<PAGE> 1
[COVER IMAGE]
AIM
MID CAP EQUITY FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT DECEMBER 31, 1998
INVEST WITH DISCIPLINE--Registered Trademark--
<PAGE> 2
[ COVER IMAGE ]
----------------------------------------------
TENDING THE GARDEN BY KONSTANTIN RODKO (1908-1995)
THIS CHARMING FOLK-ART PAINTING BY KONSTANTIN RODKO DEPICTS
AN ATTENTIVE GARDENER CARING FOR HER TIDY CROP. LIKE A GARDEN-
ER, FUND MANAGERS LOOK FOR GROWING COMPANIES THAT MAY ONE
DAY BLOSSOM INTO MAJOR CORPORATIONS.
----------------------------------------------
AIM Mid Cap Equity Fund seeks long-term growth of capital by investing primarily
in the equity securities of mid-cap companies.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Mid Cap Equity Fund (formerly GT Global America Mid Cap Growth 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 12/31/98 the Fund paid distributions of $.99
per share for each class of shares.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B 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 performance of the Fund's Class B shares will differ from that of
Class A shares due to differences in sales charge structure and Class
expenses.
o Advisor Class shares are not sold directly to the general public and are
available only through certain employee benefit plans, financial
institutions, and other entities that have entered into specific agreements
with the Fund's Distributor. Please see the Fund's prospectus for more
complete information.
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 The Fund's portfolio composition is subject to change, and there is no
assurance the Fund will continue to hold any particular security.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
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. Results shown assume the reinvestment of
dividends.
o The Standard & Poor's 400 Mid-Cap Index (S&P 400) is an unmanaged index
comprising common stocks of approximately 400 mid-capitalization companies.
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of 30
actively traded primarily industrial stocks.
o The Russell Midcap Index comprises the capitalization-weighted average price
of 800 selected common stocks of medium-size domestic companies. Its
performance includes the effect of reinvested dividends and is measured in
U.S. dollars.
o The Russell 2000 is an unmanaged index generally considered representative
of small-capitalization stocks.
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 MID CAP EQUITY 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 to
Bauer, all-time highs in spring and early summer. However, the year
Chairman of was to bring two particularly serious financial shocks, first
the Board of the debt default by Russia, and later the gathering crisis in
THE FUND Brazil, which devalued its currency shortly after the fiscal
APPEARS HERE] year closed. The result was another year of significant
market volatility here and abroad.
Optimism yielded to pessimism over the summer amid
global financial crises and a widespread decline in U.S.
corporate earnings growth. Particularly from July through
October, a major market correction for equities, including
previously high-flying blue chips, bolstered U.S. Treasury
issues, whose safety attracts investors in doubtful times.
Beginning in late September, the U.S. Federal Reserve Board
intervened to pump liquidity and confidence into markets. Investors responded
favorably, and the year closed on a positive note with domestic equities
rallying and bonds displaying much less momentum.
Some stock indexes produced excellent total return for the year, with the
S&P 500 index of large-company stocks up a dramatic 28.60%. But focusing on one
market benchmark may give you an incomplete view. There was wide divergence
among market segments this fiscal year. For example, the Russell 2000 index of
small-company stocks declined 2.55%. Even within the S&P 500, the bigger the
company, the better the performance.
HOW SHOULD INVESTORS RESPOND?
We understood how unnerving 1998's level of volatility could have been. Of
course, our repeated message to you is to keep a long-term outlook on
investments rather than responding to short-term fluctuations. And we are
pleased to note that most mutual fund shareholders remained cool headed and did
not pull out of the markets during 1998. In the end, most were rewarded for
their long-term perspective.
In view of recent volatility and the divergent performance of market
sectors, this may be a very good time to meet with your financial consultant to
review your current asset allocation and the diversification of your portfolio.
Broad portfolio diversification remains one of the most fundamental principles
of investing, along with long-term thinking and realistic expectations.
YOUR FUND MANAGERS' COMMENTS
On the pages that follow, your Fund's managers, experienced professionals who
have weathered previous periods of market turbulence, offer more detailed
discussion of how markets behaved, how they managed the portfolio in light of
recent volatility, and what they foresee for markets and your Fund. We hope you
find their discussion informative.
YEAR 2000 CONCERN
Many of our shareholders have asked us about AIM's year 2000 readiness status.
We appreciate these concerns, and we take the year 2000 issue seriously. AIM has
devoted considerable effort to creating a comprehensive plan for assessing,
correcting and testing our in-house systems. We will also participate in an
industrywide testing effort scheduled to begin in March. But no matter how well
we prepare and test, no one can know for sure what the year 2000 will bring. Our
industry's systems are connected in complex ways to many third parties, and
there may be unforeseen problems when the year 2000 actually arrives. Though we
cannot predict what all those problems might be, we are working with our
business recovery team to develop contingency plans appropriate for a variety of
year 2000 scenarios.
We are pleased to send you this report on your Fund's fiscal year. If you
have any questions or comments, please contact our Client Services department at
800-959-4246, or e-mail your inquiry to us at [email protected]. You can
access information about your account through our AIM Investor Line at
800-246-5463 or at our Web site, www.aimfunds.com. We often post market updates
on our Web site.
We thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
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 MID CAP EQUITY FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
MARKET VOLATILITY PROVES
CHALLENGING FOR FUND
THIS YEAR WAS PARTICULARLY UNSETTLING FOR THE STOCK MARKET. HOW DID THE FUND
PERFORM?
Fund performance fluctuated considerably during extreme market volatility. The
Fund, like the entire mid-cap stock market, was hard hit during a deep sell-off
in August. The Fund rallied by 36% between October 8, when many markets hit
their low for 1998, and the December 31, 1998, close of the fiscal year. Despite
this comeback, the Fund was unable to recoup its losses completely. The Fund's
total return for the fiscal year ending December 31, 1998, was -4.71% for Class
A shares, -5.41% for Class B shares, and -4.59% for Advisor Class shares.
WHAT WERE MARKET CONDITIONS LIKE DURING THIS REPORTING PERIOD?
As the fiscal year opened, concern about Asia's financial difficulties was
widespread. The midsize-company stocks in which the Fund invests were especially
out of favor as uneasy investors sought the relative safety of blue-chip stocks.
Markets rallied in the spring as investors seemed to shrug off Asian worries.
For the first half of the fiscal year, the Fund produced impressive returns. The
latter half of the fiscal year was even more volatile. A summer rally took many
stock indexes to all-time highs by mid-July, but mid-cap stocks did not
participate. For example, the S&P 400 Midcap Stock Index was higher in mid-April
than it was on July 17, when large-cap indexes such as the S&P 500 peaked. In
August, another wave of concern washed over markets. Its causes were multiple:
the seemingly intractable Asian downturn, a default on Russian government debt,
the collapse of some highly leveraged hedge funds, and recognition that domestic
corporate profit growth was slipping after several years of robust growth. Late
in the fiscal year amid evidence of a possible credit crunch both here and
abroad, the Federal Reserve Board (the Fed) shifted its focus from inflation
fighting to providing liquidity and supporting markets. In three steps, it
lowered the short-term target federal funds rate from 5.50% to 4.75%, and equity
markets rallied in response. In the short run at least, the Fed appeared to have
assured investors that it would intervene to forestall a recession. Mid-cap
stocks finished the year lower than their large-cap counterparts. The S&P 400
Midcap Index produced total return of 18.25%, compared with the 28.60% return of
the S&P 500. The Russell Mid-Cap Index, the Fund's benchmark, finished the year
up 10.10%.
WHAT ARE YOU DOING TO IMPROVE THE FUND'S PERFORMANCE? HAVE YOU CHANGED THE WAY
THE FUND IS MANAGED?
A former GT Global fund, AIM Mid Cap Equity was added to the AIM fund family
during 1998. Since taking over management, we have made changes in its
investment strategy to enhance the Fund's performance. We are applying AIM's
discipline of growth at a reasonable price. Basically, we look for companies
that are undervalued relative to their market or industry, and then try to find
a catalyst for growth, such as a new product or a change in management. We look
for both earnings growth and stock price improvements relative to earnings.
The tumble in mid-cap markets this fiscal year offered a great buying
opportunity for the Fund, as many growth-oriented stocks were available at a
significant discount. We took advantage of this and broadened the portfolio from
46 holdings as of June 30, 1998, to 91 holdings as of December 31, 1998.
We also diversified the Fund by adding to our technology and health-care
holdings. At the end of the fiscal year, technology stocks represented 29.6% of
the portfolio, while health-care stocks made up 12.3%.
WHAT AREAS OF TECHNOLOGY DID YOU FAVOR?
Of the technology holdings, semiconductor stocks made up 7.47% of the portfolio.
Semiconductor makers and equipment manufacturers survived a tough year in 1998.
The Asian financial flu drove down demand for electronics, components and
computers in Southeast Asia and depressed the price of semiconductor stocks. But
near the end of the fiscal year, these stocks saw a strong rebound as the glut
in inventory eased. One of our holdings to benefit from this turnaround was
Xilinx, a computer chip manufacturer whose stock rose almost four-fold in 1998.
Our other semiconductor holdings included AMD, Burr-Brown and Lattice
Semiconductor.
We liked computer software and services stocks, particularly in companies
that integrate and implement software solutions. We believe stocks in this
sector are selling at a discount because of the "millennium bug." The computer
glitch
See important Fund and index disclosures inside front cover.
------------------------------------------
The tumble in mid-cap markets this
fiscal year offered a great buying
opportunity for the Fund, as many
growth-oriented stocks were avail-
able at a significant discount.
------------------------------------------
AIM MID CAP EQUITY FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 12/31/98, based on total net assets
<TABLE>
<CAPTION>
============================================================================================================
Top 10 Holdings Top 10 Industries
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Outdoor Systems, Inc. 7.2% 1. Services (Advertising/Marketing) 10.41%
2. U.S. Foodservice, Inc. 5.0 2. Computers (Software & Services) 9.27
3. Cablevision Systems Corp. - Class A 2.9 3. Electronics (Semiconductors) 7.47
4. Jacor Communications, Inc. 1.8 4. Broadcasting (Television, Radio & Cable) 6.00
5. Providian Financial Corp. 1.8 5. Healthcare (Medical Equipment & Supplies) 5.05
6. Forest Laboratories, Inc. 1.7 6. Distributors (Food & Health) 5.01
7. Young & Rubicam, Inc. 1.7 7. Healthcare (Drugs - Generic and Other) 4.46
8. Burr-Brown Corp. 1.7 8. Oil & Gas (Exploration & Production) 3.44
9. Arterial Vascular Engineering, Inc. 1.6 9. Oil & Gas (Drilling & Equipment) 2.95
10. International Specialty Products, Inc. 1.6 10. Services (Computer Systems) 2.87
Please keep in mind the Fund's portfolio composition is subject to change, and there is no
assurance the Fund will continue to hold any particular security.
