<PAGE> 1
SEMIANNUAL REPORT / APRIL 30 1999
AIM
BLUE CHIP FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
-------------------------------------
THE SWING BY PIERRE-AUGUSTE RENOIR
RENOIR BEGAN HIS CAREER AS A PAINTER IN A PORCELAIN FACTORY,
GAINING EXPERIENCE WITH THE COLORS THAT WOULD DISTINGUISH HIS
IMPRESSIONIST WORK AND LEARNING THE IMPORTANCE OF GOOD
CRAFTSMANSHIP. HIS PAINTINGS ARE AMONG SOME OF THE
BEST-KNOWN IN THE WORLD FOR THEIR SIGNIFICANCE AND THEIR
VALUE, AS ARE MANY OF THE BLUE-CHIP COMPANIES IN WHICH THIS
FUND INVESTS.
-------------------------------------
AIM Blue Chip Fund is for shareholders who seek long-term growth of capital
with a relatively conservative investment portfolio that contains the stocks of
top-performing companies within designated business sectors.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Blue Chip 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 calendar quarter end) are as
follows: For Class A shares, one year, 14.48%; five years, 24.77%; 10
years, 17.82%; since inception (2/4/87), 15.01%. For Class B shares, one
year, 15.27%; since inception (10/1/96), 27.77%. For Class C shares, one
year, 19.25%; since inception (8/4/97), 21.80%.
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 Dow Jones Industrial Average (the Dow) is a price-weighted average of
30 actively traded primarily industrial stocks.
o The unmanaged Lipper Growth and Income Funds Index represents an average of
the performance of the 30 largest growth-and-income funds. It is compiled
by Lipper, Inc., an independent mutual-fund performance monitor. Results
shown reflect reinvestment of dividends.
o The Russell 1000 Stock Index is an unmanaged index generally considered
representative of large capitalization stocks.
o The Standard & Poor's Composite Index of 500 Stocks (S&P 500) is a group of
unmanaged securities widely regarded by investors to be representative of
the stock market in general. Results shown assume the reinvestment of
dividends.
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.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/99, including sales charges
CLASS A SHARES
Inception (2/4/87) 15.00%
10 years 17.39
5 years 24.70
1 year 13.73
CLASS B SHARES
Inception (10/2/96) 27.28%
1 year 14.44
CLASS C SHARES
Inception (8/4/97) 21.39%
1 year 18.48
Past performance cannot guarantee comparable future results.
================================================================================
AIM BLUE CHIP 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, A I M Advisors, Inc.
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 BLUE CHIP FUND
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
LARGE-CAP STOCKS RULE IN NARROW MARKET
MARKETS HAVE REBOUNDED CONSIDERABLY SINCE LAST YEAR'S RECORD VOLATILITY. HOW
DID AIM BLUE CHIP FUND PERFORM?
The Fund finished out 1998 quite strongly and has continued to provide
excellent returns.
For the six months ended April 30, 1999, the Fund posted a total return of
22.34% for Class A shares, 21.88% for Class B shares, and 21.89% for Class C
shares, excluding sales charges. The Fund finished ahead of the Lipper Growth
and Income Funds Index, which had a return of 17.85% for the reporting period,
and close to the Russell 1000 Index, which had a return of 22.53%.
AIM Blue Chip Fund was one of only 16% of all stock funds to outperform the
S&P 500 for 1998, according to Morningstar, Inc. Class A, Class B and Class C
shares finished 1998 with total returns of 30.42%, 29.43% and 29.47%,
respectively, excluding sales charges. The S&P 500 had a return of 28.60% for
1998.
Since our last report, total net assets in the Fund have skyrocketed from
$1.92 billion to $3.63 billion.
================================================================================
GROWTH OF TOTAL NET ASSETS
as of 4/30/99
- --------------------------------------------------------------------------------
[BAR CHART]
10/31/98 $1.92 BILLION
4/30/99 $3.63 BILLION
================================================================================
WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE REPORTING PERIOD?
Global markets rebounded in late 1998 largely due to a global credit easing
initiated by the Federal Reserve Board's (the Fed) rate cuts in the United
States. The Fed's moves helped buoy stocks and halt the downward spiral that
started in Asia and gave emerging markets--and the global financial system--a
big scare last summer.
A handful of large-cap growth stocks drove U.S. markets during the first
part of 1999, causing a narrow market environment in which investors still
looked to the large, well-established companies after being burned by last
year's volatility. The Dow surpassed the 10,000 mark on March 29 and proceeded
to climb for the rest of the reporting period.
The IMF says the worst may be over in the global financial crisis. Asian
markets have rallied in recent weeks, and investor confidence is returning in
Latin America. Some economists also believe that Japan's financial situation
may have bottomed out and be on its way back up. The debut of Europe's new
common currency, the euro, at the beginning of 1999 went smoothly. However,
Europe has been enveloped in an economic malaise that weakened the euro against
the dollar.
