<PAGE> 1
[AIM LOGO APPEARS HERE]
[PHOTO APPEARS HERE]
AIM VALUE FUND
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE> 2
AIM VALUE FUND
For shareholders who seek long-term growth of capital through a portfolio that
consists primarily of stocks of companies that are undervalued
relative to the stock market as a whole.
ABOUT FUND PERFORMANCE AND DATA THROUGHOUT THIS REPORT:
o AIM Value Fund performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, Fund results were computed at net asset value without
reflecting sales charges.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B share
performance reflects the applicable contingent deferred sales charge (CDSC)
for the period involved. The CDSC on Class B shares declines from 5% to 0%
at the beginning of the seventh year. The performance of the Fund's Class B
shares will differ from that of Class A shares.
o In 1995, the Fund paid distributions for Class A and Class B shares of
$1.676 and $1.587 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 Past performance cannot guarantee comparable future results.
o The Fund's portfolio composition is subject to change, and there is no
assurance the Fund will continue to hold any one particular security.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Standard & Poor's Corporation (S&P) is a credit-rating agency. The
unmanaged Standard & Poor's Composite Index of 500 Stocks is widely regarded
by investors as representative of the stock market in general.
o The Dow Jones Industrial Average (DJIA) is an unmanaged composite of
30 large-company stocks.
o Lipper Analytical Services, Inc., is an independent mutual fund performance
monitor. The unmanaged Lipper Growth Fund Index represents an average of the
performance of the 30 largest growth funds.
o The NASDAQ (National Association of Securities Dealers Automated
Quotation system) Composite Index is a group of more than 4,500 unmanaged
over-the-counter securities widely regarded by investors to be
representative of the small- and medium-size company stock universe.
o An investment cannot be made in any indexes listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
A Message from
the Chairman
Dear Fellow Shareholder:
AIM Value Fund advanced with the stock market in 1995,
turning in a performance that garnered the attention of the
national media, including Money, USA Today, Mutual Funds
Magazine, and Fortune.
[PHOTO OF Declining interest rates, no threat of inflation, and a
Charles T. surge in technology issues propelled the stock market to record
Bauer, highs. AIM Value Fund remained fully invested during most of
Chairman of the year and enjoyed the full force of the wave. Total returns
the Board of during the 12 months that ended December 31, 1995 for Class A
the Fund, and Class B shares were 34.85% and 33.73%, respectively. Both
APPEARS HERE] classes performed better than the 31.48% total return of the
Lipper Growth Fund Index, which averages the performance of
the 30 largest growth funds tracked by Lipper Analytical
Services, an independent mutual fund performance monitor.
The Fund's success during the period covered by this report can be attributed
to its investment strategy: Fund managers emphasize out-of-favor stocks
with a trend of improved earnings. This conservative approach attracted
approximately 250,000 new investors to the Fund in 1995, as combined net assets
of both classes swelled from $2.04 billion in December 1994 to $6.27 billion in
December 1995. A more detailed discussion of the Fund's performance begins on
the following page.
It is important to remember that AIM Value Fund and the financial markets in
general have experienced ups and downs over time. Although past performance
does not ensure comparable future results, we believe shareholders who keep a
long-range outlook will enjoy the greatest returns on their investments.
In 1996, debate over the federal budget deficit--which affects the future of
Medicare and Social Security--brings home the need for all of us to plan for
retirement. It's more important than ever to build our nest eggs independent
from government programs that may, or may not, exist by the time we retire. And
for some baby boomers, that time is just 10 years away.
What 1996 holds for the stock market is anyone's guess, but few expect
another year like the exceptional 1995. AIM Value Fund managers have the
flexibility to brace for the contingencies of the market through a diversified
portfolio.
We are pleased to report such an outstanding year for AIM Value Fund. If you
have any questions or comments, please call Client Services at 800-959-4246
during regular business hours. For automated account information, call the
24-hour AIM Investor Line toll-free at 800-246-5463.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
AIM VALUE FUND
OUTPERFORMED THE
AVERAGE GROWTH FUND
IN 1995
AIM VALUE FUND
CLASS A SHARES
34.85%
AIM VALUE FUND
CLASS B SHARES
33.73%
LIPPER GROWTH
FUND INDEX
31.48%
Fund total return performance is
compared to the performance of
the 30 largest growth funds
tracked by Lipper, excluding all
sales charges, and including fees
and expenses.
<PAGE> 4
Management's
Discussion & Analysis
- -------------------
AIM Value Fund's
investment strategy
does not involve
shopping for the
cheapest stocks.
Instead, the Fund
targets out-of-favor
stocks with
long-term earnings
growth potential.
- -------------------
EARNINGS GROWTH PROPELS VALUE FUND
Strong earnings, low interest rates, and a slowing economy converged to
make 1995 the year of the raging bull. Market benchmarks--the Dow Jones
Industrial Average, the S&P 500, and the NASDAQ Composite--all soared more than
36% in a year in which everything seemed to go right.
Driving the market were strong earnings performances across the board.
I/B/E/S International reported in The Wall Street Journal that of the companies
reporting third-quarter earnings, 55% were higher than analysts' expectations,
14% were on target, and 31% were below expectations. In the second quarter, 57%
exceeded expectations and 30% fell short. Fourth-quarter earnings were not
available at the end of this reporting period, and predictions were mixed.
Earnings growth stretched across each sector of the market. The S&P 500--
considered to be representative of the stock market in general--logged a 37.45%
annual total return. The Dow Jones Industrial Average of 30 blue-chip stocks
increased 36.83%, and the NASDAQ Composite Index of small-cap stocks rose
39.92%.
FED EASES RATES
The market heated up in July, when the Federal Reserve cut the federal funds
rate, which banks charge each other for overnight loans. This was the first time
that the Fed had cut rates since 1992, and the action boosted both the stock
and bond markets. The Fed cut the rate again in December in response to
growing signs of economic weakness.
For most of the year, technology stocks remained market favorites.
Third-quarter earnings for major companies like Intel, Microsoft, Nokia, and
IBM were disappointing, however. By the end of the year, computer makers
retained larger inventories, which indicated a drop in demand. Technology stock
prices weakened at year-end, and Fund managers responded by decreasing their
emphasis on the sector.
YOUR INVESTMENT PORTFOLIO
AIM Value Fund soared with the market in 1995 because it remained fully
invested for most of the year, turning in a 34.85% annual total return for
Class A shares and 33.73% for Class B shares. Technology stocks comprised 35%
of
- --------------------------------------------------------------------------------
THE PASSING OF MILLENIA ON THE DOW
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
It took 15 years, from 1972 to 1987,for
the DJIA to climb to its next 1000 mark. It
took only nine months in 1995. DJIA Rise
11/14/72 1000
After breaking 5000, the DJIA sailed past 1/8/87 2000
5100 and then 5200 before year-end, 4/17/91 3000
logging its largest one-year point 2/23/95 4000
gain ever: 1282.68. 11/21/95 5000
</TABLE>
- --------------------------------------------------------------------------------
Source: Barron's
See important Fund disclosure on inside front cover.
2
<PAGE> 5
Management's
Discussion & Analysis
the Fund for most of the year, but holdings in that sector decreased to 25%
at year-end when tech stocks weakened. Semiconductor stocks had been the
Fund's strongest area of concentration, making up 11.47% of the portfolio in
November. Fund managers decreased holdings to 6.03% when several key computer
chip manufacturers reported in late December that fourth-quarter earnings might
fall short of expectations. The Fund's holdings are subject to change, and
there is no guarantee it will continue to hold any particular security.
AIM Value Fund's investment strategy does not involve shopping for the
cheapest stocks. Instead, the Fund targets out-of-favor stocks with long-term
earnings growth potential. Fund managers analyze stocks using a number
of financial criteria including a price-to-earnings ratio, which compares a
company's earnings with its stock price. The goal of the Fund is to buy
earnings growth at a discount.
CHANGES IN TOP HOLDINGS
Three of the Fund's largest stock holdings have remained on its top-10 equities
list since last year: Philip Morris Companies, Inc.; Texas Instruments, Inc.;
and COMPAQ Computer Corp. Six of the top 10 stocks from last year have been
dropped from the portfolio because their earnings momentum fell short: Ford
Motor Company; International Business Machines Corp.; Philips Electronics NV
N.Y. Shares-ADR; Telephone & Data Systems, Inc.; Itel Corp.; and Sun
Microsystems, Inc.
The portfolio added Citicorp; Schering-Plough Corp.; MFS Communications Co.,
Inc.; and AT&T Corp. in 1995 and increased its holdings in Xerox Corp.;
Computer Associates International, Inc.; and Seagate Technology, Inc.
As of December 31, 1995, the Fund held 211 securities.
