<PAGE> 1
AIM INTERMEDIATE
GOVERNMENT FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT JUNE 30, 1997
<PAGE> 2
--------------------------------
AIM INTERMEDIATE
GOVERNMENT FUND
For shareholders
who seek
a high level of
current income
and relative price stability.
The Fund invests in
a portfolio of
U.S. government securities.
--------------------------------
[COVER
PHOTO
APPEARS
HERE]
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Intermediate Government Fund's performance figures are historical and
reflect reinvestment of all distributions and changes in net asset value.
Unless otherwise indicated, the Fund's performance is computed without a
sales charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B share
performance reflects the applicable contingent deferred sales charge (CDSC)
for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The performance of the Fund's Class B shares will differ from that of
Class A shares due to differing fees and expenses.
o The 30-day yield is calculated on the basis of a formula defined by the
SEC. The formula is based on the portfolio's potential earnings from
dividends, interest, yield-to-maturity or yield-to-call of the bonds in the
portfolio, net of all expenses and expressed on an annualized basis.
o The Fund'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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Fund had an average quality rating of AAAf, the highest such rating
assigned by Standard & Poor's Corporation (S&P), a widely known
credit-rating agency. S&P's ratings are historical and are based on an
annual analysis of the Fund's credit quality, composition, and management.
o The unmanaged Lipper U.S. Intermediate Government Funds Index represents an
average of the performance of the 30 largest intermediate government funds.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS
ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY;
ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK OR ANY AFFILIATE; AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
As 1997 came to its midway point, the market environment
was ideal for fixed-income investments. The course was not
smooth; indeed, bond markets fluctuated widely during the
first six months of the year amid concerns over vigorous
[PHOTO OF economic growth and rising interest rates. Only after
Charles T. subsequent reports indicated that economic growth had
Bauer, moderated and that inflation was still absent did bond
Chairman of markets recover.
the Board of On the following pages, your Fund's portfolio management
the Fund team offers a complete discussion of recent market activity
APPEARS HERE] and how the Fund was affected. They also discuss the Fund's
portfolio strategy, why they believe the portfolio is
well-positioned for attractive current income and total
return, and why they are confident that the reasons for
investing in the Fund remain as compelling as ever. These
discussions are offered to help you better understand the
relative performance of your Fund.
The point we want to emphasize most is that market volatility has become the
norm rather than the exception. Those of you who are long-time investors, and
those who are new shareholders in The AIM Family of Funds--Registered
Trademark--, should recognize that periods of falling prices in both stock and
bond markets are inevitable. Indeed, we can learn important lessons about
investing in periods of market uncertainty.
That's why it's a good idea to reassess your financial goals periodically
with your financial consultant. Managing your investments in changing markets
can be challenging. But your financial consultant knows a few time-tested
investment strategies that can help. Diversification, for example, can help you
cushion the effects of volatility and reduce your risk exposure in any one type
of security.
In our experience, we have observed that the best action to take is to stay
focused--not on the market, but on your own long-term goals. The market can
change from day to day. Those who try to "time" the market, over time, tend to
be less successful than those who continue to follow a disciplined investment
strategy.
It's also important to maintain realistic expectations about investing.
Short-term volatility in financial markets may tempt some investors to
liquidate investments regardless of their personal financial objectives.
Remember that time is the best medicine for uncertain markets. The market's
performance early in the year was driven by concerns about the possibility of
rising inflation. Yet, no evidence of inflation has materialized.
AIM/INVESCO MERGER FINALIZED
We are pleased to announce that the merger of A I M Management Group Inc. and
INVESCO PLC was concluded on February 28, 1997. AIM is now part of one of the
world's largest independent investment management groups with approximately
$177 billion in assets under management. The combined company, AMVESCAP PLC,
has the financial strength necessary to meet your needs in an increasingly
competitive financial services environment, both in the United States and
worldwide. The merger will not result in any change of portfolio management or
investment style of your AIM Fund.
We appreciate the trust you have placed in us and we look forward to our
continued close association. If you have any questions or comments about this
report, we invite you to call Client Services at 800-959-4246 during normal
business hours. For automated account information 24 hours a day, call the AIM
Investor Line at 800-246-5463. We also invite you to visit AIM's Internet Web
site at www.aimfunds.com.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
-------------------------------------------
It is important
to maintain
realistic expectations
about investment performance.
-------------------------------------------
<PAGE> 4
The Managers' Overview
AIM INTERMEDIATE GOVERNMENT FUND PROVIDES
ATTRACTIVE CURRENT INCOME DESPITE VOLATILE MARKET
A roundtable discussion with the Fund management team for AIM Intermediate
Government Fund for the six months ended June 30, 1997.
- -------------------------------------------------------------------------------
Q. IT WAS A TUMULTUOUS ENVIRONMENT FOR BONDS. HOW DID THE FUND PERFORM DURING
THE REPORT- ING PERIOD?
A. The first quarter was particularly trying for bond investors, and the Fund
made little progress. Improved market conditions during the second quarter
enabled the Fund to generate most of its gain for the reporting period. The
Fund's current income remained strong throughout the period. The Fund's
30-day yield on Class A and Class B shares was 6.45% and 5.97%,
respectively, as of June 30, 1997. Total return was 3.03% for Class A
shares and 2.60% for Class B shares in the six months ended June 30, 1997.
That compared favorably to the 2.64% total return for the Lipper
Intermediate U.S. Government Funds Index.
