<PAGE> 1
AIM ADVISOR
MULTIFLEX FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT JUNE 30, 1998
<PAGE> 2
--------------------------------------------
AIM ADVISOR
MULTIFLEX FUND
For shareholders who
seek a high total return
from five different types
of investments--
large-cap stocks,
small-cap stocks,
international stocks, real estate
securities,
and fixed-income securities.
--------------------------------------------
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Advisor MultiFlex Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the fund's performance is computed at net asset value
without a sales charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the Fund's Class B and Class C shares will differ from
that of Class A shares due to differing fees and expenses.
o Because Class B shares have been offered for less that one year (since
3/03/98), all total return figures for Class B shares reflect cumulative
total return that has not been annualized.
o The Fund's average annual total returns, including sales charges, for the
periods ended 6/30/98 are as follows: For Class A shares, one year, 7.26%;
since inception (12/31/96), 12.56%. For Class B shares, cumulative total
return since inception (3/3/98), -3.71%. For Class C shares, one year,
11.60%; since inception (11/17/93), 13.12%.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o Past performance cannot guarantee comparable future results
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30
actively traded primarily industrial stocks.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS
ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY;
ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK OR ANY AFFILIATE; AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders
or to persons who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
When we last reported to you, for the fiscal year ended
[PHOTO OF December 31, 1997, equity markets worldwide were still shaken
Charles T. by the financial crisis in Asia. By June 30, 1998, the end of
Bauer, this six-month reporting period, most markets had recovered
Chairman of nicely, with domestic equities producing generous returns and
the Board of European markets outpacing the U.S. Only Asian markets
THE FUND remained in the doldrums. High-quality bonds have turned in a
APPEARS HERE] solid performance with generous real returns.
Good economic news has been arriving almost daily.
Inflation and joblessness in the U.S. have been at their
lowest levels in decades, consumer confidence at its highest.
The economic fundamentals in the U.S. appear sound, and we at
AIM remain cautiously optimistic that the current economic
expansion may continue for the foreseeable future although
market valuations are high compared to historical standards.
By the close of this reporting period, markets had
become less ebullient. Equities had declined slightly from the heights reached
earlier in the period. Many participants in the U.S. equity markets voiced
concern about prices that continued rising despite slowing earnings growth,
especially for larger companies. The performance of European markets had
exceeded everyone's expectations. Asia's economic woes, especially the
continuing recession in Japan, which markets had shrugged off for a while,
seemed more troublesome as the reporting period closed.
In the face of such uncertainty, the best course for investors is to remain
realistic. We are now in the fourth year of unprecedented market advances, with
equities having the potential to produce returns above 30% again. We have never
experienced this before, and it may have fostered unrealistic expectations among
investors, who would do well to remember that the long-term average return for
equities is closer to 10% per year.
A well-diversified portfolio is still one of the most effective tools for
coping with market shifts because different asset classes and different national
markets tend to move independently of one another. Your financial consultant
remains your best source of information about how to allocate your investments
based on your goals and situation.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Shortly before the close of the reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds. During
the next few months you will be receiving more details about this transaction
and the products it adds to The AIM Family of Funds--Registered Trademark--.
This transaction gives you, our shareholders, access to a greater variety of
investment choices. A complete list of the funds now included in The AIM Family
of Funds--Registered Trademark-- appears on the back cover of this report. We
encourage you to discuss with your financial consultant how these funds may fit
into your portfolio.
The transaction also helps strengthen AIM's position as a major participant
in the money-management industry worldwide. Such strength will enable us to
continue enlarging both the scope of our fund offerings and our menu of services
for our shareholders. AIM continuously reviews its products and services with a
view to enhancing our ability to help shareholders meet their investment goals.
YOUR FUND MANAGERS COMMENT
On the pages that follow, the managers of your AIM Fund discuss how the Fund
performed during the six months covered by this report and give their near-term
market outlook. We hope you will find their discussion informative.
We are pleased to send you this report on your Fund. If you have any
questions or comments, please contact our Client Services department at
800-959-4246 or visit our Web site at www.aimfunds.com. You can access
information about your account on our Web site and also on our automated AIM
Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
----------------------------------------------
A well-diversified portfolio
is still one of the most
effective tools for coping with
market shifts because
different asset classes and
different national markets tend
to move independently
of one another.
----------------------------------------------
<PAGE> 4
The Managers' Overview
FUND CONTENDS WITH NARROW STOCK,
BOND MARKETS
A roundtable discussion with the Fund management team for AIM Advisor MultiFlex
Fund for the six months ended June 30, 1998.
- --------------------------------------------------------------------------------
Q. FINANCIAL MARKETS WERE PRETTY NARROW DURING THE REPORTING PERIOD. HOW DID
AIM ADVISOR MULTIFLEX FUND PERFORM?
A. Markets favoring large-cap growth stocks and high-quality bonds created a
difficult environment for a Fund that diversifies into five different asset
classes. For the six months ended June 30, 1998, cumulative total return for
Class A and C shares was 5.75% and 5.35%, respectively. Class B shares
commenced sales on March 3, 1998, and had a cumulative total return of
1.29%.
Q. GIVEN THE CHALLENGING MARKET ENVIRONMENT, DID YOU MANAGE THE FUND ANY
DIFFERENTLY?
A. No, we maintained our disciplined approach of investing in five asset
classes: large-cap stocks, small-cap stocks, international stocks, real
estate securities, and fixed-income securities. These asset classes often
react differently to various market trends. Structuring the portfolio in
this way tends to reduce the risk associated with investing in any one asset
class. In addition, it can enhance total return by positioning the Fund to
take advantage of a rally in more than one financial market segment.
At the end of the reporting period, the Fund's total net assets were
divided as follows: small-cap stocks, 23.00%; international stocks, 22.10%;
large-cap stocks, 17.99%; real estate investment trusts (REITs), 21.25%;
fixed-income securities, 14.29%; and cash, 1.37%. Since our last report, we
have slightly increased our small-cap, large-cap, and international-stock
holdings and our REIT holdings while reducing our fixed-income and cash
positions.
Q. HOW DID SMALL-CAP STOCKS FARE, AND WHAT WERE THE MAJOR FACTORS INFLUENCING
THEIR PERFORMANCE?
A. During the first four months of the year, small-cap stocks performed quite
well. Investors gravitated to small-cap stocks because of their attractive
valuations in comparison to large-cap stocks. Moreover, earnings growth has
been greater for smaller companies than for larger companies since the
second quarter of 1997. However, in May and June, small-cap stocks were
negatively affected by renewed concerns over the economic crisis in Asia and
its potential impact on corporate profits in the U.S. and other developed
countries.
We continue to find small-cap stocks compelling because of their
attractive valuations. Small-cap stocks we liked included Trigon Healthcare,
Inc., a managed-care company; Orion Capital Corp., an insurance firm; and
Veritas DGC, Inc., a computer software company.
Q. WHAT WERE THE IMPORTANT TRENDS IN THE INTERNATIONAL STOCK MARKETS?
A. European stocks soared while Asian markets struggled. Several factors
contributed to the strong performance of European stocks, including
corporate restructurings and consolidations, falling interest rates, and low
inflation. Europeans are also investing more money in stocks as declining
yields are making bonds less attractive. In Asia and the Pacific Rim, the
dismal performance of stocks could be attributed to the lingering problems
associated with currency devaluations in the region and Japan's worsening
economic problems.
On balance, the Fund benefited from its overexposure in Europe, where
we found better-priced stocks, and from its underexposure in Asia and the
Pacific Rim. The Fund's international-stock holdings included Societe
Generale, a French bank; Nestle S.A., a Swiss food company; and Repsol S.A.,
a Spanish oil and gas company.
Q. WHAT ACCOUNTED FOR THE IMPRESSIVE GAINS OF LARGE-CAP STOCKS?
A. In the uncertain market environment created by the Asian crisis, investors
gravitated to the stocks of large, well-known companies. In addition,
foreign investors, who began shifting more assets into the American stock
market, were attracted to the equities of the largest companies with global
reputations. The stocks of the very largest companies-- the so-called
"mega-caps"--were the primary beneficiaries of these trends.
Within the large-cap sector, investors tended to favor the stocks of
companies that were expected to experience rapid earnings growth over stocks
that were undervalued relative to the rest of the market. That hurt the
performance of the Fund, which is value oriented in its stock-selection
process.
The Fund's large-cap stock holdings
--------------------------------------------------
. . .we maintained our disciplined
approach of investing in five
asset classes: large-cap stocks,
small-cap stocks, international
stocks, real estate securities, and
fixed-income securities.
--------------------------------------------------
See important fund and index disclosures inside front cover.
2
<PAGE> 5
PORTFOLIO HOLDINGS
As of 6/30/98, based on total net assets
<TABLE>
<CAPTION>
INTERNATIONAL STOCKS REITs
LARGE-CAP STOCKS
<S> <C> <C>
1. CarrAmerica Realty Corp. 0.92%
1. Britsh Telecommunications 0.73% 2. Patriot American 0.91
1. Bristol-Myers Squibb Co. 0.49% PLC (United Kingdom) Hospitality, Inc.
2. Schering-Plough Corp. 0.41 2. Societe Generale 0.69 3. Equity Office 0.84
(France) Properties Trust
3. NationsBank Corp. 0.39
3. Nestle S.A(Switzerland) 0.68 4. Starwood Hotels & Resorts 0.77
4. Electronic Data 0.37
Systems Group. 4. Groupe Danone - ADR 0.65 5. Prentiss Properties Trust 0.74
(France)
5. American International 0.36
Group, Inc. 5. Repsol S.A. - ADR 0.62
(Spain)
SMALL-CAP STOCKS FIXED-INCOME SECURITIES
1. Trigon Healthcare, Inc. 0.35% 1. U.S. Treasury 3.76%
Notes & Bonds
2. Orion Capital Corp. 0.34
International Stocks 22.1% 2. Federal National Mortgage 1.94
3. Veritas DGC, Inc. 0.32 Association ("FNMA")
REITS 21.25
4. Canandaigua Wine Co., 0.30 3. Federal Home Loan 0.69
Inc.-Class A. Large Cap Stocks 17.99 Mortgage Corp. ("FHLMC")
5. Technitrol, Inc. 0.29 Fixed-Income Securities 14.29 4. USG Corp., Sr. Notes 0.67
Cash/ Cash Equivalents 1.37 5. Federal Home 0.47
Loan Bank Board
Small-Cap Stocks 23.0
</TABLE>
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
included Bristol-Myers Squibb Co., a diversified health-care firm;
Schering-Plough Corp., a pharmaceutical company; and Electronic Data
Systems, a computer software/service firm.
