<PAGE> 1
PHOTO OF BALANCE AND STOCK/BOND TEARSHEETS
[AIM LOGO AIM BALANCED FUND
APPEARS HERE] SEMIANNUAL REPORT JUNE 30, 1996
<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'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 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%
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 During the six months ended 6/30/96, the Fund paid distributions for Class A
and Class B shares of $0.245 and $0.17 per share,
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 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 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 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:
"Past performance cannot guarantee comparable future
results."
[PHOTO OF
Charles T. Bauer, As a mutual fund investor, you've seen this disclaimer on
Chairman of every piece of mail you've ever received about your fund.
the Board of You've seen it so often that you probably don't even think
the Fund, about it or question what it means. But you should.
APPEARS HERE] That sentence about past performance is true now more
than ever. These days it bluntly means, "Don't expect the
25% to 35% returns you received last year." Don't
automatically expect the 15% to 20% returns of the past decade, either. History
shows that the average annual return on stocks is about 9% to 10%. If you're
investing in mutual funds with expectations of double-digit returns every year,
you will be disappointed. Maybe not today, but sometime in the future.
What is a realistic expectation for 1996? In this uncertain market, it is
easier to discuss what is unrealistic. Last year's performance was an
anomaly--the equivalent of euphoria. To expect a repeat is unrealistic.
I realize I am sounding a warning bell during the mutual fund industry's
best year ever. Investors like you poured $122.1 billion into stock mutual
funds during the first six months of 1996--the highest inflows on record. At $3
trillion in assets, the industry has grown 1,500 times over the past 50 years.
If we are to sustain that growth, we must have the public's confidence. Our
industry has a long-standing reputation for honesty and integrity. To maintain
that reputation as our assets swell into the trillions of dollars, we must make
sure that we don't promise anything we can't produce.
The industry's concern about investors' expectations goes beyond stamping
all our advertising with a standard disclaimer about performance. Mutual fund
leaders recently met for a conference in New York, and foremost on our minds
was educating investors about market volatility.
A whole generation of investors has seen nothing but a bull market, which
started in 1982. Except for the 1987 market crash, they've enjoyed a heady
rise. They may expect the same throughout this decade. I've been in the mutual
fund industry for more than 25 years, and I have seen a 5% to 10% market
correction about every five years. The last major correction was in 1990. If
history is any kind of teacher, we are overdue. Indeed, the bellwether Dow
Jones Industrial Average was off more than 4% from its peak in May to July 15,
1996.
The challenge for investors is not to panic when the market takes a
downturn. We have another saying in the industry: "Focus on time, not timing."
Over time, the stock market has proven to be the only investment that
consistently beats inflation. But investing in it takes a long-term view.
Market timing--trying to play the market and "rescue" your money in a
downturn--has proven to be an inefficient strategy for most investors.
The challenge for the mutual fund industry is to keep your trust during a
bear market. The industry has survived and thrived because of its built-in
integrity: By law, we must operate in the best interests of our shareholders.
The Investment Company Act of 1940, which governs our industry, protects
shareholders against self-dealing, conflicts of interest, misappropriation of
funds, and other fraudulent activities. At AIM we have an exhaustive Code of
Ethics that governs each of our 1,200 employees.
On a very basic level, it boils down to this: We are dealing with your
money, and if we lose your trust, we lose our business. We are vulnerable to
even the hint of impropriety. That's why the mutual fund industry is set up to
avoid even the appearance of self-dealing. Fund managers succeed to the extent
that they attract and keep investors. If they lose your faith, managers
ultimately will fail.
------------------------
At $3 trillion
in assets, the industry
has grown
1,500 times over the
past 50 years.
If we are to sustain
that growth,
we must have
the public's confidence.
------------------------
<PAGE> 4
Mutual funds are highly liquid investments. Any time you choose, you can
pull out of a fund and receive a redemption price reflective of the market that
day. If you become dissatisfied with a fund manager, it's easy to leave and go
elsewhere. With more than 7,000 funds available, it's a buyers' market.
The next time you read, "Past performance cannot guarantee comparable
future results," think about your own expectations as an investor. We cannot
promise you another year like 1995. But we can promise to manage your money
with honesty and integrity.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
2
<PAGE> 5
The Managers' Overview
DIVERSIFIED PORTFOLIO PERFORMS
WELL IN UNCERTAIN MARKET
A roundtable discussion with the Fund management team for AIM Balanced Fund
about the six-month reporting period ended June 30, 1996.
- -------------------------------------------------------------------------------
Q: AIM BALANCED FUND HAS BEEN CITED AMONG TOP-PERFORMING FUNDS IN ITS PEER
GROUP. HOW DID THE FUND PERFORM DURING THE SIX-MONTH REPORTING PERIOD?
A: Fund performance was excellent. Total return for Class A shares was 9.01%
and 8.61% for Class B shares from January 1 through June 30. As of June 30,
the Fund was in the top 2% of balanced funds, according to Lipper Analytical
Services. The quarterly dividend paid by the Fund was raised.
During the six months covered by this report, net assets in the Fund more
than doubled, from $164.9 million to $352 million.
Q: WHAT WERE SOME OF THE MAJOR INFLUENCES ON THE FUND'S PORTFOLIO THE PAST SIX
MONTHS?
A: As the year started, the bull market was still going strong, but things
became less certain as the reporting period progressed. Uncertainty about
the strength of the economy, plus the potential for higher interest rates to
ward off a rise in inflation, contributed to financial market volatility.
Late in 1995, the U.S. economy was in the doldrums, but that began to
change early this year. The rate of economic growth improved from 0.5% in
the last quarter of 1995 to 2.0% during the first quarter of this year.
During the second-quarter of 1996, the economy grew at an annualized 4.2%
rate, first reports on growth showed.
When the economy seemed to turn around, especially after reports of
unusually large job growth during February and March, interest rates started
to climb. Bond investors began demanding higher yields to shield them from
possible inflation. A five-year Treasury note, for example, yielded 5.37% at
the end of 1995; by June 30, that yield was up more than a percentage point
to 6.46%.
Such rate rises tend to reduce the value of outstanding debt, and that
put pressure on the value of some of our fixed-income holdings. And since
higher rates typically draw investors out of equities, the stock market
became decidedly less bullish the latter half of the reporting period.
Stocks were still up for the six months--the Standard & Poor's 500 by
10.09%--but the rate of climb was less steep during the latter half of the
period.
Q: HOW DID YOU MANAGE THE FUND'S EQUITY HOLDINGS IN THIS MARKET ENVIRONMENT?
A: There were no dramatic changes. The Fund's stock holdings are very diverse.
As of June 30, the largest single equity holding represented less than 1% of
net assets. A few patterns did develop in the portfolio, however.
For example, holdings of medical stocks increased, especially those of
patient care providers and makers of drugs and medical instruments. A trend
in medicine is the search for less intrusive but more effective treatments.
There are new anticancer medications coming to market that are more
effective with fewer unpleasant side effects than older chemotherapy drugs.
SmithKline Beecham is one participant in this trend, with an alternative to
Taxol.
The retailing sector, which had been out of market favor, has made
something of a comeback. It has benefited from renewed economic growth in
California and also because a wave of consolidations in the
continued on page 4
- -------------------------------------------------------------------------------
LIPPER RANKINGS
AS OF 6/30/96
CLASS A SHARES
AIM FUNDS IN
FUND BALANCED
PERIOD RANK CATEGORY TOP %
- ------ ---- -------- -----
1 YEAR 4 247 2%
3 YEARS 8 125 7%
5 YEARS 2 67 3%
10 YEARS 23 30 77%
CLASS B SHARES
(Inception date 10/18/93)
AIM FUNDS IN
FUND BALANCED
PERIOD RANK CATEGORY TOP %
- ------ ---- -------- -----
1 YEAR 5 247 3%
Fund percentage rankings are based on total returns and are vs. all balanced
mutual funds tracked by Lipper, excluding sales charges and including fees and
expenses.
- -------------------------------------------------------------------------------
3
<PAGE> 6
- ------------------------------
PORTFOLIO COMPOSITION
AS OF 6/30/96
EQUITIES 55%
FIXED-INCOME 45%
- ------------------------------
continued from page 3
industry has finally paid off. One recent winner is The Gap, Inc., which
reported earnings up 63% for the first quarter of 1996. We increased holdings
of retail stores.
Finally, the portfolio also includes more financial stocks. Many financial
stocks are attractive because of their dividend yield. Given the fund's
total-return orientation, seeking both growth and income, we try to hold
income-generating equities as well as fixed-income securities in the portfolio.
Q: THE FUND ALSO OWNS QUITE A FEW SECURITIES IN THE TELECOMMUNICATIONS
INDUSTRY, DOESN'T IT?
A: Yes. Deregulation, technological advances, and the telecommunications bill
passed earlier this year are fostering sweeping change in this industry, and
we have found some very attractive opportunities. For example, Frontier
Corp., formerly Rochester Telephone Corporation, used to be a local phone
company. It appears to be adapting well. Frontier now offers integrated
telecommunications in certain markets--one-stop shopping for long-distance,
voice mail, toll-free numbers, cellular services, paging, and local phone
service.
As we found such success stories in telecommunications, we increased
holdings in this industry during the reporting period.
Q: HOW DID YOU MANAGE THE FIXED-INCOME SIDE OF THE PORTFOLIO THE PAST SIX
MONTHS?
A: We simply took advantage of rising interest rates by purchasing more
securities. As previously noted, the Fund's excellent performance attracted
significant new assets during the reporting period, and we were able to put
them to work to capture more attractive yields.
Government securities from the U.S. and Canada, and high-grade corporate
bonds from such firms as Coca-Cola Enterprises and General Electric Capital
Corporation round out the diversified portfolio.
Q: WHAT IS THE OUTLOOK FOR THE FUND OVER THE NEAR FUTURE?
A: It looks as though interest rates are going to remain level, since the
Federal Reserve
<TABLE>
<CAPTION>
===============================================================================
PORTFOLIO HOLDINGS
AS OF 6/30/96 TOTAL NUMBER OF HOLDINGS: 321
===============================================================================
<S> <C>
Top 10 Equity Holdings Top 10 Fixed-Income Securities
1. Gucci Group 1. Dresdner Bank AG
2. Philip Morris Companies, Inc. 2. First Union Bancorp.
3. Lilly (Eli) & Co. 3. Finova Capital Corp.
4. Sitel Corp. 4. Household Finance Corp.
5. Cybercash, Inc. 5. Coca-Cola Enterprises Inc.
6. Coach USA, Inc. 6. Time Warner, Inc,
7. Chase Manhattan Corp. 7. Bell Canada-ADR
8. CIGNA Corp. 8. 360 Communications, Inc.
9. Johnson & Johnson 9. Nabors Industries, Inc.
10. American Home Products Corp. 10. Indiana Michigan Power Co.
===============================================================================
</TABLE>
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
4
<PAGE> 7
continued from page 4
Board decided not to raise short-term rates at its meeting in early July. This
is good for the fixed-income portion of the portfolio. On the equity side, it
seems we can look forward to moderate economic growth and little inflation.