Q. CONCERNS OVER THE ECONOMY AND HIGHER INTEREST RATES DOMINATED THE PERIOD.
HOW DID THAT AFFECT BOND INVESTMENTS?
A. The bond market sold off sharply through the end of April, when the
benchmark 30-year U.S. Treasury bond hit a peak weekly closing yield of
7.13% in reaction to reports of vigorous growth in the economy. Indicators
seemed pointed either to an acceleration in inflation or to action by the
Federal Reserve to stave off price pressures. But the market later
rebounded nearly as sharply, owing to, in various measures, an apparent
slowdown in the economy plus the absence of inflation. The rally in bonds
took the yield on the benchmark 30-year U.S. Treasury bond to 6.78% by June
30--the lowest level since late February.
Q. WHAT TRIGGERED THE TURNAROUND?
A. The rally in bonds was touched off in April by news that the Consumer Price
Index (CPI) had risen 0.1%--half the increase expected by analysts, a trend
that continued into June. That news, combined with lower than expected
increases in employment costs and a record six consecutive declines in
producers prices, encouraged some analysts to speculate that the chances
the Fed will tighten monetary policy again this year are diminishing.
Indeed, following the increase in short-term interest rates in March, the
Fed elected to leave rates unchanged in May. Investors looking for greater
diversification amid a record stock market turned to bonds. Bond and income
funds witnessed an inflow of $2.75 billion in May, compared with an inflow
of $759.9 million in April.
Q. HOW DID THESE FACTORS AFFECT THE FUND?
A. The Fund lost ground early in the reporting period as fixed-income
securities were pressured by economic uncertainty and the resulting
increase in interest rates. However, the Fund's performance was cushioned
by its strong participation in the mortgage market. Mortgage-backed
securities--which comprised 64% of the Fund as of June 30--tend to benefit
from rising interest rates. When mortgage rates top 8%, homeowners are
discouraged from refinancing and the rate of mortgage prepayments slows
appreciably. Continuing the trend from 1996, mortgage-backed securities
outperformed U.S. Treasury securities of equivalent duration. That
advantage diminished somewhat as interest rates declined in May and bonds
rebounded sharply with encouraging economic reports. The Fund's invest
=========================================================================
CURRENT YIELD ADVANTAGE
-------------------------------------------------------------------------
As of 6/30/97
FUND CLASS A 30-DAY YIELD 6.45%
2-YEAR U.S. TREASURY NOTE 6.03*
6-MONTH CD 5.65**
=========================================================================
5.97% was the 30-day yield for the Fund's Class B shares. *Government
securities, such as U.S. Treasury bills, notes, and bonds offer a high degree
of safety and are guaranteed as to the timely payment of principal and interest
if held to maturity. **Bank certificates of deposit, which are insured by the
FDIC for up to $100,000, are short-term investments that pay fixed principal
and interest, but are subject to fluctuating rollover rates and early
withdrawal penalties. CD income is calculated using the six-month annualized
average monthly CD rate reported by the Bank Rate Monitor. Fund shares are not
insured, and their value will vary with market conditions.
------------------------------------------------------------
Investors looking for
greater diversification amid
a record stock market
turned to bonds.
------------------------------------------------------------
See important Fund & index disclosures inside front cover.
2
<PAGE> 5
ment in U.S. Treasury securities, about 15% of the portfolio, gained as
rates drifted lower. In addition, prices for U.S. Treasury securities were
aided by a narrowing of supply during the reporting period as fewer issues
were offered at auction. That also served to narrow yield spreads of
government securities across maturity levels.
Q. How are mortgage-backed securities affected by declining interest rates?
A. Declining interest rates encourage mortgage prepayments. That means
investors in mortgage-backed securities receive their investment back when
reinvestment rates are lower. And analysts anticipate that homeowners may
be able to refinance their mortgages more cheaply in the coming months than
last December. Nonetheless, mortgage analysts have suggested that there is
strong support for mortgage-backed securities from bidders who are
well-equipped to handle periodic prepayment risk and are not likely to
reduce their mortgage portfolios dramatically. Federally chartered agencies
like Federal National Mortgage Association and Federal Home Loan Mortgage
Corporation, who buy mortgages from banks and thrifts, play a key role as a
strong and continuing source of demand for mortgage-backed securities.
Q. What is your outlook for the fixed-income market?
A. Fixed-income funds should fare well as long as the economy grows in a 2% to
3% range. And indications are that the fair weather should continue--the
Federal Reserve has described the current economic environment as ideal.
Inflation--bond investors' worst enemy--is showing no signs of a resurgence
and the supply of U.S. Treasury bonds is growing slowly, which tightens
demand and helps cushion the price of those securities. Interest rates
should remain stable--long-term rates have even declined slightly. However,
market watchers don't anticipate substantially lower rates for U.S.
Treasury bonds from current levels. That lessens the likelihood of
significant prepayment risk for mortgage-backed securities. Key factors we
see driving the government securities market in coming months include:
o The Fed indicated recently that no further monetary policy changes may
be necessary in 1997.
o Foreign demand for U.S. government issues is up sharply.
o Recently passed legislation for a balanced budget should contribute to a
further reduction in the supply of U.S. Treasury debt issues.
