Q. WHAT IS YOUR MARKET OUTLOOK FOR THE NEXT FEW MONTHS?
A: The outlook for high-yield securities is cautious given the mixed prospects
for corporate earnings for the rest of 1996. Further, the possibility of
inflation continues to concern investors in spite of mounting evidence that
the U.S. economy is growing reasonably and that inflationary pressures
remain modest. At its July meeting, the Fed elected to leave monetary
policy unchanged; the outlook for the rest of 1996 is less certain.
Reports of accelerating economic growth have prompted some analysts to
predict that the Fed will raise short-term interest rates in the coming
months. Others have suggested that market interest rates that have been
rising for most of the year may have forestalled any inflation threat,
precluding the necessity for Fed intervention. The Fed expects economic
growth will slow during the second half of the year, and that would lessen
the likelihood that monetary policy would be tightened.
The continued pace of economic growth is the key, and interestingly,
the consumer may play an important role. Strong consumer demand has helped
spur economic growth. While there has been much speculation that the
climbing level of consumer debt will have an eroding effect on demand,
household balance sheets have thus far remained healthy.
===========================================
PORTFOLIO COMPOSITION
AS OF 6/30/96
TOP 10 INDUSTRIES
1. TELECOMMUNICATIONS
2. CABLE TELEVISION
3. GAMING
4. ADVERTISING/BROADCASTING
5. PAPER AND FOREST PRODUCTS
6. RETAIL (STORES)
7. CHEMICALS
8. OIL & GAS (EXPLORATION & PRODUCTION)
9. RETAIL (FOOD AND DRUG)
10. LEISURE & RECREATION
Keep in mind, the Fund's portfolio
composition is subject to change and there
is no guarantee the Fund will continue to
hold any particular security mentioned in
this report.
===========================================
----------------------------
The Fed expects
economic growth
will slow during
the second half of the year,
and that would lessen
the likelihood that
monetary policy
would be tightened.
----------------------------
3
<PAGE> 6
Financials
SCHEDULE OF INVESTMENTS
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
BONDS AND NOTES-93.57%
ADVERTISING/BROADCASTING-5.77%
$ 9,500,000 Ackerley Communication Inc., Sr. Secured Series B Notes,
10.75%, 10/01/03 $ 9,903,750
- -------------------------------------------------------------------------------------------
18,180,000 EchoStar Satellite Broadcast, Sr. Disc. Notes,
13.125%, 03/15/04(a)(b) (Acquired 03/19/96-06/10/96; Cost
$11,391,400) 11,226,150
- -------------------------------------------------------------------------------------------
9,000,000 Granite Broadcasting Corp., Sr. Sub. Notes,
10.375%, 05/15/05 8,820,000
- -------------------------------------------------------------------------------------------
13,700,000 Katz Corp., Sr. Sub. Notes,
12.75%, 11/15/02 15,207,000
- -------------------------------------------------------------------------------------------
9,500,000 Rogers Cable Systems, Sr. Secured Second Priority Notes,
10.00%, 03/15/05 9,357,500
- -------------------------------------------------------------------------------------------
20,000,000 Rogers Communications Inc., Conv. Notes,
5.50%, 05/20/13(c) 7,250,000
- -------------------------------------------------------------------------------------------
15,430,000 SFX Broadcasting, Inc., Sr. Sub. Notes,
10.75%, 05/15/06(a) (Acquired 05/23/96-05/29/96; Cost
$15,434,750) 15,314,275
- -------------------------------------------------------------------------------------------
Sinclair Broadcasting Group, Sr. Sub. Notes,
2,525,000 10.00%, 12/15/03 2,411,375
- -------------------------------------------------------------------------------------------
13,850,000 10.00%, 09/30/05 13,226,750
- -------------------------------------------------------------------------------------------
17,560,000 United International Holdings, Inc., Sr. Secured Disc. Notes,
14.00%, 11/15/99(c) 11,551,700
- -------------------------------------------------------------------------------------------
104,268,500
- -------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-0.91%
15,879,000 K & F Industries Inc., Sr. Sub. Deb.,
13.75%, 08/01/01 16,514,160
- -------------------------------------------------------------------------------------------
AIRLINES-1.32%
15,370,000 Airplanes Pass Through Trust, Sub. Bonds,
10.875%, 03/15/19 16,023,225
- -------------------------------------------------------------------------------------------
2,000,000 Continental Airlines, Inc., Conv. Sr. Sub. Notes,
6.75%, 04/15/06(a) (Acquired 02/27/96; Cost $1,999,275) 2,395,000
- -------------------------------------------------------------------------------------------
5,390,000 Greenwich Air Services, Inc., Sr. Notes,
10.50%, 06/01/06 5,336,100
- -------------------------------------------------------------------------------------------
23,754,325
- -------------------------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.54%
9,000,000 Aftermarket Technology Corp., Sr. Sub. Notes,
12.00%, 08/01/04 9,765,000
- -------------------------------------------------------------------------------------------
BEVERAGES-0.59%
60,000,000 Coca-Cola Enterprises Inc., Putable Notes,
7.24%, 06/20/20(c) 10,590,600
- -------------------------------------------------------------------------------------------
BUSINESS SERVICES-0.72%
13,000,000 Neodata Services Inc., Sr. Deferred Coupon Notes,
12.00%, 05/01/03 13,000,000
- -------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 7
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
CABLE TELEVISION-8.23%
$14,672,000 CAI Wireless Systems Inc., Sr. Notes,
12.25%, 09/15/02 $15,332,240
- -------------------------------------------------------------------------------------------
10,900,000 Century Communications, Sr. Sub. Deb.,
11.875%, 10/15/03 11,581,250
- -------------------------------------------------------------------------------------------
20,100,000 Comcast UK Cable, Sr. Deb.,
11.20%, 11/15/07(b) 11,607,750
- -------------------------------------------------------------------------------------------
22,000,000 Diamond Cable Community Co., Sr. Disc. Notes,
11.75%, 12/15/05(b) 12,925,000
- -------------------------------------------------------------------------------------------
11,000,000 Fonorola Inc., Sr. Yankee Notes,
12.50%, 08/15/02 11,880,000
- -------------------------------------------------------------------------------------------
7,400,000 Fundy Cable Ltd., Sr. Yankee Secured Second Priority Notes,
11.00%, 11/15/05 7,474,000
- -------------------------------------------------------------------------------------------
10,500,000 Groupe Videotron Ltee, Sr. Notes,
10.625%, 02/15/05 10,972,500
- -------------------------------------------------------------------------------------------
21,200,000 International CableTel, Inc., Sr. Notes,
11.50%, 02/01/06(b) 11,978,000
- -------------------------------------------------------------------------------------------
8,525,000 Marcus Cable Co., Sr. Deb.,
11.875%, 10/01/05 8,748,781
- -------------------------------------------------------------------------------------------
12,500,000 Marcus Cable Co., Sr. Disc. Notes,
14.25%, 12/15/05(b) 7,687,500
- -------------------------------------------------------------------------------------------
13,245,000 Rifkin Acquisition Partners L.L.P., Sr. Sub. Notes,
11.125%, 01/15/06 12,946,987
- -------------------------------------------------------------------------------------------
15,970,000 Telewest PLC, Sr. Yankee Disc. Deb.,
11.00%, 10/01/07(b) 9,422,300
- -------------------------------------------------------------------------------------------
1,000,000 Videotron Holdings PLC, Sr. Disc. Notes,
11.125%, 07/01/04(b) 735,000
- -------------------------------------------------------------------------------------------
2,300,000 Videotron Ltd., Sr. Sub. Notes,
10.25%, 10/15/02 2,369,000
