<PAGE>
[LOGO OF AIM APPEARS HERE]
[GRAPHIC COLLAGE APPEARS HERE]
AIM STRATEGIC
INCOME FUND, INC.
SEMIANNUAL REPORT
JUNE 30, 1995
<PAGE>
AIM STRATEGIC INCOME FUND
For shareholders who seek high current income consistent with
stability of principal by investing primarily in convertible
securities and by employing short-selling to enhance income and hedge
against market risk.
IMPORTANT INFORMATION ABOUT PERFORMANCE DATA IN THIS REPORT
o AIM Strategic Income Fund, Inc. performance figures are historical and
reflect reinvestment of all distributions and changes in net
asset value.
o The Fund's investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less
than their original cost.
o The Fund's portfolio composition may change and there is no assurance
the Fund will continue to hold these same securities.
o Past performance cannot guarantee comparable future results.
o The unmanaged Standard & Poor's Composite Index of 500 stocks (S&P
500) is considered by investors to be most representative of the stock
market in general.
o An investment cannot be made in any indexes listed. Unless otherwise
indicated, index results include reinvested dividends and do not
reflect sales charges.
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
For periods ended June 30, 1995
Inception (3/23/89) 9.61%
5 Years 9.82
1 Year 10.58
6 Months 7.42
Six-month performance includes reinvested distributions of $0.30 per
share.
-------------------------------------------------------------------------------
<PAGE>
CHAIRMAN'S LETTER
Dear Shareholder:
Following a dramatic rally in stock and bond prices,
[PHOTO of including the best quarterly performance for stocks in 2
Charles T. Bauer, 1/2 years, AIM Strategic Income Fund, Inc. closed the six
Chairman of months ended June 30, 1995, with a solid total return on
the Board of net asset value of 7.42%.
the Fund, The Fund also provided annualized net portfolio income
APPEARS HERE] of 6.32% as of June 30, 1995--which compares favorably
with the 10-year U.S. Treasury note, which yielded 6.20%,
and the 5.56% yield on the U.S. Treasury 90-day bill.
The Fund achieved an increase of 4% in net assets to $66 million during
the six months ended June 30, 1995. Net asset value per share increased to
$9.51 from $9.18. Market value per share increased to $8.19 from $8.00. As
a closed-end fund, AIM Strategic Income Fund, Inc. has a limited number of
shares that trade on the American Stock Exchange under the symbol AST.
AIM Strategic Income Fund, Inc. has achieved positive total returns on
net asset value since its inception in 1989. While the Fund has fluctuated
with changing markets during those years, and past performance cannot
guarantee future results, shareholders who have retained a long-term
perspective have enjoyed the greatest returns on their investment.
We remain committed to managing your Fund according to AIM's
research-based, earnings-driven, investment discipline. We believe our
faithful application of this philosophy has been a major contributor to
AIM's growth. In the first six months of this year, total assets under
AIM's management increased by more than 18% to approximately $32.5 billion.
While part of this growth can be attributed to favorable market conditions,
it also reflects the addition of more than 320,000 shareholder accounts
during the period.
We appreciate your continued confidence in AIM Strategic Income Fund,
Inc.. As always, we are ready to respond to your questions or comments
about this report. Please call Client Services at 800-959-4246 during
normal business hours. For automated account information 24 hours a day,
call the AIM Investor Line toll-free at 800-246-5463.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE>
DISCUSSION & ANALYSIS
-----------
AIM Strategic
Income Fund, Inc.
delivered a
current monthly
yield that was
132% of the U.S.
Treasury 90-day
bill yield.
-----------
STOCKS AND BONDS CHARGE FORWARD IN 1995
Following 1994, when stocks posted flat to negative returns and bonds had one of
their worst years on record, investors were more than ready for good news.
It came in the form of positive evidence that the Federal Reserve Bank
Board's long sought after "soft landing" for the economy--a strategy to slow
growth, but not to the point of recession--was working. More than a year after
the Fed began efforts to slow the economy to a more sustainable 2.5% annual
pace, the results were in--a 2.7% annual growth rate in the first quarter of
1995. The economy had slowed decidedly from the 5.1% annual rate it logged in
the fourth quarter of 1994.
The news was a tonic for stocks. Heartened investors relaxed the inflation
vigil and drove up stocks to extraordinary levels. While record-breaking levels
in stock prices snatched the majority of media attention, long-term government
bonds actually outperformed stocks for most of the first six months of 1995.
As of June 30, 1995, long-term government bonds returned almost 20%--
compared to 20.15% for the Standard & Poor's Composite Index of 500 stocks (S&P
500)--and about 12% in the second quarter of 1995 compared to 9.5% for stocks.
During most of the reporting period, technology companies--particularly
those companies producing semiconductors, computers, and software--led the
market advance, followed by such financial services companies as banks,
securities firms, and insurance companies.
In the second quarter of 1995, economic growth dropped to an annual rate of
less than 1%. Markets began to discount the possibility that the Fed would ease
short-term interest rates. Even a moderate reduction in interest rates would
save corporations and consumers billions of dollars in borrowing costs and help
to extend the favorable business cycle.
