<PAGE> 1
AIM GLOBAL
INCOME FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30, 1998
<PAGE> 2
AIM GLOBAL INCOME FUND
For shareholders who seek
a high level of current income.
The Fund invests in a portfolio
of debt securities
issued by U.S. and foreign
governments and corporations.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Income Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed without a sales
charge.
o The Fund's average annual total returns, including sales charges, for
periods ended 3/31/98, the most recent calendar quarter end, were as
follows: For Class A shares, one year, 8.51%; since inception (9/15/94),
9.99%. For Class B shares, one year, 8.31%; since inception (9/15/97),
10.28%. From their inception date (8/4/97), Class C shares produced
cumulative total return of 6.24%.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and 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 shares and Class C shares will differ
from that of Class A shares due to differing fees and expenses.
o Because Class C shares have been offered for less than one year (since
8/4/97), all total return figures for Class C shares reflect cumulative
total return that has not been annualized.
o The Fund's annualized distribution rate reflects the Fund's most recent
monthly dividend distribution multiplied by 12 divided by the most recent
month-end net asset value.
o The 30-day yield is calculated on the basis of a formula defined by the SEC.
The formula is based on the portfolio's potential earnings from dividends,
interest, yield-to-maturity, or yield-to-call of the bonds in the portfolio,
net of all expenses and expressed on an annualized basis.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o Past performance cannot guarantee comparable future results.
o The Fund's portfolio composition is subject to change and there is no
assurance the Fund will continue to hold any particular security.
o International investing presents certain risks not associated with investing
solely in the U.S. These include risks relating to fluctuations of the value
of the U.S. dollar relative to the value of other currencies, the custody
arrangements made for the Fund's foreign holdings, differences in
accounting, political risks, and the lesser degree of public information
required to be provided by non-U.S. companies.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Lehman Brothers Government Bond Index is an unmanaged composite
generally representative of intermediate- and long-term U.S. Treasury and
U.S. government agency securities.
o The Salomon Brothers World Government Bond Index is an unmanaged composite
of long-term foreign government debt securities.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE;
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
Last October, equity markets worldwide had just been shaken
[PHOTO OF by the currency crisis in Southeast Asia. By the April 30,
Charles T. 1998, end of this reporting period, most markets had
Bauer, recovered nicely, with domestic equities reaching new highs
Chairman of and European markets outdoing even the U.S.'s heady pace.
the Board of Only Asian markets remained in the doldrums. Bonds have
THE FUND turned in a solid performance with generous real returns,
APPEARS HERE] though not as spectacular as some had predicted when the
Asian crisis first broke.
However, by the close of this reporting period, many
market participants were uneasy. Some participants fretted
about signs of speculative fever, particularly in U.S. stock
markets, where equity prices continued to rise despite
evidence that earnings growth, especially for larger
companies, had slowed considerably. The growth of European
markets also exceeded everyone's expectations, and some
wondered how long the rise could continue. All were aware that the Asian story
was not yet completed, and no one was certain how serious its ultimate impact
would be.
Of course, bull markets do end, and markets became less ebullient shortly
after this reporting period closed. For investors, the best course is to remain
realistic and ready. A well-diversified portfolio is still one of the most
effective tools for coping with shifts in a market's direction because different
asset classes and different national markets tend to move independently of one
another. Of course, your financial consultant remains your best source of
information about how to allocate your investments based on your particular
goals and situation.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Shortly after the close of this reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds. During
the next few months you will be receiving more details about this transaction
and the products it adds to The AIM Family of Funds--Registered Trademark--.
In addition to making a more varied group of investments available to our
shareholders, this transaction helps strengthen AIM's position as a major
participant in the money-management industry worldwide. Such strength will
enable us to continue expanding both the scope of our fund offerings and our
menu of services for our shareholders.
YOUR FUND MANAGERS COMMENT
On the pages that follow, the managers of your AIM Fund discuss how the Fund
performed during the six months covered by this report and give their near-term
market outlook. We hope you will find their discussion informative.
We are pleased to send you this report on your Fund. If you have any
questions or comments, please contact our Client Services department at
800-959-4246 or visit our Web site at www.aimfunds.com. You can access
information about your account on our Web site and also on our automated AIM
Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds--
Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 4
The Managers' Overview
DISCIPLINED STRATEGY BOOSTS FUND
A roundtable discussion with the Fund management team for AIM Global Income Fund
for the six months ended April 30, 1998.
- --------------------------------------------------------------------------------
Q. IT WAS A CHALLENGING PERIOD FOR GLOBAL BOND INVESTORS. HOW DID AIM GLOBAL
INCOME FUND PERFORM?
A. Your Fund's diversified, three-pronged investment approach and its emphasis
on developed markets enabled it to post respectable gains, despite a strong
U.S. dollar which adversely affected returns for U.S. investors in foreign
bonds. For the six months ended April 30, 1998, cumulative total return for
Class A, B, and C shares was 4.64%, 4.36%, and 4.27%, respectively. That
handily beat the 0.52% total return for the Salomon Brothers World
Government Bond Index.
The Fund continued to provide a high level of current income. As of
April 30, 1998, the Fund's 30-day distribution rate at net asset value was
6.53% for Class A shares and 5.99% for Class B and C shares. The Fund's
30-day yield at maximum offering price was 5.63% for Class A shares and
5.42% for Class B and Class C shares.
During the reporting period, net assets in the Fund increased from $56
million to $72 million.
Q. WHAT WAS YOUR INVESTMENT STRATEGY, GIVEN THE CHALLENGING MARKET ENVIRONMENT?
A. We maintained our disciplined strategy of investing in the three major bond
classes: foreign bonds, domestic investment-grade bonds, and high-yield
securities. These three types of bonds tend to react differently to various
economic and market trends. Diversifying the portfolio in this way can
reduce the risk associated with investing in a single bond class.
Additionally, it can enhance total return by positioning the Fund to take
advantage of a rally in one or more segments of the bond market.
At the end of the reporting period, the Fund's total assets were divided
as follows: foreign bonds, 39.41%; domestic investment grade bonds, 27.68%;
high-yield bonds, 26.81%; and other assets, 6.10%.
Q. WHAT WERE SOME OF THE TRENDS IN THE FOREIGN-BOND MARKET?
A. Foreign bonds benefited from the low-inflation, low-interest-rate
environment in most developed countries. Corporate restructuring overseas
and global competition helped keep retail prices from rising significantly.
The efforts of foreign governments to balance their budgets and reduce their
deficits also helped to curtail inflation.
The lingering effects of the Asian currency crisis most adversely
affected emerging-market debt. Since we invest primarily in developed
countries and had little exposure to Asian markets, the ongoing problems in
the Far East had little impact on the Fund's performance.
================================================================================
TOTAL RETURN
- --------------------------------------------------------------------------------
For six months ended 4/30/98
4.64% 4.36% 4.27% 0.52%
Class A Class B Class C Salomon
Shares Shares Shares Brothers
World
Government
Index
================================================================================
PORTFOLIO COMPOSITION
As of 4/30/98, based on total assets
================================================================================
Domestic Investment Grade Bonds 27.68%
High-Yield Bonds 26.81%
Foreign Bonds 39.41%
Other Assets 6.10%
================================================================================
-------------------------------------
Your Fund's diversified,
three-pronged investment approach
and its emphasis on developed markets
enabled it to post respectable gains . . .
-------------------------------------
See important fund & index disclosures inside front cover.
2
<PAGE> 5
================================================================================
TOP FIVE BOND HOLDINGS
As of 4/30/98, based on total net assets
- --------------------------------------------------------------------------------
Coupon Maturity %
1. U.S. Treasury Notes 6.25% 8/31/02 2.14%
2. United Kingdom Treasury 7.00% 11/6/01 1.92
3. New South Wales Treasury Corp 8.00% 3/1/08 1.55
4. Mercantile Bancorp 7.30% 6/15/07 1.47
5. ConAgra, Inc. 7.125% 10/01/26 1.33
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
================================================================================
Bond markets we liked included Australia, the United Kingdom, and
Sweden. In local currency terms, most of the foreign markets where the Fund
invests performed well during the reporting period. However, the strength of
the U.S. dollar relative to most other major currencies diminished returns
for U.S. investors. The Fund mitigated the effect of a strong dollar by
selectively hedging some of its currency exposure.
Q. HOW DID DOMESTIC INVESTMENT-GRADE BONDS FARE?
A. The Asian currency crisis added momentum to a rally in the domestic
investment-grade bond market that began prior to the reporting period.
Domestic investment-grade bonds, especially U.S. Treasury securities,
benefited from heightened volatility and weakness in the stock market,
stemming from the troubles in the Far East.
Early in 1998, however, the bond rally began to lose some of its vigor
as the U.S. economy continued to grow at a healthy pace, dampening prospects
that the Federal Reserve Board (the Fed) would lower interest rates in the
immediate future. Domestic investment-grade bond prices remained essentially
flat for the remainder of the reporting period as reflected in the yield of
the benchmark 30-year Treasury bond, which was 5.92% on December 31, 1997
and 5.95% on April 30, 1998.
