<PAGE> 1
[COVER ART FOR SELECT GROWTH
THE ARTIST'S GARDEN AT GIVERNY]
AIM
SELECT GROWTH FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT DECEMBER 31, 1998
INVEST WITH DISCIPLINE--Registered Trademark--
<PAGE> 2
[ COVER IMAGE ]
-------------------------------------
THE ARTIST'S GARDEN AT GIVERNY
BY CLAUDE MONET (1840-1926, FRENCH)
A CAREFULLY SELECTED COMBINATION OF MULTI-COLORED FLOWERS
CAN RESULT IN A STUNNINGLY BEAUTIFUL GARDEN, JUST LIKE THE
ONE DEPICTED IN MONET'S CLASSIC WORK. IN AIM SELECT
GROWTH FUND, WE ENDEAVOR TO OWN THE MOST ATTRACTIVE
LARGE-, MID- AND SMALL-CAP STOCKS IN AN EFFORT TO PRODUCE
THE BEST RESULTS FOR OUR INVESTORS.
-------------------------------------
For shareholders who seek long-term growth of capital. The Fund invests
primarily in the common stocks of established medium- to large-sized companies
with prospects for above-average, long-term earnings growth.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Select Growth 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 differences in sales charge
structure and class expenses.
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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Russell 3000 Index measures the performance of the stocks of
the 3,000 largest U.S. companies based on total market capitalization. The
unmanaged Russell 2000 Index measures the performance of the 2,000 smallest
companies in the Russell 3000 Index and is generally considered
representative of the performance of stocks of small-capitalization
companies.
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of
30 actively traded primarily industrial stocks.
o The Standard & Poor's Composite Index of 500 stocks (S&P 500) is a group of
unmanaged securities widely regarded by investors to be representative of
the stock market in general. The Standard & Poor's Mid-Cap 400 Index (S&P
400) is an unmanaged index comprising common stocks of approximately 400
mid-capitalization companies.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. THERE IS A RISK THAT YOU
COULD LOSE A PORTION OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons who
have received a current prospectus of the Fund.
AIM SELECT GROWTH FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
As the fiscal year opened, markets were recovering from
[Photo of the concerns produced by financial crises in Asia during
Charles T. Bauer 1997, and this optimism early in 1998 led several market
Chairman of indexes to all-time highs in spring and early summer.
the Board of However, the year was to bring two particularly serious
the Fund appears financial shocks, first the debt default by Russia, and
here] later the gathering crisis in Brazil, which devalued its
currency shortly after the fiscal year closed. The result
was another year of significant market volatility here and
abroad.
Optimism yielded to pessimism over the summer amid
global financial crises and a widespread decline in U.S.
corporate earnings growth. Particularly from July through
October, a major market correction for equities, including
previously high-flying blue chips, bolstered U.S. Treasury
issues, whose safety attracts investors in doubtful times.
Beginning in late September, the U.S. Federal Reserve Board intervened to pump
liquidity and confidence into markets. Investors responded favorably, and the
year closed on a positive note with domestic equities rallying and bonds
displaying much less momentum.
Some stock indexes produced excellent total return for the year, with the
S&P 500 index of large-company stocks up a dramatic 28.60%. But focusing on one
market benchmark may give you an incomplete view. There was wide divergence
among market segments this fiscal year. For example, the Russell 2000 index of
small-company stocks declined 2.55%. Even within the S&P 500, the bigger the
company, the better the performance.
HOW SHOULD INVESTORS RESPOND?
We understood how unnerving 1998's level of volatility could have been. Of
course, our repeated message to you is to keep a long-term outlook on
investments rather than responding to short-term fluctuations. And we are
pleased to note that most mutual fund shareholders remained cool headed and did
not pull out of the markets during 1998. In the end, most were rewarded for
their long-term perspective.
In view of recent volatility and the divergent performance of market
sectors, this may be a very good time to meet with your financial consultant to
review your current asset allocation and the diversification of your portfolio.
Broad portfolio diversification remains one of the most fundamental principles
of investing, along with long-term thinking and realistic expectations.
YOUR FUND MANAGERS' COMMENTS
On the pages that follow, your Fund's managers, experienced professionals
who have weathered previous periods of market turbulence, offer more detailed
discussion of how markets behaved, how they managed the portfolio in light of
recent volatility, and what they foresee for markets and your Fund. We hope you
find their discussion informative.
YEAR 2000 CONCERN
Many of our shareholders have asked us about AIM's year 2000 readiness status.
We appreciate these concerns, and we take the year 2000 issue seriously. AIM
has devoted considerable effort to creating a comprehensive plan for assessing,
correcting and testing our in-house systems. We will also participate in an
industrywide testing effort scheduled to begin in March. But no matter how well
we prepare and test, no one can know for sure what the year 2000 will bring.
Our industry's systems are connected in complex ways to many third parties, and
there may be unforeseen problems when the year 2000 actually arrives. Though we
cannot predict what all those problems might be, we are working with our
business recovery team to develop contingency plans appropriate for a variety
of year 2000 scenarios.
We are pleased to send you this report on your Fund's fiscal year. If you
have any questions or comments, please contact our Client Services department
at 800-959-4246, or e-mail your inquiry to us at [email protected]. You can
access information about your account through our AIM Investor Line at
800-246-5463 or at our Web site, www.aimfunds.com. We often post market updates
on our Web site.
We thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
-------------------------------------
. . . WE ARE PLEASED
TO NOTE THAT MOST
MUTUAL FUND
SHAREHOLDERS REMAINED
COOL HEADED AND DID NOT
PULL OUT OUT OF THE
MARKETS DURING 1998.
-------------------------------------
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
AIM SELECT GROWTH FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
LARGE-CAP STOCKS, TECH HOLDINGS BOOST
FUND PERFORMANCE
1998 WAS THE MOST VOLATILE YEAR IN THE STOCK MARKET IN MORE THAN A DECADE. HOW
DID THE FUND PERFORM?
Despite a roller coaster stock market, the Fund's diversified investment
approach enabled it to post impressive gains for the year. Total returns for
Class A, B and C shares were 27.09%, 26.13% and 26.07%, respectively, which
beat the 24.14% total return for the Russell 3000 Index.
