<PAGE> 1
SEMIANNUAL REPORT / JUNE 30 1999
AIM GLOBAL UTILITIES FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[THUMBNAIL OF COVER ARTWORK]
-------------------------------------
TULIP FIELDS AND WINDMILL IN HOLLAND
BY CLAUDE MONET (1840-1926, FRENCH)
STANDING TALL AGAINST THE HORIZON WITH SAILS WHIRLING IN THE AIR,
WINDMILLS HAVE PLAYED AN IMPORTANT PART IN THE HISTORIC AND ECO-
NOMIC DEVELOPMENT OF CIVILIZATION THROUGH THE CENTURIES. LIKE
THEIR PREDECESSORS, TODAY'S NETWORK OF GLOBAL UTILITIES ENABLES
OUR CONTINUING ADVANCEMENT.
-------------------------------------
AIM Global Utilities Fund is for shareholders who seek high current income and
capital appreciation through a portfolio primarily of common and preferred
stocks of public utility companies.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Utilities Fund performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B and Class C shares will differ from
that of Class A shares due to differences in sales charge structure and
expenses.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o International investing presents certain risks not associated with investing
solely in the U.S. These include risks relating to fluctuations in the value
of the U.S. dollar relative to the value of other currencies, the custody
arrangements made for the fund's foreign holdings, differences in
accounting, political risks and the lesser degree of public information
required to be provided by non-U.S. companies.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Average of 15 Utilities is a weighted average of the
performance of 15 large publicly traded utility stocks.
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of 30
actively traded primarily industrial stocks.
o The Lipper Utility Funds Index is an average of the 30 largest utility funds
tracked by Lipper, Inc., an independent mutual-fund performance monitor.
o The Nasdaq (National Association of Securities Dealers Automated Quotation
system) Composite Index is a market-value-weighted index comprising all
Nasdaq domestic and non-U.S. based common stocks listed on the Nasdaq
system. It includes more than 5,000 companies and is often considered
representative of the small and medium-size company stock universe. While it
includes many small and mid-sized company stocks, large-capitalization
technology companies tend to dominate the index.
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.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A
BANK AND IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. THERE IS A
RISK THAT YOU COULD LOSE SOME OR
ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM GLOBAL UTILITIES FUND
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
With only several months remaining in 1999, the question on
many of your minds may be, "How will the year 2000 computer
[PHOTO OF issue affect AIM and my investments?" We would like you to
Charles T. feel comfortable. We are pleased to be able to report to you
Bauer, that as of June 1999 we achieved a major milestone toward
Chairman of year 2000 compliance status: we have successfully completed
the Board of the testing of all of our mission-critical systems.
THE FUND Earlier this year, AIM participated in an industrywide
APPEARS HERE] test that gave us a chance to see how our technology systems
might be affected by the changeover to the year 2000 (Y2K).
Everything went as well as we had hoped; in general, the
industry sailed through the testing process with flying
colors. The financial industry has been seen as a leader in
planning for year 2000 concerns. Thus, it was no surprise to
most participants that the test was an overwhelming success.
The general purpose of the process was to test
electronic interfaces among financial industry members in the United States and
to follow transactions through a typical trading cycle--from order entry to the
settlement process. Investment banks, broker-dealers, custodian banks and mutual
fund companies all worked together to make this possible. Approximately 400
firms were involved in the testing; AIM was one of 70 asset managers.
During the testing process, thousands of transactions were submitted and
approximately 260,000 steps were tested. Of those, only a handful experienced
minor glitches--just 0.02% of the total number of transactions. All problems
were worked through quickly before the hypothetical trades were settled. Of
course, AIM will keep testing and planning throughout 1999 as a precaution.
AIM'S INTERNAL EFFORTS CONTINUE
As you know from our previous communications to you, AIM has been addressing the
year 2000 issue for several years. Now that we have finished adjusting our
applications and systems, our focus for the rest of 1999 is to continue
monitoring the year 2000 readiness status of outside sources we're linked to
electronically. On the investment side, our portfolio management staff is
continually evaluating the Y2K preparedness of the domestic and foreign
companies in which we invest.
We feel that our preparations for 2000 are very comprehensive, and the
industrywide testing showed that our colleagues in the financial industry are
also working hard to be ready for the new year. We do not think shareholders
need to take any extraordinary measures with their investments to prepare for
2000. However, if you have any lingering concerns, it may reassure you to know
that AIM is finalizing contingency plans that will be ready if necessary. Our
plans will give AIM employees guidelines to follow for a wide variety of
situations.
For a more comprehensive discussion of our Y2K efforts and for periodic
updates, please visit our Web site, www.aimfunds.com.
We are pleased to send you this report covering your fund's performance over
the last six months. If you have any questions or comments, please contact our
Client Services department at 800-959-4246, or e-mail your inquiry to us at
[email protected]. You can access information about your account through our
automated AIM Investor Line at 800-246-5463 or at our Web site.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--. We appreciate your business.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
A I M Advisors, Inc.
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS LETTER IS DEEMED
AIM'S YEAR 2000 READINESS DISCLOSURE.
-------------------------------------
THE FINANCIAL INDUSTRY
HAS BEEN SEEN AS A
LEADER IN PLANNING FOR
YEAR 2000 CONCERNS.
-------------------------------------
AIM GLOBAL UTILITIES FUND
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/99, based on total net assets
<TABLE>
<CAPTION>
===========================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES TOP 10 COUNTRIES
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Williams Companies, Inc. (The) 2.81% 1. Electric Companies 24.25% 1. United States 75.53%
2. MCI WorldCom, Inc. 2.74 2. Telephone 21.34 2. United Kingdom 5.37
3. Ameritech Corp. 2.72 3. Telecommunications 10.31 3. Canada 4.17
(Long Distance)
4. SBC Communications, Inc. 2.70 4. Natural Gas 8.61 4. Netherlands 1.82
5. Lucent Technologies, Inc. 2.16 5. Communications Equipment 7.09 5. Spain 1.80
6. National Grid Co. PLC 1.60 6. Power Producers (Independent) 3.52 6. France 1.73
7. Qwest Communications 1.56 7. Broadcasting (Television, 3.48 7. Finland 1.62
International Inc. Radio & Cable)
8. CenturyTel, Inc. 1.48 8. Computers (Networking) 2.63 8. Italy 0.89
9. Redback Networks, Inc. 1.44 9. Water Utilities 2.04 9. Germany 0.84
10. Nokia Oyj. A.B.-Class A-ADR 1.33 10. Telecommunications 1.97 10. Japan 0.70
(Cellular/Wireless)
The fund's portfolio is subject to change, and there is no assurance that the fund will
continue to hold any particular security.
