<PAGE> 1
SEMIANNUAL REPORT / APRIL 30 1999
AIM GLOBAL INCOME FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
------------------------------
[COVER IMAGE]
THE WATER LILY POND BY CLAUDE MONET AIM GLOBAL INCOME FUND IS
BRIDGING CONTINENTS TO BRING SHAREHOLDERS NEW INVESTMENT
OPPORTUNITIES. WIDE OCEANS NO LONGER FORM MUCH MORE OF A
BARRIER TO GLOBAL INVESTING THAN THE TRANQUIL POND DEPICTED
IN MONET'S PAINTING. THE MANAGEMENT TEAM HAS CONSTRUCTED
A DIVERSE PORTFOLIO CONSISTING OF GOVERNMENT AND CORPORATE
BONDS FROM AROUND THE WORLD.
------------------------------
AIM Global Income Fund is for shareholders who seek a high level of current
income. The Fund invests in a portfolio of debt 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.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and Class
C share performance reflects the applicable contingent deferred sales
charge (CDSC) for the period involved. The CDSC on Class B shares declines
from 5% beginning at the time of purchase to 0% at the beginning of the
seventh year. The CDSC on Class C shares is 1% for the first year after
purchase. The performance of the Fund's Class B shares will differ from
that of Class A shares due to differences in sales charge structure and
expenses.
o The Fund's investment return and principal value will fluctuate so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o The Fund'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 invests in higher-yielding, lower-rated corporate bonds, commonly
known as "junk bonds." These bonds have greater risk of price fluctuation
and loss of principal than U.S. government securities, such as U.S.
Treasury bonds and bills, which offer a government guarantee as to the
repayment of principal and interest if held to maturity.
o International investing presents certain risks not associated with
investing solely in the United States. These include risks relating to
fluctuations in the value of the U.S. dollar relative to the values of
other currencies, the custody arrangements made for the Fund's foreign
holdings, differences in accounting, political risks and the lesser degree
of public information required to be provided by non-U.S. companies.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
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.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND
IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THERE IS A RISK
THAT YOU COULD LOSE SOME OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
AIM GLOBAL INCOME FUND
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
[PHOTO OF With only several months remaining in 1999, the question on
Charles T. many of your minds may be, "How will the year 2000 computer
Bauer issue affect AIM and my investments?" We would like you to
Chairman of feel comfortable.
the Board of During March and April, AIM participated in an
THE FUND industrywide test that gave us a chance to see how our
APPEARS HERE) technology systems might be affected by the changeover to the
year 2000 (Y2K). Everything went as well as we had hoped; in
general, the industry sailed through the testing process with
flying colors. The financial industry has been seen as a
leader in planning for year 2000 concerns. Thus, it was no
surprise to most participants that the test was an
overwhelming success.
The general purpose of the process was to test
electronic interfaces among financial industry members in the United States and
to follow transactions through a typical trading cycle--from order entry to the
settlement process. Investment banks, broker-dealers, custodian banks and mutual
fund companies all worked together to make this possible. Approximately 400
firms were involved in the testing; AIM was one of 70 asset managers.
TEST RESULTS EXCELLENT
During the testing process, thousands of transactions were submitted and
approximately 260,000 steps were tested. Of those, only a handful experienced
minor glitches--just 0.02% of the total number of transactions. All problems
were worked through quickly before the hypothetical trades were settled. Of
course, AIM will keep testing and planning throughout 1999 as a precaution.
AIM'S INTERNAL EFFORTS CONTINUE
As you know from our previous communications to you, AIM has been
addressing the year 2000 issue for several years. During 1998, we made
substantial progress on our preparations. We are now in the final phases of the
project, continually testing internal applications and our interfaces with
outside parties. On the investment side, our portfolio management staff is
evaluating the Y2K preparedness of the companies in which we invest.
We feel that our preparations for 2000 are very comprehensive, and the
industrywide testing showed that our colleagues in the financial industry are
also working hard to be ready for the new year. We do not think shareholders
need to take any extraordinary measures with their investments to prepare for
2000. However, if you have any lingering concerns, it may reassure you to know
that AIM is finalizing contingency plans that will be ready if there are
unexpected problems. Our plans will give AIM employees guidelines to follow for
a wide variety of situations.
For a more comprehensive discussion of our Y2K efforts and for periodic
updates, please visit our Web site, www.aimfunds.com.
We are pleased to send you this report covering your fund's performance
over the last six months. If you have any questions or comments, please contact
our Client Services department at 800-959-4246, or e-mail your inquiry to us at
[email protected]. You can access information about your account through our
AIM Investor Line at 800-246-5463 or at our Web site.
Thank you for your continued participation in The AIM Family of
Funds--Registration Mark--. We appreciate your business.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS
LETTER IS DEEMED AIM'S YEAR 2000 READINESS DISCLOSURE.
------------------------------
THE FINANCIAL INDUSTRY
HAS BEEN SEEN AS A
LEADER IN PLANNING FOR
YEAR 2000 CONCERNS.
------------------------------
AIM GLOBAL INCOME FUND
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
FUND CONTENDS WITH STRONG U.S. DOLLAR
THE STRONG DOLLAR NEGATIVELY AFFECTED RETURNS FOR U.S. INVESTORS IN FOREIGN
BONDS. HOW DID AIM GLOBAL INCOME FUND PERFORM?
Despite the strength of the U.S. dollar relative to other major currencies, the
Fund's diversified investment strategy enabled it to post positive gains for the
six months ended April 30, 1999. Excluding sales charges, total returns were
2.45%, 2.28% and 2.18% for Class A, B and C shares, respectively. Over the same
period, the total return of the Salomon Brothers World Government Bond Index was
- -3.35%.
The Fund continued to provide attractive monthly income. As of April 30,
1999, the Fund's 30-day distribution rate at net asset value was 6.51%, 5.99%
and 6.00% for Class A, B and C shares, respectively. The Fund's 30-day SEC yield
at maximum offering price was 5.71% for Class A shares and 5.49% for both Class
B and Class C shares.
Since our last report six months ago, nets assets in the Fund grew from $96
million to $106 million.
TOP MARKETS REPRESENTED BY CURRENCY IN THE PORTFOLIO
As of 4/30/99, based on total net assets
<TABLE>
<S> <C>
1. United States 65.21%
2. Canada 9.91
3. United Kingdom 8.57
4. EMU* 8.70
5. New Zealand 3.57
6. Australia 2.26
7. Sweden 1.78
</TABLE>
*The European Economic and Monetary Union includes France, Germany, Italy,
Spain, Portugal, Austria, the Netherlands, Belgium, Luxembourg, Ireland and
Finland.
WHAT WERE SOME OF THE KEY TRENDS IN FOREIGN-BOND MARKETS?
In most developed countries, the economic climate was favorable for
bonds. Inflation and interest rates were low. In Europe, slowing economic growth
raised the possibility of further interest-rate cuts. The advent of the European
Economic and Monetary Union (EMU) on January 1 proved to be a stimulus to the
corporate bond market on the continent. European firms issued $39.4 billion in
new debt between January 1 and March 26, more than twice the amount issued for
the same period in 1998.
Emerging market debt, hurt by a succession of crises in developing nations
such as Russia and Brazil, recovered somewhat toward the end of the reporting
period. However, this was of little consequence for the Fund since it invests
primarily in developed markets. Bond markets we liked included the United
Kingdom, Germany, Canada and Australia.
For most of the reporting period, the U.S. dollar was strong against most
major currencies, particularly the euro, adopted as the new currency in the 11
EMU countries at the beginning of 1999. The Fund mitigated the effect of a
strong dollar by selectively hedging some of its currency exposure.
HOW DID U.S. INVESTMENT-GRADE BONDS FARE?
Over the reporting period, a very narrow bond market began to give way to more
normal conditions. Crises in developing markets led investors to shun securities
other than U.S. Treasury issues, even those of investment-grade quality.
However, on November 17, 1998, the Federal Reserve Board (the Fed) approved
the last of three interest-rate cuts designed to infuse liquidity back into the
broader market. The Fed's rate cuts and continued strong economic growth caused
the performance of domestic investment-grade corporate bonds to improve. Robust
economic expansion dispelled concerns that problems in developing nations would
plunge the United States into recession and undermine the ability of corporate
bond issuers to meet their debt obligations.
At the outset of the period, investors had favored Treasuries because of
their liquidity and safety. But toward the end of the period, concerns about
increased inflation in the face of strong U.S. economic growth drove Treasury
prices lower.
Demand for investment-grade corporate bonds picked up in 1999 as investors
shifted their focus from Treasuries to securities with more attractive yields.
