<PAGE> 1
AIM GLOBAL
UTILITIES FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT JUNE 30, 1998
<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.
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 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. s 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:
When we last reported to you, for the fiscal year ended
[PHOTO OF December 31, 1997, equity markets worldwide were still shaken
Charles T. by the financial crisis in Asia. By June 30, 1998, the end of
Bauer, this six-month reporting period, most markets had recovered
Chairman of nicely, with domestic equities producing generous returns and
the Board of European markets outpacing the U.S. Only Asian markets
THE FUND remained in the doldrums. High-quality bonds have turned in a
APPEARS HERE] solid performance with generous real returns.
Good economic news has been arriving almost daily.
Inflation and joblessness in the U.S. have been at their
lowest levels in decades, consumer confidence at its highest.
The economic fundamentals in the U.S. appear sound, and we at
AIM remain cautiously optimistic that the current economic
expansion may continue for the foreseeable future although
market valuations are high compared to historical standards.
By the close of this reporting period, markets had
become less ebullient. Equities had declined slightly from the heights reached
earlier in the period. Many participants in the U.S. equity markets voiced
concern about prices that continued rising despite slowing earnings growth,
especially for larger companies. The performance of European markets had
exceeded everyone's expectations. Asia's economic woes, especially the
continuing recession in Japan, which markets had shrugged off for a while,
seemed more troublesome as the reporting period closed.
In the face of such uncertainty, the best course for investors is to remain
realistic. We are now in the fourth year of unprecedented market advances, with
equities having the potential to produce returns above 30% again. We have never
experienced this before, and it may have fostered unrealistic expectations among
investors, who would do well to remember that the long-term average return for
equities is closer to 10% per year.
A well-diversified portfolio is still one of the most effective tools for
coping with market shifts because different asset classes and different national
markets tend to move independently of one another. Your financial consultant
remains your best source of information about how to allocate your investments
based on your goals and situation.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Shortly before the close of the reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds. During
the next few months you will be receiving more details about this transaction
and the products it adds to The AIM Family of Funds--Registered Trademark--.
This transaction gives you, our shareholders, access to a greater variety of
investment choices. A complete list of the funds now included in The AIM Family
of Funds--Reigstered Trademark-- appears on the back cover of this report. We
encourage you to discuss with your financial consultant how these funds may fit
into your portfolio.
The transaction also helps strengthen AIM's position as a major participant
in the money-management industry worldwide. Such strength will enable us to
continue enlarging both the scope of our fund offerings and our menu of services
for our shareholders. AIM continuously reviews its products and services with a
view to enhancing our ability to help shareholders meet their investment goals.
YOUR FUND MANAGERS COMMENT
On the pages that follow, the managers of your AIM Fund discuss how the
Fund performed during the six months covered by this report and give their
near-term market outlook. We hope you will find their discussion informative. We
are pleased to send you this report on your Fund. If you have any questions or
comments, please contact our Client Services department at 800-959-4246 or visit
our Web site at www.aimfunds.com. You can access information about your account
on our Web site and also on our automated AIM Investor Line, 800-246-5463. Thank
you for your continued participation in The AIM Family of Funds--Registered
Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
------------------------------
A well-diversified portfolio
is still one of the most
effective tools for coping with
market shifts because
different asset classes and
different national markets tend
to move independently
of one another.
------------------------------
<PAGE> 4
The Managers' Overview
UTILITY SECTOR CONTINUES HOT PERFORMANCE
A roundtable discussion with the Fund management team for AIM Global Utilities
Fund for the six months ended June 30, 1998.
- --------------------------------------------------------------------------------
Q. HOW DID AIM GLOBAL UTILITIES FUND PERFORM DURING THE SIX MONTHS ENDED JUNE
30, 1998?
A. We are pleased to report the Fund's total return was 9.12% for Class A
shares, and 8.74% for both Class B and Class C shares for the six-month
period ended June 30, 1998. Comparatively, the Lipper Utility Funds Index
returned 8.22% during the same period.
The Fund continued to outperform the Lipper Utility Funds Index for the
last three years. For the three-year period ended June 30, 1998, the Fund's
Class A shares produced a 20.53% average annual total return and Class B
shares produced a 19.64% average annual total return. Both classes exceeded
the Lipper Utility Funds Index average annual total return of 19.32% over
the same period.
Q. WHAT FACTORS CAUSED THE FUND'S PERFORMANCE?
A. The market's volatility at the end of 1997 carried over into the first
quarter of 1998, attracting many investors to the perceived stability of
utility stocks. The Fund was well-rewarded by this market sentiment as the
Fund's Class A shares returned 10.73% during the first three months of the
year. We knew that such strong short-term performance would not be
sustainable, but nonetheless the Fund received a nice spurt of growth during
that period. In fact, the Fund's Class A shares rose 17.62% from October 1,
1997 to March 31, 1998, besting the DJIA's gain of 11.74%. Such extreme
returns are very unusual for the utilities sector.
Q. TELECOMMUNICATIONS CONTINUED TO BE A MAJOR COMPONENT OF THE FUND'S
PORTFOLIO. HOW DID THAT SECTOR PERFORM DURING THE REPORTING PERIOD?
A. There is significant growth in the telecommunications sector both inside and
outside the U.S. because the services and equipment providers continue to do
well in this competitive environment. Additionally, the frenzy of corporate
merger and acquisition activity during the first half of 1998 has included
some major telephone companies, such as SBC Communications, Inc. announcing
plans to acquire Ameritech Corp. and the WorldCom Inc./MCI deal announced
last year. Three of these companies were among the Fund's top 10 holdings at
the end of the reporting period, so the Fund greatly benefited from these
deals.
The telecommunications and telephone sectors comprised over 30% of the
Fund at the end of the reporting period as the telecommunications/telephone
sector was the Fund's largest sector weighting.
Q. WHAT PERCENTAGE OF THE FUND'S PORTFOLIO WAS IN DOMESTIC UTILITIES?
A. We finished the reporting period with just over 63% of the Fund's holdings
in the domestic utilities sector. Electric power companies comprised almost
25% of the Fund's portfolio. This is a very mature industry, so there are
little long-term growth opportunities in this sector for investors. However,
with most of the country experiencing unusually hot temperatures this year,
the increased demand for air conditioning combined with deregulation of
electricity providers forced some electric companies to pay incredible rates
for electricity on the free market when emergencies rose. It was reported in
the media that electricity that normally costs $0.03 to $0.05 a kilowatt was
being purchased for $10 a kilowatt. Companies were forced to pay such
inflated prices to provide the necessary electricity to their customers. How
such free market situations affect the industry as a whole remains to be
seen.