TOTAL RETURN
Year ended December 31. 1998
================================================================================
27.09% 26.13% 26.07% 24.14%
CLASS A CLASS B CLASS C RUSSELL
SHARES SHARES SHARES 3000
================================================================================
The Fund's performance from the market low on October 8 through the end of
the fiscal year was particularly dramatic. Total return was 52.37%, 52.01% and
51.93% for Class A, B and C shares, respectively. Over the same period, the
Standard and Poor's Composite Index of 500 Stocks (S&P 500) gained 28.52% while
the Russell 3000 gained 30.87%.
WHAT WERE THE MAJOR TRENDS IN THE STOCK MARKET?
Early in the year, markets shook off initial concerns about the potential
impact of the economic turmoil in Asia and soared to new heights in April.
Although renewed fears about Asia's impact halted the rally, large-cap stocks
rebounded and the Dow Jones Industrial Average (the Dow) set a record in July.
The Dow then lost 16.82% of its value between July 17 and October 8. Severe
economic problems in Russia and Latin America as well as Asia, combined with
political controversy in the United States, prompted the selloff.
However, the market rebounded impressively in October as the Dow posted its
best percentage gain for a single month in more than 11 years. The Federal
Reserve Board (the Fed) cut interest rates three times in the fall. These Fed
moves, combined with encouraging economic indicators, sparked a strong rally in
the stock market. The Dow soared to a record high on November 23 and ended the
year up 18.15%.
HOW DID LARGE-, MID- AND SMALL-CAP STOCKS FARE IN THIS ENVIRONMENT?
In 1998, size did matter-large-cap stocks outperformed mid- and small-cap stocks
by a wide margin. In the uncertain market environment created by foreign
economic problems and domestic political controversy, investors favored
large-cap stocks because of their greater liquidity. Mid-cap stocks, which were
in the doldrums for much of the year, finished strongly, and the Standard &
Poor's Mid Cap 400 Index wound up posting a 18.25% gain for 1998. Small-cap
stocks, on the other hand, were in the throes of a severely declining market for
much of the reporting period. Although small caps bounced back impressively in
the fall, the Russell 2000 Index still ended the year down 2.55%.
WHAT WERE OTHER NOTEWORTHY TRENDS IN THE MARKET?
The stocks of companies expected to experience strong earnings growth
out-performed stocks considered to be under-valued relative to the rest of the
market. 1998 also was a banner year for technology.
WAS THE FUND IN A GOOD POSITION TO TAKE ADVANTAGE OF THESE TRENDS?
Absolutely. At the end of the year, large-cap stocks, the market favorites,
composed 58% of the Fund's holdings. Mid-cap stocks composed 37% of the
portfolio, while small-cap stocks made up only 5%. The Fund's growth-stock
orientation along with its heavy weighting in the high-flying technology sector
also enhanced performance.
During the fiscal year, we completed the process of restructuring the portfolio
to include the most attractive large-, mid- and small-cap growth and value
stocks.
We have reduced the number of holdings in the Fund from 319 at the beginning
of the fiscal year to 128 at its conclusion. As of December 31, 1998, the
Fund's top sector weightings included technology, 32%; financial, 16%; and
health care, 13%. During the six months since our last report, we slightly
increased our holdings in all three of these sectors.
HOW DID TECHNOLOGY STOCKS PERFORM?
Despite volatility, technology stocks were the top-performing equity sector in
1998. Investors flocked to Internet-related companies as they considered the
possibilities for explosive growth in the new medium.
-------------------------------------
DURING THE FISCAL YEAR, WE COMPLETED
THE PROCESS OF RESTRUCTURING THE PORTFOLIO
TO INCLUDE THE MOST ATTRACTIVE LARGE-, MID- AND SMALL-CAP
GROWTH AND VALUE STOCKS.
-------------------------------------
See important Fund and index disclosures inside front cover.
AIM SELECT GROWTH FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 12/31/98, based on total net assets
<TABLE>
<CAPTION>
===========================================================================================================================
Top 10 Equity Holdings Top 10 Industries
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. America Online, Inc. 4.29% 1. Computers (Software & Services) 14.48%
2. MCI/WorldCom, Inc. 3.11 2. Financial (Diversified) 6.89
3. Microsoft Corp. 2.56 3. Telecommunications (Long Distance) 3.39
4. Freddie Mac 2.05 4. Electrical Equipment 3.36
5. Warner-Lambert Co. 1.79 5. Health Care (Drugs-Generic & Other) 3.27
6. Dell Computer Corp. 1.70 6. Electronics (Semiconductors) 3.19
7. Tyco International Ltd. 1.67 7. Communications Equipment 3.10
8. CVS Corp. 1.40 8. Services (Data Processing) 2.97
9. Comverse Technology, Inc. 1.34 9. Consumer Finance 2.67
10. Pfizer Inc. 1.33 10. Broadcasting (Television, Radio & Cable) 2.44
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>
Technology companies also benefited from consumer demand for computers costing
less than $1,000, the need to upgrade computers to avoid complications
associated with the so-called "millennium bug," and the introduction of faster
and more powerful chips and software.
America Online (AOL), the Fund's top holding, is the world's largest
Internet online service provider with approximately 15 million subscribers. The
company reported robust earnings in 1998, and its stock soared in December
after it was announced that AOL would be added to the S&P 500.
The Fund also got a boost from owning the stocks of software giant
Microsoft; MCI/WorldCom, a leading global provider of telephone, Internet and
data communications services; Comverse Technology, a manufacturer of enhanced
telecommunications systems; and Dell Computer, a leading maker and marketer of
a wide range of computer systems and a pioneer of on-line selling.
WHAT MADE FINANCIAL STOCKS ATTRACTIVE?
During the first half of the year, the financial sector benefited from
declining interest rates, low inflation, a series of key mergers and a
burgeoning stock market. However, financial-company stocks were pummeled when
equity markets plunged in the late summer and early fall. Financial stocks
rebounded toward the end of the year following the Fed's three interest-rate
cuts and the stock market's resurgence.
