<PAGE> 1
ANNUAL REPORT / JULY 31 2000
AIM HIGH YIELD FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
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[ COVER IMAGE ]
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WHEAT FIELD WITH A LARK
BY VINCENT VAN GOGH
GOOD TIMES ARE COMMONLY REPRESENTED BY A WHEAT SHEAF,
CONNOTING NATURE'S BOUNTY AND THE HARVEST THAT IS REAPED
AFTER ARDUOUS LABOR. ALTHOUGH HARDSHIP MAY BE INCURRED
ALONG THE WAY, THE DISCIPLINED INVESTOR KNOWS THAT IN THE
LONG TERM, PERSEVERANCE SHOULD RESULT IN REWARD.
-------------------------------------
AIM High Yield Fund is for shareholders who seek a high level of current income.
The fund invests in a portfolio consisting primarily of high-yielding,
lower-rated bonds.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THE REPORT:
o AIM High Yield Fund's performance figures are historical, and they reflect
the reinvestment of distributions and changes in net asset value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B and Class C shares will differ from
that of its Class A shares due to different sales-charge structure and class
expenses.
o The 30-day yield is calculated on the basis of a formula defined by the SEC.
The formula is based on the portfolio's potential earnings from dividends,
interest, yield-to-maturity or yield-to-call of the bonds in the portfolio,
net of all expenses and annualized.
o Since our last report to you, the fund's fiscal year end was changed from
December 31 to July 31. Certain information in the financial pages of this
report and information concerning fund distributions are for the period
12/31/99-7/31/00. The portfolio managers' discussion and the performance
information presented are for the period 7/31/99-7/31/00.
o For the seven-month period ended 7/31/00, the fund paid distributions of
$0.51 per Class A share and $0.4695 per Class B and Class C share.
o The fund's cumulative returns are at net asset value for the seven-month
period ended 7/31/00 were as follows: Class A shares, -7.01%, Class B
shares, -7.49%; Class C shares, -7.51%.
o Government securities (such as U.S. Treasury bills, notes and bonds) offer a
high degree of safety, and they guarantee the timely payment of principal
and interest if held to maturity. Fund shares are not insured, and their
value will vary with market conditions.
o The fund invests in higher-yielding, lower-rated corporate bonds, commonly
known as junk bonds, which have a greater risk of price fluctuation and loss
of principal than do U.S. government securities (such as U.S. Treasury
bills, notes and bonds), for which the government guarantees the repayment
of principal and interest if held to maturity.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lehman High Yield Bond Index, which represents the performance
of non-investment-grade debt securities, is compiled by Lehman Brothers, a
well-known global investment firm.
o The unmanaged Lipper High Current Yield Fund Index represents an average of
the performance of the 30 largest high-yield funds tracked by Lipper, Inc.,
an independent mutual fund performance monitor.
o An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM HIGH YIELD FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
When we started AIM in 1976, we had only a table, two chairs
[PHOTO OF and a telephone. At the time, Bob Graham, Gary Crum and I
Charles T. had the idea of creating a mutual fund company that put
Bauer, people first. Our slogan, "people are the product," means
Chairman of that people-our employees and our investors-are our
the Board of company.
THE FUND Almost a quarter-century later, we've grown to more
APPEARS HERE] than eight million investors, with $176 billion in assets
under management. Over that time, the industry as a whole
[PHOTO OF has grown from $51 billion in assets to more than $7
Robert H. trillion today. I never dreamed we would see such phenomenal
Graham growth. You are the main reason for our success, and I want
APPEARS HERE] you to know how much I appreciate your loyalty and trust
over the past 24 years.
Usually in this letter I review market activity during
the period covered by the report. This time, I'd just like
to say thank you. I am retiring as chairman of the AIM Funds effective September
30, and as chairman of AIM effective December 31, 2000. Bob Graham, whose
picture appears under mine, will succeed me as AIM's chairman and chairman of
the AIM Funds. Gary Crum will remain president of A I M Capital Management,
Inc., leading our investment division. I am enormously proud to leave AIM in
such capable hands.
I'm also very proud of our team of employees, now more than 2,500 strong.
Because of their collective commitment to excellence and ethical business
practices, AIM has earned the trust of investors and financial advisors alike.
And every employee, from portfolio managers to client services representatives,
is dedicated to serving our shareholders.
Rest assured that nothing at AIM will change because of my retirement. You
can still depend on this company to manage your money responsibly and provide
you with top-notch service. As chairman of AIM and chairman of the AIM Funds,
Bob is committed to preserving the things that have made AIM great in the past
and positioning it to succeed in the future. And Gary is dedicated to
maintaining the quality and long-term performance you've come to expect from
AIM.
In the pages that follow, the managers of your fund comment on recent market
activity, how they have managed your fund over the past year and their outlook
for the coming months. We trust you will find their comments helpful.
If you have any questions or comments, please contact us through our Web
site, www.aimfunds.com, or call our Client Services department at 800-959-4246
during normal business hours. Information about your account is available at our
Web site and on our automated AIM Investor Line, 800-246-5463.
Thank you again for the support and trust you've shown us. I feel privileged
to have helped you with your financial goals, and I wish you success in all your
endeavors.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
AIM HIGH YIELD FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
HIGH-YIELD MARKET CONTINUES TO STRUGGLE AS DEMAND INCREASES
THE LAST YEAR HAS BEEN CHALLENGING FOR CORPORATE BONDS. HOW DID AIM HIGH YIELD
FUND PERFORM?
Stock-market volatility, rising interest rates and large cash
outflows from high-yield mutual funds weighed heavily on the high-yield bond
sector. AIM High Yield Fund was not immune to this trend. The fund posted
returns of -7.49% for Class A shares, -8.09% for Class B shares and -8.22% for
Class C shares for the year ended July 31, 2000. These returns are computed at
net asset value, that is, without sales charges.
While the high-yield market struggled through much of the reporting period,
the fund's annual return belies an improving high-yield picture. For instance,
for the month of June, the fund posted returns of 1.33% for Class A shares,
1.38% for Class B shares and 1.25% for Class C shares.
And despite difficult market conditions, the fund continued to provide
extremely attractive current income. As of July 31, 2000, the fund's 30-day SEC
yield was 12.15% for Class A shares and 11.97% for Class B and Class C shares.
By comparison, the yield on the 30-year U.S. Treasury bond was 5.79%.
WHAT CONDITIONS INFLUENCED FIXED-INCOME MARKETS DURING THE LAST YEAR?
Throughout much of the last year, a tight labor market, signs of rising
inflation and persistently robust economic growth applied downward pressure on
bond prices in many fixed-income sectors. These economic conditions led the
Federal Reserve Board (the Fed) to raise interest rates six times since last
summer. The last three rate hikes came after the new year with two
25-basis-point increases (a basis point is one one-hundredth of a percentage
point) in the first quarter, followed by a 50-basis-point increase in May-the
largest in more than five years. Market observers, however, blew a collective
sigh of relief when the Fed, seeing signs that the economy was slowing, decided
not to raise interest rates again in June, and perhaps not in the foreseeable
future.
HOW DID FIXED-INCOME MARKETS REACT TO THESE CONDITIONS?
1999 proved one of the worst calendar years for bonds since 1994. A variety of
economic conditions coupled with a strong equity market kept investors in stocks
and largely out of fixed-income investments for most of 1999. The new year,
however, brought some investor interest back to fixed-income securities.
Stock-market sell-offs and increased market volatility led some to the safer
fixed-income sectors.
The 30-year Treasury bond in particular has had a stellar year thus far,
providing one of the strongest total returns of any security. Beyond investor
flight from a volatile stock market, the government bond market was buoyed by a
unique situation. In January, the Treasury announced its intention to buy back
$30 billion in Treasury securities and perhaps to cease issuing 30-year Treasury
bonds in the not-too-distant future. This (among other factors) literally turned
the Treasury market upside-down, or in bond parlance, inverted the Treasury
yield curve. The curve-a graph of Treasury security yields from three months to
30 years-under normal conditions slopes upward, with short-term yields lower
than longer-term yields. With an inverted curve, however, short-term Treasuries
actually yield more than longer-term ones.
While the Treasury market rallied, corporate bonds struggled at the
beginning of the year but returned to life near the end of the reporting period.
In June and July, the corporate bond sector recorded some of the best returns of
any fixed-income sector.
HOW DID HIGH-YIELD BONDS FARE IN THIS DIFFICULT MARKET?
Although the high-yield market posted some of the best annual returns of any
fixed-income sector in 1999, those gains haven't translated into investor
confidence. Until about June of this year, the high-yield sector has suffered
from what could be considered a difficult technical situation-more cash
outflows than inflows, poor liquidity and rising default rates. In fact, cash
outflows from high-yield mutual funds thus far this year have been higher than
all cash inflows into high-yield funds for all of 1999. Fortunately, a reversal
of this trend began in June, as cash inflows started averaging $145 million per
week.
FUND PROVIDES
ATTRACTIVE INCOME
30-day SEC yield as of 7/31/00
===============================================================================
CLASS A SHARES 12.15%
CLASS B SHARES 11.97%
CLASS C SHARES 11.97%
30-YEAR* U.S. TREASURY 5.79%
*Source: Lehman Brothers
===============================================================================
See important fund and index disclosures inside front cover.
AIM HIGH YIELD FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
More outflows than inflows into a market is significant, as it means more
sellers than buyers. In most cases, this does not mean there is a fundamental
problem with the company issuing the debt. But when a market experiences more
sellers than buyers, securities' prices generally go down. In the high-yield
market, for instance, to get new issues into the market, they must be priced
attractively. This effectively reprices the rest of the market, sending existing
bond prices down and pushing their yields up.
And yields on high-yield bonds were at some of their highest levels in years
during the first half of 2000, yielding over 13% in May. One has to go back to
the 1990-91 period to find higher yields. Spreads (the difference between yields
on high-yield bonds and comparable maturity Treasuries) were also wide at well
over 600 basis points. Once again, that's probably not due to credit-quality
concerns as much as to comparatively rich prices in the Treasury market and
rather low demand for corporate bonds. But as investors return to the high-yield
market, those spreads have narrowed a bit.
HOW DID YOU MANAGE THE FUND?
Both economic factors and the high-yield sector's lack of cash inflows and poor
liquidity have hampered returns in the high-yield sector in general. The fund
has not been immune to these trends.
The single-B and CCC sectors of the high-yield market have underperformed
for the fiscal year and much of 2000. With the majority of fund assets in
single-B credits and a number of holdings in the CCC sector, the fund suffered.
Given the high-yield market's limited liquidity, it was difficult to reposition
the fund. Overall, the fund has an average credit quality of B.
Although the fund was hampered by negative cash inflows for some of the
reporting period, we were still able to pursue some attractive yield
opportunities. Going forward, we continue to look for opportunities to improve
credit quality and liquidity.
WHAT IS YOUR OUTLOOK FOR THE BOND MARKET?
The near-term outlook for the fixed-income investor depends largely on what the
economy does in the coming months. Has the Fed with its string of rate hikes
orchestrated the proverbial "soft landing"-a gradual slowing of the economy,
which would prevent inflation and avoid economic distress? A string of recent
statistical releases (including data reported in the Federal Reserve's latest
survey of business activity) suggests that the pace of economic activity is
indeed slowing. If this continues, and if the Fed does not feel the need to
raise rates again in the coming months, that could bring about a recovery in the
bond market.
For the high-yield investor, June provided a reversal of sorts. Attractive
yields enticed investors back into the high-yield sector. Although the past year
has been challenging for the high-yield market, increased demand is encouraging.
Although we cannot predict to what extent or for how long these increased cash
inflows will continue, we believe that high-yield bonds remain an option for
investors looking for high income with some potential appreciation.
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IMPORTANT NEWS ABOUT YOUR FUND
Since our last report to you, your fund's fiscal year-end was changed from
December 31 to July 31. Going forward, you will receive an annual report dated
July 31 and a semiannual report dated January 31 each year.
In addition, several proposals made in a proxy solicitation to shareholders
were voted on at a shareholder meeting. Details concerning these proxy votes
will be found near the end of this report.
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PORTFOLIO COMPOSITION
As of 7/31/00, based on total net assets
<TABLE>
<CAPTION>
===================================================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES
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<S> <C> <C> <C>
1. Allied Waste North America, Inc.- Series B 2.29% 1. Telecommunications (Cellular/Wireless) 15.00%
2. Airplanes Pass Through Trust - Series D 2.10 2. Telephone 11.48
3. U.S. Xchange LLC 1.96 3. Telecommunications (Long Distance) 8.90
4. ICG Services, Inc. 1.89 4. Manufacturing (Specialized) 5.15
5. Venetian Casino Resort LLC 1.80 5. Broadcasting (Television, Radio & Cable) 4.84
6. Powertel, Inc. 1.50 6. Oil & Gas (Exploration & Production) 4.38
7. FirstCom Corp. 1.47 7. Airlines 3.21
8. Nextel Communications, Inc. 1.32 8. Gaming, Lottery & Parimutuel Cos. 3.14
9. TFM S.A. de C.V. (Mexico) 1.08 9. Computers (Software & Services) 2.78
10. Nextel International, Inc. 1.05 10. Auto Parts & Equipment 2.38
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security
===================================================================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
AIM HIGH YIELD FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM HIGH YIELD FUND VS. BENCHMARK INDEXES
<TABLE>
<CAPTION>
7/31/90-7/31/00
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LIPPER HIGH LEHMAN
AIM HIGH YIELD FUND, CURRENT YIELD HIGH YIELD
CLASS A SHARES FUND INDEX BOND INDEX
--------------------------------------------------------------------------------
<S> <C> <C> <C>
7/90 9,750 10,000 10,000
7/91 10,697 11,185 11,489
7/92 13,542 13,988 14,066
7/93 15,909 16,362 16,222
7/94 16,374 16,886 16,778
7/95 18,444 18,812 19,178
7/96 20,213 20,524 20,868
7/97 23,723 24,046 24,307
7/98 25,833 26,437 26,495
7/99 24,250 26,015 26,351
7/00 22,434 25,782 26,175
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
================================================================================
</TABLE>
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
AVERAGE ANNUAL TOTAL RETURNS
As of 7/31/00, including sales charges
<TABLE>
<CAPTION>
================================================================================
CLASS A SHARES
<S> <C>
10 Years 8.42%
5 Years 2.99
1 Year -11.86*
*-7.49%, excluding sales charges
CLASS B SHARES
Inception (9/1/93) 4.21%
5 Years 2.96
1 Year -12.23*
*-8.09%, excluding CDSC
CLASS C SHARES
Inception (8/4/97) -2.66%
1 Year -9.05*
*-8.22%, excluding CDSC
The fund's average annual total returns as of the close of the reporting period
are shown in the table above. In addition, industry regulations require us to
provide average annual total returns (including sales charges) as of 6/30/00,
the most recent calendar quarter-end, which were: Class A shares, one year,
-11.06%; five years, 3.45%; 10 years, 8.71%. Class B shares, one year, -11.57%;
five years, 3.43%; inception (9/1/93), 4.35%. Class C shares, one year, -8.25%;
inception (8/4/97), -2.56%.
