<PAGE> 1
[COVER IMAGE]
AIM
CHARTER FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30, 1999
<PAGE> 2
[COVER IMAGE]
-------------------------------------
FULL SAIL, 1907, BY JAMES G. TYLER, 1855-1931
A CLIPPER WITH BILLOWING SAILS CUTTING THROUGH A CALM BLUE
SEA, THIS MARITIME SCENE DEPICTS OPTIMISM, CONFIDENCE, AND A
SENSE OF PURPOSE, THE SAME QUALITIES EXHIBITED BY AIM CHARTER
FUND. CELEBRATING ITS 30TH ANNIVERSARY THIS YEAR, THE AIM
CHARTER FUND IS ONE OF THE PREMIER FUNDS OF ITS ERA.
-------------------------------------
AIM Charter Fund is for shareholders who seek growth of capital with a secondary
objective of current income. The Fund invests primarily in stocks of large-cap,
well-run companies with a history of stable and improving earnings and generally
increasing dividend payouts.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Charter Fund 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 5.50% sales charge, and Class B and Class
C share performance reflects the applicable contingent deferred sales
charge (CDSC) for the period involved. The CDSC on Class B shares declines
from 5% beginning at the time of purchase to 0% at the beginning of the
seventh year. The CDSC on Class C shares is 1% for the first year after
purchase. The performance of the Fund's Class B and Class C shares will
differ from that of Class A shares due to differences in sales charge
structure and expenses.
o The Fund's average annual total returns, including sales charges, for
periods ended 3/31/99 (the most recent quarter-end), are as follows: for
Class A shares, one year, 15.94%; five years, 20.97%; 10 years, 17.90%.
Class B shares, one year, 16.72%; since inception (6/26/95), 23.15%. Class
C shares, one year, 20.82%; since inception (8/4/97), 19.43%.
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 Lipper Growth & Income Funds Index represents an average of
the performance of the 30 largest growth-and-income mutual funds.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (S&P 500) is
widely regarded by investors as representative of the stock market in
general.
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of
30 actively traded primarily industrial stocks.
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 CHARTER FUND
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
With only several months remaining in 1999, the question on
[PHOTO OF many of your minds may be, "How will the year 2000 computer
Charles T. issue affect AIM and my investments?" We would like you to
Bauer, feel comfortable.
Chairman of During March and April, AIM participated in an
the Board of industrywide test that gave us a chance to see how our
THE FUND technology systems might be affected by the changeover to
APPEARS HERE] the year 2000 (Y2K). Everything went as well as we had
hoped; in general, the industry sailed through the testing
process with flying colors. The financial industry has been
seen as a leader in planning for year 2000 concerns. Thus,
it was no surprise to most participants that the test was an
overwhelming success.
The general purpose of the process was to test
electronic interfaces among financial industry members in
the United States and to follow transactions through a
typical trading cycle--from order entry to the settlement process. Investment
banks, broker-dealers, custodian banks and mutual fund companies all worked
together to make this possible. Approximately 400 firms were involved in the
testing; AIM was one of 70 asset managers.
TEST RESULTS EXCELLENT
During the testing process, thousands of transactions were submitted and
approximately 260,000 steps were tested. Of those, only a handful experienced
minor glitches--just 0.02% of the total number of transactions. All problems
were worked through quickly before the hypothetical trades were settled. Of
course, AIM will keep testing and planning throughout 1999 as a precaution.
AIM'S INTERNAL EFFORTS CONTINUE
As you know from our previous communications to you, AIM has been addressing the
year 2000 issue for several years. During 1998, we made substantial progress on
our preparations. We are now in the final phases of the project, continually
testing internal applications and our interfaces with outside parties. On the
investment side, our portfolio management staff is evaluating the Y2K
preparedness of the companies in which we invest.
We feel that our preparations for 2000 are very comprehensive, and the
industrywide testing showed that our colleagues in the financial industry are
also working hard to be ready for the new year. We do not think shareholders
need to take any extraordinary measures with their investments to prepare for
2000. However, if you have any lingering concerns, it may reassure you to know
that AIM is finalizing contingency plans that will be ready if there are
unexpected problems. Our plans will give AIM employees guidelines to follow for
a wide variety of situations.
For a more comprehensive discussion of our Y2K efforts and for periodic
updates, please visit our Web site, www.aimfunds.com.
We are pleased to send you this report covering your fund's performance over
the last six months. If you have any questions or comments, please contact our
Client Services department at 800-959-4246, or e-mail your inquiry to us at
[email protected]. You can access information about your account through our
AIM Investor Line at 800-246-5463 or at our Web site.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--. We appreciate your business.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS LETTER IS DEEMED
AIM'S YEAR 2000 READINESS DISCLOSURE.
-------------------------------------
THE FINANCIAL INDUSTRY
HAS BEEN SEEN AS A
LEADER IN PLANNING FOR
YEAR 2000 CONCERNS.
-------------------------------------
AIM CHARTER FUND
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
AIM CHARTER FUND BEATS S&P 500
THE STOCK MARKET SEEMS TO HAVE DONE VERY WELL OVER THE PAST SIX MONTHS. HOW DID
AIM CHARTER FUND PERFORM?
The Fund turned in an outstanding performance for the period ending April 30,
1999. Class A shares gained 27.68%; Class B shares, 27.22%; and Class C shares,
27.23%, all excluding sales charges. The Fund beat the performance of the S&P
500, which reported a 22.31% return. It also outperformed its peer group,
represented by the Lipper Growth & Income Funds Index, which gained 17.85%. Net
assets climbed from $5.2 billion to $6.7 billion over the six-month reporting
period.
WHAT WERE MARKET CONDITIONS LIKE DURING THE REPORTING PERIOD?
In late 1998, the Federal Reserve Board lowered interest rates and spurred a
market rally. That rally continued into 1999, but not all stocks participated.
The Dow crossed the 10,000 threshold during the reporting period, but its
performance reflected the strength of a small number of major American
corporations. The rest of the market did not perform as well as leading
large-company stocks. In April, the market broadened as earnings improved across
a wider spectrum of companies.
WHAT CONTRIBUTED TO THE STRONG PERFORMANCE OF THE FUND?
The Fund invests in large, brand-name companies in a market where size matters.
These big companies have large research and development budgets to develop new
products, economies of scale to reduce costs and access to global markets to
sell products. In response to the narrowness of the market over the past six
months, we reduced the number of holdings in the Fund from 145 to 94.