Q. WHAT ABOUT HIGH-YIELD BONDS?
A. Once again, high-yield bonds were the top-performing portion of the
portfolio because of strong economic growth throughout the reporting period.
High-yield bonds usually benefit from a vibrant economy. When business
conditions and cash flows are favorable, corporate issuers of high-yield
bonds are generally better able to meet their debt obligations.
Q. WHAT ARE SOME OF THE SECTORS WITHIN THE THREE BOND CLASSES THAT YOU FOUND
ATTRACTIVE?
A. We especially liked the bonds of media and telecommunications companies.
These companies in particular benefited from favorable business conditions
and cash flows during the reporting period.
Q. HOW WAS THE FUND POSITIONED AT THE END OF THE REPORTING PERIOD?
A. There were 194 holdings in the Fund as of April 30, 1998. The weighted
average maturity of the portfolio was 10.44 years and its duration was 6.29
years. The Fund had an average portfolio quality rating of A as measured by
Standard & Poor's Corporation (S&P) and Moody's Investor Service (Moody's),
two widely known credit rating agencies. These ratings are historical and
are based on analysis of the credit quality of the individual securities in
the Fund's portfolio.
Q. WHAT IS YOUR SHORT-TERM OUTLOOK FOR THE FUND?
A. We believe there are a number of reasons to be optimistic about global
bonds. Corporate restructuring, international competition, and the efforts
of governments to balance budgets and reduce deficits should help to keep
inflation contained, and that should be good for foreign bonds.
The coming European Monetary Union (EMU) also should give bonds a boost.
The EMU, an economic and monetary union of 11 European countries, is
scheduled to become a reality in January 1999. It will replace 11 small bond
markets with one large bond market. We believe this will encourage the
expansion of the corporate bond market in Europe, which is not as highly
developed as it is in the U.S. and create more investment opportunities for
the Fund.
In the U.S., economic growth continues to be robust, but without
significant inflation. For example, the gross domestic product (GDP) grew at
a healthy 4.8% annualized rate in the first quarter of 1998. However, the
inflation rate for the year ended April 30 was only 1.4%. And the Fed has
left interest rates unchanged for more than a year. Should these conditions
persist, it should extend the favorable environment for domestic
investment-grade and high-yield bonds.
Whatever the trends in the market, we will maintain our three-pronged
approach of investing in foreign, domestic investment-grade, and high-yield
bonds in an effort to reduce risk and enhance potential return.
Corporate restructuring,
international competition, and
the efforts of governments to
balance budgets and reduce deficits
should help to keep inflation contained,
and that should be good
for foreign bonds.
See important fund & index disclosures inside front cover.
3
<PAGE> 6
Long-Term Performance
AIM GLOBAL INCOME FUND VS. BENCHMARK INDEXES
The chart below compares your Fund to benchmark indexes. It is intended to give
you a general idea of how your Fund performed compared to the bond market over
the period 9/15/94-4/30/98. It is important to understand the difference between
your Fund and an index. Your Fund's total return is shown with a sales charge
and includes Fund expenses and management fees. An index measures the
performance of a hypothetical portfolio, in this case the Lehman Brothers
Government Bond Index and the Salomon Brothers World Government Bond Index.
Unlike your Fund, an index is not managed; therefore, there are no sales
charges, expenses or fees. You cannot invest in an index. But if you could buy
all the securities that make up a particular index, you would incur expenses
that would affect the return on your investment.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 4/30/98, including sales charges
CLASS A SHARES
Inception (9/15/94) 9.81%
3 Years 9.04
1 Year 7.59*
CLASS B SHARES
Inception (9/15/94) 10.08%
3 Years 9.42
1 Year 7.33**
CLASS C SHARES
Inception (8/4/97) 6.39%***
*12.94% excluding sales charges.
**12.33% excluding sales charges.
***7.39% excluding sales charges. Total return is cumulative total return that
has not been annualized.
================================================================================
- --------------------------------------------------------------------------------
Class A Class B Lehman Brothers Solomon Brothers
Government World Government
Bond Index Bond Index
- --------------------------------------------------------------------------------
$9,613.00 $10,079.00 $9,992.00 $10,160.00
$9,671.00 $10,128.00 $10,221.00 $10,259.00
$10,314.00 $10,789.00 $10,644.00 $11,353.00
$10,711.00 $10,182.00 $11,117.00 $11,769.00
$11,158.00 $11,647.00 $11,529.00 $11,705.00
$11,463.00 $11,948.00 $11,948.00 $11,813.00
$11,456.00 $11,926.00 $11,531.00 $11,690.00
$11,695.00 $12,160.00 $11,689.00 $12,011.00
$12,298.00 $12,772.00 $12,118.00 $12,333.00
$12,467.00 $12,931.00 $12,217.00 $12,064.00
$12,426.00 $12,871.00 $12,278.00 $11,778.00
$13,094.00 $13,546.00 $12,878.00 $12,147.00
$13,411.00 $13,855.00 $13,166.00 $12,656.00
$13,770.00 $14,219.00 $13,573.00 $12,545.00
$14,034.00 $14,159.00 $13,635.00 $12,722.00
Past performance cannot guarantee comparable future results.
================================================================================
Your Fund's total return includes sales charges, expenses, and management fees.
The performance of Class B and Class C shares of the Fund will differ from that
of Class A shares due to differing fees and expenses. For Fund performance
calculations and descriptions of indexes cited on this page, please refer to the
inside front cover.
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL(a) MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS & NOTES-62.44%
AGRICULTURAL PRODUCTS-0.15%
Hines Horticulture, Inc., Series B
Sr. Gtd. Sub. Notes, 11.75%,
10/15/05 $ 100,000 $ 110,500
- ----------------------------------------------------------------
AIR FREIGHT-0.49%
Atlas Air, Inc., Sr. Notes, 9.25%,
04/15/08 (Acquired 04/07/98; Cost
$349,535)(b) 350,000 351,750
- ----------------------------------------------------------------
AIRLINES-2.60%
Airplanes Pass Thru Trust, Sub.
Bonds, 10.875%, 03/15/19 230,000 256,020
- ----------------------------------------------------------------
America West Airlines, Inc., Pass
Thru Certificates, 6.86%, 07/02/04 588,000 581,602
- ----------------------------------------------------------------
Delta Air Lines, Inc., Deb., 9.00%,
05/15/16 550,000 654,115
- ----------------------------------------------------------------
United Air Lines, Inc., Pass Thru
Certificates, 9.56%, 10/19/18 300,000 368,127
- ----------------------------------------------------------------
1,859,864
- ----------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.44%
Advance Stores Co., Sr. Sub. Notes,
10.25%, 04/15/08 (Acquired
04/07/98; Cost $310,000)(b) 310,000 316,200
- ----------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.68%
Royal Bank of Scotland PLC (United
Kingdom), Yankee Sub. Notes,
6.375%, 02/01/11 500,000 490,460
- ----------------------------------------------------------------
BANKS (MONEY CENTER)-1.96%
Bankers Trust New York Corp., Gtd.
Notes, 7.875%, 02/25/27 400,000 411,060
- ----------------------------------------------------------------
Deutsche Bank Financial, Gtd. Unsec.
Sub. Deb., 6.70%, 12/13/06 750,000 765,240
- ----------------------------------------------------------------
First Union Bancorp, Sub. Deb.,
7.50%, 04/15/35 200,000 228,534
- ----------------------------------------------------------------
1,404,834
- ----------------------------------------------------------------
BANKS (REGIONAL)-2.19%
HSBC Americas Inc., Sub. Notes,
7.00%, 11/01/06 500,000 510,960
- ----------------------------------------------------------------
Mercantile Bancorp Inc., Unsec. Sub.
Notes, 7.30%, 06/15/07 1,000,000 1,056,350
- ----------------------------------------------------------------
1,567,310
- ----------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-1.00%
Coca-Cola Enterprises, Inc., Putable
Notes, 8.35%, 06/20/20(c) 3,113,000 713,998
- ----------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-4.50%
Capstar Broadcasting Partners, Sr.
Disc. Notes, 12.75%, 02/01/09(d) 390,000 292,500
- ----------------------------------------------------------------
Comcast Cable Communications, Notes,
8.50%, 05/01/27 500,000 592,170
- ----------------------------------------------------------------
Diamond Cable Communications PLC
(United Kingdom), Sr. Yankee Disc.
Notes, 10.75%, 02/15/07(d) 870,000 613,350
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL(a) MARKET
AMOUNT VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO & CABLE)-(CONTINUED)
EchoStar DBS Corp., Sr. Sec. Gtd.
Notes, 12.50%, 07/01/02 $ 320,000 $ 364,000
- ----------------------------------------------------------------
Kabelmedia Holdings GmbH (Germany),
Sr. Yankee Unsec. Disc. Notes,
13.625%, 08/01/06(d) 200,000 156,000
- ----------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.875%, 10/15/07(d) 700,000 418,250
- ----------------------------------------------------------------
TCI Communications Inc., Sr. Notes,
8.00%, 08/01/05 150,000 161,781
- ----------------------------------------------------------------
TeleWest Communications PLC (United
Kingdom), Sr. Yankee Disc. Deb.,
11.00%, 10/01/07(d) 300,000 245,250
- ----------------------------------------------------------------
United International Holdings, Sr.
