<PAGE>
ANNUAL REPORT / DECEMBER 31 1998
AIM FLOATING RATE FUND
ARTWORK
AIM LOGO
INVEST WITH DISCIPLINE-Registered Trademark-
<PAGE>
ARTWORK
SAILBOATS AROUND THE PENINSULA BY PETER SICKLES (1945-, AMERICAN)
SAILBOATS GLIDE MAJESTICALLY ON A PLACID OCEAN ON THEIR WAY TO A FRIENDLY
PORT. WHETHER THE ECONOMIC WATERS ARE CALM OR TURBULENT, AIM FLOATING RATE
FUND ENDEAVORS TO BE A STABLE INVESTMENT VEHICLE FOR SHAREHOLDERS WHILE
TRANSPORTING THEM TO THEIR FINANCIAL DESTINATION.
AIM Floating Rate Fund is for shareholders who seek a high level of current
income and preservation of capital as is consistent with investing in senior
secured floating rate corporate loans and senior secured debt securities.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
- - AIM Floating Rate Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed at net asset value
without a sales charge.
- - When sales charges are included in performance figures, performance
reflects the maximum applicable early withdrawal charge. The early
withdrawal charge declines from 3% beginning at the time of purchase
to 0% at the beginning of the fifth year.
- - The Fund's distribution rate is calculated by taking the sum of the
previous 30 days of distribution factors and dividing this sum by the
ending net asset value. This value is then annualized to arrive at the
30-day distribution rate.
- - The Fund's effective yield is derived from the distribution rate, taking
into account the timing of the dividend payments and using a factor to
account for a 30-day period.
- - The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
- - The Fund invests primarily in higher-yielding, lower-rated senior secured
floating rate corporate loans and other debt obligations that are subject
to the risk of nonpayment of scheduled interest or principal payments,
which may cause the Fund to experience a decline in net asset value per
share. Prepayment of principal by borrowers may require the Fund to
replace its investment with a lower-yielding security that may adversely
affect the net asset value of the Fund.
- - Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
- - The London Interbank Offered Rate (LIBOR) is the interest rate the world's
most creditworthy banks charge one another for large loans. It is used
worldwide as a base interest rate for loans made to major commercial and
industrial corporations.
- - 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 A PORTION 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 FLOATING RATE FUND
<PAGE>
ANNUAL REPORT / CHAIRMAN'S LETTER
Mr. Bauer's photo
DEAR SHAREHOLDER:
Throughout the first half of the year, markets were influenced by
anticipation that the Federal Reserve Board (the Fed) would raise interest
rates in light of the continued strong growth of the U.S. economy. In late
July testimony before Congress, Fed Chairman Alan Greenspan intimated that
the potential threat of inflation could lead the Fed to raise interest rates.
Market sentiment shifted over the summer amid myriad financial troubles in
Japan, Asia and Latin America; Russia's effective default on its government
debt; and the widely noted collapse of several hedge funds. In the fall, when
the threat of a global credit crunch loomed, the Fed finally lowered interest
rates to pump liquidity and confidence into the markets and demonstrate that
it would intervene to forestall a recession in the United States. Even the
market for senior secured floating rate loans, which normally is relatively
insulated from market turmoil, was affected by these events.
In an attempt to calm investors who were shifting their money from equity
markets to any security considered liquid--a worldwide flight to quality--the
Fed cut the federal funds rate by 0.25% on September 29. Few people were
assuaged by the action. Two weeks later, in an unusual inter-meeting move,
the Fed lowered the federal funds rate and the discount rate by 0.25%, and a
fierce market rally ensued. Both rates were lowered by 0.25% again in
November. By the close of the fiscal year, markets were enjoying relative
equilibrium.
YEAR 2000 CONCERN
Many of our shareholders have asked us about AIM's year 2000 readiness
status. We appreciate these concerns, and we take the year 2000 issue
seriously. AIMhas devoted considerable effort to creating a comprehensive
plan for assessing, correcting and testing our in-house systems. We will also
participate in an industrywide testing effort scheduled to begin in March.
But no matter how well we prepare and test, no one can know for sure what
the year 2000 will bring. Our industry's systems are connected in complex
ways to many third parties, and there may be unforeseen problems when the
year 2000 actually arrives. Though we cannot predict what all those problems
might be, we are working with our business recovery team to develop
contingency plans appropriate for a variety of year 2000 scenarios.
YOUR FUND MANAGEMENT'S COMMENTS
We are pleased to send you this report on your Fund's fiscal year. On the
pages that follow, your Fund's management team offers more detailed
discussion of how markets behaved, how they managed the portfolio, and what
they foresee for markets and your Fund. We hope you find their discussion
informative. If you have any questions or comments, please contact our Client
Services department at 800-959-4246, or e-mail your inquiry to us at
[email protected]. You can access information about your account through
our AIM Investor Line at 800-246-5463 or at our Web site, www.aimfunds.com.
We often post market updates on our Web site.
We thank you for your continued participation in The AIM Family of
Funds-Registered Trademark-.
Sincerely,
Mr. Bauer's signature
Charles T. Bauer
Chairman, A I M Advisors, Inc.
AIM FLOATING RATE FUND
<PAGE>
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND PROVIDES RELATIVE SAFE HAVEN FROM EXTREME MARKET VOLATILITY
MOST FINANCIAL MARKETS WERE VERY TURBULENT IN 1998. HOW DID AIM FLOATING RATE
FUND PERFORM?
Senior secured floating rate loans displayed much greater price stability
than most other asset classes in the highly volatile market environment that
prevailed in 1998. Consequently, the Fund continued to provide attractive
income while maintaining relative stability of net asset value per share. As
of December 31, 1998, the Fund's 30-day effective yield was 6.72%. By
comparison, the six-month London InterBank Offered Rate (LIBOR) was 5.06%.
Total return for the year ended December 31, 1998, was 5.25%. During the
year, net asset value per share remained within the relatively narrow range
of $9.82 to $10.02, extending the Fund's record of share price stability as
shown on the accompanying chart. While the Fund attempts to maintain a
relatively stable net asset value, floating rate investments should not be
confused with money market funds, and the Fund will not maintain a stable net
asset value.
During the six months since our last report, the Fund's net assets
increased from $215 million to $288 million.
THE YIELD ADVANTAGE
The Fund's 30-day effective yield vs LIBOR, 5/1/97 to 12/31/98
<TABLE>
<CAPTION>
Aim Floating LIBOR
<S> <C> <C>
5/01/97 0.0753 0.06
0.0741 0.0587
0.0754 0.0581
0.075 0.0584
0.0736 0.0581
0.0727 0.0579
11/30/97 0.0719 0.0593
0.0729 0.0591
0.0739 0.0563
0.0704 0.057
0.0696 0.0575
0.0685 0.0572
0.0676 0.0575
6/30/98 0.069 0.057
12/31/98 0.0672 0.0506
</TABLE>
WHAT ARE SENIOR SECURED FLOATING RATE LOANS, AND WHY DO THEY TEND TO BE MORE
STABLE IN PRICE THAN OTHER ASSET CLASSES?