================================================================================
</TABLE>
YOUR FUND'S TOTAL RETURN INCLUDES SALES CHARGES, EXPENSES AND MANAGEMENT FEES.
THE PERFORMANCE OF THE FUND'S CLASS B AND CLASS C SHARES WILL DIFFER FROM THAT
OF ITS CLASS A SHARES DUE TO DIFFERING FEES AND EXPENSES. FOR FUND PERFORMANCE
CALCULATIONS AND DESCRIPTIONS OF THE INDEXES CITED ON THIS PAGE, PLEASE SEE THE
INSIDE FRONT COVER.
ABOUT THIS CHART
This chart compares the performance of your fund's Class A shares to benchmark
indexes over the period 7/31/90-7/31/00. It is important to understand the
differences between your fund and an index. Your fund's total return is shown
with a sales charge, and it includes fund expenses and management fees. An index
measures the performance of a hypothetical portfolio. A market index is not
managed, incurring no sales charges, expenses or fees. If you could buy all the
securities that make up a market index, you would incur expenses that would
affect your investment's return. An index of funds such as the Lipper High
Current Yield Fund Index includes a number of mutual funds grouped by investment
objective. Each of these funds interprets that objective differently, and each
employs a different management style and investment strategy.
AIM HIGH YIELD FUND
4
<PAGE> 7
ANNUAL REPORT / FOR CONSIDERATION
WHAT DO BOND RATINGS MEAN?
The preceding discussion of your fund's performance mentions the quality of the
bonds in the fund's portfolio. Just what are bond quality ratings?
Two well-known rating agencies, Moody's and Standard & Poor's (S&P), assign
ratings to bond issues. The chart shows a summary of the definitions of these
ratings.
HOW BONDS ARE RATED
Bond ratings are essentially based on the issuer's risk of default (nonpayment
of principal and/or interest) on the bond. How does a bond rating come about?
Say a company wants to raise $5 million for expansion by issuing a five-year
bond, meaning that in five years, the company will repay $5 million plus
interest to the investor(s) in the bond issue. The company, or issuer, pays a
fee to have its bond rated by a qualified rating agency. The selected rating
agency sends representatives to the company to meet with management and evaluate
the company's short- and long-term risk profile-the company's ability and
willingness to pay the principal and interest of the bond issue at its maturity,
in this case five years. Other rating factors include:
o the make-up and terms of the particular issue;
o the level and predictability of the issuer's cash flow;
o how well-protected the issue is in the event of bankruptcy, reorganization
or other arrangement;
o possible adverse economic conditions, both in general and in the company's
sector; and
o currency risk in the case of foreign issues.
After considering these and other factors deemed necessary by agency
representatives, the rating agency assigns a rating, such as "A," to the issue.
The rating is made public before the issue is offered to investors so they know
the relative quality of the bond. Investors can then decide for themselves if
they wish to invest in a particular bond issue.
================================================================================
MOODY'S DEFINITION S&P
--------------------------------------------------------------------------------
INVESTMENT GRADE
Aaa Bonds of the highest quality, with the lowest AAA
degree of long-term investment risk. Issuers'
ability to repay is very high.
Aa Bonds of high quality with slightly greater AA
long-term investment risk.
A Bonds with favorable investment attributes A
but elements making them more susceptible
to adversity.
Baa Medium-grade bonds that are currently secure BBB
but possibly unreliable over time.
NON-INVESTMENT-GRADE
(High-Yield or Junk)
Ba Bonds with speculative elements that make them BB
not well-safeguarded and uncertain.
B Bonds with low long-term assurance of payment. B
Caa Bonds of poor standing that may be in default CCC
or in danger of default.
Ca Bonds of highly speculative quality that are often CC
in default.
C Lowest-rated bonds, with poor prospects C
of ever being upgraded to investment standing.
- Bonds in default. Issuer cannot repay. D
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AIM HIGH YIELD FUND
5
<PAGE> 8
ANNUAL REPORT / FOR CONSIDERATION
WHAT BOND RATINGS MEAN
Although the rating systems of the two agencies differ slightly, their hierarchy
is essentially the same: the highest-rated bonds, Aaa for Moody's and AAA for
S&P, are those which show the best capacity for repayment of the principal (face
value) plus interest to the bondholder. These high-rated bonds have a lower
return because they are a lower-risk investment. In other words, rating and
risk/return move inversely for bonds-the lower the rating, the higher the
potential risk and return, and vice versa. So although investment-grade bonds
such as U.S. Treasury issues are some of the safest investments around, more
speculative junk bonds can yield significantly higher returns if an investor can
tolerate the risk.
Moody's and S&P sometimes use modifiers with their standard ratings. Moody's
may add a 1, 2 or 3 to a rating (e.g., Aa2), with a 1 denoting an issue ranking
in the higher end of its category, a 2 denoting a mid-range ranking and a 3
denoting a lower-end ranking. Similarly, S&P may add a plus (+) or minus (-) to
show an issue's relative standing within a category (e.g., B+).
Once assigned, bond ratings are not often altered. However, if major changes
occur in an issuer's short- or long-term credit outlook, a rating agency may
review the rating for possible modification. Contributing factors may include
shifts in industry demand, new technologies, government intervention, regulatory
changes or changes in macroeconomic variables such as oil prices. Events such as
these are weighed to determine how much they will affect the issuer's operations
and direction.
UNRATED BONDS
What about unrated bonds? The fact that a bond is unrated does not make it a
"bad" bond. Some organizations simply choose not to pay to have their bonds
rated. Often the issuer of an unrated bond is a small entity such as a town or
district that does not have extra money to pay for a rating. In those cases,
independent research is necessary on the part of the investor to put together a
risk profile of the issuer.
-------------------------------------
[IMAGE]
WHAT TYPES OF BONDS DOES YOUR FUND OWN?
YOUR FUND'S PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION DISCUSS IN
MORE DETAIL THE TYPES OF BONDS CONTAINED IN YOUR FUND'S PORTFOLIO AND THE
RISK FACTORS THAT MAY BE ASSOCIATED WITH THESE SECURITIES. YOUR FINANCIAL
CONSULTANT IS THE BEST PERSON TO CONTACT IF YOU HAVE ANY QUESTIONS ABOUT
INVESTING IN BONDS OR IN A BOND FUND.
-------------------------------------
AIM HIGH YIELD FUND
6
<PAGE> 9
SCHEDULE OF INVESTMENTS
July 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS & NOTES-92.16%
AEROSPACE/DEFENSE-0.57%
Precision Partners, Inc., Sr.
Unsec. Sub. Notes, 12.00%,
03/15/09 $19,225,000 $ 13,553,625
---------------------------------------------------------------
AIR FREIGHT-0.66%
Atlas Air, Inc., Sr. Unsec.
Notes, 10.75%, 08/01/05 15,147,000 15,601,410
---------------------------------------------------------------
AIRLINES-3.21%
Airplanes Pass Through
Trust-Series D, Gtd. Sub.
Bonds, 10.88%, 03/15/19 62,086,822 49,896,385
---------------------------------------------------------------
Amtran, Inc., Sr. Unsec. Gtd.
Notes, 10.50%, 08/01/04 9,115,000 8,408,587
---------------------------------------------------------------
Dunlop Standard Aerospace
Holdings PLC (United Kingdom),
Sr. Unsec. Yankee Sub. Notes,
11.88%, 05/15/09 17,960,000 17,915,100
---------------------------------------------------------------
76,220,072
---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-2.38%
Advance Stores Co., Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 24,825,000 20,418,562
---------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 22,550,000 20,858,750
---------------------------------------------------------------
Venture Holdings Trust, Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
06/01/07 20,250,000 15,288,750
---------------------------------------------------------------
56,566,062
---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-4.66%
Charter Communications Holdings,
LLC/ Charter Communications
Holdings Capital Corp., Sr.
Unsec. Disc. Notes, 9.92%,
04/01/11(a) 33,920,000 19,504,000
---------------------------------------------------------------
Diamond Cable Communications PLC
(United Kingdom), Sr. Disc.
Yankee Notes, 10.75%,
02/15/07(a) 8,000,000 6,240,000
---------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(a) 28,000,000 19,460,000
---------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.88%, 10/15/07(a) 44,305,000 23,592,412
---------------------------------------------------------------
Pegasus Communications
Corp.-Series B, Sr. Unsec.
Notes, 12.50%, 08/01/07 17,500,000 18,637,500
---------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands)-Series B,
Sr. Unsec. Disc. Yankee Notes,
13.38%, 11/01/09(a) 50,000,000 23,250,000
---------------------------------------------------------------
110,683,912
---------------------------------------------------------------
BUILDING MATERIALS-1.51%
Blount Inc., Sr. Unsec. Gtd. Sub.
Notes, 13.00%, 08/01/09 22,750,000 23,091,250
---------------------------------------------------------------
Dayton Superior Corp., Sr. Sub.
Notes, 13.00%, 06/15/09
(Acquired 06/09/00; Cost
$12,179,750)(b)(c) 12,500,000 12,468,750
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
BUILDING MATERIALS-(CONTINUED)
Imperial Home Decor Group-Series
B, Sr. Unsec. Gtd. Sub. Notes,
11.00%, 03/15/08(d) $19,100,000 $ 286,500
---------------------------------------------------------------
35,846,500
---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-1.33%
Avecia Group PLC (United
Kingdom), Sr. Unsec. Gtd.
Yankee Notes, 11.00%, 07/01/09 14,300,000 14,478,750
---------------------------------------------------------------
Sterling Chemicals, Inc.-Series
B, Sr. Gtd. Sec. Sub. Notes,
12.38%, 07/15/06 16,500,000 17,201,250
---------------------------------------------------------------
31,680,000
---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.28%
Key Plastics Holdings,
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.25%, 03/15/07(d) 23,770,000 2,495,850
---------------------------------------------------------------
Trans-Resources, Inc.-Series B,
Sr. Unsec. Disc. Notes, 12.00%,
03/15/08(a) 11,750,000 1,116,250
---------------------------------------------------------------
Sr. Unsec. Notes, 10.75%,
03/15/08 19,000,000 2,945,000
---------------------------------------------------------------
6,557,100
---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.47%
Convergent Communications-Series
B, Sr. Unsec. Notes, 13.00%,
04/01/08 23,540,000 16,536,850
---------------------------------------------------------------
Exodus Communications, Inc., Sr.
Unsec. Notes, 11.25%, 07/01/08 18,425,000 18,425,000
---------------------------------------------------------------
34,961,850
---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.54%
Equinix Inc., Sr. Unsec. Notes,
13.00%, 12/01/07 15,110,000 12,843,500
---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-2.68%
Cybernet Internet Services
International, Inc., Conv.
Unsec. Sub. Notes, 13.00%,
08/15/09(a)(e) 11,250,000 5,203,125
---------------------------------------------------------------
Earthwatch Inc.,
Sr. Disc. Notes, 13.00%,
07/15/07 (Acquired 07/07/99;
Cost $23,276,740)(a)(b)(c) 34,000,000 23,715,000
---------------------------------------------------------------
Sr. Notes, 12.50%, 03/01/05
(Acquired 03/14/97-09/01/99;
Cost $15,500,000)(c) 22,320,000 15,679,800
---------------------------------------------------------------
Globix Corp., Sr. Unsec. Notes,
12.50%, 02/01/10 24,000,000 19,020,000
---------------------------------------------------------------
63,617,925
---------------------------------------------------------------
CONSTRUCTION (CEMENT &
AGGREGATES)-0.41%
Schuff Steel Co., Sr. Unsec. Gtd.
Sub. Notes, 10.50%, 06/01/08 14,000,000 9,695,000
---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
DISTRIBUTORS (FOOD &
HEALTH)-1.01%
Fleming Cos., Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 10.63%,
07/31/07 $27,700,000 $ 24,029,750
---------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-0.75%
Cherokee International LCC-Series
B, Sr. Unsec. Sub. Notes,
10.50%, 05/01/09 20,600,000 17,819,000
---------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.70%
Morrison Knudsen Corp., Sr.
Notes, 11.00%, 07/01/10
(Acquired 06/28/00; Cost
$16,467,566)(c) 16,590,000 16,672,950
---------------------------------------------------------------
ENTERTAINMENT-0.52%
Callahan Nordrhein Westfalen
(Denmark), Sr. Yankee Notes,
14.00%, 07/15/10 (Acquired
06/29/00; Cost $12,500,000)(c) 12,500,000 12,281,250
---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.07%
Madison River Capital, Sr. Notes,
13.25%, 03/01/10(e) 17,700,000 16,018,500
---------------------------------------------------------------
ONO Finance PLC (United Kingdom),
Sr. Gtd. Sub. Euro Notes,
13.00%, 05/01/09 9,500,000 9,357,500
---------------------------------------------------------------
25,376,000
---------------------------------------------------------------
FOODS-0.47%
Volume Services America Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
03/01/09 12,000,000 11,040,000
---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-3.14%
Hollywood Casino Corp., Sr. Sec.
Gtd. Sub. Notes, 11.25%,
05/01/07 1,000,000 1,025,000
---------------------------------------------------------------
MGM Grand, Inc., Sr. Unsec. Gtd.
Sub. Notes, 9.75%, 06/01/07 12,240,000 12,576,600
---------------------------------------------------------------
Resort at Summerlin LP-Series B,
Sr. Unsec. Sub. Notes, 13.00%,
12/15/07 25,769,000 18,167,145
---------------------------------------------------------------
Venetian Casino Resort LLC, Sec.
Gtd. Mortgage Notes, 12.25%,
11/15/04 42,200,000 42,833,000
---------------------------------------------------------------
74,601,745
---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-1.77%
King Pharmaceuticals, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/09 19,300,000 20,747,500
---------------------------------------------------------------
Warner Chilcott, Inc., Sr. Unsec.