Financial stocks that performed well for the Fund included Federal Home
Loan Mortgage Corp. (Freddie Mac), which purchases mortgages and sells them to
investors as guaranteed mortgage passthrough securities; Knight/Trimark, a
securities broker which has established a significant online trading presence;
and Chase Manhattan, the nation's second largest bank.
WHAT ABOUT HEALTH-CARE STOCKS?
Within the health-care sector, the stocks of medical-supply and pharmaceutical
companies soared while the stocks of health-care service providers languished.
Pharmaceutical companies in particular enjoyed robust earnings as they
continued to offer a wide range of new products that were enthusiastically
received by a health-conscious population.
The Fund's health-care holdings included Warner-Lambert, one of the
fastest-growing U.S. drug companies. The company is benefiting from the success
of a cholesterol-reducing drug and a diabetes treatment. Other stocks in the
portfolio included Guidant, which develops and sells products used for cardiac
rhythm management, Watson Pharmaceuticals, which offers generic versions of
brand-name drugs, and prescription-drug manufacturer Pfizer, developer of the
highly publicized drug Viagra.
WHAT IS YOUR OUTLOOK?
We expect the low-inflation, low-interest rate environment that proved so
favorable to the stock market in 1998 to persist in the months ahead. We also
believe the economy will continue to grow, but at a slower pace. Corporate
profits are expected to decline for larger companies while remaining robust for
mid- and small-sized companies. Such a trend could prove beneficial to mid- and
small-cap stocks. Since our stock-selection process is based on corporate
earnings, we believe the Fund will be well positioned.
Given the unsettling economic problems in Asia, Russia and Latin America,
as well as political controversy in the United States, stock markets could
remain volatile. In such an environment, investors would be well advised to
focus on their long-term financial goals, rather than transitory market
fluctuations.
See important Fund and index disclosures inside front cover.
AIM SELECT GROWTH FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM SELECT GROWTH FUND, CLASS A SHARES VS. BENCHMARK INDEXES
12/31/88-12/31/98
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/98 including sales charges
CLASS A SHARES
10 Years 14.24%
5 Years 16.79
1 Year 20.12*
*27.09% excluding sales charges
CLASS B SHARES
Inception (9/1/93) 15.64%
5 Years 16.87
1 Year 21.13**
**26.13% excluding CDSC
CLASS C SHARES
Inception (8/4/97) 14.63%
1 Year 25.07***
***26.07% excluding CDSC.
==============================================================================
Sources: Towers Data Systems HYPO--Registered Trademark--, Morgan Stanley
Capital International.
Your Fund's total return includes sales charges, expenses, and management
fees. The performance of the Fund's Class B and C shares will differ from that
of Class A shares due to differing fees and expenses. For Fund performance
calculations and descriptions of indexes cited on this page, please refer to
the inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF
AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
==============================================================================
- ------------------------------------------------------------------------------
AIM SELECT S&P 500 Russell 3000
GROWTH FUND
Class A Shares
- ------------------------------------------------------------------------------
12/88 9,453 10,000 10,000
12/89 12,183 13,164 12,932
12/90 11,569 12,756 12,278
12/91 15,855 16,635 16,410
12/92 15,885 17,901 17,999
12/93 16,462 19,703 19,956
12/94 15,640 19,962 19,992
12/95 21,005 27,457 27,350
12/96 24,913 33,758 33,318
12/97 29,781 45,018 43,909
12/98 37,849 57,881 54,509
Past performance is no guarantee of comparable future results.
==============================================================================
ABOUT THIS CHART
The chart above 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
these benchmarks over the period 12/31/88-12/31/98. It is important to
understand the difference 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 the performance of a hypothetical portfolio,
in this case the Russell 3000 Index and the S&P 500. Market indexes such as the
Russell 3000 Index and the S&P 500 are not managed, incurring no sales charges,
expenses, or fees. If you could buy all the securities that make up a market
index, you would incur expenses that would affect your investment's return.
AIM Select Growth Fund has elected to use the Russell 3000 Index as its
benchmark because it more closely reflects the performance of stocks in which
the Fund invests. The Fund will no longer measure its performance against the
S&P 500, the index published in previous reports to shareholders. Because this
is the first reporting period since we have adopted the new index, SEC
guidelines require that we compare the Fund's performance to both the old and
the new index.