Senior secured floating rate loans are made by banks and financial
institutions to corporations. Usually, they carry the highest priority claim
on the company's assets and earnings. These loans generally are backed by
collateral such as stock, property or equipment, which can be sold to meet
debt obligations. For the most part, companies use these loans for highly
leveraged transactions such as acquisitions or capital expansions.
The interest rates on these loans are adjusted periodically, usually every
30 to 50 days, to reflect changes in LIBOR. Consequently, the value of these
loans, in comparison to investments with fixed interest rates, is less
susceptible to fluctuations in the prevailing interest-rate environment. The
senior status of these loans also helps to maintain their market price.
THE FUND'S NET ASSET VALUE PER SHARE DECLINED 1.8% BETWEEN SEPTEMBER AND
NOVEMBER, THEN MOVED UPWARD AGAIN. WHAT WAS RESPONSIBLE FOR THIS TREND?
An oversupply of floating rate loans caused their market prices to decline.
RELATIVE PRICE STABILITY
<TABLE>
<S> <C> <S> <C>
5/1/97 $10.00 3/98 $10.01
6/97 $10.00 4/98 $10.01
7/97 $10.00 5/98 $10.00
8/97 $10.01 6/98 $10.00
9/97 $10.01 7/98 $10.00
10/97 $10.02 8/98 $10.00
11/97 $10.02 9/98 $9.89
12/97 $10.02 10/98 $9.85
1/98 $10.02 11/98 $9.82
2/98 $10.02 12/98 $9.84
</TABLE>
Source: Towers Data Systems. There is no guarantee the Fund will maintain a
constant net asset value. Investment return will vary so that you may have a
gain or a loss when you sell shares. Past performance cannot guarantee
comparable future results.
Additionally, hedge funds and other investors sold floating rate loans at
discount prices for liquidity reasons or to purchase other assets that had
dropped much more dramatically in value, such as high-yield bonds. While
decreases in the market value of the underlying loans in the portfolio had a
negative impact on the fund's net asset value, its yield remained relatively
firm. Moreover, we took advantage of the decline in market prices to purchase
loans at reduced rates.
The Fund's net asset value rose toward the end of the year as the issuance
of new floating rate loans declined, alleviating the oversupply problem. We
expect the rate of new issuance to continue to slow.
WHAT DISCIPLINE DO YOU EMPLOY IN SELECTING LOANS FOR THE PORTFOLIO?
The primary risk associated with senior secured floating rate loans is credit
risk. Most of these loans are below investment-grade quality as measured by
Standard & Poor's Corporation (S&P) and Moody's Investors Service (Moody's),
two widely known credit-rating agencies. We endeavor to reduce credit risk by
using a rigorous process for selecting loans to include in the portfolio.
In evaluating a loan, we conduct an extensive bottom-up credit analysis of
the company. This analysis includes an assessment of the company's
management, the corporation's position within its particular industry, the
company's prospects, its dependence on various markets worldwide, its
financial sponsor, and its overall financial flexibility.
Once this process is completed, we conduct an analysis of the loan to
assess its value relative to similar types of invest-
SEE IMPORTANT FUND AND INDEX DISCLOSURES INSIDE FRONT COVER.
AIM FLOATING RATE FUND
2
<PAGE>
ANNUAL REPORT / MANAGERS' OVERVIEW
FIFTY-EIGHT COMPANIES, SPANNING 26 DIFFERENT INDUSTRIES, WERE REPRESENTED IN
THE PORTFOLIO.
ments and to determine how well it might trade in the market. If our overall
assessment is positive, we will then make a decision to purchase the loan.
IS THE EVALUATION PROCESS ONGOING?
Yes, we closely monitor each investment in the portfolio. Senior secured
floating rate loans typically are not publicly traded, but are placed
privately with institutional investors. Consequently, we sign confidentiality
agreements for each financing. We get information, such as financial reports,
directly from the companies represented in the portfolio, usually on a
monthly basis. Additionally, the borrower is generally bound by an agreement
with rigorous stipulations. As a result, if a company develops a problem in
meeting its debt obligation, we can react quickly and have the company
resolve it, usually well before it reaches the default stage.
While past performance cannot guarantee comparable future results, the
default rate on these loans has been relatively low--about 2% over the past
10 years. Additionally, in cases where companies have defaulted on their
loans, creditors have recovered more than 80% of their investment because
of the senior status of these debt obligations.
PORTFOLIO COMPOSITION
As of 12/31/98, based on total net assets
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
<S><C> <C>
1. Lyondell Petrochemical Co. 3.6%
2. Capstar Broadcasting Corp. 3.4
3. Patriot American Hospitality, Inc. 2.9
4. 20th Century Plastics, Inc. 2.6
5. Intesys Technologies 2.6
6. Ferrellgas, L.P. 2.4
7. Formax, Inc. 2.4
8. Coinmach Laundry Corp. 2.4
9. White Knight Broadcasting, Inc. 1.8
10. Mariner Post-Acute Network, Inc. 1.8
</TABLE>
<TABLE>
<CAPTION>
TOP 10 INDUSTRIES
<S><C> <C>
1. Leisure & Tourism 13.0%
2. Broadcasting & Publishing 7.9
3. Chemicals 7.7
4. Household Products 5.5
5. Business & Public Services 5.2
6. Health Care Services 4.7
7. Auto Parts 4.3
8. Consumer Services 3.9
9. Cable Television 3.4
10. Wireless Communications 3.4
</TABLE>
Please keep in mind that the Fund's portfolio is subject to change and there
is no assurance the Fund will continue to hold any particular security.
HOW WAS THE FUND POSITIONED AT THE END OF THE FISCAL YEAR?
Fifty-eight companies, spanning 26 different industries, were represented in
the portfolio. The largest holding was Lyondell Petrochemical, a leading
manufacturer of petrochemicals and polymers. Additional holdings included
Capstar Broadcasting, a major mid-market radio company; Patriot American
Hospitality, a real estate investment trust which focuses on hotels; and 20th
Century Plastics, a marketer of office and photography products.
WHAT IS YOUR OUTLOOK?
The U.S. economic climate appears to be favorable for most types of
investments, including senior secured floating rate loans. Perhaps most
important, inflation and interest rates remain low. The economy continues to
grow at a healthy pace, although it is expected to slow in the months ahead.
However, the concerns that rattled the stock and bond markets in
1998-severe economic problems in Asia, Russia and Latin America and political
controversy in the United States-remain in the background. Consequently, the
extreme volatility that affected equity and fixed-income markets last year
could persist in 1999. Such a development could make senior secured floating
rate loans even more attractive as an investment option because they
generally are relatively more stable in price than other asset classes.
