<PAGE> 1
AIM HIGH
YIELD FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT JUNE 30, 1998
<PAGE> 2
-------------------------------------
AIM HIGH YIELD FUND
For shareholders who seek
a high level of current income.
The Fund invests in a
portfolio consisting primarily
of high-yielding, lower-rated corporate bonds.
-------------------------------------
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM High Yield Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed without a sales
charge.
o AIM High Yield Fund's average annual total returns, including sales charges,
for periods ended 6/30/98 were as follows. Class A shares: one year, 5.95%
(11.21% excluding sales charges); five years, 9.27%; 10 years, 11.00%. Class
B shares: one year, 5.32% (10.32% excluding CDSC); since inception (9/1/93),
9.21%. Class C shares: since inception (8/4/97), 6.66% (7.66% excluding
sales charges). Total return provided for Class C shares is cumulative total
return that has not been annualized.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and Class C
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 CDSC on Class C shares is 1% for the first year after purchase.
The performance of the Fund's Class B and Class C shares will differ from
that of Class A shares due to differing fees and expenses.
o Because Class C shares have been offered for less than one year (since
8/4/97), all total return figures for Class C shares reflect cumulative
total return that has not been annualized.
o The 30-day yield is calculated on the basis of a formula defined by the SEC.
The formula is based on the portfolio's potential earnings from dividends,
interest, yield-to-maturity or yield-to-call of the bonds in the portfolio,
net of all expenses and expressed on an annualized basis.
o The Fund invests primarily in higher-yielding, lower-rated corporate bonds,
commonly known as "junk bonds." These bonds have a greater risk of price
fluctuation and loss of principal and income than U.S. government
securities, such as U.S. Treasury bonds and bills, which offer a government
guarantee as to the repayment of principal and interest if held to maturity.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Government securities, such as U.S. Treasury bills, notes, and bonds offer a
high degree of safety and are guaranteed as to the timely payment of
principal and interest if held to maturity. Fund shares are not insured, and
their value will vary with market conditions.
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:
When we last reported to you, for the fiscal year ended
[PHOTO OF December 31, 1997, equity markets worldwide were still shaken
Charles T. by the financial crisis in Asia. By June 30, 1998, the end of
Bauer, this six-month reporting period, most markets had recovered
Chairman of nicely, with domestic equities producing generous returns and
THE FUNDS European markets outpacing the U.S. Only Asian markets
APPEARS HERE] remained in the doldrums. High-quality bonds have turned in a
solid performance with generous real returns.
Good economic news has been arriving almost daily.
Inflation and joblessness in the U.S. have been at their
lowest levels in decades, consumer confidence at its highest.
The economic fundamentals in the U.S. appear sound, and we at
AIM remain cautiously optimistic that the current economic
expansion may continue for the foreseeable future although
market valuations are high compared to historical standards.
By the close of this reporting period, markets had become less ebullient.
Equities had declined slightly from the heights reached earlier in the period.
Many participants in the U.S. equity markets voiced concern about prices that
continued rising despite slowing earnings growth, especially for larger
companies. The performance of European markets had exceeded everyone's
expectations. Asia's economic woes, especially the continuing recession in
Japan, which markets had shrugged off for a while, seemed more troublesome as
the reporting period closed.
In the face of such uncertainty, the best course for investors is to remain
realistic. We are now in the fourth year of unprecedented market advances. Even
accounting for the steep drop in equities in early August, after the close of
this reporting period, equities still have the potential to produce returns
above 30% again for the full year. We have never experienced this before, and it
may have fostered unrealistic expectations among investors, who would do well to
remember that the long-term average return for equities is closer to 10% per
year.
A well-diversified portfolio is still one of the most effective tools for
coping with market shifts because different asset classes and different national
markets tend to move independently of one another. Your financial consultant
remains your best source of information about how to allocate your investments
based on your goals and situation.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Shortly before the close of the reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds. During
the next few months you will be receiving more details about this transaction
and the products it adds to The AIM Family of Funds--Registered Trademark--.
This transaction gives you, our shareholders, access to a greater variety of
investment choices. A complete list of the funds now included in The AIM Family
of Funds--Registered Trademark-- appears on the back cover of this report.
We encourage you to discuss with your financial consultant how these funds may
fit into your portfolio.
The transaction also helps strengthen AIM's position as a major participant
in the money-management industry worldwide. Such strength will enable us to
continue enlarging both the scope of our fund offerings and our menu of services
for our shareholders. AIM continuously reviews its products and services with a
view to enhancing our ability to help shareholders meet their investment goals.
YOUR FUND MANAGERS
Comment On the pages that follow, the managers of your AIM Fund discuss how the
Fund performed during the six months covered by this report and give their
near-term market outlook. We hope you will find their discussion informative.
We are pleased to send you this report on your Fund. If you have any
questions or comments, please contact our Client Services department at
800-959-4246 or visit our Web site at www.aimfunds.com. You can access
information about your account on our Web site and also on our automated AIM
Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds(R).
Sincerely,
Charles T. Bauer
Chairman
-------------------------------
A well-diversified portfolio
is still one of the most
effective tools for coping with
market shifts because
different asset classes and
different national markets tend
to move independently
of one another.
-------------------------------
<PAGE> 4
The Managers' Overview
HIGH YIELD MARKET LIVELY IN FIRST QUARTER, MORE SOBER IN SECOND
A roundtable discussion with the Fund management team for AIM High Yield Fund
for the six months ended June 30, 1998.
================================================================================
CURRENT YIELD ADVANTAGE
- --------------------------------------------------------------------------------
As of 6/30/98
AIM HIGH YIELD FUND CLASS A SHARES 30-DAY SEC YIELD 8.49%
AIM HIGH YIELD FUND CLASS B SHARES 30-DAY SEC YIELD 8.14%
AIM HIGH YIELD FUND CLASS C SHARES 30-DAY SEC YIELD 8.14%
10-YEAR U.S. TREASURY NOTE 5.45%
5-YEAR U.S. TREASURY NOTE 5.47%
================================================================================
Q. HOW DID THE AIM HIGH YIELD FUND PERFORM?
A. The Fund continued to provide attractive current income. As of June 30,
1998, the Fund's 30-day SEC yield at maximum offering price was 8.49% for
Class A shares. Class B and C shares each produced a 30-day SEC yield of
8.14%. The Fund held a distinct yield advantage over 10-year and 5-year
Treasury Notes. (See the current yield advantage chart below for
comparison.)
After a strong first quarter, the Fund faced a more challenging second
quarter, which tempered the total return performance for the reporting
period. Total returns were 3.39% for Class A shares, 2.93% for Class B
shares, and 3.04% for Class C shares for the six months ended June 30, 1998.
Long-term, the Fund's performance has been very good. Average annual
total return (including sales charges) for the 10-year period ended June 30,
1998 was 11.00% for Class A shares.(See the inside front cover for further
long-term performance figures.)
Q. WHAT WERE THE MAJOR ISSUES INFLUENCING FIXED-INCOME MARKETS?
A. Overall, the first half of 1998 was a favorable environment for bonds. A
thriving domestic economy and solid corporate cash flows encouraged
fixed-income investors. During May and June, however, concerns about Asia
resurfaced and many companies in the high-yield market reported lower than
expected earnings.
As a result, there was a flight to quality into the Treasury market.
This resulted in a narrow rally that sent the yield on the 30-year Treasury
bond to its lowest levels since the 1960s, falling from 5.95% on April 30,
1998 to 5.63% at the end of the reporting period.
Q. WHY DIDN'T HIGH-YIELD BONDS PARTICIPATE IN THIS RALLY?
A. Prices of corporate bonds remained weak and yields stayed relatively high
compared to Treasuries. There are two major reasons. First of all, as a
general rule the high-yield bond market is more sensitive to corporate
earnings concerns. A disappointing quarterly earnings report can spark
worries about a company's ability to meet its debt obligations. When the
effects of the Asian problem on corporate profits became visible during the
second quarter, both equity and high-yield bond investors backed away.
Besides corporate earnings concerns, the other major factor affecting
the high-yield market is simply supply and demand. Supplies of high-yield
issues have been running at a record pace. During the first quarter,
record-breaking quantities of new high-yield debt were placed in the market,
and the supply was quickly absorbed by investors. Investor interest waned
during the second quarter, but the number of new high-yield issues continued
to climb. With large supplies and weak demand, market levels declined.
Q. IS THERE CONCERN THAT MORE COMPANIES WILL DEFAULT ON THEIR HIGH-YIELD
OBLIGATIONS?
A. The default rate has slowly increased during 1998. At the end of the
reporting period, the trailing 12-month default rate stood at 3.49%, up from
3.0% at year-end 1997. However, few market watchers
------------------------
Supplies of high-yield
issues have been running
at a record pace.
------------------------
See important fund and index disclosures inside front cover.
2
<PAGE> 5
PORTFOLIO COMPOSITION
As of 6/30/98, based on total net assets
<TABLE>
<CAPTION>
=========================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Viatel, Inc. 1.03% 1. Telecommunications (Cellular/Wireless) 8.30%
2. Dobson Wireline Co. 0.91 2. Broadcasting (Television, Radio & Cable) 8.14
3. Airplanes Pass Through Trust 0.89 3. Manufacturing (Specialized) 6.19
4. United International Holdings 0.89 4. Telecommunications (Long Distance) 4.83
5. Carr-Gottstein Foods Co. 0.86 5. Shipping 4.68
6. TFM S.A. de C.V. 0.85 6. Telephone 4.28
7. Amtran, Inc. 0.81 7. Gaming, Lottery & Parimutuel Companies 4.09
8. Kabelmedia Holdings GmbH 0.80 8. Iron & Steel 3.99
9. US Xchange LLC 0.78 9. Oil & Gas (Exploration & Production) 2.95
10. Alpha Shipping PLC 0.78 10. Retail (Specialty) 2.84
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
=========================================================================================================
</TABLE>
expect to see the double-digit default rates that plagued the high-yield
market in 1990. The high-yield debt of today is a different breed from that
of the 1980s and early 1990s. Today's high-yield issues have lower default
rates overall.
