<PAGE> 1
AIM GLOBAL
UTILITIES FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT DECEMBER 31, 1997
<PAGE> 2
--------------------------------------
AIM GLOBAL
UTILITIES FUND
For shareholders
who seek high current income
and capital appreciation
through a portfolio
primarily of
common and preferred stocks
of public utility companies.
--------------------------------------
[COVER PHOTO
APPEARS HERE]
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Utilities Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed at net asset value
without a sales charge.
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 differing fees and expenses.
o Because Class C shares have been offered for less than one year (since
8/4/97), all total return figures for Class C shares reflect cumulative
total return that has not been annualized.
o In 1997, the Fund paid distributions of $0.48, $0.36, and $0.14 for Class A,
Class B, and Class C shares, respectively.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o Past performance cannot guarantee comparable future results.
o International investing presents certain risks not associated with investing
solely in the U.S. These include risks relating to fluctuations in the value
of the U.S. dollar relative to the value of other currencies, the custody
arrangements made for the Fund's foreign holdings, differences in
accounting, political risks, and the lesser degree of public information
required to be provided by non-U.S. companies.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Average of 15 Utilities is a weighted average of the
performance of 15 large publicly traded utility stocks.
o The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30
actively traded primarily industrial stocks.
o The Lipper Utility Funds Index is an average of the 30 largest utility funds
tracked by Lipper Analytical Services, Inc., an independent mutual fund
performance monitor.
o The NAREIT (National Association of Real Estate Investment Trusts) Equity
Index tracks the performance of all tax-qualified REITs listed on the New
York Stock Exchange, American Stock Exchange, and the NASDAQ National Market
System. Equity REITs are defined as REITs with 75% or more of their gross
invested book assets invested directly or indirectly in the equity ownership
of real estate.
o Standard & Poor's Corporation is a credit-rating agency. 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 An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS
ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY;
ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK OR ANY AFFILIATE; AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders
or to persons who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
1997 proved an eventful year in securities markets. The Dow
[PHOTO OF Jones Industrial Average reached its all-time high--and also
Charles T. had its largest one-day point drop ever, though not its
Bauer, largest percentage drop. Volatility was unabated, and we
Chairman of experienced the first 10% stock market correction in the
the Board of U.S. since 1991.
THE FUND Never dull and occasionally unsettling, 1997 was also
APPEARS HERE] a very good year for many investments. For an unprecedented
third year in a row, domestic equities rose more than 20%.
Late in the year, in the uncertainty brought on by events in
Asia, bond markets, especially the U.S. Treasury market,
fulfilled their usual role as relative safe havens, and a
bull market in bonds took hold. Overseas, though Asian
markets plummeted, Europe thrived.
Market expectations performed an about-face during the
year. Worry about the inflationary potential of vigorous
economic growth became concern about the potential negative impact of Asia's
financial crisis. At fiscal year end, there was no consensus about how serious
or widespread this impact would be.
An interview with your Fund's managers appears on the following pages. They
discuss their investment strategies, how your Fund performed in this context,
and their outlook for the future.
In uncertain times like these, your financial consultant remains your best
source for information on market trends and for advice on how to invest
strategically rather than emotionally. We encourage you to visit your financial
consultant regularly to make sure your chosen investments still suit your goals,
risk tolerance, and time horizon.
INVESTOR EDUCATION EVENTS
In addition to professional guidance, every investor needs fundamental
information about the saving and investing choices offered by the marketplace.
AIM has always championed investor education, convinced a more knowledgeable
shareholder is a better customer. A great deal of investment information will be
available during two upcoming events, and we hope our shareholders will
participate in and learn from them to the greatest extent possible.
First, from March 29 through April 4, the Securities and Exchange Commission
(SEC) will sponsor Saving and Investing Education Week. As the SEC points out,
financial markets are more stable when investors are confident in them, and
knowledge is a major confidence builder. The week's theme is "Get the facts.
It's your money. It's your future." The aim is to inform citizens about the
saving and investment possibilities available and to build understanding about
how one's financial needs and goals change throughout one's life. The week's
awareness and education events will culminate with a national investors town
meeting at satellite-linked locations across the nation. You can find out more
from the SEC's Web site at www.sec.gov.
The second event concerns citizens' financial planning for retirement, a
subject of growing urgency as the population ages and the solvency of the Social
Security system is increasingly debatable. In July, the first National Summit on
Retirement Savings will be held at the White House. Under the auspices of the
Department of Labor, working through public-private partnership, the summit's
goal is to advance the public's knowledge of retirement savings through
development of a broad-based education program and to develop recommendations
for public/private action to promote private retirement savings among American
workers.
Look for further information on both of these investor education events in
the national and local press.
We are pleased to send you this report on your Fund. Please contact our
Client Services department at 800-959-4246 if you have questions or comments.
Automated information about your account is available 24 hours a day on the AIM
Investor Line, 800-246-5463. Account information and much more can be found on
our Web site, www.aimfunds.com.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
----------------------------------
In uncertain times like these,
your financial consultant
remains your best source
for information on market trends
and for advice on
how to invest strategically
rather than emotionally.
----------------------------------
<PAGE> 4
The Managers' Overview
FOURTH-QUARTER SURGE LEADS
TO IMPRESSIVE RETURNS
A roundtable discussion with the Fund management team for AIM Global Utilities
Fund about the fiscal year ended December 31, 1997.
- --------------------------------------------------------------------------------
Q. HOW DID AIM GLOBAL UTILITIES FUND PERFORM DURING THE FISCAL YEAR?
A. We are pleased to report the Fund's average annual total return was 23.70%
for Class A shares and 22.74% for Class B shares for the fiscal year ended
December 31, 1997. Since inception on August 4, 1997, Class C shares
produced a cumulative total return of 9.74%. This was the Fund's
third-highest one-year return in its nearly 10 years of operations. The
Lipper Utility Funds Index returned 25.81% during the same period, while the
Dow Jones Average of 15 Utilities returned 23.00%.
For the three-year period ended December 31, 1997, the Fund's Class A
shares averaged 21.74% annual returns and Class B shares 20.81%. Both
classes exceeded the Lipper Utility Funds Index average annual total return
of 20.44% over the same period, while the Fund's Class A shares outperformed
the Dow Jones Average of 15 Utilities' three-year return of 20.99%.
================================================================================
FUND'S ONE-YEAR TOTAL RETURN
- --------------------------------------------------------------------------------
1997 Performance
Class A Shares 23.70%
Class B Shares 22.74%
1996 Performance
Class A Shares 13.88%
Class B Shares 12.98%
================================================================================
Note: Class C shares commenced sales on August 4, 1997.
Q. WHAT CAUSED THE OUTSTANDING PERFORMANCE FOR DOMESTIC UTILITIES DURING THE
FOURTH QUARTER?
A. The total return on the Fund's Class A, Class B, and Class C shares was
6.22%, 6.02%, and 6.02%, respectively, during the fourth quarter of the
fiscal year. This unusually high three-month return was caused by the low
valuations of domestic electric company stocks compared to the rest of the
market and by the financial uncertainty in Asia. This combination attracted
investors to the domestic electric stock sector and proved to be very
beneficial for the Fund.