===========================================================================================================================
</TABLE>
TELECOMMUNICATIONS HOLDINGS BOOST FUND PERFORMANCE
HOW DID AIM GLOBAL UTILITIES FUND PERFORM?
For the six-month reporting period ended June 30, 1999, cumulative total return
for AIM Global Utilities Fund was a solid 6.96% for Class A shares, and 6.61%
for Class B shares and Class C shares. These returns are computed at net asset
value, that is, without the effect of sales charges. Fund performance during the
reporting period was competitive with the 6.78% return of the Lipper Utility
Funds Index and outpaced the Dow Jones Average of 15 Utilities, which returned
3.17%.
Net assets under management totaled $318.5 million at the reporting period's
end.
WHAT WERE THE MAJOR TRENDS IN THE FINANCIAL MARKETS?
U.S. equity markets regained their momentum in the first half of 1999 as major
market indexes--the Dow, S&P 500, and Nasdaq--reached record highs. During the
first quarter of 1999, the broadening of earnings sparked investor interest in
mid- and small-cap companies. The recovery extended to a wide range of
industries that had suffered during the market narrowness of the last few years.
As a result of this dramatic shift in market sentiment, traditional large-cap
growth stocks were no longer the dominant market drivers at the reporting
period's end.
In Europe, stock market indexes have returned to the historic highs reached
in mid-1998, but in U.S.-dollar terms were still lower. The euro has had a weak
start since its inception in January, caused by a weakening of sentiment toward
the region when economic growth disappointed. Meanwhile, economic growth around
the rest of the world showed signs of improvement or continued to be strong, as
in the United States.
On June 30, the Federal Reserve Board raised the federal funds rate from
4.75% to 5% to slow economic growth and combat inflation.
WHAT EFFECTS DO RISING RATES HAVE ON UTILITY STOCKS?
As a group, since the mid-1980s, utilities have tended to perform better in the
months ahead of Fed tightening. That's because, as the Fed starts to tighten,
the desired outcome is to slow the economy, which makes traditional growth
sectors, like technology and health care, less attractive. In that environment,
higher-yielding utilities are a better performing asset than growth stocks,
since investors regard utility stocks as a surrogate hedge against inflation.
WHAT HOLDINGS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE SO FAR IN 1999?
The best-performing stocks during the reporting period were in the domestic
telecommunications area. MCI WorldCom boosted fund performance because the
company was well positioned to take advantage of the fastest-growing segment of
the telecommunications industry--data com-
See important fund and index disclosures inside front cover.
AIM GLOBAL UTILITIES FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL UTILITIES FUND VS. DOW JONES AVERAGE OF 15 UTILITIES
6/30/89-6/30/99
================================================================================
[BAR CHART]
FUND CLASS A SHARES $31,934
DOW JONES AVERAGE OF 15 UTILITIES $26,751
Source: Lipper, Inc.
================================================================================
Fund performance includes sales charges, expenses, and management fees.
Past performance is no guarantee of comparable future results.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/99, including sales charges
CLASS A SHARES
10 Years 12.31%
5 Years 16.34
1 Year 7.46
CLASS B SHARES
Since Inception (9/1/93) 10.47%
5 Years 16.53
1 Year 7.88
CLASS C SHARES
Since Inception (8/4/97) 16.92%
1 Year 11.84
================================================================================
munications. Qwest Communications also contributed positively to the fund's
strong performance. The company is building a national network designed to
accommodate state-of-the-art data communication.
The fund participated successfully in the initial public offering (IPO) of
Redback Networks, which provides subscriber management products to the growing
market for high-speed data and voice communications. According to Hoover's Inc.,
a leading provider of business information on the Web, Redback Networks was the
best-returning IPO launched during the second quarter of 1999, up more than 446%
through quarter-end.
The Williams Companies, the fund's largest holding on June 30, also helped
fund performance. The firm's natural gas business got a boost when battered oil
and natural gas prices recovered in early 1999, while its telecommunications
group continued to enjoy increasing voice and data traffic.
ELECTRIC COMPANIES REPRESENTED ONE OF THE FUND'S LARGEST INDUSTRIES ON JUNE 30.
WHAT ARE THE MAJOR TRENDS IN THIS INDUSTRY?
Deregulation is changing the U.S. electric utility market in several ways.
First, fewer electric companies are paying high dividends. This trend continues
as corporations reinvest their earnings to promote growth, rather than pay
dividends. Secondly, deregulation has prompted a number of electric utilities to
look beyond their original markets. Some electric companies are exiting the
power generation part of the business, which is the part that is turning very
competitive, and are focusing on distribution, which remains regulated. An
example of this type of company is Sierra Pacific Resources, which purchases
power and then sells it to some 287,000 clients in Nevada and California. On the
other hand, another group of electric companies is focusing on the competitive
power generation and related businesses. The aim of these companies is clearly
to boost their growth rates.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We continue to see many opportunities in the utilities sector. Deregulation in
the United States and privatization abroad are two powerful forces that are
opening up markets worldwide, allowing well-managed companies to reap the
benefits. There are plenty of opportunities in domestic stocks, especially in
the telecommunications industry. Many telecommunications firms have transformed
themselves into high-growth businesses by taking advantage of growing markets
for Internet, data and cellular service. Consumer demand for high-speed Internet
access is on the rise, and analysts believe the next two years will be a boom
for broadband technology--with which a single channel can carry several channels
simultaneously. The strong demand for broadband access is leading to increased
expenditures by competitive local exchange carriers as they prepare for
competition. In the domestic market, we expect the merger activity between
telecommunications firms and the regional Bells to continue, as exemplified by
the recently proposed joining of SBC Communications and Ameritech. Given the
fund's sizable stake in telecommunications and telephone stocks, we believe that
AIM Global Utilities Fund is poised to benefit from these trends.
See important fund and index disclosures inside front cover.
