<PAGE> 1
SEMIANNUAL REPORT / JANUARY 31 2000
AIM HIGH YIELD FUND II
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[ COVER IMAGE ]
-------------------------------------
LANDSCAPE AT AUVERS AFTER THE RAIN
BY VINCENT VAN GOGH (1853-1890, DUTCH)
VAN GOGH SPENT ONLY THREE MONTHS IN AUVERS-SUR-OISE, A SMALL VIL-
LAGE NORTH OF PARIS, WHERE HE PRODUCED THE LAST OF HIS BELOVED
PAINTINGS. THIS LANDSCAPE, AMONG HIS TRIBUTES TO THE HEALTH AND
RESTORATIVE FORCES OF THE FRENCH COUNTRYSIDE, IS A FITTING EMBLEM
FOR THE GROWTH POTENTIAL OF AIM'S NEWEST HIGH-YIELD FUND.
-------------------------------------
AIM High Yield Fund II is for shareholders who seek a high level of current
income. The fund invests in a portfolio consisting primarily of high-yielding,
lower-rated corporate bonds.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM High Yield Fund II's performance figures are historical, and they
reflect changes in net asset value and the reinvestment of distributions.
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
expenses.
o Had the advisors not absorbed fund exenses, performance figures would have
been lower.
o The fund's average annual total returns, including sales charges, for the
periods ended 12/31/99 (the most recent calendar quarter-end) are as
follows. For Class A shares, one year, 14.14%; inception (9/30/98), 18.65%.
For Class B shares, one year, 13.90%; inception (11/20/98), 14.07%. For
Class C shares, one year, 17.69%; inception (11/20/98), 17.52%
o The 30-day yield is calculated using a formula prescribed 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 The fund invests primarily in higher-yielding, lower-rated corporate bonds,
commonly known as "junk bonds." These bonds have a greater risk of price
fluctuation and loss of principal and income than U.S. government
securities, such as U.S. Treasury bonds and bills, which offer a government
guarantee as to the repayment of principal and interest if held to maturity.
o The fund's investment return and principal value will fluctuate, so 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, generally considered
representative of high-yield debt securities, is compiled by Lehman
Brothers, a well-known global investment bank.
o The unmanaged Lipper High Current Yield Fund Index represents an average of
the performance of the 30 largest high-yield funds charted by Lipper, Inc.,
an independent mutual fund performance monitor.
o An investment cannot be made directly 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.
AVERAGE ANNUAL TOTAL RETURNS
As of 1/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (9/30/98) 16.57%
1 Year 11.61%*
*17.20%, excluding sales charges
CLASS B SHARES
Inception (11/20/98) 12.05%
1 Year 11.24%*
*16.24%, excluding CDSC
CLASS C SHARES
Inception (11/20/98) 15.23%
1 Year 15.03%*
*16.03%, excluding CDSC
================================================================================
PAST PERFORMANCE DOES NOT GUARANTEE COMPARABLE FUTURE RESULTS.
Market volatility can significantly impact short-term performance. Results
of an investment made today may differ substantially from the historical
performance shown.
AIM HIGH YIELD FUND II
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholders:
Many investors have been disappointed in their fixed-income
[PHOTO OF investments' performance during the six months covered by
Charles T. this report. The Federal Reserve Board (the Fed) raised
Bauer, interest rates twice during the reporting period and again
Chairman of shortly after the period closed, putting downward pressure on
the Board of the prices of fixed-income investments. Nevertheless, there
THE FUND is cause for celebration of 1999 bond investments--and hope
APPEAR HERE] for 2000. For investors who stayed the course with their
fixed-income funds last year, their investment dollars were
used to purchase bonds at significant discounts, as
fixed-income securities of all types were true bargains. In
addition, yields on some fixed-income investments rose
significantly during the reporting period.
LOOKING AHEAD
most market watchers anticipate that bond market conditions
will remain difficult through the first half of 2000, as the Fed may raise
interest rates again to try to steer the economy to a soft landing: economic
growth diminished enough to thwart inflation, but without recession. But
analysts also remind us that, historically, fixed-income markets have rebounded
the year following a down year such as 1999. If so, 2000 may be a year of
recovery for fixed-income investing.
In addition, many analysts believe bond markets have in the past fared well
on the down side of a Fed tightening cycle. Assuming economic growth and low
inflation continue on their current path, there's every reason to be optimistic
about fixed-income funds.
The changeable nature of the markets reinforces our confidence in the wisdom
of investing through a financial advisor. In addition to helping you select
investments appropriate to your time horizon and risk tolerance, a financial
advisor can keep you informed about how shifting market conditions affect you
and your portfolio--and help assure that when you do alter your investments,
there's a logical reason for doing so. AIM believes every investor should be
guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the six months ended January 31, how the markets
behaved and what they foresee for the near future. We trust you will find their
discussion informative.
If you have any questions or comments, we invite you to contact us, either
at our Web site, aimfunds.com, or through our Client Services department at
800-959-4246. Information about your account is also available through our
automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
- --Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
A I M Advisors, Inc.