The United States continued to see strong economic growth, stable prices
for goods and services, record low unemployment and stable lending rates. The
U.S. economy grew at a rate of 4.5% during the first quarter of 1999, with
inflation below 1%.
HOW HAVE YOU MANAGED THE FUND?
The Fund continued to be overweighted in growth sectors such as consumer
cyclicals, technology and healthcare at 8.86%, 13.08% and 13.13% of net assets,
respectively. Growth dominated the market during the reporting period. The
Fund's strategy gives us the flexibility to be more growth-oriented when
earnings point us in that direction.
WHAT KINDS OF TECHNOLOGY STOCKS DO YOU BUY?
For our technology holdings, we look for companies with strong product lines,
global reach and large research and development budgets. The technology sector
experienced some volatility during the first part of the year because many
investors worried that such stocks were overvalued. We are not into the ".com"
craze of buying stocks just because they are Internet-related. The fundamentals
of tech companies must support their valuations for our purposes. That's why we
own Microsoft, AOL, Cisco, EMC, Dell, IBM--large tech companies with proven
track records.
HOW DID HEALTH-CARE STOCKS PERFORM?
Within the health-care sector, stocks of large pharmaceutical companies,
biotechnology firms and medical-device manufacturers were the strongest
performers. Pharmaceutical and medical-device stocks tend to be less volatile
than technology stocks, which helps balance volatility in the portfolio.
Demographics also plays a strong role in the attractiveness of health-care
stocks as the population ages and new drugs and surgical techniques become
available.
First-quarter earnings for pharmaceutical giant Pfizer, a top Fund holding,
increased 18%. First-quarter earnings rose by 12% for pharmaceutical company
and Fund holding Eli Lilly, largely on the strength of Zyprexa, a drug that
treats anxiety disorders. Pharmaceutical and personal-care products maker
Bristol-Myers Squibb, another Fund holding, also
-------------------------------------
A HANDFUL OF LARGE-CAP GROWTH
STOCKS DROVE U.S. MARKETS DURING
THE FIRST PART OF 1999 . . .
-------------------------------------
See important Fund and index disclosures inside front cover.
AIM BLUE CHIP FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 4/30/99, based on total net assets
<TABLE>
<CAPTION>
==========================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Microsoft Corp. 2.74% 1. Computers 6.13%
(Software & Services)
2. MCI WorldCom, Inc. 2.60 2. Health Care (Diversified) 5.54
3. America Online, Inc. 2.26 3. Financial (Diversified) 5.48
4. Cisco Systems, Inc. 2.12 4. Health Care 4.59
(Drugs-Major Pharmaceuticals)
5. General Electric Co. 2.04 5. Telecommunications 3.79
(Long Distance)
6. American International Group, Inc. 1.86 6. Computers (Hardware) 3.24
7. Pfizer Inc. 1.70 7. Retail (General Merchandise) 3.17
8. Tyco International Ltd. 1.68 8. Communications Equipment 3.06
9. Wal-Mart Stores, Inc. 1.65 9. Broadcasting 3.02
(Television, Radio & Cable)
10. Lucent Technologies, Inc. 1.49 10. Health Care 2.68
(Medical Products & Supplies)
The Fund's portfolio is subject to change, and there is no assurance that the Fund will
continue to hold any particular security.
==========================================================================================
</TABLE>
RESULTS OF A $10,000 INVESTMENT
AIM BLUE CHIP FUND VS. BENCHMARK INDEX
2/4/87--4/30/99,
based on average annual total returns
================================================================================
[BAR CHART]
AIM BLUE CHIP
CLASS A SHARES $55,288
LIPPER GROWTH AND
INCOME FUNDS INDEX $50,624
For a chart of Fund returns, please see the inside front cover. Past
performance cannot guarantee comparable future results. MARKET VOLATILITY CAN
SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN INVESTMENT MADE
TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE SHOWN.
================================================================================
reported a good first quarter, with earnings up 15% over the same period last
year.
WHAT HAS THE STRONG U.S. ECONOMY MEANT FOR RETAIL STOCKS?
Healthy consumer spending meant strong performance by retail stocks,
particularly those of discount and specialty chains. Retail sales in the United
States climbed 1.7% in February, the largest increase on a monthly basis in
five years. The Fund benefited from owning retail holdings such as Wal-Mart,
the world's largest retailer, and Home Depot, the country's largest
home-improvement retailer. Sales for Wal-Mart rose by 16.7% for 1998, and Home
Depot continues to benefit from the boom in home construction and renovation.
Another retail holding we liked was the casual-clothing company The Gap, which
reported a 54% increase in net income for 1998.
ARE THERE ANY OTHER SECTORS THAT HAVE HELPED THE FUND?
Energy stocks rebounded sharply on the heels of rising crude-oil and
natural-gas prices--since February, oil is up more than 60%. The rising prices
have been spurred by production cutbacks, unexpectedly strong demand in the
U.S. market, and optimism about the Asian economic recovery. Even though we had
only 4% of net assets in this sector, our holdings allowed us to participate in
the rally during the first part of 1999. However, the outlook for these stocks
is still cautious because global demand for energy continues to lag.