- -------------------------------------------------------------------------------------------
12,520,000 Wireless One Inc., Sr. Notes,
13.00%, 10/15/03 12,958,200
- -------------------------------------------------------------------------------------------
148,618,508
- -------------------------------------------------------------------------------------------
CHEMICALS-4.31%
9,600,000 Applied Extrusion Technologies, Inc., Sr. Series B Notes,
11.50%, 04/01/02 9,696,000
- -------------------------------------------------------------------------------------------
10,600,000 Arcadian Partners, L.P., Sr. Series B Notes,
10.75%, 05/01/05 11,448,000
- -------------------------------------------------------------------------------------------
9,000,000 Berry Plastics Corp., Sr. Sub. Notes,
12.25%, 04/15/04 9,585,000
- -------------------------------------------------------------------------------------------
7,750,000 BPC Holdings Corp., Sr. Notes,
12.50%, 06/15/06(a) (Acquired 06/12/96; Cost $7,750,000) 7,846,875
- -------------------------------------------------------------------------------------------
14,500,000 Crain Industries, Inc., Sr. Sub. Notes,
13.50%, 08/15/05 15,442,500
- -------------------------------------------------------------------------------------------
13,415,000 Laroche Industries, Inc., Sr. Sub. Notes,
13.00%, 08/15/04 14,219,900
- -------------------------------------------------------------------------------------------
8,834,000 Polymer Group, Inc., Sr. Notes,
12.25%, 07/15/02 9,540,720
- -------------------------------------------------------------------------------------------
77,778,995
- -------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
CHEMICALS (SPECIALTY)-0.23%
$ 4,000,000 Texas Petrochemical Corp., Sr. Sub. Notes,
11.125%, 07/01/06(a) (Acquired 06/25/96; Cost $4,000,000) $ 4,090,000
- -------------------------------------------------------------------------------------------
COMPUTER MINI/PCS-0.10%
1,500,000 Unisys Corp., Conv. Sub. Notes,
8.25%, 03/15/06 1,845,000
- -------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-0.89%
13,000,000 Exide Electronics Group, Inc., Sr. Sub. Notes,
11.50%, 03/15/06(a)(d) (Acquired 03/07/96-5/22/96; Cost
$13,620,000) 13,780,000
- -------------------------------------------------------------------------------------------
2,000,000 Storage Technology Corp., Conv. Deb.,
8.00%, 05/31/15 2,372,500
- -------------------------------------------------------------------------------------------
16,152,500
- -------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES-0.90%
15,670,000 Hines Horticulture, Inc., Sr. Sub. Notes,
11.75%, 10/15/05 16,296,800
- -------------------------------------------------------------------------------------------
CONTAINERS-2.23%
18,000,000 Ivex Holdings Corp., Sr. Disc. Series B Deb.,
13.25%, 03/15/05(b) 10,845,000
- -------------------------------------------------------------------------------------------
6,500,000 Ivex Packaging Corp., Sr. Sub. Notes,
12.50%, 12/15/02 6,841,250
- -------------------------------------------------------------------------------------------
10,000,000 MVE, Inc., Sr. Notes,
12.50%, 02/15/02 10,425,000
- -------------------------------------------------------------------------------------------
6,750,000 MVE, Inc., Sr. Secured Notes,
12.50%, 02/15/02(e) 7,239,375
- -------------------------------------------------------------------------------------------
4,861,000 Silgan Holdings Inc., Sr. Disc. Deb.,
13.25%, 12/15/02 4,921,763
- -------------------------------------------------------------------------------------------
40,272,388
- -------------------------------------------------------------------------------------------
ENERGY (ALTERNATE SOURCES)-1.86%
10,000,000 CE Casecnan Water & Energy, Series A Sr. Notes,
11.45%, 11/15/05(a) (Acquired 11/21/95; Cost $10,000,000) 10,075,000
- -------------------------------------------------------------------------------------------
21,575,000 Petroleum Heat & Power Company, Inc., Sub. Deb.,
12.25%, 02/01/05 23,516,750
- -------------------------------------------------------------------------------------------
33,591,750
- -------------------------------------------------------------------------------------------
FINANCE (LEASING COMPANIES)-0.94%
Sea Containers Ltd., Sr. Sub. Deb.,
5,350,000 Series A, 12.50%, 12/01/04 5,992,000
- -------------------------------------------------------------------------------------------
10,220,000 Series B, 12.50%, 12/01/04 11,037,600
- -------------------------------------------------------------------------------------------
17,029,600
- -------------------------------------------------------------------------------------------
FOOD/PROCESSING-1.51%
17,263,000 American Rice Inc., Secured Mortgage Notes,
13.00%, 07/31/02 15,623,015
- -------------------------------------------------------------------------------------------
12,385,000 Pilgrim's Pride Corp., Sr. Sub. Notes,
10.875%, 08/01/03 11,703,825
- -------------------------------------------------------------------------------------------
27,326,840
- -------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
FURNITURE-0.52%
$ 9,500,000 Simmons Co., Sr. Sub. Notes,
10.75%, 04/15/06(a) (Acquired 04/15/96-05/09/96; Cost
$9,495,625) $ 9,452,500
- -------------------------------------------------------------------------------------------
GAMING-6.34%
Aztar Corp., Sr. Sub. Notes,
6,510,000 11.00%, 10/01/02 6,770,400
- -------------------------------------------------------------------------------------------
9,460,000 13.75%, 10/01/04 10,879,000
- -------------------------------------------------------------------------------------------
11,000,000 Bally's Grand Inc., First Mortgage Notes,
10.375%, 12/15/03 12,072,500
- -------------------------------------------------------------------------------------------
16,510,000 Coast Hotels & Casinos Inc., First Mortgage Notes,
13.00%, 12/15/02(a) (Acquired 01/23/96; Cost $16,071,329) 17,913,350
- -------------------------------------------------------------------------------------------
10,000,000 GNF Corp., First Mortgage Notes,
10.625%, 04/01/03 10,875,000
- -------------------------------------------------------------------------------------------
11,000,000 Grand Casinos Inc., First Mortgage Notes,
10.125%, 12/01/03 11,275,000
- -------------------------------------------------------------------------------------------
7,900,000 Harveys Casino Resorts, Sr. Sub. Notes,
10.625%, 06/01/06 8,038,250
- -------------------------------------------------------------------------------------------
17,400,000 Showboat Marina Casino Partnership & Showboat Marina
Financial Corp., First Mortgage Notes,
13.50%, 03/15/03(a) (Acquired 03/21/96-05/07/96; Cost
$17,890,250) 18,879,000
- -------------------------------------------------------------------------------------------
17,680,000 Trump Atlantic City Associates, First Mortgage Notes,
11.25%, 05/01/06 17,768,400
- -------------------------------------------------------------------------------------------
114,470,900
- -------------------------------------------------------------------------------------------
HOME BUILDING-0.95%
17,840,000 Continental Homes Holding Corp., Sr. Notes,
10.00%, 04/15/06 17,126,400
- -------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.95%
16,320,000 American Life Holding Co., Sr. Sub. Notes,
11.25%, 09/15/04 17,217,600
- -------------------------------------------------------------------------------------------
LEISURE & RECREATION-3.74%
15,000,000 American Skiing Corp., Sr. Sub. Notes,
12.00%, 07/15/06(a) (Acquired 06/25/96; Cost $14,574,750) 14,737,500
- -------------------------------------------------------------------------------------------
10,250,000 Cobb Theatres L.L.C., Sr. Secured Notes,
10.625%, 03/01/03(a) (Acquired 02/29/96-06/24/96; Cost
$10,423,125) 10,480,625
- -------------------------------------------------------------------------------------------