This heightened demand was met by an increase in new-issue supply. From January
1 through March 25, approximately $105 billion in new investment-grade corporate
bond issues entered the market--well above the average of $60 billion for the
comparable period for the past five years.
WHAT ABOUT HIGH-YIELD BONDS?
High-yield bonds were among the asset classes most adversely affected by
investor preference for U.S. Treasury securities. When this sentiment changed,
high-yield bonds were among the chief beneficiaries. Indeed, during the first
four months of 1999, high-yield bonds were among the top-performing fixed-income
classes.
Within the high-yield sector, the bonds of telecommunications firms, cable
------------------------------
DEMAND FOR INVESTMENT-GRADE CORPORATE
BONDS PICKED UP IN 1999 AS INVESTORS
SHIFTED THEIR FOCUS FROM TREASURIES TO
SECURITIES WITH MORE ATTRACTIVE YIELDS.
------------------------------
See important Fund and index disclosures inside front cover.
AIM GLOBAL INCOME FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 4/30/99, based on total net assets
TOP 5 BOND HOLDINGS
<TABLE>
<CAPTION>
Coupon Maturity
<S> <C> <C> <C>
1. U.S. Treasury Bonds 6.125% 11/2027 1.99%
2. Bundesrepublik Deutschland 7.25 10/2002 1.65
3. Treuhandanstalt Gtd Notes 6.00 11/2003 1.62
4. U.S. Treasury Notes 6.875 5/2006 1.53
5. Prudential Financial 9.375 6/2007 1.48
</TABLE>
companies and gaming establishments performed well. In March, energy-company
bonds increased in value with the rise in oil prices.
HOW WAS THE FUND STRUCTURED AT THE END OF THE REPORTING PERIOD?
At the end of the reporting period, the Fund's total assets were divided as
follows: foreign bonds (including those denominated in U.S. dollars), 41.71%;
domestic investment-grade bonds, 26.57%; and domestic high-yield bonds, 25.93%.
Other assets made up the remainder of the portfolio's holdings. The Fund had 208
holdings as of April 30, 1999. The weighted average maturity of the portfolio
was 11.54 years, and its duration was 6.89 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.
WHAT IS YOUR OUTLOOK?
In most developed countries, the economic climate appears favorable for bonds.
In Europe, for example, inflation is low. Further cuts in already-low interest
rates are possible to stimulate economic growth. Moreover, we remain optimistic
about the long-term prospects for Europe. The mergers and restructurings now
taking place there should increase corporate profitability. We expect the EMU to
continue to act as a catalyst for the development of the corporate bond market
in Europe, potentially increasing the Fund's investment options.
In the United States, robust economic growth could continue to benefit
investment-grade corporate bonds and high-yield securities. One ominous
development was the dramatic and unexpected rise in the inflation rate in April.
That prompted the Fed, at its first meeting after the end of the reporting
period, to shift to a bias of raising interest rates. However, a possible
tightening of monetary policy has been largely reflected in recent higher bond
yields.
Regardless, we will adhere to our three-faceted strategy of investing in
foreign, domestic investment-grade and high-yield bonds. These bonds tend to
react differently to various economic and market conditions. We believe our
strategy can enhance returns and reduce risk over the long term.
RESULTS OF A $10,000 INVESTMENT
9/15/94-4/30/99, INCLUDING SALES CHARGES
<TABLE>
<CAPTION>
$14,449 $14,282 $13,767
<S> <C> <C>
AIM AIM Salomon
Global Income Global Income Brothers World
Fund Class Fund Class Government
B shares A shares Bond Index
</TABLE>
Your Fund's total return includes sales charges, expenses and management fees.
For Fund performance calculations and descriptions of indexes cited on this
page, please refer to the inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
Past performance cannot guarantee comparable future results.
The Fund's portfolio composition is subject to change and there is no assurance
the fund will continue to hold any particular security.
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/99, including sales charges
CLASS A SHARES
Inception (9/15/94) 8.02%
1 Year -3.07*
CLASS B SHARES Inception
(9/15/94) 8.29%
1 Year -3.45**
CLASS C SHARES Inception (8/4/97) 4.98
1 Year 0.36***
*1.77% excluding sales charges
**1.32 excluding sales charges
***1.32 excluding sales charges
See important Fund and index disclosures inside front cover.
AIM GLOBAL INCOME FUND
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS & NOTES-56.82%
AEROSPACE/DEFENSE-0.25%
Pacific Aerospace & Electric, Sr.
Unsec. Gtd. Sub., 11.25%,
08/01/05 $ 350,000 $ 264,250
==============================================================
AGRICULTURAL PRODUCTS-0.46%
Cargill Inc., Notes, 6.875%,
05/01/28 (Acquired 03/12/99,
Cost $499,010)(b) 500,000 484,950
==============================================================
AIR FREIGHT-0.35%
Atlas Air, Inc., Sr. Notes,
10.75%, 08/01/05 350,000 369,250
==============================================================
AIRLINES-2.34%
Airplanes Pass Through Trust, Sub.
Bonds, 10.875%, 03/15/19 230,000 231,295
- --------------------------------------------------------------
Delta Air Lines, Inc.,
Deb., 9.00%, 05/15/16 550,000 622,473
- --------------------------------------------------------------
Deb., 10.375%, 12/15/22 1,000,000 1,286,980
- --------------------------------------------------------------
United Air Lines, Inc., Pass Thru
Ctfs., 9.56%, 10/19/18 300,000 345,303
==============================================================
2,486,051
==============================================================
AUTO PARTS & EQUIPMENT-0.71%
Advance Stores Co. Inc., Sr.
Unsec. Gtd. Notes, 10.25%,
04/15/08 310,000 314,650
- --------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 430,000 438,600
==============================================================
753,250
==============================================================
BANKS (MAJOR REGIONAL)-0.97%
Regions Financial Corp., Sub.
Notes, 7.75%, 09/15/24 500,000 539,600
- --------------------------------------------------------------
Royal Bank of Scotland PLC (United
Kingdom), Yankee Sub. Notes,
6.375%, 02/01/11 500,000 490,680
==============================================================
1,030,280
==============================================================
BANKS (MONEY CENTER)-0.91%
Deutsche Bank Financial, Gtd.
Unsec. Sub. Deb., 6.70%,
12/13/06 750,000 760,410
- --------------------------------------------------------------
First Union Bancorp, Sub. Deb.,
7.50%, 04/15/35 200,000 212,392
==============================================================
972,802
==============================================================
BANKS (REGIONAL)-1.47%
HSBC Americas Inc., Sub. Notes,
7.00%, 11/01/06 500,000 513,310
- --------------------------------------------------------------
Mercantile Bancorp Inc., Unsec.
Sub. Notes, 7.30%, 06/15/07 1,000,000 1,046,770
==============================================================
1,560,080
==============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
BEVERAGES (NON-ALCOHOLIC)-0.45%
Coca-Cola Enterprises, Inc.,
Putable Notes, 8.35%,
06/20/20(c) $ 2,113,000 $ 482,101
==============================================================
BROADCASTING (TELEVISION)-3.46%
Comcast Cable Communications,
Notes, 8.50%, 05/01/27 500,000 593,895
- --------------------------------------------------------------
CSC Holdings Inc.,
Unsec. Deb., 7.625%, 07/15/18 1,100,000 1,106,654
- --------------------------------------------------------------
Unsec. Deb., 7.875%, 02/15/18 400,000 412,316
- --------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(d) 940,000 634,500
- --------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.875%, 10/15/07(d) 700,000 428,750
- --------------------------------------------------------------
USA Networks, Inc., Sr. Notes,
6.75%, 11/15/05 (Acquired
11/30/98; Cost $501,370)(b) 500,000 498,050
==============================================================
3,674,165
==============================================================
BUILDING MATERIALS-0.69%
Owens Corning, Unsec. Bonds,
7.50%, 08/01/18 750,000 731,700
==============================================================
CHEMICALS-1.54%
Agrium Inc. (Canada), Unsec.
Notes, 7.00%, 02/01/04 350,000 347,252
- --------------------------------------------------------------
Airgas Inc., Medium Term Notes,
7.14%, 03/08/04 500,000 489,575
- --------------------------------------------------------------
Nova Gas Transmission Ltd.
(Canada), Yankee Deb., 8.50%,
12/15/12 450,000 513,306
- --------------------------------------------------------------
Sterling Chemicals, Inc., Sr.