Though it is unrealistic to expect 1996 to be a rerun of the markets'
spectacular 1995 performance, there is reason to be optimistic. AIM anticipates
predominantly good second-quarter corporate earnings reports.
In any kind of market, by holding both stocks and bonds, AIM Balanced Fund
attempts to moderate volatility. It is normal to expect the stock and bond
markets to move in opposite directions, though there are anomalies like 1995
when they both went up. Holding a mix of the two types of securities means
shareholders may be spared the full impact of the volatility in one market or
the other.
===============================================================================
GROWTH OF $10,000 INVESTMENT
===============================================================================
In thousands. As of 6/30/96. Including sales charges.
Past Performance cannot guarantee comparable future results.
BALANCED FUND LIPPER BALANCED
CLASS A LIPPER BALANCED FUND INDEX
------- --------------------------
$ 9,521 $10,000
11,486 11,366
12,593 12,214
14,549 13,674
13,757 13,394
18,569 16,727
20,241 17,480
===============================================================================
- -------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
For periods ended 6/30/96.
Including sales charges.
CLASS A SHARES
1 Year 18.99%
5 Years 15.16
10 Years 8.59
CLASS B SHARES
1 Year 18.99%
Inception (10/18/93) 9.89
- -------------------------------------------------------------------------------
5
<PAGE> 8
- -------------------
Some investments
may benefit
from a
market trend
when others do not.
- -------------------
For Consideration
ASSET ALLOCATION HELPS YOU COPE WITH CHANGING MARKETS
Every mutual fund investor would like to invest in a market that only goes
up--a tide that floats all ships. The truth is, markets also decline. But
market changes do not affect all investments the same way. Some investments may
benefit from a market trend when others do not.
Market changes are not the only factors an investor must manage. There are a
number of important considerations with every investment including investment
risk, and investment risk takes many forms:
o MARKET RISK. The prices of some investments will fluctuate according to
changes in the market.
o INTEREST RATE RISK. The value of some investments, such as fixed-income
securities, will rise and fall as interest rates change.
o REINVESTMENT RISK. When interest rates fall, investors face the possibility
that investment income cannot be reinvested at higher rates previously
available.
o INFLATION RISK. Inflation can cause the value of some investments to erode
as the cost of living increases.
o CURRENCY RATE RISK. Investments valued in U.S. dollars will rise and fall
according to the dollar's value against other world currencies.
To manage these changing conditions, investors have learned to diversify
their assets across a wide variety of investments. For most investors, mutual
funds offer convenient and affordable methods to diversify their assets. For as
little as $500, an investor has access to a portfolio of hundreds of
professionally selected securities.
When you invest in more than one fund, you increase the level of
diversification. You also gain another important benefit. Since mutual funds
are managed according to specific investment objectives, such as growth or
income, you can invest in mutual funds with different investment objectives to
create a personalized investment plan which suits your unique financial
objectives. This investment strategy is called asset allocation.
Mutual fund investors tend to seek growth, or current income, or some
combination of both. Generally, investors who choose to assume more investment
risk get the potential for a higher return. With asset allocation, you can
fine-tune your investment plan to be more conservative, or more aggressive,
depending on your personal financial goals and risk tolerance.
Your financial consultant can assist you in developing an asset allocation
strategy and selecting the appropriate investments to help you meet your
long-term investment goals.
===============================================================================
STOCKS, BONDS, AND MARKET TRENDS
===============================================================================
As of 6/30/96
These data illustrate how asset diversification into different market sectors,
such as equities and bonds, may help moderate the effects of market volatility
for investors.
From January 1, 1975, through December 31, 1995, there were only four
calendar years during which either the stock market or the bond market had a
negative total return. In each case, the other market moved in the opposite
direction. When one market fell, the other did not. Of course, past performance
is no guarantee of comparable future results.
CALENDAR LEHMAN BROTHERS
YEAR S&P 500 AGGREGATE BOND INDEX
---- ------- --------------------
1977 -7.16% 3.04%
1981 -4.92% 6.25%
1990 -3.11% 8.96%
1994 1.31% -2.92%
The first six months of 1996 have been consistent with this pattern:
LEHMAN BROTHERS
PERIOD S&P 500 AGGREGATE BOND INDEX
------ ------- --------------------
1/1/96-
6/30/96 10.09% -1.21%
===============================================================================
6
<PAGE> 9
Financials
SCHEDULE OF INVESTMENTS
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
DOMESTIC BONDS & NOTES-21.67%
ADVERTISING/BROADCASTING-0.97%
$ 1,200,000 Tele-Communications, Inc., Conv. Sub. Deb., 4.50%, 02/15/06 $ 1,044,000
- -------------------------------------------------------------------------------------------
Time Warner, Inc.,
925,000 Deb., 8.18%, 08/15/07(a) (Acquired 12/06/95; Cost $996,614) 921,531
- -------------------------------------------------------------------------------------------
1,500,000 Deb., 6.85%, 01/15/26 1,436,805
- -------------------------------------------------------------------------------------------
3,402,336
- -------------------------------------------------------------------------------------------
AIRLINES-0.60%
500,000 Airplanes Pass Through Trust, Sub. Bond, 10.875%, 03/15/19 521,250
- -------------------------------------------------------------------------------------------
500,000 Continental Airlines, Inc., Conv. Sr. Sub. Deb. Notes, 6.75%,
04/15/06(a)
(Acquired 02/27/96; Cost $499,825) 598,750
- -------------------------------------------------------------------------------------------
1,000,000 Greenwich Air Services, Inc., Sr. Notes, 10.50%, 06/01/06 990,000
- -------------------------------------------------------------------------------------------
2,110,000
- -------------------------------------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-0.18%
150,000 Chrysler Financial Corp., Deb., 8.50%, 02/01/18 154,726
- -------------------------------------------------------------------------------------------
400,000 General Motors Corp., Putable Notes, 8.80%, 03/01/21 448,276
- -------------------------------------------------------------------------------------------
603,002
- -------------------------------------------------------------------------------------------
BANKING-1.48%
3,000,000 First Union Bancorp., Sub. Deb., 7.50%, 04/15/35 3,099,120
- -------------------------------------------------------------------------------------------
800,000 First Union Corp., Sub. Notes, 6.375%, 01/15/09 724,168
- -------------------------------------------------------------------------------------------
700,000 Mercantile Bank, Sub. Notes, 6.375%, 01/15/04 656,495
- -------------------------------------------------------------------------------------------
800,000 Wachovia Corp., Sub. Notes, 6.375%, 02/01/09 729,416
- -------------------------------------------------------------------------------------------
5,209,199
- -------------------------------------------------------------------------------------------
BEVERAGES-0.75%
15,000,000 Coca-Cola Enterprises Inc., Notes, 7.24%, 6/20/20(b) 2,647,650
- -------------------------------------------------------------------------------------------
BUILDING MATERIALS-0.15%
500,000 Medusa Corp., Conv. Sub. Notes, 6.00%, 11/15/03 528,750
- -------------------------------------------------------------------------------------------
BUSINESS SERVICES-0.15%
250,000 Career Horizons, Inc., Conv. Bonds, 7.00%, 11/01/02(a)
(Acquired 10/16/95; Cost $250,000) 531,533
- -------------------------------------------------------------------------------------------
CABLE TELEVISION-0.54%
1,200,000 International CableTel, Inc., Conv. Sub. Deb., 7.00%,
06/15/08(a)
(Acquired 06/07/96; Cost $1,200,000) 1,183,500
- -------------------------------------------------------------------------------------------
750,000 Viacom Inc., Sr. Gtd. Notes, 7.75%, 06/01/05 731,265
- -------------------------------------------------------------------------------------------
1,914,765
- -------------------------------------------------------------------------------------------
COMPUTER MINI/PCS-0.68%
1,200,000 Apple Computer Inc., Conv. Sub. Notes, 6.00%, 06/01/01(a)
(Acquired 06/04/96; Cost $1,200,000) 1,149,000
- -------------------------------------------------------------------------------------------
1,000,000 Unisys Corp., Conv. Sub. Notes, 8.25%, 03/15/06 1,230,000
- -------------------------------------------------------------------------------------------
2,379,000
- -------------------------------------------------------------------------------------------
COMPUTER NETWORKING-0.22%
500,000 3Com Corp., Conv. Sub. Notes, 10.25%, 11/01/01(a)
(Acquired 11/08/94-11/14/95; Cost $663,437) 780,000
- -------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
COMPUTER PERIPHERALS-0.16%
$ 500,000 Sanmina Corp., Conv. Sub. Notes, 5.50%, 08/15/02(a)
(Acquired 08/10/95-04/16/96; Cost $560,525) $ 575,000
- -------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-0.26%
196,000 Network Equipment Technologies, Inc., Conv. Sub. Deb., 7.25%,
05/15/14 179,790
- -------------------------------------------------------------------------------------------
950,000 SoftKey International Inc., Conv. Notes, 5.50%, 11/01/00(a)
(Acquired 10/17/95-10/20/95; Cost $943,000) 745,750
- -------------------------------------------------------------------------------------------
925,540
- -------------------------------------------------------------------------------------------
CONGLOMERATES-0.16%
500,000 General Electric Capital Corp., Notes, 8.30%, 09/20/09 545,400
- -------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES-0.27%
850,000 Metro Pacific Corp., Conv. Deb., 2.50%, 04/11/03(a)
(Acquired 04/02/96; Cost $850,000) 956,250
- -------------------------------------------------------------------------------------------
ELECTRIC POWER-1.15%
1,000,000 AES Corp., Sr. Sub. Notes, 10.25%, 07/15/06 1,005,625
- -------------------------------------------------------------------------------------------
1,500,000 El Paso Electric Co., First Mortgage Notes, 8.25%, 02/01/03 1,455,000
- -------------------------------------------------------------------------------------------
1,357,887 Indiana Michigan Power Co., Secured Lease Obligation Bonds,
9.82%, 12/07/22 1,576,398
- -------------------------------------------------------------------------------------------
4,037,023
- -------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.60%
600,000 Park Electrochemical Corp., Conv. Sub Notes, 5.50%, 03/01/06 477,000
- -------------------------------------------------------------------------------------------
600,000 SCI Systems Inc., Conv. Sub. Notes, 5.00%, 05/01/06(a)
(Acquired 04/17/96; Cost $600,000) 631,500
- -------------------------------------------------------------------------------------------
500,000 Solectron Corp., Conv. Sub. Notes, 6.00%, 03/01/06(a)
