<PAGE> 1
SEMIANNUAL REPORT / JUNE 30 1999
AIM INCOME FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[ COVER IMAGE ]
-------------------------------------
THE BOAT AT GIVERNY BY CLAUDE MONET
IN MONET'S CAPTIVATING PAINTING, THREE WOMEN GENTLY GUIDE A
SMALL BOAT OVER A TRANQUIL BODY OF WATER. SIMILARLY, AIM
INCOME FUND RELIES PRIMARILY ON THREE ASSET CLASSES--DOMESTIC
INVESTMENT-GRADE BONDS, HIGH-YIELD BONDS AND FOREIGN BONDS--
TO STEER IT TO ITS FINANCIAL DESTINATION.
-------------------------------------
AIM Income Fund is for shareholders who seek a high level of current income
consistent with a reasonable concern for safety of principal by investing in a
portfolio consisting primarily of fixed-rate corporate debt and U.S. government
obligations.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Income Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value.
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 differences in sales charge structures and
class expenses.
o The 30-day yield is calculated on the basis of a formula defined by the SEC.
The formula is based on the portfolio's potential earnings from dividends,
interest, yield-to-maturity, or yield-to-call of the bonds in the portfolio,
net of all expenses and expressed on an annualized basis.
o The fund's annualized distribution rate reflects the fund's most recent
monthly dividend distribution multiplied by 12 and divided by the most
recent month-end net asset value
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o The fund invests in higher-yielding, lower-rated corporate bonds, commonly
known as "junk bonds." These bonds have greater risk of price fluctuation
and loss of principal 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 International investing presents certain risks not associated with investing
solely in the United States. These include risks relating to fluctuations in
the value of the U.S. dollar relative to the values of other currencies, the
custody arrangements made for the fund's foreign holdings, differences in
accounting, political risks and the lesser degree of public information
required to be provided by non-U.S. companies.
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.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD
LOSE SOME OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to
persons who have received a current prospectus of the fund.
AIM INCOME FUND
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
With only several months remaining in 1999, the question on
many of your minds may be, "How will the year 2000 computer
[PHOTO OF issue affect AIM and my investments?" We would like you to
Charles T. feel comfortable. We are pleased to be able to report to you
Bauer, that as of June 1999 we achieved a major milestone toward
Chairman of year 2000 compliance status: we have successfully completed
the Board of the testing of all of our mission-critical systems.
THE FUND Earlier this year, AIM participated in an industrywide
APPEARS HERE] test that gave us a chance to see how our technology systems
might be affected by the changeover to the year 2000 (Y2K).
Everything went as well as we had hoped; in general, the
industry sailed through the testing process with flying
colors. The financial industry has been seen as a leader in
planning for year 2000 concerns. Thus, it was no surprise to
most participants that the test was an overwhelming success.
The general purpose of the process was to test
electronic interfaces among financial industry members in the United States and
to follow transactions through a typical trading cycle--from order entry to the
settlement process. Investment banks, broker-dealers, custodian banks and mutual
fund companies all worked together to make this possible. Approximately 400
firms were involved in the testing; AIM was one of 70 asset managers.
During the testing process, thousands of transactions were submitted and
approximately 260,000 steps were tested. Of those, only a handful experienced
minor glitches--just 0.02% of the total number of transactions. All problems
were worked through quickly before the hypothetical trades were settled. Of
course, AIM will keep testing and planning throughout 1999 as a precaution.
AIM'S INTERNAL EFFORTS CONTINUE
As you know from our previous communications to you, AIM has been addressing the
year 2000 issue for several years. Now that we have finished adjusting our
applications and systems, our focus for the rest of 1999 is to continue
monitoring the year 2000 readiness status of outside sources we're linked to
electronically. On the investment side, our portfolio management staff is
continually evaluating the Y2K preparedness of the domestic and foreign
companies in which we invest.
We feel that our preparations for 2000 are very comprehensive, and the
industrywide testing showed that our colleagues in the financial industry are
also working hard to be ready for the new year. We do not think shareholders
need to take any extraordinary measures with their investments to prepare for
2000. However, if you have any lingering concerns, it may reassure you to know
that AIM is finalizing contingency plans that will be ready if necessary. Our
plans will give AIM employees guidelines to follow for a wide variety of
situations.
For a more comprehensive discussion of our Y2K efforts and for periodic
updates, please visit our Web site, www.aimfunds.com.
We are pleased to send you this report covering your fund's performance over
the last six months. If you have any questions or comments, please contact our
Client Services department at 800-959-4246, or e-mail your inquiry to us at
[email protected]. You can access information about your account through our
automated AIM Investor Line at 800-246-5463 or at our Web site.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--. We appreciate your business.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
A I M Advisors, Inc.
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS LETTER IS DEEMED
AIM'S YEAR 2000 READINESS DISCLOSURE.
-------------------------------------
THE FINANCIAL INDUSTRY
HAS BEEN SEEN AS A
LEADER IN PLANNING FOR
YEAR 2000 CONCERNS.
-------------------------------------
AIM INCOME FUND
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
INTEREST-RATE CONCERNS RATTLE BOND MARKET
BOND PRICES GENERALLY DECLINED DURING THE REPORTING PERIOD. HOW DID AIM INCOME
FUND PERFORM?
Despite a difficult market environment, the fund continued to provide attractive
monthly income. As of June 30, 1999, the fund's 30-day distribution rate at net
asset value was 6.96%, 6.14% and 6.15% for Class A, B and C shares,
respectively. The fund's 30-day yield at maximum offering price was 6.41% for
Class A shares and 5.98% for both Class B and Class C shares. That compared
favorably with the 5.97% yield of the benchmark 30-year U.S. Treasury bond at
the end of the reporting period.
The general drop in bond prices hurt the fund's total returns for the
six-month period ended June 30, 1999. Total returns were -2.13%, -2.53% and
- -2.64% for Class A, B and C shares, respectively. These returns are at net asset
value, without the effect of a sales charge. While the fund's short-term
performance was negatively affected by the weakness in the bond market, its
long-term track record remains solid (see accompanying chart).
Since our last report six months ago, nets assets in the fund grew from $638
million to $677 million.
WHAT WAS YOUR REACTION TO THE SELLOFF IN THE BOND MARKET?
We used it as an opportunity to buy attractive bonds at reduced prices.
Additionally, in an effort to lower volatility, we reduced the fund's weighted
average maturity from 14.12 years to 13.22 years and its duration from 8.26
years to 7.06 years during the reporting period. The fund maintained an average
portfolio quality rating of BBB/Baa as measured by Standard & Poor's
Corporation, Moody's Investor Services and other 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.
At the end of the reporting period, the fund's total assets were allocated
as follows: domestic investment-grade bonds, 43.42%; high-yield bonds, 23.33%;
foreign bonds, 27.43%; and other assets, 5.82%. We believe this diversified
investment strategy can reduce risk and enhance potential returns.
HOW DID U.S. DOMESTIC INVESTMENT-GRADE BONDS FARE?
U.S. Treasury issues performed poorly because of heightened concerns that the
Federal Reserve Board (the Fed) would raise interest rates to slow economic
growth and combat inflation. One impetus for these concerns was the dramatic and
unexpected rise in the inflation rate in April.
Uncertainty concerning the extent to which the Fed might raise interest
rates eroded Treasury prices in May and June, sending their yields higher. The
yield of the benchmark 30-year U.S. Treasury bond soared from 5.09% at the
beginning of the reporting period to 6.16% on June 24, its highest level since
1997.
Speculation surrounding the Fed's possible action did not end until June 30,
when the central bank raised the federal funds rate from 4.75% to 5%. At the
same time, the Fed announced that it had shifted from a tightening to a neutral
bias, indicating it planned no further rate hikes in the near future. That
sparked a "relief rally" in the bond market, dropping the yield on the 30-year
Treasury to 5.97% at the close of the reporting period.
Rising interest rates and an overabundance of new issues hurt the
performance of investment-grade corporate bonds. During the first half of 1999,
about $200 billion in new corporate issues entered the market. Still,
investment-grade corporate bonds outperformed Treasuries. Yield differentials
between Treasuries and investment-grade corporate bonds narrowed, but remained
relatively wide at the end of the reporting period.
WHAT ABOUT HIGH-YIELD BONDS?
High-yield securities were among the best-performing segments of the bond
market. This asset class proved to be less sensitive to rising interest rates
than Treasuries or investment-grade corporate bonds. The value of a high-yield
bond is largely dependent on the ability of its issuer to meet its debt
obligations. When the economy is booming and companies are taking in more
revenue, this generally bodes well for issuers of high-yield bonds.
================================================================================
FUND PROVIDES SOLID INCOME
AS OF 6/30/99
30-DAY DISTRIBUTION AND YIELD
30-DAY 30-DAY
DISTRIBUTION SEC YIELD
RATE AT AT MAXIMUM
NAV OFFERING PRICE
CLASS A 6.96% 6.41%
CLASS B 6.14 5.98
CLASS C 6.15 5.98
================================================================================
================================================================================
CLASS A SHARES VS.
30-YEAR U.S. TREASURY BOND
[BAR CHART]
DISTRIBUTION RATE 6.96%
SEC YIELD 6.41%
30-YEAR TREASURY YIELD 5.97%
================================================================================
See important fund and index disclosures inside front cover.
AIM INCOME FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/99, based on total net assets
TOP FIVE BOND HOLDINGS
================================================================================
% OF
COUPON MATURITY ASSETS
- --------------------------------------------------------------------------------
Time Warner, 9.150% 02/2023 1.55%
Inc.
Treuhandan- 6.000 11/2003 1.21
stalt
Province 7.750 07/2016 1.20
of
Manitoba
Torchmark 7.875 05/2023 1.18
Corp.
News 9.250 02/2013 1.18
America
Holdings, Inc.
================================================================================
HOLDINGS BY TYPE CLASSIFICATION
================================================================================
(Pie Chart)
Domestic Investment-Grade Bonds 43.42%
Foreign Bonds 27.43%
High-Yield Bonds 23.33%
Other 5.82%
================================================================================
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security.