-------------------------------------
IF ANALYSTS ARE
CORRECT, THE CURRENT
TIGHTENING CYCLE MAY
END BY MID-YEAR,
AND A STRONG RALLY COULD FOLLOW
-------------------------------------
AIM HIGH YIELD FUND II
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
AIM HIGH YIELD FUND II THRIVES IN DIFFICULT
BOND ENVIRONMENT
HOW DID AIM HIGH YIELD FUND II PERFORM DURING THE REPORTING PERIOD?
Fixed-income markets continued to be plagued by a stubbornly strong U.S. economy
and higher interest rates. Given this difficult market environment, AIM High
Yield Fund II posted a 5.31% return for Class A shares, a 4.92% return for Class
B shares and a 4.93% return for Class C shares for the six months ended January
31, 2000. These returns are computed at net asset value (that is, without the
effect of sales charges). The fund outperformed the Lehman High Yield Bond
Index, which returned 0.64%, and the Lipper High Current Yield Fund Index, which
gained 0.36% during the same period.
Despite 1999's poor market environment, the fund continued to provide
extremely attractive current income. As of January 31, 2000, the fund's 30-day
SEC yield was 10.91%, 10.70% and 10.70% for Class A, Class B and Class C shares,
respectively. By comparison, the yield on the 30-year U.S. Treasury bond was
6.49%.
WHAT WERE THE MAJOR TRENDS IN BOND MARKETS DURING 1999?
Throughout 1999, downward pressure on bond prices resulted from the U.S.
economy's continued strong growth, low unemployment, rising commodity prices,
improving global economies, rising long-term interest rates and heightened
inflation fears. These factors contributed to a market environment in which
investors favored stocks over bonds. Bond investors are particularly attuned to
any hint of inflation, since it erodes the purchasing power of future interest
and principal payments. For these reasons, bonds in general had a very difficult
year.
HOW DID HIGH-YIELD BONDS FARE IN THIS DIFFICULT MARKET ENVIRONMENT?
High-yield bonds were able to withstand some of the pressure of rising interest
rates and ended up being one of the better-performing fixed-income sectors in
1999. During the year, issuers flooded the market with high-yield bonds--many of
them to ensure they would have adequate capital should Y2K-related problems
materialize. This massive supply was met with lackluster demand from buyers,
some of whom may have had Y2K-related concerns about buying high-yield bonds in
such an atmosphere of uncertainty. As Y2K approached, liquidity in the
high-yield market simply dried up, pushing high-yield bond prices downward.
High-yield bond funds also suffered from negative fund flows. In contrast to
the past several years, when high-yield bond funds enjoyed record cash inflows,
lower bond prices and greater market volatility during much of the six months
covered by this report eroded investor interest in this sector. Many investors
exited the fixed-income markets and entered the equities markets.
Tax-loss selling and Y2K pressures in December caused more disappointments.
These actions pushed the average yield of high-yield bonds up to almost 12% at
the end of 1999-approximately 120 basis points over historical standards.(A
basis point is one one-hundredth of a percentage point.)
GIVEN CURRENT MARKET CONDITIONS, HOW DID YOU MANAGE THE FUND'S CREDIT QUALITY?
While yield spreads have come down from their 1998 levels, they still remain
high on a historical basis. As a result, we have found opportunities for higher
yields in the lower-quality sectors of the high-yield market. Lower-quality
sectors of the high-yield bond market generally offer higher yields to
compensate investors for taking on more risks. On January 31, CCC and non-rated
bonds accounted for approximately 30% of the fund's net assets, compared to less
than 7% six months ago.
Overall, the fund has an average credit quality of B, as rated by Standard &
Poor's, a widely known credit-rating agency.
GROWTH OF NET ASSETS
================================================================================
7/31/99 $ 59.1 million
1/31/00 $100.5 million
================================================================================
PORTFOLIO COMPOSITION
As of 1/31/00, based on total net assets
================================================================================
Equities & Other Interests 9.02%
Cash Equivalents & Other Assets 5.83%
High-Yield Bonds 85.15%
================================================================================
See important fund and index disclosures inside front cover.
AIM HIGH YIELD FUND II
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
WHAT CHANGES DID YOU MAKE TO THE FUND'S PORTFOLIO?
The fund's exposure to issuers in the telecommunications and telephone
industries, which represented more than 37% of total net assets on January 31,
helped fuel fund performance. We continue to believe that these industries
represent attractive value, and the fund's performance has greatly benefited
from continued consolidation in these industries.
During the reporting period, we increased our allocation in foreign
developed countries to approximately 10%. Bonds issued by foreign
telecommunications companies accounted for most of the increase. The
underpinnings of a sustained global expansion make the telecommunications
high-yield sector attractive.
DID THE EQUITIES COMPONENT OF THE FUND CONTRIBUTE POSITIVELY TO ITS SUCCESS
DURING THE REPORTING PERIOD?
Very much so. Fund managers may invest up to 15% of the fund's assets in
equities (stocks of companies in which we hold high-yield debt) if those stocks
represent compelling value. This policy allows fund managers to leverage their
research capabilities; having researched a company from a debt perspective, it
takes just a little more effort to research its stock. The fund benefits because
its equity component may perform well even when bonds may be underperforming,
thereby increasing the fund's total return. Because equities do not provide
income, managers try to avoid reducing the fund's yield substantially.