(Acquired 02/15/96; Cost $500,000) 457,500
- -------------------------------------------------------------------------------------------
700,000 Telxon Corp., Conv. Deb., 5.75%, 01/01/03(a)
(Acquired 12/07/95-01/25/96; Cost $706,500) 535,500
- -------------------------------------------------------------------------------------------
2,101,500
- -------------------------------------------------------------------------------------------
ENERGY (ALTERNATE SOURCES)-0.21%
630,000 California Energy Co. Inc., Conv. Sub. Deb., 5.00%,
07/31/00(a)
(Acquired 04/26/95-10/19/95; Cost $594,025) 723,713
- -------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.13%
250,000 First Financial Management, Conv. Deb., 5.00%, 12/15/99 472,500
- -------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-2.38%
550,000 AAMES Financial Corp., Conv. Sub. Deb., 5.50%, 03/15/06(a)
(Acquired 02/16/96-04/23/96; Cost $596,250) 756,250
- -------------------------------------------------------------------------------------------
650,000 Associates Corp. of North America, Series B Sr. Deb., 7.95%,
02/15/10 687,966
- -------------------------------------------------------------------------------------------
450,000 Cityscape Financial Corp., Conv. Sub. Deb., 6.00%,
05/01/06(a)
(Acquired 04/26/96; Cost $450,000) 501,750
- -------------------------------------------------------------------------------------------
500,000 Countrywide Funding Corp., Sub. Notes, 8.25%, 07/15/02 525,650
- -------------------------------------------------------------------------------------------
1,500,000 Ford Motor Credit Co., Notes, 6.125%, 01/09/06 1,371,150
- -------------------------------------------------------------------------------------------
800,000 Ford Motor Credit Co., Notes, 6.75%, 08/15/08 750,400
- -------------------------------------------------------------------------------------------
750,000 GMAC, Notes, 9.00%, 10/15/02 817,800
- -------------------------------------------------------------------------------------------
3,000,000 Household Finance Corp., Notes, 7.125%, 09/01/05 2,971,260
- -------------------------------------------------------------------------------------------
8,382,226
- -------------------------------------------------------------------------------------------
HOTELS/MOTELS-0.47%
750,000 ITT Corp., Gtd. Deb., 7.375%, 11/15/15 705,112
- -------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
HOTELS/MOTELS-(continued)
$ 1,750,000 Marriott International, Inc., Conv. Notes, 4.25%,
03/25/11(a)(b)
(Acquired 03/19/96; Cost $941,430) $ 951,563
- -------------------------------------------------------------------------------------------
1,656,675
- -------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.18%
400,000 American Travellers Corp., Conv. Sub. Deb., 6.50%, 10/01/05 648,000
- -------------------------------------------------------------------------------------------
LEISURE & RECREATION-0.29%
1,000,000 IMAX, Corp., Conv. Deb., 5.75%, 04/01/03(a)
(Acquired 04/02/96 Cost $1,000,000) 1,035,000
- -------------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.07%
200,000 Thermo Electron Corp., Conv. Sub. Deb., 4.25%, 01/01/03(a)
(Acquired 11/28/95; Cost $200,000) 245,000
- -------------------------------------------------------------------------------------------
MEDICAL (DRUGS)-0.10%
300,000 ICN Pharmaceuticals Inc., Conv. Sub. Notes, 8.50%, 11/15/99 358,350
- -------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-2.55%
400,000 American Medical Response, Conv. Sub. Notes, 5.25%,
02/01/01(a)
(Acquired 01/03/96; Cost $400,938) 438,000
- -------------------------------------------------------------------------------------------
500,000 ARV Assisted Living, Inc., Conv. Sub. Notes, 6.75%,
04/01/06(a)
(Acquired 03/28/96-03/29/96; Cost $500,400) 482,500
- -------------------------------------------------------------------------------------------
150,000 Genesis Health Ventures, Sr. Conv. Sub. Deb., 6.00%, 11/30/03 314,964
- -------------------------------------------------------------------------------------------
1,000,000 Healthsource, Inc., Conv. Sub. Notes, 5.00%, 03/01/03(a)
(Acquired 03/17/94-03/18/94; Cost $302,437) 770,800
- -------------------------------------------------------------------------------------------
300,000 HEALTHSOUTH Rehabilitation Corp., Conv. Sub. Deb., 5.00%,
04/01/01 581,760
- -------------------------------------------------------------------------------------------
580,000 NABI, Inc., Conv. Sub. Notes, 6.50%, 02/01/03(a)
(Acquired 02/02/96; Cost $582,677) 533,600
- -------------------------------------------------------------------------------------------
750,000 PhyCor, Inc., Conv. Sub. Deb., 4.50%, 02/15/03 855,000
- -------------------------------------------------------------------------------------------
400,000 Prime Hospitality Corp., Conv. Sub. Notes, 7.00%, 04/15/02 592,000
- -------------------------------------------------------------------------------------------
1,200,000 Quintiles Transnational Corp., Conv. Sub. Notes, 4.25%,
05/31/00(a)
(Acquired 04/23/96; Cost $1,203,000) 1,212,000
- -------------------------------------------------------------------------------------------
1,000,000 Renal Treatment Centers, Inc., Conv. Notes, 5.625%,
07/15/06(a)
(Acquired 06/06/96-06/07/96; Cost $998,650) 1,011,250
- -------------------------------------------------------------------------------------------
1,200,000 Rotech Medical Corp., Conv. Sub. Deb., 5.25%, 06/01/03(a)
(Acquired 05/24/96; Cost $1,201,050) 1,146,000
- -------------------------------------------------------------------------------------------
500,000 Tenet Healthcare Corp., Conv. Sub. Notes, 6.00%, 12/01/05 515,000
- -------------------------------------------------------------------------------------------
600,000 Veterinary Centers of America, Conv. Sub. Deb., 5.25%,
05/01/06(a)
(Acquired 05/30/96; Cost $576,250) 525,000
- -------------------------------------------------------------------------------------------
8,977,874
- -------------------------------------------------------------------------------------------
NATURAL GAS (PIPELINE & DISTRIBUTORS)-0.71%
800,000 Enron Corp., Sr. Sub. Deb., 6.75%, 07/01/05 759,353
- -------------------------------------------------------------------------------------------
1,000,000 Ferrellgas Partners, L.P., Sr. Secured Notes, 9.375%,
06/15/06(a)
(Acquired 04/23/96; Cost $1,000,000) 972,500
- -------------------------------------------------------------------------------------------
750,000 PanEnergy Corp., Deb., 7.875%, 08/15/04 771,217
- -------------------------------------------------------------------------------------------
2,503,070
- -------------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.35%
800,000 U.S. Office Products Co., Conv. Sub. Notes, 5.50%, 02/01/01 1,214,946
- -------------------------------------------------------------------------------------------
OIL & GAS (EQUIPMENT & SUPPLIES)-0.29%
775,000 Pride Petroleum Services, Inc., Conv. Sub. Deb., 6.25%,
02/15/06 1,011,375
- -------------------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.72%
1,500,000 Nabors Industries, Inc., Conv. Sub. Notes, 5.00%, 05/15/06 1,687,500
- -------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)-(continued)
$ 800,000 Pogo Producing Co., Conv. Sub. Notes, 5.50%, 06/15/06(a)
(Acquired 06/11/96; Cost $800,000) $ 864,000
- -------------------------------------------------------------------------------------------
2,551,500
- -------------------------------------------------------------------------------------------
POLLUTION CONTROL-0.36%
800,000 United Waste Systems, Inc., Conv. Sub. Notes, 4.50%,
06/01/01(a)
(Acquired 05/31/96; Cost $800,000) 904,000
- -------------------------------------------------------------------------------------------
280,000 U.S. Filter Corp., Conv. Sub. Notes, 6.00%, 09/15/05(a)
(Acquired 09/13/95; Cost $280,000) 379,400
- -------------------------------------------------------------------------------------------
1,283,400
- -------------------------------------------------------------------------------------------
PUBLISHING-0.28%
900,000 News America Holdings, Sr. Gtd. Deb., 9.25%, 02/01/13 978,202
- -------------------------------------------------------------------------------------------
REAL ESTATE-1.08%
800,000 FDC Capital Cayman, Conv. Gtd. Notes, 2.50%, 05/15/06(a)
(Acquired 05/08/96; Cost $800,000) 820,000
- -------------------------------------------------------------------------------------------
3,000,000 Finova Capital Corp., Notes, 7.40%, 05/06/06 2,983,470
- -------------------------------------------------------------------------------------------
3,803,470
- -------------------------------------------------------------------------------------------
RESTAURANTS-0.13%
1,500,000 Boston Chicken, Inc., LYON, 8.00%, 06/01/15(b) 442,500
- -------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.14%
500,000 Great Atlantic & Pacific, Gtd. Notes, 7.78%, 11/01/00(a)
(Acquired 10/18/95; Cost $500,000) 481,970
- -------------------------------------------------------------------------------------------
RETAIL (STORES)-0.75%
500,000 Federated Department Stores, Conv. Notes, 5.00%, 10/01/03 574,375
- -------------------------------------------------------------------------------------------
500,000 Staples, Inc., Conv. Sub. Deb., 4.50%, 10/01/00(a)
(Acquired 09/12/95; Cost $500,000) 537,500
- -------------------------------------------------------------------------------------------
1,500,000 Sunglass Hut International, Inc., Conv. Sub. Notes, 5.25%,
06/15/03(a)
(Acquired 06/20/96; Cost $1,500,000) 1,528,125
- -------------------------------------------------------------------------------------------
2,640,000
- -------------------------------------------------------------------------------------------
SEMICONDUCTORS-0.06%
100,000 LSI Logic Corp., Conv. Sub. Notes, 5.50%, 3/15/01(a)
(Acquired 12/04/95; Cost $370,090) 216,500
- -------------------------------------------------------------------------------------------
SHOES & RELATED APPAREL-0.43%
1,500,000 Nine West Group, Inc., Conv. Sub. Notes, 5.50%, 07/15/03(a)
(Acquired 06/20/96; Cost $1,500,000) 1,516,875
- -------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-1.47%
800,000 BroadBand Technologies, Inc., Conv. Sub. Notes, 5.00%,
05/15/01(a)
(Acquired 05/17/96-05/22/96; Cost $804,570) 796,000
- -------------------------------------------------------------------------------------------
1,000,000 TCI Communications Inc., Sr. Notes, 8.00%, 08/01/05 977,430
- -------------------------------------------------------------------------------------------
2,000,000 360 Communications Co., Sr. Notes, 7.50%, 03/01/06 1,900,600
- -------------------------------------------------------------------------------------------
2,300,000 U.S. Cellular Corp., Sub. LYON, 6.00%, 06/15/15(b) 763,313
- -------------------------------------------------------------------------------------------
500,000 World Communications Inc., Conv. Sub. Notes, 5.00%, 08/15/03 730,403
- -------------------------------------------------------------------------------------------
5,167,746
- -------------------------------------------------------------------------------------------
TRANSPORTATION (MISCELLANEOUS)-0.20%
677,748 Delta Air Lines, Inc., Equipment Transportation Ctf. Series
92-E Notes, 8.54%, 01/02/07 706,560
- -------------------------------------------------------------------------------------------
Total Domestic Bonds & Notes 76,264,400
- -------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-39.40%
ADVERTISING/BROADCASTING-0.97%
22,200 Chancellor Corp.(c) $ 693,750
- -------------------------------------------------------------------------------------------