YOUR FUND'S PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
6/30/89-6/30/99
in thousands
================================================================================
(Line Chart)
AIM INCOME FUND CLASS A SHARES
6/89 $9,527
6/90 $9,985
6/91 $10,763
6/92 $12,422
6/93 $14,405
6/94 $13,758
6/95 $15,659
6/96 $16,955
6/87 $19,145
6/98 $21,259
6/99 $21,260
================================================================================
Past performance cannot guarantee comparable future results.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/99, including sales charges
CLASS A SHARES
10 years 7.83%
5 years 8.04
1 year -6.30*
*-1.65% excluding sales charges
CLASS B SHARES
Inception (9/7/93) 4.81%
5 years 7.93
1 year -6.93**
**-2.53% excluding CDSC
CLASS C SHARES
Inception (8/4/97) 3.36%
1 year -3.37***
***-2.64 % excluding CDSC
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
Your fund's total return includes sales charges, expenses and management fees.
================================================================================
WHAT WERE SOME OF THE KEY TRENDS IN FOREIGN BOND MARKETS?
In most developed countries, the yields of government bonds rose, following U.S.
Treasury yields. Other types of bonds generally outperformed government issues,
and lower-rated bonds outperformed higher-rated securities. Foreign bond markets
benefited from relatively low inflation and interest rates. In Europe, sluggish
economic growth caused the European Central Bank to cut interest rates in April.
The advent of the European Economic and Monetary Union (the EMU) on January 1
and the euro currency stimulated the corporate bond market in the 11 member
nations--Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
the Netherlands, Portugal and Spain.
Emerging-markets debt, hurt by a succession of crises in developing nations
such as Russia and Brazil, rebounded toward the end of the reporting period.
Despite an improvement in performance, emerging-markets debt remained volatile.
However, this was of little consequence for the fund since it invests primarily
in developed markets. Foreign bond markets we liked included the United Kingdom,
Canada and Germany.
For most of the reporting period, the U.S. dollar was strong against most
major currencies, particularly the euro, the new EMU currency. The fund
mitigated the effect of a strong dollar by selectively hedging some of its
currency exposure.
WHAT IS YOUR OUTLOOK?
In the United States, the economic climate appears to be favorable for bonds.
Although there is still some question about the Fed's future actions, inflation
remains low. Economic growth is strong, corporate earnings are solid and the
country enjoys nearly full employment.
In most other developed countries, conditions are also "bond-friendly." In
Europe, for example, inflation remains low. Additionally, the corporate mergers
and restructurings now taking place in Europe should increase profitability. We
expect the EMU to continue to revitalize the development of the corporate bond
market in Europe, potentially increasing the fund's investment options.
See important fund and index disclosures inside front cover.
AIM INCOME FUND
3
<PAGE> 6
SEMIANNUAL REPORT / FOR CONSIDERATION
[PAINT BRUSH IMAGE]
CHOOSE YOUR INVESTMENT PALETTE
No two pieces of art are exactly alike. Just as an artist may use different
paints to create a piece, so does an investor use different kinds of investments
to create a portfolio. And as with art, tastes can change over time--most
investors have different goals at different stages in their lives, as well as
varying tolerance for risk. The biggest advantage mutual funds offer is the
potential for diversification. Providing funds with assorted objectives and
goals allows investors to shape their portfolios to their specific needs and
spread their risk over several different funds, rather than painting their
portfolios all one color.
GROWTH VS. INCOME
If you look at the list of AIM's retail mutual funds on the back of your fund
report, you'll notice that they are divided into different types. Two that
frequently appear are growth and income. Common stock is normally the growth
component of a mutual fund with growth as a primary or secondary objective.
Bonds are typically the income components of a mutual fund with income as a
primary or secondary objective.
Let's take a closer look at the categories into which AIM's retail mutual
funds are divided. Keep in mind that funds listed under the same category don't
necessarily have the same kind of investment strategy or portfolio, even if they
have the same objective.
DOMESTIC MUTUAL FUNDS
GROWTH FUNDS
Growth funds typically invest in common stocks of companies whose businesses are
growing. Growth companies tend to reinvest their profits toward expansion of
their potential to produce greater returns instead of paying dividends. So
growth mutual funds focus on generating capital gains--increasing the value of
the stocks they hold--rather than current income, which means they generally
don't pay regular income dividends. Growth funds usually do, however, make one
capital-gains distribution per year, when there are gains.
An increase over time in the value of a growth fund's portfolio means the
fund's value, or share price, increases over time also. Shareholders in a growth
fund, then, make money by selling their shares for more than they paid for them.
Of course, the opposite is also true--shareholders can lose money by selling
their shares for less than they paid for them. Growth funds usually range from
moderate to very aggressive, depending on the size and types of companies in
which they invest.
GROWTH AND INCOME FUNDS
A growth and income fund generally invests in common and preferred stocks and
bonds of older, more established companies that have a longer track record of
growth and paying dividends.
A typical growth and income mutual fund will pay quarterly or annual income
dividends to its shareholders. (Monthly dividends are not common.) In this way,
growth and income funds can potentially provide long-term growth of investments
and also current income. These funds tend to be more conservative than growth
funds.
INCOME FUNDS
Income funds are generally designed to provide high current income rather than
long-term growth. To that end, income funds usually invest chiefly in
interest-paying corporate and government bonds. They may also own stocks of
companies that pay regular dividends. Some income funds are more aggressive than
others. The aggressiveness of a particular fund depends not only on the kinds of
securities in which it invests, but also on the fund's sector allocation and
maturity structure.
For example, Treasury securities are considered a relatively safe investment
because they are guaranteed by the U.S. government. However, lower risk also
means lower return potential. On the other hand, lower-rated corporate bonds,
often called junk bonds, involve more risk because they are not guaranteed--they
are only as good as the companies that issue them. But the added risk also means
higher return potential.
Income funds are considered more conservative and are suited for investors
seeking income rather than growth.
[PALETTE IMAGE]
AIM INCOME FUND
4
<PAGE> 7
SEMIANNUAL REPORT / FOR CONSIDERATION
TAX-FREE INCOME OR MUNICIPAL FUNDS
These funds provide shareholders with current income that is tax-exempt at some
level, depending on the securities in which they invest. So municipal mutual
funds appeal to investors who are looking to reduce income that would otherwise
be subject to tax. Municipal bonds or notes, which are issued by state or local
governments, are generally exempt from federal taxes. Federal securities, like
Treasury bonds, are usually exempt from state taxes. And then there are some
securities that are exempt from both federal and state taxes.(1)
MONEY-MARKET FUNDS
A money-market fund is one of the safest types of mutual funds available because
its main goal is preserving your investment while paying current income in the
form of interest. As a result, these funds tend to appeal to investors looking
for safety, liquidity and some income from their investment. Money-market funds
invest in high-quality, short-term securities such as commercial paper and U.S.
government agency securities. Although money-market funds are not guaranteed or
insured by the U.S. government, the securities they hold are less risky than
other types of fixed-income securities. The trade-off for safety of principal
investment is a lower rate of return.(2)
INTERNATIONAL AND GLOBAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
An international growth fund has the same objective as a domestic growth fund,
except it invests in stocks of companies located outside the United States.
Like their domestic counterparts, international growth funds tend to pay
distributions in the form of capital gains rather than dividends. An
international growth mutual fund might invest in a particular country, region or
continent depending on the investment strategy shown in its prospectus.
International funds carry different risks than domestic funds because most
foreign markets are not as established as the markets in the United States.
Other risks include changes in the value of the U.S. dollar compared to foreign
currencies, accounting differences, political risks and foreign regulatory
differences.
GLOBAL GROWTH, GLOBAL GROWTH AND INCOME, AND GLOBAL INCOME FUNDS
These funds are similar to their domestic equivalents in terms of their goals
and the income distributions they pay. Global funds are comparable to
international funds in that they can invest in stocks of companies outside the
United States. But global funds can also invest substantially in U.S. stocks;
international funds generally do not. The amount of a global fund's portfolio
that can be invested in the United States varies greatly from fund to fund,
according to a fund's prospectus. Global funds carry the same risks as
international funds.
SPECIALIZED FUNDS
THEME FUNDS
Theme or sector funds invest primarily in a particular industry or sector of the
economy, either domestically or globally. Theme funds are required by prospectus
to invest a certain percentage of their assets in their industry or sector of
choice under normal market conditions. As a result, theme funds present greater
risk and potential reward than more diversified funds. The types of securities
held by a theme fund determine its goal of growth and/or income.
TYPES OF FUND DISTRIBUTIONS
INCOME DIVIDENDS are paid from dividends and/or interest from securities in a
fund's portfolio. For example, if a company in which a mutual fund owns stock
distributes some of its earnings to its shareholders as a dividend, the fund
passes on those earnings to its own shareholders. Income dividends are usually
taxed as ordinary income.
CAPITAL GAINS represent the net profit realized from the growth in value of the
holdings in a fund's portfolio. These distributions are usually made once per
year. There are two types of capital gains:
o Short-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for less than a year. Short-term capital
gains are taxed as ordinary income.
o Long-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for more than a year. Long-term capital
gains are usually taxed at the capital-gains rate, which is typically lower
than ordinary income-tax rates.
(1) Investors in tax-free income funds still have a risk of incurring taxes on
capital-gains distributions, for example, so it's wise to see your tax advisor
before investing in such funds.
(2) There is no guarantee that a money-market fund will be able to maintain a
stable net asset value of $1.00 per share.
See the back cover for a complete list of AIM's retail mutual funds. For more
information about your fund's objective, read your fund prospectus. 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.
