<PAGE> 1
ANNUAL REPORT / OCTOBER 31 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 ARE
NOW NO 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 average annual total returns, including sales charges, for the
periods ended 9/30/99, the most recent calendar quarter end, were as
follows: for Class A shares, one year, -7.39%; five years, 6.57%; inception
(9/15/94), 6.53%. For Class B shares, one year, -7.93%; five years, 6.75%;
inception (9/15/94), 6.85%. For Class C shares, one year, -4.29%; inception
(8/4/97), 2.09%.
o The 30-day yield is calculated on the basis of a formula defined by the SEC.
The formula is based on the portfolio's potential earnings from dividends,
interest, yield-to-maturity or yield-to-call of the bonds in the portfolio,
net of all expenses and expressed on an annualized basis.
o The fund's annualized distribution rate reflects the fund's most recent
monthly dividend distribution multiplied by 12 and divided by the most
recent month-end net asset value.
o Government securities, such as U.S. Treasury bills, notes and bonds, offer a
high degree of safety and are guaranteed as to the timely payment of
principal and interest if held to maturity. Fund shares are not insured, and
their value will vary with market conditions.
o 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.
o The fund invests in higher-yielding, lower-rated corporate bonds, commonly
known as "junk bonds." These bonds have a greater risk of price fluctuation
and loss of principal and income than U.S. government securities, such as
U.S. Treasury bonds and bills, which offer a government guarantee as to the
repayment of principal and interest if held to maturity.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lehman Government Bond Index is generally considered
representative of intermediate and long-term U.S. Treasury and U.S.
government agency securities.
o The unmanaged Salomon Brothers World Government Bond Index is a 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
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
[PHOTO OF The fiscal year discussed in this report reconfirmed our
Charles T. faith in two long-established principles of investing:
Bauer, portfolio diversification and long-term thinking. We could
Chairman of title this report "What a Difference a Year Makes."
the Board of An investor surveying conditions when the fiscal year
THE FUND opened on October 31, 1998, saw a market dominated by
APPEARS HERE] large-capitalization stocks and high-quality bonds,
especially U.S. Treasuries. Ten months into 1998, two
well-known indexes of large-capitalization U.S. company
stocks, the S&P 500 and the Dow Jones Industrial Average,
were up by double digits, but the smaller-company stocks in
the Russell 2000 had lost 12.80%. Overseas, many markets
were languishing, especially in Asia, where many financial
difficulties originated in 1997.
In bond markets also, name-brand quality was the place
to be. The Lehman Corporate/Government Bond Index, which
follows intermediate and long-term government and investment-grade debt, was up
8.56%, while the Lehman High Yield Index, which tracks riskier "junk bonds," had
dropped 2.30%.
It would be easy for an investor to conclude that blue chips, whether equity
or fixed-income, were the only place to be. That investor, of course, would be
wrong.
MARKETS TURN
While large-capitalization stocks continue to do very well, during 1999 markets
broadened considerably, with many investment sectors performing a complete
turnaround. Year to date by October 31, 1999, the small-cap stocks in the
Russell 2000 were back in positive territory, and the many Asian markets had
staged a comeback. The same holds true for bonds. The higher-quality Lehman
index is down 1.49% year to date through October 31, 1999, while high-yield
bonds have moved into positive returns.
The point, at the risk of sounding repetitive to those of you who have
invested with us for a long time, is that this is why diversification is a
fundamental investing principle. Market sectors and asset classes go in and out
of favor, but over the long run--and the long run is several years--the markets'
overall trend has been upward. Selecting an asset class or a market sector on
the basis of a short-term snapshot of conditions is usually unwise, as is
concentrating your portfolio in one asset class. Staying fully invested in a
diversified portfolio remains a compelling strategy and one of your best
prospects for long-term gain.
LOOKING AHEAD
As we look about at the close of this fiscal year, we are encouraged by signs of
economic health in Europe and Asia, not to mention the prolonged U.S. economic
expansion. However, we are aware of how easily an investor could have been
misled by conditions just 12 months ago. For our shareholders, we therefore
reiterate our commitment to investing through a financial advisor. In addition
to helping you select investments appropriate to your time horizon and risk
tolerance, a financial advisor can keep you informed about how changing market
conditions affect you and your portfolio and can help assure that when you do
alter your investments, there's a logical reason for doing so. AIM believes
every investor should be guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the year ended October 31, 1999, how the markets
behaved and what they foresee for the near future. We trust you will find their
discussion informative. If you have any questions or comments, we invite you to
contact us, either at our Web site, aimfunds.com, or through our Client Services
department at 800-959-4246. Information about your account is also available
through our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
- --Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
-------------------------------------
STAYING FULLY
INVESTED IN A DIVERSIFIED PORTFOLIO REMAINS
A COMPELLING STRATEGY AND ONE OF YOUR
BEST PROSPECTS FOR LONG-TERM GAIN.
-------------------------------------
AIM GLOBAL INCOME FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
DESPITE CHALLENGING MARKET,
FUND PROVIDES SOLID INCOME
THE MARKET ENVIRONMENT WAS DIFFICULT FOR BOND INVESTORS. HOW DID AIM GLOBAL
INCOME FUND PERFORM?
Although bond performance was dreary due to rising interest
rates, the fund continued to provide attractive monthly income. As of October
31, 1999, the fund's 30-day distribution rates at net asset value were 7.04%,
6.48% and 6.49% for Class A, B and C shares, respectively. The fund's 30-day SEC
yield at maximum offering price was 6.68% for Class A shares and 6.53% for both
Class B and Class C shares.
The rising interest-rate environment negatively affected most bond-market
sectors, and this trend detracted from the fund's total returns for the fiscal
year. Excluding sales charges, total returns were -1.94%, -2.37%, and -2.47% for
Class A, B and C shares, respectively. Over the same period, the total return of
the Salomon Brothers World Government Bond Index was -2.46%.
HOW DID FOREIGN BONDS FARE?
Although the U.S. dollar weakened against the Japanese yen, it remained strong
against other major currencies, including the euro. The strength of the dollar
against most other currencies hurt returns for U.S. investors in foreign bonds.
We continued to mitigate the effect of a strong dollar by selectively hedging
currency.
Even without taking currency factors into consideration, the performance of
foreign bonds (except for emerging markets debt) was lackluster as evidenced by
the performance of the Salomon Brothers World Government Bond Index for the
fiscal year.
Two of the better-performing bond markets were Canada and the United
Kingdom, and the fund benefited from its significant exposure to these markets.
In the United Kingdom, the bond market got a boost from low inflation and a Bank
of England that acted diligently to keep it in check. Bonds in the Euroland
regions performed poorly in the face of a strengthening economy before showing
signs of recovering toward the end of the fiscal year as economic conditions
moderated.
WHAT WERE KEY TRENDS IN THE DOMESTIC INVESTMENT-GRADE BOND MARKET?
As of the end of the fiscal year, 1999 had been the worst year for bonds in
the United States since 1994 and the second worst year on record. Investors were
concerned that continued strong economic growth would prompt the Federal Reserve
Board (the Fed) to raise interest rates to keep inflation at bay, and this had
an unsettling effect on the bond market. Ultimately, in two separate moves, the
Fed raised the key federal funds rate from 4.75% to 5.25%.
The bond market was also rattled by record supply, the potential impact of
the Y2K problem--the need to reprogram older computers to recognize the year
2000--and the decline in value of the U.S. dollar against the Japanese yen. An
overabundance of new issues hurt the performance of investment-grade corporate
bonds. Companies rushed to issue new bonds before Y2K concerns became more
pronounced toward the end of 1999. This overabundance of supply was generally
met by weak demand, stemming from concerns that rising interest rates might
undermine corporate profits and affect the ability of companies to meet their
debt obligations. However, there was some increase in demand for
investment-grade corporate bonds toward the end of the fiscal year as their
yields rose to attractive levels.
The weakness in the bond market was reflected in the yield of the benchmark
30-year U.S. Treasury bond, which rose from 5.15% at the beginning of the fiscal
year to 6.16% at its conclusion. In October, bond yields neared their highs for
the year. The yield differentials between Treasuries and lower-rated bonds, wide
at the beginning of the fiscal year, narrowed somewhat as the reporting period
progressed. However, by the end of the fiscal year, yield spreads again
approached their widest levels of the reporting period, as nearly every bond
sector displayed weakness amid continuing concerns about inflation.