3,400 Clear Channel Communications, Inc.(c) 280,075
- -------------------------------------------------------------------------------------------
42,000 Matav-Cable Systems Media Ltd.(c) 698,250
- -------------------------------------------------------------------------------------------
13,000 Meredith Corp. 542,750
- -------------------------------------------------------------------------------------------
34,400 Outdoor Systems, Inc.(c) 1,212,600
- -------------------------------------------------------------------------------------------
3,427,425
- -------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-0.60%
10,000 Boeing Co. (The) 871,250
- -------------------------------------------------------------------------------------------
11,500 Rockwell International Corp. 658,375
- -------------------------------------------------------------------------------------------
5,000 United Technologies Corp. 575,000
- -------------------------------------------------------------------------------------------
2,104,625
- -------------------------------------------------------------------------------------------
AIRLINES-0.58%
8,000 AMR Corp.(c) 728,000
- -------------------------------------------------------------------------------------------
34,000 Aviation Sales Co.(c) 697,000
- -------------------------------------------------------------------------------------------
32,000 Greenwich Air Services, Inc.(c) 624,000
- -------------------------------------------------------------------------------------------
2,049,000
- -------------------------------------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-0.35%
20,000 Chrysler Corp. 1,240,000
- -------------------------------------------------------------------------------------------
BANKING-0.22%
20,000 Commercial Federal Corp. 765,000
- -------------------------------------------------------------------------------------------
BANKING (MONEY CENTER)-0.66%
23,500 Chase Manhattan Corp. 1,659,687
- -------------------------------------------------------------------------------------------
7,999 Citicorp 660,997
- -------------------------------------------------------------------------------------------
2,320,684
- -------------------------------------------------------------------------------------------
BEVERAGES (SOFT DRINKS)-0.40%
40,000 PepsiCo Inc. 1,415,000
- -------------------------------------------------------------------------------------------
BIOTECHNOLOGY-0.88%
64,100 Affymetrix, Inc.(c) 977,525
- -------------------------------------------------------------------------------------------
12,000 AMGEN Inc.(c) 648,000
- -------------------------------------------------------------------------------------------
65,000 Biotransplant, Inc.(c) 528,125
- -------------------------------------------------------------------------------------------
50,000 Digene Corp.(c) 400,000
- -------------------------------------------------------------------------------------------
36,000 Millennium Pharmaceuticals, Inc. PLC(c) 558,000
- -------------------------------------------------------------------------------------------
3,111,650
- -------------------------------------------------------------------------------------------
BUSINESS SERVICES-1.99%
29,250 Corestaff, Inc.(c) 1,308,937
- -------------------------------------------------------------------------------------------
15,750 Diebold, Inc. 759,938
- -------------------------------------------------------------------------------------------
24,000 Equifax, Inc. 630,000
- -------------------------------------------------------------------------------------------
6,000 Healthcare COMPARE Corp.(c) 292,500
- -------------------------------------------------------------------------------------------
32,700 Learning Tree International, Inc.(c) 1,005,525
- -------------------------------------------------------------------------------------------
8,620 Olsten Corp. 253,232
- -------------------------------------------------------------------------------------------
10,200 Registry, Inc. (The)(c) 298,350
- -------------------------------------------------------------------------------------------
43,400 Sitel Corp.(c) 1,822,800
- -------------------------------------------------------------------------------------------
13,000 Walsh International, Inc.(c) 120,250
- -------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
BUSINESS SERVICES-(continued)
22,200 Western Staff Services Inc.(c) $ 310,800
- -------------------------------------------------------------------------------------------
5,300 Whittman-Hart, Inc.(c) 190,800
- -------------------------------------------------------------------------------------------
6,993,132
- -------------------------------------------------------------------------------------------
CHEMICALS-0.30%
20,000 Pioneer Hi-Bred International, Inc. 1,057,500
- -------------------------------------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.36%
16,000 IMC Global, Inc. 602,000
- -------------------------------------------------------------------------------------------
16,000 Praxair, Inc. 676,000
- -------------------------------------------------------------------------------------------
1,278,000
- -------------------------------------------------------------------------------------------
COMPUTER MAINFRAMES-0.25%
9,000 International Business Machines Corp. 891,000
- -------------------------------------------------------------------------------------------
COMPUTER MINI/PCS-0.61%
15,000 COMPAQ Computer Corp.(c) 738,750
- -------------------------------------------------------------------------------------------
13,000 Digital Equipment Corp.(c) 585,000
- -------------------------------------------------------------------------------------------
14,000 Sun Microsystems, Inc.(c) 824,250
- -------------------------------------------------------------------------------------------
2,148,000
- -------------------------------------------------------------------------------------------
COMPUTER NETWORKING-0.90%
22,000 Ascend Communications, Inc.(c) 1,237,500
- -------------------------------------------------------------------------------------------
12,000 Cabletron Systems, Inc.(c) 823,500
- -------------------------------------------------------------------------------------------
14,000 Cisco Systems, Inc.(c) 792,750
- -------------------------------------------------------------------------------------------
21,000 Digital Systems International, Inc.(c) 317,625
- -------------------------------------------------------------------------------------------
3,171,375
- -------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-0.80%
10,000 Adaptec Inc.(c) 473,750
- -------------------------------------------------------------------------------------------
40,000 EMC Corp.(c) 745,000
- -------------------------------------------------------------------------------------------
18,750 Oracle Systems Corp.(c) 739,453
- -------------------------------------------------------------------------------------------
10,000 U.S. Robotics Corp.(c) 855,000
- -------------------------------------------------------------------------------------------
2,813,203
- -------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-2.61%
21,100 Aspect Development, Inc.(c) 538,050
- -------------------------------------------------------------------------------------------
20,400 AXENT Technologies, Inc.(c) 336,600
- -------------------------------------------------------------------------------------------
10,000 Computer Associates International, Inc. 712,500
- -------------------------------------------------------------------------------------------
10,000 Cotelligent Group, Inc.(c) 172,500
- -------------------------------------------------------------------------------------------
31,000 Cybercash, Inc.(c) 1,697,250
- -------------------------------------------------------------------------------------------
700 Documentum, Inc.(c) 21,350
- -------------------------------------------------------------------------------------------
17,000 DST Systems, Inc.(c) 544,000
- -------------------------------------------------------------------------------------------
13,000 Electronic Data Systems Corp. 698,750
- -------------------------------------------------------------------------------------------
9,400 Gensym Corp.(c) 206,800
- -------------------------------------------------------------------------------------------
18,200 Mechanical Dynamics, Inc.(c) 275,275
- -------------------------------------------------------------------------------------------
19,500 Metromail Corp.(c) 436,312
- -------------------------------------------------------------------------------------------
5,000 Microsoft Corp.(c) 600,625
- -------------------------------------------------------------------------------------------
15,400 Objective Systems Integrators, Inc.(c) 562,100
- -------------------------------------------------------------------------------------------
3,100 OpenVision Technologies(c) 37,975
- -------------------------------------------------------------------------------------------
18,200 RadiSys Corp.(c) 618,800
- -------------------------------------------------------------------------------------------
25,000 SoftKey International Inc.(c) 473,438
- -------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES-(continued)
32,200 Sunquest Information Services(c) $ 483,000
- -------------------------------------------------------------------------------------------
40,000 USCS International Inc.(c) 770,000
- -------------------------------------------------------------------------------------------
9,185,325
- -------------------------------------------------------------------------------------------
CONGLOMERATES-0.40%
12,000 Allied-Signal, Inc. 685,500
- -------------------------------------------------------------------------------------------
8,000 Olin Corp. 714,000
- -------------------------------------------------------------------------------------------
1,399,500
- -------------------------------------------------------------------------------------------
COSMETICS/TOILETRIES-1.12%
15,000 Colgate-Palmolive Co. 1,271,250
- -------------------------------------------------------------------------------------------
13,000 Estee Lauder Co. 549,250
- -------------------------------------------------------------------------------------------
13,000 Procter & Gamble Co. 1,178,125
- -------------------------------------------------------------------------------------------
17,000 Warner-Lambert Co. 935,000
- -------------------------------------------------------------------------------------------
3,933,625
- -------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.29%
8,700 Cable Design Technologies Corp.(c) 284,925
- -------------------------------------------------------------------------------------------
29,000 DII Group, Inc.(c) 739,500
- -------------------------------------------------------------------------------------------
1,024,425
- -------------------------------------------------------------------------------------------
ELECTRONIC/DEFENSE-0.20%
19,000 Sundstrand Corp. 695,875
- -------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.70%
20,000 Imperial Credit Industries, Inc.(c) 605,000
- -------------------------------------------------------------------------------------------
17,000 Merrill Lynch & Co., Inc. 1,107,125
- -------------------------------------------------------------------------------------------
15,000 Morgan Stanley Group, Inc. 736,875
- -------------------------------------------------------------------------------------------
2,449,000
- -------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-1.95%