AIM GLOBAL UTILITIES FUND
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-54.01%
BROADCASTING (TELEVISION, RADIO & CABLE)-1.96%
United GlobalCom, Inc.(a) 31,000 $ 2,096,375
- --------------------------------------------------------------
Univision Communications, Inc.(a) 63,000 4,158,000
- --------------------------------------------------------------
6,254,375
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-4.81%
ANTEC Corp.(a) 45,000 1,442,812
- --------------------------------------------------------------
Copper Mountain Networks, Inc.(a) 11,000 849,750
- --------------------------------------------------------------
Juniper Networks, Inc.(a) 8,100 1,206,900
- --------------------------------------------------------------
Lucent Technologies, Inc. 102,200 6,892,112
- --------------------------------------------------------------
NorthPoint Communications Group,
Inc.(a) 51,500 1,879,750
- --------------------------------------------------------------
Tellabs, Inc.(a) 45,000 3,040,312
- --------------------------------------------------------------
15,311,636
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-2.24%
Cisco Systems, Inc.(a) 20,000 1,290,000
- --------------------------------------------------------------
Redback Networks, Inc.(a) 36,400 4,570,475
- --------------------------------------------------------------
Rhythms NetConnections, Inc.(a) 22,000 1,284,250
- --------------------------------------------------------------
7,144,725
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.24%
Covad Communications Group, Inc.(a) 14,100 751,706
- --------------------------------------------------------------
ELECTRIC COMPANIES-13.65%
Allegheny Energy, Inc. 82,100 2,632,331
- --------------------------------------------------------------
BEC Energy 40,000 1,650,000
- --------------------------------------------------------------
Carolina Power & Light Co. 48,800 2,089,250
- --------------------------------------------------------------
DQE, Inc. 76,500 3,069,563
- --------------------------------------------------------------
Edison International 139,000 3,718,250
- --------------------------------------------------------------
Energy East Corp. 112,000 2,912,000
- --------------------------------------------------------------
FirstEnergy Corp. 50,000 1,550,000
- --------------------------------------------------------------
FPL Group, Inc. 63,000 3,441,375
- --------------------------------------------------------------
IPALCO Enterprises, Inc. 42,000 889,875
- --------------------------------------------------------------
New Century Energies, Inc. 52,000 2,018,250
- --------------------------------------------------------------
NiSource, Inc. 101,000 2,607,063
- --------------------------------------------------------------
Pinnacle West Capital Corp. 81,000 3,260,250
- --------------------------------------------------------------
Public Service Co. of New Mexico 74,000 1,470,750
- --------------------------------------------------------------
Sierra Pacific Resources 45,500 1,655,063
- --------------------------------------------------------------
Southern Co. 130,000 3,445,000
- --------------------------------------------------------------
Teco Energy, Inc. 137,000 3,116,750
- --------------------------------------------------------------
Texas Utilities Co. 60,000 2,475,000
- --------------------------------------------------------------
Unicom Corp. 38,000 1,465,375
- --------------------------------------------------------------
43,466,145
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.97%
Quanta Services, Inc.(a) 70,000 3,080,000
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.61%
Superior TeleCom, Inc. 77,950 $ 1,948,750
- --------------------------------------------------------------
NATURAL GAS-3.94%
Enron Corp. 30,000 2,452,500
- --------------------------------------------------------------
Public Service Co. of North
Carolina, Inc. 40,000 1,170,000
- --------------------------------------------------------------
Williams Companies, Inc. (The) 209,900 8,933,869
- --------------------------------------------------------------
12,556,369
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.31%
AES Corp.(a) 34,000 1,976,250
- --------------------------------------------------------------
MidAmerican Energy Holdings Co.(a) 63,200 2,188,300
- --------------------------------------------------------------
4,164,550
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-1.39%
Alexandria Real Estate Equities, Inc. 52,500 1,640,625
- --------------------------------------------------------------
Boston Properties, Inc. 48,000 1,722,000
- --------------------------------------------------------------
Crescent Real Estate Equities, Co. 26,400 627,000
- --------------------------------------------------------------
Golf Trust of America, Inc. 18,000 439,875
- --------------------------------------------------------------
4,429,500
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.29%
Convergys Corp.(a) 160,000 3,080,000
- --------------------------------------------------------------
Metzler Group, Inc.(a) 37,200 1,027,650
- --------------------------------------------------------------
4,107,650
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/ WIRELESS)-0.45%
Phone.com, Inc.(a) 25,700 1,439,200
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-6.17%
AT&T Corp. 58,350 3,256,659
- --------------------------------------------------------------
Global TeleSystems Group, Inc.(a) 14,600 1,182,600
- --------------------------------------------------------------
IXC Communications, Inc.(a) 65,000 2,555,313
- --------------------------------------------------------------
MCI WorldCom, Inc.(a) 101,326 8,739,368
- --------------------------------------------------------------
WinStar Communications, Inc.(a) 80,064 3,903,120
- --------------------------------------------------------------
19,637,060
- --------------------------------------------------------------
TELEPHONE-14.54%
Ameritech Corp. 117,700 8,650,950
- --------------------------------------------------------------
Bell Atlantic Corp. 49,000 3,203,375
- --------------------------------------------------------------
BellSouth Corp. 71,800 3,365,625
- --------------------------------------------------------------
CenturyTel, Inc. 118,800 4,722,300
- --------------------------------------------------------------
Cincinnati Bell, Inc. 160,000 3,990,000
- --------------------------------------------------------------
GTE Corp. 36,600 2,772,450
- --------------------------------------------------------------
McLeodUSA, Inc.-Class A(a) 40,000 2,200,000
- --------------------------------------------------------------
Nextlink Communications,
Inc.-Class A(a) 19,400 1,442,875
- --------------------------------------------------------------
Qwest Communications
International, Inc.(a) 150,000 4,959,375
- --------------------------------------------------------------
SBC Communications, Inc. 148,000 8,584,000
- --------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-(CONTINUED)
Time Warner Telecom, Inc.(a) 83,800 $ 2,430,200
- --------------------------------------------------------------
46,321,150
- --------------------------------------------------------------
WATER UTILITIES-0.44%
Azurix Corp.(a) 70,000 1,400,000
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $81,601,080) 172,012,816
- --------------------------------------------------------------
FOREIGN STOCKS-19.69%
AUSTRALIA-0.35%
Telstra Corp. Ltd. (Telephone) 195,000 1,115,928
- --------------------------------------------------------------
AUSTRIA-0.57%
Oesterreichische
Elektrizitaetswirtschafts A.G.-
Class A (Electric Companies) 12,500 1,819,009
- --------------------------------------------------------------
BELGIUM-0.48%
Electrabel S.A. (Electric Companies) 4,700 1,516,116
- --------------------------------------------------------------
BERMUDA-0.66%
Global Crossing Ltd.