HOW DID HIGH-YIELD BONDS PERFORM?
After beginning the fiscal year in the doldrums, high-yield bonds rallied midway
through the reporting period, and for a time were market leaders. However, the
performance of high-yield bonds plummeted amid concerns about interest rates,
inflation and a growing default
-------------------------------------
TWO OF THE BETTER-PERFORMING
BOND MARKETS WERE CANADA AND
THE UNITED KINGDOM, AND THE
FUND BENEFITED FROM ITS SIGNIFICANT
EXPOSURE TO THESE MARKETS.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM GLOBAL INCOME FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 10/31/99, based on total net assets
<TABLE>
<CAPTION>
================================================================================
TOP FIVE BOND HOLDINGS Coupon Maturity % of
Portfolio
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1. CSC Holdings, Inc., Sr. Unsec. Deb. 7.625% 07/2018 1.70%
2. Delta Air Lines, Inc., Deb. 10.375 12/2022 1.38
3. Time Warner Inc., Deb. 9.125 01/2013 1.29
4. Stadshypotek A.B. Series 1562, Notes 3.50 09/2004 1.24
5. Dresdner Finance B.V. 3.532 07/2003 1.20
Series 11 Floating Rate Gtd. Notes
Please keep in mind that the fund's portfolio is subject to change, and there is
no assurance that the fund will continue to hold any particular security.
================================================================================
</TABLE>
================================================================================
PIE CHART
- --------------------------------------------------------------------------------
[S] [C]
Other 7.58%
Investment-grade bonds 26.75%
Foreign bonds 42.40%
High-yield bonds 23.27%
================================================================================
rate. Toward the end of the fiscal year, the default rate for the issuers of
high-yield bonds rose to approximately 4%, its highest level since 1991. An
overabundance of supply and concerns about liquidity also hurt the high-yield
market.
HOW WAS THE FUND STRUCTURED AT THE END OF THE FISCAL YEAR?
As of October 31, the fund had 191 holdings, with total assets divided as
follows: foreign bonds, 42.40%; domestic investment-grade bonds, 26.75%,
high-yield bonds, 23.27%; and other assets, 7.58%. The weighted average maturity
of the portfolio was 10.60 years and its duration was 5.898 years. The fund had
an average portfolio quality rating of BBB as measured by Standard & Poor's
Corporation (S&P) and Moody's Investor Service (Moody's), two widely known
credit rating agencies. These historical ratings are based on an analysis of the
credit quality of the individual securities in the fund's portfolio. The average
coupon was 8.13%.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
We believe bonds will continue to be an attractive source of income. Globally,
the economy is improving. In Europe, inflation is low, and the economy is
showing signs of recovery. Mergers and restructurings are proceeding at a brisk
pace, which should enhance corporate profitability and the attractiveness of
European corporate bonds. We expect the European Economic and Monetary Union to
continue to stimulate the development of the corporate- and high-yield bond
markets in Europe, potentially increasing the fund's investment options.
Additionally, Asia appears to be well on its way to recovery from the economic
crisis that had global ramifications in 1997-1998.
The global acceleration in economic growth could lead to higher interest
rates to keep inflation in check, which could affect total returns for bonds.
In the United States, we also expect bond performance to improve in 2000.
Inflation and interest rates remain relatively low. Moreover, there are
indications that, for the short term at least, the Fed may be finished adjusting
monetary policy. On November 16, after the close of the reporting period, the
central bank raised the federal funds rate to 5.5% and adopted a neutral bias
toward additional rate hikes.
Furthermore, the U.S. economy continues to grow at a healthy pace and
corporate profits are solid. This could spark investor interest in
investment-grade corporate bonds, which offered attractive yields at the close
of the fiscal year. It also could benefit high-yield bonds, whose issuers are
generally better able to meet their debt obligations when corporate earnings are
strong.
Regardless, we will adhere to our strategy of investing in foreign, domestic
investment-grade and high-yield bonds. Normally, these bonds tend to react
differently to various economic and market conditions. Over the long term, we
believe this investment approach can enhance returns, reduce risk and provide
for an attractive level of income.
See important fund and index disclosures inside front cover.
AIM GLOBAL INCOME FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL INCOME FUND VS. BENCHMARK INDEXES
2/3/89-10/31/99
in thousands
================================================================================
Salomon
AIM Global AIM Global Brothers World Lehman World
Income Fund, Income Fund, Government Government
Class B shares, Class A shares, Bond Index Bond Index
- --------------------------------------------------------------------------------
9/30/94 9524 10000 10072 9859
10/31/94 9613 10079 10234 9851.11
10/31/95 11158 11647 11790 11366.9
10/31/96 12298 12772 12422 11947.6
10/31/97 13411 13855 12746 12980.8
10/31/98 13940 14323 14346 14446.6
10/31/99 13670 13889 13993 14270.1
Past performance cannot guarantee comparable future results.
Source: Lipper, Inc.
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. THE
RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
ABOUT THIS CHART
The chart compares your fund to benchmark indexes. It is intended to give you a
general idea of how your fund performed compared to the bond market over the
period 9/15/94-10/31/99. (Please note that index performance is from
8/31/94-10/31/99). It is important to understand the difference between your
fund and an index. Your fund's total return is shown with a sales charge and
includes fund expenses and management fees. An index measures the performance of
a hypothetical portfolio. Market indexes are not managed, incurring no sales
charges, expenses or fees. If you could buy all the securities that make up a
market index, you would incur expenses that would affect your investment's
return.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/99, including sales charges
================================================================================
CLASS A SHARES
Inception (9/15/94) 6.29%
5 Years 6.26
1 Year -6.61*
*-1.94% excluding sales charges
CLASS B SHARES
Inception (9/15/94) 6.61%
5 Years 6.47
1 Year -6.96*
*-2.37% excluding sales charges
CLASS C SHARES
Inception (8/4/97) 1.70%
1 Year -3.38*
*-2.47% excluding sales charges
================================================================================
The performance of Class C shares will differ from that of Class A and Class B
shares due to differing fees and expenses. For fund performance calculations and
descriptions of the indexes cited on this page, please refer to the inside front
cover.
AIM GLOBAL INCOME FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS &
NOTES-62.27%
AIR FREIGHT-0.40%
Atlas Air, Inc., Sr. Unsec. Notes,
10.75%, 08/01/05 $ 350,000 $ 350,000
- --------------------------------------------------------------
AIRLINES-3.80%
Air 2 US, Series C, Equipment Trust,
10.127%, 10/01/20 (Acquired
10/28/99; Cost $450,000)(b) 450,000 457,920
- --------------------------------------------------------------
Airplanes Pass Through Trust, Series
D Gtd. Sub. Bonds, 10.875%,
03/15/19 230,000 204,845
- --------------------------------------------------------------
Delta Air Lines, Inc., Deb.,
9.00%, 05/15/16 550,000 583,297
- --------------------------------------------------------------
10.375%, 12/15/22 1,000,000 1,208,370
- --------------------------------------------------------------
Dunlop Standard Aero Holdings
(United Kingdom), Sr. Notes,
11.875%, 05/15/09(c) 530,000 537,950
- --------------------------------------------------------------
United Air Lines, Inc., Pass Through
Ctfs., 9.56%, 10/19/18 300,000 329,784
- --------------------------------------------------------------
3,322,166
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.75%
Advance Stores Co., Inc., Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 270,000 249,750
- --------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 430,000 402,050
- --------------------------------------------------------------
651,800
- --------------------------------------------------------------
AUTOMOBILES-0.34%
DaimlerChrysler N.A. Holdings
(Germany), Gtd. Notes, 7.20%,
09/01/09 300,000 301,065
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-2.55%
Midland Bank PLC (United Kingdom),
Sub. Notes, 7.65%, 05/01/25 280,000 283,480
- --------------------------------------------------------------
Regions Financial Corp., Sub. Notes,
7.75%, 09/15/24 500,000 497,940
- --------------------------------------------------------------
Republic New York Corp.,
Sub. Notes, 9.70%, 02/01/09 400,000 455,340
- --------------------------------------------------------------
Sub. Deb., 9.50%, 04/15/14 370,000 412,546
- --------------------------------------------------------------
Deutsche Bank Finance B.V.
(Netherlands), Conv. Bonds, 4.50%,
02/12/17(e) 1,200,000 579,060
- --------------------------------------------------------------
2,228,366
- --------------------------------------------------------------
BANKS (MONEY CENTER)-1.26%
Capital One Financial Corp., Unsec.