Q. HOW DID REITs FARE?
A. REITs posted slightly better returns than small-cap stocks, but
significantly underperformed large-cap stocks. Uncertainties created by
proposed legislation that would only impact "paired-share" REITs-a small
segment of this asset class- adversely affected the entire REIT market. A
paired-share REIT consists of two companies that are paired together and
trade as one share. One company is a REIT and the other is an operating
company. Only four public companies and one private company fall into this
category. The preference of investors for growth stocks also had a negative
impact on the performance of REITs.
We continue to like REITs because of their attractive valuations and
dividends. The Fund's leading REIT holdings included CarrAmerica Realty
Corp., Patriot American Hospitality, Inc., and Prentiss Properties Trust.
Q. HOW DID FIXED-INCOME SECURITIES FARE?
A. A late rally in the fixed-income market tended to be rather narrow in scope,
with high-quality, long-term bonds, particularly U.S. Treasury and corporate
issues, the primary beneficiaries. These bonds benefited from renewed
concerns that the economic problems in Asia would undermine corporate
profits in the U.S. and other developed countries. Investors, seeking
relatively safe havens for their money, shifted more of their assets into
higher-rated bonds, particularly U.S. Treasury securities. The late rally in
the bond market was reflected in the yield on the benchmark 30-year U.S.
Treasury bond, which fell from 5.95% on April 30, 1998, to 5.63% at the end
of the reporting period.
The Fund's top fixed-income holdings included high-quality U.S.
Treasury notes and bonds and U.S. government agency issues.
Q. WHAT IS YOUR OUTLOOK FOR THE FUTURE?
A. In the U.S., the economic climate continues to be favorable for stocks and
bonds. If inflation remains low, the Federal Reserve Board (the Fed), which
has left monetary policy unchanged for more than a year, will be less likely
to raise interest rates. However, Fed Chairman Alan Greenspan, speaking to
Congress in July, warned that the tight labor market could eventually
accelerate inflation.
The healthy economic growth in the U.S. could increase demand for
commercial real estate--a development that could prove beneficial for REITs.
With regard to international stocks, the corporate restructurings and
mergers taking place in Europe, combined with low inflation and interest
rates, should extend the favorable environment for stocks in that region.
However, the ongoing economic problems in Asia and the Pacific Rim make the
prospects for stocks uncertain in this troubled part of the world.
Investors have displayed a willingness to pay premium prices for the
highly liquid investments, particularly big-cap stocks. At some point,
investors will likely shift their focus to the more reasonably priced stocks
in the large- and small-cap arenas as well as to REITs. Such a development
would prove beneficial for the Fund and its value-oriented approach to stock
selection.
See important fund and index disclosures inside front cover.
3
<PAGE> 6
AIM PREPARES FOR THE YEAR 2000
THE YEAR 2000. THE WORDS STIR THE IMAGINATION, MAKING US
WONDER WHAT THE NEXT MILLENNIUM WILL BRING. BUT THE WORDS
ARE ALSO STARTING TO MAKE SOME PEOPLE WORRY, SINCE THERE'S
BEEN SO MUCH TALK LATELY ABOUT A COMPUTER GLITCH CALLED "THE
YEAR 2000 PROBLEM." BECAUSE THIS IS A PROBLEM THAT COULD
AFFECT MOST AMERICAN INDUSTRIES, INCLUDING THE MUTUAL FUND
INDUSTRY, WE WANT TO BRING YOU THIS UPDATE TO LET YOU KNOW
HOW AIM IS GETTING READY.
THE YEAR 2000 PROBLEM
It has to do with the way that computers understand dates. Most computers were
programmed to recognize only the last two digits of a four-digit date ("98" for
1998). When the year 2000 hits, the computer will read"00"-- but it may
interpret that as the year 1900. So, if the computer makes calculation
involving a date of January 1, 2000, or later, it could be processed
incorrectly. Date-sensitive calculations are found in all kinds of places--from
elevators to air traffic control systems--but they are especially prevalent in
the financial services industry.
AIM'S YEAR 2000 COMPLIANCE
AIM's technology team has been addressing Year 2000 issues for some time now.
Our internal team, together with an independent technology consultant, are
implementing a comprehensive Year 2000 Compliance Project for A I M Management
Group Inc. and its subsidiaries.
So far, we've inventoried all software applications that we rely on, and
we've identified the applications that might need adjustments to function
properly when the Year 2000 arrives. We are now in the final phase of the
project, making corrections and testing applications that need adjustment. We
plan to complete this phase during the fourth quarter of 1998.
AN INDUSTRY-WIDE TEST
In the spring of 1999, AIM will be participating in industry-wide testing that
will simulate the arrival of the Year 2000. This will allow mutual fund
companies, banks, exchanges, and other players in the financial community to
test various kinds of transactions and to determine if any further adjustments
need to be made before the end of the year.
We believe our plans are quite comprehensive, and we're committed to
monitoring all software applications through the critical period, extending as
far as needed into the 21st century.
<PAGE> 7
SCHEDULE OF INVESTMENTS
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-84.51%
AEROSPACE/DEFENSE-0.58%
BE Aerospace, Inc.(a) 15,900 $ 463,088
- --------------------------------------------------------------
Lockheed Martin Corp. 9,616 1,018,094
- --------------------------------------------------------------
Precision Castparts Corp. 11,300 603,138
- --------------------------------------------------------------
Sequa Corp.(a) 5,500 367,124
- --------------------------------------------------------------
2,451,444
- --------------------------------------------------------------
AGRICULTURAL PRODUCTS-0.11%
Archer-Daniels-Midland 6,125 118,671
- --------------------------------------------------------------
Universal Corp. 8,900 332,638
- --------------------------------------------------------------
451,309
- --------------------------------------------------------------
AIR FREIGHT-0.10%
Airborne Freight Corp. 11,900 415,756
- --------------------------------------------------------------
AIRLINES-0.82%
America West Airlines, Inc.(a) 14,000 399,875
- --------------------------------------------------------------
British Airways PLC-ADR (United
Kingdom) 19,000 2,043,687
- --------------------------------------------------------------
Southwest Airlines Co 34,900 1,033,912
- --------------------------------------------------------------
3,477,474
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.42%
Arvin Industries, Inc. 17,500 635,468
- --------------------------------------------------------------
Borg-Warner Automotive, Inc. 14,600 701,713
- --------------------------------------------------------------
Cooper Tire & Rubber Co. 22,300 459,938
- --------------------------------------------------------------
1,797,119
- --------------------------------------------------------------
AUTOMOBILES-0.51%
Ford Motor Co. 16,600 979,400
- --------------------------------------------------------------
Volvo A.B.-ADR (Sweden) 40,000 1,182,500
- --------------------------------------------------------------
2,161,900
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-3.23%
ABN Amro Holding N.V.-ADR
(Netherlands) 100,000 2,343,750
- --------------------------------------------------------------
Banco Santander-ADR (Spain) 25,000 1,267,187
- --------------------------------------------------------------
Deutsche Bank A.G.-ADR (Germany) 30,000 2,536,239
- --------------------------------------------------------------
HSBC Holdings PLC-ADR (United
Kingdom) 9,000 2,201,049
- --------------------------------------------------------------
Istituto Mobiliare Italiano
S.p.A.-ADR (Italy) 45,000 2,145,937
- --------------------------------------------------------------
National Australia Bank Ltd.-ADR
(Australia) 30,000 1,981,875
- --------------------------------------------------------------
Wachovia Corp. 14,000 1,183,000
- --------------------------------------------------------------
13,659,037
- --------------------------------------------------------------
BANKS (MONEY CENTER)-1.92%
Den Danske Bank-ADR (Denmark) 17,000 2,039,402
- --------------------------------------------------------------
First Chicago N.B.D. Corp. 17,000 1,506,625
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BANKS (MONEY CENTER)-(CONTINUED)
NationsBank Corp. 21,662 $ 1,657,143
- --------------------------------------------------------------
Societe Generale (France) 70,000 2,910,670
- --------------------------------------------------------------
8,113,840
- --------------------------------------------------------------
BANKS (REGIONAL)-1.39%
Commerce Bancorp, Inc. 12,500 731,250
- --------------------------------------------------------------
Cullen/Frost Bankers, Inc. 11,600 629,300
- --------------------------------------------------------------
Development Bank of Singapore
Ltd.-ADR (Singapore) 55,000 1,217,529
- --------------------------------------------------------------
FirstBank Puerto Rico (Puerto Rico) 18,000 468,000
- --------------------------------------------------------------
HUBCO, Inc. 14,400 515,700
- --------------------------------------------------------------
Imperial Bancorp(a) 28,200 846,000
- --------------------------------------------------------------
Independent Bank Corp. 16,600 321,625
- --------------------------------------------------------------
Magna Group, Inc. 10,900 615,850
- --------------------------------------------------------------
Silicon Valley Bancshares(a) 9,200 327,462
- --------------------------------------------------------------
Trustmark Corp. 9,900 217,181
- --------------------------------------------------------------
5,889,897
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.80%
Canandaigua Wine Co., Inc.-Class
A(a) 25,800 1,269,037
- --------------------------------------------------------------
Compania Cervecerias Unidas
S.A.-ADR (Chile) 45,000 950,625
- --------------------------------------------------------------
Kirin Brewery Co., Ltd.-ADR (Japan) 12,000 1,146,000
- --------------------------------------------------------------
3,365,662
- --------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-0.21%
PepsiCo, Inc. 21,750 895,828
- --------------------------------------------------------------
BIOTECHNOLOGY-0.06%
IDEC Pharmaceuticals Corp.(a) 11,000 259,187
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.11%
Heftel Broadcasting Corp.(a) 10,700 478,825
- --------------------------------------------------------------
BUILDING MATERIALS-0.21%
Cameron Ashley Building Products(a) 16,300 275,062
- --------------------------------------------------------------
TJ International, Inc. 20,400 614,550
- --------------------------------------------------------------
889,612
- --------------------------------------------------------------
CHEMICALS-1.21%
Air Products & Chemicals, Inc. 18,000 720,000
- --------------------------------------------------------------
Akzo Nobel N.V.-ADR (Netherlands) 20,000 2,217,500
- --------------------------------------------------------------
Dow Chemical Co. (The) 5,800 560,787
- --------------------------------------------------------------
Norsk Hydro A.S.A.-ADR (Norway) 30,000 1,323,750
- --------------------------------------------------------------
NL Industries, Inc. 14,500 290,000
- --------------------------------------------------------------
5,112,037
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CHEMICALS (DIVERSIFIED)-1.05%
BASF A.G.-ADR (Germany) 50,000 $ 2,375,300
- --------------------------------------------------------------
Bayer A.G.-ADR (Germany) 40,000 2,069,764
- --------------------------------------------------------------
4,445,064
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.28%