Q. WHAT PERCENTAGE OF THE FUND'S PORTFOLIO WAS IN DOMESTIC UTILITIES?
A. We finished the fiscal year with just over 51% of the Fund's holdings in the
domestic utilities sector. Electric power companies continued to be the
Fund's largest industry weighting at almost 27% of the portfolio. Such
electric companies as Pinnacle West Capital and NIPSCO Industries, Inc.,
both among the portfolio's top 10 holdings at the end of the reporting
period, are companies that provided attractive current income for the Fund.
Q. WHAT PERCENTAGE OF THE FUND'S PORTFOLIO WAS OVERSEAS?
A. We finished the fiscal year with 34% of the Fund's holdings in the foreign
sector, an increase of 2% from the start of the year. We expect that figure
to rise as we identify more foreign utilities with attractive earnings, and
as more companies around the world continue to go public. The foreign
utilities sector continued to offer the Fund the best opportunities for
growth. In fact, for the first time a foreign holding, Telecom Italia,
finished the fiscal year among the Fund's top 10 holdings.
Q. WAS THE FUND AFFECTED BY THE FINANCIAL TURMOIL IN ASIA?
A. Fortunately, only 1% of the portfolio was in Asia, so we were spared much of
the volatility during the last part of the reporting period. The volatility
in the Asian markets combined with the low valuations of the domestic
electric stocks actually brought a lot of non-traditional utility investors
into the sector, contributing to the strong fourth-quarter performance for
utilities.
However, the portfolio wasn't completely immune to the "Asian Flu," as
analysts termed the financial turmoil in Asia. About 5% of the portfolio was
in Latin America, and those holdings did experience some of the turbulence
that occurred in Southeast Asia, although it was not as dramatic. Europe
continued to be the Fund's largest overseas region with almost 20% of the
portfolio, and European markets were less affected by the troubles in Asia
than other parts of the world.
------------------------
The volatility in the Asian markets
combined with the low valuations of the
domestic electric stocks actually brought a lot
of non-traditional utility investors into the
sector, contributing to the strong fourth-
quarter performance for utilities.
------------------------
2
<PAGE> 5
PORTFOLIO COMPOSITION
As of 12/31/97, based on total net assets
<TABLE>
<CAPTION>
================================================================================================
TOP 10 INDUSTRIES*
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Electric Companies 26.63% 6. Telecommunications (Long Distance) 4.02%
2. Telephone 21.81 7. Power Producers (Independent) 3.89
3. Natural Gas 12.75 8. Telecommunications (Cellular/Wireless) 3.35
4. Real Estate Investment Trusts 5.03 9. Water Utilities 2.46
5. Communications Equipment 4.69 10. Oil & Gas (Exploration & Production) 1.83
================================================================================================
================================================================================================
TOP 10 HOLDINGS
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Cincinnati Bell, Inc. 2.64% 6. Telecom Italia S.p.A. 1.83%
2. Williams Companies., Inc. (The) 2.50 7. BellSouth Corp. 1.83
3. El Paso Natural Gas Co. 2.50 8. FPL Group, Inc. 1.72
4. Pinnacle West Capital Corp. 2.31 9. SBC Communications, Inc. 1.70
5. Ameritech Corp. 1.92 10. NIPSCO Industries, Inc. 1.53
================================================================================================
================================================================================================
TOP 10 COUNTRIES
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. United States 60.80% 6. Germany 2.27%
2. United Kingdom 7.22 7. Brazil 1.95
3. Canada 5.78 8. Portugal 1.57
4. Italy 2.81 9. Chile 1.40
5. Spain 2.38 10. New Zealand 1.33
* Domestic and Foreign Combined
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
================================================================================================
</TABLE>
Q. TELECOMMUNICATIONS CONTINUED TO BE A MAJOR COMPONENT OF THE FUND'S
PORTFOLIO. HOW DID THAT SECTOR PERFORM DURING THE FISCAL YEAR?
A. The fourth quarter saw a dramatic rise among the regional Bell telephone
companies due to their lower valuations when compared to the market, and the
Fund participated in their positive increases. Some familiar names in the
Fund's top 10 holdings at the end of the reporting period were Cincinnati
Bell, Inc., Ameritech Corp., BellSouth Corp., and SBC Communications, Inc.
The telecommunications and telephone sectors comprised over 33% of the
Fund at the end of the fiscal year.
Q. DID THE FUND PARTICIPATE IN THE REAL ESTATE SECTOR'S STRONG PERFORMANCE?
A. Yes. During the reporting period, the National Association of Real Estate
Investment Trusts (NAREIT) Index returned over 19%, and the Fund benefited
from the sector's strong performance. Historically, real estate investment
trusts (REITs) have been a very attractive investment as they provide
average returns of 12% to 15%, including fairly high yields, with very low
volatility. This year they performed very well, as they now are reaping the
benefits of a fairly inexpensive real estate market over the last 10 years.
Our REIT exposure was just over 5% at the end of the fiscal year.
Q. DISCUSSIONS CONTINUE ABOUT THE DEREGULATION OF ELECTRIC UTILITIES IN THE
U.S. HOW WOULD THAT AFFECT THE FUND?
A. Electric utilities deregulation was a hot topic during the past year. Many
people believe that deregulation, and the competition that theoretically
would come from a free market caused by deregulation, will lead to lower
bills for consumers. However, there are other factors that are not being
considered that will greatly influence the new free market for utilities,
such as the increasing political influence of electric companies. There is a
lot of debate about whether a true free market actually can be created for
deregulated utilities.
Regardless, the utility sector is a different investment option today
than it was 15 years ago. It is more volatile today, and will continue to be
so. The "guaranteed dividends" that utility companies were expected to
provide to investors are a thing of the past. Today an electric company may
choose to reinvest that capital in the company to make it more competitive
in the face of deregulation or use it to buy back its stock rather than
distributing those dividends to its shareholders. While many companies will
prosper, some will fail. There will be many mergers and acquisitions, and
there will be many growth opportunities in the future.
Q. WHAT IS YOUR MARKET OUTLOOK FOR UTILITIES IN THE NEAR FUTURE?
A. During the fiscal year we saw many positive influences in the utilities
sector. Domestically we saw attractive valuations among electric companies
and the regional Bells that sparked a nice rally for the sector in the
fourth quarter. While it may be unrealistic to expect continued annual
returns of over 20% for the Fund, we are positive on the utilities sector
overall. We anticipate continuing breakthroughs in telecommunications, and
the prospects in the foreign utilities markets are enticing as we expect to
see more privatization of government-owned electric, gas, and telephone
utilities overseas. Those two segments offer the Fund the best growth
potential, while the U.S. electric utilities continue to offer attractive
opportunities.
The new, competitive marketplace means utility stocks will see more
volatility. However, we expect utilities potentially to have the lowest
volatility of any stock in any particular country. Given the global outlook
for stable interest rates and healthy, moderate growth in most areas in
which the Fund invests, the market conditions seem favorable for utility
companies in 1998.
See important fund and index disclosures inside front cover.
3
<PAGE> 6
Long-Term Performance
AIM GLOBAL UTILITIES FUND VS. BENCHMARK INDEXES
The chart compares your Fund's Class A shares to benchmark indexes. It is
intended to give you a general idea of how your Fund performed compared to the
stock market over the period 1/18/88 to 12/31/97.