===============================================================================
PORTFOLIO COMPOSITION
- -------------------------------------------------------------------------------
As of 6/30/97
Mortgage-Backed Obligations 64.3%
U.S. Treasury Obligations 14.6%
U.S. Agency Obligations 10.0%
Cash Equivalents 11.1%
BREAKDOWN OF MORTGAGE-BACKED OBLIGATIONS
Federal National Mortgage Assn. 61.4%
Federal Home Loan Mortgage Corp. 24.6
Government National Mortgage Assn. 14.0
S&P RATING AAAf
WEIGHTED AVERAGE MATURITY 8.96 years
DURATION 4.06 years
===============================================================================
FUND MANAGERS USE WEIGHTED AVERAGE MATURITY AND DURATION TO MANAGE RISK
In the box above showing the Fund's portfolio composition, we indicate the
weighted average maturity and duration. These both measure the effects of time
on the portfolio, but there the similarity ends:
o Weighted average maturity is an average of the term to maturity remaining
on each of the Fund's bond holdings.
o Duration is the average time it takes to receive the interest and the
principal on a bond.
For example, if we compared two bonds of identical quality and maturity,
the two bonds could have the same weighted average maturity. However, the bond
with the higher coupon would have the lower duration because the investor would
collect all payments in a shorter average amount of time. Using these tools,
fund managers can manage the sensitivity of a portfolio to changes in interest
rates. A longer duration on a bond or a portfolio, like a longer weighted
average maturity, indicates more sensitivity to interest rate changes because
the investment is committed for a longer period. During periods of rising
interest rates as noted earlier in 1997, the Fund's managers tend to shorten
one or both of these measures to reduce the impact on the Fund's share values.
See important Fund & index disclosures inside front cover.
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES-89.60%
FEDERAL HOME LOAN BANK-2.98%
Debentures
7.31%, 07/06/01 $ 4,000,000 $ 4,124,360
- --------------------------------------------------------------
7.36%, 07/01/04 2,800,000 2,912,560
- --------------------------------------------------------------
7,036,920
- --------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. ("FHLMC")-19.11%
Pass through certificates
9.00%, 12/01/05 to 04/01/25 9,297,897 9,786,874
- --------------------------------------------------------------
8.00%, 07/01/06 to 12/01/06 32,683 33,643
- --------------------------------------------------------------
8.50%, 07/01/07 to 05/01/26 15,421,569 16,093,163
- --------------------------------------------------------------
10.50%, 09/01/09 to 01/01/21 3,402,005 3,763,998
- --------------------------------------------------------------
7.00%, 11/01/10 to 04/01/11 2,167,791 2,170,347
- --------------------------------------------------------------
6.50%, 02/01/11 4,665,918 4,598,822
- --------------------------------------------------------------
10.00%, 11/01/11 to 02/01/16 41,387 45,152
- --------------------------------------------------------------
12.00%, 02/01/13 25,310 28,656
- --------------------------------------------------------------
9.50%, 04/01/25 8,079,997 8,699,794
- --------------------------------------------------------------
45,220,449
- --------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA")-52.90%
Debentures
8.625%, 11/10/04 3,500,000 3,646,125
- --------------------------------------------------------------
8.50%, 02/01/05 4,500,000 4,685,985
- --------------------------------------------------------------
7.875%, 02/24/05 3,000,000 3,216,000
- --------------------------------------------------------------
Pass through certificates
6.24%, 02/01/06 4,441,946 4,254,496
- --------------------------------------------------------------
8.50%, 01/01/07 to 03/01/07 39,728 41,143
- --------------------------------------------------------------
6.625%, 02/01/07 4,486,729 4,409,063
- --------------------------------------------------------------
7.50%, 06/01/10 to 03/01/27 32,099,364 32,450,833
- --------------------------------------------------------------
7.00%, 05/01/11 3,980,036 3,982,315
- --------------------------------------------------------------
8.00%, 09/01/11 to 06/01/26 17,621,554 18,059,307
- --------------------------------------------------------------
9.50%, 07/01/16 to 08/01/22 3,337,655 3,604,667
- --------------------------------------------------------------
7.50%, 07/14/27 TBA(a) 15,000,000 15,055,078
- --------------------------------------------------------------
8.00%, 07/14/27 TBA(a) 30,000,000 30,717,189
- --------------------------------------------------------------
STRIPS(b)
7.37%, 10/09/19 5,000,000 1,031,100
- --------------------------------------------------------------
125,153,301
- --------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION ("GNMA")-10.86%
Pass through certificates
9.00%, 10/15/08 to 01/15/21 $ 1,114,717 $ 1,194,379
- --------------------------------------------------------------
9.50%, 06/15/09 to 03/15/23 9,213,208 9,988,059
- --------------------------------------------------------------
10.00%, 11/15/09 to 07/15/24 4,623,518 5,087,591
- --------------------------------------------------------------
11.00%, 12/15/09 to 12/15/15 220,011 244,591
- --------------------------------------------------------------
13.50%, 07/15/10 to 04/15/15 463,712 540,155
- --------------------------------------------------------------
12.50%, 11/15/10 246,108 285,406
- --------------------------------------------------------------
13.00%, 01/15/11 to 05/15/15 474,798 552,500
- --------------------------------------------------------------
12.00%, 02/15/13 to 07/15/15 861,270 979,958
- --------------------------------------------------------------
10.50%, 07/15/13 to 02/15/16 245,927 272,672
- --------------------------------------------------------------
8.00%, 03/15/23 to 06/15/27 6,388,345 6,545,215
- --------------------------------------------------------------
25,690,526
- --------------------------------------------------------------
TENNESSEE VALLEY AUTHORITY-3.75%
Debentures
5.98%, 04/01/36 8,815,000 8,866,237
- --------------------------------------------------------------
Total U.S. Government Agency
Securities 211,967,433
- --------------------------------------------------------------
U.S. TREASURY SECURITIES-17.68%
U.S. TREASURY NOTES & BONDS-16.79%
7.00%, 07/15/06 4,000,000 4,117,200
- --------------------------------------------------------------
6.625%, 05/15/07 5,000,000 5,044,650
- --------------------------------------------------------------
7.25%, 05/15/16 7,500,000 7,824,975
- --------------------------------------------------------------
7.50%, 11/15/16 5,500,000 5,880,875
- --------------------------------------------------------------
8.125%, 08/15/19 4,000,000 4,564,640
- --------------------------------------------------------------