OUTLOOK FOR THE FUTURE
Few analysts expect the stock market to repeat its 1995 performance. A partial
government shutdown in December prevented the release of economic data from
some federal agencies, but private data and empirical evidence indicate
that the economy is sluggish heading into 1996.
To hedge the risk of disappointing earnings in 1996, managers in December
increased the Fund's position in cash to 14.69% and in U.S. Treasury bills and
notes to 13.91%.
FOCUS ON DEFENSIVE STOCKS
Fund managers also have turned their focus from
cyclical stocks--those whose earnings fluctuate with the economy--to defensive
stocks, such as utilities and energy stocks, which are not economically
sensitive.
Rather than predict the market's performance, AIM remains committed to its
disciplined investment strategy.
Fund managers determine on a company-by-company basis which stocks to own
and which to sell based on their earnings momentum--without the guesswork of
market timing.
- -------------------------------------------------------------------------------
TOP 10 EQUITY HOLDINGS
(As of 12/31/95)
- -------------------------------------------------------------------------------
1. Philip Morris Companies, Inc.
2. Texas Instruments, Inc.
3. Computer Associates International, Inc.
4. Xerox Corp.
5. Citicorp
6. Schering-Plough Corp.
7. COMPAQ Computer Corp.
8. MFS Communications Co., Inc.
9. AT&T Corp.
10. Seagate Technology, Inc.
- -------------------------------------------------------------------------------
LIPPER RANKINGS
(As of 12/31/95)
AIM VALUE FUND CLASS A SHARES
<TABLE>
<CAPTION>
Rank vs. All
Period Mutual Funds Top %
<S> <C> <C>
10 Years 32 of 1,230 3%
5 Years 86 of 2,772 4%
1 Year 629 of 7,468 9%
</TABLE>
Lipper Ranking for the Fund's Class B shares: one year, 747 of 7,468 funds,
10.00%. Fund performance rankings are based on total returns and are versus
all funds tracked by Lipper, excluding sales charges, and including fees and
expenses. Of course, past performance cannot guarantee comparable future
results.
See important Fund disclosure on inside front cover.
3
<PAGE> 6
Long-Term
Performance
GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
For periods ended December 31, 1995
<TABLE>
<CAPTION>
SALES CHARGE
WITHOUT WITH
<S> <C> <C>
CLASS A SHARES
10 Years 17.79% 17.13%
5 Years 22.51 21.14
1 Year 34.85 27.43
CLASS B SHARES
Inception (10/18/93) 15.00% 13.84%
1 Year 33.73 28.73
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM Value Fund AIM Value Fund
Class A Shares (w/o sales charge) Class A Shares (w/sales charge) S&P 500 Lipper Growth Fund Index
<S> <C> <C> <C> <C>
12/85 10,000 9,451 10,000 10,000
12/86 10,879 10,282 11,862 11,560
12/87 11,528 10,895 12,476 11,931
12/88 13,904 13,140 14,534 13,619
12/89 18,289 17,284 19,125 17,363
12/90 18,633 17,609 18,530 16,423
12/91 26,730 25,261 24,151 22,271
12/92 31,111 29,402 25,988 23,971
12/93 36,931 34,902 28,596 26,842
12/94 38,141 36,045 28,984 26,420
12/95 51,432 48,606 39,837 34,737
</TABLE>
Past performance cannot guarantee comparable future results.
An investment cannot be made in any indexes listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
The performance of Class B shares will differ from that of Class A shares due
to differing fees and expenses. For Fund performance calculations and
descriptions of indexes cited on this page, please refer to the inside front
cover of this report.
4
<PAGE> 7
LONG-TERM INCOME TAX DEFERRAL:
A BIG BOOST TO RETURNS ON AN IRA
Although the rules regarding deductibility of Individual Retirement Account
(IRA) contributions have been tightened, the important thing about an IRA is not
the tax deduction but the tax-deferred compounding of the earnings on your
investment. Over time, tax-deferred compounding can be a very powerful
investment tool.
In the example shown in the table, an investor puts $2,000 per year into
two accounts, each averaging 7.5% total return per year. In one, the earnings
are taxed; in the other, an IRA, the earnings are untaxed. At the end of year
one, the difference between the two accounts is only $42. But after 20 years,
the difference is $20,381.
Of course, eventually you will be taxed on the money you withdraw from your
retirement account. But if you leave your IRA investments alone until you retire
and then withdraw only the amount of income you need, the paid-out amount
will be subject to the applicable ordinary income tax while the balance of your
retirement account remains tax deferred. Also, if you wait until retirement to
begin making withdrawals, by then you may qualify for a lower tax bracket.
Money withdrawn early from an IRA (before age 59-1/2) is usually subject to a
10% tax penalty.
At age 70-1/2 you are required to begin making withdrawals from your IRA.
Failure to do so has significant tax penalties. The IRS has established minimum
required withdrawals.
- --------------------------------------------------------------------------------
THE IMPACT OF TAX DEFERRAL ON AN INVESTMENT PLAN
- --------------------------------------------------------------------------------
$2,000 per year at 7.5% annual total return, all earnings reinvested
TOTAL VALUE OF INVESTMENT
<TABLE>
<CAPTION>
AT END OF: TAXED AT 28% TAX-DEFERRED
<S> <C> <C>
1 Year $2,108 $2,150
3 Years $6,672 $6,946
5 Years $11,742 $12,488
10 Years $27,015 $30,416
15 Years $46,881 $56,155
20 Years $72,724 $93,105
</TABLE>
- --------------------------------------------------------------------------------
The 7.5% rate of return is a conservative assumption.
During the 20 years ended 12/31/95, for example, the
unmanaged Standard & Poor's Composite Index of 500
Stocks (S&P 500) delivered total average annual return
of 14.55%. The 28% tax bracket is a standard tax bracket
per the IRS, 1995. This example is hypothetical and is
not intended to represent the performance of any AIM fund.
CHANGING JOBS OR
RETIRING SOON?
If you receive a lump-sum
distribution, you can keep
your money working tax
deferred and avoid a
mandatory 20% withholding
tax by transferring your
assets directly into an
AIM IRA. You need simply
to complete AIM's IRA
transfer form.
WANT TO START AN AIM IRA?
Contact your financial
consultant or AIM for the
AIM IRA kit. It includes the
information and forms you
need to get started.
WANT TO ADD TO YOUR
EXISTING AIM IRA?
Simply mail your check
payable to the AIM fund in
which you have your IRA
and include your account
number on the check. Mail
it to A I M Fund Services,
Inc., Box 4739, Houston, TX
77210-4739.
5
<PAGE> 8
ASSET ALLOCATION HELPS YOU MANAGE
YOUR INVESTMENTS IN CHANGING MARKETS
- -------------------
Your financial
consultant can
assist you in
developing an asset
allocation strategy
and select the
appropriate invest-
ments to help you
meet your long-
term investment
goals.
- -------------------
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.
And 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 tolerances.
Your financial consultant can assist you in developing an asset allocation
strategy and select the appropriate investments to help you meet your
long-term investment goals.
6
<PAGE> 9
<TABLE>
<CAPTION>
RELATIVELY
AGGRESSIVE OBJECTIVE FUND
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
Aggressive Growth AIM Aggressive Growth Fund*
AIM Constellation Fund
AIM Global Aggressive Growth Fund
- -----------------------------------------------------------------------------------------------
Growth AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
- -----------------------------------------------------------------------------------------------
Growth and Income AIM Balanced Fund
AIM Charter Fund
- -----------------------------------------------------------------------------------------------
Income and Growth AIM Global Utilities Fund**
- -----------------------------------------------------------------------------------------------
High Current Income AIM High Yield Fund
- -----------------------------------------------------------------------------------------------
Current Income AIM Global Income Fund
AIM Income Fund
- -----------------------------------------------------------------------------------------------
Current Tax-Free Income AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of CT
AIM Tax-Free Intermediate Shares
- -----------------------------------------------------------------------------------------------
Current Income AIM Intermediate Government Fund***
and High Degree of Safety
- -----------------------------------------------------------------------------------------------
High Degree of Safety AIM Limited Maturity Treasury Shares
and Current Income
- -----------------------------------------------------------------------------------------------
Stability, Liquidity AIM Money Market Fund
and Current Income
- -----------------------------------------------------------------------------------------------
Stability, Liquidity AIM Tax-Exempt Cash Fund
and Current Tax-Free Income
- -----------------------------------------------------------------------------------------------
RELATIVELY
CONSERVATIVE
</TABLE>
*AIM Aggressive Growth Fund was closed to new investors on July 18, 1995.
**On May 1, 1995, AIM Utilities Fund broadened its investment strategy to permit
up to 80% of its total assets to be invested in foreign securities, and was
renamed AIM Global Utilities Fund. ***On September 25, 1995, AIM Government
Securities Fund was renamed AIM Intermediate Government Fund. For more complete
information about any AIM Fund(s), including sales charges and expenses, ask
your financial consultant or securities dealer for a free prospectus(es).