It is important to understand differences between your Fund and these
indexes. Your Fund's total return is shown with a sales charge and includes Fund
expenses and management fees. An index measures performance of a hypothetical
portfolio, in this case the Standard & Poor's 500 and the Dow Jones Average of
15 Utilities. Keep in mind that the S&P 500 is a broad equities index that does
not include many utility stocks. As of December 31, 1997, only 3.40% of the S&P
500 consisted of utility stocks.
Unlike your Fund, the indexes are not managed, incurring no sales charges,
expenses, or fees. You cannot invest in an index. But if you could buy all the
securities that make up a particular index, you would incur expenses that would
affect the return on your investment.
GROWTH OF A $10,000 INVESTMENT
1/18/88-12/31/97
Past performance is no guarantee of comparable future results.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AIM GLOBAL UTILITIES STANDARD & POOR'S DOW JONES
FUND, CLASS A SHARES 500 STOCK INDEX AVERAGE OF 15 UTILITIES
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1/18/88 $ 9,453.00 $10,000.00 $10,000.00
12/31/88 11,030.00 11,545.00 10,655.00
12/31/89 15,013.00 15,192.00 14,419.00
12/31/90 14,566.00 14,719.00 13,767.00
12/31/91 18,011.00 19,184.00 15,845.00
12/31/92 19,438.00 20,643.00 16,481.00
12/31/93 21,832.00 22,715.00 18,062.00
12/31/94 19,307.00 23,023.00 15,338.00
12/31/95 24,728.00 31,644.00 20,273.00
12/31/96 28,159.00 38,891.00 22,144.00
12/31/97 34,830.00 51,847.00 27,187.00
================================================================================
</TABLE>
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/97, including sales charges
CLASS A SHARES
Inception (1/18/88) 13.36%
5 Years 11.12
1 Year 16.91
CLASS B SHARES
Inception (9/1/93) 8.84%
3 Years 20.12
1 Year 17.74
CLASS C SHARES
Inception (8/4/97) 8.74%*
*Total return provided is cumulative total return that has not been annualized.
================================================================================
Source: Towers Data Systems HYPO--Registered Trademark--. Your Fund's total
return includes sales charges, expenses, and management fees. For Fund
performance calculations and descriptions of the index cited on this page,
please refer to the inside front cover. The performance of the Fund's Class B
and Class C shares will differ from that of Class A shares due to differing fees
and expenses.
4
<PAGE> 7
For Consideration
THE ROTH IRA: THE POWER TO KEEP MORE
Contribute After-Tax Dollars Now . . . So You Can Get Federally Tax-Free Savings
Later
A new and potentially more powerful type of IRA--the Roth IRA--became available
on January 1, 1998. What makes it more powerful? The Roth IRA gives you the
opportunity to keep more of what you earn.
Are you eligible to open a Roth IRA? The answer is yes if you or your spouse
has earned income for the tax year for which you want to make the contribution,
and your adjusted gross income is below $110,000 if you are a single tax filer,
$160,000 if you file jointly.
TWO KEY ROTH IRA BENEFITS:
TAX-FREE AND PENALTY-FREE WITHDRAWALS
o Of earnings after five years. Earnings on your Roth IRA are federally
tax-free if your Roth IRA account has been open for five years and you are
at least 59 1/2 years old, or in the case of death or disability. You may
also use up to $10,000 of your earnings to buy a first home (after five
years).
o Of contributions at any time. For instance, if you make annual contributions
of $2,000 for the next three years, you may take out up to $6,000 and use
that money for any purpose.
HOW YOU MIGHT PUT BOTH BENEFITS TO WORK FOR YOU
Here's an example of how you may take full advantage of a Roth IRA. You are 39
1/2 years old. You contribute $2,000 after-tax annually in your Roth IRA every
year for 20 years, earning an average annual return of 10%. After 20 years, your
account has grown to $126,005. Now at age 59 1/2 you can begin taking
withdrawals and pay no federal income tax or penalty on any of your $126,005. Or
you can keep your money invested and take it out whenever you need it.
THE ROTH IRA: TO CONVERT OR NOT TO CONVERT
Can you convert your Traditional IRA to a Roth IRA? The answer is yes if you
meet these requirements:
You must pay taxes on the amount you convert. If you convert in 1998, you
can spread your tax payments over the next four years. This four-year allowance
will not be available after December 31, 1998.
You cannot convert to a Roth IRA if you are married and file your tax return
separately, or if your annual gross income is over $100,000.
SOME ROTH IRA CONVERSION GUIDELINES
If you can check most of these boxes, converting your Traditional IRA to a Roth
IRA may make sense for you.
[ ] You have assets outside your retirement savings with which you can easily
afford to pay the taxes due when you convert.
[ ] You have 10 years or more before you retire. The longer you invest tax-free,
the more you benefit.
[ ] Your tax rate will probably be higher in retirement than it is now. If so,
you'll pay less taxes now to convert than you would pay at retirement if you
withdrew from a traditional IRA.
[ ] You plan to convert in 1998. On January 1, 1999, the ability to spread tax
payments over four years disappears.
[ ] You want to keep making contributions after age 70 1/2 and may wish to
pass your IRA assets on to your heirs after your death.
ROTH IRA
CALCULATOR & (GRAPHIC)
ANALYZER
The Roth IRA Analyzer & Calculator at AIM's Internet Web site--
www.aimfunds.com-- can help you determine your IRA eligibility status and
whether it makes sense for you to convert an existing IRA into a Roth IRA.
MAKE YOUR IRA CONVERSION DECISION A TRULY INFORMED ONE
Talk to your financial consultant, who knows your specific needs and goals. You
may also wish to talk with a tax adviser.
This discussion does not constitute tax advice. Your tax adviser can provide
guidance concerning your particular situation.