Pinnacle West Capital Corp. was the only electric power company among
the portfolio's top 10 holdings at the end of the reporting period, but the
Fund owned common stock in 35 electric power companies all around the world.
Q. WHAT PERCENTAGE OF THE FUND'S PORTFOLIO WAS OVERSEAS?
A. We finished the reporting period with 34% of the Fund's holdings in the
foreign sector. The foreign utilities sector continued to offer the Fund the
best opportunities for growth as more companies privatize around the world,
a trend that we expect to continue. The roaring stock markets in Europe
produced excellent
================================================================================
Fund Outperformed Index Over Three Years
- --------------------------------------------------------------------------------
Average Annual Total Returns for period 6/30/95-6/30/98
AIM Fund Class A Shares 20.53%
AIM Fund Class B Shares 19.64%
Lipper Utility Fund Index 19.32%
Note: Class C shares commenced sales on August 4, 1997.
================================================================================
----------------------------------
There is significant growth in the
telecommunications sector
both inside and outside the U.S.
----------------------------------
2
<PAGE> 5
PORTFOLIO COMPOSITION
As of 6/30/98, based on total net assets
<TABLE>
<CAPTION>
===================================================================================================================================
TOP 10 INDUSTRIES TOP 10 HOLDINGS TOP 10 COUNTRIES
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Electric Companies 25.45% 1. El Paso Energy Cap. Trust, Inc. 2.67% 1. United States 65.88%
2. Telephone 20.71 2. Williams Companies, Inc. (The) 2.38 2. United Kingdom 6.72
3. Natural Gas 12.90 3. Pinnacle West Capital Corp. 2.04 3. Canada 5.55
4. Communications Equipment 6.79 4. SBC Communications, Inc. 1.99 4. Italy 3.64
5. Telecommunications 6.04 5. Telecom Italia S.p.A. 1.93 5. Spain 2.94
(Long Distance) 6. BellSouth Corp. 1.81 6. Germany 2.28
6. Power Producers (Independent) 4.38 7. Ameritech Corp. 1.77 7. Portugal 2.12
7. Telecommunications 4.02 8. National Grid Group PLC 1.74 8. Brazil 1.45
(Cellular/Wireless) 9. WorldCom, Inc. 1.60 9. New Zealand 1.11
8. Real Estate Investment Trusts 3.71 10. Cincinnati Bell, Inc. 1.54 10. Sweden 0.96
9. Water Utilities 2.32
10. Manufacturing (Diversified) 1.72
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>
returns that enhanced the Fund's performance. The Fund had almost 20% of its
portfolio invested in European utilities at the end of the reporting period.
Two foreign holdings, Telecom Italia S.p.A. and National Grid Group PLC,
finished the reporting period among the portfolio's top 10 holdings. On the
other hand, the Fund's foreign holdings in Asia and Latin America were hurt
by the volatility of the markets in those areas.
Q. WHAT OTHER UTILITY STOCKS DID THE FUND HOLD?
A. The Fund had significant positions in natural gas, water, and services and
equipment utility stocks. Just under 13% of the portfolio was in natural gas
holdings, the third-largest industry weighting. Additionally, the top two
positions in the portfolio--El Paso Energy Cap. Trust, Inc., and The
Williams Companies, Inc., respectively--were natural gas utility holdings.
Services and equipment providers, especially in the telecommunications
industry, continue to do well in this competitive environment. For instance,
if ABC Company and XYZ Company both are competing for the same market share,
then the service companies and equipment providers benefit first because the
service companies and equipment providers receive business from both
competing companies. The rapidly changing environment for both
telecommunication and electric companies may make the service and equipment
providers a good area for growth. Approximately 10% of the Fund is in the
service and equipment providers sector in familiar names as Lucent
Technologies, Inc., Nokia Oyj A.B., and Superior TeleCom Inc.
Q. WHAT IS YOUR MARKET OUTLOOK FOR UTILITIES IN THE NEAR FUTURE?
A. We are in the midst of the third year of very good growth for utilities. We
believe this growth can be sustained for a while. The uncertain markets of
recent times have brought many unlikely investors into the utility sector,
and this has caused outstanding performance returns that usually are not
associated with this sector. Furthermore, it is important to note that these
returns are coming with lower volatility than other investments.
While it may be unrealistic to expect continued annual returns of over
20% for the Fund, we are positive on the utilities sector overall. The new,
competitive marketplace means utility stocks will see more volatility than
ever before. 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 and the Fund for the remainder of 1998.
---------------------------
We are in the midst of
the third year of very good
growth for utilities.
---------------------------
================================================================================
Average Annual Total Returns
Class A shares
10 Years 13.32%
5 Years 10.53
1 Year 16.62
Class B shares
Inception (9/1/93) 9.81%
1 Year 17.48
Class C shares
Inception (8/4/97) 18.34%*
*Total return provided is cumulative total return that has not been annualized.
================================================================================
3
<PAGE> 6
For Consideration
AIM PREPARES FOR THE YEAR 2000
THE YEAR 2000. THE WORDS STIR THE IMAGINATION, MAKING US WONDER WHAT THE NEXT
MILLENNIUM WILL BRING. BUT THE WORDS ARE ALSO STARTING TO MAKE SOME PEOPLE
WORRY, SINCE THERE'S BEEN SO MUCH TALK LATELY ABOUT A COMPUTER GLITCH CALLED
"THE YEAR 2000 PROBLEM." BECAUSE THIS IS A PROBLEM THAT COULD AFFECT MOST
AMERICAN INDUSTRIES, INCLUDING THE MUTUAL FUND INDUSTRY, WE WANT TO BRING YOU
THIS UPDATE TO LET YOU KNOW HOW AIM IS GETTING READY.
THE YEAR 2000 PROBLEM
It has to do with the way that computers understand dates. Most computers were
programmed to recognize only the last two digits of a four-digit date ("98" for
1998). When the year 2000 hits, the computer will read "00"-- but it may
interpret that as the year 1900. So, if the computer makes a calculation
involving a date of January 1, 2000, or later, it could be processed
incorrectly. Date-sensitive calculations are found in all kinds of places-- from
elevators to air traffic control systems-- but they are especially prevalent in
the financial services industry.
AIM'S YEAR 2000 COMPLIANCE
AIM's technology team has been addressing Year 2000 issues for some time now.
Our internal team, together with an independent technology consultant, are
implementing a comprehensive Year 2000 Compliance Project for AIM Management
Group Inc. and its subsidiaries.