Dexter Corp. 28,800 916,200
- --------------------------------------------------------------
Fuller (H.B.) Co. 5,000 277,187
- --------------------------------------------------------------
1,193,387
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.47%
Dycom Industries, Inc.(a) 23,000 776,250
- --------------------------------------------------------------
Inter-Tel, Inc. 33,000 528,000
- --------------------------------------------------------------
Tekelec(a) 15,400 689,150
- --------------------------------------------------------------
1,993,400
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-0.73%
Compaq Computer Corp. 26,900 763,287
- --------------------------------------------------------------
Hewlett-Packard Co 9,800 586,775
- --------------------------------------------------------------
International Business Machines
Corp. 6,500 746,281
- --------------------------------------------------------------
Stratus Computer, Inc.(a) 9,100 230,344
- --------------------------------------------------------------
Sun Microsystems, Inc.(a) 17,800 773,187
- --------------------------------------------------------------
3,099,874
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.32%
Adaptec, Inc.(a) 51,000 729,937
- --------------------------------------------------------------
FileNet Corp.(a) 11,500 332,062
- --------------------------------------------------------------
MICROS Systems, Inc.(a) 8,800 291,225
- --------------------------------------------------------------
1,353,224
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-1.93%
Aspen Technologies, Inc.(a) 9,600 484,800
- --------------------------------------------------------------
Boole & Babbage, Inc.(a) 27,000 644,625
- --------------------------------------------------------------
Computer Associates International,
Inc. 20,750 1,152,921
- --------------------------------------------------------------
DSP Group, Inc.(a) 30,300 598,425
- --------------------------------------------------------------
Electronic Data Systems Corp. 39,600 1,584,000
- --------------------------------------------------------------
Harbinger Corp.(a) 13,950 337,416
- --------------------------------------------------------------
Information Management Resources,
Inc.(a) 19,500 659,344
- --------------------------------------------------------------
Legato Systems, Inc.(a) 11,600 452,400
- --------------------------------------------------------------
Manugistics Group, Inc.(a) 7,800 193,050
- --------------------------------------------------------------
Mastech Corp.(a) 33,800 950,625
- --------------------------------------------------------------
Platinum Technology, Inc.(a) 11,400 325,612
- --------------------------------------------------------------
Symantec Corp.(a) 13,500 352,688
- --------------------------------------------------------------
Systems & Computer Technology
Corp.(a) 16,300 440,100
- --------------------------------------------------------------
8,176,006
- --------------------------------------------------------------
CONSTRUCTION (CEMENT & AGGREGATES)-0.79%
Cemex S.A. de C.V. (Mexico) 110,000 969,496
- --------------------------------------------------------------
Centex Construction Products, Inc. 12,000 462,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSTRUCTION (CEMENT & AGGREGATES)-(CONTINUED)
Southdown, Inc. 10,300 $ 735,163
- --------------------------------------------------------------
Vulcan Materials Co. 11,000 1,173,562
- --------------------------------------------------------------
3,340,221
- --------------------------------------------------------------
CONSUMER FINANCE-0.14%
FIRSTPLUS Financial Group, Inc.(a) 9,600 345,600
- --------------------------------------------------------------
Flagstar Bancorp, Inc. 9,900 241,313
- --------------------------------------------------------------
586,913
- --------------------------------------------------------------
CONTAINERS & PACKAGING (PAPER)-0.22%
Amcor Ltd.-ADR (Australia) 55,000 948,750
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.36%
AmeriSource Health Corp.-Class A(a) 4,900 321,869
- --------------------------------------------------------------
Bindley Western Industries, Inc. 24,667 814,000
- --------------------------------------------------------------
Richfood Holdings, Inc. 17,900 370,306
- --------------------------------------------------------------
1,506,175
- --------------------------------------------------------------
ELECTRIC COMPANIES-3.22%
Central Maine Power Co 16,000 312,000
- --------------------------------------------------------------
CILCORP, Inc. 5,500 264,000
- --------------------------------------------------------------
Cleco Corp. 13,500 401,625
- --------------------------------------------------------------
Commonwealth Energy System 10,400 392,600
- --------------------------------------------------------------
DTE Energy Co. 26,700 1,078,013
- --------------------------------------------------------------
Endesa S.A.-ADR (Spain) 90,000 1,946,250
- --------------------------------------------------------------
Entergy Corp. 24,000 690,000
- --------------------------------------------------------------
Hawaiian Electric Industries, Inc. 15,200 603,250
- --------------------------------------------------------------
Hong Kong Electric Holdings
Ltd.-ADR (Hong Kong) 400,000 1,238,920
- --------------------------------------------------------------
Interstate Energy Corp. 20,355 661,537
- --------------------------------------------------------------
Minnesota Power & Light Co 8,300 329,925
- --------------------------------------------------------------
PowerGen PLC-ADR (United Kingdom) 35,000 1,973,125
- --------------------------------------------------------------
RWE A.G. (Germany) 32,000 1,893,370
- --------------------------------------------------------------
SIGCORP, Inc. 10,950 351,084
- --------------------------------------------------------------
Southern Co. 30,000 830,625
- --------------------------------------------------------------
Texas Utilities Co. 16,000 666,000
- --------------------------------------------------------------
13,632,324
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.46%
Avid Technology, Inc.(a) 15,400 515,900
- --------------------------------------------------------------
C & D Technologies, Inc. 5,800 336,400
- --------------------------------------------------------------
Carlton Communications PLC-ADR
(United Kingdom) 55,000 2,475,000
- --------------------------------------------------------------
DII Group, Inc.(a) 20,100 342,956
- --------------------------------------------------------------
Emerson Electric Co. 11,400 688,275
- --------------------------------------------------------------
General Cable Corp. 29,100 840,262
- --------------------------------------------------------------
General Electric Co. 11,000 1,001,000
- --------------------------------------------------------------
Hitachi Ltd.-ADR (Japan) 18,000 1,161,000
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-(CONTINUED)
Matsushita Electric Industrial Co.,
Ltd.-ADR (Japan) 8,000 $ 1,286,000
- --------------------------------------------------------------
Pinnacle Systems, Inc.(a) 7,500 242,812
- --------------------------------------------------------------
Plexus Corp.(a) 15,500 308,063
- --------------------------------------------------------------
Technitrol, Inc. 30,800 1,230,075
- --------------------------------------------------------------
10,427,743
- --------------------------------------------------------------
ELECTRONIC (COMPONET DISTRIBUTORS)-0.21%
Kyocera Corp.-ADR (Japan) 9,000 874,688
- --------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.28%
Raytheon Co. 20,000 1,182,500
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.44%
Dallas Semiconductor Corp. 9,300 288,300
- --------------------------------------------------------------
Integrated Circuit Systems, Inc.(a) 14,600 242,725
- --------------------------------------------------------------
PMC-Sierra, Inc.(a) 10,000 468,750
- --------------------------------------------------------------
Texas Instruments, Inc. 15,000 874,687
- --------------------------------------------------------------
1,874,462
- --------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.12%
Stone & Webster, Inc. 12,700 503,238
- --------------------------------------------------------------
ENTERTAINMENT-0.50%
News Corp. Ltd.-ADR (The)
(Australia) 50,000 1,606,250
- --------------------------------------------------------------
Walt Disney Co. (The) 5,000 525,313
- --------------------------------------------------------------
2,131,563
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.41%
American General Corp. 19,900 1,416,631
- --------------------------------------------------------------
Associates First Capital
Corp.-Class A 4,350 334,406
- --------------------------------------------------------------
Fannie Mae 24,300 1,476,225
- --------------------------------------------------------------
MGIC Investment Corp. 11,500 656,219
- --------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 14,850 1,356,919
- --------------------------------------------------------------
U.S. Trust Corp. 9,700 739,625
- --------------------------------------------------------------
5,980,025
- --------------------------------------------------------------
FOODS-3.15%
Agribrands International, Inc.(a) 1,210 36,603
- --------------------------------------------------------------
Associated British Foods PLC-ADR
(United Kingdom) 200,000 1,882,060
- --------------------------------------------------------------
Earthgrains Co. (The) 10,000 558,750
- --------------------------------------------------------------
Groupe Danone-ADR (France) 50,000 2,750,000
- --------------------------------------------------------------
H.J. Heinz Co. 19,000 1,066,375
- --------------------------------------------------------------
Nestle S.A. (Switzerland) 27,000 2,889,019
- --------------------------------------------------------------
Ralston-Ralston Purina Group 12,100 1,413,431
- --------------------------------------------------------------
Smithfield Foods, Inc.(a) 17,000 518,500
- --------------------------------------------------------------
Unigate PLC (Spain) 200,000 2,215,760
- --------------------------------------------------------------
13,330,498
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GAMING, LOTTERY & PARIMUTUEL COMPANIES-0.37%
Anchor Gaming(a) 11,000 $ 853,875
- --------------------------------------------------------------
Grand Casinos, Inc.(a) 42,300 708,525
- --------------------------------------------------------------
1,562,400
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.23%
Abbott Laboratories 29,500 1,205,813
- --------------------------------------------------------------
American Home Products Corp. 22,000 1,138,500
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 17,900 2,057,381
- --------------------------------------------------------------
Johnson & Johnson 10,800 796,500
- --------------------------------------------------------------
5,198,194
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.90%
Alpharma, Inc. 30,100 662,200
- --------------------------------------------------------------
Astra A.B. (Sweden) 110,000 2,255,000
- --------------------------------------------------------------
ICN Pharmaceuticals, Inc. 9,700 443,169
- --------------------------------------------------------------
MedImmune, Inc.(a) 5,000 311,875
- --------------------------------------------------------------
Novartis (Switzerland) 26,666 2,218,632
- --------------------------------------------------------------
Novo Nordisk A.S. (Denmark) 20,000 1,376,250
- --------------------------------------------------------------
Parexel International Corp.(a) 21,600 785,700
- --------------------------------------------------------------
8,052,826
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-1.32%
Glaxo Wellcome PLC (United Kingdom) 40,000 2,392,500