14,550 AAMES Financial Corp. 521,981
- -------------------------------------------------------------------------------------------
17,500 American Express Co. 780,937
- -------------------------------------------------------------------------------------------
12,900 Associates First Capital Corp. 485,363
- -------------------------------------------------------------------------------------------
12,000 Federal Home Loan Mortgage Corp. 1,026,000
- -------------------------------------------------------------------------------------------
33,000 Federal National Mortgage Association 1,105,500
- -------------------------------------------------------------------------------------------
28,000 Green Tree Financial Corp. 875,000
- -------------------------------------------------------------------------------------------
25,000 MBNA Corp. 712,500
- -------------------------------------------------------------------------------------------
50,400 Medallion Financial Corp.(c) 630,000
- -------------------------------------------------------------------------------------------
10,000 Student Loan Marketing Association 740,000
- -------------------------------------------------------------------------------------------
6,877,281
- -------------------------------------------------------------------------------------------
FOOD/PROCESSING-0.26%
20,000 ConAgra, Inc. 907,500
- -------------------------------------------------------------------------------------------
HOTELS/MOTELS-0.18%
20,000 Extended Stay America, Inc.(c) 630,000
- -------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.04%
7,300 Riscorp, Inc.(c) 133,225
- -------------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-2.52%
18,000 Aetna Life & Casualty Co. 1,287,000
- -------------------------------------------------------------------------------------------
15,500 Capital Re Corp. 569,625
- -------------------------------------------------------------------------------------------
36,200 Capmac Holdings Inc. 1,031,700
- -------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
INSURANCE (MULTI-LINE PROPERTY)-(continued)
14,000 CIGNA Corp. $ 1,650,250
- -------------------------------------------------------------------------------------------
12,000 Everest Re Holdings, Inc. 310,500
- -------------------------------------------------------------------------------------------
5,500 EXEL, Ltd. 387,750
- -------------------------------------------------------------------------------------------
7,000 GCR Holdings Ltd. 185,500
- -------------------------------------------------------------------------------------------
50,200 Terra Nova 803,200
- -------------------------------------------------------------------------------------------
24,000 Travelers Group, Inc. 1,095,000
- -------------------------------------------------------------------------------------------
55,000 Travelers/Aetna Property Casualty Corp.(c) 1,560,625
- -------------------------------------------------------------------------------------------
8,881,150
- -------------------------------------------------------------------------------------------
LEISURE & RECREATION-0.29%
13,000 Eastman Kodak Co. 1,010,750
- -------------------------------------------------------------------------------------------
MACHINERY (HEAVY)-0.14%
10,500 Case Corp. 504,000
- -------------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.16%
13,500 Thermo Electron Corp.(c) 561,938
- -------------------------------------------------------------------------------------------
MEDICAL (DRUGS)-3.12%
16,000 Abbott Laboratories 696,000
- -------------------------------------------------------------------------------------------
26,000 American Home Products Corp. 1,563,250
- -------------------------------------------------------------------------------------------
9,000 Bristol-Myers Squibb Co. 810,000
- -------------------------------------------------------------------------------------------
13,000 Cardinal Health, Inc. 937,625
- -------------------------------------------------------------------------------------------
33,000 Johnson & Johnson 1,633,500
- -------------------------------------------------------------------------------------------
28,500 Lilly (Eli) & Co. 1,852,500
- -------------------------------------------------------------------------------------------
13,500 Merck & Co., Inc. 872,438
- -------------------------------------------------------------------------------------------
20,000 Pfizer Inc. 1,427,500
- -------------------------------------------------------------------------------------------
19,000 Schering-Plough Corp. 1,192,250
- -------------------------------------------------------------------------------------------
10,985,063
- -------------------------------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS)-1.92%
18,000 Baxter International Inc. 850,500
- -------------------------------------------------------------------------------------------
8,500 Becton, Dickinson & Co. 682,125
- -------------------------------------------------------------------------------------------
25,000 CardioThoracic Systems Inc.(c) 331,250
- -------------------------------------------------------------------------------------------
24,200 Cytyc Corp.(c) 626,175
- -------------------------------------------------------------------------------------------
53,000 Endovascular Technologies(c) 583,000
- -------------------------------------------------------------------------------------------
37,200 ESC Medical Systems Ltd.(c) 1,050,900
- -------------------------------------------------------------------------------------------
50,000 Fusion Medical Technologies(c) 353,125
- -------------------------------------------------------------------------------------------
44,800 Imagyn Medical, Inc.(c) 492,800
- -------------------------------------------------------------------------------------------
18,000 Medtronic, Inc. 1,008,000
- -------------------------------------------------------------------------------------------
30,000 Omnicare Inc. 795,000
- -------------------------------------------------------------------------------------------
6,772,875
- -------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-1.14%
17,000 Columbia/HCA Healthcare Corp. 907,375
- -------------------------------------------------------------------------------------------
20,000 Healthsource, Inc.(c) 350,000
- -------------------------------------------------------------------------------------------
10,100 Physicians Resource Group, Inc.(c) 337,088
- -------------------------------------------------------------------------------------------
32,500 Sunrise Assisted Living Inc.(c) 780,000
- -------------------------------------------------------------------------------------------
45,000 Tenet Healthcare Corp.(c) 961,875
- -------------------------------------------------------------------------------------------
12,000 U.S. Healthcare, Inc. 660,000
- -------------------------------------------------------------------------------------------
3,996,338
- -------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 17
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
METALS (MISCELLANEOUS)-0.26%
35,000 Titanium Metals Corp.(c) $ 905,625
- -------------------------------------------------------------------------------------------
NATURAL GAS DISTRIBUTION-0.42%
20,000 Consolidated Natural Gas Co. 1,045,000
- -------------------------------------------------------------------------------------------
13,000 KN Energy, Inc. 435,500
- -------------------------------------------------------------------------------------------
1,480,500
- -------------------------------------------------------------------------------------------
NATURAL GAS PIPELINE-1.57%
9,000 Columbia Gas System, Inc. 469,125
- -------------------------------------------------------------------------------------------
28,500 El Paso Natural Gas Co. 1,097,250
- -------------------------------------------------------------------------------------------
22,000 Enron Corp. 899,250
- -------------------------------------------------------------------------------------------
20,000 PanEnergy Corp. 657,500
- -------------------------------------------------------------------------------------------
26,000 Sonat, Inc. 1,170,000
- -------------------------------------------------------------------------------------------
25,000 Williams Companies, Inc. (The) 1,237,500
- -------------------------------------------------------------------------------------------
5,530,625
- -------------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.27%
18,000 Xerox Corp. 963,000
- -------------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.12%
8,000 Avery-Dennison Corp. 439,000
- -------------------------------------------------------------------------------------------
OIL & GAS (SERVICES)-0.60%
7,000 Exxon Corp. 608,125
- -------------------------------------------------------------------------------------------
8,000 Mobil Corp. 897,000
- -------------------------------------------------------------------------------------------
82,100 TPC Corp.(c) 595,225
- -------------------------------------------------------------------------------------------
2,100,350
- -------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.27%
8,000 Kimberly-Clark Corp. 618,000
- -------------------------------------------------------------------------------------------
6,700 Mead Corp. (The) 347,563
- -------------------------------------------------------------------------------------------
965,563
- -------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-0.91%
18,000 FelCor Suite Hotels, Inc. 549,000
- -------------------------------------------------------------------------------------------
14,500 Meditrust 483,937
- -------------------------------------------------------------------------------------------
12,500 National Health Investors, Inc. 409,375
- -------------------------------------------------------------------------------------------
29,000 Omega Healthcare Investors, Inc. 801,125
- -------------------------------------------------------------------------------------------
16,500 Patriot American Hospitality, Inc. 488,813
- -------------------------------------------------------------------------------------------
14,000 Public Storage Inc. 288,750
- -------------------------------------------------------------------------------------------
11,000 RFS Hotel Investors Inc. 170,500
- -------------------------------------------------------------------------------------------
3,191,500
- -------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.55%
23,000 American Stores Co. 948,750
- -------------------------------------------------------------------------------------------
30,000 Safeway, Inc.(c) 990,000
- -------------------------------------------------------------------------------------------
1,938,750
- -------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 18
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
RETAIL (STORES)-1.15%
25,000 Consolidated Stores Corp.(c) $ 918,750
- -------------------------------------------------------------------------------------------
35,000 Gap, Inc. (The) 1,124,375
- -------------------------------------------------------------------------------------------
20,000 Saks Holdings, Inc.(c) 682,500
- -------------------------------------------------------------------------------------------
23,000 Sears, Roebuck & Co. 1,118,375
- -------------------------------------------------------------------------------------------
10,500 Staples, Inc.(c) 204,750
- -------------------------------------------------------------------------------------------