The financial sector has taken off dramatically, but very selectively. Many
financial-services companies and banks that have reported earnings so far have
come in at or above expectations. However, there is definitely less enthusiasm
for banks and brokerages with global reach because of the deep losses many of
those companies endured in 1998.
WHAT IS YOUR OUTLOOK FOR THE SHORT TERM?
There doesn't seem to be much indication that the economic slowdown analysts
have been predicting for the United States will appear any time soon, and this
has sparked some fears of impending inflation. In his semiannual report on
monetary policy and the economy, Fed Chairman Alan Greenspan said the Fed would
need to re-evaluate the interest rate situation now that some stability has
returned to world financial markets. For now, it seems the Fed is content to
leave well enough alone.
If large-company growth stocks continue to dominate the market, such an
environment would most likely benefit the Fund. Regardless of market trends, we
believe focusing on fundamentals like earnings growth will pay off for the Fund
in the long run, and we are optimistic that the Fund will continue to provide
solid results in the months ahead.
See important Fund and index disclosures inside front cover.
AIM BLUE CHIP FUND
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-89.36%
AEROSPACE/DEFENSE-0.36%
Goodrich (B.F.) Co. 325,000 $ 12,918,750
- ---------------------------------------------------------------
AIRLINES-0.35%
Delta Air Lines, Inc. 200,000 12,687,500
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.57%
Lear Corp.(a) 400,000 18,350,000
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-1.85%
Fifth Third Bancorp 360,000 25,807,500
- ---------------------------------------------------------------
State Street Corp. 225,000 19,687,500
- ---------------------------------------------------------------
Wells Fargo Co. 500,000 21,593,750
- ---------------------------------------------------------------
67,088,750
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-1.91%
BankAmerica Corp. 275,000 19,800,000
- ---------------------------------------------------------------
Chase Manhattan Corp. (The) 600,000 49,650,000
- ---------------------------------------------------------------
69,450,000
- ---------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-0.75%
Coca-Cola Co. (The) 400,000 27,200,000
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-3.02%
AT&T Corp.-Liberty Media Group(a) 300,000 19,162,500
- ---------------------------------------------------------------
CBS Corp.(a) 625,000 28,476,562
- ---------------------------------------------------------------
Clear Channel Communications,
Inc.(a) 325,000 22,587,500
- ---------------------------------------------------------------
Comcast Corp.-Class A 600,000 39,412,500
- ---------------------------------------------------------------
109,639,062
- ---------------------------------------------------------------
CHEMICALS-0.68%
Du Pont (E.I.) de Nemours & Co. 350,000 24,718,750
- ---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.65%
Monsanto Co. 525,000 23,756,250
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.06%
Lucent Technologies, Inc. 900,000 54,112,500
- ---------------------------------------------------------------
Northern Telecom Ltd.-ADR
(Canada) 325,000 22,160,938
- ---------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR
(Finland) 425,000 31,529,688
- ---------------------------------------------------------------
Nokia Oyj-Class A (Finland) 40,000 3,083,013
- ---------------------------------------------------------------
110,886,139
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-3.24%
Dell Computer Corp.(a) 750,000 30,890,625
- ---------------------------------------------------------------
International Business Machines
Corp. 200,000 41,837,500
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 750,000 44,859,375
- ---------------------------------------------------------------
117,587,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (NETWORKING)-2.48%
Ascend Communications, Inc.(a) 135,000 $ 13,044,375
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 675,000 76,992,187
- ---------------------------------------------------------------
90,036,562
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.23%
EMC Corp.(a) 410,000 44,664,375
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-6.13%
America Online, Inc.(a) 575,000 82,081,250
- ---------------------------------------------------------------
Cadence Design Systems, Inc.(a) 250,000 3,390,625
- ---------------------------------------------------------------
Microsoft Corp.(a) 1,225,000 99,607,813
- ---------------------------------------------------------------
Oracle Corp.(a) 600,000 16,237,500
- ---------------------------------------------------------------
Yahoo! Inc.(a) 120,000 20,962,500
- ---------------------------------------------------------------
222,279,688
- ---------------------------------------------------------------
CONSUMER FINANCE-0.53%
Providian Financial Corp. 150,000 19,359,375
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-0.88%
Cardinal Health, Inc. 533,437 31,906,201
- ---------------------------------------------------------------
ELECTRIC COMPANIES-1.18%
Duke Power Co. 265,000 14,840,000
- ---------------------------------------------------------------
Edison International 700,000 17,150,000
- ---------------------------------------------------------------
Texas Utilities Co. 275,000 10,931,250
- ---------------------------------------------------------------
42,921,250
- ---------------------------------------------------------------
ELECTRIC EQUIPMENT-2.03%
General Electric Co. 700,000 73,850,000
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-2.57%
Intel Corp. 750,000 45,890,625