During 1999, fund managers used the strength of equity markets as an
opportunity to increase their holdings of stock of companies in which we held
debt. Fund managers concentrated their equity ownership in rapidly growing
telephone and telecommunications companies, which enjoyed tremendous price
appreciation during the reporting period.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?
The prospect of higher interest rates and further defaults will keep the level
of uncertainty and volatility high in the high-yield sector. As a result, a
recovery in the high-yield market may not occur until the second half of 2000.
Although the past year and a half has been difficult for the high-yield market,
we believe the worst may be behind us. In these uncertain market conditions, we
will continue to take selective advantage of attractively valued high-yield
credits with the perspective that over the long term, these credits should
provide attractive income and total-return opportunities for our investors.
We also believe that the current high-yield environment represents an
excellent opportunity for investors. When compared to the long-term yield
average, high-yield bonds seem cheap relative to other alternatives in the
fixed-income universe.
<TABLE>
<CAPTION>
===================================================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Intermedia Communications, Inc. (Bond) 3.24% 1. Telephone 14.70%
2. Alestra SA (Mexico)(Bond) 3.01 2. Telecommunications (Long Distance) 12.27
3. Venetian Casino Resort LLC (Bond) 2.91 3. Telecommunications (Cellular/Wireless) 10.50
4. Anthony Crane Rentals LP (Bond) 2.77 4. Broadcasting (Television, Radio & Cable) 7.10
5. United Pan-Europe Communications N.V. 5. Household Furniture and Appliances 4.76
(Netherlands)(Bond) 2.72
6. FirstCom Corp. (Stock) 2.68 6. Trucks and Parts 3.40
7. Vlasic Foods International Inc.(Bond) 2.67 7. Communications Equipment 3.26
8. Viatel, Inc. (Bond) 2.62 8. Gaming, Lottery and Parimutuel Cos. 2.91
9. Allied Waste Industries, Inc.(Bond) 2.60 9. Manufacturing--Diversified 2.77
10. Primus Telecom Group Inc.(Bond) 2.16 10. Foods 2.67
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 II
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
January 31, 2000
(unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS & NOTES-85.15%
AUTO PARTS & EQUIPMENT-1.70%
Advance Stores Co., Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 $2,000,000 $ 1,710,000
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-7.10%
Charter Communications Holdings,
LLC/Charter Communications
Holdings Capital Corp., Sr.
Unsec. Disc. Notes, 9.92%,
04/01/11(a) 3,000,000 1,773,750
- --------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(a) 2,000,000 1,315,000
- --------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.88%, 10/15/07(a) 2,000,000 1,305,000
- --------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands), Sr. Disc.
Notes, 13.38%, 11/01/09(a)(b) 5,000,000 2,737,500
- --------------------------------------------------------------
7,131,250
- --------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-2.10%
Sterling Chemicals, Inc.-Series B,
Sr. Gtd. Sec. Sub. Notes, 12.38%,
07/15/06 2,000,000 2,110,000
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.97%
Key Plastics Holdings, Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.25%, 03/15/07(c) 2,540,000 977,900
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.26%
Dictaphone Corp., Sr. Sub. Gtd.
Notes, 11.75%, 08/01/05 1,500,000 1,222,500
- --------------------------------------------------------------
ProNet Inc., Sr. Sub. Notes,
11.88%, 06/15/05 3,000,000 2,055,000
- --------------------------------------------------------------
3,277,500
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-2.16%
Earthwatch Inc., Sr. Disc. Notes,
13.00%, 07/15/07 (Acquired
07/07/99; Cost
$1,711,525)(a)(d)(e) 2,500,000 1,750,000
- --------------------------------------------------------------
Globix Corp., Sr. Notes, 12.50%,
02/01/10 (Acquired 01/28/00; Cost
$420,000)(d) 420,000 425,250
- --------------------------------------------------------------
2,175,250
- --------------------------------------------------------------
CONSTRUCTION (CEMENT &
AGGREGATES)-0.41%
Schuff Steel Co., Sr. Unsec. Gtd.
Sub. Notes, 10.50%, 06/01/08 550,000 409,750
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-1.80%
Fleming Companies, Inc.-Series B
Sr. Unsec. Gtd. Sub. Notes,
10.63%, 07/31/07 2,000,000 1,810,000
- --------------------------------------------------------------
FOODS-2.67%
Vlasic Foods International
Inc.-Series B Sr. Unsec. Sub.
Notes, 10.25%, 07/01/09 3,000,000 2,685,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-2.91%
Venetian Casino Resort LLC, Sec.
Gtd. Mortgage Notes, 12.25%,
11/15/04 $3,500,000 $ 2,922,500
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-2.08%
King Pharmaceuticals, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/09 2,000,000 2,090,000
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-2.04%
DJ Orthopedics, LLC, Sr. Unsec.
Gtd. Sub. Notes, 12.63%, 06/15/09 2,100,000 2,047,500
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-1.46%
Team Health, Inc., Sr. Sub. Notes,
12.00%, 03/15/09(b) 1,550,000 1,464,750
- --------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-4.66%
Falcon Products, Inc.-Series B Sr.
Unsec. Gtd. Sub. Notes, 11.38%,
06/15/09 2,000,000 1,880,000
- --------------------------------------------------------------
O'Sullivan Industries Inc., Sr.