Disc. Notes, 10.75%, 02/15/08(d) 600,000 382,500
- ----------------------------------------------------------------
3,225,801
- ----------------------------------------------------------------
CHEMICALS-2.73%
Nova Chemicals Ltd. (Canada), Yankee
Deb., 7.00%, 08/15/26 600,000 620,562
- ----------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada),
Global Notes, 8.50%, 12/15/12 450,000 526,878
- ----------------------------------------------------------------
Solutia Inc., Bonds, 6.72%, 10/15/37 500,000 507,225
- ----------------------------------------------------------------
Sterling Chemicals, Inc., Sr. Unsec.
Sub. Notes, 11.75%, 08/15/06 300,000 303,750
- ----------------------------------------------------------------
1,958,415
- ----------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.07%
Foamex Capital Corp., Sr. Sub.
Notes, 13.50%, 08/15/05 (Acquired
12/31/97; Cost $45,800)(b) 40,000 46,600
- ----------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.08%
Cable & Wireless Communications PLC
(United Kingdom), Yankee Notes,
6.75%, 03/06/08 500,000 503,840
- ----------------------------------------------------------------
ProNet, Inc., Sr. Sub. Notes,
11.875%, 06/15/05 250,000 273,125
- ----------------------------------------------------------------
776,965
- ----------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.29%
Commemorative Brands, Sr. Sub.
Notes, 11.00%, 01/15/07 200,000 205,000
- ----------------------------------------------------------------
CONSUMER FINANCE-1.01%
Household Finance Corp., Notes,
7.125%, 09/01/05 700,000 726,600
- ----------------------------------------------------------------
CONTAINERS & PACKAGING (PAPER)-0.61%
BPC Holding Corp., Series B Sr.
Notes, 12.50%, 06/15/06 100,000 109,875
- ----------------------------------------------------------------
MVE Inc., Sr. Sec. Notes, 12.50%,
02/15/02 100,000 102,000
- ----------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes,
11.25%, 04/01/07 200,000 223,000
- ----------------------------------------------------------------
434,875
- ----------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.36%
AmeriServ Food Co., Gtd. Notes,
10.125%, 07/15/07 240,000 257,100
- ----------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL(a) MARKET
AMOUNT VALUE
<S> <C> <C>
ELECTRIC COMPANIES-2.52%
Commonwealth Edison Co., 1st
Mortgage Notes, 7.50%, 07/01/13 $ 500,000 $ 534,990
- ----------------------------------------------------------------
El Paso Electric Co.
Series D Sec. 1st Mortgage Bonds,
8.90%, 02/01/06 250,000 280,407
- ----------------------------------------------------------------
Series E Sec. 1st Mortgage Bonds,
9.40%, 05/01/11 250,000 285,835
- ----------------------------------------------------------------
Niagara Mohawk Power, 1st Mortgage
Notes, 9.25%, 10/01/01 650,000 704,236
- ----------------------------------------------------------------
1,805,468
- ----------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.32%
Electronic Retailing Systems
International, Inc., Sr. Disc.
Notes, 13.25%, 02/01/04(d) 440,000 231,000
- ----------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.49%
Phase Metrics, Inc., Sr. Notes,
10.75%, 02/01/05
(Acquired 01/23/98-03/02/98; Cost
$352,288)(b) 350,000 348,250
- ----------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.31%
Panda Funding Corp., Series A-1
Pooled Project Bonds, 11.625%,
08/20/12 199,591 218,552
- ----------------------------------------------------------------
ENTERTAINMENT-2.34%
Ascent Entertainment Group, Sr.
Disc. Notes, 11.875%, 12/15/04(d) 400,000 254,000
- ----------------------------------------------------------------
Silver Cinemas, Inc., Sr. Sub.
Notes, 10.50%, 04/15/05 (Acquired
04/09/98; Cost $350,000)(b) 350,000 357,437
- ----------------------------------------------------------------
Time Warner, Inc., Deb., 9.125%,
01/15/13 500,000 613,675
- ----------------------------------------------------------------
Notes, 8.18%, 08/15/07 200,000 221,302
- ----------------------------------------------------------------
Unsec. Deb., 6.85%, 01/15/26 125,000 127,355
- ----------------------------------------------------------------
Viacom, Inc., Sr. Notes, 7.75%,
06/01/05 100,000 105,888
- ----------------------------------------------------------------
1,679,657
- ----------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.62%
Associates Corp. of North America,
Series B Sr. Deb., 7.95%, 02/15/10 100,000 111,306
- ----------------------------------------------------------------
Finova Capital Corp., Unsec. Notes,
7.40%, 05/06/06 500,000 529,095
- ----------------------------------------------------------------
US West Cap Funding Inc., Unsec.
Gtd. Notes., 6.95%, 01/15/37 500,000 523,275
- ----------------------------------------------------------------
1,163,676
- ----------------------------------------------------------------
FOODS-2.24%
ConAgra Inc., Sr. Unsec. Notes,
7.125%, 10/01/26 900,000 955,323
- ----------------------------------------------------------------
Del Monte Corp./Foods Co., Sr.
Unsec. Sub. Notes, 12.25%,
04/15/07 260,000 295,100
- ----------------------------------------------------------------
RAB Enterprises, Inc., Sr. Notes
10.50%, 05/01/05 (Acquired
04/28/98; Cost $350,000)(b) 350,000 352,625
- ----------------------------------------------------------------
1,603,048
- ----------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.17%
Showboat Marina Casino Partnership &
Showboat Marina Financial Corp.,
Series B Sec. 1st Mortgage Notes,
13.50%, 03/15/03 100,000 118,250
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL(a) MARKET
AMOUNT VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.37%
Global Health Sciences, Sr. Notes,
11.00%, 05/01/08 (Acquired
04/17/98; Cost $262,078)(b) $ 270,000 $ 265,950
- ----------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.72%
Tenet Healthcare Corp., Sr. Notes,
8.00%, 01/15/05 500,000 514,300
- ----------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.64%
Sun Healthcare Group, Inc., Sr. Sub.
Notes, 9.50%, 07/01/07 (Acquired
07/01/97; Cost $448,200)(b) 450,000 457,875
- ----------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.44%
Alaris Medical Systems, Sr. Unsec.
Gtd. Sub. Deb., 9.75%, 12/01/06 200,000 207,500
- ----------------------------------------------------------------
Dade International Inc., Series B
Sr. Sub. Notes, 11.125%, 05/01/06 100,000 111,500
- ----------------------------------------------------------------
319,000
- ----------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.30%
Dynacare Inc. (Canada), Sr. Yankee
Notes, 10.75%, 01/15/06 200,000 214,000
- ----------------------------------------------------------------
HOMEBUILDING-0.58%
D. R. Horton Inc., Unsec. Gtd.
Notes, 10.00%, 04/15/06 55,000 59,400
- ----------------------------------------------------------------
Engle Homes, Inc., Sr. Unsec. Gtd.
Notes, 9.25%, 02/01/08 350,000 357,000
- ----------------------------------------------------------------
416,400
- ----------------------------------------------------------------
HOUSEWARES-0.48%
Decora Industries, Inc., Sr. Sec.
Notes, 11.00%, 05/01/05 (Acquired
04/24/98; Cost $341,732)(b) 350,000 343,437
- ----------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.11%
Torchmark Corp., Notes, 7.875%,
05/15/23 750,000 796,440
- ----------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.43%
Travelcenters of America Inc., Sr.
Gtd. Unsec. Sub. Deb., 10.25%,
04/01/07 290,000 306,675
- ----------------------------------------------------------------
IRON & STEEL-1.19%
Acme Metal, Inc., Sr. Notes,
10.875%, 12/15/07 (Acquired
01/20/98; Cost $362,600)(b) 370,000 373,700
- ----------------------------------------------------------------
GS Industries, Inc., Sr. Gtd. Notes,
12.00%, 09/01/04 200,000 220,000
- ----------------------------------------------------------------
Sheffield Steel Corp., 1st Mortgage
Notes, 11.50%, 12/01/05 250,000 260,625
- ----------------------------------------------------------------
854,325
- ----------------------------------------------------------------
LODGING-HOTELS-0.45%
Coast Hotels & Casinos Inc., Series
B Sec. 1st Mortgage Gtd. Notes,
13.00%, 12/15/02 70,000 80,850
- ----------------------------------------------------------------
ITT Corp., Unsec. Gtd. Deb., 7.375%,
11/15/15 150,000 139,128
- ----------------------------------------------------------------
John Q. Hammons Hotels Inc., Sec.
1st Mortgage Notes, 9.75%,
10/01/05 100,000 104,750
- ----------------------------------------------------------------
324,728
- ----------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL(a) MARKET
AMOUNT VALUE
<S> <C> <C>
MANUFACTURING (SPECIALIZED)-0.77%
First Wave Marine, Inc., Sr. Unsec.