So far, we've inventoried all software applications that we rely on, and
we've identified the applications that might need adjustments to function
properly when the Year 2000 arrives. We are now in the final phase of the
project, making corrections and testing applications that need adjustment. We
plan to complete this phase during the fourth quarter of 1998.
AN INDUSTRY-WIDE TEST
In the spring of 1999, AIM will be participating in industry-wide testing that
will simulate the arrival of the Year 2000. this will allow mutual fund
companies, banks, exchanges, and other players in the financial community to
test various kinds of transactions and to determine if any further adjustments
need to be made before the end of the year.
We believe our plans are quite comprehensive, and we're committed to
monitoring all software applications through the critical period, extending as
far as needed into the 21st century.
<PAGE> 7
SCHEDULE OF INVESTMENTS
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-46.72%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.66%
Univision Communications Inc.(a) 53,000 $ 1,974,250
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.73%
ADC Telecommunications, Inc.(a) 55,000 2,009,219
- --------------------------------------------------------------
Lucent Technologies, Inc. 49,600 4,126,100
- --------------------------------------------------------------
NEXTLINK Communications, Inc.-Class
A(a) 15,900 602,212
- --------------------------------------------------------------
Qwest Communications International
Inc.(a) 75,000 2,615,625
- --------------------------------------------------------------
Tellabs, Inc.(a) 20,000 1,432,500
- --------------------------------------------------------------
US LEC Corp.-Class A(a) 16,000 334,000
- --------------------------------------------------------------
11,119,656
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.03%
Evolving Systems, Inc.(a) 3,300 36,506
- --------------------------------------------------------------
Mobius Management Systems, Inc.(a) 2,900 43,500
- --------------------------------------------------------------
80,006
- --------------------------------------------------------------
ELECTRIC COMPANIES-14.33%
Allegheny Energy, Inc. 82,100 2,473,263
- --------------------------------------------------------------
Boston Edison Co. 40,000 1,660,000
- --------------------------------------------------------------
Carolina Power & Light Co. 48,800 2,116,700
- --------------------------------------------------------------
Cinergy Corp. 57,000 1,995,000
- --------------------------------------------------------------
DQE, Inc. 76,500 2,754,000
- --------------------------------------------------------------
Edison International 61,000 1,803,313
- --------------------------------------------------------------
Energy East Corp. 75,000 3,121,875
- --------------------------------------------------------------
FPL Group, Inc. 63,000 3,969,000
- --------------------------------------------------------------
IPALCO Enterprises, Inc. 21,000 933,188
- --------------------------------------------------------------
New Century Energies, Inc. 52,000 2,362,750
- --------------------------------------------------------------
NIPSCO Industries, Inc. 134,000 3,752,000
- --------------------------------------------------------------
Pinnacle West Capital Corp. 135,000 6,075,000
- --------------------------------------------------------------
Public Service Company of New Mexico 60,000 1,361,250
- --------------------------------------------------------------
Sierra Pacific Resources 45,500 1,652,218
- --------------------------------------------------------------
Southern Co. 92,000 2,547,250
- --------------------------------------------------------------
Teco Energy, Inc. 88,200 2,364,862
- --------------------------------------------------------------
Texas Utilities Co. 42,600 1,773,225
- --------------------------------------------------------------
42,714,894
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.14%
ONIX Systems, Inc.(a) 26,000 334,750
- --------------------------------------------------------------
RELTEC Corp.(a) 1,800 81,000
- --------------------------------------------------------------
415,750
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (INSTRUMENTATION)-0.23%
Quanta Services, Inc.(a) 46,000 $ 675,625
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-0.02%
Charles River Associates Inc.(a) 3,100 77,500
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.59%
Superior TeleCom Inc. 42,625 1,774,266
- --------------------------------------------------------------
NATURAL GAS-5.68%
Coastal Corp. (The) 15,000 1,047,188
- --------------------------------------------------------------
Columbia Energy Group 33,000 1,835,625
- --------------------------------------------------------------
Energen Corp. 29,600 595,700
- --------------------------------------------------------------
KN Energy, Inc. 54,600 2,958,637
- --------------------------------------------------------------
Public Service Company of North
Carolina, Inc. 40,000 870,000
- --------------------------------------------------------------
Sonat, Inc. 66,000 2,549,250
- --------------------------------------------------------------
Williams Companies, Inc. (The) 209,900 7,084,125
- --------------------------------------------------------------
16,940,525
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.14%
AES Corp.(a) 28,400 1,492,775
- --------------------------------------------------------------
CalEnergy Co., Inc.(a) 63,200 1,899,950
- --------------------------------------------------------------
3,392,725
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-3.71%
Alexandria Real Estate Equities,
Inc. 40,000 1,197,500
- --------------------------------------------------------------
Anthracite Mortgage Capital Inc. 25,100 348,263
- --------------------------------------------------------------
Boston Properties, Inc. 48,000 1,656,000
- --------------------------------------------------------------
CCA Prison Realty Trust 38,200 1,169,875
- --------------------------------------------------------------
Corporate Office Properties Trust,
Inc. 40,000 355,000
- --------------------------------------------------------------
Correctional Properties Trust(a) 10,300 208,575
- --------------------------------------------------------------
Crescent Real Estate Equities, Co. 26,400 887,700
- --------------------------------------------------------------
Entertainment Properties Trust 15,100 275,575
- --------------------------------------------------------------
Golf Trust of America, Inc. 15,000 515,625
- --------------------------------------------------------------
Mack-Cali Realty Corp. 25,000 859,375
- --------------------------------------------------------------
Meditrust Corp. 30,000 838,125
- --------------------------------------------------------------
Patriot American Hospitality, Inc. 77,800 1,862,337
- --------------------------------------------------------------
Starwood Hotels & Resorts 18,500 893,781
- --------------------------------------------------------------
11,067,731
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.21%
Metzler Group, Inc.(a) 16,800 615,300
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.23%
Hyperion Telecommunications,
Inc.(a) 43,900 $ 688,681
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-3.83%
IXC Communications, Inc.(a) 40,500 1,964,250
- --------------------------------------------------------------
Pacific Gateway Exchange, Inc.(a) 38,000 1,522,375