Notes, 7.25%, 05/01/06 600,000 570,000
- --------------------------------------------------------------
Riggs Capital Trust II, Series C
Gtd. Bonds, 8.875%, 03/15/27 570,000 533,722
- --------------------------------------------------------------
1,103,722
- --------------------------------------------------------------
BANKS (REGIONAL)-0.75%
Mercantile Bancorp, Inc., Unsec.
Sub. Notes, 7.30%, 06/15/07 660,000 654,562
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO &
CABLE)-5.94%
British Sky Broadcasting (United
Kingdom), Unsec. Gtd. Notes,
8.20%, 07/15/09 (Acquired
07/01/99-08/10/99; Cost
$890,547)(b) $ 900,000 $ 877,254
- --------------------------------------------------------------
Comcast Cable Communications, Unsec.
Notes, 8.50%, 05/01/27 500,000 540,710
- --------------------------------------------------------------
Cox Communications, Inc., Unsec.
Notes, 7.75%, 08/15/06 400,000 409,744
- --------------------------------------------------------------
CSC Holdings, Inc., Sr. Unsec. Deb.,
7.875%, 02/15/18 400,000 381,784
- --------------------------------------------------------------
7.625%, 07/15/18 1,600,000 1,489,024
- --------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(f) 940,000 618,050
- --------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.875%, 10/15/07(f) 700,000 393,750
- --------------------------------------------------------------
USA Networks, Inc., Sr. Unsec. Gtd.
Notes, 6.75%, 11/15/05 500,000 477,914
- --------------------------------------------------------------
5,188,230
- --------------------------------------------------------------
CHEMICALS-1.63%
Agrium, Inc. (Canada), Unsec. Notes,
7.00%, 02/01/04 350,000 337,536
- --------------------------------------------------------------
Airgas, Inc., Medium Term Notes,
7.14%, 03/08/04 500,000 474,010
- --------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada),
Yankee Deb., 8.50%, 12/15/12 450,000 482,634
- --------------------------------------------------------------
Sterling Chemicals, Inc., Sr. Unsec.
Sub. Notes, 11.75%, 08/15/06 200,000 127,000
- --------------------------------------------------------------
1,421,180
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.93%
Dialog Corp. PLC (United Kingdom),
Series A, Sr. Sub. Yankee Notes,
11.00%, 11/15/07 750,000 637,500
- --------------------------------------------------------------
ProNet, Inc., Sr. Sub. Notes,
11.875%, 06/15/05 250,000 171,250
- --------------------------------------------------------------
808,750
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-0.33%
Exodus Communications, Sr. Unsec.
Notes, 11.25%, 07/01/08 280,000 290,500
- --------------------------------------------------------------
CONSTRUCTION (CEMENT &
AGGREGATES)-0.34%
Schuff Steel Co., Sr. Unsec. Gtd.
Sub. Notes, 10.50%, 06/01/08 350,000 299,250
- --------------------------------------------------------------
CONSUMER FINANCE-1.25%
Countrywide Capital, Gtd. Notes,
8.05%, 06/15/27 350,000 332,052
- --------------------------------------------------------------
MBNA Capital I, Series A Bonds,
8.278%, 12/01/26 835,000 757,161
- --------------------------------------------------------------
1,089,213
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
DISTRIBUTORS (FOOD & HEALTH)-0.26%
Fleming Companies, Inc., Sr. Unsec.
Gtd. Sub. Notes, 10.625%, 07/31/07 $ 255,000 $ 229,500
- --------------------------------------------------------------
ELECTRIC COMPANIES-2.30%
Cleveland Electric Illumination,
Series D, Sr. Sec. Notes, 7.88%,
11/01/17 500,000 482,969
- --------------------------------------------------------------
CMS Energy Corp., Sr. Unsec. Notes,
7.50%, 01/15/09 750,000 690,172
- --------------------------------------------------------------
El Paso Electric Co., Series D, Sec.
First Mortgage Bonds, 8.90%,
02/01/06 250,000 265,052
- --------------------------------------------------------------
Series E, Sec. First Mortgage Bonds,
9.40%, 05/01/11 250,000 273,007
- --------------------------------------------------------------
Niagara Mohawk Power, Series H, Sr.
Unsec. Disc. Notes, 8.50%,
07/01/10 (Acquired 08/11/99; Cost
$291,000)(b) 400,000 302,664
- --------------------------------------------------------------
2,013,864
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.23%
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.625%,
08/20/12 198,404 199,396
- --------------------------------------------------------------
ENTERTAINMENT-1.88%
News America Holdings, Inc., Notes,
8.45%, 08/01/34 500,000 512,615
- --------------------------------------------------------------
Time Warner Inc., Deb., 9.125%,
01/15/13 1,000,000 1,127,140
- --------------------------------------------------------------
1,639,755
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.07%
Finova Capital Corp., Unsec. Sr.
Notes, 7.625%, 09/21/09 210,000 210,244
- --------------------------------------------------------------
Sumitomo Bank International Finance
N.V. (Japan), Gtd. Sub. Notes,
8.50%, 06/15/09 700,000 724,511
- --------------------------------------------------------------
934,755
- --------------------------------------------------------------
FOODS-1.02%
ConAgra, Inc., Sr. Unsec. Notes,
7.125%, 10/01/26 900,000 889,443
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.09%
Harborside Healthcare, Sr. Unsec.
Gtd. Disc. Sub. Notes, 11.00%,
08/01/08(e) 300,000 78,000
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.54%
Team Health, Inc., Sr. Sub. Notes,
12.00%, 03/15/09(c) 470,000 472,350
- --------------------------------------------------------------
HOMEBUILDING-0.06%
D.R. Horton, Inc., Unsec. Gtd.
Notes, 10.00%, 04/15/06 55,000 55,275
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-0.50%
Procter & Gamble Co. (The), Putable
Deb., 8.00%, 09/01/24 400,000 434,548
- --------------------------------------------------------------
HOUSEWARES-0.35%
Decora Industries, Inc., Series B,
Sr. Sec. Gtd. Notes, 11.00%,
05/01/05 350,000 306,250
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.79%
Torchmark Corp., Notes, 7.875%,
05/15/23 750,000 693,143
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
INSURANCE (PROPERTY-CASUALTY)-1.09%
Terra Nova Holdings, Co. (United
Kingdom), Sr. Unsec. Gtd. Notes,
7.20%, 08/15/07 $ 500,000 $ 479,330
- --------------------------------------------------------------
7.00%, 05/15/08 500,000 471,800
- --------------------------------------------------------------
951,130
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-1.61%
HSBC America Capital Trust II, Gtd.
Bonds, 8.38%, 05/15/27 (Acquired
08/12/99; Cost $479,210)(b) 500,000 479,120
- --------------------------------------------------------------
Lehman Brothers, Inc.,
Sr. Sub. Notes, 7.375%, 01/15/07 530,000 523,667
- --------------------------------------------------------------
Notes, 8.50%, 08/01/15 390,000 404,305
- --------------------------------------------------------------
1,407,092
- --------------------------------------------------------------
IRON & STEEL-0.47%
Acme Metal, Inc., Sr. Unsec. Gtd.
Deb., 10.875%, 12/15/07(d)(g) 438,000 94,170
- --------------------------------------------------------------
GS Technologies, Inc., Sr. Gtd.
Notes, 12.00%, 09/01/04 200,000 111,000
- --------------------------------------------------------------
Sheffield Steel Corp., Series B,
First Mortgage Notes, 11.50%,
12/01/05 250,000 208,750
- --------------------------------------------------------------
413,920
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.46%
Marvel Enterprises, Inc., Sr. Unsec.
Gtd. Sub. Notes, 12.00%, 06/15/09 440,000 402,600
- --------------------------------------------------------------
LODGING-HOTELS-0.35%
John Q. Hammons Hotels, Inc., Sec.
First Mortgage Notes, 9.75%,
10/01/05 100,000 90,500
- --------------------------------------------------------------
Stena Line A.B. (Sweden), Sr. Unsec.
Yankee Notes, 10.625%, 06/01/08 310,000 217,775
- --------------------------------------------------------------
308,275
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.24%
Glenoit Corp., Sr. Unsec. Gtd. Sub.
