<PAGE> 1
SEMIANNUAL REPORT / JUNE 30 1999
AIM VALUE FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[ COVER IMAGE ]
-----------------------------
THE ANTIQUE DEALER BY HEINRICH EDE (1846)
ANTIQUE DEALERS SEARCH FOR RARE, HISTORIC PIECES THAT
MAY APPRECIATE IN VALUE OVER TIME. FINE ANTIQUES DEVELOP
A PATINA THAT CANNOT BE DUPLICATED, BUT BUILDS ONLY
WITH TIME. LIKE ANTIQUE COLLECTING, INVESTING ALSO TAKES
PATIENCE AND AN EYE FOR INTRINSIC VALUE.
-----------------------------
AIM Value Fund seeks long-term growth of capital by investing primarily in
stocks that are considered by the fund's investment advisor to be undervalued
relative to the stock market as a whole.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Value 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
class 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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Standard & Poor's Composite Index of 500 Stocks (the S&P 500) is a
group of unmanaged securities widely regarded by investors to be
representative of the stock market in general. Results shown assume the
reinvestment of dividends.
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of
30 actively traded primarily industrial stocks.
o The Lipper Growth Funds Index represents an average of the performance of
the 30 largest growth funds. It is compiled by Lipper, Inc., an
independent mutual-fund performance monitor.
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 VALUE FUND
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
[PHOTO OF
Charles T. With only several months remaining in 1999, the question on
Bauer, many of your minds may be, "How will the year 2000 computer
Chairman of issue affect AIM and my investments?" We would like you to
the Board of feel comfortable. We are pleased to be able to report to you
THE FUND that as of June 1999 we achieved a major milestone toward
APPEARS HERE] year 2000 compliance status: we have successfully completed
the testing of all of our mission-critical systems.
Earlier this year, AIM participated in an industrywide
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
AIM Advisors, Inc.
-----------------------------
THE FINANCIAL INDUSTRY
HAS BEEN SEEN AS A
LEADER IN PLANNING FOR
YEAR 2000 CONCERNS.
-----------------------------
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS LETTER IS DEEMED
AIM'S YEAR 2000 READINESS DISCLOSURE.
AIM VALUE FUND
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
AIM VALUE FUND OUTPACES
BENCHMARK INDEXES
HOW DID AIM VALUE FUND PERFORM DURING THE PAST SIX MONTHS?
The fund continued its stellar performance. For the six-month period ended
June 30, 1999, the fund's Class A shares returned 14.53%, Class B shares 14.09%
and Class C shares 14.06%. These returns are at net asset value and exclude
sales charges. This performance beat the S&P 500, which rose 12.38% over the
reporting period. The fund also outperformed its peers, represented by the
11.89% return of the Lipper Growth Funds Index. The fund remains AIM's largest,
with assets climbing from $18.7 billion as of December 31, 1998, to $23.2
billion at the end of June.
WHAT WERE THE MAJOR MARKET TRENDS DURING THE REPORTING PERIOD?
Interest-rate changes and earnings surprises were the major factors driving the
equity markets. In late 1998, the Federal Reserve Board (the Fed) lowered
interest rates and spurred a market rally. That rally continued in 1999, and the
Dow crossed the 11,000 threshold during the reporting period. In April, concerns
about interest rates shook the markets when the Consumer Price Index revealed an
unexpected increase in inflation. In May, the Fed hinted that it may raise
interest rates, and at its June 30 meeting, it increased the federal funds rate
from 4.75% to 5%, leaving the discount rate unchanged. At the same time, the Fed
announced that it had shifted from a tightening to a neutral bias, indicating
that it planned no further rate hikes in the near future. The announcement
sparked a "relief rally" in the markets.
The earnings landscape changed drastically over the first six months of
1999. For most of 1998, earnings reached a plateau for many companies, and the
market favored large-company growth stocks. In the first quarter of 1999,
positive earnings broadened across a wide spectrum of companies, surprising many
analysts and forcing them to revise their estimates. Investors started looking
beyond large companies toward a much broader array of stocks. Value
stocks--those considered to be undervalued relative to the stock market as a
whole--returned to favor, as did small and mid-cap stocks.
WHY DID AIM VALUE FUND PERFORM SO WELL?
The fund remained diversified in a market in which diversification paid. We
continued to invest in stocks of winning companies with strong current earnings
trends and reasonable stock-price valuations. The fund benefited from its
broad range of investments in telecommunications, computers, insurance, retail
and other sectors. In the high-tech arena,
-----------------------------
WE CONTINUED TO INVEST IN
STOCKS OF WINNING COMPANIES
WITH STRONG CURRENT
EARNINGS TRENDS AND REASONABLE
STOCK-PRICE VALUATIONS.
-----------------------------
===============================================================================
AIM VALUE FUND VS. BENCHMARK INDEXES
- -------------------------------------------------------------------------------
As of 6/30/99
Six-month total returns, excluding sales charges
BAR CHART
14.53% Class A Shares
14.09% Class B Shares
14.06% Class C Shares
12.38% S&P 500
11.89% Lipper Growth Funds Index
===============================================================================
LIPPER RANKINGS
As of 6/30/99
===============================================================================
AIM VALUE FUND, CLASS A SHARES
- -------------------------------------------------------------------------------
RANK VS. PERCENTILE
PERIOD ALL GROWTH FUNDS RANK
15 years 12 of 111 11%
10 years 10 of 172 6%
5 years 121 of 399 31%
1 year 168 of 1,063 16%
Fund percentage rankings are vs. all funds in
the Lipper growth fund category, excluding
sales charges and including fees and expenses.
