<PAGE> 1
[COVER IMAGE]
AIM
GLOBAL UTILITIES FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT DECEMBER 31, 1998
INVEST WITH DISCIPLINE--Registered Trademark--
<PAGE> 2
[ COVER IMAGE ]
----------------------------------------
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 ECONOMIC DEVELOPMENT OF CIVILIZATIONS 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. Unless
otherwise indicated, the Fund's performance is computed at net asset value
without a sales charge.
o During the fiscal year ended December 31, 1998, the Fund paid distributions
of $1.26 per share for Class A shares, $1.12 for Class B shares, and $1.12
for Class C shares.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the Fund's Class B and Class C shares will differ from
that of Class A shares due to differences in sales charge structure and
class expenses.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o 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 Lipper Utility Fund Index is an average of the 30 largest utility funds
tracked by Lipper, Inc., an independent mutual fund performance monitor.
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 A PORTION OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
AIM GLOBAL UTILITIES FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
As the fiscal year opened, markets were recovering from the
[PHOTO OF concerns produced by financial crises in Asia during 1997,
Charles T. and this optimism early in 1998 led several market indexes
Bauer, to all-time highs in spring and early summer. However, the
Chairman of year was to bring two particularly serious financial shocks,
the Board of first the debt default by Russia, and later the gathering
THE FUND crisis in Brazil, which devalued its currency shortly after
APPEARS HERE] the fiscal year closed. The result was another year of
significant market volatility.
Optimism yielded to pessimism over the summer as global
financial crises precipitated a worldwide loss of confidence
that affected even previously high-flying U.S. blue chips
and market-leading European stocks. The deep market
correction bolstered U.S. Treasury issues, whose safety
attracts investors in doubtful times.
Beginning in late September, the U.S. Federal Reserve
Board intervened to pump liquidity and confidence into
markets. Numerous interest rate cuts in other countries followed. Investors
responded favorably, and by year end, equities were again rallying. Of course,
not all markets rebounded into positive territory. Europe and the U.S. regained
their market leadership, but investors in most emerging markets suffered serious
financial loss over the year.
HOW SHOULD INVESTORS RESPOND?
We understood how unnerving 1998's level of volatility could have been. Our
repeated message to you is to keep a long-term outlook on investments rather
than responding to short-term fluctuations. And we are pleased to note that most
mutual fund shareholders remained cool headed and did not pull out of the
markets during 1998. In the end, most were rewarded for their long-term
perspective.
In view of recent volatility and the divergent performance of
market sectors, this may be a very good time to meet with your financial
consultant to review your current asset allocation and the diversification of
your portfolio. Broad portfolio diversification remains one of the most
fundamental principles of investing, along with long-term thinking and realistic
expectations.
YOUR FUND MANAGERS' COMMENTS
On the pages that follow, your Fund's managers, experienced professionals who
have weathered previous periods of market turbulence, offer more detailed
discussion of how markets behaved, how they managed the portfolio in light of
recent volatility, and what they foresee for markets and your Fund. We hope you
find their discussion informative.
YEAR 2000 CONCERN
Many of our shareholders have asked us about AIM's year 2000 readiness status.
We appreciate these concerns, and we take the year 2000 issue seriously. AIM has
devoted considerable effort to creating a comprehensive plan for assessing,
correcting and testing our in-house systems. We will also participate in an
industrywide testing effort scheduled to begin in March. But no matter how well
we prepare and test, no one can know for sure what the year 2000 will bring. Our
industry's systems are connected in complex ways to many third parties, and
there may be unforeseen problems when the year 2000 actually arrives. Though we
cannot predict what all those problems might be, we are working with our
business recovery team to develop contingency plans appropriate for a variety of
year 2000 scenarios.
We are pleased to send you this report on your Fund's fiscal year. If you
have any questions or comments, please contact our Client Services department at
800-959-4246, or e-mail your inquiry to us at [email protected]. You can
access information about your account through our AIM Investor Line at
800-246-5463 or at our Web site, www.aimfunds.com. We often post market updates
on our Web site. We thank you for your continued participation in The AIM Family
of Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
--------------------------------------
. . . WE ARE PLEASED
TO NOTE THAT MOST MUTUAL FUND
SHAREHOLDERS REMAINED COOL
HEADED AND DID NOT PULL OUT OF
THE MARKETS DURING 1998.
--------------------------------------
AIM GLOBAL UTILITIES FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
AIM GLOBAL UTILITIES FUND POSTS SOLID
RETURNS IN VOLATILE MARKET
THE MARKET EXPERIENCED ALL-TIME HIGHS AND ONE OF ITS MOST VICIOUS CORRECTIONS
DURING 1998. HOW DID AIM GLOBAL UTILITIES FUND PERFORM IN THIS UNSETTLING
ENVIRONMENT?
AIM Global Utilities Fund continued to benefit from weakening market conditions
during the past year as investors sought the relative safety and income
potential of investments in utilities. For the fiscal year ended December 31,
1998, total return was 16.01% for Class A shares, 15.14% for Class B shares, and
15.09% for Class C shares. This was competitive with the 18.40% return of the
Lipper Utility Fund Index, and with the 18.88% return of the Dow Jones Average
of 15 Utilities. During the reporting period, net assets under management grew
approximately $37 million for a total of $311.5 million at the close of the
fiscal year.
WHAT WERE THE MAJOR TRENDS IN THE FINANCIAL MARKETS SINCE YOUR JUNE REPORT TO
SHAREHOLDERS?
Currency collapse halted the performance of markets worldwide during the second
half of 1998. Beginning in July, the second wave of "Asian contagion," sparked
by devalued currencies and billions in bad loans, quickly caused fears of
deflation around the globe. A month later, Russia's default on its government
debt and the failure of several highly leveraged U.S. hedge funds brought more
trouble in the third quarter. The ensuing "flight to quality" further devastated
equity markets as investors rushed to large-cap equities and government
securities for their relative safety.
The Federal Reserve Board (the Fed) announced the first of three interest
rate cuts in September, hoping to shelter the U.S. from a potential global
recession. Boosted by the Fed easing, the U.S. markets halted their downturn and
rebounded. Many securities that had experienced losses earlier in the year
recovered and posted gains. At the close of the fiscal year, U.S. markets had
once again reached new highs, marking 1998 as the unprecedented fourth year of
double-digit gains for market indexes such as the S&P 500.
HOW DID THE FUND FARE IN THIS VOLATILE PERIOD?