Unsec. Sub. Notes, 11.75%,
08/15/06 300,000 283,500
==============================================================
1,633,633
==============================================================
COMMUNICATIONS EQUIPMENT-0.94%
Dialog Corp. PLC (United Kingdom),
Series A Sr. Sub. Notes, 11.00%,
11/15/07 750,000 751,875
- --------------------------------------------------------------
ProNet, Inc., Sr. Sub. Notes,
11.875%, 06/15/05 250,000 243,750
==============================================================
995,625
==============================================================
COMPUTERS (NETWORKING)-0.37%
Exodus Communications, Sr. Unsec.
Notes, 11.25%, 07/01/08 360,000 390,600
==============================================================
CONSTRUCTION (CEMENT & AGGREGATES)-0.31%
Schuff Steel Co., Sr. Unsec. Gtd.
Sub. Notes, 10.50%, 06/01/08 350,000 327,250
==============================================================
CONTAINERS & PACKAGING (PAPER)-0.08%
BPC Holding Corp., Series B Sr.
Sec. Notes, 12.50%, 06/15/06 80,000 85,200
==============================================================
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
DISTRIBUTORS (FOOD & HEALTH)-0.23%
Fleming Companies, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.625%,
07/31/07 $ 255,000 $ 247,988
==============================================================
ELECTRIC COMPANIES-3.21%
Cleveland Electric Illumination,
Series D Sr. Notes, 7.88%,
11/01/17 500,000 536,766
- --------------------------------------------------------------
CMS Energy Corp., Sr. Unsec.
Notes, 7.50%, 01/15/09 750,000 752,858
- --------------------------------------------------------------
El Paso Electric Co.,
Series D Sec. First Mortgage
Bonds, 8.90%, 02/01/06 250,000 278,280
- --------------------------------------------------------------
Series E Sec. First Mortgage
Bonds, 9.40%, 05/01/11 250,000 279,610
- --------------------------------------------------------------
Niagara Mohawk Power Corp., Series
G Sr. Unsec. Notes, 7.75%,
10/01/08 1,000,000 1,065,450
- --------------------------------------------------------------
Western Resources, Inc., Sr.
Unsec. Notes, 6.25%, 8/15/03 500,000 499,385
==============================================================
3,412,349
==============================================================
ELECTRICAL EQUIPMENT-0.09%
Electronic Retailing Systems
International, Inc., Sr. Disc.
Notes, 13.25%, 02/01/04(d) 290,000 97,150
==============================================================
ELECTRONICS (SEMICONDUCTORS)-0.19%
Panda Funding Corp., Series A-1
Pooled Project Bonds, 11.625%,
08/20/12 199,591 204,581
==============================================================
ENTERTAINMENT-1.49%
Ascent Entertainment Group, Sr.
Sec. Disc. Notes, 11.875%,
12/15/04(d) 150,000 107,250
- --------------------------------------------------------------
Time Warner, Inc.,
Deb., 9.125%, 01/15/13 1,000,000 1,218,170
- --------------------------------------------------------------
Deb., 6.85%, 01/15/26 250,000 257,533
==============================================================
1,582,953
==============================================================
FINANCIAL (DIVERSIFIED)-1.07%
Associates of North America,
Series B Sr. Deb., 7.95%,
02/15/10 100,000 111,752
- --------------------------------------------------------------
Bonds, 6.95%, 11/01/18 500,000 505,045
- --------------------------------------------------------------
Finova Capital Corp., Unsec.
Notes, 7.40%, 05/06/06 500,000 523,750
==============================================================
1,140,547
==============================================================
FOODS-1.14%
Ameriserve Food Distributors,
Notes, 8.875%, 10/15/06 300,000 279,750
- --------------------------------------------------------------
ConAgra Inc., Sr. Unsec. Notes,
7.125%, 10/01/26 900,000 935,802
==============================================================
1,215,552
==============================================================
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.47%
Watson Pharmaceuticals Inc., Sr.
Notes, 7.125%, 05/15/08 500,000 498,270
==============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
HEALTH CARE (LONG TERM)-0.33%
Harborside Healthcare, Sr. Unsec.
Gtd. Disc. Sub. Notes, 11.00%,
08/01/08(d) $ 750,000 $ 347,813
==============================================================
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.75%
Beckman Coulter, Sr. Unsec. Gtd.
Notes, 7.45%, 03/04/08 500,000 489,370
- --------------------------------------------------------------
Dade International Inc., Series B
Sr. Sub. Notes, 11.125%,
05/01/06 100,000 111,000
- --------------------------------------------------------------
Mediq Inc., Sr. Unsec. Gtd. Sub.
Notes, 11.00%, 06/01/08 220,000 191,400
==============================================================
791,770
==============================================================
HEALTH CARE (SPECIALIZED
SERVICES)-0.46%
Team Health Inc., Sr. Sub. Notes,
12.00%, 03/15/09 (Acquired
03/05/99; Cost $470,000)(b) 470,000 484,100
==============================================================
HOMEBUILDING-1.27%
D.R. Horton Inc.,
Unsec. Gtd. Notes, 10.00%,
04/15/06 55,000 58,988
- --------------------------------------------------------------
Sr. Unsec. Gtd., 8.00%, 01/01/09 580,000 577,100
- --------------------------------------------------------------
Engle Homes Inc., Sr. Unsec. Gtd.
Sub. Notes, 9.25%, 02/01/08 350,000 349,125
- --------------------------------------------------------------
Schuler Homes, Sr. Unsec. Gtd.
Sub. Notes, 9.00%, 04/15/08 370,000 360,750
==============================================================
1,345,963
==============================================================
HOUSEWARES-0.32%
Decora Industries, Inc., Series B
Sr. Sec. Gtd. Notes, 11.00%,
05/01/05 350,000 341,250
==============================================================
INSURANCE (LIFE & HEALTH)-1.60%
Sun Life Canada Capital Trust,
Gtd. Notes, 8.526%, 05/29/49
(Acquired 11/05/98; Cost
$900,000)(b) 900,000 939,510
- --------------------------------------------------------------
Torchmark Corp., Notes, 7.875%,
05/15/23 750,000 762,585
==============================================================
1,702,095
==============================================================
INSURANCE (PROPERTY &
CASUALTY)-1.33%
Orion Capital Trust II, Gtd.
Notes, 7.701%, 04/15/28 500,000 422,365
- --------------------------------------------------------------
Terra Nova Holdings (United
Kingdom),
Gtd. Sr. Secured Notes, 7.20%,
08/15/07 500,000 500,695
- --------------------------------------------------------------
Sr. Unsec. Gtd. Notes, 7.00%,
05/15/08 (Acquired 05/12/98;
Cost $499,495)(b) 500,000 494,175
==============================================================
1,417,235
==============================================================
IRON & STEEL-0.45%
Acme Metal Inc., Sr. Unsec. Gtd.
Deb., 10.875%, 12/15/07(e) 438,000 54,750
- --------------------------------------------------------------
GS Industries, Inc., Sr. Gtd.
Notes, 12.00%, 09/01/04 200,000 175,000
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
IRON & STEEL-(CONTINUED)
Sheffield Steel Corp., First
Mortgage Notes, 11.50%, 12/01/05 $ 250,000 $ 243,750
==============================================================
473,500
==============================================================
LEISURE TIME (PRODUCTS)-0.47%
Marvel Enterprises Inc., 12.00%,
06/15/09 (Acquired 02/17/99;
Cost $480,000)(b) 480,000 495,600
==============================================================
LODGING-HOTELS-0.32%
John Q. Hammons Hotels Inc., Sec.
First Mortgage Notes, 9.75%,
10/01/05 100,000 95,500
- --------------------------------------------------------------
Stena Line A.B. (Sweden), Sr.
Yankee Notes, 10.625%, 06/01/08 310,000 243,350
==============================================================
338,850
==============================================================
MANUFACTURING (DIVERSIFIED)-0.32%
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07 380,000 343,900
==============================================================
MANUFACTURING (SPECIALIZED)-0.49%
First Wave Marine, Inc., Sr.
Notes, 11.00%, 02/01/08 250,000 237,500
- --------------------------------------------------------------
MMI Products Inc., Sr. Unsec. Sub.
Notes, 11.25%, 04/15/07 260,000 281,450
==============================================================
518,950
==============================================================
METALS MINING-0.23%
Rio Algom Ltd. (Canada), Yankee
Unsec. Deb., 7.05%, 11/01/05 250,000 246,518
==============================================================
NATURAL GAS-1.47%
Dynegy Inc., Sr. Unsec. Deb.,
7.125%, 05/15/18 500,000 483,370
- --------------------------------------------------------------
Enron Corp., Sr. Sub. Deb., 8.25%,
09/15/12 500,000 550,200
- --------------------------------------------------------------
K N Energy, Inc., Unsec. Deb.,
7.35%, 08/01/26 500,000 528,525
==============================================================
1,562,095
==============================================================
OIL & GAS (EXPLORATION & PRODUCTION)-2.12%
Abraxas Petroleum Corp., Series D
Sr. Unsec. Gtd. Notes, 11.50%,
11/01/04 25,000 14,750
- --------------------------------------------------------------
Canadian Forest Oil Ltd. (Canada),
Sr. Yankee Unsec. Sub. Notes,
8.75%, 09/15/07 780,000 766,350
- --------------------------------------------------------------
Chesapeake Energy Corp., Unsec.