Gtd. Notes, 12.63%, 02/15/08(e) 20,650,000 21,372,750
---------------------------------------------------------------
42,120,250
---------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.39%
Triad Hospitals, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
11.00%, 05/15/09 8,915,000 9,360,750
---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.50%
DJ Orthopedics, LLC, Sr. Unsec.
Gtd. Sub. Notes, 12.63%,
06/15/09 12,400,000 11,842,000
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
HEALTH CARE (SPECIALIZED
SERVICES)-0.06%
Team Health Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
03/15/09 $ 1,735,000 $ 1,479,087
---------------------------------------------------------------
HOMEBUILDING-0.29%
Lennar Corp., Sr. Notes, 9.95%,
05/01/10(e) 6,775,000 6,842,750
---------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-2.03%
Falcon Products, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
11.38%, 06/15/09 12,065,000 11,672,887
---------------------------------------------------------------
O'Sullivan Industries,
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 13.38%, 10/15/09 21,000,000 19,740,000
---------------------------------------------------------------
Winsloew Furniture, Inc.-Series
B, Sr. Gtd. Sub. Notes, 12.75%,
08/15/07 17,870,000 16,708,450
---------------------------------------------------------------
48,121,337
---------------------------------------------------------------
IRON & STEEL-0.51%
Acme Metals Inc., Sr. Unsec. Gtd.
Notes, 10.88%, 12/15/07(d) 28,939,000 3,906,765
---------------------------------------------------------------
Sheffield Steel Corp.-Series B,
First Mortgage Notes, 11.50%,
12/01/05 13,500,000 8,167,500
---------------------------------------------------------------
12,074,265
---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.99%
Marvel Enterprises, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
06/15/09 29,375,000 23,573,437
---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.42%
National Equipment
Services-Series B, Sr. Unsec.
Sub. Notes, 10.00%, 11/30/04 11,850,000 9,894,750
---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.45%
Actuant Corp., Sr. Unsec. Gtd.
Sub. Notes, 13.00%, 05/01/09
(Acquired 07/21/00; Cost
$9,038,630)(c) 9,160,000 9,205,800
---------------------------------------------------------------
Anthony Crane Rentals LP-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.38%, 08/01/08 21,085,000 11,649,463
---------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07(d) 24,915,000 4,235,550
---------------------------------------------------------------
Jordan Industries, Inc.-Series D,
Sr. Unsec. Notes, 10.38%,
08/01/07 10,000,000 9,325,000
---------------------------------------------------------------
34,415,813
---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-5.15%
Berry Plastics Corp.,
Sr. Gtd. Sub. Notes, 12.25%,
04/15/04 13,000,000 12,577,500
---------------------------------------------------------------
Series C, Sr. Gtd. Sub. Notes,
12.25%, 04/15/04 4,750,000 4,607,500
---------------------------------------------------------------
Brand Scaffold Services, Inc.,
Sr. Unsec. Notes, 10.25%,
02/15/08 20,800,000 18,564,000
---------------------------------------------------------------
First Wave Marine, Inc., Sr.
Unsec. Notes, 11.00%, 02/01/08 22,835,000 13,130,125
---------------------------------------------------------------
Flextronics International Ltd.
(Singapore), Sr. Sub Yankee
Notes, 9.88%, 07/01/10
(Acquired 06/26/00; Cost
$6,151,640)(c) 6,200,000 6,378,250
---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
MANUFACTURING (SPECIALIZED)-(CONTINUED)
Knowles Electronics, Inc., Sr.
Sub. Notes, 13.13%, 10/15/09(e) $12,000,000 $ 10,980,000
---------------------------------------------------------------
MMI Products, Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.25%,
04/15/07 17,640,000 17,375,400
---------------------------------------------------------------
Neenah Corp.
Series B, Sr. Sub. Notes,
11.13%, 05/01/07 4,000,000 3,030,000
---------------------------------------------------------------
Series D, Sr. Sub. Notes,
11.13%, 05/01/07 15,000,000 11,362,500
---------------------------------------------------------------
Omega Cabinets, Sr. Sub. Notes,
10.50%, 06/15/07 16,740,000 15,317,100
---------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes,
12.75%, 06/15/10 (Acquired
06/15/00; Cost $8,580,810)(c) 8,700,000 8,917,500
---------------------------------------------------------------
122,239,875
---------------------------------------------------------------
METALS MINING-1.83%
Centaur Mining and Exploration
Ltd. (Australia), Sr. Gtd.
Yankee Notes, 11.00%, 12/01/07 28,800,000 22,320,000
---------------------------------------------------------------
Doe Run Resources Corp.
(The)-Series B, Sr. Unsec. Gtd.
Sub. Notes, 11.25%, 03/15/05 21,000,000 10,815,000
---------------------------------------------------------------
Metal Management, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.00%,
05/15/08 20,500,000 10,352,500
---------------------------------------------------------------
43,487,500
---------------------------------------------------------------
NATURAL GAS-0.53%
Western Gas Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.00%,
06/15/09 12,000,000 12,480,000
---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.32%
Global Imaging Systems, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/07 8,800,000 7,612,000
---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.56%
Pride International, Inc., Sr.
Unsec. Notes, 10.00%, 06/01/09 12,735,000 13,180,725
---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-4.38%
Abraxas Petroleum Corp.
Series A, Sr. Gtd. Sub. Notes,
11.50%, 11/01/04 8,644,000 7,477,060
---------------------------------------------------------------
Series B, Sr. Sec. Gtd. Notes,
12.88%, 03/15/03 13,000,000 13,422,500
---------------------------------------------------------------
Chesapeake Energy Corp., Series
B, Sr. Unsec. Gtd. Sub. Notes,
9.63%, 05/01/05 1,150,000 1,144,250
---------------------------------------------------------------
Comstock Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
05/01/07 17,275,000 17,706,875
---------------------------------------------------------------
Frontier Oil Corp., Sr. Unsec.
Notes, 11.75%, 11/15/09 23,750,000 24,759,375
---------------------------------------------------------------
Pioneer Natural Resources Co.,
Sr. Unsec. Gtd. Notes, 9.63%,
04/01/10 13,000,000 13,617,500
---------------------------------------------------------------
Pogo Producing Co.-Series B, Sr.
Unsec. Sub. Notes, 10.38%,
02/15/09 18,335,000 18,976,725
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)-(CONTINUED)
Queen Sand Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.50%,
07/01/08 $13,145,000 $ 6,769,675
---------------------------------------------------------------
103,873,960
---------------------------------------------------------------
OIL & GAS (REFINING & MARKETING)-0.67%
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.13%,
07/01/06 17,980,000 15,912,300
---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.82%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 18,370,000 19,380,350
---------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-0.85%
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.63%,
08/20/12 20,439,125 20,132,538
---------------------------------------------------------------
PUBLISHING-0.34%
Ziff Davis Media, Inc., Sr. Sub.
Notes, 12.00%, 07/15/10
(Acquired 07/18/00-07/20/00;
Cost $7,949,200)(c) 7,880,000 8,037,600
---------------------------------------------------------------
RAILROADS-1.72%
RailWorks Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.50%, 04/15/09 16,400,000 15,170,000
---------------------------------------------------------------
TFM S.A. de C.V. (Mexico), Sr.
Yankee Gtd. Disc. Notes,
11.75%, 06/15/09(a) 33,150,000 25,691,250
---------------------------------------------------------------
40,861,250
---------------------------------------------------------------
RESTAURANTS-0.11%
AFC Enterprises, Sr. Unsec. Sub.
Notes, 10.25%, 05/15/07 2,625,000 2,559,375
---------------------------------------------------------------
RETAIL (SPECIALTY)-1.46%
CSK Auto Inc.-Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 14,245,000 11,146,713
---------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 27,650,000 16,175,250
---------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%,
08/15/08 7,520,000 7,294,400
---------------------------------------------------------------
34,616,363
---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.82%
Big 5 Corp.-Series B, Sr. Unsec.
Notes, 10.88%, 11/15/07 17,315,000 15,799,938
---------------------------------------------------------------
J. Crew Operating Corp., Sr. Sub.
Notes, 10.38%, 10/15/07 4,500,000 3,768,750
---------------------------------------------------------------
19,568,688
---------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.65%
MDC Corp. Inc. (Canada), Sr.
Unsec. Sub. Yankee Notes,
10.50%, 12/01/06 15,920,000 15,362,800
---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.82%
Avis Group Holdings, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
05/01/09 18,400,000 19,458,000
---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.59%
MSX International, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.38%,
01/15/08 14,930,000 14,108,850
---------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-11.40%
AirGate PCS, Inc., Sr. Disc. Sub.
Notes, 13.50%, 10/01/09(a)(b) $28,400,000 $ 16,543,000
---------------------------------------------------------------
Alamosa PCS Holdings, Inc., Sr.
Unsec. Gtd. Disc. Notes,
12.88%, 02/15/10(a) 25,300,000 13,282,500
---------------------------------------------------------------
Crown Castle International Corp.,
Sr. Notes, 10.75%, 08/01/11 10,000,000 10,300,000
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 10.63%,
11/15/07(a) 18,144,000 13,925,520
---------------------------------------------------------------
IPCS, Inc., Sr. Disc. Notes,
14.00%, 07/15/10 (Acquired
06/30/00; Cost
$2,995,843)(a)(b)(c) 5,900,000 3,289,250
---------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr.
Unsec. Notes, 13.50%, 05/15/09 21,100,000 18,884,500
---------------------------------------------------------------
Metrocall, Inc., Sr. Sub. Notes,
11.88%, 06/15/05 19,650,000 16,407,750
---------------------------------------------------------------
Nextel Communications, Inc., Sr.
Notes, 12.00%, 11/01/08 29,040,000 31,363,200
---------------------------------------------------------------
Nextel International, Inc., Sr.
Notes, 12.75%, 08/01/10
(Acquired 07/26/00; Cost
$16,765,740)(c) 17,000,000 16,957,500
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.13%,
04/15/08(a) 37,500,000 24,872,250
---------------------------------------------------------------
Orion Network Systems, Inc., Sr.
Gtd. Sub. Notes, 11.25%,
01/15/07 20,300,000 12,484,500
---------------------------------------------------------------
Powertel, Inc., Sr. Unsec. Disc.
Notes, 12.00%, 05/01/06(a) 38,000,000 35,719,240
---------------------------------------------------------------
Spectrasite Holdings, Inc., Sr.
Disc. Notes, 12.00%,
07/15/08(a) 30,300,000 21,058,500
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 11.25%,
04/15/09(a) 21,230,000 13,056,450
---------------------------------------------------------------
TeleCorp PCS, Inc., Sr. Sub.
Notes, 10.63%, 07/15/10
(Acquired 07/11/00; Cost
$5,350,000)(c) 5,350,000 5,457,000
---------------------------------------------------------------
UbiquiTel Operating Co., Sr. Gtd.
Disc. Notes, 14.00%,
04/15/10(a)(b)(e) 28,700,000 16,933,000
---------------------------------------------------------------
270,534,160
---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-7.68%
360networks Inc. (Canada), Sr.
Unsec. Yankee Notes, 12.00%,
08/01/09 17,210,000 16,091,350
---------------------------------------------------------------
Sr. Yankee Notes, 12.50%,
12/15/05 9,065,000 9,042,338
---------------------------------------------------------------
Destia Communications, Inc., Sr.
Unsec. Notes, 13.50%, 07/15/07 20,200,000 17,675,000
---------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee
Notes, 11.50%, 12/15/07 19,500,000 14,137,500
---------------------------------------------------------------
FirstCom Corp., Sr. Notes,
14.00%, 10/27/07 30,990,000 34,786,275
---------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Sec. Notes, 11.75%,
08/01/04 20,000,000 13,300,000
---------------------------------------------------------------
RSL Communications PLC (United
Kingdom), Sr. Unsec. Gtd.
Yankee Notes, 12.00%, 11/01/08 14,500,000 5,292,500
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-(CONTINUED)
Versatel Telecom International
N.V. (Netherlands), Sr. Unsec.
Yankee Notes, 13.25%, 05/15/08 $12,810,000 $ 13,194,300
---------------------------------------------------------------
Sr. Yankee Notes, 13.25%,
05/15/08 19,100,000 19,673,000
---------------------------------------------------------------
Viatel, Inc., Sr. Sec. Notes,
11.25%, 04/15/08 28,250,000 19,351,250
---------------------------------------------------------------
Sr. Unsec. Notes, 11.50%,
03/15/09(e) 28,417,000 19,749,815
---------------------------------------------------------------
182,293,328
---------------------------------------------------------------
TELEPHONE-11.02%
Alestra S.A. (Mexico), Sr. Unsec.
Yankee Notes, 12.13%,
05/15/06(e) 12,000,000 11,880,000
---------------------------------------------------------------
Sr. Yankee Notes, 12.63%,
05/15/09(e) 7,535,000 7,327,788
---------------------------------------------------------------
CFW Communications Co., Sr.
Notes, 13.00%, 08/15/10
(Acquired 07/21/00; Cost
$14,944,346)(b)(c) 15,155,000 15,155,000
---------------------------------------------------------------
GT Group Telecom Inc. (Canada),
Sr. Disc. Yankee Notes, 13.25%,
02/01/10(a)(b) 28,900,000 15,172,500
---------------------------------------------------------------
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%,
02/15/08(a) 79,650,000 44,782,416
---------------------------------------------------------------
IMPSAT Fiber Networks, Inc., Sr.
Yankee Notes, 13.75%, 02/15/05
(Acquired 02/11/00; Cost
$12,000,000)(c) 12,000,000 10,920,000
---------------------------------------------------------------
Intermedia Communications,
Inc.-Series B, Sr. Disc. Notes,
11.25%, 07/15/07(a) 30,620,000 20,668,500
---------------------------------------------------------------
Logix Communications Enterprises,
Sr. Unsec. Notes, 12.25%,
06/15/08 53,750,000 13,571,875
---------------------------------------------------------------
NEXTLINK Communications, Inc.,
Sr. Disc. Notes, 12.13%,
12/01/09(a)(e) 23,500,000 13,218,750
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.25%,
06/01/09(a) 25,855,000 15,771,550
---------------------------------------------------------------
NTL Communications Corp.-Series
B, Sr. Unsec. Notes, 11.50%,
10/01/08 16,320,000 16,870,800
---------------------------------------------------------------
NTL Inc.-Series B, Sr. Disc.
Notes, 11.50%, 02/01/06 4,245,000 3,990,300
---------------------------------------------------------------
PF.Net Communications Inc., Sr.