As the stock market swooned, nervous investors looked to the stability,
liquidity and consistent cash flows of utilities. This resulted in solid
performance for the Fund. While domestic utilities held their own and even
outperformed large-cap stocks, earnings of foreign utilities in lesser developed
countries suffered as a result of global currency problems. During the "flight
to quality," the Fund's smaller-capitalization telecommunications holdings,
particularly competitive local exchange carriers (CLECs), were hit hard as
investors went after the more stable, large-cap equities. Despite this pullback,
we believe that growth potential in this industry remains positive for the near
term. The Fund benefited when CLECs rebounded significantly in the fourth
quarter of 1998.
HOW HAVE YOU MANAGED THE FUND DURING THE FISCAL YEAR?
We continued to manage the Fund with our disciplined, earnings-driven stock
selection process, looking at the underlying fundamentals of individual
companies, not the overall market. Given the compelling growth prospects for
communications-related businesses, the Fund had approximately 40% of its total
net assets invested in the telephone, telecommunications, and communications
equipment industries, as of December 31, 1998.
We ended the year with 70.57% of the Fund's total investments in the United
States. Europe continued to be the Fund's largest overseas region, representing
almost 24% of the portfolio. In the wake of economic difficulties in developing
markets, we no longer have holdings Latin America.
THE TELEPHONE INDUSTRY REMAINED A MAJOR COMPONENT OF THE FUND'S PORTFOLIO. HOW
DID THIS INDUSTRY PERFORM DURING THE FISCAL YEAR?
The $103-billion local telephone industry continued to perform well in a
deregulated market, spurred by technological advances and increased competition.
Several mergers and acquisitions were announced in 1998, as local telephone
companies gained market shares by buying customers rather than building new
networks. Century Telephone Enterprises, one of the Fund's top holdings, has
grown through acquisitions from a 75-line local telephone company to a
local-exchange telephone service provider in 21 states and an Internet provider
in seven states. The company reported robust earnings in
----------------------------------------
AS THE STOCK MARKET SWOONED,
NERVOUS INVESTORS LOOKED TO THE
STABILITY, LIQUIDITY AND CONSISTENT
CASH FLOWS OF UTILITIES.
----------------------------------------
----------------------------------------
WE CONTINUED TO MANAGE THE FUND
WITH OUR DISCIPLINED, EARNINGS-DRIVEN
STOCK SELECTION PROCESS, LOOKING
AT THE UNDERLYING FUNDAMENTALS OF
INDIVIDUAL COMPANIES, NOT THE
OVERALL MARKET.
----------------------------------------
See important Fund and index disclosures inside front cover.
AIM GLOBAL UTILITIES FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 12/31/98, based on total net assets
<TABLE>
<CAPTION>
===================================================================================================================================
Top 10 Equity Holdings Top 10 Industries Top 10 Countries
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. SBC Communications, Inc. 2.55% 1. Electric Companies 31.24% 1. United States 70.57%
2. Ameritech Corp. 2.39 2. Telephone 21.23 2. United Kingdom 6.50
3. MCI WorldCom, Inc. 2.27 3. Natural Gas 10.89 3. Italy 4.84
4. Telecom Italia S.p.A. 2.16 4. Telecommunications 9.72 4. Canada 4.21
5. Williams Companies. Inc. (The) 2.10 (Long Distance) 5. Spain 3.00
6. Cincinnati Bell, Inc. 1.94 5. Communications Equipment 5.29 6. Portugal 2.16
7. National Grid Group PLC 1.84 6. Power Producers (Independent) 3.58 7. France 1.38
8. Lucent Technologies, Inc. 1.80 7. Telecommunications 3.27 8. Finland 1.18
9. BellSouth Corp. 1.77 (Cellular/Wireless) 9. Germany 1.04
10. Century Telephone 1.72 8. Water Utilities 1.93 10. Switzerland 0.74
Enterprise, Inc. 9. Manufacturing (Specialized) 1.85
10. Broadcasting 1.59
(Television, Radio & Cable)
FOREIGN INVESTMENTS
29.31%
U.S. INVESTMENTS*
70.69%
*includes cash equivalents
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
===================================================================================================================================
</TABLE>
1998 and had one-year sales growth of 20.2%. Earlier in the year, SBC
Communications, the Fund's largest holding as a percent of total net assets,
agreed to buy Chicago-based Ameritech in an effort to create the United States'
largest local telephone company. As of December 31, 1998, the Fund had 2.39% of
its total net assets in Ameritech and should benefit from this merger.
WHERE ELSE HAVE YOU FOUND OPPORTUNITIES FOR GROWTH?
Industry analysts believe that the wireless communications industry still has a
lot of room for growth. Currently, there are more than 50 million wireless phone
users in the United States, representing a market penetration of only about 17%,
and 180 million wireless customers worldwide, or about 3% market penetration.
Lower calling prices and increased competition continue to drive domestic and
international growth in this industry. According to Yankee Group, a Boston
consulting firm, the number of wireless phone customers in the United States is
expected to double in the next seven or eight years. At the close of the fiscal
year, the telecommunications and communications equipment industries represented
about 16% of the Fund's total net assets. We expect to increase holdings in
these areas in the future.
WHAT IS YOUR OUTLOOK FOR UTILITIES IN 1999?
As deregulation of the U.S. electric industry becomes more of a reality,
confidence in the stability of these utilities investments may not be as solid
as it was in the past. With more competition, electric utility companies will
have to spend money to retain their market share, increasing volatility in this
market. However, mergers and acquisitions within this industry are likely and
may offer attractive growth opportunities. One example is the recent acquisition
of New England Electric System by U.K. transmission group National Grid. Given
the Fund's sizable holding in this industry, we believe it should continue to
benefit from future consolidation activities, as electric companies prepare to
compete in new deregulated markets.
Similarly, we remain positive about prospects from the privatization of
government-owned utilities in international markets. For the near term, we
expect growth to remain in telecommunications and telephone services. With a
diversified portfolio of domestic and international holdings in these core
industries, we believe the Fund is well-positioned to take advantage of these
trends, while continuing to provide a level of relative safety.
See important Fund and index disclosures inside front cover.
AIM GLOBAL UTILITIES FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL UTILITIES FUND VS. BENCHMARK INDEXES
12/31/88--12/31/98
- --------------------------------------------------------------------------------
AIM S&P 500 Dow Jones
Global Utilities Fund Index Average
Class A Shares of 15 Utilities
- --------------------------------------------------------------------------------
In Thousands
12/31/88 9450 10000 10000
12/31/89 12862 13164 13533
12/31/90 12479 12756 12921
12/31/91 15430 16635 14871
12/31/92 16653 17901 15468
12/31/93 18704 19703 16951
12/31/94 16541 19962 14395
12/31/95 21184 27457 19027
12/31/96 24124 33752 20754
12/31/97 29842 45018 25515
12/31/98 34615 57881 30263
================================================================================
PAST PERFORMANCE IS NO GUARANTEE OF COMPARABLE FUTURE RESULTS.
