<PAGE> 1
[COVER IMAGE]
AIM
MONEY MARKET FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT DECEMBER 31, 1998
INVEST WITH DISCIPLINE--Registered Trademark--
<PAGE> 2
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Shareholder:
We are pleased to send you this report on AIM Money Market
[PHOTO OF Fund for the 1998 fiscal year, a year marked by dramatic
Charles T. reversals of market conditions and U.S. Federal Reserve
Bauer, Board (the Fed) policy.
the Board of
THE FUND VOLATILITY LEADS TO FED RATE CUTS
APPEARS HERE] Throughout the first half of the year, markets were
influenced by anticipation that the Fed would raise interest
rates in light of the continued robust growth of the U.S.
economy. In late July testimony before Congress, Fed
Chairman Alan Greenspan intimated that the potential threat
of inflation could lead the Fed to raise interest rates.
Market sentiment shifted over the summer amid myriad
financial troubles in Japan, Asia and Latin America;
Russia's effective default on its government debt; and the
widely noted collapse of several hedge funds. In the fall,
when the threat of a global credit crunch loomed, the Fed finally lowered
interest rates to pump liquidity and confidence into the markets and demonstrate
that it would intervene to forestall a recession in the United States.
In an attempt to calm the nerves of investors who were shifting their money
from equity markets to any security considered liquid--a worldwide flight to
quality--the Fed cut the federal funds rate by 0.25% on September 29. Few people
were assuaged by the action. Two weeks later, in an unusual inter-meeting move,
the Fed lowered the federal funds rate and the discount rate by 0.25%, and a
fierce market rally ensued. Both rates were lowered by 0.25% again in November.
By the close of the fiscal year, markets were enjoying relative equilibrium.
FUND PROVIDES STEADY RETURNS
Continued volatility and market uncertainty led the Fund to maintain a weighted
average maturity (WAM) in the 20- to 25-day range. At the end of the reporting
period, the WAM stood at 19 days. This strategy produced competitive yields. As
the fiscal year closed, seven-day yields for the Fund were 3.32% for Class B
shares, 3.31% for Class C shares, and 4.07% for AIM Cash Reserve Shares. Total
net assets in the Fund reached a record $1.5 billion during the reporting
period, reflecting in part the merger of AIM Dollar Fund into the Fund.
AIM Money Market Fund seeks to provide as high a level of current income as
possible consistent with preservation of capital and liquidity by investing in
high-quality money market instruments including commercial paper, repurchase
agreements, and U.S. Treasury and U.S. government agency securities. An
investment in the Fund is neither insured nor guaranteed by the U.S. government,
and there can be no assurance that the Fund will be able to maintain a stable
net asset value of $1.00 per share.
At the close of the fiscal year, the consumer price index was on track to
record its smallest annual increase since 1986, when the index rose just 1.1%.
The U.S. economy exceeded many forecasts and grew by 5.6% during the fourth
quarter. And while the Fed appears to have adopted a "wait and see" attitude as
inflation sits at its lowest point in more than a decade, some analysts expect
more rate cuts in the coming year with the U.S. economy slowing and world
markets continuing to recover and stabilize.
AIM DOLLAR AND MONEY MARKET FUNDS MERGE
Effective December 21, 1998, AIM Dollar Fund merged into AIM Money Market Fund
as follows: AIM Dollar Fund Class A shares merged into AIM Cash Reserve Shares;
AIM Dollar Fund Class B shares merged into AIM Money Market Fund Class B shares;
and AIM Dollar Fund Advisor Class shares merged into AIM Cash Reserve Shares.
Additionally, AIM Money Market Fund Class A shares were reclassified as AIM Cash
Reserve Shares.
As always, please feel free to contact our Client Services department at
800-959-4246 if you have any questions or comments concerning this report on
your Fund. Automated information about your AIM account is available 24 hours a
day on the AIM Investor Line at 800-246-5463. Or visit our Web site at
www.aimfunds.com for account or fund information.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
AIM Advisors, Inc.