6.875%, 08/15/25 2,500,000 2,509,775
- --------------------------------------------------------------
6.625%, 02/15/27 ($5,000,000)(c) 10,000,000 9,787,700
- --------------------------------------------------------------
39,729,815
- --------------------------------------------------------------
U.S. TREASURY STRIPS-0.89%(b)
6.77%, 11/15/08 4,000,000 1,872,480
- --------------------------------------------------------------
6.79%, 11/15/18 1,000,000 228,550
- --------------------------------------------------------------
2,101,030
- --------------------------------------------------------------
Total U.S. Treasury Securities 41,830,845
- --------------------------------------------------------------
Total Investments (excluding
Repurchase Agreements) 253,798,278
- --------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS-13.43%(d)
Goldman Sachs & Co., 5.875%,
07/01/97(e) $ 5,052,836 $ 5,052,836
- --------------------------------------------------------------
HSBC Securities, Inc., 6.10%,
07/01/97(f) 26,713,640 26,713,640
- --------------------------------------------------------------
Total Repurchase Agreements 31,766,476
- --------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TOTAL INVESTMENTS-120.71% $285,564,754
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-(20.71%) (48,993,089)
- --------------------------------------------------------------
NET ASSETS-100.00% $236,571,665
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) At 06/30/97, cost of securities purchased on a when-issued basis totalled
$45,752,344. These securities are also subject to dollar roll transactions.
See Note 1 section C of Notes to Financial Statements.
(b) STRIPS 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) Amount in parentheses represents principal amount deposited in escrow with
custodian as collateral for reverse repurchase agreements outstanding at
06/30/97.
(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, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$500,081,597. Collateralized by $489,647,000 U.S. Government obligations,
5.875% to 12.00% due 01/15/00 to 05/15/05 with an aggregate market value at
06/30/97 of $510,506,061.
(f) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$100,016,944. Collateralized by $97,880,000 U.S. Government obligations,
7.50% due 10/31/99 with a market value at 06/30/97 of $102,002,909.
Abbreviations:
TBA - To Be Announced
See Notes to Financial Statements.
5
<PAGE> 8
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$249,954,101) $253,798,278
- ---------------------------------------------------------
Repurchase agreements (cost $31,766,476) 31,766,476
- ---------------------------------------------------------
Receivables for:
Fund shares sold 574,378
- ---------------------------------------------------------
Interest 2,336,140
- ---------------------------------------------------------
Investment for deferred compensation plan 21,391
- ---------------------------------------------------------
Other assets 142,101
- ---------------------------------------------------------
Total assets 288,638,764
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 45,752,344
- ---------------------------------------------------------
Reverse repurchase agreement (Note C) 5,043,750
- ---------------------------------------------------------
Fund shares redeemed 467,186
- ---------------------------------------------------------
Dividends 381,327
- ---------------------------------------------------------
Deferred compensation plan 21,391
- ---------------------------------------------------------
Interest expense (Note C) 6,921
- ---------------------------------------------------------
Accrued advisory fees 94,551
- ---------------------------------------------------------
Accrued administrative service fees 12,600
- ---------------------------------------------------------
Accrued distribution fees 192,882
- ---------------------------------------------------------
Accrued transfer agent fees 30,019
- ---------------------------------------------------------
Accrued operating expenses 64,128
- ---------------------------------------------------------
Total liabilities 52,067,099
- ---------------------------------------------------------
Net assets applicable to shares outstanding $236,571,665
=========================================================
NET ASSETS:
Class A $157,530,314
=========================================================
Class B $ 79,041,351
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 17,057,622
=========================================================
Class B 8,557,994
=========================================================
Class A:
Net asset value and redemption price per
share $ 9.24
=========================================================
Offering price per share:
(Net asset value of $9.24
divided by 95.25%) $ 9.70
=========================================================
Class B:
Net asset value and offering price per
share $ 9.24
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 9,674,175
- ---------------------------------------------------------
EXPENSES:
Advisory fees 582,272
- ---------------------------------------------------------
Custodian fees 25,276
- ---------------------------------------------------------
Distribution fees -- Class A 204,126
- ---------------------------------------------------------
Distribution fees -- Class B 391,384
- ---------------------------------------------------------
Administrative service fees 44,068
- ---------------------------------------------------------
Interest (Note C) 46,328
- ---------------------------------------------------------
Transfer agent fees -- Class A 114,933
- ---------------------------------------------------------
Transfer agent fees -- Class B 62,021
- ---------------------------------------------------------
Trustees' fees 3,683
- ---------------------------------------------------------
Other 75,589
- ---------------------------------------------------------
Total expenses 1,549,680
- ---------------------------------------------------------
Less: Expenses paid indirectly (1,739)
- ---------------------------------------------------------
Net expenses 1,547,941
- ---------------------------------------------------------
Net investment income 8,126,234
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Net realized gain (loss) on sales of
investment securities (748,121)
- ---------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities (716,568)
- ---------------------------------------------------------
Net gain (loss) on investment securities (1,464,689)
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $ 6,661,545
=========================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 9
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 8,126,234 $ 16,155,081
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (748,121) (4,339,042)