Notes, 11.00%, 04/15/07 380,000 210,900
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.52%
First Wave Marine, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%, 02/01/08 250,000 188,750
- --------------------------------------------------------------
MMI Products, Inc., Sr. Unsec. Sub.
Notes, 11.25%, 04/15/07 260,000 265,200
- --------------------------------------------------------------
453,950
- --------------------------------------------------------------
METALS MINING-0.27%
Rio Algom Ltd. (Canada), Yankee
Unsec. Deb., 7.05%, 11/01/05 250,000 238,455
- --------------------------------------------------------------
NATURAL GAS-1.80%
Dynegy, Inc., Sr. Unsec. Deb.,
7.125%, 05/15/18 500,000 459,975
- --------------------------------------------------------------
Enron Corp., Sr. Sub. Deb., 8.25%,
09/15/12 500,000 515,220
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
NATURAL GAS-(CONTINUED)
Sonat, Inc., Unsec. Notes, 7.625%,
07/15/11 $ 600,000 $ 600,828
- --------------------------------------------------------------
1,576,023
- --------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-1.43%
Oneok, Inc., Unsec. Notes, 7.75%,
08/15/06 400,000 401,224
- --------------------------------------------------------------
Pogo Producing Co., Series B, Sr.
Unsec. Sub. Notes, 10.375%,
02/15/09 500,000 520,000
- --------------------------------------------------------------
Queen Sand Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.50%,
07/01/08 160,000 92,000
- --------------------------------------------------------------
Talisman Energy, Inc. (Canada),
Yankee Deb., 7.125%, 06/01/07 250,000 240,210
- --------------------------------------------------------------
1,253,434
- --------------------------------------------------------------
OIL & GAS (REFINING &
MARKETING)-0.70%
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.125%,
07/01/06 750,000 611,250
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.54%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 470,000 472,350
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.30%
AES Corp., Sr. Notes, 8.00%,
12/31/08 750,000 686,250
- --------------------------------------------------------------
Kincaid Generation LLC, Sec. Bonds,
7.33%, 06/15/20 (Acquired
04/30/98; Cost $501,235)(b) 500,000 453,630
- --------------------------------------------------------------
1,139,880
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.65%
News America Holdings, Inc., Sr.
Gtd. Deb., 9.25%, 02/01/13 250,000 274,755
- --------------------------------------------------------------
United News & Media PLC (United
Kingdom), Sr. Unsec. Yankee Notes,
7.75%, 07/01/09 300,000 292,905
- --------------------------------------------------------------
567,660
- --------------------------------------------------------------
RAILROADS-1.48%
CSX Corp., Sr. Unsec. Putable Deb.,
7.25%, 05/01/27 750,000 747,173
- --------------------------------------------------------------
Norfolk Southern Corp., Putable
Bonds, 7.05%, 05/01/37 550,000 546,816
- --------------------------------------------------------------
1,293,989
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-1.22%
Glenborough Properties, Series B,
Sr. Unsec. Notes, 7.625%, 03/15/05 500,000 445,514
- --------------------------------------------------------------
Health Care REIT, Inc., Sr. Unsec.
Notes, 7.625%, 03/15/08 200,000 169,320
- --------------------------------------------------------------
Spieker Properties LP, Unsec. Deb.,
7.35%, 12/01/17 500,000 446,705
- --------------------------------------------------------------
1,061,539
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.19%
Plainwell, Inc., Series B, Sr.
Unsec. Sub. Notes, 11.00%,
03/01/08 230,000 166,750
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-2.31%
Amazon.com, Inc., Conv. Deb., 4.75%,
02/01/09 (Acquired 01/29/99; Cost
$501,875)(b) $ 500,000 $ 532,500
- --------------------------------------------------------------
CEX Holdings, Inc., Series B Sr.
Unsec. Gtd. Sub. Notes, 9.625%,
06/01/08 170,000 184,450
- --------------------------------------------------------------
CSK Auto Inc., Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 130,000 134,550
- --------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 840,000 814,800
- --------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 08/15/08 350,000 350,000
- --------------------------------------------------------------
2,016,300
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.15%
J Crew Operating Corp., Sr. Sub.
Notes, 10.375%, 10/15/07 150,000 126,750
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-1.02%
Sovereign Bancorp, Inc., Medium Term
Sub. Notes, 8.00%, 03/15/03 600,000 595,242
- --------------------------------------------------------------
Washington Mutual, Inc., Notes,
7.50%, 08/15/06 290,000 293,622
- --------------------------------------------------------------
888,864
- --------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.22%
MDC Communications Corp. (Canada),
Sr. Unsec. Sub. Yankee Notes,
10.50%, 12/01/06 200,000 195,000
- --------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-0.65%
Hydrochem Industrial Service Co.,
Series B, Sr. Sec. Gtd. Sub.
Notes, 10.375%, 08/01/07 150,000 131,250
- --------------------------------------------------------------
Laidlaw, Inc. (Canada), Unsec.
Yankee Deb., 6.70%, 05/01/08 500,000 436,010
- --------------------------------------------------------------
567,260
- --------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.28%
MSX International, Inc., Sr. Unsec.
Sub. Notes, 11.375%, 01/15/08 260,000 245,700
- --------------------------------------------------------------
SOVEREIGN DEBT-2.38%
Province of Manitoba (Canada),
Yankee Deb., 7.75%, 07/17/16 550,000 585,629
- --------------------------------------------------------------
Province of Quebec (Canada), Series
A, Medium Term Putable Yankee
Notes, 5.735%, 03/02/26 500,000 497,670
- --------------------------------------------------------------
Series A, Medium Term Yankee
Notes, 6.29%, 03/06/26 1,000,000 993,710
- --------------------------------------------------------------
2,077,009
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.64%
PageMart Wireless, Inc., Sr. Sub.
Disc. Notes, 11.25%, 02/01/08(f) 600,000 189,000
- --------------------------------------------------------------
US Unwired Inc., Sr. Disc. Notes,
13.375%, 11/01/09 (Acquired
10/26/99; Cost $366,142)(b)(f) 700,000 369,250
- --------------------------------------------------------------
558,250
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG
DISTANCE)-4.14%
Call-Net Enterprises, Inc. (Canada),
Sr. Unsec. Disc. Yankee Notes,
8.94%, 08/15/08(e) $ 330,000 $ 196,350
- --------------------------------------------------------------
Centel Capital, Deb., 9.00%,
10/15/19 300,000 342,225
- --------------------------------------------------------------
Econophone, Inc., Sr. Unsec. Notes,
13.50%, 07/15/07 750,000 781,875
- --------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee Notes,
11.50%, 12/15/07 250,000 256,250
- --------------------------------------------------------------
MCI Communications Corp., Putable
Sr. Unsec. Deb., 7.125%, 06/15/27 650,000 655,025
- --------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Notes, 11.25%, 01/15/09 750,000 693,750
- --------------------------------------------------------------
Tele1 Europe B.V. (Netherlands), Sr.
Unsec. Notes, 13.00%, 05/15/09(c) 500,000 497,500
- --------------------------------------------------------------
Versatel Telecom B.V. (Netherlands),
Sr. Notes, 13.25%, 05/15/08 190,000 191,900
- --------------------------------------------------------------
3,614,875
- --------------------------------------------------------------
TELEPHONE-4.42%
AT&T Canada Inc., Notes, 7.65%,
09/15/06 (Acquired 09/15/99) Cost
$369,123)(b) 370,000 370,758
- --------------------------------------------------------------
Bell Atlantic Financial Services,
Inc., Conv. Bonds, 4.25%, 09/15/05 500,000 528,806
- --------------------------------------------------------------
Esat Holdings Ltd. (Ireland), Sr.
Yankee Notes, 12.50%, 02/01/07(f) 350,000 255,500
- --------------------------------------------------------------
ICG Services, Inc., Sr. Unsec. Disc.
Notes, 10.00%, 02/15/08(f) 600,000 321,096
- --------------------------------------------------------------
Liberty Media Group, Bonds, 7.875%,
07/15/09 (Acquired 06/30/99; Cost
$397,616)(b) 400,000 398,910
- --------------------------------------------------------------
Logix Communications, Sr. Unsec.
Notes, 12.25%, 06/15/08 350,000 280,875
- --------------------------------------------------------------
SBC Communications, Inc., Deb.,
7.375%, 07/15/43 500,000 466,490
- --------------------------------------------------------------
Williams Communications Group, Inc.,
Sr. Unsec. Notes, 10.70%, 10/01/07 450,000 469,125
- --------------------------------------------------------------
Worldwide Fiber, Inc. (Canada), Sr.