Sub. Notes, 13.38%,
10/15/09(b)(e) 1,000,000 990,000
- --------------------------------------------------------------
Winsloew Furniture, Inc.-Series B
Sr. Sub. Notes, 12.75%, 08/15/07 2,000,000 1,810,000
- --------------------------------------------------------------
4,680,000
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-1.76%
Marvel Enterprises, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
06/15/09 1,910,000 1,766,750
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-2.77%
Anthony Crane Rentals LP-Series B
Sr. Unsec. Gtd. Sub. Notes,
10.38%, 08/01/08 3,250,000 2,778,750
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-1.80%
Brand Scaffold Services, Inc., Sr.
Unsec. Notes, 10.25%, 02/15/08 2,000,000 1,810,000
- --------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-1.92%
Frontier Oil Corp., Sr. Unsec.
Notes, 11.75%, 11/15/09 2,000,000 1,930,000
- --------------------------------------------------------------
PERSONAL CARE-1.22%
American Tissue Inc., Sr. Sec.
Notes, 12.50%, 07/15/06(b) 1,200,000 1,230,000
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.00%
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.63%,
08/20/12 1,535 1,543
- --------------------------------------------------------------
RAILROADS-1.51%
RailWorks Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.50%, 04/15/09 1,500,000 1,515,000
- --------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
SERVICES (COMMERCIAL &
CONSUMER)-1.60%
Avis Rent A Car, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%, 05/01/09 $1,550,000 $ 1,606,187
- --------------------------------------------------------------
SHIPPING-1.57%
Transportacion Maritima Mexicana
S.A. de C.V. (Mexico),
Sr. Yankee Unsec. Notes, 10.00%,
11/15/06 1,000,000 840,000
- --------------------------------------------------------------
Yankee Notes, 8.50%, 10/15/00 750,000 736,875
- --------------------------------------------------------------
1,576,875
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-7.20%
IMPSAT Fiber Networks, Inc., Sr.
Gtd. Notes, 12.13%, 07/15/03 575,000 540,500
- --------------------------------------------------------------
Nextel International, Inc., Sr.
Unsec. Disc. Notes, 12.13%,
04/15/08(a) 2,500,000 1,527,125
- --------------------------------------------------------------
Orion Network Systems, Inc., Sr.
Gtd. Sub. Notes, 11.25%, 01/15/07 1,700,000 1,334,500
- --------------------------------------------------------------
Powertel, Inc., Sr. Unsec. Disc.
Notes, 12.00%, 05/01/06(a) 2,000,000 1,806,860
- --------------------------------------------------------------
WebLink Wireless, Inc., Sr. Disc.
Sub. Notes, 11.25%, 02/01/08(a) 5,000,000 2,025,000
- --------------------------------------------------------------
7,233,985
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-8.55%
FirstCom Corp., Sr. Notes, 14.00%,
10/27/07 2,000,000 2,035,000
- --------------------------------------------------------------
Long Distance International, Inc.,
Sr. Unsec. Notes, 12.25%,
04/15/08 3,000,000 1,747,500
- --------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Unsec. Notes, 12.75%,
10/15/09 2,100,000 2,173,500
- --------------------------------------------------------------
Viatel, Inc., Sr. Notes, 11.50%,
03/15/09(b) 2,744,120 2,634,355
- --------------------------------------------------------------
8,590,355
- --------------------------------------------------------------
TELEPHONE-13.93%
Alestra S.A. (Mexico), Sr. Yankee
Notes, 12.63%, 05/15/09 3,000,000 3,022,500
- --------------------------------------------------------------
GT Group Telecom Inc. (Canada), Sr.
Disc. Notes, 13.25%, 02/01/10
(Acquired 01/27/00; Cost
$2,106,040)(a)(d)(e) 4,000,000 2,140,000
- --------------------------------------------------------------
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%, 02/15/08(a) 3,000,000 1,690,260
- --------------------------------------------------------------
Intermedia Communications, Inc.,
Series B Sr. Disc. Notes, 11.25%,
07/15/07(a) 4,250,000 3,251,250
- --------------------------------------------------------------
Logix Communications Enterprises,
Sr. Unsec. Notes, 12.25%,
06/15/08 2,295,000 1,772,888
- --------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec. Notes,
15.00%, 07/01/08 2,270,000 2,116,775
- --------------------------------------------------------------
13,993,673
- --------------------------------------------------------------
TRUCKS & PARTS-3.40%
FleetPride Inc., Sr. Unsec. Gtd.
Sub. Notes, 12.00%, 08/01/05 1,550,000 1,410,500
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TRUCKS & PARTS-(CONTINUED)
North American Van Lines, Inc., Sr.