WHAT WERE THE TOP SECTORS FOR THE FUND?
Our main sectors are technology, health care and financial stocks, where
companies continue to show strong earnings growth. Technology now makes up 27.9%
of the portfolio, up from 21% at the end of the fiscal year.
WHY IS TYCO YOUR LARGEST HOLDING?
We like Tyco because it is a diversified corporation with leading positions in a
wide array of businesses. The company has four divisions, and each exhibits
strength and stability--health-care products, fire and security systems,
flow-control technology (pipes, pipe fittings and tubing) and electrical
components. Some of the products made by its subsidiaries include Curity
bandages, fire extinguishers and undersea fiber-optic cable.
The Bermuda-based company has grown through acquisitions, buying nearly 100
companies and growing its earnings 26% over the past six years. Its most
-------------------------------------
THE FUND INVESTS IN
LARGE, BRAND-NAME
COMPANIES IN A MARKET
WHERE SIZE MATTERS.
-------------------------------------
YOUR FUND'S PERFORMANCE
LIPPER RANKINGS
AIM Charter Fund Class A Shares
As of 4/30/99
===============================================================================
RANK VS.
ALL GROWTH
& INCOME %
PERIOD FUNDS RANK
- -------------------------------------------------------------------------------
20 years 10 of 72 14%
10 years 12 of 148 9
5 years 100 of 319 32
1 year 32 of 815 4
Fund percentage rankings are vs. all funds in the category tracked by Lipper
Inc., excluding sales charges and including fees and expenses.
===============================================================================
RESULTS OF A $10,000 INVESTMENT
AIM Charter Fund Class A Shares vs. Benchmark
Indexes 11/26/68-4/30/99
- ------------------------------------------------------------
AIM S&P 500 LIPPER
CHARTER FUND INDEX GROWTH &
CLASS A INCOME
SHARES FUNDS INDEX
- ------------------------------------------------------------
$616,798
$375,805
$280,056
(Bar Chart)
============================================================
Past performance cannot guarantee comparable future results.
============================================================
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/99, including sales charges
CLASS A SHARES
INCEPTION (11/26/68) 14.51%
10 YEARS 17.43
5 YEARS 21.28
1 YEAR 17.67*
*24.53% excluding sales charges
CLASS B SHARES
INCEPTION (6/15/95) 23.05%
1 YEAR 18.58**
**23.58% excluding sales charges
CLASS C SHARES
INCEPTION (8/4/97) 19.32%
1 year 22.60***
***23.60% excluding sales charges
===============================================================================
See important Fund and index disclosures inside front cover.
AIM CHARTER FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 4/30/99, based on total net assets
================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES
- --------------------------------------------------------------------------------
1. Tyco International Ltd. 5.42% 1. Computer (Software &
2. Microsoft Corp. 3.62 Services) 9.16%
3. MCI/Worldcom, Inc. 2.86 2. Manufacturing (Diversified) 6.18
4. America Online Inc. 2.86 3. Financial (Diversified) 6.00
5. Chase Manhattan Corp. (The) 2.76 4. Health Care (Diversified) 5.88
6. American International 2.70 5. Computers (Hardware) 5.54
Group Inc. 6. Telecommunications 5.49
7. International Business 2.48 (Long Distance)
Machines Corp. 7. Retail (General Merchandise) 4.53
8. General Electric Co. 2.35 8. Health Care (Drugs- 4.36
9. Cisco Systems Inc. 2.11 Major Pharmaceuticals)
10. Wal-Mart Stores Inc. 2.05 9. Communications Equipment 3.82
10. Computers (Networking) 3.12
================================================================================
==============================================
PERCENTAGE OF HOLDINGS
- ----------------------------------------------
(Pie chart) U.S. Government
Bonds 0.89%
Convertible Preferred
Stock 2.56%
Cash & Cash
Equivalents 4.19%
COMMON STOCK
88.15%
Convertible Bonds
4.64%
NUMBER OF HOLDINGS
94
The Fund's portfolio is subject to
change, and there is no assurance the
Fund will continue to hold any
particular security.
==============================================
recent acquisitions include an $11 billion purchase of AMP, an electronics
equipment maker, and a $3.27 billion deal for Raychem, a telecommunications
cable company.
Tyco embodies much of what we look for in a growth stock: leading
market-share positions in high-growth industries both in the United States and
in international markets, which recently have begun to show signs of improving
growth prospects.
DOES THE FUND OWN ANY INTERNET STOCKS?
Yes. The leading Internet holding for AIM Charter Fund is America Online. The
No. 1 online Internet service provider, which has about 17 million subscribers
worldwide, recently announced quarterly earnings that beat Wall Street
estimates. The company successfully closed its $10.2 billion acquisition of
Netscape, a major Internet browser system.
The Fund also participated in a large convertible bond offering for
Amazon.com, an online bookseller. Although Amazon.com has yet to make a profit,
the company's revenue has risen 236% in the most recent quarter. Amazon.com has
expanded its niche to offer music, videos, gifts and auctions online.
Many of the Fund's Internet investments aren't involved with online access
or e-commerce. A major Internet player is MCI WorldCom, the world's
second-largest long-distance company. In its most recent quarterly report, MCI
WorldCom's sales from its Internet business jumped 60%, while its voice lines
grew by 7%.
Another of our core holdings, Microsoft, is a key Internet player. In a
deal announced shortly after the close of the reporting period, Microsoft will
invest $5 billion for a small stake in AT&T. With its set-top boxes, AT&T will
offer digital cable services using Microsoft's Windows operating system.
Microsoft has cut other deals to steer telecommunications business its way. As
cable and phone companies build networks to provide voice, video and data over
the same pipeline, Microsoft hopes to attract more users for its multimedia
communications software.
WHAT TYPE OF HEALTH-CARE COMPANIES DO YOU FAVOR?
The Fund's health-care holdings, which make up about 14% of the portfolio, are
split between diversified health-care companies such as Bristol-Myers Squibb and
major pharmaceuticals such as Pfizer. Our investment in this sector has been
driven by long-term demographic trends. The population is aging and requires
more health care. Worldwide drug sales are rising at a rate of 8% to 10% a year.
WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
Four months into 1999, fears of a recession in the United States have faded. In
fact, most economists are betting on continued steady growth, with low inflation
and high employment. Domestically, interest rates, another key factor supporting
a bullish outlook, are likely to remain quite steady, thanks to the Federal
Reserve Board's watchful guard. To the extent that these factors remain in
place, the investing environment for the Fund continues to be favorable.
See important Fund and index disclosures inside front cover.
AIM CHARTER FUND
3
<PAGE> 6
SEMIANNUAL REPORT / FOR CONSIDERATION
TECHNOLOGY INVESTMENTS IN AIM FUNDS
You may have noticed that technology stocks have long been a factor in your
Fund's holdings. The growth of technology stocks, in particular those of
Internet companies, has been in the forefront of financial news. So, how is AIM
participating in the recent surge of technology stocks?
RISKS, REWARDS, AND THE WILD, WILD WEST
AIM equity portfolio manager Jonathan Schoolar describes AIM's position on
technology investments using the following analogy.
When they opened the American West, there were two ways to get rich. One
was to jump in a covered wagon and head west to stake out a big claim. If you
were right, you wound up with a million acres that your
great-great-grandchildren sold for a fortune. But if you were wrong, you lost
your shirt. The other way to get rich was to live in St. Louis and sell pots,
pans and shovels to the people who were going west. You probably wouldn't get
quite as rich, but you also wouldn't run the risk of losing everything you had.
So the risk/reward tradeoff was a little better in the second situation. In
addition, you could put a value on your business as opposed to just taking your
chances out there.
THREE WAVES OF TECHNOLOGICAL DEVELOPMENT
The technology sector has gone through three waves of development. The first
wave was the introduction of the microprocessor and computer chip. The second
wave, the development of computer hardware and software, gave rise to the
prevalence of the personal computer. The third wave of technological development
arrived with the improvement of bandwidth.
Bandwidth is a measurement of the volume of information that can be
transmitted over a network at a given time, and increasing bandwidth is
necessary for the evolution of information exchange and Internet commerce. If
you think of a network as a water pipe, the higher the bandwidth (the larger the
diameter of the pipe), the more data (water) can pass over the network (through
the pipe).
With the advancement of the first two waves, bandwidth has become the
current area of growth. This growth is not limited only to the Internet but
involves all of the companies that support and build demand for Internet use.
MORE THAN THE INTERNET
Within the category of "Internet stocks," there are many more companies than
just the AOLs of the world. AIM seeks those stocks in the technology sector that
meet the growth potential necessary for AIM funds that follow our disciplined
earnings-momentum style of investing. Likewise, value funds look at undervalued
securities in the technology sector that stand to benefit from the rapid success
of the Internet.
The kinds of companies that make up the "Internet stock" category include:
o Companies that build the Internet infrastructure and are working to provide
improvements in bandwidth include Cisco Systems, Lucent Technologies and
Ascend Communications.
o Network distribution sources for Internet access are companies such as AT&T
and MCI WorldCom.
o Companies such as America Online that provide portals to the Internet are
among the most familiar to the general population.
o Companies that have a growing percentage of Internet commerce include Cisco
Systems, Dell and Amazon.com. Companies in this category experience rapid
increases in sales via Internet orders.
VALUATION
Along with the enthusiasm generated by their explosive growth, Internet-related
stocks have also raised concerns about their valuation. The valuation of a stock
is typically measured by its price-to-earnings (P/E) ratio. A high P/E ratio may
indicate that a particular stock is overvalued. Currently, the high P/Es of many
Internet stocks are based on projections about future earnings or revenue
streams.
AIM portfolio managers evaluate these stocks based on current factors, such
as free cash flow or funds from operations. Concern about overvaluation is one
reason AIM is cautious about buying Internet stocks for certain portfolios. In
balancing risk and reward, AIM tends to hold positions in those stocks that
support the Internet infrastructure and commerce, not necessarily the highly
visible stocks of some Internet companies. In other words, AIM invests in the
companies in St. Louis successfully selling the pots, pans and shovels.
[PHOTO]
AIM CHARTER FUND
<PAGE> 7
SCHEDULE OF INVESTMENTS
April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-88.15%
AUTOMOBILES-1.38%
Ford Motor Co. 1,450,000 $ 92,709,375
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.36%
BankBoston Corp. 500,000 24,500,000
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-2.76%
Chase Manhattan Corp. (The) 2,250,000 186,187,500
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-1.37%
Broadcast.com, Inc.(a) 250,000 32,062,500
- ---------------------------------------------------------------
Comcast Corp.-Class A 500,000 32,843,750
- ---------------------------------------------------------------
Infinity Broadcasting
Corp.-Class A(a) 1,000,000 27,687,500
- ---------------------------------------------------------------
92,593,750
- ---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-1.51%
Monsanto Co. 2,250,000 101,812,500
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.82%
Corning Inc. 800,000 45,800,000
- ---------------------------------------------------------------
Lucent Technologies, Inc. 700,000 42,087,500
- ---------------------------------------------------------------
Motorola, Inc. 850,000 68,106,250
- ---------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR 900,000 66,768,750
- ---------------------------------------------------------------
QUALCOMM, Inc.(a) 175,000 35,000,000
- ---------------------------------------------------------------
257,762,500
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-5.21%
Dell Computer Corp.(a) 2,000,000 82,375,000
- ---------------------------------------------------------------
International Business Machines
Corp. 800,000 167,350,000
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 1,700,000 101,681,250
- ---------------------------------------------------------------
351,406,250
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-3.12%
Ascend Communications, Inc.(a) 700,000 67,637,500
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 1,250,000 142,578,125
- ---------------------------------------------------------------
210,215,625
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.75%
EMC Corp.(a) 800,000 87,150,034
- ---------------------------------------------------------------
Lexmark International Group,
Inc.(a) 250,000 30,875,000
- ---------------------------------------------------------------
118,025,034
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-8.81%
America Online, Inc.(a) 1,350,000 192,712,500
- ---------------------------------------------------------------
GeoCities(a) 53,100 6,186,150
- ---------------------------------------------------------------
Microsoft Corp.(a) 3,000,000 243,937,500
- ---------------------------------------------------------------
Novell, Inc.(a) 5,387,100 119,862,975
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Unisys Corp.(a) 1,000,000 $ 31,437,500
- ---------------------------------------------------------------
594,136,625