Notes,
12.50%, 12/15/05 230,000 235,750
- --------------------------------------------------------------
12.00%, 08/01/09(c) 530,000 532,650
- --------------------------------------------------------------
3,859,960
- --------------------------------------------------------------
TRUCKERS-0.33%
Travelcenters of America, Inc., Sr.
Unsec. Gtd. Sub. Deb., 10.25%,
04/01/07 290,000 286,375
- --------------------------------------------------------------
WASTE MANAGEMENT-2.05%
Browning-Ferris, Deb., 9.25%,
05/01/21 350,000 302,750
- --------------------------------------------------------------
Waste Management Inc., Sr. Unsec.
Notes,
7.125%, 10/01/09 525,000 447,258
- --------------------------------------------------------------
7.125%, 12/15/17 190,000 145,263
- --------------------------------------------------------------
WMX Technologies, Inc., Unsec.
Putable Notes, 7.10%, 08/01/26 980,000 897,327
- --------------------------------------------------------------
1,792,598
- --------------------------------------------------------------
Total U.S. Dollar Denominated
Bonds & Notes (Cost
$58,071,172) 54,413,221
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(h) VALUE
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED BONDS
& NOTES-33.28%
AUSTRALIA-1.97%
New South Wales Treasury Corp.
(Sovereign Debt), Gtd. Notes,
7.00%, 04/01/04 AUD 1,320,000 $ 856,995
- --------------------------------------------------------------
State Bank New South Wales
(Banks-Major Regional), Series E
Medium Term Sr. Unsec. Gtd.
Notes, 8.625%, 08/20/01 AUD 1,300,000 862,743
- --------------------------------------------------------------
1,719,738
- --------------------------------------------------------------
CANADA-9.47%
B.C. Generic Residual (Sovereign
Debt), Deb.,13.88%,
06/21/04(e) CAD 150,000 76,004
- --------------------------------------------------------------
Bank of Montreal (Banks-Money
Center), Sub. Deb., 7.92%,
07/31/12 CAD 300,000 216,435
- --------------------------------------------------------------
Bell Mobility Cellular
(Telecommunications-
Cellular/Wireless), Deb., 6.55%,
06/02/08 CAD 750,000 492,805
- --------------------------------------------------------------
British Columbia Municipal Finance
Authority (Sovereign Debt),
Bonds, 7.75%, 12/01/05 CAD 500,000 362,997
- --------------------------------------------------------------
Canadian Oil Debco Inc. (Oil &
Gas- Exploration & Production),
Deb., 11.00%, 10/31/00 CAD 450,000 317,870
- --------------------------------------------------------------
Canadian Pacific Ltd.,
(Railroads), Unsec. Medium Term
Disc. Notes, 5.85%, 03/30/09
(Acquired 03/24/99; Cost
$661,416)(b)(f) CAD 1,000,000 634,015
- --------------------------------------------------------------
Clearnet Communications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes, 11.75%,
08/13/07(f) CAD 1,100,000 524,859
- --------------------------------------------------------------
10.40%, 05/15/08(f) CAD 1,200,000 507,369
- --------------------------------------------------------------
Sr. Unsec. Disc. Notes, 10.75%,
02/15/09(f) CAD 1,300,000 509,916
- --------------------------------------------------------------
GMAC Canada Ltd. (Financial
Diversified), Sr. Unsec. Gtd.
Unsub. Notes, 6.50%, 03/23/04GBP 450,000 718,447
- --------------------------------------------------------------
Loblaw Co. Ltd. (Retail-Food
Chains), Unsec. Medium Term
Disc. Notes, 6.45%, 03/01/39 CAD 750,000 460,896
- --------------------------------------------------------------
Molson Breweries Co. Ltd.
(Beverages- Alcoholic), Unsec.
Unsub. Notes, 6.00%, 06/02/08CAD 700,000 453,605
- --------------------------------------------------------------
NAV Canada (Services-Commercial &
Consumer), Bonds, 7.40%,
06/01/27 CAD 1,000,000 730,551
- --------------------------------------------------------------
Poco Petroleums Ltd. (Oil &
Gas-Exploration & Production),
Unsec. Deb., 6.60%, 09/11/07 CAD 750,000 484,961
- --------------------------------------------------------------
Province of Ontario (Sovereign
Debt), Sr. Unsec. Unsub. Notes,
6.25%, 12/03/08 NZD 1,500,000 672,945
- --------------------------------------------------------------
Telegobe Canada, Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 CAD 650,000 453,958
- --------------------------------------------------------------
TransCanada Pipelines (Natural
Gas), Series Q, Deb., 10.625%,
10/20/09 CAD 375,000 318,211
- --------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(h) VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Westcoast Energy, Inc. (Natural
Gas), Series V, Unsec. Deb.,
6.45%, 12/18/06 CAD $ 500,000 $ 335,635
- --------------------------------------------------------------
8,271,479
- --------------------------------------------------------------
DENMARK-1.08%
Kingdom of Denmark (Sovereign
Debt), Bonds, 7.00%, 12/15/04DKK 6,150,000 940,928
- --------------------------------------------------------------
GERMANY-2.86%
Bundesrepublik Deutschland
(Sovereign Debt), Series 92
Bonds, 7.25%, 10/21/02 EUR 810,000 921,185
- --------------------------------------------------------------
Hypovereins Finance N.V.
(Banks-Major Regional), Gtd.
Series E Medium Term Notes,
6.00%, 03/12/07 DEM 250,000 134,974
- --------------------------------------------------------------
International Bank for
Reconstruction & Development
(Banks-Money Center), Unsec.
Deb., 7.125%, 04/12/05 DEM 1,400,000 826,494
- --------------------------------------------------------------
Treuhandanstalt (Sovereign Debt),
Gtd. Notes, 6.00%, 11/12/03 EUR 560,000 618,697
- --------------------------------------------------------------
2,501,350
- --------------------------------------------------------------
GREECE-1.18%
Hellenic Republic (Sovereign
Debt), Bonds, 6.60%, 01/15/04GRD 333,000,000 1,032,847
- --------------------------------------------------------------
NETHERLANDS-4.70%
Dresdner Finance B.V. (Banks-Major
Regional), Series 11 Floating
Rate Gtd. Notes, 3.532%,
07/30/03 EUR 1,000,000 1,047,839
- --------------------------------------------------------------
KPNQWest B.V.
(Telecommunications-Long
Distance), Sr. Unsec. Notes,
7.125%, 06/01/09 (Acquired
05/25/99; Cost $1,051,124)(b)EUR 1,000,000 1,019,104
- --------------------------------------------------------------
Mannesmann Finance B.V. (Machinery
Diversified), Gtd. Unsec. Unsub.
Notes, 4.75%, 05/27/09 EUR 900,000 843,286
- --------------------------------------------------------------
Prudential Financial B.V.
(Investment Banking/ Brokerage),
Sr. Unsec. Gtd. Bonds, 9.375%,
06/04/07 GBP 400,000 749,353
- --------------------------------------------------------------
SPT Telecom A.S.
(Telecommunications-Long
Distance), Gtd. Unsec. Unsub.
Notes, 5.125%, 05/07/03 DEM 275,000 147,120
- --------------------------------------------------------------
Tecnost International Finance N.V.
(Financial- Diversified), Series
E Medium Term Gtd. Notes,
6.125%, 07/30/09 EUR 290,000 297,125
- --------------------------------------------------------------
4,103,827
- --------------------------------------------------------------
NEW ZEALAND-2.59%
Inter-American Development Bank,
(Banks- Money Center), Unsec.
Bonds, 5.75%, 04/15/04 NZD 2,000,000 951,163
- --------------------------------------------------------------
International Bank for
Reconstruction & Development
(Banks-Money Center),
Unsec. Notes, 5.50%, 04/15/04NZD 800,000 378,406
- --------------------------------------------------------------
Sr. Unsec. Notes, 6.77%,
08/20/07(e) NZD 750,000 209,131
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(h) VALUE
<S> <C> <C>
NEW ZEALAND-(CONTINUED)
New Zealand Government (Sovereign
Debt), Bonds,
10.00%, 03/15/02 NZD $ 675,000 $ 369,771
- --------------------------------------------------------------
8.00%, 04/15/04 NZD 675,000 357,696
- --------------------------------------------------------------
2,266,167
- --------------------------------------------------------------
SWEDEN-2.23%
AB Spintab (Banks-Regional),
Series 161, Unsec. Deb., 7.50%,
06/15/04 SEK 6,700,000 861,443
- --------------------------------------------------------------
Stadshypotek A.B.