- --------------------------------------------------------------
WinStar Communications, Inc.(a) 74,000 3,177,375
- --------------------------------------------------------------
WorldCom, Inc.(a) 98,526 4,772,353
- --------------------------------------------------------------
11,436,353
- --------------------------------------------------------------
TELEPHONE-12.19%
Advanced Communications Group,
Inc.(a) 21,800 151,238
- --------------------------------------------------------------
Ameritech Corp. 117,700 5,281,787
- --------------------------------------------------------------
Bell Atlantic Corp. 40,000 1,825,000
- --------------------------------------------------------------
BellSouth Corp. 80,400 5,396,850
- --------------------------------------------------------------
Century Telephone Enterprises, Inc. 79,200 3,633,300
- --------------------------------------------------------------
Cincinnati Bell, Inc. 160,000 4,580,000
- --------------------------------------------------------------
Electric Lightwave, Inc.-Class A(a) 80,000 885,000
- --------------------------------------------------------------
GTE Corp. 36,600 2,035,875
- --------------------------------------------------------------
Intermedia Communications Inc.(a) 30,000 1,258,125
- --------------------------------------------------------------
McLeodUSA Inc.-Class A(a) 40,000 1,555,000
- --------------------------------------------------------------
SBC Communications, Inc. 148,000 5,920,000
- --------------------------------------------------------------
SCC Communications Corp.(a) 41,600 509,600
- --------------------------------------------------------------
Teleport Communications Group
Inc.-Class A(a) 35,000 1,898,750
- --------------------------------------------------------------
US West, Inc. 30,000 1,410,000
- --------------------------------------------------------------
36,340,525
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $81,327,048) 139,313,787
- --------------------------------------------------------------
DOMESTIC PREFERRED STOCKS-5.62%
COMMUNICATIONS EQUIPMENT-0.24%
NEXTLINK Communications, Inc.-$3.25
Conv. Pfd.(b) (Acquired 03/26/98;
Cost $705,000) 14,100 720,778
- --------------------------------------------------------------
ENTERTAINMENT-0.33%
Time Warner Inc., Series M-$102.50
PIK Pfd. 891 996,806
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.13%
Salomon Smith Barney Holdings-$3.48
Conv. Pfd. DECS 6,700 374,781
- --------------------------------------------------------------
NATURAL GAS-3.12%
El Paso Energy Cap. Trust,
Inc.-$2.375 Conv. Pfd. 150,000 7,950,000
- --------------------------------------------------------------
MCN Corp.-$2.013 Conv. PRIDES 57,000 1,350,188
- --------------------------------------------------------------
9,300,188
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.45%
AES Trust II-$2.75 Conv. Pfd. 74,000 4,315,680
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-0.35%
WinStar Communications, Inc.-$3.50
Conv. Pfd.(b) (Acquired 03/12/98;
Cost $950,000) 19,000 $ 1,040,250
- --------------------------------------------------------------
Total Domestic Preferred Stocks
(Cost $16,179,864) 16,748,483
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-28.54%
ARGENTINA-0.66%
Central Costanera S.A.-Class B
(Electric Companies) 475,200 1,378,280
- --------------------------------------------------------------
Telefonica de Argentina S.A.-ADR
(Telephone) 18,300 593,606
- --------------------------------------------------------------
1,971,886
- --------------------------------------------------------------
AUSTRALIA-0.17%
Telstra Corp. Ltd. (Telephone) 195,000 501,374
- --------------------------------------------------------------
AUSTRIA-0.50%
Oesterreichische
Elektrizitaetswirtschafts
A.G.-Class A (Electric Companies) 12,500 1,498,009
- --------------------------------------------------------------
BELGIUM-0.45%
Electrabel S.A. (Electric
Companies) 4,700 1,333,289
- --------------------------------------------------------------
BRAZIL-1.45%
Centrais Eletricas de Santa
Catarina S.A. (Electric
Companies) 590,000 448,921
- --------------------------------------------------------------
Companhia Paranaense de Energia
(Electric Companies) 45,700 422,726
- --------------------------------------------------------------
Eletricidade de Sao Paulo S.A.
(Electric Companies) 3,990 300,143
- --------------------------------------------------------------
Empresa Bandeirante de Energia S.A.
(Electric Companies)(a) 3,990 63,133
- --------------------------------------------------------------
Empresa Metropolitana de Aguas e
Energia S.A. (Electric
Companies)(a) 3,990 3,105
- --------------------------------------------------------------
Empresa Paulista de Transmissao de
Energia Eletrica S.A. (Electric
Companies)(a) 3,990 14,110
- --------------------------------------------------------------
Telecomunicacoes Brasileiras
S.A.-ADR (Telephone) 28,000 3,057,250
- --------------------------------------------------------------
4,309,388
- --------------------------------------------------------------
CANADA-1.98%
Laidlaw One, Inc.-$1.22 Conv. Pfd.
(Waste Management) 27,000 985,500
- --------------------------------------------------------------
MetroNet Communications Corp.-Class
B (Communications Equipment)(a) 23,400 661,050
- --------------------------------------------------------------
TELUS Corp.
(Telecommunications-Cellular &
Wireless) 95,000 2,457,258
- --------------------------------------------------------------
Westcoast Energy Inc. (Natural Gas) 71,900 1,604,269
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Westshore Terminals Income Fund
(Services-Facilities & Environmental) 40,800 $ 194,147
- --------------------------------------------------------------
5,902,224
- --------------------------------------------------------------
CHILE-0.96%
Cia. de Telecomunicaciones de Chile
S.A.-ADR (Telephone) 80,750 1,640,234
- --------------------------------------------------------------
Enersis S.A.-ADR (Electric Companies) 49,600 1,212,100
- --------------------------------------------------------------
2,852,334
- --------------------------------------------------------------
DENMARK-0.43%
Tele Danmark A.S.-ADR (Telephone) 27,500 1,295,938
- --------------------------------------------------------------
FINLAND-0.56%
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 23,200 1,683,450
- --------------------------------------------------------------
FRANCE-0.90%
Alstom (Engineering &
Construction)(a) 30,500 1,004,136
- --------------------------------------------------------------
France Telecom S.A.-ADR
(Communications Equipment) 24,000 1,669,500
- --------------------------------------------------------------
2,673,636
- --------------------------------------------------------------
GERMANY-2.28%
RWE A.G. (Electric Companies) 28,100 1,664,216
- --------------------------------------------------------------
VEBA A.G.
(Manufacturing-Diversified) 46,500 3,129,138
- --------------------------------------------------------------
Viag A.G.
(Manufacturing-Diversified) 2,900 1,997,338
- --------------------------------------------------------------
6,790,692
- --------------------------------------------------------------
HUNGARY-0.42%
Magyar Tavkozlesi ADR
(Telecommunications-Long Distance) 42,700 1,256,981
- --------------------------------------------------------------
ISRAEL-0.22%
Gilat Communications Ltd.
(Telecommunications-
Cellular/Wireless)(a) 75,000 646,875
- --------------------------------------------------------------
ITALY-3.64%
Societa Nordelettrica S.p.A.