Sr. Notes, 9.625%, 05/01/05 120,000 109,800
- --------------------------------------------------------------
Pogo Producing Co., Sr. Unsec.
Sub. Notes, 10.375%, 02/15/09 500,000 521,250
- --------------------------------------------------------------
Queen Sand Resources, Inc., Sr.
Unsec. Gtd. Notes, 12.50%,
07/01/08 160,000 112,800
- --------------------------------------------------------------
Talisman Energy, Inc. (Canada),
Yankee Deb.,
7.125%, 06/01/07 250,000 249,240
- --------------------------------------------------------------
7.25%, 10/15/27 500,000 476,425
==============================================================
2,250,615
==============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
OIL & GAS (REFINING & MARKETING)-0.62%
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.125%,
07/01/06 $ 750,000 $ 656,250
==============================================================
PERSONAL CARE-0.47%
Alberto-Culver Corp., Notes,
6.375%, 06/15/28 500,000 500,450
==============================================================
PHOTOGRAPHY IMAGING-0.46%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 470,000 493,500
==============================================================
POWER PRODUCERS (INDEPENDENT)-1.15%
AES Corp., Sr. Notes, 8.00%,
12/31/08 750,000 723,788
- --------------------------------------------------------------
Kincaid Generation LLC, Sec.
Bonds, 7.33%, 06/15/20 (Acquired
04/30/98; Cost $501,235)(b) 500,000 498,830
==============================================================
1,222,618
==============================================================
PUBLISHING (NEWSPAPERS)-0.28%
News America Holdings, Inc., Sr.
Gtd. Deb., 9.25%, 02/01/13 250,000 301,620
==============================================================
RAILROADS-1.86%
CSX Corp.,
Sr. Unsec. Deb., 7.25%, 05/01/27 750,000 785,738
- --------------------------------------------------------------
Series C, Medium Term Notes,
6.80%, 12/01/28 750,000 719,798
- --------------------------------------------------------------
Norfolk Southern Corp., Putable
Bonds, 7.05%, 05/01/37 450,000 468,976
==============================================================
1,974,512
==============================================================
REAL ESTATE INVESTMENT TRUST-1.23%
Glenborough Properties, Sr. Unsec.
Notes, 7.625%, 03/15/05 500,000 446,837
- --------------------------------------------------------------
Health Care REIT, Inc., Sr. Unsec.
Notes, 7.625%, 03/15/08 400,000 382,660
- --------------------------------------------------------------
Spieker Properties LP, Unsec.
Deb., 7.35%, 12/01/17 500,000 481,235
==============================================================
1,310,732
==============================================================
RETAIL (GENERAL MERCHANDISE)-0.17%
Plainwell Inc., Series B Sr.
Unsec. Sub. Notes, 11.00%,
03/01/08 230,000 185,150
==============================================================
RETAIL (SPECIALTY)-1.62%
CEX Holdings, Inc., Sr. Unsec.
Gtd. Notes, 9.625%, 06/01/08 300,000 288,000
- --------------------------------------------------------------
CSK Auto Inc., Sr. Gtd. Sub. Deb.,
11.00%, 11/01/06 130,000 137,150
- --------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.,
10.25%, 06/01/08 840,000 877,800
- --------------------------------------------------------------
Rent-A-Center Inc., Sr. Unsec.
Gtd. Sub., 11.00%, 08/15/08 350,000 371,875
- --------------------------------------------------------------
Wilson's-The Leather Experts,
Inc., Sr. Notes, 11.25%,
08/15/04 40,000 41,300
==============================================================
1,716,125
==============================================================
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-0.46%
J Crew Operating Corp., Sr. Sub.
Notes, 10.375%, 10/15/07 $ 150,000 $ 145,500
- --------------------------------------------------------------
Specialty Retailers, Inc., Sr.
Unsec. Gtd. Notes, 8.50%,
07/15/05 455,000 348,075
==============================================================
493,575
==============================================================
SAVINGS & LOAN COMPANIES-0.58%
Sovereign Bancorp, Inc., Sub.
Notes, 8.00%, 03/15/03 600,000 617,795
==============================================================
SERVICES-ADVERTISING-MARKETING-0.19%
MDC Communications Corp. (Canada),
Sr. Unsec. Sub. Notes, 10.50%,
12/01/06 200,000 207,000
==============================================================
SERVICES (COMMERCIAL & CONSUMER)-0.93%
Hydrochem Industrial Service, Co.
Sr. Sec. Gtd. Sub. Notes,
10.375%, 08/01/07 180,000 159,300
- --------------------------------------------------------------
Laidlaw, Inc. (Canada), Deb.,
6.70%, 05/01/08 500,000 471,835
- --------------------------------------------------------------
Willis Corroon Corp., Sr. Sub.
Notes, 9.00%, 02/01/09 (Acquired
01/28/99; Cost $350,000)(b) 350,000 356,125
==============================================================
987,260
==============================================================
SERVICES (EMPLOYMENT)-0.24%
MSX International Inc., Unsec. Sr.
Sub. Notes, 11.375%, 01/15/08 260,000 258,700
==============================================================
SHIPPING-0.22%
Pacific & Atlantic Holding, Notes,
11.50%, 05/30/08 390,000 235,950
==============================================================
SOVEREIGN DEBT-2.06%
Province of Manitoba (Canada),
Yankee Bonds, 7.75%, 07/17/16 550,000 612,827
- --------------------------------------------------------------
Province of Quebec (Canada),
Yankee Notes, 5.735%, 03/02/26 500,000 530,835
- --------------------------------------------------------------
Notes, 6.29%, 03/06/26 1,000,000 1,040,690
==============================================================
2,184,352
==============================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-2.18%
Metrocall Inc., Sr. Sub. Notes,
11.00%, 09/15/08 (Acquired
12/17/98; Cost $744,780)(b) 750,000 660,000
- --------------------------------------------------------------
Nextel Communications, Inc., Sr.
Notes, 12.00%, 11/01/08
(Acquired 10/28/98; Cost
$522,463)(b) 530,000 628,050
- --------------------------------------------------------------
PageMart Wireless, Inc., Sr. Sub.
Disc. Notes, 11.25%, 02/01/08(d) 600,000 225,000
- --------------------------------------------------------------
Powertel, Inc., Sr. Unsec. Notes,
11.125%, 06/01/07 760,000 801,800
==============================================================
2,314,850
==============================================================
TELECOMMUNICATIONS (LONG DISTANCE)-3.16%
Call-Net Enterprises, Inc.
(Canada), Sr. Notes, 8.94%,
08/15/08(c) 330,000 221,925
==============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-(CONTINUED)
Centel Capital, Deb., 9.00%,
10/15/19 $ 300,000 $ 364,221
- --------------------------------------------------------------
Econophone, Inc., Sr. Unsec.
Notes, 13.50%, 07/15/07 750,000 823,125
- --------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Yankee Notes,
11.50%, 12/15/07 250,000 280,000
- --------------------------------------------------------------
MCI Communications Corp., Putable
Sr. Unsec. Deb., 7.125%,
06/15/27 650,000 674,304
- --------------------------------------------------------------
Primus Telecom Group, Sr. Notes,
11.25%, 01/15/09 (Acquired
01/22/99; Cost $750,000)(b) 750,000 783,750
- --------------------------------------------------------------
Versatel Telecom B.V.
(Netherlands), Sr. Notes,
13.25%, 05/15/08 190,000 206,150
==============================================================
3,353,475
==============================================================
TELEPHONE-2.56%
Cable & Wireless Communications
PLC (United Kingdom), Yankee
Notes, 6.75%, 03/06/08 500,000 501,370
- --------------------------------------------------------------
Esat Holdings Ltd. (Ireland), Sr.
Yankee Notes, 12.50%,
02/01/07(d) 350,000 263,375
- --------------------------------------------------------------
ICG Services Inc., Sr. Unsec.
Disc. Notes, 10.00%, 02/15/08(d) 600,000 386,670
- --------------------------------------------------------------
Logix Communications, Sr. Unsec.