Moreover, the trading of these loans in the secondary market continues to
expand rapidly. Approximately $62 billion in senior secured floating rate
loans were traded in the secondary market in 1997 compared to just $4 billion
in 1990. As the market for these loans grows, we believe it will improve
liquidity and further enhance the price stability of this asset class.
SEE IMPORTANT FUND AND INDEX DISCLOSURES INSIDE FRONT COVER.
AIM FLOATING RATE FUND
3
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
RATING PRINCIPAL VALUE % OF NET
SENIOR SECURED FLOATING RATE INTERESTS{.:}{/\} (UNAUDITED) AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Leisure & Tourism (13.0%)
Patriot American Hospitality, Inc.: ....................... NR 2.9
Term loan B due 3/31/03 ................................. 5,620,313 $ 5,402,526
Term loan due 3/31/00 ................................... 1,488,971 1,455,469
Term loan due 3/31/99 ................................... 1,323,529 1,293,750
Starwood Hotels & Resorts Worldwide, Inc.: ................ NR 1.7
Term loan due 2/23/03 ................................... 5,000,000 4,937,500
Extended Stay America, Inc.: .............................. NR 1.7
Term loan B due 12/31/03 ................................ 5,000,000 4,900,000
Interval International Corp.: ............................. NR 1.4
Term loan B due 12/16/05 ................................ 2,103,750 2,097,176
Term loan C due 12/15/06 ................................ 2,103,750 2,097,176
The Resort at Summerlin, Inc.: ............................ NR 1.4
Term loan A due 3/31/04 ................................. 4,000,000 3,970,000
KSL Recreation Group, Inc.: ............................... B2 1.3
Revolving Credit due 4/30/03 ............................ 4,011,429 2,516,362
Term loan A due 4/30/05 ................................. 707,143 699,336
Term loan B due 4/30/06 ................................. 707,143 699,336
ASC-West, Inc.: ........................................... B1 1.2
Term loan due 5/31/06 ................................... 3,571,429 3,571,429
Aladdin Gaming, LLC.: ..................................... B2 0.9
Term loan C due 2/26/08 ................................. 2,222,223 2,194,444
Term loan B due 8/26/06 ................................. 277,778 274,305
ASC East, Inc.: ........................................... B1 0.5
Term loan due 5/31/06 ................................... 1,428,570 1,428,570
------------
37,537,379
------------
Broadcasting & Publishing (7.9%)
Capstar Broadcasting Corp.: ............................... B3 3.4
Term loan B due 5/31/05 ................................. 9,950,000 9,894,031
White Knight Broadcasting, Inc.: .......................... NR 1.8
Term loan B due 9/30/05 ................................. 5,329,268 5,315,945
21st Century Newspapers, Inc.: ............................ Ba3 1.7
Term loan due 9/15/05 ................................... 4,962,500 4,894,266
Comcorp Broadcasting, Inc.: ............................... NR 1.0
Term loan B due 9/30/05 ................................. 2,926,829 2,897,561
------------
23,001,803
------------
Chemicals (7.7%)
Lyondell Petrochemical Co.: ............................... Ba2 3.6
Term loan B due 6/30/05 ................................. 10,479,000 10,217,025
Huntsman Specialty Chemicals Corp.: ....................... Ba2 1.6
Term loan due 3/15/07 ................................... 2,727,273 2,707,636
Term loan C due 3/15/05 ................................. 2,152,144 2,136,003
Sterling Pulp Chemicals (SASK) Ltd.: ...................... NR 1.3
Term loan B due 6/30/05 ................................. 3,640,598 3,604,192
Huntsman Corp.: ........................................... Ba2 1.2
Term loan B due 6/30/04 ................................. 3,442,437 3,412,316
------------
22,077,172
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
RATING PRINCIPAL VALUE % OF NET
SENIOR SECURED FLOATING RATE INTERESTS{.:}{/\} (UNAUDITED) AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Household Products (5.5%)
20th Century Plastics, Inc.: .............................. NR 2.6
Term loan B due 9/30/05 ................................. 3,988,889 $ 3,958,972
Term loan C due 9/30/06 ................................. 3,491,250 3,465,066
Century Maintenance Supply, Inc.: ......................... NR 1.7
Term loan B due 7/8/05 .................................. 4,975,000 4,912,813
Paint Sundry Brands Corp.: ................................ NR 1.2
Term loan B due 8/11/05 ................................. 1,795,500 1,764,079
Term loan C due 8/11/06 ................................. 1,661,667 1,632,588
------------
15,733,518
------------
Business & Public Services (5.2%)
Bridge Information Systems, Inc.: ......................... B1 1.7
Term loan due 5/29/05 ................................... 5,000,000 4,940,000
Genicom Corp.: ............................................ NR 1.6
Term loan B due 9/5/04 .................................. 4,843,750 4,698,438
Safety-Kleen Services Inc.: ............................... Ba3 1.0
Term loan B due 4/3/04 .................................. 1,356,818 1,356,818
Term loan C due 4/3/05 .................................. 1,356,818 1,356,818
Decision One Corp.: ....................................... B1 0.9
Term loan B due 8/6/05 .................................. 2,962,500 2,562,562
------------
14,914,636
------------
Health Care Services (4.7%)
Mariner Post-Acute Network, Inc.: ......................... Ba3 1.8
Term loan B due 3/31/05 ................................. 2,495,000 2,457,575
Term loan C due 3/31/06 ................................. 2,495,000 2,457,575
MedPartners, Inc.: ........................................ B1 1.6
Term loan B due 6/9/01 .................................. 4,636,661 4,485,969
Genesis Health Ventures, Inc.: ............................ Ba3 0.8
Term loan B due 9/30/04 ................................. 1,203,598 1,182,535
Term loan C due 6/30/05 ................................. 1,200,806 1,179,791
The Multicare Companies, Inc.: ............................ B1 0.5
Term loan B due 9/30/04 ................................. 1,234,375 1,208,145
Term loan C due 6/1/05 .................................. 410,417 401,695
------------
13,373,285
------------
Auto Parts (4.3%)
American Axle & Manufacturing of Michigan, Inc.: .......... Ba3 1.7
Term loan due 4/30/06 ................................... 5,000,000 4,962,500
Federal-Mogul Corp.: ...................................... Ba2 1.6
Term loan B due 12/31/05 ................................ 4,500,000 4,454,999
Joan Fabrics Corp.: ....................................... B1 1.0
Term loan B due 6/30/05 ................................. 1,907,401 1,893,096
Term loan C due 6/30/06 ................................. 990,514 983,085
------------
12,293,680
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
RATING PRINCIPAL VALUE % OF NET
SENIOR SECURED FLOATING RATE INTERESTS{.:}{/\} (UNAUDITED) AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Services (3.9%)
Coinmach Laundry Corp.: ................................... Ba2 2.4
Term loan B due 6/30/05 ................................. 6,932,538 $ 6,897,875
Rent-A-Center, Inc.: ...................................... Ba3 1.5
Term loan C due 2/5/07 .................................. 2,408,924 2,366,767
Term loan B due 2/5/06 .................................. 1,970,938 1,936,446