---------------------------------
SOME ANALYSTS EXPECT
MORE RATE CUTS IN THE
COMING YEAR WITH THE
U.S. ECONOMY SLOWING
AND WORLD MARKETS
CONTINUING TO RECOVER
AND STABILIZE.
---------------------------------
<PAGE> 3
SCHEDULE OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
BANK NOTES-1.32%
BANKS-DOMESTIC-1.32%
Harris Trust & Savings Bank
5.64%(a) 02/01/99 $ 10,000 $ 10,000,000
- ------------------------------------------------------------------
Wachovia Bank, N.A.
5.50% (a) 01/29/99 10,000 10,000,000
- ------------------------------------------------------------------
Total Bank Notes 20,000,000
- ------------------------------------------------------------------
COMMERCIAL PAPER-31.51%(B)
ASSET-BACKED
SECURITIES-15.06%
Centric Capital Corp.
5.12% 01/13/99 9,800 9,783,275
- ------------------------------------------------------------------
5.06% 03/05/99 25,000 24,778,625
- ------------------------------------------------------------------
Ciesco L.P.
5.35% 01/11/99 5,000 4,992,570
- ------------------------------------------------------------------
Corporate Asset Funding Co.
5.20% 02/17/99 14,000 13,904,955
- ------------------------------------------------------------------
Delaware Funding Corp.
5.15% 03/11/99 14,000 13,861,808
- ------------------------------------------------------------------
Edison Asset
Securitization, L.L.C.
5.17% 03/19/99 25,000 24,723,550
- ------------------------------------------------------------------
Falcon Asset Securitization
Corp.
5.26% 02/04/99 3,551 3,533,358
- ------------------------------------------------------------------
Monte Rosa Capital Corp.
5.35% 01/11/99 25,000 24,962,847
- ------------------------------------------------------------------
5.32% 01/21/99 7,000 6,979,310
- ------------------------------------------------------------------
5.43% 02/16/99 10,000 9,930,617
- ------------------------------------------------------------------
Preferred Receivables
Funding Corp.
5.33% 01/13/99 5,000 4,991,117
- ------------------------------------------------------------------
5.50% 01/13/99 6,000 5,989,000
- ------------------------------------------------------------------
5.25% 03/11/99 15,000 14,849,062
- ------------------------------------------------------------------
5.06% 04/21/99 25,750 25,351,876
- ------------------------------------------------------------------
Variable Funding Capital
5.10% 01/20/99 40,000 39,892,334
- ------------------------------------------------------------------
228,524,304
- ------------------------------------------------------------------
AUTOMOBILES-1.12%
Ford Motor Credit Co.
5.625% 01/15/99 16,995 16,996,194
- ------------------------------------------------------------------
BANKS (DOMESTIC)-1.18%
First Chicago Financial
Corp.
5.26% 02/19/99 18,000 17,871,130
- ------------------------------------------------------------------
BANKS (FOREIGN)-1.95%
UBS Finance (Delaware) Inc.
4.85% 04/05/99 30,000 29,620,083
- ------------------------------------------------------------------
BROADCAST MEDIA-0.91%
Scripps (E.W.) Co.
4.98% 04/13/99 14,000 13,802,460
- ------------------------------------------------------------------
BUSINESS CREDIT-1.62%
National Rural Utilities
Cooperative Finance Corp.
4.80% 04/27/99 25,000 24,613,333
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
CHEMICALS-0.33%
Du Pont (E.I.) de Nemours
and Co.
5.08% 02/05/99 $ 5,000 $ 4,975,306
- ------------------------------------------------------------------
FOOD PROCESSING-2.58%
Campbell Soup Co.
5.45% 01/14/99 10,000 9,980,319
- ------------------------------------------------------------------
5.17% 02/10/99 10,000 9,942,555
- ------------------------------------------------------------------
Cargill Inc.
4.98% 04/01/99 19,500 19,257,225
- ------------------------------------------------------------------
39,180,099
- ------------------------------------------------------------------
HOUSEHOLD PRODUCTS-0.40%
Colgate-Palmolive Co.