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-48.27%
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.67%
Univision Communications Inc.(a) 26,500 $ 1,850,031
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.06%
ADC Telecommunications, Inc.(a) 62,000 2,588,500
- --------------------------------------------------------------
Excel Switching Corp.(a) 4,900 87,587
- --------------------------------------------------------------
Lucent Technologies, Inc. 29,000 2,316,375
- --------------------------------------------------------------
NEXTLINK Communications, Inc.-Class
A(a) 15,900 338,869
- --------------------------------------------------------------
Qwest Communications International
Inc.(a) 34,100 2,028,950
- --------------------------------------------------------------
Tellabs, Inc.(a) 20,000 1,057,500
- --------------------------------------------------------------
8,417,781
- --------------------------------------------------------------
ELECTRIC COMPANIES-16.07%
Allegheny Energy, Inc. 106,500 3,461,250
- --------------------------------------------------------------
Carolina Power & Light Co. 57,000 2,418,937
- --------------------------------------------------------------
CINergy Corp. 57,000 2,183,813
- --------------------------------------------------------------
DQE, Inc. 110,000 3,863,750
- --------------------------------------------------------------
Edison International 61,000 1,658,437
- --------------------------------------------------------------
FPL Group, Inc. 80,000 4,735,000
- --------------------------------------------------------------
IPALCO Enterprises, Inc. 25,500 1,069,406
- --------------------------------------------------------------
New Century Energies, Inc. 65,200 3,125,525
- --------------------------------------------------------------
New York State Electric & Gas Corp. 75,000 2,662,500
- --------------------------------------------------------------
NIPSCO Industries, Inc. 85,000 4,202,188
- --------------------------------------------------------------
Pinnacle West Capital Corp. 150,000 6,356,250
- --------------------------------------------------------------
Public Service Company of New
Mexico 60,000 1,421,250
- --------------------------------------------------------------
Sierra Pacific Resources 45,500 1,706,250
- --------------------------------------------------------------
Southern Co. 109,000 2,820,375
- --------------------------------------------------------------
Teco Energy, Inc. 88,200 2,480,625
- --------------------------------------------------------------
44,165,556
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.43%
Superior TeleCom Inc.(a) 34,100 1,178,581
- --------------------------------------------------------------
NATURAL GAS-8.81%
Coastal Corp. (The) 17,500 1,083,906
- --------------------------------------------------------------
Columbia Gas System, Inc. 25,000 1,964,063
- --------------------------------------------------------------
El Paso Natural Gas Co. 103,000 6,849,500
- --------------------------------------------------------------
Energen Corp. 19,100 759,225
- --------------------------------------------------------------
KN Energy, Inc. 41,600 2,246,400
- --------------------------------------------------------------
Public Service Company of North
Carolina, Inc. 40,000 915,000
- --------------------------------------------------------------
Sonat, Inc. 76,500 3,499,875
- --------------------------------------------------------------
Williams Companies, Inc. (The) 242,600 6,883,775
- --------------------------------------------------------------
24,201,744
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.20%
AES Corp.(a) 28,400 $ 1,324,150
- --------------------------------------------------------------
Calenergy, Inc.(a) 69,000 1,983,750
- --------------------------------------------------------------
3,307,900
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-5.03%
Alexandria Real Estate Equities,
Inc. 27,500 867,969
- --------------------------------------------------------------
Boston Properties, Inc. 40,000 1,322,500
- --------------------------------------------------------------
Mack-Cali Realty Corp. 43,400 1,779,400
- --------------------------------------------------------------
Captec Net Lease Realty, Inc. 35,000 601,562
- --------------------------------------------------------------
CCA Prison Realty Trust 38,200 1,704,675
- --------------------------------------------------------------
Crescent Real Estate Equities, Co. 26,400 1,039,500
- --------------------------------------------------------------
Entertainment Properties Trust 30,400 589,000
- --------------------------------------------------------------
Golf Trust of America, Inc. 13,500 391,500
- --------------------------------------------------------------
Imperial Credit Commercial Mortgage
Investment Corp. 31,600 462,150
- --------------------------------------------------------------
Meditrust Corp. 25,594 937,380
- --------------------------------------------------------------
Parkway Properties, Inc. 15,000 514,688
- --------------------------------------------------------------
Patriot American Hospitality, Inc. 60,800 1,751,800
- --------------------------------------------------------------
Public Storage, Inc. 27,000 793,125
- --------------------------------------------------------------
Starwood Lodging Trust 18,500 1,070,688
- --------------------------------------------------------------
13,825,937
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.42%
IXC Communications, Inc.(a) 36,500 1,145,188
- --------------------------------------------------------------
WinStar Communications, Inc.(a) 61,500 1,533,656
- --------------------------------------------------------------
WorldCom, Inc.(a) 40,000 1,210,000
- --------------------------------------------------------------
3,888,844
- --------------------------------------------------------------
TELEPHONE-11.58%
Ameritech Corp. 65,400 5,264,700
- --------------------------------------------------------------
BellSouth Corp. 89,100 5,017,444
- --------------------------------------------------------------
Century Telephone Enterprises 66,800 3,327,475
- --------------------------------------------------------------
Cincinnati Bell, Inc. 234,000 7,254,000
- --------------------------------------------------------------
Electric Lightwave, Inc.-Class A(a) 80,000 1,190,000
- --------------------------------------------------------------
GTE Corp. 36,600 1,912,350
- --------------------------------------------------------------
McLeodUSA Inc.-Class A(a) 40,000 1,280,000
- --------------------------------------------------------------
SBC Communications, Inc. 63,800 4,673,350
- --------------------------------------------------------------
Teleport Communications Group
Inc.-Class A(a) 35,000 1,920,625
- --------------------------------------------------------------
31,839,944
- --------------------------------------------------------------
Total Domestic Common Stocks 132,676,318
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC PREFERRED STOCKS-3.53%
ENTERTAINMENT-0.36%
Time Warner Inc.-Series M, $102.50
PIK Pfd. 891 $ 1,002,672
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.14%
Salomon Inc.-$3.48 Conv. Pfd. 6,700 396,975
- --------------------------------------------------------------
NATURAL GAS-0.71%
MCN Corp.-$2.013 Conv. Pfd. PRIDES 57,000 1,952,250
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.61%
AES Trust I-$2.69 Conv. Pfd. 54,000 3,874,500
- --------------------------------------------------------------
Citizens Utilities Co.-$2.50 Conv.
Pfd. 11,400 544,350
- --------------------------------------------------------------
4,418,850
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.71%
WorldCom, Inc.-$2.68 Conv. Pfd. 18,500 1,942,500
- --------------------------------------------------------------
Total Domestic Preferred Stocks 9,713,247
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-30.05%
ARGENTINA-0.70%
Central Costanera S.A.-Class B
(Electric Companies) 475,200 1,235,755
- --------------------------------------------------------------
Telefonica de Argentina S.A.-ADR
(Telephone) 18,300 681,675
- --------------------------------------------------------------
1,917,430
- --------------------------------------------------------------
AUSTRALIA-0.14%
Telstra Corp. Ltd. (Telephone)(a) 195,000 411,776
- --------------------------------------------------------------
AUSTRIA-0.48%
Oesterreichische
Elektrizitaetswirtschafts
A.G.-Class A (Electric Companies) 12,500 1,326,050
- --------------------------------------------------------------
BELGIUM-0.54%
Electrabel S.A. (Electric
Companies) 6,400 1,480,338
- --------------------------------------------------------------
BRAZIL-1.95%
Centrais Eletricas de Santa
Catarina S.A. (Electric
Companies) 590,000 734,824
- --------------------------------------------------------------
Companhia Paranaense de
Energia-Copel (Electric
Companies)(a) 45,700 625,519
- --------------------------------------------------------------
Eletricidade de Sao Paulo SA
(Electric Companies)(a) 3,990 750,773
- --------------------------------------------------------------
Telecomunicacoes Brasileiras
S.A.-Telebras-ADR (Telephone) 28,000 3,260,250
- --------------------------------------------------------------
5,371,366
- --------------------------------------------------------------
CANADA-1.82%
MetroNet Communications Corp.-Class
B (Communications Equipment)(a) 23,400 406,575
- --------------------------------------------------------------
Philip Services Corp. (Waste
Management)(a) 50,000 718,750
- --------------------------------------------------------------
TELUS Corp.
(Telecommunications-Cellular
/Wireless) 95,000 2,107,344
- --------------------------------------------------------------
Westcoast Energy Inc. (Natural Gas) 71,900 1,653,700
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Westshore Terminals Inc.