Gtd. Notes, 11.00%, 02/01/08 $ 250,000 $ 263,750
- ----------------------------------------------------------------
MMI Products Inc., Sr. Unsec. Sub.
Notes, 11.25%, 04/15/07 260,000 287,950
- ----------------------------------------------------------------
551,700
- ----------------------------------------------------------------
METAL FABRICATORS-0.09%
Gulf States Steel Corp., 1st
Mortgage Notes, 13.50%, 04/15/03 60,000 62,400
- ----------------------------------------------------------------
METALS MINING-0.36%
Rio Algom Ltd. (Canada), Yankee
Unsec. Deb., 7.05%, 11/01/05 250,000 255,995
- ----------------------------------------------------------------
NATURAL GAS-1.01%
Enron Corp., Notes, 6.75%, 08/01/09 400,000 403,728
- ----------------------------------------------------------------
Ferrellgas Partners, Series B Sr.
Sec. Gtd. Notes, 9.375%, 06/15/06 300,000 318,000
- ----------------------------------------------------------------
721,728
- ----------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.29%
United Stationer Supply, Sr. Sub.
Notes, 12.75%, 05/01/05 180,000 207,450
- ----------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-0.83%
Gulf Canada Resources, Ltd.
(Canada), Sr. Yankee Unsec. Notes,
8.35%, 08/01/06 550,000 598,301
- ----------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-1.44%
Petroleum Geo-Services A.S.A.
(Norway), Yankee Notes, 7.50%,
03/31/07 500,000 529,175
- ----------------------------------------------------------------
R&B Falcon Corp., Sr. Notes, 7.375%,
04/15/18
(Acquired 04/08/98; Cost
$495,870)(b) 500,000 501,070
- ----------------------------------------------------------------
1,030,245
- ----------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-1.67%
Abraxas Petroleum Corp., Series B
Sr. Notes, 11.50%, 11/01/04 95,000 99,750
- ----------------------------------------------------------------
Canadian Forest Oil Ltd. (Canada),
Sr. Sub. Notes, 8.75%, 09/15/07
(Acquired 01/28/98; Cost
$350,875)(b) 350,000 357,000
- ----------------------------------------------------------------
Chesapeake Energy Corp., Sr. Notes,
9.625%, 05/01/05 (Acquired
04/17/98; Cost $220,000)(b) 220,000 222,750
- ----------------------------------------------------------------
Kelley Oil & Gas Corp., Series B Sr.
Gtd. Sub. Notes, 10.375%, 10/15/06 250,000 260,000
- ----------------------------------------------------------------
Talisman Energy, Inc. (Canada),
Yankee Deb., 7.125%, 06/01/07 250,000 257,113
- ----------------------------------------------------------------
1,196,613
- ----------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.30%
National Fiberstok Corp., Series B
Sr. Notes, 11.625%, 06/15/02 200,000 215,000
- ----------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.42%
News America Holdings, Inc., Sr.
Gtd. Deb., 9.25%, 02/01/13 250,000 300,753
- ----------------------------------------------------------------
RAILROADS-0.67%
Norfolk Southern Corp., Putable
Bonds, 7.05%, 05/01/37 450,000 479,300
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL(a) MARKET
AMOUNT VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUST-1.95%
Glenborough Realty Trust, Sr. Notes,
7.625%, 03/15/05 (Acquired
03/18/98; Cost $499,185)(b) $ 500,000 $ 497,815
- ----------------------------------------------------------------
Health Care REIT, Inc., Sr. Unsec.
Notes, 7.625%, 03/15/08 400,000 399,520
- ----------------------------------------------------------------
Spieker Properties LP, Unsec. Deb.,
7.35%, 12/01/17 500,000 499,170
- ----------------------------------------------------------------
1,396,505
- ----------------------------------------------------------------
RESTAURANTS-0.41%
Planet Hollywood International,
Inc., Sr. Sub. Notes, 12.00%,
04/01/05 (Acquired 03/20/98; Cost
$300,000)(b) 300,000 296,250
- ----------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.39%
Carr-Gottstein Foods Co., Sr. Sub.
Notes, 12.00%, 11/15/05 250,000 276,562
- ----------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.33%
Plainwell, Inc., Sr. Sub. Notes,
11.00%, 03/01/08 (Acquired
03/03/98-03/04/98; Cost
$231,025)(b) 230,000 238,331
- ----------------------------------------------------------------
RETAIL (SPECIALTY)-0.45%
CSK Auto Inc., Sr. Gtd. Sub. Deb.,
11.00%, 11/01/06 130,000 143,000
- ----------------------------------------------------------------
Icon Health & Fitness, Series B Sr.
Sub. Notes, 13.00%, 07/15/02 70,000 74,900
- ----------------------------------------------------------------
Wilsons-The Leather Experts Inc.,
Sr. Notes, 11.25%, 08/15/04
(Acquired 08/14/97; Cost
$100,000)(b) 100,000 104,000
- ----------------------------------------------------------------
321,900
- ----------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.20%
J Crew Operating Corp., Sr. Sub.
Notes, 10.375%, 10/15/07 150,000 142,875
- ----------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.87%
Sovereign Bancorp, Inc., Sub. Notes,
8.00%, 03/15/03 600,000 627,480
- ----------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.30%
MDC Communications Corp. (Canada),
Sr. Yankee Unsec. Sub. Notes,
10.50%, 12/01/06 200,000 217,000
- ----------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-0.70%
Choice Hotels International, Inc.,
Notes, 7.125%, 05/01/08 (Acquired
04/28/98; Cost $496,770)(b) 500,000 498,420
- ----------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.38%
MSX International, Inc., Sr. Sub.
Notes, 11.375%, 01/15/08 (Acquired
01/16/98; Cost $260,150)(b) 260,000 269,100
- ----------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.35%
ATC Group Services, Inc., Sr. Sub.
Notes, 12.00%, 01/15/08 (Acquired
01/22/98-01/28/98; Cost
$253,750)(b) 250,000 248,750
- ----------------------------------------------------------------
SHIPPING-1.78%
Alpha Shipping PLC (United Kingdom),
Sr. Notes, 9.50%, 02/15/08
(Acquired 02/25/98; Cost
$387,632)(b) 400,000 386,000
- ----------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL(a) MARKET
AMOUNT VALUE
<S> <C> <C>
SHIPPING-(CONTINUED)
Holt Group, Sr. Notes, 9.75%,
01/15/06 (Acquired
01/14/98-01/15/98; Cost
$190,300)(b) $ 190,000 $ 193,325
- ----------------------------------------------------------------
Hutchison Whampoa Ltd. (Cayman
Islands), Series D Sr. Gtd. Unsub.
Deb., 6.988%, 08/01/37 (Acquired
10/02/97; Cost $502,005)(b) 500,000 475,540
- ----------------------------------------------------------------
Stena A.B. (Sweden), Sr. Yankee
Unsec. Notes, 10.50%, 12/15/05 200,000 218,500
- ----------------------------------------------------------------
1,273,365
- ----------------------------------------------------------------
SOVEREIGN DEBT-1.20%
Province of Manitoba (Canada),
Yankee Bonds, 7.75%, 07/17/16 300,000 340,317
- ----------------------------------------------------------------
Province of Quebec (Canada), Notes,
6.29%, 03/06/26 500,000 520,870
- ----------------------------------------------------------------
861,187
- ----------------------------------------------------------------
TELECOMMUNICATIONS-0.51%
KMC Telecom Holdings, Inc., Sr.
Disc. Notes, 12.50%, 02/15/08
(Acquired 01/26/98-03/03/98; Cost
$332,625)(b)(d) 600,000 366,000
- ----------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-2.68%
360 Communications Co.,
Sr. Unsec. Notes, 7.50%, 03/01/06 500,000 531,560
- ----------------------------------------------------------------
Sr. Unsec. Notes, 7.60%, 04/01/09 250,000 269,885
- ----------------------------------------------------------------
GST Telecommunications, Inc., Sr.
Sec. Notes, 13.25%, 05/01/07
(Acquired 05/08/97; Cost
$200,000)(b) 200,000 232,500
- ----------------------------------------------------------------
Pagemart Wireless, Inc., Sr. Disc.
Notes, 11.25%, 02/01/08 (Acquired
01/22/98-03/03/98; Cost
$363,372)(b)(d) 600,000 381,750
- ----------------------------------------------------------------
Sygnet Wireless Inc., Sr. Unsec.
Notes, 11.50%, 10/01/06 160,000 178,400
- ----------------------------------------------------------------
Triton Communications, Sr. Disc.
Notes, 11.00%, 05/01/08 (Acquired
04/29/98; Cost $322,273)(b)(d) 550,000 327,938
- ----------------------------------------------------------------
1,922,033
- ----------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-1.34%
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee Notes,
11.50%, 12/15/07 250,000 273,750
- ----------------------------------------------------------------
MCI Communications Corp., Putable
Deb., 7.125%, 06/15/27 650,000 683,338
- ----------------------------------------------------------------
957,088
- ----------------------------------------------------------------
TELEPHONE-0.89%
Esat Holdings Ltd. (Ireland), Sr.