AIM INCOME FUND
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS &
NOTES-68.43%
AGRICULTURAL PRODUCTS-0.55%
Cargill, Inc., Notes, 6.875%,
05/01/28 (Acquired 03/12/99;
Cost $3,992,080)(b) $ 4,000,000 $ 3,721,360
- --------------------------------------------------------------
AIR FREIGHT-0.26%
Atlas Air, Inc., Sr. Notes,
10.75%, 08/01/05 1,720,000 1,767,300
- --------------------------------------------------------------
AIRLINES-2.96%
Airplanes Pass Through Trust,
Series D Gtd. Sub. Bonds,
10.875%, 03/15/19 1,810,000 1,744,197
- --------------------------------------------------------------
Delta Air Lines, Inc.,
Deb., 9.00%, 05/15/16 500,000 545,780
- --------------------------------------------------------------
Deb., 10.375%, 12/15/22 5,000,000 6,211,700
- --------------------------------------------------------------
Equipment Trust Ctfs., 10.50%,
04/30/16 5,000,000 6,151,950
- --------------------------------------------------------------
Dunlop Stand Aero Holdings, Sr.
Notes, 11.875%, 05/15/09
(Acquired 05/07/97; Cost
$2,698,265)(b) 2,710,000 2,764,200
- --------------------------------------------------------------
United Air Lines, Inc., Pass
Through Ctfs., 9.56%, 10/19/18 2,325,000 2,606,557
- --------------------------------------------------------------
20,024,384
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.68%
Advance Stores Co., Inc., Series B
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 2,000,000 1,920,000
- --------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 2,640,000 2,666,400
- --------------------------------------------------------------
4,586,400
- --------------------------------------------------------------
AUTOMOBILES-1.13%
General Motors Corp., Deb., 8.80%,
03/01/21 6,700,000 7,634,918
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.56%
Regions Financial Corp., Sub.
Notes, 7.75%, 09/15/24 3,650,000 3,787,349
- --------------------------------------------------------------
BANKS (MONEY CENTER)-1.80%
First Union Bancorp, Sub. Deb.,
7.50%, 04/15/35 5,900,000 6,070,569
- --------------------------------------------------------------
HSBC Holdings PLC (United
Kingdom), Sub. Notes, 7.50%,
07/15/09 6,020,000 6,087,304
- --------------------------------------------------------------
12,157,873
- --------------------------------------------------------------
BANKS (REGIONAL)-1.08%
Mercantile Bancorp, Inc., Unsec.
Sub. Notes, 7.30%, 06/15/07 5,000,000 5,062,150
- --------------------------------------------------------------
US Bancorp, Sub. Deb., 7.50%,
06/01/26 2,200,000 2,248,334
- --------------------------------------------------------------
7,310,484
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
BEVERAGES (NON-ALCOHOLIC)-0.83%
Coca-Cola Enterprises, Inc.,
Putable Notes, 8.35%,
06/20/20(c) $25,500,000 $ 5,639,325
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-3.74%
Comcast Cable Communications,
Notes, 8.50%, 05/01/27 3,000,000 3,344,730
- --------------------------------------------------------------
CSC Holdings, Inc., Sr. Unsec.
Deb.
7.88%, 02/15/18 6,000,000 5,823,720
- --------------------------------------------------------------
7.63%, 07/15/18 6,650,000 6,294,757
- --------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(d) 5,680,000 3,578,400
- --------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.875%, 10/15/07(d) 4,100,000 2,388,250
- --------------------------------------------------------------
USA Networks, Inc., Sr. Unsec.
Gtd. Notes, 6.75%, 11/15/05 4,000,000 3,843,372
- --------------------------------------------------------------
25,273,229
- --------------------------------------------------------------
CHEMICALS-0.78%
Nova Gas Transmission Ltd.
(Canada), Yankee Deb., 8.50%,
12/15/12 3,000,000 3,336,240
- --------------------------------------------------------------
Sterling Chemicals, Inc., Sr.
Unsec. Sub. Notes, 11.75%,
08/15/06 2,505,000 1,941,375
- --------------------------------------------------------------
5,277,615
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.33%
Dialog Corp. PLC (United Kingdom),
Series A Sr. Sub. Notes, 11.00%,
11/15/07 1,500,000 1,365,000
- --------------------------------------------------------------
ProNet, Inc., Sr. Sub. Notes,
11.875%, 06/15/05 1,000,000 885,000
- --------------------------------------------------------------
2,250,000
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-0.41%
Exodus Communications, Sr. Unsec.
Notes, 11.25%, 07/01/08 2,600,000 2,749,500
- --------------------------------------------------------------
CONSUMER FINANCE-0.22%
Commercial Credit Co., Putable
Notes, 7.875%, 02/01/25 1,400,000 1,480,360
- --------------------------------------------------------------
CONTAINERS & PACKAGING
(PAPER)-0.11%
BPC Holding Corp., Series B Sr.
Sec. Notes, 12.50%, 06/15/06 785,000 769,300
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.22%
Fleming Companies, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.625%,
07/31/07 1,600,000 1,496,000
- --------------------------------------------------------------
ELECTRIC COMPANIES-4.54%
Cleveland Electric Illumination,
Series D Sr. Sec. Notes, 7.88%,
11/01/17 3,800,000 3,894,761
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
ELECTRIC COMPANIES-(CONTINUED)
CMS Energy Corp., Sr. Unsec.
Notes, 8.125%, 05/15/02 $ 850,000 $ 866,855
- --------------------------------------------------------------
El Paso Electric Co.,
Series D Sec. First Mortgage
Bonds, 8.90%, 02/01/06 2,500,000 2,696,250
- --------------------------------------------------------------
Series E, Sec. First Mortgage
Notes, 9.40%, 05/01/11 4,600,000 5,171,826
- --------------------------------------------------------------
Niagara Mohawk Power Corp.,
First Mortgage Notes, 7.75%,
05/15/06 4,300,000 4,504,293
- --------------------------------------------------------------
Series G Sr. Unsec. Notes,
7.75%, 10/01/08 2,200,000 2,266,000
- --------------------------------------------------------------
Sr. Unsec. Disc. Notes, 8.50%,
07/01/10 (Acquired 11/20/98;
Cost $6,041,200)(b)(d) 8,000,000 6,014,640
- --------------------------------------------------------------
Western Resources, Inc., Sr.
Unsec. Notes, 7.125%, 08/01/09 5,352,000 5,324,384
- --------------------------------------------------------------
30,739,009
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.15%
Electronic Retailing Systems
International, Inc., Sr. Disc.
Notes, 13.25%, 02/01/04(d) 3,630,000 1,034,550
- --------------------------------------------------------------
ENTERTAINMENT-2.55%
Ascent Entertainment Group, Sr.
Sec. Disc. Notes, 11.875%,
12/15/04(d) 1,460,000 1,058,500
- --------------------------------------------------------------
Time Warner, Inc., Deb.,
9.125%, 01/15/13 5,000,000 5,719,050
- --------------------------------------------------------------
9.15%, 02/01/23 9,000,000 10,455,210
- --------------------------------------------------------------
17,232,760
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.01%
Associates Corp. of North America,
Series B Sr. Deb., 7.95%,
02/15/10 6,000,000 6,353,880
- --------------------------------------------------------------
Sr. Deb., 6.95%, 11/01/18 3,000,000 2,856,390
- --------------------------------------------------------------
Sumitomo Bank International
Finance N.V. (Japan), Gtd. Sub.
Notes, 8.50%, 06/15/09 4,350,000 4,385,753
- --------------------------------------------------------------
13,596,023
- --------------------------------------------------------------
FOODS-1.82%
AmeriServe Food Distributors,
Inc., Sr. Unsec. Gtd. Notes,
8.875%, 10/15/06 990,000 915,750
- --------------------------------------------------------------
ConAgra, Inc., Sr. Unsec. Notes,
7.125%, 10/01/26 6,100,000 6,136,478
- --------------------------------------------------------------
Grand Metro Investment, Gtd.
Bonds, 7.45%, 04/15/35 5,000,000 5,229,200
- --------------------------------------------------------------
12,281,428
- --------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES-0.89%
Argosy Gaming, Sr. Sub. Notes,
10.75%, 06/01/09 (Acquired
06/03/99; Cost $3,000,000)(b) 3,000,000 3,075,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-(CONTINUED)
Venetian Casino Resort LLC, Gtd.
Mortgage Notes, 12.25%, 11/15/04 $ 3,000,000 $ 2,955,000
- --------------------------------------------------------------
6,030,000
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.28%
Harborside Healthcare, Sr. Unsec.
Gtd. Disc. Sub. Notes, 11.00%,
08/01/08(d) 4,550,000 1,916,687
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.49%
Beckman Coulter Inc., Sr. Unsec.
Gtd. Notes, 7.45%, 03/04/08 3,500,000 3,333,155
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.43%
Team Health, Inc., Sr. Sub. Notes,
12.00%, 03/15/09 (Acquired
03/05/99; Cost $2,870,000)(b) 2,870,000 2,927,400
- --------------------------------------------------------------
HOMEBUILDING-0.62%
D.R. Horton, Inc.,
Sr. Unsec. Gtd. Notes, 8.00%,
02/01/09 3,600,000 3,420,000
- --------------------------------------------------------------
Unsec. Gtd. Notes, 10.00%,
04/15/06 745,000 795,287
- --------------------------------------------------------------
4,215,287
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-0.41%
Procter & Gamble Co. (The),
Putable Deb., 8.00%, 09/01/24 2,500,000 2,792,450
- --------------------------------------------------------------
HOUSEWARES-0.36%
Decora Industries, Inc., Series B
Sr. Sec. Gtd. Notes, 11.00%,
05/01/05 2,500,000 2,412,500
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.78%
Americo Life, Inc., Sr. Sub.
Notes, 9.25%, 06/01/05 1,000,000 1,015,000
- --------------------------------------------------------------
Sun Life Canada Capital Trust,
Gtd. Notes, 8.526%, 05/29/49
(Acquired 11/05/98; Cost
$3,152,490)(b) 3,000,000 3,033,210
- --------------------------------------------------------------
Torchmark Corp., Notes, 7.875%,
05/15/23 8,000,000 8,007,760
- --------------------------------------------------------------
12,055,970
- --------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-1.35%
Terra Nova Holdings Co. (United
Kingdom),
Sr. Yankee Sec. Gtd. Notes,
7.20%, 08/15/07 2,200,000 2,138,224
- --------------------------------------------------------------
Sr. Unsec. Gtd. Notes, 7.00%,
05/15/08 2,000,000 1,914,500
- --------------------------------------------------------------
USF&G Corp., Gtd. Series B Bonds,
8.47%, 01/10/27 5,000,000 5,056,250
- --------------------------------------------------------------
9,108,974
- --------------------------------------------------------------
IRON & STEEL-0.42%
Acme Metal, Inc., Sr. Unsec. Gtd.