(Services-Facilities &
Environmental) 40,800 $ 102,782
- --------------------------------------------------------------
4,989,151
- --------------------------------------------------------------
CHILE-1.40%
Cia. de Telecomunicaciones de Chile
S.A.-ADR (Telephone) 80,750 2,412,406
- --------------------------------------------------------------
Enersis S.A.-ADR (Electric
Companies) 49,600 1,438,400
- --------------------------------------------------------------
3,850,806
- --------------------------------------------------------------
DENMARK-0.31%
Tele Danmark A.S.-ADR (Telephone) 27,500 847,344
- --------------------------------------------------------------
FINLAND-0.30%
Nokia Oy A.B.-Class A-ADR
(Communications Equipment) 11,600 812,000
- --------------------------------------------------------------
GERMANY-2.27%
RWE A.G. (Electric Companies) 28,100 1,507,310
- --------------------------------------------------------------
VEBA A.G.
(Manufacturing-Diversified) 46,500 3,166,342
- --------------------------------------------------------------
Viag A.G.
(Manufacturing-Diversified) 2,900 1,562,034
- --------------------------------------------------------------
6,235,686
- --------------------------------------------------------------
FRANCE-0.37%
France Telecom S.A.-ADR
(Telecommunications-Cellular
/Wireless)(a) 28,000 1,008,000
- --------------------------------------------------------------
HONG KONG-0.23%
China Telecom Ltd.-ADR
(Telecommunications-Cellular
/Wireless)(a) 19,000 637,688
- --------------------------------------------------------------
HUNGARY-0.40%
Magyar Tavkozlesi-ADR
(Telecommunications-Long
Distance)(a) 42,700 1,110,200
- --------------------------------------------------------------
INDONESIA-0.16%
PT Indosat-ADR (Telephone) 23,000 444,187
- --------------------------------------------------------------
ISRAEL-0.51%
ECI Telecommunications Ltd.
(Communications Equipment) 33,200 846,600
- --------------------------------------------------------------
Gilat Communications Ltd.
(Communications Equipment)(a) 75,000 553,125
- --------------------------------------------------------------
1,399,725
- --------------------------------------------------------------
ITALY-2.81%
Telecom Italia Mobile S.p.A.
(Telecommunications-Cellular
/Wireless) 578,300 2,668,222
- --------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 788,333 5,042,835
- --------------------------------------------------------------
7,711,057
- --------------------------------------------------------------
JAPAN-0.58%
Nippon Telegraph & Telephone Corp.
(Telephone) 850 729,111
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
Nippon Telegraph & Telephone Corp.-ADR
(Telephone) 20,000 $ 866,250
- ---------------------------------------------------------------
1,595,361
- ---------------------------------------------------------------
NETHERLANDS-0.66%
Royal PTT Nederland N.V.--ADR
(Telephone) 43,709 1,813,923
- ---------------------------------------------------------------
NEW ZEALAND-1.33%
Sky Network Television Ltd.
(Broadcasting-Television, Radio &
Cable)(a) 22,600 339,000
- ---------------------------------------------------------------
Telecom Corp. of New Zealand Ltd.-ADR
(Telephone) 85,600 3,317,000
- ---------------------------------------------------------------
3,656,000
- ---------------------------------------------------------------
PERU-0.48%
Luz del Sur S.A. (Power
Producers-Independent) 32,000 552,000
- ---------------------------------------------------------------
Telefonica del Peru S.A.-ADR
(Telephone) 33,000 769,313
- ---------------------------------------------------------------
1,321,313
- ---------------------------------------------------------------
PORTUGAL-1.57%
Electricidade de Portugal, S.A.-ADR
(Electric Companies)(a) 16,100 623,875
- ---------------------------------------------------------------
Portugal Telecom S.A.-ADR (Telephone) 68,100 3,200,700
- ---------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.
(Telecommunications-Cellular
/Wireless)(a) 4,600 492,200
- ---------------------------------------------------------------
4,316,775
- ---------------------------------------------------------------
SPAIN-2.38%
Autopistas Concesionaria Espanola S.A.
(Services-Commercial & Consumer) 77,000 1,033,574
- ---------------------------------------------------------------
Iberdrola S.A. (Electric Companies) 233,000 3,066,393
- ---------------------------------------------------------------
Telefonica de Espana-ADR (Telephone) 26,800 2,440,475
- ---------------------------------------------------------------
6,540,442
- ---------------------------------------------------------------
SWEDEN-0.68%
Telefonaktiebolaget LM Ericsson-ADR
(Communications Equipment) 50,000 1,865,625
- ---------------------------------------------------------------
UNITED KINGDOM-7.22%
Energy Group PLC (Power
Producers-Independent) 30,000 1,338,750
- ---------------------------------------------------------------
Hyder PLC (Water Utilities) 53,955 857,774
- ---------------------------------------------------------------
National Grid Group PLC (Electric
Companies) 154,737 734,442
- ---------------------------------------------------------------
National Power PLC (Electric Companies) 175,000 1,724,468
- ---------------------------------------------------------------
National Power PLC-ADR (Electric
Companies) 40,000 1,585,000
- ---------------------------------------------------------------
PowerGen PLC (Electric Companies) 209,500 2,725,053
- ---------------------------------------------------------------
PowerGen PLC-ADR (Electric Companies) 40,900 2,172,812
- ---------------------------------------------------------------
Scottish Power PLC (Electric Companies) 201,550 1,780,864
- ---------------------------------------------------------------
Southern Electric PLC (Electric
Companies) 124,061 1,030,983
- ---------------------------------------------------------------
United Utilities PLC (Water Utilities) 197,100 2,524,916
- ---------------------------------------------------------------
Wessex Water PLC (Water Utilities) 152,775 1,287,168
- ---------------------------------------------------------------
UNITED KINGDOM-(CONTINUED)
Yorkshire Water PLC (Water
Utilities) 262,440 $ 2,090,439
- --------------------------------------------------------------
19,852,669
- --------------------------------------------------------------
VENEZUELA-0.76%
Cia. Anonima Nacional Telefonos de
Venezuela--ADR
(Telecommunications-Long
Distance)(a) 49,900 2,077,088
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 82,592,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
DOMESTIC NON-CONVERTIBLE BONDS &
NOTES-9.00%
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.74%
Comcast Corp., Sr. Sub. Deb.,
9.50%, 01/15/08 $ 900,000 $ 961,875
- --------------------------------------------------------------
TCI Communications Inc., Sr.
Notes, 8.00%, 08/01/05 1,000,000 1,071,860
- --------------------------------------------------------------
2,033,735
- --------------------------------------------------------------
ELECTRIC COMPANIES-0.91%
El Paso Electric Co., Series D
Sec. 1st Mortgage Bonds, 8.90%,
02/01/06 1,425,000 1,577,688
- --------------------------------------------------------------
Western Resources Inc., Sr. Notes,
7.125%, 08/01/09 900,000 926,856
- --------------------------------------------------------------
2,504,544
- --------------------------------------------------------------
ENTERTAINMENT-0.89%
Time Warner, Inc.
Deb., 9.125%, 01/15/13 1,000,000 1,194,540
- --------------------------------------------------------------
Notes, 8.18%, 08/15/07 1,150,000 1,262,953
- --------------------------------------------------------------
2,457,493
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.55%
California Energy Co., Notes,
10.25%, 01/15/04 1,400,000 1,512,000
- --------------------------------------------------------------
NATURAL GAS-2.64%
Enron Corp., Sr. Sub. Deb., 6.75%,
07/01/05 3,750,000 3,779,812
- --------------------------------------------------------------
Ferrellgas Partners, Series B Sr.