Yankee Notes, 12.50%, 02/01/07(d) 350,000 262,500
- ----------------------------------------------------------------
ICG Services, Inc., Sr. Disc. Notes,
10.00%, 02/15/08 (Acquired
02/09/98; Cost $375,760)(b)(d) 600,000 373,500
- ----------------------------------------------------------------
636,000
- ----------------------------------------------------------------
TEXTILES (APPAREL)-0.66%
Fruit of the Loom, Notes, 6.50%,
11/15/03 500,000 474,650
- ----------------------------------------------------------------
TRUCKERS-0.38%
AmeriTruck Distribution Corp.,
Series B Sr. Sub. Notes, 12.25%,
11/15/05 300,000 271,500
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL(a) MARKET
AMOUNT VALUE
<S> <C> <C>
TRUCKS & PARTS-0.12%
Blue Bird Body Co., Series B Sr.
Sub. Notes, 10.75%, 11/15/06 $ 80,000 $ 89,000
- ----------------------------------------------------------------
WASTE MANAGEMENT-1.82%
Allied Waste Industries Inc., Sr.
Unsec. Disc. Notes, 11.30%,
06/01/07(d) 620,000 460,350
- ----------------------------------------------------------------
Norcal Waste Systems Inc., Series B
Sr. Gtd. Notes, 13.50%, 11/15/05 150,000 174,750
- ----------------------------------------------------------------
WMX Technologies, Inc., Unsec.
Notes, 7.10%, 08/01/26 650,000 668,376
- ----------------------------------------------------------------
1,303,476
- ----------------------------------------------------------------
Total U.S. Dollar
Denominated
Non-Convertible Bonds &
Notes (Cost $43,219,315) 44,734,260
- ----------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS & NOTES(e)-11.36%
CANADA-7.27%
Bank of Montreal (Banks-Money
Center), Sub. Deb., 7.92%,
07/31/12 CAD 300,000 240,178
- ----------------------------------------------------------------
Bell Canada (Telephone), Unsec.
Deb., 10.875%, 10/11/04 250,000 221,147
- ----------------------------------------------------------------
Bell Mobility Cellular Inc.
(Telecommunications-Cellular/Wireless),
Deb., 6.55%, 06/02/08 750,000 537,775
- ----------------------------------------------------------------
Canadian Oil Debco Inc. (Oil &
Gas-Exploration & Production),
Deb., 11.00%, 10/31/00 250,000 196,087
- ----------------------------------------------------------------
Clearnet Communications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes, 11.75%, 08/13/07
(Acquired 07/31/97-11/04/97; Cost
$491,328)(b)(d) 1,100,000 525,055
- ----------------------------------------------------------------
Molson Breweries Co. Ltd.
(Beverages-Alcoholic), Unsub.
Notes, 6.00%, 06/02/08 (Acquired
01/27/98; Cost $480,465)(b) 700,000 487,028
- ----------------------------------------------------------------
NAV Canada (Services-Commercial &
Consumer), Bonds, 7.40%, 06/01/27 1,000,000 831,975
- ----------------------------------------------------------------
Poco Petroleums Ltd. (Oil &
Gas-Exploration & Production),
Unsec. Deb., 6.60%, 09/11/07 750,000 531,992
- ----------------------------------------------------------------
Teleglobe Canada, Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 650,000 505,753
- ----------------------------------------------------------------
Trans-Canada Pipelines (Oil &
Gas-Exploration & Production),
Series Q Deb., 10.625%, 10/20/09 375,000 362,907
- ----------------------------------------------------------------
Unsec. Notes, 8.55%, 02/01/06 500,000 407,938
- ----------------------------------------------------------------
Westcoast Energy, Inc. (Oil &
Gas-Exploration & Production),
Deb., 6.45%, 12/18/06 (Acquired
12/03/96; Cost $369,657)(b) 500,000 365,066
- ----------------------------------------------------------------
5,212,901
- ----------------------------------------------------------------
FRANCE-0.20%
Credit Foncier de France
(Financial-Diversified),
Sr. Unsec. Unsub. Eurobonds,
6.50%, 02/22/99 FRF 750,000 97,628
- ----------------------------------------------------------------
Sr. Unsec. Unsub. Eurobonds,
6.00%, 11/15/01 250,000 43,427
- ----------------------------------------------------------------
141,055
- ----------------------------------------------------------------
GERMANY-1.99%
Daimler-Benz A.G. (Automobiles),
Gtd. Unsub. Eurobonds, 4.125%,
07/05/03 DEM 430,000 412,240
- ----------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL(a) MARKET
AMOUNT VALUE
<S> <C> <C>
GERMANY-(CONTINUED)
International Bank for
Reconstruction & Development
(Banks-Money Center), Unsec.
Global Bonds, 7.125%, 04/12/05 DEM 475,000 $ 300,467
- ----------------------------------------------------------------
LKB Global (Financial-Diversified),
Gtd. Notes, 6.00%, 01/25/06 1,200,000 715,766
- ----------------------------------------------------------------
1,428,473
- ----------------------------------------------------------------
NEW ZEALAND-0.30%
International Bank for
Reconstruction & Development
(Banks-Money Center), Unsec. Sr.
Notes, 6.63%, 08/20/07(c) NZD 750,000 213,937
- ----------------------------------------------------------------
UNITED KINGDOM-1.60%
Ford Credit Europe PLC
(Financial-Diversified), Deb.,
6.00%, 03/30/99 GBP 200,000 113,638
- ----------------------------------------------------------------
KFW International Finance
(Investment Banking/ Brokerage),
Gtd. Eurobonds, 10.625%, 09/03/01 100,000 186,356
- ----------------------------------------------------------------
Sutton Bridge Financial Ltd.
(Financial-Diversified), Gtd.
Bonds, 8.625%, 06/03/22 (Acquired
05/29/97; Cost $733,621)(b) 450,000 843,881
- ----------------------------------------------------------------
1,143,875
- ----------------------------------------------------------------
Total Non-U.S. Dollar
Denominated
Non-Convertible Bonds &
Notes (Cost $7,968,996) 8,140,241
- ----------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS & NOTES(e)-2.11%
JAPAN-0.22%
Glaxo Wellcome PLC
(Financial-Diversified), Conv.
Unsub. Notes, 4.30%, 09/28/98 JPY 4,000,000 72,815
- ----------------------------------------------------------------
Sony Corp. (Electrical Equipment),
Conv. Deb., 1.40%, 03/31/05 8,000,000 86,895
- ----------------------------------------------------------------
159,710
- ----------------------------------------------------------------
UNITED KINGDOM-1.89%
British Airport Authority PLC
(Airlines), Conv. Eurobonds,
5.75%, 03/29/06 GBP 450,000 899,387
- ----------------------------------------------------------------
National Grid Co. PLC (Electric
Companies), Conv. Bonds, 4.25%,
02/17/08 250,000 453,666
- ----------------------------------------------------------------
1,353,053
- ----------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Convertible
Bonds & Notes (Cost
$1,344,644) 1,512,763
- ----------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
GOVERNMENT BONDS & NOTES(e)-18.66%
AUSTRALIA-2.39%
New South Wales Treasury Corp., Gtd.
Notes, 8.00%, 03/01/08 AUD 1,500,000 1,107,271
- ----------------------------------------------------------------
Queensland Treasury Corp., Gtd.