YOUR INVESTMENT PORTFOLIO
AIM Strategic Income Fund, Inc. employs an investment strategy unique to
closed-end income funds. The Fund invests in convertible securities, which tend
to participate in the appreciation of the underlying common stocks while
providing a higher level of current income. Convertible securities also tend to
decline less in falling markets than the underlying common stocks. The Fund
seeks to generate income from the interest and dividends paid on the convertible
securities, and from the proceeds generated on "short sales."
In a short sale, the investor first sells the stock at the current market
value, and later repurchases
===============================================================================
CURRENT YIELD ADVANTAGE
Current Yield as of 6/30/95
[BAR CHART APPEARS HERE]
<TABLE>
<S> <C> <C>
4.96% 5.56% 7.33%
6-MONTH 90-DAY U.S. AIM STRATEGIC
CD* TREASURY BILL** INCOME, INC.
FUND***
</TABLE>
*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. **U.S. Treasury bonds,
notes, and bills are guaranteed as to the timely payment of principal and
interest. Fund shares are not insured and their value will vary with
market conditions. ***Current monthly yield based on market price as of
June 30, 1995.
See important Fund disclosure on inside front cover.
2
<PAGE>
============================================================================
TOP 10 HOLDINGS
1. OFFICE DEPOT, INC.
2. LSI LOGIC CORP.
3. EMC CORP.
4. LAM RESEARCH CORP.
5. GENERAL MOTORS CORP.
6 ARROW ELECTRONICS, INC.
7. GENERAL INSTRUMENT CORP.
8. SOLECTRON CORP.
9. THERMO ELECTRON CORP.
10. VENCOR, INC.
This is a summary of the largest holdings in the Fund's portfolio as of June
30, 1995. Holdings include convertible bonds and convertible preferred
stocks.
the stock. As a result of short sales, the Fund creates a credit balance in the
portfolio--and may earn additional income for the shareholder. Short selling
also helps the Fund to cushion the portfolio against market risk.
The Fund seeks to generate about 130% of the yield offered on the U.S.
Treasury 90-day bill, while maintaining low volatility in the net asset value.
By June 30, 1995, the yield on the U.S. Treasury 90-day bill was 5.56%. Based on
the market price on that date of $8.19 per share of AIM Strategic Income Fund,
Inc., and its monthly dividend per share of $0.05, the Fund's monthly yield was
7.33%--about 132% of the target.
During the reporting period, the Fund placed a strong emphasis on
convertible securities of companies with strong earnings potential such as
selected technology companies. Expanding market penetration and product
innovations helped many technology companies to report record profits in 1995.
Semiconductor chip maker Altera Corp. credited its recently reported 96%
increase in quarterly sales to solid growth in demand from Europe and Japan. The
Fund's holdings in LSI Logic Corp. and VLSI Technology Inc. also benefited from
the increase in global bookings by roughly 40% in the first six months of 1995.
LAM Research Corp. announced a breakthrough in thermal processing of 300mm
microchips, and Silicon Graphics, Inc. has developed a new line of powerful 3D
graphics and imaging workstations that offer unparalleled imaging capabilities.
Electronics companies experienced strong sales growth in North America,
Europe, and Asia. Arrow Electronics, Inc. reported a 95% increase in earnings in
the first half of 1995. Similarly, EMC Corp. reported its 18th consecutive
quarter of improved earnings, and anticipated that the bulk of its growth for
the year would occur in the second half of 1995.
The 35% gain in quarterly earnings reported by medical services company
Vencor, Inc. was largely fueled by the acquisition of four hospitals in 1995.
Similarly, Thermo Electron Corp. has pursued other makers of medical and
analytical instruments.
Office Depot, Inc. reported an increase of 32% in earnings for its
second quarter, and plans to open stores specializing in graphic design,
printing, and copy services.
The Fund's positions in cable television provider General Instrument Corp.
rose on strong earnings--up 20% in its second quarter--and favorable news about
legislation proposed in Congress which would allow cable companies to channel
video to customers over phone lines.
OUTLOOK FOR THE FUTURE
We have traveled halfway through this amazing year. While some express concern
about the rise in the overall market, AIM Strategic Income Fund, Inc. continues
to look for investment potential one company at a time. By confining the scope
of our analysis to individual companies, we can maintain our focus on earnings
momentum. We rely on what we know about a company, rather than projections about
that company's future.
At this writing, earnings remain strong for several sectors, particularly
selected technology groups. Defensive companies have performed well in the more
moderate economy, and financial services companies have benefited from the more
favorable interest rate environment.
Technology companies and large domestic companies with a strong foreign
presence, such as many companies in which AIM Strategic Income Fund, Inc. is
invested, have the potential to benefit from continued moderate growth in the
U.S. and the growing demand overseas for U.S. products and services.
See important Fund disclosure on inside front cover.