===============================================================================
See important fund and index disclosures inside front cover.
AIM VALUE FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGER'S OVERVIEW
PORTFOLIO COMPOSITION
As of June 30, 1999, based on total net assets
<TABLE>
<CAPTION>
=====================================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. MCI WorldCom, Inc. 5.58% 1. Telecommunications (Long Distance) 6.59%
2. Nokia Oyj A.B.-Class A-ADR 4.51 2. Computers (Software & Services) 6.25
3. Pharmacia & Upjohn, Inc. 3.43 3. Communications Equipment 5.96
4. American International Group, Inc. 3.29 4. Broadcasting (Television, Radio & Cable) 5.48
5. Guidant Corp. 3.18 5. Computers (Hardware) 5.16
6. Best Buy Co., Inc. 2.94 6. Retail (General Merchandise) 5.04
7. Tyco International Ltd. 2.90 7. Financial (Diversified) 5.04
8. Dayton Hudson Corp. 2.89 8. Health Care (Drugs-Major Pharmaceuticals) 3.80
9. International Business Machines Corp. 2.60 9. Health Care (Medical Products & Supplies) 3.65
10. Microsoft Corp. 2.43 10. Insurance (Multi-Line) 3.61
====================================================================================================================
The fund's portfolio composition is subject to change, and there is no assurance that the fund will continue to hold
any particular security.
</TABLE>
the demand for wireless telecommunications, cable TV and data transmission
propelled some of the key stocks in the fund's portfolio.
WHICH STOCKS CONTRIBUTED MOST TO THE FUND'S PERFORMANCE?
The stocks that made the most significant contributions to the fund's
performance were Nokia, AIG, Tyco and Dayton Hudson. Finland-based Nokia is one
of the fastest-growing companies in the wireless equipment and infrastructure
industry. The world's largest cellular-phone maker has developed a promising
technology called WAP (wireless application protocol) as a new standard for
delivering Internet content to cellular phones. During the six months covered
by this report, its stock price almost doubled.
AIG is an insurance powerhouse. Its acquisition of annuities company
SunAmerica took effect on January 1, 1999, giving AIG a foothold in the
worldwide retirement-savings business. AIG's stock rose about 30% over the
reporting period.
Dayton Hudson's Target stores continue to perform well, offering more
upscale merchandise than competitors Wal-Mart and Kmart. Target has seen an
increase in same-store sales and higher profit margins because of its favorable
pricing policies.
We like Tyco because it is a diversified corporation with leading positions
in a wide array of businesses. The company has four divisions: health-care
products, fire and security systems, flow-control technology (pipes, pipe
fittings and tubing) and electrical components. The company has grown through
acquisitions, buying nearly 100 companies and growing its earnings rapidly over
the past six years.
WHAT IS YOUR OUTLOOK FOR THE REST OF THE YEAR?
We expect the market to continue to be volatile and choppy throughout 1999.
Investors with a strong, well-defined discipline can benefit from this type of
market because it gives them the opportunity to buy when the market dips and
sell when it rises. We feel that the broadening of the market bodes well for
actively managed funds, and we believe that AIM Value Fund's diversification
allows it to take advantage of the wider opportunities available in the market.
===============================================================================
RESULTS OF A $10,000 INVESTMENT
5/1/84-6/30/99
- -------------------------------------------------------------------------------
$141,470 Value Class A
$134,501 S&P 500
$101,880 Lipper Growth Funds Index
===============================================================================
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/99, including sales charges
- -------------------------------------------------------------------------------
CLASS A SHARES
Inception (5/1/84) 19.09%
10 Years 20.52
5 Years 23.93
1 Year 21.16*
*28.21%, excluding sales charges
CLASS B SHARES
Inception (10/18/93) 20.13%
5 Years 24.14
1 Year 22.21**
**27.21%, excluding CDSC
CLASS C SHARES
Inception (8/4/97) 23.78%
1 Year 26.16***
***27.16%, excluding CDSC
Past performance cannot guarantee 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.
See important fund and index disclosures inside front cover.
AIM VALUE FUND
3
<PAGE> 6
SEMIANNUAL REPORT / FOR CONSIDERATION
THE WORLD ACCORDING TO GARP
GARP isn't just a character played by Robin Williams; it's an important
investment discipline for AIM fund managers. GARP, or Growth at a Reasonable
Price, combines AIM's growth and value investment strategies.
WHAT IS AN INVESTMENT DISCIPLINE?
It's a clearly defined strategy for selecting securities. Our investment
discipline:
o follows a proven, systematic investment process
o relies on historical data instead of big-picture forecasts and
o takes the emotion out of investment decisions.
We believe that following a consistent investment discipline is the best
way to seek superior results over time.
WHAT IS AIM'S GARP DISCIPLINE?
With GARP, we look for undervalued stocks that have what it takes to produce
real growth - earnings acceleration. Earnings are a tangible measure of a
company's growth, and they reveal much more about a company than its stock
price.
STOCKS WE SELECT SHOW:
o GROWTH IN EARNINGS. We believe earnings drive stock prices. Can the company
sustain earnings growth in the future?
o MOMENTUM IN EARNINGS. Momentum helps us determine when to buy and sell a
stock.
o VALUE OF EARNINGS. Return and risk are both important. It doesn't always pay
to buy a stock just because it's cheap. We look for stocks that have a low
price-to-earnings ratio compared with their projected growth rate.
WHY GARP?
We believe that stocks purchased at a discount relative to their potential for
growth and the underlying value of the company may realize greater rewards once
earnings start to rise. This performance often comes from a change in
management, a new product or some other catalyst - factors we study carefully.