In the AIM High Yield Fund, there were no defaults during the first six
months of 1998. There is still good, strong quality credit in high-yield
companies, and our comprehensive credit analysis techniques help us identify
it.
Q. WHAT HAS YOUR STRATEGY BEEN IN THIS CHALLENGING ENVIRONMENT?
A. A diversified portfolio helped the Fund weather the volatility in the
high-yield market. Health care, supermarket, cable, and gaming industries
were all attractive during the reporting period and enhanced the Fund's
performance. Telecommunications, which has been an important component of
the portfolio for some time, performed well during the first quarter because
of a high level of take-over activity among large companies. However, during
the second quarter the supply and demand imbalance weakened the performance
in this industry. Nevertheless, we believe in the long-term potential of
telecommunications.
We carefully research the credit history of individual companies to
select bonds that are stable or improving. We focus on the single B-rated
issues, which we believe provide the best balance between interest rate
sensitivity, credit risk, and current income. When interest rates are
falling, we don't try to maintain dividend levels by investing in the more
speculative sectors of the high-yield market.
Q. DESCRIBE THE PORTFOLIO AT THE END OF THE REPORTING PERIOD.
A. The Fund had 226 holdings as of June 30, 1998. The weighted average maturity
of the portfolio was 7.84 years and its duration was 6.04 years. The average
quality rating of the portfolio was B, as measured by Standard and Poor's
and Moody's Investors Service, two widely known credit rating agencies.
These ratings are historical and are based on analysis of the credit quality
of the individual securities in the Fund's portfolio.
Q. WHAT IS YOUR OUTLOOK FOR THE SECOND HALF OF 1998?
A. For the broader domestic bond market, the fundamentals appear sound. With
continuing low inflation and a slight slowdown in economic growth, there is
little reason for the Federal Reserve Board to raise interest rates. Some
investors even consider a monetary easing possible.
In the high-yield arena, we expect the new issuance level to remain
heavy despite recent weakness in the market. That could put more pressure on
the secondary market in the short term as the spread between new and
existing issues widens. However, we don't expect the widening to be as
significant as it was earlier in 1998. Eventually we believe that supply and
demand factors will begin to balance out.
Default rates will likely continue to rise slowly. As the pace of
economic activity slows, companies with weaker credit profiles will be
exposed. We believe that credit quality will become more of a
differentiating factor in total return performance, especially if the
economy continues to slow.
As always, the Fund will strive to maintain an average credit rating of
single B. However, going forward we expect to participate more in the higher
credit quality BB sector to help insulate the portfolio from too much credit
risk.
See important fund and index disclosures inside front cover.
-----------------------------------
There is still good, strong quality
credit in high-yield companies,
and our comprehensive credit
analysis techniques help us
identify it.
-----------------------------------
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS & NOTES-91.09%
AEROSPACE/DEFENSE-0.67%
Compass Aerospace Corp., Sr.
Sub. Notes, 10.125%,
04/15/05(a)
(Acquired 04/15/98-06/29/98;
Cost $10,229,125) $ 10,150,000 $ 10,454,500
- ---------------------------------------------------------------
Earthwatch Inc., Sr. Notes,
12.50%, 03/01/01(a)(b)
(Acquired 03/14/97; Cost
$15,500,000) 15,500,000 15,577,500
- ---------------------------------------------------------------
26,032,000
- ---------------------------------------------------------------
AIR FREIGHT-0.77%
Atlas Air, Inc.,
Sr. Notes, 10.75%, 08/01/05 16,750,000 17,880,626
- ---------------------------------------------------------------
Sr. Notes, 9.25%, 04/15/08(a)
(Acquired 04/07/98; Cost
$12,213,960) 12,230,000 12,291,150
- ---------------------------------------------------------------
30,171,776
- ---------------------------------------------------------------
AIRLINES-1.79%
Airplanes Pass Through Trust,
Sub. Bonds, 10.875%, 03/15/19 31,520,000 34,770,658
- ---------------------------------------------------------------
Amtran, Inc., Sr. Unsec. Gtd.
Notes, 10.50%, 08/01/04 29,750,000 31,758,125
- ---------------------------------------------------------------
World Airways, Inc., Conv. Sub.
Deb., 8.00%, 08/26/04(a)
(Acquired 08/21/97; Cost
$5,000,000) 5,000,000 3,175,000
- ---------------------------------------------------------------
69,703,783
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-1.51%
Advance Holding Corp., Sr. Disc.
Deb., 12.875%, 04/15/09(a)(c)
(Acquired 04/07/98-04/27/98;
Cost $7,813,149) 14,000,000 8,330,000
- ---------------------------------------------------------------
Advance Stores Co., Sr. Sub
Notes, 10.25%, 04/15/08(a)
(Acquired 04/07/98-04/27/98;
Cost $18,718,750) 18,680,000 19,520,600
- ---------------------------------------------------------------
Exide Corp., Conv. Sr. Disc.
Sub. Notes, 2.90%, 12/15/05(a)
(Acquired 12/19/96-04/07/98;
Cost $13,422,710) 20,700,000 13,005,604
- ---------------------------------------------------------------
Newcor, Inc., Sr. Sub. Notes,
9.875%, 03/01/08(a)
(Acquired 02/27/98-03/04/98;
Cost $17,693,871) 17,700,000 18,009,750
- ---------------------------------------------------------------
58,865,954
- ---------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-0.78%
Coca-Cola Enterprises, Inc.,
Putable Notes, 8.35%,
06/20/20(d) 125,000,000 30,303,750
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO
& CABLE)-7.02%
Capstar Broadcasting Partners,
Sr. Disc. Notes, 12.75%,
02/01/09(c) 28,500,000 21,945,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO &
CABLE)-(CONTINUED)
Cumulus Media, Inc., Sr. Sub.
Notes, 10.375%, 07/01/08 $ 8,000,000 $ 8,120,000
- ---------------------------------------------------------------
Diamond Cable Communications PLC
(United Kingdom), Sr. Yankee
Disc. Notes, 11.75%,
12/15/05(c) 35,700,000 29,720,250
- ---------------------------------------------------------------
Digital TV Services LLC, Sr.
Gtd. Sub. Notes, 12.50%,
08/01/07 26,000,000 29,900,000
- ---------------------------------------------------------------
EchoStar DBS Corp., Sr. Sec.
Gtd. Notes, 12.50%, 07/01/02 11,230,000 12,661,825
- ---------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(c) 32,750,000 21,451,250
- ---------------------------------------------------------------
Frontiervision Holdings LP, Sr.
Disc. Notes, 11.875%,
09/15/07(c) 27,480,000 21,846,600
- ---------------------------------------------------------------
International CableTel, Inc.,
Sr. Notes, 11.50%, 02/01/06(c) 24,200,000 19,965,000
- ---------------------------------------------------------------
Kabelmedia Holdings GmbH
(Germany), Sr. Yankee Unsec.
Disc. Notes, 13.625%,
08/01/06(c) 40,000,000 31,200,000
- ---------------------------------------------------------------
Knology Holdings, Inc., Sr.
Disc. Notes, 11.875%
10/15/07(c) 47,250,000 27,523,125
- ---------------------------------------------------------------
Park N View, Inc., Sr. Notes,
13.00%, 05/15/08(a)(e)
(Acquired 05/20/98-05/21/98;
Cost $15,416,875) 15,400,000 15,207,500
- ---------------------------------------------------------------
United International Holdings,
Series B Sr. Disc. Notes,
10.75%, 02/15/08(c) 55,550,000 34,718,750
- ---------------------------------------------------------------
274,259,300
- ---------------------------------------------------------------
BUILDING MATERIALS-0.51%
Imperial Home Decor Group, Sr.
Sub. Notes, 11.00%,
03/15/08(a)
(Acquired 03/11/98-04/02/98;
Cost $19,210,375) 19,100,000 19,864,000
- ---------------------------------------------------------------
CHEMICALS-0.51%
Sterling Chemicals, Inc., Sr.
Unsec. Sub. Notes, 11.75%,
08/15/06 19,990,000 20,089,950
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-1.49%
Key Plastics, Inc.,
Sr. Notes, 14.00%, 11/15/99 1,900,000 2,085,250
- ---------------------------------------------------------------
Sr. Sub. Notes, 10.25%,
03/15/07 14,000,000 14,595,000
- ---------------------------------------------------------------
Texas Petrochemical Corp., Sr.
Sub. Notes, 11.125%, 07/01/06 13,000,000 14,170,000
- ---------------------------------------------------------------
Trans-Resources Inc.,
Series B Sr. Unsec. Disc.
Notes, 12.00%, 03/15/08(c) 26,000,000 15,210,000
- ---------------------------------------------------------------
Series B Sr. Unsec. Notes,
10.75%, 03/15/08 11,700,000 12,138,750
- ---------------------------------------------------------------
58,199,000
- ---------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
COMPUTERS (NETWORKING)-0.48%
Exodus Communications, Inc., Sr.
Notes, 11.25%, 07/01/08(a)
(Acquired 06/26/98; Cost
$18,660,000) $ 18,660,000 $ 18,823,275
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.33%
Commemorative Brands, Sr. Sub.
Notes, 11.00%, 01/15/07 12,751,000 13,037,897
- ---------------------------------------------------------------
CONTAINERS & PACKAGING (PAPER)-1.28%
BPC Holding Corp., Series B Sr.
Sec. Notes, 12.50%, 06/15/06 17,120,000 18,489,600
- ---------------------------------------------------------------
MVE Inc., Sr. Sec. Notes,
12.50%, 02/15/02 19,250,000 19,538,750
- ---------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes,
11.25%, 04/01/07 10,930,000 12,023,000
- ---------------------------------------------------------------
50,051,350
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-1.69%
Core-Mark International, Inc.,
Sr. Sub. Notes, 11.375%,
09/15/03 16,340,000 17,442,950
- ---------------------------------------------------------------
Fleming Companies, Inc., Sr.