Notes, 10.875%, 12/15/07(e) 3,240,000 372,600
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
IRON & STEEL-(CONTINUED)
GS Industries, Inc., Sr. Gtd.
Notes, 12.00%, 09/01/04 $ 3,000,000 $ 2,490,000
- --------------------------------------------------------------
2,862,600
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.32%
Marvel Enterprises, Inc., Sr.
Notes, 12.00%, 06/15/09
(Acquired 02/17/99; Cost
$2,075,000)(b) 2,075,000 2,163,187
- --------------------------------------------------------------
LODGING-HOTELS-0.54%
John Q. Hammons Hotels, Inc., Sec.
First Mortgage Notes, 9.75%,
10/01/05 2,000,000 1,915,000
- --------------------------------------------------------------
Stena Line A.B. (Sweden), Sr.
Yankee Notes, 10.625%, 06/01/08 2,300,000 1,742,250
- --------------------------------------------------------------
3,657,250
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.87%
Caterpillar, Inc., Deb., 9.375%,
08/15/11 5,000,000 5,897,650
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.70%
Anthony Crane Rentals, Sr. Notes,
10.375%, 08/01/08 1,500,000 1,455,000
- --------------------------------------------------------------
Elgin National Industries, Series
B Sr. Unsec. Gtd. Notes, 11.00%,
11/01/07 1,265,000 1,258,675
- --------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07 2,310,000 2,044,350
- --------------------------------------------------------------
4,758,025
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.55%
Brand Scaffold Services, Sr.
Unsec. Notes, 10.25%, 02/15/08 1,600,000 1,560,000
- --------------------------------------------------------------
MMI Products, Inc., Sr. Unsec.
Sub. Notes, 11.25%, 04/15/07 2,070,000 2,132,100
- --------------------------------------------------------------
3,692,100
- --------------------------------------------------------------
METALS MINING-0.84%
Centaur Mining & Exploration Ltd.
(Australia), Sr. Yankee Sec.
Gtd. Notes, 11.00%, 12/01/07 2,500,000 2,306,250
- --------------------------------------------------------------
Rio Algom Ltd. (Canada), Yankee
Unsec. Deb., 7.05%, 11/01/05 3,500,000 3,368,960
- --------------------------------------------------------------
5,675,210
- --------------------------------------------------------------
NATURAL GAS-1.93%
Dynegy, Inc., Sr. Unsec. Deb.,
7.125%, 05/15/18 4,000,000 3,739,680
- --------------------------------------------------------------
Enron Corp., Sr. Sub. Deb., 8.25%,
09/15/12 4,100,000 4,347,435
- --------------------------------------------------------------
K N Energy, Inc., Unsec. Deb.,
7.35%, 08/01/26 5,000,000 4,939,650
- --------------------------------------------------------------
13,026,765
- --------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.50%
NRG Energy, Inc., Sr. Unsec.
Notes, 7.50%, 06/01/09 3,400,000 3,354,032
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)-2.31%
Anadarko Petroleum Corp., Deb.,
7.25%, 03/15/25 $ 5,395,000 $ 5,458,068
- --------------------------------------------------------------
Canadian Forest Oil Ltd. (Canada),
Sr. Yankee Unsec. Gtd. Sub.
Notes, 8.75%, 09/15/07 3,270,000 3,163,725
- --------------------------------------------------------------
Chesapeake Energy Corp., Series B
Sr. Unsec. Gtd. Notes, 9.625%,
05/01/05 915,000 860,100
- --------------------------------------------------------------
Talisman Energy, Inc. (Canada),
Yankee Deb., 7.125%, 06/01/07 3,750,000 3,660,600
- --------------------------------------------------------------
Tennessee Gas Pipeline Co., Unsec.
Bonds, 7.00%, 03/15/27 2,450,000 2,449,902
- --------------------------------------------------------------
15,592,395
- --------------------------------------------------------------
OIL & GAS (REFINING &
MARKETING)-1.43%
Sun Co., Inc., Deb., 9.00%,
11/01/24 4,000,000 4,451,240
- --------------------------------------------------------------
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.125%,
07/01/06 2,010,000 1,798,950
- --------------------------------------------------------------
Tosco Corp., Unsec. Deb., 7.80%,
01/01/27 3,400,000 3,428,832
- --------------------------------------------------------------
9,679,022
- --------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-0.28%
Husky Oil Ltd. (Canada), Sr.
Yankee Notes, 7.125%, 11/15/06 2,000,000 1,917,080
- --------------------------------------------------------------
PERSONAL CARE-0.57%
Alberto-Culver Corp., Unsec. Deb.,
6.375%, 06/15/28 4,000,000 3,855,200
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.35%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 2,220,000 2,364,300
- --------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-1.81%
AES Corp., Sr. Sub. Notes, 10.25%,
07/15/06 1,000,000 1,030,000
- --------------------------------------------------------------
Indiana Michigan Power, Sec. Lease
Obligation Bonds, 9.82%,
12/07/22 4,968,690 6,123,612
- --------------------------------------------------------------
Kincaid Generation LLC, Sec.
Bonds, 7.33%, 06/15/20 (Acquired
04/30/98; Cost $2,004,940)(b) 2,000,000 1,906,802
- --------------------------------------------------------------
MidAmerican Energy Holdings Co.,
Sr. Unsec. Bonds, 8.48%,
09/15/28 3,000,000 3,212,310
- --------------------------------------------------------------
12,272,724
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-2.19%
News America Holdings, Inc.,
Sr. Gtd. Deb., 9.25%, 02/01/13 7,100,000 8,002,481
- --------------------------------------------------------------
Sr. Gtd. Putable Bonds, 7.43%,
10/01/26 1,000,000 1,012,900
- --------------------------------------------------------------
Sr. Notes, 8.45%, 08/01/34 3,000,000 3,173,370
- --------------------------------------------------------------
United News & Media PLC (United
Kingdom), Yankee Notes, 7.75%,
07/01/09 2,650,000 2,645,124
- --------------------------------------------------------------
14,833,875
- --------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
RAILROADS-2.13%
CSX Corp.,
Sr. Unsec. Putable Deb., 6.95%,
05/01/27 $ 2,000,000 $ 2,007,520
- --------------------------------------------------------------
Sr. Unsec. Putable Deb., 7.25%,
05/01/27 7,000,000 7,046,900
- --------------------------------------------------------------
Series C Medium Term Notes,
6.80%, 12/01/28 2,850,000 2,570,441
- --------------------------------------------------------------
Norfolk Southern Corp., Putable
Bonds, 7.05%, 05/01/37 2,750,000 2,799,830
- --------------------------------------------------------------
14,424,691
- --------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUSTS-1.40%
Glenborough Properties, Series B
Sr. Unsec. Notes, 7.625%,
03/15/05 3,900,000 3,476,565
- --------------------------------------------------------------
Health Care REIT, Inc., Sr. Unsec.
Notes, 7.625%, 03/15/08 3,000,000 2,759,760
- --------------------------------------------------------------
Spieker Properties LP, Unsec.
Deb., 7.35%, 12/01/17 3,500,000 3,251,920
- --------------------------------------------------------------
9,488,245
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.58%
Fred Meyer, Inc., Sr. Notes,
7.45%, 03/01/08 2,500,000 2,530,750
- --------------------------------------------------------------
Plainwell, Inc., Series B Sr.
Unsec. Sub. Notes, 11.00%,
03/01/08 1,710,000 1,376,550
- --------------------------------------------------------------
3,907,300
- --------------------------------------------------------------
RETAIL (SPECIALTY)-1.42%
CEX Holdings, Inc., Series B Sr.
Unsec. Gtd. Sub. Notes, 9.625%,
06/01/08 1,810,000 1,705,925
- --------------------------------------------------------------
Neff Corp., Sr. Sub. Notes,
10.25%, 06/01/08 5,190,000 5,345,700
- --------------------------------------------------------------
Rent-A-Center, Inc., Sr. Sub.
Notes, 11.00%, 08/15/08 2,500,000 2,518,750
- --------------------------------------------------------------
9,570,375
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.48%
Big 5 Corp., Sr. Unsec. Notes,
10.875%, 11/15/07 2,000,000 2,040,000
- --------------------------------------------------------------
J Crew Operating Corp., Sr. Sub.
Notes, 10.375%, 10/15/07 1,255,000 1,236,175
- --------------------------------------------------------------
3,276,175
- --------------------------------------------------------------
RETAIL-SPECIALTY STORES-0.11%
CSK Auto Inc., Sr. Gtd. Sub. Deb.,
11.00%, 11/01/06 715,000 740,025
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.76%
Sovereign Bancorp, Inc., Sub.
Notes, 8.00%, 03/15/03 5,050,000 5,112,064
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.45%
Hydrochem Industrial Service,
Series B Sr. Sec. Gtd. Sub.
Notes, 10.375%, 08/01/07 1,135,000 1,027,175
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
SERVICES (COMMERCIAL & CONSUMER)-(CONTINUED)
Laidlaw, Inc. (Canada),
Yankee Deb., 6.72%, 10/01/27 $ 2,000,000 $ 1,836,440
- --------------------------------------------------------------
Yankee Unsec. Deb., 6.70%,
05/01/08 3,550,000 3,224,004
- --------------------------------------------------------------
Protection One, Inc., Sr. Unsec.
Gtd. Notes, 7.375%, 08/15/05 4,000,000 3,699,920
- --------------------------------------------------------------
9,787,539
- --------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.29%
MSX International, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.375%,
01/15/08 1,980,000 1,930,500
- --------------------------------------------------------------
SHIPPING-0.23%
Pegasus Shipping Hellas Co.
(Bermuda), Series A Sr. Sec.