FOUR BASIC RULES TO GARP
1. Remain fully invested at all times.
2. Focus on individual companies rather than industries, sectors or countries.
3. Strive to find the best earnings at attractive prices.
4. Maintain a strong sell discipline.
PICTURE OF ED LARSEN
---------------------------------------
"THE KEY TO LONG-TERM SUCCESSFUL INVESTMENT RESULTS IN A CONSIS-
TENT FOCUS ON DISCIPLINE. WE'VE APPLIED OUR DISCIPLINES THROUGH
BULL AND BEAR MARKETS AND FIRMLY BELIEVE IN THEIR EFFECTIVENESS."
---------------------------------------
ED LARSEN, CHIEF EQUITY OFFICER
AIM VALUE FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-86.21%
AUTOMOBILES-0.90%
Ford Motor Co. 3,700,000 $ 208,818,750
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-2.36%
Chase Manhattan Corp. (The) 6,300,000 545,737,500
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-5.48%
Cablevision Systems Corp.-Class
A(a) 621,000 43,470,000
- ---------------------------------------------------------------
Comcast Corp.-Class A 9,347,000 359,275,313
- ---------------------------------------------------------------
Cox Communications, Inc.-Class
A(a)(b) 11,089,500 408,232,219
- ---------------------------------------------------------------
MediaOne Group, Inc.(a) 6,166,200 458,611,125
- ---------------------------------------------------------------
1,269,588,657
- ---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-1.11%
Monsanto Co. 6,500,000 256,343,750
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.44%
Comverse Technology, Inc.(a) 1,025,000 77,387,500
- ---------------------------------------------------------------
Lucent Technologies, Inc. 1,700,000 114,643,750
- ---------------------------------------------------------------
Motorola, Inc. 1,482,300 140,447,925
- ---------------------------------------------------------------
332,479,175
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-5.16%
Dell Computer Corp.(a) 1,400,000 51,800,000
- ---------------------------------------------------------------
Gateway, Inc.(a) 4,240,000 250,160,000
- ---------------------------------------------------------------
International Business Machines
Corp. 4,666,400 603,132,200
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a)(b) 4,200,000 289,275,000
- ---------------------------------------------------------------
1,194,367,200
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.11%
Cisco Systems, Inc.(a)(b) 400,000 25,800,000
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.87%
EMC Corp.(a)(b) 1,100,000 60,500,000
- ---------------------------------------------------------------
Lexmark International Group,
Inc.(a) 2,136,800 141,162,350
- ---------------------------------------------------------------
201,662,350
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-6.25%
BMC Software, Inc.(a) 6,715,300 362,626,200
- ---------------------------------------------------------------
Microsoft Corp.(a) 6,250,000 563,671,875
- ---------------------------------------------------------------
Unisys Corp.(a) 13,402,500 521,859,844
- ---------------------------------------------------------------
1,448,157,919
- ---------------------------------------------------------------
CONSUMER FINANCE-0.48%
Providian Financial Corp. 1,200,000 112,200,000
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-0.39%
Cardinal Health, Inc. 1,400,000 89,775,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-2.05%
General Electric Co. 3,500,000 $ 395,500,000
- ---------------------------------------------------------------
Solectron Corp.(a) 1,200,000 80,025,000
- ---------------------------------------------------------------
475,525,000
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.11%
Waters Corp.(a) 500,000 26,562,500
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-0.16%
Texas Instruments, Inc. 252,400 36,598,000
- ---------------------------------------------------------------
ENTERTAINMENT-2.26%
Time Warner, Inc. 7,130,500 524,091,750
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-0.13%
Teradyne, Inc.(a) 404,900 29,051,575
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-5.04%
American Express Co. 1,500,000 195,187,500
- ---------------------------------------------------------------
Associates First Capital
Corp.-Class A 7,350,000 325,696,875
- ---------------------------------------------------------------
Citigroup, Inc. 2,100,000 99,750,000
- ---------------------------------------------------------------
Fannie Mae 3,400,000 232,475,000
- ---------------------------------------------------------------
Freddie Mac 5,400,000 313,200,000
- ---------------------------------------------------------------
1,166,309,375
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-3.52%
Bristol-Myers Squibb Co. 6,000,000 422,625,000
- ---------------------------------------------------------------
Warner-Lambert Co. 5,660,000 392,662,500
- ---------------------------------------------------------------
815,287,500
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-3.80%
Merck & Co., Inc. 1,150,000 85,100,000
- ---------------------------------------------------------------
Pharmacia & Upjohn, Inc. 14,000,000 795,375,000
- ---------------------------------------------------------------
880,475,000
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-3.65%
Guidant Corp.(b) 14,335,500 737,382,281
- ---------------------------------------------------------------
Medtronic, Inc. 1,400,000 109,025,000
- ---------------------------------------------------------------
846,407,281
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-1.61%
Colgate-Palmolive Co. 3,777,200 372,998,500
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-3.61%
American International Group,
Inc.(b) 6,500,000 760,906,250
- ---------------------------------------------------------------
Hartford Financial Services
Group, Inc. (The) 1,285,700 74,972,381
- ---------------------------------------------------------------
835,878,631
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-0.52%
Progressive Corp. 512,300 74,283,500
- ---------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (PROPERTY-CASUALTY)-(CONTINUED)
XL Capital Ltd. 800,000 $ 45,200,000
- ---------------------------------------------------------------
119,483,500
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-0.75%
Morgan Stanley, Dean Witter,
Discover & Co. 1,700,000 174,250,000