Notes, 13.75%, 05/15/10
(Acquired 05/05/00; Cost
$18,200,000)(b)(c) 18,200,000 13,923,000
---------------------------------------------------------------
PTC International Finance II S.A.
(Luxembourg), Sr. Unsec. Gtd.
Yankee Sub. Notes, 11.25%,
12/01/09 11,400,000 11,913,000
---------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec.
Notes, 15.00%, 07/01/08 42,500,000 46,431,250
---------------------------------------------------------------
261,596,729
---------------------------------------------------------------
TEXTILES (APPAREL)-0.51%
Cabot Safety Corp., Sr. Sub.
Notes, 12.50%, 07/15/05 11,975,000 12,034,875
---------------------------------------------------------------
TRUCKERS-0.58%
Travelcenters of America, Inc.,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/01/07 13,530,000 13,699,125
---------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TRUCKS & PARTS-1.29%
FleetPride Inc., Sr. Unsec. Gtd.
Sub. Notes, 12.00%, 08/01/05 $10,665,000 $ 7,172,213
---------------------------------------------------------------
North American Van Lines Inc.,
Sr. Sub. Notes, 13.38%,
12/01/09(e) 24,750,000 23,388,750
---------------------------------------------------------------
30,560,963
---------------------------------------------------------------
WASTE MANAGEMENT-2.29%
Allied Waste North America
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.00%, 08/01/09(e) 61,990,000 54,396,225
---------------------------------------------------------------
Total U.S. Dollar Denominated
Bonds & Notes
(Cost $2,569,417,266) 2,187,359,669
---------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
STOCKS & OTHER EQUITY INTERESTS-5.22%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.17%
UnitedGlobalCom Inc.-Class A(f) 83,896 4,116,147
---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.09%
Earthwatch Inc.-Series C, $1.20,
Conv. Pfd. (Acquired
03/14/97-06/15/00; Cost
$4,824)(c) 112,106 2,045,936
---------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.03%
Tenet Healthcare Corp.(f) 26,460 805,376
---------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.06%
Abraxas Petroleum Corp.(f) 736,227 1,426,440
---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.04%
Convergent Communications,
Inc.(f) 179,280 918,810
---------------------------------------------------------------
SHIPPING-0.03%
Pegasus Shipping Hellas Co.
(Bermuda) 15,000 825,000
---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-3.55%
AirGate PCS, Inc.(f) 61,003 3,065,401
---------------------------------------------------------------
Celcaribe S.A., Ordinary Trust
Ctfs. (Acquired
05/17/94-01/23/97; Cost
$0)(c)(f) 2,276,400 3,414,600
---------------------------------------------------------------
Clearnet Communications
Inc.-Class A-ADR (Canada)(f) 100,716 2,832,637
---------------------------------------------------------------
Crown Castle International
Corp.-$3.13 Conv. Pfd.(f) 248,000 13,407,500
---------------------------------------------------------------
Dobson Communications
Corp.-$122.50 PIK Pfd. 22,781 21,471,313
---------------------------------------------------------------
Microcell Telecommunications
Inc.-Class B-ADR (Canada)(f) 253,257 8,056,738
---------------------------------------------------------------
Nextel Communications, Inc.-Class
A(f) 104,390 5,839,316
---------------------------------------------------------------
Powertel, Inc.(f) 45,663 4,103,962
---------------------------------------------------------------
WebLink Wireless, Inc.(f) 1,260,940 12,688,209
---------------------------------------------------------------
World Access, Inc.-Series D,
Conv. Pfd. (Acquired 03/03/00;
Cost $16,365,448)(c)(f) 15,511 9,500,488
---------------------------------------------------------------
84,380,164
---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG
DISTANCE)-1.22%
FirstCom Corp.(f) 804,650 $ 11,164,519
---------------------------------------------------------------
Primus Telecommunications Group,
Inc.(f) 34,902 569,339
---------------------------------------------------------------
RSL Communications, Ltd.-Class A
(United Kingdom)(f) 179,444 964,512
---------------------------------------------------------------
Versatel Telecom International
N.V.-ADR (Netherlands)(f) 452,021 14,464,672
---------------------------------------------------------------
Viatel, Inc.(f) 121,387 1,691,831
---------------------------------------------------------------
28,854,873
---------------------------------------------------------------
TELEPHONE-0.03%
ICG Communications, Inc.(f) 39,600 603,900
---------------------------------------------------------------
Total Stocks & Other Equity
Interests
(Cost $85,723,866) 123,976,646
---------------------------------------------------------------
WARRANTS & OTHER INTERESTS-0.58%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.01%
Knology Inc., expiring 10/22/07
(Acquired 03/12/98-02/01/00;
Cost $270)(c) 47,295 118,238
---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.00%
Sterling Chemicals Holdings,
expiring 08/15/08 7,500 69,375
---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.05%
Equinix Inc., expiring 12/01/07
(Acquired 05/30/00; Cost
$0)(c)(g) 15,110 1,057,972
---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.01%
Cybernet Internet Services
International, Inc., expiring
07/01/09 (Acquired 10/18/99;
Cost $0)(c)(g) 23,000 235,750
---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, Inc., expiring
02/01/04 18,802 18,802
---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.00%
Resort At Summerlin LP, expiring
12/15/07 21,197 0
---------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-0.03%
O'Sullivan Industries, Inc.,
expiring 11/05/09(g) 42,000 630,000
---------------------------------------------------------------
Winsloew Furniture, Inc.,
expiring 08/15/07 (Acquired
12/06/99; Cost $0)(c)(g) 17,870 178,700
---------------------------------------------------------------
808,700
---------------------------------------------------------------
IRON & STEEL-0.00%
Bar Technologies, Inc., expiring
04/01/01(g) 6,000 0
---------------------------------------------------------------
METAL FABRICATORS-0.00%
Gulf States Steel, Inc., expiring
04/15/03(h) 15,990 0
---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.00%
Abraxas Petroleum Corp.-Rts.(i) 736,228 0
---------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.05%
Cellnet Data System, expiring
10/01/07 (Acquired
09/24/97-10/15/97; Cost
$0)(c)(g) 10,000 $ 2,600
---------------------------------------------------------------
Globalstar Telecom, expiring
02/15/04 (Acquired 01/05/00;
Cost $11,790)(c) 45 56
---------------------------------------------------------------
KMC Telecom Holdings, Inc.,
expiring 04/15/08 35 107
---------------------------------------------------------------
Nextel International, Inc.,
expiring 04/15/07(g) 39,500 1,195,298
---------------------------------------------------------------
1,198,061
---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.00%
Long Distance International,
Inc., expiring 04/13/08(g) 25,620 0
---------------------------------------------------------------
TELEPHONE-0.43%
Esat Telecom Group PLC (Ireland),
expiring 02/01/07 (Acquired
06/16/97-01/05/00; Cost
$7,245)(c) 25,565 5,943,863
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-(CONTINUED)
PF.Net Communications Inc.,
expiring 05/15/10 (Acquired
07/19/00; Cost $0)(c)(g) 18,200 $ 4,277,000
---------------------------------------------------------------
10,220,863
---------------------------------------------------------------
Total Warrants & Other
Interests (Cost $414,302) 13,727,761
---------------------------------------------------------------
MONEY MARKET FUNDS-1.32%
STIC Liquid Assets Portfolio(j) 15,696,885 15,696,885
---------------------------------------------------------------
STIC Prime Portfolio(j) 15,696,885 15,696,885
---------------------------------------------------------------
Total Money Market Funds
(Cost $31,393,770) 31,393,770
---------------------------------------------------------------
TOTAL INVESTMENTS-99.28% (Cost
$2,686,949,204) 2,356,457,846
---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.72% 17,028,761
---------------------------------------------------------------
NET ASSETS-100.00% $2,373,486,607
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
Pfd. - Preferred
PIK - Payment In Kind
Rts. - Rights
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Notes to Schedule of Investments:
(a) Discounted bond at purchase. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(b) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit contains warrants that enable the
holder to purchase shares of the issuer at a predetermined price.
(c) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 07/31/00 was $205,833,581
which represented 8.67% of the Fund's net assets.
(d) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(e) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(f) Non-income producing security.
(g) Acquired as part of a unit with or in exchange for other securities.
(h) Affiliated issuers are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has not owned enough of the outstanding voting securities of the issuer
to have control (as defined in the Investment Company Act of 1940) of that
issuer. The market value as of 07/31/00 represented 0.00% of the Fund's net
assets.
(i) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(j) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
12
<PAGE> 15
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS & NOTES-88.24%
AEROSPACE/DEFENSE-0.46%
Precision Partners, Inc., Sr.
Unsec. Sub. Notes, 12.00%,
03/15/09 $19,225,000 $ 11,246,625
---------------------------------------------------------------
AIR FREIGHT-0.63%
Atlas Air, Inc., Sr. Unsec.
Notes, 10.75%, 08/01/05 15,147,000 15,601,410
---------------------------------------------------------------
AIRLINES-3.30%
Airplanes Pass Through
Trust-Series D, Gtd. Sub.
Bonds, 10.88%, 03/15/19 62,086,822 50,477,518
---------------------------------------------------------------
Amtran, Inc., Sr. Unsec. Gtd.
Notes, 10.50%, 08/01/04 14,045,000 12,956,512
---------------------------------------------------------------
Dunlop Standard Aerospace
Holdings PLC (United Kingdom),
Sr. Unsec. Yankee Sub. Notes,
11.88%, 05/15/09 17,960,000 17,690,600
---------------------------------------------------------------
81,124,630
---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-2.23%
Advance Stores Co., Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 24,825,000 20,232,375
---------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 22,550,000 20,295,000
---------------------------------------------------------------
Venture Holdings Trust, Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
06/01/07 20,250,000 14,276,250
---------------------------------------------------------------
54,803,625
---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-4.24%
Charter Communications Holdings,
LLC/ Charter Communications
Holdings Capital Corp., Sr.
Unsec. Disc. Notes, 9.92%,
04/01/11(a) 33,920,000 19,419,200
---------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(a) 28,000,000 17,500,000
---------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.88%, 10/15/07(a) 44,305,000 24,035,462
---------------------------------------------------------------
Pegasus Communications
Corp.-Series B, Sr. Unsec.
Notes, 12.50%, 08/01/07 17,500,000 18,725,000
---------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands)-Series B,
Sr. Unsec. Disc. Yankee Notes,
13.38%, 11/01/09(a) 50,000,000 24,500,000
---------------------------------------------------------------
104,179,662
---------------------------------------------------------------
BUILDING MATERIALS-1.47%
Blount Inc., Sr. Unsec. Gtd. Sub.
Notes, 13.00%, 08/01/09 22,750,000 23,318,750
---------------------------------------------------------------
Dayton Superior Corp., Sr. Sub.
Notes, 13.00%, 06/15/09
(Acquired 06/09/00; Cost
$12,179,750)(b)(c) 12,500,000 12,406,250
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
BUILDING MATERIALS-(CONTINUED)
Imperial Home Decor Group-Series
B, Sr. Unsec. Gtd. Sub. Notes,
11.00%, 03/15/08(d) $19,100,000 $ 286,500
---------------------------------------------------------------
36,011,500
---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-1.27%
Avecia Group PLC (United
Kingdom), Sr. Unsec. Gtd.
Yankee Notes, 11.00%, 07/01/09 14,300,000 14,085,500
---------------------------------------------------------------
Sterling Chemicals, Inc.-Series
B, Sr. Gtd. Sec. Sub. Notes,
12.38%, 07/15/06 16,500,000 17,077,500
---------------------------------------------------------------
31,163,000
---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.31%
Key Plastics Holdings,
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.25%, 03/15/07(d) 23,770,000 2,495,850
---------------------------------------------------------------
Trans-Resources, Inc.-Series B,
Sr. Unsec. Disc. Notes, 12.00%,
03/15/08(a) 11,750,000 1,233,750
---------------------------------------------------------------
Sr. Unsec. Notes, 10.75%,
03/15/08 19,000,000 3,895,000
---------------------------------------------------------------
7,624,600
---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.42%
Convergent Communications-Series
B, Sr. Unsec. Notes, 13.00%,
04/01/08 23,540,000 16,536,850
---------------------------------------------------------------
Exodus Communications, Inc., Sr.
Unsec. Notes, 11.25%, 07/01/08 18,425,000 18,332,875
---------------------------------------------------------------
34,869,725
---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.63%
Equinix Inc., Sr. Notes, 13.00%,
12/01/07(b)(e) 15,110,000 15,601,075
---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-3.05%
Cybernet Internet Services
International, Inc.,
Conv. Unsec. Sub. Notes,
13.00%, 08/15/09(a)(e) 11,250,000 5,203,125
---------------------------------------------------------------
Sr. Notes, 14.00%, 07/01/09 24,000,000 10,620,000
---------------------------------------------------------------
Earthwatch Inc.,
Sr. Disc. Notes, 13.00%,
07/15/07 (Acquired 07/07/99;
Cost $23,276,740)(a)(b)(c) 34,000,000 23,715,000
---------------------------------------------------------------
Sr. Notes, 12.50%, 03/01/05
(Acquired 03/14/97-09/01/99;
Cost $15,500,000)(c) 22,320,000 15,679,800
---------------------------------------------------------------
Globix Corp., Sr. Unsec. Notes,
12.50%, 02/01/10 24,000,000 19,860,000
---------------------------------------------------------------
75,077,925
---------------------------------------------------------------
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CONSTRUCTION (CEMENT & AGGREGATES)-0.40%
Schuff Steel Co., Sr. Unsec. Gtd.
Sub. Notes, 10.50%, 06/01/08 $14,000,000 $ 9,870,000
---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.95%
Fleming Companies, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.63%, 07/31/07 27,700,000 23,406,500
---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.73%
Cherokee International LCC-Series
B, Sr. Unsec. Sub. Notes,
10.50%, 05/01/09 20,600,000 17,819,000
---------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.67%
Morrison Knudsen Corp., Sr.
Notes, 11.00%, 07/01/10
(Acquired 06/28/00; Cost
$16,467,566)(c) 16,590,000 16,548,525
---------------------------------------------------------------
ENTERTAINMENT-0.51%
Callahan Nordrhein Westfalen
(Denmark), Sr. Yankee Notes,
14.00%, 07/15/10 (Acquired
06/29/00; Cost $12,500,000)(c) 12,500,000 12,515,625
---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.04%
Madison River Capital, Sr. Notes,
13.25%, 03/01/10(e) 17,700,000 16,195,500
---------------------------------------------------------------
ONO Finance PLC (United Kingdom),
Sr. Gtd. Sub. Euro Notes,
13.00%, 05/01/09 9,500,000 9,357,500
---------------------------------------------------------------
25,553,000
---------------------------------------------------------------
FOODS-0.45%
Volume Services America Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
03/01/09 12,000,000 11,040,000
---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES-2.94%
MGM Grand, Inc., Sr. Unsec. Gtd.