Sub. Notes, 13.38%, 12/01/09(b) $2,000,000 $ 2,010,000
- --------------------------------------------------------------
3,420,500
- --------------------------------------------------------------
WASTE MANAGEMENT-2.60%
Allied Waste North America Inc.,
Sr. Sub Notes, 10.00%,
08/01/09(b) 2,980,000 2,607,500
- --------------------------------------------------------------
Total Corporate Bonds & Notes
(Cost $87,204,462) 85,552,518
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-9.02%
AIR FREIGHT-0.05%
Atlas Air, Inc.(f) 2,000 53,000
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-0.13%
Convergent Communications, Inc.(f) 14,620 132,494
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.21%
Cybernet Internet Services
International, Inc.(f) 5,000 55,000
- --------------------------------------------------------------
Cybernet Internet Services
International, Inc.- Wts.,
expiring 07/01/09(f) 1,000 150,250
- --------------------------------------------------------------
205,250
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-0.35%
King Pharmaceuticals, Inc.(f) 6,000 354,000
- --------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-0.10%
Winsloew Furniture, Inc.-Wts.,
expiring 08/15/07(f) 2,000 100,000
- --------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.16%
Pride International, Inc.(f) 10,000 160,625
- --------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.22%
Comstock Resources, Inc.(f) 20,000 65,000
- --------------------------------------------------------------
Pogo Producing Co. 7,000 157,937
- --------------------------------------------------------------
222,937
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-3.30%
Clearnet Communications Inc.-Class
A-ADR (Canada)(f) 6,500 252,687
- --------------------------------------------------------------
Crown Castle International Corp.(f) 3,000 94,875
- --------------------------------------------------------------
Microcell Telecommunications Inc.
(Canada)(f) 12,000 460,500
- --------------------------------------------------------------
Nextel Communications, Inc.-Class
A(f) 4,000 425,500
- --------------------------------------------------------------
Nextel Communications, Inc.-Series
D, $130 PIK Pfd. 2,000 2,080,000
- --------------------------------------------------------------
3,313,562
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG
DISTANCE)-3.72%
Call-Net Enterprises, Inc.(f) 15,000 $ 60,000
- --------------------------------------------------------------
FirstCom Corp.(f) 100,000 2,693,750
- --------------------------------------------------------------
Long Distance International, Wts.,
expiring 04/13/08(f) 670 1,675
- --------------------------------------------------------------
Primus Telecommunications Group,
Inc.(f) 8,000 255,500
- --------------------------------------------------------------
Versatel Telecom International N.V.
(Netherlands)(f) 8,000 307,000
- --------------------------------------------------------------
Viatel, Inc.(f) 11,270 416,286
- --------------------------------------------------------------
3,734,211
- --------------------------------------------------------------
TELEPHONE-0.77%
AirGate PCS Inc.(f) 924 56,457
- --------------------------------------------------------------
GST Telecommunications, Inc.(f) 23,000 199,812
- --------------------------------------------------------------
ICG Communications, Inc.(f) 8,300 200,238
- --------------------------------------------------------------
Intermedia Communications Inc.(f) 4,500 193,500
- --------------------------------------------------------------
NEXTLINK Communications, Inc.-Class
A(f) 1,500 126,563
- --------------------------------------------------------------
776,570
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-0.01%
Allied Waste Industries, Inc.(f) 1,000 $ 6,438
- --------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$4,773,544) 9,059,087
- --------------------------------------------------------------
MONEY MARKET FUNDS-7.52%
STIC Liquid Assets Portfolio(g) 3,776,908 3,776,908
- --------------------------------------------------------------
STIC Prime Portfolio(g) 3,776,908 3,776,908
- --------------------------------------------------------------
Total Money Market Funds (Cost
$7,553,816) 7,553,816
- --------------------------------------------------------------
TOTAL INVESTMENTS-101.69% (Cost
$99,531,822) 102,165,421
- --------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(1.69%) (1,699,782)
- --------------------------------------------------------------
NET ASSETS-100.00% $100,465,639
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Disc. - Discounted
Pfd. - Preferred
PIK - Payment in Kind
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Wts. - Warrants
Notes to Schedule of Investments:
(a) Discounted bond at purchase. Interest rate shown represents the coupon rate
at which the bond will accrue at a specified future date.
(b) 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
1933, as amended.
(c) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(d) 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 represented 4.33% of the Fund's
net assets.
(e) Consists of more than one class of securities traded together as a unit.
(f) Non-income producing security.