3
<PAGE>
FINANCIALS
SCHEDULE OF INVESTMENTS
June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CONVERTIBLE BONDS & NOTES--86.43%(a)
AIRLINES-0.78%
$ 500,000 Alaska Air Group Inc., Conv. Sub. Deb., ($258,000) 6.50%, 06/15/05 $ 516,250
-----------------------------------------------------------------------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-2.92%
3,000,000 J Seagram & Sons, Inc., Liquid Yield Option Notes,($1,681,128) 8.00%(b), 1,937,970
03/05/06
-----------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY-1.48%
1,000,000 Genzyme Corp., Sub. Deb.(c), ($559,545) 6.75%, 10/01/01
(acquired 12/23/91-02/26/92; cost $1,198,125) 983,900
-----------------------------------------------------------------------------------------------------------------------------
COMPUTER MAINFRAMES-1.43%
850,000 Unisys Corp., Conv. Sub. Notes, ($716,625) 8.25%, 08/01/00 952,000
-----------------------------------------------------------------------------------------------------------------------------
COMPUTER NETWORKING-4.25%
1,300,000 3Com Corp., Conv. Sub. Notes(c), ($691,253) 10.25%, 11/01/01
(acquired 11/08/94-01/04/95; cost $1,314,250) 1,664,000
-----------------------------------------------------------------------------------------------------------------------------
1,250,000 Network Equipment Technology Inc., Conv. Deb., ($567,001) 7.25%, 05/15/14 1,156,250
-----------------------------------------------------------------------------------------------------------------------------
2,820,250
-----------------------------------------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-5.34%
2,000,000 EMC Corp., Conv. Deb., ($991,985) 4.25%, 01/01/01 2,670,000
-----------------------------------------------------------------------------------------------------------------------------
900,000 Storage Technology Corp., Conv. Sub. Deb., ($370,125) 8.00%, 05/31/15 873,000
-----------------------------------------------------------------------------------------------------------------------------
3,543,000
-----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-1.99%
2,000,000 Silicon Graphics Inc., Conv. Sub. Deb.(c), ($1,352,266) 4.15%(b), 11/02/13
(acquired 01/20/95; cost $1,117,360) 1,319,900
-----------------------------------------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-5.25%
1,000,000 Altera Corp., Conv. Sub. Notes(c), ($511,701) 5.75%, 6/15/02
(acquired 06/16/95; cost $1,000,000) 1,058,250
-----------------------------------------------------------------------------------------------------------------------------
1,000,000 Integrated Device Technology Inc., Conv. Sub. Notes, ($515,252) 5.50%, 6/01/02 1,053,750
-----------------------------------------------------------------------------------------------------------------------------
1,000,000 VLSI Technology Inc., Conv. Deb., ($681,994) 7.00%, 05/01/12 1,370,000
-----------------------------------------------------------------------------------------------------------------------------
3,482,000
-----------------------------------------------------------------------------------------------------------------------------
ELECTRONIC PC DISTRIBUTORS-3.66%
1,600,000 Arrow Electronics, Inc., Conv. Sub. Deb., ($1,159,363) 5.75%, 10/15/20 2,428,000
-----------------------------------------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-1.38%
897,000 Alexander & Alexander Services Inc., Conv. Sub. Deb., ($585,001) 11.00%, 919,426
04/15/07
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
HOTELS/MOTELS-3.18%
$ 750,000 Hospitality Franchise System, Conv. Sr. Notes, ($471,818) 4.50%, 10/01/99 $ 851,250
-----------------------------------------------------------------------------------------------------------------------------
1,200,000 Prime Hospitality Corp., Conv. Sub. Notes, ($540,001) 7.00%, 04/15/02 1,263,000
-----------------------------------------------------------------------------------------------------------------------------
2,114,250
-----------------------------------------------------------------------------------------------------------------------------
MACHINERY-3.08%
1,500,000 Thermo Electron Corp., Conv. Deb.(c), ($1,039,502) 5.00%, 04/15/01
(acquired 04/07/94; cost $1,100,000) 2,043,750
-----------------------------------------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-2.86%
1,000,000 Omnicare, Inc., Conv. Sub. Notes, ($713,214) 5.75%, 10/01/03 1,896,250
-----------------------------------------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-11.80%
1,300,000 Genesis Health Ventures, Inc., Conv. Sr. Sub. Deb.,($906,241) 6.00%, 11/30/03 1,779,375
-----------------------------------------------------------------------------------------------------------------------------
1,700,000 Healthsouth Rehabilitation Corp., Conv. Sub. Deb., ($1,655,499) 5.00%, 04/01/01 1,864,220
-----------------------------------------------------------------------------------------------------------------------------
1,000,000 Integrated Health Services, Inc., Conv. Sub. Deb., ($706,760) 6.00%, 01/01/03 1,066,600
-----------------------------------------------------------------------------------------------------------------------------
500,000 Multicare Companies Inc., Conv. Sub. Deb.(c), ($260,001) 7.00%, 03/15/03
(acquired 03/09/95; cost $500,000) 483,775
-----------------------------------------------------------------------------------------------------------------------------
750,000 Theratx Inc., Conv. Sub. Notes(c), ($480,000) 8.00%, 02/01/02
(acquired 02/09/95; cost $753,500) 693,750
-----------------------------------------------------------------------------------------------------------------------------
1,550,000 Vencor, Inc., Conv. Sub. Notes, ($793,001) 6.00%, 10/01/02 1,945,173
-----------------------------------------------------------------------------------------------------------------------------
7,832,893
-----------------------------------------------------------------------------------------------------------------------------
METALS-2.58%
1,500,000 Inco Ltd., Sub. Deb., ($750,006) 5.75%, 07/01/04 1,710,000
-----------------------------------------------------------------------------------------------------------------------------