Notes, 12.25%, 06/15/08 350,000 345,625
- --------------------------------------------------------------
NTL Inc., Sr. Notes, 11.50%,
10/01/08 (Acquired 10/26/98;
Cost $415,000)(b) 415,000 469,988
- --------------------------------------------------------------
SBC Communications Inc., Deb.,
7.375%, 07/15/43 500,000 509,590
- --------------------------------------------------------------
Worldwide Fiber, Inc., Sr. Notes,
12.50%, 12/15/05 (Acquired
01/28/99; Cost $235,750)(b) 230,000 247,250
==============================================================
2,723,868
==============================================================
TRUCKERS-0.29%
Travelcenters of America Inc., Sr.
Unsec. Gtd. Sub. Deb., 10.25%,
04/01/07 290,000 306,675
- --------------------------------------------------------------
WASTE MANAGEMENT-0.97%
Browning-Ferris, Deb., 9.25%,
05/01/21 350,000 359,429
- --------------------------------------------------------------
WMX Technologies, Inc., Unsec.
Notes, 7.10%, 08/01/26 650,000 669,039
==============================================================
1,028,468
==============================================================
Total U.S. Dollar Denominated
Non-Convertible Bonds &
Notes (Cost $61,075,331) 60,373,756
==============================================================
NON-U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS & NOTES-20.90%
AUSTRALIA-1.10%
European Bank of Reconstruction
and Development (Banks-Money
Center), Sr. Unsub. Unsec.
Bonds, 6.65%, 02/10/28(c) AUD 10,000,000 1,173,408
==============================================================
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
CANADA-8.32%
Bank of Montreal (Banks-Money
Center), Sub. Deb., 7.92%,
07/31/12 CAD 300,000 $ 233,724
- --------------------------------------------------------------
Bell Canada
(Telecommunications-Cellular/
Wireless), Unsec. Deb., 10.875%,
10/11/04 250,000 213,467
- --------------------------------------------------------------
Bell Mobility Cellular
(Telecommunications-Cellular/
Wireless), Deb., 6.55%,
06/02/08 750,000 522,932
- --------------------------------------------------------------
Canadian Oil Debco Inc. (Oil &
Gas-Exploration & Production),
Deb., 11.00%, 10/31/00 450,000 331,019
- --------------------------------------------------------------
Canadian Pac Ltd. (Manufacturing-
Diversified), Unsec. Notes,
5.85%, 03/30/09 1,000,000 685,583
- --------------------------------------------------------------
Clearnet Communications
(Telecommunications-Cellular/
Wireless), Sr. Disc. Notes,
11.75%, 08/13/07(d) 1,100,000 537,551
- --------------------------------------------------------------
Sr. Disc. Notes, 10.40%,
05/15/08(d) 1,200,000 528,807
- --------------------------------------------------------------
Sr. Disc. Notes, 10.75%,
02/15/09(d) 1,300,000 537,209
- --------------------------------------------------------------
Loblaw Co. Ltd. (Retail-Food
Chains), Unsec. Notes, 6.45%,
03/01/39 750,000 516,667
- --------------------------------------------------------------
Molson Breweries Co. Ltd.
(Beverages- Alcoholic), Unsub.
Notes, 6.00%, 06/02/08 700,000 488,459
- --------------------------------------------------------------
NAV Canada (Services-Commercial &
Consumer), Bonds, 7.40%,
06/01/27 1,000,000 825,412
- --------------------------------------------------------------
Ontario Hydro (Electric
Companies), Deb., 9.00%,
06/24/02 1,000,000 764,150
- --------------------------------------------------------------
Ontario Hydro Residual (Electric
Companies), Deb., 10.00%,
02/06/20(c) 2,750,000 560,185
- --------------------------------------------------------------
Poco Petroleums Ltd. (Oil &
Gas-Exploration & Production),
Unsec. Deb., 6.60%, 09/11/07 750,000 504,578
- --------------------------------------------------------------
Telegobe Canada, Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 650,000 492,591
- --------------------------------------------------------------
Trans-Canada Pipelines (Natural
Gas),
Unsec. Notes, 8.55%, 02/01/06 500,000 396,111
- --------------------------------------------------------------
Series Q Deb., 10.625%, 10/20/09 375,000 347,667
- --------------------------------------------------------------
Westcoast Energy, Inc. (Natural
Gas), Deb., 6.45%, 12/18/06 500,000 357,253
==============================================================
8,843,365
==============================================================
GERMANY-1.98%
Dresdner Finance B.V. (Banks-Major
Regional), Gtd. Floating Rate
Notes Series 11, 2.619%, 07/30/03
EUR 1,000,000 1,053,697
- --------------------------------------------------------------
Hypovereins Finance N.V.
(Banks-Major Regional), Gtd.
Notes, 6.00%, 03/12/07 DEM 250,000 148,819
- --------------------------------------------------------------
International Bank for
Reconstruction & Development
(Banks-Money Center), Unsec.
Global Bonds, 7.125%,
04/12/05 DEM 1,400,000 896,743
==============================================================
2,099,259
==============================================================
NETHERLANDS-1.48%
Prudential Financial B.V.
(Investment Banking/ Brokerage),
Sr. Unsec. Gtd. Bonds, 9.375%,
06/04/07 NLG 800,000 1,573,970
==============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
NEW ZEALAND-2.30%
Inter-American Development Bank,
(Banks-Money Center), Unsec.
Notes, 5.75%, 04/15/04 NZD 2,000,000 $ 1,108,548
- --------------------------------------------------------------
International Bank for
Reconstruction & Development
(Banks-Money Center),
Unsec. Notes, 5.50%, 04/15/04 800,000 438,836
- --------------------------------------------------------------
Sr. Unsec. Notes, 6.77%,
08/20/07(c) 750,000 242,399
- --------------------------------------------------------------
Sr. Unsec. Sub. Notes, 5.50%,
11/03/08 1,250,000 655,350
==============================================================
2,445,133
==============================================================
SWEDEN-0.87%
A.B. Spintab (Banks-Regional),
Unsec. Deb., 7.50%, 06/15/04 SEK 6,700,000 918,639
==============================================================
UNITED KINGDOM-3.77%
European Investment Bank
(Banks-Money Center), Unsec.
Unsub. Notes, 7.625%,
12/07/07 GBP 550,000 1,021,379
- --------------------------------------------------------------
Merrill Lynch & Co. (Investment
Banking/ Brokerage), Sr. Unsec.
Unsub. Notes, 7.375%, 12/17/07 300,000 523,335
- --------------------------------------------------------------
National Power PLC (Electric
Companies), Sr. Unsec. Unsub.
Bonds, 8.00%, 02/21/07 AUD 800,000 567,768
- --------------------------------------------------------------
Sutton Bridge Financial Ltd.
(Financial- Diversified), Gtd.
Eurobonds, 8.625%, 06/30/22
(Acquired 05/29/97; Cost
$733,665)(b) GBP 450,000 863,958
- --------------------------------------------------------------
Union Bank Switzerland London,
(Banks-Major Regional), Unsec.