------------
11,201,088
------------
Cable Television (3.4%)
Charter Communications Entertainment, L.P.: ............... Ba3 1.7
Term loan due 9/30/07 ................................... 5,000,000 4,987,500
Charter Communications Southeast, L.P.: ................... Ba3 1.7
Term loan C due 1/1/08 .................................. 5,000,000 4,953,125
------------
9,940,625
------------
Wireless Communications (3.4%)
Western PCS Holding Corp.: ................................ B1 1.7
Term loan B due 6/26/07 ................................. 5,000,000 4,968,750
Commnet Cellular, Inc.: ................................... B1 1.7
Term loan D due 9/30/07 ................................. 3,252,033 3,228,992
Term loan C due 3/31/07 ................................. 1,161,440 1,153,211
Term loan B due 9/30/06 ................................. 586,527 582,251
------------
9,933,204
------------
Appliances & Household (3.4%)
Simmons Co., Inc.: ........................................ Ba3 1.7
Term loan C due 10/29/06 ................................ 3,562,500 3,544,688
Term loan B due 10/29/05 ................................ 1,424,489 1,417,367
The Imperial Home Decor Group: ............................ B1 1.7
Term loan B due 3/13/05 ................................. 3,300,000 3,262,875
Term loan C due 3/13/06 ................................. 1,700,000 1,680,875
------------
9,905,805
------------
Transportation - Shipping (2.6%)
American Commercial Lines: ................................ Ba2 1.7
Term loan C due 6/30/07 ................................. 2,877,301 2,861,122
Term loan B due 6/30/06 ................................. 2,111,273 2,099,401
Atlas Freighter Leasing, Inc.: ............................ Ba3 0.9
Term loan due 5/29/04 ................................... 2,734,865 2,706,380
------------
7,666,903
------------
Plastics & Rubber (2.6%)
Intesys Technologies, Inc.: ............................... NR 2.6
Term loan due 6/30/06 ................................... 7,485,000 7,410,150
------------
Gas Production & Distribution (2.4%)
Ferrellgas, L.P.: ......................................... NR 2.4
Term loan C due 6/17/06 ................................. 7,000,000 7,000,000
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
RATING PRINCIPAL VALUE % OF NET
SENIOR SECURED FLOATING RATE INTERESTS{.:}{/\} (UNAUDITED) AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Machinery & Engineering (2.4%)
Formax, Inc.: ............................................. NR 2.4
Term loan B due 9/30/05 ................................. 6,965,000 $ 6,930,175
------------
Pharmaceuticals (2.4%)
Leiner Health Products Group: ............................. Ba3 1.5
Term loan C due 12/30/05 ................................ 4,451,207 4,417,822
Endo Pharmaceuticals, Inc.: ............................... B1 0.9
Term loan B due 6/30/04 ................................. 2,452,381 2,427,857
------------
6,845,679
------------
Paper/Packaging (2.3%)
Graham Packaging Co.: ..................................... B1 1.3
Term loan D due 1/31/07 ................................. 1,446,429 1,439,196
Term loan B due 1/31/06 ................................. 1,353,516 1,343,364
Term loan C due 1/31/07 ................................. 1,121,484 1,115,877
Stone Container Corp.: .................................... Ba3 1.0
Term loan E due 10/1/03 ................................. 2,895,738 2,877,640
------------
6,776,077
------------
Restaurants (1.7%)
AFC Enterprises, Inc.: .................................... Ba3 1.7
Term loan B due 6/30/04 ................................. 4,987,500 4,975,031
------------
Retailers-Food (1.7%)
Star Markets, Inc.: ....................................... Ba3 1.7
Term Loan C due 12/31/02 ................................ 4,954,088 4,941,703
------------
Beverages - Non-alcoholic (1.6%)
Mistic/Snapple Brands, Inc.: .............................. NR 1.6
Term loan B due 6/1/04 .................................. 2,439,492 2,421,196
Term loan C due 6/1/05 .................................. 2,439,492 2,421,196
------------
4,842,392
------------
Office Equipment (1.6%)
Dictaphone Corp.: ......................................... B2 1.6
Term loan C due 12/31/02 ................................ 2,475,000 2,351,250
Term loan B due 6/30/02 ................................. 2,436,828 2,290,618
------------
4,641,868
------------
Coal (1.6%)
P & L Coal Holdings Corp.: ................................ NR 1.0
Term loan B due 6/9/06 .................................. 2,769,231 2,751,924
Centennial Resoures, Inc.:-/- ............................. NR 0.6
Term loan B due 3/31/04 ................................. 1,966,666 983,334
Term loan A due 3/31/02 ................................. 850,000 425,000
Revolving Credit due 6/30/99 ............................ 355,789 176,704
------------
4,336,962
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
RATING PRINCIPAL VALUE % OF NET
SENIOR SECURED FLOATING RATE INTERESTS{.:}{/\} (UNAUDITED) AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Other Consumer Goods (1.5%)
The Boyds Collection, Ltd.: ............................... Ba3 1.5
Term loan B due 4/21/06 ................................. 4,216,667 $ 4,169,229
------------
Industrial Components (1.4%)
Thermadyne MFG. L.L.C.: ................................... B1 1.4
Term loan B due 5/22/05 ................................. 1,990,000 1,976,319
Term loan C due 5/22/06 ................................. 1,990,000 1,976,319
------------
3,952,638
------------
Building Materials & Components (1.3%)
Atrium Cos., Inc.: ........................................ B1 1.3
Term Loan C due 6/30/06 ................................. 1,963,333 1,951,554
Term Loan B due 6/30/05 ................................. 1,716,481 1,706,182
------------
3,657,736
------------
Medical Technology & Supplies (0.9%)
Sterling Diagnostic Imaging, Inc.: ........................ NR 0.9
Term loan due 6/30/05 ................................... 2,497,596 2,472,620
------------ -----
TOTAL SENIOR SECURED FLOATING RATE INTERESTS (cost
$265,043,827) .............................................. 260,531,358 90.4
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1998, with State Street Bank & Trust
Co., due January 4, 1999, for an effective yield of 4.50%,
collateralized by $325,000 U.S. Treasury Notes, 4.00% due
10/31/00 and $22,395,000 U.S. Treasury Notes, 6.875% due
5/15/06 (market value of collateral is $25,825,681
including accrued interest). (cost $25,314,000) .......... 25,314,000 8.8
------------ -----
TOTAL INVESTMENTS (cost $290,357,827) * .................... 285,845,358 99.2
Other Assets and Liabilities ................................ 2,228,208 0.8
------------ -----
NET ASSETS .................................................. $288,073,566 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{.:} Senior secured corporate loans and senior secured debt securities
in the Fund's portfolio generally have variable rates which adjust
to a base, such as the London Inter-Bank Offered Rate ("LIBOR"), on
set dates, typically every 30 days but not greater than one year;
and/or have interest rates that float at a margin above a widely
recognized base lending rate such as the Prime Rate of a designated
U.S. bank. Senior secured floating rate interests are, at present,
not readily marketable and may be subject to restrictions on
resale.