Unsec. Gtd. Sub. Notes,
10.625%, 07/31/07 20,700,000 21,631,500
- ---------------------------------------------------------------
Nebco Evans Holding Co., Sr.
Disc. Notes, 12.375%,
07/15/07(c) 38,760,000 26,938,200
- ---------------------------------------------------------------
66,012,650
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.21%
Electronic Retailing Systems
International, Inc., Sr. Disc.
Notes, 13.25%, 02/01/04(c) 18,802,000 8,366,890
- ---------------------------------------------------------------
ENTERTAINMENT-1.15%
Ascent Entertainment Group, Sr.
Sec. Disc. Notes, 11.875%,
12/15/04(c) 43,132,000 27,820,140
- ---------------------------------------------------------------
Silver Cinemas, Inc., Sr. Sub.
Notes, 10.50%, 04/15/05(a)
(Acquired 04/09/98-06/04/98;
Cost $16,838,750) 16,750,000 16,917,500
- ---------------------------------------------------------------
44,737,640
- ---------------------------------------------------------------
FOODS-1.68%
Del Monte Corp./Foods Co., Sr.
Unsec. Sub. Notes, 12.25%,
04/15/07 20,720,000 23,310,000
- ---------------------------------------------------------------
Favorite Brands International,
Inc., Sr. Notes, 10.75%,
05/15/06(a)
(Acquired 05/14/98-05/15/98;
Cost $17,655,000) 17,600,000 17,820,000
- ---------------------------------------------------------------
RAB Enterprise, Inc.,
Sr. Notes, 10.50%, 05/01/05(a)
(Acquired 04/28/98; Cost
$9,350,000) 9,350,000 9,443,500
- ---------------------------------------------------------------
Sr. Notes, 13.00%, 05/01/08(a)
(Acquired 04/28/98; Cost
$15,000,000) 15,000,000 15,150,000
- ---------------------------------------------------------------
65,723,500
- ---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES-4.09%
Alliance Gaming Corp., Sr.
Unsec. Gtd. Notes, 10.00%,
08/01/07 17,500,000 17,587,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-(CONTINUED)
Aztar Corp., Sr. Sub. Notes,
13.75%, 10/01/04 $ 19,710,000 $ 22,420,125
- ---------------------------------------------------------------
Coast Hotels & Casinos Inc.,
Series B Sec. First Mortgage
Gtd. Notes, 13.00%, 12/15/02 23,760,000 27,442,800
- ---------------------------------------------------------------
Resort At Summerlin LP, Sr. Sub.
Notes, 13.00%, 12/15/07(a)
(Acquired 12/23/97-06/15/98;
Cost $25,402,791) 25,324,033 26,452,146
- ---------------------------------------------------------------
Showboat Marina Casino
Partnership & Showboat Marina
Financial Corp., Series B Sec.
First Mortgage Notes, 13.50%,
03/15/03 21,600,000 25,596,000
- ---------------------------------------------------------------
Venetian Casino/LV Sands,
Sec. Gtd. Mortgage Notes,
12.25%, 11/15/04 18,300,000 18,986,250
- ---------------------------------------------------------------
Sr. Unsec. Sub. Notes, 10.00%,
11/15/05(c) 22,900,000 21,297,000
- ---------------------------------------------------------------
159,781,821
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.49%
Global Health Sciences, Inc.,
Sr. Notes, 11.00%, 05/01/08(a)
(Acquired 04/17/98-05/01/98;
Cost $18,899,484) 19,400,000 19,303,000
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.60%
Paragon Health Networks Inc.,
Series B Sr. Unsec. Disc. Sub.
Notes, 10.50%, 11/01/07(c) 35,350,000 23,507,750
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-2.23%
Alaris Medical Systems Inc., Sr.
Unsec. Gtd. Sub. Deb., 9.75%,
01/01/06 22,870,000 23,327,400
- ---------------------------------------------------------------
Alliance Imaging Inc., Sr. Sub.
Notes, 9.94%, 12/15/05 20,000,000 20,200,000
- ---------------------------------------------------------------
Dade International Inc., Series
B Sr. Sub. Notes, 11.125%,
05/01/06 15,710,000 17,752,300
- ---------------------------------------------------------------
Mediq, Inc., Sr. Disc. Deb.,
13.00%, 06/01/09(a)(f)
(Acquired 05/21/98; Cost
$10,092,086) 18,750,000 10,312,500
- ---------------------------------------------------------------
Sr. Unsec. Sub. Notes, 11.00%,
06/01/08(a) (Acquired 05/21/98;
Cost $15,020,000) 15,020,000 15,545,700
- ---------------------------------------------------------------
87,137,900
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.49%
Dynacare Inc.(Canada), Sr.
Yankee Notes, 10.75%, 01/15/06 5,392,000 5,729,000
- ---------------------------------------------------------------
Pediatric Services of America,
Series A Sr. Unsec. Gtd. Sub.
Notes, 10.00%, 04/15/08 13,285,000 13,218,575
- ---------------------------------------------------------------
18,947,575
- ---------------------------------------------------------------
HOMEBUILDING-1.49%
D.R. Horton, Inc., Unsec. Gtd.
Notes, 10.00%, 04/15/06 16,040,000 17,243,000
- ---------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
HOMEBUILDING-(CONTINUED)
Engle Homes, Inc., Sr. Unsec.
Gtd. Notes, 9.25%, 02/01/08 $ 21,850,000 $ 21,686,125
- ---------------------------------------------------------------
Schuler Homes Inc., Sr. Notes,
9.00%, 04/15/08(a)
(Acquired 04/30/98; Cost
$19,091,035) 19,400,000 19,109,000
- ---------------------------------------------------------------
58,038,125
- ---------------------------------------------------------------
HOUSEWARES-0.81%
Decora Industries, Inc., Sr.
Sec. Notes, 11.00%, 05/01/05(a)
(Acquired 04/24/98; Cost
$20,853,574) 21,350,000 20,816,250
- ---------------------------------------------------------------
Zeta Consumer Products Corp.,
Sr. Notes, 11.25%, 11/30/07(a)
(Acquired 11/20/97-01/13/98;
Cost $15,550,500) 15,480,000 10,913,400
- ---------------------------------------------------------------
31,729,650
- ---------------------------------------------------------------
IRON & STEEL-3.98%
Acme Metal, Inc., Sr. Unsec.
Gtd. Notes, 10.875%, 12/15/07 21,584,000 18,454,320
- ---------------------------------------------------------------
GS Industries, Inc.,
Sr. Gtd. Notes, 12.00%,
09/01/04 15,755,000 17,133,563
- ---------------------------------------------------------------
Sr. Notes, 12.25%, 10/01/05 14,525,000 16,122,750
- ---------------------------------------------------------------
Gulf States Steel Corp., First
Mortgage Notes, 13.50%,
04/15/03 23,460,000 22,873,500
- ---------------------------------------------------------------
Schuff Steel Co., Sr. Notes,
10.50%, 06/01/08(a)
(Acquired 06/01/98-06/03/98;
Cost $18,875,000) 18,850,000 18,897,125
- ---------------------------------------------------------------
Sheffield Steel Corp., First
Mortgage Notes, 11.50%,
12/01/05 19,100,000 19,195,500
- ---------------------------------------------------------------
Weirton Steel Corp., Sr. Notes,
11.375%, 07/01/04 19,600,000 21,094,500
- ---------------------------------------------------------------
WHX Corp., Sr. Unsec. Notes,
10.50%, 04/15/05 21,200,000 21,624,000
- ---------------------------------------------------------------
155,395,258
- ---------------------------------------------------------------
LODGING-HOTELS-1.08%
American Skiing Corp., Series B
Sr. Sub. Notes, 12.00%,
07/15/06 18,000,000 20,295,000
- ---------------------------------------------------------------
Booth Creek Ski Holdings,
Sr. Notes, 12.50%, 03/15/07 17,610,000 19,062,825
- ---------------------------------------------------------------
Sr. Notes, 12.50%, 03/15/07(a)
(Acquired 02/23/98; Cost
$2,700,000) 2,700,000 2,922,750
- ---------------------------------------------------------------
42,280,575
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.89%
National Equipment Services, Sr.
Sub. Notes, 10.00%, 11/30/04(a)
(Acquired 12/02/97-04/03/98;
Cost $19,628,928) 20,000,000 20,300,000
- ---------------------------------------------------------------
Neff Corp., Sr. Sub. Notes,
10.25%, 06/01/08(a)
(Acquired 05/22/98-06/03/98;
Cost $14,007,500) 14,000,000 14,280,000
- ---------------------------------------------------------------
34,580,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
MANUFACTURING (DIVERSIFIED)-1.47%
Elgin National Industries, Sr.
Unsec. Gtd. Sub. Notes,
11.00%, 11/01/07 $ 17,640,000 $ 18,786,600
- ---------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07 14,690,000 15,791,750
- ---------------------------------------------------------------
Interlake Corp., Sr. Sub. Deb.,
12.125%, 03/01/02 22,050,000 22,849,313
- ---------------------------------------------------------------
57,427,663
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-6.19%
Berry Plastics Corp., Sr. Sub.
Notes, 12.25%, 04/15/04 12,500,000 13,656,250
- ---------------------------------------------------------------
Brand Scaffold Services, Inc.,
Sr. Notes, 10.25%, 02/15/08(a)
(Acquired 02/20/98-04/01/98;
Cost $26,272,500) 25,700,000 26,214,000
- ---------------------------------------------------------------
Cabot Safety Corp., Sr. Sub.