Sec. Gtd. Notes, 9.375%,
06/15/06 1,000,000 1,065,000
- --------------------------------------------------------------
PanEnergy Corp., Notes, 7.875%,
08/15/04 2,205,000 2,396,857
- --------------------------------------------------------------
7,241,669
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.73%
Tennessee Gas Pipeline Co., Bonds,
7.00%, 03/15/27 1,900,000 2,003,360
- --------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-1.80%
AES Corp., Sr. Sub. Notes, 10.25%,
07/15/06 925,000 1,005,938
- --------------------------------------------------------------
Indiana Michigan Power, Sec. Lease
Obligation Bonds, 9.82%,
12/07/22 3,021,500 3,953,663
- --------------------------------------------------------------
4,959,601
- --------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-0.74%
AT&T Corp., Sr. Notes, 7.75%,
03/01/07 $ 1,850,000 $ 2,027,767
- --------------------------------------------------------------
Total Domestic Non-Convertible
Bonds & Notes 24,740,169
- --------------------------------------------------------------
FOREIGN NON-CONVERTIBLE BONDS &
NOTES-3.97%
CANADA-3.97%(b)
Bell Canada
(Telecommunications-Cellular/Wireless),
Series EW Deb., 8.80%, 08/17/05 CAD 950,000 780,169
- --------------------------------------------------------------
Unsec. Deb., 10.875, 10/11/04 1,700,000 1,500,468
- --------------------------------------------------------------
Canadian Oil Debco Inc. (Oil &
Gas-Exploration & Production),
Deb., 11.00%, 10/31/00 1,750,000 1,372,643
- --------------------------------------------------------------
Ontario Hydro (Electric
Companies), Global Bonds, 9.00%,
06/24/02 2,500,000 1,985,357
- --------------------------------------------------------------
Telegobe Canada, Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 2,400,000 1,863,772
- --------------------------------------------------------------
CANADA-(CONTINUED)
Trans-Canada Pipelines (Oil &
Gas-Exploration & Production),
Series Q Deb., 10.625%, 10/20/09CAD 1,750,000 $ 1,665,834
- --------------------------------------------------------------
Unsec. Notes, 8.55%, 02/01/06 2,150,000 1,741,650
- --------------------------------------------------------------
Total Foreign Non-Convertible
Bonds & Notes 10,909,893
- --------------------------------------------------------------
REPURCHASE AGREEMENT-4.69%(c)
Smith Barney, Inc., 6.75%,
01/02/98(d) $12,885,919 12,885,919
- --------------------------------------------------------------
TOTAL INVESTMENT SECURITIES-99.51% 273,517,546
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.49% 1,348,748
- --------------------------------------------------------------
NET ASSETS-100.00% $274,866,294
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)Foreign denominated security. Par value and coupon are denominated in
Canadian dollars.
(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 as being 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.
(d)Joint repurchase agreement entered into 12/31/97 with a maturing value of
$400,150,000. Collateralized by $395,097,000 U.S. Government obligations, 0%
to 13.875% due 01/07/98 to 12/15/43 with an aggregate market value at
12/31/97 at $408,000,323.
Abbreviations:
ADR - American Depositary Receipt
CAD - Canadian Dollars
Conv. - Convertible
Deb. - Debentures
Gtd. - Guaranteed
Pfd. - Preferred
PIK - Payment in Kind
PRIDES - Preferred Redeemable Increased Dividend Equity Securities
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$185,929,099) $273,517,546
- ---------------------------------------------------------
Foreign currencies, at market value (cost
$88,841) 89,034
- ---------------------------------------------------------
Receivables for:
Investments sold 1,090,901
- ---------------------------------------------------------
Fund shares sold 709,629
- ---------------------------------------------------------
Dividends and interest 1,401,296
- ---------------------------------------------------------
Investment for deferred compensation plan 21,326
- ---------------------------------------------------------
Other assets 41,624
- ---------------------------------------------------------
Total assets 276,871,356
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 210,840
- ---------------------------------------------------------
Fund shares reacquired 1,155,229
- ---------------------------------------------------------
Dividends 80,868
- ---------------------------------------------------------
Deferred compensation 21,326
- ---------------------------------------------------------
Accrued advisory fees 130,112
- ---------------------------------------------------------
Accrued administrative service fees 4,301
- ---------------------------------------------------------
Accrued distribution fees 218,550
- ---------------------------------------------------------
Accrued trustees' fees 2,114
- ---------------------------------------------------------
Accrued transfer agent fees 86,224
- ---------------------------------------------------------
Accrued operating expenses 95,498
- ---------------------------------------------------------
Total liabilities 2,005,062
- ---------------------------------------------------------
Net assets applicable to shares outstanding $274,866,294
=========================================================
NET ASSETS:
Class A $179,456,316
=========================================================
Class B $ 94,226,860
=========================================================
Class C $ 1,183,118
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 9,317,846
=========================================================
Class B 4,897,285
=========================================================
Class C 61,490
=========================================================
Class A:
Net asset value and redemption price per
share $ 19.26
=========================================================
Offering price per share:
(Net asset value of $19.26 divided by
94.50%) $ 20.38
=========================================================
Class B:
Net asset value and offering price per
share $ 19.24
=========================================================
Class C:
Net asset value and offering price per
share $ 19.24
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $353,265 foreign
withholding tax) $ 6,525,168
- ---------------------------------------------------------
Interest 3,200,225
- ---------------------------------------------------------
Total investment income 9,725,393
- ---------------------------------------------------------
EXPENSES:
Advisory fees 1,440,692
- ---------------------------------------------------------
Administrative service fees 77,375
- ---------------------------------------------------------
Custodian fees 63,892
- ---------------------------------------------------------
Trustees' fees 9,921
- ---------------------------------------------------------
Distribution fees -- Class A 411,911
- ---------------------------------------------------------
Distribution fees -- Class B 832,184
- ---------------------------------------------------------
Distribution fees -- Class C 1,555
- ---------------------------------------------------------
Transfer agent fees -- Class A 298,837
- ---------------------------------------------------------
Transfer agent fees -- Class B 183,976
- ---------------------------------------------------------
Transfer agent fees -- Class C 315
- ---------------------------------------------------------
Other 129,993
- ---------------------------------------------------------
Total expenses 3,450,651
- ---------------------------------------------------------
Less: Expenses paid indirectly (4,257)
- ---------------------------------------------------------
Net expenses 3,446,394
- ---------------------------------------------------------
Net investment income 6,278,999
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from
Investment securities 10,287,778
- ---------------------------------------------------------
Foreign currency transactions (85,284)
- ---------------------------------------------------------
10,202,494
- ---------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 36,483,295
- ---------------------------------------------------------
Foreign currency transactions (14,239)
- ---------------------------------------------------------
36,469,056
- ---------------------------------------------------------
Net gain from investment securities and
foreign currency transactions 46,671,550
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $52,950,549
=========================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 6,278,999 $ 8,067,022
- --------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currency transactions 10,202,494 9,942,020
- --------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currency transactions 36,469,056 12,247,663
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 52,950,549 30,256,705
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (4,517,536) (6,101,120)
- --------------------------------------------------------------------------------------------
Class B (1,708,856) (2,294,587)
- --------------------------------------------------------------------------------------------
Class C (2,079)
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (99,987) --
- --------------------------------------------------------------------------------------------
Class B (52,584) --
- --------------------------------------------------------------------------------------------
Class C (629) --
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A (15,436,814) (21,359,001)
- --------------------------------------------------------------------------------------------
Class B (921,844) 1,711,797
- --------------------------------------------------------------------------------------------
Class C 1,124,595
- --------------------------------------------------------------------------------------------
Net increase in net assets 31,334,815 2,213,794
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 243,531,479 241,317,685
- --------------------------------------------------------------------------------------------
End of period $274,866,294 $243,531,479
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $186,636,908 $201,870,971
- --------------------------------------------------------------------------------------------
Undistributed net investment income 78,008 112,764
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currency transactions 567,427 (9,567,151)
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currency transactions 87,583,951 51,114,895
- --------------------------------------------------------------------------------------------
$274,866,294 $243,531,479
============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Utilities Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust 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 series
portfolios, each having an unlimited number of shares of beneficial interest.