AIM SELECT GROWTH FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-89.75%
BANKS (MONEY CENTER)-0.99%
Chase Manhattan Corp. (The) 110,400 $ 7,514,101
- --------------------------------------------------------------
BANKS (REGIONAL)-0.50%
AmSouth Bancorporation 82,500 3,764,064
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-2.44%
CBS Corp.(a) 122,400 4,008,601
- --------------------------------------------------------------
Chancellor Media Corp.(a) 76,000 3,638,500
- --------------------------------------------------------------
Clear Channel Communications, Inc.(a) 153,400 8,360,300
- --------------------------------------------------------------
Jacor Communications, Inc.(a) 38,500 2,478,438
- --------------------------------------------------------------
18,485,839
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-2.51%
Comverse Technology, Inc.(a) 143,300 10,174,301
- --------------------------------------------------------------
Lucent Technologies, Inc. 80,400 8,844,000
- --------------------------------------------------------------
19,018,301
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-1.70%
Dell Computer Corp.(a) 176,000 12,881,001
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-2.19%
EMC Corp.(a) 100,000 8,500,001
- --------------------------------------------------------------
Quantum Corp.(a) 380,000 8,075,000
- --------------------------------------------------------------
16,575,001
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-14.48%
America Online, Inc.(a) 203,000 32,480,001
- --------------------------------------------------------------
BMC Software, Inc.(a) 108,000 4,812,750
- --------------------------------------------------------------
Cadence Design Systems, Inc.(a) 147,000 4,373,250
- --------------------------------------------------------------
Citrix Systems, Inc.(a) 61,650 5,983,903
- --------------------------------------------------------------
Compuware Corp.(a) 104,000 8,125,000
- --------------------------------------------------------------
Concord EFS, Inc.(a) 116,550 4,938,806
- --------------------------------------------------------------
Electronic Arts, Inc.(a) 96,700 5,427,287
- --------------------------------------------------------------
HBO & Co. 226,400 6,494,850
- --------------------------------------------------------------
InfoSpace.com, Inc.(a) 50,300 1,917,687
- --------------------------------------------------------------
ISS Group, Inc.(a) 8,200 451,000
- --------------------------------------------------------------
Medical Manager Corp.(a) 120,000 3,765,000
- --------------------------------------------------------------
Microsoft Corp.(a) 139,800 19,388,512
- --------------------------------------------------------------
Sterling Commerce, Inc.(a) 100,000 4,500,000
- --------------------------------------------------------------
USWeb Corp.(a) 261,000 6,883,875
- --------------------------------------------------------------
109,541,921
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER FINANCE-2.67%
Capital One Financial Corp. 31,000 $ 3,565,001
- --------------------------------------------------------------
Household International, Inc. 153,400 6,078,475
- --------------------------------------------------------------
MBNA Corp. 158,925 3,963,192
- --------------------------------------------------------------
Providian Financial Corp. 88,050 6,603,750
- --------------------------------------------------------------
20,210,418
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.62%
McKesson Corp. 59,000 4,664,689
- --------------------------------------------------------------
ELECTRIC COMPANIES-1.43%
Niagara Mohawk Power Corp.(a) 214,300 3,455,588
- --------------------------------------------------------------
Northeast Utilities(a) 146,600 2,345,600
- --------------------------------------------------------------
Texas Utilities Co. 107,000 4,995,562
- --------------------------------------------------------------
10,796,750
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.63%
American Power Conversion Corp.(a) 50,000 2,421,876
- --------------------------------------------------------------
Raychem Corp. 52,700 1,702,868
- --------------------------------------------------------------
Sanmina Corp.(a) 87,200 5,450,000
- --------------------------------------------------------------
SCI Systems, Inc.(a) 99,500 5,746,125
- --------------------------------------------------------------
Solectron Corp.(a) 49,000 4,553,937
- --------------------------------------------------------------
19,874,806
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.47%
Waters Corp.(a) 41,000 3,577,251
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-3.19%
Altera Corp.(a) 140,400 8,546,851
- --------------------------------------------------------------
Linear Technology Corp. 44,400 3,976,575
- --------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 70,000 3,058,125
- --------------------------------------------------------------
PMC-Sierra, Inc.(a) 135,800 8,572,375
- --------------------------------------------------------------
24,153,926
- --------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.46%
McDermott International, Inc. 140,700 3,473,532
- --------------------------------------------------------------
ENTERTAINMENT-1.19%
SFX Entertainment, Inc.-Class A(a) 164,200 9,010,476
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-0.62%
Teradyne, Inc.(a) 110,000 4,661,251
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-6.89%
American Express Co. 40,100 4,100,226
- --------------------------------------------------------------
Associates First Capital
Corp.-Class A 175,200 7,424,100
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-(CONTINUED)
Citigroup Inc. 200,250 $ 9,912,375
- --------------------------------------------------------------
Fannie Mae 81,500 6,031,000
- --------------------------------------------------------------
Freddie Mac 241,020 15,530,726
- --------------------------------------------------------------
Hamilton Bancorp, Inc.(a) 98,000 2,615,375
- --------------------------------------------------------------
Heller Financial, Inc. 95,300 2,799,437
- --------------------------------------------------------------
MGIC Investment Corp. 92,900 3,698,581
- --------------------------------------------------------------
52,111,820
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.79%
Warner-Lambert Co. 180,000 13,533,751
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-3.27%
Forest Laboratories, Inc.(a) 105,200 5,595,325
- --------------------------------------------------------------
ICN Pharmaceuticals, Inc. 115,750 2,618,843
- --------------------------------------------------------------
Jones Pharma Inc. 110,000 4,015,000
- --------------------------------------------------------------
Medicis Pharmaceutical-Class A(a) 78,000 4,650,750
- --------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 125,000 7,859,375
- --------------------------------------------------------------
24,739,293
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-1.71%
Lilly (Eli) & Co. 32,300 2,870,662
- --------------------------------------------------------------
Pfizer Inc. 80,400 10,085,175
- --------------------------------------------------------------
12,955,837
- --------------------------------------------------------------
HEALTH CARE (LONG-TERM CARE)-0.46%
HCR Manor Care, Inc.(a) 118,700 3,486,812
- --------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.99%
Express Scripts, Inc.-Class A(a) 34,600 2,322,525
- --------------------------------------------------------------
United HealthCare Corp. 119,800 5,158,887
- --------------------------------------------------------------
7,481,412
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.38%
Arterial Vascular Engineering,
Inc.(a) 27,700 1,454,250
- --------------------------------------------------------------
Beckman Coulter Inc. 34,300 1,860,775
- --------------------------------------------------------------
Biomet, Inc. 120,600 4,854,150
- --------------------------------------------------------------
Guidant Corp. 52,500 5,788,125
- --------------------------------------------------------------
Sybron International Corp.(a) 149,000 4,050,937
- --------------------------------------------------------------
18,008,237
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.91%