9,400,000 Cobblestone Golf Group, Inc., Sr. Notes,
11.50%, 06/01/03(a) (Acquired 05/29/96-06/12/96; Cost
$9,451,250) 9,517,500
- -------------------------------------------------------------------------------------------
9,000,000 Cobblestone Holdings, Inc., Sr. Notes,
13.50%, 06/01/04(b)(f) 3,352,500
- -------------------------------------------------------------------------------------------
7,250,000 Icon Health & Fitness, Sr. Sub. Notes,
13.00%, 07/15/02 8,101,875
- -------------------------------------------------------------------------------------------
15,500,000 IHF Holdings, Inc., Sr. Sub. Disc. Notes,
15.00%, 11/15/04(b) 10,733,750
- -------------------------------------------------------------------------------------------
10,000,000 Selmer Co., Inc., Sr. Gtd. Sub. Notes,
11.00%, 05/15/05 10,550,000
- -------------------------------------------------------------------------------------------
67,473,750
- -------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
MACHINERY (HEAVY)-1.70%
$13,725,000 Fairfield Manufacturing, Sr. Sub. Notes,
11.375%, 07/01/01 $13,999,500
- -------------------------------------------------------------------------------------------
15,990,000 Primeco Inc., Sr. Sub. Notes,
12.75%, 03/01/05 16,629,600
- -------------------------------------------------------------------------------------------
30,629,100
- -------------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-3.32%
17,575,000 AM General Corp., Sr. Notes,
12.875%, 05/01/02 18,146,188
- -------------------------------------------------------------------------------------------
10,500,000 Calmar Spraying Systems, Sr. Sub. Notes,
11.50%, 08/15/05 10,263,750
- -------------------------------------------------------------------------------------------
16,500,500 Coinmach Corp., Sr. Notes,
11.75%, 11/15/05 17,366,775
- -------------------------------------------------------------------------------------------
8,300,000 Interlake Corp., Sr. Notes,
12.00%, 11/15/01 8,715,000
- -------------------------------------------------------------------------------------------
5,455,000 Interlake Corp., Sr. Sub. Deb.,
12.125%, 03/01/02 5,455,000
- -------------------------------------------------------------------------------------------
59,946,713
- -------------------------------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS)-1.09%
7,890,000 Dade International Inc., Sr. Sub. Notes,
11.125%, 05/01/06(a) (Acquired 04/30/96-06/19/96; Cost
$7,977,500) 8,225,325
- -------------------------------------------------------------------------------------------
10,790,000 Graphic Controls Corp., Sr. Sub. Notes,
12.00%, 09/15/05 11,491,350
- -------------------------------------------------------------------------------------------
19,716,675
- -------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-1.74%
1,000,000 American Medical Response, Inc., Conv. Sub. Notes,
5.25%, 02/01/01(a) (Acquired 02/08/96; Cost $1,050,000) 1,095,000
- -------------------------------------------------------------------------------------------
10,050,000 Dynacare Inc., Sr. Yankee Notes,
10.75%, 01/15/06 10,112,813
- -------------------------------------------------------------------------------------------
2,000,000 Healthsource, Inc., Conv. Sub. Notes,
5.00%, 03/01/03(a) (Acquired 03/01/96; Cost $2,000,000) 1,541,600
- -------------------------------------------------------------------------------------------
2,000,000 PhyCor, Inc., Conv. Sub. Deb.,
4.50%, 02/15/03 2,280,000
- -------------------------------------------------------------------------------------------
15,600,000 Tenet Healthcare Corp., Sr. Sub. Notes,
10.125%, 03/01/05 16,458,000
- -------------------------------------------------------------------------------------------
31,487,413
- -------------------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-4.09%
7,100,000 Benton Oil & Gas Co., Sr. Notes,
11.625%, 05/01/03(a) (Acquired 04/29/96; Cost $7,100,000) 7,348,500
- -------------------------------------------------------------------------------------------
12,150,000 CODA Energy, Inc., Sr. Sub. Notes,
10.50%, 04/01/06(a) (Acquired 03/12/96-06/26/96; Cost
$12,261,125) 11,998,125
- -------------------------------------------------------------------------------------------
9,322,000 Forest Oil Corp., Sr. Sub. Notes,
11.25%, 09/01/03 9,648,270
- -------------------------------------------------------------------------------------------
8,750,000 Gerrity Oil & Gas Corp., Sr. Sub. Notes,
11.75%, 07/15/04 9,187,500
- -------------------------------------------------------------------------------------------
11,650,000 HS Resources, Sr. Sub. Notes,
9.875%, 12/01/03 11,387,875
- -------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)-(continued)
$12,200,000 Maxus Energy Corp., Deb.,
11.50%, 11/15/15 $12,688,000
- -------------------------------------------------------------------------------------------
11,630,000 Plains Resources Inc., Sr. Sub. Notes,
10.25%, 03/15/06(a) (Acquired 03/14/96-06/26/96; Cost
$11,570,648) 11,630,000
- -------------------------------------------------------------------------------------------
73,888,270
- -------------------------------------------------------------------------------------------
OIL & GAS (INTEGRATED)-0.63%
11,415,000 Wainoco Oil Corp., Sr. Notes,
12.00%, 08/01/02 11,415,000
- -------------------------------------------------------------------------------------------
OIL & GAS (SERVICES)-1.09%
10,100,000 Falcon Drilling Co. Inc., Sr. Notes,
9.75%, 01/15/01 10,302,000
- -------------------------------------------------------------------------------------------
8,500,000 Falcon Drilling Co. Inc., Sr. Sub. Notes,
12.50%, 03/15/05 9,456,250
- -------------------------------------------------------------------------------------------
19,758,250
- -------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-5.79%
12,380,000 National Fiberstock Corp., Sr. Notes,
11.625%, 06/15/02(a) (Acquired 06/21/96-06/26/96; Cost
$12,408,750) 12,472,850
- -------------------------------------------------------------------------------------------
11,110,000 Pacific Lumber, Sr. Notes,
10.50%, 03/01/03 10,776,700
- -------------------------------------------------------------------------------------------
13,920,000 RAPP International Finance, Gtd. Yankee Secured Notes,
11.50%, 12/15/00 14,268,000
- -------------------------------------------------------------------------------------------
14,420,000 Repap New Brunswick, Second Priority Sr. Secured Notes,
10.625%, 04/15/05 13,554,800
- -------------------------------------------------------------------------------------------
12,890,000 Riverwood International Corp., Sr. Gtd. Sub. Notes,
10.875%, 04/01/08 12,696,650
- -------------------------------------------------------------------------------------------
9,000,000 Tjiwi Kimia International Global Co., Sr. Gtd. Notes,
13.25%, 08/01/01 10,080,000
- -------------------------------------------------------------------------------------------
12,500,000 United Stationer Supply, Sr. Sub. Notes,
12.75%, 05/01/05 13,453,125
- -------------------------------------------------------------------------------------------
15,240,000 Williamhouse-Regency, Sr. Sub. Notes,
13.00%, 11/15/05 17,259,300
- -------------------------------------------------------------------------------------------
104,561,425
- -------------------------------------------------------------------------------------------
POLLUTION CONTROL-1.31%
9,500,000 Allied Waste Industries, Inc., Sr. Sub. Notes,
12.00%, 02/01/04 9,975,000
- -------------------------------------------------------------------------------------------
12,910,000 Norcal Waste Systems Inc., Sr. Notes,
12.75%, 11/15/05(a) (Acquired 04/25/96-05/29/96; Cost
$13,543,888) 13,684,600
- -------------------------------------------------------------------------------------------
23,659,600
- -------------------------------------------------------------------------------------------
PUBLISHING-1.54%