(Telecommunications- Long
Distance)(a) 49,123 2,093,868
- --------------------------------------------------------------
CANADA-1.60%
AT&T Canada, Inc. (Telephone)(a) 30,000 1,921,875
- --------------------------------------------------------------
BCT.Telus Communications, Inc.
(Telephone) 55,383 1,330,536
- --------------------------------------------------------------
BCT.Telus Communications,
Inc.-Class A (Telephone) 18,461 436,621
- --------------------------------------------------------------
Westcoast Energy, Inc. (Natural Gas) 71,900 1,420,025
- --------------------------------------------------------------
5,109,057
- --------------------------------------------------------------
DENMARK-0.53%
Tele Danmark A.S.-ADR (Telephone) 65,000 1,673,750
- --------------------------------------------------------------
ESTONIA-0.11%
AS Eesti Telekom-GDR
(Telecommunications-
Cellular/Wireless) (Acquired
02/11/99; Cost $338,188)(b) 18,330 363,850
- --------------------------------------------------------------
FINLAND-1.62%
Fortum Corp. (Electric Companies) 70,450 340,521
- --------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 46,400 4,248,500
- --------------------------------------------------------------
Sonera Group Oyj
(Telecommunications-
Cellular/Wireless) 25,900 565,882
- --------------------------------------------------------------
5,154,903
- --------------------------------------------------------------
FRANCE-1.38%
France Telecom S.A.-ADR
(Communications Equipment) 39,000 3,003,000
- --------------------------------------------------------------
Suez Lyonnaise des Eaux
(Manufacturing- Diversified) 5,100 919,285
- --------------------------------------------------------------
Vivendi (Services-Commercial &
Consumer) 6,000 485,722
- --------------------------------------------------------------
4,408,007
- --------------------------------------------------------------
GERMANY-0.84%
RWE A.G. (Electric Companies) 28,100 1,300,008
- --------------------------------------------------------------
Viag A.G.
(Manufacturing-Diversified) 2,900 $ 1,368,843
- --------------------------------------------------------------
2,668,851
- --------------------------------------------------------------
GREECE-0.10%
Panafon Hellenic Telecom S.A.-GDR
(Telecommunications-Cellular/Wireless)
(Acquired 11/20/98; Cost
$244,080)(a)(b) 13,500 327,375
- --------------------------------------------------------------
HUNGARY-0.37%
Magyar Tavkozlesi Rt-ADR
(Telecommunications-Long
Distance) 42,700 1,174,250
- --------------------------------------------------------------
ITALY-0.89%
AEM S.p.A. (Electric Companies) 645,000 1,149,995
- --------------------------------------------------------------
Societa Nordelettrica S.p.A.
(Electric Companies) 570,000 1,674,210
- --------------------------------------------------------------
2,824,205
- --------------------------------------------------------------
JAPAN-0.70%
Nippon Telegraph & Telephone Corp.
(Telecommunications-Long
Distance) 850 990,905
- --------------------------------------------------------------
Nippon Telegraph & Telephone
Corp.-ADR
(Telecommunications-Long
Distance) 20,000 1,252,500
- --------------------------------------------------------------
2,243,405
- --------------------------------------------------------------
NETHERLANDS-1.82%
Equant N.V.
(Computers-Networking)(a) 3,400 313,261
- --------------------------------------------------------------
Equant N.V.-ADR
(Computers-Networking)(a) 9,900 931,838
- --------------------------------------------------------------
Libertel N.V.
(Telecommunications-Cellular/
Wireless)(a) 75,000 1,468,605
- --------------------------------------------------------------
TNT Post Group N.V.-ADR (Air
Freight) 44,726 1,073,424
- --------------------------------------------------------------
United Pan-Europe Communications
N.V. (Broadcasting-Television,
Radio & Cable)(a) 37,000 2,005,754
- --------------------------------------------------------------
5,792,882
- --------------------------------------------------------------
NEW ZEALAND-0.20%
Contact Energy Ltd. (Electric
Companies)(a) 391,000 633,466
- --------------------------------------------------------------
PORTUGAL-0.70%
Electricidade de Portugal, S.A.
(Electric Companies) 32,000 575,817
- --------------------------------------------------------------
Electricidade de Portugal,
S.A.-ADR (Electric Companies) 46,000 1,650,250
- --------------------------------------------------------------
2,226,067
- --------------------------------------------------------------
SOUTH KOREA-0.56%
Korea Telecom Corp.-ADR (Telephone)(a) 44,800 1,792,000
- --------------------------------------------------------------
SPAIN-1.80%
Autopistas Concesionaria Espanola
S.A. (Services-Commercial &
Consumer) 77,000 900,693
- --------------------------------------------------------------
Endesa S.A. (Electric Companies) 34,000 724,635
- --------------------------------------------------------------
Telefonica S.A.-ADR (Telephone)(a) 27,883 4,102,245
- --------------------------------------------------------------
5,727,573
- --------------------------------------------------------------
SWITZERLAND-0.65%
Swisscom A.G. (Telephone) 5,500 2,068,467
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-3.76%
Hyder PLC (Water Utilities) 57,924 $ 689,335
- --------------------------------------------------------------
National Grid Group PLC (Electric
Companies) 131,526 915,308
- --------------------------------------------------------------
Orange PLC (Telephone)(a) 69,000 1,011,480
- --------------------------------------------------------------
PowerGen PLC (Electric Companies) 136,949 1,476,522
- --------------------------------------------------------------
PowerGen PLC-ADR (Electric
Companies) 40,900 1,753,588
- --------------------------------------------------------------
Scottish Power PLC (Electric
Companies) 201,550 1,740,959
- --------------------------------------------------------------
United Utilities PLC (Water
Utilities) 206,936 2,514,870
- --------------------------------------------------------------
Yorkshire Water PLC (Water
Utilities) 270,407 1,879,670
- --------------------------------------------------------------
11,981,732
- --------------------------------------------------------------
Total Foreign Stocks (Cost
$40,119,173) 62,714,761
- --------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS-2.40%
COMPUTERS (SOFTWARE & SERVICES)-0.91%
PSINet, Inc., $3.375 Conv. Pfd. 60,000 2,895,000
- --------------------------------------------------------------
NATURAL GAS-1.16%
El Paso Energy Cap Trust, Inc.-
$2.375 Conv. Pfd. 74,500 3,687,750
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.14%
WinStar Communications, Inc.-
$3.50 Conv. Pfd. 8,000 448,000
- --------------------------------------------------------------
TELEPHONE-0.19%
Nextlink Communications, Inc.,
$3.25 Conv. Pfd. 3,000 273,375
- --------------------------------------------------------------
(Acquired 03/26/98; Cost
$180,000)(b) 3,600 328,050
- --------------------------------------------------------------
601,425
- --------------------------------------------------------------
Total Convertible Preferred
Stocks (Cost $7,666,288) 7,632,175
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES-1.92%
COMPUTERS (HARDWARE)-1.13%
Candescent Technology Corp., Sr.