Ocular Sciences, Inc.(a) 125,000 3,343,750
- --------------------------------------------------------------
Omnicare, Inc. 71,400 2,481,150
- --------------------------------------------------------------
Quintiles Transnational Corp.(a) 20,400 1,088,850
- --------------------------------------------------------------
6,913,750
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOMEBUILDING-0.43%
Clayton Homes, Inc. 235,000 $ 3,245,937
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.57%
Conseco, Inc. 141,400 4,321,537
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.33%
Century Business Services, Inc.(a) 100,000 1,437,500
- --------------------------------------------------------------
MONY Group, Inc. (The)(a) 33,900 1,061,493
- --------------------------------------------------------------
2,498,993
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-0.35%
CMAC Investment Corp. 57,000 2,618,437
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-1.48%
Affiliated Managers Group, Inc.(a) 54,300 1,622,212
- --------------------------------------------------------------
Knight/Trimark Group, Inc.-Class A(a) 400,000 9,575,000
- --------------------------------------------------------------
11,197,212
- --------------------------------------------------------------
LODGING-HOTELS-1.20%
Carnival Corp.-Class A 189,500 9,096,000
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.67%
Tyco International Ltd. 167,700 12,650,868
- --------------------------------------------------------------
NATURAL GAS-0.42%
Enron Corp. 56,000 3,195,500
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.39%
Knoll, Inc.(a) 100,000 2,962,500
- --------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.46%
Atlantic Richfield Co. 52,900 3,451,725
- --------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.94%
ENSCO International, Inc. 344,600 3,682,912
- --------------------------------------------------------------
Schlumberger Ltd. 73,400 3,385,575
- --------------------------------------------------------------
7,068,487
- --------------------------------------------------------------
PERSONAL CARE-0.51%
Steiner Leisure Ltd.(a) 120,000 3,840,000
- --------------------------------------------------------------
RAILROADS-0.67%
Kansas City Southern Industries,
Inc. 103,000 5,066,312
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.00%
Home Depot, Inc. (The) 45,200 2,765,675
- --------------------------------------------------------------
Lowe's Companies, Inc. 93,600 4,791,150
- --------------------------------------------------------------
7,556,825
- --------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.12%
CDW Computer Centers, Inc.(a) 76,050 7,296,046
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (COMPUTERS & ELECTRONICS)-(CONTINUED)
Tech Data Corp.(a) 30,000 $ 1,207,500
- --------------------------------------------------------------
8,503,546
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-1.08%
J.C. Penney Co., Inc. 61,200 2,868,750
- --------------------------------------------------------------
Kohl's Corp.(a) 21,800 1,339,337
- --------------------------------------------------------------
Saks Inc.(a) 124,500 3,929,531
- --------------------------------------------------------------
8,137,618
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.49%
Dollar Tree Stores, Inc.(a) 84,025 3,670,842
- --------------------------------------------------------------
RETAIL (DRUG STORES)-1.40%
CVS Corp. 192,498 10,587,390
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-2.09%
Kroger Co.(a) 114,900 6,951,450
- --------------------------------------------------------------
Safeway, Inc.(a) 146,000 8,896,875
- --------------------------------------------------------------
15,848,325
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-1.94%
Costco Companies, Inc.(a) 76,000 5,486,250
- --------------------------------------------------------------
Dayton Hudson Corp. 170,000 9,222,500
- --------------------------------------------------------------
14,708,750
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.91%
Williams-Sonoma, Inc.(a) 170,000 6,853,125
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.43%
Washington Mutual, Inc. 85,512 3,265,489
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.18%
Young & Rubicam, Inc.(a) 42,600 1,379,175
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.83%
Convergys Corp.(a) 98,000 2,192,750
- --------------------------------------------------------------
Service Corp. International 162,400 6,181,350
- --------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 210,800 4,690,300
- --------------------------------------------------------------
Trammell Crow Co.(a) 28,400 795,200
- --------------------------------------------------------------
13,859,600
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.52%
SunGard Data Systems Inc.(a) 98,600 3,913,187
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.97%
Affiliated Computer Services, Inc.(a) 22,600 1,017,000
- --------------------------------------------------------------
CSG Systems International, Inc.(a) 90,000 7,110,000
- --------------------------------------------------------------
DST Systems, Inc.(a) 58,100 3,315,331
- --------------------------------------------------------------
Fiserv, Inc.(a) 56,850 2,924,221
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (DATA PROCESSING)-(CONTINUED)
NOVA Corp.(a) 102,233 $ 3,546,189
- --------------------------------------------------------------
Paychex, Inc. 89,000 4,577,937
- --------------------------------------------------------------
22,490,678
- --------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.34%
Robert Half International, Inc.(a) 58,000 2,591,875
- --------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.41%
Corrections Corp. of America(a) 177,600 3,130,200
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-3.11%
MCI WorldCom, Inc.(a) 327,963 23,531,345
- --------------------------------------------------------------
TEXTILES (APPAREL)-0.48%
Tommy Hilfiger Corp.(a) 60,200 3,612,000
- --------------------------------------------------------------
TOBACCO-1.32%
Philip Morris Companies, Inc. 186,800 9,993,800
- --------------------------------------------------------------
WASTE MANAGEMENT-2.22%
Allied Waste Industries, Inc.(a) 226,050 5,340,431
- --------------------------------------------------------------
KTI, Inc.(a) 210,000 4,541,250
- --------------------------------------------------------------
Waste Management, Inc. 148,920 6,943,395
- --------------------------------------------------------------
16,825,076
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $419,252,775) 679,106,593
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-1.60%
BERMUDA-0.28%
Global Crossing Ltd.
(Telecommunications-Long Distance)(a) 47,600 2,147,950
- --------------------------------------------------------------
FINLAND-0.59%
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 36,700 4,420,056
- --------------------------------------------------------------
NETHERLANDS-0.73%
Philips Electronics N.V.-ADR-New
York Shares (Electrical Equipment) 81,200 5,496,225
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$7,151,112) 12,064,231
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
DOMESTIC CONVERTIBLE CORPORATE
NOTES-0.25%
COMPUTERS (PERIPHERALS)-0.25%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 (Cost $677,145) $ 500,000 $ 1,885,000
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-2.62%
U.S. TREASURY BILLS(B)-2.62%
4.439%, 03/25/99(c) (Cost
$19,844,292) $20,050,000 $ 19,844,292
- --------------------------------------------------------------
REPURCHASE AGREEMENT(d)-4.63%
Goldman, Sachs & Co., 4.40%,
01/04/99(e) (Cost $35,047,833) 35,047,833 35,047,833
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.85% 747,947,949
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.15% 8,698,821
- --------------------------------------------------------------
NET ASSETS-100.00% $756,646,770
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) U.S. Treasury bills are traded on discount basis. In such cases the interest
rate shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 8.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$700,342,222. Collateralized by $646,494,000 U.S. Government obligations, 0%
to 11.75% due 02/15/99 to 04/15/28 with an aggregate market value at
12/31/98 of $714,694,897.