Gtd. Sec. Mortgage Notes,
11.875%, 11/15/04 2,850,000 1,581,750
- --------------------------------------------------------------
SOVEREIGN DEBT-2.30%
Province of Manitoba (Canada),
Yankee Bonds, 7.75%, 07/17/16 7,500,000 8,093,400
- --------------------------------------------------------------
Province of Quebec (Canada), Series A Yankee
Notes,
5.735%, 03/02/26 3,500,000 3,487,330
- --------------------------------------------------------------
6.29%, 03/06/26 4,000,000 3,992,360
- --------------------------------------------------------------
15,573,090
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-1.47%
Nextel Communications, Inc., Sr.
Unsec. Notes, 12.00%, 11/01/08 3,375,000 3,847,500
- --------------------------------------------------------------
PageMart Wireless, Inc., Sr. Sub.
Disc. Notes, 11.25%, 02/01/08(d) 3,110,000 1,290,650
- --------------------------------------------------------------
Powertel, Inc., Sr. Unsec. Notes,
11.125%, 06/01/07 4,630,000 4,792,050
- --------------------------------------------------------------
9,930,200
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-3.51%
Call-Net Enterprises, Inc.
(Canada), Sr. Unsec. Disc.
Yankee Notes,
8.94%, 08/15/08(d) 1,990,000 1,124,350
- --------------------------------------------------------------
10.80%, 05/15/09(d) 4,000,000 2,220,000
- --------------------------------------------------------------
Centel Capital, Deb., 9.00%,
10/15/19 3,800,000 4,474,538
- --------------------------------------------------------------
Econophone, Inc., Sr. Unsec.
Notes, 13.50%, 07/15/07 3,500,000 3,736,250
- --------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee
Notes, 11.50%, 12/15/07 1,500,000 1,635,000
- --------------------------------------------------------------
MCI Communications Corp., Putable
Sr. Unsec. Deb., 7.125%,
06/15/27 5,500,000 5,558,135
- --------------------------------------------------------------
Primus Telecom Group, Sr. Notes,
11.25%, 01/15/09 (Acquired
01/22/99; Cost $3,500,000)(b) 3,500,000 3,570,000
- --------------------------------------------------------------
Versatel Telecom B.V.
(Netherlands), Sr. Notes,
13.25%, 05/15/08(f) 1,370,000 1,424,800
- --------------------------------------------------------------
23,743,073
- --------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TELEPHONE-1.76%
Alestra S.A. De RL De C.V.
(Mexico), Sr. Notes, 12.625%,
05/15/09 (Acquired 05/12/99;
Cost $3,000,000)(b) $ 3,000,000 $ 2,910,000
- --------------------------------------------------------------
Cable & Wireless Communications
PLC (United Kingdom), Yankee
Notes, 6.75%, 03/06/08 1,250,000 1,201,450
- --------------------------------------------------------------
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%, 02/15/08(d) 4,000,000 2,250,000
- --------------------------------------------------------------
NTL Communications Corp., Series B
Sr. Unsec. Notes, 11.50%,
10/01/08 2,655,000 2,940,413
- --------------------------------------------------------------
SBC Communications, Inc., Deb.,
7.375%, 07/15/43 1,200,000 1,177,272
- --------------------------------------------------------------
Worldwide Fiber, Inc., Sr. Notes,
12.50%, 12/15/05 (Acquired
01/28/99; Cost $1,465,750)(b) 1,430,000 1,447,875
- --------------------------------------------------------------
11,927,010
- --------------------------------------------------------------
TRUCKERS-0.32%
Travelcenters of America, Inc.,
Sr. Unsec. Gtd. Sub. Deb.,
10.25%, 04/01/07 2,180,000 2,190,900
- --------------------------------------------------------------
WASTE MANAGEMENT-1.27%
Browning-Ferris, Deb., 9.25%,
05/01/21 2,570,000 2,543,144
- --------------------------------------------------------------
WMX Technologies, Inc., Unsec.
Putable Notes, 7.10%, 08/01/26 6,000,000 6,078,600
- --------------------------------------------------------------
8,621,744
- --------------------------------------------------------------
Total U.S. Dollar Denominated
Non-Convertible Bonds &
Notes (Cost $477,728,825) 463,007,686
- --------------------------------------------------------------
U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS & NOTES-2.43%
COMPUTERS (HARDWARE)-0.23%
Candescent Technology Corp., Conv.
Sr. Sub. Deb., 7.00%, 05/01/03
(Acquired 04/20/98; Cost
$2,000,000)(b) 2,000,000 1,560,000
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.72%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 (Acquired
03/06/97; Cost $1,000,000)(b) 1,000,000 4,877,500
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.22%
Omnicare, Inc., Conv. Sub. Deb.,
5.00%, 12/01/07 (Acquired
12/04/97; Cost $2,000,000)(b) 2,000,000 1,475,000
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.36%
Amazon.com, Inc., Conv. Deb.,
4.75%, 02/01/09 (Acquired
01/29/99; Cost $2,507,500)(b) 2,500,000 2,426,562
- --------------------------------------------------------------
SHIPPING-0.34%
Hutchison Delta Finance (Cayman
Islands), Conv. Unsec. Notes,
7.00%, 11/08/02 2,000,000 2,320,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TELEPHONE-0.56%
Bell Atlantic Financial Services,
Inc., Conv. Bonds, 4.25%,
09/15/05 $ 3,700,000 $ 3,782,133
- --------------------------------------------------------------
Total U.S. Dollar Denominated
Convertible Bonds & Notes
(Cost $13,724,500) 16,441,195
- --------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED NON-CONVERTIBLE
BONDS & NOTES-13.82%(G)
CANADA-5.65%
Bank of Montreal (Banks-Money
Center), Sub. Deb., 7.92%,
07/31/12 CAD 4,000,000 $ 3,010,791
- --------------------------------------------------------------
Bell Canada
(Telecommunications-Cellular/
Wireless), Unsec. Deb., 10.875%,
10/11/04 CAD 3,000,000 2,440,420
- --------------------------------------------------------------
Bell Mobility Cellular, Inc.
(Telecommunications-Cellular/Wireless),
Deb., 6.55%, 06/02/08 CAD 2,250,000 1,510,791
- --------------------------------------------------------------
Canadian Pacific Ltd.
(Manufacturing- Diversified),
Unsec. Notes, 5.85%, 03/30/09CAD 3,250,000 2,148,573
- --------------------------------------------------------------
Clearnet Communications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes,
11.75%, 08/13/07(d) CAD 8,200,000 3,756,362
- --------------------------------------------------------------
10.40%, 05/15/08(d) CAD 9,050,000 3,685,103
- --------------------------------------------------------------
GMAC Canada Ltd.
(Financial-Diversified), Sr.
Unsec. Gtd. Unsub. Notes, 6.50%,
03/23/04 GBP 2,800,000 4,422,243
- --------------------------------------------------------------
Loblaw Co. Ltd. (Retail-Food
Chains), Unsec. Notes, 6.45%,
03/01/39 CAD 4,600,000 2,983,959
- --------------------------------------------------------------
Microcell Telecommunications
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes, 11.125%,
10/15/07(d) CAD 3,500,000 1,466,746
- --------------------------------------------------------------
NAV Canada (Services-Commercial &
Consumer), Bonds, 7.40%,
06/01/27 CAD 2,500,000 1,961,384
- --------------------------------------------------------------
Poco Petroleums Ltd. (Oil &
Gas-Exploration & Production),
Unsec. Deb., 6.60%, 09/11/07 CAD 4,150,000 2,690,642
- --------------------------------------------------------------
Telegobe Canada, Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 CAD 5,000,000 3,680,658
- --------------------------------------------------------------
TransCanada Pipelines (Natural
Gas),
Series Q Deb., 10.625%,
10/20/09 CAD 1,750,000 1,549,430
- --------------------------------------------------------------
Unsec. Notes, 8.55%, 02/01/06CAD 3,000,000 2,266,176
- --------------------------------------------------------------
Westcoast Energy, Inc. (Natural
Gas), Unsec. Series V Deb.,
6.45%, 12/18/06 CAD 1,000,000 691,585
- --------------------------------------------------------------
38,264,863
- --------------------------------------------------------------
NETHERLANDS-2.51%
Dresdner Finance B.V. (Banks-Major
Regional), Series 11 Gtd. Notes,
3.072%, 07/30/03 EUR 4,700,000 4,832,795
- --------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
NETHERLANDS-(CONTINUED)
Hypovereins Finance N.V.
(Banks-Major Regional), Gtd.
Series E Medium Term Notes,
6.00%, 03/12/07 DEM 1,485,000 $ 823,253
- --------------------------------------------------------------
KPNQWest B.V.
(Telecommunications-Long
Distance), Sr. Unsec. Notes,
7.125%, 06/01/09 (Acquired
05/25/99; Cost $5,255,824)(b)EUR 5,000,000 5,153,000
- --------------------------------------------------------------
Mannesmann Finance B.V. (Machinery
Diversified), Gtd. Unsec. Unsub.
Notes, 4.75%, 05/27/09 EUR 1,890,000 1,861,724
- --------------------------------------------------------------
Prudential Financial B.V.
(Investment Banking/ Brokerage),
Sr. Unsec. Gtd. Bonds, 9.375%,
06/04/07 GBP 2,300,000 4,286,147
- --------------------------------------------------------------
16,956,919
- --------------------------------------------------------------
NEW ZEALAND-0.70%
Inter-American Development Bank
(Banks- Money Center), Unsec.
Bonds, 5.75%, 04/15/04 NZD 4,750,000 2,405,419
- --------------------------------------------------------------
International Bank of
Reconstruction & Development
(Banks-Money Center), Sr. Unsec.
Notes, 6.77%, 08/20/07(c) NZD 8,000,000 2,311,909
- --------------------------------------------------------------
4,717,328
- --------------------------------------------------------------
SWEDEN-1.21%
AB Spintab (Banks-Regional),
Series 161, Unsec. Deb., 7.50%,
06/15/04 SEK 24,000,000 3,101,909
- --------------------------------------------------------------
Stadshypotek A.B.