Conv. Sub. Deb., 7.00%, 05/01/03
(Acquired 04/17/98-11/30/98;
Cost $4,509,350)(b) $ 4,605,000 $ 3,591,900
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.79%
Global Telesystems Group, Conv.
Notes, 8.75%, 06/30/00 620,000 2,523,400
- --------------------------------------------------------------
Total U.S. Dollar Denominated
Convertible Bonds & Notes
(Cost $5,631,765) 6,115,300
- --------------------------------------------------------------
U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS & NOTES-11.30%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.88%
Comcast Cable Communications,
Unsec. Unsub. Notes, 6.20%,
11/15/08 2,000,000 1,866,140
- --------------------------------------------------------------
Comcast Corp., Sr. Sub. Deb.,
9.50%, 01/15/08 $ 900,000 $ 942,750
- --------------------------------------------------------------
2,808,890
- --------------------------------------------------------------
ELECTRIC COMPANIES-3.57%
Cleveland Electric Illuminating
Co. (The), Series D Sr. Sec.
Notes, 7.43%, 11/01/09 1,500,000 1,511,295
- --------------------------------------------------------------
Commonwealth Edison Co., First
Mortgage Notes, 7.50%, 07/01/13 1,300,000 1,366,703
- --------------------------------------------------------------
El Paso Electric Co.
Series D Sec. First Mortgage
Bonds, 8.90%, 02/01/06 1,425,000 1,536,862
- --------------------------------------------------------------
Series E Sec. First Mortgage
Bonds, 9.40%, 05/01/11 1,900,000 2,136,189
- --------------------------------------------------------------
Texas-New Mexico Power, Sr. Sec.
Notes, 6.25%, 01/15/09 2,750,000 2,454,843
- --------------------------------------------------------------
Western Resources, Inc.
Sr. Unsec. Notes, 6.25%,
08/15/03 1,500,000 1,473,345
- --------------------------------------------------------------
Sr. Unsec. Notes, 7.125%,
08/01/09 900,000 895,356
- --------------------------------------------------------------
11,374,593
- --------------------------------------------------------------
NATURAL GAS-2.07%
Dynegy, Inc., Sr. Unsec. Deb.,
7.125%, 05/15/18 1,400,000 1,308,888
- --------------------------------------------------------------
K N Energy, Inc., Unsec. Deb.,
7.35%, 08/01/26 3,000,000 2,963,790
- --------------------------------------------------------------
PanEnergy Corp., Notes, 7.875%,
08/15/04 2,205,000 2,308,040
- --------------------------------------------------------------
6,580,718
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.60%
Tennessee Gas Pipeline Co., Unsec.
Bonds, 7.00%, 03/15/27 1,900,000 1,899,924
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-2.21%
AES Corp.
Sr. Sub. Notes, 10.25%, 07/15/06 925,000 952,750
- --------------------------------------------------------------
Sr. Notes, 8.00%, 12/31/08 2,500,000 2,362,500
- --------------------------------------------------------------
Indiana Michigan Power, Sec. Lease
Obligation Bonds, 9.82%,
12/07/22 3,020,986 3,723,184
- --------------------------------------------------------------
7,038,434
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.48%
AT&T Corp., Sr. Notes, 7.75%,
03/01/07 1,850,000 1,960,963
- --------------------------------------------------------------
Sprint Capital Corp., Sr. Unsec.
Gtd. Notes, 6.875%, 11/15/28 3,000,000 2,747,640
- --------------------------------------------------------------
4,708,603
- --------------------------------------------------------------
TELEPHONE-0.49%
SBC Communications, Inc., Deb.,
7.375%, 07/15/43 1,600,000 1,569,696
- --------------------------------------------------------------
Total U.S. Dollar Denominated
Non-Convertible Bonds &
Notes (Cost $37,284,926) 35,980,858
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS &
NOTES-1.96%(C)
FRANCE-0.35%
France Telecom (Telephone), Conv.
Bonds, 2.00%, 01/01/04 FRF $ 6,455,040 $ 1,123,131
- --------------------------------------------------------------
UNITED KINGDOM-1.61%
National Grid Co. PLC (Electric
Companies), Conv. Bonds, 4.25%,
02/17/08 GBP 2,760,000 5,106,341
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Convertible
Bonds & Notes (Cost
$5,712,741) 6,229,472
- --------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS &
NOTES-2.57%(C)
CANADA-2.57%
Bell Canada
(Telecommunications-Cellular/
Wireless)
Series EW Deb., 8.80%,
08/17/05 CAD 950,000 737,486
- --------------------------------------------------------------
Unsec. Deb., 10.875%, 10/11/04 1,700,000 1,382,905
- --------------------------------------------------------------
Clearnet Communications, Inc.
(Telephone), Unsec. Sr. Disc.
Notes, 5.303%, 02/15/09(d) 3,000,000 1,119,783
- --------------------------------------------------------------
Telegobe Canada, Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 2,400,000 1,766,716
- --------------------------------------------------------------
TransCanada Pipelines (Natural Gas)
Series Q Deb., 10.625%,
10/20/09 CAD $ 1,750,000 $ 1,549,430
- --------------------------------------------------------------
Unsec. Notes, 8.55%, 02/01/06 2,150,000 1,624,092
- --------------------------------------------------------------
8,180,412
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Non-Convertible
Bonds & Notes (Cost
$8,303,088) 8,180,412
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
RIGHTS-0.01%
SERVICES (COMMERCIAL & CONSUMER)-0.01%
Autopistas Concesionaria Espanola
S.A., Bonus Rts. expiring
07/12/99 (Cost $0) 77,000 $ 44,439
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT-5.90%(E)
Chase Securities, Inc., 5.00%,
07/01/99 (Cost $18,795,027)(f) $18,795,027 $ 18,795,027
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.76% 317,705,260
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.24% 750,121
- --------------------------------------------------------------
NET ASSETS-100.00% $318,455,381
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 06/30/99 was $4,611,175 which
represented 1.45% of the Fund's net assets.