(Electric Companies) 570,000 1,560,101
- --------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications-Cellular/Wireless) 578,300 3,530,177
- --------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 788,333 5,762,252
- --------------------------------------------------------------
10,852,530
- --------------------------------------------------------------
JAPAN-0.52%
Nippon Telegraph & Telephone Corp.-ADR
(Telecommunications-Long Distance) 20,000 840,000
- --------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telecommunications-Long
Distance) 85 707,923
- --------------------------------------------------------------
1,547,923
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS-0.95%
Royal PTT Nederland N.V.-ADR
(Services-Commercial & Consumer) 44,449 $ 2,828,068
- --------------------------------------------------------------
NEW ZEALAND-1.11%
Sky Network Television Ltd.
(Broadcasting-Television, Radio &
Cable)(a) 22,600 271,200
- --------------------------------------------------------------
Telecom Corp. of New Zealand
Ltd.-Interim ADR (Telephone) 14,400 242,100
- --------------------------------------------------------------
Telecom Corp. of New Zealand
Ltd.-ADR (Telephone) 85,600 2,803,400
- --------------------------------------------------------------
3,316,700
- --------------------------------------------------------------
PERU-0.34%
Luz Del Sur S.A. (Power
Producers-Independent) 32,000 356,000
- --------------------------------------------------------------
Telefonica del Peru S.A.-ADR
(Telecommunications-Long
Distance) 33,000 674,438
- --------------------------------------------------------------
1,030,438
- --------------------------------------------------------------
PORTUGAL-2.12%
Electricidade de Portugal, S.A.-ADR
(Electric Companies) 41,100 1,893,169
- --------------------------------------------------------------
Portugal Telecom S.A.-ADR
(Telephone) 68,100 3,605,044
- --------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.
(Telecommunications-Cellular/Wireless) 4,600 816,500
- --------------------------------------------------------------
6,314,713
- --------------------------------------------------------------
SPAIN-2.94%
Autopistas Concesionaria Espanola
S.A. (Services-Commercial &
Consumer) 77,000 1,192,533
- --------------------------------------------------------------
Autopistas Concesionaria Espanola
S.A.-Rts., expiring 07/10/98
(Services-Commercial &
Consumer)(a) 77,000 59,627
- --------------------------------------------------------------
Iberdrola S.A. (Electric Companies) 233,000 3,783,306
- --------------------------------------------------------------
Telefonica de Espana-ADR
(Telephone) 26,800 3,726,875
- --------------------------------------------------------------
8,762,341
- --------------------------------------------------------------
SWEDEN-0.96%
Telefonaktiebolaget LM Ericsson-ADR
(Communications Equipment) 100,000 2,862,500
- --------------------------------------------------------------
UNITED KINGDOM-4.98%
Hyder PLC (Water Utilities) 54,863 860,684
- --------------------------------------------------------------
National Grid Group PLC (Electric
Companies) 131,526 887,752
- --------------------------------------------------------------
PowerGen PLC (Electric Companies) 133,512 1,846,924
- --------------------------------------------------------------
PowerGen PLC-ADR (Electric
Companies) 40,900 2,305,738
- --------------------------------------------------------------
Scottish Power PLC (Electric
Companies) 201,550 1,767,830
- --------------------------------------------------------------
Southern Electric PLC (Electric
Companies) 124,061 1,123,396
- --------------------------------------------------------------
United Utilities PLC (Water
Utilities) 200,507 2,919,412
- --------------------------------------------------------------
Wessex Water PLC (Water Utilities) 154,649 1,183,344
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Yorkshire Water PLC (Water
Utilities) 262,440 $ 1,964,294
- --------------------------------------------------------------
14,859,374
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$51,938,638) 85,090,663
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
DOMESTIC NON-CONVERTIBLE BONDS &
NOTES-7.70%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.32%
Comcast Corp., Sr. Sub. Deb.,
9.50%, 01/15/08 $ 900,000 $ 958,500
- --------------------------------------------------------------
ELECTRIC COMPANIES-0.85%
El Paso Electric Co., Series D Sec.
First Mortgage Bonds, 8.90%,
02/01/06 1,425,000 1,607,300
- --------------------------------------------------------------
Western Resources Inc., Sr. Notes,
7.125%, 08/01/09 900,000 941,310
- --------------------------------------------------------------
2,548,610
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.51%
California Energy Co., Notes,
10.25%, 01/15/04 1,400,000 1,508,500
- --------------------------------------------------------------
NATURAL GAS-2.43%
Enron Corp., Sr. Sub. Deb., 6.75%,
07/01/05 3,750,000 3,819,263
- --------------------------------------------------------------
Ferrellgas Partners, Series B Sr.
Sec. Gtd. Notes, 9.375%, 06/15/06 1,000,000 1,035,000
- --------------------------------------------------------------
PanEnergy Corp., Notes, 7.875%,
08/15/04 2,205,000 2,394,938
- --------------------------------------------------------------
7,249,201
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.68%
Tennessee Gas Pipeline Co., Bonds,
7.00%, 03/15/27 1,900,000 2,028,649
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.68%
AES Corp., Sr. Sub. Notes, 10.25%,
07/15/06 925,000 1,008,250
- --------------------------------------------------------------
Indiana Michigan Power, Sec. Lease
Obligation Bonds, 9.82%, 12/07/22 3,021,249 3,986,538
- --------------------------------------------------------------
4,994,788
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.54%
360 Communications Co., Sr. Notes,
7.60%, 04/01/09 1,500,000 1,624,890
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.69%
AT&T Corp., Sr. Notes, 7.75%,
03/01/07 1,850,000 2,043,048
- --------------------------------------------------------------
Total Domestic Non-Convertible
Bonds & Notes (Cost
$21,775,316) 22,956,186
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
DOMESTIC CONVERTIBLE BONDS &
NOTES-2.78%
COMPUTERS (HARDWARE)-1.24%
Candescent Technology Corp., Conv.
Sr. Sub. Deb., 7.00%, 05/01/03(b)
(Acquired 04/17/98; Cost
$3,700,000) $3,700,000 $ 3,700,000
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.51%
Global Telesystems Group, Sr. Sub.