Please read the prospectus(es) carefully before you invest or send money.
7
<PAGE> 10
Financials
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-63.59%
ADVERTISING/BROADCASTING-0.08%
200,000 Heritage Media Corp.(a) $ 5,125,000
- ---------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-1.74%
861,300 Boeing Co. 67,504,388
- ---------------------------------------------------------------------------------------------
300,000 General Dynamics Corp. 17,737,500
- ---------------------------------------------------------------------------------------------
250,000 United Technologies Corp. 23,718,750
- ---------------------------------------------------------------------------------------------
108,960,638
- ---------------------------------------------------------------------------------------------
APPLIANCES-0.12%
150,400 Premark International Inc. 7,614,000
- ---------------------------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.51%
1,000,000 Borg-Warner Automotive, Inc. 32,000,000
- ---------------------------------------------------------------------------------------------
BANKING-2.34%
400,000 BankAmerica Corp. 25,900,000
- ---------------------------------------------------------------------------------------------
1,800,000 Citicorp 121,050,000
- ---------------------------------------------------------------------------------------------
146,950,000
- ---------------------------------------------------------------------------------------------
BIOTECHNOLOGY-0.34%
500,000 Guidant Corp. 21,125,000
- ---------------------------------------------------------------------------------------------
BUILDING MATERIALS-0.26%
358,800 Snap-On, Inc. 16,235,700
- ---------------------------------------------------------------------------------------------
CHEMICALS-0.23%
1,000,000 Terra Industries, Inc. 14,125,000
- ---------------------------------------------------------------------------------------------
CHEMICALS (SPECIALTY)-1.44%
400,000 Cabot Corp. 21,550,000
- ---------------------------------------------------------------------------------------------
800,000 IMC Global, Inc. 32,700,000
- ---------------------------------------------------------------------------------------------
270,000 OM Group Inc. 8,943,750
- ---------------------------------------------------------------------------------------------
800,000 Praxair, Inc. 26,900,000
- ---------------------------------------------------------------------------------------------
90,093,750
- ---------------------------------------------------------------------------------------------
COMPUTER MINI/PCS-3.48%
2,000,000 COMPAQ Computer Corp.(a) 96,000,000
- ---------------------------------------------------------------------------------------------
920,000 Dell Computer Corp.(a) 31,855,000
- ---------------------------------------------------------------------------------------------
500,000 Digital Equipment Corp.(a) 32,062,500
- ---------------------------------------------------------------------------------------------
500,000 Hewlett-Packard Co. 41,875,000
- ---------------------------------------------------------------------------------------------
1,000,000 Wang Laboratories, Inc.(a) 16,625,000
- ---------------------------------------------------------------------------------------------
218,417,500
- ---------------------------------------------------------------------------------------------
COMPUTER NETWORKING-2.37%
300,000 Bay Networks, Inc.(a) 12,337,500
- ---------------------------------------------------------------------------------------------
450,000 Belden Inc. 11,587,500
- ---------------------------------------------------------------------------------------------
1,400,000 Cheyenne Software, Inc.(a) 36,575,000
- ---------------------------------------------------------------------------------------------
600,000 Cisco Systems, Inc.(a) 44,775,000
- ---------------------------------------------------------------------------------------------
330,000 Comverse Technology, Inc. 6,600,000
- ---------------------------------------------------------------------------------------------
500,000 Network Equipment Technologies, Inc.(a) 13,687,500
- ---------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER NETWORKING (continued)
500,000 3Com Corp.(a) $ 23,312,500
- ---------------------------------------------------------------------------------------------
148,875,000
- ---------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-3.25%
1,400,000 Adaptec, Inc.(a) 57,400,000
- ---------------------------------------------------------------------------------------------
302,900 Alliance Semiconductor Corp.(a) 3,521,213
- ---------------------------------------------------------------------------------------------
1,400,000 EMC Corp.(a) 21,525,000
- ---------------------------------------------------------------------------------------------
300,000 Lexmark International Group, Inc.(a) 5,475,000
- ---------------------------------------------------------------------------------------------
400,000 Read-Rite Corp.-Class A(a) 9,300,000
- ---------------------------------------------------------------------------------------------
1,600,000 Seagate Technology(a) 76,000,000
- ---------------------------------------------------------------------------------------------
200,000 U.S. Robotics, Inc.(a) 17,550,000
- ---------------------------------------------------------------------------------------------
700,000 Western Digital Corp.(a) 12,512,500
- ---------------------------------------------------------------------------------------------
203,283,713
- ---------------------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES-4.85%
220,000 Adobe Systems, Inc. 13,640,000
- ---------------------------------------------------------------------------------------------
400,000 BMC Software, Inc.(a) 17,100,000
- ---------------------------------------------------------------------------------------------
2,500,000 Computer Associates International, Inc. 142,187,500
- ---------------------------------------------------------------------------------------------
492,000 Computervision Corp.(a) 7,564,500
- ---------------------------------------------------------------------------------------------
100,000 Electronics for Imaging, Inc.(a) 4,375,000
- ---------------------------------------------------------------------------------------------
350,000 First Data Corp. 23,406,250
- ---------------------------------------------------------------------------------------------
383,200 FTP Software, Inc.(a) 11,112,800
- ---------------------------------------------------------------------------------------------
500,000 National Data Corp. 12,375,000
- ---------------------------------------------------------------------------------------------
523,000 NetManage, Inc.(a) 12,159,750
- ---------------------------------------------------------------------------------------------
400,000 Network General Corp.(a) 13,350,000
- ---------------------------------------------------------------------------------------------
680,000 SoftKey International, Inc.(a) 15,725,000
- ---------------------------------------------------------------------------------------------
150,000 Sterling Software, Inc.(a) 9,356,250
- ---------------------------------------------------------------------------------------------
1,200,000 S3, Inc.(a) 21,150,000
- ---------------------------------------------------------------------------------------------
303,502,050
- ---------------------------------------------------------------------------------------------
CONGLOMERATES-0.53%
200,000 Allied Products Corp. 4,800,000
- ---------------------------------------------------------------------------------------------
360,000 Loews Corp. 28,215,000
- ---------------------------------------------------------------------------------------------
33,015,000
- ---------------------------------------------------------------------------------------------
COSMETICS & TOILETRIES-0.45%
256,900 McKesson Corp. 13,005,563
- ---------------------------------------------------------------------------------------------
180,000 Procter & Gamble Co. 14,940,000
- ---------------------------------------------------------------------------------------------
27,945,563
- ---------------------------------------------------------------------------------------------
ELECTRIC SERVICES-1.42%
212,100 Allegheny Power System, Inc. 6,071,363
- ---------------------------------------------------------------------------------------------
168,000 American Electric Power Co. 6,804,000
- ---------------------------------------------------------------------------------------------
212,100 Consolidated Edison Co. of New York, Inc. 6,787,200
- ---------------------------------------------------------------------------------------------
358,800 Dominion Resources, Inc. 14,800,500
- ---------------------------------------------------------------------------------------------
268,900 DQE, Inc. 8,268,675
- ---------------------------------------------------------------------------------------------
500,000 Entergy Corp. 14,625,000
- ---------------------------------------------------------------------------------------------
169,200 FPL Group, Inc. 7,846,650
- ---------------------------------------------------------------------------------------------
459,900 Houston Industries, Inc. 11,152,575
- ---------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
ELECTRIC SERVICES (continued)
415,200 Illinova Corp. $ 12,456,000
- ---------------------------------------------------------------------------------------------
88,811,963
- ---------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-2.27%
400,000 Amphenol Corp.(a) 9,700,000
- ---------------------------------------------------------------------------------------------
2,468,700 Anixter International, Inc.(a) 45,979,537
- ---------------------------------------------------------------------------------------------
117,000 AVX Corp. 3,100,500
- ---------------------------------------------------------------------------------------------
630,000 Harman International Industries, Inc. 25,278,750
- ---------------------------------------------------------------------------------------------
500,000 Parker-Hannifin Corp. 17,125,000
- ---------------------------------------------------------------------------------------------
66,500 Raychem Corp. 3,782,188
- ---------------------------------------------------------------------------------------------
300,000 Tektronix, Inc. 14,737,500
- ---------------------------------------------------------------------------------------------
900,000 Teradyne Inc.(a) 22,500,000
- ---------------------------------------------------------------------------------------------
142,203,475
- ---------------------------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS-0.94%
700,000 Arrow Electronics, Inc.(a) 30,187,500
- ---------------------------------------------------------------------------------------------
253,500 Avnet, Inc. 11,344,125
- ---------------------------------------------------------------------------------------------
500,000 Wyle Electronics 17,562,500
- ---------------------------------------------------------------------------------------------
59,094,125
- ---------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.23%
300,000 Finova Group, Inc. 14,475,000
- ---------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-3.28%
200,000 ADVANTA Corp.-Class A 7,650,000
- ---------------------------------------------------------------------------------------------
200,000 ADVANTA Corp.-Class B 7,275,000
- ---------------------------------------------------------------------------------------------
240,000 A T & T Capital Corp. 9,180,000
- ---------------------------------------------------------------------------------------------
235,700 CMAC Investment Corp. 10,370,800
- ---------------------------------------------------------------------------------------------