{/\} Senior secured floating rate interests often require prepayments
from excess cash flow or permit the borrower to repay at its
election. The degree to which borrowers repay, whether as a
contractual requirement or at their election, cannot be predicted
with accuracy. As a result, the actual remaining maturity may be
substantially less than the stated maturities shown. However, it is
anticipated that the senior secured floating rate interests will
have an expected average life of three to five years.
-/- Non-income producing security: Centennial Resources, Inc. filed for
bankruptcy under Chapter 11 on October 13, 1998.
* For Federal income tax purposes, cost is $290,357,827 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,815
Unrealized depreciation: (4,517,284)
-------------
Net unrealized depreciation: $ (4,512,469)
-------------
-------------
</TABLE>
Abbreviation:
NR--Not rated
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments at value (cost $290,357,827) (Note 1).......................................... $285,845,358
U.S. currency.............................................................................. 756
Interest receivable........................................................................ 2,294,966
Receivable for Fund shares sold............................................................ 1,469,019
Unamortized organizational costs (Note 1).................................................. 141,376
Receivable for securities sold............................................................. 30,148
Miscellaneous receivable................................................................... 3,798
-----------
Total assets............................................................................. 289,785,421
-----------
Liabilities:
Payable for distribution................................................................... 785,474
Deferred facility fees (Note 1)............................................................ 582,302
Payable for investment management and administration fees (Note 2)......................... 241,073
Payable for professional fees.............................................................. 39,949
Payable for printing and postage expenses.................................................. 14,218
Payable for transfer agent fees (Note 2)................................................... 9,928
Payable for securities purchased........................................................... 8,989
Payable for fund accounting fees (Note 2).................................................. 7,258
Payable for registration and filing fees................................................... 3,139
Payable for Trustees' fees and expenses.................................................... 2,141
Payable for custodian fees................................................................. 1,886
Other accrued expenses..................................................................... 15,398
-----------
Total liabilities........................................................................ 1,711,755
-----------
Minority interest (Note 1)................................................................. 100
-----------
Net assets................................................................................... $288,073,566
-----------
-----------
Net asset value and offering price per share
($288,073,566 DIVIDED BY 29,274,261 shares outstanding).................................... $ 9.84
-----------
-----------
Net assets consist of:
Paid in capital (Note 4)................................................................... $292,414,237
Undistributed net investiment income....................................................... 161,289
Accumulated net realized gain on investments............................................... 10,509
Net unrealized depreciation of investments................................................. (4,512,469)
-----------
Total -- representing net assets applicable to shares of common stock outstanding............ $288,073,566
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STATEMENT OF OPERATIONS
Year ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income.................................................................................... $18,745,091
Facility fees earned............................................................................... 311,167
Interest expense (Note 1).......................................................................... (11,594)
----------
Total investment income.......................................................................... 19,044,664
----------
Expenses:
Investment management and administration fees (Note 2)............................................. 2,715,134
Printing and postage expenses...................................................................... 257,766
Professional fees.................................................................................. 230,750
Transfer agent fees (Note 2)....................................................................... 184,250
Registration and filing fees....................................................................... 93,150
Fund accounting fees (Note 2)...................................................................... 68,019
Amortization of organization costs (Note 1)........................................................ 42,468
Trustees' fees and expenses (Note 2)............................................................... 30,540
Custodian fees..................................................................................... 3,970
Other expenses..................................................................................... 79,382
----------
Total expenses before reductions................................................................. 3,705,429
Expenses reimbursed by A I M Advisors, Inc. (Note 2)........................................... (299,381)
----------
Total net expenses............................................................................... 3,406,048
----------
Net investment income................................................................................ 15,638,616
----------
Net realized and unrealized gain (loss) on investments: (Note 1)
Net realized gain on investments................................................................... 10,508
Net unrealized depreciation on investments......................................................... (4,634,050)
----------
Net realized and unrealized gain (loss) on investments............................................... (4,623,542)
----------
Net increase in net assets resulting from operations................................................. $11,015,074
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 1, 1997
(COMMENCEMENT
OF
YEAR ENDED OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
1998 1997
------------- --------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income................. $15,638,616 $ 5,351,450
Net realized gain on investments...... 10,508 150,555
Net change in unrealized appreciation
(depreciation) of investments........ (4,634,050) 121,581
------------- --------------
Net increase in net assets resulting
from operations.................... 11,015,074 5,623,586
------------- --------------
Distributions to shareholders: (Note 1)
From net investment income............ (15,477,327) (5,351,450)
From net realized gain on
investments.......................... (150,555) --
------------- --------------
Total distributions................. (15,627,882) (5,351,450)
------------- --------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 170,075,753 168,538,536
Decrease from capital shares
repurchased.......................... (39,086,520) (7,213,531)
------------- --------------
Net increase from capital share
transactions....................... 130,989,233 161,325,005
------------- --------------
Total increase in net assets............ 126,376,425 161,597,141
Net assets:
Beginning of year..................... 161,697,141 100,000
------------- --------------
End of year *........................ $288,073,566 $161,697,141
------------- --------------
------------- --------------
* Includes undistributed net
investment income.................... $ 161,289 $ --
------------- --------------
------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STATEMENT OF CASH FLOWS
Year ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Cash Provided by Operating Activities:
Net increase in net assets resulting from operations...... $ 11,015,074
Increase in receivables................................. (952,065)
Increase in payables.................................... 156,855
Net realized and unrealized gain on investments......... 4,623,542
Increase in deferred facility fees...................... 393,307
Decrease in unamortized organization costs.............. 42,468
---------------
Net cash provided by operating activities............. 15,279,181
---------------
Cash Used for Investing Activities:
Proceeds from principal payments and sales of senior
floating rate interests.................................. 155,074,585
Purchases of senior secured floating rate interests....... (263,037,556)
Purchases of short-term investments....................... (4,074,810,000)
Proceeds from sales and maturities of short-term
investments.............................................. 4,051,099,000
---------------
Net cash used in investing activities................. (131,673,971)
---------------
Cash Provided by Financing Activities:
Proceeds from capital shares sold and reinvested.......... 163,500,280
Disbursements from capital shares repurchased............. (39,086,520)
Dividends paid to shareholders............................ (8,018,356)
Proceeds from bank line of credit......................... 38,416,000
Repayment of proceeds from bank line of credit............ (38,416,000)
---------------
Net cash provided by financing activities............. 116,395,404
---------------
Net increase in cash...................................... 614
Cash at Beginning of Period............................... 142
---------------
Cash at End of Period..................................... $ 756
---------------
---------------
Non-Cash Financing Activities:
Value of capital shares issued in reinvestment of
dividends paid to shareholders........................... $ 7,380,819
---------------
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
MAY 1, 1997
(COMMENCEMENT
OF
YEAR ENDED OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- --------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.02 $ 10.00
-------------- --------------
Income from investment operations:
Net investment income................. 0.68 0.46
Net realized and unrealized gain
(loss) on investments................ (0.18) 0.02
-------------- --------------
Net increase from investment
operations......................... 0.50 0.48
-------------- --------------
Distributions to shareholders:
From net investment income............ (0.67) (0.46)
From net realized gain on
investments.......................... (0.01) --
-------------- --------------
Total distributions................. (0.68) (0.46)
-------------- --------------
Net asset value, end of period.......... $ 9.84 $ 10.02
-------------- --------------
-------------- --------------
Total investment return (c)............. 5.25 % 5.04 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 288,074 $ 161,697
Ratio of net investment income to
average net assets:
With expense reimbursement (Note 2)... 6.88 % 7.26 %(a)
Without expense reimbursement......... 6.75 % 6.24 %(a)
Ratio of expenses to average net assets:
With expense reimbursement (Note 2)... 1.50 % 1.50 %(a)
Without expense reimbursement......... 1.63 % 2.52 %(a)
Ratio of interest expense to average net
assets................................. 0.01 % 0.15 %(a)
Portfolio turnover rate................. 75 % 118 %(a)
</TABLE>
- --------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
NOTES TO
FINANCIAL STATEMENTS
December 31, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Floating Rate Fund, Inc., d/b/a AIM Floating Rate Fund (the "Fund"),
is organized as a Maryland corporation and is registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as a continuously offered
non-diversified, closed-end management investment company.