Notes, 12.50%, 07/15/05 18,975,000 21,394,312
- ---------------------------------------------------------------
Derby Cycle Corp., Sr. Notes,
10.00%, 05/15/08(a)
(Acquired 05/07/98; Cost
$17,600,000) 17,600,000 17,556,000
- ---------------------------------------------------------------
EV International Inc., Series A
Sr. Unsec. Sub. Notes, 11.00%,
03/15/07 22,350,000 20,450,250
- ---------------------------------------------------------------
First Wave Marine, Inc., Sr.
Notes, 11.00%, 02/01/08 18,300,000 19,123,500
- ---------------------------------------------------------------
MMI Products Inc., Sr. Unsec.
Sub. Notes, 11.25%, 04/15/07 17,140,000 18,854,000
- ---------------------------------------------------------------
Neenah Corp., Sr. Sub. Notes,
11.125%, 05/01/07 4,000,000 4,380,000
- ---------------------------------------------------------------
Series C Sr. Sub. Notes,
11.125%, 05/01/07 15,000,000 16,425,000
- ---------------------------------------------------------------
Omega Cabinets, Sr. Sub. Notes,
10.50%, 06/15/07 26,140,000 26,270,700
- ---------------------------------------------------------------
Precise Technology Inc., Sr.
Unsec. Gtd. Sub., 11.125%,
06/15/07(a)
(Acquired 06/10/97-04/02/98;
Cost $20,346,750) 19,900,000 20,397,500
- ---------------------------------------------------------------
Simmons Co., Sr. Sub. Notes,
10.75%, 04/15/06 16,800,000 18,060,000
- ---------------------------------------------------------------
Steel Heddle Manufacturing Co.,
Sr. Sub. Notes, 10.625%,
06/01/08(a)
(Acquired 05/21/98-06/18/98;
Cost $18,766,000) 18,700,000 18,840,250
- ---------------------------------------------------------------
241,621,762
- ---------------------------------------------------------------
METALS MINING-1.93%
Centaur Mining & Exploration,
Ltd. (Australia), Sr. Gtd.
Notes, 11.00%, 12/01/07(a)
(Acquired 11/24/97-02/18/98;
Cost $27,917,500) 27,800,000 28,425,500
- ---------------------------------------------------------------
Doe Run Resources Corp., Sr.
Notes, Sr. Notes, 11.25%,
03/15/05(a) (Acquired 03/06/98;
Cost $12,849,000) 12,790,000 13,109,750
- ---------------------------------------------------------------
Sr. Sub. Notes, 12.00%,
03/15/03(a) (Acquired 03/06/98;
Cost $10,000,000) 10,000,000 10,150,000
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
METALS MINING-(CONTINUED)
Lodestar Holdings, Inc.
(Canada), Sr. Notes, 11.50%,
05/15/05(a)
(Acquired 05/12/98-06/18/98;
Cost $23,570,000) $ 23,600,000 $ 23,600,000
- ---------------------------------------------------------------
75,285,250
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-1.53%
CEX Holdings, Inc., Sr. Sub. Notes,
9.625%, 06/01/08(a)
(Acquired 05/20/98; Cost
$10,680,000) 10,680,000 10,880,250
- ---------------------------------------------------------------
United Stationer Supply Co., Sr.
Sub. Notes, 12.75%, 05/01/05 19,021,000 21,779,045
- ---------------------------------------------------------------
US Office Products Co., Sr. Sub.
Notes, 9.75%, 06/15/08(a)
(Acquired 06/05/98-06/19/98;
Cost $26,737,601) 26,800,000 27,101,500
- ---------------------------------------------------------------
59,760,795
- ---------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-0.48%
Rutherford-Moran Oil Corp., Sr.
Unsec. Gtd. Sub. Notes,
10.75%, 10/01/04 17,400,000 18,705,000
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.49%
Ocean Rig Norway A.S. (Norway),
Sr. Sec. Gtd. Notes, 10.25%,
06/01/08(a) (Acquired 05/19/98;
Cost $19,933,000) 19,933,000 19,036,015
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-2.95%
Abraxas Petroleum Corp., Series
D Sr. Unsec. Gtd. Notes,
11.50%, 11/01/04 19,290,000 19,965,150
- ---------------------------------------------------------------
Canadian Forest Oil Ltd.
(Canada), Sr. Sub. Notes,
8.75%, 09/15/07(a)
(Acquired 01/28/98; Cost
$29,273,000) 29,200,000 28,470,000
- ---------------------------------------------------------------
Chesapeake Energy Corp., Sr.
Notes, 9.625%, 05/01/05(a)
(Acquired 04/17/98-06/11/98;
Cost $15,755,000) 15,760,000 15,838,800
- ---------------------------------------------------------------
Gerrity Oil & Gas Corp., Sr.
Sub. Notes, 11.75%, 07/15/04 14,750,000 16,003,750
- ---------------------------------------------------------------
Kelley Oil & Gas Corp.,
Series B Sr. Gtd. Sub. Notes,
10.375%, 10/15/06 20,150,000 20,452,250
- ---------------------------------------------------------------
Series C Sr. Sub Notes,
10.375%, 10/15/06(a)
(Acquired 05/26/98; Cost
$9,896,250) 9,750,000 9,896,250
- ---------------------------------------------------------------
Southwest Royalties, Inc., Sr.
Gtd. Notes, 10.50%, 10/15/04 5,569,000 4,483,045
- ---------------------------------------------------------------
115,109,245
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-1.24%
American Pad & Paper Co., Series
B Sr. Sub. Notes, 13.00%,
11/15/05 8,420,000 8,546,300
- ---------------------------------------------------------------
National Fiberstok Corp., Series
B Sr. Notes, 11.625%, 06/15/02 23,790,000 25,098,450
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
PAPER & FOREST PRODUCTS-(CONTINUED)
SF Holdings Group, Inc., Sr.
Disc. Notes, 12.75%,
03/15/08(a)(c)(g)
(Acquired 03/05/98-05/05/98;
Cost $15,331,773) $ 27,000,000 $ 14,580,000
- ---------------------------------------------------------------
48,224,750
- ---------------------------------------------------------------
POWER PRODUCER (INDEPENDENT)-0.64%
Panda Global Energy Co. (China),
Sr. Yankee Gtd. Sec. Notes,
12.50%, 04/15/04 13,262,000 12,134,730
- ---------------------------------------------------------------
Series A-1 Pooled Project
Bonds, 11.625%, 08/20/12 11,775,869 12,894,577
- ---------------------------------------------------------------
25,029,307
- ---------------------------------------------------------------
PUBLISHING-0.46%
Liberty Group Publishing Inc.,
Sr. Unsec. Disc. Notes,
11.625%, 02/01/09(c) 29,350,000 18,050,250
- ---------------------------------------------------------------
RAILROADS-0.85%
TFM S.A. de C.V. (Mexico), Sr.
Yankee Gtd. Disc. Notes,
11.75%, 06/15/09(c) 52,000,000 33,280,000
- ---------------------------------------------------------------
RESTAURANTS-0.83%
AFC Enterprises, Sr. Sub. Notes,
10.25%, 05/15/07 18,240,000 19,425,600
- ---------------------------------------------------------------
Planet Hollywood International,
Inc., Sr. Unsec. Sub. Notes,
12.00%, 04/01/05 14,288,000 12,930,640
- ---------------------------------------------------------------
32,356,240
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.95%
Carr-Gottstein Foods Co., Sr.
Sub. Notes, 12.00%, 11/15/05 29,955,000 33,549,600
- ---------------------------------------------------------------
Cumberland Farms Inc., Sec.
Notes, 10.50%, 10/01/03 18,777,000 19,058,655
- ---------------------------------------------------------------
Jitney-Jungle Stores of America
Inc., Sr. Gtd. Notes, 12.00%,
03/01/06 20,905,000 23,727,175
- ---------------------------------------------------------------
76,335,430
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.60%
Plainwell, Inc., Sr. Sub. Notes,
11.00%, 03/01/08(a)
(Acquired 03/03/98-04/01/98;
Cost $23,735,537) 23,380,000 23,613,800
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-2.84%
Amazon.com, Inc. Sr. Disc. Notes,
10.00%, 05/01/08(a)(c)
(Acquired 05/05/98-06/03/98;
Cost $30,195,570) 48,760,000 29,865,500
- ---------------------------------------------------------------
CSK Auto Inc., Sr. Gtd. Sub.
Deb., 11.00%, 11/01/06 18,245,000 20,115,112
- ---------------------------------------------------------------
Icon Health & Fitness Inc.,
Series B Sr. Sub. Notes,
13.00%, 07/15/02 20,930,000 21,034,650
- ---------------------------------------------------------------
Selmer Co., Inc., Sr. Gtd. Sub.
Notes, 11.00%, 05/15/05 18,920,000 20,622,800
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-(CONTINUED)
Wilsons-The Leather Experts
Inc., Sr. Notes, 11.25%,
08/15/04 $ 18,290,000 $ 19,295,950
- ---------------------------------------------------------------
110,934,012
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.94%
Big 5 Corp., Sr. Unsec. Notes
10.875%, 11/15/07 20,350,000 21,011,375
- ---------------------------------------------------------------
Big 5 Holdings Corp., Sr. Disc.
Notes, 13.45%, 11/30/08(a)(c)
(Acquired 02/03/98; Cost
$10,000,000) 10,000,000 5,625,000
- ---------------------------------------------------------------
GFSI Holdings, Inc., Sr. Disc.
Notes, 11.375%, 09/15/09 20,000,000 22,450,000
- ---------------------------------------------------------------
J Crew Group, Sr. Sec. Disc.
Deb., 13.125%, 10/15/08(c) 15,780,000 8,915,700
- ---------------------------------------------------------------
J Crew Operating Corp., Sr. Sub.
Notes, 10.375%, 10/15/07 18,245,000 17,606,425
- ---------------------------------------------------------------
75,608,500
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.47%
MDC Communications Corp.
(Canada), Sr. Yankee Unsec.
Sub. Notes, 10.50%, 12/01/06 17,470,000 18,343,500
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.82%
Coinmach Corp., Series D Sr.