- ---------------------------------------------------------------
Texas Instruments, Inc. 240,000 24,510,000
- ---------------------------------------------------------------
Xilinx, Inc.(a) 500,000 22,812,500
- ---------------------------------------------------------------
93,213,125
- ---------------------------------------------------------------
ENTERTAINMENT-1.11%
Time Warner Inc. 575,000 40,250,000
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-0.48%
Applied Materials, Inc.(a) 325,000 17,428,125
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-5.48%
American Express Co. 300,000 39,206,250
- ---------------------------------------------------------------
Citigroup Inc. 550,000 41,387,500
- ---------------------------------------------------------------
Fannie Mae 675,000 47,882,813
- ---------------------------------------------------------------
Freddie Mac 800,000 50,200,000
- ---------------------------------------------------------------
MBIA, Inc. 300,000 20,175,000
- ---------------------------------------------------------------
198,851,563
- ---------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DIVERSIFIED)-5.54%
Abbott Laboratories 750,000 $ 36,328,125
- ---------------------------------------------------------------
American Home Products Corp. 650,000 39,650,000
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 725,000 46,082,812
- ---------------------------------------------------------------
Johnson & Johnson 375,000 36,562,500
- ---------------------------------------------------------------
Warner-Lambert Co. 625,000 42,460,937
- ---------------------------------------------------------------
201,084,374
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-4.59%
Lilly (Eli) & Co. 550,000 40,493,750
- ---------------------------------------------------------------
Merck & Co., Inc. 350,000 24,587,500
- ---------------------------------------------------------------
Pfizer Inc. 535,000 61,558,438
- ---------------------------------------------------------------
Schering-Plough Corp. 825,000 39,857,813
- ---------------------------------------------------------------
166,497,501
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-2.68%
Becton, Dickinson & Co. 625,000 23,242,187
- ---------------------------------------------------------------
Guidant Corp. 625,000 33,554,687
- ---------------------------------------------------------------
Medtronic, Inc. 563,600 40,543,975
- ---------------------------------------------------------------
97,340,849
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.32%
HEALTHSOUTH Corp.(a) 875,000 11,757,813
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-1.75%
Colgate-Palmolive Co. 275,000 28,170,312
- ---------------------------------------------------------------
Procter & Gamble Co. (The) 375,000 35,179,688
- ---------------------------------------------------------------
63,350,000
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-2.28%
American International Group,
Inc. 575,000 67,526,562
- ---------------------------------------------------------------
CIGNA Corp. 175,000 15,257,812
- ---------------------------------------------------------------
82,784,374
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-2.10%
Merrill Lynch & Co., Inc. 300,000 25,181,250
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 350,000 34,715,625
- ---------------------------------------------------------------
Schwab (Charles) Corp. 150,000 16,462,500
- ---------------------------------------------------------------
76,359,375
- ---------------------------------------------------------------
LODGING (HOTELS)-1.02%
Carnival Corp. 900,000 37,125,000
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.89%
Ingersoll-Rand Co. 465,000 32,172,188
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-2.68%
Tyco International Ltd. 750,000 60,937,500
- ---------------------------------------------------------------
United Technologies Corp. 250,000 36,218,750
- ---------------------------------------------------------------
97,156,250
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NATURAL GAS-1.16%
El Paso Energy Corp. 425,000 $ 15,618,750
- ---------------------------------------------------------------
Enron Corp. 350,000 26,337,500
- ---------------------------------------------------------------
41,956,250
- ---------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-1.26%
Halliburton Co. 550,000 23,443,750
- ---------------------------------------------------------------
Schlumberger Ltd. 350,000 22,356,250
- ---------------------------------------------------------------
45,800,000
- ---------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-2.21%
Exxon Corp. 425,000 35,301,562
- ---------------------------------------------------------------
Mobil Corp. 225,000 23,568,750
- ---------------------------------------------------------------
Royal Dutch Petroleum Co.-New
York Shares-ADR (Netherlands) 365,000 21,420,938
- ---------------------------------------------------------------
80,291,250
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.75%
Bowater, Inc. 275,000 14,746,875
- ---------------------------------------------------------------
International Paper Co. 235,000 12,528,438
- ---------------------------------------------------------------
27,275,313
- ---------------------------------------------------------------
PERSONAL CARE-0.95%
Avon Products, Inc. 325,000 17,651,562
- ---------------------------------------------------------------
Gillette Co. 325,000 16,960,937
- ---------------------------------------------------------------
34,612,499
- ---------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.36%
New York Times Co.-Class A (The) 375,000 12,937,500
- ---------------------------------------------------------------
RAILROADS-0.35%
Canadian National Railway Co.