(Banks-Regional), Series 1562,
Notes, 3.50%, 09/15/04 SEK 10,000,000 1,086,187
- --------------------------------------------------------------
1,947,630
- --------------------------------------------------------------
U.S.A.-0.61%
AT&T Canada, Inc. (Telephone), Sr.
Unsec. Notes, 7.15%, 09/23/04CAD 800,000 537,070
- --------------------------------------------------------------
UNITED KINGDOM-6.59%
Airtours PLC (Services-Commercial
& Consumer), Conv. Sub. Notes,
5.75%, 01/05/04 (Acquired
12/09/98; Cost $494,636)(b) GBP 299,000 452,874
- --------------------------------------------------------------
Lloyds Bank PLC (Banks-Major
Regional), Sub. Notes, 5.25%,
07/14/08 DEM 1,500,000 771,334
- --------------------------------------------------------------
Merrill Lynch & Co. (Investment
Banking/ Brokerage), Sr. Unsec.
Unsub. Notes, 7.375%,
12/17/07 GBP 245,000 408,554
- --------------------------------------------------------------
National Power PLC (Electric
Companies), Sr. Unsec. Unsub.
Bonds, 8.00%, 02/21/07 AUD 800,000 512,359
- --------------------------------------------------------------
National Westminster Bank PLC
(Banks-Money Center), Series E,
Medium Term Unsec. Unsub. Notes,
5.125%, 06/30/11 EUR 210,000 200,584
- --------------------------------------------------------------
Scotia Holdings PLC (Health
Care-Drugs- Generic & Other),
Conv. Unsec. Unsub. Notes,
8.50%, 03/26/02 GBP 650,000 917,237
- --------------------------------------------------------------
Sutton Bridge Financial Ltd.
(Financial- Diversified), Gtd.
Eurobonds, 8.625%, 06/30/22 GBP 450,000 845,032
- --------------------------------------------------------------
TeleWest Communications PLC
(Broadcasting- Television, Radio
& Cable), Sr. Unsec. Notes,
5.25%, 02/19/07 GBP 400,000 651,844
- --------------------------------------------------------------
Union Bank Switzerland London,
(Banks-Major Regional), Unsec.
Sub. Notes, 7.375%, 11/26/04 GBP 600,000 1,000,628
- --------------------------------------------------------------
5,760,446
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Bonds & Notes
(Cost $30,661,602) 29,081,482
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-1.71%
BANKS (MAJOR REGIONAL)-0.09%
Societe Generale (France) 350 76,221
- --------------------------------------------------------------
BANKS (REGIONAL)-1.40%
First Republic Capital Corp.,
Series A-Pfd. (Acquired
05/26/99; Cost $750,000)(b) 750 746,250
- --------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BANKS (REGIONAL)-(CONTINUED)
Westpac Banking Corp. STRYPES
Trust-$3.135 Conv. Pfd. 16,000 $ 480,000
- --------------------------------------------------------------
1,226,250
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.00%
Knology Holdings, Inc.-Wts.,
expiring 10/15/07(i) 700 1,575
- --------------------------------------------------------------
Wireless One, Inc.-Wts., expiring
10/19/00(i) 150 0
- --------------------------------------------------------------
1,575
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, Inc.-Wts.,
expiring 02/01/04(i) 290 290
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.09%
Glaxo Wellcome PLC (United
Kingdom) 2,607 76,980
- --------------------------------------------------------------
PERSONAL CARE-0.00%
IHF Capital, Inc., Series I-Wts.,
expiring 11/14/99(i) 70 35
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.01%
Clearnet Communications Inc.-Wts.
(Canada), expiring 09/15/05(i) 330 4,290
- --------------------------------------------------------------
Loral Space & Communications,
Ltd.-Wts., expiring 01/15/07(i) 420 4,095
- --------------------------------------------------------------
8,385
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-0.08%
Tele1 Europe B.V.-Wts.
(Netherlands), expiring
05/15/09(i) 500 $ 40,125
- --------------------------------------------------------------
Versatel Telecom B.V.-Wts.
(Netherlands), expiring
05/15/08(i) 190 27,597
- --------------------------------------------------------------
67,722
- --------------------------------------------------------------
TELEPHONE-0.04%
Esat Holdings Ltd.-Wts. (Ireland),
expiring 02/01/07(i) 350 25,375
- --------------------------------------------------------------
Intermedia Communications,
Inc.-Wts., expiring 06/01/00(i) 150 13,763
- --------------------------------------------------------------
39,138
- --------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$1,339,360) 1,496,596
- --------------------------------------------------------------
MONEY MARKET FUNDS-1.35%
STIC Liquid Assets Portfolio(j) 588,479 588,479
- --------------------------------------------------------------
STIC Prime Portfolio(j) 588,479 588,479
- --------------------------------------------------------------
Total Money Market Funds (Cost
$1,176,958) 1,176,958
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.61% 86,168,257
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.39% 1,214,655
- --------------------------------------------------------------
NET ASSETS-100.00% $87,382,912
==============================================================
</TABLE>
Investment Abbreviations:
AUD - Australian Dollar
CAD - Canadian Dollars
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
DEM - German Deutsche Mark
Disc. - Discounted
DKK - Danish Krone
FRF - French Franc
GBP - British Pound Sterling
GRD - Greek Drachma
Gtd. - Guaranteed
NZD - New Zealand Dollar
Pfd. - Preferred
PRIDES - Preferred Redemption Increase Dividend Equity Security
Sec. - Secured
Sr. - Senior
STRYPES - Structured Yield Product Exchangeable for Stock
SEK - Swedish Krona
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Wts. - Warrants
Notes to Schedule of Investments:
(a) Principal amount is in U.S. Dollars, except as indicated by note (h).
(b) Restricted securities. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at 10/31/99 was $7,094,249 which
represented 8.14% of the Fund's net assets.
(c) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended.
(d) Non-income producing security.
(e) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(f) Discounted bond at purchase. Interest rate shown represent the coupon rate
at which the bond will accrue at a specified future date.
(g) Defaulted security. Currently, the issue is in default with respect to
interest payments.