- --------------------------------------------------------------
Merck & Co., Inc. 11,000 1,471,250
- --------------------------------------------------------------
Schering-Plough Corp. 18,800 1,722,550
- --------------------------------------------------------------
5,586,300
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.27%
Columbia/HCA Healthcare Corp. 39,428 1,148,341
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.19%
Integrated Health Services, Inc. 15,600 585,000
- --------------------------------------------------------------
NovaCare, Inc.(a) 19,400 227,950
- --------------------------------------------------------------
812,950
- --------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.35%
Trigon Healthcare, Inc.(a) 40,500 1,465,594
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.15%
ADAC Laboratories(a) 16,200 364,500
- --------------------------------------------------------------
Arterial Vascular Engineering,
Inc.(a) 16,000 572,000
- --------------------------------------------------------------
ATL Ultrasound, Inc.(a) 22,300 1,017,437
- --------------------------------------------------------------
Biomet, Inc. 19,500 644,719
- --------------------------------------------------------------
Coopers Companies, Inc.(a) 10,400 378,950
- --------------------------------------------------------------
Safeskin Corp.(a) 15,000 616,875
- --------------------------------------------------------------
Theragenics Corp.(a) 41,500 1,081,594
- --------------------------------------------------------------
West Co, Inc. (The) 6,800 192,525
- --------------------------------------------------------------
4,868,600
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (SPECIALIZED SERVICES)-0.12%
Hanger Orthopedic Group, Inc.(a) 15,700 $ 319,888
- --------------------------------------------------------------
Hooper Holmes, Inc. 9,600 201,600
- --------------------------------------------------------------
521,488
- --------------------------------------------------------------
HOMEBUILDING-0.44%
NVR Inc.(a) 18,700 767,869
- --------------------------------------------------------------
Pulte Corp. 21,200 633,350
- --------------------------------------------------------------
U.S. Home Corp.(a) 11,700 482,625
- --------------------------------------------------------------
1,883,844
- --------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.45%
Ethan Allen Interiors, Inc. 14,000 699,125
- --------------------------------------------------------------
Furniture Brands International,
Inc.(a) 14,300 401,294
- --------------------------------------------------------------
Whirlpool Corp. 11,500 790,625
- --------------------------------------------------------------
1,891,044
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.76%
Kimberly-Clark Corp. 15,000 688,125
- --------------------------------------------------------------
Unilever N.V.-New York Shares
(Netherlands) 32,000 2,526,000
- --------------------------------------------------------------
3,214,125
- --------------------------------------------------------------
HOUSEWARES-0.13%
Fortune Brands, Inc. 14,500 557,344
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.51%
Delphi Financial Group, Inc. 10,640 599,165
- --------------------------------------------------------------
Guarantee Life Companies Inc. (The) 8,900 194,687
- --------------------------------------------------------------
Jefferson-Pilot Corp. 3,900 225,956
- --------------------------------------------------------------
Presidential Life Corp. 18,900 403,988
- --------------------------------------------------------------
Torchmark Corp. 16,400 750,300
- --------------------------------------------------------------
2,174,096
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.76%
American International Group, Inc. 10,425 1,522,050
- --------------------------------------------------------------
FBL Financial Group, Inc. 13,400 343,375
- --------------------------------------------------------------
Travelers Group, Inc. 22,035 1,335,872
- --------------------------------------------------------------
3,201,297
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-1.57%
Chubb Corp. 2,900 233,088
- --------------------------------------------------------------
Executive Risk Inc. 7,300 538,375
- --------------------------------------------------------------
Fidelity National Financial, Inc. 10,200 406,087
- --------------------------------------------------------------
Fremont General Corp. 13,300 720,694
- --------------------------------------------------------------
General Re Corp. 3,800 963,300
- --------------------------------------------------------------
LandAmerica Financial Group, Inc. 14,800 847,300
- --------------------------------------------------------------
Old Republic International Corp. 13,200 386,925
- --------------------------------------------------------------
Orion Capital Corp. 26,000 1,452,750
- --------------------------------------------------------------
SAFECO Corp. 18,500 840,594
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (PROPERTY-CASUALTY)-(CONTINUED)
Selective Insurance Group, Inc. 10,800 $ 241,987
- --------------------------------------------------------------
6,631,100
- --------------------------------------------------------------
INSURANCE BROKERS-0.28%
Marsh & McLennan Co. 12,075 729,783
- --------------------------------------------------------------
Poe & Brown, Inc. 12,300 457,406
- --------------------------------------------------------------
1,187,189
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.07%
Advest Group, Inc. 10,800 311,850
- --------------------------------------------------------------
IRON & STEEL-0.68%
AK Steel Holding Corp. 40,700 727,513
- --------------------------------------------------------------
National Steel Corp. 24,300 288,562
- --------------------------------------------------------------
Nucor Corp. 14,000 644,000
- --------------------------------------------------------------
Texas Industries, Inc. 23,000 1,219,000
- --------------------------------------------------------------
2,879,075
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.76%
Mattel, Inc. 29,900 1,265,144
- --------------------------------------------------------------
Nintendo Co. Ltd.-ADR (Japan) 170,000 1,967,512
- --------------------------------------------------------------
3,232,656
- --------------------------------------------------------------
LODGING-HOTELS-0.32%
Bristol Hotel Co.(a) 9,300 227,850
- --------------------------------------------------------------
Host Marriott Corp.(a) 62,700 1,116,844
- --------------------------------------------------------------
1,344,694
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.09%
Applied Power, Inc.-Class A 15,400 529,375
- --------------------------------------------------------------
Caterpillar Inc. 13,500 713,813
- --------------------------------------------------------------
Dover Corp. 29,700 1,017,225
- --------------------------------------------------------------
Gencor Industries, Inc. 12,300 247,537
- --------------------------------------------------------------
Manitiwoc Co., Inc. (The) 14,850 598,641
- --------------------------------------------------------------
NACCO Industries, Inc.-Class A 3,000 387,750
- --------------------------------------------------------------
Terex Corp.(a) 39,600 1,128,600
- --------------------------------------------------------------
4,622,941
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.66%
Carlisle Companies, Inc. 8,800 378,950
- --------------------------------------------------------------
GenCorp, Inc. 17,200 434,300
- --------------------------------------------------------------
IDEX Corp. 13,300 458,850
- --------------------------------------------------------------
Textron, Inc. 9,700 695,369
- --------------------------------------------------------------
Tredegar Industries, Inc. 9,500 806,312
- --------------------------------------------------------------
2,773,781
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.87%
AptarGroup, Inc. 14,600 907,938
- --------------------------------------------------------------
Federal Signal Corp. 32,300 785,294
- --------------------------------------------------------------
Halter Marine Group, Inc.(a) 16,800 253,050
- --------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MANUFACTURING (SPECIALIZED)-(CONTINUED)
Robbins & Myers, Inc. 23,100 $ 671,344
- --------------------------------------------------------------
Superior TeleCom Inc. 12,100 503,662
- --------------------------------------------------------------
York International Corp. 12,500 544,531
- --------------------------------------------------------------
3,665,819
- --------------------------------------------------------------
METALS MINING-0.50%
Phelps Dodge Corp. 11,200 640,500
- --------------------------------------------------------------
Rio Tinto Ltd.-ADR (Australia) 31,000 1,474,304
- --------------------------------------------------------------
2,114,804
- --------------------------------------------------------------
NATURAL GAS-0.25%
Energen Corp. 33,000 664,125
- --------------------------------------------------------------
ONEOK, Inc. 10,200 406,725
- --------------------------------------------------------------
1,070,850
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.65%
Knoll, Inc.(a) 16,100 474,950
- --------------------------------------------------------------
Mail-Well, Inc.(a) 22,700 492,306
- --------------------------------------------------------------
Pitney Bowes, Inc. 18,000 866,250
- --------------------------------------------------------------
United Stationers, Inc.(a) 14,200 919,450
- --------------------------------------------------------------
2,752,956
- --------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.92%
Cliffs Drilling Co.(a) 19,800 649,688
- --------------------------------------------------------------
Marine Drilling Companies, Inc.(a) 21,400 342,400
- --------------------------------------------------------------
Maverick Tube Corp.(a) 25,000 290,625
- --------------------------------------------------------------
Pride International, Inc.(a) 36,300 614,831
- --------------------------------------------------------------
Trico Marine Services, Inc.(a) 21,500 294,281
- --------------------------------------------------------------
Varco International, Inc.(a) 18,100 358,606
- --------------------------------------------------------------
Veritas DGC, Inc.(a) 27,200 1,358,300
- --------------------------------------------------------------
3,908,731
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.44%
Cabot Oil & Gas Corp.-Class A 9,800 196,000
- --------------------------------------------------------------
HS Resources, Inc.(a) 23,700 345,131
- --------------------------------------------------------------
Total S.A.-ADR (France) 20,000 1,307,500
- --------------------------------------------------------------
1,848,631
- --------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.14%
Atlantic Richfield Co 7,800 609,375
- --------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-2.15%
Amoco Corp. 14,000 582,750
- --------------------------------------------------------------
Exxon Corp. 17,400 1,240,838
- --------------------------------------------------------------
Repsol S.A.-ADR (Spain) 48,000 2,640,000
- --------------------------------------------------------------
Royal Dutch Petroleum Co.-New York
Shares (Netherlands) 27,600 1,512,825
- --------------------------------------------------------------
Shell Transport & Trading Co.-ADR
(United Kingdom) 45,000 1,906,875
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL (INTERNATIONAL INTEGRATED)-(CONTINUED)
YPF Sociedad Anonima-ADR
(Argentina) 40,000 $ 1,202,500
- --------------------------------------------------------------
9,085,788
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.12%
Westvaco Corp. 18,000 508,500
- --------------------------------------------------------------