(c) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(d) Step bond issued at a discount. The interest rate represents the coupon rate
at which the bond will accrue at a specified future date.
(e) 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.
(f) Joint repurchase agreement entered into 06/30/99 with a maturing value
$200,027,778. Collateralized by U.S. Government agency obligations.
Investment Abbreviations:
ADR - American Depositary Receipt
AUD - Australian Dollar
CAD - Canadian Dollars
CHF - Swiss Franc
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
DECS - Dividend Enhanced Convertible Stock
Dep. - Depositary
DEM - German Deutsche Mark
Disc. - Discounted
FRF - French Franc
GBP - British Pound Sterling
GDR - Global Depositary Receipt
Gtd. - Guaranteed
Pfd - Preferred
Rts. - Rights
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$205,114,088) $317,705,260
- ---------------------------------------------------------
Receivables for:
Fund shares sold 411,518
- ---------------------------------------------------------
Dividends and interest 1,648,688
- ---------------------------------------------------------
Investment for deferred compensation plan 26,617
- ---------------------------------------------------------
Other assets 26,227
- ---------------------------------------------------------
Total assets 319,818,310
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 185,525
- ---------------------------------------------------------
Fund shares reacquired 549,290
- ---------------------------------------------------------
Dividends 81,018
- ---------------------------------------------------------
Deferred compensation 26,617
- ---------------------------------------------------------
Accrued advisory fees 145,687
- ---------------------------------------------------------
Accrued distribution fees 263,056
- ---------------------------------------------------------
Accrued trustees' fees 2,135
- ---------------------------------------------------------
Accrued transfer agent fees 44,659
- ---------------------------------------------------------
Accrued operating expenses 64,942
- ---------------------------------------------------------
Total liabilities 1,362,929
- ---------------------------------------------------------
Net assets applicable to shares outstanding $318,455,381
- ---------------------------------------------------------
NET ASSETS:
Class A $199,172,093
=========================================================
Class B $115,486,148
=========================================================
Class C $ 3,797,140
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 8,962,178
=========================================================
Class B 5,205,436
=========================================================
Class C 171,166
=========================================================
Class A:
Net asset value and redemption price per
share $ 22.22
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $22.22 / 94.50%) $ 23.51
=========================================================
Class B:
Net asset value and offering price per
share $ 22.19
=========================================================
Class C:
Net asset value and offering price per
share $ 22.18
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $122,108 foreign
withholding tax) $ 2,526,769
- ---------------------------------------------------------
Interest 2,361,279
- ---------------------------------------------------------
Total investment income 4,888,048
- ---------------------------------------------------------
EXPENSES:
Advisory fees 862,165
- ---------------------------------------------------------
Administrative services fees 46,220
- ---------------------------------------------------------
Custodian fees 54,874
- ---------------------------------------------------------
Trustees' fees 2,865
- ---------------------------------------------------------
Distribution fees -- Class A 239,850
- ---------------------------------------------------------
Distribution fees -- Class B 551,495
- ---------------------------------------------------------
Distribution fees -- Class C 15,079
- ---------------------------------------------------------
Transfer agent fees -- Class A 157,055
- ---------------------------------------------------------
Transfer agent fees -- Class B 92,255
- ---------------------------------------------------------
Transfer agent fees -- Class C 2,674
- ---------------------------------------------------------
Other 122,503
- ---------------------------------------------------------
Total expenses 2,147,035
- ---------------------------------------------------------
Less: Expenses paid indirectly (1,996)
- ---------------------------------------------------------
Net expenses 2,145,039
- ---------------------------------------------------------
Net investment income 2,743,009
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 18,123,725
- ---------------------------------------------------------
Foreign currencies (184,630)
- ---------------------------------------------------------
17,939,095
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities (159,202)
- ---------------------------------------------------------
Foreign currencies (4,081)
- ---------------------------------------------------------
(163,283)
- ---------------------------------------------------------
Net gain from investment securities and
foreign currencies 17,775,812
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $20,518,821
=========================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,743,009 $ 6,163,727
- --------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 17,939,095 11,466,949
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts (163,283) 25,167,621
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 20,518,821 42,798,297
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (2,189,420) (4,323,452)
- --------------------------------------------------------------------------------------------
Class B (882,147) (1,627,090)
- --------------------------------------------------------------------------------------------
Class C (24,180) (23,697)
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A -- (7,225,608)
- --------------------------------------------------------------------------------------------
Class B -- (4,089,137)
- --------------------------------------------------------------------------------------------
Class C -- (109,604)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A (8,403,877) 865,940
- --------------------------------------------------------------------------------------------
Class B (2,703,969) 8,749,835
- --------------------------------------------------------------------------------------------
Class C 614,629 1,643,746
- --------------------------------------------------------------------------------------------
Net increase in net assets 6,929,857 36,659,230
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 311,525,524 274,866,294
- --------------------------------------------------------------------------------------------
End of period $318,455,381 $311,525,524
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $188,303,212 $198,796,429
- --------------------------------------------------------------------------------------------
Undistributed net investment income (421,538) (68,800)
- --------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and option contracts 17,985,418 46,323
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 112,588,289 112,751,572
- --------------------------------------------------------------------------------------------
$318,455,381 $311,525,524
============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Utilities Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate series
portfolios, each having an unlimited number of shares of beneficial interest.
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's objective is to achieve a high level of current income, and as a
secondary objective the Fund seeks to achieve capital appreciation, by investing
primarily in the common and preferred stocks of public utility companies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales
9
<PAGE> 12
price on the exchange where the security is principally traded, or lacking
any sales on a particular day, the security is valued at the closing bid
price on that day. Each security reported on the NASDAQ National Market
System is valued at the last sales price on the valuation date or absent a
last sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the
above methods are valued based upon quotes furnished by independent sources
and are valued at the last bid price in the case of equity securities and in
the case of debt obligations, the mean between the last bid and asked
prices. Securities for which market quotations either are not readily
available or are questionable are valued at fair value as determined in good
faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times.