The Fund currently offers three different classes of shares: the Class A shares,
Class B shares and Class C shares. The new Class C shares commenced sales on
August 4, 1997. Class A shares are sold with a front-end sales charge. The Class
B 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 objective is to
achieve a high level of current income, and as a secondary objective the Fund
seeks to achieve capital appreciation, by investing primarily in the common and
preferred stocks of public utility companies.
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 mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market (but
11
<PAGE> 14
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. If a mean is not available,
as is the case in some foreign markets, the closing bid will be used absent
a last sales price. 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 mean of the closing bid and asked prices. 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 mean between last bid and asked
prices based upon quotes furnished by independent sources. Securities for
which market quotations either are not readily available or are questionable
are valued at fair value as determined in good faith by or under the
supervision of the Trust's officers in a manner specifically authorized by
the Board of Trustees. 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 Trustees.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. It is the policy of the Fund to declare daily dividends
from net investment income. Such dividends are paid monthly. Distributions
from net realized capital gains, if any, are recorded on ex-dividend date
and are paid annually. On December 31, 1997 undistributed net investment
income was reduced and undistributed net realized gains increased by $85,284
in order to comply with the requirements of the American Institute of
Certified Public Accountants Statement of Position 93-2. Net assets of the
fund were unaffected by the reclassification discussed above.
C. 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.
D. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
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. 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 Trust 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 an annual rate of 0.60% of
the first $200 million of the Fund's average daily net assets, plus 0.50% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.40% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion.
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 year ended December 31, 1997, AIM
was reimbursed $77,375 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 1997, AFS
was paid $293,817 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("A I M Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust 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 0.25% of the average daily net assets of the Class A shares
and 1.00% of the average daily net
12
<PAGE> 15
assets of the 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 attributable to 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 by the Class B or Class C shares 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. AIM Distributors may, from time to time, assign, transfer, or pledge to
one or more designees, its rights to all or a designated portion of (a)
compensation received by AIM Distributors from the Fund pursuant to the Class B
Plan (but not AIM Distributors' duties and obligations pursuant to the Class B
Plan) and (b) any contingent deferred sales charges received by AIM Distributors
related to the Class B shares. During the year ended December 31, 1997 for the
Class A shares and Class B shares, and the period August 4, 1997 (date sales
commenced) through December 31, 1997 for the Class C shares, the Class A, Class
B and Class C shares paid AIM Distributors $411,911, $832,184 and $1,555,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $57,864 from sales of the Class A
shares of the Fund during the year ended December 31, 1997. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1997,
AIM Distributors received $88,250 in contingent deferred sales charges imposed
on redemptions of Fund shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AIM Distributors and AFS.
During the year ended December 31, 1997, the Fund paid legal fees of $4,839
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced the
Fund's expenses by $873 during the year ended December 31, 1997. Also during the
year ended December 31, 1997 the Fund received reductions in transfer agency
fees from AFS (an affiliate of AIM) and reductions in custodian fees of $2,795
and $589, respectively, under expense offset arrangements. The effect of the
above arrangements resulted in a reduction of the Fund's total expenses of
$4,257 during the year ended December 31, 1997.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, 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) $500,000,000 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. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of (i) $325,000,000 or (ii) the limits set
by its prospectus for borrowings. During the year ended December 31, 1997, the
Fund did not borrow under the line of credit agreement. The funds which are
parties 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 such
funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1997 was
$61,910,794 and $81,509,097, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1997 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $88,905,655
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (1,317,208)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $87,588,447
=========================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
1997 1996
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 2,718,197 $46,163,286 2,473,508 $36,689,173
- ------------------------------------------------------------------------
Class B 765,587 13,195,278 1,424,455 21,097,067
- ------------------------------------------------------------------------
Class C* 62,085 1,135,211 -- --
- ------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 237,293 4,070,874 353,355 5,316,653
- ------------------------------------------------------------------------
Class B 87,895 1,505,898 127,578 1,926,340
- ------------------------------------------------------------------------
Class C* 94 1,781 -- --
- ------------------------------------------------------------------------
Reacquired:
Class A (3,882,294) (65,670,974) (4,274,871) (63,364,827)
- ------------------------------------------------------------------------
Class B (924,101) (15,623,020) (1,425,633) (21,311,610)
- ------------------------------------------------------------------------
Class C* (689) (12,397) -- --
- ------------------------------------------------------------------------
(935,933) $(15,234,063) (1,321,608) $(19,647,204)
=========================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
13
<PAGE> 16
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A outstanding
during each of the years in the five-year period ended December 31, 1997, for a
share of Class B outstanding during each of the years in the four-year period
ended December 31, 1997 and the period September 1, 1993 (date sales commenced)
through December 31, 1993 and for a share of Class C outstanding during the
period August 4, 1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.01 $ 14.59 $ 11.85 $ 14.09 $ 13.31
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.47 0.55 0.55 0.59 0.60
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 3.26 1.43 2.71 (2.20) 1.02
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 3.73 1.98 3.26 (1.61) 1.62
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.47) (0.56) (0.52) (0.60) (0.61)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains (0.01) -- -- -- (0.23)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Returns of capital -- -- -- (0.03) --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.48) (0.56) (0.52) (0.63) (0.84)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 19.26 $ 16.01 $ 14.59 $ 11.85 $ 14.09
- ------------------------------------------------------------ ======== ======== ======== ======== ========
Total return(a) 23.70% 13.88% 28.07% (11.57)% 12.32%
- ------------------------------------------------------------ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $179,456 $164,001 $170,624 $150,515 $200,016
- ------------------------------------------------------------ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.13%(b)(c) 1.17% 1.21% 1.18% 1.16%
- ------------------------------------------------------------ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 2.79%(b) 3.62% 4.20% 4.67% 4.21%
- ------------------------------------------------------------ ======== ======== ======== ======== ========
Portfolio turnover rate 26% 48% 88% 101% 76%
- ------------------------------------------------------------ ======== ======== ======== ======== ========
Average brokerage commission rate paid(d) $ 0.0465 $ 0.0460 N/A N/A N/A
- ------------------------------------------------------------ ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $164,764,424.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been 1.12%.
(d) The average brokerage commission rate paid is the total brokerage
commissions paid on applicable purchases and sales of securities for the
period divided by the total number of related shares purchased and sold,
which is required to be disclosed for fiscal years beginning September 1,
1995 and thereafter.