Source: Towers Data Systems HYPO--Registered Trademark--
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/98, including sales charges
CLASS A SHARES
10 Years 13.22%
5 Years 11.83
1 Year 9.63*
CLASS B SHARES
Since Inception (9/1/93) 10.16%
5 Years 11.97
1 Year 10.14**
CLASS C SHARES
Since Inception (8/4/97) 18.04%
1 Year 14.09***
*16.01%, excluding sales charges
**15.14%, excluding CDSC
***15.09%, excluding CDSC
================================================================================
Your Fund's total return includes sales charges, expenses, and management fees.
The performance of the Fund's Class B and Class C shares will differ from Class
A shares due to differing fees and expenses. For Fund data performance
calculations and descriptions of indexes cited on this page, please refer to the
inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
ABOUT THIS CHART
The chart compares your Fund's Class A shares to benchmark indexes. It is
intended to give you a general idea of how your Fund performed compared to these
benchmarks over the period 12/31/88 to 12/31/98. It is important to understand
differences between your Fund and these indexes. An index measures performance
of a hypothetical portfolio. Market indexes such as the S&P 500 and Dow Jones
Average of 15 Utilities are not managed, incurring no sales charges, expenses,
or fees. If you could buy all the securities that make up a market index,
you would incur expenses that would affect your investment's return. In
addition, it is worth noting that the S&P 500 is a broad equities index that
does not include many utility stocks.
AIM GLOBAL UTILITIES FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-50.44%
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.62%
Univision Communications Inc.(a) 53,000 $ 1,917,938
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.08%
ANTEC Corp.(a) 45,000 905,625
- --------------------------------------------------------------
Carrier Access Corp.(a) 49,700 1,711,544
- --------------------------------------------------------------
Lucent Technologies, Inc. 51,100 5,621,000
- --------------------------------------------------------------
Tellabs, Inc.(a) 20,000 1,371,250
- --------------------------------------------------------------
9,609,419
- --------------------------------------------------------------
ELECTRIC COMPANIES-18.03%
Allegheny Energy, Inc. 82,100 2,832,450
- --------------------------------------------------------------
BEC Energy 40,000 1,647,500
- --------------------------------------------------------------
Carolina Power & Light Co. 48,800 2,296,650
- --------------------------------------------------------------
Cinergy Corp. 57,000 1,959,375
- --------------------------------------------------------------
CMS Energy Corp. 18,000 871,875
- --------------------------------------------------------------
DQE, Inc. 76,500 3,361,219
- --------------------------------------------------------------
Edison International 133,000 3,707,375
- --------------------------------------------------------------
Energy East Corp. 75,000 4,237,500
- --------------------------------------------------------------
FPL Group, Inc. 63,000 3,882,375
- --------------------------------------------------------------
IPALCO Enterprises, Inc. 21,000 1,161,563
- --------------------------------------------------------------
New Century Energies, Inc. 52,000 2,535,000
- --------------------------------------------------------------
Niagara Mohawk Power Corp.(a) 161,000 2,596,125
- --------------------------------------------------------------
NIPSCO Industries, Inc. 134,000 4,078,625
- --------------------------------------------------------------
Pinnacle West Capital Corp. 121,000 5,127,375
- --------------------------------------------------------------
Public Service Company of New
Mexico 110,000 2,248,125
- --------------------------------------------------------------
Sierra Pacific Resources 45,500 1,729,000
- --------------------------------------------------------------
Southern Co. 130,000 3,778,125
- --------------------------------------------------------------
Teco Energy, Inc. 137,000 3,861,688
- --------------------------------------------------------------
Texas Utilities Co. 60,000 2,801,250
- --------------------------------------------------------------
Unicom Corp. 38,000 1,465,375
- --------------------------------------------------------------
56,178,570
- --------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.42%
Quanta Services, Inc.(a) 60,000 1,323,750
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-1.38%
Superior TeleCom Inc. 59,000 2,787,750
- --------------------------------------------------------------
USEC Inc. 110,000 1,526,250
- --------------------------------------------------------------
4,314,000
- --------------------------------------------------------------
NATURAL GAS-4.33%
Columbia Energy Group 33,000 1,905,750
- --------------------------------------------------------------
Energen Corp. 29,600 577,200
- --------------------------------------------------------------
Enron Corp. 25,000 1,426,563
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NATURAL GAS-(CONTINUED)
KN Energy, Inc. 54,600 $ 1,986,075
- --------------------------------------------------------------
Public Service Co. of North
Carolina, Inc. 40,000 1,040,000
- --------------------------------------------------------------
Williams Companies, Inc. (The) 209,900 6,546,256
- --------------------------------------------------------------
13,481,844
- --------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-1.14%
AES Corp.(a) 28,400 1,345,450
- --------------------------------------------------------------
CalEnergy Co., Inc.(a) 63,200 2,192,250
- --------------------------------------------------------------
3,537,700
- --------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUST-1.35%
Alexandria Real Estate Equities,
Inc. 52,500 1,624,219
- --------------------------------------------------------------
Boston Properties, Inc. 48,000 1,464,000
- --------------------------------------------------------------
Crescent Real Estate Equities,
Co. 26,400 607,200
- --------------------------------------------------------------
Golf Trust of America, Inc. 18,000 499,500
- --------------------------------------------------------------
4,194,919
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.26%
Metzler Group, Inc.(a) 16,800 817,950
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-5.56%
AT&T Corp. 33,005 2,483,626
- --------------------------------------------------------------
Global TeleSystems Group, Inc.(a) 14,600 813,950
- --------------------------------------------------------------
IXC Communications, Inc.(a) 65,000 2,185,625
- --------------------------------------------------------------
MCI WorldCom, Inc.(a) 98,526 7,069,240
- --------------------------------------------------------------
Pacific Gateway Exchange, Inc.(a) 38,000 1,826,375
- --------------------------------------------------------------
WinStar Communications, Inc.(a) 75,731 2,953,509
- --------------------------------------------------------------
17,332,325
- --------------------------------------------------------------
TELEPHONE-14.27%
Ameritech Corp. 117,700 7,459,237
- --------------------------------------------------------------
Bell Atlantic Corp. 40,000 2,272,500
- --------------------------------------------------------------
BellSouth Corp. 110,800 5,526,150
- --------------------------------------------------------------
Century Telephone Enterprises,
Inc. 79,200 5,346,000
- --------------------------------------------------------------
Cincinnati Bell, Inc. 160,000 6,050,000
- --------------------------------------------------------------
GTE Corp. 36,600 2,468,212
- --------------------------------------------------------------
McLeodUSA Inc.-Class A(a) 40,000 1,250,000
- --------------------------------------------------------------
NEXTLINK Communications,
Inc.-Class A(a) 15,900 451,162
- --------------------------------------------------------------
Qwest Communications
International Inc.(a) 75,000 3,750,000
- --------------------------------------------------------------
SBC Communications, Inc. 148,000 7,936,500
- --------------------------------------------------------------
US West, Inc. 30,000 1,938,750
- --------------------------------------------------------------
44,448,511
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $83,444,784) 157,156,926
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC CONVERTIBLE PREFERRED
STOCKS-1.44%
NATURAL GAS-1.27%
El Paso Energy Cap Trust,
Inc.-$2.375 Conv. Pfd. 74,500 $ 3,566,688
- --------------------------------------------------------------
KN Energy, Inc.-$3.548 Conv. Pfd. 10,000 375,625
- --------------------------------------------------------------
3,942,313
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.12%
WinStar Communications,
Inc.-$3.50 Conv. Pfd. 8,000 368,000
- --------------------------------------------------------------
TELEPHONE-0.05%
NEXTLINK Communications, Inc.-$3.25 Conv.