13,826,000 Affiliated Newspaper Investments Inc., Sr. Disc. Notes,
13.25%, 07/01/06(b) 9,609,070
- -------------------------------------------------------------------------------------------
11,000,000 Garden State Newspapers, Sr. Sub. Secured Notes,
12.00%, 07/01/04 11,605,000
- -------------------------------------------------------------------------------------------
6,430,000 K-III Communications Corp., Sr. Secured Notes,
10.625%, 05/01/02 6,655,050
- -------------------------------------------------------------------------------------------
27,869,120
- -------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
RAILROADS-1.30%
$14,510,000 Johnstown American Industries, Inc., Sr. Sub. Notes,
11.75%, 08/15/05 $13,748,225
- -------------------------------------------------------------------------------------------
13,000,000 Transtar Holdings L.P., Sr. Disc. Notes,
13.375%, 12/15/03(b) 9,652,500
- -------------------------------------------------------------------------------------------
23,400,725
- -------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-4.03%
14,750,000 Carr-Gottstein Foods Co., Sr. Sub. Notes,
12.00%, 11/15/05 15,118,750
- -------------------------------------------------------------------------------------------
10,000,000 Cumberland Farms, Secured Notes,
10.50%, 10/01/03 9,525,000
- -------------------------------------------------------------------------------------------
15,110,000 Jitney-Jungle Stores of America, Inc., Sr. Gtd. Notes,
12.00%, 03/01/06 15,752,175
- -------------------------------------------------------------------------------------------
16,145,000 Penn Traffic Co., Sr. Notes,
11.50%, 04/15/06 15,176,300
- -------------------------------------------------------------------------------------------
17,480,000 Ralph's Grocery Co., Sr. Gtd. Notes,
10.45%, 06/15/04 17,130,400
- -------------------------------------------------------------------------------------------
72,702,625
- -------------------------------------------------------------------------------------------
RETAIL (STORES)-5.14%
7,800,000 Apparel Retailers Inc., Sr. Disc. Deb.,
12.75%, 8/15/05(b) 6,805,500
- -------------------------------------------------------------------------------------------
9,800,000 County Seat Stores, Sr. Sub. Notes,
12.00%, 10/01/02 8,624,000
- -------------------------------------------------------------------------------------------
5,000,000 Guitar Center Management Co., Sr. Notes,
11.00%, 07/01/06(a)
(Acquired 06/27/96; Cost $5,000,000) 5,087,500
- -------------------------------------------------------------------------------------------
12,280,000 Loehmann's Holdings, Inc., Sr. Notes,
11.875%, 05/15/03 12,740,500
- -------------------------------------------------------------------------------------------
14,950,000 Pamida Inc., Sr. Sub. Notes,
11.75%, 03/15/03 13,006,500
- -------------------------------------------------------------------------------------------
13,590,000 Samsonite Corp. Sr. Sub. Notes,
11.125%, 07/15/05 13,793,850
- -------------------------------------------------------------------------------------------
1,960,000 Specialty Retailers Inc., Notes,
10.00%, 08/15/00 2,028,600
- -------------------------------------------------------------------------------------------
10,000,000 Specialty Retailers Inc., Sr. Secured Notes,
12.50%, 12/15/00(a)
(Acquired 05/23/96; Cost $10,000,000) 10,150,000
- -------------------------------------------------------------------------------------------
19,770,000 Specialty Retailers Inc., Sr. Sub. Notes,
11.00%, 08/15/03 20,581,425
- -------------------------------------------------------------------------------------------
92,817,875
- -------------------------------------------------------------------------------------------
SCHOOLS-0.75%
13,040,000 Herff Jones Inc., Sr. Sub. Notes,
11.00%, 08/15/05 13,463,800
- -------------------------------------------------------------------------------------------
SECURITY (SAFETY SERVICES)-0.46%
7,500,000 Cabot Safety Corp., Sr. Sub. Notes,
12.50%, 07/15/05 8,325,000
- -------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
STEEL-3.06%
$ 6,000,000 Bar Technologies Inc., Sr. Secured Notes,
13.50%, 04/01/01(a)(g)
(Acquired 03/28/96-03/29/96; Cost $5,900,000) $ 6,120,000
- -------------------------------------------------------------------------------------------
13,000,000 Bayou Steel Corp., First Mortgage Notes,
10.25%, 03/01/01 12,252,500
- -------------------------------------------------------------------------------------------
5,250,000 GS Technologies Operating Co., Gtd. Sr. Notes,
12.00%, 09/01/04 5,364,844
- -------------------------------------------------------------------------------------------
8,525,000 GS Technologies Operating Co., Sr. Notes,
12.25%, 10/01/05 8,759,438
- -------------------------------------------------------------------------------------------
15,990,000 Gulf States Steel, First Mortgage Notes,
13.50%, 04/15/03 14,590,875
- -------------------------------------------------------------------------------------------
7,900,000 Oregon Steel Mills, Inc., First Mortgage Notes,
11.00%, 06/15/03 8,137,000
- -------------------------------------------------------------------------------------------
55,224,657
- -------------------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES-9.25%
11,795,000 A+ Network Inc., Sr. Sub. Notes,
11.875%, 11/01/05 12,119,362
- -------------------------------------------------------------------------------------------
18,010,000 Arch Communications Group, Inc., Sr. Disc. Notes,
10.875%, 03/15/08(b) 9,230,125
- -------------------------------------------------------------------------------------------
8,000,000 Celcaribe S.A., Sr. Secured Notes,
13.50%, 03/15/04(b)(h) 8,280,000
- -------------------------------------------------------------------------------------------
30,520,000 Clearnet Communications, Inc., Sr. Disc. Notes,
14.75%, 12/15/05(b)(i) 18,464,600
- -------------------------------------------------------------------------------------------
20,000,000 IntelCom Group (USA) Inc., Sr. Disc. Notes,
13.50%, 9/15/05(b) 12,000,000
- -------------------------------------------------------------------------------------------
13,330,000 InterCel, Inc., Sr. Disc. Notes,
12.00%, 02/01/06(b) 8,031,325
- -------------------------------------------------------------------------------------------
10,000,000 12.00%, 05/01/06(b) 5,425,000
- -------------------------------------------------------------------------------------------
1,500,000 Intermedia Communication of Florida, Inc., Sr. Notes,
13.50%, 06/01/05 1,680,000
- -------------------------------------------------------------------------------------------
10,000,000 Intermedia Communications of Florida, Inc., Sr. Disc. Notes,
12.50%, 05/15/06(b) 5,637,500
- -------------------------------------------------------------------------------------------
41,500,000 Microcell Telecommunications, Inc., Sr. Disc. Notes,
14.00%, 06/01/06(a)(b)(j)
(Acquired 06/13/96; Cost $19,857,292) 20,231,250
- -------------------------------------------------------------------------------------------
12,000,000 Nextlink Communications Inc., Sr. Notes,
12.50%, 04/15/06(a)
(Acquired 04/18/96; Cost $12,000,000) 11,940,000
- -------------------------------------------------------------------------------------------
14,200,000 PriCellular Wireless Corp., Sr. Disc. Notes,
14.00%, 11/15/01(b) 12,851,000
- -------------------------------------------------------------------------------------------
2,900,000 ProNet, Inc., Sr. Sub. Notes,
10.875%, 09/15/06 2,820,250
- -------------------------------------------------------------------------------------------
10,500,000 11.875%, 06/15/05 10,290,000
- -------------------------------------------------------------------------------------------
10,500,000 Shared Technologies Fairchild, Inc., Sr. Disc. Notes,
12.25%, 03/01/06(a)(b)
(Acquired 03/08/96-05/02/96; Cost $7,535,640) 7,875,000