- ---------------------------------------------------------------
LODGING-HOTELS-1.51%
Carnival Corp. 7,000,000 339,500,000
- ---------------------------------------------------------------
Royal Caribbean Cruises Ltd. 240,500 10,521,875
- ---------------------------------------------------------------
350,021,875
- ---------------------------------------------------------------
MANUFACTURING
(DIVERSIFIED)-2.96%
Tyco International Ltd. 7,100,610 672,782,797
- ---------------------------------------------------------------
United Technologies Corp. 162,900 11,677,894
- ---------------------------------------------------------------
684,460,691
- ---------------------------------------------------------------
PERSONAL CARE-1.76%
Avon Products, Inc. 7,325,000 406,537,500
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.25%
Xerox Corp. 994,000 58,708,125
- ---------------------------------------------------------------
PUBLISHING-0.28%
Dow Jones & Co., Inc. 1,200,000 63,675,000
- ---------------------------------------------------------------
RESTAURANTS-1.88%
McDonald's Corp. 6,500,000 268,531,250
- ---------------------------------------------------------------
Tricon Global Restaurants,
Inc.(a) 3,100,000 167,787,500
- ---------------------------------------------------------------
436,318,750
- ---------------------------------------------------------------
RETAIL (BUILDING
SUPPLIES)-1.52%
Lowe's Companies, Inc. 6,225,000 352,879,687
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-2.94%
Best Buy Co., Inc.(a) 10,088,200 680,953,500
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-3.50%
Albertson's, Inc. 360,800 18,603,750
- ---------------------------------------------------------------
Kroger Co.(a) 14,180,000 396,153,750
- ---------------------------------------------------------------
Safeway, Inc.(a) 8,000,000 396,000,000
- ---------------------------------------------------------------
810,757,500
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-5.04%
Costco Companies, Inc.(a) 3,100,000 248,193,750
- ---------------------------------------------------------------
Dayton Hudson Corp. 10,290,400 668,876,000
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 5,200,000 250,900,000
- ---------------------------------------------------------------
1,167,969,750
- ---------------------------------------------------------------
RETAIL
(SPECIALTY-APPAREL)-0.02%
Gap, Inc. (The) 92,100 4,639,537
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-1.81%
Omnicom Group, Inc. 5,242,500 419,400,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMPUTER
SYSTEMS)-0.41%
SunGard Data Systems, Inc.(a) 2,731,300 $ 94,229,850
- ---------------------------------------------------------------
SERVICES (DATA
PROCESSING)-1.54%
Equifax, Inc. 1,112,600 39,705,913
- ---------------------------------------------------------------
First Data Corp. 6,471,400 316,694,138
- ---------------------------------------------------------------
356,400,051
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-1.56%
Nextel Communications,
Inc.-Class A(a) 7,214,400 362,072,700
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-6.59%
A T & T Corp.(b) 4,200,000 234,412,500
- ---------------------------------------------------------------
MCI WorldCom, Inc.(a)(b) 14,972,543 1,291,381,834
- ---------------------------------------------------------------
1,525,794,334
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.88%
Waste Management, Inc. 3,800,000 204,250,000
- ---------------------------------------------------------------
Total Domestic Common
Stocks (Cost
$13,742,692,956) 19,966,917,763
- ---------------------------------------------------------------
FOREIGN STOCKS-5.69%
FINLAND-4.52%
Nokia Oyj A.B.-Class A
(Communications Equipment) 46,000 4,029,646
- ---------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 11,400,000 1,043,812,500
- ---------------------------------------------------------------
1,047,842,146
- ---------------------------------------------------------------
UNITED KINGDOM-1.17%
Vodafone Airtouch PLC-ADR
(Telecommunications-Cellular/Wireless) 1,075,000 211,775,000
- ---------------------------------------------------------------
WPP Group PLC
(Services-Advertising/
Marketing) 7,000,000 59,196,069
- ---------------------------------------------------------------
270,971,069
- ---------------------------------------------------------------
Total Foreign Stocks (Cost
$511,810,988) 1,318,813,215
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
MASTER NOTE AGREEMENT-0.16%
Citicorp Securities, Inc.,
6.25%, 07/26/99 (Cost
$36,000,000)(c) $ 36,000,000 36,000,000
- ---------------------------------------------------------------
TIME DEPOSITS-3.80%
Bank of Austria, 5.75%,
07/01/99 95,494,982 $ 95,494,982
- ---------------------------------------------------------------
Commerzbank, 4.75%, 07/01/99 400,000,000 400,000,000
- ---------------------------------------------------------------
LaSalle Bank, 5.1875%, 07/01/99 184,198,697 184,198,697
- ---------------------------------------------------------------
Warburg Dillon Read LLC, 5.00%,
07/01/99 200,000,000 200,000,000
- ---------------------------------------------------------------
Total Time Deposits (Cost
$879,693,679) 879,693,679
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS-4.27%(D)
Barclays Capital, Inc., 4.95%,
07/01/99(e) $138,852,341 $ 138,852,341
- ---------------------------------------------------------------
Bear, Stearns & Co., Inc.,
5.00%(f) 200,000,000 200,000,000
- ---------------------------------------------------------------
Bear, Stearns & Co., Inc.,
5.00%(g) 347,000,000 347,000,000
- ---------------------------------------------------------------
Deutsche Bank Securities, Inc.,
5.02%(h) 150,000,000 150,000,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS-(CONTINUED)
Warburg Dillon Read LLC, 5.10%,
07/01/99(i) $154,117,246 $ 154,117,246
- ---------------------------------------------------------------
Total Repurchase Agreements
(Cost $989,969,587) 989,969,587
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.13% 23,191,394,244
- ---------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.13%) (29,873,013)
- ---------------------------------------------------------------
NET ASSETS-100.00% $23,161,521,232
===============================================================
</TABLE>
Notes to Schedule of Investments.