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (716,568) (6,405,094)
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,661,545 5,410,945
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (5,637,703) (11,114,092)
- --------------------------------------------------------------------------------------------
Class B (2,366,329) (3,966,734)
- --------------------------------------------------------------------------------------------
Return of capital:
Class A -- (712,857)
- --------------------------------------------------------------------------------------------
Class B -- (292,831)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A (15,865,137) 5,857,162
- --------------------------------------------------------------------------------------------
Class B (8,152) 20,988,143
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (17,215,776) 16,169,736
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 253,787,441 237,617,705
- --------------------------------------------------------------------------------------------
End of period $236,571,665 $253,787,441
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $249,399,422 $265,272,711
- --------------------------------------------------------------------------------------------
Undistributed net investment income 102,959 (19,243)
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (16,774,893) (16,026,772)
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 3,844,177 4,560,745
- --------------------------------------------------------------------------------------------
$236,571,665 $253,787,441
============================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Intermediate Government 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. The Fund's investment objective
is to seek to achieve a high level of current income consistent with reasonable
concern for safety of principal by investing in debt securities issued,
guaranteed or otherwise backed by the United States Government. Information
presented in these financial statements pertains only to the Fund.
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 -- Debt obligations that are issued or guaranteed by the
U.S. Government, its agencies, authorities, and instrumentalities 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, maturity date and seasoning differential. Securities for
which market prices are not provided by the pricing service are valued at
the mean between the last bid and asked prices based upon quotes furnished
by independent sources. Securities for which market quotations are either
not readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's officers
in a manner specifically authorized by the Board of Trustees. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. It is the policy of the Fund to
declare daily dividends from net investment income. Such dividends are paid
monthly. Distributions from net realized capital gains, if any, are recorded
on ex-dividend date and are paid annually subject to restrictions noted in
Section "D" below.
C. Reverse Repurchase Agreements and Dollar Roll Transactions -- A reverse
repurchase agreement involves the sale of securities held by the Fund, with
an agreement that the Fund will repurchase such securities at an agreed-upon
price and date. Proceeds from reverse repurchase agreements are treated as
borrowings. The agreements are collateralized by the underlying securities
and are carried at the amount at which the securities will subsequently be
repurchased as specified in the agreements. Reverse repurchase agreements
outstanding at June 30, 1997 were collateralized by U.S. Treasury Notes with
a market value of $4,893,850. This agreement had an interest rate of 3.80%
and a termination date of July 2, 1997. The maximum amount outstanding
during the six months ended June 30, 1997 was $9,993,750 while borrowings
averaged $2,312,051 per day with a weighted average interest rate of 4.40%.
The Fund may also engage in dollar roll transactions with respect to mortgage
securities issued by GNMA, FNMA and FHLMC. In a dollar roll transaction, the
Fund sells a mortgage security held in the portfolio to a financial institution
such as a bank or broker-dealer, and simultaneously agrees to repurchase a
substantially similar security (same type, coupon and maturity) from the
institution at a later date at an agreed upon price. The mortgage securities
that are repurchased will bear the same interest rate as those sold, but
generally will be collateralized by different pools of mortgages with different
prepayment histories. During the period between the sale and repurchase, the
Fund will not be entitled to receive interest and principal payments on the
securities sold. Proceeds of the sale will be invested in short-term
instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for the Fund
exceeding the yield on the security sold.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the securities
that the Fund has sold but is obligated to repurchase under the agreement. In
the event the buyer of securities in a dollar roll transaction files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale
of the securities may be restricted pending a determination
8
<PAGE> 11
by the other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities. The Fund will limit its borrowings
from banks, reverse repurchase agreements and dollar roll transactions to an
aggregate of 33-1/3% of its total assets at the time of investment. The Fund
will not purchase additional securities when any borrowings from banks exceed
5% of the Fund's total assets.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $15,870,990 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2004. The Fund cannot distribute capital gains to
shareholders until the tax loss carryforwards have been utilized.
E. Expenses -- Operating expenses directly attributable to a class of shares
are charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
NOTE 2- ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays AIM an advisory fee at an annual rate of 0.50% of the
first $200 million of the Fund's average daily net assets, plus 0.40% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.35% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended June 30, 1997, AIM
was reimbursed $44,068 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the six months ended June 30, 1997, the
Fund paid AFS $106,006 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 designees, its rights to all or a designated
portion of (a) compensation received by AIM Distributors from the Fund pursuant
to the Class B Plan (but not AIM Distributors' duties and obligations pursuant
to the Class B Plan) and (b) any contingent deferred sales charges received by
AIM Distributors related to the Class B shares. During the six months ended June
30, 1997, the Class A shares and the Class B shares paid AIM Distributors
$204,126 and $391,384 respectively, as compensation under the Plans.