(h) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(i) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(j) The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$91,252,953) $ 86,168,257
- -----------------------------------------------------------
Foreign currencies (cost $18,242) 18,464
- -----------------------------------------------------------
Receivables for:
Investments sold 764,818
- -----------------------------------------------------------
Forward currency contracts 4,248
- -----------------------------------------------------------
Capital stock sold 85,861
- -----------------------------------------------------------
Dividends and interest 2,088,500
- -----------------------------------------------------------
Investment for deferred compensation plan 20,023
- -----------------------------------------------------------
Other assets 13,214
- -----------------------------------------------------------
Total assets 89,163,385
- -----------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,059,968
- -----------------------------------------------------------
Capital stock reacquired 478,062
- -----------------------------------------------------------
Dividends 101,464
- -----------------------------------------------------------
Deferred compensation plan 20,023
- -----------------------------------------------------------
Accrued administrative services fees 4,247
- -----------------------------------------------------------
Accrued directors' fees 617
- -----------------------------------------------------------
Accrued distribution fees 55,603
- -----------------------------------------------------------
Accrued transfer agent fees 26,401
- -----------------------------------------------------------
Accrued operating expenses 34,088
- -----------------------------------------------------------
Total liabilities 1,780,473
- -----------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 87,382,912
===========================================================
NET ASSETS:
Class A $ 51,076,640
===========================================================
Class B $ 34,422,767
===========================================================
Class C $ 1,883,505
===========================================================
Capital stock, $0.001 par value per share:
Class A:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 5,255,715
===========================================================
Class B:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 3,543,063
===========================================================
Class C:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 193,937
===========================================================
Class A:
Net asset value and redemption price per
share $ 9.72
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $9.72 divided by
95.25%) $ 10.20
===========================================================
Class B:
Net asset value and offering price per
share $ 9.72
===========================================================
Class C:
Net asset value and offering price per
share $ 9.71
===========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 7,761,097
- -----------------------------------------------------------
Dividends (net of $476 foreign withholding
tax) 64,902
- -----------------------------------------------------------
Total investment income 7,825,999
- -----------------------------------------------------------
EXPENSES:
Advisory fees 703,524
- -----------------------------------------------------------
Administrative services fees 66,799
- -----------------------------------------------------------
Custodian fees 48,756
- -----------------------------------------------------------
Directors' fees 8,112
- -----------------------------------------------------------
Distribution fees-Class A 300,260
- -----------------------------------------------------------
Distribution fees-Class B 385,265
- -----------------------------------------------------------
Distribution fees-Class C 19,247
- -----------------------------------------------------------
Transfer agent fees-Class A 114,393
- -----------------------------------------------------------
Transfer agent fees-Class B 73,389
- -----------------------------------------------------------
Transfer agent fees-Class C 3,666
- -----------------------------------------------------------
Other 160,098
- -----------------------------------------------------------
Total expenses 1,883,509
- -----------------------------------------------------------
Less:
Fees waived by advisor (423,180)
- -----------------------------------------------------------
Expenses paid indirectly (2,351)
- -----------------------------------------------------------
Net expenses 1,457,978
- -----------------------------------------------------------
Net investment income 6,368,021
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (3,425,545)
- -----------------------------------------------------------
Foreign currencies (699,509)
- -----------------------------------------------------------
Forward currency contracts 117,048
- -----------------------------------------------------------
(4,008,006)
- -----------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities (4,733,538)
- -----------------------------------------------------------
Foreign currencies (5,039)
- -----------------------------------------------------------
Forward currency contracts 267,350
- -----------------------------------------------------------
(4,471,227)
- -----------------------------------------------------------
Net gain (loss) from investment securities,
foreign currencies and forward currency
contracts (8,479,233)
- -----------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(2,111,212)
===========================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 6,368,021 $ 4,564,973
- ----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and forward currency contracts (4,008,006) (293,145)
- ----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and forward
currency contracts (4,471,227) (2,380,155)
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations (2,111,212) 1,891,673
- ----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (3,538,334) (2,295,926)
- ----------------------------------------------------------------------------------------
Class B (2,065,556) (1,495,827)
- ----------------------------------------------------------------------------------------
Class C (102,985) (42,707)
- ----------------------------------------------------------------------------------------
Return of capital distribution:
Class A (483,962) (354,717)
- ----------------------------------------------------------------------------------------
Class B (310,211) (250,576)
- ----------------------------------------------------------------------------------------
Class C (15,757) (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 (1,856,726) 29,014,691
- ----------------------------------------------------------------------------------------
Class B 1,178,036 12,527,487
- ----------------------------------------------------------------------------------------
Class C 263,914 1,597,917
- ----------------------------------------------------------------------------------------
Net increase (decrease) in net assets (9,042,793) 40,138,586
- ----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 96,425,705 56,287,119
- ----------------------------------------------------------------------------------------
End of period $87,382,912 $96,425,705
========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $95,576,239 $96,795,220
- ----------------------------------------------------------------------------------------
Undistributed net investment income (45,192) 222,498
- ----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and forward currency
contracts (3,069,640) 15,255
- ----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and forward currency
contracts (5,078,495) (607,268)
- ----------------------------------------------------------------------------------------
$87,382,912 $96,425,705
========================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Income Fund (the "Fund") is a series 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 will
be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is high current income. Its secondary
objective is protection of principal and growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at
12
<PAGE> 15
the closing bid price on that day. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and options contracts generally will be
valued 15 minutes after the close of trading of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Directors.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Such distributions are
declared and paid monthly. The Fund may elect to use a portion of the
proceeds of capital stock redemptions as distributions for Federal income
tax purposes. Distributions from net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, undistributed net investment income was decreased by
$118,906, undistributed net realized gains increased by $923,111 and
paid-in-capital decreased by $804,205 as a result of a tax return of capital
in order to comply with the requirements of the American Institute of
Certified Public Accountants Statement of Position 93-2. Net assets of the
Fund were unaffected by the reclassification discussed above.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $3,052,967 as of October 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires, if not
previously utilized, in the year 2007.
D. 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.
E. 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 forward currency contracts at October 31, 1999 were as
follows:
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
SETTLEMENT TO CONTRACT TO APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
- ---------- --------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
11/10/99 AUD 650,000 424,775 414,696 10,079
- ------------------------------------------------------------------------------------
11/04/99 CAD 5,000,000 3,344,705 3,396,451 (51,745)
- ------------------------------------------------------------------------------------
11/26/99 GBP 800,000 1,279,104 1,315,326 (36,222)
- ------------------------------------------------------------------------------------
11/26/99 GBP 2,600,000 4,305,600 4,274,808 30,792
- ------------------------------------------------------------------------------------
11/26/99 NZD 2,300,000 1,218,885 1,167,541 51,344
- ------------------------------------------------------------------------------------
$10,573,069 $10,568,822 $ 4,248
====================================================================================
</TABLE>
F. Bond Premiums -- It is the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes.
G. Expenses -- Distribution expenses 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 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 year ended October 31,
1999, AIM waived fees of $423,180.
13
<PAGE> 16
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1999, AIM was
paid $66,799 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended October 31, 1999, AFS
was paid $148,724 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 a plan
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.50% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. During the year ended October 31,
1999, the Class A, Class B and Class C shares paid AIM Distributors $300,260,
$385,265 and $19,247, respectively, as compensation under the Plans.
AIM Distributors received commissions of $28,250 from sales of the Class A
shares of the Fund during the year ended October 31, 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 year ended October 31, 1999,
AIM Distributors received $3,743 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 year ended October 31, 1999, the Fund paid legal fees of $3,672 for
services rendered by 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 year ended October 31, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$1,167 and $1,184, respectively, under expense offset arrangements. The effect
of the above arrangements resulted in a reduction of the Fund's total expenses
of $2,351 during the year ended October 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests 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 year
ended October 31, 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 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1999 was
$90,400,242 and $90,308,631, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 815,437
- ------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (5,913,598)
- ------------------------------------------------------------
Net unrealized depreciation of investment
securities $(5,098,161)
============================================================
</TABLE>
Cost of investments for tax purposes is $91,266,418.
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 2,496,536 $ 26,051,117 3,840,125 $ 41,970,650
- ----------------------------------------------------------------------------
Class B 1,275,307 13,306,447 1,818,456 19,865,377
- ----------------------------------------------------------------------------
Class C 101,598 1,053,223 155,501 1,696,174
- ----------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 315,101 3,238,097 221,486 2,412,254
- ----------------------------------------------------------------------------
Class B 188,786 1,938,556 144,487 1,573,639
- ----------------------------------------------------------------------------
Class C 9,111 93,556 4,387 47,595
- ----------------------------------------------------------------------------
Reacquired:
Class A (3,041,035) (31,145,940) (1,406,526) (15,368,213)
- ----------------------------------------------------------------------------
Class B (1,370,398) (14,066,967) (814,522) (8,911,529)
- ----------------------------------------------------------------------------
Class C (85,444) (882,865) (13,394) (145,852)
- ----------------------------------------------------------------------------
(110,438) $ (414,776) 3,950,000 $ 43,140,095
============================================================================
</TABLE>
14
<PAGE> 17
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
capital stock outstanding during each of the years in the five-year period ended
October 31, 1999 and for a share of Class C capital stock outstanding during
each of the years in the two-year period ended October 31, 1999 and the period
August 4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.60 $ 10.93 $ 10.85 $10.74 $10.02
- ------------------------------------------------------ ------- ------- ------- ------ ------
Income from investment operations:
Net investment income 0.67 0.71 0.72 0.79(a) 0.79
- ------------------------------------------------------ ------- ------- ------- ------ ------
Net gains (losses) on securities (both realized and
unrealized) (0.86) (0.27) 0.21 0.25 0.75
- ------------------------------------------------------ ------- ------- ------- ------ ------
Total from investment operations (0.19) 0.44 0.93 1.04 1.54
- ------------------------------------------------------ ------- ------- ------- ------ ------
Less distributions:
Dividends from investment income (0.61) (0.61) (0.72) (0.81) (0.82)
- ------------------------------------------------------ ------- ------- ------- ------ ------
Distributions from net realized gains -- (0.07) (0.13) (0.12) --
- ------------------------------------------------------ ------- ------- ------- ------ ------
Return of capital (0.08) (0.09) -- -- --
- ------------------------------------------------------ ------- ------- ------- ------ ------
Total distributions (0.69) (0.77) (0.85) (0.93) (0.82)
- ------------------------------------------------------ ------- ------- ------- ------ ------
Net asset value, end of period $ 9.72 $ 10.60 $ 10.93 $10.85 $10.74
====================================================== ======= ======= ======= ====== ======
Total return(b) (1.94)% 3.95% 9.05% 10.22% 16.07%
====================================================== ======= ======= ======= ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $51,077 $58,115 $30,924 $21,926 $10,004
====================================================== ======= ======= ======= ====== ======
Ratio of expenses to average net assets(c) 1.25%(d) 1.23% 1.25% 1.25% 1.25%
====================================================== ======= ======= ======= ====== ======
Ratio of net investment income to average net assets(e) 6.54%(d) 6.38% 6.54% 7.27% 7.38%
====================================================== ======= ======= ======= ====== ======
Portfolio turnover rate 93% 47% 61% 83% 128%
====================================================== ======= ======= ======= ====== ======
</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%, 1.73%, 1.86%, 2.02% and 3.03% for the periods 1999-1995.