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 8.
(c) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon two days' notice to the issuer. Interest rates on
master notes are redetermined periodically. Rate shown is the rate in effect
on 06/30/99.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 06/30/99 with a maturing value of
$291,645,791. Collateralized by U.S. Government obligations.
(f) Open repurchase agreement entered into 09/29/98. Either party may terminate
the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by U.S. Government obligations with an
aggregate market value at 06/30/99 of $256,706,824.
(g) Open repurchase agreement entered into 10/05/98. Either party may terminate
the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by U.S. Government obligations with an
aggregate market value at 06/30/99 of $355,207,230.
(h) Open repurchase agreement entered into 10/02/97. Either party may terminate
the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by U.S. Government obligations with an
aggregate market value at 06/30/99 of $204,004,358.
(i) Joint repurchase agreement entered into 06/30/99 with a maturing value of
$400,056,667. Collateralized by U.S. Government obligations.
Investment Abbreviation:
ADR - American Depositary Receipt
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
$16,160,167,210) $23,191,394,244
- ----------------------------------------------------------
Receivables for:
Investments sold 99,006,610
- ----------------------------------------------------------
Fund shares sold 61,298,363
- ----------------------------------------------------------
Dividends and interest 6,043,127
- ----------------------------------------------------------
Forward contracts closed 2,009,550
- ----------------------------------------------------------
Forward contracts 27,279,963
- ----------------------------------------------------------
Investment for deferred compensation plan 142,693
- ----------------------------------------------------------
Other assets 402,148
- ----------------------------------------------------------
Total assets 23,387,576,698
- ----------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 130,160,122
- ----------------------------------------------------------
Fund shares reacquired 42,507,603
- ----------------------------------------------------------
Deferred compensation plan 142,693
- ----------------------------------------------------------
Options written (Premiums received
$28,654,623) 18,603,125
- ----------------------------------------------------------
Accrued advisory fees 10,967,434
- ----------------------------------------------------------
Accrued distribution fees 20,141,991
- ----------------------------------------------------------
Accrued transfer agent fees 2,475,073
- ----------------------------------------------------------
Accrued trustees' fees 17,700
- ----------------------------------------------------------
Accrued operating expenses 1,039,725
- ----------------------------------------------------------
Total liabilities 226,055,466
- ----------------------------------------------------------
Net assets applicable to shares
outstanding $23,161,521,232
- ----------------------------------------------------------
NET ASSETS:
Class A $10,750,474,984
==========================================================
Class B $11,930,604,187
==========================================================
Class C $ 480,442,061
==========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 233,562,314
==========================================================
Class B 266,510,969
==========================================================
Class C 10,728,236
==========================================================
Class A:
Net asset value and redemption price
per share $ 46.03
- ----------------------------------------------------------
Offering price per share:
(Net asset value of $46.03 / 94.50%) $ 48.71
==========================================================
Class B:
Net asset value and offering price per
share $ 44.77
==========================================================
Class C:
Net asset value and offering price per
share $ 44.78
==========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $1,003,035 foreign
withholding tax) $ 54,986,556
- ----------------------------------------------------------
Interest 48,713,252
- ----------------------------------------------------------
Total investment income 103,699,808
- ----------------------------------------------------------
EXPENSES:
Advisory fees 64,521,881
- ----------------------------------------------------------
Administrative services fees 238,729
- ----------------------------------------------------------
Custodian fees 462,506
- ----------------------------------------------------------
Distribution fees -- Class A 12,062,935
- ----------------------------------------------------------
Distribution fees -- Class B 53,128,974
- ----------------------------------------------------------
Distribution fees -- Class C 1,646,021
- ----------------------------------------------------------
Trustees' fees 56,560
- ----------------------------------------------------------
Transfer agent fees -- Class A 5,924,419
- ----------------------------------------------------------
Transfer agent fees -- Class B 9,259,468
- ----------------------------------------------------------
Transfer agent fees -- Class C 366,283
- ----------------------------------------------------------
Other 1,893,584
- ----------------------------------------------------------
Total expenses 149,561,360
- ----------------------------------------------------------
Less: Expenses paid indirectly (139,361)
- ----------------------------------------------------------
Fees waived by advisor (2,327,722)
- ----------------------------------------------------------
Net expenses 147,094,277
- ----------------------------------------------------------
Net investment income (loss) (43,394,469)
- ----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FORWARD AND OPTION
CONTRACTS:
Net realized gain from:
Investment securities 1,338,705,869
- ----------------------------------------------------------
Foreign currencies 374,411
- ----------------------------------------------------------
Forward contracts 62,839,403
- ----------------------------------------------------------
1,401,919,683
- ----------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 1,382,351,558
- ----------------------------------------------------------
Foreign currencies (6,734)
- ----------------------------------------------------------
Forward contracts 22,736,800
- ----------------------------------------------------------
Option contracts written 9,938,868
- ----------------------------------------------------------
1,415,020,492
- ----------------------------------------------------------
Net gain from investment securities,
foreign currencies, forward and option
contracts 2,816,940,175
- ----------------------------------------------------------
Net increase in net assets resulting from
operations $2,773,545,706
==========================================================
</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 (loss) $ (43,394,469) $ (24,044,585)
- --------------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures, forward and option contracts 1,401,919,683 1,197,383,660
- --------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, forward contracts and
option contracts 1,415,020,492 3,328,905,060
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,773,545,706 4,502,244,135
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A -- (18,008,475)
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (539,610,813)
- --------------------------------------------------------------------------------------------------
Class B -- (602,045,865)
- --------------------------------------------------------------------------------------------------
Class C -- (12,727,398)
- --------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 609,306,781 439,374,153
- --------------------------------------------------------------------------------------------------
Class B 838,639,701 1,179,878,726
- --------------------------------------------------------------------------------------------------
Class C 224,772,574 156,203,496
- --------------------------------------------------------------------------------------------------
Net increase in net assets 4,446,264,762 5,105,307,959
- --------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 18,715,256,470 13,609,948,511
- --------------------------------------------------------------------------------------------------
End of period $23,161,521,232 $18,715,256,470
==================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $14,637,861,692 $12,965,142,636
- --------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (43,785,898) (391,429)
- --------------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign
currencies, futures, forward and option contracts 1,498,890,748 96,971,065
- --------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, forward contracts and option contracts 7,068,554,690 5,653,534,198
- --------------------------------------------------------------------------------------------------
$23,161,521,232 $18,715,256,470
==================================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Value 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 investment
objective is to seek to achieve long-term growth of capital by investing
primarily in equity securities judged by the Fund's investment advisor to be
undervalued relative to the investment advisor's appraisal of the current or
projected earnings of the companies issuing the securities, or relative to
current market values of assets owned by the companies issuing the securities or
relative to the equity market generally. Income is a secondary objective.