(Canada) 200,000 12,625,000
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.32%
Home Depot, Inc. (The) 800,000 47,950,000
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.59%
CVS Corp. 450,000 21,431,250
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.86%
Kroger Co.(a) 550,000 29,871,875
- ---------------------------------------------------------------
Safeway, Inc.(a) 700,000 37,756,250
- ---------------------------------------------------------------
67,628,125
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-3.17%
Costco Companies, Inc.(a) 330,000 26,709,375
- ---------------------------------------------------------------
Dayton Hudson Corp. 425,000 28,607,812
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 1,300,000 59,800,000
- ---------------------------------------------------------------
115,117,187
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.68%
Staples, Inc.(a) 825,000 24,750,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.24%
Gap, Inc. (The) 475,000 31,617,188
- ---------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-(CONTINUED)
TJX Companies, Inc. 400,000 $ 13,325,000
- ---------------------------------------------------------------
44,942,188
- ---------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.41%
Interpublic Group of Companies,
Inc. 190,000 14,736,875
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.71%
Equifax, Inc. 387,800 13,936,562
- ---------------------------------------------------------------
First Data Corp. 600,000 25,462,500
- ---------------------------------------------------------------
Fiserv, Inc.(a) 385,000 22,546,563
- ---------------------------------------------------------------
61,945,625
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.84%
AirTouch Communications, Inc.(a) 325,000 30,346,875
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-3.79%
AT&T Corp. 850,000 42,925,000
- ---------------------------------------------------------------
MCI WorldCom, Inc.(a) 1,150,000 94,515,625
- ---------------------------------------------------------------
137,440,625
- ---------------------------------------------------------------
TELEPHONE-1.80%
BellSouth Corp. 675,000 30,206,250
- ---------------------------------------------------------------
SBC Communications, Inc. 625,000 35,000,000
- ---------------------------------------------------------------
65,206,250
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TOBACCO-0.58%
Philip Morris Companies, Inc. 600,000 $ 21,037,500
- ---------------------------------------------------------------
Total Common Stocks (Cost
$2,488,135,807) 3,242,701,001
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY BILLS-0.22%(B)
4.237%, 06/24/99 (Cost
$8,106,511) $ 8,160,000(c) $ 8,106,511
- ---------------------------------------------------------------
Total Investments (excluding
Repurchase Agreements (Cost
$2,496,242,318) 3,250,807,512
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS-10.77%(D)
Dresdner Bank, 4.94%, 05/03/99(e) 51,506,184 51,506,184
- ---------------------------------------------------------------
SBC Warburg Dillon Read Inc.,
4.94%,(f) 05/03/99 339,145,171 339,145,171
- ---------------------------------------------------------------
Total Repurchase Agreement
(Cost $390,651,355) 390,651,355
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.35% 3,641,458,867
- ---------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.35%) (12,534,956)
- ---------------------------------------------------------------
NET ASSETS-100.00% $3,628,923,911
===============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) U.S. Treasury bills are trades on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreements entered into 04/30/99 with a maturing value of
$300,123,500. Collateralized by $297,865,514 U.S. Government Obligations,
5.81% to 7.68% due 05/01/03 to 11/01/37 with an aggregate market value at
04/30/99 of $306,001,164.
(f) Joint repurchase agreements 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.
See Notes to Financial Statements.
6
<PAGE> 9
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$2,496,242,318) $3,250,807,512
- ---------------------------------------------------------
Repurchase agreements (cost $390,651,355) 390,651,355
- ---------------------------------------------------------
Foreign currencies, at value (cost
$15,074) 17,370
- ---------------------------------------------------------
Receivables for:
Investments sold 997,392
- ---------------------------------------------------------
Capital stock sold 34,518,826
- ---------------------------------------------------------
Dividends and interest 1,493,609
- ---------------------------------------------------------
Investment for deferred compensation plan 15,074
- ---------------------------------------------------------
Other assets 199,452
- ---------------------------------------------------------
Total assets 3,678,700,590
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 39,236,695
- ---------------------------------------------------------
Capital stock reacquired 5,277,919
- ---------------------------------------------------------
Deferred compensation 15,074
- ---------------------------------------------------------
Variation margin 1,223,750
- ---------------------------------------------------------
Accrued advisory fees 1,847,688
- ---------------------------------------------------------
Accrued administrative services fees 23,293
- ---------------------------------------------------------
Accrued directors' fees 4,360
- ---------------------------------------------------------
Accrued distribution fees 2,107,141
- ---------------------------------------------------------
Accrued transfer agent fees 30,390
- ---------------------------------------------------------
Accrued operating expenses 10,369
- ---------------------------------------------------------
Total liabilities 49,776,679
- ---------------------------------------------------------
Net assets applicable to shares
outstanding $3,628,923,911
- ---------------------------------------------------------
NET ASSETS:
Class A $1,914,224,775
=========================================================
Class B $1,476,816,270
=========================================================
Class C $ 237,882,86
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER
SHARE:
Class A:
Authorized 750,000,000
- ---------------------------------------------------------
Outstanding 43,426,611
=========================================================
Class B:
Authorized 750,000,000
- ---------------------------------------------------------
Outstanding 33,993,629
=========================================================
Class C:
Authorized 750,000,000
- ---------------------------------------------------------
Outstanding 5,477,141
=========================================================
Class A:
Net asset value and redemption price
per share $ 44.08
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $44.08
divided by 94.50%) $ 46.65
=========================================================
Class B:
Net asset value and offering price per
share $ 43.44
=========================================================
Class C:
Net asset value and offering price per
share $ 43.43
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $58,476 foreign
withholding tax) $ 9,590,639