Pfd.(b)
(Acquired 03/26/98; Cost
$180,000) 3,600 146,700
- --------------------------------------------------------------
Total Domestic Convertible
Preferred Stocks (Cost
$4,934,288) 4,457,013
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-24.80%
AUSTRALIA-0.30%
Telstra Corp. Ltd. (Telephone) 195,000 911,011
- --------------------------------------------------------------
AUSTRIA-0.61%
Oesterreichische
Elektrizitaetswirtschafts
A.G.-Class A (Electric
Companies) 12,500 1,910,774
- --------------------------------------------------------------
BELGIUM-0.66%
Electrabel S.A. (Electric
Companies) 4,700 2,054,125
- --------------------------------------------------------------
BERMUDA-0.43%
Global Crossing Ltd.
(Telecommunications-Long
Distance)(a) 30,000 1,353,750
- --------------------------------------------------------------
CANADA-1.93%
MetroNet Communications
Corp.-Class B
(Telecommunications)(a) 30,000 1,005,000
- --------------------------------------------------------------
Teleglobe, Inc.
(Telecommunications-Long
Distance) 43,500 1,566,000
- --------------------------------------------------------------
TELUS Corp.
(Telecommunications-Cellular &
Wireless) 95,000 2,017,975
- --------------------------------------------------------------
Westcoast Energy Inc. (Natural
Gas) 71,900 1,429,013
- --------------------------------------------------------------
6,017,988
- --------------------------------------------------------------
DENMARK-0.60%
Tele Danmark A.S.-ADR (Telephone) 27,500 1,866,562
- --------------------------------------------------------------
FINLAND-1.18%
Fortum Corp. (Electric
Companies)(a) 70,450 428,519
- --------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 23,200 2,794,150
- --------------------------------------------------------------
Sonera Group OYj
(Telecommunications-Cellular/Wireless)(a)(b)
(Acquired 11/10/98; Cost
$226,839) 25,900 457,373
- --------------------------------------------------------------
3,680,042
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-0.99%
France Telecom S.A.-ADR
(Communications Equipment) 39,000 $ 3,078,563
- --------------------------------------------------------------
GERMANY-1.04%
RWE A.G. (Electric Companies) 28,100 1,538,721
- --------------------------------------------------------------
Viag A.G.
(Manufacturing-Diversified) 2,900 1,700,253
- --------------------------------------------------------------
3,238,974
- --------------------------------------------------------------
GREECE-0.11%
Panafon Hellenic Telecom S.A.-GDR
(Telecommunications-Cellular/Wireless)(a)(b)
(Acquired 11/20/98; Cost
$244,080) 13,500 357,750
- --------------------------------------------------------------
HUNGARY-0.41%
Magyar Tavkozlesi-ADR
(Telecommunications-Long
Distance) 42,700 1,272,994
- --------------------------------------------------------------
ITALY-4.84%
AEM S.p.A. (Electric
Companies)(a)(b) (Acquired
07/17/98; Cost $610,231) 645,000 1,547,422
- --------------------------------------------------------------
Societa Nordelettrica S.p.A.
(Electric Companies) 570,000 2,521,147
- --------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications-Cellular/Wireless) 578,300 4,268,929
- --------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 788,333 6,725,659
- --------------------------------------------------------------
15,063,157
- --------------------------------------------------------------
JAPAN-0.45%
Nippon Telegraph & Telephone
Corp. (Telecommunications-Long
Distance) 85 656,046
- --------------------------------------------------------------
Nippon Telegraph & Telephone
Corp.-ADR
(Telecommunications-Long
Distance) 20,000 750,000
- --------------------------------------------------------------
1,406,046
- --------------------------------------------------------------
NETHERLANDS-0.69%
Equant N.V.
(Computers-Networking)(a) 9,900 671,343
- --------------------------------------------------------------
Royal PTT Nederland N.V.-ADR
(Telephone) 542 27,235
- --------------------------------------------------------------
TNT Post Group N.V.-ADR (Air
Freight) 44,727 1,453,622
- --------------------------------------------------------------
2,152,200
- --------------------------------------------------------------
PORTUGAL-2.16%
Electricidade de Portugal, S.A.
(Electric Companies) 32,000 705,170
- --------------------------------------------------------------
Electricidade de Portugal,
S.A.-ADR (Electric Companies) 46,000 2,049,875
- --------------------------------------------------------------
Portugal Telecom S.A.-ADR
(Telephone) 68,100 3,038,962
- --------------------------------------------------------------
Telecel-Comunicacaoes Pessoais,
S.A.