============================================================================================================
</TABLE>
requires reprogramming older computers and software to recognize the year 2000.
Financial markets have discounted the high near-term growth of software and
services firms conducting Y2K-related work, questioning whether they will
continue to grow after the Year 2000. We feel that these stocks have been
discounted too much, and we consider these firms to be long-term buying
opportunities. Holdings in this area included Oracle, Citrix and Novell.
WHAT HEALTH-CARE STOCKS WERE ATTRACTIVE?
In the health-care sector, we favored mid-sized drug manufacturers. These
companies make generic drugs but also have several proprietary products in their
pipeline. Our holdings included Forest Laboratories and Teva Pharmaceutical.
WHAT IS YOUR NEAR-TERM OUTLOOK ON THE ECONOMY?
We are optimistic that the United States will avoid a recession in 1999. The
economy is likely to experience annual gross domestic product growth in the 1.5%
to 2.0% range, so low inflation and low interest rates should continue. The
challenge will be earnings. With global markets in or near recession and the
U.S. economy expanding more slowly, companies will find it harder to produce
earnings growth. There is added risk until the Asian and Latin American
situations stabilize.
AND WHAT DO YOU THINK ABOUT THE MID-CAP MARKET SECTOR WHERE THE FUND INVESTS?
We believe there are several reasons for optimism about mid-cap stocks.
Valuations of the stocks in the mid-cap sector are significantly lower than in
the large-cap sector. Mid-cap stocks also offer some refuge because they tend to
have less international exposure. In addition, smaller-company stocks
historically do better than large-company stocks when the Fed eases monetary
policy, and we were encouraged to note that this was true after the Fed began
lowering interest rates.
Although this is much too short a period in which to identify a market
trend, from the Fed's first interest rate cut September 29 through December 31,
1998, mid-caps did outperform large-caps. The S&P 400 advanced 25.74% while the
large-cap S&P 500 rose 17.60%. Of course, a favorable environment for
smaller-company stocks should bode well for the AIM Mid Cap Equity Fund.
------------------------------------------
We liked computer software and ser-
vices stocks, particularly in compa-
nies that integrate and implement
software solutions.
------------------------------------------
See important Fund and index disclosures inside front cover.
AIM MID CAP EQUITY FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM MID CAP EQUITY FUND VS. BENCHMARK INDEX
6/9/87-12/31/98
- ----------------------------------------------------------------
AIM Mid Cap Equity Russell Midcap
Fund, Class A, Index
shares
- ----------------------------------------------------------------
In thousands
6/9/87 $ 9,452 $10,407
12/31/87 $ 8,091 $ 8,526
12/31/88 $ 8,992 $10,215
12/31/89 $13,917 $12,896
12/31/90 $12,887 $11,415
12/31/91 $15,373 $16,156
12/31/92 $20,253 $18,799
12/31/93 $21,943 $21,484
12/31/94 $25,385 $21,083
12/31/95 $31,281 $28,238
12/31/96 $36,177 $33,657
12/31/97 $41,260 $43,422
12/31/98 $39,317 $47,804
================================================================
PAST PERFORMANCE IS NO GUARANTEE OF COMPARABLE FUTURE RESULTS.
================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/98, including sales charges
CLASS A SHARES
Inception (6/9/87) 12.57%
10 years 15.24
5 years 11.11
1 year -9.94*
Class B Shares
Inception (4/1/93) 12.84%
5 years 11.38
1 year -9.88**
Advisor Class Shares
Inception (6/1/95) 8.26%
3 years 8.14
1 year -4.59
*-4.71% excluding sales charges
**-5.41% excluding sales charges
================================================================
Source: Towers Data Systems HYPO--Registered Trademark.
Your Fund's total return includes sales charges, expenses, and management fees.
The performance of Class B and Advisor Class shares will differ from that of
Class A shares due to differing fees and expenses. For Fund performance
calculations and descriptions of indexes cited on this page, please refer to the
inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT 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 a benchmark index. It is
intended to give you a general idea of how your Fund performed compared to the
stock market over the period 6/9/87-12/31/98. (Please note that the
Russell Midcap Index performance figures in this chart are for the period
5/31/87-12/31/98.) It is important to understand differences between your Fund
and an index. An index measures performance of a hypothetical portfolio.
A market index such as the Russell Midcap Index is 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 the return on your
investment.