(Banks-Regional), Series 1562,
Notes, 3.50%, 09/15/04 SEK 47,000,000 5,086,072
- --------------------------------------------------------------
8,187,981
- --------------------------------------------------------------
UNITED STATES-0.56%
General Electric Capital Corp.
(Financial- Diversified), Sr.
Unsec. Unsub. Notes, 6.00%,
02/05/03 GBP 2,400,000 3,782,830
- --------------------------------------------------------------
UNITED KINGDOM-3.19%
European Investment Bank
(Banks-Money Center), Unsec.
Unsub. Notes, 7.625%,
12/07/07 GBP 2,660,000 4,656,090
- --------------------------------------------------------------
Lloyds Bank PLC (Banks-Major
Regional), Sub. Notes, 5.25%,
07/14/08 DEM 6,400,000 3,368,594
- --------------------------------------------------------------
Merrill Lynch & Co. (Investment
Banking/ Brokerage), Sr. Unsec.
Unsub. Notes, 7.375%,
12/17/07 GBP 1,910,000 3,153,589
- --------------------------------------------------------------
National Power PLC (Electric
Companies), Sr. Unsec. Unsub.
Notes, 8.00%, 02/21/07 AUD 5,000,000 3,387,706
- --------------------------------------------------------------
Sutton Bridge Financial Ltd.
(Financial- Diversified), Gtd.
Eurobonds, 8.625%, 06/30/22
(Acquired 05/29/97; Cost
$3,260,778)(b) GBP 2,000,000 3,610,886
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Union Bank of Switzerland-London
(Banks- Major Regional), Unsec.
Sub. Notes, 8.00%, 01/08/07 GBP 2,000,000 $ 3,413,808
- --------------------------------------------------------------
21,590,673
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Non-Convertible
Bonds & Notes (Cost
$98,246,632) 93,500,594
- --------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS &
NOTES-2.85%(G)
LUXEMBOURG-0.92%
Daimler-Benz A.G. (Automobiles),
Conv. Gtd. Unsub. Eurobonds,
4.125%, 07/05/03 DEM 6,440,000 6,210,091
- --------------------------------------------------------------
UNITED KINGDOM-1.93%
Airtours PLC (Services-Commercial
& Consumer), Series RG Conv.
Notes, 5.75%, 01/05/04 (Acquired
12/09/98; Cost $3,091,887)(b)GBP 1,869,000 3,583,086
- --------------------------------------------------------------
National Grid Co. PLC (Electric
Companies), Conv. Bonds, 4.25%,
02/17/08 (Acquired 02/05/98;
Cost $3,729,375)(b) GBP 2,250,000 4,162,778
- --------------------------------------------------------------
Scotia Holdings PLC (Health
Care-Drugs- Generic & Other),
Conv. Unsec. Notes, 8.50%,
03/26/02 GBP 1,000,000 1,208,205
- --------------------------------------------------------------
Telewest Communications PLC
(Leisure Time- Products), Sr.
Unsec. Conv. Notes, 5.25%,
02/19/07 GBP 2,530,000 4,128,666
- --------------------------------------------------------------
13,082,735
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Convertible
Bonds & Notes (Cost
$17,341,088) 19,292,826
- --------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED GOVERNMENT BONDS &
NOTES-6.65%(G)
AUSTRALIAN DOLLAR-1.07%
New South Wales Treasury Corp.,
Gtd. Notes, 7.00%, 04/01/04 AUD 10,600,000 7,252,961
- --------------------------------------------------------------
BRITISH POUND STERLING-0.57%
Federal National Mortgage
Association, Sr. Unsec. Notes,
6.875%, 06/07/02 GBP 2,400,000 3,877,787
- --------------------------------------------------------------
CANADIAN DOLLAR-1.25%
Ontario Province, Sr. Unsec.
Unsub. Global Bonds, 8.00%,
03/11/03 CAD 5,350,000 3,890,552
- --------------------------------------------------------------
Province of British Columbia,
Unsec. Unsub. Deb., 5.25%,
12/01/06 CAD 7,000,000 4,565,083
- --------------------------------------------------------------
8,455,635
- --------------------------------------------------------------
DANISH KRONE-0.91%
Kingdom of Denmark, Bonds, 7.00%,
12/15/04 DKK 39,500,000 6,159,997
- --------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
EURO-1.89%
Bundesrepublic Deutschland, Bonds,
7.25%, 10/21/02 EUR 4,000,000 $ 4,577,451
- --------------------------------------------------------------
Treuhandanstalt, Gtd. Notes,
6.00%, 11/12/03 EUR 7,345,000 8,187,616
- --------------------------------------------------------------
12,765,067
- --------------------------------------------------------------
NEW ZEALAND DOLLAR-0.96%
New Zealand Government, Bonds,
10.00%, 03/15/02 NZD 4,575,000 2,680,066
- --------------------------------------------------------------
8.00%, 04/15/04 NZD 4,580,000 2,599,831
- --------------------------------------------------------------
Province of Ontario, Unsec. Unsub.
Notes, 6.25%, 12/03/08 NZD 2,500,000 1,202,626
- --------------------------------------------------------------
6,482,523
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Government Bonds
& Notes (Cost $46,933,604) 44,993,970
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
DOMESTIC COMMON STOCKS-0.03%
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.03%
Nextel Communications, Inc.-Class
A (Cost $74,234)(h) 4,600 $ 230,862
- --------------------------------------------------------------
DOMESTIC PREFERRED STOCKS-2.33%
BANKS (REGIONAL)-0.97%
First Republic Cap. Corp., Series
A-$105 Pfd. (Acquired 05/26/99;
Cost $3,500,000)(b) 3,500 3,502,188
- --------------------------------------------------------------
Westpac Banking Corp. STRYPES
Trust-$3.135 Conv. Pfd. 95,000 3,075,625
- --------------------------------------------------------------
6,577,813
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.27%
Microsoft Corp., Series A-$2.196
Conv. Pfd. 18,000 1,798,875
- --------------------------------------------------------------
ENTERTAINMENT-0.39%
Houston Industries, Inc.-$3.22
Conv. Pfd. 22,000 2,623,500
- --------------------------------------------------------------
FOODS-0.16%
Ralston Purina Co.-$4.34 Conv.
Pfd. 23,000 1,069,500
- --------------------------------------------------------------
OIL & GAS (REFINING &
MARKETING)-0.14%
Tosco Financing Trust-$2.875 Conv.
Pfd. (Acquired
12/10/96-12/11/96; Cost
$1,006,950)(b) 20,000 980,000
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.40%
Cendant Corp.-$3.75 Conv. PRIDES 78,000 2,686,125
- --------------------------------------------------------------
Total Domestic Preferred
Stocks (Cost $14,790,538) 15,735,813
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-0.09%
UNITED KINGDOM-0.09%
PowerGen PLC.-ADR (Electric
Companies) (Cost $467,674) 14,000 $ 600,250
- --------------------------------------------------------------
WARRANTS-0.03%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.00%
Knology Holdings, Inc., expiring
10/15/07 (Acquired 03/12/98;
Cost $0)(b)(i) 4,100 9,225
- --------------------------------------------------------------
Wireless One, Inc., expiring
10/19/00(i) 2,670 27
- --------------------------------------------------------------
9,252
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.01%
Electronic Retailing Systems
International, expiring
02/01/04(i) 3,630 18,150
- --------------------------------------------------------------
METAL FABRICATORS-0.00%
Gulf States Steel, Inc., expiring
04/15/03(i) 1,650 16
- --------------------------------------------------------------
PERSONAL CARE-0.00%
IHF Capital, Inc., Series I,
expiring 11/14/99(i) 1,200 600
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.01%
Clearnet Communications Inc.
(Canada), expiring 09/15/05(i) 5,874 49,929
- --------------------------------------------------------------
Loral Space & Communications,
Ltd., expiring 01/15/07(i) 3,400 35,700
- --------------------------------------------------------------
85,629
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.01%
Versatel Telecom B.V.
(Netherlands), expiring
01/15/07(i) 1,370 68,843
- --------------------------------------------------------------
Total Warrants (Cost $50,050) 182,490
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(a)
<S> <C> <C>
U.S. TREASURY SECURITIES-1.02%
U.S. TREASURY NOTES-1.02%
4.75%, 01/02/04 $ 5,000,000 $ 4,806,650
- --------------------------------------------------------------
6.875%, 02/15/08 2,000,000 2,106,900
- --------------------------------------------------------------
6,913,550
- --------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $6,958,718) 6,913,550
- --------------------------------------------------------------
REPURCHASE AGREEMENT-0.63%(J)
Greenwich Capital Markets, Inc.,
5.00%, 07/01/99 (Cost
$4,228,412)(k) 4,228,412 $ 4,228,412
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.31% 665,127,648
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.69% 11,448,835
- --------------------------------------------------------------
NET ASSETS-100.00% $676,576,483
==============================================================
</TABLE>
12
<PAGE> 15
Abbreviations:
ADR - America Depositary Receipt
AUD - Australian Dollar
CAD - Canadian Dollar
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
DEM - German Deutsche Mark
Disc. - Discounted
DKK - Danish Krone
EUR - Euro
GBP - British Pound Sterling
Gtd. - Guaranteed
NZD - New Zealand Dollar
Pfd. - Preferred
PRIDES - Preferred Redeemable Increased Dividend Equity Security
Sec. - Secured
SEK - Swedish Krona
Sr. - Senior
STRYPES - Structured Yield Product Exchangeable for Stock
Sub. - Subordinated
Unsec. - Unsecured
Notes to Schedule of Investments:
(a) Principal amount is in U.S. Dollars, except as indicated by note (g).
(b) 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 06/30/99 was $61,152,039
which represents 9.04% of the Fund's net assets.
(c) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(d) Discounted bond at purchase. The interest rate represents the coupon rate
at which the bond will accrue at a specified future date.
(e) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(f) Consists of more than one class of securities traded together as a unit. In
addition to the debt obligations listed, each unit contains warrants that
enable the holder to purchase common stock in the issuer at a predetermined
price per share of common stock.