300,000 Countrywide Credit Industries, Inc. 6,525,000
- ---------------------------------------------------------------------------------------------
500,000 Federal Home Loan Mortgage Corp. 41,750,000
- ---------------------------------------------------------------------------------------------
300,000 Federal National Mortgage Association 37,237,500
- ---------------------------------------------------------------------------------------------
400,000 Green Tree Financial Corp. 10,550,000
- ---------------------------------------------------------------------------------------------
1,200,000 MBNA Corp. 44,250,000
- ---------------------------------------------------------------------------------------------
400,000 PMI Group, Inc. (The) 18,100,000
- ---------------------------------------------------------------------------------------------
144,200 Student Loan Marketing Association 9,499,175
- ---------------------------------------------------------------------------------------------
69,150 SunAmerica, Inc. 3,284,625
- ---------------------------------------------------------------------------------------------
205,672,100
- ---------------------------------------------------------------------------------------------
FINANCE (SAVINGS & LOAN)-0.21%
500,000 Ahmanson (H. F.) & Co. 13,250,000
- ---------------------------------------------------------------------------------------------
FOOD PROCESSING-1.21%
500,000 ConAgra, Inc. 20,625,000
- ---------------------------------------------------------------------------------------------
750,000 Hudson Foods, Inc.-Class A 12,937,500
- ---------------------------------------------------------------------------------------------
649,400 IBP, Inc. 32,794,700
- ---------------------------------------------------------------------------------------------
416,500 Interstate Bakeries Corp. 9,319,188
- ---------------------------------------------------------------------------------------------
75,676,388
- ---------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FUNERAL SERVICES-0.94%
1,128,200 Service Corp. International $ 49,640,800
- ---------------------------------------------------------------------------------------------
258,300 Stewart Enterprises, Inc. 9,557,100
- ---------------------------------------------------------------------------------------------
59,197,900
- ---------------------------------------------------------------------------------------------
GAMING-0.33%
600,000 Mirage Resorts, Inc.(a) 20,700,000
- ---------------------------------------------------------------------------------------------
HOMEBUILDING-0.17%
504,750 Clayton Homes, Inc. 10,789,032
- ---------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.10%
97,500 Conseco Inc. 6,105,938
- ---------------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-1.80%
900,000 Allstate Corp. 37,012,500
- ---------------------------------------------------------------------------------------------
300,000 CIGNA Corp. 30,975,000
- ---------------------------------------------------------------------------------------------
400,000 ITT Hartford Group, Inc.(a) 19,350,000
- ---------------------------------------------------------------------------------------------
900,000 TIG Holdings, Inc. 25,650,000
- ---------------------------------------------------------------------------------------------
112,987,500
- ---------------------------------------------------------------------------------------------
MACHINE TOOLS-0.05%
100,000 Applied Power Inc.-Class A 3,000,000
- ---------------------------------------------------------------------------------------------
MACHINERY (HEAVY)-0.36%
500,000 Case Corp. 22,875,000
- ---------------------------------------------------------------------------------------------
MEDICAL (DRUGS)-4.26%
300,000 American Home Products Corp. 29,100,000
- ---------------------------------------------------------------------------------------------
800,000 Bergen Brunswig Corp. 19,900,000
- ---------------------------------------------------------------------------------------------
1,198,359 ICN Pharmaceuticals, Inc. 23,068,425
- ---------------------------------------------------------------------------------------------
150,000 Johnson & Johnson 12,843,750
- ---------------------------------------------------------------------------------------------
700,000 Mylan Laboratories 16,450,000
- ---------------------------------------------------------------------------------------------
500,000 Pfizer Inc. 31,500,000
- ---------------------------------------------------------------------------------------------
500,000 R.P. Scherer Corp.(a) 24,562,500
- ---------------------------------------------------------------------------------------------
2,000,000 Schering-Plough Corp. 109,500,000
- ---------------------------------------------------------------------------------------------
266,924,675
- ---------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-1.50%
160,000 Bausch & Lomb, Inc. 6,340,000
- ---------------------------------------------------------------------------------------------
1,500,000 Baxter International, Inc. 62,812,500
- ---------------------------------------------------------------------------------------------
250,300 Cordis Corp.(a) 25,155,150
- ---------------------------------------------------------------------------------------------
94,307,650
- ---------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-2.33%
250,000 Genesis Health Ventures, Inc.(a) 9,125,000
- ---------------------------------------------------------------------------------------------
550,000 Health Care and Retirement Corp.(a) 19,250,000
- ---------------------------------------------------------------------------------------------
530,000 Integrated Health Services, Inc. 13,250,000
- ---------------------------------------------------------------------------------------------
300,000 Living Centers of America, Inc.(a) 10,500,000
- ---------------------------------------------------------------------------------------------
640,000 Manor Care, Inc. 22,400,000
- ---------------------------------------------------------------------------------------------
750,000 OrNda Healthcorp(a) 17,437,500
- ---------------------------------------------------------------------------------------------
700,000 Quorum Health Group, Inc.(a) 15,400,000
- ---------------------------------------------------------------------------------------------
660,000 Sybron International Corp.(a) 15,675,000
- ---------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES) (continued)
500,000 U.S. Healthcare, Inc. $ 23,250,000
- ---------------------------------------------------------------------------------------------
146,287,500
- ---------------------------------------------------------------------------------------------
METALS-0.08%
90,400 Harsco Corp. 5,254,500
- ---------------------------------------------------------------------------------------------
OFFICE AUTOMATION-2.21%
429,400 In Focus Systems, Inc.(a) 15,512,075
- ---------------------------------------------------------------------------------------------
900,000 Xerox Corp. 123,300,000
- ---------------------------------------------------------------------------------------------
138,812,075
- ---------------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.12%
200,000 Reynolds & Reynolds Co.-Class A 7,775,000
- ---------------------------------------------------------------------------------------------
OIL & GAS-0.51%
1,500,000 Occidental Petroleum Corp. 32,062,500
- ---------------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-1.03%
520,000 BJ Services Co.(a) 15,080,000
- ---------------------------------------------------------------------------------------------
300,000 Diamond Offshore Drilling, Inc.(a) 10,125,000
- ---------------------------------------------------------------------------------------------
400,000 Halliburton Co. 20,250,000
- ---------------------------------------------------------------------------------------------
600,000 Tidewater, Inc. 18,900,000
- ---------------------------------------------------------------------------------------------
64,355,000
- ---------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.56%
96,000 Bowater, Inc. 3,408,000
- ---------------------------------------------------------------------------------------------
455,800 James River Corp. of Virginia 10,996,175
- ---------------------------------------------------------------------------------------------
400,000 Mead Corp. 20,900,000
- ---------------------------------------------------------------------------------------------
35,304,175
- ---------------------------------------------------------------------------------------------
POLLUTION CONTROL-0.38%
800,000 WMX Technologies, Inc. 23,900,000
- ---------------------------------------------------------------------------------------------
PUBLISHING-0.25%
400,000 Scripps (E.W.) Co. 15,750,000
- ---------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.27%
667,100 Circle K Corp.(a) 16,927,663
- ---------------------------------------------------------------------------------------------
RETAIL STORES-0.07%
288,500 Intimate Brands, Inc. 4,327,500
- ---------------------------------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.88%
1,000,000 Millipore Corp. 41,125,000
- ---------------------------------------------------------------------------------------------
300,000 Varian Associates, Inc. 14,325,000
- ---------------------------------------------------------------------------------------------
55,450,000
- ---------------------------------------------------------------------------------------------
SEMICONDUCTORS-5.26%
700,000 Analog Devices, Inc.(a) 24,762,500
- ---------------------------------------------------------------------------------------------
1,800,000 Applied Materials, Inc.(a) 70,875,000
- ---------------------------------------------------------------------------------------------
1,400,000 Cypress Semiconductor Corp.(a) 17,850,000
- ---------------------------------------------------------------------------------------------
574,000 Electroglas, Inc.(a) 14,063,000
- ---------------------------------------------------------------------------------------------
350,000 Kemet Corp.(a) 8,356,250
- ---------------------------------------------------------------------------------------------
100,000 LAM Research Corp.(a) 4,575,000
- ---------------------------------------------------------------------------------------------
600,000 LSI Logic Corp.(a) 19,650,000
- ---------------------------------------------------------------------------------------------
360,000 Novellus Systems, Inc.(a) 19,440,000
- ---------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
SEMICONDUCTORS (continued)
360,000 Sierra Semiconductor Corp.(a) $ 4,995,000
- ---------------------------------------------------------------------------------------------
2,800,000 Texas Instruments Inc. 144,900,000
- ---------------------------------------------------------------------------------------------
329,466,750
- ---------------------------------------------------------------------------------------------
SHOES & RELATED APPAREL-0.06%
50,000 Nike, Inc.-Class B 3,481,250
- ---------------------------------------------------------------------------------------------
STEEL-0.09%
121,900 J&L Specialty Steel, Inc. 2,285,625
- ---------------------------------------------------------------------------------------------
403,700 UNR Industries, Inc. 3,481,913
- ---------------------------------------------------------------------------------------------
5,767,538
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-2.85%
1,200,000 A T & T Corp. 77,700,000
- ---------------------------------------------------------------------------------------------
1,551,900 MFS Communications Co., Inc.(a) 82,638,675
- ---------------------------------------------------------------------------------------------