AIM MID CAP EQUITY FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-90.98%
AUTO PARTS & EQUIPMENT-0.62%
Keystone Automotive Industries,
Inc.(a) 103,000 $ 2,156,563
- --------------------------------------------------------------
BANKS (REGIONAL)-1.04%
Bank United Corp.-Class A 92,000 3,611,000
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO, & CABLE)-6.00%
Cablevision Systems Corp.-Class
A(a)(b) 200,000 10,037,500
- --------------------------------------------------------------
Chancellor Media Corp.(a) 95,500 4,572,063
- --------------------------------------------------------------
Jacor Communications, Inc.(a) 96,300 6,199,313
- --------------------------------------------------------------
20,808,876
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-1.63%
International Specialty Products,
Inc.(a) 415,700 5,637,931
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.94%
Discreet Logic, Inc. (Canada)(a) 272,100 5,135,888
- --------------------------------------------------------------
Tekelec(a) 95,000 1,573,438
- --------------------------------------------------------------
6,709,326
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-2.43%
FORE Systems, Inc.(a) 166,900 3,056,356
- --------------------------------------------------------------
Xylan Corp.(a) 304,800 5,353,050
- --------------------------------------------------------------
8,409,406
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-9.27%
BMC Software, Inc.(a) 76,300 3,400,119
- --------------------------------------------------------------
Citrix Systems, Inc.(a) 46,900 4,552,231
- --------------------------------------------------------------
Electronic Arts, Inc.(a) 25,000 1,403,125
- --------------------------------------------------------------
Hyperion Solutions Corp.(a) 68,000 1,224,000
- --------------------------------------------------------------
I2 Technologies, Inc.(a) 65,000 1,974,375
- --------------------------------------------------------------
Mastech Corp.(a) 80,000 2,290,000
- --------------------------------------------------------------
Novell, Inc.(a) 240,700 4,362,688
- --------------------------------------------------------------
Oracle Corp.(a) 123,500 5,325,938
- --------------------------------------------------------------
Rational Software Corp.(a) 156,600 4,149,900
- --------------------------------------------------------------
Unisys Corp.(a) 100,000 3,443,750
- --------------------------------------------------------------
32,126,126
- --------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.60%
Blyth Industries, Inc.(a) 67,000 2,093,750
- --------------------------------------------------------------
CONSUMER FINANCE-1.79%
Providian Financial Corp. 82,500 6,187,500
- --------------------------------------------------------------
CONTAINERS (METAL & GLASS)-0.92%
Owens-Illinois, Inc.(a) 104,400 3,197,250
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-5.00%
U S Foodservice, Inc.(a)(b) 353,400 17,316,600
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.99%
Molex, Inc.-Class A 135,100 4,306,313
- --------------------------------------------------------------
SCI Systems, Inc.(a) 45,000 2,598,750
- --------------------------------------------------------------
6,905,063
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTOR)-7.47%
Advanced Micro Devices, Inc.(a) 145,600 4,213,300
- --------------------------------------------------------------
Analog Devices, Inc.(a) 106,200 3,332,025
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (SEMICONDUCTOR)-(CONTINUED)
Burr-Brown Corp.(a) 247,300 $ 5,796,094
- --------------------------------------------------------------
Dallas Semiconductor Corp. 49,000 1,996,750
- --------------------------------------------------------------
Lattice Semiconductor Corp.(a) 64,000 2,938,000
- --------------------------------------------------------------
Level One Communications, Inc.(a) 68,300 2,424,650
- --------------------------------------------------------------
Xilinx, Inc.(a) 79,600 5,183,950
- --------------------------------------------------------------
25,884,769
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-0.85%
KLA-Tencor Corp.(a) 68,200 2,958,175
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.33%
Ambac Financial Group, Inc. 35,000 2,106,563
- --------------------------------------------------------------
SEI Investments Co. 25,000 2,484,375
- --------------------------------------------------------------
4,590,938
- --------------------------------------------------------------
HEALTHCARE (DRUGS-GENERIC & OTHER)-4.46%
Barr Laboratories, Inc.(a) 42,000 2,016,000
- --------------------------------------------------------------
Forest Laboratories, Inc.(a) 113,000 6,010,188
- --------------------------------------------------------------
Jones Pharma, Inc. 55,400 2,022,100
- --------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Israel) 78,900 3,210,244
- --------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 35,000 2,200,625
- --------------------------------------------------------------
15,459,157
- --------------------------------------------------------------
HEALTHCARE (MEDICAL EQUIPMENT & SUPPLIES)-5.05%
Allegiance Corp. 40,000 1,865,000
- --------------------------------------------------------------
Arterial Vascular Engineering, Inc.(a) 108,100 5,675,250
- --------------------------------------------------------------
Guidant Corp. 28,000 3,087,000
- --------------------------------------------------------------
Henry Schein, Inc.(a) 50,000 2,237,500
- --------------------------------------------------------------
PSS World Medical, Inc.(a) 95,000 2,185,000
- --------------------------------------------------------------
Sybron International Corp.(a) 90,000 2,446,875
- --------------------------------------------------------------
17,496,625
- --------------------------------------------------------------
HEALTHCARE (SPECIALIZED SERVICES)-1.55%
Alza Corp.(a) 66,000 3,448,500
- --------------------------------------------------------------
Omnicare, Inc. 55,000 1,911,250
- --------------------------------------------------------------
5,359,750
- --------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-0.93%
EXEL Limited-Class A 43,100 3,232,500
- --------------------------------------------------------------
LODGING-HOTELS-0.94%
Promus Hotel Corp.(a) 100,500 3,253,688