AIM Distributors received commissions of $63,787 from sales of the Class A
shares of the Fund during the six months ended June 30, 1997. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of Class A shares. During the six months ended June 30,
1997, AIM Distributors received $74,507 in contingent deferred sales charges
imposed on redemptions of Fund shares. Certain officers and trustees of the
Trust are officers and directors of AIM, AIM Distributors and AFS.
During the six months ended June 30, 1997, the Fund paid legal fees of $2,825
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the six months
ended June 30, 1997 the Fund's expenses were reduced by $138 and the Fund
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
reductions in custodian fees of $1,584 and $17, respectively, under expense
offset arrangements. The effect of the above arrangements resulted in a
reduction of the Fund's total expenses of $1,739 during the six months ending
June 30, 1997.
9
<PAGE> 12
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of (i) $325,000,000 or (ii) the limits set
by its prospectus for borrowings. During the six months ended June 30, 1997, the
Fund did not borrow under the line of credit agreement. The funds which are
parties to the line of credit are charged a commitment fee of 0.05% on the
unused balance of the committed line. The commitment fee is allocated among such
funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended June 30, 1997 was
$72,826,262 and $106,208,436, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $4,044,079
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (256,620)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $3,787,459
=========================================================
Cost of investments for tax purposes is $281,777,295.
</TABLE>
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 1997 and the
year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
------------------------ ------------------------
SHARES VALUE SHARES VALUE
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 2,583,736 $23,771,571 7,920,265 $74,033,231
- ------------------------------------------------------------ ---------- ----------- ---------- -----------
Class B 1,966,869 18,089,131 5,052,488 47,193,668
- ------------------------------------------------------------ ---------- ----------- ---------- -----------
Issued as reinvestment of dividends:
Class A 494,475 4,544,963 1,025,026 9,536,042
- ------------------------------------------------------------ ---------- ----------- ---------- -----------
Class B 171,745 1,578,296 314,728 2,925,034
- ------------------------------------------------------------ ---------- ----------- ---------- -----------
Reacquired:
Class A (4,799,827) (44,181,671) (8,340,854) (77,712,111)
- ------------------------------------------------------------ ---------- ----------- ---------- -----------
Class B (2,139,878) (19,675,579) (3,132,635) (29,130,559)
- ------------------------------------------------------------ ---------- ----------- ---------- -----------
(1,722,880) $(15,873,28) 2,839,018 $26,845,305
============================================================ ========== =========== ========== ===========
</TABLE>
10
<PAGE> 13
Note 8 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share outstanding during
the six months ended June 30, 1997 and each of the years in the nine-year period
ended December 31, 1996 and for a Class B share outstanding during the six
months ended June 30, 1997, the three-year period ended December 31, 1996 and
the period September 7, 1993 (date sales commenced) through December 31, 1993.
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992(a) 1991 1990
CLASS A: -------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 9.28 $ 9.70 $ 8.99 $ 10.05 $ 10.19 $ 10.34 $ 9.95 $ 9.91
- ----------------------------------- -------- -------- -------- -------- -------- -------- -------- -------
Income from investment operations:
Net investment income 0.32 0.63 0.69 0.68 0.74 0.77 0.82 0.87
- ----------------------------------- -------- -------- -------- -------- -------- -------- -------- -------
Net gains (losses) on securities
(both realized and unrealized) (0.04) (0.42) 0.73 (1.02) (0.04) (0.15) 0.41 0.01
- ----------------------------------- -------- -------- -------- -------- -------- -------- -------- -------
Total from investment operations 0.28 0.21 1.42 (0.34) 0.70 0.62 1.23 0.88
- ----------------------------------- -------- -------- -------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment
income (0.32) (0.59) (0.67) (0.58) (0.70) (0.74) (0.84) (0.84)
- ----------------------------------- -------- -------- -------- -------- -------- -------- -------- -------
Distributions from net realized
capital gains -- -- -- (0.04) (0.14) (0.03) -- --
- ----------------------------------- -------- -------- -------- -------- -------- -------- -------- -------
Return of capital -- (0.04) (0.04) (0.10) -- -- -- --
- ----------------------------------- -------- -------- -------- -------- -------- -------- -------- -------
Total distributions (0.32) (0.63) (0.71) (0.72) (0.84) (0.77) (0.84) (0.84)
- ----------------------------------- -------- -------- -------- -------- -------- -------- -------- -------
Net asset value, end of period $ 9.24 $ 9.28 $ 9.70 $ 8.99 $ 10.05 $ 10.19 $ 10.34 $ 9.95
=================================== ======== ======== ======== ======== ======== ======== ======== =======
Total return(b) 3.03% 2.35% 16.28% (3.44)% 7.07% 6.26% 12.98% 9.39%
=================================== ======== ======== ======== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $157,530 $174,344 $176,318 $158,341 $139,586 $123,484 $101,409 $61,463
=================================== ======== ======== ======== ======== ======== ======== ======== =======
Ratio of expenses to average net
assets (exclusive of interest
expense)(c) 0.99%(d)(e) 1.00% 1.08% 1.04% 1.00% 0.98% 1.00% 1.00%
=================================== ======== ======== ======== ======== ======== ======== ======== =======
Ratio of net investment income to
average net assets(f) 6.98%(d) 6.76% 7.36% 7.34% 7.08% 7.53% 8.15% 8.85%
=================================== ======== ======== ======== ======== ======== ======== ======== =======
Portfolio turnover rate 33% 134% 140% 109% 110% 42% 26% 16%
=================================== ======== ======== ======== ======== ======== ======== ======== =======
Borrowings for the period:
Amount of debt outstanding at ended
of period (000's omitted) $ 3,410 -- -- -- -- -- -- --