4.85% 04/22/99 6,200 6,107,284
- ------------------------------------------------------------------
INSURANCE (LIFE)-1.25%
Hancock (John) Capital
Corp.
5.35% 01/22/99 19,000 18,940,704
- ------------------------------------------------------------------
INSURANCE (OTHER)-0.91%
Marsh & McLennan Companies,
Inc.
5.10% 03/22/99 14,000 13,841,333
- ------------------------------------------------------------------
MACHINERY-0.33%
Caterpillar Financial
Services Corp.
5.10% 02/04/99 5,000 4,975,917
- ------------------------------------------------------------------
MULTIPLE INDUSTRIES-1.64%
General Electric Capital
Corp.
5.05% 04/06/99 25,000 24,666,840
- ------------------------------------------------------------------
OIL & GAS
(INTEGRATED)-1.64%
Petrofina Delaware, Inc.
5.36% 01/22/99 25,000 24,921,833
- ------------------------------------------------------------------
TELEPHONE-0.59%
Bellsouth Capital Funding
Corp.
5.38% 01/22/99 9,000 8,971,755
- ------------------------------------------------------------------
Total Commercial Paper 478,008,575
- ------------------------------------------------------------------
MASTER NOTE
AGREEMENTS-9.23%
Citicorp Securities,
Inc.(c)
5.75% 01/25/99 33,000 33,000,000
- ------------------------------------------------------------------
Merrill Lynch Mortgage
Capital, Inc.(d)
5.78% 08/16/99 52,000 52,000,000
- ------------------------------------------------------------------
Morgan Stanley, Dean
Witter, Discover & Co.(e)
5.60% 05/24/99 55,000 55,000,000
- ------------------------------------------------------------------
Total Master Note
Agreements 140,000,000
- ------------------------------------------------------------------
TAXABLE MUNICIPAL
BONDS-3.35%
HEALTH CARE-0.66%
Jacksonville Florida Health
Facilities; Hospital
Series Revenue Bonds
5.65%(f) 08/15/19 10,000 10,000,000
- ------------------------------------------------------------------
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
HOSPITAL MANAGEMENT-2.03%
BMC Special Care
Facilities; Revenue Bonds
5.55%(f) 11/15/29 $ 20,000 $ 20,000,000
- ------------------------------------------------------------------
Illinois Health Facilities
Authority (Loyola
University Health
Systems); Revenue Bonds
5.65%(f) 07/01/24 10,800 10,800,000
- ------------------------------------------------------------------
30,800,000
- ------------------------------------------------------------------
MULTIPLE INDUSTRY-0.66%
Mississippi Business
Finance Corp.
(Mississippi Industrial
Development); Revenue
Bonds
5.61%(f) 02/01/23 10,000 10,000,000
- ------------------------------------------------------------------
Total Taxable Municipal
Bonds 50,800,000
- ------------------------------------------------------------------
TIME DEPOSITS-3.96%
Credit Communal de Belgique
5.125% 01/04/99 60,000 60,000,000
- ------------------------------------------------------------------
U.S. GOVERNMENT AGENCY
SECURITIES-2.77%
Federal National Mortgage
Association(g)
4.696% 06/02/99 32,000 32,000,000
- ------------------------------------------------------------------
Student Loan Marketing
Association(g)
4.848% 02/08/99 10,000 10,000,180
- ------------------------------------------------------------------
Total U.S. Government
Agency Securities 42,000,180
- ------------------------------------------------------------------
Total Investments
(excluding repurchase
agreements) 790,808,755
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
REPURCHASE
AGREEMENTS-45.73%(h)
Barclays Capital Inc.(i)
4.75% 01/04/99 $ 50,000 $ 50,000,000
- ------------------------------------------------------------------
Bear Stearns & Co., Inc.(j)
4.85% -- 55,000 55,000,000
- ------------------------------------------------------------------
CIBC Oppenheimer Corp.(k)
5.05% -- 100,000 100,000,000
- ------------------------------------------------------------------
Credit Suisse First Boston
Corp.(l)
5.00% 01/04/99 50,000 50,000,000
- ------------------------------------------------------------------
Goldman, Sachs & Co.(m)
4.80% 01/04/99 300,000 300,000,000
- ------------------------------------------------------------------
SBC Warburg Dillon Read
Inc.(n)
4.75% 01/04/99 138,804 138,803,265
- ------------------------------------------------------------------
Total Repurchase
Agreements 693,803,265
- ------------------------------------------------------------------
TOTAL INVESTMENTS-97.87% 1,484,612,020(o)
- ------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-2.13% 32,384,637
- ------------------------------------------------------------------
NET ASSETS-100.00% $1,516,996,657
- ------------------------------------------------------------------
</TABLE>
Notes to Schedule of Investments:
(a) Interest rates are redetermined daily. Rate shown is the rate in effect on
12/31/98.