Unsec. Notes, 11.75%, 11/15/05 25,350,000 28,392,000
- ---------------------------------------------------------------
Hydrochem Industrial Service,
Series B Sr. Sec. Gtd. Sub.
Notes, 10.375%, 08/01/07 21,300,000 21,832,500
- ---------------------------------------------------------------
Localiza Rent A Car (Brazil),
Sr. Gtd. Notes, 10.25%,
10/01/05 25,250,000 20,831,250
- ---------------------------------------------------------------
71,055,750
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.51%
Dialog Corp. PLC (United
Kingdom), Series A Sr. Sub.
Notes, 11.00%, 11/15/07 18,000,000 19,800,000
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.42%
DecisionOne Holdings Corp., Sr.
Disc. Deb., 11.50%,
08/01/08(c)(h) 27,085,000 16,318,712
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.48%
MSX International, Inc., Sr.
Sub. Notes, 11.375%, 01/15/08(a)
(Acquired 01/16/98-03/11/98;
Cost $18,263,525) 18,130,000 18,764,550
- ---------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.91%
ATC Group Services, Inc., Sr.
Sub. Notes, 12.00%, 01/15/08(a)
(Acquired 01/22/98-03/23/98;
Cost $15,110,562) 14,950,000 13,828,750
- ---------------------------------------------------------------
Metal Management, Inc., Sr. Sub.
Notes, 10.00%, 05/15/08(a)
(Acquired 05/26/98-06/10/98;
Cost $21,705,500) 21,900,000 21,626,250
- ---------------------------------------------------------------
35,455,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
SHIPPING-4.49%
Alpha Shipping PLC (United
Kingdom), Sr. Notes, 9.50%,
02/15/08(a)
(Acquired 02/11/98-02/25/98;
Cost $31,811,791) $ 32,300,000 $ 30,604,250
- ---------------------------------------------------------------
American Reefer Co. Ltd., First
Pfd. Ship Mortgage Notes,
10.25%, 03/01/08(a)
(Acquired 02/27/98-03/31/98;
Cost $15,564,125) 15,500,000 15,577,500
- ---------------------------------------------------------------
Holt Group, Sr. Notes, 9.75%,
01/15/06(a)
(Acquired 01/14/98-02/24/98;
Cost $23,024,225) 22,760,000 22,418,600
- ---------------------------------------------------------------
MC Shipping, Inc., Sr. Notes,
11.25%, 03/01/08(a)
(Acquired 03/05/98-05/08/98;
Cost $24,811,162) 24,690,000 24,813,450
- ---------------------------------------------------------------
Navigator Gas Transport PLC
(United Kingdom), Notes,
10.50%, 06/30/07(a)
(Acquired 07/31/97-09/04/97;
Cost $18,716,250) 18,520,000 19,399,700
- ---------------------------------------------------------------
Pacific & Atlantic Holdings,
First Pfd. Ship Mortgage
Notes, 11.50%, 05/30/08(a)
(Acquired 05/21/98; Cost
$20,675,790) 20,980,000 20,350,600
- ---------------------------------------------------------------
Pegasus Shipping Hellas Co.
(Bermuda), Sr. Sec. Gtd. First
Pfd. Ship Mortgage Notes,
11.875%, 11/15/04(a)
(Acquired 11/19/97-12/19/97;
Cost $21,801,674) 22,500,000 22,893,750
- ---------------------------------------------------------------
Stena Line A.B. (Sweden), Sr.
Yankee Notes, 10.625%,
06/01/08 18,680,000 19,030,250
- ---------------------------------------------------------------
175,088,100
- ---------------------------------------------------------------
TELECOMMUNICATIONS-1.20%
Convergent Communications, Sr.
Notes, 13.00%, 04/01/08(a)(i)
(Acquired 03/26/98; Cost
$23,500,000) 23,500,000 22,912,500
- ---------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr.
Disc. Notes, 12.50%,
02/15/08(a)(c)(j)
(Acquired 01/26/98-05/18/98;
Cost $23,693,973) 40,550,000 24,127,250
- ---------------------------------------------------------------
47,039,750
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-5.98%
Clearnet Communications Inc.
(Canada), Sr. Yankee Disc.
Notes, 14.75%, 12/15/05(c) 29,320,000 24,775,400
- ---------------------------------------------------------------
GST Equipment, Inc., Sr. Sec.
Notes, 13.25%, 05/01/07 12,950,000 14,924,875
- ---------------------------------------------------------------
GST Telecommunications, Inc.,
Sr. Disc. Notes, 10.50%,
05/01/08(a)(c)
(Acquired 04/29/98; Cost
$9,143,642) 15,000,000 9,112,500
- ---------------------------------------------------------------
HighwayMaster Communications,
Inc., Sr. Notes, 13.75%,
09/15/05 20,310,000 15,232,500
- ---------------------------------------------------------------
Microcell Telecommunications
Inc., Sr. Disc. Notes, 14.00%,
06/01/06(c) 29,500,000 22,198,750
- ---------------------------------------------------------------
Nextel International, Inc., Sr.
Disc. Notes, 12.125%,
04/15/08(a)(c) (Acquired 03/09/98;
Cost $20,909,058) 36,750,000 21,590,625
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS
(CELLULAR/WIRELESS)-(CONTINUED)
PageMart Wireless, Inc., Sr.
Sub. Disc. Notes, 11.25%,
02/01/08(c) $ 36,040,000 $ 21,984,400
- ---------------------------------------------------------------
Powertel, Inc., Sr. Unsec.
Notes,
11.125%, 06/01/07 26,000,000 28,470,000
- ---------------------------------------------------------------
ProNet, Inc., Sr. Sub. Notes,
11.875%, 06/15/05 23,640,000 25,649,400
- ---------------------------------------------------------------
Spectrasite Holdings Inc., Sr.
Disc. Notes, 12.00%,
07/15/08(a)(c)
(Acquired 06/23/98; Cost
$17,948,630) 32,300,000 18,007,250
- ---------------------------------------------------------------
Sygnet Wireless Inc., Sr. Unsec.
Notes, 11.50%, 10/01/06 18,800,000 20,680,000
- ---------------------------------------------------------------
Triton Communications Sr. Disc.
Notes, 11.00%, 05/01/08(a)(c)
(Acquired 04/29/98; Cost
$11,595,666) 19,464,000 11,045,820
- ---------------------------------------------------------------
233,671,520
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-4.71%
Esprit Telecom Group PLC (United Kingdom),
Sr. Notes, 10.875%,
06/15/08(a)
(Acquired 06/19/98; Cost
$4,900,000) 4,900,000 4,863,250
- ---------------------------------------------------------------
Sr. Yankee Notes, 11.50%,
12/15/07 22,500,000 23,259,375
- ---------------------------------------------------------------
Interamericas Communications
Corp., Sr. Notes, 14.00%,
10/27/07(a)(k)
(Acquired 10/21/97-12/03/97;
Cost $23,203,167) 22,990,000 24,024,550
- ---------------------------------------------------------------
Long Distance International,
Inc., Sr. Notes, 12.25%,
04/15/08(a)(l)
(Acquired 04/07/98-05/05/98;
Cost $25,619,550) 25,610,000 25,738,050
- ---------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Sec. Notes, 11.75%,
08/01/04 20,000,000 21,300,000
- ---------------------------------------------------------------
RSL Communications, Ltd. (United
Kingdom), Sr. Yankee Gtd.
Notes, 12.25%, 11/15/06 20,734,000 23,429,420
- ---------------------------------------------------------------
Versatel Telecom BV
(Netherlands), Sr. Notes,
13.25%, 05/15/08(m) 20,230,000 21,342,650
- ---------------------------------------------------------------
Viatel, Inc., Sr. Notes, 11.25%,
04/15/08(a)(n)
(Acquired 04/03/98-06/02/98;
Cost $39,782,600) 38,000,000 40,090,000
- ---------------------------------------------------------------
184,047,295
- ---------------------------------------------------------------
TELEPHONE-3.64%
Dobson Wireline Co., Sr. Notes,
12.25%, 06/15/08(a)
(Acquired 06/10/98-06/24/98;
Cost $35,960,270) 36,250,000 35,706,250
- ---------------------------------------------------------------
Esat Holdings Ltd.(Ireland), Sr.
Yankee Notes, 12.50%,
02/01/07(c) 25,530,000 19,019,850
- ---------------------------------------------------------------
Esat Telecom Group PLC
(Ireland), Sr. Yankee Notes,
12.50%, 02/01/07(c) 4,500,000 3,352,500
- ---------------------------------------------------------------
ICG Services, Inc., Sr. Disc.
Notes, 10.00%, 02/15/08(a)(c)
(Acquired 02/09/98-02/24/98;
Cost $23,589,761) 37,800,000 22,774,500
- ---------------------------------------------------------------
Nextlink Communications Inc.,
Sr. Notes, 12.50%, 04/15/06 26,620,000 30,280,250
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELEPHONE-(CONTINUED)
US Xchange LLC, Sr. Notes,
15.00%, 07/01/08(a)
(Acquired 06/22/98; Cost
$29,900,000) $ 29,900,000 $ 30,871,750
- ---------------------------------------------------------------
142,005,100
- ---------------------------------------------------------------
TRUCKERS-0.61%
AmeriTruck Distribution Corp.,
Series B Sr. Sub. Notes,
12.25%, 11/15/05 9,174,000 5,366,790
- ---------------------------------------------------------------
Travelcenters of America Inc.,
Sr. Unsec. Gtd. Sub. Deb.,
10.25%, 04/01/07 17,530,000 18,406,500
- ---------------------------------------------------------------
23,773,290
- ---------------------------------------------------------------
TRUCKS & PARTS-0.43%
Blue Bird Body Co., Series B Sr.
Sub. Notes, 10.75%, 11/15/06 15,425,000 16,890,375
- ---------------------------------------------------------------
WASTE MANAGEMENT-1.01%
Allied Waste Industries, Sr.