- ---------------------------------------------------------------
CONSUMER FINANCE-0.86%
Providian Financial Corp. 450,000 58,078,125
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.53%
Cardinal Health, Inc. 600,000 35,887,500
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.35%
General Electric Co. 1,500,000 158,250,000
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-1.11%
Linear Technology Corp. 600,000 34,125,000
- ---------------------------------------------------------------
Texas Instruments, Inc. 400,000 40,850,000
- ---------------------------------------------------------------
74,975,000
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.08%
Applied Materials, Inc.(a) 700,000 37,537,500
- ---------------------------------------------------------------
Teradyne, Inc.(a) 750,000 35,390,625
- ---------------------------------------------------------------
72,928,125
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-6.00%
American Express Co. 800,000 104,550,000
- ---------------------------------------------------------------
Citigroup Inc. 1,000,000 75,250,000
- ---------------------------------------------------------------
Fannie Mae 1,400,000 99,312,500
- ---------------------------------------------------------------
Freddie Mac 2,000,000 125,500,000
- ---------------------------------------------------------------
404,612,500
- ---------------------------------------------------------------
FOOTWEAR-0.17%
Nike, Inc.-Class B 183,200 11,392,750
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-5.88%
Abbott Laboratories 1,350,000 65,390,625
- ---------------------------------------------------------------
American Home Products Corp. 1,000,000 61,000,000
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 1,500,000 95,343,750
- ---------------------------------------------------------------
Johnson & Johnson 400,000 39,000,000
- ---------------------------------------------------------------
Warner-Lambert Co. 2,000,000 135,875,000
- ---------------------------------------------------------------
396,609,375
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-4.36%
Lilly (Eli) & Co. 700,000 51,537,500
- ---------------------------------------------------------------
Merck & Co., Inc. 140,600 9,877,150
- ---------------------------------------------------------------
Pfizer, Inc. 1,150,000 132,321,875
- ---------------------------------------------------------------
Pharmacia & Upjohn, Inc. 1,356,000 75,936,000
- ---------------------------------------------------------------
Schering-Plough Corp. 500,000 24,156,250
- ---------------------------------------------------------------
293,828,775
- ---------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (HOSPITAL MANAGEMENT)-0.37%
Columbia/HCA Healthcare Corp. 1,000,000 $ 24,687,500
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.86%
Guidant Corp. 1,000,000 53,687,500
- ---------------------------------------------------------------
Medtronic, Inc. 1,000,000 71,937,500
- ---------------------------------------------------------------
125,625,000
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.73%
Omnicare, Inc. 2,037,900 49,036,969
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.41%
Maytag Corp. 400,000 27,350,000
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-1.05%
Clorox Co. 300,000 34,612,500
- ---------------------------------------------------------------
Colgate-Palmolive Co. 350,000 35,853,125
- ---------------------------------------------------------------
70,465,625
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-2.70%
American International Group, Inc. 1,550,000 182,028,125
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-2.84%
Merrill Lynch & Co., Inc. 600,000 50,362,500
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 650,000 64,471,875
- ---------------------------------------------------------------
Schwab (Charles) Corp. 700,000 76,825,000
- ---------------------------------------------------------------
191,659,375
- ---------------------------------------------------------------
LODGING-HOTELS-0.49%
Carnival Corp. 800,000 33,000,000
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-6.17%
Tyco International Ltd. 4,500,000 365,625,000
- ---------------------------------------------------------------
United Technologies Corp. 350,000 50,706,250
- ---------------------------------------------------------------
416,331,250
- ---------------------------------------------------------------
NATURAL GAS-0.56%
Enron Corp. 500,000 37,625,000
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.98%
Halliburton Co. 800,000 34,100,000
- ---------------------------------------------------------------
Schlumberger Ltd. 500,000 31,937,500
- ---------------------------------------------------------------
66,037,500
- ---------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-1.55%
Mobil Corp. 1,000,000 104,750,000
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.27%
Georgia Pacific Corp. 200,000 18,500,000
- ---------------------------------------------------------------
PERSONAL CARE-0.58%
Gillette Co. 750,000 39,140,626
- ---------------------------------------------------------------
RAILROADS-0.53%
Kansas City Southern Industries,
Inc. 600,000 35,737,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (BUILDING SUPPLIES)-0.51%
Lowe's Companies, Inc. 650,000 $ 34,287,500
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.30%
Kohl's Corp.(a) 300,000 19,931,250
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.26%
Walgreen Co. 650,000 17,468,750
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.00%
Kroger Co.(a) 600,000 32,587,500
- ---------------------------------------------------------------
Safeway, Inc.(a) 650,000 35,059,375
- ---------------------------------------------------------------
67,646,875
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-4.52%
Costco Companies, Inc.(a) 400,000 32,375,000
- ---------------------------------------------------------------
Dayton Hudson Corp. 2,000,000 134,625,000
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 3,000,000 138,000,000
- ---------------------------------------------------------------
305,000,000
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.17%
First Data Corp. 1,200,000 50,925,000
- ---------------------------------------------------------------
Paychex, Inc. 550,000 28,084,375
- ---------------------------------------------------------------
79,009,375
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-4.01%
AT&T Corp. 1,000,000 50,500,000
- ---------------------------------------------------------------
Global TeleSystems Group, Inc.(a) 400,000 26,450,000
- ---------------------------------------------------------------
MCI WorldCom, Inc.(a) 2,350,000 193,140,625
- ---------------------------------------------------------------
270,090,625
- ---------------------------------------------------------------
TELEPHONE-1.04%
SBC Communications, Inc. 1,250,000 70,000,000
- ---------------------------------------------------------------
TOBACCO-1.82%
Philip Morris Companies, Inc. 3,500,000 122,718,750
- ---------------------------------------------------------------
Total Common Stocks (Cost
$4,088,054,762) 5,944,038,904
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS &
NOTES-4.64%
COMPUTERS (HARDWARE)-0.33%
Candescent Technology Corp.,
Conv. Sr. Sub. Deb., 7.00%,
05/01/03(b) (Acquired
04/17/98-11/30/98; Cost
$27,971,827) $ 28,300,000 $ 22,074,000
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.34%
Veritas Software Corp., Conv.
Sub. Notes, 5.25%, 11/01/04 12,500,000 23,109,375
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.58%
Home Depot, Inc., Conv. Sub
Notes, 3.25%, 10/01/01 15,000,000 39,037,500
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-1.90%
Amazon.com Inc., Conv. Sub.