(b) Treasury bills and some commercial paper are traded on a discount basis. In
such cases the interest rate shown represents the rate of discount paid or
received at the time of purchase by the Fund.
(c) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon three business days notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
12/31/98.
(d) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement generally upon two business days notice. Interest rates
on master notes are redetermined periodically. Rate shown is the rate in
effect on 12/31/98.
(e) Master Note Purchase Agreement may be terminated by either party upon three
business days prior written notice. Interest rates on master notes are
redetermined periodically. Rate shown is the rate in effect on 12/31/98.
(f) Demand security; payable upon demand by the Fund with usually no more than
seven calendar days notice. Interest rates are redetermined weekly. Rates
shown are rates in effect on 12/31/98.
(g) Interest rates are redetermined weekly. Rates shown are rates in effect on
12/31/98.
(h) 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.
(i) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$300,158,333. Collateralized by $297,134,000 U.S. Government obligations, 0%
to 9.05% due 03/17/99 to 06/15/05 with an aggregate market value at 12/31/98
of $306,000,115.
(j) Open repurchase agreement entered into 12/31/98. Either party may terminate
the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $354,763,000 U.S. Government
obligations, 0% to 8.65% due 01/15/99 to 06/11/18 with an aggregate market
value at 12/31/98 of $360,262,932.
(k) Open repurchase agreement entered into 12/31/98. Either party may terminate
the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $1,105,835,904 U.S. Government
obligations, 5.882% to 8.50% due 06/30/01 to 11/01/37 with an aggregate
market value at 12/31/98 of $510,000,001.
(l) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$50,027,778. Collateralized by $153,487,893 U.S. Government obligations,
0.00% to 0.00% due 05/01/18 to 04/01/31 with an aggregate market value at
12/31/98 of $51,861,895.
(m) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$500,266,667. Collateralized by $484,139,000 U.S. Government obligations,
5.75% to 6.00% due 04/15/08 to 05/15/08 with an aggregate market value at
12/31/98 of $510,000,184.
(n) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$1,000,527,778. Collateralized by $2,207,068,000 U.S. Government
obligations, 0% to 6.75% due 06/30/99 to 11/15/21 with an aggregate market
value at 12/31/98 of $1,020,001,079.