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.18%
Applied Power, Inc.-Class A 108,100 4,080,775
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-2.53%
Pall Corp. 135,700 3,434,906
- --------------------------------------------------------------
United States Filter Corp. 233,249 5,335,571
- --------------------------------------------------------------
8,770,477
- --------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-2.95%
BJ Services Co.(a) 174,900 2,732,812
- --------------------------------------------------------------
Cooper Cameron Corp.(a) 102,800 2,518,600
- --------------------------------------------------------------
Rowan Companies, Inc.(a) 116,000 1,160,000
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
Transocean Offshore Inc. 45,600 $ 1,222,650
- --------------------------------------------------------------
Weatherford International, Inc.(a) 134,400 2,604,000
- --------------------------------------------------------------
10,238,062
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-3.44%
Anadarko Petroleum Corp. 81,800 2,525,575
- --------------------------------------------------------------
Burlington Resources, Inc. 132,200 4,734,412
- --------------------------------------------------------------
Devon Energy Corp. 50,000 1,534,375
- --------------------------------------------------------------
Noble Affiliates, Inc. 50,000 1,231,250
- --------------------------------------------------------------
Seagull Energy Corp.(a) 301,200 1,901,325
- --------------------------------------------------------------
11,926,937
- --------------------------------------------------------------
PERSONAL CARE-0.49%
Avon Products, Inc. 38,000 1,681,500
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.25%
New York Times Co. (The)-Class A 25,000 867,187
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.40%
Federated Department Stores,
Inc.(a) 33,000 1,437,562
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.63%
Kroger Co.(a) 36,000 2,178,000
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-1.04%
Kmart Corp.(a) 235,000 3,598,437
- --------------------------------------------------------------
RETAIL (SPECIALTY)-1.37%
Pep Boys-Manny, Moe & Jack 301,800 4,734,487
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.61%
Abercrombie & Fitch Co.-Class A(a) 18,600 1,315,950
- --------------------------------------------------------------
Intimate Brands, Inc. 142,200 4,248,225
- --------------------------------------------------------------
5,564,175
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.94%
GreenPoint Financial Corp. 92,900 3,263,111
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-10.39%
Outdoor Systems, Inc.(a)(b) 831,180 24,935,400
- --------------------------------------------------------------
Snyder Communications, Inc.(a) 152,700 5,153,625
- --------------------------------------------------------------
Young & Rubicam, Inc.(a) 183,200 5,931,100
- --------------------------------------------------------------
36,020,125
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.16%
Metzler Group, Inc.(a) 60,000 2,921,250
- --------------------------------------------------------------
Stewart Enterprises, Inc.- Class A 50,000 1,112,500
- --------------------------------------------------------------
4,033,750
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-2.87%
Cambridge Technology Partners,
Inc.(a) 164,400 3,637,350
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMPUTER SYSTEMS)-(CONTINUED)
Gerber Scientific, Inc. 82,600 $ 1,966,912
- --------------------------------------------------------------
Policy Management Systems Corp.(a) 86,000 4,343,000
- --------------------------------------------------------------
9,947,262
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.83%
CSG Systems International, Inc.(a) 41,000 3,239,000
- --------------------------------------------------------------
Equifax, Inc. 25,000 854,687
- --------------------------------------------------------------
NOVA Corp.(a) 65,300 2,265,093
- --------------------------------------------------------------
6,358,780
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.68%
Metromedia Fiber Network, Inc.(a) 70,000 2,345,000
- --------------------------------------------------------------
WASTE MANAGEMENT-1.41%
Allied Waste Industries, Inc.(a) 207,000 4,890,375
- --------------------------------------------------------------
Total Common Stocks (Cost
$252,047,680) 315,330,995
- --------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
OPTIONS PURCHASED-0.03%
PUT OPTIONS-0.03%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.00%
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
<S> <C> <C> <C> <C>
Cablevision Systems Corp.-
Class A 1,230 40 Jan-99 $ 15,375
- -----------------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-0.01%
U S Foodservice, Inc. 2,828 45 Jan-99 35,350
- -----------------------------------------------------------------------
SERVICES (ADVERTISING/
MARKETING)-0.02%
Outdoor Systems, Inc. 7,010 22.50 Jan-99 65,718
- -----------------------------------------------------------------------
Total Options Purchased
(Cost $1,172,362) 116,443
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
WARRANTS-0.50%
BANKS (REGIONAL)-0.50%
Golden State Bancorp, Litigation
Warrants, expiring 01/01/01
(Cost $2,296,743) 381,300 $ 1,739,682
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT-7.90%
SBC Warburg Dillon Read Inc.,
4.75%, 01/04/99 $27,371,944 $ 27,371,944
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.41% 344,559,064
- --------------------------------------------------------------
OTHER ASSETS & LIABILITIES-0.59% 2,059,395
- --------------------------------------------------------------
NET ASSETS-100.00% $346,618,459
==============================================================
</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 4.
(c) Collateral on repurchase agreements, including the fund's pro-rata interest
in joint repurchase agreement 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 as being 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.
(d) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$1,000,527,778. Collateralized by $2,207,068,000 U.S. Government
obligations, 0% to 6.75% due 06/30/99 to 11/15/21 with an aggregate market
value at 12/31/98 of $1,020,001,079.