The Fund invests all of its investable assets in the Floating Rate Portfolio
("Portfolio"). The Portfolio is organized as a Delaware business trust and is
registered under the 1940 Act as a non-diversified, closed-end management
investment company.
The Portfolio has investment objectives, policies, and limitations substantially
identical to those of the Fund. Therefore, the financial statements of the Fund
and the Portfolio have been presented on a consolidated basis, and represent all
activities of both the Fund and the Portfolio. Through December 31, 1998, all of
the beneficial interest in the Portfolio was owned either by the Fund or INVESCO
(NY), Inc., the Portfolio's investment sub-sub-advisor which has a nominal
($100) investment in the Portfolio.
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting year. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Portfolio invests primarily in senior secured corporate loans ("Corporate
Loans") and senior secured debt securities ("Corporate Debt Securities") that
meet credit standards established by INVESCO Senior Secured Management, Inc.,
(the "Sub-Adviser"), formerly, Chancellor LGT Senior Secured Management, Inc.
When possible, A I M Advisors, Inc. (the "Manager") or the Sub-Adviser will rely
on quotations provided by banks, dealers or pricing services with respect to
Corporate Loans and Corporate Debt Securities. Whenever it is not possible to
obtain such quotes, the Sub-Adviser, subject to guidelines reviewed by the
Portfolio's Board of Trustees, values the Corporate Loans and Corporate Debt
Securities at Fair Value, which approximates market value. In valuing a
Corporate Loan or Corporate Debt Security, the Sub-Adviser considers, among
other factors, (i) the credit worthiness of the U.S. or non-U.S. Company
borrowing or issuing Corporate Debt Securities and any intermediate loan
participants, (ii) the current interest rate, period until next interest rate
reset and maturity of the Corporate Loan or Corporate Debt Security, (iii)
recent prices in the market for instruments of similar quality, rate, and period
until next interest rate reset and maturity.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Portfolio
under each agreement at its maturity. Repurchase agreements are valued at cost
plus accrued interest.
(C) INTERMEDIATE PARTICIPANTS
The Portfolio invests primarily in Corporate Loans from U.S. or non-U.S.
companies (the "Borrowers"). The investment of the Portfolio in a Corporate Loan
may take the form of participation interests or assignments. If the Portfolio
purchases a participation interest from a syndicate of lenders ("Lenders") or
one of the participants in the syndicate ("Participant"), one or more of which
administers the loan on behalf of all the Lenders (the "Agent Bank"), the
Portfolio would be required to rely on the Lender that sold the participation
interest not only for the enforcement of the Portfolio's rights against the
Borrower but also for the receipt and processing of payments due to the
Portfolio under the Corporate Loans. As such, the Portfolio is subject to the
credit risk of the Borrower and a Participant. Lenders and Participants
interposed between the Portfolio and a Borrower, together with Agent Banks, are
referred to as "Intermediate Participants".
(D) INVESTMENT TRANSACTIONS
Investment transactions are accounted for on the trade date (date the order to
buy or sell is executed). The cost of investments sold is determined on a
first-in, first-out basis, unless otherwise specified. The Portfolio may trade
securities on other than normal settlement terms. This may increase the market
risk if the other party to the transaction fails to deliver and causes the
Portfolio to subsequently invest at less advantageous prices.
(E) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, and unrealized appreciation of securities held, or excise tax on income
and capital gains.
(F) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income are declared daily and
paid or reinvested monthly. Income and capital gain distributions are determined
in accordance with Federal income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
differing treatments
14
<PAGE>
of income and gains on various investment securities held by the Portfolio and
timing differences.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund or Portfolio in connection with its organization
aggregated $212,350. These expenses are being amortized on a straightline basis
over a five-year period.
(H) RESTRICTED SECURITIES
The Portfolio may invest all or substantially all of its assets in Corporate
Loans, Corporate Debt Securities or other securities that are rated below
investment grade by a nationally recognized statistical rating organization, or
in comparable unrated securities. The Portfolio is permitted to invest in
privately placed restricted securities. These securities may be resold in
transactions exempt from registration or to the public if the securities are
registered. Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
(I) SECURITIES PURCHASED ON A WHEN-ISSUED AND DELAYED
DELIVERY BASIS
The Portfolio may purchase and sell interests in Corporate Loans and Corporate
Debt Securities and other portfolio securities on a when-issued and delayed
delivery basis, with payment and delivery scheduled for a future date. No income
accrues to the Portfolio on such interests or securities in connection with such
transactions prior to the date the Portfolio actually takes delivery of such
interests or securities. These transactions are subject to market fluctuations
and are subject to the risk that the value at delivery may be more or less than
the trade date purchase price. Although the Portfolio will generally purchase
these securities with the intention of acquiring such securities, they may sell
such securities before the settlement date. These securities are identified on
the accompanying Portfolio of Investments. The Portfolio has set aside
sufficient cash or liquid high grade debt securities as collateral for these
purchase commitments.