(o) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
2
<PAGE> 5
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase
agreements, at value (amortized cost) $ 790,808,755
- ----------------------------------------------------------
Repurchase agreements 693,803,265
- ----------------------------------------------------------
Receivables for:
Fund shares sold 110,560,096
- ----------------------------------------------------------
Interest 1,930,931
- ----------------------------------------------------------
Investment for deferred compensation plan 94,268
- ----------------------------------------------------------
Other assets 334,133
- ----------------------------------------------------------
Total assets 1,597,531,448
- ----------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 78,432,704
- ----------------------------------------------------------
Dividends 295,936
- ----------------------------------------------------------
Deferred compensation plan 94,268
- ----------------------------------------------------------
Accrued advisory fees 584,365
- ----------------------------------------------------------
Accrued distribution fees 937,106
- ----------------------------------------------------------
Accrued transfer agent fees 190,412
- ----------------------------------------------------------
Total liabilities 80,534,791
- ----------------------------------------------------------
Net assets applicable to shares
outstanding $1,516,996,657
- ----------------------------------------------------------
NET ASSETS:
AIM Cash Reserve Shares $1,179,071,674
==========================================================
Class B $ 310,534,240
==========================================================
Class C $ 27,390,743
==========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
AIM Cash Reserve Shares 1,179,046,939
==========================================================
Class B 310,522,285
==========================================================
Class C 27,390,325
==========================================================
AIM Cash Reserve Shares:
Net asset value, offering and redemption
price per share $ 1.00
==========================================================
Class B:
Net asset value and offering price per
share $ 1.00
==========================================================
Class C:
Net asset value and offering price per
share $ 1.00
==========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $59,499,145
- ---------------------------------------------------------
EXPENSES:
Advisory fees 5,891,106
- ---------------------------------------------------------
Administrative services fees 71,394
- ---------------------------------------------------------
Custodian fees 121,851
- ---------------------------------------------------------
Distribution fees - Class A 1,160,113
- ---------------------------------------------------------
Distribution fees - Class B 1,767,568
- ---------------------------------------------------------
Distribution fees - Class C 176,383
- ---------------------------------------------------------
Distribution fees - AIM Cash Reserve Shares 1,049,453
- ---------------------------------------------------------
Trustees' fees 19,516
- ---------------------------------------------------------
Transfer agent fees - Class A 767,760
- ---------------------------------------------------------
Transfer agent fees - Class B 292,385
- ---------------------------------------------------------
Transfer agent fees - Class C 29,176
- ---------------------------------------------------------
Transfer agent fees - AIM Cash Reserve
Shares 649,349
- ---------------------------------------------------------
Other 620,409
- ---------------------------------------------------------
Total expenses 12,616,463
- ---------------------------------------------------------
Less: Expenses paid indirectly (11,572)
- ---------------------------------------------------------
Net expenses 12,604,891
- ---------------------------------------------------------
Net investment income 46,894,254
- ---------------------------------------------------------
Net realized gain from investments 2,781
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $46,897,035
==========================================================
</TABLE>
See Notes to Financial Statements.
3
<PAGE> 6
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 $ 46,894,254 $ 37,026,961
- --------------------------------------------------------------------------------------------
Net realized gain from investments 2,781 19,347
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 46,897,035 37,046,308
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (20,797,936) (15,420,950)
- --------------------------------------------------------------------------------------------
Class B (6,486,731) (4,508,913)
- --------------------------------------------------------------------------------------------
Class C (628,599) (81,245)
- --------------------------------------------------------------------------------------------
AIM Cash Reserve Shares (18,980,988) (17,015,853)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A (375,997,608) 88,133,325
- --------------------------------------------------------------------------------------------
Class B 194,469,771 24,881,617
- --------------------------------------------------------------------------------------------
Class C 19,103,703 8,286,622
- --------------------------------------------------------------------------------------------
AIM Cash Reserve Shares 834,944,363 28,629,341
- --------------------------------------------------------------------------------------------
Net increase in net assets 672,523,010 149,950,252
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 844,473,647 694,523,395
- --------------------------------------------------------------------------------------------
End of period $1,516,996,657 $844,473,647
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,516,959,549 $844,439,320
- --------------------------------------------------------------------------------------------
Undistributed net realized gain from investments 37,108 34,327
- --------------------------------------------------------------------------------------------
$1,516,996,657 $844,473,647
============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Money Market 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 B shares, Class C
shares and AIM Cash Reserve Shares. The Fund formerly also offered Class A
shares; however, on December 21, 1998 the Class A shares were reclassified as
AIM Cash Reserve Shares. Class B shares and Class C shares are sold with a
contingent deferred sales charge. AIM Cash Reserve Shares are sold at net asset
value. 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 provide as high a level of current income as is consistent with preservation
of capital and liquidity.