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Sub. - Subordinated
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$481,973,157) $747,947,949
- ---------------------------------------------------------
Receivables for:
Investments sold 10,294,721
- ---------------------------------------------------------
Fund shares sold 6,395,594
- ---------------------------------------------------------
Dividends and interest 216,101
- ---------------------------------------------------------
Variation margin 57,800
- ---------------------------------------------------------
Investment for deferred compensation plan 67,342
- ---------------------------------------------------------
Other assets 59,351
- ---------------------------------------------------------
Total assets 765,038,858
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 5,243,174
- ---------------------------------------------------------
Fund shares reacquired 1,859,671
- ---------------------------------------------------------
Deferred compensation plan 67,342
- ---------------------------------------------------------
Accrued advisory fees 393,919
- ---------------------------------------------------------
Accrued distribution fees 649,458
- ---------------------------------------------------------
Accrued transfer agent fees 87,005
- ---------------------------------------------------------
Accrued operating expenses 91,519
- ---------------------------------------------------------
Total liabilities 8,392,088
- ---------------------------------------------------------
Net assets applicable to shares outstanding $756,646,770
- ---------------------------------------------------------
NET ASSETS:
Class A $320,143,475
=========================================================
Class B $428,001,840
=========================================================
Class C $ 8,501,455
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 16,543,648
=========================================================
Class B 23,350,643
=========================================================
Class C 464,149
=========================================================
Class A:
Net asset value and redemption price per
share $ 19.35
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $19.35
divided by 94.50%) $ 20.48
=========================================================
Class B:
Net asset value and offering price per
share $ 18.33
=========================================================
Class C:
Net asset value and offering price per
share $ 18.32
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $14,769 foreign
withholding tax) $ 2,559,950
- ---------------------------------------------------------
Interest 3,261,372
- ---------------------------------------------------------
Total investment income 5,821,322
- ---------------------------------------------------------
EXPENSES:
Advisory fees 4,362,261
- ---------------------------------------------------------
Administrative services fees 78,567
- ---------------------------------------------------------
Custodian fees 65,321
- ---------------------------------------------------------
Transfer agent fees-Class A 383,508
- ---------------------------------------------------------
Transfer agent fees-Class B 774,106
- ---------------------------------------------------------
Transfer agent fees-Class C 10,945
- ---------------------------------------------------------
Trustees' fees 12,591
- ---------------------------------------------------------
Distribution fees-Class A 701,677
- ---------------------------------------------------------
Distribution fees-Class B 3,710,226
- ---------------------------------------------------------
Distribution fees-Class C 42,675
- ---------------------------------------------------------
Other 225,296
- ---------------------------------------------------------
Total expenses 10,367,173
- ---------------------------------------------------------
Less: Expenses paid indirectly (12,167)
- ---------------------------------------------------------
Net expenses 10,355,006
- ---------------------------------------------------------
Net investment income (loss) (4,533,684)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FUTURES AND OPTION
CONTRACTS:
Net realized gain (loss) from:
Investment securities 10,012,133
- ---------------------------------------------------------
Futures contracts 7,613,270
- ---------------------------------------------------------
Option contracts (9,052)
- ---------------------------------------------------------
17,616,351
- ---------------------------------------------------------
Net unrealized appreciation of:
Investment securities 147,338,375
- ---------------------------------------------------------
Foreign currencies 26
- ---------------------------------------------------------
Futures contracts 1,416,600
- ---------------------------------------------------------
148,755,001
- ---------------------------------------------------------
Net gain from investment securities,
foreign currencies, futures and
option contracts 166,371,352
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $161,837,668
=========================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (4,533,684) $ (2,562,900)
- -------------------------------------------------------------------------------------------
Net realized gain from investment securities, futures and
option contracts 17,616,351 68,573,981
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and futures contracts 148,755,001 29,604,019
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 161,837,668 95,615,100
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A -- (115,803)
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (8,360,767) (28,869,623)
- -------------------------------------------------------------------------------------------
Class B (11,756,791) (40,478,955)
- -------------------------------------------------------------------------------------------
Class C (234,011) (105,058)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A (7,618,676) 23,238,247
- -------------------------------------------------------------------------------------------
Class B (6,948,989) 64,250,779
- -------------------------------------------------------------------------------------------
Class C 6,185,419 1,318,691
- -------------------------------------------------------------------------------------------
Net increase in net assets 133,103,853 114,853,378
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 623,542,917 508,689,539
- -------------------------------------------------------------------------------------------
End of period $756,646,770 $623,542,917
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $494,529,257 $499,110,813
- -------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (71,168) (34,200)
- -------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, futures and option contracts (4,913,364) 6,119,260
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 267,102,045 118,347,044
- -------------------------------------------------------------------------------------------
$756,646,770 $623,542,917
===========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Select Growth 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 shares and Class C shares are sold with a contingent
deferred sales charge. Matters affecting each portfolio or class are voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to achieve long-term growth of capital by
investing primarily in the common stocks of established medium-to-large size
companies with prospects for above-average, long-term earnings growth.
Realization of current income is an incidental consideration.
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 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
10
<PAGE> 13
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. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
C. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may 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.
D. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date and paid annually. On
December 31, 1998 additional paid-in capital was increased by $3,800,690,
undistributed net investment income was increased by $4,496,716 and
undistributed net realized gains was decreased by $8,297,406 as a result of
equalization credits and net operating loss reclassifications 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 reclassifications discussed above.
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. 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
11
<PAGE> 14
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.
G. Put Options -- The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the
Fund to hedge securities it owns by locking in a minimum price at which the
Fund can sell. If security prices fall, the put option could be exercised
to offset all or a portion of the Fund's resulting losses. At the same
time, because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged. The Fund
will not purchase put options where the aggregate value of the securities
underlying all such options exceeds 25% of the value of its net assets.
H. Stock Index Futures Contracts -- The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash as collateral for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contracts are open, changes in the value of
the contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the Fund's
portfolio being hedged.
I. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
NOTE 2- ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The 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 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended December 31,
1998, AIM was reimbursed $78,567 for such services.
The Fund, pursuant to a transfer agency and shareholder 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,
1998, AFS was paid $666,866 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 year ended December 31, 1998, the Class A, Class B and Class
C shares paid AIM Distributors $701,677, $3,710,226 and $42,675, respectively,
as compensation under the Plans.
AIM Distributors received commissions of $136,229 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1998,
AIM Distributors received $105,783 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, 1998, the Fund paid legal fees of $4,830
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 year ended December 31, 1998, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $7,306 and $4,861, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $12,167 during the year ended December 31, 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.
12
<PAGE> 15
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 year ended December 31, 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 year ended December 31, 1998 was
$400,007,825 and $403,676,609, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of December 31, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $273,731,588
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (8,010,915)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $265,720,673
=========================================================
</TABLE>
Cost of investments for tax purposes is $482,227,276.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 31,005,519 $ 526,456,274 14,466,946 $ 234,213,923
- --------------------------------------------------------------------------------
Class B 5,430,217 86,111,821 7,100,475 113,053,525
- --------------------------------------------------------------------------------
Class C* 569,912 9,220,769 104,003 1,760,456
- --------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 444,090 7,953,651 1,802,991 27,333,257
- --------------------------------------------------------------------------------
Class B 649,261 11,017,972 2,600,309 37,704,454
- --------------------------------------------------------------------------------
Class C* 13,022 220,846 6,820 98,891
- --------------------------------------------------------------------------------
Reacquired:
Class A (31,896,692) (542,028,601) (14,695,429) (238,308,933)
- --------------------------------------------------------------------------------
Class B (6,508,718) (104,078,782) (5,524,470) (86,507,200)
- --------------------------------------------------------------------------------
Class C* (198,182) (3,256,196) (31,426) (540,656)
- --------------------------------------------------------------------------------
(491,571) $ (8,382,246) 5,830,219 $ 88,807,717
================================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
NOTE 8-OPEN FUTURES CONTRACTS
On December 31, 1998, $1,020,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
<TABLE>
<CAPTION>
NUMBER OF UNREALIZED
CONTRACTS CONTRACTS MONTH/COMMITMENT APPRECIATION
--------- --------- ---------------- ------------
<S> <C> <C> <C>
S&P 500 Index 68 March 99/Buy $1,127,100
</TABLE>
NOTE 9-CALL OPTION CONTRACTS WRITTEN
Transactions in call option contracts written during the year ended December 31,
1998 are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Beginning of period -- $ --
- ------------------------------------------------------------
Written 2,056 1,225,702
- ------------------------------------------------------------
Closed (478) (188,956)
- ------------------------------------------------------------
Exercised (1,329) (971,846)
- ------------------------------------------------------------
Expired (249) (64,900)
- ------------------------------------------------------------
End of period -- $ --
- ------------------------------------------------------------
</TABLE>
13
<PAGE> 16
NOTE 10-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1998; and for a share of Class C outstanding during the year ended
December 31, 1998 and the period August 4, 1997 (date sales commenced) through
December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.67 $ 14.78 $ 13.05 $ 10.32 $ 11.32
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.04) 0.01(a) 0.07 0.02(a) --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 4.24 2.82 2.34 3.50 (0.57)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 4.20 2.83 2.41 3.52 (0.57)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- (0.01) -- -- --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains (0.52) (1.93) (0.68) (0.79) (0.43)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.52) (1.94) (0.68) (0.79) (0.43)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 19.35 $ 15.67 $ 14.78 $ 13.05 $ 10.32
============================================================ ======== ======== ======== ======== ========
Total return(b) 27.09% 19.54% 18.61% 34.31% (4.99)%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $320,143 $266,168 $227,882 $168,217 $123,271
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.11%(c) 1.13%() 1.18% 1.28% 1.22%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets (0.22)%(c) 0.04%() 0.46% 0.20% 0.02%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 68% 110% 97% 87% 201%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $280,671,673.
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------------------------- --------------------
1998 1997 1996 1995 1994 1998 1997
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.98 $ 14.32 $ 12.77 $ 10.21 $ 11.31 $ 14.98 $ 17.65
- ----------------------------------------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.17) (0.13)(a) (0.05) (0.08)(a) (0.06) (0.17)(a) (0.04)(a)
- ----------------------------------------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 4.04 2.72 2.28 3.43 (0.61) 4.03 (0.70)
- ----------------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations 3.87 2.59 2.23 3.35 (0.67) 3.86 (0.74)
- ----------------------------------------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Distributions from net realized gains (0.52) (1.93) (0.68) (0.79) (0.43) (0.52) (1.93)
- ----------------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.52) (1.93) (0.68) (0.79) (0.43) (0.52) (1.93)
- ----------------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 18.33 $ 14.98 $ 14.32 $ 12.77 $ 10.21 $ 18.32 $ 14.98
========================================= ======== ======== ======== ======== ======== ======== ========
Total return(b) 26.13% 18.50% 17.60% 33.00% (5.88)% 26.07% (3.86)%
========================================= ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $428,002 $356,186 $280,807 $138,034 $ 38,448 $ 8,501 $ 1,189
========================================= ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.93%(c) 1.99% 2.03% 2.13% 2.18% 1.93%(c) 1.95%(d)
========================================= ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income (loss) to
average net assets (1.04)%(c) (0.82)% (0.39)% (0.65)% (0.94)% (1.04)%(c) (0.77)%(d)
========================================= ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 68% 110% 97% 87% 201% 68% 110%
========================================= ======== ======== ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $371,022,634 and $4,267,476 for
Class B and Class C, respectively.
(d) Annualized.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Select Growth Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Select Growth Fund (a portfolio of AIM
Funds Group), including the schedule of investments, as
of December 31, 1998, 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 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. Our procedures included confirmation of
securities owned as of December 31, 1998, 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 Select
Growth Fund as of December 31, 1998, 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 in the five-year period then ended, in conformity
with generally accepted accounting principles.