Notes, 8.75%, 06/30/00 620,000 1,532,175
- --------------------------------------------------------------
CONSUMER FINANCE-1.03%
Bell Atlantic Financial Services,
Conv. Bonds, 5.75%, 04/01/03(b)
(Acquired 02/12/98; Cost
$3,000,000) 3,000,000 3,073,140
- --------------------------------------------------------------
Total Domestic Convertible
Bonds & Notes (Cost
$7,811,912) 8,305,315
- --------------------------------------------------------------
FOREIGN NON-CONVERTIBLE BONDS & NOTES-5.31%(c)
CANADA-3.57%
Bell Canada
(Telecommunications-Cellular/
Wireless), Series EW Deb., 8.80%,
08/17/05 CAD 950,000 763,468
- --------------------------------------------------------------
Unsec. Deb., 10.875%, 10/11/04 1,700,000 1,452,148
- --------------------------------------------------------------
Canadian Oil Debco Inc. (Oil &
Gas-Exploration & Production),
Deb., 11.00%, 10/31/00 1,750,000 1,334,166
- --------------------------------------------------------------
Ontario Hydro (Electric Companies),
Global Bonds, 9.00%, 06/24/02 2,500,000 1,912,450
- --------------------------------------------------------------
Telegobe Canada, Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 2,400,000 1,813,301
- --------------------------------------------------------------
Trans-Canada Pipelines (Natural
Gas),
Series Q Deb., 10.625%, 10/20/09 1,750,000 1,648,406
- --------------------------------------------------------------
Unsec. Notes, 8.55%, 02/01/06 2,150,000 1,706,919
- --------------------------------------------------------------
10,630,858
- --------------------------------------------------------------
UNITED KINGDOM-1.74%
National Grid Co. PLC (Electric
Companies), Bonds, 4.25%,
02/17/08 GBP 2,760,000 5,199,051
- --------------------------------------------------------------
Total Foreign Non-Convertible
Bonds & Notes (Cost
$15,161,403) 15,829,909
- --------------------------------------------------------------
REPURCHASE AGREEMENT-3.06%(D)
Dean Witter Reynolds, Inc., 6.10%
07/01/98(e) (Cost $9,115,273) 9,115,273 9,115,273
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.73% 297,359,616
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.27% 799,110
- --------------------------------------------------------------
NET ASSETS-100.00% $298,158,726
==============================================================
</TABLE>
8
<PAGE> 11
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with provisions of Rule 144A under the Securities Act of 1933, as
amended. The valuation of this security has been determined in accordance
with procedures established by the Board of Trustees. The market value of
these securities at 06/30/98 was $8,534,168 which represented 2.86% of the
Fund's net assets.
(c) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(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 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.
(e) Joint repurchase agreement entered into 06/30/98 with a maturing value of
$200,033,889. Collateralized by $203,366,000 U.S. Government obligations, 0%
to 9.375% due 07/01/98 to 09/21/04 with an aggregate market value at
06/30/98 of $209,153,696.
Abbreviations:
ADR - American Depositary Receipt
CAD - Canadian Dollars
Conv. - Convertible
Deb. - Debentures
DECS - Dividend Enhanced Convertible Stock
GBP - British Pound Sterling
Gtd. - Guaranteed
Pfd. - Preferred
PIK - Payment in Kind
PRIDES - Preferred Redeemable Increased Dividend Equity Securities
Rts. - Rights
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$203,309,454) $297,359,616
- ---------------------------------------------------------
Foreign currencies, at value (cost
$1,525,656) 1,530,479
- ---------------------------------------------------------
Receivables for:
Investments sold 480,029
- ---------------------------------------------------------
Fund shares sold 493,165
- ---------------------------------------------------------
Dividends and interest 1,634,680
- ---------------------------------------------------------
Investment for deferred compensation plan 22,237
- ---------------------------------------------------------
Other assets 18,877
- ---------------------------------------------------------
Total assets 301,539,083
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,478,932
- ---------------------------------------------------------
Fund shares reacquired 300,083
- ---------------------------------------------------------
Dividends 81,871
- ---------------------------------------------------------
Deferred compensation 22,237
- ---------------------------------------------------------
Accrued advisory fees 137,074
- ---------------------------------------------------------
Accrued administrative services fees 4,884
- ---------------------------------------------------------
Accrued distribution fees 246,180
- ---------------------------------------------------------
Accrued trustees' fees 1,765
- ---------------------------------------------------------
Accrued transfer agent fees 49,098
- ---------------------------------------------------------
Accrued operating expenses 58,233
- ---------------------------------------------------------
Total liabilities 3,380,357
- ---------------------------------------------------------
Net assets applicable to shares outstanding $298,158,726
=========================================================
NET ASSETS:
Class A $192,194,027
=========================================================
Class B $104,825,534
=========================================================
Class C $ 1,139,165
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 9,251,924
=========================================================
Class B 5,051,718
=========================================================
Class C 54,901
=========================================================
Class A:
Net asset value and redemption price per
share $ 20.77
=========================================================
Offering price per share:
(Net asset value of $20.77
divided by 94.50%) $ 21.98
=========================================================
Class B:
Net asset value and offering price per
share $ 20.75
=========================================================
Class C:
Net asset value and offering price per
share $ 20.75
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1998
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $248,784 foreign
withholding tax) $ 3,480,637
- ---------------------------------------------------------
Interest 1,811,137
- ---------------------------------------------------------
Total investment income 5,291,774
- ---------------------------------------------------------
EXPENSES:
Advisory fees 820,666
- ---------------------------------------------------------
Administrative services fees 38,565
- ---------------------------------------------------------
Custodian fees 48,890
- ---------------------------------------------------------
Trustees' fees 4,746
- ---------------------------------------------------------
Distribution fees -- Class A 233,993
- ---------------------------------------------------------
Distribution fees -- Class B 502,260
- ---------------------------------------------------------
Distribution fees -- Class C 4,745
- ---------------------------------------------------------
Transfer agent fees -- Class A 137,477
- ---------------------------------------------------------
Transfer agent fees -- Class B 71,351
- ---------------------------------------------------------
Transfer agent fees -- Class C 719
- ---------------------------------------------------------
Other 27,050
- ---------------------------------------------------------
Total expenses 1,890,462
- ---------------------------------------------------------
Less: Expenses paid indirectly (1,838)
- ---------------------------------------------------------
Net expenses 1,888,624
- ---------------------------------------------------------
Net investment income 3,403,150
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION
CONTRACTS:
Net realized gain from:
Investment securities 14,947,629
- ---------------------------------------------------------
Foreign currencies 81,586
- ---------------------------------------------------------
Option contracts 11,841
- ---------------------------------------------------------
15,041,056
- ---------------------------------------------------------
Net unrealized appreciation of:
Investment securities 6,461,714
- ---------------------------------------------------------
Foreign currencies 12,131
- ---------------------------------------------------------
6,473,845
- ---------------------------------------------------------
Net gain from investment securities,
foreign currencies and option
contracts 21,514,901
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $24,918,051
=========================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1998 and the year ended December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,403,150 $ 6,278,999
- --------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 15,041,056 10,202,494
- --------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and option contracts 6,473,845 36,469,056
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 24,918,051 52,950,549
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (2,235,073) (4,517,536)
- --------------------------------------------------------------------------------------------
Class B (840,015) (1,708,856)
- --------------------------------------------------------------------------------------------
Class C (7,891) (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 (1,512,386) (15,436,814)
- --------------------------------------------------------------------------------------------
Class B 3,072,654 (921,844)
- --------------------------------------------------------------------------------------------
Class C (102,908) 1,124,595
- --------------------------------------------------------------------------------------------
Net increase in net assets 23,292,432 31,334,815
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 274,866,294 243,531,479
- --------------------------------------------------------------------------------------------
End of period $298,158,726 $274,866,294
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $188,094,268 $186,636,908
- --------------------------------------------------------------------------------------------
Undistributed net investment income 398,179 78,008
- --------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and option contracts 15,608,483 567,427
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 94,057,796 87,583,951
- --------------------------------------------------------------------------------------------
$298,158,726 $274,866,294
============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
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: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. 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
11
<PAGE> 14
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. 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.