- --------------------------------------------------------
Interest 7,814,731
- --------------------------------------------------------
Total investment income 17,405,370
- --------------------------------------------------------
EXPENSES:
Advisory fees 8,684,044
- --------------------------------------------------------
Administrative services fees 68,458
- --------------------------------------------------------
Custodian fees 14,475
- --------------------------------------------------------
Directors' fees 8,737
- --------------------------------------------------------
Distribution fees -- Class A 2,568,835
- --------------------------------------------------------
Distribution fees -- Class B 5,440,354
- --------------------------------------------------------
Distribution fees -- Class C 767,464
- --------------------------------------------------------
Transfer agent fees -- Class A 1,190,343
- --------------------------------------------------------
Transfer agent fees -- Class B 1,308,126
- --------------------------------------------------------
Transfer agent fees -- Class C 163,011
- --------------------------------------------------------
Other 280,610
- --------------------------------------------------------
Total expenses 20,494,457
- --------------------------------------------------------
Less: Expenses paid indirectly (18,427)
- --------------------------------------------------------
Net expenses 20,476,030
- --------------------------------------------------------
Net investment income (loss) (3,070,660)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (7,220,919)
- --------------------------------------------------------
Foreign currencies (480,586)
- --------------------------------------------------------
Futures contracts 22,718,805
- --------------------------------------------------------
15,017,300
- --------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 474,622,704
- --------------------------------------------------------
Foreign currencies (9,610)
- --------------------------------------------------------
Futures contracts (2,286,033)
- --------------------------------------------------------
472,327,061
- --------------------------------------------------------
Net gain from investment securities,
foreign currencies and futures
contracts 487,344,361
- --------------------------------------------------------
Net increase in net assets resulting from
operations $484,273,701
========================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 10
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 (loss) $ (3,070,660) $ 664,009
- ----------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and futures 15,017,300 1,200,650
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and futures contracts 472,327,061 175,782,639
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 484,273,701 177,647,298
- ----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (786,958) (1,249,305)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (3,115,713) (10,987,892)
- ----------------------------------------------------------------------------------------------
Class B (2,254,273) (6,118,620)
- ----------------------------------------------------------------------------------------------
Class C (293,546) (150,526)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 563,462,680 486,282,009
- ----------------------------------------------------------------------------------------------
Class B 543,016,160 425,444,112
- ----------------------------------------------------------------------------------------------
Class C 125,558,445 81,733,726
- ----------------------------------------------------------------------------------------------
Net increase in net assets 1,709,860,496 1,152,600,802
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,919,063,415 766,462,613
- ----------------------------------------------------------------------------------------------
End of period $3,628,923,911 $1,919,063,415
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $2,863,937,370 $1,631,900,085
- ----------------------------------------------------------------------------------------------
Undistributed net investment (loss) (3,151,371) 706,247
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, and futures 10,009,386 655,618
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 758,128,526 285,801,465
- ----------------------------------------------------------------------------------------------
$3,628,923,911 $1,919,063,415
==============================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Blue Chip 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 three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately. The
Fund's investment objective is long-term growth of capital. Information
presented in these financial statements pertains only to the Fund.
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 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 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 market value as determined in good faith by or under the supervision
of the Board of Directors.
B. Foreign Currency Translation--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.
C. Foreign Currency Contracts--A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may enter into a foreign currency contract for
the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could
be exposed to risk if counterparties to the contracts are unable to meet
the terms of their contracts.
D. Securities Transactions, Investment Income and Distributions--Securities
transactions are recorded 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.
E. Federal Income Taxes--The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
F. 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 or cash, and/or by securing a
standby letter of credit from a major commercial bank, 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
9
<PAGE> 12
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 contracts may not correlate with changes in the
value of the securities being hedged.
G. 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.
H. 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 options'
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 in 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.
I. Expenses--Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million.
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 $68,458 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Fund. During the six months ended April 30,
1999, AFS was paid $146,454 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.35% of the average daily net assets of the Class A shares
and 1.00% of the average daily net assets of Class C shares. The Fund, pursuant
to the Class B Plan, pays AIM Distributors compensation at an annual rate of
1.00% of the average daily net assets of the Class B shares. Of these amounts,
the Fund may pay a service fee of 0.25% of the average daily net assets of the
Class A, Class B or Class C shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own the appropriate class of shares of the Fund. Any
amounts not paid as a service fee under the Plans would constitute an asset-
based sales charge. The Plans also impose a cap on the total sales charges,
including asset-based sales charges that may be paid by the respective classes.