Foreign currency exchange rates are also generally determined prior to the
close of the New York Stock Exchange. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the
times at which they are determined and the close of the New York Stock
Exchange which will not be reflected in the computation of the Fund's net
asset value. If events materially affecting the value of such securities
occur during such period, then these securities will be valued at their fair
value as determined in good faith by or under the supervision of the Board
of Trustees.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. It is the policy of the Fund to declare daily dividends
from net investment income. Such distributions are paid quarterly effective
July 99. Distributions from net realized capital gains, if any, are recorded
on ex-dividend date and are paid annually.
C. Bond Premiums -- It is the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes.
D. 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.
E. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
F. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
G. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.60% of
the first $200 million of the Fund's average daily net assets, plus 0.50% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.40% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM a fee for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended June 30, 1999, AIM
was paid $46,220 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the six months ended June 30, 1999, AFS
was paid $184,946 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
10
<PAGE> 13
assets of the Class C shares. The Fund pursuant to the Class B Plan, pays AIM
Distributors compensation at an annual rate of 1.00% of the average daily net
assets of the Class B shares. Of these amounts, the Fund may pay a service fee
of 0.25% of the average daily net assets of the Class A, Class B or Class C
shares to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own the
appropriate class of shares of the Fund. Any amounts not paid as a service fee
under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. During the six months ended June 30,
1999, Class A, Class B and Class C shares paid AIM Distributors $239,850,
$551,495 and $15,079, respectively, as compensation under the Plans.
AIM Distributors received commissions of $28,122 from sales of the Class A
shares of the Fund during the six months ended June 30, 1999. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of Class A shares. During the six months ended June 30,
1999, AIM Distributors received $28,469 in contingent deferred sales charges
imposed on redemptions of Fund shares. Certain officers and trustees of the
Trust are officers and directors of AIM, AIM Distributors and AFS.
During the six months ended June 30, 1999, the Fund paid legal fees of $2,155
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the six months ended June 30, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $1,937 and $59, respectively under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $1,996 during the six months ended June 30, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, 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 0.09% 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. Prior to May 28, 1999, the commitment fee rate was
0.05%.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended June 30, 1999 was
$35,752,488 and $55,865,575, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $117,226,221
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (4,635,068)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $112,591,153
==========================================================
</TABLE>
Cost of investments for tax purposes is $205,114,107.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 1999 and the
year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 748,108 $ 15,943,045 2,025,020 $40,729,263
- --------------------------------------------------------------------------
Class B 472,483 9,985,730 1,124,804 22,635,167
- --------------------------------------------------------------------------
Class C 87,938 1,865,540 196,103 3,960,554
- --------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 91,194 1,936,389 520,447 10,555,882
- --------------------------------------------------------------------------
Class B 35,535 753,343 246,404 4,994,635
- --------------------------------------------------------------------------
Class C 1,014 21,557 5,787 117,358
- --------------------------------------------------------------------------
Reacquired:
Class A (1,239,456) (26,283,311) (2,500,981) (50,419,205)
- --------------------------------------------------------------------------
Class B (635,581) (13,443,042) (935,494) (18,879,967)
- --------------------------------------------------------------------------
Class C (60,578) (1,272,468) (120,588) (2,434,166)
- --------------------------------------------------------------------------
(499,343) $(10,493,217) 561,502 $11,259,521
==========================================================================
</TABLE>
11
<PAGE> 14
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during the six months ended June 30, 1999 and each of the
years in the five-year period ended December 31, 1998, and for a share of Class
C outstanding during the six months ended June 30, 1999, the year ended December
31, 1998 and the period August 4, 1997 (date sales commenced) through December
31, 1997.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
DECEMBER 31,
JUNE 30, ----------------------------------------------------
1999 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.01 $ 19.26 $ 16.01 $ 14.59 $ 11.85 $ 14.09
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.22 0.48 0.47 0.55 0.55 0.59
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 1.23 2.53 3.26 1.43 2.71 (2.20)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Total from investment operations 1.45 3.01 3.73 1.98 3.26 (1.61)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.24) (0.46) (0.47) (0.56) (0.52) (0.60)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Distributions from net realized gains -- (0.80) (0.01) -- -- --
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Returns of capital -- -- -- -- -- (0.03)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Total distributions (0.24) (1.26) (0.48) (0.56) (0.52) (0.63)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 22.22 $ 21.01 $ 19.26 $ 16.01 $ 14.59 $ 11.85
============================================================ ======== ======== ======== ======== ======== ========
Total return(a) 6.96% 16.01% 23.70% 13.88% 28.07% (11.57)%
============================================================ ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $199,172 $196,665 $179,456 $164,001 $170,624 $150,515
============================================================ ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.13%(b) 1.06% 1.13% 1.17% 1.21% 1.18%
============================================================ ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 2.08%(b) 2.39% 2.79% 3.62% 4.20% 4.67%
============================================================ ======== ======== ======== ======== ======== ========
Portfolio turnover rate 12% 38% 26% 48% 88% 101%
============================================================ ======== ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets of $193,470,148.