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. 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.
The Fund will not write a covered call option if, immediately thereafter,
the aggregate value of the securities underlying all such options,
determined as of the dates such options were written, would exceed 25% of
the net assets of the Fund.
F. 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
12
<PAGE> 15
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.
G. 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 six months ended June 30, 1998, AIM
was reimbursed $38,565 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 six months ended June 30, 1998, AFS
was paid $127,168 for such services.
The Trust 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 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 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 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 June 30, 1998, the Class A, Class B and
Class C shares paid AIM Distributors $233,993, $502,260 and $4,745,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $40,078 from sales of the Class A
shares of the Fund during the six months ended June 30, 1998. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of Class A shares. During the six months ended June 30,
1998, AIM Distributors received $35,319 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 six months ended June 30, 1998, the Fund paid legal fees of $1,516
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
During the six months ended June 30, 1998, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $1,748 and $90, respectively under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $1,838 during the six months ended June 30, 1998.
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) $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. 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 May 1, 1998, the Fund was limited
to borrowing up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. During the six months ended June 30, 1998, 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 six months ended June 30, 1998 was
$51,936,855 and $45,733,550, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1998 was as follows:
Aggregate unrealized appreciation of
investment securities $96,856,117
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (2,805,960)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $94,050,157
=========================================================
Costs of investments for tax purposes is $203,309,459.
13
<PAGE> 16
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 1998 and the
year ended December 31, 1997 were as follows:
JUNE 30, DECEMBER 31,
1998 1997
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------
Sold:
Class A 1,334,780 $26,855,266 2,718,197 $ 46,163,286
- ---------------------- ---------- ----------- ---------- ------------
Class B 553,247 11,144,381 765,587 13,195,278
- ---------------------- ---------- ----------- ---------- ------------
Class C* 84,344 1,720,401 62,085 1,135,211
- ---------------------- ---------- ----------- ---------- ------------
Issued as reinvestment
of dividends:
Class A 95,985 1,981,727 237,293 4,070,874
- ---------------------- ---------- ----------- ---------- ------------
Class B 34,112 710,110 87,895 1,505,898
- ---------------------- ---------- ----------- ---------- ------------
Class C* 216 4,516 94 1,781
- ---------------------- ---------- ----------- ---------- ------------
Reacquired:
Class A (1,496,687) (30,349,379) (3,882,294) (65,670,974)
- ---------------------- ---------- ----------- ---------- ------------
Class B (432,926) (8,781,837) (924,101) (15,623,020)
- ---------------------- ---------- ----------- ---------- ------------
Class C* (91,149) (1,827,825) (689) (12,397)
- ---------------------- ---------- ----------- ---------- ------------
81,922 $ 1,457,360 (935,933) $(15,234,063)
====================== ========== =========== ========== ============
* Class C shares commenced sales on August 4, 1997.
NOTE 8-CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended June 30, 1998
are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
Beginning of period -- --
- ---------------------- --------- ---------
Written 180 $ 38,798
- ---------------------- --------- ---------
Closed (180) (38,798)
- ---------------------- --------- ---------
End of period -- $ 0
====================== ========= =========
14
<PAGE> 17
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A outstanding
during the six months ended June 30, 1998 and each of the years in the five-
year period ended December 31, 1997; for a share of Class B outstanding during
the six months ended June 30, 1998, 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 six
months ended June 30, 1998 and the period August 4, 1997 (date sales commenced)
through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
DECEMBER 31,
JUNE 30, ----------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.26 $ 16.01 $ 14.59 $ 11.85 $ 14.09 $ 13.31
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.26 0.47 0.55 0.55 0.59 0.60
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 1.49 3.26 1.43 2.71 (2.20) 1.02
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Total from investment operations 1.75 3.73 1.98 3.26 (1.61) 1.62
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.24) (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 (0.24) (0.48) (0.56) (0.52) (0.63) (0.84)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 20.77 $ 19.26 $ 16.01 $ 14.59 $ 11.85 $ 14.09
============================================================ ======== ======== ======== ======== ======== ========
Total return(a) 9.12% 23.70% 13.88% 28.07% (11.57)% 12.32%
============================================================ ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $192,194 $179,456 $164,001 $170,624 $150,515 $200,016
============================================================ ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.05%(b) 1.13% 1.17% 1.21% 1.18% 1.16%
============================================================ ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 2.62%(b) 2.79% 3.62% 4.20% 4.67% 4.21%
============================================================ ======== ======== ======== ======== ======== ========
Portfolio turnover rate 16% 26% 48% 88% 101% 76%
============================================================ ======== ======== ======== ======== ======== ========
Average brokerage commission rate paid(c) $ 0.0406 $ 0.0465 $ 0.0460 N/A N/A N/A
============================================================ ======== ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets of $188,745,599.