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 -- The Fund's securities are valued on the basis of
amortized cost which approximates market value. This method values a
security at its cost on the date of purchase and thereafter, assumes a
constant amortization to maturity of any discount or premiums.
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, adjusted for amortization of
4
<PAGE> 7
premiums and discounts on investments, is recorded as earned from
settlement date and is recorded on the accrual basis. Dividends to
shareholders are declared daily and are paid monthly.
C. 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.
D. 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 0.55% of
the first $1 billion of the Fund's average daily net assets plus 0.50% of the
Fund's average daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended December 31, 1998, AIM
was reimbursed $71,394 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency and shareholder services to the Fund. During the year ended
December 31, 1998, the Fund paid AFS $904,191 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 B, Class C and the AIM Cash Reserve 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 C shares and the AIM Cash Reserve Shares (the "Class
C and Cash Reserve Plan"), and the Fund's Class B shares (the "Class B Plan")
(collectively, the "Plans"). The Fund, pursuant to the Class C and Cash Reserve
Plan, pays AIM Distributors compensation at an annual rate of 0.25% of the
average daily net assets of the AIM Cash Reserve 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 B, Class
C or AIM Cash Reserve 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, Class C, and AIM Cash Reserve Shares
paid AIM Distributors $1,160,113, $1,767,568, $176,383 and $1,049,453,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $347,757 from sales of the former
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 $905,887 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 $5,530
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 $11,563 and $9, respectively under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $11,572 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.
5
<PAGE> 8
NOTE 5-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* 12,526,260,894 $ 12,526,260,894 4,653,429,305 $ 4,653,429,305
- ------------------------------------------------------------------------------------------------------------------------------
Class B 732,230,888 732,230,888 420,215,854 420,215,854
- ------------------------------------------------------------------------------------------------------------------------------
Class C** 350,900,238 350,900,238 61,859,578 61,859,578
- ------------------------------------------------------------------------------------------------------------------------------
AIM Cash Reserve Shares 6,566,275,190 6,566,275,190 4,356,728,398 4,356,728,398
- ------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A* 15,630,817 15,630,817 13,299,323 13,299,323
- ------------------------------------------------------------------------------------------------------------------------------
Class B 5,684,934 5,684,934 3,988,737 3,988,737
- ------------------------------------------------------------------------------------------------------------------------------
Class C** 536,206 536,206 75,390 75,390
- ------------------------------------------------------------------------------------------------------------------------------
AIM Cash Reserve Shares 15,456,154 15,456,154 13,807,718 13,807,718
- ------------------------------------------------------------------------------------------------------------------------------
Issued in connection with acquisitions***:
Class A* 135,276 135,276 -- --
- ------------------------------------------------------------------------------------------------------------------------------
Class B 72,923,588 72,923,588 -- --
- ------------------------------------------------------------------------------------------------------------------------------
Class C** 5,548,897 5,548,897 -- --
- ------------------------------------------------------------------------------------------------------------------------------
AIM Cash Reserve Shares 117,682,745 117,682,745 -- --
- ------------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A* (12,918,024,595) (12,918,024,595) (4,578,595,303) (4,578,595,303)
- ------------------------------------------------------------------------------------------------------------------------------
Class B (616,369,639) (616,369,639) (399,322,974) (399,322,974)
- ------------------------------------------------------------------------------------------------------------------------------
Class C** (337,881,638) (337,881,638) (53,648,346) (53,648,346)
- ------------------------------------------------------------------------------------------------------------------------------
AIM Cash Reserve Shares (5,864,469,726) (5,864,469,726) (4,341,906,775) (4,341,906,775)
- ------------------------------------------------------------------------------------------------------------------------------
672,520,229 $ 672,520,229 149,930,905 $ 149,930,905
==============================================================================================================================
</TABLE>
* Class A shares were reclassified to AIM Cash Reserve Shares effective
December 21, 1998.