OFFICE AUTOMATION-2.38%
1,500,000 Danka Business Systems PLC, Conv. Sub. Notes(c), ($699,000) 6.75%, 04/01/02
(acquired 03/06/95-03/07/95; cost $1,506,750) 1,582,500
-----------------------------------------------------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-2.11%
1,200,000 Pogo Producing Co., Conv. Sub. Notes, ($931,897) 5.50%, 03/15/04 1,404,000
-----------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL-1.90%
1,250,000 Browning-Ferris Industries, Conv. Sub. Deb. ($779,008) 6.25%, 08/15/12 1,262,500
-----------------------------------------------------------------------------------------------------------------------------
RESTAURANTS-1.86%
1,000,000 Starbucks Corp., Conv. Sub. Deb., ($570,006) 4.50%, 08/01/03 1,232,500
-----------------------------------------------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-2.18%
1,000,000 Kroger Co., Conv. Jr. Sub. Notes, ($504,362) 6.375%, 12/01/99 1,443,750
-----------------------------------------------------------------------------------------------------------------------------
RETAIL STORES-6.02%
4,000,000 Office Depot, Inc., Liquid Yield Option Notes, ($2,562,920) 5.00%(b), 12/11/07 3,340,000
-----------------------------------------------------------------------------------------------------------------------------
700,000 Pep Boys-Manny, Moe & Jack, Conv. Sub. Notes, ($492,001) 4.00%, 09/01/99 653,905
-----------------------------------------------------------------------------------------------------------------------------
3,993,905
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
SEMICONDUCTORS-11.97%
$ 1,000,000 LAM Research Corp., Conv. Sub. Deb., ($725,000) 6.00%, 05/01/03 $ 2,581,250
------------------------------------------------------------------------------------------------------------------------------
1,000,000 LSI Logic Corp., Conv. Sub. Notes(c), ($808,501) 5.50%, 03/15/01
(acquired 03/18/94-05/04/94; cost $1,075,000) 3,230,000
------------------------------------------------------------------------------------------------------------------------------
3,000,000 Solectron Corp., Liquid Yield Option Notes, ($1,779,531) 7.00%(b), 05/05/12 2,130,000
------------------------------------------------------------------------------------------------------------------------------
7,941,250
------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-3.46%
1,400,000 General Instrument Corp., Conv. Jr. Sub. Notes, ($831,252) 5.00%, 06/15/00 2,296,000
------------------------------------------------------------------------------------------------------------------------------
TEXTILES-1.46%
1,000,000 Interface, Inc., Conv. Deb., ($735,694) 8.00%, 09/15/13 970,000
------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION-1.11%
700,000 Varlen Corp., Conv. Sub. Deb., ($437,326) 6.50%, 06/01/03 735,000
------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds & Notes 57,361,244
------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS-16.76%(a)
AUTOMOBILE (MANUFACTURERS)-3.80%
40,000 General Motors Corp. $3.25 Series C Conv. Pfd. (28,414 shares) 2,520,000
------------------------------------------------------------------------------------------------------------------------------
BANKING (MONEY CENTER)-2.88%
12,000 Citicorp, $5.375 Conv. Pfd. (8,031 shares) 1,908,120
------------------------------------------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-1.83%
20,000 SCI Finance LLC, $3.125 Conv. Pfd. (10,111 shares) 1,215,000
------------------------------------------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-1.97%
25,000 Beverly Enterprises Inc., $2.75 Conv. Exch. Pfd. (20,396 shares) 1,306,250
------------------------------------------------------------------------------------------------------------------------------
OIL & GAS (DRILLING)-0.64%
15,000 Reading & Bates Corp., $1.625 Conv. Pfd. (9,314 shares) 427,500
------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES-2.18%
34,000 Best Buy Company Inc., $3.25 Conv. Pfd. (13,051 shares) 1,449,250
------------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS-1.49%
10,000 National Semiconductor Corp., $3.25 Conv. Pfd. (3,828 shares) 986,250
------------------------------------------------------------------------------------------------------------------------------
STEEL-1.97%
25,000 Bethlehem Steel Corp., $5.00 Series Conv. Pfd. (15,763 shares) 1,309,375
------------------------------------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks 11,121,745
------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK-1.13%
RETAIL STORES-1.13%
26,000 Staples Inc. 750,750
------------------------------------------------------------------------------------------------------------------------------
Total Common Stock 750,750
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
FINANCIALS
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS-0.92%(d)
$ 612,143 Daiwa Securities America, Inc. 6.20%, 06/30/95(e) $ 612,143
-----------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements 612,143
-----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES-105.24% 69,845,882
-----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(5.24%) (3,477,864)
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $66,368,018
=============================================================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Amount in parentheses represents principal amount or number of shares
deposited in escrow with custodian as collateral for securities sold
short.
(b) Zero-coupon bonds. The interest rate shown represents the rate of original
issue discount.
(c) Restricted securities. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at June 30, 1995 was $13,059,825
which represents 19.68% of the net assets.
(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 06/30/95 with a maturing value of
$186,890,118. Collateralized by $195,572,000 U.S. Treasury obligations,
0.00% to 8.375% due 06/27/96 to 08/15/08.
Abbreviations:
Conv. - Convertible
Deb. - Debentures
Exch. - Exchangeable
Jr. - Junior
Pfd. - Preferred
Sr. - Senior
Sub. - Subordinated
See Notes to Financial Statements.