500,000 Tellabs, Inc.(a) 18,500,000
- ---------------------------------------------------------------------------------------------
178,838,675
- ---------------------------------------------------------------------------------------------
TELEPHONE-1.29%
1,000,000 Ameritech Corp. 59,000,000
- ---------------------------------------------------------------------------------------------
496,500 BellSouth Corp. 21,597,750
- ---------------------------------------------------------------------------------------------
80,597,750
- ---------------------------------------------------------------------------------------------
TOBACCO-3.82%
225,600 Dimon, Inc. 3,976,200
- ---------------------------------------------------------------------------------------------
2,600,000 Philip Morris Companies, Inc. 235,300,000
- ---------------------------------------------------------------------------------------------
239,276,200
- ---------------------------------------------------------------------------------------------
TRANSPORTATION-0.47%
647,600 CSX Corp. 29,546,750
- ---------------------------------------------------------------------------------------------
Total Domestic Common Stocks 3,986,519,486
- ---------------------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-6.88%
AUSTRALIA-0.35%
202,776 Broken Hill Proprietary Co. Ltd. (Conglomerates) 2,863,643
- ---------------------------------------------------------------------------------------------
1,000,000 News Corp. Ltd.-Preference Shares-ADR (Publishing) 19,250,000
- ---------------------------------------------------------------------------------------------
22,113,643
- ---------------------------------------------------------------------------------------------
CANADA-0.38%
500,000 Corel Corp. (Computer Software & Services)(a) 6,500,000
- ---------------------------------------------------------------------------------------------
402,100 Northern Telecom Ltd. (Telecommunications) 17,290,300
- ---------------------------------------------------------------------------------------------
23,790,300
- ---------------------------------------------------------------------------------------------
DENMARK-0.18%
233,000 Danisco A/S (Food Processing) 11,246,106
- ---------------------------------------------------------------------------------------------
FINLAND-0.06%
103,000 Nokia Corp.-Class A-ADR (Telecommuncations) 4,004,126
- ---------------------------------------------------------------------------------------------
FRANCE-0.94%
15,200 Docks De France S.A. (Retail-Food & Drug) 2,309,333
- ---------------------------------------------------------------------------------------------
4,800 Essilor International-Compagnie Generale d'Optique (Medical
Services) 917,459
- ---------------------------------------------------------------------------------------------
13,000 LVMH-Moet Hennessy Louis Vuitton (Beverages) 2,707,780
- ---------------------------------------------------------------------------------------------
7,260 Promodes S.A. (Retail Stores) 1,706,403
- ---------------------------------------------------------------------------------------------
16,900 Roussel Uclaf (Medical-Drugs) 2,864,406
- ---------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FRANCE (continued)
1,200,000 SGS-Thomson Microelectronic N.V. (Semiconductors)(a) $ 48,300,000
- ---------------------------------------------------------------------------------------------
58,805,381
- ---------------------------------------------------------------------------------------------
GERMANY-0.06%
8,300 Mannesmann AG (Machinery-Heavy) 2,642,460
- ---------------------------------------------------------------------------------------------
31,500 VEBA A.G. (Electric Services) 1,337,296
- ---------------------------------------------------------------------------------------------
3,979,756
- ---------------------------------------------------------------------------------------------
HONG KONG-0.39%
1,080,000 HSBC Holdings PLC (Banking) 16,341,416
- ---------------------------------------------------------------------------------------------
700,000 Hutchison Whampoa Ltd.(Conglomerates) 4,263,821
- ---------------------------------------------------------------------------------------------
440,000 Sun Hung Kai Properties Ltd. (Real Estate) 3,599,094
- ---------------------------------------------------------------------------------------------
24,204,331
- ---------------------------------------------------------------------------------------------
ITALY-0.50%
156,800 Fila Holding S.p.A.-ADR (Retail Stores) 7,134,400
- ---------------------------------------------------------------------------------------------
7,620,000 Telecom Italia Mobile S.p.A. (Telecommunications)(a) 13,386,729
- ---------------------------------------------------------------------------------------------
7,020,000 Telecom Italia S.p.A. (Telecommunications) 10,887,216
- ---------------------------------------------------------------------------------------------
31,408,345
- ---------------------------------------------------------------------------------------------
MALAYSIA-0.05%
301,000 Leader Universal Holdings (Electronic
Components/Miscellaneous) 687,404
- ---------------------------------------------------------------------------------------------
272,000 Malayan Banking Berhad (Banking) 2,291,924
- ---------------------------------------------------------------------------------------------
2,979,328
- ---------------------------------------------------------------------------------------------
NETHERLANDS-0.44%
500,000 Madge Networks N.V. (Computer Networking)(a) 22,375,000
- ---------------------------------------------------------------------------------------------
10,900 Verenigde Nederlandse Utgevbedri Verigd Bezit (Publishing) 1,496,398
- ---------------------------------------------------------------------------------------------
40,000 Wolters Kluwer N.V. (Publishing) 3,783,884
- ---------------------------------------------------------------------------------------------
27,655,282
- ---------------------------------------------------------------------------------------------
NEW ZEALAND-0.44%
6,115,300 Telecom Corp. of New Zealand Ltd. (Telecommunications) 25,666,988
- ---------------------------------------------------------------------------------------------
29,800 Telecom Corp. of New Zealand Ltd.-ADR (Telecommunications) 2,067,375
- ---------------------------------------------------------------------------------------------
27,734,363
- ---------------------------------------------------------------------------------------------
NORWAY-0.34%
3,835,000 UNI Storebrand A/S-Class A (Insurance-Multi-Line
Property)(a) 21,190,855
- ---------------------------------------------------------------------------------------------
SWEDEN-1.56%
1,020,000 ASTRA AB "A" (Medical-Drugs) 40,709,670
- ---------------------------------------------------------------------------------------------
100,000 ASTRA AB "B" Free(Medical-Drugs) 3,961,022
- ---------------------------------------------------------------------------------------------
800,000 Skandia Forsakring AB (Insurance-Multi-Line Property) 21,627,484
- ---------------------------------------------------------------------------------------------
1,600,000 Telefonaktiebolaget L.M. Ericsson-ADR
(Telecommunications)(a) 31,200,000
- ---------------------------------------------------------------------------------------------
97,498,176
- ---------------------------------------------------------------------------------------------
SWITZERLAND-0.04%
2,350 BBC Brown Boveri A.G. (Conglomerates) 2,729,952
- ---------------------------------------------------------------------------------------------
UNITED KINGDOM-1.15%
93,400 BOC Group PLC (Chemicals-Specialty) 1,306,932
- ---------------------------------------------------------------------------------------------
1,800,000 Burton Group PLC (Retail-Stores) 3,759,900
- ---------------------------------------------------------------------------------------------
721,200 Invesco PLC (Finance-Asset Management) 2,839,325
- ---------------------------------------------------------------------------------------------
54,800 Invesco PLC-ADR (Finance-Asset Management) 2,123,500
- ---------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 17
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
UNITED KINGDOM (continued)
125,400 Orthofix International N.V. (Medical Services)(a) $ 924,825
- ---------------------------------------------------------------------------------------------
320,000 SmithKline Beecham-ADR (Medical-Drugs) 17,760,000
- ---------------------------------------------------------------------------------------------
3,982,300 Standard Chartered PLC (Finance-Asset Management) 33,891,914
- ---------------------------------------------------------------------------------------------
67,420 Thorn EMI PLC (Leisure & Recreation) 1,587,863
- ---------------------------------------------------------------------------------------------
720,100 Waste Management International PLC-ADR (Pollution
Control)(a) 7,741,075
- ---------------------------------------------------------------------------------------------
71,935,334
- ---------------------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 431,275,278
- ---------------------------------------------------------------------------------------------
PREFERRED STOCKS-0.07%
PUBLISHING-0.07%
150,000 Time Warner Financing-$1.24 Convertible Pfd. 4,687,500
- ---------------------------------------------------------------------------------------------
Total Preferred Stocks 4,687,500
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
U.S. TREASURY SECURITIES-13.91%
U.S. Treasury Bills-10.69%(b)
$189,000,000(c) 5.46%, 01/04/96 189,007,560
- ---------------------------------------------------------------------------------------------
94,000,000 5.41%, 01/11/96 93,955,820
- ---------------------------------------------------------------------------------------------
340,945,000(c) 5.38%, 04/04/96 336,625,226
- ---------------------------------------------------------------------------------------------
52,000,000 5.195%, 06/06/96 50,891,880
- ---------------------------------------------------------------------------------------------
Total U.S. Treasury Bills 670,480,486
- ---------------------------------------------------------------------------------------------
U.S. Treasury Notes-3.22%
193,000,000 6.75%, 05/31/99 201,594,531
- ---------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 872,075,017
- ---------------------------------------------------------------------------------------------
Total Investments (excluding Repurchase Agreements) 5,294,557,281
- ---------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-14.57%(d)
158,540,664 Daiwa Securities America Inc., 5.92% 01/02/96(e) 158,540,664
- ---------------------------------------------------------------------------------------------
615,000,000 Goldman, Sachs & Co., 5.92% 01/02/96(f) 615,000,000
- ---------------------------------------------------------------------------------------------
140,000,000 Morgan Stanley Group, Inc., 5.90% 01/02/96(g) 140,000,000
- ---------------------------------------------------------------------------------------------
Total Repurchase Agreements 913,540,664
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.02% 6,208,097,945
- ---------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.98% 61,385,301
- ---------------------------------------------------------------------------------------------
NET ASSETS-100.00% $6,269,483,246
=============================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) U.S. Treasury Bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(e) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
(f) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$1,195,786,044. Collateralized by $1,106,121,000 U.S. Treasury obligations,
5.50% to 11.25% due 01/31/98 to 02/15/23.