Sub. Notes, 9.75%, 06/01/07 12,240,000 12,484,800
---------------------------------------------------------------
Resort at Summerlin LP-Series B,
Sr. Unsec. Sub. Notes, 13.00%,
12/15/07 25,769,000 16,878,695
---------------------------------------------------------------
Venetian Casino Resort LLC, Sec.
Gtd. Mortgage Notes, 12.25%,
11/15/04 42,200,000 42,833,000
---------------------------------------------------------------
72,196,495
---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.68%
King Pharmaceuticals, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/09 19,300,000 20,072,000
---------------------------------------------------------------
Warner Chilcott, Inc., Sr. Unsec.
Gtd. Notes, 12.63%, 02/15/08(e) 20,650,000 21,166,250
---------------------------------------------------------------
41,238,250
---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.37%
Triad Hospitals, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
11.00%, 05/15/09 8,915,000 9,182,450
---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.48%
DJ Orthopedics, LLC, Sr. Unsec.
Gtd. Sub. Notes, 12.63%,
06/15/09 12,400,000 11,873,000
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
HEALTH CARE (SPECIALIZED SERVICES)-0.15%
Team Health Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
03/15/09 $ 4,335,000 $ 3,728,100
---------------------------------------------------------------
HOMEBUILDING-0.27%
Lennar Corp., Sr. Notes, 9.95%,
05/01/10(e) 6,775,000 6,673,375
---------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES-1.97%
Falcon Products, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
11.38%, 06/15/09 12,065,000 11,642,725
---------------------------------------------------------------
O'Sullivan Industries, Inc., Sr.
Sub. Notes, 13.38%,
10/15/09(b)(e) 21,000,000 20,317,500
---------------------------------------------------------------
Winsloew Furniture, Inc.-Series
B, Sr. Gtd. Sub. Notes, 12.75%,
08/15/07 17,870,000 16,529,750
---------------------------------------------------------------
48,489,975
---------------------------------------------------------------
IRON & STEEL-0.71%
Acme Metals Inc., Sr. Unsec. Gtd.
Notes, 10.88%, 12/15/07(d) 28,939,000 4,485,545
---------------------------------------------------------------
GS Technologies Operating Co.,
Inc., Sr. Gtd. Notes, 12.00%,
09/01/04 13,285,000 3,387,675
---------------------------------------------------------------
Sheffield Steel Corp.-Series B,
First Mortgage Notes, 11.50%,
12/01/05 13,500,000 9,517,500
---------------------------------------------------------------
17,390,720
---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.92%
Marvel Enterprises, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
06/15/09 29,375,000 22,692,188
---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.54%
National Equipment
Services-Series B, Sr. Unsec.
Sub. Notes, 10.00%, 11/30/04 16,000,000 13,360,000
---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.09%
Anthony Crane Rentals LP-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.38%, 08/01/08 21,085,000 13,810,675
---------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07(d) 24,915,000 3,612,675
---------------------------------------------------------------
Jordan Industries, Inc.-Series D,
Sr. Unsec. Notes, 10.38%,
08/01/07 10,000,000 9,350,000
---------------------------------------------------------------
26,773,350
---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-5.10%
Berry Plastics Corp.,
Sr. Gtd. Sub. Notes, 12.25%,
04/15/04 13,000,000 12,285,000
---------------------------------------------------------------
Series C, Sr. Gtd. Sub. Notes,
12.25%, 04/15/04 4,750,000 4,530,313
---------------------------------------------------------------
Brand Scaffold Services, Inc.,
Sr. Unsec. Notes, 10.25%,
02/15/08 20,800,000 18,408,000
---------------------------------------------------------------
First Wave Marine, Inc., Sr.
Unsec. Notes, 11.00%, 02/01/08 22,835,000 13,130,125
---------------------------------------------------------------
Flextronics International Ltd.
(Singapore), Sr. Sub Yankee
Notes, 9.88%, 07/01/10
(Acquired 06/26/00; Cost
$6,151,640)(c) 6,200,000 6,308,500
---------------------------------------------------------------
Knowles Electronics, Inc., Sr.
Sub. Notes, 13.13%, 10/15/09(e) 17,000,000 14,705,000
---------------------------------------------------------------
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
MANUFACTURING (SPECIALIZED)-(CONTINUED)
MMI Products, Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.25%,
04/15/07 $17,640,000 $ 17,375,400
---------------------------------------------------------------
Neenah Corp.,
Series B, Sr. Sub. Notes,
11.13%, 05/01/07 4,000,000 3,080,000
---------------------------------------------------------------
Series D, Sr. Sub. Notes,
11.13%, 05/01/07 15,000,000 11,550,000
---------------------------------------------------------------
Omega Cabinets, Sr. Sub. Notes,
10.50%, 06/15/07 16,740,000 15,149,700
---------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes,
12.75%, 06/15/10 (Acquired
06/15/10; Cost $8,580,810)(c) 8,700,000 8,721,750
---------------------------------------------------------------
125,243,788
---------------------------------------------------------------
METALS MINING-1.71%
Centaur Mining and Exploration
Ltd. (Australia), Sr. Gtd.
Yankee Notes, 11.00%, 12/01/07 28,800,000 23,184,000
---------------------------------------------------------------
Doe Run Resources Corp.
(The)-Series B, Sr. Unsec. Gtd.
Sub. Notes, 11.25%, 03/15/05 21,000,000 8,505,000
---------------------------------------------------------------
Metal Management, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.00%,
05/15/08 20,500,000 10,352,500
---------------------------------------------------------------
42,041,500
---------------------------------------------------------------
NATURAL GAS-0.50%
Western Gas Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.00%,
06/15/09 12,000,000 12,240,000
---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.36%
Global Imaging Systems, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/07 10,300,000 8,909,500
---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.53%
Pride International, Inc., Sr.
Unsec. Notes, 10.00%, 06/01/09 12,735,000 13,053,375
---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-4.09%
Abraxas Petroleum Corp.,
Series A, Sr. Gtd. Sub. Notes,
11.50%, 11/01/04 8,644,000 6,958,420
---------------------------------------------------------------
Series B, Sr. Sec. Gtd. Notes,
12.88%, 03/15/03 13,000,000 13,422,500
---------------------------------------------------------------
Comstock Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
05/01/07 17,275,000 17,620,500
---------------------------------------------------------------
Frontier Oil Corp., Sr. Unsec.
Notes, 11.75%, 11/15/09 23,750,000 23,868,750
---------------------------------------------------------------
Pioneer Natural Resources Co.,
Sr. Unsec. Gtd. Notes, 9.63%,
04/01/10 13,000,000 13,520,000
---------------------------------------------------------------
Pogo Producing Co.-Series B, Sr.
Unsec. Sub. Notes, 10.38%,
02/15/09 18,335,000 18,793,375
---------------------------------------------------------------
Queen Sand Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.50%,
07/01/08 13,145,000 6,441,050
---------------------------------------------------------------
100,624,595
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
OIL & GAS (REFINING & MARKETING)-0.63%
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.13%,
07/01/06 $17,980,000 $ 15,372,900
---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.78%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 18,370,000 19,265,538
---------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.82%
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.63%,
08/20/12 20,439,125 20,132,538
---------------------------------------------------------------
RAILROADS-1.58%
RailWorks Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.50%, 04/15/09 16,400,000 15,826,000
---------------------------------------------------------------
TFM S.A. de C.V. (Mexico), Sr.
Yankee Gtd. Disc. Notes,
11.75%, 06/15/09(a) 33,150,000 22,956,375
---------------------------------------------------------------
38,782,375
---------------------------------------------------------------
RESTAURANTS-0.14%
AFC Enterprises, Sr. Unsec. Sub.
Notes, 10.25%, 05/15/07 3,625,000 3,480,000
---------------------------------------------------------------
RETAIL (SPECIALTY)-1.54%
CSK Auto Inc.-Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 14,245,000 13,176,625
---------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 27,650,000 17,281,250
---------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%,
08/15/08 7,520,000 7,332,000
---------------------------------------------------------------
37,789,875
---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.89%
Big 5 Corp.-Series B, Sr. Unsec.
Notes, 10.88%, 11/15/07 17,315,000 16,102,950
---------------------------------------------------------------
J. Crew Operating Corp., Sr. Sub.
Notes, 10.38%, 10/15/07 7,000,000 5,722,500
---------------------------------------------------------------
21,825,450
---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.68%
MDC Corp. Inc. (Canada), Sr.
Unsec. Sub. Yankee Notes,
10.50%, 12/01/06 17,420,000 16,810,300
---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.78%
Avis Group Holdings, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
05/01/09 18,400,000 19,274,000
---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.58%
MSX International, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.38%,
01/15/08 14,930,000 14,183,500
---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-9.75%
AirGate PCS, Inc., Sr. Disc. Sub.
Notes, 13.50%, 10/01/09(a)(b) 28,400,000 16,898,000
---------------------------------------------------------------
Alamosa PCS Holdings, Inc., Sr.
Unsec. Gtd. Disc. Notes,
12.88%, 02/15/10(a) 25,300,000 13,282,500
---------------------------------------------------------------
Crown Castle International Corp.,
Sr. Notes, 10.75%, 08/01/11 10,000,000 10,200,000
---------------------------------------------------------------
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-(CONTINUED)
Sr. Unsec. Disc. Notes, 10.63%,
11/15/07(a) $18,144,000 $ 13,562,640
---------------------------------------------------------------
IPCS, Inc., Sr. Disc. Notes,
14.00%, 07/15/10 (Acquired
06/30/00; Cost
$2,998,839)(a)(b)(c) 5,900,000 3,068,000
---------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr.
Unsec. Notes, 13.50%, 05/15/09 18,000,000 15,930,000
---------------------------------------------------------------
Metrocall, Inc., Sr. Sub. Notes,
11.88%, 06/15/05 19,650,000 14,049,750
---------------------------------------------------------------
Nextel Communications, Inc., Sr.
Notes, 12.00%, 11/01/08 29,040,000 31,363,200
---------------------------------------------------------------
Nextel International, Inc., Sr.
Unsec. Disc. Notes, 12.13%,
04/15/08(a) 37,500,000 24,627,375
---------------------------------------------------------------
Orion Network Systems, Inc., Sr.
Gtd. Sub. Notes, 11.25%,
01/15/07 20,300,000 11,875,500
---------------------------------------------------------------
Powertel, Inc., Sr. Unsec. Disc.
Notes, 12.00%, 05/01/06(a) 38,000,000 35,429,680
---------------------------------------------------------------
Spectrasite Holdings, Inc.,
Sr. Disc. Notes, 12.00%,
07/15/08(a) 30,300,000 20,149,500
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 11.25%,
04/15/09(a) 21,230,000 12,419,550
---------------------------------------------------------------
UbiquiTel Operating Co., Sr. Gtd.
Disc. Notes, 14.00%,
04/15/10(a)(b)(e) 28,700,000 16,753,625
---------------------------------------------------------------
239,609,320
---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-8.43%
360 networks Inc. (Canada),
Sr. Unsec. Yankee Notes,
12.00%, 08/01/09 17,210,000 16,435,550
---------------------------------------------------------------
Sr. Yankee Notes, 12.50%,
12/15/05 9,065,000 9,336,950
---------------------------------------------------------------
Destia Communications, Inc., Sr.
Unsec. Notes, 13.50%, 07/15/07 20,200,000 18,079,000
---------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee
Notes, 11.50%, 12/15/07 19,500,000 15,307,500
---------------------------------------------------------------
FirstCom Corp., Sr. Notes,
14.00%, 10/27/07 30,990,000 33,856,575
---------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Sec. Notes, 11.75%,
08/01/04 20,000,000 16,100,000
---------------------------------------------------------------
RSL Communications PLC (United
Kingdom),
Sr. Unsec. Gtd. Yankee Notes,
12.88%, 03/01/10 (Acquired
02/14/00-03/23/00; Cost
$15,451,800)(c) 15,740,000 11,726,300
---------------------------------------------------------------
12.00%, 11/01/08 14,500,000 10,657,500
---------------------------------------------------------------
Versatel Telecom International
N.V. (Netherlands),
Sr. Unsec. Yankee Notes,
13.25%, 05/15/08 12,810,000 13,130,250
---------------------------------------------------------------
Sr. Yankee Notes, 13.25%,
05/15/08 19,100,000 19,577,500
---------------------------------------------------------------
Viatel, Inc.,
Sr. Sec. Notes, 11.25%,
04/15/08 28,250,000 21,328,750
---------------------------------------------------------------
Sr. Unsec. Notes, 11.50%,
03/15/09(e) 28,417,000 21,739,005
---------------------------------------------------------------
207,274,880
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELEPHONE-10.03%
Alestra S.A. (Mexico),
Sr. Unsec. Yankee Notes,
12.13%, 05/15/06(e) $12,000,000 $ 11,160,000
---------------------------------------------------------------
Sr. Yankee Notes, 12.63%,
05/15/09(e) 7,535,000 6,781,500
---------------------------------------------------------------
GT Group Telecom Inc. (Canada),
Sr. Disc. Yankee Notes, 13.25%,
02/01/10(a)(b)(e) 28,900,000 16,039,500
---------------------------------------------------------------
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%,
02/15/08(a) 79,650,000 44,288,586
---------------------------------------------------------------
IMPSAT Fiber Networks, Inc., Sr.
Yankee Notes, 13.75%, 02/15/05
(Acquired 02/11/00; Cost
$12,000,000)(c) 12,000,000 10,860,000
---------------------------------------------------------------
Intermedia Communications,
Inc.-Series B, Sr. Disc. Notes,
11.25%, 07/15/07(a) 24,720,000 19,652,400
---------------------------------------------------------------
Logix Communications Enterprises,
Sr. Unsec. Notes, 12.25%,
06/15/08 53,750,000 18,946,875
---------------------------------------------------------------
NEXTLINK Communications, Inc.,
Sr. Disc. Notes, 12.13%,
12/01/09(a)(e) 23,500,000 13,747,500
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.25%,
06/01/09(a) 25,855,000 16,159,375
---------------------------------------------------------------
NTL Communications Corp.-Series
B, Sr. Unsec. Notes, 11.50%,
10/01/08 12,320,000 12,381,600
---------------------------------------------------------------
PF.Net Communications Inc., Sr.