PERSONAL CARE-0.07%
Rexall Sundown, Inc.(a) 8,400 296,100
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.86%
Fuji Photo Film-ADR (Japan) 60,000 2,073,750
- --------------------------------------------------------------
IKON Office Solutions, Inc. 33,700 490,756
- --------------------------------------------------------------
Xerox Corp. 10,500 1,067,063
- --------------------------------------------------------------
3,631,569
- --------------------------------------------------------------
PUBLISHING-0.34%
Dai Nippon Printing Co., Ltd.-ADR
(Japan) 9,000 1,436,394
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.25%
Gannett Co., Inc. 11,600 824,325
- --------------------------------------------------------------
Pulitzer Publishing Co. 2,600 232,050
- --------------------------------------------------------------
1,056,375
- --------------------------------------------------------------
RAILROADS-0.24%
Johnstown America Industries,
Inc.(a) 17,800 309,275
- --------------------------------------------------------------
Norfolk Southern Corp. 24,000 715,500
- --------------------------------------------------------------
1,024,775
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-21.05%
American General Hospitality Corp. 130,100 2,764,625
- --------------------------------------------------------------
Apartment Investment & Management
Co. 52,800 2,085,600
- --------------------------------------------------------------
Arden Realty Group, Inc. 114,000 2,949,750
- --------------------------------------------------------------
Avalon Bay Communities, Inc. 35,300 1,341,400
- --------------------------------------------------------------
Beacon Capital(a) 60,000 1,230,000
- --------------------------------------------------------------
Bedford Property Investors, Inc. 81,700 1,491,025
- --------------------------------------------------------------
Brandywine Realty Trust 40,000 895,000
- --------------------------------------------------------------
Cabot Industrial Trust 36,400 778,050
- --------------------------------------------------------------
Camden Property Trust 34,989 1,040,923
- --------------------------------------------------------------
CarrAmerica Realty Corp. 138,000 3,915,750
- --------------------------------------------------------------
CBL & Associates Properties, Inc. 96,800 2,347,400
- --------------------------------------------------------------
Charles E. Smith Residential
Realty, Inc. 58,400 1,868,800
- --------------------------------------------------------------
Chelsea GCA Realty, Inc. 17,100 684,000
- --------------------------------------------------------------
Crescent Real Estate Equities, Co. 46,900 1,577,013
- --------------------------------------------------------------
CRIIMI MAE, Inc. 125,100 1,735,763
- --------------------------------------------------------------
Eastgroup Properties, Inc. 51,300 1,029,206
- --------------------------------------------------------------
Equity Office Properties Trust 124,879 3,543,442
- --------------------------------------------------------------
Equity Residential Properties Trust 58,700 2,784,581
- --------------------------------------------------------------
Essex Property Trust, Inc. 76,700 2,377,700
- --------------------------------------------------------------
Excel Legacy Corp.(a) 35,800 156,625
- --------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS-(CONTINUED)
Excel Realty Trust, Inc. 35,800 $ 1,031,488
- --------------------------------------------------------------
FelCor Suite Hotels, Inc. 26,200 822,025
- --------------------------------------------------------------
First Industrial Realty Trust, Inc. 53,700 1,704,975
- --------------------------------------------------------------
Gables Residential Trust 60,100 1,630,213
- --------------------------------------------------------------
General Growth Properties 28,500 1,065,187
- --------------------------------------------------------------
Glenborough Realty Trust, Inc. 50,500 1,331,938
- --------------------------------------------------------------
Healthcare Realty Trust, Inc. 29,300 798,425
- --------------------------------------------------------------
Highwoods Properties, Inc. 53,300 1,722,256
- --------------------------------------------------------------
Hospitality Properties Trust 24,600 790,275
- --------------------------------------------------------------
Kilroy Realty Corp. 60,700 1,517,500
- --------------------------------------------------------------
Kimco Realty Corp. 33,000 1,353,000
- --------------------------------------------------------------
Koger Equity, Inc. 87,900 1,774,481
- --------------------------------------------------------------
Liberty Property Trust 102,900 2,630,381
- --------------------------------------------------------------
Mack-Cali Realty Corp. 64,200 2,206,875
- --------------------------------------------------------------
MGI Properties, Inc. 46,000 1,204,625
- --------------------------------------------------------------
Pan Pacific Retail Properties, Inc. 46,800 953,550
- --------------------------------------------------------------
Parkway Properties, Inc. 39,000 1,150,500
- --------------------------------------------------------------
Patriot American Hospitality, Inc. 161,528 3,866,576
- --------------------------------------------------------------
Philips International Realty Corp. 52,400 864,600
- --------------------------------------------------------------
Prentiss Properties Trust 128,000 3,112,000
- --------------------------------------------------------------
Prime Group Realty Trust 65,500 1,121,687
- --------------------------------------------------------------
Public Storage, Inc. 45,500 1,274,000
- --------------------------------------------------------------
Regency Realty Corp. 5,100 128,138
- --------------------------------------------------------------
Security Capital Group Inc.,
warrants, expiring 09/18/98
(Luxembourg)(a) 1,346 463
- --------------------------------------------------------------
Security Capital U.S. Realty
(Luxembourg)(a) 98,700 1,312,710
- --------------------------------------------------------------
Shurgard Storage Centers, Inc. 87,700 2,433,675
- --------------------------------------------------------------
Simon DeBartolo Group, Inc. 41,900 1,361,750
- --------------------------------------------------------------
SL Green Realty Corp. 65,600 1,476,000
- --------------------------------------------------------------
Starwood Hotels & Resorts 67,150 3,244,184
- --------------------------------------------------------------
Sun Hung Kai Properties Ltd.-ADR
(Hong Kong) 150,000 636,885
- --------------------------------------------------------------
Sunstone Hotel Investors, Inc. 115,900 1,542,918
- --------------------------------------------------------------
Tower Realty Trust, Inc. 64,000 1,432,000
- --------------------------------------------------------------
TriNet Corporate Realty Trust, Inc. 33,200 1,128,800
- --------------------------------------------------------------
Vornado Realty Trust 53,300 2,115,344
- --------------------------------------------------------------
Weeks Corp. 56,300 1,780,487
- --------------------------------------------------------------
89,116,564
- --------------------------------------------------------------
RESTAURANTS-0.70%
Brinker International, Inc.(a) 27,400 527,450
- --------------------------------------------------------------
Cheesecake Factory (The)(a) 14,400 325,800
- --------------------------------------------------------------
CKE Restaurants, Inc. 9,285 383,006
- --------------------------------------------------------------
Consolidated Products, Inc.(a) 16,125 340,641
- --------------------------------------------------------------
McDonald's Corp. 11,300 779,700
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RESTAURANTS-(CONTINUED)
Showbiz Pizza Time, Inc.(a) 15,200 $ 612,750
- --------------------------------------------------------------
2,969,347
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.26%
Sherwin-Williams Co. 32,800 1,086,500
- --------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.23%
CHS Electronics, Inc.(a) 54,800 979,550
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.32%
J.C. Penney Co., Inc. 13,375 967,179
- --------------------------------------------------------------
Proffitt's, Inc.(a) 9,650 389,619
- --------------------------------------------------------------
1,356,798
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.17%
Ames Department Stores, Inc.(a) 7,000 184,188
- --------------------------------------------------------------
ShopKo Stores, Inc.(a) 15,400 523,600
- --------------------------------------------------------------
707,788
- --------------------------------------------------------------
RETAIL (DRUG STORES)-0.32%
Rite Aid Corp. 36,000 1,352,250
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.15%
Wal-Mart Stores, Inc. 10,500 637,875
- --------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.09%
Lands' End, Inc.(a) 11,800 373,175
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.39%
AutoZone, Inc.(a) 7,500 239,532
- --------------------------------------------------------------
Footstar, Inc.(a) 15,400 739,200
- --------------------------------------------------------------
Pier 1 Imports, Inc. 27,750 662,531
- --------------------------------------------------------------
1,641,263
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.19%
Abercrombie & Fitch Co.-Class A(a) 11,900 523,600
- --------------------------------------------------------------
American Eagle Outfitters, Inc.(a) 7,800 300,788
- --------------------------------------------------------------
824,388
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.83%
Astoria Financial Corp. 7,700 411,950
- --------------------------------------------------------------
Downey Financial Corp. 8,505 278,007
- --------------------------------------------------------------
FirstFed Financial Corp.(a) 16,700 868,400
- --------------------------------------------------------------
Peoples Heritage Financial Group,
Inc. 21,800 515,025
- --------------------------------------------------------------
Sovereign Bancorp, Inc. 18,480 302,033
- --------------------------------------------------------------
TR Financial Corp. 15,900 665,812
- --------------------------------------------------------------
Webster Financial Corp. 13,600 452,200
- --------------------------------------------------------------
3,493,427
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.26%
Acxiom Corp.(a) 25,400 633,413
- --------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (ADVERTISING/MARKETING)-(CONTINUED)
True North Communications, Inc. 16,100 $ 470,925
- --------------------------------------------------------------
1,104,338
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.63%
Budget Group, Inc.-Class A(a) 21,600 689,850
- --------------------------------------------------------------
Caribiner International, Inc.(a) 12,600 220,500
- --------------------------------------------------------------
DeVry, Inc.(a) 43,000 943,313
- --------------------------------------------------------------
Dun & Bradstreet Corp. 23,000 830,875
- --------------------------------------------------------------
2,684,538
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.24%
Banctec, Inc.(a) 21,800 504,125
- --------------------------------------------------------------
Gerber Scientific, Inc. 22,900 520,975
- --------------------------------------------------------------
1,025,100
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.40%
Billing Information Concepts
Corp.(a) 25,800 399,900
- --------------------------------------------------------------
Computer Horizons Corp.(a) 6,000 222,375
- --------------------------------------------------------------
First Data Corp. 24,300 809,494
- --------------------------------------------------------------
Hyperion Software Corp.(a) 9,400 267,900