(J) INVESTMENT INCOME
Investment income is recorded on an accrual basis. Where a high level of
uncertainty exists as to collection of income on securities, income is recorded
net of all withholding tax with any rebate recorded when received. Facility fees
received are recognized as income over the expected life of the loan. Market
discounts are accreted over the stated life of each applicable security.
(K) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by A I M
Advisors, Inc. ("AIM" or the "Manager"), has a line of credit with BankBoston
and State Street Bank and Trust Company. The arrangements with the banks allow
the Fund and certain other funds to borrow, on a first come, first served basis,
an aggregate maximum amount of $250,000,000. The Fund is limited to borrowing up
to 33 1/3% of the value of the Fund's total assets. On December 31, 1998, the
Fund had no outstanding loan balance.
For the year ended December 31, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $2,799,958 with a weighted average interest rate of 6.21%. Interest expense
for the year ended was $11,594.
2. RELATED PARTIES
A I M Advisors, Inc. (the "Manager") is the investment manager and administrator
for the Fund and Portfolio, INVESCO Senior Secured Management, Inc. (formerly,
Chancellor LGT Senior Secured Management, Inc.) is the Portfolio's investment
sub-adviser ("Sub-Adviser"), and INVESCO (NY), Inc. (formerly Chancellor LGT
Asset Management, Inc.) is the Portfolio's sub-sub-adviser. As of the close of
business on May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the former
indirect parent organization of Chancellor LGT Asset Management, Inc.
("Chancellor LGT") and Chancellor LGT Senior Secured Management, Inc. ("Senior
Secured"), consummated a purchase agreement with AMVESCAP PLC pursuant to which
AMVESCAP PLC acquired LGT's Asset Management Division, which included Chancellor
LGT, Senior Secured and certain other affiliates. As a result of this
transaction, Chancellor LGT was renamed INVESCO (NY), Inc., Senior Secured was
renamed INVESCO Senior Secured Management, Inc., and each of them is now an
indirect wholly-owned subsidiary of AMVESCAP PLC. A I M Distributors, Inc. ("AIM
Distributors"), a wholly-owned subsidiary of the Manager, became the Fund's
distributor as of the close of business on May 29, 1998. Finally, as of the
close of business on September 4, 1998, A I M Fund Services, Inc. ("AFS"), an
affiliate of the Manager and AIM Distributors, replaced GT Global Investor
Services, Inc. ("GT Services") as the transfer agent of the Fund.
The Fund pays the Manager administration fees at the annualized rate of 0.25% of
such Fund's average daily net assets. The Portfolio pays investment management
and administration fees to the Manager at the annualized rate of 0.95% of the
Portfolio's average daily net assets.
AIM Distributors serves as the Fund's distributor. For the year ended May 29,
1998, GT Global, Inc. ("GT Global") served as the Fund's distributor.
Certain redemptions of common shares made within four years of purchase are
subject to an early withdrawal charge, in accordance with the fund's current
prospectus. For the period ended December 31, 1998, AIM Distributors and GT
Global collected early withdrawal charges in the amount of $475,585 and $77,982,
respectively for the Fund.
The Manager and AIM Distributors have undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 1.50% of the average daily net assets of
the Fund.
Effective as of the close of business September 4, 1998, the Fund, pursuant to a
transfer agency and service agreement, has agreed to pay AFS an annualized fee
of $24.85 per shareholder accounts that are open during any monthly period (this
fee includes all out-of-pocket expenses), and an annualized fee of $0.70 per
shareholder account that is closed during any monthly period. Both fees shall be
15
<PAGE>
billed by AFS monthly in arrears on a prorated basis of 1/12 of the annualized
fee for all such accounts.
For the period January 1, 1998 to September 4, 1998, GT Services, an affiliate
of the Manager and AIM Distributors, was the transfer agent of the Fund. For
performing shareholder servicing, reporting, and general transfer agent
services, GT Services received an annual maintenance fee of $17.50 per account,
a new account fee of $4.00 per account, a per transaction fee of $1.75 for all
transactions other than exchanges and a per exchange fee of $2.25. GT Services
was also reimbursed by the Fund for its out-of-pocket expenses for such items as
postage, forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived based on
the aggregate net assets of the funds which comprise the following investment
companies: AIM Growth Series, AIM Investment Funds, AIM Investment Portfolios,
AIM Series Trust, G.T. Global Variable Investment Series and G.T. Global
Variable Investment Trust. The fee is calculated at the rate of 0.03% to the
first $5 billion of assets and 0.02% to the assets in excess of $5 billion. An
amount is allocated to and paid by each such fund based on its relative average
daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1998, purchases and sales of investment
securities by the Portfolio, other than U.S. government obligations and
short-term investments, aggregated $263,046,545 and $154,949,346, respectively.
There were no purchases or sales of U.S. government obligations by the Portfolio
for the year ended December 31, 1998.
4. CAPITAL SHARES
At December 31, 1998, the Fund is authorized to issue 1 billion shares of
capital stock, $0.001 par value, all of which is classified as Common Stock.
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MAY 1, 1997
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold................................................. 16,339,303 $ 162,694,934 16,621,817 $ 166,317,980
Shares issued in connection with reinvestment of
distributions............................................. 741,971 7,380,819 221,712 2,220,556
------------ -------------- ------------ --------------
17,081,274 170,075,753 16,843,529 168,538,536
Shares repurchased.......................................... (3,940,550) (39,086,520) (719,992) (7,213,531)
------------ -------------- ------------ --------------
Net increase................................................ 13,140,724 $ 130,989,233 16,123,537 $ 161,325,005
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
</TABLE>
5. UNFUNDED LOAN COMMITMENTS
As of December 31, 1998, the Fund had unfunded loan commitments of $1,634,762,
which would be extended at the option of the borrower, pursuant to the following
loan agreements:
<TABLE>
<CAPTION>
UNFUNDED
BORROWER COMMITMENTS
- ------------------------------------------------------------ -----------
<S> <C>
Centennial Resources, Inc................................... $ 176,395
KLS Recreation Group, Inc................................... 1,458,367
</TABLE>
6. TENDER OFFER
The Fund's Board of Directors considers each quarter the making of Tender Offers
which are offers to repurchase all or a portion of its shares of Common Stock
from stockholders at a price per share equal to the net asset value per share of
the Fund's Common Stock determined at the close of business on the day an offer
terminates. Shares of Common Stock held less than four years and which are
repurchased by the Fund pursuant to Tender Offers will be subject to an early
withdrawal charge of up to 3% of the lesser of the then current net asset value
or the original purchase price of the Common Stock being tendered.