Deb., 4.75%, 02/01/09(b)
(Acquired 01/29/99-04/29/99;
Cost $110,132,690) $100,000,000 $ 127,937,500
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-1.49%
Global TeleSystems Group, Inc.,
Conv. Sr. Unsec. Sub. Notes,
8.75%, 06/30/00(b) (Acquired
02/05/98; Cost $13,002,080) 10,000,000 33,287,500
- ---------------------------------------------------------------
Global TeleSystems Group, Inc.,
Conv. Sr. Sub. Deb., 5.75%,
07/01/10 50,000,000 66,875,000
- ---------------------------------------------------------------
100,162,500
- ---------------------------------------------------------------
Total Convertible Corporate
Bonds & Notes (Cost
$240,831,428) 312,320,875
- ---------------------------------------------------------------
CONVERTIBLE PREFERRED
STOCKS-2.56%
BROADCASTING (TELEVISION, RADIO
& CABLE)-1.07%
Mediaone Group, Inc.-$2.25
Series D Conv. Pfd. 450,000 72,450,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
ENTERTAINMENT-1.49%
Reliant Energy, Inc.-$3.22 Conv.
Pfd. $ 850,000 $ 100,300,000
- ---------------------------------------------------------------
Total Convertible Preferred
Stocks (Cost $112,602,801) 172,750,000
- ---------------------------------------------------------------
U.S. TREASURY NOTES-0.89%
9.125%, 05/15/99 (Cost
$61,726,172) 60,000,000 60,097,800
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS-4.19%(C)
Chase Securities, Inc.
4.94%, 05/03/99(d) 80,000,000 80,000,000
- ---------------------------------------------------------------
SBC Warburg Dillon Read, Inc.
4.93%, 05/03/1999(e) 160,854,829 160,854,829
- ---------------------------------------------------------------
4.94%, 05/03/1999(f) 41,510,885 41,510,885
- ---------------------------------------------------------------
Total Repurchase Agreements
(Cost $282,365,714) 282,365,714
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.43% 6,771,573,293
- ---------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.43%) (28,924,273)
- ---------------------------------------------------------------
NET ASSETS-100.00% $6,742,649,020
===============================================================
</TABLE>
Notes to Schedule of Investments
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with the procedures established by the Board of Directors. The
aggregate market value of these securities at 04/30/99 was $183,299,000,
which represented 2.72% of the Fund's net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment. companies managed by the
investment advisor for its affiliates.
(d) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$200,082,333. Collateralized by $204,362,012 U.S. Government obligations, 0%
to 9.50% due 02/01/02 to 06/01/37 with an aggregate market value at 04/30/99
of $204,003,573.
(e) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$500,205,417. Collateralized by $657,973,000 U.S. Government obligations, 0%
to 10.35% due 05/18/99 to 01/15/30 with an aggregate market value at
04/30/99 of $510,002,651.
(f) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$250,102,917. Collateralized by $249,736,152 U.S. Government obligations,
6.00% to 10.50% due 03/15/01 to 01/15/33 with an aggregate market value at
04/30/99 of $255,819,341.
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
Pfd. - Preferred
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$4,785,580,877) $6,771,573,293
- ------------------------------------------------------------
Cash 380,972
- ------------------------------------------------------------
Receivables for:
Investments sold 132,982,122
- ------------------------------------------------------------
Capital stock sold 16,787,862
- ------------------------------------------------------------
Dividends and interest 11,006,924
- ------------------------------------------------------------
Investment for deferred compensation plan 69,365
- ------------------------------------------------------------
Other assets 232,138
- ------------------------------------------------------------
Total assets 6,933,032,676
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 173,299,670
- ------------------------------------------------------------
Capital stock reacquired 9,420,270
- ------------------------------------------------------------
Deferred compensation 69,365
- ------------------------------------------------------------
Accrued advisory fees 3,408,501
- ------------------------------------------------------------
Accrued administrative services fees 15,982
- ------------------------------------------------------------
Accrued directors' fees 18,200
- ------------------------------------------------------------
Accrued distribution fees 3,327,736
- ------------------------------------------------------------
Accrued transfer agent fees 524,200
- ------------------------------------------------------------
Accrued operating expenses 299,732
- ------------------------------------------------------------
Total liabilities 190,383,656
- ------------------------------------------------------------
Net assets applicable to shares outstanding $6,742,649,020
- ------------------------------------------------------------
NET ASSETS:
Class A $4,680,937,706
============================================================
Class B $1,920,528,266
============================================================
Class C $ 82,155,706
============================================================
Institutional Class $ 59,027,342
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 286,251,175
============================================================
Class B:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 118,322,530
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 5,048,163
============================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 3,583,129
============================================================
Class A:
Net asset value and redemption price per
share $ 16.35
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $16.35
divided by 94.50%) $ 17.30
============================================================
Class B:
Net asset value and offering price per
share $ 16.23
============================================================
Class C:
Net asset value and offering price per
share $ 16.27
============================================================
Institutional Class:
Net asset value, offering and redemption
price per share $ 16.47
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For The Six Months Ended April 30, 1999
(unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $178,340 foreign
withholding tax) $ 27,691,770
- ------------------------------------------------------------
Interest 15,327,232
- ------------------------------------------------------------
Total investment income 43,019,002
- ------------------------------------------------------------
EXPENSES:
Advisory fees 18,998,755
- ------------------------------------------------------------
Administrative services fees 92,412
- ------------------------------------------------------------
Custodian fees 163,248
- ------------------------------------------------------------
Directors' fees 29,205
- ------------------------------------------------------------
Distribution fees-Class A 6,378,547
- ------------------------------------------------------------
Distribution fees-Class B 8,400,680
- ------------------------------------------------------------
Distribution fees-Class C 270,044
- ------------------------------------------------------------
Transfer agent fees-Class A 2,336,290
- ------------------------------------------------------------
Transfer agent fees-Class B 1,374,142
- ------------------------------------------------------------
Transfer agent fees-Class C 50,623
- ------------------------------------------------------------
Transfer agent fees-Institutional Class 2,579
- ------------------------------------------------------------
Other 506,527
- ------------------------------------------------------------
Total expenses 38,603,052
- ------------------------------------------------------------
Less: Fees waived by advisor (506,799)
- ------------------------------------------------------------
Expenses paid indirectly (92,598)
- ------------------------------------------------------------
Net expenses 38,003,655
- ------------------------------------------------------------
Net investment income $ 5,015,347
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 612,487,365
- ------------------------------------------------------------
Foreign currencies (1,105,968)
- ------------------------------------------------------------
Option contracts written (9,533,983)
- ------------------------------------------------------------
601,847,414
- ------------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 820,803,380
- ------------------------------------------------------------
Foreign currencies (48,017)
- ------------------------------------------------------------
Option contracts written 388,911
- ------------------------------------------------------------
821,144,274
- ------------------------------------------------------------
Net gain from investment securities,