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------------------- -------
1997 1996 1995 1994 1993 1997
-------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.01 $ 14.60 $ 11.84 $ 14.08 $ 15.30 $ 17.67
- ------------------------------------------------------- -------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.34 0.42 0.44 0.47 0.17 0.13
- ------------------------------------------------------- -------- ------- ------- ------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 3.25 1.44 2.73 (2.19) (0.98) 1.58
- ------------------------------------------------------- -------- ------- ------- ------- ------- -------
Total from investment operations 3.59 1.86 3.17 (1.72) (0.81) 1.71
- ------------------------------------------------------- -------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.35) (0.45) (0.41) (0.49) (0.17) (0.13)
- ------------------------------------------------------- -------- ------- ------- ------- ------- -------
Distributions from net realized gains (0.01) -- -- -- (0.24) (0.01)
- ------------------------------------------------------- -------- ------- ------- ------- ------- -------
Returns of capital -- -- -- (0.03) --
- ------------------------------------------------------- -------- ------- ------- ------- ------- -------
Total distributions (0.36) (0.45) (0.41) (0.52) (0.41) (0.14)
- ------------------------------------------------------- -------- ------- ------- ------- ------- -------
Net asset value, end of period $ 19.24 $ 16.01 $ 14.60 $ 11.84 $ 14.08 $ 19.24
- ------------------------------------------------------- ======== ======== ======== ======== ======== =======
Total return(a) 22.74% 12.98% 27.16% (12.35)% (5.32)% 9.74%
- ------------------------------------------------------- ======== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $94,227 $79,530 $70,693 $42,568 $23,892 $1,183
- ------------------------------------------------------- ======== ======== ======== ======== ======== =======
Ratio of expenses to average net assets 1.91%(b)(c) 1.96% 1.97% 2.07% 1.99%(d) 1.90%(b)(c)(d)
- ------------------------------------------------------- ======== ======== ======== ======== ======== =======
Ratio of net investment income to average net assets 2.01%(b) 2.83% 3.44% 3.78% 3.38%(d) 2.02%(b)(d)
- ------------------------------------------------------- ======== ======== ======== ======== ======== =======
Portfolio turnover rate 26% 48% 88% 101% 76% 26%
- ------------------------------------------------------- ======== ======== ======== ======== ======== =======
Average brokerage commission rate paid(e) $ 0.0465 $0.0460 N/A N/A N/A $0.0465
- ------------------------------------------------------- ======== ======== ======== ======== ======== =======
</TABLE>
(a) Does not deduct contingent deferred sales charges and are not annualized for
periods less than one year.
(b) Ratios are based on average net assets of $83,218,352 and $378,512,
respectively, for Class B and Class C.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same for
Class B and would have been 1.89% for Class C.
(d) Annualized.
(e) The average brokerage commission rate paid is the total brokerage
commissions paid on applicable purchases and sales of securities for the
period divided by the total number of related shares purchased and sold,
which is required to be disclosed for fiscal years beginning September 1,
1995 and thereafter.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Global Utilities Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Global Utilities Fund (a portfolio of
AIM Funds Group), including the schedule of investments,
as of December 31, 1997, and the related statement of
operations for the year then ended, the statement of
changes in net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years or periods in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures
included confirmation of securities owned as of December
31, 1997, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Global Utilities Fund as of December 31, 1997, the
results of its operations for the year then ended, the
changes in its net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years or periods in the five-year period
then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 6, 1998
15
<PAGE> 18
Trustees & Officers
<TABLE>
<S> <C>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
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; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Chief Senior Vice President and Treasurer 11 Greenway Plaza
Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President
Owen Daly II and Secretary TRANSFER AGENT
Director
Cortland Trust Inc. Gary T. Crum A I M Fund Services, Inc.
Senior Vice President P.O. Box 4739
Jack Fields Houston, TX 77210-4739
Chief Executive Officer Dana R. Sutton
Texana Global, Inc., Vice President and Assistant Treasurer CUSTODIAN
Formerly Member of the
U.S. House of Representatives Robert G. Alley State Street Bank & Trust Company
Vice President 225 Franklin Street
Carl Frischling Boston, MA 02110
Partner Stuart W. Coco
Kramer, Levin, Naftalis & Frankel Vice President COUNSEL TO THE FUND
Robert H. Graham Melville B. Cox Ballard Spahr
President and Chief Executive Officer Vice President Andrews & Ingersoll
A I M Management Group Inc. 1735 Market Street
Karen Dunn Kelly Philadelphia, PA 19103
John F. Kroeger Vice President
Formerly Consultant COUNSEL TO THE TRUSTEES
Wendell & Stockel Associates, Inc. Jonathan C. Schoolar
Vice President Kramer, Levin, Naftalis & Frankel
Lewis F. Pennock 919 Third Avenue
Attorney P. Michelle Grace New York, NY 10022
Assistant Secretary
Ian W. Robinson DISTRIBUTOR
Consultant; Formerly Executive Nancy L. Martin
Vice President and Assistant Secretary A I M Distributors, Inc.
Chief Financial Officer 11 Greenway Plaza
Bell Atlantic Management Ofelia M. Mayo Suite 100
Services, Inc. Assistant Secretary Houston, TX 77046
Louis S. Sklar Kathleen J. Pflueger AUDITORS
Executive Vice President Assistant Secretary
Hines Interests KPMG Peat Marwick LLP
Limited Partnership Samuel D. Sirko 700 Louisiana
Assistant Secretary Houston, TX 77002
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Global Utilities Fund Class A, Class B, and Class C shares paid ordinary
dividends in the amount of $0.4692, $0.3522, and $0.1322 per share,
respectively, to shareholders during its tax year ended December 31, 1997. Of
these amounts, 60.17% is eligible for the dividends received deduction for
corporations. The Fund also distributed long-term capital gains of $0.0108 per
share for Class A, Class B, and Class C shares for the Fund's tax year ended
December 31, 1997. Of this amount, 100% is 20% rate gain.
<PAGE> 19
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds--Registered Trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds.
o RETIREMENT PLANS. You may purchase shares of the fund for your Individual
Retirement Account (IRA) or any other type of retirement plan, and earn
tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o WWW.AIMFUNDS.COM. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
-----------------------------------
Current shareholders
can call our
AIM Investor Line at
800-246-5463
for 24-hour-a-day
account information.
-----------------------------------
<PAGE> 20
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Asian Growth Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
GROWTH OF CAPITAL
AIM Advisor International Value Fund
[PHOTO OF AIM Blue Chip Fund
11 GREENWAY PLAZA AIM Global Growth Fund
APPEARS HERE] AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Charter Fund
AIM Global Utilities Fund
HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has provided leadership in the *AIM Aggressive Growth Fund was closed to new investors on
mutual fund industry since 1976 and managed approximately June 5, 1997. For more complete information about any AIM
$83 billion in assets for more than 3.7 million shareholders, Fund(s), including sales charges and expenses, ask your
including individual investors, corporate clients, and financial financial consultant or securities dealer for a free
institutions as of December 31, 1997. The AIM Family of prospectus(es). Please read the prospectus(es) carefully
Funds--Registered Trademark-- is distributed nationwide, and before you invest or send money.
AIM today ranks among the nation's top 15 mutual fund
companies in assets under management, according to Lipper INVEST WITH DISCIPLINE-SM-
Analytical Services, Inc.
</TABLE>
GLU-AR-1