Abbreviation:
ADR - American Depositary Receipt
See Notes to Financial Statements.
6
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at market value
(cost $282,888,729) $344,559,064
- ---------------------------------------------------------
Cash 718,265
- ---------------------------------------------------------
Receivables for:
Investments sold 3,035,046
- ---------------------------------------------------------
Fund shares sold 5,232,000
- ---------------------------------------------------------
Dividends and interest 57,064
- ---------------------------------------------------------
Other assets 14,660
- ---------------------------------------------------------
Total assets 353,616,099
- ---------------------------------------------------------
LIABILITIES:
Payable for fund shares reacquired 1,853,509
- ---------------------------------------------------------
Options written
(premiums received $2,262,028) 4,346,737
- ---------------------------------------------------------
Accrued investment management &
administration fees 203,493
- ---------------------------------------------------------
Accrued accounting fees 7,983
- ---------------------------------------------------------
Accrued distribution fees 352,058
- ---------------------------------------------------------
Accrued trustees' fees 7,113
- ---------------------------------------------------------
Accrued transfer agent fees 83,800
- ---------------------------------------------------------
Accrued operating expenses 142,947
- ---------------------------------------------------------
Total liabilities 6,997,640
- ---------------------------------------------------------
Net assets applicable to shares outstanding $346,618,459
- ---------------------------------------------------------
NET ASSETS:
Class A $180,258,032
=========================================================
Class B $165,447,122
=========================================================
Advisor Class $ 913,305
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 9,501,665
=========================================================
Class B 9,110,457
=========================================================
Advisor Class 47,866
=========================================================
Class A:
Net asset value and redemption price per
share $ 18.97
- ---------------------------------------------------------
Offering price per share:
(Net asset value of
$18.97 divided by 94.50%) $ 20.07
=========================================================
Class B:
Net asset value and offering price per
share $ 18.16
=========================================================
Advisor Class:
Net asset value and offering price per
share $ 19.08
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $5,749 foreign
withholding tax) $ 1,161,164
- ---------------------------------------------------------
Interest 613,489
- ---------------------------------------------------------
Security lending income 254,918
- ---------------------------------------------------------
Total investment income 2,029,571
- ---------------------------------------------------------
EXPENSES:
Investment management & administration fees 3,140,938
- ---------------------------------------------------------
Accounting fees 118,894
- ---------------------------------------------------------
Trustees fees 17,403
- ---------------------------------------------------------
Distribution fees -- Class A 760,959
- ---------------------------------------------------------
Distribution fees -- Class B 2,148,252
- ---------------------------------------------------------
Transfer agent fees -- Class A 487,406
- ---------------------------------------------------------
Transfer agent fees -- Class B 483,318
- ---------------------------------------------------------
Transfer agent fees -- Advisor Class 2,521
- ---------------------------------------------------------
Other 1,043,368
- ---------------------------------------------------------
Total expenses 8,203,059
- ---------------------------------------------------------
Less: Expense reductions (46,733)
- ---------------------------------------------------------
Net expenses 8,156,326
- ---------------------------------------------------------
Net investment income (loss) (6,126,755)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND OPTION
CONTRACTS:
Net realized gain (loss) from investment
securities (7,289,125)
- ---------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities (3,811,413)
- ---------------------------------------------------------
Option contracts written (2,084,709)
- ---------------------------------------------------------
(5,896,122)
- ---------------------------------------------------------
Net gain (loss) from investment
securities and option contracts (13,185,247)
- ---------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(19,312,002)
=========================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (6,126,755) $ (6,767,300)
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
option contracts (7,289,125) 91,288,360
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities and option contracts (5,896,122) (23,043,968)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (19,312,002) 61,477,092
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (8,638,559) (27,861,047)
- ----------------------------------------------------------------------------------------------
Class B (8,762,197) (29,550,073)
- ----------------------------------------------------------------------------------------------
Advisor Class (46,305) (120,835)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A (59,340,039) (91,841,233)
- ----------------------------------------------------------------------------------------------
Class B (69,635,070) (78,964,718)
- ----------------------------------------------------------------------------------------------
Advisor Class 70,469 (860,102)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (165,663,703) (167,720,916)
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 512,282,162 680,003,078
- ----------------------------------------------------------------------------------------------
End of period $ 346,618,459 $ 512,282,162
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 295,648,297 $ 430,679,692
- ----------------------------------------------------------------------------------------------
Undistributed net investment income -- --
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (8,615,464) 16,120,722
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 59,585,626 65,481,748
- ----------------------------------------------------------------------------------------------
$ 346,618,459 $ 512,282,162
==============================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Mid Cap Equity Fund, formerly AIM Mid Cap Growth Fund, (the "Fund"), is a
separate series of AIM Growth Series (the "Trust"). The Trust is a Delaware
business trust and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as an open-end management investment company. The Trust
has six diversified series of shares in operation, each series corresponding to
a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
A. Portfolio Valuation -- The Fund calculates the net asset value of and
completes orders to purchase, exchange or repurchase Fund shares on each
business day, with the exception of those days on which the New York Stock
Exchange is closed.