KPMG LLP
Houston, Texas
February 5, 1999
15
<PAGE> 18
TRUSTEES & OFFICERS
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer
Chairman Charles T. Bauer 11 Greenway Plaza
A I M Management Group Inc. Chairman Suite 100
Houston, TX 77046
Bruce L. Crockett Robert H. Graham
Director President INVESTMENT ADVISOR
ACE Limited;
Formerly Director, President, and John J. Arthur A I M Advisors, Inc.
Chief Executive Officer Senior Vice President and Treasurer 11 Greenway Plaza
COMSAT Corporation Suite 100
Carol F. Relihan Houston, TX 77046
Owen Daly II Senior Vice President and Secretary
Director TRANSFER AGENT
Cortland Trust Inc. Gary T. Crum
Senior Vice President A I M Fund Services, Inc.
Edward K. Dunn Jr. P.O. Box 4739
Chairman, Mercantile Mortgage Corp.; Dana R. Sutton Houston, TX 77210-4739
Formerly Vice Chairman and President, Vice President and Assistant Treasurer
Mercantile-Safe Deposit & Trust Co.; and CUSTODIAN
President, Mercantile Bankshares Robert G. Alley
Vice President State Street Bank and Trust Company
Jack Fields 225 Franklin Street
Chief Executive Officer Stuart W. Coco Boston, MA 02110
Texana Global, Inc.; Vice President
Formerly Member COUNSEL TO THE FUND
of the U.S. House of Representatives Melville B. Cox
Vice President Ballard Spahr
Carl Frischling Andrews & Ingersoll, LLP
Partner Karen Dunn Kelley 1735 Market Street
Kramer, Levin, Naftalis & Frankel Vice President Philadelphia, PA 19103
Robert H. Graham Jonathan C. Schoolar COUNSEL TO THE TRUSTEES
President and Chief Executive Officer Vice President
A I M Management Group Inc. Kramer, Levin, Naftalis & Frankel
Renee A. Friedli 919 Third Avenue
Prema Mathai-Davis Assistant Secretary New York, NY 10022
Chief Executive Officer, YWCA of the U.S.A.,
Commissioner, New York City Dept. for P. Michelle Grace DISTRIBUTOR
the Aging; and member of the Board of Directors, Assistant Secretary
Metropolitan Transportation Authority of A I M Distributors, Inc.
New York State Jeffrey H. Kupor 11 Greenway Plaza
Assistant Secretary Suite 100
Lewis F. Pennock Houston, TX 77046
Attorney Nancy L. Martin
Assistant Secretary AUDITORS
Ian W. Robinson
Consultant; Formerly Executive Ofelia M. Mayo KPMG LLP
Vice President and Assistant Secretary 700 Louisiana
Chief Financial Officer Houston, TX 77002
Bell Atlantic Management Lisa A. Moss
Services, Inc. Assistant Secretary
Louis S. Sklar Kathleen J. Pflueger
Executive Vice President Assistant Secretary
Hines Interests
Limited Partnership Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Select Growth Fund Class A, Class B, and Class C shares paid ordinary
dividends in the amount of $0.0180, $0.0180, and $0.0180 per share,
respectively, to shareholders during its tax year ended December 31, 1998. Of
these amounts, 31.04% is eligible for the dividends received deduction for
corporations.
The Fund also distributed long-term capital gains of $25,351,284 for the Fund's
tax year ended December 31, 1998. Of long-term capital gains distributed, 100%
is 20% rate gain.
16
<PAGE> 19
ANNUAL REPORT / FOR CONSIDERATION
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 an AIM fund for your
Individual Retirement Account (IRA), Roth 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.
--------------------
AIM SMALL CAP GROWTH FUND
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Asian Growth Fund since 1976 and managed approximately $109
AIM Capital Development Fund AIM Developing Markets Fund(2) billion in assets for more than 6.2 million
AIM Constellation Fund AIM Europe Growth Fund(2) shareholders, including individual investors,
AIM Mid Cap Equity Fund(2), (A) AIM European Development Fund corporate clients, and financial institutions,
AIM Select Growth Fund(3) AIM International Equity Fund as of December 31, 1998.
AIM Small Cap Growth Fund(2), (B) AIM Japan Growth Fund(2) The AIM Family of Funds--Registered
AIM Small Cap Opportunities Fund AIM Latin American Growth Fund(2) Trademark-- is distributed nationwide, and AIM
AIM Value Fund AIM New Pacific Growth Fund(2) today is the 10th-largest mutual fund complex
AIM Weingarten Fund in the U.S. in assets under management, according
to Strategic Insight, an independent mutual fund
GROWTH & INCOME FUNDS GLOBAL GROWTH FUNDS monitor.
AIM Advisor Flex Fund AIM Global Aggressive Growth Fund
AIM Advisor Large Cap Value Fund AIM Global Growth Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS
AIM Balanced Fund AIM Global Growth & Income Fund(2)
AIM Basic Value Fund(2), (C) AIM Global Utilities Fund
AIM Charter Fund
GLOBAL INCOME FUNDS
INCOME FUNDS AIM Emerging Markets Debt Fund(2), (D)
AIM Floating Rate Fund(2) AIM Global Government Income Fund(2)
AIM High Yield Fund AIM Global Income Fund
AIM High Yield Fund II AIM Strategic Income Fund(2)
AIM Income Fund
AIM Intermediate Government Fund THEME FUNDS
AIM Limited Maturity Treasury Fund AIM Global Consumer Products and Services Fund(2)
AIM Global Financial Services Fund(2)
TAX-FREE INCOME FUNDS AIM Global Health Care Fund(2)
AIM High Income Municipal Fund AIM Global Infrastructure Fund(2)
AIM Municipal Bond Fund AIM Global Resources Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(2), (E)
MONEY MARKET FUNDS
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998. (2)
Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth
Fund. (A) On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C) On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D) On September 8, 1998, AIM Global High Income
Fund was renamed AIM Emerging Markets Debt Fund. (E) On September 8, 1998, AIM
New Dimension Fund was renamed AIM Global Trends Fund. For more complete
information about any AIM Fund(s), including sales charges and expenses, ask
your financial consultant or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money.