** Class C shares commenced sales on August 4, 1997.
*** The Fund acquired AIM Advisor Cash Management Fund and AIM Dollar Fund on
February 27, 1998 and December 21, 1998, respectively. The acquired funds'
net assets as of the respective closing dates were $5,680,255 and
$190,605,903, respectively. The net assets of the Fund immediately prior to
each acquisition were $701,467,228 and $1,383,530,387, respectively.
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A outstanding
during the period ended December 21, 1998 and each of the years in the four-year
period ended December 31, 1997; for a share of Class B and AIM Cash Reserve
Shares 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 SHARES
---------------------------------------------------------
DECEMBER 21,
1998 1997 1996 1995 1994
------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.0436 0.0453 0.0433 0.0495 0.0337
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.0436) (0.0453) (0.0433) (0.0495) (0.0337)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, date of reclassification $ (1.00)
============================================================ ======== ======== ======== ======== ========
Net asset value, end of period $ -- $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================================================ ======== ======== ======== ======== ========
Total return(b) 4.44% 4.63% 4.42% 5.06% 3.43%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data;
Net assets, end of period (000's omitted) -- $376,012 $287,905 $221,487 $148,886
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.06%(c) 1.05% 1.07% 1.03% 0.97%(d)
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 4.46%(c) 4.55% 4.34% 4.91% 3.53%(d)
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges where applicable.
(c) Ratios are annualized and based on average net assets of $478,464,451.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average daily net assets prior to fee waivers and/or
expense reimbursements were 1.06% and 3.44%, respectively, for 1994.
6
<PAGE> 9
NOTE 6-FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B SHARES
---------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------ -------- -------- -------- ------- --------
Income from investment operations:
Net investment income 0.0371(a) 0.0378 0.0360 0.0419 0.0259
- ------------------------------------------------------------ -------- -------- -------- ------- --------
Less distributions:
Dividends from net investment income (0.0371) (0.0378) (0.0360) (0.0419) (0.0259)
- ------------------------------------------------------------ -------- -------- -------- ------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================================================ ======== ======== ======== ======= ========
Total return(b) 3.78% 3.84% 3.66% 4.27% 2.62%
============================================================ ======== ======== ======== ======= ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $310,534 $116,058 $ 91,148 $69,857 $ 33,999
============================================================ ======== ======== ======== ======= ========
Ratio of expenses to average net assets 1.81%(c) 1.80% 1.81% 1.78% 1.78%(d)
============================================================ ======== ======== ======== ======= ========
Ratio of net investment income to average net assets 3.71%(c) 3.80% 3.60% 4.14% 3.14%(d)
============================================================ ======== ======== ======== ======= ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges where applicable.
(c) Ratios are based on average net assets of $176,756,795.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average daily net assets prior to fee waivers and/or
expense reimbursements were 1.87% and 3.05%, respectively, for 1994.
<TABLE>
<CAPTION>
CLASS C SHARES AIM CASH RESERVE SHARES
-------------------- ----------------------------------------------------------
1998 1997 1998 1997 1996 1995 1994
-------- -------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------- -------- -------- ---------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.0371(a) 0.0158 0.0453(a) 0.0456 0.0433 0.0493 0.0337
- ------------------------------------------- -------- -------- ---------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.0371) (0.0158) (0.0453) (0.0456) (0.0433) (0.0493) (0.0337)
- ------------------------------------------- -------- -------- ---------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========================================== ======== ======== ========== ======== ======== ======== ========
Total return(b) 3.78% 3.92% 4.62% 4.66% 4.41% 5.04% 3.42%
=========================================== ======== ======== ========== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 27,391 $ 8,287 $1,179,072 $344,117 $315,470 $293,450 $359,952
=========================================== ======== ======== ========== ======== ======== ======== ========
Ratio of expenses to average net assets 1.81%(c) 1.80%(d) 0.99%(c) 1.05% 1.08% 1.04% 0.99%(e)
=========================================== ======== ======== ========== ======== ======== ======== ========
Ratio of net investment income to average
net assets 3.71%(c) 3.80%(d) 4.53%(c) 4.55% 4.32% 4.92% 3.49%(e)
=========================================== ======== ======== ========== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges where applicable and is
annualized for periods less than one year.