Unsec. Disc. Notes, 11.30%,
06/01/07(c) 31,200,000 23,010,000
- ---------------------------------------------------------------
Norcal Waste Systems Inc.,
Series B Sr. Gtd. Notes,
13.50%, 11/15/05 14,280,000 16,422,000
- ---------------------------------------------------------------
39,432,000
- ---------------------------------------------------------------
Total Corporate Bonds &
Notes (Cost
$3,487,051,349) 3,557,007,330
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-0.39%
PUBLISHING (NEWSPAPERS)-0.04%
Affiliated Newspaper
Investments(o) 13,826 1,659,120
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUST-0.06%
Meditrust Companies(o) 89,907 2,511,797
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.27%
Celcaribe S.A., Ordinary Trust
Certificates(o) 2,276,400 9,105,600
- ---------------------------------------------------------------
Nextel Communications, Inc.(o) 52,195 1,298,350
- ---------------------------------------------------------------
10,403,950
- ---------------------------------------------------------------
TELEPHONE-0.02%
Intermedia Communications
Inc.(o) 14,526 609,184
- ---------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$2,063,468) 15,184,051
- ---------------------------------------------------------------
PREFERRED STOCKS-4.45%
BROADCASTING (TELEVISION, RADIO & CABLE)-1.12%
Benedek Communications,
11.50% Sr. PIK Pfd.(a)(o)
(Acquired 05/07/98-05/11/98;
Cost $28,020,000) 27,900 27,900,000
- ---------------------------------------------------------------
EchoStar Communications Corp.,
12.125% PIK Pfd.(o) 14,213 15,669,833
- ---------------------------------------------------------------
43,569,833
- ---------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BUILDING MATERIALS-0.28%
Brand Scaffold Services, Inc.,
14.50% Pfd.(a)(o)
(Acquired 02/25/98; Cost
$11,092,290) 330,000 $ 10,972,500
- ---------------------------------------------------------------
FOODS-0.28%
Nebco Evans Holding Co.,
11.25% PIK Pfd.(o) 105,308 10,767,743
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.09%
SF Holdings Group, Inc.,
13.75% PIK Pfd.(a)(o)(p)
(Acquired 03/11/98; Cost
$3,780,000) 420 3,696,000
- ---------------------------------------------------------------
SHIPPING-0.19%
Pegasus Shipping Ltd., (Bermuda)
Notes,
14.50%, 07/01/08(a)(q)
(Acquired 06/24/98; Cost
$7,461,000) 1,500,000 7,575,000
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-1.90%
Dobson Communications,
12.25% Sr. PIK Pfd.(a)(o)
(Acquired 01/20/98-04/01/98;
Cost $26,467,723) 26,129 27,436,206
- ---------------------------------------------------------------
Nextel Communications, Inc.,
11.125% PIK Pfd.(a)(o)
(Acquired 01/20/98-04/01/98;
Cost $26,467,723) 15,580 16,086,350
- ---------------------------------------------------------------
13.00% Series D Sr. Unsec. PIK
Pfd.(o) 27,329 30,745,540
- ---------------------------------------------------------------
74,268,096
- ---------------------------------------------------------------
TELEPHONE-0.59%
Intermedia Communications Inc.,
7.00% Series E, Conv. Pfd.(o) 50,000 1,831,250
- ---------------------------------------------------------------
7.00% Conv. Pfd.(a)(o)
(Acquired 10/24/97; Cost
$14,007,253) 580,000 21,242,500
- ---------------------------------------------------------------
23,073,750
- ---------------------------------------------------------------
Total Preferred Stocks (Cost
$156,379,515) 173,922,922
- ---------------------------------------------------------------
RIGHTS & WARRANTS-0.36%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.01%
Knology Holdings, Inc., expiring
10/15/07(a)(o)
(Acquired 03/12/98; Cost $0) 47,250 248,062
- ---------------------------------------------------------------
United International Holdings,
expiring 11/15/99(o) 9,250 111,000
- ---------------------------------------------------------------
359,062
- ---------------------------------------------------------------
CHEMICALS-0.00%
Sterling Chemicals Holdings,
expiring 08/15/08(o) 7,500 180,000
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, expiring
02/01/04(o) 18,802 188,020
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GAMING, LOTTERY & PERIMUTUEL COMPANIES-0.00%
Resort at Summerlin Corp.,
expiring 12/15/07(o) 23,900 $ 239
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.01%
Republic Health Corp., expiring
04/03/00(o) 17,500 315,000
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.02%
HighwayMaster Communication
Inc., expiring 01/20/49(o) 20,310 50,775
- ---------------------------------------------------------------
MVE Inc., expiring 02/15/02(o) 6,750 135,000
- ---------------------------------------------------------------
Primus Telecommunications,
expiring 08/01/04(o) 20,000 405,000
- ---------------------------------------------------------------
590,775
- ---------------------------------------------------------------
IRON & STEEL-0.01%
Bar Technologies Inc., expiring
04/01/01(o) 6,000 360,000
- ---------------------------------------------------------------
Gulf States Steel Corp.,
expiring 04/15/03(o) 15,990 39,975
- ---------------------------------------------------------------
399,975
- ---------------------------------------------------------------
MANUFACTURING
(SPECIALIZED)-0.01%
Berry Plastics Corp., expiring
04/15/04(o) 6,000 270,120
- ---------------------------------------------------------------
PERSONAL CARE-0.01%
IHF Capital Inc.,
Series H, expiring 11/14/99(o)
(Acquired 11/04/94; Cost $0) 8,000 240,000
- ---------------------------------------------------------------
Series I, expiring 11/14/99(o)
(Acquired 11/04/94-03/01/95;
Cost $0) 7,250 36,250
- ---------------------------------------------------------------
276,250
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.15%
Cellnet Data System, expiring
10/01/07(o)
(Acquired 09/24/97-10/15/97;
Cost $0) 10,000 302,500
- ---------------------------------------------------------------
Clearnet Communications Inc.
(Canada), expiring 09/15/05(o) 100,716 981,981
- ---------------------------------------------------------------
ICG Communications, Inc.,
expiring 10/15/05(o) 39,600 1,049,400
- ---------------------------------------------------------------
McCaw Intl. Ltd., expiring
04/15/07(o) 39,500 207,375
- ---------------------------------------------------------------
Microcell Telecommunications
Inc., expiring 06/01/06(o)
(Acquired 12/18/96; Cost
$992,888) 118,000 2,216,040
- ---------------------------------------------------------------
Orion Network Systems, Inc.,
expiring 01/15/07(o) 43,600 589,600
- ---------------------------------------------------------------
Powertel Inc., expiring
02/01/06(o) 42,656 415,896
- ---------------------------------------------------------------
5,762,792
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.11%
RSL Communications, Ltd. (United
Kingdom), expiring 11/15/06(o) 45,145 4,379,065
- ---------------------------------------------------------------
TELEPHONE-0.03%
ESAT Holdings Ltd., expiring
02/01/07(o)
(Acquired 06/16/97; Cost $0) 25,530 1,021,200
- ---------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-(CONTINUED)
Intermedia Communications Inc.,
expiring 06/01/00(a)(o)
(Acquired 10/25/95; Cost $0) 1,500 $ 232,500
- ---------------------------------------------------------------
1,253,700
- ---------------------------------------------------------------
Total Rights & Warrants
(Cost $3,747,797) 13,974,998
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENT-2.60%(r)
SBC Capital Markets, Inc.,
5.70%, 07/01/98(s) (Cost
$101,487,521) $101,487,521 $ 101,487,521
- ---------------------------------------------------------------
TOTAL INVESTMENTS-98.89% 3,861,576,822
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.11% 43,165,184
- ---------------------------------------------------------------
NET ASSETS-100.00% $3,904,742,006
===============================================================
</TABLE>
Abbreviations:
Conv. - Convertible
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
Pfd. - Preferred
PIK - Payment in Kind
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Notes to Schedule of Investments:
(a)Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of 1933,
as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 06/30/98 was $1,355,988,668
which represented 34.73% of the Fund's net assets.
(b)Issued as a unit. This unit also includes 15,500 warrants to purchase 31.12
shares of common stock per warrant.
(c)Discounted bond at purchase. Interest rate shown represents coupon rate at
which the bond will accrue at a specified future date.
(d)Zero coupon bonds. Interest rate shown represents the rate of original issue
discount.
(e)Issued as a unit. This unit also includes 15,400 warrants to purchase 6.73833
shares of common stock per warrant.
(f)Issued as a unit. This unit also includes 18,750 warrants to buy 1 share of
common stock per warrant.
(g)Issued as a unit. This unit also includes 54,000 shares of Class C common
stock.
(h)Issued as a unit. This unit also includes 27,085 warrants to buy 1.9 shares
of common stock per warrant.
(i)Issued as a unit. This unit also includes 94,000 warrants to buy 10.8 shares
of common stock per warrant.
(j)Issued as a unit. This unit also includes 40,550 warrants to buy .21785 share
of common stock per warrant.
(k)Issued as a unit. This unit also includes 804,650 warrants to buy 1 share of
common stock per warrant.
(l)Issued as a unit. This unit also includes 25,610 warrants to buy 15.0874
shares of common stock per warrant.
(m)Issued as a unit. This unit also includes 20,230 warrants to buy 6.667 shares
of common stock per warrant.
(n)Issued as a unit. This unit also includes 18,354 shares of Series A preferred
stock.
(o)Non-income producing security.
(p)Issued as a unit. This unit also includes 15,540 shares of Class C common
stock.
(q)Issued as a unit. This unit also includes 15,000 warrants to buy 0.01411
shares of common stock per warrant.
(r)Collateral on repurchase agreements, including the Funds 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.
(s)Joint repurchase agreement entered into 06/30/98 with a maturing value of
$200,031,667. Collateralized by $671,357,000 U.S. Government obligations, 0%
due 05/15/18 to 11/15/21 with an aggregate market value at 06/30/98 of
$206,411,960.