(Telecommunications-Cellular/Wireless) 4,600 940,333
- --------------------------------------------------------------
6,734,340
- --------------------------------------------------------------
SPAIN-3.00%
Autopistas Concesionaria Espanola
S.A. (Services-Commercial &
Consumer) 77,000 1,279,087
- --------------------------------------------------------------
Iberdrola S.A. (Electric
Companies) 233,000 4,354,297
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SPAIN-(CONTINUED)
Telefonica S.A.-ADR (Telephone) 27,336 $ 3,700,612
- --------------------------------------------------------------
9,333,996
- --------------------------------------------------------------
SWITZERLAND-0.74%
Swisscom A. G. (Telephone)(a) 5,500 2,303,014
- --------------------------------------------------------------
UNITED KINGDOM-4.66%
Hyder PLC (Water Utilities) 54,863 688,384
- --------------------------------------------------------------
National Grid Group PLC (Electric
Companies) 131,526 1,048,652
- --------------------------------------------------------------
PowerGen PLC (Electric Companies) 136,949 1,798,004
- --------------------------------------------------------------
PowerGen PLC-ADR (Electric
Companies) 40,900 2,188,150
- --------------------------------------------------------------
Scottish & Southern Energy PLC
(Electric Companies) 124,061 1,395,817
- --------------------------------------------------------------
Scottish Power PLC (Electric
Companies) 201,550 2,068,352
- --------------------------------------------------------------
United Utilities PLC (Water
Utilities) 206,936 2,864,744
- --------------------------------------------------------------
Yorkshire Water PLC (Water
Utilities) 270,407 2,471,641
- --------------------------------------------------------------
14,523,744
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$41,051,157) 77,259,030
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
DOMESTIC NON-CONVERTIBLE BONDS &
NOTES-13.56%
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.97%
Comcast Cable Communications,
Unsec. Unsub. Notes, 6.20%,
11/15/08 $ 2,000,000 2,039,960
- --------------------------------------------------------------
Comcast Corp., Sr. Sub. Deb.,
9.50%, 01/15/08 900,000 941,750
- --------------------------------------------------------------
2,981,710
- --------------------------------------------------------------
ELECTRIC COMPANIES-3.15%
Commonwealth Edison Co., First
Mortgage Notes, 7.50%, 07/01/13 1,300,000 1,469,988
- --------------------------------------------------------------
El Paso Electric Co., Sec. First Mortgage Bonds
Series D, 8.90%, 02/01/06 1,425,000 1,605,263
- --------------------------------------------------------------
Series E, 9.40%, 05/01/11 1,900,000 2,157,583
- --------------------------------------------------------------
Niagara Mohawk Power Corp.,
Series G Sr. Unsec. Notes,
7.75%, 10/01/08 1,900,000 2,076,890
- --------------------------------------------------------------
Western Resources, Inc.,
Sr. Unsec. Notes, 6.25%,
8/15/03 1,500,000 1,529,640
- --------------------------------------------------------------
Sr. Notes, 7.125%, 08/01/09 900,000 979,740
- --------------------------------------------------------------
9,819,104
- --------------------------------------------------------------
ENTERTAINMENT-0.40%
Time Warner, Inc., Deb., 9.125%,
01/15/13 1,000,000 1,257,610
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.47%
California Energy Co., Notes,
10.25%, 01/15/04 1,400,000 1,478,680
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
NATURAL GAS-3.80%
Dynegy Inc., Sr. Unsec. Deb.,
7.125%, 05/15/18 $ 1,400,000 $ 1,381,394
- --------------------------------------------------------------
Enron Corp., Sr. Sub. Deb.,
6.75%, 07/01/05 3,750,000 3,871,312
- --------------------------------------------------------------
Ferrellgas Partners, Series B Sr.
Sec. Gtd. Notes, 9.375%,
06/15/06 1,000,000 1,005,000
- --------------------------------------------------------------
KN Energy, Inc., Unsec. Deb.,
7.35%, 08/01/26 3,000,000 3,165,450
- --------------------------------------------------------------
PanEnergy Corp., Notes, 7.875%,
08/15/04 2,205,000 2,421,024
- --------------------------------------------------------------
11,844,180
- --------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.64%
Tennessee Gas Pipeline Co.,
Bonds, 7.00%, 03/15/27 1,900,000 1,989,528
- --------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-2.44%
AES Corp.
Sr. Sub. Notes, 10.25%,
07/15/06 925,000 1,011,313
- --------------------------------------------------------------
Sr. Notes, 8.00%, 12/31/08 2,500,000 2,491,775
- --------------------------------------------------------------
Indiana Michigan Power, Sec.
Lease Obligation Bonds, 9.82%,
12/07/22 3,020,986 4,099,991
- --------------------------------------------------------------
7,603,079
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-1.69%
AT&T Corp., Sr. Notes, 7.75%,
03/01/07 1,850,000 2,134,234
- --------------------------------------------------------------
Sprint Capital Corp., Sr. Unsec.
Notes, 6.875%, 11/15/28 3,000,000 3,126,480
- --------------------------------------------------------------
5,260,714
- --------------------------------------------------------------
Total Domestic
Non-Convertible Bonds &
Notes (Cost $40,474,043) 42,234,605
- --------------------------------------------------------------
DOMESTIC CONVERTIBLE BONDS &
NOTES-1.89%
COMPUTERS (HARDWARE)-1.33%
Candescent Technology Corp.,
Conv. Sr. Sub. Deb., 7.00%,
05/01/03(b) (Acquired
04/17/98-11/30/98; Cost
$4,510,988) 4,605,000 4,144,500
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.56%
Global Telesystems Group, Sr.
Sub. Notes, 8.75%, 06/30/00 620,000 1,746,850
- --------------------------------------------------------------
Total Domestic Convertible
Bonds & Notes (Cost
$5,622,901) 5,891,350
- --------------------------------------------------------------
FOREIGN NON-CONVERTIBLE BONDS &
NOTES-2.28%(C)
CANADA-2.28%
Bell Canada (Telecommunications-
Cellular/Wireless)
Unsec. Deb., 10.875%,
10/11/04 CAD 1,700,000 1,407,132
- --------------------------------------------------------------
Series EW Deb., 8.80%, 08/17/05 950,000 738,069
- --------------------------------------------------------------
Teleglobe Canada, Inc.
(Telephone), Unsec. Deb.,
8.35%, 06/20/03 2,400,000 1,753,522
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Trans-Canada Pipelines (Natural
Gas)
Unsec. Notes, 8.55%,
02/01/06 CAD $ 2,150,000 $ 1,638,342
- --------------------------------------------------------------
Series Q Deb., 10.625%,
10/20/09 1,750,000 1,576,441
- --------------------------------------------------------------
Total Foreign Non-Convertible
Bonds & Notes (Cost
$7,084,147) 7,113,506
- --------------------------------------------------------------
FOREIGN CONVERTIBLE BONDS &
NOTES-2.23%(c)
FRANCE-0.39%
France Telecom (Telephone), Conv.
Bonds, 2.00%, 01/01/04 FRF 6,455,040 1,228,450
- --------------------------------------------------------------
UNITED KINGDOM-1.84%
National Grid Co. PLC (Electric
Companies), Bonds, 4.25%,
02/17/08 GBP 2,760,000 $ 5,733,554
- --------------------------------------------------------------
Total Foreign Convertible
Bonds & Notes (Cost
$5,712,741) 6,962,004
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENT-3.24%(d)
Goldman, Sachs & Co., 4.40%,
01/04/99 (Cost $10,092,144)(e) $ 10,092,144 $ 10,092,144
- --------------------------------------------------------------
TOTAL INVESTMENT
SECURITIES-99.88% 311,166,578
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.12% 358,946
- --------------------------------------------------------------
NET ASSETS-100.00% $311,525,524
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with provisions of Rule 144A under the Securities Act of 1933, as
amended. The valuation of these securities has been determined in accordance
with procedures established by the Board of Trustees. The market value of
these securities at 12/31/98 was $6,653,745 which represented 2.14% of the
Fund's net assets.