Notes, 13.75%, 05/15/10
(Acquired 05/05/00; Cost
$18,200,000)(b)(c) 18,200,000 18,427,500
---------------------------------------------------------------
PTC International Finance II S.A.
(Luxembourg), Sr. Unsec. Gtd.
Yankee Sub. Notes, 11.25%,
12/01/09 11,400,000 11,628,000
---------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec.
Notes, 15.00%, 07/01/08 42,500,000 46,431,250
---------------------------------------------------------------
246,504,086
---------------------------------------------------------------
TEXTILES (APPAREL)-0.49%
Cabot Safety Corp., Sr. Sub.
Notes, 12.50%, 07/15/05 11,975,000 12,034,875
---------------------------------------------------------------
TRUCKERS-0.56%
Travelcenters of America, Inc.,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/01/07 13,530,000 13,699,125
---------------------------------------------------------------
TRUCKS & PARTS-1.27%
FleetPride Inc., Sr. Unsec. Gtd.
Sub. Notes, 12.00%, 08/01/05 10,665,000 7,732,125
---------------------------------------------------------------
North American Van Lines Inc.,
Sr. Sub. Notes, 13.38%,
12/01/09(e) 24,750,000 23,388,750
---------------------------------------------------------------
31,120,875
---------------------------------------------------------------
WASTE MANAGEMENT-2.12%
Allied Waste North America
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.00%, 08/01/09(e) 61,990,000 52,071,600
---------------------------------------------------------------
Total U.S. Dollar Denominated
Bonds & Notes (Cost
$2,562,241,584) 2,168,998,325
---------------------------------------------------------------
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
STOCKS & OTHER EQUITY INTERESTS-5.09%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.16%
UnitedGlobalCom Inc.-Class A(f) 83,896 $ 3,922,138
---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.08%
Earthwatch Inc.-Series C, $1.20,
Conv. Pfd. (Acquired 03/14/97;
Cost $4,824)(c) 103,236 1,884,057
---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.03%
Tenet Healthcare Corp.(f) 26,460 714,420
---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.04%
Abraxas Petroleum Corp.(f) 736,227 1,104,340
---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.06%
Convergent Communications,
Inc.(f) 179,280 1,434,240
---------------------------------------------------------------
SHIPPING-0.03%
Pegasus Shipping Hellas Co.
(Bermuda) 15,000 825,000
---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-3.11%
AirGate PCS, Inc.(f) 61,003 3,206,470
---------------------------------------------------------------
Celcaribe S.A., Ordinary Trust
Ctfs. (Acquired
05/17/94-01/23/97; Cost
$0)(c)(f) 2,276,400 2,845,500
---------------------------------------------------------------
Clearnet Communications
Inc.-Class A-ADR (Canada)(f) 100,716 2,796,443
---------------------------------------------------------------
Dobson Communications
Corp.-$122.50 PIK Pfd 22,097 22,041,757
---------------------------------------------------------------
Microcell Telecommunications
Inc.-Class B-ADR (Canada)(f) 253,257 9,148,909
---------------------------------------------------------------
Nextel Communications, Inc.-Class
A(f) 104,390 6,387,363
---------------------------------------------------------------
Powertel, Inc.(f) 45,663 3,239,219
---------------------------------------------------------------
WebLink Wireless, Inc.(f) 1,260,940 16,707,455
---------------------------------------------------------------
World Access, Inc.-Series D,
Conv. Pfd. (Acquired 03/03/00;
Cost $16,365,448)(c)(f) 15,511 9,965,818
---------------------------------------------------------------
76,338,934
---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.55%
FirstCom Corp.(f) 804,650 12,120,041
---------------------------------------------------------------
Primus Telecommunications Group,
Inc.(f) 34,902 868,187
---------------------------------------------------------------
RSL Communications, Ltd.-Class A
(United Kingdom)(f) 179,444 2,052,391
---------------------------------------------------------------
Versatel Telecom International
N.V.-ADR (Netherlands)(f) 452,021 19,493,406
---------------------------------------------------------------
Viatel, Inc.(f) 121,387 3,467,116
---------------------------------------------------------------
38,001,141
---------------------------------------------------------------
TELEPHONE-0.03%
ICG Communications, Inc.(f) 39,600 873,675
---------------------------------------------------------------
Total Stocks & Other Equity
Interests (Cost
$73,323,866) 125,097,945
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WARRANTS & OTHER INTERESTS-0.35%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.00%
Knology Inc., expiring 10/22/07
(Acquired 03/12/98-02/01/00;
Cost $270)(c) 47,295 $ 118,238
---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.00%
Sterling Chemicals Holdings,
expiring 08/15/08 7,500 65,625
---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.00%
Equinix Inc., expiring 12/01/07
(Acquired 05/30/00; Cost
$0)(c)(g) 15,110 0
---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.02%
Cybernet Internet Services
International, Inc., expiring
07/01/09 (Acquired 10/18/99;
Cost $0)(c)(g) 23,000 465,901
---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, Inc., expiring
02/01/04 18,802 19,014
---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES-0.00%
Resort At Summerlin LP, expiring
12/15/07 21,197 0
---------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES-0.05%
O'Sullivan Industries, Inc.,
expiring 11/05/09(g) 42,000 945,067
---------------------------------------------------------------
Winsloew Furniture, Inc.,
expiring 08/15/07 (Acquired
12/06/99; Cost $0)(c)(g) 17,870 178,700
---------------------------------------------------------------
1,123,767
---------------------------------------------------------------
IRON & STEEL-0.00%
Bar Technologies, Inc., expiring
04/01/01(g) 6,000 0
---------------------------------------------------------------
METAL FABRICATORS-0.00%
Gulf States Steel, Inc., expiring
04/15/03(h) 15,990 160
---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.00%
Abraxas Petroleum Corp.-Rts(i) 736,228 0
---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.05%
Cellnet Data System, expiring
10/01/07 (Acquired
09/24/97-10/15/97; Cost
$0)(c)(g) 10,000 2,600
---------------------------------------------------------------
Globalstar Telecom, expiring
02/15/04 (Acquired 01/05/00;
Cost $11,790)(c) 45 0
---------------------------------------------------------------
KMC Telecom Holdings, Inc.,
expiring 04/15/08 35 163
---------------------------------------------------------------
Nextel International, Inc.,
expiring 04/15/07(g) 39,500 1,194,875
---------------------------------------------------------------
1,197,638
---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.00%
Long Distance International,
Inc., expiring 04/13/08(g) 25,620 0
---------------------------------------------------------------
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-0.23%
Esat Telecom Group PLC (Ireland),
expiring 02/01/07 (Acquired
06/16/97-01/05/00; Cost
$7,245)(c) 25,565 $ 5,560,644
---------------------------------------------------------------
Total Warrants & Other
Interests (Cost $414,303) 8,550,987
---------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY NOTES-3.94%
6.63%, 05/31/02 $34,000,000 34,150,620
---------------------------------------------------------------
6.75%, 05/15/05 38,000,000 38,908,580
---------------------------------------------------------------
6.50%, 02/15/10 23,000,000 23,790,740
---------------------------------------------------------------
96,849,940
---------------------------------------------------------------
Total U.S. Treasury Notes
(Cost $96,364,844) 96,849,940
---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-1.72%
STIC Liquid Assets Portfolio(j) 21,067,923 $ 21,067,923
---------------------------------------------------------------
STIC Prime Portfolio(j) 21,067,923 21,067,923
---------------------------------------------------------------
Total Money Market Funds
(Cost $42,135,846) 42,135,846
---------------------------------------------------------------
TOTAL INVESTMENTS-99.34% (Cost
$2,774,480,443) 2,441,633,043
---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.66% 16,324,930
---------------------------------------------------------------
NET ASSETS-100.00% $2,457,957,973
===============================================================
</TABLE>
<TABLE>
<S> <C> <C>
Investment Abbreviations:
ADR - American Depositary Receipt PIK - Payment In Kind
Conv. - Convertible Rts. - Rights
Ctfs. - Certificates Sec. - Secured
Deb. - Debentures Sr. - Senior
Disc. - Discounted Sub. - Subordinated
Gtd. - Guaranteed Unsec. - Unsecured
Pfd. - Preferred
</TABLE>
Notes to Schedule of Investments:
(a) Discounted bond at purchase. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(b) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit contains warrants that enable the
holder to purchase shares of the issuer at a predetermined price.
(c) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 06/30/00 was $160,998,508
which represented 6.55% of the Fund's net assets.
(d) Defaulted security. Currently, the issuer is in default with respect to a
portion of interest payments.
(e) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(f) Non-income producing security.
(g) Acquired as a part of a unit with or in exchange for other securities.
(h) Affiliated issuers are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has not owned enough of the outstanding voting securities of the issuer
to have control (as defined in the Investment Company Act of 1940) of that
issuer. The market value as of 06/30/00 represented 0.00% of the Fund's net
assets.
(i) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(j) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
18
<PAGE> 21
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
JUNE 30, 2000
JULY 31, 2000 (UNAUDITED)
-------------- --------------
<S> <C> <C>
ASSETS:
Investments, at market value (cost
$2,686,949,204 and $2,774,480,443,
respectively) $2,356,457,846 $2,441,633,043
---------------------------------------------------------------------------------------------
Receivables for:
Investments sold 19,441,006 14,666,345
---------------------------------------------------------------------------------------------
Fund shares sold 2,552,311 3,733,151
---------------------------------------------------------------------------------------------
Dividends and interest 58,427,054 57,648,913
---------------------------------------------------------------------------------------------
Investment for deferred compensation plan 87,353 84,858
---------------------------------------------------------------------------------------------
Other assets 262,688 14,989
---------------------------------------------------------------------------------------------
Total assets 2,437,228,258 2,517,781,299
---------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 38,204,370 34,693,114
---------------------------------------------------------------------------------------------
Fund shares reacquired 11,575,972 9,384,520
---------------------------------------------------------------------------------------------
Dividends 10,792,466 11,874,999
---------------------------------------------------------------------------------------------
Deferred compensation plan 87,353 84,858
---------------------------------------------------------------------------------------------
Accrued advisory fees 981,404 993,902
---------------------------------------------------------------------------------------------
Accrued administrative services fees 15,047 14,723
---------------------------------------------------------------------------------------------
Accrued distribution fees 1,517,739 2,408,880
---------------------------------------------------------------------------------------------
Accrued trustees' fees 439 3,233
---------------------------------------------------------------------------------------------
Accrued transfer agent fees 344,285 328,861
---------------------------------------------------------------------------------------------
Accrued operating expenses 222,576 36,236
---------------------------------------------------------------------------------------------
Total liabilities 63,741,651 59,823,326
---------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $2,373,486,607 $2,457,957,973
=============================================================================================
NET ASSETS:
Class A $1,056,453,189 $1,090,533,020
=============================================================================================
Class B $1,206,736,726 $1,252,962,645
=============================================================================================
Class C $ 110,296,692 $ 114,462,308
=============================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 150,860,590 153,636,597
=============================================================================================
Class B 172,126,117 176,303,478
=============================================================================================
Class C 15,771,552 16,145,681
=============================================================================================
Class A:
Net asset value and redemption price per share $ 7.00 $ 7.10
---------------------------------------------------------------------------------------------
Offering price per share:
(Net asset value divided
by 95.25%) $ 7.35 $ 7.45
=============================================================================================
Class B:
Net asset value and offering price per share $ 7.01 $ 7.11
=============================================================================================
Class C:
Net asset value and offering price per share $ 6.99 $ 7.09
=============================================================================================
</TABLE>
See Notes to Financial Statements.
19
<PAGE> 22
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS
SEVEN MONTHS ENDED
ENDED JUNE 30, 2000 YEAR ENDED
JULY 31, 2000 (UNAUDITED) DECEMBER 31, 1999
------------- ------------- -----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 180,465,440 $ 155,351,624 $ 375,366,595
---------------------------------------------------------------------------------------------------------------
Dividends -- -- 1,457,300
---------------------------------------------------------------------------------------------------------------
Dividends -- affiliated issuers 2,209,329 2,051,763 936,102
---------------------------------------------------------------------------------------------------------------
Total investment income 182,674,769 157,403,387 377,759,997
---------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 7,537,550 6,556,146 16,396,698
---------------------------------------------------------------------------------------------------------------
Administrative services fee 107,029 91,982 177,468
---------------------------------------------------------------------------------------------------------------
Custodian fees 81,232 64,443 235,619
---------------------------------------------------------------------------------------------------------------
Distribution fees -- Class A 1,735,976 1,506,774 3,885,854
---------------------------------------------------------------------------------------------------------------
Distribution fees -- Class B 7,941,484 6,887,276 17,586,035
---------------------------------------------------------------------------------------------------------------
Distribution fees -- Class C 700,789 604,019 1,307,654
---------------------------------------------------------------------------------------------------------------
Transfer agent fees -- Class A 1,019,300 869,910 2,097,314
---------------------------------------------------------------------------------------------------------------
Transfer agent fees -- Class B 1,249,466 1,074,312 2,604,737
---------------------------------------------------------------------------------------------------------------
Transfer agent fees -- Class C 110,253 94,233 193,682
---------------------------------------------------------------------------------------------------------------
Trustees' fees 7,321 6,275 27,921
---------------------------------------------------------------------------------------------------------------
Other 550,567 447,527 1,290,693
---------------------------------------------------------------------------------------------------------------
Total expenses 21,040,967 18,202,897 45,803,675
---------------------------------------------------------------------------------------------------------------
Less: Expenses paid indirectly (45,044) (37,293) (175,176)
---------------------------------------------------------------------------------------------------------------
Net expenses 20,995,923 18,165,604 45,628,499
---------------------------------------------------------------------------------------------------------------
Net investment income 161,678,846 139,237,783 332,131,498
---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES
Net realized gain (loss) from investment securities (248,282,272) (212,556,807) (269,838,431)
---------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (113,824,748) (116,180,790) 1,279,047
---------------------------------------------------------------------------------------------------------------
Net gain (loss) on investment securities (362,107,020) (328,737,597) (268,559,384)
---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(200,428,174) $(189,499,814) $ 63,572,114
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
20
<PAGE> 23
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
SEVEN MONTHS ENDED YEAR YEAR
ENDED JUNE 30, ENDED ENDED
JULY 31, 2000 DECEMBER 31, DECEMBER 31,
2000 (UNAUDITED) 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 161,678,846 $ 139,237,783 $ 332,131,498 $ 336,256,233
-------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (248,282,272) (212,556,807) (269,838,431) (188,887,632)
-------------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (113,824,748) (116,180,790) 1,279,047 (359,473,146)
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (200,428,174) (189,499,814) 63,572,114 (212,104,545)
-------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (77,895,270) (67,278,486) (159,655,684) (170,021,135)
-------------------------------------------------------------------------------------------------------------------------------
Class B (81,662,712) (70,584,600) (165,609,472) (158,792,161)
-------------------------------------------------------------------------------------------------------------------------------
Class C (7,223,368) (6,207,027) (12,356,480) (6,792,770)
-------------------------------------------------------------------------------------------------------------------------------
Return of capital distributions:
Class A (2,891,943) -- (2,837,931) --
-------------------------------------------------------------------------------------------------------------------------------
Class B (3,303,456) -- (3,209,458) --
-------------------------------------------------------------------------------------------------------------------------------
Class C (292,296) -- (239,296) --
-------------------------------------------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A -- (3,427,039) (520,904) --
-------------------------------------------------------------------------------------------------------------------------------
Class B -- (3,595,446) (589,357) --
-------------------------------------------------------------------------------------------------------------------------------
Class C -- (316,174) (43,823) --
-------------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (141,076,710) (121,569,405) (181,118,609) 142,435,247
-------------------------------------------------------------------------------------------------------------------------------
Class B (163,296,867) (133,739,372) (116,020,002) 448,570,951
-------------------------------------------------------------------------------------------------------------------------------
Class C (2,482,351) 135,582 27,659,521 101,384,122
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (680,553,147) (596,081,781) (550,969,381) 144,679,709
-------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,054,039,754 3,054,039,754 3,605,009,135 3,460,329,426
-------------------------------------------------------------------------------------------------------------------------------
End of period $2,373,486,607 $2,457,957,973 $3,054,039,754 $3,605,009,135
===============================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,422,514,855 $3,480,685,283 $3,735,858,478 $4,011,736,919
-------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (3,613,421) (12,271,700) (100,711) 5,490,138
-------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (714,923,469) (677,608,210) (465,051,403) (194,272,265)
-------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (330,491,358) (332,847,400) (216,666,610) (217,945,657)
-------------------------------------------------------------------------------------------------------------------------------
$2,373,486,607 $2,457,957,973 $3,054,039,754 $3,605,009,135
===============================================================================================================================
</TABLE>
See Notes to Financial Statements.