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. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at the date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
C. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably. Outstanding forward currency contracts at
June 30, 1999 were as follows:
<TABLE>
<CAPTION>
CONTRACT TO
SETTLEMENT -------------------------- UNREALIZED
DATE DELIVER RECEIVE VALUE APPRECIATION
---------- ----------- ------------ ------------ ------------
<C> <S> <C> <C> <C> <C>
7/19/99 EUR 136,500,000 $145,849,786 $140,877,464 $ 4,972,322
7/20/99 EUR 366,000,000 391,754,350 377,765,681 13,988,669
7/21/99 EUR 101,000,000 107,427,540 104,254,624 3,172,916
7/22/99 EUR 130,500,000 138,684,450 134,715,324 3,969,126
7/20/99 GBP 15,000,000 24,207,000 23,646,600 560,400
8/17/99 GBP 15,000,000 24,267,975 23,651,445 616,530
------------ ------------ -----------
$832,191,101 $804,911,138 $27,279,963
============ ============ ===========
</TABLE>
D. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Such distributions are
paid annually.
E. Stock Index Futures Contracts -- The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash as collateral for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contract is open, changes in the value of the
contract are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contract at the
end of each day's trading. Variation margin payments are made or received
depending upon whether unrealized gains or losses are incurred. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction
and the Fund's basis in the contract. Risks include the possibility of an
illiquid market and the change in the value of the contract may not
correlate with changes in the value of the Fund's portfolio being hedged.
F. Covered Call Options -- The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option
is the mean between the last bid and asked prices on that day. If a written
call option expires on the stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or a
loss if the closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a
10
<PAGE> 13
loss from the sale of the underlying security and the proceeds of the sale
are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at
the stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security
decline. During the option period, the Fund may be required at any time to
deliver the underlying security against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at
such earlier time at which the Fund effects a closing purchase transaction
by purchasing (at a price which may be higher than that received when the
call option was written) a call option identical to the one originally
written.
The Fund will not write a covered call option if, immediately thereafter,
the aggregate value of the securities underlying all such options,
determined as of the dates such options were written, would exceed 25% of
the net assets of the Fund.
G. Put Options -- The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the
Fund to hedge securities it owns by locking in a minimum price at which the
Fund can sell. If security prices fall, the put option could be exercised
to offset all or a portion of the Fund's resulting losses. At the same
time, because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged. The Fund
will not purchase put options where the aggregate value of the securities
underlying all such options exceeds 25% of the value of its net assets.
H. 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.
I. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. AIM is currently
contractually waiving a portion of its advisory fees payable by the Fund to AIM
to the extent necessary to reduce the fees paid by the Fund at net asset levels
higher than those currently incorporated in the present advisory fee schedule.
AIM will receive a fee calculated at 0.80% of the first $150 million of the
Fund's average daily net assets, plus 0.625% of the Fund's average daily net
assets in excess of $150 million to and including $2 billion, plus 0.60% of the
Fund's average daily net assets in excess of $2 billion. During the six months
ended June 30, 1999, AIM waived advisory fees in the amount of $2,327,722.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended June 30, 1999, AIM
was paid $238,729 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
services to the Fund. During the six months ended June 30, 1999, AFS was paid
$9,047,233 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.25% of the average daily net assets of the Class A shares
and 1.00% of the average daily net assets of the Class C shares. The Fund
pursuant to the Class B Plan, pays AIM Distributors compensation at an annual
rate of 1.00% of the average daily net assets of the Class B shares. Of these
amounts, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class A, Class B or Class C shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own the appropriate class of shares of the Fund. Any
amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the six months ended June 30, 1999, the Class A, Class B and
Class C shares paid AIM Distributors $12,062,935, $53,128,974 and $1,646,021,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $3,677,202 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 $555,569 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 $20,457
for services rendered by Kramer, Levin, Naftalis &
11
<PAGE> 14
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 $129,657 and $9,704, respectively under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $139,361 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% of 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
$6,757,495,714 and $5,175,488,196, 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 $7,156,006,736
- ----------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (170,503,748)
- ----------------------------------------------------------------------------
Net unrealized appreciation of investment securities $6,985,502,988
============================================================================
</TABLE>
Cost of investments for tax purposes is $16,205,891,256.