(c) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$700,342,222. Collateralized by $646,494,000 U.S. Government obligations, 0%
to 11.75% due 02/15/99 to 04/15/28 with an aggregate market value at
12/31/98 at $714,694,897.
Abbreviations:
ADR - American Depositary Receipt
CAD - Canadian Dollars
Conv. - Convertible
Deb. - Debentures
FRF - French Franc
GBP - British Pound Sterling
GDR - Global Depositary Receipt
Gtd. - Guaranteed
Pfd. - Preferred
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$198,416,205) $311,166,578
- ---------------------------------------------------------
Receivables for:
Fund shares sold 276,166
- ---------------------------------------------------------
Dividends and interest 1,569,609
- ---------------------------------------------------------
Investment for deferred compensation plan 26,670
- ---------------------------------------------------------
Other assets 12,164
- ---------------------------------------------------------
Total assets 313,051,187
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 933,957
- ---------------------------------------------------------
Dividends 83,573
- ---------------------------------------------------------
Deferred compensation 26,670
- ---------------------------------------------------------
Accrued advisory fees 145,219
- ---------------------------------------------------------
Accrued distribution fees 250,821
- ---------------------------------------------------------
Accrued trustees' fees 2,480
- ---------------------------------------------------------
Accrued transfer agent fees 45,041
- ---------------------------------------------------------
Accrued operating expenses 37,902
- ---------------------------------------------------------
Total liabilities 1,525,663
- ---------------------------------------------------------
Net assets applicable to shares outstanding $311,525,524
=========================================================
NET ASSETS:
Class A $196,665,324
=========================================================
Class B $111,866,205
=========================================================
Class C $ 2,993,995
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 9,362,332
=========================================================
Class B 5,332,999
=========================================================
Class C 142,792
=========================================================
Class A:
Net asset value and redemption price per
share $ 21.01
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $21.01
divided by 94.50%) $ 22.23
=========================================================
Class B:
Net asset value and offering price per
share $ 20.98
=========================================================
Class C:
Net asset value and offering price per
share $ 20.97
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $318,609 foreign
withholding tax) $ 5,939,307
- ---------------------------------------------------------
Interest 4,083,371
- ---------------------------------------------------------
Total investment income 10,022,678
- ---------------------------------------------------------
EXPENSES:
Advisory fees 1,652,662
- ---------------------------------------------------------
Administrative services fees 85,383
- ---------------------------------------------------------
Custodian fees 85,708
- ---------------------------------------------------------
Trustees' fees 12,855
- ---------------------------------------------------------
Distribution fees -- Class A 467,750
- ---------------------------------------------------------
Distribution fees -- Class B 1,019,004
- ---------------------------------------------------------
Distribution fees -- Class C 15,320
- ---------------------------------------------------------
Transfer agent fees -- Class A 296,822
- ---------------------------------------------------------
Transfer agent fees -- Class B 161,294
- ---------------------------------------------------------
Transfer agent fees -- Class C 2,540
- ---------------------------------------------------------
Other 63,725
- ---------------------------------------------------------
Total expenses 3,863,063
- ---------------------------------------------------------
Less: Expenses paid indirectly (4,112)
- ---------------------------------------------------------
Net expenses 3,858,951
- ---------------------------------------------------------
Net investment income 6,163,727
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION
CONTRACTS:
Net realized gain from:
Investment securities 11,405,417
- ---------------------------------------------------------
Foreign currencies 49,691
- ---------------------------------------------------------
Option contracts written 11,841
- ---------------------------------------------------------
11,466,949
- ---------------------------------------------------------
Net unrealized appreciation of:
Investment securities 25,161,926
- ---------------------------------------------------------
Foreign currencies 5,695
- ---------------------------------------------------------
25,167,621
- ---------------------------------------------------------
Net gain from investment securities,
foreign currencies and option
contracts written 36,634,570
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $42,798,297
=========================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 6,163,727 $ 6,278,999
- --------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 11,466,949 10,202,494
- --------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and option contracts 25,167,621 36,469,056
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 42,798,297 52,950,549
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (4,323,452) (4,517,536)
- --------------------------------------------------------------------------------------------
Class B (1,627,090) (1,708,856)
- --------------------------------------------------------------------------------------------
Class C (23,697) (2,079)
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (7,225,608) (99,987)
- --------------------------------------------------------------------------------------------
Class B (4,089,137) (52,584)
- --------------------------------------------------------------------------------------------
Class C (109,604) (629)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A 865,940 (15,436,814)
- --------------------------------------------------------------------------------------------
Class B 8,749,835 (921,844)
- --------------------------------------------------------------------------------------------
Class C 1,643,746 1,124,595
- --------------------------------------------------------------------------------------------
Net increase in net assets 36,659,230 31,334,815
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 274,866,294 243,531,479
- --------------------------------------------------------------------------------------------
End of period $311,525,524 $274,866,294
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $198,796,429 $186,636,908
- --------------------------------------------------------------------------------------------
Undistributed net investment income (68,800) 78,008
- --------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and option contracts 46,323 567,427
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 112,751,572 87,583,951
- --------------------------------------------------------------------------------------------
$311,525,524 $274,866,294
============================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Utilities Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate series
portfolios, each having an unlimited number of shares of beneficial interest.
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's objective is to achieve a high level of current income, and as a
secondary objective the Fund seeks to achieve capital appreciation, by investing
primarily in the common and preferred stocks of public utility companies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market (but
not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. If a mean is not available,
as is the case in some foreign markets, the closing bid will be used absent
a last sales price. Each security reported on the NASDAQ National Market
System is valued at the last sales price on the valuation date or absent a
last sales price, at the mean of the closing bid and asked prices. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued at the mean between last bid and asked
prices based upon quotes furnished by independent sources. Securities for
which market quotations either are not readily available or are questionable
are valued at fair value as determined in good faith by or under the
supervision of the Trust's officers in a manner specifically authorized by
the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value.
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York Stock
Exchange. Occasionally, events affecting the values of such securities and
such exchange rates may occur between the times at which they are determined
and the close of the New York Stock Exchange which will not be reflected in
the computation of the Fund's net asset value. If events materially
affecting the value of such securities occur during such period, then these
securities will be valued at their fair value as determined in good faith by
or under the supervision of the Board of Trustees.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. It is the policy of the Fund to declare daily dividends
from net investment income. Such dividends are paid monthly. Distributions
from net realized capital gains, if any, are recorded on ex-dividend date
and are paid annually. On December 31, 1998 additional paid-in capital was
increased by $900,000, undistributed net investment income was decreased by
$336,296 and undistributed net realized gains was decreased by $563,704 as a
result of differing book/tax treatment of foreign currency transactions and
equalization credits in order to comply with the requirements of the
American Institute of Certified Public Accountants Statement of Position
93-2. Net assets of the Fund were unaffected by the reclassifications
discussed above.