(g) Foreign denominated security. Par value and coupon rate are denominated in
currency indicated.
(h) Non-income producing security.
(i) Non-income producing security acquired as part of a unit with or in
exchange for other securities.
(j) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to insure its market value as being at least 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.
(k) Joint repurchase agreement entered into 06/30/99 with a maturing value of
$100,013,889. Collateralized by U.S. Government obligations.
See Notes to Financial Statements.
13
<PAGE> 16
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$680,544,275) $665,127,648
- ---------------------------------------------------------
Foreign currencies, at value (cost
$164,009) 163,596
- ---------------------------------------------------------
Receivables for:
Investments sold 7,114,779
- ---------------------------------------------------------
Forward currency contracts closed 794,899
- ---------------------------------------------------------
Fund shares sold 2,251,647
- ---------------------------------------------------------
Interest and dividends 12,643,166
- ---------------------------------------------------------
Forward currency contracts 1,008,834
- ---------------------------------------------------------
Investment for deferred compensation plan 65,169
- ---------------------------------------------------------
Other assets 61,423
- ---------------------------------------------------------
Total assets 689,231,161
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 8,868,278
- ---------------------------------------------------------
Fund shares reacquired 1,938,286
- ---------------------------------------------------------
Dividends 880,136
- ---------------------------------------------------------
Deferred compensation plan 65,169
- ---------------------------------------------------------
Accrued advisory fees 229,923
- ---------------------------------------------------------
Accrued distribution fees 544,684
- ---------------------------------------------------------
Accrued transfer agent fees 67,802
- ---------------------------------------------------------
Accrued operating expenses 60,400
- ---------------------------------------------------------
Total liabilities 12,654,678
- ---------------------------------------------------------
Net assets applicable to shares outstanding $676,576,483
- ---------------------------------------------------------
NET ASSETS:
Class A $407,791,198
=========================================================
Class B $243,802,621
=========================================================
Class C $ 24,982,664
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 51,451,641
=========================================================
Class B 30,797,898
=========================================================
Class C 3,160,488
=========================================================
Class A:
Net asset value and redemption price per
share $ 7.93
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $7.93
divided by 95.25%) $ 8.33
=========================================================
Class B:
Net asset value and offering price per
share $ 7.92
=========================================================
Class C:
Net asset value and offering price per
share $ 7.90
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 25,189,123
- ---------------------------------------------------------
Dividends (net of $1,420 foreign
withholding tax) 472,309
- ---------------------------------------------------------
Total investment income 25,661,432
- ---------------------------------------------------------
EXPENSES:
Advisory fees 1,369,900
- ---------------------------------------------------------
Administrative services fees 49,060
- ---------------------------------------------------------
Custodian fees 55,174
- ---------------------------------------------------------
Distribution fees -- Class A 501,514
- ---------------------------------------------------------
Distribution fees -- Class B 1,161,053
- ---------------------------------------------------------
Distribution fees -- Class C 109,319
- ---------------------------------------------------------
Transfer agent fees -- Class A 317,740
- ---------------------------------------------------------
Transfer agent fees -- Class B 190,901
- ---------------------------------------------------------
Transfer agent fees -- Class C 18,489
- ---------------------------------------------------------
Other 146,726
- ---------------------------------------------------------
Total expenses 3,919,876
- ---------------------------------------------------------
Less: Expenses paid indirectly (6,984)
- ---------------------------------------------------------
Net expenses 3,912,892
- ---------------------------------------------------------
Net investment income 21,748,540
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FORWARD CURRENCY CONTRACTS
AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (8,611,504)
- ---------------------------------------------------------
Foreign currencies (37,178)
- ---------------------------------------------------------
Forward currency contracts 1,803,822
- ---------------------------------------------------------
Futures contracts 315,500
- ---------------------------------------------------------
(6,529,360)
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities (31,870,436)
- ---------------------------------------------------------
Foreign currencies (49,466)
- ---------------------------------------------------------
Forward currency contracts 623,296
- ---------------------------------------------------------
(31,296,606)
- ---------------------------------------------------------
Net gain (loss) from investment
securities, foreign currencies, forward
currency contracts and futures
contracts (37,825,966)
- ---------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(16,077,426)
=========================================================
</TABLE>
14
<PAGE> 17
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 21,748,540 $ 35,484,095
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, forward currency contracts and
futures contracts (6,529,360) (2,670,536)
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and forward
currency contracts (31,296,606) (8,393,729)
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (16,077,426) 24,419,830
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (13,605,406) (24,056,371)
- ------------------------------------------------------------------------------------------
Class B (6,933,392) (9,376,348)
- ------------------------------------------------------------------------------------------
Class C (653,224) (561,222)
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (2,510,957)
- ------------------------------------------------------------------------------------------
Class B -- (1,354,867)
- ------------------------------------------------------------------------------------------
Class C -- (120,997)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A 30,802,015 67,975,662
- ------------------------------------------------------------------------------------------
Class B 38,062,655 97,469,590
- ------------------------------------------------------------------------------------------
Class C 6,915,749 17,151,361
- ------------------------------------------------------------------------------------------
Net increase in net assets 38,510,971 169,035,681
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 638,065,512 469,029,831
- ------------------------------------------------------------------------------------------
End of period $676,576,483 $638,065,512
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $700,316,476 $624,536,057
- ------------------------------------------------------------------------------------------
Undistributed net investment income 625,322 68,804
- ------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, forward currency
contracts and futures contracts (9,913,744) (3,384,384)
- ------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and forward currency
contracts (14,451,571) 16,845,035
- ------------------------------------------------------------------------------------------
$676,576,483 $638,065,512
==========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Income 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 will be voted on exclusively
by the shareholders of such portfolio or class. The assets, liabilities and
operations of each portfolio are accounted for separately. Information presented
in these financial statements pertains only to the Fund. The Fund's investment
objective is to seek to achieve a high level of current income consistent with
reasonable concern for safety of principal by investing primarily in fixed rate
corporate debt and U.S. Government obligations.
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
15
<PAGE> 18
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations-Debt obligations (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. Equity
securities which are listed or traded on an exchange or the NASDAQ National
Market System are valued at the last sales price on the exchange where the
security is principally traded or, lacking any sales on a particular day,
at the closing bid price on that day. 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 closing
bid price. Securities for which market quotations are either not readily
available or are questionable are valued at fair value as determined in
good faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. Generally, trading in foreign securities, as
well as corporate bonds and U.S. Government securities, is substantially
completed each day at various times prior to the close of the New York
Stock Exchange. The values of such securities used in computing the net
asset value of the Fund's shares are determined as of such times. Foreign
currency exchange rates are also generally determined prior to the close of
the New York Stock Exchange. Occasionally, events affecting the values of
such securities and such exchange rates may occur between the times at
which they are determined and the close of the New York Stock Exchange
which will not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair
value as determined in good faith by or under the supervision of the Board
of Trustees.
B. Bond Premiums-It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
C. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
D. 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 to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also 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 or if the value of the foreign
currency changes unfavorably. Outstanding forward currency contracts at
June 30, 1999 were as follows:
<TABLE>
<CAPTION>
Contract to
Settlement -------------------------- Unrealized
Date Deliver Receive Value Appreciation
- ---------- ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
08/10/99 AUD $ 3,000,000 $ 2,011,081 $ 1,984,028 $ 27,053
08/04/99 CAD 35,000,000 23,992,484 23,764,998 227,486
10/08/99 EUR 8,000,000 8,365,440 8,309,022 56,418
08/31/99 GBP 13,000,000 20,761,000 20,500,389 260,611
10/06/99 GBP 15,000,000 23,771,400 23,665,228 106,172
08/26/99 NZD 9,000,000 4,928,400 4,770,306 158,094
07/22/99 SEK 69,500,000 8,371,981 8,198,981 173,000
------------ ----------- ----------- ----------
$152,500,000 $92,201,786 $91,192,952 $1,008,834
============ =========== =========== ==========
</TABLE>
E. 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 distributions are paid monthly.
Distributions from net realized capital gains, if any, are recorded on ex-
dividend date and are paid annually.
F. Federal Income Taxes-The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $1,419,489 as of December 31, 1998 (which may be carried
forward to offset future taxable capital gains, if any) which expires, if
not previously utilized, through the year 2006. The fund cannot distribute
capital gains to shareholders until the tax loss carryforwards have been
utilized.
G. Expenses-Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class'
16
<PAGE> 19
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 AIM an advisory fee at an annual rate of 0.50% of the
first $200 million of the Fund's average daily net assets, plus 0.40% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.35% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended June 30, 1999, AIM
was paid $49,060 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,
1999, the Fund paid AFS $329,473 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, 1999, the Class A, Class B and
Class C shares paid AIM Distributors $501,514, $1,161,053 and $109,319,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $220,590 from sales of the Class A
shares of the Fund during the six months ended June 30, 1999. 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, 1999, AIM Distributors received $22,660 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, 1999, the Fund paid legal fees of
$2,294 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the six months ended June 30, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $4,169 and $2,815, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $6,984 during the six months ended June 30, 1999.
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) $975,000,000 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. During the six
months ended June 30, 1999, 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 0.09% 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. Prior to May 28, 1999, the commitment fee rate was
0.05%.
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, 1999 was
$331,246,307 and $243,033,527, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 16,691,656
- ------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (32,109,326)
- ------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities $(15,417,670)
============================================================
</TABLE>
Cost of investments for tax purposes is $680,545,318.