4,048,750
- -------------------------------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.15%
10,000 Varian Associates, Inc. 517,500
- -------------------------------------------------------------------------------------------
SEMICONDUCTORS-1.00%
25,000 Analog Devices, Inc.(c) 637,500
- -------------------------------------------------------------------------------------------
43,900 DuPont Photomasks, Inc.(c) 899,950
- -------------------------------------------------------------------------------------------
14,700 Intel Corp. 1,079,532
- -------------------------------------------------------------------------------------------
14,500 Motorola, Inc. 911,687
- -------------------------------------------------------------------------------------------
3,528,669
- -------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-2.18%
20,000 ADC Telecommunications, Inc.(c) 900,000
- -------------------------------------------------------------------------------------------
60,000 American Portable Telecom Inc.(c) 645,000
- -------------------------------------------------------------------------------------------
25,000 A T & T Corp. 1,550,000
- -------------------------------------------------------------------------------------------
30,000 Frontier Corp. 918,750
- -------------------------------------------------------------------------------------------
31,000 ICT Group Inc.(c) 596,750
- -------------------------------------------------------------------------------------------
25,000 Lucent Technologies, Inc. 946,875
- -------------------------------------------------------------------------------------------
34,500 McLeod Inc.(c) 828,000
- -------------------------------------------------------------------------------------------
380 MFS Communications Co., Inc. 14,298
- -------------------------------------------------------------------------------------------
48,000 Tadiran Telecommunications(c) 768,000
- -------------------------------------------------------------------------------------------
13,400 U.S. Satellite Broadcasting(c) 505,850
- -------------------------------------------------------------------------------------------
7,673,523
- -------------------------------------------------------------------------------------------
TELEPHONE-0.81%
21,500 Ameritech Corp. 1,276,563
- -------------------------------------------------------------------------------------------
7,100 Century Telephone Enterprises, Inc. 226,313
- -------------------------------------------------------------------------------------------
16,000 GTE Corp. 716,000
- -------------------------------------------------------------------------------------------
15,000 SBC Communications, Inc. 414,375
- -------------------------------------------------------------------------------------------
13,000 U.S. West, Inc. 203,850
- -------------------------------------------------------------------------------------------
2,837,101
- -------------------------------------------------------------------------------------------
TEXTILES-0.86%
5,500 Designer Holdings Ltd.(a) 146,438
- -------------------------------------------------------------------------------------------
34,200 Gucci Group 2,205,900
- -------------------------------------------------------------------------------------------
20,000 Liz Claiborne, Inc. 692,500
- -------------------------------------------------------------------------------------------
3,044,838
- -------------------------------------------------------------------------------------------
TOBACCO-0.53%
18,000 Philip Morris Companies, Inc. 1,872,000
- -------------------------------------------------------------------------------------------
TRANSPORTATION (MISCELLANEOUS)-0.84%
80,100 AirNet Systems, Inc.(c) 1,281,600
- -------------------------------------------------------------------------------------------
75,200 Coach USA, Inc.(c) 1,673,200
- -------------------------------------------------------------------------------------------
2,954,800
- -------------------------------------------------------------------------------------------
Total Domestic Common Stocks 138,725,558
- -------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 19
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC PREFERRED STOCKS-4.48%
ADVERTISING/BROADCASTING-0.54%
21,900 American Radio Systems, $3.50 Conv. Pfd.(a)
(Acquired 06/19/96; Cost $1,095,000) $ 1,303,050
- -------------------------------------------------------------------------------------------
600 Time Warner, Inc.-Series K 10.25% Conv. PIK Pfd.(a)
(Acquired 04/03/96; Cost $600,000) 579,750
- -------------------------------------------------------------------------------------------
1,882,800
- -------------------------------------------------------------------------------------------
AIRLINES-0.20%
10,000 Continental Airlines Finance Trust-$4.25 Conv. Pfd.(a)
(Acquired 11/21/95-11/22/95; Cost $500,350) 737,500
- -------------------------------------------------------------------------------------------
BUILDING MATERIALS-0.13%
9,000 Greenfield Capital-$3.00 Conv Pfd.(a) (Acquired 04/18/96;
Cost $450,000) 463,500
- -------------------------------------------------------------------------------------------
ELECTRIC POWER-0.21%
15,000 Citizens Utilities Co.-$2.50 Conv. Pfd. 723,750
- -------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-0.36%
10,500 First USA-$1.9925 Conv. Pfd. PRIDES 501,375
- -------------------------------------------------------------------------------------------
10,000 SunAmerica, Inc.-Series E $3.10 Conv. Dep. Pfd. 747,500
- -------------------------------------------------------------------------------------------
1,248,875
- -------------------------------------------------------------------------------------------
FUNERAL SERVICES-0.19%
7,000 SCI Financial LLC-Series A, $3.125 Conv. Pfd. 676,375
- -------------------------------------------------------------------------------------------
GAS UTILITY-0.33%
46,000 MCN Corp.-$2.00 Conv. Pfd. PRIDES 1,173,000
- -------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.35%
16,000 Conseco, Inc.-$4.278 Conv. Pfd. 1,240,000
- -------------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-0.05%
4,000 Allstate Inc.-$2.299 Conv. Pfd. PRIDES 158,000
- -------------------------------------------------------------------------------------------
LEISURE & RECREATION-0.53%
20,000 Bally Entertainment Corp.-$0.89 Conv. Pfd. PRIDES 522,500
- -------------------------------------------------------------------------------------------
240,000 Tyco Toys Inc.-$0.4125 Conv. Pfd. 1,350,000
- -------------------------------------------------------------------------------------------
1,872,500
- -------------------------------------------------------------------------------------------
OIL & GAS (DISTRIBUTION & SERVICES)-0.70%
25,000 Atlantic Richfield Co.-$2.228 Exch. Conv. Pfd. 609,375
- -------------------------------------------------------------------------------------------
20,000 Enron Corp.-$1.359 Conv. Pfd. ACES 517,500
- -------------------------------------------------------------------------------------------
15,000 NorAm Energy-Series A, $3.00 Conv. Pfd. 813,750
- -------------------------------------------------------------------------------------------
8,500 Occidental Petroleum Corp.-$3.875 Conv. Pfd.(a)
(Acquired 04/04/96; Cost $531,250) 510,000
- -------------------------------------------------------------------------------------------
2,450,625
- -------------------------------------------------------------------------------------------
RETAIL (STORES)-0.55%
20,000 Ann Taylor Finance Trust-$4.25 Conv. Pfd.(a)
(Acquired 04/18/96-04/29/96; Cost $999,000) 1,192,500
- -------------------------------------------------------------------------------------------
14,000 Kmart Financing, Inc.-$3.875 Conv. Pfd. 759,500
- -------------------------------------------------------------------------------------------
1,952,000
- -------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-0.34%
19,000 MFS Communications Co., Inc.-$2.68 Conv. Dep. Pfd. 1,206,500
- -------------------------------------------------------------------------------------------
Total Domestic Preferred Stocks 15,785,425
- -------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 20
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(d) MARKET VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED FOREIGN BONDS & NOTES-3.97%
CANADA-1.20%
$ 1,750,000 Bell Canada (Telecommunications), Yankee Deb., 9.50%,
10/15/10 $ 2,050,212
- -------------------------------------------------------------------------------------------
50,000,000 Ontario (Province of) (Foreign Governments), STRIP, 8.18%,
01/10/45(b) 710,468
- -------------------------------------------------------------------------------------------
1,500,000 Talisman Energy, Inc. (Oil & Gas-Exploration & Production),
Deb., 7.125%, 06/01/07 1,456,500
- -------------------------------------------------------------------------------------------
4,217,180
- -------------------------------------------------------------------------------------------
GERMANY-1.44%
4,000,000 Dresdner Bank AG (Banking), Sub. Deb., 6.00%, 11/03/08 3,537,200
- -------------------------------------------------------------------------------------------
1,500,000 Tarkett Pegulan AG (Textiles), Sr. Sub. Notes, 9.00%,
03/01/02(a)
(Acquired 01/31/96; Cost $1,600,313) 1,526,250
- -------------------------------------------------------------------------------------------
5,063,450
- -------------------------------------------------------------------------------------------
ITALY-0.35%
1,200,000 Italy (Republic of) (Foreign Governments), Conv. Notes,
5.00%, 06/28/01 1,227,000
- -------------------------------------------------------------------------------------------
SWITZERLAND-0.50%
1,000,000 Roche Holdings Inc. (Medical-Drugs), Conv. LYON, 7.00%,
04/20/10(a)(b) (Acquired 04/12/95; Cost $356,280) 426,250
- -------------------------------------------------------------------------------------------
1,250,000 Sandoz Capital BVI Ltd. (Chemicals), Sr. Conv. Deb., 2.00%,
10/06/02(a) (Acquired 03/07/96-06/05/96; Cost $1,306,500) 1,343,750
- -------------------------------------------------------------------------------------------
1,770,000
- -------------------------------------------------------------------------------------------
UNITED KINGDOM-0.48%
300,000 Danka Business Systems PLC (Office Automation), Conv. Sub.
Deb., 6.75%, 04/01/02(a) (Acquired 03/06/95; Cost $300,000) 355,875
- -------------------------------------------------------------------------------------------
1,500,000 Royal Bank of Scotland Group PLC (Banking), Sub. Notes,
6.375% 02/01/11 1,336,230
- -------------------------------------------------------------------------------------------
1,692,105
- -------------------------------------------------------------------------------------------
Total U.S. Dollar Denominated Foreign Bonds & Notes 13,969,735
- -------------------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED FOREIGN BONDS & NOTES-1.97%
CANADA-1.97%
CAD
1,500,000 Canadian Oil Debco Inc. (Oil & Gas-Services), Deb., 11.00%,
10/31/00 1,231,049
- -------------------------------------------------------------------------------------------
CAD
1,500,000 Manitoba (Province of) (Foreign Governments), Series AZ Deb.,
7.75%, 07/17/16 1,536,960
- -------------------------------------------------------------------------------------------
CAD
500,000 New Brunswick (Province of) (Foreign Governments), Deb.,
8.94%, 01/15/05 375,100
- -------------------------------------------------------------------------------------------
CAD
2,300,000 Ontario (Province of) (Foreign Governments), Sr.