Bonds, 6.50%, 06/14/05 900,000 604,468
- ----------------------------------------------------------------
1,711,739
- ----------------------------------------------------------------
CANADA-3.76%
B.C. Generic Residual, Deb., 13.88%,
06/21/04(c) CAD 150,000 75,074
- ----------------------------------------------------------------
Canada Government, Bonds, 7.00%,
12/01/06 1,000,000 776,711
- ----------------------------------------------------------------
Municipal Finance Authority of
British Columbia, Bonds, 7.75%,
12/01/05 500,000 396,563
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL(a) MARKET
AMOUNT VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Ontario Province,
Deb., 11.125%, 02/14/01 CAD 500,000 $ 920,791
- ----------------------------------------------------------------
Sr. Unsec. Unsub. Deb., 6.875%,
09/15/00 35,000 58,475
- ----------------------------------------------------------------
Sr. Unsub. Global Bonds, 8.00%,
03/11/03 600,000 466,253
- ----------------------------------------------------------------
2,693,867
- ----------------------------------------------------------------
FRANCE-0.83%
French Treasury Bill, Notes, 5.75%,
11/12/98 FRF 3,500,000 589,202
- ----------------------------------------------------------------
GERMANY-0.99%
Bundesrepublik Deutschland,
Bonds, 6.75%, 07/15/04 DEM 750,000 462,065
- ----------------------------------------------------------------
Bonds, 6.875%, 05/12/05 400,000 249,264
- ----------------------------------------------------------------
711,329
- ----------------------------------------------------------------
NEW ZEALAND-2.62%
Federal National Mortgage
Association, Notes, 7.25%,
06/20/02 NZD 750,000 406,418
- ----------------------------------------------------------------
New Zealand Government,
Bonds, 8.00%, 02/15/01 1,000,000 561,707
- ----------------------------------------------------------------
Bonds, 10.00%, 03/15/02 1,500,000 905,061
- ----------------------------------------------------------------
1,873,186
- ----------------------------------------------------------------
SWEDEN-3.31%
Swedish Government,
Bonds, 13.00%, 06/15/01 SEK 3,000,000 475,598
- ----------------------------------------------------------------
Bonds, 10.25%, 05/05/03 5,000,000 793,582
- ----------------------------------------------------------------
Bonds, 6.00%, 02/09/05 4,000,000 540,935
- ----------------------------------------------------------------
Bonds, 6.50%, 10/25/06 4,000,000 563,933
- ----------------------------------------------------------------
2,374,048
- ----------------------------------------------------------------
UNITED KINGDOM-4.76%
Federal National Mortgage
Association, Unsec. Sr. Notes,
6.875%, 06/07/02 GBP 350,000 597,803
- ----------------------------------------------------------------
United Kingdom Treasury,
Bonds, 8.00%, 12/07/00 350,000 608,898
- ----------------------------------------------------------------
Bonds, 7.50%, 12/07/06 450,000 834,663
- ----------------------------------------------------------------
Gtd. Notes, 7.00%, 11/06/01 800,000 1,372,565
- ----------------------------------------------------------------
3,413,929
- ----------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Government
Bonds & Notes (Cost
$13,801,469) 13,367,300
- ----------------------------------------------------------------
DOMESTIC COMMON STOCK-0.02%
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.02%
Nextel Communications, Inc. (Cost
$9,000)(f) 557 15,979
- ------------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS-1.72%
BANKS (REGIONAL)-0.76%
WBK STRYPES Trust-$3.135 16,000 546,000
- ------------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.96%
Conseco Inc.-$4.278 Conv. PRIDES 4,000 685,000
- ------------------------------------------------------------------
Total Domestic Convertible
Preferred Stocks (Cost $746,100) 1,231,000
- ------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC NON-CONVERTIBLE PREFERRED STOCKS-0.00%
ENTERTAINMENT-0.00%
Time Warner Inc.-Series M,
$102.50 PIK Pfd. (Cost $25) 1 $ 1,125
- ------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-0.10%
FRANCE-0.10%
Societe Generale (Banks-Major
Regional) (Cost $44,327) 350 70,789
- ------------------------------------------------------------------
WARRANTS-0.09%
ELECTRICAL EQUIPMENT-0.01%
Electronic Retailing Systems
International, Inc., expiring
02/01/04(g) 440 8,800
- ------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.01%
MVE Inc., expiring 02/15/02(g) 100 2,000
- ------------------------------------------------------------------
METAL FABRICATORS-0.00%
Gulf States Steel Corp., expiring
04/15/03(g) 60 165
- ------------------------------------------------------------------
PERSONAL CARE-0.00%
IHF Capital Inc., Series I,
expiring 11/14/99(g) 70 1,750
- ------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.01%
Clearnet Communications Inc.,
expiring 09/15/05(g) 330 3,465
- ------------------------------------------------------------------
Orion Network Systems, Inc.,
expiring 01/15/07(g) 420 7,140
- ------------------------------------------------------------------
10,605
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-0.06%
ESAT Holdings Ltd., expiring
02/01/07 (Acquired 06/16/97;
Cost $0)(b)(g) 350 $ 14,000
- ------------------------------------------------------------------
Intermedia Communications Inc.,
expiring 06/01/00(g) 150 20,250
- ------------------------------------------------------------------
Knology Holdings, Inc., expiring
10/15/07 (Acquired 03/12/98;
Cost $0)(b)(g) 700 3,675
- ------------------------------------------------------------------
37,925
- ------------------------------------------------------------------
Total Warrants (Cost
$2,812) 61,245
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES-2.85%
Notes, 6.25%, 08/31/02 $ 1,500,000 1,531,665
- ------------------------------------------------------------------
Bonds, 6.125%, 11/15/27 500,000 512,105
- ------------------------------------------------------------------
Total U.S. Treasury
Securities (Cost
$2,063,672) 2,043,770
- ------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-0.57%
Tennessee Valley Authority,
Bonds, 5.98%, 04/01/36 (Cost
$407,160) 400,000 410,188
- ------------------------------------------------------------------
REPURCHASE AGREEMENT-0.71%(h)
Dean Witter Reynolds, Inc.,
5.55%, 05/01/98(i)(Cost
$509,050) 509,050 509,050
- ------------------------------------------------------------------
TOTAL INVESTMENTS-100.63% 72,097,710
- ------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-(0.63)% (450,196)
- ------------------------------------------------------------------
NET ASSETS-100.00% $ 71,647,514
==================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Principal amount is in U.S. Dollars, except as indicated by note (e).
(b) Restricted Security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144 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 Directors. The
aggregate market value of these securities at 4/30/98 was $11,422,568 which
represented 15.94% of the Fund's net assets.
(c) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(d) Discounted bond at purchase. Interest rate shown represents the coupon rate
at which the bond will accrue at a specified future date.
(e) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(f) Non-income producing security.
(g) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(h) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(i) Joint repurchase agreement entered into 4/30/98 with a maturing value of
$300,046,250. Collateralized by $307,111,000 U.S. Government obligations,
0% to 9.40% due 06/10/98 to 09/26/19 with an aggregate market value at
4/30/98 of $306,000,308.
Abbreviations:
AUD - Australian Dollar
CAD - Canadian Dollar
Conv. - Convertible
Deb. - Debentures
DEM - German Deutschmark
Disc. - Discounted
FRF - French Franc
GBP - British Pound Sterling
Gtd. - Guaranteed
JPY - Japanese Yen
NZD - New Zealand Dollar
Pfd. - Preferred
PIK - Payment in Kind
PRIDES - Preferred Redemption Increased Dividend Equity Securities
Sec. - Secured
SEK - Swedish Krona
Sr. - Senior
STRYPES - Structured Yield Product Exchangeable for Stock
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$70,116,570) $72,097,710
- -----------------------------------------------------------
Foreign currencies, at value (cost $2,500) 2,506
- -----------------------------------------------------------
Receivables for:
Investments sold 194,225
- -----------------------------------------------------------
Capital stock sold 908,114
- -----------------------------------------------------------
Dividends and interest 1,450,074
- -----------------------------------------------------------
Forward contracts 85,706
- -----------------------------------------------------------
Investment for deferred compensation plan 12,079
- -----------------------------------------------------------
Other assets 19,974
- -----------------------------------------------------------
Total assets 74,770,388
- -----------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,169,043
- -----------------------------------------------------------
Capital stock reacquired 1,792,222
- -----------------------------------------------------------
Dividends 69,982
- -----------------------------------------------------------
Deferred compensation plan 12,079
- -----------------------------------------------------------
Accrued advisory fees 9,398
- -----------------------------------------------------------
Accrued administrative services fees 6,264
- -----------------------------------------------------------
Accrued directors' fees 533
- -----------------------------------------------------------
Accrued distribution fees 42,140
- -----------------------------------------------------------
Accrued transfer agent fees 14,027
- -----------------------------------------------------------
Accrued operating expenses 7,186
- -----------------------------------------------------------
Total liabilities 3,122,874
- -----------------------------------------------------------
Net assets applicable to shares outstanding $71,647,514
===========================================================
NET ASSETS:
Class A $41,159,559
===========================================================
Class B $29,721,926
===========================================================
Class C $ 766,029
===========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 3,732,043
===========================================================
Class B:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 2,696,496
===========================================================
Class C:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 69,551
===========================================================
Class A:
Net asset value and redemption price per
share $ 11.03
===========================================================
Offering price per share:
(Net asset value of $11.03 / 95.25%) $ 11.58
===========================================================
Class B:
Net asset value and offering price per share $ 11.02
===========================================================
Class C:
Net asset value and offering price per share $ 11.01
===========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1998
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $2,336,355
- -----------------------------------------------------------
Dividends (net of $1,316 foreign withholding
tax) 42,560
- -----------------------------------------------------------
Total investment income 2,378,915
- -----------------------------------------------------------
EXPENSES:
Advisory fees 219,552
- -----------------------------------------------------------
Administrative services fees 40,039
- -----------------------------------------------------------
Custodian fees 12,795
- -----------------------------------------------------------
Directors' fees 4,652
- -----------------------------------------------------------
Distribution fees-Class A 86,370
- -----------------------------------------------------------
Distribution fees-Class B 138,307
- -----------------------------------------------------------
Distribution fees-Class C 2,600
- -----------------------------------------------------------
Transfer agent fees-Class A 39,044
- -----------------------------------------------------------
Transfer agent fees-Class B 31,261
- -----------------------------------------------------------
Transfer agent fees-Class C 587
- -----------------------------------------------------------
Other 58,255
- -----------------------------------------------------------
Total expenses 633,462
- -----------------------------------------------------------
Less:
Fees waived by advisor (169,369)
- -----------------------------------------------------------
Expenses paid indirectly (1,314)
- -----------------------------------------------------------
Net expenses 462,779
- -----------------------------------------------------------
Net investment income 1,916,136
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities 413,697
- -----------------------------------------------------------
Foreign currencies (257,469)
- -----------------------------------------------------------
Forward currency contracts 397,692
- -----------------------------------------------------------
553,920
- -----------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 164,517
- -----------------------------------------------------------
Foreign currencies (1,688)
- -----------------------------------------------------------