Equity securities are valued at the last sale price on the exchange on
which such securities are traded or on the principal over-the-counter market
on which such securities are traded, as of the close of business on the day
the securities are being valued or, lacking any sales, at the mean between
the closing bid and asked prices. In cases where securities are traded on
more than one exchange, the securities are valued on the exchange determined
by A I M Advisors, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted
bid and ask prices for such investments or, if such prices are not available,
at prices for investments of comparative maturity, quality and type; however,
when the Manager deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term investments
with a maturity of 60 days or less are valued at amortized cost which
approximates market value.
Investments for which market quotations are not readily available
(including restricted securities which are subject to limitations on their
sale) are valued at fair value as determined in good faith by or under the
direction of the Trust's Board of Trustees.
B. Repurchase Agreements -- With respect to repurchase agreements entered into
by the Fund, it is the Fund's policy to always receive, as collateral, United
States government securities or other high quality debt securities of which
the value, including accrued interest, is at least equal to the amount to be
repaid to the Fund under each agreement at its maturity.
C. Option Accounting Principles -- When the Fund writes a call or put option, an
amount equal to the premium received is included in the Fund's "Statement of
Assets and Liabilities" 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. The current market value of an option is the mean
between the last bid and asked prices on that day. If an option expires on
its stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option
is extinguished. If a written call option is exercised, a gain or loss is
realized from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only
on a covered basis, which, for a call, requires that the Fund hold the
underlying security, and, for a put, requires the Fund to set aside cash,
U.S. government securities or other liquid securities in an amount not less
than the exercise price or otherwise provide adequate cover at all times
while the put option is outstanding. The Fund may use options to manage its
exposure to the stock market and to fluctuations in interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of
the option. If an option which the Fund has purchased expires on the
stipulated expiration date, the Fund realizes a loss in the amount of the
cost of the option. If the Fund enters into a closing sale transaction, the
Fund realizes a gain or loss, depending on whether proceeds from the closing
sale transaction are greater or less than the cost of the option. If the Fund
exercises a call option, the cost of the securities acquired by exercising
the call is increased by the premium paid to buy the call. If the Fund
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium
originally paid. The risk in writing a call option is that the Fund may
forego the opportunity of profit if the market value of the underlying
security or index increases and the option is exercised. The risk in writing
a put option is that the Fund may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In
addition, there is the risk the Fund may not be able to enter into a closing
transaction because of an illiquid secondary market.
D. Futures Contracts -- A futures contract is an agreement between two parties
to buy and sell a security at a set price on
9
<PAGE> 12
a future date. Upon entering into such a contract the Fund is required to
pledge to the broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the exchange on which the contract is
traded. Pursuant to the contract, the Fund agrees to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is
closed, the Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at
the time it was closed. The potential risk to the Fund is that the change in
value of the underlying securities may not correlate to the change in value
of the contracts. The Fund may use futures contracts to manage its exposure
to the stock market and to fluctuations in interest rates.
E. Security Transactions and Related Investment Income -- Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Realized gains and losses are computed on the basis of specific
identification of the Securities sold. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a
high level of uncertainty exists as to its collection, income is recorded net
of all withholding tax with any rebate recorded when received. The Fund may
trade securities on other than normal settlement terms. This may increase the
risk if the other party to the transaction fails to deliver and causes the
Fund to subsequently invest at less advantageous prices. On December 31, 1998
$6,126,755 was reclassified from paid-in capital to undistributed net
investment income as a result of a net operating tax loss 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 as a result of this reclassification.
F. Portfolio Securities Loaned -- At December 31, 1998, stocks with an aggregate
value listed below were on loan to brokers. The loans were secured by cash
collateral received by the Fund:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 PERIOD ENDED
----------------------------- DECEMBER 31, 1998
AGGREGATE VALUE CASH -----------------
ON LOANS COLLATERAL FEES RECEIVED
--------------- ----------- -----------------
<S> <C> <C> <C>
$49,076,261 $49,978,243 $254,918
</TABLE>
Cash collateral is received by the Fund against loaned securities in the
amount at least equal to 102% of the market value of the loaned securities at
the inception of each loan. This collateral must be maintained at not less
than 100% of the market value of the loaned securities during the period of
the loan. The cash collateral is invested in a securities lending trust which
consists of a portfolio of high quality short duration securities whose
average effective duration is restricted to 120 days or less.
G. Taxes -- It is the policy of the Fund to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the intention of the Fund to
make distributions sufficient to avoid imposition of any excise tax under
Section 4982 of the Code. Therefore, no provision has been made for Federal
taxes on income, capital gains, or unrealized appreciation of securities
held, and excise tax on income and capital gains. The Fund has a capital loss
carryforward of $8,616,058 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2006. The Fund cannot distribute capital gains to
shareholders until the tax loss carryforwards have been utilized.
H. Distributions to Shareholders -- Distributions to shareholders are recorded
by the Fund on the ex-date. Income and capital gain distributions are
determined in accordance with Federal income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments of income and gains on various
investment securities held by the Fund and timing differences.
I. Restricted Securities -- The Fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions exempt
from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult.
J. Indexed Securities -- The Fund may invest in indexed securities whose value
is linked either directly or indirectly to changes in foreign currencies,
interest rates, equities, indices, or other reference instruments. Indexed
securities may be more volatile than the reference instrument itself, but
any loss is limited to the amount of the original investment.