Unsubordinated Notes, 8.00%, 03/11/03 1,732,875
- -------------------------------------------------------------------------------------------
CAD
1,000,000 Teleglobe Inc. (Telecommunications), Deb., 8.35%, 06/20/03 753,095
- -------------------------------------------------------------------------------------------
CAD
1,750,000 TransAlta Utilities Corp. (Electric Power), Secured Series T
Deb., 8.35%, 12/15/03 1,329,067
- -------------------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Foreign Bonds & Notes 6,958,146
- -------------------------------------------------------------------------------------------
<CAPTION>
SHARES
FOREIGN STOCKS & OTHER EQUITY INTERESTS-4.51%
AUSTRALIA-0.22%
59,500 OzEmail Ltd. (Computer Networking)(c) 766,062
- -------------------------------------------------------------------------------------------
BRAZIL-0.21%
10,500 Telecomunicacoes Brasileiras SA.-Telebras-ADR
(Telecommunications) 731,063
- -------------------------------------------------------------------------------------------
CANADA-0.13%
16,400 CanWest Global Communications Corp.(c) 446,900
- -------------------------------------------------------------------------------------------
FRANCE-0.16%
30,700 Genset-ADR (Biotechnology)(c) 571,787
- -------------------------------------------------------------------------------------------
GERMANY-0.16%
10,750 Veba A.G. (Electric Power) 571,754
- -------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 21
Financials
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ISRAEL-0.16%
24,000 ECI Telecommunication Ltd. (Computer Networking) $ 558,000
- -------------------------------------------------------------------------------------------
ITALY-0.17%
30,000 SAES Getters S.p.A.-ADR (Electronic
Components/Miscellaneous)(c) 603,750
- -------------------------------------------------------------------------------------------
NETHERLANDS-0.62%
11,500 Elsag Baily Process Automation-N.V.-ADR (Electronic
Components/Miscellaneous)-$2.75 Conv. Pfd.(a)
(Acquired 12/14/95; Cost $575,000) 554,875
- -------------------------------------------------------------------------------------------
5,400 Royal PTT Nederland N.V.-ADR (Telecommunications) 738,750
- -------------------------------------------------------------------------------------------
37,300 Toolex Alpha N.V.-ADR (Machinery/Miscellaneous)(c) 895,200
- -------------------------------------------------------------------------------------------
2,188,825
- -------------------------------------------------------------------------------------------
NORWAY-0.15%
17,000 Nera A.S.-ADR (Telecommunications) 539,750
- -------------------------------------------------------------------------------------------
PORTUGAL-0.13%
17,000 Portugal Telecom S.A.-ADR (Telecommunications) 446,250
- -------------------------------------------------------------------------------------------
SPAIN-0.44%
82,000 Autopistas, Concesionaria Espanola, S.A. (Engineering &
Construction) 954,493
- -------------------------------------------------------------------------------------------
57,000 Iberdrola (Electric Power) 585,563
- -------------------------------------------------------------------------------------------
1,540,056
- -------------------------------------------------------------------------------------------
SWEDEN-0.09%
15,000 Telefonaktiebolaget L.M. Ericsson-ADR (Telecommunications)(c) 322,500
- -------------------------------------------------------------------------------------------
UNITED KINGDOM-1.87%
37,700 AXA S.A.-ADR (Insurance-Life & Health)(c) 1,022,612
- -------------------------------------------------------------------------------------------
64,350 Bass PLC-ADR (Beverages-Alcoholic) 807,997
- -------------------------------------------------------------------------------------------
6,500 British Sky Broadcasting Group PLC-ADR
(Advertising/Broadcasting) 264,062
- -------------------------------------------------------------------------------------------
73,000 National Power PLC (Electric Power) 589,533
- -------------------------------------------------------------------------------------------
8,000 National Power PLC-ADR (Electric Power) 195,000
- -------------------------------------------------------------------------------------------
17,300 Nynex CableComms Group PLC-ADR (Telecommunications)(c) 281,125
- -------------------------------------------------------------------------------------------
50,000 Orange PLC-ADR (Telecommunications)(c) 875,000
- -------------------------------------------------------------------------------------------
72,000 PowerGen PLC (Electric Power) 524,429
- -------------------------------------------------------------------------------------------
11,000 PowerGen PLC-ADR (Electric Power) 228,250
- -------------------------------------------------------------------------------------------
16,000 SmithKline Beecham PLC-ADR (Medical-Drugs) 870,000
- -------------------------------------------------------------------------------------------
16,000 Teva Pharmaceutical Industries Inc.-ADR (Medical-Drugs) 606,000
- -------------------------------------------------------------------------------------------
8,000 Vodafone Group PLC-ADR (Telecommunications) 295,000
- -------------------------------------------------------------------------------------------
6,559,008
- -------------------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 15,845,705
- -------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-12.33%
U.S. TREASURY NOTES
$ 2,500,000 7.50%, 12/31/96 2,524,975
- -------------------------------------------------------------------------------------------
12,000,000(e) 6.50%, 04/30/99 12,069,120
- -------------------------------------------------------------------------------------------
2,500,000 7.125%, 02/29/00 2,558,450
- -------------------------------------------------------------------------------------------
3,000,000 6.25%, 08/31/00 2,980,140
- -------------------------------------------------------------------------------------------
7,000,000 6.50%, 05/31/01 7,006,580
- -------------------------------------------------------------------------------------------
2,500,000 7.25%, 08/15/04 2,591,575
- -------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 22
Financials
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY NOTES-(continued)
3,000,000(e) 7.50%, 02/15/05 $ 3,157,230
- -------------------------------------------------------------------------------------------
10,650,000(e) 6.50%, 08/15/05 10,500,155
- -------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 43,388,225
- -------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-9.89%(f)
Daiwa Securities America, Inc.
801,551 5.50%, 07/01/96(g) 801,551
- -------------------------------------------------------------------------------------------
Goldman, Sachs & Co.
34,000,000 4.75%, 07/0196(h) 34,000,000
- -------------------------------------------------------------------------------------------
Total Repurchase Agreements 34,801,551
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES-98.22% 345,738,745
- -------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.78% 6,282,299
- -------------------------------------------------------------------------------------------
NET ASSETS-100.00% $352,021,044
===========================================================================================
</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 06/30/96 was $38,845,215,
which represented 11.04% 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) Principal amount is in U.S. Dollars unless indicated otherwise.
(e) A portion of the principal balance was pledged to cover margin
requirements for open futures contracts. See Note 7.
(f) 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 or its affiliates.
(g) 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.
(h) 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,
5.50% to 11.625% due 10/03/96 to 11/15/04.
Abbreviations:
ACES -- Automatic Convertible Exchange Security
ADR -- American Depository Receipt
CAD -- Canadian Dollar
Conv. -- Convertible
Ctf. -- Certificates
Deb. -- Debentures
Dep. -- Depository
Exch. -- Exchangeable
Gtd. -- Guaranteed
LYON -- Liquid Yield Option Notes
Pfd. -- Preferred
PIK -- Payment in kind
PRIDES -- Preferred Redeemable Increased Dividend Equity Securities
Sr. -- Senior
Sub. -- Subordinated
See Notes to Financial Statements.
20
<PAGE> 23
Financials
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $316,206,004) $345,738,745
- ----------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $133,093) 132,675
- ----------------------------------------------------------------------------------------
Receivables for:
Investments sold 4,185,405
- ----------------------------------------------------------------------------------------
Fund shares sold 4,742,127
- ----------------------------------------------------------------------------------------
Interest and dividends 2,593,945
- ----------------------------------------------------------------------------------------
Variation margin 118,125
- ----------------------------------------------------------------------------------------
Investment for deferred compensation plan 9,008
- ----------------------------------------------------------------------------------------
Other assets 32,694
- ----------------------------------------------------------------------------------------
Total assets 357,552,724
- ----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 4,448,609
- ----------------------------------------------------------------------------------------
Fund shares reacquired 225,783
- ----------------------------------------------------------------------------------------
Deferred compensation plan 9,008
- ----------------------------------------------------------------------------------------
Accrued advisory fees 207,795
- ----------------------------------------------------------------------------------------
Accrued administrative service fees 5,436
- ----------------------------------------------------------------------------------------
Accrued distribution fees 238,260
- ----------------------------------------------------------------------------------------
Accrued transfer agent fees 44,640
- ----------------------------------------------------------------------------------------
Accrued trustees' fees 1,600
- ----------------------------------------------------------------------------------------
Accrued operating expenses 350,549
- ----------------------------------------------------------------------------------------
Total liabilities 5,531,680
- ----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $352,021,044
========================================================================================
NET ASSETS:
Class A $202,754,437
========================================================================================
Class B $149,266,607
========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 9,793,488
========================================================================================
Class B 7,212,316
========================================================================================
Class A:
Net asset value and redemption price per share $ 20.70
========================================================================================
Offering price per share:
(Net asset value of $20.70 divided by 95.25%) $ 21.73
========================================================================================
Class B:
Net asset value and offering price per share $ 20.70
========================================================================================
</TABLE>
See Notes to Financial Statements.
21
<PAGE> 24
Financials
STATEMENT OF OPERATIONS
For the six months ended June 30, 1996
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 4,274,548
- ----------------------------------------------------------------------------------------
Dividends (net of $15,084 foreign withholding tax) 1,049,420
- ----------------------------------------------------------------------------------------
Total investment income 5,323,968
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 859,875
- ----------------------------------------------------------------------------------------
Custodian fees 31,670
- ----------------------------------------------------------------------------------------
Distribution fees-Class A 182,254
- ----------------------------------------------------------------------------------------
Distribution fees-Class B 544,220
- ----------------------------------------------------------------------------------------
Administrative service fees 28,639
- ----------------------------------------------------------------------------------------
Trustees' fees 3,061
- ----------------------------------------------------------------------------------------
Transfer agent fees-Class A 111,903
- ----------------------------------------------------------------------------------------
Transfer agent fees-Class B 124,886
- ----------------------------------------------------------------------------------------
Other 104,922
- ----------------------------------------------------------------------------------------
Total expenses 1,991,430
- ----------------------------------------------------------------------------------------
Net investment income 3,332,538
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES, FOREIGN CURRENCY
TRANSACTIONS AND FUTURES CONTRACTS:
Net realized gain from:
Investment securities 6,418,390
- ----------------------------------------------------------------------------------------
Foreign currency transactions 473
- ----------------------------------------------------------------------------------------
Futures contracts 1,394,876
- ----------------------------------------------------------------------------------------
7,813,739
- ----------------------------------------------------------------------------------------
Unrealized appreciation of:
Investment securities 10,268,906
- ----------------------------------------------------------------------------------------
Foreign currencies 5,367
- ----------------------------------------------------------------------------------------
Futures contracts 546,154
- ----------------------------------------------------------------------------------------
10,820,427
- ----------------------------------------------------------------------------------------
Net gain from investment securities, foreign currencies and futures
contracts 18,634,166
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $21,966,704
========================================================================================
</TABLE>
See Notes to Financial Statements.
22
<PAGE> 25
Financials
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 $ 3,332,538 $ 2,293,374
- -----------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currency transactions and futures contracts 7,813,739 3,819,964
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 10,820,427 20,162,424
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 21,966,704 26,275,762
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (1,971,126) (1,509,535)
- -----------------------------------------------------------------------------------------
Class B (1,028,320) (772,889)
- -----------------------------------------------------------------------------------------
Net equalization credits 2,945,002 1,435,649
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 97,744,520 39,846,397
- -----------------------------------------------------------------------------------------
Class B 67,489,908 41,781,556
- -----------------------------------------------------------------------------------------
Net increase in net assets 187,146,688 107,056,940
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 164,874,356 57,817,416
- -----------------------------------------------------------------------------------------
End of period $352,021,044 $164,874,356
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $306,066,223 $140,831,795
- -----------------------------------------------------------------------------------------
Undistributed net investment income 5,843,081 2,564,987
- -----------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currency transactions and
futures contracts 10,017,134 2,203,395
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and futures contracts 30,094,606 19,274,179
- -----------------------------------------------------------------------------------------
$352,021,044 $164,874,356
=========================================================================================
</TABLE>
See Notes to Financial Statements.
23
<PAGE> 26
Financials
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
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 - A security listed or traded on an exchange (except for
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the mean between the closing bid and asked prices
on that day. Exchange listed convertible 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 mean between the closing bid and asked prices. 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. 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.
C. Bond Premiums - It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
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
24
<PAGE> 27
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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 $28,639 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, AFS
was paid $146,822 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) 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 $182,254
and $544,220, respectively, as compensation under the Plans.
25
<PAGE> 28
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
AIM Distributors received commissions of $321,301 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 $24,136 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 $1,468
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 $1,100,000 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 an administrative fee, payable quarterly, at the
annual rate of $1,100.