21
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM High Yield Fund (the "Fund") is a series portfolio of AIM Investment
Securities Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of seven
separate portfolios, each having an unlimited number of shares of beneficial
interest. Prior to June 1, 2000 the Fund was organized as a series portfolio of
AIM Funds Group. At a meeting held on February 3, 2000, the Board of Trustees of
AIM Funds Group approved an Agreement and Plan of Reorganization (the
"Reorganization") which reorganized the Fund as a series portfolio of the Trust.
Shareholders of the Fund approved the Reorganization at a meeting held on May
31, 2000. Pursuant to the Reorganization, the Fund's fiscal year-end was changed
from December 31 to July 31. This report includes financial information for the
period ended July 31, 2000 (seven months), the six months ended June 30, 2000
and the year ended December 31, 1999. Financial information for the six months
ended June 30, 2000 is unaudited. The Fund currently offers three different
classes of shares: Class A shares, Class B shares and Class C shares. Class A
shares are sold with a front-end sales charge. Class B 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
level of current income. The Fund will also consider the possibility of capital
growth when it purchases and sells securities. Debt securities of less than
investment grade are considered "high-risk" securities (commonly referred to as
junk bonds). These bonds may involve special risks in addition to the risks
associated with higher rated debt securities. High yield bonds may be more
susceptible to real or perceived adverse economic conditions than higher grade
bonds. Also, the secondary market in which high yield bonds are traded may be
less liquid than the market for higher grade bonds.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the 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 as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales on a particular day, the security is
valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. 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 based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
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 Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income -- 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On July 31, 2000, undistributed net investment income was increased by
$8,077,489, undistributed net realized gains decreased by $1,589,794 and
paid-in capital was decreased by $6,487,695 a result of differing book/tax
treatment of market discount and other reclassifications. Net assets of the
Fund were unaffected by the reclassifications.
C. Distributions -- Distributions from income are declared daily and paid
monthly and are recorded on ex-dividend date. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The
22
<PAGE> 25
Fund may elect to use a portion of the proceeds from redemptions as
distributions for federal income tax 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.
The Fund has a capital loss carryforward of $713,198,778 which may be
carried forward to offset future taxable gains, if any, which expires in
varying increments, if not previously utilized, in the year 2008.
E. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated among the classes.
F. Bond Premiums -- It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at an annual rate of 0.625% on the first
$200 million of the Fund's average daily net assets, plus 0.55% on the next $300
million of the Fund's average daily net assets, plus 0.50% on the next $500
million of the Fund's average daily net assets, plus 0.45% on the Fund's average
daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the year ended December 31, 1999, AIM was
paid $107,029, $91,982 and $177,468, respectively, for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the seven-month period ended July 31,
2000, the six months ended June 30, 2000 and the year ended December 31, 1999,
AFS was paid $1,463,943, $1,272,274 and $2,941,102, respectively, for such
services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C 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. For the seven-month period ended
July 31, 2000, the Class A, Class B and Class C shares paid AIM Distributors
$1,735,976, $7,941,484 and $700,789, respectively, as compensation under the
Plans. For the six months ended June 30, 2000, the Class A, Class B and Class C
shares paid AIM Distributors $1,506,774, $6,887,276 and $604,019, respectively,
as compensation under the Plans. For the year ended December 31, 1999, the Class
A, Class B and Class C shares paid AIM Distributors $3,885,854, $17,586,035 and
$1,307,654, respectively, as compensation under the Plans.
AIM Distributors received commissions of $265,022, $234,338 and $800,330 from
sales of the Class A shares of the Fund during the seven-month period ended July
31, 2000, the six months ended June 30, 2000 and the year ended December 31,
1999, respectively. Such commissions are not an expense of the Fund. They are
deducted from, and are not included in, the proceeds from sales of Class A
shares. During the seven-month period ended July 31, 2000, the six months ended
June 30, 2000 and the year ended December 31, 1999, AIM Distributors received
$136,582, $127,185 and $423,986, respectively, in contingent deferred sales
charges imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors. During the seven-month period ended July 31, 2000, the
six months ended June 30, 2000 and the year ended December 31, 1999, the Fund
paid legal fees of $4,817, $3,776 and $9,734, respectively, for services
rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Trust's
trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the seven-month period ended July 31, 2000, the six months ended June 30,
2000 and the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $18,336, $15,037 and
$39,420, respectively, and reductions in custodian fees of $26,708, $22,256 and
$135,756, respectively, under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $45,044, $37,293 and $175,176 for the
seven-month period ended July 31, 2000, the six months ended June 30, 2000 and
the year ended December 31, 1999, respectively.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
23
<PAGE> 26
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the seven months ended July
31, 2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. Prior to May 28, 1999, the commitment
fee rate was 0.05%. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the seven-month period ended July 31, 2000
was $586,121,511 and $829,386,205, respectively, and during the six months ended
June 30, 2000 was $495,609,987 and $692,814,640, respectively. The amount of
unrealized appreciation (depreciation) of investment securities, for tax
purposes, is as follows:
<TABLE>
<CAPTION>
JUNE 30,
JULY 31, 2000
2000 (UNAUDITED)
------------- -------------
<S> <C> <C>
Aggregate unrealized
appreciation of investment
securities $ 109,030,572 $ 103,969,470
-------------------------------------------------------------
Aggregate unrealized
(depreciation) of investment
securities (441,246,620) (440,300,434)
-------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investment
securities $(332,216,048) $(336,330,964)
=============================================================
Cost of investments for tax purposes for the seven months
ended July 31, 2000 and the six months ended June 30, 2000
are $2,688,673,894 and $2,777,964,007, respectively.
</TABLE>
24
<PAGE> 27
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the years ended December 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000
JULY 31, 2000 (UNAUDITED) DECEMBER 31, 1999
--------------------------- --------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Sold:
Class A 29,346,531 $ 221,060,411 27,824,466 $ 210,254,406 87,500,179 $ 744,553,292
-------------------------------------------------------------------------------------------------------------------
Class B 18,742,023 140,014,267 17,869,910 128,818,625 46,805,949 400,392,138
-------------------------------------------------------------------------------------------------------------------
Class C 6,229,247 47,023,748 5,725,634 42,218,363 10,550,688 89,612,238
-------------------------------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Class A 6,800,148 50,644,208 5,938,164 44,606,398 12,419,332 104,772,227
-------------------------------------------------------------------------------------------------------------------
Class B 5,317,053 39,676,757 3,922,082 34,822,144 10,055,937 84,833,641
-------------------------------------------------------------------------------------------------------------------
Class C 623,821 4,641,763 366,455 4,059,693 975,391 8,192,752
-------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (54,468,978) (412,781,329) (49,308,922) (376,430,209) (121,294,314) (1,030,444,128)
-------------------------------------------------------------------------------------------------------------------
Class B (45,276,418) (342,987,891) (38,831,973) (297,380,141) (71,318,813) (601,245,781)
-------------------------------------------------------------------------------------------------------------------
Class C (7,191,956) (54,147,862) (6,056,848) (46,142,474) (8,365,761) (70,145,469)
-------------------------------------------------------------------------------------------------------------------
(39,878,529) $(306,855,928) (32,551,032) $(255,173,195) (32,671,412) $ (269,479,090)
===================================================================================================================
<CAPTION>
DECEMBER 31, 1998
------------------------------
SHARES AMOUNT
------------ ---------------
<S> <C> <C>
Sold:
Class A 113,312,954 $ 1,099,027,598
------------------------------------------------------
Class B 81,983,594 793,346,240
------------------------------------------------------
Class C 31,084,188 309,774,327
------------------------------------------------------
Issued as reinvestment
of dividends:
Class A 11,706,241 112,173,341
------------------------------------------------------
Class B 8,418,057 80,427,189
------------------------------------------------------
Class C 480,845 4,500,556
------------------------------------------------------
Reacquired:
Class A (110,296,515) (1,068,765,692)
------------------------------------------------------
Class B (44,848,230) (425,202,478)
------------------------------------------------------
Class C (21,196,339) (212,890,761)
------------------------------------------------------
70,644,795 $ 692,390,320
======================================================
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------------------------
SIX MONTHS
SEVEN MONTHS ENDED YEAR ENDED DECEMBER 31,
ENDED JUNE 30, 2000 ------------------------------------------------------------
JULY 31, 2000 (UNAUDITED) 1999 1998 1997 1996 1995
------------------ ---------------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 8.07 $ 8.07 $ 8.77 $ 10.16 $ 9.88 $ 9.43 $ 8.93
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Income from investment
operations:
Net investment income 0.47 0.40 0.85 0.92 0.90 0.92 0.93
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net gains (losses) on
securities (both
realized and
unrealized) (1.03) (0.93) (0.66) (1.40) 0.28 0.46 0.52
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Total from investment
operations (0.56) (0.53) 0.19 (0.48) 1.18 1.38 1.45
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net
investment income (0.49) (0.44) (0.87) (0.91) (0.90) (0.93) (0.95)
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Return of capital (0.02) -- (0.02) -- -- -- --
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Total distributions (0.51) (0.44) (0.89) (0.91) (0.90) (0.93) (0.95)
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net asset value, end of
period $ 7.00 $ 7.10 $ 8.07 $ 8.77 $ 10.16 $ 9.88 $ 9.43
=========================== ========== ========== ========== ========== ========== ========== ========
Total return(a) (7.12)% (6.56)% 2.21% (5.10)% 12.52% 15.44% 16.86%
=========================== ========== ========== ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $1,056,453 $1,090,533 $1,364,502 $1,670,863 $1,786,352 $1,272,974 $886,106
=========================== ========== ========== ========== ========== ========== ========== ========
Ratio of expenses to
average net assets 0.93%(b) 0.93%(b) 0.92% 0.85% 0.90% 0.97% 0.96%
=========================== ========== ========== ========== ========== ========== ========== ========
Ratio of net investment
income to average net
assets 10.79%(b) 10.72%(b) 10.06% 9.45% 9.08% 9.67% 9.95%
=========================== ========== ========== ========== ========== ========== ========== ========
Portfolio turnover rate 23% 19% 79% 76% 80% 77% 61%
=========================== ========== ========== ========== ========== ========== ========== ========
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets of $1,193,177,640 and
$1,212,042,030 for July 31, 2000 and June 30, 2000, respectively.
25
<PAGE> 28
NOTE 8-FINANCIAL HIGHLIGHTS-(CONTINUED)
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
SEVEN MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
JULY 31, 2000 ------------------------------------------------------------
2000 (UNAUDITED) 1999 1998 1997 1996 1995
------------------ ---------------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 8.07 $ 8.07 $ 8.76 $ 10.16 $ 9.88 $ 9.42 $ 8.92
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Income from investment
operations:
Net investment income 0.44 0.38 0.79 0.84 0.83 0.85 0.85
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net gains (losses) on
securities (both
realized and
unrealized) (1.03) (0.93) (0.66) (1.40) 0.28 0.47 0.52
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Total from investment
operations (0.59) (0.55) 0.13 (0.56) 1.11 1.32 1.37
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net
investment income (0.45) (0.41) (0.80) (0.84) (0.83) (0.86) (0.87)
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Return of capital (0.02) -- (0.02) -- -- -- --
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Total distributions (0.47) (0.41) (0.82) (0.84) (0.83) (0.86) (0.87)
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net asset value, end of
period $ 7.01 $ 7.11 $ 8.07 $ 8.76 $ 10.16 $ 9.88 $ 9.42
=========================== ========== ========== ========== ========== ========== ========== ========
Total return(a) (7.49)% (6.99)% 1.46% (5.90)% 11.71% 14.68% 15.91%
=========================== ========== ========== ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $1,206,737 $1,252,963 $1,559,864 $1,820,899 $1,647,801 $1,068,060 $557,926
=========================== ========== ========== ========== ========== ========== ========== ========
Ratio of expenses to
average net assets 1.69%(b) 1.69%(b) 1.68% 1.61% 1.65% 1.68% 1.73%
=========================== ========== ========== ========== ========== ========== ========== ========
Ratio of net investment
income to average net
assets 10.03%(b) 9.96%(b) 9.30% 8.69% 8.33% 8.95% 9.18%
=========================== ========== ========== ========== ========== ========== ========== ========
Portfolio turnover rate 23% 19% 79% 76% 80% 77% 61%
=========================== ========== ========== ========== ========== ========== ========== ========
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $1,364,593,065 and
$1,385,023,658 for July 31, 2000 and June 30, 2000, respectively.