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
11
<PAGE> 14
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. Covered Call Options -- The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option
was written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security
decline. During the option period, the Fund may be required at any time to
deliver the underlying security against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at such
earlier time at which the Fund effects a closing purchase transaction by
purchasing (at a price which may be higher than that received when the call
option was written) a call option identical to the one originally written.
The Fund will not write a covered call option if, immediately thereafter,
the aggregate value of the securities underlying all such options,
determined as of the dates such options were written, would exceed 25% of
the net assets of the Fund.
G. 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.
H. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
NOTE 2- ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.60% of
the first $200 million of the Fund's average daily net assets, plus 0.50% of the
Fund's average daily net assets in excess of $200 million to and including $500
million, plus 0.40% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended December 31, 1998, AIM
was reimbursed $85,383 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 year ended December 31, 1998, AFS
was paid $295,741 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.25% of the average daily net assets of the Class A shares
and 1.00% of the average daily net assets of the Class C shares. The Fund
pursuant to the Class B Plan, pays AIM Distributors compensation at an annual
rate of 1.00% of the average daily net assets of the Class B shares. Of these
amounts, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class A, Class B or Class C shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own the appropriate class of shares of the Fund. Any
amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the year ended December 31, 1998, the Class A, Class B and Class
C shares paid AIM Distributors $467,750, $1,019,004 and $15,320, respectively,
as compensation under the Plans.
AIM Distributors received commissions of $71,338 from sales of the Class A
shares of the Fund during the year ended December 31, 1998. Such commissions are
not an expense of the Fund. They are
12
<PAGE> 15
deducted from, and are not included in, the proceeds from sales of Class A
shares. During the year ended December 31, 1998, AIM Distributors received
$71,709 in contingent deferred sales charges imposed on redemptions of Fund
shares. Certain officers and trustees of the Trust are officers and directors of
AIM, AIM Distributors and AFS.
During the year ended December 31, 1998, the Fund paid legal fees of $3,992
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1998, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $3,225 and $887, respectively under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $4,112 during the year ended December 31, 1998.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on May 1, 1998, the Fund was limited
to borrowing up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. During the year ended December 31, 1998, the Fund did
not borrow under the line of credit agreement. The funds which are parties to
the line of credit are charged a commitment fee of 0.05% on the unused balance
of the committed line. The commitment fee is allocated among such funds based on
their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1998 was
$107,669,891 and $103,795,551, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1998 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $113,860,514
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (1,110,165)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $112,750,349
==========================================================
</TABLE>
Cost of investments for tax purposes is $198,416,229.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 2,025,020 $ 40,729,263 2,718,197 $46,163,286
- --------------------------------------------------------------------------
Class B 1,124,804 22,635,167 765,587 13,195,278
- --------------------------------------------------------------------------
Class C* 196,103 3,960,554 62,085 1,135,211
- --------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 520,447 10,555,882 237,293 4,070,874
- --------------------------------------------------------------------------
Class B 246,404 4,994,635 87,895 1,505,898
- --------------------------------------------------------------------------
Class C* 5,787 117,358 94 1,781
- --------------------------------------------------------------------------
Reacquired:
Class A (2,500,981) (50,419,205) (3,882,294) (65,670,974)
- --------------------------------------------------------------------------
Class B (935,494) (18,879,967) (924,101) (15,623,020)
- --------------------------------------------------------------------------
Class C* (120,588) (2,434,166) (689) (12,397)
- --------------------------------------------------------------------------
561,502 $ 11,259,521 (935,933) $(15,234,063)
==========================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
NOTE 8-CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended December 31, 1998 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
---------- ---------
<S> <C> <C>
Beginning of period -- $ --
- --------------------------------- ------- --------
Written 180 38,798
- --------------------------------- ------- --------
Closed (180) (38,798)
- --------------------------------- ------- --------
End of period -- $ --
================================= ======= ========
</TABLE>
13
<PAGE> 16
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1998; and for a share of Class C outstanding during the year ended
December 31, 1998 and the period August 4, 1997 (date sales commenced) through
December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.26 $ 16.01 $ 14.59 $ 11.85 $ 14.09
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.48 0.47 0.55 0.55 0.59
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 2.53 3.26 1.43 2.71 (2.20)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 3.01 3.73 1.98 3.26 (1.61)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (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 (1.26) (0.48) (0.56) (0.52) (0.63)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 21.01 $ 19.26 $ 16.01 $ 14.59 $ 11.85
============================================================ ======== ======== ======== ======== ========
Total return(a) 16.01% 23.70% 13.88% 28.07% (11.57)%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $196,665 $179,456 $164,001 $170,624 $150,515
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.06%(b) 1.13% 1.17% 1.21% 1.18%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 2.39%(b) 2.79% 3.62% 4.20% 4.67%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 38% 26% 48% 88% 101%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $187,100,175.
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------ ----------------
1998 1997 1996 1995 1994 1998 1997
-------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.24 $ 16.01 $ 14.60 $ 11.84 $ 14.08 $ 19.24 $17.67
- ---------------------------------------------------------- -------- ------- ------- ------- ------- ------- ------
Income from investment operations:
Net investment income 0.33 0.34 0.42 0.44 0.47 0.33 0.13
- ---------------------------------------------------------- -------- ------- ------- ------- ------- ------- ------
Net gains (losses) on securities (both realized and
unrealized) 2.53 3.25 1.44 2.73 (2.19) 2.52 1.58
- ---------------------------------------------------------- -------- ------- ------- ------- ------- ------- ------
Total from investment operations 2.86 3.59 1.86 3.17 (1.72) 2.85 1.71
- ---------------------------------------------------------- -------- ------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.32) (0.35) (0.45) (0.41) (0.49) (0.32) (0.13)
- ---------------------------------------------------------- -------- ------- ------- ------- ------- ------- ------
Distributions from net realized gains (0.80) (0.01) -- -- -- (0.80) (0.01)
- ---------------------------------------------------------- -------- ------- ------- ------- ------- ------- ------
Returns of capital -- -- -- -- (0.03) -- --
- ---------------------------------------------------------- -------- ------- ------- ------- ------- ------- ------
Total distributions (1.12) (0.36) (0.45) (0.41) (0.52) (1.12) (0.14)
- ---------------------------------------------------------- -------- ------- ------- ------- ------- ------- ------
Net asset value, end of period $ 20.98 $ 19.24 $ 16.01 $ 14.60 $ 11.84 $ 20.97 $19.24
========================================================== ======== ======= ======= ======= ======= ======= ======
Total return(a) 15.14% 22.74% 12.98% 27.16% (12.35)% 15.09% 9.74%
========================================================== ======== ======= ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $111,866 $94,227 $79,530 $70,693 $42,568 $2,994 $1,183
========================================================== ======== ======= ======= ======= ======= ======= ======
Ratio of expenses to average net assets 1.81%(b) 1.91% 1.96% 1.97% 2.07% 1.81%(b) 1.90%(c)
========================================================== ======== ======= ======= ======= ======= ======= ======
Ratio of net investment income to average net assets 1.64%(b) 2.01% 2.83% 3.44% 3.78% 1.64%(b) 2.02%(c)
========================================================== ======== ======= ======= ======= ======= ======= ======
Portfolio turnover rate 38% 26% 48% 88% 101% 38% 26%
========================================================== ======== ======= ======= ======= ======= ======= ======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average net assets of $101,900,371 and $1,531,963 for
Class B and Class C, respectively.