During the six months ended April 30, 1999, the Class A, Class B and Class C
shares paid AIM Distributors $2,568,835, $5,440,354, and $767,464 respectively,
as compensation under the Plans.
AIM Distributors received commissions of $1,476,783 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.
10
<PAGE> 13
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 $69,208 in contingent deferred sales charges imposed on
redemption of Fund shares. Certain officers and directors of the Company are
officers and directors of AIM, AFS and AIM Distributors.
During the six months ended April 30, 1999, the Fund paid legal fees of
$2,552, respectively, 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 $16,199 and $2,228, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $18,427 during the six months ended April 30, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended April 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.05% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the six months ended April 30, 1999 was $1,394,828,354
and $310,765,126, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $792,401,137
- -----------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (38,132,249)
- -----------------------------------------------------
Net unrealized appreciation of
investment securities $754,268,888
=====================================================
</TABLE>
Costs of investments for tax purposes is $2,887,189,979.
NOTE 7-FUTURES CONTRACTS
On April 30, 1999, $8,159,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts were as follows:
<TABLE>
<CAPTION>
NO. OF MONTH/ UNREALIZED
CONTRACT CONTRACTS COMMITMENT APPRECIATION
-------- --------- ---------- ------------
<S> <C> <C> <C>
S&P 500 Index 445 June 99 $3,565,562
=====================================================
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in 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, OCTOBER 31,
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 19,390,333 $ 810,796,822 26,179,983 $ 915,652,812
- --------------------------------------------------------------------------------
Class B 14,952,458 618,742,761 14,239,927 492,929,849
- --------------------------------------------------------------------------------
Class C 3,782,110 156,838,426 2,711,151 95,200,193
- --------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 93,903 3,711,998 371,504 11,699,310
- --------------------------------------------------------------------------------
Class B 54,814 2,141,077 184,940 5,805,443
- --------------------------------------------------------------------------------
Class C 7,198 281,070 3,949 128,203
- --------------------------------------------------------------------------------
Reacquired:
Class A (6,098,695) (251,046,140) (12,601,919) (441,070,113)
- --------------------------------------------------------------------------------
Class B (1,889,298) (77,867,678) (2,143,627) (73,291,180)
- --------------------------------------------------------------------------------
Class C (763,219) (31,561,051) (392,399) (13,594,670)
- --------------------------------------------------------------------------------
29,529,604 $1,232,037,285 28,553,509 $ 993,459,847
================================================================================
</TABLE>
11
<PAGE> 14
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, each of the years in the
two-year period ended October 31, 1998, the one month ended October 31, 1996 and
each of the years in the three-year period ended September 30, 1996, for a share
of Class B capital stock outstanding during the six months ended April 30, 1999,
each of the years in the two-year period ended October 31, 1998 and the period
October 1, 1996 (date sales commenced) through October 31, 1996, 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, SEPTEMBER 30,
APRIL 30, ---------------------------------- ------------------------------
1999 1998 1997 1996 1996(a) 1995 1994
---------- ---------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 36.14 $ 30.96 $ 26.08 $ 25.56 $ 23.83 $ 19.22 $ 18.89
- ------------------------------------------- ---------- ---------- -------- -------- -------- ------- -------
Income from investment operations:
Net investment income 0.03(b) 0.13(b) 0.17(b) -- 0.33 0.14 0.15
- ------------------------------------------- ---------- ---------- -------- -------- -------- ------- -------
Net gains on securities (both realized
and unrealized) 8.03 5.75 6.93 0.52 4.61 5.05 1.24
- ------------------------------------------- ---------- ---------- -------- -------- -------- ------- -------
Total from investment operations 8.06 5.88 7.10 0.52 4.94 5.19 1.39
- ------------------------------------------- ---------- ---------- -------- -------- -------- ------- -------
Less distributions:
Dividends from net investment income (0.02) (0.07) (0.05) -- (0.21) (0.12) (0.21)
- ------------------------------------------- ---------- ---------- -------- -------- -------- ------- -------
Distributions from net realized gains (0.10) (0.63) (2.17) -- (3.00) (0.46) (0.85)
- ------------------------------------------- ---------- ---------- -------- -------- -------- ------- -------
Total distributions (0.12) (0.70) (2.22) -- (3.21) (0.58) (1.06)
- ------------------------------------------- ---------- ---------- -------- -------- -------- ------- -------
Net asset value, end of period $ 44.08 $ 36.14 $ 30.96 $ 26.08 $ 25.56 $ 23.83 $ 19.22
=========================================== ========== ========== ======== ======== ======== ======= =======
Total return(c) 22.34% 19.36% 29.68% 2.04% 22.39% 27.84% 7.69%
=========================================== ========== ========== ======== ======== ======== ======= =======
Ratios/supplement data:
Net assets, end of period (000s omitted) $1,914,225 $1,085,648 $498,178 $120,448 $106,415 $71,324 $60,115
=========================================== ========== ========== ======== ======== ======== ======= =======
Ratio of expenses to average net assets(d) 1.18%(e) 1.22% 1.31% 1.30%(f) 1.26% 1.3% 1.4%
=========================================== ========== ========== ======== ======== ======== ======= =======
Ratio of net investment income to average
net assets(g) 0.10%(e) 0.33% 0.50% 0.12%(f) 0.53% 0.7% 0.8%
=========================================== ========== ========== ======== ======== ======== ======= =======
Portfolio turnover rate 13% 27% 43% 10% 58% 17% 13%
=========================================== ========== ========== ======== ======== ======== ======= =======
</TABLE>
(a) The Fund changed investment advisors on June 3, 1996.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and is not annualized for periods less than
one year.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.32%, 1.37% (annualized) and 1.28% for the periods 1997-1996 and September
30, 1996.