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------------------------
AUGUST 4, 1997
SIX MONTHS ENDED YEAR ENDED (DATE SALES
SEVEN MONTHS ENDED JUNE 30, DECEMBER 31, COMMENCED)
JULY 31, 2000 -------------------- TO
2000 (UNAUDITED) 1999 1998(a) 1997
------------------ ---------------- -------- -------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.05 $ 8.05 $ 8.74 $ 10.14 $ 10.04
----------------------------------------------- -------- -------- -------- -------- -------
Income from investment operations:
Net investment income 0.44 0.38 0.78 0.82 0.35
----------------------------------------------- -------- -------- -------- -------- -------
Net gains (losses) on securities (both
realized and unrealized) (1.03) (0.93) (0.65) (1.38) 0.10
----------------------------------------------- -------- -------- -------- -------- -------
Total from investment operations (0.59) (0.55) 0.13 (0.56) 0.45
----------------------------------------------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.45) (0.41) (0.80) (0.84) (0.35)
----------------------------------------------- -------- -------- -------- -------- -------
Return of capital (0.02) -- (0.02) -- --
----------------------------------------------- -------- -------- -------- -------- -------
Total distributions (0.47) (0.41) (0.82) (0.84) (0.35)
----------------------------------------------- -------- -------- -------- -------- -------
Net asset value, end of period $ 6.99 $ 7.09 $ 8.05 $ 8.74 $ 10.14
=============================================== ======== ======== ======== ======== =======
Total return(b) (7.51)% (7.01)% 1.46% (5.92)% 4.49%
=============================================== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $110,297 $114,462 $129,675 $113,246 $26,177
=============================================== ======== ======== ======== ======== =======
Ratio of expenses to average net assets 1.69%(c) 1.69%(c) 1.68% 1.61% 1.68%(d)
=============================================== ======== ======== ======== ======== =======
Ratio of net investment income to average net
assets 10.03%(c) 9.96%(c) 9.30% 8.69% 8.30%(d)
=============================================== ======== ======== ======== ======== =======
Portfolio turnover rate 23% 19% 79% 76% 80%
=============================================== ======== ======== ======== ======== =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $120,417,254 and
$121,467,555 for July 31, 2000 and June 30, 2000, respectively.
(d) Annualized.
26
<PAGE> 29
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM High Yield Fund:
We have audited the accompanying statement of assets and liabilities of AIM High
Yield Fund (a portfolio of AIM Investment Securities Funds), including the
schedule of investments, as of July 31, 2000, the related statement of
operations for the seven months ended July 31, 2000 and the year ended December
31, 1999, the statements of changes in net assets for the seven months ended
July 31, 2000 and the two-years ended December 31, 1999, and the financial
highlights for the seven months ended July 31, 2000 and for each of the years in
the five-year period ended December 31, 1999. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2000, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
High Yield Fund as of July 31, 2000, the results of its operations for seven
months ended July 31, 2000 and the year ended December 31, 1999, the changes in
its net assets for the seven months ended July 31, 2000 and the two-years ended
December 31, 1999, and the financial highlights for the seven months ended July
31, 2000 and for each of the years in the five-year period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States of America.
/s/ KPMG LLP
September 1, 2000
Houston, Texas
27
<PAGE> 30
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM High Yield Fund, a portfolio of AIM
Funds Group, a Delaware business trust (the "Trust"), reorganized as AIM High
Yield Fund a new series portfolio of AIM Investment Securities Fund, was held on
May 3, 2000. The meeting was held for the following purposes:
(1) To elect Trustees as follows: Charles T. Bauer, Bruce L. Crockett, Owen Daly
II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H. Graham,
Prema Mathai-Davis, Lewis F. Pennock and Louis S. Sklar.
(2) Adjournment of approval of an Agreement and Plan of Reorganization which
provided for the reorganization of the Fund into a new series portfolio of
AIM Investment Securities Funds having the same investment objective and
policies.
(3) To approve a new Master Investment Advisory Agreement for AIM High Yield
Fund (the "Fund").
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To ratify the selection of KPMG LLP as independent accountants of the Fund
for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
TRUSTEES/MATTER VOTES FOR WITHHELD
--------------- ------------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer............................................ 1,514,464,534 46,493,668
Bruce L. Crockett........................................... 1,516,486,806 44,471,396
Owen Daly II................................................ 1,515,115,325 45,842,877
Edward K. Dunn, Jr. ........................................ 1,516,300,879 44,657,323
Jack M. Fields.............................................. 1,516,328,985 44,629,217
Carl Frischling............................................. 1,515,733,560 45,224,642
Robert H. Graham............................................ 1,516,470,809 44,487,393
Prema Mathai-Davis.......................................... 1,515,583,756 45,374,446
Lewis F. Pennock............................................ 1,516,458,889 44,499,313
Louis S. Sklar.............................................. 1,516,220,167 44,738,035
</TABLE>
<TABLE>
<CAPTION>
VOTES WITHHELD/
VOTES FOR AGAINST ABSTENTIONS
------------- --------- -----------
<S> <C> <C> <C> <C>
(2) Adjournment of approval of an Agreement and Plan of
Reorganization which provided for the reorganization of the
Fund into a new series portfolio of AIM Investment
Securities Funds having the same investment objective and
policies.................................................... 161,386,111 2,915,926 56,265,329*
(3) Approval of a new Investment Advisory Agreement............. 160,906,716 3,204,384 56,456,266*
(4)(a) Change to Fundamental Restriction on Issuer
Diversification............................................. 157,798,381 4,493,425 58,275,560*
(4)(b) Change to Fundamental Restriction on Borrowing Money and
Issuing Senior Securities................................... 157,060,859 5,462,249 58,044,258*
(4)(c) Change to or Addition of Fundamental Restriction on
Underwriting Securities..................................... 157,762,758 4,704,674 58,099,934*
(4)(d) Change to or Addition of Fundamental Restriction on Industry
Concentration............................................... 157,884,901 4,494,355 58,188,110*
(4)(e) Change to Fundamental Restriction on Purchasing or Selling
Real Estate................................................. 157,083,892 5,312,451 58,171,023*
(4)(f) Change to Fundamental Restriction on Purchasing or Selling
Commodities and Elimination of Fundamental Restriction on
Puts and Calls.............................................. 156,210,776 5,953,192 58,403,398*
(4)(g) Change to Fundamental Restriction on Making Loans........... 156,489,379 5,762,771 58,315,216*
(4)(h) A new Fundamental Investment Restriction on Investing all of
the Fund's assets in an Open-End Fund....................... 156,939,325 5,305,562 58,322,479*
(4)(i) Elimination of Fundamental Restriction on Margin
Transactions................................................ 154,786,167 7,225,398 58,555,801*
(4)(j) Elimination of Fundamental Restriction on Short Sales of
Securities.................................................. 155,462,564 6,585,345 58,519,457*
(5) Ratification of the selection of KPMG LLP as Independent
Accountants of the Fund..................................... 209,868,895 1,735,780 8,962,691
</TABLE>
The Special Meeting of Shareholders of the Trust was reconvened on May 31,
2000. The following matters were then considered:
<TABLE>
<CAPTION>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
------ ------------- --------- -----------
<S> <C> <C> <C> <C>
(2) Approval of an Agreement and Plan of Reorganization which
provides for the reorganization of the Fund into a new
series portfolio of AIM Investment Securities Funds having
the same investment objective and policies.................. 198,873,189 3,980,439 36,064,485*
</TABLE>
---------------
* Includes Broker Non-Votes
28
<PAGE> 31
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Director and 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; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Formerly, Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Melville B. Cox Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President
Formerly Vice Chairman, President CUSTODIAN
and Chief Operating Officer, Karen Dunn Kelley
Mercantile-Safe Deposit & Trust Co.; and Vice President State Street Bank and Trust Company
President, Mercantile Bankshares 225 Franklin Street
Mary J. Benson Boston, MA 02110
Jack Fields Assistant Vice President and
Chief Executive Officer Assistant Treasurer COUNSEL TO THE FUND
Texana Global, Inc. and
Twenty First Century Group, Inc.; Sheri Morris Ballard Spahr
Formerly Member Assistant Vice President and Andrews & Ingersoll, LLP
of the U.S. House of Representatives Assistant Treasurer 1735 Market Street
Philadelphia, PA 19103
Carl Frischling Renee A. Friedli
Partner Assistant Secretary COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
P. Michelle Grace Kramer, Levin, Naftalis & Frankel LLP
Robert H. Graham Assistant Secretary 919 Third Avenue
Director, President and Chief Executive Officer New York, NY 10022
A I M Management Group Inc. Nancy L. Martin
Assistant Secretary DISTRIBUTOR
Prema Mathai-Davis
Formerly, Chief Executive Officer, Ofelia M. Mayo A I M Distributors, Inc.
YWCA of the U.S.A. Assistant Secretary 11 Greenway Plaza
Suite 100
Lewis F. Pennock Lisa A. Moss Houston, TX 77046
Attorney Assistant Secretary
AUDITORS
Louis S. Sklar Kathleen J. Pflueger
Executive Vice President, Assistant Secretary KPMG LLP
Development and Operations, 700 Louisiana
Hines Interests Houston, TX 77002
Limited Partnership
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
Of ordinary dividends paid to shareholders during the Fund's tax year ended
July 31, 2000, 0% is eligible for the dividends received deduction for
corporations.
REQUIRED STATE INCOME TAX INFORMATION
Of the ordinary dividends paid, 0.20% was derived from U.S. Treasury
Obligations.
<PAGE> 32
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<CAPTION>
EQUITY FUNDS
<S> <C> <C>
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS A I M Management Group Inc. has provided
leadership in the mutual fund industry
MORE AGGRESSIVE MORE AGGRESSIVE since 1976 and managed approximately
$176 billion in assets for more
AIM Small Cap Opportunities(1) AIM Latin American Growth than 8 million shareholders, including
AIM Mid Cap Opportunities(2) AIM Developing Markets individual investors, corporate clients and
AIM Large Cap Opportunities(6) AIM European Small Company financial institutions, as of June 30, 2000.
AIM Emerging Growth AIM Asian Growth The AIM Family of Funds--Registered
AIM Small Cap Growth(3) AIM Japan Growth Trademark-- is distributed nationwide,
AIM Aggressive Growth AIM International Emerging Growth and AIM today is the eighth-largest
AIM Mid Cap Growth AIM European Development mutual fund complex in the United States
AIM Small Cap Equity AIM Euroland Growth in assets under management, according to
AIM Capital Development AIM Global Aggressive Growth Strategic Insight, an independent mutual
AIM Constellation(4) AIM International Equity fund monitor.
AIM Dent Demographic Trends AIM Advisor International Value AIM is a subsidiary of AMVESCAP PLC,
AIM Select Growth AIM Global Trends one of the world's largest independent
AIM Large Cap Growth AIM Global Growth financial services companies with $389
AIM Weingarten billion in assets under management as of
AIM Mid Cap Equity MORE CONSERVATIVE June 30, 2000.
AIM Value II
AIM Charter SECTOR EQUITY FUNDS
AIM Value
AIM Blue Chip MORE AGGRESSIVE
AIM Basic Value
AIM Large Cap Basic Value AIM New Technology
AIM Balanced AIM Global Telecommunications and Technology
AIM Advisor Flex AIM Global Resources
AIM Global Financial Services
MORE CONSERVATIVE AIM Global Health Care
AIM Global Consumer Products and Services
AIM Global Infrastructure
AIM Advisor Real Estate
AIM Global Utilities
MORE CONSERVATIVE
FIXED-INCOME FUNDS
TAXABLE FIXED-INCOME FUNDS TAX-FREE FIXED-INCOME FUNDS
MORE AGGRESSIVE MORE AGGRESSIVE
AIM Strategic Income AIM High Income Municipal
AIM High Yield II AIM Tax-Exempt Bond of Connecticut
AIM High Yield AIM Municipal Bond
AIM Income AIM Tax-Free Intermediate
AIM Global Income AIM Tax-Exempt Cash
AIM Floating Rate(5)
AIM Intermediate Government MORE CONSERVATIVE
AIM Limited Maturity Treasury
AIM Money Market
MORE CONSERVATIVE
</TABLE>
The AIM Risk Spectrum illustrates equity and fixed-income funds from more
aggressive to more conservative. When assessing the degree of risk, three
factors were considered: the funds' portfolio holdings, volatility patterns over
time and diversification permitted within the fund. Fund rankings are relative
to one another within The AIM Family of Funds--Registered Trademark-- and should
not be compared with other investments. There is no guarantee that any one AIM
fund will be less volatile than any other. (1) AIM Small Cap Opportunities Fund
closed to new investors Nov. 4, 1999. (2) AIM Mid Cap Opportunities Fund closed
to new investors March 21, 2000. (3) AIM Small Cap Growth Fund closed to new
investors Nov. 8, 1999. (4) AIM Constellation Fund's investment strategy
broadened to allow investments across all market capitalizations Dec. 1, 1999.
(5) AIM Floating Rate Fund was restructured to offer multiple share classes
April 3, 2000. Existing shares were converted to Class B shares, and Class C
shares commenced offering. (6) AIM Large Cap Opportunities Fund will close to
new investors Sept. 29, 2000, or when the fund reaches a total net asset value
of $750 million, whichever occurs first.
FOR MORE COMPLETE INFORMATION ABOUT ANY AIM FUND, INCLUDING SALES CHARGES
AND EXPENSES, OBTAIN THE APPROPRIATE PROSPECTUS(ES) FROM YOUR FINANCIAL ADVISOR.
PLEASE READ THE PROSPECTUS(ES) CAREFULLY BEFORE YOU INVEST OR SEND MONEY. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a currently effective fund prospectus. If used as
sales material after Oct. 20, 2000, this report must be accompanied by a fund
Performance & Commentary or by an AIM Quarterly Review of Performance for the
most recent quarter end.
[DALBAR LOGO APPEARS HERE] [AIM LOGO APPEARS HERE]
--Registered Trademark--
INVEST WITH DISCIPLINE
--Registered Trademark--
A I M Distributors, Inc. HYI-AR-1