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 35,812,098 $ 1,543,088,790 61,939,114 $ 2,232,305,973
- -------------------------------------------------------------------------------------
Class B 34,871,169 1,466,691,513 44,964,399 1,587,327,551
- -------------------------------------------------------------------------------------
Class C 6,257,394 263,920,299 4,634,085 164,861,278
- -------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Class A -- -- 13,921,013 529,914,065
- -------------------------------------------------------------------------------------
Class B -- -- 15,274,620 567,695,520
- -------------------------------------------------------------------------------------
Class C -- -- 327,964 12,197,171
- -------------------------------------------------------------------------------------
Reacquired:
Class A (21,778,710) (933,782,009) (64,405,244) (2,322,845,885)
- -------------------------------------------------------------------------------------
Class B (15,023,068) (628,051,812) (27,805,340) (975,144,345)
- -------------------------------------------------------------------------------------
Class C (932,032) (39,147,725) (590,550) (20,854,953)
- -------------------------------------------------------------------------------------
39,206,851 $ 1,672,719,056 48,260,061 $ 1,775,456,375
=====================================================================================
</TABLE>
NOTE 8-CALL OPTION CONTRACTS WRITTEN
Transactions in call option contracts written during the six months ended June
30, 1999 are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of period 2,995 $ 1,254,474
- ----------------------------------------------- --------- ------------
Written 56,000 36,229,869
- ----------------------------------------------- --------- ------------
Closed -- --
- ----------------------------------------------- --------- ------------
Exercised -- --
- ----------------------------------------------- --------- ------------
Expired (12,995) (8,829,720)
- ----------------------------------------------- --------- ------------
End of period 46,000 $ 28,654,623
=============================================== ========= ============
</TABLE>
Open call option contracts written as of June 30, 1999 were as follows:
<TABLE>
<CAPTION>
NUMBER UNREALIZED
CONTRACT STRIKE OF PREMIUM JUNE 30, 1999 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
----- --------- ------ --------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
ATXT Corp. October 60 5,000 $2,297,423 $ 1,437,500 $ 859,923
- ----------------------- ---------- ---- ------ ----------- ----------- -----------
American International
Group, Inc. August 130 2,500 1,749,592 359,375 1,590,217
- ----------------------- ---------- ---- ------ ----------- ----------- -----------
Cisco Systems, Inc. October 55 4,000 3,344,048 5,025,000 (1,680,952)
- ----------------------- ---------- ---- ------ ----------- ----------- -----------
Cox Communications,
Inc.-Class A September 45 10,000 5,604,813 875,000 4,729,813
- ----------------------- ---------- ---- ------ ----------- ----------- -----------
EMC Corp. July 57.5 3,000 1,831,439 431,250 1,400,189
- ----------------------- ---------- ---- ------ ----------- ----------- -----------
Guidant Corp. July 75 2,500 1,437,827 31,250 1,406,577
- ----------------------- ---------- ---- ------ ----------- ----------- -----------
MCI WorldCom, Inc. September 90 15,000 9,439,633 7,593,750 1,845,883
- ----------------------- ---------- ---- ------ ----------- ----------- -----------
Sun MicroSystems, Inc. July 62.5 4,000 2,749,848 2,850,000 (100,152)
- ----------------------- ---------- ---- ------ ----------- ----------- -----------
46,000 $28,454,623 $18,603,125 $10,051,498
======================= ========== ==== ====== =========== =========== ===========
</TABLE>
12
<PAGE> 15
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
---------------------------------------------------------------------------------------
JUNE 30, DECEMBER 31,
----------- ----------------------------------------------------------------------
1999 1998 1997 1996(a) 1995 1994
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 40.19 $ 32.42 $ 29.15 $ 26.81 $ 21.14 $ 20.82
- --------------------------------------- ----------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.00 0.09 0.17 0.43 0.14 0.16
- --------------------------------------- ----------- ---------- ---------- ---------- ---------- ----------
Net gains on securities (both realized
and unrealized) 5.84 10.38 6.78 3.42 7.21 0.52
- --------------------------------------- ----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 5.84 10.47 6.95 3.85 7.35 0.68
- --------------------------------------- ----------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income -- (0.09) (0.04) (0.41) (0.09) (0.16)
- --------------------------------------- ----------- ---------- ---------- ---------- ---------- ----------
Distributions from net realized gains -- (2.61) (3.64) (1.10) (1.59) (0.20)
- --------------------------------------- ----------- ---------- ---------- ---------- ---------- ----------
Total distributions -- (2.70) (3.68) (1.51) (1.68) (0.36)
- --------------------------------------- ----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 46.03 $ 40.19 $ 32.42 $ 29.15 $ 26.81 $ 21.14
======================================= =========== ========== ========== ========== ========== ==========
Total return(b) 14.53% 32.76% 23.95% 14.52% 34.85% 3.28%
======================================= =========== ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $10,750,475 $8,823,094 $6,745,253 $5,100,061 $3,408,952 $1,358,725
======================================= =========== ========== ========== ========== ========== ==========
Ratio of expenses to average net
assets(c) 1.00%(d) 1.00% 1.04% 1.11% 1.12% 0.98%
======================================= =========== ========== ========== ========== ========== ==========
Ratio of net investment income to
average net assets(e) 0.00%(d) 0.26% 0.57% 1.65% 0.74% 0.92%
======================================= =========== ========== ========== ========== ========== ==========
Portfolio turnover rate 28% 113% 137% 126% 151% 127%
======================================= =========== ========== ========== ========== ========== ==========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.02% (annualized), 1.02%, 1.06%, 1.13% and 1.13% for 1999-1995,
respectively.