- --------------------------------------------------------------
1,699,669
- --------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.39%
Norrell Corp. 20,800 414,700
- --------------------------------------------------------------
Romac International, Inc.(a) 27,000 820,125
- --------------------------------------------------------------
StaffMark, Inc.(a) 11,100 406,538
- --------------------------------------------------------------
1,641,363
- --------------------------------------------------------------
SPECIALTY PRINTING-0.35%
Consolidated Graphics, Inc.(a) 10,700 631,300
- --------------------------------------------------------------
Deluxe Corp. 24,300 870,244
- --------------------------------------------------------------
1,501,544
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.16%
Centennial Cellular Corp.(a) 18,900 705,206
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.30%
Pacific Gateway Exchange, Inc.(a) 6,700 268,419
- --------------------------------------------------------------
Telefonos de Mexico S.A.-ADR
(Mexico) 15,000 720,937
- --------------------------------------------------------------
WinStar Communications, Inc.(a) 6,800 291,975
- --------------------------------------------------------------
1,281,331
- --------------------------------------------------------------
TELEPHONE-2.32%
British Telecommunications PLC
(United Kingdom) 25,000 3,087,500
- --------------------------------------------------------------
e.spire Communications Inc.(a) 25,800 582,113
- --------------------------------------------------------------
Portugal Telecom S.A.-ADR 35,000 1,852,813
- --------------------------------------------------------------
Telecom Italia S.p.A.-ADR (Italy) 30,000 2,205,000
- --------------------------------------------------------------
Telefonica de Espana-ADR (Spain) 15,000 2,085,937
- --------------------------------------------------------------
9,813,363
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TEXTILES (APPAREL)-0.52%
Kellwood Co. 23,800 $ 850,850
- --------------------------------------------------------------
Liz Claiborne, Inc. 14,700 768,075
- --------------------------------------------------------------
Nautica Enterprises, Inc.(a) 10,100 270,806
- --------------------------------------------------------------
St. John Knits, Inc. 8,200 316,725
- --------------------------------------------------------------
2,206,456
- --------------------------------------------------------------
TEXTILES (HOME FURNISHINGS)-0.32%
Interface, Inc. 30,800 621,775
- --------------------------------------------------------------
Springs Industries, Inc.-Class A 15,600 719,550
- --------------------------------------------------------------
1,341,325
- --------------------------------------------------------------
TEXTILES (SPECIALTY)-0.49%
Burlington Industries, Inc.(a) 76,400 1,074,375
- --------------------------------------------------------------
Galey & Lord, Inc.(a) 19,200 285,600
- --------------------------------------------------------------
Unifi, Inc. 20,300 695,275
- --------------------------------------------------------------
2,055,250
- --------------------------------------------------------------
TOBACCO-0.18%
Philip Morris Companies, Inc. 19,450 765,844
- --------------------------------------------------------------
TRUCKERS-0.26%
Consolidated Freightways Corp.(a) 16,100 224,394
- --------------------------------------------------------------
Roadway Express, Inc. 22,700 428,462
- --------------------------------------------------------------
Werner Enerprises, Inc. 22,875 436,055
- --------------------------------------------------------------
1,088,911
- --------------------------------------------------------------
WATER UTILITIES-0.05%
E'Town Corp. 5,100 191,250
- --------------------------------------------------------------
Total Common Stocks (Cost
$287,363,576) 357,775,791
- --------------------------------------------------------------
NON-CONVERTIBLE PREFERRED STOCKS-0.26%
CONSUMER FINANCE-0.14%
Home Ownership Funding Corp.,
13.33% step down Pfd. (Acquired
02/13/97; Cost $640,000)(b) 6,400 608,000
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-0.12%
Tier One Properties, 11.095% step
down Pfd. (Acquired 01/31/97;
Cost $500,000)(b) 5,000 508,125
- --------------------------------------------------------------
Total Non-Convertible Preferred
Stocks (Cost $1,140,000) 1,116,125
- --------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS-0.08%
REAL ESTATE INVESTMENT TRUST
Kimco Realty Corp., 7.50% Conv.
Pfd. 11,880 322,245
- --------------------------------------------------------------
Total Convertible Preferred
Stocks (Cost $235,475) 322,245
- --------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS & NOTES-5.68%
BUILDING MATERIALS-0.66%
USG Corp., Sr. Notes, 8.50%,
08/01/05 $2,550,000 $ 2,819,076
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.21%
Motorola Inc., Deb., 8.40%,
08/15/31 700,000 884,492
- --------------------------------------------------------------
CONSUMER FINANCE-0.27%
Beneficial Corp., Deb, 8.40%,
05/15/08 1,000,000 1,150,980
- --------------------------------------------------------------
CONTAINERS (METAL & GLASS)-0.44%
Owens-Illinois, Inc., Deb., 7.80%,
05/15/18 1,800,000 1,869,480
- --------------------------------------------------------------
ENTERTAINMENT-0.46%
Viacom, Inc., Sr. Gtd. Unsec. Deb.,
7.625%, 01/15/16 1,775,000 1,930,242
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.31%
Association Corp. N.A., Sr. Notes,
7.75%, 02/15/05 1,200,000 1,301,676
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.29%
Bear Stearns Companies, Inc.,
Unsec. Notes, 6.625%, 10/01/04 1,200,000 1,224,456
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.13%
Tyco International Group S.A.
(Bermuda), Yankee Bonds, 7.00%,
06/15/28 550,000 556,737
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-0.85%
Highwoods Properties Inc., Sr.
Unsec. Notes, 7.50%, 04/15/18 700,000 722,862
- --------------------------------------------------------------
Kimco Realty Corp., Medium Term
Notes, 7.06%, 07/14/09 970,000 1,019,160
- --------------------------------------------------------------
Spieker Properties, Unsec. Notes,
6.75%, 01/15/08 1,150,000 1,154,886
- --------------------------------------------------------------
Weingarten Realty Investment,
Medium Term Notes, 6.90%,
11/24/08 700,000 722,603
- --------------------------------------------------------------
3,619,511
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.81%
Dayton Hudson Corp., Unsec. Notes,
7.50%, 07/15/06 1,100,000 1,187,714
- --------------------------------------------------------------
Federated Department Stores, Unsec.
Deb., 7.00%, 02/15/28 1,345,000 1,368,174
- --------------------------------------------------------------
Neiman Marcus Group, Inc., Deb.,
7.125%, 06/01/28 825,000 855,451
- --------------------------------------------------------------
3,411,339
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.28%
Hertz Corp., Sr. Notes, 6.00%,
02/01/01 1,200,000 1,195,392
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.24%
BellSouth Telecommunication, Deb,
5.85%, 11/15/45 1,000,000 1,005,670
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-0.26%
MCI Communications Corp., Sr.
Notes, 6.125%, 04/15/02 $1,100,000 $ 1,100,473
- --------------------------------------------------------------
TELEPHONE-0.47%
GTE Corp.,
Deb., 10.25%, 11/01/20 790,000 889,761
- --------------------------------------------------------------
Notes, 7.51%, 04/01/09 1,000,000 1,086,850
- --------------------------------------------------------------
1,976,611
- --------------------------------------------------------------
Total Corporate Bonds & Notes
(Cost $23,439,288) 24,046,135
- --------------------------------------------------------------
ASSET-BACKED SECURITIES-1.16%
CONSUMER FINANCE-1.16%
Delta Funding Home Equity Loan
Trust, 6.38%, 09/15/26 1,275,000 1,279,208
- --------------------------------------------------------------
Green Tree Home Equity Loan Trust,
6.39%, 07/15/29 650,000 656,708
- --------------------------------------------------------------
IMC Home Equity Loan Trust, 6.71%,
01/20/12 1,500,000 1,510,218
- --------------------------------------------------------------
Premier Auto Trust, 5.77%, 01/06/02 1,470,000 1,470,096
- --------------------------------------------------------------
Total Asset Backed Securities
(Cost $4,894,219) 4,916,280
- --------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-3.34%
FEDERAL HOME LOAN BANK BOARD-0.47%
Deb.
5.70%, 02/22/00 2,000,000 1,999,540
- --------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-0.69%
Pass Through Certificates
6.50%, 08/01/03 264,599 273,694
- --------------------------------------------------------------
9.00%, 01/01/05 to 08/15/06 852,891 888,598
- --------------------------------------------------------------
6.00%, 03/01/13 1,471,387 1,458,512
- --------------------------------------------------------------
8.00%, 08/01/17 294,026 310,103
- --------------------------------------------------------------
2,930,907
- --------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
("FNMA")-1.94%
Pass Through Certificates
9.00%, 12/01/06 767,980 803,737
- --------------------------------------------------------------
8.50%, 06/01/07 731,585 753,072
- --------------------------------------------------------------
6.00%, 04/01/24 1,848,716 1,814,625
- --------------------------------------------------------------
6.50%, 10/01/27 to 11/01/27 1,787,592 1,782,550
- --------------------------------------------------------------
7.00%, 01/01/28 2,993,282 3,039,109
- --------------------------------------------------------------
8,193,093
- --------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
("GNMA")-0.24%
Pass Through Certificates
7.00%, 01/16/07 987,568 994,634
- --------------------------------------------------------------
Total U.S. Government Agency
Securities (Cost $13,935,093) 14,118,174
- --------------------------------------------------------------
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-3.77%
U.S. Treasury Notes & Bonds
5.50%, 11/15/98 $3,000,000 $ 3,001,950
- --------------------------------------------------------------
6.25%, 05/31/99 2,500,000 2,517,150
- --------------------------------------------------------------
7.50%, 11/15/01 7,000,000 7,409,360
- --------------------------------------------------------------
7.25%, 08/15/04 2,300,000 2,504,056
- --------------------------------------------------------------
7.875%, 11/15/04 450,000 505,557
- --------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $15,948,432) 15,938,073
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENT(c)-0.99%
Dean Witter Reynolds, Inc., 6.10%,
07/01/98(d) $4,203,458 $ 4,203,458
- --------------------------------------------------------------
Total Repurchase Agreements
(Cost $4,203,458) 4,203,458
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.79% 422,436,281
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.21% 908,844
- --------------------------------------------------------------
NET ASSETS-100.00% $423,345,125
==============================================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Deb. - Debentures
Conv. - Convertible
Gtd. - Guaranteed
Pfd. - Preferred
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Notes to Schedule of Investments:
(a) Non-income producing security
(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 the securities has been determined in
accordance with the procedures established by the Board of Directors. The
aggregate market value of these securities at 06/30/98 was $1,116,125 which
represented 0.26% of the Fund's net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(d) Joint repurchase agreement entered into 06/30/98 with a maturing value of
$200,033,889. Collateralized by $203,366,000 U.S. Government obligations,
0% to 9.375% due 07/01/98 to 09/21/04 with an aggregate market value at
06/30/98 of $209,153,696.