=================================== ======== ======== ======== ======== ======== ======== ======== =======
Average amount of debt outstanding
during the period (000's
omitted)(g) $ 1,563 -- -- -- -- -- -- --
=================================== ======== ======== ======== ======== ======== ======== ======== =======
Average number of shares
outstanding during the period
(000's omitted)(g) 17,893 -- -- -- -- -- -- --
=================================== ======== ======== ======== ======== ======== ======== ======== =======
Average amount of debt per share
during the period $ 0.0873 -- -- -- -- -- -- --
=================================== ======== ======== ======== ======== ======== ======== ======== =======
<CAPTION>
DECEMBER 31,
-----------------
1989 1988
CLASS A: ------- -------
<S> <C> <C>
Net asset value, beginning of
period $ 9.70 $ 9.92
- ----------------------------------- ------- -------
Income from investment operations:
Net investment income 0.90 0.89
- ----------------------------------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 0.15 (0.27)
- ----------------------------------- ------- -------
Total from investment operations 1.05 0.62
- ----------------------------------- ------- -------
Less distributions:
Dividends from net investment
income (0.84) (0.84)
- ----------------------------------- ------- -------
Distributions from net realized
capital gains -- --
- ----------------------------------- ------- -------
Return of capital -- --
- ----------------------------------- ------- -------
Total distributions (0.84) (0.84)
- ----------------------------------- ------- -------
Net asset value, end of period $ 9.91 $ 9.70
=================================== ======= =======
Total return(b) 11.28% 6.43%
=================================== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $57,077 $48,372
=================================== ======= =======
Ratio of expenses to average net
assets (exclusive of interest
expense)(c) 1.00% 1.00%
=================================== ======= =======
Ratio of net investment income to
average net assets(f) 9.10% 9.11%
=================================== ======= =======
Portfolio turnover rate 15% 15%
=================================== ======= =======
Borrowings for the period:
Amount of debt outstanding at ended
of period (000's omitted) -- --
=================================== ======= =======
Average amount of debt outstanding
during the period (000's
omitted)(g) -- --
=================================== ======= =======
Average number of shares
outstanding during the period
(000's omitted)(g) -- --
=================================== ======= =======
Average amount of debt per share
during the period -- --
=================================== ======= =======
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charges and is not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of
expenses to average net assets prior to fee waivers and/or
expense reimbursement were 1.05%, 1.04%, 1.04%, 1.10%,
1.13%, 1.08% and 1.08% for 1994-88, respectively.
(d) Ratios are annualized and based on average net assets of
$164,653,827.
(e) Includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets
would have remained the same.
(f) After fee waivers and/or expense reimbursements. Ratios of
net investment income to average net assets prior to fee
waivers and/or expense reimbursement were 7.32%, 7.04%,
7.48%, 8.05%, 8.72%, 9.03% and 9.03% for 1994-88,
respectively.
(g) Averages computed on a daily basis.
11
<PAGE> 14
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------------------------
1997 1996 1995 1994 1993
CLASS B: -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.28 $ 9.69 $ 8.99 $ 10.04 $ 10.44
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.28 0.55 0.63 0.61 0.21
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) (0.04) (0.41) 0.70 (1.02) (0.27)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Total from investment operations 0.24 0.14 1.33 (0.41) (0.06)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.28) (0.51) (0.59) (0.50) (0.20)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Distributions from net realized capital gains -- -- -- (0.04) (0.14)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Return of capital -- (0.04) (0.04) (0.10) --
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Total distributions (0.28) (0.55) (0.63) (0.64) (0.34)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net asset value, end of period $ 9.24 $ 9.28 $ 9.69 $ 8.99 $ 10.04
============================================================ ======= ======= ======= ======= =======
Total return(a) 2.60% 1.61% 15.22% (4.13)% (0.52)%
============================================================ ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $79,041 $79,443 $61,300 $23,415 $ 6,160
============================================================ ======= ======= ======= ======= =======
Ratio of expenses to average net assets (exclusive of
interest expense)(b) 1.77%(c)(d) 1.76% 1.86% 1.82% 1.71%(f)
============================================================ ======= ======= ======= ======= =======
Ratio of net investment income to average net assets(e) 6.20%(c) 6.00% 6.58% 6.56% 6.37%(f)
============================================================ ======= ======= ======= ======= =======
Portfolio turnover rate 33% 134% 140% 109% 110%
============================================================ ======= ======= ======= ======= =======
Borrowings for the period:
Amount of debt outstanding at ended of period (000's
omitted) $ 1,634 -- -- -- --
============================================================ ======= ======= ======= ======= =======
Average amount of debt outstanding during the period (000's
omitted)(g) $ 749 -- -- -- --
============================================================ ======= ======= ======= ======= =======
Average number of shares outstanding during the period
(000's omitted)(g) 8,578 -- -- -- --
============================================================ ======= ======= ======= ======= =======
Average amount of debt per share during the period $0.0873 -- -- -- --
============================================================ ======= ======= ======= ======= =======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not
annualized for periods less than one year.
(b) After fee waivers and/or expense reimbursements. Ratio of
expenses to average net assets prior to fee waivers and/or
expense reimbursement for the year ended December 31, 1994
and the period ended December 31, 1993 were 1.87% and 2.18%
(annualized), respectively.