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$3,750,729,650) $3,861,576,822
- ----------------------------------------------------------
Receivables for:
Investments sold 4,852,038
- ----------------------------------------------------------
Fund shares sold 27,094,730
- ----------------------------------------------------------
Dividends and interest 65,103,809
- ----------------------------------------------------------
Investment for deferred compensation plan 60,493
- ----------------------------------------------------------
Other assets 119,928
- ----------------------------------------------------------
Total assets 3,958,807,820
- ----------------------------------------------------------
LIABILITIES:
Payables for:
Investment purchased 27,365,354
- ----------------------------------------------------------
Fund shares reacquired 8,624,293
- ----------------------------------------------------------
Dividends 12,383,209
- ----------------------------------------------------------
Deferred compensation plan 60,493
- ----------------------------------------------------------
Accrued advisory fees 1,510,775
- ----------------------------------------------------------
Accrued administrative services fees 10,388
- ----------------------------------------------------------
Accrued distribution fees 3,336,394
- ----------------------------------------------------------
Accrued trustees' fees 4,050
- ----------------------------------------------------------
Accrued transfer agent fees 455,675
- ----------------------------------------------------------
Accrued operating expenses 315,183
- ----------------------------------------------------------
Total liabilities 54,065,814
- ----------------------------------------------------------
Net assets applicable to shares
outstanding $3,904,742,006
==========================================================
NET ASSETS:
Class A $1,879,803,065
==========================================================
Class B $1,934,751,352
==========================================================
Class C $ 90,187,589
==========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 186,847,862
==========================================================
Class B 192,423,005
==========================================================
Class C 8,985,914
==========================================================
Class A:
Net asset value and redemption price per
share $ 10.06
==========================================================
Offering price per share:
(Net asset value of $10.06
divided by 95.25%) $ 10.56
==========================================================
Class B:
Net asset value and offering price per
share $ 10.05
==========================================================
Class C:
Net asset value and offering price per
share $ 10.04
==========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $185,722,534
- ---------------------------------------------------------
Dividends 972,161
- ---------------------------------------------------------
Total investment income 186,694,695
- ---------------------------------------------------------
EXPENSES:
Advisory fees 8,822,624
- ---------------------------------------------------------
Administrative services fees 62,331
- ---------------------------------------------------------
Custodian fees 112,210
- ---------------------------------------------------------
Transfer agent fees -- Class A 1,057,310
- ---------------------------------------------------------
Transfer agent fees -- Class B 1,051,841
- ---------------------------------------------------------
Transfer agent fees -- Class C 34,660
- ---------------------------------------------------------
Trustees' fees 11,756
- ---------------------------------------------------------
Distribution fees -- Class A 2,330,502
- ---------------------------------------------------------
Distribution fees -- Class B 9,019,306
- ---------------------------------------------------------
Distribution fees -- Class C 272,736
- ---------------------------------------------------------
Other 164,581
- ---------------------------------------------------------
Total expenses 22,939,857
- ---------------------------------------------------------
Less: Expenses paid indirectly (93,343)
- ---------------------------------------------------------
Net expenses 22,846,514
- ---------------------------------------------------------
Net investment income 163,848,181
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities (19,984,454)
- ---------------------------------------------------------
Foreign currencies (2,878)
- ---------------------------------------------------------
(19,987,332)
- ---------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities (30,680,317)
- ---------------------------------------------------------
Net gain (loss) from investment
securities and foreign currencies (50,667,649)
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $113,180,532
=========================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 15
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 163,848,181 $ 247,013,864
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (19,987,332) 62,942,651
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (30,680,317) 18,112,537
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 113,180,532 328,069,052
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (81,422,042) (133,510,208)
- ----------------------------------------------------------------------------------------------
Class B (72,307,245) (111,521,456)
- ----------------------------------------------------------------------------------------------
Class C (2,166,714) (357,582)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 112,500,361 469,620,256
- ----------------------------------------------------------------------------------------------
Class B 309,113,918 540,779,350
- ----------------------------------------------------------------------------------------------
Class C 65,513,770 26,215,648
- ----------------------------------------------------------------------------------------------
Net increase in net assets 444,412,580 1,119,295,060
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,460,329,426 2,341,034,366
- ----------------------------------------------------------------------------------------------
End of period $3,904,742,006 $3,460,329,426
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,819,731,698 $3,332,603,649
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 12,643,780 4,691,600
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (38,480,644) (18,493,312)
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 110,847,172 141,527,489
- ----------------------------------------------------------------------------------------------
$3,904,742,006 $3,460,329,426
==============================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM High Yield Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate series portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares, and Class C shares. Class A shares are sold with a front-end sales
charge. Class B and Class C shares are sold with a contingent deferred sales
charge. Matters affecting each portfolio or class are voted on exclusively by
the shareholders of such portfolio or class. The assets, liabilities and
operations of each portfolio are accounted for separately. Information presented
in these financial statements pertains only to the Fund. The Fund's objective is
to achieve a high level of current income by investing primarily in publicly
traded non-investment grade debt securities. The Fund will also consider the
possibility of capital growth when it purchases and sells securities. Debt
securities of less than investment grade are considered "high risk" securities
(commonly referred to as junk bonds). These bonds may involve special risks in
addition to the risks associated with investment in higher rated debt
securities. High yield bonds may be more susceptible to real or perceived
adverse economic and competitive industry conditions than higher grade bonds.
Also, the secondary market in which high yield bonds are traded may be less
liquid than the market for higher grade bonds.
The 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 securities (including convertible bonds) are
valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
institution-size trading in similar groups of securities, developments
related to special securities, yield, quality, coupon rate, maturity, type
of issue, individual trading characteristics and other market data.
Investment securities
13
<PAGE> 16
for which prices are not provided by the pricing service and which are
listed or traded on an exchange (except convertible bonds) are valued at the
last sales price on the exchange where principally traded or, lacking any
sales on a particular day, at the mean between the closing bid and asked
prices on that day unless the Board of Trustees, or persons designated by
the Board of Trustees, determines that over-the-counter quotations more
closely reflect the current market value of the security. Securities traded
in the over-the-counter market, except (i) securities priced by the pricing
service, (ii) securities for which representative exchange prices are
available, and (iii) securities reported in the NASDAQ National Market
System, are valued at the mean between representative last bid and asked
prices obtained from an electronic quotation reporting system, if such
prices are available, or from established market makers. Each security
reported in the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the mean
between the closing bid and asked prices. Securities for which market
quotations either are not readily available or are questionable are valued
at fair value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. It is the policy of the Fund to declare daily dividends
from net investment income. Such dividends are paid monthly. Distributions
from net realized capital gains, if any, are recorded on ex-dividend date
and are paid annually subject to restrictions noted in section "C" below.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $5,680,483 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2003. The Fund cannot distribute capital gains to
shareholders until the tax loss carryforwards have been utilized.
D. Foreign Currency Translation -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions.
E. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract for the purchase
or sale of a security denominated in a foreign currency in order to "lock
in" the U.S. dollar price of that security. The Fund could be exposed to
risk if counterparties to the contracts are unable to meet the terms of
their contracts.
F. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
NOTE 2- ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.625% of
the first $200 million of the Fund's average daily net assets, plus 0.55% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.50% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.45% of the Fund's average daily net
assets in excess of $1 billion.
The 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, 1998, AIM
was reimbursed $62,331 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, 1998, the
Fund paid AFS $1,324,990 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, Class B and Class C shares of the Fund. The Trust has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.25% of the average daily net assets of the Class A shares
and 1.00% of the average daily net assets of the Class C shares. 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 of the Class B shares. Of these
amounts, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class A, Class B or Class C shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own the appropriate class of shares of the Fund. Any
amounts not paid as a service fee under the 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. During the six months ended June 30, 1998, the Class A, Class B and
Class C shares paid AIM Distributors $2,330,502, $9,019,306 and $272,736,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,102,778 from sales of the Class A
shares of the Fund during the six months ended June 30, 1998. 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,
1998, AIM Distributors received $262,559 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, 1998, the Fund paid legal fees of $3,471
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.
14
<PAGE> 17
NOTE 3-INDIRECT EXPENSES
During the six months ended June 30, 1998, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $22,533 and $70,810, respectively under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $93,343 during the six months ended June 30, 1998.