(c) 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
---------------------------------------------------------- -----------------------
DECEMBER 31,
JUNE 30, ----------------------------------------------- JUNE 30, DECEMBER 31,
1998 1997 1996 1995 1994 1993 1998 1997
-------- ------- ------- ------- ------- ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.24 $ 16.01 $ 14.60 $ 11.84 $ 14.08 $ 15.30 $ 19.24 $ 17.67
- ------------------------------------------ -------- ------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.19 0.34 0.42 0.44 0.47 0.17 0.19 0.13
- ------------------------------------------ -------- ------- ------- ------- ------- ------- ------- -------
Net gains (losses) on securities (both
realized and unrealized) 1.49 3.25 1.44 2.73 (2.19) (0.98) 1.49 1.58
- ------------------------------------------ -------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 1.68 3.59 1.86 3.17 (1.72) (0.81) 1.68 1.71
- ------------------------------------------ -------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.17) (0.35) (0.45) (0.41) (0.49) (0.17) (0.17) (0.13)
- ------------------------------------------ -------- ------- ------- ------- ------- ------- ------- -------
Distributions from net realized gains -- (0.01) -- -- -- (0.24) -- (0.01)
- ------------------------------------------ -------- ------- ------- ------- ------- ------- ------- -------
Returns of capital -- -- -- -- (0.03) -- -- --
- ------------------------------------------ -------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.17) (0.36) (0.45) (0.41) (0.52) (0.41) (0.17) (0.14)
- ------------------------------------------ -------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 20.75 $ 19.24 $ 16.01 $ 14.60 $ 11.84 $ 14.08 $ 20.75 $ 19.24
========================================== ======== ======= ======= ======= ======= ======= ======= =======
Total return(a) 8.74% 22.74% 12.98% 27.16% (12.35)% (5.32)% 8.74% 9.74%
========================================== ======== ======= ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $104,826 $94,227 $79,530 $70,693 $42,568 $23,892 $1,139 $ 1,183
========================================== ======== ======= ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets 1.79%(b) 1.91% 1.96% 1.97% 2.07% 1.99%(c) 1.79%(b) 1.90%(c)
========================================== ======== ======= ======= ======= ======= ======= ======= =======
Ratio of net investment income to average
net assets 1.87%(b) 2.01% 2.83% 3.44% 3.78% 3.38%(c) 1.87%(b) 2.02%(c)
========================================== ======== ======= ======= ======= ======= ======= ======= =======
Portfolio turnover rate 16% 26% 48% 88% 101% 76% 16% 26%
========================================== ======== ======= ======= ======= ======= ======= ======= =======
Average brokerage commission rate paid(d) $ 0.0406 $0.0465 $0.0460 N/A N/A N/A $0.0406 $0.0465
========================================== ======== ======= ======= ======= ======= ======= ======= =======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $101,284,493 and
$956,938 for Class B and Class C, respectively.
(c) Annualized.
(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.
15
<PAGE> 18
Trustees & Officers
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway
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 Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II TRANSFER AGENT
Director Gary T. Crum
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 Assistant Treasurer
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Robert G. Alley
President, Mercantile Bankshares Vice President State Street Bank and Trust Company
225 Franklin Street
Jack Fields Stuart W. Coco Boston, MA 02110
Chief Executive Officer Vice President
Texana Global, Inc.; COUNSEL TO THE FUND
Formerly Member Melville B. Cox
of the U.S. House of Representatives Vice President Ballard Spahr
Andrews & Ingersoll, LLP
Carl Frischling Karen Dunn Kelley 1735 Market Street
Partner Vice President Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel
Jonathan C. Schoolar COUNSEL TO THE TRUSTEES
Robert H. Graham Vice President
President and Chief Executive Officer Kramer, Levin, Naftalis & Frankel
A I M Management Group Inc. Renee A. Friedli 919 Third Avenue
Assistant Secretary New York, NY 10022
Lewis F. Pennock
Attorney P. Michelle Grace DISTRIBUTOR
Assistant Secretary
Ian W. Robinson A I M Distributors, Inc.
Consultant; Formerly Executive Jeffrey H. Kupor 11 Greenway Plaza
Vice President and Assistant Secretary Suite 100
Chief Financial Officer Houston, TX 77046
Bell Atlantic Management Nancy L. Martin
Services, Inc. Assistant Secretary
Louis S. Sklar Ofelia M. Mayo
Executive Vice President Assistant Secretary
Hines Interests
Limited Partnership Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
16
<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. Certain restrictions
apply.
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
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund
AIM Blue Chip Fund AIM Asian Growth Fund
AIM Capital Development Fund AIM Developing Markets Fund(2)
[PHOTO OF AIM Constellation Fund AIM Emerging Markets Fund(2)
11 GREENWAY PLAZA AIM Mid Cap Growth Fund(2) AIM Europe Growth Fund(2)
APPEARS HERE] AIM Select Growth Fund(3) AIM European Development Fund
AIM Small Cap Equity Fund(2) AIM International Equity Fund
AIM Small Cap Opportunities Fund AIM International Growth Fund(2)
AIM Value Fund AIM Weingarten Fund AIM Japan Growth Fund(2)
AIM Latin American Growth Fund(2)
GROWTH & INCOME FUNDS AIM New Pacific Growth Fund(2)
AIM Advisor Flex Fund GLOBAL GROWTH FUNDS
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund AIM Global Aggressive Growth Fund
AIM Advisor Real Estate Fund AIM Global Growth Fund
AIM America Value Fund(2) AIM Worldwide Growth Fund(2)
AIM Balanced Fund AIM Charter Fund
GLOBAL GROWTH & INCOME FUNDS
INCOME FUNDS
AIM Global Growth & Income Fund(2)
AIM Floating Rate Fund(2) AIM Global Utilities Fund
AIM High Yield Fund
AIM Income Fund GLOBAL INCOME FUNDS
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund AIM Global Government Income Fund(2)
AIM Global High Income Fund(2)
TAX-FREE INCOME FUNDS AIM Global Income Fund
AIM Strategic Income Fund(2)
AIM High Income Municipal Fund
AIM Municipal Bond Fund THEME FUNDS
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund AIM Global Consumer Products and Services Fund(2)
AIM Global Financial Services Fund(2)
MONEY MARKET FUNDS AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
AIM Dollar Fund(2) AIM Global Resources Fund(2)
AIM Money Market Fund AIM Global Telecommunications Fund(2)
AIM Tax-Exempt Cash Fund AIM New Dimension Fund(2)
</TABLE>
(1) AIM Aggressive Growth Fund was closed to new investors on June 5, 1997.
(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. 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.
A I M Management Group Inc. has provided leadership in the mutual fund industry
since 1976 and managed approximately $101 billion in assets for more than 5.2
million shareholders, including individual investors, corporate clients, and
financial institutions, as of June 30, 1998. The AIM Family of Funds--Registered
Trademark-- is distributed nationwide, and AIM today is the ninth-largest mutual
fund complex in the U.S. in assets under management, according to Strategic
Insight, an independent mutual fund monitor.
INVEST WITH DISCIPLINE(SM)