Sub. Notes, 7.375%, 11/26/04 600,000 1,032,105
==============================================================
4,008,545
==============================================================
UNITED STATES-1.08%
General Electric Capital Corp.,
Sr. Unsec. Unsub. Mtn., 6.00%,
02/05/03 GBP 700,000 1,143,681
==============================================================
Total Non-U.S. Dollar
Denominated Non-Convertible
Bonds & Notes (Cost
$22,058,086) 22,206,000
==============================================================
NON-U.S. DOLLAR DENOMINATED GOVERNMENT BONDS &
NOTES-11.02%
AUSTRALIA-0.63%
Australian Government, Bonds,
9.50%, 08/15/03 AUD 880,000 678,732
==============================================================
CANADA-3.42%
British Columbia Generic Residual,
Deb., 13.88%, 06/21/04(c) CAD 150,000 78,961
- --------------------------------------------------------------
British Columbia Municipal Finance
Authority, Bonds, 7.75%,
12/01/05 500,000 389,043
- --------------------------------------------------------------
Canada Government, Bonds, 7.00%,
12/01/06 1,000,000 766,262
- --------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Ontario Province,
Deb., 11.125%, 02/14/01 GBP 650,000 $ 1,135,607
- --------------------------------------------------------------
Sr. Unsub. Notes, 8.00%,
03/11/03 CAD 600,000 453,449
- --------------------------------------------------------------
Unsec. Unsub. Notes, 6.25%,
12/03/08 NZD 1,500,000 810,475
==============================================================
3,633,797
==============================================================
GERMANY-4.75%
Bundesrepublik Deutschland, Bonds,
7.25%, 10/21/02 EUR 1,460,000 1,757,550
- --------------------------------------------------------------
Treuhandanstalt,
Gtd. Notes, 6.00%, 11/12/03 1,460,000 1,723,930
- --------------------------------------------------------------
Gtd. Notes, 7.50%, 09/09/04 1,225,000 1,556,543
==============================================================
5,038,023
==============================================================
NEW ZEALAND-0.51%
New Zealand Government, Bonds,
8.00%, 04/15/04 NZD 875,000 544,078
==============================================================
SWEDEN-0.91%
Swedish Government, Bonds, 6.50%,
10/25/06 SEK 7,000,000 969,139
==============================================================
UNITED KINGDOM-0.80%
United Kingdom Treasury, Bonds,
7.50%, 12/07/06 GBP 450,000 846,594
==============================================================
Total Non-U.S. Dollar
Denominated Government Bonds
& Notes (Cost $11,616,617) 11,710,363
==============================================================
U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS & NOTES-1.12%
RETAIL (SPECIALTY)-0.60%
Amazon.com Inc., Conv. Deb., 4.75%
(Acquired 01/29/99; Cost
$501,875)(b) $ 500,000 639,688
==============================================================
TELEPHONE-0.52%
Bell Atlantic Financial Service,
Conv. Bonds, 4.25%, 09/15/05 500,000 550,772
==============================================================
Total U.S. Dollar Denominated
Convertible Bonds & Notes
(Cost $1,056,875) 1,190,460
==============================================================
NON-U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS & NOTES-2.74%
GERMANY-0.43%
Daimler-Benz A.G. (Automobiles),
Conv. Gtd. Unsub. Eurobonds,
4.125%, 07/05/03 DEM 430,000 452,937
==============================================================
UNITED KINGDOM-2.31%
Airtours PLC, (Services-Commercial
& Consumer) Conv. Sub. Notes,
5.75%, 01/05/04(b) (Acquired
12/09/98; Cost $494,636) GBP 299,000 533,277
- --------------------------------------------------------------
National Grid Co. PLC, (Electric
Companies), Conv. Bonds, 4.25%,
02/17/08 250,000 472,024
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Scotia Holdings PLC (Health
Care-Drugs-Generic & Other),
Conv. Unsec. Unsub. Notes,
8.50%, 03/26/02 GBP 650,000 $ 773,145
- --------------------------------------------------------------
Telewest Communications PLC
(Leisure Time-Products), Sr.
Unsec. Conv. Notes, 5.25%,
02/19/07 400,000 674,792
==============================================================
2,453,238
==============================================================
Total Non-U.S. Dollar
Denominated Convertible
Bonds & Notes (Cost
$2,610,756) 2,906,175
==============================================================
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
DOMESTIC COMMON STOCKS-0.02%
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.02%
Nextel Communications, Inc.-Class
A (Cost $8,984)(e) 556 22,760
==============================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-0.13%
FRANCE-0.06%
Societe Generale (Banks-Major
Regional) 350 62,643
==============================================================
UNITED KINGDOM-0.07%
Glaxo Wellcome PLC (Health Care-
Drugs-Generic & Other) 2,607 77,079
==============================================================
Total Foreign Stocks & Other
Equity Interests (Cost
$84,949) 139,722
==============================================================
DOMESTIC CONVERTIBLE PREFERRED
STOCKS-0.52%
BANKS (REGIONAL)-0.52%
Westpac Banking Corp. STRYPES
Trust-$3.135 Conv. Pfd. (Cost
$501,600) 16,000 555,000
==============================================================
RIGHTS & WARRANTS-0.07%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.00%
Knology Holdings, Inc., expiring
10/15/07 (Acquired 03/12/98;
Cost $0)(g) 700 2,100
- --------------------------------------------------------------
Wireless One, Inc., expiring
10/19/00(g) 150 2
==============================================================
2,102
==============================================================
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, expiring
02/01/04(g) 290 1,450
==============================================================
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.01%
MVE Inc., expiring 02/15/02(g) 100 4,000
==============================================================
PERSONAL CARE-0.00%
IHF Capital Inc., Series I,
expiring 11/14/99(g) 70 35
==============================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.01%
Clearnet Communications Inc.,
expiring 09/15/05(g) 330 2,805
==============================================================
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS
(CELLULAR/WIRELESS)-(CONTINUED)
Orion Network Systems, Inc.,
expiring 01/15/07(g) 420 $ 4,358
==============================================================
7,163
==============================================================
TELECOMMUNICATIONS (LONG
DISTANCE)-0.01%
Versatel, expiring 01/15/07(g) 190 13,347
==============================================================
TELEPHONE-0.04%
ESAT Holdings Ltd., expiring
02/01/07(g) 350 28,175
- --------------------------------------------------------------
Intermedia Communications Inc.,
expiring 06/01/00 (Acquired
05/25/95; Cost $0)(g) 150 15,600
==============================================================
43,775
==============================================================
Total Rights & Warrants (Cost
$2,811) 71,872
==============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-3.72%
Notes, 5.75%, 04/30/03 $ 200,000 $ 203,550
- --------------------------------------------------------------
Notes, 6.875%, 05/15/06 1,500,000 1,624,410
- --------------------------------------------------------------
Bonds, 6.125%, 11/15/27 2,050,000 2,118,183
==============================================================
Total U.S. Treasury Securities
(Cost $4,078,289) 3,946,143
==============================================================
U.S. GOVERNMENT AGENCY
SECURITIES-1.02%
Fannie Mae, Unsec. Sr. Notes,
6.875%, 06/07/02(f) (Cost
$1,078,336) GBP 650,000 1,085,776
==============================================================
REPURCHASE AGREEMENT(h)-1.67%
West LB Securities Americas, Inc.,
4.88%, 04/30/99(i) (Cost
$1,772,440) $ 1,772,440 1,772,440
==============================================================
TOTAL INVESTMENTS-99.75% 105,980,467
==============================================================
OTHER ASSETS LESS
LIABILITIES-0.25% 268,166
==============================================================
NET ASSETS-100.00% $106,248,633
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Principal Amount is in U.S. Dollars, except as indicated by note (f).
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144 under Securities Act of 1933, as
amended. The valuation of these securities has been determined in accordance
with procedures established bye the Board of Directors. The aggregate market
value of these securities at 04/30/99 was $9,095,001 which represented 8.30%
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) Non-income producing security.
(f) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(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 is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(i) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$250,101,667. Collateralized by $249,045,000, U.S. Government obligations,
4.00% to 8.75% due 08/31/00 to 11/15/08 with an aggregate market value at
04/30/99 of $255,023,179.