- -------------------------------------------------------------------------------------------
30,000,000 Teleport Communications Group, Inc., Sr. Disc. Notes,
11.125%, 07/01/07(b) 17,550,000
- -------------------------------------------------------------------------------------------
2,500,000 Telex Communication Inc., Sr. Notes,
12.00%, 07/15/04 2,678,125
- -------------------------------------------------------------------------------------------
167,103,537
- -------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
TEXTILES-1.02%
$11,080,000 Consoltex Group, Sr. Sub. Notes,
11.00%, 10/01/03 $10,110,500
- -------------------------------------------------------------------------------------------
8,000,000 Tultex Corp., Sr. Gtd. Notes,
10.625%, 03/15/05 8,280,000
- -------------------------------------------------------------------------------------------
18,390,500
- -------------------------------------------------------------------------------------------
TRANSPORTATION-1.86%
13,550,000 Gear Bulk Holding Ltd., Sr. Notes,
11.25%, 12/01/04 14,092,000
- -------------------------------------------------------------------------------------------
13,380,000 Stena AB, Sr. Yankee Notes,
10.50%, 12/15/05 13,346,550
- -------------------------------------------------------------------------------------------
6,000,000 Trans Ocean Container, Sr. Sub. Notes,
12.25%, 07/01/04 6,180,000
- -------------------------------------------------------------------------------------------
33,618,550
- -------------------------------------------------------------------------------------------
TRUCKING-0.85%
16,000,000 Ameritruck Distribution Corp., Sr. Sub. Notes,
12.25%, 11/15/05 15,360,000
- -------------------------------------------------------------------------------------------
Total Bonds and Notes 1,689,974,951
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<C> <S> <C>
COMMON STOCKS-0.44%
AUTOMOBILE/TRUCK PARTS & TIRES-0.14%
72,600 Lear Seating Corp.(k) 2,559,150
- -------------------------------------------------------------------------------------------
CHEMICALS-0.01%
6,000 Berry Plastics Corp.(k) 270,120
- -------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-0.06%
24,000 Total Renal Care Holdings, Inc.(k) 1,014,000
- -------------------------------------------------------------------------------------------
OIL & GAS (SERVICES)-0.17%
781,250 Kelley Oil & Gas Corp.(k) 3,125,000
- -------------------------------------------------------------------------------------------
PUBLISHING-0.02%
13,826 Affiliated Newspaper Investments Inc.(k) 414,780
- -------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.04%
37,050 Thrifty Payless Holdings-Class C(k) 639,113
- -------------------------------------------------------------------------------------------
Total Common Stocks 8,022,163
- -------------------------------------------------------------------------------------------
PREFERRED STOCKS-3.11%
ADVERTISING/BROADCASTING-0.32%
6,000 Time Warner, Inc., Series K,
10.25% PIK Conv. Pfd.(a)
(Acquired 04/03/96; Cost $6,000,000) 5,797,500
- -------------------------------------------------------------------------------------------
CABLE TELEVISON-0.82%
156,363 Cablevision Systems Corp., Series L,
$11.125 PIK Conv. Pfd.(a)
(Acquired 02/08/96-03/13/96; Cost $15,002,132) 14,874,030
- -------------------------------------------------------------------------------------------
ELECTRIC POWER-0.29%
50,000 El Paso Electric Co.,
$11.40 PIK Pfd. 5,262,500
- -------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
Financials
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GAS DISTRIBUTION-0.11%
35,000 NorAm Financing Inc.,
$3.125 Conv. Pfd. $ 1,898,750
- -------------------------------------------------------------------------------------------
OIL & GAS (SERVICES)-0.12%
100,000 Kelley Oil & Gas Corp.,
$2.625 Conv. Pfd. 2,225,000
- -------------------------------------------------------------------------------------------
PUBLISHING-1.05%
300,000 K-III Communications Corp.,
$2.875 Series B Pfd. 7,912,500
- -------------------------------------------------------------------------------------------
120,000 K-III Communications Corp.,
$10.00 Series C Pfd.(a)
(Acquired 01/19/96-02/13/96; Cost $12,020,000) 10,980,000
- -------------------------------------------------------------------------------------------
18,892,500
- -------------------------------------------------------------------------------------------
RETAIL (STORES)-0.06%
20,000 Kmart Financing,
$3.875 Conv. Pfd. 1,085,000
- -------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-0.34%
6,000 IntelCom Group, Inc.,
$1.425 Pfd.(a)
(Acquired 04/25/96; Cost $6,000,000) 6,210,000
- -------------------------------------------------------------------------------------------
Total Preferred Stocks 56,245,280
- -------------------------------------------------------------------------------------------
WARRANTS-0.15%
BUILDING MATERIALS-0.00%
3,000 Payless Cashways, Inc.,
expiring 11/01/96(k) 300
- -------------------------------------------------------------------------------------------
LEISURE & RECREATION-0.08%
8,000 IHF Capital Inc. -- Series H,
expiring 11/14/99(k) 1,040,000
- -------------------------------------------------------------------------------------------
7,250 IHF Capital Inc. -- Series I,
expiring 11/14/99(k) 290,000
- -------------------------------------------------------------------------------------------
1,330,000
- -------------------------------------------------------------------------------------------
MEDICAL (SERVICES)-0.02%
17,500 Republic Health Corp. expiring 04/03/00(k) 315,000
- -------------------------------------------------------------------------------------------
RETAIL (STORES)-0.02%
6,800 County Seat Stores,
expiring 10/15/98(k) 34,000
- -------------------------------------------------------------------------------------------
37,560 Wireless One, Inc.,
expiring 10/19/00(k) 300,480
- -------------------------------------------------------------------------------------------
334,480
- -------------------------------------------------------------------------------------------
STEEL-0.00%
15,990 Gulf States Steel Acquisition Corp.,
expiring 04/15/03(k) 79,950
- -------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
TELECOMMUNICATIONS-0.03%
39,600 Intelcom Group, Inc,
expiring 09/15/05(k) $ 554,400
- -------------------------------------------------------------------------------------------
42,656 InterCel, Inc.,
expiring 02/01/06(k) 43
- -------------------------------------------------------------------------------------------
1,500 Intermedia Communications of Florida, Inc.,
expiring 06/01/00(k) 60,000
- -------------------------------------------------------------------------------------------
614,443
- -------------------------------------------------------------------------------------------
Total Warrants 2,674,173
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENTS(l)-2.16%
$ 940,239 Daiwa Securities America Inc.,
5.50%, 07/01/96(m) 940,239
- ---------------------------------------------------------------------------------------------
38,000,000 Goldman Sachs & Co.,
4.75%, 07/01/96(n) 38,000,000
- ---------------------------------------------------------------------------------------------
Total Repurchase Agreements 38,940,239
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.43% 1,795,856,806
- ---------------------------------------------------------------------------------------------
LESS LIABILITIES-0.57% 10,246,847
- ---------------------------------------------------------------------------------------------
NET ASSETS-100.00% $1,806,103,653
=============================================================================================
</TABLE>
Notes to Schedule of Investments:
<TABLE>
<S> <C>
(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
the securities at June 30, 1996 was $312,969,055, which represented 17.33% of the
net assets.