(c) Annualized.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Global Utilities Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Global Utilities Fund (a portfolio of
AIM Funds Group), including the schedule of investments,
as of December 31, 1998, and the related statement of
operations for the year then ended, the statement of
changes in net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years or periods in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1998, by
correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Global
Utilities Fund as of December 31, 1998, the results of
its operations for the year then ended, the changes in
its net assets for each of the years in the two-year
period then ended and the financial highlights for each
of the years or periods in the five-year period then
ended, in conformity with generally accepted accounting
principles.
KPMG LLP
Houston, Texas
February 5, 1999
15
<PAGE> 18
<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; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II TRANSFER AGENT
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Assistant Treasurer
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Robert G. Alley
President, Mercantile Bankshares Vice President State Street Bank and Trust Company
225 Franklin Street
Jack Fields Stuart W. Coco Boston, MA 02110
Chief Executive Officer Vice President
Texana Global, Inc.; COUNSEL TO THE FUND
Formerly Member Melville B. Cox
of the U.S. House of Representatives Vice President Ballard Spahr
Andrews & Ingersoll, LLP
Carl Frischling Karen Dunn Kelley 1735 Market Street
Partner Vice President Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel
Jonathan C. Schoolar COUNSEL TO THE TRUSTEES
Robert H. Graham Vice President
President and Chief Executive Officer Kramer, Levin, Naftalis & Frankel
A I M Management Group Inc. Renee A. Friedli 919 Third Avenue
Assistant Secretary New York, NY 10022
Prema Mathai-Davis
Chief Executive Officer, YWCA of the U.S.A., P. Michelle Grace DISTRIBUTOR
Commissioner, New York City Dept. for Assistant Secretary
the Aging; and member of the Board of Directors A I M Distributors, Inc.
Metropolitan Transportation Authority Jeffrey H. Kupor 11 Greenway Plaza
New York State Assistant Secretary Suite 100
Houston, TX 77046
Lewis F. Pennock Nancy L. Martin
Attorney Assistant Secretary AUDITORS
Ian W. Robinson Ofelia M. Mayo KPMG LLP
Consultant; Formerly Executive Assistant Secretary 700 Louisiana
Vice President and Houston, TX 77002
Chief Financial Officer Lisa A. Moss
Bell Atlantic Management Assistant Secretary
Services, Inc.
Kathleen J. Pflueger
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Samuel D. Sirko
Limited Partnership Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Global Utilities Fund Class A, Class B and Class C shares paid ordinary
dividends in the amount of $0.4668, $0.3228, and $0.3228 per share,
respectively, to shareholders during its tax year ended December 31, 1998. Of
these amounts, 57.52% is eligible for the dividends received deduction for
corporations.
The Fund also distributed long-term capital gains of $12,324,349 for the Fund's
tax year ended December 31, 1998. Of long-term capital gains distributed, 100%
is 20% rate gain.
16
<PAGE> 19
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds--Registered Trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds. Certain restrictions
apply.
o RETIREMENT PLANS. You may purchase shares of an AIM fund for your Individual
Retirement Account (IRA), Roth IRA, or any other type of retirement plan,
and earn tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o www.aimfunds.com. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
---------------------------
CURRENT SHAREHOLDERS
CAN CALL OUR
AIM INVESTOR LINE AT
800-246-5463
FOR 24-HOUR-A-DAY
ACCOUNT INFORMATION.
---------------------------
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately $109
AIM Capital Development Fund billion in assets for more than 6.2 million
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS shareholders, including individual investors,
AIM Mid Cap Equity Fund(2)(A) AIM Advisor International Value Fund corporate clients, and financial institutions,
AIM Select Growth Fund(3) AIM Asian Growth Fund as of December 31, 1998.
AIM Small Cap Growth Fund(2)(B) AIM Developing Markets Fund(2) The AIM Family of Funds--Registered Trademark--
AIM Small Cap Opportunities Fund AIM Europe Growth Fund(2) is distributed nationwide, and AIM today is the
AIM Value Fund AIM European Development Fund 10th-largest mutual fund complex in the U.S. in
AIM Weingarten Fund AIM International Equity Fund assets under management, according to Strategic
AIM Japan Growth Fund(2) Insight, an independent mutual fund monitor.
GROWTH & INCOME FUNDS AIM Latin American Growth Fund(2)
AIM Advisor Flex Fund AIM New Pacific Growth Fund(2)
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund GLOBAL GROWTH FUNDS
AIM Advisor Real Estate Fund AIM Global Aggressive Growth Fund
AIM Balanced Fund AIM Global Growth Fund
AIM Basic Value Fund(2)(C)
AIM Charter Fund GLOBAL GROWTH & INCOME FUNDS
AIM Global Growth & Income Fund(2)
INCOME FUNDS AIM Global Utilities Fund
AIM Floating Rate Fund(2)
AIM High Yield Fund GLOBAL INCOME FUNDS
AIM High Yield Fund II AIM Emerging Markets Debt Fund(2)(D)
AIM Income Fund AIM Global Government Income Fund(2)
AIM Intermediate Government Fund AIM Global Income Fund
AIM Limited Maturity Treasury Fund AIM Strategic Income Fund(2)
TAX-FREE INCOME FUNDS THEME FUNDS
AIM High Income Municipal Fund AIM Global Consumer Products and Services Fund(2)
AIM Municipal Bond Fund AIM Global Financial Services Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Health Care Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
AIM Global Trends Fund(2)(E)
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998.
(2) Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth
Fund. (A) On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C) On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D) On September 8, 1998, AIM Global High Income
Fund was renamed AIM Emerging Markets Debt Fund. (E) On September 8, 1998, AIM
New Dimension Fund was renamed AIM Global Trends Fund. For more complete
information about any AIM Fund(s), including sales charges and expenses, ask
your financial consultant or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money.