7
<PAGE>
FINANCIALS
SECURITIES SOLD SHORT
June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
COMMON SHARES
(OR EQUIVALENT SHARES SECURITIES MARKET
IN ESCROW) SOLD SHORT SOLD SHORT VALUE
<S> <C> <C> <C>
12,000 12,000 Alaska Air Group Inc. $ 220,500
--------------------------------------------------------------------------------------
15,000 15,000 Alexander & Alexander Services, Inc. 358,125
--------------------------------------------------------------------------------------
10,000 10,000 Altera Corp. 432,500
--------------------------------------------------------------------------------------
35,000 35,000 Arrow Electronics, Inc. 1,741,250
--------------------------------------------------------------------------------------
14,501 14,500 Best Buy Company Inc. 386,063
--------------------------------------------------------------------------------------
27,901 27,900 Bethlehem Steel Corp. 453,375
--------------------------------------------------------------------------------------
76,503 76,500 Beverly Enterprises, Inc. 946,687
--------------------------------------------------------------------------------------
19,000 19,000 Browning-Ferris Industries 686,375
--------------------------------------------------------------------------------------
22,003 22,000 Citicorp 1,273,250
--------------------------------------------------------------------------------------
24,000 24,000 Danka Business Systems PLC 580,500
--------------------------------------------------------------------------------------
50,000 50,000 EMC Corp. 1,212,500
--------------------------------------------------------------------------------------
35,000 35,000 General Instrument Corp. 1,343,125
--------------------------------------------------------------------------------------
40,001 40,000 General Motors Corp. Class E 1,740,000
--------------------------------------------------------------------------------------
40,000 40,000 Genesis Health Ventures, Inc. 1,185,000
--------------------------------------------------------------------------------------
12,000 12,000 Genzyme Corp. 480,000
--------------------------------------------------------------------------------------
44,000 44,000 Healthsouth Rehabilitation Corp. 764,500
--------------------------------------------------------------------------------------
13,000 13,000 Hospitality Franchise Systems, Inc. 450,125
--------------------------------------------------------------------------------------
25,000 25,000 Inco Ltd. 706,250
--------------------------------------------------------------------------------------
9,000 9,000 Integrated Device Technology, Inc. 416,250
--------------------------------------------------------------------------------------
22,000 22,000 Integrated Health Services, Inc. 660,000
--------------------------------------------------------------------------------------
43,500 43,500 Interface, Inc. 543,750
--------------------------------------------------------------------------------------
27,000 27,000 Kroger Co. 725,625
--------------------------------------------------------------------------------------
29,000 29,000 LAM Research Corp. 1,856,000
--------------------------------------------------------------------------------------
66,000 66,000 LSI Logic Corp. 2,582,250
--------------------------------------------------------------------------------------
10,000 10,000 Multicare Companies, Inc. 173,750
--------------------------------------------------------------------------------------
13,503 13,500 National Semiconductor Corp. 374,625
--------------------------------------------------------------------------------------
18,000 18,000 Network Equipment Technology, Inc. 427,500
--------------------------------------------------------------------------------------
75,000 75,000 Office Depot, Inc. 2,109,375
--------------------------------------------------------------------------------------
49,400 49,400 Omnicare, Inc. 1,339,975
--------------------------------------------------------------------------------------
12,000 12,000 Pep Boys-Manny, Moe & Jack 321,000
--------------------------------------------------------------------------------------
42,000 42,000 Pogo Producing Co. 960,750
--------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
FINANCIALS
<TABLE>
<CAPTION>
COMMON SHARES
(OR EQUIVALENT SHARES SECURITIES MARKET
IN ESCROW) SOLD SHORT SOLD SHORT VALUE
<S> <C> <C> <C>
45,000 45,000 Prime Hospitality Corp. $ 444,375
--------------------------------------------------------------------------------------
27,001 27,000 Reading & Bates Corp. 249,750
--------------------------------------------------------------------------------------
34,000 34,000 J Seagram & Sons, Inc. 1,177,250
--------------------------------------------------------------------------------------
16,801 16,800 Service Corp. International 531,300
--------------------------------------------------------------------------------------
22,000 22,000 Silicon Graphics, Inc. 877,250
--------------------------------------------------------------------------------------
37,000 37,000 Solectron Corp. 1,262,625
--------------------------------------------------------------------------------------
19,000 19,000 Starbucks Corp. 676,875
--------------------------------------------------------------------------------------
10,500 10,500 Storage Technology Corp. 258,563
--------------------------------------------------------------------------------------
20,000 20,000 Theratx, Inc. 267,500
--------------------------------------------------------------------------------------
33,000 33,000 Thermo Electron Corp. 1,328,250
--------------------------------------------------------------------------------------
10,000 10,000 3Com Corp. 670,000
--------------------------------------------------------------------------------------
70,000 70,000 Unisys Corp. 761,250
--------------------------------------------------------------------------------------
32,000 32,000 VLSI Technology, Inc. 964,000
--------------------------------------------------------------------------------------
17,600 17,600 Varlen Corp. 413,600
--------------------------------------------------------------------------------------
30,500 30,500 Vencor, Inc. 960,750
--------------------------------------------------------------------------------------
$38,294,313
======================================================================================
</TABLE>
As indicated in the Schedule of Investments, securities which are convertible
into at least the number of shares sold short have been deposited in escrow with
the custodian.