foreign currencies and option contracts 1,422,991,688
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $1,428,007,035
============================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1999 and the year ended October 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 5,015,347 $ 37,825,223
- ----------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 601,847,414 206,268,933
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 821,144,274 254,914,824
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,428,007,035 499,008,980
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (11,677,825) (28,039,987)
- ----------------------------------------------------------------------------------------------
Class B (536,374) (3,013,337)
- ----------------------------------------------------------------------------------------------
Class C (14,809) (47,378)
- ----------------------------------------------------------------------------------------------
Institutional Class (247,665) (445,449)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (145,635,667) (346,531,949)
- ----------------------------------------------------------------------------------------------
Class B (56,570,251) (108,856,197)
- ----------------------------------------------------------------------------------------------
Class C (1,569,913) (819,962)
- ----------------------------------------------------------------------------------------------
Institutional Class (1,712,180) (3,989,466)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 116,760,777 235,195,827
- ----------------------------------------------------------------------------------------------
Class B 179,208,076 350,425,592
- ----------------------------------------------------------------------------------------------
Class C 34,445,580 32,069,085
- ----------------------------------------------------------------------------------------------
Institutional Class 4,905,802 3,464,509
- ----------------------------------------------------------------------------------------------
Net increase in net assets 1,545,362,586 628,420,268
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 5,197,286,434 4,568,866,166
- ----------------------------------------------------------------------------------------------
End of period $6,742,649,020 $5,197,286,434
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $4,157,224,204 $3,821,903,969
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 1,830,531 9,291,857
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 597,609,975 201,250,572
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 1,985,984,310 1,164,840,036
- ----------------------------------------------------------------------------------------------
$6,742,649,020 $5,197,286,434
==============================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Charter Fund (the "Fund") is a series portfolio of AIM Equity 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 nine separate portfolios. The
Fund currently offers four different classes of shares: Class A shares, Class B
shares, Class C shares and the Institutional Class. 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 to provide growth of capital, with
current income as a secondary objective.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
A. Security Valuations-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 the closing bid price on that day. Each
security traded in the over-the-counter market (but not including securities
reported on the NASDAQ National Market System) is valued at the mean between
the last bid and asked prices based upon quotes furnished by market makers
for such securities. 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 at the last bid price based upon quotes furnished
by independent sources. 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. Generally, trading in
foreign securities is substantially completed each day at various times
prior to the close of the New York Stock Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will 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. Bond Premiums-It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
C. 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 and are paid annually.
D. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed
to shareholders. Therefore, no provision for federal income taxes is
recorded in the financial statements.
E. Expenses-Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
are allocated among the classes.
F. 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.
G. 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 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
10
<PAGE> 13
to the contracts are unable to meet the terms of their contracts.
H. Stock Index Futures Contracts-The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the
Fund's basis in the contract. Risks include the possibility of an illiquid
market and that a change in the value of the contracts may not correlate
with changes in the value of the securities being hedged.
I. Covered Call Options-The fund may write call options, but only on a covered
basis; that is, the Fund will own the underlying security. Options written
by the Fund normally will have expiration dates between three and nine
months from the date written. The exercise price of a call option may be
below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option
was written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security
decline. During the option period, the Fund may be required at any time to
deliver the underlying security against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at such
earlier time at which the Fund effects a closing purchase transaction by
purchasing (at a price which may be higher than that received when the call
option was written) a call option identical to the one originally written.
J. Put options-The Fund may purchase put options. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, a
Fund pays an option premium. The option's underlying instrument may be a
security, or a futures contract. Put options may be used by a Fund to hedge
securities it owns by locking a minimum price at which the Fund can sell. If
security prices fall, the put option could be exercised to offset all or a
portion of the Fund's resulting losses. At the same time, because the
maximum the Fund has at risk is the cost of the option, purchasing put
options does not eliminate the potential for the Fund to profit from an
increase in the value of the securities hedged.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.0% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $150
million, plus 0.625% of the Fund's average daily net assets in excess of $150
million. AIM has contractually agreed to waive a portion of its advisory fees
paid by the Fund to AIM to the extent necessary to reduce the fees paid by the
Fund at net asset levels higher than those currently incorporated in the present
advisory fee schedule. Under the contractual waiver, AIM will receive a fee
calculated at the annual rate of 1.0% of the first $30 million of the Fund's
average daily net assets, plus 0.75% of the Fund's average daily net assets in
excess of $30 million to and including $150 million, plus 0.625% of the Fund's
average daily net assets in excess of $150 million to and including $2 billion,
plus 0.60% of the Fund's average daily net assets in excess of $2 billion. The
waiver is contractual and may not be terminated without approval of the Board of
Directors. During the six months ended April 30, 1999, AIM waived fees of
$506,799. Under the terms of a master sub-advisory agreement between AIM and
A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the
amount paid by the Fund to AIM.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the six months ended April 30,
1999, AIM was reimbursed $92,412 for such services.
The Fund, pursuant to a transfer agent 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 six months ended April 30, 1999,
AFS was paid $2,259,697 with respect to the Class A, Class B, Class C and
Institutional Class shares.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted
distribution plans pursuant to
11
<PAGE> 14
Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares and
Class C shares (the "Class A and C Plan"), and the Fund's Class B shares (the
"Class B Plan") (collectively, the "Plans"). The Fund, pursuant to the Class A
and C Plan, pays AIM Distributors compensation at an annual rate of 0.30% of the
average daily net assets of the Class A shares and 1.00% of the average daily
net assets of Class C shares. The Fund, pursuant to the Class B Plan, pays AIM
Distributors compensation at an annual rate of 1.00% of the average daily net
assets of the Class B shares. Of these amounts, the Fund may pay a service fee
of 0.25% of the average daily net assets of Class A, Class B or C shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. During the six months ended April 30, 1999, the Class
A, Class B and Class C shares paid AIM Distributors $6,378,547, $8,400,680, and
$270,044, respectively, as compensation under the Plans.