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) $1,000,000,000 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 May 1, 1998, the Fund was limited
to borrowing up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. During the six months ended June 30, 1998, 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, 1998 was
$1,844,208,262 and $1,399,309,113, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1998 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $164,487,495
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (54,255,623)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $110,231,872
=========================================================
</TABLE>
Cost of investments for tax purposes is $3,751,344,950.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 1998 and the
year ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 57,501,096 $ 588,988,364 93,715,770 $ 935,998,102
- --------------------- ----------------------------- -----------------------------
Class B 40,225,322 412,002,687 74,428,033 739,555,783
- --------------------- ----------------------------- -----------------------------
Class C* 19,084,681 194,842,959 2,840,747 28,847,843
- --------------------- ----------------------------- -----------------------------
Issued as
reinvestment of
dividends:
Class A 5,208,756 53,287,982 8,409,927 83,983,856
- --------------------- ----------------------------- -----------------------------
Class B 3,509,503 35,895,442 5,178,022 54,019,940
- --------------------- ----------------------------- -----------------------------
Class C* 139,528 1,422,075 19,254 195,246
- --------------------- ----------------------------- -----------------------------
Reacquired:
Class A (51,697,002) (529,775,985) (55,082,159) (550,361,702)
- --------------------- ----------------------------- -----------------------------
Class B (13,558,785) (138,784,211) (25,424,400) (252,796,373)
- --------------------- ----------------------------- -----------------------------
Class C* (12,819,723) (130,751,264) (278,573) (2,827,441)
- --------------------- ----------------------------- -----------------------------
47,593,376 $ 487,128,049 103,806,621 $ 1,036,615,254
===================== ============================= =============================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
15
<PAGE> 18
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A outstanding
during the six months ended June 30, 1998 and each of the years in the five-year
period ended December 31, 1997; for a share of Class B outstanding during the
six months ended June 30, 1998, each of the years in the four-year period ended
December 31, 1997 and the period September 1, 1993; (date sales commenced)
through December 31, 1993; and for a share of Class C outstanding during the six
months ended June 30, 1998 and the period August 4, 1997 (date sales commenced)
through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
DECEMBER 31,
JUNE 30, ---------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.16 $ 9.88 $ 9.43 $ 8.93 $ 10.05 $ 9.40
- ------------------------------------------------- ---------- ---------- ---------- -------- -------- -------
Income from investment operations:
Net investment income 0.47 0.90 0.92 0.93 0.96 0.97
- ------------------------------------------------- ---------- ---------- ---------- -------- -------- -------
Net gains (losses) on securities (both realized
and unrealized) (0.13) 0.28 0.46 0.52 (1.12) 0.69
- ------------------------------------------------- ---------- ---------- ---------- -------- -------- -------
Total from investment operations 0.34 1.18 1.38 1.45 (0.16) 1.66
- ------------------------------------------------- ---------- ---------- ---------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.44) (0.90) (0.93) (0.95) (0.96) (1.01)
- ------------------------------------------------- ---------- ---------- ---------- -------- -------- -------
Net asset value, end of period $ 10.06 $ 10.16 $ 9.88 $ 9.43 $ 8.93 $ 10.05
================================================= ========== ========== ========== ======== ======== =======
Total return(a) 3.39% 12.52% 15.44% 16.86% (1.67)% 18.40%
================================================= ========== ========== ========== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,879,803 $1,786,352 $1,272,974 $886,106 $578,959 $550,760
================================================= ========== ========== ========== ======== ======== =======
Ratio of expenses to average net assets 0.86%(b) 0.90% 0.97% 0.96% 1.00% 1.12%
================================================= ========== ========== ========== ======== ======== =======
Ratio of net investment income to average net
assets 9.17%(b) 9.08% 9.67% 9.95% 10.07% 9.82%
================================================= ========== ========== ========== ======== ======== =======
Portfolio turnover rate 39% 80% 77% 61% 53% 53%
================================================= ========== ========== ========== ======== ======== =======
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets of $1,879,852,200.
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------------------------------- --------
DECEMBER 31,
JUNE 30, ---------------------------------------------------------------- JUNE 30,
1998 1997 1996 1995 1994 1993 1998
---------- ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 10.16 $ 9.88 $ 9.42 $ 8.92 $ 10.04 $ 9.96 $ 10.14
- ------------------------------- ---------- ---------- ---------- -------- -------- -------- -------
Income from investment
operations:
Net investment income 0.42 0.83 0.85 0.85 0.87 0.32 0.43
- ------------------------------- ---------- ---------- ---------- -------- -------- -------- -------
Net gains (losses) on
securities (both realized
and unrealized) (0.12) 0.28 0.47 0.52 (1.10) 0.07 (0.12)
- ------------------------------- ---------- ---------- ---------- -------- -------- -------- -------
Total from investment
operations 0.30 1.11 1.32 1.37 (0.23) 0.39 0.31
- ------------------------------- ---------- ---------- ---------- -------- -------- -------- -------
Less distributions:
Dividends from net investment
income (0.41) (0.83) (0.86) (0.87) (0.89) (0.31) (0.41)
- ------------------------------- ---------- ---------- ---------- -------- -------- -------- -------
Net asset value, end of period $ 10.05 $ 10.16 $ 9.88 $ 9.42 $ 8.92 $ 10.04 $ 10.04
=============================== ========== ========== ========== ======== ======== ======== =======
Total return(a) 2.93% 11.71% 14.68% 15.91% (2.48)% 4.00% 3.04%
=============================== ========== ========== ========== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $1,934,751 $1,647,801 $1,068,060 $557,926 $191,338 $ 31,264 $90,188
=============================== ========== ========== ========== ======== ======== ======== =======
Ratio of expenses to average
net assets 1.61%(b) 1.65% 1.68% 1.73% 1.80% 1.93%(c) 1.61%(b)
=============================== ========== ========== ========== ======== ======== ======== =======
Ratio of net investment income
to average net assets 8.42%(b) 8.33% 8.95% 9.18% 9.27% 8.99%(c) 8.42%(b)
=============================== ========== ========== ========== ======== ======== ======== =======
Portfolio turnover rate 39% 80% 77% 61% 53% 53% 39%
=============================== ========== ========== ========== ======== ======== ======== =======
<CAPTION>
CLASS C
------------
DECEMBER 31,
1997
------------
<S> <C>
Net asset value, beginning of
period $ 10.04
- ------------------------------- --------
Income from investment
operations:
Net investment income 0.35
- ------------------------------- --------
Net gains (losses) on
securities (both realized
and unrealized) 0.10
- ------------------------------- --------
Total from investment
operations 0.45
- ------------------------------- --------
Less distributions:
Dividends from net investment
income (0.35)
- ------------------------------- --------
Net asset value, end of period $ 10.14
=============================== ========
Total return(a) 4.49%
=============================== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $ 26,177
=============================== ========
Ratio of expenses to average
net assets 1.68%(c)
=============================== ========
Ratio of net investment income
to average net assets 8.30%(c)
=============================== ========
Portfolio turnover rate 80%
=============================== ========
</TABLE>
(a) Does not deduct contingent deferred sales charges and for periods less than
one year is not annualized.
(b) Ratios are annualized and based on average net assets of $1,818,810,362 and
$54,999,294, for Class B and Class C respectively.
(c) Annualized.
16
<PAGE> 19
Trustees & Officers
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II TRANSFER AGENT
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Assistant Treasurer
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Robert G. Alley
President, Mercantile Bankshares Vice President State Street Bank and Trust Company
225 Franklin Street
Jack Fields Stuart W. Coco Boston, MA 02110
Chief Executive Officer Vice President
Texana Global, Inc.; COUNSEL TO THE FUND
Formerly Member Melville B. Cox
of the U.S. House of Representatives Vice President Ballard Spahr
Andrews & Ingersoll, LLP
Carl Frischling Karen Dunn Kelley 1735 Market Street
Partner Vice President Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel
Jonathan C. Schoolar COUNSEL TO THE TRUSTEES
Robert H. Graham Vice President
President and Chief Executive Officer Kramer, Levin, Naftalis & Frankel
A I M Management Group Inc. Renee A. Friedli 919 Third Avenue
Assistant Secretary New York, NY 10022
Lewis F. Pennock
Attorney P. Michelle Grace DISTRIBUTOR
Assistant Secretary
Ian W. Robinson A I M Distributors, Inc.
Consultant; Formerly Executive Jeffrey H. Kupor 11 Greenway Plaza
Vice President and Assistant Secretary Suite 100
Chief Financial Officer Houston, TX 77046
Bell Atlantic Management Nancy L. Martin
Services, Inc. Assistant Secretary
Louis S. Sklar Ofelia M. Mayo
Executive Vice President Assistant Secretary
Hines Interests
Limited Partnership Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
<PAGE> 20
The AIM Family of Funds--Registered Trademark--
<TABLE>
<CAPTION>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund
AIM Blue Chip Fund AIM Asian Growth Fund
AIM Capital Development Fund AIM Developing Markets Fund(2)
AIM Constellation Fund AIM Emerging Markets Fund(2)
AIM Mid Cap Growth Fund(2) AIM Europe Growth Fund(2)
AIM Select Growth Fund(3) AIM European Development Fund
[PHOTO OF AIM Small Cap Equity Fund(2) AIM International Equity Fund
11 GREENWAY PLAZA AIM Small Cap Opportunities Fund AIM International Growth Fund(2)
APPEARS HERE] AIM Value Fund AIM Weingarten Fund AIM Japan Growth Fund(2)
AIM Latin American
GROWTH & INCOME FUNDS Growth Fund(2)
AIM New Pacific Growth Fund(2)
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund GLOBAL GROWTH FUNDS
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund AIM Global Aggressive Growth Fund
AIM America Value Fund(2) AIM Global Growth Fund
AIM Balanced Fund AIM Worldwide Growth Fund(2)
AIM Charter Fund
GLOBAL GROWTH & INCOME FUNDS
INCOME FUNDS
AIM Global Growth & Income Fund(2)
AIM Floating Rate Fund(2) AIM Global Utilities Fund
AIM High Yield Fund
AIM Income Fund GLOBAL INCOME FUNDS
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund AIM Global Government Income Fund(2)
AIM Global High Income Fund(2)
TAX-FREE INCOME FUNDS AIM Global Income Fund
AIM Strategic Income Fund(2)
AIM High Income Municipal Fund
AIM Municipal Bond Fund THEME FUNDS
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund AIM Global Consumer Products and Services Fund(2)
AIM Global Financial Services Fund(2)
MONEY MARKET FUNDS AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
AIM Dollar Fund(2) AIM Global Resources Fund(2)
AIM Money Market Fund AIM Global Telecommunications Fund(2)
AIM Tax-Exempt Cash Fund AIM New Dimension Fund(2)
</TABLE>
(1) AIM Aggressive Growth Fund was closed to new investors on June 5, 1997.
(2) Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds.
(3) On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth Fund. For
more complete information about any AIM Fund(s), including sales charges and
expenses, ask your financial consultant or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest
or send money.
A I M Management Group Inc. has provided leadership in the mutual fund industry
since 1976 and managed approximately $101 billion in assets for more than 5.2
million shareholders, including individual investors, corporate clients, and
financial institutions, as of June 30, 1998. The AIM Family of Funds(R) is
distributed nationwide, and AIM today is the ninth-largest mutual fund complex
in the U.S. in assets under management, according to Strategic Insight, an
independent mutual fund monitor.
INVEST WITH DISCIPLINE-SM-