Forward currency contracts 133,314
- -----------------------------------------------------------
296,143
- -----------------------------------------------------------
Net gain from investment securities, foreign
currencies and forward currency contracts 850,063
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $2,766,199
===========================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1998 and the year ended October 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,916,136 $ 3,129,370
- ------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and forward currency contracts 553,920 397,245
- ------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and forward currency contracts 296,143 794,339
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,766,199 4,320,954
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (1,095,547) (1,835,866)
- ------------------------------------------------------------------------------------------
Class B (805,523) (1,337,369)
- ------------------------------------------------------------------------------------------
Class C (15,066) (767)
- ------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A (38,835) --
- ------------------------------------------------------------------------------------------
Class B (31,094) --
- ------------------------------------------------------------------------------------------
Class C (585) --
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (114,141) (311,081)
- ------------------------------------------------------------------------------------------
Class B (91,049) (242,850)
- ------------------------------------------------------------------------------------------
Class C (1,412) (605)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A 9,922,519 8,692,165
- ------------------------------------------------------------------------------------------
Class B 4,345,382 8,049,066
- ------------------------------------------------------------------------------------------
Class C 519,547 239,702
- ------------------------------------------------------------------------------------------
Net increase in net assets 15,360,395 17,573,349
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 56,287,119 38,713,770
- ------------------------------------------------------------------------------------------
End of period $ 71,647,514 $56,287,119
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 69,049,534 $54,262,086
- ------------------------------------------------------------------------------------------
Undistributed net investment income (81,435) (10,921)
- ------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and forward currency
contracts 610,385 263,067
- ------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and forward currency contracts 2,069,030 1,772,887
- ------------------------------------------------------------------------------------------
$ 71,647,514 $56,287,119
=========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1998
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Income Fund (the "Fund") is an investment portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of six
separate portfolios: AIM Global Income Fund, AIM Asian Growth Fund, AIM European
Development Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund and
AIM International Equity Fund. 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 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 the financial statements pertains only to
the Fund. The Fund's investment objective is to provide high current income.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to
12
<PAGE> 15
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations-Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as institution-
size trading in similar groups of securities, developments related to special
securities, yield, quality, coupon rate, maturity, type of issue, individual
trading characteristics and other market data. Investment securities for
which prices are not provided by the pricing service and which are listed or
traded on an exchange (except convertible bonds) are valued at the last sales
price on the exchange where the security is principally traded or, lacking
any sales on a particular day, at the mean between the closing bid and asked
prices on that day unless the Board of Directors, or persons designated by
the Board of Directors, determines that the over-the-counter quotations more
closely reflect the current market value of the security. Securities traded
in the over-the-counter market, except (i) securities priced by the pricing
service, (ii) securities for which representative exchange prices are
available, and (iii) securities reported in the NASDAQ National Market
System, are valued at the mean between representative last bid and asked
prices obtained from an electronic quotation reporting system, if such prices
are available, or from established market makers. Each security reported in
the NASDAQ National Market System is valued at the last sales price on the
valuation date or absent a last sales price, at the mean between the closing
bid and asked prices. Securities for which market quotations are not readily
available or are questionable are valued at fair value as determined in good
faith by or under the supervision of the Company's officers in accordance
with methods which are specifically authorized by the Board of Directors.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. Generally, trading in foreign
securities, as well as corporate bonds and U.S. Government securities, is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. The values of such securities used in computing the
net asset value of a Fund's shares are determined as of such times. Foreign
currency exchange rates are also generally determined prior to the close of
the New York Stock Exchange. Occasionally, events affecting the values of
such securities and such exchange rates may occur between the times at which
they are determined and the close of the New York Stock Exchange which would
not be reflected in the computation of a Fund's net asset value. If events
materially affecting the value of such securities and exchange rates occur
during such period, then these securities and exchange rates will be valued
at their fair value as determined in good faith by or under the supervision
of the Board of Directors.
B. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts-A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
Outstanding contracts at April 30, 1998 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACT TO APPRECIATION
DATE DELIVER VALUE RECEIVE (DEPRECIATION)
---------- -------------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
05/04/98 AUD 730,000 $ 476,175 $ 502,167 $ 25,992
05/18/98 NZD 2,680,000 1,486,344 1,554,400 68,056
05/20/98 DEM 1,400,000 781,243 773,139 (8,104)
05/29/98 GBP 1,300,000 2,171,096 2,132,000 (39,096)
06/05/98 JPY 20,500,000 155,689 164,659 8,970
06/19/98 NZD 1,000,000 552,990 578,000 25,010
06/22/98 AUD 870,000 568,038 577,158 9,120
07/15/98 DEM 660,000 369,448 364,863 (4,585)
07/27/98 GBP 550,000 916,037 911,570 (4,467)
07/28/98 DEM 1,850,000 1,036,295 1,038,159 1,864
07/29/98 SEK 18,000,000 2,331,470 2,340,702 9,232
07/31/98 GBP 1,200,000 1,998,286 1,992,000 (6,286)
----------- ----------- --------
$12,843,111 $12,928,817 $ 85,706
=========== =========== ========
</TABLE>
D. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on an accrual basis. Dividend income is recorded on the ex-dividend
date. It is the policy of the Fund to declare daily dividends from net
investment income. Such dividends are paid monthly.
E. 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.
F. Expenses-Distribution and transfer agency expenses directly attributable to a
class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated among the
classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an
13
<PAGE> 16
advisory fee to AIM at the annual rate of 0.70% of the first $1 billion of the
Fund's average daily net assets, plus 0.65% of the Fund's average daily net
assets in excess of $1 billion. During the six months ended April 30, 1998, AIM
waived fees of $169,369.
The Fund, pursuant to a master administrative services agreement, has agreed
to reimburse AIM for administrative costs incurred in providing accounting
services to the Fund. During the six months ended April 30, 1998, AIM was
reimbursed $40,039 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
services to the Fund. During the six months ended April 30, 1998, the Fund paid
AFS $41,992 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.50% of the average daily net assets of the Class A shares
and 1.00% of the average daily net assets of Class C shares. The Fund, pursuant
to the Class B Plan, pays AIM Distributors compensation at an annual rate of
1.00% of the average daily net assets attributable to the Class B shares. Of
these amounts, the Fund may pay a service fee of 0.25% of the average daily net
assets of the Class A, Class B or 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. AIM Distributors may, from time to time, assign, transfer, or pledge to
one or more designees, its rights to all or a designated portion of (a)
compensation received by AIM Distributors from the Fund pursuant to the Class B
Plan (but not AIM Distributors' duties and obligations pursuant to the Class B
Plan) and (b) any contingent deferred sales charges received by AIM Distributors
related to the Class B shares. During the six months ended April 30, 1998, the
Class A, Class B and Class C shares paid AIM Distributors $86,370, $138,307 and
$2,600, respectively, as compensation under the Plans.
AIM Distributors received commissions of $20,964 from sales of the Class A
shares of the Fund during the six months ended April 30, 1998. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in
the proceeds from sales of Class A shares. During the six months ended April 30,
1998, AIM Distributors received commissions of $7,140 in contingent deferred
sales charges imposed on redemptions of Fund shares. Certain officers and
directors of the Company are officers and directors of AIM, AFS and AIM
Distributors.
During the six months ended April 30, 1998, the Fund incurred legal fees of
$1,284 for services rendered by the law firm of Kramer, Levin, Naftalis, &
Frankel as counsel to the Company's directors. A member of that firm is a
director of the Company.
NOTE 3-INDIRECT EXPENSES
During the six months ended April 30, 1998, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $358 and $956, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $1,314 during the six months ended April 30, 1998.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 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) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
During the six months ended April 30, 1998, 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 0.05% 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.
Pursuant to an amendment to the line of credit agreement effective May 1,
1998, the Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the
limits set by the prospectus for borrowings.
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 April 30, 1998 was
$28,130,662, and $10,772,001, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1998, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment
securities $ 3,381,672
- -------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (1,401,254)
- -------------------------------------------------------------
Net unrealized appreciation of investment
securities $ 1,980,418
=============================================================
</TABLE>
Cost of investments for tax purposes is $70,117,292.
14
<PAGE> 17
NOTE 7-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the six months ended
April 30, 1998 and the year ended October 31, 1997 were as follows:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1998 1997
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 1,635,532 $17,982,402 1,677,097 $17,985,938
- --------------------------------------------------------------------------------------------------------------------
Class B 814,755 8,957,551 1,244,806 13,337,043
- --------------------------------------------------------------------------------------------------------------------
Class C* 49,894 547,451 23,915 258,631
- --------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 95,050 1,043,251 168,472 1,809,673
- --------------------------------------------------------------------------------------------------------------------
Class B 69,355 760,197 118,888 1,275,952
- --------------------------------------------------------------------------------------------------------------------
Class C* 1,296 14,221 71 779
- --------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (828,567) (9,103,134) (1,035,690) (11,103,446)
- --------------------------------------------------------------------------------------------------------------------
Class B (488,561) (5,372,366) (610,857) (6,563,929)
- --------------------------------------------------------------------------------------------------------------------
Class C* (3,817) (42,125) (1,808) (19,708)
- --------------------------------------------------------------------------------------------------------------------
1,344,937 $14,787,448 1,584,894 $16,980,933
====================================================================================================================
</TABLE>
* Class C Shares commenced sales on August 4, 1997.