AIM Distributors received commissions of $898,342 from sales of Class A
shares of the Fund during the six months ended April 30, 1999. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of Class A shares. During the six months ended April 30,
1999, AIM Distributors received commissions of $54,352 in contingent deferred
sales charges imposed on redemptions of Fund shares. Certain officers and
directors of the Company are officers and directors of AIM, AIM Capital, AIM
Distributors, AFS, and FMC.
During the six months ended April 30, 1999, the Fund paid legal fees of
$5,369 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 six months ended April 30, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $39,540 and $53,058, respectively, under expense offset arrangements.
The effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $92,598 during the six months ended April 30, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended April 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.05% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1999 was
$4,369,860,119 and $4,334,376,218, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities as of April 30, 1999, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $1,996,840,459
- --------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (27,642,398)
- --------------------------------------------------------------
Net unrealized appreciation of investment
securities $1,969,198,061
==============================================================
</TABLE>
Cost of investments for tax purposes is $4,802,375,232.
12
<PAGE> 15
NOTE 7-OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 1999
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
--------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of Period 31,202 $ 8,091,351
- ---------------------------------------------------------------
Written 40,092 14,577,537
- ---------------------------------------------------------------
Closed (54,607) (18,452,622)
- ---------------------------------------------------------------
Exercised (14,921) (4,076,635)
- ---------------------------------------------------------------
Expired (1,766) (139,631)
- ---------------------------------------------------------------
End of period 0 $ 0
===============================================================
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in the capital stock outstanding during the six months ended April 30,
1999 and the year ended October 31, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1999 OCTOBER 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold
Class A 29,915,028 $ 457,014,973 65,753,775 $ 868,543,898
- --------------------------------------------------------------------------------
Class B 16,636,975 254,772,037 32,991,364 431,938,545
- --------------------------------------------------------------------------------
Class C* 2,764,108 43,154,162 2,736,777 36,139,093
- --------------------------------------------------------------------------------
Institutional Class 367,416 5,788,239 568,334 7,594,968
- --------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 10,448,868 148,018,497 29,328,588 355,378,824
- --------------------------------------------------------------------------------
Class B 3,859,466 54,290,360 8,807,895 105,930,618
- --------------------------------------------------------------------------------
Class C* 106,186 1,498,498 67,166 810,828
- --------------------------------------------------------------------------------
Institutional Class 133,502 1,911,399 351,483 4,295,496
- --------------------------------------------------------------------------------
Reacquired:
Class A (32,368,241) (488,272,693) (75,327,509) (988,726,895)
- --------------------------------------------------------------------------------
Class B (8,550,619) (129,854,321) (14,417,738) (187,443,571)
- --------------------------------------------------------------------------------
Class C* (673,199) (10,207,080) (376,288) (4,880,836)
- --------------------------------------------------------------------------------
Institutional Class (182,932) (2,793,836) (636,014) (8,425,955)
- --------------------------------------------------------------------------------
22,456,558 $ 335,320,235 49,847,833 $ 621,155,013
================================================================================
</TABLE>
* Class C commenced sales on August 4, 1997.
13
<PAGE> 16
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the six months ended April 30, 1999 and each of the years in
the five-year period ended October 31, 1998, for a share of Class B capital
stock outstanding during the six months ended April 30, 1999, each of the years
in the three-year period ended October 31, 1998 and the period June 26, 1995
(date sales commenced) through October 31, 1995, and for a share of Class C
capital stock outstanding during the six months ended April 30, 1999, the year
ended October 31, 1998 and the period August 4, 1997 (date sales commenced)
through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------
OCTOBER 31,
APRIL 30, ------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.32 $ 13.41 $ 11.19 $ 10.63 $ 8.90 $ 9.46
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.03 0.12 0.10 0.19 0.15 0.21
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net gains (losses) on securities (both
realized and unrealized) 3.57 1.23 2.91 1.43 2.11 (0.45)
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.60 1.35 3.01 1.62 2.26 (0.24)
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (0.04) (0.10) (0.12) (0.16) (0.20) (0.16)
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Distributions from net realized gains (0.53) (1.34) (0.67) (0.90) (0.33) (0.16)
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.57) (1.44) (0.79) (1.06) (0.53) (0.32)
- ---------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 16.35 $ 13.32 $ 13.41 $ 11.19 $ 10.63 $ 8.90
============================================== ========== ========== ========== ========== ========== ==========
Total return(a) 27.68% 11.20% 28.57% 16.70% 27.03% (2.55)%
============================================== ========== ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,680,938 $3,706,938 $3,466,912 $2,647,208 $1,974,417 $1,579,074
============================================== ========== ========== ========== ========== ========== ==========
Ratio of expenses (exclusive of interest) to
average net assets(b) 1.05%(c) 1.08% 1.09% 1.12% 1.17% 1.17%
============================================== ========== ========== ========== ========== ========== ==========
Ratio of net investment income to average net
assets(d) 0.38%(c) 0.95% 0.79% 1.81% 1.55% 2.32%
============================================== ========== ========== ========== ========== ========== ==========
Portfolio turnover rate 73% 154% 170% 164% 161% 126%
============================================== ========== ========== ========== ========== ========== ==========
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.07% (annualized), 1.10%, 1.10% for 1999-1997.
(c) Ratios are annualized and based on average net assets of $4,287,605,419.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 0.36% (annualized), 0.93%, 0.78% for 1999-1997.
(e) Averages computed on a daily basis.