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
$213,509,838 and $67,916,103, 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 $36,908,329
- ------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (7,375,588)
- ------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $29,532,741
============================================================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
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 5,867,120 $114,821,743 2,972,256 $ 52,107,491
- ---------------------------------------------------------------------------------------------------------------------
Class B 3,788,154 74,432,205 2,739,743 47,601,025
- ---------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 86,673 1,760,983 76,297 1,334,447
- ---------------------------------------------------------------------------------------------------------------------
Class B 42,481 861,648 38,541 678,897
- ---------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (959,943) (18,838,206) (819,551) (13,595,541)
- ---------------------------------------------------------------------------------------------------------------------
Class B (397,181) (7,803,945) (384,332) (6,498,366)
- ---------------------------------------------------------------------------------------------------------------------
8,427,304 $165,234,428 4,622,954 $ 81,627,953
=====================================================================================================================
</TABLE>
26
<PAGE> 29
Financials
NOTE 7 - OPEN FUTURES CONTRACTS
On June 30, 1996, $987,000 principal amount of U.S. Treasury notes were pledged
as collateral to cover margin requirements for open futures contracts.
Open futures contracts at June 30, 1996 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT NO. OF CONTRACTS/MONTH/COMMITMENT APPRECIATION
<S> <C> <C>
S&P 500 Index 63 contracts/Sept. 96/Buy $562,004
- ------------------------------------------------------------------- ------------------------------------- ------------------
</TABLE>
NOTE 8 - 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
two-year period ended December 31, 1995, the four months ended December 31, 1993
and each of the years in the six-year period ended August 31, 1993 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 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,
JUNE 30, ---------------------------------- --------------------
CLASS A: 1996 1995 1994 1993 1993 1992
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.22 $ 14.62 $ 16.10 $ 15.97 $ 12.77 $ 12.04
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.29 0.49 0.44 0.10 0.32 0.29
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 1.44 4.57 (1.31) 0.18 3.18 0.74
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
Total from investment operations 1.73 5.06 (0.87) 0.28 3.50 1.03
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.25) (0.46) (0.39) (0.15) (0.30) (0.30)
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
Distributions from net realized capital gains -- -- (0.22) -- -- --
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
Total distributions (0.25) (0.46) (0.61) (0.15) (0.30) (0.30)
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 20.70 $ 19.22 $ 14.62 $ 16.10 $ 15.97 $ 12.77
===================================================== ======== ======== ======== ======== ======== ========
Total return(a) 9.01% 34.97% (5.44)% 1.76% 27.75% 8.66%
===================================================== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $202,754 $ 92,241 $ 37,572 $ 23,520 $ 19,497 $ 11,796
===================================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.20%(b) 1.43%(c) 1.25%(d) 2.17%(e) 2.07% 2.12%
===================================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 2.98%(b) 2.81%(c) 3.07%(d) 1.81%(e) 2.23% 2.32%
===================================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 30.36% 76.63% 76.18% 233.10% 154.47% 165.53%
===================================================== ======== ======== ======== ======== ======== ========
Borrowings for the period:
Amount of debt outstanding at end of period -- -- -- -- -- --
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
Average amount of debt outstanding during the
period(f) -- -- -- -- -- --
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
Average number of shares outstanding during the
period (000s omitted)(f) 7,270 3,173 2,061 1,305 1,046 939
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
Average amount of debt per share during the period -- -- -- -- -- --
- ----------------------------------------------------- -------- -------- -------- -------- -------- --------
<CAPTION>
AUGUST 31,
--------------------------------------------
CLASS A: 1991 1990 1989 1988
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.73 $ 10.67 $ 9.08 $ 11.89
- ----------------------------------------------------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.28 0.32 0.39 0.42
- ----------------------------------------------------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 2.33 (0.91) 1.63 (2.65)
- ----------------------------------------------------- -------- -------- -------- --------
Total from investment operations 2.61 (0.59) 2.02 (2.23)
- ----------------------------------------------------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.30) (0.35) (0.43) (0.50)
- ----------------------------------------------------- -------- -------- -------- --------
Distributions from net realized capital gains -- -- -- (0.08)
- ----------------------------------------------------- -------- -------- -------- --------
Total distributions (0.30) (0.35) (0.43) (0.58)
- ----------------------------------------------------- -------- -------- -------- --------
Net asset value, end of period $ 12.04 $ 9.73 $ 10.67 $ 9.08
===================================================== ======== ======== ======== ========
Total return(a) 27.41% (5.67)% 22.96% (18.57)%
===================================================== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 11,750 $ 10,965 $ 14,405 $ 16,789
===================================================== ======== ======== ======== ========
Ratio of expenses to average net assets 2.39% 2.15% 1.94% 2.31%
===================================================== ======== ======== ======== ========
Ratio of net investment income to average net assets 2.74% 3.18% 3.99% 4.50%
===================================================== ======== ======== ======== ========
Portfolio turnover rate 208.11% 307.08% 149.42% 117.73%
===================================================== ======== ======== ======== ========
Borrowings for the period:
Amount of debt outstanding at end of period -- -- $260,000 --
- ----------------------------------------------------- -------- -------- -------- --------
Average amount of debt outstanding during the
period(f) -- $138,181 $ 83,195 --
- ----------------------------------------------------- -------- -------- -------- --------
Average number of shares outstanding during the
period (000s omitted)(f) 1,051 1,238 1,589 2,131
- ----------------------------------------------------- -------- -------- -------- --------
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 annualized and based on average net assets of $146,604,169.
(c) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees are 1.46% and 2.78%,
respectively.
(d) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees are 1.68% and 2.64%,
respectively.
(e) Annualized.
(f) Averages computed on a daily basis.
27
<PAGE> 30
Financials
NOTE 8 - FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -----------------------------------
CLASS B: 1996 1995 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.22 $ 14.62 $ 16.11 $ 16.69
- ----------------------------------------------------------------------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.22 0.31 0.31 0.04
- ----------------------------------------------------------------------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and unrealized) 1.43 4.61 (1.31) (0.58)
- ----------------------------------------------------------------------- -------- -------- -------- --------
Total from investment operations 1.65 4.92 (1.00) (0.54)
- ----------------------------------------------------------------------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.17) (0.32) (0.27) (0.04)
- ----------------------------------------------------------------------- -------- -------- -------- --------
Distributions from net realized capital gains -- -- (0.22) --
- ----------------------------------------------------------------------- -------- -------- -------- --------
Total distributions (0.17) (0.32) (0.49) (0.04)
- ----------------------------------------------------------------------- -------- -------- -------- --------
Net asset value, end of period $ 20.70 $ 19.22 $ 14.62 $ 16.11
======================================================================= ======== ======== ======== ========
Total return(a) 8.61% 33.93% (6.23)% (3.23)%
======================================================================= ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $149,267 $ 72,634 $ 20,245 $ 2,754
======================================================================= ======== ======== ======== ========
Ratio of expenses to average net assets 2.05%(b) 2.21%(c) 1.98%(d) 2.83%(e)
======================================================================= ======== ======== ======== ========
Ratio of net investment income to average net assets 2.13%(b) 2.03%(c) 2.34%(d) 1.15%(e)
======================================================================= ======== ======== ======== ========
Portfolio turnover rate 30.36% 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 annualized and based on average net assets of $109,442,056.
(c) After waiver of advisory fees. Ratios of expenses and net investment to
average net assets 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
to average net assets prior to waiver of advisory fees are 2.45% and 1.87%,
respectively.
(d) Annualized.
28
<PAGE> 31
Trustees &
Officers
<TABLE>
<CAPTION>
<S> <C> <C>
BOARD OF 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
Formerly Director, President, and Chief
Executive Officer John J. Arthur A I M Advisors, Inc.
COMSAT Corporation Senior Vice President and Treasurer 11 Greenway Plaza
Suite 1919
Owen Daly II Gary T. Crum Houston, TX 77046
Director Senior Vice President
Cortland Trust Inc. TRANSFER AGENT
Scott G. Lucas
Carl Frischling Senior Vice President A I M Fund Services, Inc.
Partner P.O. Box 4739
Kramer, Levin, Naftalis & Frankel Carol F. Relihan Houston, TX 77210-4739
Senior Vice President and Secretary
Robert H. Graham CUSTODIAN
President and Chief Operating Officer Robert G. Alley
A I M Management Group Inc. Vice President State Street Bank & Trust Company
225 Franklin Street
John F. Kroeger Stuart W. Coco Boston, MA 02110
Formerly Consultant Vice President
Wendell & Stockel Associates, Inc. COUNSEL TO THE FUND
Melville B. Cox
Lewis F. Pennock Vice President Ballard Spahr
Attorney Andrews & Ingersoll
Karen Dunn Kelley 1735 Market Street
Ian W. Robinson Vice President Philadelphia, PA 19103
Consultant; Formerly Executive
Vice President and Jonathan C. Schoolar COUNSEL TO THE TRUSTEES
Chief Financial Officer Vice President
Bell Atlantic Management Kramer, Levin, Naftalis & Frankel
Services, Inc. Dana R. Sutton 919 Third Avenue
Vice President and Assistant Treasurer New York, NY 10022
Louis S. Sklar
Executive Vice President P. Michelle Grace DISTRIBUTOR
Hines Interests Assistant Secretary
Limited Partnership A I M Distributors, Inc.
David L. Kite 11 Greenway Plaza
Assistant Secretary Suite 1919
Houston, TX 77046
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> 32
<TABLE>
<S> <C>
[PHOTO OF 11 GREENWAY PLAZA] 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 *AIM Aggressive Growth Fund was
leadership in the mutual fund closed to new investors on July 18,
industry since 1976 and currently 1995. **On September 25, 1995, AIM
manages approximately $55 billion Government Securities Fund became
in assets for more than 3 million AIM Intermediate Government Fund.
shareholders, including individual For more complete information about
investors, corporate clients, and any AIM Fund(s), including sales
financial institutions. The AIM charges and expenses, ask your
Family of Funds--Registered financial consultant or securities
Trademark--is distributed dealer for a free prospectus(es).
nationwide, and AIM today ranks Please read the prospectus(es)
among the nation's top 15 mutual carefully before you invest or send
fund companies in assets under money.
management, according to Lipper
Analytical Services, Inc.
[AIM LOGO APPEARS HERE] ---------------
BULK RATE
A I M Distributors, Inc. U.S. POSTAGE
11 Greenway Plaza, Suite 1919 PAID
Houston, TX 77046 HOUSTON, TX
Permit No. 1919
---------------
</TABLE>