(g) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
6
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2000
(unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$99,531,822) $102,165,421
- -------------------------------------------------------
Receivables for:
Fund shares sold 1,364,953
- -------------------------------------------------------
Investments sold 444,207
- -------------------------------------------------------
Interest and dividends 1,976,907
- -------------------------------------------------------
Investments for deferred compensation
plan 6,971
- -------------------------------------------------------
Other assets 29,186
- -------------------------------------------------------
Total assets 105,987,645
- -------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 4,852,443
- -------------------------------------------------------
Fund shares redeemed 279,704
- -------------------------------------------------------
Deferred compensation 6,971
- -------------------------------------------------------
Dividends 290,001
- -------------------------------------------------------
Accrued advisory fees 22,961
- -------------------------------------------------------
Accrued distribution fees 55,031
- -------------------------------------------------------
Accrued transfer agent fees 4,530
- -------------------------------------------------------
Accrued trustees' fees 667
- -------------------------------------------------------
Accrued administrative service fees 4,235
- -------------------------------------------------------
Accrued operating expenses 5,463
- -------------------------------------------------------
Total liabilities 5,522,006
- -------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $100,465,639
=======================================================
</TABLE>
<TABLE>
<S> <C>
NET ASSETS:
Class A $ 48,419,113
=======================================================
Class B $ 45,184,462
=======================================================
Class C $ 6,862,064
=======================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 4,381,870
=======================================================
Class B 4,097,026
=======================================================
Class C 622,796
=======================================================
Class A:
Net asset value and redemption price
per share $ 11.05
- -------------------------------------------------------
Offering price per share:
(Net asset value of $11.05 / 95.25%) $ 11.60
- -------------------------------------------------------
Class B:
Net asset value and offering price per
share $ 11.03
- -------------------------------------------------------
Class C:
Net asset value and offering price per
share $ 11.02
=======================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended January 31, 2000
(unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 4,271,606
- -------------------------------------------------------
Dividends 47,606
- -------------------------------------------------------
Total investment income 4,319,212
- -------------------------------------------------------
EXPENSES:
Advisory fees 236,529
- -------------------------------------------------------
Administrative services fees 21,027
- -------------------------------------------------------
Custodian fees 13,022
- -------------------------------------------------------
Transfer agent fees-Class A 20,204
- -------------------------------------------------------
Transfer agent fees-Class B 17,268
- -------------------------------------------------------
Transfer agent fees-Class C 2,636
- -------------------------------------------------------
Trustees' fees 3,898
- -------------------------------------------------------
Distribution fees-Class A 47,913
- -------------------------------------------------------
Distribution fees-Class B 162,591
- -------------------------------------------------------
Distribution fees-Class C 24,312
- -------------------------------------------------------
Filing fees 60,086
- -------------------------------------------------------
Other 33,688
- -------------------------------------------------------
Total expenses 643,174
- -------------------------------------------------------
Less: Fee waived by advisor (123,843)
- -------------------------------------------------------
Expenses paid indirectly (10,298)
- -------------------------------------------------------
Net expenses 509,033
- -------------------------------------------------------
Net investment income 3,810,179
- -------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (1,083,047)
- -------------------------------------------------------
Change in net unrealized appreciation of
investment securities 1,277,336
- -------------------------------------------------------
Net gain from investment securities 194,289
- -------------------------------------------------------
Net increase in net assets resulting from
operations $ 4,004,468
=======================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended January 31, 2000 and the period September 30, 1998
(Date operations commenced) through July 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,810,179 $ 2,231,058
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (1,083,047) 1,689,995
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 1,277,336 1,356,263
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 4,004,468 5,277,316
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (1,908,590) (1,710,595)
- --------------------------------------------------------------------------------------------
Class B (1,510,150) (446,277)
- --------------------------------------------------------------------------------------------
Class C (225,087) (70,876)
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (812,466) (22,467)
- --------------------------------------------------------------------------------------------
Class B (819,848) (421)
- --------------------------------------------------------------------------------------------
Class C (117,757) (64)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A 14,283,167 32,499,124
- --------------------------------------------------------------------------------------------
Class B 24,650,745 20,530,581
- --------------------------------------------------------------------------------------------
Class C 3,796,252 3,068,584
- --------------------------------------------------------------------------------------------
Net increase in net assets 41,340,734 59,124,905
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 59,124,905 --
- --------------------------------------------------------------------------------------------
End of period $100,465,639 $ 59,124,905
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 98,811,011 $ 56,080,847
- --------------------------------------------------------------------------------------------
Undistributed investment income 187,098 20,746
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (1,166,069) 1,667,049
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 2,633,599 1,356,263
- --------------------------------------------------------------------------------------------
$100,465,639 $ 59,124,905
============================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
January 31, 2000
(unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM High Yield Fund II (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 company consisting of two separate
series portfolios. The Fund currently offers three different classes of shares:
Class A shares, Class B shares and Class C shares. Class A shares are sold with
a front-end sales charge. Class B and Class C shares are sold with a contingent
deferred sales charge. Matters affecting each portfolio or class are voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to achieve a high level of current income by
investing primarily in publicly traded, non-investment grade debt securities.
The Fund will also consider the possibility of capital growth when it purchases
and sells securities. Debt securities of less than investment grade are
considered "high-risk" securities (commonly referred to as junk bonds). These
bonds may involve special risks in addition to the risks associated with 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 generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of 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 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 last sale price of the customary trading session on the
valuation date or absent a last sales price, at the closing bid price. Dept
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, quality, 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 asking 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 trading 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 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, adjusted for amortization of discounts on investments, is
recorded as earned from settlement date and is recorded on the accrual
basis. It is the policy of the Fund not to amortize bond premiums for
financial reporting purposes.
C. Distributions -- It is the policy of the Fund to declare daily dividends
from net investment income. Such distributions are paid monthly.
Distributions from net realized capital gains, if any, are generally paid
annually and recorded on ex-dividend date. The Fund may elect to use a
portion of the proceeds of fund share 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.
E. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to
9
<PAGE> 12
that class' operations. All other expenses which are attributable to more
than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.625% on
the first $500 million of the Fund's average daily net assets, plus 0.55% on the
next $500 million of Fund's average daily net assets, plus 0.50% on the Fund's
average daily net assets in excess of $1 billion. During the six months ended
January 31, 2000, AIM waived fees of $123,843.
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 six months ended January 31, 2000, AIM
was paid $21,027 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 six months ended January 31, 2000, AFS
was paid $25,509 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 six months ended January 31,
2000, the Class A, Class B and Class C shares paid AIM Distributors $47,913,
$162,591 and $24,312, respectively, as compensation under the Plans.