14
<PAGE> 17
NOTE 9-FINANCIAL HIGHLIGHTS-continued
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------------
OCTOBER 31,
APRIL 30, ------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.24 $ 13.37 $ 11.18 $ 10.62 $ 9.81
- ------------------------------------- ---------- ---------- ---------- -------- -------
Income from investment operations:
Net investment income (loss) (0.03) 0.02 0.01 0.10 0.03
- ------------------------------------- ---------- ---------- ---------- -------- -------
Net gains (losses) on securities
(both realized and unrealized) 3.56 1.22 2.89 1.45 0.80
- ------------------------------------- ---------- ---------- ---------- -------- -------
Total from investment operations 3.53 1.24 2.90 1.55 0.83
- ------------------------------------- ---------- ---------- ---------- -------- -------
Less distributions:
Dividends from net investment income (0.01) (0.03) (0.04) (0.09) (0.02)
- ------------------------------------- ---------- ---------- ---------- -------- -------
Distributions from net realized
gains (0.53) (1.34) (0.67) (0.90) --
- ------------------------------------- ---------- ---------- ---------- -------- -------
Total distributions (0.54) (1.37) (0.71) (0.99) (0.02)
- ------------------------------------- ---------- ---------- ---------- -------- -------
Net asset value, end of period $ 16.23 $ 13.24 $ 13.37 $ 11.18 $ 10.62
===================================== ========== ========== ========== ======== =======
Total return(b) 27.22% 10.33% 27.54% 15.90% 8.48%
===================================== ========== ========== ========== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $1,920,528 $1,408,687 $1,056,094 $515,672 $67,592
===================================== ========== ========== ========== ======== =======
Ratio of expenses (exclusive of
interest) to average net assets(c) 1.80%(d) 1.84%(d) 1.85% 1.94% 1.98%(f)
===================================== ========== ========== ========== ======== =======
Ratio of net investment income to
average net assets(e) (0.37)%(d) 0.19%(d) 0.03% 0.99% 0.74%(f)
===================================== ========== ========== ========== ======== =======
Portfolio turnover rate 73% 154% 170% 164% 161%
===================================== ========== ========== ========== ======== =======
</TABLE>
<TABLE>
<CAPTION>
CLASS C
-------------------------------------
OCTOBER 31,
APRIL 30, ---------------------
1999 1998 1997
--------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.27 $ 13.39 $ 13.86
- ------------------------------------- ------- ------- -------
Income from investment operations:
Net investment income (loss) (0.03) 0.02(a) --
- ------------------------------------- ------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 3.57 1.23 (0.45)
- ------------------------------------- ------- ------- -------
Total from investment operations 3.54 1.25 (0.45)
- ------------------------------------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.01) (0.03) --
- ------------------------------------- ------- ------- -------
Distributions from net realized
gains (0.53) (1.34) (0.02)
- ------------------------------------- ------- ------- -------
Total distributions (0.54) (1.37) (0.02)
- ------------------------------------- ------- ------- -------
Net asset value, end of period $ 16.27 $ 13.27 $ 13.39
===================================== ======= ======= =======
Total return(b) 27.23% 10.39% (3.24)%
===================================== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $82,156 $37,846 $ 5,669
===================================== ======= ======= =======
Ratio of expenses (exclusive of
interest) to average net assets(c) 1.80%(d) 1.84% 1.82%(f)
===================================== ======= ======= =======
Ratio of net investment income to
average net assets(e) (0.37)%(d) 0.19% 0.06%(f)
===================================== ======= ======= =======
Portfolio turnover rate 73% 154% 170%
===================================== ======= ======= =======
</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
1.82% (annualized), 1.86%, 1.86% for 1999-1997 for Class B and 1.82%
(annualized), 1.86%, 1.83% (annualized) for 1999-1997 for Class C.
(d) Ratios are annualized and based on average net assets of $1,694,059,838 and
$54,456,371 for Class B and Class C, respectively.
(e) 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 (0.39)% (annualized), 0.17%, 0.02% for 1999-1997 for
Class B and (0.39)% (annualized), 0.17%, 0.04% (annualized) for 1999-1997
for Class C.
(f) Annualized.
(g) Averages computed on a daily basis.
15
<PAGE> 18
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Edgar M. Larsen
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Treasurer
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 Mary J. Benson Boston, MA 02110
Chief Executive Officer Assistant Vice President and
Texana Global, Inc.; Assistant Treasurer COUNSEL TO THE FUND
Formerly Member
of the U.S. House of Representatives Sheri Morris Ballard Spahr
Assistant Vice President and Andrews & Ingersoll, LLP
Carl Frischling Assistant Treasurer 1735 Market Street
Partner Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel LLP Renee A. Friedli
Assistant Secretary COUNSEL TO THE DIRECTORS
Robert H. Graham
President and Chief Executive Officer P. Michelle Grace Kramer, Levin, Naftalis & Frankel LLP
A I M Management Group Inc. Assistant Secretary 919 Third Avenue
New York, NY 10022
Prema Mathai-Davis Jeffrey H. Kupor
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
Lisa A. Moss
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Kathleen J. Pflueger
Limited Partnership Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
<PAGE> 19
HOW AIM MAKES INVESTING EASY FOR YOU
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o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
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-------------------------------------
CURRENT SHAREHOLDERS
CAN CALL OUR
AIM INVESTOR LINE AT
800-246-5463
FOR 24-HOUR-A-DAY
ACCOUNT INFORMATION.
-------------------------------------
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<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 $112 billion in assets for
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund more than 6.3 million
AIM Large Cap Growth Fund AIM Asian Growth Fund shareholders, including
AIM Mid Cap Equity Fund(2), (A) AIM Developing Markets Fund(2) individual investors,
AIM Select Growth Fund(3) AIM Europe Growth Fund(2) corporate clients, and
AIM Small Cap Growth Fund(2), (B) AIM European Development Fund financial institutions as of
AIM Small Cap Opportunities Fund AIM International Equity Fund March 31, 1999.
AIM Value Fund AIM Japan Growth Fund(2) The AIM Family of
AIM Weingarten Fund AIM Latin American Growth Fund(2) Funds--Registered Trademark--
AIM New Pacific Growth Fund(2) is distributed nationwide, and
GROWTH & INCOME FUNDS AIM today is the 10th-largest
AIM Advisor Flex Fund GLOBAL GROWTH FUNDS mutual-fund complex in the
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund United States in assets under
AIM Advisor Real Estate Fund AIM Global Growth Fund management, according to
AIM Balanced Fund Strategic Insight, an
AIM Basic Value Fund(2), (C) GLOBAL GROWTH & INCOME FUNDS independent mutual-fund
AIM Charter Fund AIM Global Growth & Income Fund(2) monitor.
AIM Global Utilities Fund
INCOME FUNDS
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AIM Limited Maturity Treasury Fund
THEME FUNDS
TAX-FREE INCOME FUNDS AIM Global Consumer Products and Services Fund(2)
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AIM Municipal Bond Fund AIM Global Health Care Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Infrastructure Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Resources Fund(2)
AIM Global Telecommunications and Technology Fund(2), (E)
AIM Global Trends Fund(2), (F)
</TABLE>
(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 June 1, 1999, AIM Global
Telecommunications Fund was renamed AIM Global Telecommunications and Technology
Fund. (F) 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.
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