See Notes to Financial Statements.
9
<PAGE>
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $58,225,902) $ 69,845,882
---------------------------------------------------------------------------------------
Cash 2,089,266
---------------------------------------------------------------------------------------
Receivables for:
Investments sold 3,318,278
---------------------------------------------------------------------------------------
Investments sold short 29,880,180
---------------------------------------------------------------------------------------
Interest and dividends 636,573
---------------------------------------------------------------------------------------
Other assets 175,957
---------------------------------------------------------------------------------------
Total assets 105,946,136
---------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,197,822
---------------------------------------------------------------------------------------
Dividends on short sales 4,697
---------------------------------------------------------------------------------------
Market value of securities sold short (proceeds from sales $29,880,180) 38,294,313
---------------------------------------------------------------------------------------
Accrued advisory fees 43,443
---------------------------------------------------------------------------------------
Accrued accounting service fees 2,175
---------------------------------------------------------------------------------------
Accrued operating expenses 35,668
---------------------------------------------------------------------------------------
Total liabilities 39,578,118
---------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $ 66,368,018
=======================================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Authorized 200,000,000
---------------------------------------------------------------------------------------
Outstanding 6,976,644
=======================================================================================
Net asset value per share $9.51
=======================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
FINANCIALS
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1995
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $2,113,844
----------------------------------------------------------------------------------------
Dividends 337,343
----------------------------------------------------------------------------------------
Total investment income 2,451,187
----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 256,367
----------------------------------------------------------------------------------------
Custodian fees 11,509
----------------------------------------------------------------------------------------
Transfer agent fees 12,085
----------------------------------------------------------------------------------------
Accounting service fees 23,461
----------------------------------------------------------------------------------------
Printing fees 23,545
----------------------------------------------------------------------------------------
Directors' fees and expenses 1,028
----------------------------------------------------------------------------------------
Dividends on short sales (net of $1,050 foreign withholding tax) 69,235
----------------------------------------------------------------------------------------
Other 28,314
----------------------------------------------------------------------------------------
Total expenses 425,544
----------------------------------------------------------------------------------------
Net investment income 2,025,643
----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND OPTIONS TRANSACTIONS:
Net realized gain on sales of investment securities 940,746
----------------------------------------------------------------------------------------
Net realized gain (loss) on options contracts (110,905)
----------------------------------------------------------------------------------------
Net realized gain (loss) on securities sold short (950,165)
----------------------------------------------------------------------------------------
Net realized gain (loss) on investment securities and options transactions (120,324)
----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 2,532,975
----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $4,438,294
========================================================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1995 and the Year Ended December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,025,643 $ 3,559,322
------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from sales of investment securities and options (120,324) (521,935)
transactions
------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities 2,532,975 (3,118,038)
------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 4,438,294 (80,651)
------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (2,092,828) (3,191,511)
------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on investment securities -- (771,455)
------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 2,345,466 (4,043,617)
------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 64,022,552 68,066,169
------------------------------------------------------------------------------------------------------------------------------
End of period $66,368,018 $64,022,552
==============================================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $64,411,350 $64,411,350
------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 300,626 367,811
------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of investment securities
and options transactions (1,549,805) (1,429,481)
------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 3,205,847 672,872
------------------------------------------------------------------------------------------------------------------------------
$66,368,018 $64,022,552
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Strategic Income Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a diversified, closed-end
management investment company. The Fund was incorporated under the laws of the
State of Maryland on December 22, 1988 and commenced trading on the American
Stock Exchange on March 23, 1989 under the symbol "AST". The following is a
summary of the significant accounting policies followed by the Fund in the
preparation of its financial statements.
A. Security Valuations -- Investments in securities, including options and
securities sold short (but excluding convertible bonds), that are traded on a
national securities exchange or on the NASDAQ National Market System are
valued at market using the last reported sales price. Exchange listed
convertible bonds are valued based at the mean between the closing bid and
asked prices obtained from a broker-dealer. Securities traded in the
over-the-counter market and listed securities for which no sales were
reported are valued at the mean of the most recently quoted bid and asked
prices. When market quotations are not readily available from the above
sources for the Fund's debt securities, such securities are valued based
upon appraisals received from a pricing service using a computerized matrix
system, or based upon appraisals derived from information concerning the
securities or similar securities received from recognized dealers in those
securities. Securities for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the
supervision of the Fund's officers in accordance with methods which are
specifically authorized by the Board of Directors of the Fund. Short-term
obligations with maturities of 60 days or less are valued at amortized cost
which approximates market value.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income, dividend expense on
short sales and distributions to shareholders are recorded on the ex-dividend
date.
C. Accounting for Securities Sold Short -- When the Fund sells common stock
short an amount equal to the proceeds of the sale is recorded as an asset.
This asset is offset by a liability (representing the borrowed security)
recorded on the books of the Fund at the market value of the common stock
determined each day in accordance with the procedures for security valuations
discussed in "A" above. The Fund's risk is that the value of the security
will increase rather than decline and thus an unrealized loss will be
recorded. When the Fund closes out a short position by delivering the stock
sold short, the Fund will realize a gain or loss and the liability related
to such short position will be eliminated. The Fund will attempt to hedge
against market risk by entering into short sales of securities that it
currently owns or has the right to acquire through the conversion or
exchange of other securities that it owns. Such short sales may protect
the Fund against the risk of losses in the value of its portfolio
securities because any unrealized losses with respect to such securities
may be wholly or partially offset by a corresponding gain in the short
position. However, any potential gains in such portfolio securities may be
wholly or partially offset by a corresponding loss in the short position.