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
capital stock outstanding during the six months ended April 30, 1998, each of
the years in the three-year period ended October 31, 1997 and the period
September 15, 1994 (dates operations commenced) through October 31, 1994 and for
a share of Class C capital stock outstanding during the six months ended April
30, 1998 and the period August 4, 1997 (date sales commenced) through October
31, 1997.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
OCTOBER 31,
APRIL 30, ---------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.93 $ 10.85 $10.74 $10.02 $10.00
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Income from investment operations:
Net investment income 0.35(a) 0.72 0.79(a) 0.79 0.08
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Net gains on securities (both realized and unrealized) 0.15 0.21 0.25 0.75 0.01
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Total from investment operations 0.50 0.93 1.04 1.54 0.09
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Less distributions:
Dividends from investment income (0.36) (0.72) (0.81) (0.82) (0.07)
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Distributions from net realized gains (0.04) (0.13) (0.12) -- --
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Total distributions (0.40) (0.85) (0.93) (0.82) (0.07)
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Net asset value, end of period $ 11.03 $ 10.93 $ 10.85 $ 10.74 $10.02
============================================================ ======= ======= ======= ======= ======
Total return(b) 4.64% 9.05% 10.22% 16.07% 0.93%
============================================================ ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $41,160 $30,924 $21,926 $10,004 $2,661
============================================================ ======= ======= ======= ======= ======
Ratio of expenses to average net assets(c) 1.26%(d)(e) 1.25% 1.25% 1.25% 1.25%(f)
============================================================ ======= ======= ======= ======= ======
Ratio of net investment income to average net assets(g) 6.33%(d) 6.54% 7.27% 7.38% 6.01%(f)
============================================================ ======= ======= ======= ======= ======
Portfolio turnover rate 18% 61% 83% 128% 6%
============================================================ ======= ======= ======= ======= ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and are not annualized for periods less than
one year.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.79% (annualized), 1.86%, 2.02%, 3.03% and 5.61% (annualized) for the
periods 1998-1994.
(d) Ratios are annualized and based on average net assets of $34,834,156.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been 1.25%
(annualized).
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. The ratios of net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 5.79% (annualized), 5.93%, 6.51%, 5.59% and 1.65%
(annualized) for the periods 1998-1994.
15
<PAGE> 18
NOTE 8-FINANCIAL HIGHLIGHTS-continued
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------- CLASS C
OCTOBER 31, ------------------------
APRIL 30, ---------------------------------------- APRIL 30, OCTOBER 31,
1998 1997 1996 1995 1994 1998 1997
--------- --------- ------- ------ ------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.92 $ 10.84 $10.73 $10.01 $10.00 $10.92 $10.76
- ---------------------------------------------- ------- ------- ------- ------ ------ ------ ------
Income from investment operations:
Net investment income 0.32(a) 0.67 0.74(a) 0.74 0.07 0.32(a) 0.15(a)
- ---------------------------------------------- ------- ------- ------- ------ ------ ------ ------
Net gains on securities (both realized and
unrealized) 0.15 0.21 0.24 0.75 0.01 0.14 0.17
- ---------------------------------------------- ------- ------- ------- ------ ------ ------ ------
Total from investment operations 0.47 0.88 0.98 1.49 0.08 0.46 0.32
- ---------------------------------------------- ------- ------- ------- ------ ------ ------ ------
Less distributions:
Dividends from investment income (0.33) (0.67) (0.75) (0.77) (0.07) (0.33) (0.13)
- ---------------------------------------------- ------- ------- ------- ------ ------ ------ ------
Distributions from net realized gains (0.04) (0.13) (0.12) -- -- (0.04) (0.03)
- ---------------------------------------------- ------- ------- ------- ------ ------ ------ ------
Total distributions (0.37) (0.80) (0.87) (0.77) (0.07) (0.37) (0.16)
- ---------------------------------------------- ------- ------- ------- ------ ------ ------ ------
Net asset value, end of period $ 11.02 $ 10.92 $ 10.84 $10.73 $10.01 $11.01 $10.92
============================================== ======= ======= ======= ====== ====== ====== ======
Total return(b) 4.36% 8.48% 9.66% 15.56% 0.79% 4.27% 2.99%
============================================== ======= ======= ======= ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $29,722 $25,121 $16,787 $4,207 $362 $ 766 $ 242
============================================== ======= ======= ======= ====== ====== ====== ======
Ratio of expenses to average net assets(c) 1.75%(d)(e) 1.76% 1.75% 1.74% 1.73%(f) 1.74%(d)(e) 1.76%(f)
============================================== ======= ======= ======= ====== ====== ====== ======
Ratio of net investment income to average net
assets(g) 5.83%(d) 6.03% 6.77% 6.88% 3.59%(f) 5.84%(d) 6.03%(f)
============================================== ======= ======= ======= ====== ====== ====== ======
Portfolio turnover rate 18% 61% 83% 128% 6% 18% 61%
============================================== ======= ======= ======= ====== ====== ====== ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and are not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.29% (annualized), 2.37%, 2.53%, 3.57% and 22.09% (annualized) for
1998-1994 for Class B and 2.28% (annualized) and 2.37% (annualized) for
1998-1997 for Class C.
(d) Ratios are annualized and based on average net assets of $27,890,546 and
$524,338 for Class B and Class C, respectively.
(e) Ratios include expenses paid indirectly. Excluding expenses paid indirectly,
the ratios of expenses to average net assets would have been the same.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were 5.30% (annualized), 5.42%, 6.00%, 5.05% and (16.77)%
(annualized) for 1998-1994 for Class B and 5.30% (annualized) and 5.42%
(annualized) for 1998-1997 for Class C.
16
<PAGE> 19
Directors & Officers
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BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II TRANSFER AGENT
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Assistant Treasurer
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Robert G. Alley
President, Mercantile Bankshares Vice President State Street Bank and Trust Company
225 Franklin Street
Jack Fields Melville B. Cox Boston MA 02110
Chief Executive Officer Vice President
Texana Global, Inc.; COUNSEL TO THE FUND
Formerly Member Jonathan C. Schoolar
of the U.S. House of Representatives Vice President Ballard Spahr
Andrews & Ingersoll, LLP
Carl Frischling Renee A. Bamford 1735 Market Street
Partner Assistant Secretary Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel
P. Michelle Grace COUNSEL TO THE DIRECTORS
Robert H. Graham Assistant Secretary
President and Chief Executive Officer Kramer, Levin, Naftalis & Frankel
A I M Management Group Inc. Jeffrey H. Kupor 919 Third Avenue
Assistant Secretary New York, NY 10022
John F. Kroeger
Formerly Consultant Nancy L. Martin DISTRIBUTOR
Wendell & Stockel Associates, Inc. Assistant Secretary
A I M Distributors, Inc.
Lewis F. Pennock Ofelia M. Mayo 11 Greenway Plaza
Attorney Assistant Secretary Suite 100
Houston, TX 77046
Ian W. Robinson Lisa A. Moss
Consultant; Formerly Executive Assistant Secretary
Vice President and
Chief Financial Officer Kathleen J. Pflueger
Bell Atlantic Management Assistant Secretary
Services, Inc.
Samuel D. Sirko
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Stephen I. Winer
Limited Partnership Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
<PAGE> 20
<TABLE>
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The AIM Family of Funds--Registered Trademark--
FOR AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Asian Growth Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
[PHOTO OF FOR GROWTH OF CAPITAL
ELEVEN GREENWAY PLAZA AIM Advisor International Value Fund
APPEARS HERE] AIM Blue Chip Fund
AIM Global Growth Fund
AIM International Equity Fund
AIM Select Growth Fund**
AIM Value Fund
AIM Weingarten Fund
FOR GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Charter Fund
AIM Global Utilities Fund
FOR HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
FOR CURRENT TAX-FREE INCOME
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
FOR CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has provided leadership in the *AIM Aggressive Growth Fund was closed to new investors on
mutual fund industry since 1976 and managed approximately June 5, 1997. **On May 1, 1998, AIM Growth Fund was renamed
$89 billion in assets for more than 4.4 million AIM Select Growth Fund. For more complete information about
shareholders, including individual investors, corporate any AIM Fund(s), including sales charges and expenses, ask
clients, and financial institutions, as of March 31, 1998. your financial consultant or securities dealer for a free
The AIM Family of Funds-- Registered Trademark-- is prospectus(es). Please read the prospectus(es) carefully
distributed nationwide, and AIM today ranks among the before you invest or send money.
nation's top 15 mutual fund companies in assets under
management, according to Lipper Analytical Services, Inc. Invest with DISCIPLINE-SM-
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