See Notes to Financial Statements.
13
<PAGE> 16
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$351,159,541) $422,436,281
- ---------------------------------------------------------
Cash 1,616,416
- ---------------------------------------------------------
Receivables for:
Capital stock sold 506,067
- ---------------------------------------------------------
Interest and dividends 1,993,278
- ---------------------------------------------------------
Paydowns 44,753
- ---------------------------------------------------------
Investment for deferred compensation plan 3,426
- ---------------------------------------------------------
Other assets 88,989
- ---------------------------------------------------------
Total assets 426,689,210
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,288,283
- ---------------------------------------------------------
Capital stock reacquired 490,065
- ---------------------------------------------------------
Deferred compensation plan 3,426
- ---------------------------------------------------------
Accrued advisory fees 344,288
- ---------------------------------------------------------
Accrued operating services fees 183,838
- ---------------------------------------------------------
Accrued distribution fees 1,025,808
- ---------------------------------------------------------
Accrued directors' fees and expenses 8,377
- ---------------------------------------------------------
Total liabilities 3,344,085
- ---------------------------------------------------------
Net assets applicable to shares outstanding $423,345,125
=========================================================
NET ASSETS:
Class A $ 17,607,195
=========================================================
Class B $ 4,823,184
=========================================================
Class C $400,914,746
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 1,181,226
=========================================================
Class B:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 323,193
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 26,879,060
=========================================================
Class A:
Net asset value and redemption price per
share $ 14.91
=========================================================
Offering price per share:
(Net asset value of $14.91
divided by 94.50%) $ 15.78
=========================================================
Class B:
Net asset value and offering price per
share $ 14.92
=========================================================
Class C:
Net asset value and offering price per
share $ 14.92
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 2,375,330
- --------------------------------------------------------
Dividends (net of $182,752 foreign
withholding tax) 4,561,988
- --------------------------------------------------------
Total investment income 6,937,318
- --------------------------------------------------------
EXPENSES:
Advisory fees 2,045,023
- --------------------------------------------------------
Operating services fees 855,446
- --------------------------------------------------------
Distribution fees-Class A 24,157
- --------------------------------------------------------
Distribution fees-Class B 7,912
- --------------------------------------------------------
Distribution fees-Class C 1,968,093
- --------------------------------------------------------
Directors' fees and expenses 2,573
- --------------------------------------------------------
Total expenses 4,903,204
- --------------------------------------------------------
Less: Fees waived (112,659)
- --------------------------------------------------------
Net expenses 4,790,545
- --------------------------------------------------------
Net investment income 2,146,773
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM
INVESTMENT SECURITIES:
Net realized gain on sales of investment
securities 17,906,688
- --------------------------------------------------------
Net unrealized appreciation of investment
securities 831,936
- --------------------------------------------------------
Net gain from investment securities 18,738,624
- --------------------------------------------------------
Net increase in net assets resulting from
operations $20,885,397
========================================================
</TABLE>
14
<PAGE> 17
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,146,773 $ 3,030,247
- ------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities 17,906,688 28,345,151
- ------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 831,936 24,205,999
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 20,885,397 55,581,397
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (118,596) (54,439)
- ------------------------------------------------------------------------------------------
Class B (10,881) --
- ------------------------------------------------------------------------------------------
Class C (1,588,619) (2,620,318)
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A -- (574,586)
- ------------------------------------------------------------------------------------------
Class C -- (29,179,585)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A 7,987,924 9,196,237
- ------------------------------------------------------------------------------------------
Class B 4,880,108 --
- ------------------------------------------------------------------------------------------
Class C 5,439,858 86,678,096
- ------------------------------------------------------------------------------------------
Net increase in net assets 37,475,191 119,026,802
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 385,869,934 266,843,132
- ------------------------------------------------------------------------------------------
End of period $423,345,125 $385,869,934
==========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $331,462,647 $313,154,757
- ------------------------------------------------------------------------------------------
Undistributed net investment income 908,305 479,628
- ------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities 19,697,433 1,790,745
- ------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 71,276,740 70,444,804
- ------------------------------------------------------------------------------------------
$423,345,125 $385,869,934
==========================================================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor MultiFlex Fund (the "Fund") is a series portfolio of AIM Advisor
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of five diversified
portfolios. The Fund currently offers three different classes of shares: Class A
shares, Class B shares and Class C shares. The new Class B shares commenced
sales on March 3, 1998. Class A shares are sold with a front-end sales charge.
Class B shares 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 achieve a high total return on investment through capital
appreciation and current income, without regard to federal income tax
considerations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the mean between the closing bid and asked prices
on that day. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued
at the mean between the last bid and asked prices based upon quotes furnished
by market makers for such securities. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date, or absent a last sales price, at the mean of the closing bid and asked
prices. Debt obligations (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 yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued at the mean between last bid
and asked prices based upon quotes furnished by independent sources.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Company's Board of Directors. Investments with
maturities of 60 days or less are valued on the basis of amortized cost which
approximates market value.
B. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. Bond Premiums-It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
D. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements.
E. Expenses-Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Management and Research, Inc. ("IMR") whereby AIM pays
IMR an annual rate of 0.35% of the Fund's average daily net assets up to $500
million and 0.25% on the Fund's average daily net assets in excess of $500
million.
The Company, pursuant to an operating services agreement with AIM, has agreed
to pay AIM an annual rate of 0.45% of the Fund's average daily net assets for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. This
agreement provides that AIM pays all fees and expenses associated with these and
other functions, including, but not limited to, registration fees, shareholder
meeting fees, and proxy statement and shareholder report expenses. During the
six months ended June 30, 1998, AIM was paid $749,689 for such services. As of
June 1, 1998, AIM has voluntarily agreed to limit the operating services fees to
an annual rate of 0.45% of the first $50 million of the Fund's average daily net
assets and 0.10% of the Fund's average daily net assets in excess of $50
million. During the period June 1, 1998 through June 30, 1998, AIM voluntarily
waived operating services fees in the amount of $105,757.
The Company 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 Company has adopted
distribution plans pursuant to
16
<PAGE> 19
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 0.35% of the
average daily net assets attributable to the Class A shares and 1.00% of the
average daily net assets attributable to the Class C shares. AIM Distributors
has voluntarily agreed to limit the Class A shares plan payments to 0.25% for
three years beginning August 4, 1997. The Fund pursuant to the Class B Plan,
pays AIM Distributors compensation at an annual rate of 1.00% of the average
daily net assets attributable to the Class B shares. Of these amounts, the Fund
may pay a service fee of 0.25% of the average daily net assets of the Class A,
Class B or Class C shares to selected dealers and financial institutions who
furnish continuing personal shareholder services to their customers who purchase
and own the appropriate class of shares of the Fund. Any amounts not paid as a
service fee under the Plans would constitute an asset-based sales charge. The
Plans also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by the respective classes. During the six months ended
June 30, 1998, for the Class A and Class C shares and the period March 3, 1998
(date sales commenced) through June 30, 1998 for the Class B shares, the Class
A, Class B and Class C shares paid AIM Distributors $17,255, $7,912 and
$1,968,093, respectively, as compensation under the Plans. During the six months
ended June 30, 1998, AIM Distributors waived fees of $6,902 for the Class A
shares.
AIM Distributors received commissions of $49,986 from sales of Class A shares
of the Fund during the six months ended June 30, 1998. Such commissions are not
an expense to the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the six months ended June 30,
1998, AIM Distributors received commissions of $36,203 in contingent deferred
sales charges imposed on redemptions of Fund shares. Certain officers and
directors of the Company are officers and directors of AIM, A I M Fund Services,
Inc. and AIM Distributors.
The combined effect of the advisory agreements, operating services agreement
and the distribution plan for the Fund is to place a cap or ceiling on the total
expenses of the Fund, other than brokerage commissions, interest, taxes,
litigation, directors' fees and expenses, and other extraordinary expenses. AIM
has voluntarily agreed to adhere to maximum expense ratios for the Fund. To the
extent that the Fund exceeds the amounts, AIM or its affiliates will waive its
fees to reimburse the Fund to assure that the Fund's expenses do not exceed the
designated maximum amounts except for those items specifically identified above.
If, in any calendar quarter, the average net assets of the Fund are less than
$100 million, the Fund's expenses shall not exceed 1.80% for Class A and 2.45%
for Class C; on the next $400 million of net assets, expenses shall not exceed
1.75% for Class A and 2.40% for Class C; on the next $500 million, expenses
shall not exceed 1.70% for Class A and 2.35% for Class C; on the next $1 billion
of net assets, expenses shall not exceed 1.65% for Class A and 2.30% for Class
C; and on all assets over $2 billion, expenses shall not exceed 1.60% for Class
A and 2.25% for Class C.
During the six months ended June 30, 1998, the Fund paid legal fees of $1,299
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended June 30, 1998 was
$161,966,944 and $130,626,391, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 84,689,420
- -----------------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (13,415,748)
- -----------------------------------------------------------------------
Net unrealized appreciation of investment
securities $ 71,273,672
=======================================================================
</TABLE>
Cost of investments for tax purposes is $351,162,609.
17
<PAGE> 20
NOTE 5-CAPITAL STOCK*
Changes in the Fund's capital stock outstanding for the six months ended June
30, 1998 and the year ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 613,355 $ 9,032,992 619,395 $ 8,916,997
- ------------------------------------------------ ---------- ------------ ----------- ------------
Class B** 324,389 4,898,416 -- --
- ------------------------------------------------ ---------- ------------ ----------- ------------
Class C 2,646,926 39,146,255 6,751,442 95,937,310
- ------------------------------------------------ ---------- ------------ ----------- ------------
Issued as reinvestment of dividends:
Class A 7,584 110,439 44,119 616,050
- ------------------------------------------------ ---------- ------------ ----------- ------------
Class B** 687 9,886 -- --
- ------------------------------------------------ ---------- ------------ ----------- ------------
Class C 99,538 1,451,486 2,197,213 30,337,244
- ------------------------------------------------ ---------- ------------ ----------- ------------
Reacquired:
Class A (77,925) (1,155,507) (25,302) (336,810)
- ------------------------------------------------ ---------- ------------ ----------- ------------
Class B** (1,883) (28,194) -- --
- ------------------------------------------------ ---------- ------------ ----------- ------------
Class C (2,374,274) (35,157,883) (2,756,585) (39,596,458)
- ------------------------------------------------ ---------- ------------ ----------- ------------
1,238,397 $ 18,307,890 6,830,282 $ 95,874,333
================================================ ========== ============ =========== ============
</TABLE>
* Shares have been restated to reflect a 4 for 1 stock split, effected in the
form of a 300% stock dividend, on November 7, 1997.