Abbreviations:
CAD - Canadian Dollar
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
DEM - German Deutschmark
Disc. - Discounted
EUR - Euro
FRF - French Franc
GBP - British Pound Sterling
Gtd. - Guaranteed
Mtn. - Medium Term Notes
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, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$105,945,074) $105,980,467
- -----------------------------------------------------------
Receivables for:
Investments sold 818,899
- -----------------------------------------------------------
Forward currency contracts 21,386,382
- -----------------------------------------------------------
Capital stock sold 250,251
- -----------------------------------------------------------
Dividends and interest 2,422,431
- -----------------------------------------------------------
Investment for deferred compensation plan 16,701
- -----------------------------------------------------------
Other assets 67,542
===========================================================
Total assets 130,942,673
===========================================================
LIABILITIES:
Payables for:
Investments purchased 1,862,185
- -----------------------------------------------------------
Forward currency contracts 21,712,545
- -----------------------------------------------------------
Capital stock reacquired 818,245
- -----------------------------------------------------------
Dividends 107,189
- -----------------------------------------------------------
Deferred compensation plan 16,701
- -----------------------------------------------------------
Accrued advisory fees 44,157
- -----------------------------------------------------------
Accrued administrative services fees 11,800
- -----------------------------------------------------------
Accrued directors' fees 2,000
- -----------------------------------------------------------
Accrued distribution fees 64,271
- -----------------------------------------------------------
Accrued transfer agent fees 46,550
- -----------------------------------------------------------
Accrued operating expenses 8,397
===========================================================
Total liabilities 24,694,040
===========================================================
Net assets applicable to shares outstanding $106,248,633
===========================================================
NET ASSETS:
Class A $ 64,692,930
===========================================================
Class B $ 39,572,911
===========================================================
Class C $ 1,982,792
===========================================================
Capital stock, $0.001 par value per share:
Class A:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 6,154,264
===========================================================
Class B:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 3,766,232
===========================================================
Class C:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 188,803
===========================================================
Class A:
Net asset value and redemption price per
share $ 10.51
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $10.51
divided by 95.25%) $ 11.03
===========================================================
Class B:
Net asset value and offering price per
share $ 10.51
===========================================================
Class C:
Net asset value and offering price per
share $ 10.50
===========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 3,896,998
- ------------------------------------------------------------
Dividends (net of $146 foreign withholding
tax) 30,188
============================================================
Total investment income 3,927,186
============================================================
EXPENSES:
Advisory fees 364,471
- ------------------------------------------------------------
Administrative services fees 48,104
- ------------------------------------------------------------
Custodian fees 17,977
- ------------------------------------------------------------
Directors' fees 3,834
- ------------------------------------------------------------
Distribution fees-Class A 155,945
- ------------------------------------------------------------
Distribution fees-Class B 199,021
- ------------------------------------------------------------
Distribution fees-Class C 9,761
- ------------------------------------------------------------
Transfer agent fees-Class A 66,579
- ------------------------------------------------------------
Transfer agent fees-Class B 42,485
- ------------------------------------------------------------
Transfer agent fees-Class C 2,084
- ------------------------------------------------------------
Other 63,167
============================================================
Total expenses 973,428
============================================================
Less:
Fees waived by advisor (216,548)
- ------------------------------------------------------------
Expenses paid indirectly (1,144)
============================================================
Net expenses 755,736
============================================================
Net investment income 3,171,450
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,324,742)
- ------------------------------------------------------------
Foreign currencies (40,290)
- ------------------------------------------------------------
Forward currency contracts 320,751
============================================================
(1,044,281)
============================================================
Net unrealized appreciation (depreciation) of:
Investment securities 386,551
- ------------------------------------------------------------
Foreign currencies (22,215)
- ------------------------------------------------------------
Forward currency contracts (61,424)
============================================================
302,912
============================================================
Net gain (loss) from investment securities,
foreign currencies and forward currency
contracts (741,369)
============================================================
Net increase in net assets resulting from
operations $ 2,430,081
============================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1999 and the year ended October 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1999 1998
------------ -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,171,450 $ 4,564,973
- -----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and forward currency contracts (1,044,281) (293,145)
- -----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities, foreign currencies and forward currency
contracts 302,912 (2,380,155)
=========================================================================================
Net increase in net assets resulting from operations 2,430,081 1,891,673
=========================================================================================
Distributions to shareholders from net investment income:
Class A (2,061,794) (2,295,926)
- -----------------------------------------------------------------------------------------
Class B (1,211,125) (1,495,827)
- -----------------------------------------------------------------------------------------
Class C (59,362) (42,707)
- -----------------------------------------------------------------------------------------
Return of capital distribution:
Class A -- (354,717)
- -----------------------------------------------------------------------------------------
Class B -- (250,576)
- -----------------------------------------------------------------------------------------
Class C -- (8,211)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (258,088)
- -----------------------------------------------------------------------------------------
Class B -- (181,448)
- -----------------------------------------------------------------------------------------
Class C -- (5,682)
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 7,125,285 29,014,691
- -----------------------------------------------------------------------------------------
Class B 3,384,503 12,527,487
- -----------------------------------------------------------------------------------------
Class C 215,340 1,597,917
=========================================================================================
Net increase in net assets 9,822,928 40,138,586
=========================================================================================
NET ASSETS:
Beginning of period 96,425,705 56,287,119
=========================================================================================
End of period $106,248,633 $96,425,705
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $107,520,348 $96,795,220
- -----------------------------------------------------------------------------------------
Undistributed net investment income 61,667 222,498
- -----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and forward currency
contracts (1,029,026) 15,255
- -----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and forward currency
contracts (304,356) (607,268)
=========================================================================================
$106,248,633 $96,425,705
=========================================================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
(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. 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 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 closing bid price 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 the last bid and asked prices based upon quotes furnished by
market makers for such securities. Each security reported in the NASDAQ
National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the closing bid price. Securities for
which market quotations are 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. Bond Premiums-It is the policy of the Fund not to amortize market premiums on
bonds for financial reporting purposes.
C. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
D. Foreign Currency Contracts-A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
Outstanding contracts at April 30, 1999 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACT TO APPRECIATION/
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
- --------------- ----------- ----------- ----------- --------------
<C> <S> <C> <C> <C> <C>
05/04/99 CAD 6,500,000 $ 4,295,277 $ 4,458,213 $(162,936)
05/04/99 CAD 1,900,000 1,255,385 1,303,170 (47,785)
05/10/99 AUD 1,000,000 649,600 661,763 (12,163)
05/11/99 GBP 350,000 572,740 562,937 9,803
05/18/99 AUD 1,000,000 639,140 661,774 (22,634)
05/26/99 NZD 3,200,000 1,699,680 1,792,778 (93,098)
05/28/99 GBP 2,300,000 3,688,165 3,698,567 (10,402)
07/06/99 GBP 825,000 1,330,634 1,326,270 4,364
07/06/99 GBP 25,000 40,466 40,190 276
07/12/99 GBP 3,350,000 5,389,899 5,385,328 4,571
07/12/99 GBP 300,000 484,482 482,268 2,214
07/12/99 GBP 200,000 322,660 321,512 1,148
07/13/99 NZD 350,000 187,077 196,203 (9,126)
07/22/99 SEK 6,900,000 831,177 821,572 9,605
----------- ----------- ---------
$21,386,382 $21,712,545 $(326,163)
=========== =========== =========
</TABLE>
E. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the
13
<PAGE> 16
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.
F. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements.
G. 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 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, 1999, AIM waived fees of $216,548.
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, 1999, AIM was
reimbursed $48,104 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, 1999, the Fund paid
AFS $69,464 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 of the Class B shares. Of these amounts,
the Fund may pay a service fee of 0.25% of the average daily net assets of the
Class A, Class B or C shares to selected dealers and financial institutions who
furnish continuing personal shareholder services to their customers who purchase
and own the appropriate class of shares of the Fund. Any amounts not paid as a
service fee under the Plans would constitute an asset-based sales charge. The
Plans also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by the respective classes. During the six months ended
April 30, 1999, the Class A, Class B and Class C shares paid AIM Distributors
$155,945, $199,021 and $9,761, respectively, as compensation under the Plans.
AIM Distributors received commissions of $18,530 from sales of the Class A
shares of the Fund during the six months ended April 30, 1999. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in
the proceeds from sales of Class A shares. During the six months ended April 30,
1999, AIM Distributors received commissions of $1,023 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, 1999, the Fund incurred legal fees of
$922 for services rendered by the law firm of Kramer, Levin, Naftalis, & Frankel
LLP 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, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $633 and $511, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $1,144 during the six months ended April 30, 1999.
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) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended April 30, 1999, 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.
14
<PAGE> 17
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, 1999 was
$54,968,941, and $43,131,192, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1999, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $2,711,811
- ------------------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (2,676,418)
- ------------------------------------------------------------------------
Net unrealized appreciation of
investment securities $ 35,393
========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 7-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the six months ended
April 30, 1999 and the year ended October 31, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1999 OCTOBER 31, 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 1,745,748 $18,534,230 3,840,125 $41,970,650
- -----------------------------------------------------------------------------
Class B 887,003 9,414,636 1,818,456 19,865,377
- -----------------------------------------------------------------------------
Class C 64,774 686,190 155,501 1,696,174
- -----------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 158,335 1,678,688 221,486 2,412,254
- -----------------------------------------------------------------------------
Class B 93,219 988,204 144,487 1,573,639
- -----------------------------------------------------------------------------
Class C 4,519 47,903 4,387 47,595
- -----------------------------------------------------------------------------
Reacquired:
Class A (1,234,932) (13,087,633) (1,406,526) (15,368,213)
- -----------------------------------------------------------------------------
Class B (663,358) (7,018,337) (814,522) (8,911,529)
- -----------------------------------------------------------------------------
Class C (49,162) (518,753) (13,394) (145,852)
- -----------------------------------------------------------------------------
1,006,146 $10,725,128 3,950,000 $43,140,095
=============================================================================
</TABLE>
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, 1999, each of
the years in the four-year period ended October 31, 1998 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, 1999, the year ended October 31, 1998 and the period August 4, 1997 (date
sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------
OCTOBER 31,
APRIL 30, ------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---------- ---------- ---------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.60 $ 10.93 $ 10.85 $10.74 $10.02 $10.00
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.33 0.71 0.72 0.79(a) 0.79 0.08
- -------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (0.07) (0.27) 0.21 0.25 0.75 0.01
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.26 0.44 0.93 1.04 1.54 0.09
- -------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from investment income (0.35) (0.61) (0.72) (0.81) (0.82) (0.07)
- -------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.07) (0.13) (0.12) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Return of capital -- (0.09) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.35) (0.77) (0.85) (0.93) (0.82) (0.07)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.51 $ 10.60 $ 10.93 $10.85 $10.74 $10.02
===============================================================================================================================
Total return(b) 2.45% 3.95% 9.05% 10.22% 16.07% 0.93%
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $64,693 $58,115 $30,924 $21,926 $10,004 $2,661
===============================================================================================================================
Ratio of expenses to average net assets(c) 1.25%(d) 1.23% 1.25% 1.25% 1.25% 1.25%(e)
===============================================================================================================================
Ratio of net investment income to average net
assets(f) 6.29%(d) 6.38% 6.54% 7.27% 7.38% 6.01%(e)
===============================================================================================================================
Portfolio turnover rate 42% 47% 61% 83% 128% 6%
===============================================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is 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
1.67% (annualized), 1.73%, 1.86%, 2.02%, 3.03% and 5.61% (annualized) for
the periods 1999-1994.