(d) Ratios are annualized and based on average net assets of $9,730,323,535.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were (0.02)% (annualized), 0.24%, 0.55%, 1.63% and 0.73% for
1999-1995, respectively.
13
<PAGE> 16
NOTE 9-FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B CLASS C
-------------------------------------------------------------------------------- --------
DECEMBER 31,
JUNE 30, ----------------------------------------------------------------- JUNE 30,
1999 1998 1997 1996(a) 1995 1994 1999
----------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 39.24 $ 31.89 $ 28.92 $ 26.65 $ 21.13 $ 20.82 $ 39.26
- -------------------------------- ----------- ------------ ---------- ---------- ---------- -------- --------
Income from investment
operations:
Net investment income (loss) (0.16) (0.18) (0.07) 0.20 (0.01) -- (0.12)
- -------------------------------- ----------- ------------ ---------- ---------- ---------- -------- --------
Net gains (losses) on
securities (both realized and
unrealized) 5.69 10.14 6.68 3.38 7.12 0.51 5.64
- -------------------------------- ----------- ------------ ---------- ---------- ---------- -------- --------
Total from investment
operations 5.53 9.96 6.61 3.58 7.11 0.51 5.52
- -------------------------------- ----------- ------------ ---------- ---------- ---------- -------- --------
Less distributions:
Dividends from net investment
income -- -- -- (0.21) -- --
- -------------------------------- ----------- ------------ ---------- ---------- ---------- -------- --------
Distributions from net realized
gains -- (2.61) (3.64) (1.10) (1.59) (0.20) --
- -------------------------------- ----------- ------------ ---------- ---------- ---------- -------- --------
Total distributions -- (2.61) (3.64) (1.31) (1.59) (0.20) --
- -------------------------------- ----------- ------------ ---------- ---------- ---------- -------- --------
Net asset value, end of period $ 44.77 $ 39.24 $ 31.89 $ 28.92 $ 26.65 $ 21.13 $ 44.78
================================ =========== ============ ========== ========== ========== ======== ========
Total return(b) 14.09% 31.70% 22.96% 13.57% 33.73% 2.46% 14.06%
================================ =========== ============ ========== ========== ========== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $11,930,604 $ 19,680,068 $6,831,796 $4,875,933 $2,860,531 $680,119 $480,442
================================ =========== ============ ========== ========== ========== ======== ========
Ratio of expenses to average net
assets(c) 1.81%(d) 1.80% 1.85% 1.94% 1.94% 1.90% 1.80%(d)
================================ =========== ============ ========== ========== ========== ======== ========
Ratio of net investment income
(loss) to average net assets(e) (0.80)%(d) (0.54)% (0.24)% 0.82% (0.08)% 0.00% (0.79)%(d)
================================ =========== ============ ========== ========== ========== ======== ========
Portfolio turnover rate 28% 113% 137% 126% 151% 127% 28%
================================ =========== ============ ========== ========== ========== ======== ========
<CAPTION>
CLASS C
------------------------
DECEMBER 31,
------------------------
1998(a) 1997
-------- ------------
<S> <C> <C>
Net asset value, beginning of
period $ 31.90 $ 35.60
- -------------------------------- -------- -------
Income from investment
operations:
Net investment income (loss) (0.19) (0.01)
- -------------------------------- -------- -------
Net gains (losses) on
securities (both realized and
unrealized) 10.16 (0.05)
- -------------------------------- -------- -------
Total from investment
operations 9.97 (0.06)
- -------------------------------- -------- -------
Less distributions:
Dividends from net investment
income -- --
- -------------------------------- -------- -------
Distributions from net realized
gains (2.61) (3.64)
- -------------------------------- -------- -------
Total distributions (2.61) (3.64)
- -------------------------------- -------- -------
Net asset value, end of period $ 39.26 $ 31.90
================================ ======== =======
Total return(b) 31.72% (0.08)%
================================ ======== =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $212,095 $32,900
================================ ======== =======
Ratio of expenses to average net
assets(c) 1.80% 1.84%(f)
================================ ======== =======
Ratio of net investment income
(loss) to average net assets(e) (0.54)% (0.23)%(f)
================================ ======== =======
Portfolio turnover rate 113% 137%
================================ ======== =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.83% (annualized), 1.82%, 1.87%, 1.96% and 1.96% for 1999-1995 for Class B,
respectively, and 1.82% (annualized), 1.82% and 1.86% (annualized) for
1999-1997, respectively, for Class C.
(d) Ratios are annualized and based on average net assets of $10,713,853,823 and
$331,932,344 for Class B and Class C, respectively.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were (0.82)% (annualized), (0.56)%, (0.26)%, 0.81% and
(0.09)% for 1999-1995, respectively, for Class B, and (0.81)% (annualized),
(0.56)% and (0.25)% (annualized) for 1999-1997, respectively, for Class C.
(f) Annualized.
14
<PAGE> 17
<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>
15
<PAGE> 18
[THIS PAGE INTENTIONALLY LEFT BLANK]
16
<PAGE> 19
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-----------------
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund leadership in the mutual-fund industry since
AIM Blue Chip Fund AIM Asian Growth Fund 1976 and managed approximately $121 billion
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AIM Dent Demographic Trends Fund AIM European Development Fund investors, corporate clients and financial
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AIM Small Cap Opportunities Fund complex in the United States in assets under
AIM Value Fund GLOBAL GROWTH FUNDS management, according to Strategic Insight,
AIM Weingarten Fund AIM Global Aggressive Growth Fund an independent mutual-fund monitor.
AIM Global Growth Fund
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</TABLE>
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