AIM Distributors received commissions of $73,964 from sales of the Class A
shares of the Fund during the six months ended January 31, 2000. Such
commissions are not an expense of the Fund. They are deducted from, and are not
included in, the proceeds from sales of Class A shares. During the six months
ended January 31, 2000, AIM Distributors received $7,451 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 six months ended January 31, 2000, the Fund paid legal fees of
$1,257 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel
to the Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the six months ended January 31, 2000, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $432 and $9,866, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $10,298 during the six months ended January 31, 2000.
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.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended January 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. 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 six months ended January 31, 2000 was
$94,313,988 and $56,215,860, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of January 31, 2000 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 6,267,997
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (3,634,398)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 2,633,599
=========================================================
Investments have the same cost for tax and financial
statement purposes.
</TABLE>
10
<PAGE> 13
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the six months ended January 31, 2000 and
the year ended July 31, 1999 were as follows:
<TABLE>
<CAPTION>
JANUARY 31, 2000 JULY 31, 1999
------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 2,912,713 $ 32,303,868 3,879,343 $40,951,231
- -----------------------------------------------------------------------------------------------------------------
Class B* 3,229,887 35,737,796 2,156,519 23,713,819
- -----------------------------------------------------------------------------------------------------------------
Class C* 416,930 4,610,790 322,660 3,551,731
- -----------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 178,612 1,988,613 99,704 1,082,276
- -----------------------------------------------------------------------------------------------------------------
Class B* 142,892 1,589,799 23,551 261,935
- -----------------------------------------------------------------------------------------------------------------
Class C* 20,304 225,709 3,953 43,955
- -----------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,819,979) (20,009,314) (868,523) (9,534,383)
- -----------------------------------------------------------------------------------------------------------------
Class B* (1,145,109) (12,676,850) (310,714) (3,445,173)
- -----------------------------------------------------------------------------------------------------------------
Class C* (94,166) (1,040,247) (46,885) (527,102)
- -----------------------------------------------------------------------------------------------------------------
3,842,084 $ 42,730,164 5,259,608 $56,098,289
=================================================================================================================
</TABLE>
* Class B and Class C shares commenced sales on November 20, 1998.
11
<PAGE> 14
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A shares
outstanding during the six months ended January 31, 2000 and during the period
September 30, 1998 (date operations commenced) to July 31, 1999, and for a share
of Class B and Class C outstanding during the six months ended January 31, 2000
and during the period November 20, 1998 (date sales commenced) to July 31, 1999.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------ ------------------------ ------------------------
JANUARY 31, JULY 31, JANUARY 31, JULY 31, JANUARY 31, JULY 31,
2000 1999 2000 1999 2000 1999
----------- -------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.25 $ 10.00 $ 11.23 $ 10.59 $ 11.22 $ 10.59
- --------------------------------------------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.57 0.90 0.52 0.68 0.52 0.68
- --------------------------------------------- ------- ------- ------- ------- ------- -------
Net gains on securities (both realized and
unrealized) 0.01 1.26 0.02 0.65 0.02 0.64
- --------------------------------------------- ------- ------- ------- ------- ------- -------
Total from investment operations 0.58 2.16 0.54 1.33 0.54 1.32
- --------------------------------------------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.55) (0.90) (0.51) (0.68) (0.51) (0.68)
- --------------------------------------------- ------- ------- ------- ------- ------- -------
Distributions from net realized gains (0.23) (0.01) (0.23) (0.01) (0.23) (0.01)
- --------------------------------------------- ------- ------- ------- ------- ------- -------
Total distributions (0.78) (0.91) (0.74) (0.69) (0.74) (0.69)
- --------------------------------------------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 11.05 $ 11.25 $ 11.03 $ 11.23 $ 11.02 $ 11.22
============================================= ======= ======= ======= ======= ======= =======
Total return(a) 5.31% 22.39% 4.92% 13.03% 4.93% 12.93%
============================================= ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $48,419 $34,992 $45,184 $20,994 $ 6,862 $ 3,139
============================================= ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets:
Including waivers and reimbursement 1.00%(b) 1.00%(d) 1.75%(b) 1.75%(d) 1.75%(b) 1.75%(d)
============================================= ======= ======= ======= ======= ======= =======
Excluding waivers and reimbursement 1.33%(b) 1.58%(d) 2.08%(b) 2.33%(d) 2.08%(b) 2.33%(d)
============================================= ======= ======= ======= ======= ======= =======
Ratio of net investment income to average net
assets(c) 10.44%(b) 9.74%(d) 9.69%(b) 8.99%(d) 9.69%(b) 8.99%(d)
============================================= ======= ======= ======= ======= ======= =======
Portfolio turnover rate 78% 223% 78% 223% 78% 223%
============================================= ======= ======= ======= ======= ======= =======
</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 $38,121,939,
$32,341,556 and $4,836,068, for Class A, Class B and Class C shares,
respectively.
(c) After fee waivers and/or expense reimbursements.
(d) Ratios are annualized.
12
<PAGE> 15
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director A I M Advisors, Inc.
ACE Limited; Carol F. Relihan 11 Greenway Plaza
Formerly Director, President, and Senior Vice President and Secretary Suite 100
Chief Executive Officer Houston, TX 77046
COMSAT Corporation Gary T. Crum
Senior Vice President TRANSFER AGENT
Owen Daly II A I M Fund Services, Inc.