(c) Ratios are based on average net assets of $17,638,255 and $419,781,232 for
Class C and AIM Cash Reserve Shares, respectively.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average daily net assets prior to fee waivers and/or
expense reimbursements were 1.08% and 3.40%, respectively, for 1994.
7
<PAGE> 10
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Money Market Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Money Market 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. 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 Money
Market Fund as of December 31, 1998, the results of its
operations for the year then ended, the 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, in conformity with
generally accepted accounting principles.
KPMG LLP
Houston, Texas
February 5, 1999
8
<PAGE> 11
Trustees & Officers
<TABLE>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; 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
Prema Mathai-Davis
Chief Executive Officer, YWCA of the U.S.A., P. Michelle Grace DISTRIBUTOR
Commissioner, New York City Dept. for Assistant Secretary
the Aging; and member of the Board of Directors, A I M Distributors, Inc.
Metropolitan Transportation Authority of Jeffrey H. Kupor 11 Greenway Plaza
New York State Assistant Secretary Suite 100
Houston, TX 77046
Lewis F. Pennock Nancy L. Martin
Attorney Assistant Secretary AUDITORS
Ian W. Robinson Ofelia M. Mayo KPMG LLP
Consultant; Formerly Executive Assistant Secretary 700 Louisiana
Vice President and Houston, TX 77002
Chief Financial Officer Lisa A. Moss
Bell Atlantic Management Assistant Secretary
Services, Inc.
Kathleen J. Pflueger
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Samuel D. Sirko
Limited Partnership Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
This report may be distributed only to current shareholders or to persons who
have received a current prospectus of the Fund.
<PAGE> 12
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately $109
AIM Capital Development Fund billion in assets for more than 6.2 million
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS shareholders, including individual investors,
AIM Mid Cap Equity Fund(2), (A) AIM Advisor International Value Fund corporate clients, and financial institutions,
AIM Select Growth Fund(3) AIM Asian Growth Fund as of December 31, 1998.
AIM Small Cap Growth Fund(2), (B) AIM Developing Markets Fund(2) The AIM Family of Funds--Registered Trademark
AIM Small Cap Opportunities Fund AIM Europe Growth Fund(2) is distributed nationwide, and AIM today is the
AIM Value Fund AIM European Development Fund 10th-largest mutual fund complex in the U.S. in
AIM Weingarten Fund AIM International Equity Fund assets under management, according to Strategic
AIM Japan Growth Fund(2) Insight, an independent mutual fund monitor.
GROWTH & INCOME FUNDS AIM Latin American Growth Fund(2)
AIM Advisor Flex Fund AIM New Pacific Growth Fund(2)
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund GLOBAL GROWTH FUNDS
AIM Advisor Real Estate Fund AIM Global Aggressive Growth Fund
AIM Balanced Fund AIM Global Growth Fund
AIM Basic Value Fund(2), (C)
AIM Charter Fund GLOBAL GROWTH & INCOME FUNDS
AIM Global Growth & Income Fund(2)
INCOME FUNDS AIM Global Utilities Fund
AIM Floating Rate Fund(2)
AIM High Yield Fund GLOBAL INCOME FUND
AIM High Yield Fund II AIM Emerging Markets Debt Fund(2), (D)
AIM Income Fund AIM Global Government Income Fund(2)
AIM Intermediate Government Fund AIM Global Income Fund
AIM Limited Maturity Treasury Fund AIM Strategic Income Fund(2)
TAX-FREE INCOME FUNDS THEME FUNDS
AIM High Income Municipal Fund AIM Global Consumer Products and Services Fund(2)
AIM Municipal Bond Fund AIM Global Financial Services Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Health Care Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
AIM Global Trends Fund(2), (E)
</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.