17
<PAGE> 20
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 1999 and the
year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 11,211,115 $ 92,154,071 18,358,462 $ 156,866,536
- ----------------------------------------------------------------------------------------------------------------------
Class B 8,198,866 67,307,408 15,156,529 128,945,810
- ----------------------------------------------------------------------------------------------------------------------
Class C 1,417,797 11,618,607 2,530,069 21,507,916
- ----------------------------------------------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 1,370,414 11,214,447 2,575,274 21,978,433
- ----------------------------------------------------------------------------------------------------------------------
Class B 646,944 5,286,460 956,975 8,134,643
- ----------------------------------------------------------------------------------------------------------------------
Class C 64,827 528,571 65,508 553,356
- ----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (8,814,960) (72,566,503) (12,996,807) (110,869,307)
- ----------------------------------------------------------------------------------------------------------------------
Class B (4,216,032) (34,531,213) (4,664,899) (39,610,863)
- ----------------------------------------------------------------------------------------------------------------------
Class C (635,301) (5,231,429) (581,112) (4,909,911)
- ----------------------------------------------------------------------------------------------------------------------
9,243,670 $ 75,780,419 21,399,999 $ 182,596,613
======================================================================================================================
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during the six months ended June 30, 1999 and each of the
years in the five-year period ended December 31, 1998; and for a share of Class
C outstanding during the six months ended June 30, 1999, the year ended December
31, 1998 and the period August 4, 1997 (date sales commenced) through December
31, 1997.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
DECEMBER 31,
JUNE 30, -----------------------------------------------------
1999 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.38 $ 8.57 $ 8.24 $ 8.17 $ 7.20 $ 8.45
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.28 0.57 0.55 0.57 0.58 0.58
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.45) (0.16) 0.39 0.09 1.00 (1.22)
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Total from investment operations (0.17) 0.41 0.94 0.66 1.58 (0.64)
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.28) (0.55) (0.52) (0.59) (0.61) (0.49)
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Distributions from net realized gains -- (0.05) (0.09) -- -- (0.01)
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Return of capital -- -- -- -- -- (0.11)
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Total distributions (0.28) (0.60) (0.61) (0.59) (0.61) (0.61)
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 7.93 $ 8.38 $ 8.57 $ 8.24 $ 8.17 $ 7.20
========================================================= ======== ======== ======== ======== ======== ========
Total return(a) (2.13)% 4.94% 11.92% 8.58% 22.77% (7.65)%
========================================================= ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $407,791 $399,701 $340,608 $286,183 $251,280 $201,677
========================================================= ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.90%(b) 0.91% 0.94% 0.98% 0.98% 0.98%
========================================================= ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 6.93%(b) 6.69% 6.55% 7.13% 7.52% 7.53%
========================================================= ======== ======== ======== ======== ======== ========
Portfolio turnover rate 38% 41% 54% 80% 227% 185%
========================================================= ======== ======== ======== ======== ======== ========
</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 $404,535,810.
18
<PAGE> 21
NOTE 8-FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------------------------------- -----------------------------
DECEMBER 31, DECEMBER 31,
JUNE 30, ------------------------------------------------- JUNE 30, -----------------
1999 1998 1997 1996 1995 1994 1999 1998 1997
-------- -------- -------- ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 8.37 $ 8.55 $ 8.23 $ 8.15 $ 7.18 $ 8.43 $ 8.36 $ 8.54 8.38
- ----------------------------- ------- -------- -------- ------- ------- ------- ------- ------- ------
Income from investment
operations:
Net investment income 0.25 0.50 0.48 0.50 0.53 0.52 0.25 0.50 0.19
- ----------------------------- ------- -------- -------- ------- ------- ------- ------- ------- ------
Net gains (losses) on
securities (both realized
and unrealized) (0.46) (0.15) 0.38 0.11 0.98 (1.23) (0.47) (0.15) 0.22
- ----------------------------- ------- -------- -------- ------- ------- ------- ------- ------- ------
Total from investment
operations (0.21) 0.35 0.86 0.61 1.51 (0.71) (0.22) 0.35 0.41
- ----------------------------- ------- -------- -------- ------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net
investment income (0.24) (0.48) (0.45) (0.53) (0.54) (0.42) (0.24) (0.48) (0.16)
- ----------------------------- ------- -------- -------- ------- ------- ------- ------- ------- ------
Distributions from net
realized gains -- (0.05) (0.09) -- -- (0.01) -- (0.05) (0.09)
- ----------------------------- ------- -------- -------- ------- ------- ------- ------- ------- ------
Return of capital -- -- -- -- -- (0.11) -- -- --
- ----------------------------- ------- -------- -------- ------- ------- ------- ------- ------- ------
Total distributions (0.24) (0.53) (0.54) (0.53) (0.54) (0.54) (0.24) (0.53) (0.25)
- ----------------------------- ------- -------- -------- ------- ------- ------- ------- ------- ------
Net asset value, end of
period $ 7.92 $ 8.37 $ 8.55 $ 8.23 $ 8.15 $ 7.18 $ 7.90 $ 8.36 8.54
============================= ======= ======== ======== ======= ======= ======= ======= ======= ======
Total return(a) (2.53)% 4.20% 10.89% 7.87% 21.72% (8.46)% (2.64)% 4.21% 4.96%
============================= ======= ======== ======== ======= ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) 243,803 $219,033 $125,871 $85,343 $44,304 $12,321 $24,983 $19,332 2,552
============================= ======= ======== ======== ======= ======= ======= ======= ======= ======
Ratio of expenses to average
net assets 1.66%(b) 1.66% 1.69% 1.80% 1.79% 1.83%(c) 1.66%(b) 1.66% 1.69%(d)
============================= ======= ======== ======== ======= ======= ======= ======= ======= ======
Ratio of net investment
income to average net assets 6.17%(b) 5.94% 5.80% 6.30% 6.71% 6.69%(e) 6.17%(b) 5.94% 5.80%(d)
============================= ======= ======== ======== ======= ======= ======= ======= ======= ======
Portfolio turnover rate 38% 41% 54% 80% 227% 185% 38% 41% 54%
============================= ======= ======== ======== ======= ======= ======= ======= ======= ======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $234,134,979 and
$22,044,925 for Class B and Class C, respectively.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.04% for 1994.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements was 6.48% for 1994.
19
<PAGE> 22
AIM FUNDS(SM) MAKES
INVESTING EASY
o AIM BANK CONNECTION. You can make investments in your AIM account in amounts
from $50 to $100,000 without writing a check. Once you set up this
convenient feature, AIM will draw the funds from your pre-authorized
checking account at your request.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. You can receive
distributions in cash, or you can reinvest them in your account without
paying a sales charge. Over time, the power of compounding can significantly
increase the value of your account.
o AUTOMATIC INVESTMENT PLAN. You can add to your account by authorizing your
AIM Fund to withdraw a specified amount, minimum $50, from your bank account
on a regular schedule.
o EASY ACCESS TO YOUR MONEY. You can redeem shares of your AIM fund any day
the New York Stock Exchange is open. The value of the shares may be more or
less than their original cost depending on market conditions.
o EXCHANGE PRIVILEGE. As your investment goals change, you may exchange part
or all of your shares of one fund for shares of a different AIM Fund within
the same share class. You may make up to 10 such exchanges per calendar
year.
o TAX-ADVANTAGED RETIREMENT PLANS. You can enjoy the tax advantages offered by
a variety of investment plans, including Traditional IRAs, Roth IRAs and
education IRAs, among others.
o TOLL-FREE ACCESS. Our automated AIM Investor Line, 800-246-5463, provides
current account information and the price, yield and total return on all AIM
funds 24 hours a day.
o E-MAIL ACCESS. You can contact us at [email protected] for general
information. For account information, contact us at
[email protected].
o www.aimfunds.com. Our award-winning Website provides account information,
shareholder education and fund performance information.
------------------------------------
CURRENT SHAREHOLDERS
CAN CALL OUR AUTOMATED
AIM INVESTOR LINE AT
800-246-5463 FOR 24-HOUR-A-DAY
ACCOUNT INFORMATION.
------------------------------------
<PAGE> 23
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual-fund industry
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately
AIM Capital Development Fund $121 billion in assets for more than 6.3
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS million shareholders, including
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund individual investors, corporate clients,
AIM Large Cap Growth Fund AIM Asian Growth Fund and financial institutions as of June
AIM Mid Cap Equity Fund(A) AIM Developing Markets Fund 30, 1999.
AIM Select Growth Fund AIM Europe Growth Fund The AIM Family of Funds--Registered
AIM Small Cap Growth Fund(B) AIM European Development Fund Trademark-- is distributed nationwide,
AIM Small Cap Opportunities Fund AIM International Equity Fund and AIM today is the 10th-largest
AIM Value Fund AIM Japan Growth Fund mutual-fund complex in the United States
AIM Weingarten Fund AIM Latin American Growth Fund in assets under management, according to
AIM New Pacific Growth Fund Strategic Insight, an independent
GROWTH & INCOME FUNDS mutual-fund monitor.
AIM Advisor Flex Fund GLOBAL GROWTH FUNDS
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund
AIM Advisor Real Estate Fund AIM Global Growth Fund
AIM Balanced Fund
AIM Basic Value Fund(C) GLOBAL GROWTH & INCOME FUNDS
AIM Charter Fund AIM Global Growth & Income Fund
AIM Global Utilities Fund
INCOME FUNDS
AIM Floating Rate Fund GLOBAL INCOME FUNDS
AIM High Yield Fund AIM Emerging Markets Debt Fund(D)
AIM High Yield Fund II AIM Global Government Income Fund
AIM Income Fund AIM Global Income Fund
AIM Intermediate Government Fund AIM Strategic Income Fund
AIM Limited Maturity Treasury Fund
THEME FUNDS
TAX-FREE INCOME FUNDS AIM Global Consumer Products and Services Fund
AIM High Income Municipal Fund AIM Global Financial Services Fund
AIM Municipal Bond Fund AIM Global Health Care Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Infrastructure Fund
AIM Tax-Free Intermediate Fund AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund(E)
AIM Global Trends Fund(F)
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998. (A)
On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap Equity
Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM Small
Cap Growth Fund. (C) On September 8, 1998, AIM America Value Fund was renamed
AIM Basic Value Fund. (D) On September 8, 1998, AIM Global High Income Fund was
renamed AIM Emerging Markets Debt Fund. (E) On June 1, 1999, AIM Global
Telecommunications Fund was renamed AIM Global Telecommunications and Technology
Fund. (F) On September 8, 1998, AIM New Dimension Fund was renamed AIM Global
Trends 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.
[AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE--REGISTERED TRADEMARK--
INC--SAR-1