(e) Ratios are annualized and based on average net assets of $1,480,070,885.
(f) Annualized.
(g) 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 0.49%, 0.05% (annualized) and 0.51% for the periods
1997-1996 and September 30, 1996.
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------- --------------------------------
OCTOBER 31, OCTOBER 31,
APRIL 30, ------------------------------- APRIL 30, ------------------
1999 1998 1997 1996 1999 1998 1997
---------- -------- -------- ------ --------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 35.73 $ 30.76 $ 26.07 $25.56 $ 35.72 $ 30.75 $31.72
- ---------------------------------------- ---------- -------- -------- ------ -------- ------- ------
Income from investment operations:
Net investment income (loss) (0.11)(b) (0.12) (0.03)(a) (0.01) (0.11)(b) (0.12)(a) (0.01)(a)
- ---------------------------------------- ---------- -------- -------- ------ -------- ------- ------
Net gains (losses) on securities
(both realized and unrealized) 7.92 5.72 6.92 0.52 7.92 5.72 (0.96)
- ---------------------------------------- ---------- -------- -------- ------ -------- ------- ------
Total from investment operations 7.81 5.60 6.89 0.51 7.81 5.60 (0.97)
- ---------------------------------------- ---------- -------- -------- ------ -------- ------- ------
Less distributions:
Dividends from net investment income -- -- (0.03) -- -- -- --
- ---------------------------------------- ---------- -------- -------- ------ -------- ------- ------
Distributions from net realized gains (0.10) (0.63) (2.17) -- (0.10) (0.63) --
- ---------------------------------------- ---------- -------- -------- ------ -------- ------- ------
Total distributions (0.10) (0.63) (2.20) -- (0.10) (0.63) --
- ---------------------------------------- ---------- -------- -------- ------ -------- ------- ------
Net asset value, end of period $ 43.44 $ 35.73 $ 30.76 $26.07 $ 43.43 $ 35.72 $30.75
======================================== ========== ======== ======== ====== ======== ======= ======
Total return(b) 21.88% 18.52% 28.81% 2.00% 21.89% 18.52% (3.06)%
======================================== ========== ======== ======== ====== ======== ======= ======
Ratios/supplement data:
Net assets, end of period (000s omitted) $1,476,816 $745,862 $264,337 $8,101 $237,883 $87,554 $3,947
======================================== ========== ======== ======== ====== ======== ======= ======
Ratio of expenses to average net
assets(c) 1.91%(d) 1.94% 2.10% 2.01%(e) 1.91%(d) 1.94% 2.10%(e)
======================================== ========== ======== ======== ====== ======== ======= ======
Ratio of net investment income (loss) to
average net assets(f) (0.62)%(d) (0.38)% (0.28)% (0.58)%(e) (0.62)%(d) (0.38)% (0.28)%(e)
======================================== ========== ======== ======== ====== ======== ======= ======
Portfolio turnover rate 13% 27% 43% 10% 13% 27% 43%
======================================== ========== ======== ======== ====== ======== ======= ======
</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 reimbursement. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.12% and 2.08% (annualized) for 1997-1996 for Class B and 2.12%
(annualized) for 1997 for Class C.
(d) Ratios are annualized and based on average net assets of $1,097,087,993 and
$154,764,861 for Class B and Class C, respectively.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.31)% and (0.65)% (annualized) for 1997-1996 for Class
B and (0.31)% (annualized) for 1997 for Class C.
12
<PAGE> 15
<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> 16
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
AIM Floating Rate Fund(2) GLOBAL INCOME FUNDS
AIM High Yield Fund AIM Emerging Markets Debt Fund(2), (D)
AIM High Yield Fund II AIM Global Government Income Fund(2)
AIM Income Fund AIM Global Income Fund
AIM Intermediate Government Fund AIM Strategic Income Fund(2)
AIM Limited Maturity Treasury Fund
THEME FUNDS
TAX-FREE INCOME FUNDS AIM Global Consumer Products and Services Fund(2)
AIM High Income Municipal Fund AIM Global Financial Services Fund(2)
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.
[AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE--Registered Trademark--