** Class B shares commenced sales on March 3, 1998.
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the six months ended June 30, 1998 and the year ended
December 31, 1997, for a share of Class B capital stock outstanding during the
period March 3, 1998 (date sales commenced) through June 30, 1998 and for a
share of Class C capital stock outstanding during the six months ended June 30,
1998, each of the years in the four-year period ended December 31, 1997 and the
period November 17, 1993 (date operations commenced) through December 31, 1993.
<TABLE>
<CAPTION>
CLASS A(a) CLASS B
------------------------ --------
JUNE 30, DECEMBER 31, JUNE 30,
1998 1997(b) 1998
-------- ------------ --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 14.21 $ 13.14 $ 14.79
- ------------------------------------------------------------ ------- ------- -------
Income from investment operations:
Net investment income 0.13(c) 0.23 0.06(c)
- ------------------------------------------------------------ ------- ------- -------
Net gains on securities (both realized and unrealized) 0.68 2.26 0.13
- ------------------------------------------------------------ ------- ------- -------
Total from investment operations 0.81 2.49 0.19
- ------------------------------------------------------------ ------- ------- -------
Less distributions:
Dividends from net investment income (0.11) (0.22) (0.06)
- ------------------------------------------------------------ ------- ------- -------
Distributions from net realized gains -- (1.20) --
- ------------------------------------------------------------ ------- ------- -------
Total distributions (0.11) (1.42) (0.06)
- ------------------------------------------------------------ ------- ------- -------
Net asset value, end of period $ 14.91 $ 14.21 $ 14.92
============================================================ ======= ======= =======
Total return(d) 5.75% 19.40% 1.29%
============================================================ ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $17,607 $ 9,066 $ 4,823
============================================================ ======= ======= =======
Ratio of expenses to average net assets(e) 1.61%(f) 1.67% 2.37%(f)
============================================================ ======= ======= =======
Ratio of net investment income to average net assets(g) 1.91%(f) 1.67% 1.15%(f)
============================================================ ======= ======= =======
Portfolio turnover rate 33% 62% 33%
============================================================ ======= ======= =======
Average brokerage commission rate(h) $0.0564 $0.0592 $0.0564
============================================================ ======= ======= =======
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct sales charges and are not annualized for periods less than
one year.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.76% (annualized) and 1.77% for 1998-1997 for Class A and 2.42%
(annualized) for 1998 for Class B.
(f) Ratios are annualized and based on average net assets of $13,918,151 and
$2,406,557 for Class A and Class B, respectively.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 1.76% (annualized) and 1.57% for 1998-1997 for Class A
and 1.10% (annualized) for 1998 for Class B.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold.
18
<PAGE> 21
NOTE 6-FINANCIAL HIGHLIGHTS-continued
<TABLE>
<CAPTION>
CLASS C(a)
----------------------------------------------------------------
DECEMBER 31,
JUNE 30, -----------------------------------------------------
1998 1997(b) 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.22 $ 13.14 $ 11.68 $ 9.78 $ 10.04 $ 10.00
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.08(c) 0.13 0.14 0.16 0.16 0.01
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 0.68 2.26 1.83 1.94 (0.26) 0.04
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Total from investment operations 0.76 2.39 1.97 2.10 (0.10) 0.05
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.06) (0.11) (0.13) (0.16) (0.16) (0.01)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Distributions from net realized gains -- (1.20) (0.38) (0.04) -- --
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Total distributions (0.06) (1.31) (0.51) (0.20) (0.16) (0.01)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 14.92 $ 14.22 $ 13.14 $ 11.68 $ 9.78 $ 10.04
============================================================ ======== ======== ======== ======== ======== ========
Total return(d) 5.35% 18.55% 17.03% 21.58% (1.02)% 0.46%
============================================================ ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $400,915 $376,804 $266,843 $174,592 $120,220 $ 12,241
============================================================ ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets(e) 2.37%(f) 2.42% 2.45% 2.50% 2.49% 2.50%(g)
============================================================ ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets(h) 1.15%(f) 0.92% 1.16% 1.53% 2.01% 1.09%(g)
============================================================ ======== ======== ======== ======== ======== ========
Portfolio turnover rate 33% 62% 62% 50% 81% 53%
============================================================ ======== ======== ======== ======== ======== ========
Average brokerage commission rate(i) $ 0.0564 $ 0.0592 $ 0.0577 N/A N/A N/A
============================================================ ======== ======== ======== ======== ======== ========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct contingent deferred sales charges and are not annualized for
periods less than one year.
(e) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.42% (annualized).
(f) Ratios are annualized and based on average net assets of $396,880,574.
(g) Annualized.
(h) 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 1.10% (annualized).
(i) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
19
<PAGE> 22
Directors & Officers
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II SUB-ADVISOR
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President INVESCO Management & Research, Inc.
101 Federal Street
Edward K. Dunn Jr. Dana R. Sutton Boston, MA 02110
Chairman, Mercantile Mortgage Corp.; Vice President and Assistant Treasurer
Formerly Vice Chairman and President, TRANSFER AGENT
Mercantile-Safe Deposit & Trust Co.; and Robert G. Alley
President, Mercantile Bankshares Vice President A I M Fund Services, Inc.
P.O. Box 4739
Jack Fields Stuart W. Coco Houston, TX 77210-4739
Chief Executive Officer Vice President
Texana Global, Inc.; CUSTODIAN
Formerly Member Melville B. Cox
of the U.S. House of Representatives Vice President State Street Bank and Trust Company
225 Franklin Street
Carl Frischling Karen Dunn Kelley Boston, MA 02110
Partner Vice President
Kramer, Levin, Naftalis & Frankel COUNSEL TO THE FUND
Jonathan C. Schoolar
Robert H. Graham Vice President Ballard Spahr
President and Chief Executive Officer Andrews & Ingersoll, LLP
A I M Management Group Inc. Renee A. Friedli 1735 Market Street
Assistant Secretary Philadelphia, PA 19103
Lewis F. Pennock
Attorney P. Michelle Grace COUNSEL TO THE DIRECTORS
Assistant Secretary
Ian W. Robinson Kramer, Levin, Naftalis & Frankel
Consultant; Formerly Executive Jeffrey H. Kupor 919 Third Avenue
Vice President and Assistant Secretary New York, NY 10022
Chief Financial Officer
Bell Atlantic Management Nancy L. Martin DISTRIBUTOR
Services, Inc. Assistant Secretary
A I M Distributors, Inc.
Louis S. Sklar Ofelia M. Mayo 11 Greenway Plaza
Executive Vice President Assistant Secretary Suite 100
Hines Interests Houston, TX 77046
Limited Partnership Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
20
<PAGE> 23
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds--Registered Trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds.
o RETIREMENT PLANS. You may purchase shares of the fund for your Individual
Retirement Account (IRA) or any other type of retirement plan, and earn
tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o WWW.AIMFUNDS.COM. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
----------------------------------------------
Current shareholders
can call our
AIM Investor Line at
800-246-5463
for 24-hour-a-day
account information.
----------------------------------------------
<PAGE> 24
The AIM Family of Funds--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS
[PHOTO OF AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund
11 GREENWAY PLAZA AIM Blue Chip Fund AIM Asian Growth Fund
APPEARS HERE] AIM Capital Development Fund AIM Developing Markets Fund(2)
AIM Constellation Fund AIM Emerging Markets Fund(2)
AIM Mid Cap Growth Fund(2) AIM Europe Growth Fund(2)
AIM Select Growth Fund(3) AIM European Development Fund
AIM Small Cap Equity Fund(2) AIM International Equity Fund
AIM Small Cap Opportunities Fund AIM International Growth Fund(2)
AIM Value Fund AIM Japan Growth Fund(2)
AIM Weingarten Fund AIM Latin American Growth Fund(2)
AIM New Pacific Growth Fund(2)
GROWTH & INCOME FUNDS
GLOBAL GROWTH FUNDS
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund
AIM Advisor MultiFlex Fund AIM Global Growth Fund
AIM Advisor Real Estate Fund AIM Worldwide Growth Fund(2)
AIM America Value Fund(2)
AIM Balanced Fund GLOBAL GROWTH & INCOME FUNDS
AIM Charter Fund
AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund
INCOME FUNDS
AIM Floating Rate Fund(2) GLOBAL INCOME FUNDS
AIM High Yield Fund
AIM Global Government Income Fund(2) AIM Global High Income Fund(2)
AIM Income Fund AIM Global Income Fund
AIM Intermediate Government Fund AIM Strategic Income Fund(2)
AIM Limited Maturity Treasury Fund
TAX-FREE INCOME FUNDS THEME FUNDS
AIM High Income Municipal Fund AIM Global Consumer Products and Services Fund(2)
AIM Municipal Bond Fund AIM Global Financial Services Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Health Care Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
MONEY MARKET FUNDS AIM Global Telecommunications Fund(2)
AIM New Dimension Fund(2)
AIM Dollar Fund(2)
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
</TABLE>
(1) AIM Aggressive Growth Fund was closed to new investors on June 5, 1997.
(2) Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds.
(3) On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth Fund. For
more complete information about any AIM Fund(s), including sales charges and
expenses, ask your financial consultant or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money.
A I M Management Group Inc. has provided leadership in the mutual fund industry
since 1976 and managed approximately $101 billion in assets for more than 5.2
million shareholders, including individual investors, corporate clients, and
financial institutions, as of June 30, 1998. The AIM Family of
Funds--Registered Trademark--is distributed nationwide, and AIM today is the
ninth-largest mutual fund complex in the U.S. in assets under management,
according to Strategic Insight, an independent mutual fund monitor.
INVEST WITH DISCIPLINE(SM)