(g) Entered into 12/29/95 with a maturing value of $140,091,778. Collateralized
by $111,455,000 U.S. Treasury obligations, 8.125% due 08/15/19.
Abbreviations:
ADR - American Depositary Receipt
Pfd. - Preferred
See Notes to Financial Statements.
15
<PAGE> 18
Financials
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $4,631,096,859) $5,294,557,281
- -----------------------------------------------------------------------------------------
Repurchase agreements (cost $913,540,664) 913,540,664
- -----------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $7,114,663) 7,150,218
- -----------------------------------------------------------------------------------------
Receivables for:
Investments sold 14,437,942
- -----------------------------------------------------------------------------------------
Fund shares sold 66,767,804
- -----------------------------------------------------------------------------------------
Dividends and interest 9,096,834
- -----------------------------------------------------------------------------------------
Variation margin 525,000
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 34,041
- -----------------------------------------------------------------------------------------
Other assets 249,239
- -----------------------------------------------------------------------------------------
Total assets 6,306,359,023
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 16,472,174
- -----------------------------------------------------------------------------------------
Fund shares reacquired 8,226,996
- -----------------------------------------------------------------------------------------
Deferred compensation plan 34,041
- -----------------------------------------------------------------------------------------
Options written 1,875,000
- -----------------------------------------------------------------------------------------
Accrued advisory fees 3,162,715
- -----------------------------------------------------------------------------------------
Accrued administrative service fees 11,268
- -----------------------------------------------------------------------------------------
Accrued distribution fees 4,682,938
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 1,098,699
- -----------------------------------------------------------------------------------------
Accrued trustees' fees 8,295
- -----------------------------------------------------------------------------------------
Accrued operating expenses 1,303,651
- -----------------------------------------------------------------------------------------
Total liabilities 36,875,777
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $6,269,483,246
=========================================================================================
NET ASSETS:
Class A $3,408,952,023
=========================================================================================
Class B $2,860,531,223
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 127,137,684
=========================================================================================
Class B 107,329,577
=========================================================================================
Class A:
Net asset value and redemption price per share $ 26.81
=========================================================================================
Offering price per share:
(Net asset value of $26.81 divided by 94.50%) $ 28.37
=========================================================================================
Class B:
Net asset value and offering price per share $ 26.65
=========================================================================================
</TABLE>
See Notes to Financial Statements.
16
<PAGE> 19
Financials
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $504,254 foreign withholding tax) $ 41,169,729
- -----------------------------------------------------------------------------------------
Interest 33,567,137
- -----------------------------------------------------------------------------------------
Total investment income 74,736,866
- -----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 25,332,486
- -----------------------------------------------------------------------------------------
Custodian fees 412,698
- -----------------------------------------------------------------------------------------
Distribution fees -- Class A 5,911,494
- -----------------------------------------------------------------------------------------
Distribution fees -- Class B 16,466,004
- -----------------------------------------------------------------------------------------
Administrative service fees 137,307
- -----------------------------------------------------------------------------------------
Trustees' fees 30,524
- -----------------------------------------------------------------------------------------
Transfer agent fees -- Class A 4,038,205
- -----------------------------------------------------------------------------------------
Transfer agent fees -- Class B 4,161,427
- -----------------------------------------------------------------------------------------
Other 2,456,489
- -----------------------------------------------------------------------------------------
Total expenses 58,946,634
- -----------------------------------------------------------------------------------------
Less fees waived by advisor (502,799)
- -----------------------------------------------------------------------------------------
Net expenses 58,443,835
- -----------------------------------------------------------------------------------------
Net investment income 16,293,031
- -----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTIONS TRANSACTIONS:
Net realized gain (loss) from:
Investment securities 349,881,906
- -----------------------------------------------------------------------------------------
Foreign currencies 162,118
- -----------------------------------------------------------------------------------------
Futures contracts 61,002,538
- -----------------------------------------------------------------------------------------
Options contracts 1,111,099
- -----------------------------------------------------------------------------------------
412,157,661
- -----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities 554,511,731
- -----------------------------------------------------------------------------------------
Foreign currencies 84,524
- -----------------------------------------------------------------------------------------
Futures contracts 7,417,297
- -----------------------------------------------------------------------------------------
Options contracts (143,308)
- -----------------------------------------------------------------------------------------
561,870,244
- -----------------------------------------------------------------------------------------
Net gain from investment securities, foreign currencies, futures and
options transactions 974,027,905
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $990,320,936
=========================================================================================
</TABLE>
See Notes to Financial Statements.
17
<PAGE> 20
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 16,293,031 $ 9,941,431
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures and options transactions 412,157,661 (14,172,848)
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, futures and options contracts 561,870,244 36,857,970
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 990,320,936 32,626,553
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
Class A (10,460,381) (9,726,386)
- ----------------------------------------------------------------------------------------------
Class B -- --
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains
on investment securities:
Class A (183,638,497) (12,282,372)
- ----------------------------------------------------------------------------------------------
Class B (154,081,759) (6,028,782)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 1,629,870,392 585,993,203
- ----------------------------------------------------------------------------------------------
Class B 1,958,628,734 619,742,029
- ----------------------------------------------------------------------------------------------
Net increase in net assets 4,230,639,425 1,210,324,245
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,038,843,821 828,519,576
- ----------------------------------------------------------------------------------------------
End of period $6,269,483,246 $2,038,843,821
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $5,534,813,265 $1,946,314,139
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 6,075,815 243,165
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures and options
transactions 53,872,233 (20,565,172)
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, and futures and options
contracts 674,721,933 112,851,689
- ----------------------------------------------------------------------------------------------
$6,269,483,246 $2,038,843,821
==============================================================================================
</TABLE>
See Notes to Financial Statements.
18
<PAGE> 21
Financials
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Value Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate series portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers two different classes of shares: the Class A shares and the
Class B shares. Class A shares are sold with a front-end sales charge. Class B
shares are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The Fund's investment objective is to seek to achieve
long-term growth of capital by investing primarily in equity securities judged
by the Fund's investment advisor to be undervalued relative to the investment
advisor's appraisal of the current or projected earnings of the companies
issuing the securities, or relative to current market values of assets owned by
the companies issuing the securities or relative to the equity market generally.
Income is a secondary objective.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange is valued at
its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. If a mean is not available, as is the case in some foreign
markets, the closing bid will be used absent a last sales price. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the mean
of the closing bid and asked prices. Debt obligations that are issued or
guaranteed by the U.S. Treasury are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued at the mean between last bid and asked prices based upon
quotes furnished by independent sources. Securities for which market
quotations either are not readily available or are questionable are valued at
fair value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value. Generally, trading
in foreign securities is substantially completed each day at various times
prior to the close of the New York Stock Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts - A forward currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a forward contract to attempt to minimize the
risk to the Fund from adverse changes in the relationship between currencies.
The Fund may also
19
<PAGE> 22
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
enter into a forward contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock in" the U.S. dollar price
of that security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value of
the foreign currency changes unfavorably.
D. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
E. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash, and/or by securing a
standby letter of credit from a major commercial bank, as collateral, for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contract is open, changes in the value of the
contract are recognized as unrealized gains or losses by "marking to market"
on a daily basis to reflect the market value of the contract at the end of
each day's trading. Variation margin payments are made or received depending
upon whether unrealized gains or losses are incurred. When the contract is
closed, the Fund records a realized gain or loss equal to the difference
between the proceeds from (or cost of) the closing transaction and the Fund's
basis in the contract. Risks include the possibility of an illiquid market
and the change in the value of the contract may not correlate with changes in
the securities being hedged.
F. Covered Call Options - The Fund may write call options, but only on a covered
basis; that is, the Fund will own the underlying security. Options written by
the Fund normally will have expiration dates between three and nine months
from the date written. The exercise price of a call option may be below,
equal to, or above the current market value of the underlying security at the
time the option is written. When the Fund writes a covered call option, an
amount equal to the premium received by the Fund is recorded as an asset and
an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the last sale price, or in
the absence of a sale, the mean between the last bid and asked prices on that
day. If a written call option expires on the stipulated expiration date, or
if the Fund enters into a closing purchase transaction, the Fund realizes a
gain (or a loss if the closing purchase transaction exceeds the premium
received when the option was written) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option
is extinguished. If a written option is exercised, the Fund realizes a gain
or a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written. The Fund will
not write a covered call option if, immediately thereafter, the aggregate
value of the securities underlying all such options, determined as of the
dates such options were written, would exceed 5% of the net assets of the
Fund.
G. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
H. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
20
<PAGE> 23
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. AIM is currently
voluntarily waiving a portion of its advisory fees payable by the Fund to AIM to
the extent necessary to reduce the fees paid by the Fund at net asset levels
higher than those currently incorporated in the present advisory fee schedule.
AIM will receive a fee calculated at 0.80% of the first $150 million of the
Fund's average daily net assets, plus 0.625% of the Fund's average daily net
assets in excess of $150 million to and including $2 billion, plus 0.60% of the
Fund's average daily net assets in excess of $2 billion. The waiver of fees is
entirely voluntary and the Board of Trustees would be advised of any decision by
AIM to discontinue the waiver. During the year ended December 31, 1995, AIM
voluntarily waived advisory fees in the amount of $502,799. The master
investment advisory agreement requires AIM to reduce its fees or, if necessary,
make payments to the Fund to the extent required to satisfy any expense
limitations imposed by the securities laws or regulations thereunder of any
state in which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended December 31, 1995, AIM
was reimbursed $137,307 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the year ended December 31, 1995, AFS was paid
$4,741,201 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares (the
"Class B Plan")(collectively, the "Plans"). The Fund, pursuant to the Class A
Plan, pays AIM Distributors compensation at an annual rate of 0.25% of the
average daily net assets attributable to the Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs and provides periodic payments to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own Class A shares of the Fund. The Fund, pursuant to
the Class B Plan, pays AIM Distributors compensation at an annual rate of 1.00%
of the average daily net assets attributable to the Class B shares. Of this
amount, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee under such
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges, that may be
paid by the respective classes. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more assignees, its rights to all or a portion of
(a) compensation received by AIM Distributors from the Fund pursuant to the
Class B Plan (but not AIM Distributors' duties and obligations pursuant to the
Class B Plan) and (b) any contingent deferred sales charges payable to AIM
Distributors related to the Class B shares. During the year ended December 31,
1995, the Class A shares and the Class B shares paid AIM Distributors $5,911,494
and $16,466,004, respectively, as compensation pursuant to the Plans.
AIM Distributors received commissions of $7,659,031 from sales of the Class A
shares of the Fund during the year ended December 31, 1995. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1995,
AIM Distributors received $2,052,439 in contingent deferred sales charges
imposed on redemptions of Fund shares. Certain officers and trustees of the
Trust are officers and directors of AIM, AIM Distributors and AFS.
During the year ended December 31, 1995, the Fund paid legal fees of $14,950
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Board of Trustees. A member of that firm is a trustee of the
Trust.
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
21
<PAGE> 24
Financials
NOTE 4 - BANK BORROWINGS
The Fund has a $56,800,000 committed line of credit with a financial institution
syndicate with Chemical Bank of New York as the administrative agent. Interest
on borrowings under the line of credit is payable on maturity or prepayment
date. During the period July 20, 1995 (effective date of line of credit
agreement) through December 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's committed
line.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1995 was
$7,344,684,429 and $5,108,145,003, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $724,875,156
- ------------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (68,891,499)
- ------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $655,983,657
==================================================================================================================
Cost of investments for tax purposes is $5,552,114,288.
</TABLE>
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------- -------------------------------
SHARES VALUE SHARES VALUE
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold:
Class A 79,351,992 $2,054,533,413 44,842,263 $ 956,547,274
- ------------------------------------------------------- ------------------------------- -------------------------------
Class B 75,466,438 1,966,370,940 30,585,526 650,657,626
- ------------------------------------------------------- ------------------------------- -------------------------------
Issued as reinvestment of dividends:
Class A 6,956,211 184,199,771 1,002,453 20,670,601
- ------------------------------------------------------- ------------------------------- -------------------------------
Class B 5,526,910 145,522,539 289,906 5,707,603
- ------------------------------------------------------- ------------------------------- -------------------------------
Reacquired:
Class A (23,428,920) (608,862,792) (18,339,133) (391,224,672)
- ------------------------------------------------------- ------------------------------- -------------------------------
Class B (5,847,788) (153,264,745) (1,727,299) (36,623,200)
- ------------------------------------------------------- ------------------------------- -------------------------------
138,024,843 $3,588,499,126 56,653,716 $1,205,735,232
======================================================= =========== ============== =========== ==============
</TABLE>
NOTE 7 - OPEN FUTURES CONTRACTS
At December 31, 1995, $16,669,000 principal amount of U.S. Treasury securities
were pledged as collateral to cover margin requirements for open futures
contracts:
Open futures contracts at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
NUMBER
OF UNREALIZED
CONTRACT CONTRACTS MONTH/COMMITMENT APPRECIATION
- ------- ---------- --------------------- --------------
<S> <C> <C> <C>
S&P 500 Index 1500 contracts/March 96/Buy $ 11,292,015
================================================================================================================================
</TABLE>
NOTE 8 - OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended December 31, 1995 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
-------------------------
NUMBER
OF PREMIUMS
CONTRACTS RECEIVED
---------- -----------
<S> <C> <C>
Beginning of period -- --
- --------------------------------------------------------------------------------------------------------------------------
Written 27,850 $ 8,137,410
- --------------------------------------------------------------------------------------------------------------------------
Closed (2,000) (608,920)
- --------------------------------------------------------------------------------------------------------------------------
Exercised (18,250) (5,190,119)
- --------------------------------------------------------------------------------------------------------------------------
Expired (3,600) (606,679)
- --------------------------------------------------------------------------------------------------------------------------
End of period 4,000 $ 1,731,692
==========================================================================================================================
</TABLE>
22
<PAGE> 25
Financials
Open call option contracts written at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUM 1995 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
----- -------- ------ --------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Boeing Co. Feb 70 2,000 $ 968,968 $(1,800,000) $ (831,032)
Computer Associates International, Inc. Jan 65 2,000 762,724 (75,000) 687,724
- ---------------------------------------------------------------------------------------------------------------------------------
4,000 $1,731,692 $(1,875,000) $ (143,308)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 9 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during each of the years in the ten-year period ended December 31,
1995 and for a Class B share outstanding during each of the years in the
two-year period ended December 31, 1995 and the period October 18, 1993 (date
sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
1995 1994 1993 1992(a) 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 21.14 $ 20.82 $ 18.24 $ 17.55 $ 13.75
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Income from investment operations:
Net investment income 0.14 0.16 0.04 0.12 0.13
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Net gains on securities (both realized and
unrealized) 7.21 0.52 3.34 2.68 5.73
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Total from investment operations 7.35 0.68 3.38 2.80 5.86
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Less distributions:
Dividends from net investment income (0.09) (0.16) (0.03) (0.12) (0.14)
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Distributions from net realized capital gains (1.59) (0.20) (0.77) (1.99) (1.92)
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Total distributions (1.68) (0.36) (0.80) (2.11) (2.06)
- ----------------------------------------------------- ---------- ---------- --------- --------- ---------
Net asset value, end of period $ 26.81 $ 21.14 $ 20.82 $ 18.24 $ 17.55
===================================================== ========== ========== ========= ========= =========
Total return(b) 34.85% 3.28% 18.71% 16.39% 43.45%
===================================================== ========== ========== ========= ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,408,952 $1,358,725 $ 765,305 $ 239,663 $ 152,149
===================================================== ========== ========== ========= ========= =========
Ratio of expenses to average net assets 1.12%(c)(d) 0.98% 1.09% 1.16% 1.22%
===================================================== ========== ========== ========= ========= =========
Ratio of net investment income to average net assets 0.74%(c)(e) 0.92% 0.30% 0.75% 0.89%
===================================================== ========== ========== ========= ========= =========
Portfolio turnover rate 151% 127% 177% 170% 135%
===================================================== ========== ========== ========= ========= =========
<CAPTION>
1990 1989 1988 1987 1986
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 14.53 $ 12.79 $ 11.47 $ 12.26 $ 12.90
- ---------------------------------------------------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.26 0.40 0.26 0.25 0.36
- ---------------------------------------------------- -------- -------- -------- -------- --------
Net gains on securities (both realized and
unrealized) 0.01 3.58 2.07 0.53 0.75
- ---------------------------------------------------- -------- -------- -------- -------- --------
Total from investment operations 0.27 3.98 2.33 0.78 1.11
- ---------------------------------------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.26) (0.43) (0.26) (0.39) (0.43)
- ---------------------------------------------------- -------- -------- -------- -------- --------
Distributions from net realized capital gains (0.79) (1.81) (0.75) (1.18) (1.32)
- ---------------------------------------------------- -------- -------- -------- -------- --------
Total distributions (1.05) (2.24) (1.01) (1.57) (1.75)
- ---------------------------------------------------- -------- -------- -------- -------- --------
Net asset value, end of period $ 13.75 $ 14.53 $ 12.79 $ 11.47 $ 12.26
==================================================== ======== ======== ======== ======== ========
Total return(b) 1.88% 31.54% 20.61% 5.96% 8.80%
==================================================== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 86,565 $ 76,444 $ 60,076 $ 55,527 $ 46,642
==================================================== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.21%(d) 1.00%(d) 1.00%(d) 1.00% 1.00%(d)
==================================================== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 1.87%(e) 2.65%(e) 1.98%(e) 1.91% 3.15%(e)
==================================================== ======== ======== ======== ======== ========
Portfolio turnover rate 131% 152% 124% 219% 134%
==================================================== ======== ======== ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Total returns do not deduct sales charges.