(d) Ratios are based on average net assets of $60,052,093.
(e) 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 6.12%, 5.89%, 5.93%, 6.51% and 5.59% for the periods
1999-1995.
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------- --------------------------
1999 1998 1997 1996 1995 1999 1998 1997
------- ------- ------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.59 $ 10.92 $ 10.84 $ 10.73 $10.01 $10.59 $10.92 $10.76
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Income from investment operations:
Net investment income 0.62 0.65 0.67 0.74(a) 0.74 0.62 0.66 0.15(a)
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Net gains (losses) on securities (both
realized and unrealized) (0.85) (0.27) 0.21 0.24 0.75 (0.86) (0.28) 0.17
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Total from investment operations (0.23) 0.38 0.88 0.98 1.49 (0.24) 0.38 0.32
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Less distributions:
Dividends from investment income (0.56) (0.55) (0.67) (0.75) (0.77) (0.56) (0.55) (0.13)
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Distributions from net realized gains -- (0.07) (0.13) (0.12) -- -- (0.07) (0.03)
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Return of capital (0.08) (0.09) -- -- -- (0.08) (0.09) --
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Total distributions (0.64) (0.71) (0.80) (0.87) (0.77) (0.64) (0.71) (0.16)
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Net asset value, end of period $ 9.72 $ 10.59 $ 10.92 $ 10.84 $10.73 $ 9.71 $10.59 $10.92
========================================== ======= ======= ======= ======= ====== ====== ====== ======
Total return(b) (2.37)% 3.38% 8.48% 9.66% 15.56% (2.47)% 3.39% 2.99%
========================================== ======= ======= ======= ======= ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $34,423 $36,525 $25,121 $16,787 $4,207 $1,884 $1,785 $ 242
========================================== ======= ======= ======= ======= ====== ====== ====== ======
Ratio of expenses to average net assets(c) 1.75%(d) 1.75% 1.76% 1.75% 1.73% 1.75%(d) 1.73% 1.76%(e)
========================================== ======= ======= ======= ======= ====== ====== ====== ======
Ratio of net investment income to average
net assets(f) 6.04%(d) 5.87% 6.03% 6.77% 6.88% 6.04%(d) 5.88% 6.03%(e)
========================================== ======= ======= ======= ======= ====== ====== ====== ======
Portfolio turnover rate 93% 47% 61% 83% 128% 93% 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%, 2.25%, 2.37%, 2.53% and 3.57% for 1999-1995 for Class B and 2.17%,
2.22% and 2.37% (annualized) for 1999-1997 for Class C.
(d) Ratios are based on average net assets of $38,526,539 and $1,924,739 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 5.62%, 5.37%, 5.42%, 6.00% and 5.05% for 1999-1995 for
Class B and 5.62%, 5.40% and 5.42% (annualized) for 1999-1997 for Class C.
15
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of the AIM Global Income Fund (a portfolio of
AIM International Funds, Inc.), including the schedule of
investments, as of October 31, 1999, and the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended and the financial
highlights for each of the years in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1999, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Global
Income Fund as of October 31, 1999, the results of its
operations for the year then ended, the changes in its
net assets for each of the years in the two-year period
then ended and the financial highlights for each of the
years in the five-year period then ended, in conformity
with generally accepted accounting principles.
KPMG LLP
December 3, 1999
Houston, Texas
16
<PAGE> 19
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BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
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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, Nancy L. Martin A I M Distributors, Inc.
Metropolitan Transportation Authority of Assistant Secretary 11 Greenway Plaza
New York State Suite 100
Ofelia M. Mayo Houston, TX 77046
Lewis F. Pennock Assistant Secretary
Attorney AUDITORS
Lisa A. Moss
Louis S. Sklar Assistant Secretary KPMG LLP
Executive Vice President 700 Louisiana
Hines Interests Kathleen J. Pflueger Houston, TX 77002
Limited Partnership Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
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REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Global Income Fund paid ordinary dividends in the amount of $0.607 per share
to Class A shareholders, and $0.552 per share to Class B and Class C
shareholders, respectively, during its tax year ended October 31, 1999. Of this
amount 0% is eligible for the dividends received deduction for corporations.
INCOME TAX INFORMATION
Of the total income dividends paid, 3.56% was derived from U.S. Treasury
obligations.
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
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<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc.
AIM Aggressive Growth Fund(1) AIM Money Market Fund has provided leadership in the
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund mutual fund industry since
AIM Capital Development Fund 1976 and managed approximately
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS $120 billion in assets for
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund more than 6.4 million
AIM Large Cap Growth Fund AIM Asian Growth Fund shareholders, including
AIM Mid Cap Equity Fund AIM Developing Markets Fund individual investors,
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) corporate clients and
AIM Mid Cap Opportunities Fund AIM European Development Fund financial institutions, as of
AIM Select Growth Fund AIM International Equity Fund September 30, 1999.
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund The AIM Family of
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund Funds--Registered Trademark--
AIM Value Fund AIM Weingarten Fund AIM New Pacific Growth Fund is distributed nationwide, and
AIM today is the 10th-largest
GROWTH & INCOME FUNDS GLOBAL GROWTH FUNDS mutual fund complex in the
AIM Advisor Flex Fund AIM Global Aggressive Growth Fund United States in assets under
AIM Advisor Large Cap Value Fund AIM Global Growth Fund management, according to
AIM Advisor Real Estate Fund Strategic Insight, an
AIM Balanced Fund GLOBAL GROWTH & INCOME FUNDS independent mutual fund
AIM Basic Value Fund AIM Global Growth & Income Fund monitor.
AIM Charter Fund AIM Global Utilities Fund
INCOME FUNDS GLOBAL INCOME FUNDS
AIM Floating Rate Fund AIM Emerging Markets Debt Fund
AIM High Yield Fund AIM Global Government Income Fund
AIM High Yield Fund II AIM Global Income Fund
AIM Income Fund AIM Strategic Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund THEME FUNDS
AIM Global Consumer Products and Services Fund
TAX-FREE INCOME FUNDS AIM Global Financial ServicesFund
AIM High Income Municipal Fund AIM Global Health Care Fund
AIM Municipal Bond Fund AIM Global Infrastructure Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Resources Fund
AIM Tax-Free Intermediate Fund AIM Global Telecommunications and Technology Fund(5)
AIM Global Trends Fund(6)
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(1) AIM Aggressive Growth Fund reopened to new investors on November 16, 1998.
(2) AIM Small Cap Growth Fund closed to new investors on November 8, 1999. (3)
AIM Small Cap Opportunities Fund closed to new investors on November 4, 1999.
(4) On September 1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth
Fund. Previously the fund invested in all size companies in most areas of
Europe. The fund now seeks to invest at least 65% of its assets in large-cap
companies within countries using the euro as their currency (EMU-member
countries). (5) On June 1, 1999, AIM Global Telecommunications Fund was renamed
AIM Global Telecommunications and Technology Fund. (6) Effective August 27,
1999, AIM Global Trends Fund was restructured to operate as a traditional mutual
fund. Before that date, the fund operated as a fund of funds. For more complete
information about any AIM fund(s), including sales charges and expenses, ask
your financial advisor or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money. If used as
sales material after January 20, 2000, this report must be accompanied by a
current Quarterly Review of Performance for AIM Funds.
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INVEST WITH DISCIPLINE
--Registered Trademark--
AIM Distributors, Inc. GLI-AR-1