(d) Ratios are annualized and based on average net assets of $62,895,013.
(e) Annualized.
(f) 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 5.87% (annualized), 5.89%, 5.93%, 6.51%, 5.59% and 1.65%
(annualized) for the periods 1999-1994.
15
<PAGE> 18
NOTE 8-FINANCIAL HIGHLIGHTS-continued
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------------- -----------------------------
OCTOBER 31, OCTOBER 31,
APRIL 30, ------------------------------------------------- APRIL 30, ----------------
1999 1998 1997 1996 1995 1994 1999 1998 1997
--------- ------- ------- ------- ------ ------ --------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 10.59 $ 10.92 $ 10.84 $ 10.73 $10.01 $10.00 $10.59 $10.92 $10.76
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.30 0.65 0.67 0.74(a) 0.74 0.07 0.30 0.66 0.15(a)
- --------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized and
unrealized) (0.06) (0.27) 0.21 0.24 0.75 0.01 (0.07) (0.28) 0.17
================================================================================================================================
Total from investment
operations 0.24 0.38 0.88 0.98 1.49 0.08 0.23 0.38 0.32
================================================================================================================================
Less distributions:
Dividends from investment
income (0.32) (0.55) (0.67) (0.75) (0.77) (0.07) (0.32) (0.55) (0.13)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized
gains -- (0.07) (0.13) (0.12) -- -- -- (0.07) (0.03)
- --------------------------------------------------------------------------------------------------------------------------------
Return of capital -- (0.09) -- -- -- -- -- (0.09) --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.32) (0.71) (0.80) (0.87) (0.77) (0.07) (0.32) (0.71) (0.16)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.51 $ 10.59 $ 10.92 $ 10.84 $10.73 $10.01 $10.50 $10.59 $10.92
================================================================================================================================
Total return(b) 2.28% 3.38% 8.48% 9.66% 15.56% 0.79% 2.18% 3.39% 2.99%
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $39,573 $36,525 $25,121 $16,787 $4,207 $ 362 $1,983 $1,785 $ 242
================================================================================================================================
Ratio of expenses to average net
assets(c) 1.75%(d) 1.75% 1.76% 1.75% 1.74% 1.73%(e) 1.75%(d) 1.73% 1.76%(e)
================================================================================================================================
Ratio of net investment income to
average net assets(f) 5.79%(d) 5.87% 6.03% 6.77% 6.88% 3.59%(e) 5.79%(d) 5.88% 6.03%(e)
================================================================================================================================
Portfolio turnover rate 42% 47% 61% 83% 128% 6% 42% 47% 61%
================================================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.17% (annualized), 2.25%, 2.37%, 2.53%, 3.57% and 22.09% (annualized) for
1999-1994 for Class B and 2.17% (annualized), 2.22% and 2.37% (annualized)
for 1999-1997 for Class C.
(d) Ratios are annualized and based on average net assets of $40,134,109 and
$1,968,359 for Class B and Class C, respectively.
(e) Annualized.
(f) 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 5.37% (annualized), 5.37%, 5.42%, 6.00%, 5.05% and
(16.77)% (annualized) for 1999-1994 for Class B and 5.38% (annualized),
5.40% and 5.42% (annualized) for 1999-1997 for Class C.
16
<PAGE> 19
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Robert G. Alley Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox
President, Mercantile Bankshares Vice President State Street Bank and Trust Company
225 Franklin Street
Jack Fields Edgar M. Larsen Boston MA 02110
Chief Executive Officer Vice President
Texana Global, Inc.; COUNSEL TO THE FUND
Formerly Member Mary J. Benson
of the U.S. House of Representatives Assistant Vice President Ballard Spahr
and Assistant Treasurer Andrews & Ingersoll, LLP
Carl Frischling 1735 Market Street
Partner Sheri Morris Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel LLP Assistant Vice President
and Assistant Treasurer COUNSEL TO THE DIRECTORS
Robert H. Graham
President and Chief Executive Officer Renee A. Friedli Kramer, Levin, Naftalis & Frankel LLP
A I M Management Group Inc. Assistant Secretary 919 Third Avenue
New York, NY 10022
Prema Mathai-Davis P. Michelle Grace
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary DISTRIBUTOR
Commissioner, New York City Dept. for the
Aging; and member of the Board of Directors, Jeffrey H. Kupor A I M Distributors, Inc.
Metropolitan Transportation Authority of Assistant Secretary 11 Greenway Plaza
New York State Suite 100
Nancy L. Martin Houston, TX 77046
Lewis F. Pennock Assistant Secretary
Attorney
Ofelia M. Mayo
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Lisa A. Moss
Limited Partnership Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
<PAGE> 20
THE AIM FAMILY OF FUNDS--REGISTRATION MARK--
GROWTH FUNDS
AIM Aggressive Growth Fund(1)
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM Dent Demographic Trends Fund
AIM Large Cap Growth Fund
AIM Mid Cap Equity Fund(2),(A)
AIM Select Growth Fund(3)
AIM Small Cap Growth Fund(2),(B)
AIM Small Cap Opportunities Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Basic Value Fund(2),(C)
AIM Charter Fund
INCOME FUNDS
AIM Floating Rate Fund(2)
AIM High Yield Fund
AIM High Yield Fund II
AIM Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
TAX-FREE INCOME FUNDS
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
MONEY MARKET FUNDS
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
INTERNATIONAL GROWTH FUNDS
AIM Advisor International Value Fund
AIM Asian Growth Fund
AIM Developing Markets Fund(2)
AIM Europe Growth Fund(2)
AIM European Development Fund
AIM International Equity Fund
AIM Japan Growth Fund(2)
AIM Latin American Growth Fund(2)
AIM New Pacific Growth Fund(2)
GLOBAL GROWTH FUNDS
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
GLOBAL GROWTH & INCOME FUNDS
AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund
GLOBAL INCOME FUNDS
AIM Emerging Markets Debt Fund(2),(D)
AIM Global Government Income Fund(2)
AIM Global Income Fund
AIM Strategic Income Fund(2)
THEME FUNDS
AIM Global Consumer Products and Services Fund(2)
AIM Global Financial Services Fund(2)
AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
AIM Global Telecommunications and Technology Fund(2),(E)
AIM Global Trends Fund(2),(F)
(1)AIM Aggressive Growth Fund reopened to new investors November 16, 1998.
(2)Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds. (3)On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth
Fund. (A)On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B)On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C)On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D)On September 8, 1998, AIM Global High Income
Fund was renamed AIM Emerging Markets Debt Fund. (E)On September 8, 1998, AIM
New Dimension Fund was renamed AIM Global Trends Fund. (F)On June 1, 1999, AIM
Global Telecommunications Fund was renamed AIM Global Telecommunications and
Technology Fund. For more complete information about any AIM Fund(s), including
sales charges and expenses, ask your financial consultant or securities dealer
for a free prospectus(es). Please read the prospectus(es) carefully before you
invest or send money.
------------------------------
A I M MANAGEMENT GROUP INC. HAS PROVIDED LEADERSHIP
IN THE MUTUAL-FUND INDUSTRY SINCE 1976 AND MANAGED
APPROXIMATELY $112 BILLION IN ASSETS FOR MORE THAN
6.3 MILLION SHAREHOLDERS, INCLUDING INDIVIDUAL
INVESTORS, CORPORATE CLIENTS AND FINANCIAL
INSTITUTIONS AS OF MARCH 31, 1999.
THE AIM FAMILY OF FUNDS--REGISTRATION MARK--
IS DISTRIBUTED NATIONWIDE, AND AIM TODAY IS THE
10TH-LARGEST MUTUAL-FUND COMPLEX IN THE UNITED
STATES IN ASSETS UNDER MANAGEMENT, ACCORDING TO
STRATEGIC INSIGHT, AN INDEPENDENT MUTUAL-FUND
MONITOR.
------------------------------
[AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE--REGISTERED TRADEMARK--
GI-SAR-1