The Fund will attempt to enhance income by entering into arrangements with
the broker-dealers, through which securities are sold short, to receive
income with respect to the proceeds of short sales during the period the
Fund's short positions remain open. During the six months ended June 30,
1995, the Fund accrued $774,241 of interest income with respect to such
arrangements.
D. Covered Call Options -- The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security or has
the immediate right to acquire, without additional consideration, through
conversion or exchange of other securities. Options written by the Fund
normally will have expiration dates between three and nine months from
the date written. The Fund may write only call options listed on national
securities exchanges. 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
13
<PAGE>
FINANCIALS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
E. Bond Premiums and Discounts -- It is the policy of the Fund not to amortize
market premiums and discounts on bonds for financial reporting purposes.
Original issue discounts are amortized to interest income over the life of
the security.
F. 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 $659,827 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2001. The Fund cannot distribute capital gains to
shareholders until the tax loss carryforwards have been utilized.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an investment advisory agreement with A I M Advisors,
Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund
will pay AIM a fee, calculated and paid monthly, in an amount equal to an
annualized rate of 0.80% of the Fund's average weekly net assets.
The Fund, pursuant to its investment advisory agreement with AIM, has agreed
to reimburse AIM for certain costs incurred in providing accounting services to
the Fund. During the six months ended June 30, 1995, the Fund reimbursed AIM
$23,461 for such services.
Certain officers and directors of the Fund are officers of AIM.
Shareholders' Meeting
An annual meeting of shareholders of the Fund was held on April 25, 1995 (the
"Meeting"). The following two items were approved by the 3,918,466 shares
represented at the Meeting, with the following vote totals cast with respect to
each item:
1) ELECTION OF DIRECTORS. At the Meeting, Messrs. Gary T. Crum and Owen Daly
II were reelected as Directors of the Fund. 3,849,757 shares voted for the
election of Messrs. Crum and Daly, respectively, while 68,709 shares
withheld authority, respectively. The other members of the Board, Messrs.
Charles T. Bauer, John F. Kroeger, Robert H. Graham, and Lewis F. Pennock,
continued in office.
2) RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. 3,764,921 shares voted
for ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors for the Fund for the Fund's fiscal year ending December 31, 1995.
108,815 shares voted against such ratification, and 44,730 shares
abstained.
NOTE 3 - DIVIDENDS
On June 14, 1995, the Board of Directors of the Fund declared a dividend of $.05
per share of net investment income payable July 11, 1995 to shareholders of
record on July 21, 1995. On July 28, 1995 the Board of Directors declared a
dividend of $.05 per share of net investment income payable August 11, 1995 to
shareholders of record on August 22, 1995.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the six months ended June 30, 1995, was $39,164,627
and $37,779,610, respectively.
The amount of unrealized appreciation (depreciation) of investments on a tax
basis as of June 30, 1995, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of:
Investment securities $12,887,485
-------------------------------------------------------------------------------------------
Securities sold short 1,162,993
-------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of:
Investment securities (1,267,505)
-------------------------------------------------------------------------------------------
Securities sold short (9,454,596)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 3,328,377
===========================================================================================
</TABLE>
Cost of investment securities for tax purposes is $58,225,902. Proceeds from
securities sold short for tax purposes is $30,002,710.
14
<PAGE>
FINANCIALS
NOTE 5 - OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended June 30, 1995
are summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
--------------------------
NUMBER
OF PREMIUMS
CONTRACTS RECEIVED
------------- -----------
<S> <C> <C>
Beginning of year -- --
---------------------------------------------------------------------------------------------------------
Written 390 $ 66,382
---------------------------------------------------------------------------------------------------------
Closed (340) (59,974)
---------------------------------------------------------------------------------------------------------
Exercised -- --
---------------------------------------------------------------------------------------------------------
Expired (50) (6,408)
---------------------------------------------------------------------------------------------------------
End of year -- $ --
=========================================================================================================
</TABLE>
NOTE 6 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Fund. The Fund may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 7 - QUARTERLY DATA
The following is a summary of quarterly results of operations for the six months
ended June 30, 1995.
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------
3/31/95 6/30/95
--------- ---------
<S> <C> <C>
Net realized and unrealized gain on investments $ 535,525 $1,877,126
-----------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments per share 0.07 0.27
-----------------------------------------------------------------------------------------------------
Net investment income $1,004,880 $1,020,763
-----------------------------------------------------------------------------------------------------
Net investment income per share 0.14 0.15
=====================================================================================================
</TABLE>
Pursuant to Section 23 of the Investment Company Act of 1940, notice is hereby
given that the Fund may in the future purchase shares of A I M Strategic Income
Fund, Inc. common stock from time to time, at such times, and in such amounts as
may be deemed advantageous to the Fund. Nothing herein shall be considered a
commitment to purchase such shares.