(b) Discounted bond at purchase. Interest rate shown represents coupon rate at which
the bond will accrue at a specified future date.
(c) Zero coupon bonds. The interest rate shown represents the rate of original issue
discount.
(d) Issued as a unit. This unit also includes 13,000 warrants to purchase 66,950
shares of common stock at $13.475 per share per warrant.
(e) Issued as a unit. This unit also includes 6,750 warrants to purchase 0.24 shares
of common stock per warrant.
(f) Issued as a unit. This unit also includes 9,000 shares of common stock.
(g) Issued as a unit. This unit also includes 6,000 warrants to purchase one share of
common stock per warrant.
(h) Issued as a unit. This unit also includes 1,300,800 Celcaribe Ordinary Trust
Certificates.
(i) Issued as a unit. This unit also includes 1,007,160 warrants to purchase shares
of common stock.
(j) Issued as a unit. This unit also includes 166,000 warrants to purchase 3.702
shares of common stock per four warrants.
(k) Non-income producing security.
(l) Collateral on repurchase agreements, including the Fund's pro-rata interest in
joint repurchase agreements, is taken into possession by the Fund upon entering
into the repurchase agreement. The collateral is marked to market daily to ensure
its market value as being 102% of the sales price of the repurchase agreement.
The investments in some repurchase agreements are through participation in joint
accounts with other mutual funds, private accounts and certain non-registered
investment companies managed by the investment advisor.
(m) Joint repurchase agreement entered into 06/28/96 with a maturing value of
$270,069,404. Collateralized by $258,303,000 U.S. Treasury obligations, 7.875%
due 11/15/07.
(n) Joint repurchase agreement entered into 06/28/96 with a maturing value of
$770,304,792. Collateralized by $716,792,000 U.S. Treasury obligations, 0% to
11.625% due 10/03/96 to 11/15/04.
</TABLE>
Abbreviations:
Conv. -- Convertible
Deb. -- Debentures
Disc. -- Discounted
Gtd. -- Guaranteed
Pfd. -- Preferred
PIK -- Payment in kind
Sr. -- Senior
Sub. -- Subordinated
See Notes to Financial Statements.
14
<PAGE> 17
Financials
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $1,763,665,609) $1,795,856,806
- -----------------------------------------------------------------------------------------
Receivables for:
Investments sold 18,117,920
- -----------------------------------------------------------------------------------------
Fund shares sold 11,061,540
- -----------------------------------------------------------------------------------------
Dividends and interest 39,681,172
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 35,370
- -----------------------------------------------------------------------------------------
Other assets 49,984
- -----------------------------------------------------------------------------------------
Total assets 1,864,802,792
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 43,312,211
- -----------------------------------------------------------------------------------------
Fund shares reacquired 6,470,447
- -----------------------------------------------------------------------------------------
Dividends 6,434,722
- -----------------------------------------------------------------------------------------
Deferred compensation plan 35,370
- -----------------------------------------------------------------------------------------
Accrued advisory fees 734,405
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 7,218
- -----------------------------------------------------------------------------------------
Accrued distribution fees 1,370,889
- -----------------------------------------------------------------------------------------
Accrued trustees' fees 3,309
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 129,072
- -----------------------------------------------------------------------------------------
Accrued operating expenses 201,496
- -----------------------------------------------------------------------------------------
Total liabilities 58,699,139
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,806,103,653
=========================================================================================
NET ASSETS:
Class A $1,003,508,937
=========================================================================================
Class B $ 802,594,716
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 106,136,326
=========================================================================================
Class B 84,889,143
=========================================================================================
Class A:
Net asset value and redemption price per share $ 9.45
=========================================================================================
Offering price per share:
(Net asset value of $9.45 divided by 95.25%) $ 9.92
=========================================================================================
Class B:
Net asset value and offering price per share $ 9.45
=========================================================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE> 18
Financials
STATEMENT OF OPERATIONS
For the six months ended June 30, 1996
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $86,931,259
- ----------------------------------------------------------------------------------------
Dividend 1,152,699
- ----------------------------------------------------------------------------------------
Total Income 88,083,958
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 4,130,864
- ----------------------------------------------------------------------------------------
Custodian fees 86,228
- ----------------------------------------------------------------------------------------
Transfer agent fees -- Class A 815,626
- ----------------------------------------------------------------------------------------
Transfer agent fees -- Class B 383,019
- ----------------------------------------------------------------------------------------
Administrative service fees 43,308
- ----------------------------------------------------------------------------------------
Trustees' fees 7,767
- ----------------------------------------------------------------------------------------
Distribution fees -- Class A 1,192,785
- ----------------------------------------------------------------------------------------
Distribution fees -- Class B 3,437,691
- ----------------------------------------------------------------------------------------
Other 420,655
- ----------------------------------------------------------------------------------------
Total expenses 10,517,943
- ----------------------------------------------------------------------------------------
Net investment income 77,566,015
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain on sales of investment securities 7,935,602
- ----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (4,673,509)
- ----------------------------------------------------------------------------------------
Net gain on investment securities 3,262,093
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $80,828,108
========================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 and the year ended December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 77,566,015 $ 103,866,411
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities 7,935,602 (13,744,221)
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities (4,673,509) 64,363,354
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 80,828,108 154,485,544
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (46,345,619) (72,863,770)
- ----------------------------------------------------------------------------------------------
Class B (30,529,315) (31,951,946)
- ----------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A -- (436,906)
- ----------------------------------------------------------------------------------------------
Class B -- (191,590)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 114,866,911 271,933,588
- ----------------------------------------------------------------------------------------------
Class B 243,250,996 352,760,393
- ----------------------------------------------------------------------------------------------
Net increase in net assets 362,071,081 673,735,313
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,444,032,572 770,297,259
- ----------------------------------------------------------------------------------------------
End of period $1,806,103,653 $1,444,032,572
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,863,171,452 $1,505,053,545
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 2,379,537 1,688,456
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (91,638,531) (99,574,133)
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 32,191,195 36,864,704
- ----------------------------------------------------------------------------------------------
$1,806,103,653 $1,444,032,572
==============================================================================================
</TABLE>
See Notes to Financial Statements.