Director Dana R. Sutton P.O. Box 4739
Cortland Trust Inc. Vice President and Treasurer Houston, TX 77210-4739
Edward K. Dunn Jr. Melville B. Cox CUSTODIAN
Chairman, Mercantile Mortgage Corp.; Vice President State Street Bank and Trust Company
Formerly Vice Chairman, President and 225 Franklin Street
Chief Operating Officer Karen Dunn Kelley Boston, MA 02110
Mercantile-Safe Deposit & Trust Co.; and Vice President
President, Mercantile Bankshares COUNSEL TO THE FUND
Mary J. Benson Ballard Spahr
Jack Fields Assistant Vice President and Andrews & Ingersoll, LLP
Chief Executive Officer Assistant Treasurer 1735 Market Street
Texana Global, Inc.; Philadelphia, PA 19103
Formerly Member Sheri Morris
of the U.S. House of Representatives Assistant Vice President COUNSEL TO THE TRUSTEES
and Assistant Treasurer Kramer, Levin, Naftalis & Frankel LLP
Carl Frischling 919 Third Avenue
Partner Renee A. Friedli New York, NY 10022
Kramer, Levin, Naftalis & Frankel LLP Assistant Secretary
DISTRIBUTOR
Robert H. Graham P. Michelle Grace A I M Distributors, Inc.
President and Chief Executive Officer Assistant Secretary 11 Greenway Plaza
A I M Management Group Inc. Suite 100
Nancy L. Martin Houston, TX 77046
Prema Mathai-Davis Assistant Secretary
Chief Executive Officer, YWCA of the U.S.A.
Ofelia M. Mayo
Lewis F. Pennock Assistant Secretary
Attorney
Lisa A. Moss
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Kathleen J. Pflueger
Limited Partnership Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
<PAGE> 16
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund AIM Advisor International Value Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Asian Growth Fund since 1976 and managed approximately $160
AIM Capital Development Fund AIM Developing Markets Fund billion in assets for more than 6.6
AIM Constellation Fund(1) AIM Euroland Growth Fund(5) million shareholders, including individual investors,
AIM Dent Demographic Trends Fund AIM European Development Fund corporate clients and financial institutions,
AIM Large Cap Growth Fund AIM International Equity Fund as of December 31, 1999.
AIM Mid Cap Equity Fund AIM Japan Growth Fund The AIM Family of Funds--Registered Trademark--
AIM Mid Cap Growth Fund AIM Latin American Growth Fund is distributed nationwide, and AIM today is the
AIM Mid Cap Opportunities Fund(2) AIM New Pacific Growth Fund eighth-largest mutual fund complex in the United
AIM Select Growth Fund States in assets under management, according to
AIM Small Cap Growth Fund(3) GLOBAL GROWTH FUNDS Strategic Insight, an independent mutual-fund
AIM Small Cap Opportunities Fund(4) AIM Global Aggressive Growth Fund monitor.
AIM Value Fund AIM Global Growth Fund
AIM Weingarten Fund
GLOBAL GROWTH & INCOME FUNDS
GROWTH & INCOME FUNDS AIM Global Growth & Income Fund
AIM Advisor Flex Fund AIM Global Utilities Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund GLOBAL INCOME FUNDS
AIM Balanced Fund AIM Emerging Markets Debt Fund
AIM Basic Value Fund AIM Global Government Income Fund
AIM Charter Fund AIM Global Income Fund
AIM Strategic Income Fund
INCOME FUNDS
AIM Floating Rate Fund THEME FUNDS
AIM High Yield Fund AIM Global Consumer Products and Services Fund
AIM High Yield Fund II AIM Global Financial Services Fund
AIM Income Fund AIM Global Health Care Fund
AIM Intermediate Government Fund AIM Global Infrastructure Fund
AIM Limited Maturity Treasury Fund AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund(6)
TAX-FREE INCOME FUNDS AIM Global Trends Fund(7)
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
MONEY MARKET FUNDS*
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
</TABLE>
(1) Effective December 1, 1999, AIM Constellation Fund's investment strategy
broadened to allow investments across all market capitalizations. (2) AIM Mid
Cap Opportunities Fund closed to new investors on March 21, 2000. (3) AIM Small
Cap Growth Fund closed to new investors on November 8, 1999. (4) AIM Small Cap
Opportunities Fund closed to new investors on November 4, 1999. (5) On September
1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth Fund. Previously
the fund invested in all size companies in most areas of Europe. The fund now
seeks to invest at least 65% of its assets in large-cap companies within
countries using the euro as their currency (EMU-member countries). (6) On June
1, 1999, AIM Global Telecommunications Fund was renamed AIM Global
Telecommunications and Technology Fund. (7) Effective August 27, 1999, AIM
Global Trends Fund was restructured to operate as a traditional mutual fund.
Before that date, the fund operated as a fund of funds. For more complete
information about any AIM fund(s), including sales charges and expenses, ask
your financial advisor or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money. If used as
sales material after April 20, 2000, this report must be accompanied by a
current Quarterly Review of Performance for AIM Funds. *An investment in any AIM
money market fund is not insured by the Federal Deposit Insurance Corporation or
any other government agency.
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