(c) Ratios are annualized and based on average net assets of
$78,925,558.
(d) Includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets
would have remained the same.
(e) After fee waivers and/or expense reimbursements. Ratio of
net investment income to average net assets prior to fee
waivers and/or expense reimbursement for the year ended
December 31, 1994 and the period ended December 31, 1993
were 6.50% and 5.90% (annualized), respectively.
(f) Annualized.
(g) Averages computed on a daily basis.
- --------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION -- SHAREHOLDER MEETING
- --------------------------------------------------------------------------------
The Annual Meeting of Shareholders of the Trust was held on February 7, 1997.
The meeting was held for the following purposes:
(1) To elect trustees as follows: Charles T. Bauer, Bruce L. Crockett, Owen Daly
II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F. Pennock,
Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Trust and AIM.
(3) To approve the elimination of the fundamental investment policy prohibiting
or restricting investments in other investment companies and/or the
amendment of certain related fundamental investment policies.
(4) Ratification of KPMG Peat Marwick LLP as independent accountants for the
Trust's fiscal year ending December 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
Votes
Trustee/Matter Votes For Against Abstentions
-------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer............................................ 773,545,353 0 34,024,196
Bruce L. Crockett........................................... 774,171,487 0 33,398,062
Owen Daly II................................................ 773,623,278 0 33,946,271
Carl Frischling............................................. 773,502,641 0 33,666,908
Robert H. Graham............................................ 774,181,971 0 33,387,578
John F. Kroeger............................................. 773,713,539 0 33,856,010
Lewis F. Pennock............................................ 773,903,304 0 33,666,245
Ian W. Robinson............................................. 773,753,378 0 33,816,171
Louis S. Sklar.............................................. 773,993,581 0 33,575,968
(2) Approval of new Investment Advisory Agreement............... 16,142,557 273,895 714,547
(3) Elimination of policy restricting investments in other
investment companies (for AIM Intermediate Government Fund
only)....................................................... 12,656,856 559,409 767,707
(4) KPMG Peat Marwick LLP....................................... 763,580,956 7,014,082 36,974,511
</TABLE>
12
<PAGE> 15
Trustees & Officers
<TABLE>
<S> <C>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Formerly Director, President, and Chief
Executive Officer John J. Arthur A I M Advisors, Inc.
COMSAT Corporation Senior Vice President and Treasurer 11 Greenway Plaza
Suite 100
Owen Daly II Carol F. Relihan Houston, TX 77046
Director Senior Vice President
Cortland Trust Inc. and Secretary TRANSFER AGENT
Jack Fields Gary T. Crum A I M Fund Services, Inc.
Formerly Member of the Senior Vice President P.O. Box 4739
U.S. House of Representatives Houston, TX 77210-4739
Scott G. Lucas
Carl Frischling Senior Vice President CUSTODIAN
Partner
Kramer, Levin, Naftalis & Frankel Dana R. Sutton State Street Bank & Trust Company
Vice President and Assistant Treasurer 225 Franklin Street
Robert H. Graham Boston, MA 02110
President and Chief Executive Officer Robert G. Alley
A I M Management Group Inc. Vice President COUNSEL TO THE FUND
John F. Kroeger Stuart W. Coco Ballard Spahr
Formerly Consultant Vice President Andrews & Ingersoll
Wendell & Stockel Associates, Inc. 1735 Market Street
Melville B. Cox Philadelphia, PA 19103
Lewis F. Pennock Vice President
Attorney COUNSEL TO THE TRUSTEES
Karen Dunn Kelly
Ian W. Robinson Vice President Kramer, Levin, Naftalis & Frankel
Consultant; Formerly Executive 919 Third Avenue
Vice President and Jonathan C. Schoolar New York, NY 10022
Chief Financial Officer Vice President
Bell Atlantic Management DISTRIBUTOR
Services, Inc. P. Michelle Grace
Assistant Secretary A I M Distributors, Inc.
Louis S. Sklar 11 Greenway Plaza
Executive Vice President David L. Kite Suite 100
Hines Interests Assistant Secretary Houston, TX 77046
Limited Partnership
Nancy L. Martin
Assistant Secretary
Ofelia M. Mayo
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
<PAGE> 16
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH OF CAPITAL
AIM Advisor International Value Fund
[PHOTO OF AIM Blue Chip Fund
11 GREENWAY PLAZA AIM Global Growth Fund
APPEARS HERE] AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Charter Fund
AIM Global Utilities Fund
HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Shares
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has provided leadership in the *AIM Aggressive Growth Fund was closed to new investors on
mutual fund industry since 1976 and managed approximately June 5, 1997. For more complete information about any AIM
$72 billion in assets for more than 3.5 million shareholders, Fund(s), including sales charges and expenses, ask your
including individual investors, corporate clients, and financial financial consultant or securities dealer for a free
institutions as of June 30, 1997. The AIM Family of prospectus(es). Please read the prospectus(es) carefully
Funds--Registered Trademark-- is distributed nationwide, and before you invest or send money.
AIM today ranks among the nation's top 15 mutual fund
companies in assets under management, according to Lipper INVEST WITH DISCIPLINE-SM-
Analytical Services, Inc.
[AIM LOGO APPEARS HERE] -----------------
BULK RATE
A I M Distributors, Inc. U.S. POSTAGE
11 Greenway Plaza, Suite 100 PAID
Houston, TX 77046 HOUSTON, TX
Permit No. 1919
-----------------
</TABLE>