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------------- ----------------------------
DECEMBER 31, DECEMBER 31,
JUNE 30, ---------------------------------------------- JUNE 30, -----------------
1999 1998 1997 1996 1995 1994 1999 1998 1997
-------- -------- ------- ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.98 $ 19.24 $ 16.01 $ 14.60 $ 11.84 $ 14.08 $ 20.97 $ 19.24 $ 17.67
- ------------------------------------ -------- -------- ------- ------- ------- ------- -------- ------- -------
Income from investment operations:
Net investment income 0.14 0.33 0.34 0.42 0.44 0.47 0.14 0.33 0.13
- ------------------------------------ -------- -------- ------- ------- ------- ------- -------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 1.24 2.53 3.25 1.44 2.73 (2.19) 1.24 2.52 1.58
- ------------------------------------ -------- -------- ------- ------- ------- ------- -------- ------- -------
Total from investment operations 1.38 2.86 3.59 1.86 3.17 (1.72) 1.38 2.85 1.71
- ------------------------------------ -------- -------- ------- ------- ------- ------- -------- ------- -------
Less distributions:
Dividends from net investment
income (0.17) (0.32) (0.35) (0.45) (0.41) (0.49) (0.17) (0.32) (0.13)
- ------------------------------------ -------- -------- ------- ------- ------- ------- -------- ------- -------
Distributions from net realized
gains -- (0.80) (0.01) -- -- -- -- (0.80) (0.01)
- ------------------------------------ -------- -------- ------- ------- ------- ------- -------- ------- -------
Returns of capital -- -- -- -- -- (0.03) -- -- --
- ------------------------------------ -------- -------- ------- ------- ------- ------- -------- ------- -------
Total distributions (0.17) (1.12) (0.36) (0.45) (0.41) (0.52) (0.17) (1.12) (0.14)
- ------------------------------------ -------- -------- ------- ------- ------- ------- -------- ------- -------
Net asset value, end of period $ 22.19 $ 20.98 $ 19.24 $ 16.01 $ 14.60 $ 11.84 $ 22.18 $ 20.97 $ 19.24
==================================== ======== ======== ======= ======= ======= ======= ======== ======= =======
Total return(a) 6.61% 15.14% 22.74% 12.98% 27.16% (12.35)% 6.61% 15.09% 9.74%
==================================== ======== ======== ======= ======= ======= ======= ======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $115,486 $111,866 $94,227 $79,530 $70,693 $42,568 $3,797 $2,994 $1,183
==================================== ======== ======== ======= ======= ======= ======= ======== ======= =======
Ratio of expenses to average net
assets 1.88%(b) 1.81% 1.91% 1.96% 1.97% 2.07% 1.88%(b) 1.81% 1.90%(c)
==================================== ======== ======== ======= ======= ======= ======= ======== ======= =======
Ratio of net investment income to
average net assets 1.32%(b) 1.64% 2.01% 2.83% 3.44% 3.78% 1.32%(b) 1.64% 2.02%(c)
==================================== ======== ======== ======= ======= ======= ======= ======== ======= =======
Portfolio turnover rate 12% 38% 26% 48% 88% 101% 12% 38% 26%
==================================== ======== ======== ======= ======= ======= ======= ======== ======= =======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $111,213,015 and
$3,040,858 for Class B and Class C, respectively.
(c) Annualized.
12
<PAGE> 15
<TABLE>
<CAPTION>
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; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Robert G. Alley Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Stuart W. Coco
President, Mercantile Bankshares Vice President State Street Bank and Trust Company
225 Franklin Street
Jack Fields Melville B. Cox Boston, MA 02110
Chief Executive Officer Vice President
Texana Global, Inc.; COUNSEL TO THE FUND
Formerly Member Karen Dunn Kelley
of the U.S. House of Representatives Vice President Ballard Spahr
Andrews & Ingersoll, LLP
Carl Frischling Edgar M. Larsen 1735 Market Street
Partner Vice President Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel LLP
Mary J. Benson COUNSEL TO THE TRUSTEES
Robert H. Graham Assistant Vice President and
President and Chief Executive Officer Assistant Treasurer Kramer, Levin, Naftalis & Frankel LLP
A I M Management Group Inc. 919 Third Avenue
Sheri Morris New York, NY 10022
Prema Mathai-Davis Assistant Vice President and
Chief Executive Officer, YWCA of the U.S.A., Assistant Treasurer DISTRIBUTOR
Commissioner, New York City Dept. for
the Aging; and member of the Board of Directors, Renee A. Friedli A I M Distributors, Inc.
Metropolitan Transportation Authority of Assistant Secretary 11 Greenway Plaza
New York State Suite 100
P. Michelle Grace Houston, TX 77046
Lewis F. Pennock Assistant Secretary
Attorney
Jeffrey H. Kupor
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Nancy L. Martin
Limited Partnership Assistant Secretary
Ofelia M. Mayo
Assistant Secretary
Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
<PAGE> 16
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. 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
AIM Capital Development Fund $121 billion in assets for more than 6.3
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS million shareholders, including
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund individual investors, corporate clients
AIM Large Cap Growth Fund AIM Asian Growth Fund and financial institutions, as of June
AIM Mid Cap Equity Fund(A) AIM Developing Markets Fund 30, 1999.
AIM Select Growth Fund AIM Europe Growth Fund The AIM Family of Funds--Registered
AIM Small Cap Growth Fund(B) AIM European Development Fund Trademark-- is distributed nationwide,
AIM Small Cap Opportunities Fund AIM International Equity Fund and AIM today is the 10th-largest
AIM Value Fund AIM Japan Growth Fund mutual-fund complex in the United States
AIM Weingarten Fund AIM Latin American Growth Fund in assets under management, according to
AIM New Pacific Growth Fund Strategic Insight, an independent
GROWTH & INCOME FUNDS mutual-fund monitor.
AIM Advisor Flex Fund GLOBAL GROWTH FUNDS
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund
AIM Advisor Real Estate Fund AIM Global Growth Fund
AIM Balanced Fund
AIM Basic Value Fund(C) GLOBAL GROWTH & INCOME FUNDS
AIM Charter Fund AIM Global Growth & Income Fund
AIM Global Utilities Fund
INCOME FUNDS
AIM Floating Rate Fund GLOBAL INCOME FUNDS
AIM High Yield Fund AIM Emerging Markets Debt Fund(D)
AIM High Yield Fund II AIM Global Government Income Fund
AIM Income Fund AIM Global Income Fund
AIM Intermediate Government Fund AIM Strategic Income Fund
AIM Limited Maturity Treasury Fund
THEME FUNDS
TAX-FREE INCOME FUNDS AIM Global Consumer Products and Services Fund
AIM High Income Municipal Fund AIM Global Financial Services Fund
AIM Municipal Bond Fund AIM Global Health Care Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Infrastructure Fund
AIM Tax-Free Intermediate Fund AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund(E)
AIM Global Trends Fund(F)
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998. (A)
On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap Equity
Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM Small
Cap Growth Fund. (C) On September 8, 1998, AIM America Value Fund was renamed
AIM Basic Value Fund. (D) On September 8, 1998, AIM Global High Income Fund was
renamed AIM Emerging Markets Debt Fund. (E) On June 1, 1999, AIM Global
Telecommunications Fund was renamed AIM Global Telecommunications and Technology
Fund. (F) On September 8, 1998, AIM New Dimension Fund was renamed AIM Global
Trends Fund. For more complete information about any AIM Fund(s), including
sales charges and expenses, ask your financial consultant or securities dealer
for a free prospectus(es). Please read the prospectus(es) carefully before you
invest or send money.
[INSERT AIM LOGO HERE]
Invest with DISCIPLINE--Registered Trademark--