16
<PAGE> 19
Financials
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM High Yield Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate series portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers two different classes of shares: the Class A shares and the
Class B shares. Class A shares are sold with a front-end sales charge. Class B
shares are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class are voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The Fund's objective is to achieve a high level of
current income by investing primarily in publicly traded non-investment grade
debt securities. The Fund will also consider the possibility of capital growth
when it purchases and sells securities. Debt securities of less than investment
grade are considered "high risk" securities (commonly referred to as junk
bonds). These bonds may involve special risks in addition to the risks
associated with investment in higher rated debt securities. High yield bonds may
be more susceptible to real or perceived adverse economic and competitive
industry conditions than higher grade bonds. Also, the secondary market in which
high yield bonds are traded may be less liquid than the market for higher grade
bonds.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations - Non-convertible bonds and notes are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as institution-size trading
in similar groups of securities, developments related to special securities,
yield, quality, coupon rate, maturity, type of issue, individual trading
characteristics and other market data. Investment securities for which prices
are not provided by the pricing service and which are listed or traded on an
exchange (except convertible bonds) are valued at the last sales price on the
exchange where principally traded or, lacking any sales on a particular day,
at the mean between the closing bid and asked prices on that day unless the
Board of Trustees, or persons designated by the Board of Trustees, determines
that over-the-counter quotations more closely reflect the current market
value of the security. Convertible bonds are valued at the mean between the
closing price and asked prices obtained from a broker-dealer. Securities
traded in the over-the-counter market, except (i) securities priced by the
pricing service, (ii) securities for which representative exchange prices are
available, and (iii) securities reported in the NASDAQ National Market
System, are valued at the mean between representative last bid and asked
prices obtained from an electronic quotation reporting system, if such prices
are available, or from established market makers. Each security reported in
the NASDAQ National Market System is valued at the last sales price on the
valuation date or absent a last sales price, at the mean between the closing
bid and asked prices. Securities for which market quotations either are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. It is the policy of the Fund to declare daily dividends
from net investment income. Such dividends are paid monthly. Distributions
from net realized capital gains, if any, are recorded on ex-dividend date and
are paid annually subject to restrictions noted in section "C" below.
17
<PAGE> 20
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
C. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $99,250,199 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2003. The Fund cannot distribute capital gains to
shareholders until the tax loss carryforwards have been utilized.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.625% of
the first $200 million of the Fund's average daily net assets, plus 0.55% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.50% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.45% of the Fund's average daily net
assets in excess of $1 billion. The advisory agreement requires AIM to reduce
its fees or, if necessary, make payments to the Fund to the extent required to
satisfy any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended June 30, 1996, AIM
was reimbursed $43,308 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 six months ended June 30, 1996, the
Fund paid AFS $804,250 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares (the
"Class B Plan") (collectively, the "Plans"). The Fund, pursuant to the Class A
Plan, pays AIM Distributors compensation at an annual rate of 0.25% of the
average daily net assets attributable to the Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs and provides periodic payments to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own Class A shares of the Fund. The Fund, pursuant to
the Class B Plan, pays AIM Distributors compensation at an annual rate of 1.00%
of the average daily net assets attributable to the Class B shares. Of this
amount, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee under such
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges, that may be
paid by the respective classes. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more assignees, its rights to all or a designated
portion of (a) compensation received by AIM Distributors from the Fund pursuant
to the Class B Plan (but not AIM Distributors' duties and obligations pursuant
to the Class B Plan) and (b) any contingent deferred sales charges payable to
AIM Distributors related to the Class B shares. During the six months ended June
30, 1996, the Class A shares and the Class B shares paid AIM Distributors
$1,192,785 and $3,437,691, respectively, as compensation under the Plans.
18
<PAGE> 21
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
AIM Distributors received commissions of $1,067,542 from sales of the Class A
shares of the Fund during the six months ended June 30, 1996. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of Class A shares. During the six months ended June 30,
1996, AIM Distributors received $344,715 in contingent deferred sales charges
imposed on redemptions of Fund shares. Certain officers and trustees of the
Trust are officers and directors of AIM, AIM Distributors and AFS.
During the six months ended June 30, 1996, the Fund paid legal fees of
$2,896 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4 - BANK BORROWINGS
The Fund has a $17,000,000 committed line of credit with a syndicate
administered by The Chase Manhattan Bank d/b/a Chemical Bank. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
During the six months ended June 30, 1996, the Fund did not borrow under the
line of credit agreement. The Fund is charged a commitment fee, payable
quarterly, at the rate of 1/10 of 1% per annum on the unused balance of the
Fund's committed line.
Effective July 19, 1996, the Fund may borrow up to the lesser of
(i) $325,000,000 or (ii) the limits set by its prospectus for borrowings,
under the line of credit administered by The Chase Manhattan Bank d/b/a
Chemical Bank. The Fund and other funds advised by AIM which are parties to
the line of credit may borrow on a first come, first serve basis.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended June 30, 1996 was
$1,139,723,174 and $757,033,651, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of June 30, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 51,715,689
- -------------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (19,552,618)
- -------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 32,163,071
===================================================================================================================
</TABLE>
Cost of investments for tax purposes is $1,763,693,735.
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 1996 and the
year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------------------------- --------------------------------
SHARES VALUE SHARES VALUE
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 34,405,243 $327,082,456 49,241,443 $ 458,547,804
- -------------------------------------------------------- ----------------------------- --------------------------------
Class B 33,811,504 320,509,563 42,866,225 400,172,189
- -------------------------------------------------------- ----------------------------- --------------------------------
Issued as reinvestment of dividends:
Class A 3,049,861 28,926,583 4,955,465 46,216,100
- -------------------------------------------------------- ----------------------------- --------------------------------
Class B 1,504,842 14,270,657 1,597,343 14,918,822
- -------------------------------------------------------- ----------------------------- --------------------------------
Reacquired:
Class A (25,330,817) (241,142,128) (25,047,265) (232,830,316)
- -------------------------------------------------------- ----------------------------- --------------------------------
Class B (9,661,039) (91,529,224) (6,678,316) (62,330,618)
- -------------------------------------------------------- ----------------------------- --------------------------------
37,779,594 $358,117,907 66,934,895 $ 624,693,981
======================================================== ============================= ================================
</TABLE>
19
<PAGE> 22
Financials
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during the six months ended June 30, 1996, each of the years in the
nine-year period ended December 31, 1995 and for a Class B share outstanding
during the six months ended June 30, 1996, each of the years in the two-year
period ended December 31, 1995 and the period September 1, 1993 (date sales
commenced) through December 31, 1993.