(c) Ratios are based on average net assets of $2,364,597,465.
(d) Ratios of expenses to average net assets prior to reduction of advisory fees
were 1.13%, 1.23%, 1.09%, 1.08% and 1.05% for 1995, 1990-88 and 1986,
respectively.
(e) Ratios of net investment income to average net assets prior to reduction of
advisory fees were 0.73%, 1.85%, 2.56%, 1.90% and 3.14% for 1995, 1990-88
and 1986, respectively.
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 21.13 $ 20.82 $ 21.80
- ---------------------------------------------------------------- ---------- -------- -------
Income from investment operations:
Net investment income (loss) (0.01) -- 0.02
- ---------------------------------------------------------------- ---------- -------- -------
Net gains (losses) on securities (both realized and unrealized) 7.12 0.51 (0.21)
- ---------------------------------------------------------------- ---------- -------- -------
Total from investment operations 7.11 0.51 (0.19)
- ---------------------------------------------------------------- ---------- -------- -------
Less distributions:
Dividends from net investment income -- -- (0.02)
- ---------------------------------------------------------------- ---------- -------- -------
Distributions from net realized capital gains (1.59) (0.20) (0.77)
- ---------------------------------------------------------------- ---------- -------- -------
Total distributions (1.59) (0.20) (0.79)
- ---------------------------------------------------------------- ---------- -------- -------
Net asset value, end of period $ 26.65 $ 21.13 $ 20.82
================================================================ ========== ======== =======
Total return(a) 33.73% 2.46% (0.74)%
================================================================ ========== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,860,531 $680,119 $63,215
================================================================ ========== ======== =======
Ratio of expenses to average net assets 1.94%(b) 1.90% 1.85%(c)
================================================================ ========== ======== =======
Ratio of net investment income (loss) to average net assets (0.08)%(b) 0.00% (0.46)%(c)
================================================================ ========== ======== =======
Portfolio turnover rate 151% 127% 177%
================================================================ ========== ======== =======
</TABLE>
(a) Total returns do not deduct contingent deferred sales charges and for
periods less than one year are not annualized.
(b) The ratios of expenses and net investment income to average net assets prior
to reduction of advisory fees were 1.96% and (0.09)% for 1995, respectively.
Ratios are based on average net assets of $1,646,600,430.
(c) Annualized.
23
<PAGE> 26
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Value Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Value Fund, (a portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended and financial highlights for each of the
years in the three-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Value Fund as of December 31, 1995, the results of its operations for the year
then ended, the changes in net assets for each of the years in the two-year
period then ended and the financial highlights for each of the years in the
three-year period then ended, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1996
24
<PAGE> 27
Trustees
& Officers
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chief Executive Officer Chairman Suite 1919
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director, President, and
Chief Executive Officer John J. Arthur A I M Advisors, Inc.
COMSAT Corporation Senior Vice President and 11 Greenway Plaza
Treasurer Suite 1919
Owen Daly II Houston, TX 77046
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President TRANSFER AGENT
Carl Frischling Carol F. Relihan A I M Fund Services, Inc.
Partner Vice President and Secretary P.O. Box 4739
Kramer, Levin, Naftalis, Nessen, Houston, TX 77210-4739
Kamin & Frankel Dana R. Sutton
Vice President and Assistant Treasurer CUSTODIAN
Robert H. Graham
President and Chief Operating Officer Robert G. Alley State Street Bank & Trust Company
A I M Management Group Inc. Vice President 225 Franklin Street
Boston, MA 02110
John F. Kroeger Stuart W. Coco
Formerly, Consultant Vice President COUNSEL TO THE FUND
Wendell & Stockel Associates,
Inc. Melville B. Cox Ballard Spahr
Vice President Andrews & Ingersoll
Lewis F. Pennock 1735 Market Street
Attorney Karen Dunn Kelley Philadelphia, PA 19103
Vice President
Ian W. Robinson COUNSEL TO THE TRUSTEES
Consultant; Former Executive Jonathan C. Schoolar
Vice President and Vice President Kramer, Levin, Naftalis,
Chief Financial Officer Nessen, Kamin & Frankel
Bell Atlantic Management P. Michelle Grace 919 Third Avenue
Services, Inc. Assistant Secretary New York, NY 10022
Louis S. Sklar David L. Kite DISTRIBUTOR
Executive Vice President Assistant Secretary
Hines Interests A I M Distributors, Inc.
Limited Partnership Nancy L. Martin 11 Greenway Plaza
Assistant Secretary Suite 1919
Houston, TX 77046
Ofelia M. Mayo
Assistant Secretary AUDITORS
Kathleen J. Pflueger KPMG Peat Marwick LLP
Assistant Secretary 700 Louisiana
NationsBank Bldg.
Samuel D. Sirko Houston, TX 77002
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Value Fund Class A and Class B shares paid ordinary dividends in the amounts
of $1.094 and $1.005 per share, respectively, to shareholders during the Fund's
tax year ended December 31, 1995. Of this amount, 14% is eligible for the
dividends received deduction for corporations. The fund also distributed
long-term capital gains of $0.582 per share during its tax year ended December
31, 1995.
STATE INCOME TAX INFORMATION
Of the total ordinary dividends paid for Class A, 2.18% was derived from U.S.
Treasury obligations.
<PAGE> 28
<TABLE>
<CAPTION>
[PHOTO OF 11 GREENWAY PLAZA] THE AIM FAMILY OF FUNDS(R)
<S> <C>
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund**
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE
OF SAFETY
AIM Intermediate Government Fund***
HIGH DEGREE OF SAFETY AND
CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND
CURRENT INCOME
AIM Money Market Fund
STABILITY, LIQUIDITY, AND
CURRENT TAX-FREE INCOME
AIM Tax-Exempt Cash Fund
*AIM Aggressive Growth Fund was closed
to new investors on July 18, 1995.
**On May 1, 1995, AIM Utilities Fund
broadened its investment strategy to
permit up to 80% of its total assets
AIM Management Group has provided leadership to be invested in foreign securities,
in the mutual fund industry since 1976 and and was renamed AIM Global Utilities
currently manages approximately $42 billion Fund. ***On September 25, 1995, AIM
in assets for more than 2 million shareholders, Government Securities Fund was renamed
including individual investors, corporate clients, AIM Intermediate Government Fund. For
and financial institutions. The AIM Family of more complete information about any
Funds(R) is distributed nationwide, and AIM AIM Fund(s), including sales charges
today ranks among the nation's top 20 mutual and expenses, ask your financial
fund companies in assets under management, consultant or securities dealer for
according to Lipper Analytical Services, Inc. a free prospectus(es). Please read the
prospectus(es) carefully before you
invest or send money.
[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>