15
<PAGE>
FINANCIALS
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding
during the six months ended June 30, 1995, each of the years in the five-year
period ended December 31, 1994 and the period March 23, 1989 (date operations
commenced) through December 31, 1989.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.18 $ 9.76 $ 9.29 $ 9.15 $ 8.64 $ 9.12 $ 9.23
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income 0.29 0.51 0.50 0.60 0.80 0.98 0.77
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Net gains (losses) on investment
securities (both realized and unrealized) 0.34 (0.52) 0.51 0.32 0.56 (0.44) (0.11)
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations 0.63 (0.01) 1.01 0.92 1.36 0.54 0.66
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income (0.30) (0.46) (0.50) (0.60) (0.80) (0.98) (0.77)
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Distributions from net realized capital
gains -- (0.11) (0.04) (0.18) (0.05) (0.04) --
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Total distributions (0.30) (0.57) (0.54) (0.78) (0.85) (1.02) (0.77)
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 9.51 $ 9.18 $ 9.76 $ 9.29 $ 9.15 $ 8.64 $ 9.12
============================================== ========= ========= ========= ========= ========= ========= =========
Per share market value, end of period $ 8.19 $ 8.00 $ 9.00 $ 9.13 $ 8.50 $ 7.88 $ 9.75
============================================== ========= ========= ========= ========= ========= ========= =========
Total investment return, based on market
value(a) 6.13% (4.94)% 4.47% 17.03% 19.05% (9.04)% 5.78%
============================================== ========= ========= ========= ========= ========= ========= =========
Total investment return, based on net asset
value(b) 7.42% 0.59% 11.34% 10.62% 16.89% 6.62% 7.20%
============================================== ========= ========= ========= ========= ========= ========= =========
Net assets, end of period (000s omitted) $ 66,368 $ 64,023 $ 68,066 $ 64,700 $ 63,068 $ 59,585 $ 62,141
============================================== ========= ========= ========= ========= ========= ========= =========
Significant ratios for the period:
Investment income 7.65(d) 6.80% 6.68% 8.16% 10.64% 12.54% 12.26%(c)
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Operating expenses (1.11(d) (1.15) (1.16) (1.15) (1.17) (1.16)(e) (0.97)(c)(e)
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Dividends on short sales (0.22)(d) (0.27) (0.34) (0.51) (0.40) (0.40) (0.43)(c)
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Tax expense -- -- (0.01) -- (0.03) (0.02) --
---------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Net investment income 6.32(d) 5.38% 5.17% 6.50% 9.04% 10.96(e) 10.86%(c)(e)
============================================== ========= ========= ========= ========= ========= ========= =========
Portfolio turnover rate 57.95% 89.96% 117.45% 89.70% 89.40% 91.73% 161.82%
============================================== ========= ========= ========= ========= ========= ========= =========
</TABLE>
(a) Assumes shares purchased at market value at the beginning of the year,
dividends reinvested at market value on payable date, and all shares sold at
market value at the end of the period.
(b) Assumes shares purchased at net asset value at the beginning of the year,
dividends reinvested at market value and all shares sold at net asset value
at the end of the period.
(c) Annualized.
(d) Annualized and based on average weekly net assets of $64,622,797.
(e) After partial waiver of advisory and administrative fees.
16
<PAGE>
DIRECTORS & OFFICERS
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chief Executive Officer Chairman Suite 1919
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
President
Gary T. Crum INVESTMENT ADVISOR
President
A I M Capital Management, Inc. John J. Arthur A I M Advisors, Inc.
Senior Vice President and Treasurer 11 Greenway Plaza
Owen Daly II Suite 1919
Director Gary T. Crum Houston, TX 77046
Cortland Trust Inc. Senior Vice President
CUSTODIAN/TRANSFER AGENT
Robert H. Graham Carol F. Relihan
President and Chief Operating Officer Vice President and Secretary State Street Bank and Trust Company
A I M Management Group Inc. P.O. Box 8200
Dana R. Sutton Boston, MA 02266-8200
John F. Kroeger Vice President
Formerly, Consultant and Assistant Treasurer
Wendell & Stockel Associates, Inc. COUNSEL TO THE FUND
Melville B. Cox
Lewis F. Pennock Vice President Ballard Spahr
Attorney Andrews & Ingersoll
P. Michelle Grace 1735 Market Street
Assistant Secretary Philadelphia, PA 19103
Nancy L. Martin
Assistant Secretary COUNSEL TO THE DIRECTORS
Ofelia M. Mayo Kramer, Levin, Naftalis,
Assistant Secretary Nessen, Kamin & Frankel
919 Third Avenue
Kathleen J. Pflueger New York, NY 10022
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
This report may be distributed only to current shareholders or to persons
who have received a current Fund prospectus.
17
<PAGE>
---------------
[AIM LOGO A I M Distributors, Inc. BULK RATE
APPEARS HERE] 11 Greenway Plaza, Suite 1919 U.S. POSTAGE
Houston, Texas 77046 PAID
Houston, TX
Permit No. 2332
---------------
THE AIM FAMILY OF FUNDS (R)
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund**
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME [FULL PAGE PHOTO OF
AIM Global Income Fund AIM MANAGEMENT GROUP
AIM Income Fund OFFICE BUILDING]
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Conn.
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Government Securities 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 broadened its investment strategy to permit up to
80% of its total assets to be invested in forigen securities, and was renamed
AIM Global Utilities 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 your invest or send money.