16
<PAGE>
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of AIM Floating Rate Fund (formerly GT
Global Floating Rate Fund, Inc.):
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the AIM Floating Rate Fund at
December 31, 1998, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of investments owned at December 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
BOSTON, MASSACHUSETTS
FEBRUARY 19, 1999
17
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of GT Global Floating Rate Fund, Inc. d/b/a
AIM Floating Rate Fund, (the "Company"), was held on May 20, 1998. The meeting
was held for the following purposes:
(1) To elect Directors as follows: C. Derek Anderson, Frank S. Bayley, William
J. Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and new
sub-advisory and sub-administration contracts and new sub-sub-advisory and
sub-sub-administration contracts with respect to the Floating Rate Portfolio
(the "Portfolio").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve the conversion of the Fund and the Portfolio to "interval fund"
status.
(5) To approve an agreement and plan of conversion and liquidation for the Fund.
(6) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Company's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES WITHHELD/
DIRECTORS/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ ----------- -------- ----------
<S> <C> <C> <C> <C>
(1) C. Derek Anderson........................................... 12,512,933 N/A 520,277
Frank S. Bayley............................................. 12,512,933 N/A 520,277
William J. Guilfoyle........................................ 12,512,933 N/A 520,277
Arthur C. Patterson......................................... 12,512,933 N/A 520,277
Ruth H. Quigley............................................. 12,512,933 N/A 520,277
(2)(a) Approval of investment management and administration
contract................................................... 9,031,140 259,080 3,742,990*
(2)(b) Approval of sub-advisory and sub-administration contracts... 9,052,634 270,990 3,709,586*
(2)(c) Approval of a sub-sub-advisory and sub-sub-administration
contract................................................... 8,951,028 358,886 3,723,296*
(3)(a) Modification of Fundamental Restriction on Selling
Securities Short and Investing in Put, Call, Straddle or
Spread Options............................................. 8,875,975 461,565 3,695,670*
(3)(b) Elimination of Fundamental Restriction on Margin
Transactions............................................... 8,875,975 461,565 3,695,670*
(4) Approval of conversion of the Fund and the Portfolio to
"interval fund" status..................................... 8,909,249 439,308 3,684,653*
(5) Approval of an agreement and plan of conversion and
liquidation for the Fund................................... 9,059,906 308,093 3,665,211*
(6) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as
PricewaterhouseCoopers LLP, as the Company's Independent
Public Accountants......................................... 12,377,388 99,782 556,040
</TABLE>
- ------------------------
* Includes Broker Non-Votes
18
<PAGE>
BOARD OF TRUSTEES
C. Derek Anderson
President, Plantagenet Capital
Management, LLC (an investment
partnership); Chief Executive Officer,
Plantagenet Holdings, Ltd.
(an investment banking firm)
Frank S. Bayley
Partner, law firm of
Baker & McKenzie
Robert H. Graham
President and Chief Executive Officer,
A I M Management Group Inc.
Arthur C. Patterson
Managing Partner, Accel Partners
(a venture capital firm)
Ruth H. Quigley
Private Investor
OFFICERS
Robert H. Graham
Chairman and President
Dana R. Sutton
Vice President & Assistant Treasurer
Samuel D. Sirko
Vice President & Secretary
Kenneth W. Chancey
Vice President & Principal
Accounting Officer
John J. Arthur
Vice President
Melville B. Cox
Vice President
Gary T. Crum
Vice President
Carol F. Relihan
Vice President
Nancy L. Martin
Assistant Secretary
Ofelia M. Mayo
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Pamela Ruddock
Assistant Treasurer
Paul Wozniak
Assistant Treasurer
OFFICE OF THE FUND
11 Greenway Plaza
Suite 100
Houston, TX 77046
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
SUB-ADVISOR
INVESCO Senior Secured Management, Inc.
1166 Avenue of the Americas
New York, NY 10036
Sub-Sub-Advisor
INVESCO (NY), Inc.
1166 Avenue of the Americas
New York, NY 10036
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
COUNSEL TO THE FUND
Kirkpatrick & Lockhart, LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
COUNSEL TO THE TRUSTEES
Paul, Hastings, Janofsky & Walker LLP
Twenty Third Floor
555 South Flower Street
Los Angeles, CA 90071
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
19
<PAGE>
THE AIM FAMILY OF FUNDS-Registered Trademark-
GROWTH FUNDS
AIM Aggressive Growth Fund(1)
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM Mid Cap Equity Fund(2), (A)
AIM Select Growth Fund(3)
AIM Small Cap Growth Fund(2), (B)
AIM Small Cap Opportunities Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Basic Value Fund(2), (C)
AIM Charter Fund
INCOME FUNDS
AIM Floating Rate Fund(2)
AIM High Yield Fund
AIM High Yield Fund II
AIM Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
TAX-FREE INCOME FUNDS
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
MONEY MARKET FUNDS
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
INTERNATIONAL GROWTH FUNDS
AIM Advisor International Value Fund
AIM Asian Growth Fund
AIM Developing Markets Fund(2)
AIM Europe Growth Fund(2)
AIM European Development Fund
AIM International Equity Fund
AIM Japan Growth Fund(2)
AIM Latin American Growth Fund(2)
AIM New Pacific Growth Fund(2)
GLOBAL GROWTH FUNDS
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
GLOBAL GROWTH & INCOME FUNDS
AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund
GLOBAL INCOME FUNDS
AIM Emerging Markets Debt Fund(2), (D)
AIM Global Government Income Fund(2)
AIM Global Income Fund
AIM Strategic Income Fund(2)
THEME FUNDS
AIM Global Consumer Products and Services Fund(2)
AIM Global Financial Services Fund(2)
AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
AIM Global Trends Fund(2), (E)
A I M MANAGEMENT GROUP INC. HAS PROVIDED LEADERSHIP IN THE MUTUAL FUND
INDUSTRY SINCE 1976 AND MANAGED APPROXIMATELY $109 BILLION IN ASSETS FOR MORE
THAN 6.2 MILLION SHAREHOLDERS, INCLUDING INDIVIDUAL INVESTORS, CORPORATE
CLIENTS, AND FINANCIAL INSTITUTIONS, AS OF DECEMBER 31, 1998.
THE AIM FAMILY OF FUNDS-Registered Trademark- IS DISTRIBUTED NATIONWIDE,
AND AIM TODAY IS THE 10TH-LARGEST MUTUAL FUND COMPLEX IN THE U.S. IN ASSETS
UNDER MANAGEMENT, ACCORDING TO STRATEGIC INSIGHT, AN INDEPENDENT MUTUAL FUND
MONITOR.
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998.
(2) Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former
GT Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select
Growth Fund. (A) On September 8, 1998, AIM Mid Cap Growth Fund was renamed
AIM Mid Cap Equity Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund
was renamed AIM Small Cap Growth Fund. (C) On September 8, 1998, AIM America
Value Fund was renamed AIM Basic Value Fund. (D) On September 8, 1998, AIM
Global High Income Fund was renamed AIM Emerging Markets Debt Fund. (E) On
September 8, 1998, AIM New Dimension Fund was renamed AIM Global Trends Fund.
For more complete information about any AIM Fund(s), including sales charges
and expenses, ask your financial consultant or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money.
FLR-AR-1