<TABLE>
<CAPTION>
DECEMBER 31,
June 30, ------------------------------------------------------------
1996 1995 1994 1993 1992(a) 1991
---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 9.43 $ 8.93 $ 10.05 $ 9.40 $ 8.86 $ 7.07
- -------------------------------------------- ---------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.45 0.93 0.96 0.97 1.04 1.02
- -------------------------------------------- ---------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 0.03 0.52 (1.12) 0.69 0.55 1.81
- -------------------------------------------- ---------- -------- -------- -------- -------- --------
Total from investment operations 0.48 1.45 (0.16) 1.66 1.59 2.83
- -------------------------------------------- ---------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.46) (0.95) (0.96) (1.01) (1.05) (1.04)
- -------------------------------------------- ---------- -------- -------- -------- -------- --------
Net asset value, end of period $ 9.45 $ 9.43 $ 8.93 $ 10.05 $ 9.40 $ 8.86
============================================ ========== ======== ======== ======== ======== ========
Total return(b) 5.16% 16.86% (1.67)% 18.40% 18.60% 42.18%
============================================ ========== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,003,509 $886,106 $578,959 $550,760 $324,518 $259,677
============================================ ========== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.00%(c) 0.96% 1.00% 1.12% 1.15% 1.22%
============================================ ========== ======== ======== ======== ======== ========
Ratio of net investment income to average
net assets 9.57%(c) 9.95% 10.07% 9.82% 11.00% 12.67%
============================================ ========== ======== ======== ======== ======== ========
Portfolio turnover rate 48% 61% 53% 53% 56% 61%
============================================ ========== ======== ======== ======== ======== ========
<CAPTION>
December 31,
-----------------------------------------------
1990 1989 1988 1987
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 8.94 $ 10.01 $ 9.67 $ 10.54
- -------------------------------------------- -------- -------- -------- --------
Income from investment operations:
Net investment income 1.09 1.21 1.18 1.16
- -------------------------------------------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) (1.84) (1.07) 0.34 (0.83)
- -------------------------------------------- -------- -------- -------- --------
Total from investment operations (0.75) 0.14 1.52 0.33
- -------------------------------------------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (1.12) (1.21) (1.18) (1.20)
- -------------------------------------------- -------- -------- -------- --------
Net asset value, end of period $ 7.07 $ 8.94 $ 10.01 $ 9.67
============================================ ======== ======== ======== ========
Total return(b) (9.03)% 1.18% 16.41% 3.07%
============================================ ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $204,932 $261,920 $274,631 $242,858
============================================ ======== ======== ======== ========
Ratio of expenses to average net assets 1.21%(d) 0.99% 0.96%(d) 0.92%
============================================ ======== ======== ======== ========
Ratio of net investment income to average
net assets 13.59%(e) 12.40% 11.84%(e) 11.21%
============================================ ======== ======== ======== ========
Portfolio turnover rate 27% 36% 76% 81%
============================================ ======== ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Total returns do not deduct sales charges and are not annualized for periods
less than one year.
(c) Ratios are annualized and based on average net assets of $959,470,915.
(d) Ratios of expenses to average net assets prior to reduction of advisory fees
were 1.22% and 1.00% for years 1990 and 1988, respectively.
(e) Ratios of net investment income to average net assets prior to reduction of
advisory fees were 13.58% and 11.80% for years 1990 and 1988, respectively.
<TABLE>
<CAPTION>
December 31,
June 30, -----------------------------------
1996 1995 1994 1993
-------- -------- -------- -------
<S> <C> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 9.42 $ 8.92 $ 10.04 $ 9.96
- ------------------------------------------------------------------------- ------- -------- -------- -------
Income from investment operations:
Net investment income 0.42 0.85 0.87 0.32
- ------------------------------------------------------------------------- ------- -------- -------- -------
Net gains (losses) on securities (both realized and unrealized) 0.03 0.52 (1.10) 0.07
- ------------------------------------------------------------------------- ------- -------- -------- -------
Total from investment operations 0.45 1.37 (0.23) 0.39
- ------------------------------------------------------------------------- ------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.42) (0.87) (0.89) (0.31)
- ------------------------------------------------------------------------- ------- -------- -------- -------
Net asset value, end of period $ 9.45 $ 9.42 $ 8.92 $ 10.04
========================================================================= ======= ======== ======== =======
Total return(a) 4.86% 15.91% (2.48)% 4.00%
========================================================================= ======= ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $802,595 $557,926 $191,338 $31,264
========================================================================= ======= ======== ======== =======
Ratio of expenses to average net assets 1.68%(b) 1.73% 1.80% 1.93%(c)
========================================================================= ======= ======== ======== =======
Ratio of net investment income to average net assets 8.88%(b) 9.18% 9.27% 8.99%(c)
========================================================================= ======= ======== ======== =======
Portfolio turnover rate 48% 61% 53% 53%
========================================================================= ======= ======== ======== =======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $691,315,922.
(c) Annualized.
20
<PAGE> 23
Trustees &
Officers
<TABLE>
<S> <C> <C>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chief Executive Chairman Suite 1919
Officer Houston, TX 77046
A I M Management Group Inc. Robert H. Graham
President INVESTMENT ADVISOR
Bruce L. Crockett
Formerly Director, President, and John J. Arthur A I M Advisors, Inc.
Chief Executive Officer Senior Vice President and 11 Greenway Plaza
COMSAT Corporation Treasurer Suite 1919
Houston, TX 77046
Owen Daly II Gary T. Crum
Director Senior Vice President TRANSFER AGENT
Cortland Trust Inc.
Scott G. Lucas A I M Fund Services, Inc.
Carl Frischling Senior Vice President P.O. Box 4739
Partner Houston, TX 77210-4739
Kramer, Levin, Naftalis & Frankel Carol F. Relihan
Senior Vice President and CUSTODIAN
Robert H. Graham Secretary
President and Chief Operating State Street Bank & Trust Company
Officer Robert G. Alley 225 Franklin Street
A I M Management Group Inc. Vice President Boston, MA 02110
John F. Kroeger Stuart W. Coco COUNSEL TO THE FUND
Formerly Consultant Vice President
Wendell & Stockel Associates, Inc. Ballard Spahr
Melville B. Cox Andrews & Ingersoll
Lewis F. Pennock Vice President 1735 Market Street
Attorney Philadelphia, PA 19103
Karen Dunn Kelley
Ian W. Robinson Vice President COUNSEL TO THE TRUSTEES
Consultant; Formerly Executive
Vice President and Jonathan C. Schoolar Kramer, Levin, Naftalis & Franke
Chief Financial Officer Vice President l919 Third Avenue
Bell Atlantic Management New York, NY 10022
Services, Inc. Dana R. Sutton
Vice President and Assistant DISTRIBUTOR
Louis S. Sklar Treasurer
Executive Vice President A I M Distributors, Inc.
Hines Interests P. Michelle Grace 11 Greenway Plaza
Limited Partnership Assistant Secretary Suite 1919
Houston, TX 77046
David L. Kite
Assistant Secretary
Nancy L. Martin
Assistant Secretary
Ofelia M. Mayo
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
<PAGE> 24
<TABLE>
<S> <C>
[PHOTO OF 11 GREENWAY PLAZA
APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Blue Chip Fund
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 Management Group has provided leadership in the *AIM Aggressive Growth Fund was closed to new investors
mutual fund industry since 1976 and currently manages on July 18, 1995. **On September 25, 1995, AIM
approximately $55 billion in assets for more than 3 Government Securities Fund became AIM Intermediate
million shareholders, including individual investors, Government Fund. For more complete information about
corporate clients, and financial institutions. The AIM any AIM Fund(s), including sales charges and expenses,
Family of Funds--Registered Trademark-- is distributed ask your financial consultant or securities dealer for
nationwide, and AIM today ranks among the nation's top a free prospectus(es). Please read the prospectus(es)
15 mutual fund companies in assets under management, carefully before you invest or send money.
according to Lipper Analytical Services, Inc.
---------------
[A I M LOGO APPEARS HERE] BULK RATE
U.S. POSTAGE
A I M Distributors, Inc. PAID
11 Greenway Plaza, Suite 1919 HOUSTON, TX
Houston, TX 77046 Permit No. 1919
---------------
</TABLE>