K. Line of Credit -- The Fund, along with certain other funds advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund
and certain other funds to borrow, on a first come, first serve basis, an
aggregate maximum amount of $250,000,000. The Fund is limited to borrowing up
to 33 1/3% of the value of the Fund's total assets. On December 31, 1998, the
Fund did not have loans outstanding.
For the period ended December 31, 1998, the average outstanding daily
balance of bank loans (based on the number of days the loans were
outstanding) for the Fund was $9,979,175 with a weighted average interest
rate of 6.33%. Interest expense for the Fund for the period ended December
31, 1998 was $253,985, and is included in "Other Expenses" on the Statement
of Operations.
NOTE 2-RELATED PARTIES
A I M Advisors, Inc. ("Manager") is the Fund's investment manager and
administrator. As of the close of business on May 29, 1998, Liechtenstein Global
Trust AG ("LGT"), the former indirect parent organization of Chancellor LGT
Asset Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund. Also
on May 29, 1998, A I M Distributors, Inc. ("AIM Distributors"), a wholly-owned
subsidiary of the Manager, became the Fund's distributor, and the Trust was
reorganized from a Massachusetts business trust into a Delaware business trust.
Finally, on September 4, 1998, A I M Fund Services, Inc. ("AFS"), a wholly-owned
subsidiary of the Manager, became the transfer agent of the Fund.
10
<PAGE> 13
The Fund pays investment management and administration fees to the Manager at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Fund; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter.
AIM Distributors serves as the Fund's distributor. For the period ended May
29, 1998, GT Global, Inc. ("GT Global"), an affiliate of Chancellor LGT, served
as the Fund's distributor. The Fund offers Class A, Class B, and Advisor Class
shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors collects the sales charges imposed on sales of
Class A shares, and reallows a portion of such charges to dealers through which
the sales are made. For the year ended December 31, 1998, AIM Distributors and
GT Global retained the following sales charges: $4,819 and $17,303,
respectively. Purchases of Class A shares exceeding $1,000,000 may be subject to
a contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. AIM Distributors also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares
are sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. For the year ended December 31, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of: $191,592 and $770,735,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Old Class A Plan") and
Class B shares ("Old Class B Plan"), the Fund reimbursed GT Global for a portion
of its shareholder servicing and distribution expenses. Under the Old Class A
Plan, the Fund was permitted to pay GT Global a service fee at the annualized
rate of up to 0.25% of the average daily net assets of the Fund's Class A shares
for GT Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for GT Global's expenditures incurred in providing services as distributor.
All expenses for which GT Global was reimbursed under the Old Class A Plan would
have been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Old Class B Plan, the Fund
was permitted to pay GT Global a service fee at the annualized rate of up to
0.25% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Old Class B Plan in excess of 1.00%
annually were permitted to be carried forward for reimbursement in subsequent
years as long as that Plan continued in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1
under the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution
Plan applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of each of the Fund's Class A shares.
Pursuant to the Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Class A Plan and the Class B Plan (together, the "Plans") are designed to
compensate AIM Distributors for certain promotional and other sales-related
costs, and to implement a dealer incentive program that provides for periodic
payments to selected dealers who furnish continuing personal shareholder
services to their customers who purchase and own Class A and Class B shares of
the Fund. Payments also can be directed by AIM Distributors to financial
institutions who have entered into service agreements with respect to Class A
and Class B shares of the Fund and who provide continuing personal services to
their customers who own Class A and Class B shares of the Fund. The service fees
payable to selected financial institutions are calculated at the annual rate of
0.25% of the average daily net asset value of those Fund shares that are held in
such institution's customers' accounts that were purchased on or after a
prescribed date set forth in the Plans.
The Manager and AIM Distributors have undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the average daily net
assets of the Fund's Class A, Class B, and Advisor Class Shares, respectively.
This undertaking may be changed or eliminated in the future. If necessary, this
limitation will be effected by waivers by the Manager of investment management
and administration fees, waivers by AIM Distributors of payments under the Class
A Plan and/or Class B Plan and/or reimbursements by the Manager or AIM
Distributors of portions of the Fund's other operating expenses.
Effective as of the close of business September 4, 1998, the Fund, pursuant to
a transfer agency and service agreement, has agreed to pay A I M Fund Services,
Inc. ("AFS") an annualized fee of $24.85 for each shareholder accounts that are
open during any calendar month (this fee includes all out-of-pocket expenses),
and an annualized fee of $0.70 per shareholder account that is closed during any
calendar month. Both fees are billed by AFS monthly in arrears on a prorated
basis of 1/12 of the annualized fee for all such accounts.
For the period January 1, 1998 to September 4, 1998, GT Global Investor
Services, Inc., an affiliate of Chancellor LGT, was the transfer agent of the
Fund. For performing shareholder servicing, reporting, and general transfer
agent services, GT Services received an annual maintenance fee of $17.50 per
account, a new account fee of $4.00 per account, a per transaction fee of $1.75
for all transactions other than exchanges and a per exchange fee of $2.25. GT
Services was also reimbursed by the
11
<PAGE> 14
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived based on
the aggregate net assets of the funds which comprise the following investment
companies: AIM Growth Series, AIM Investment Funds, AIM Series Trust, G.T.
Global Variable Investment Series and G.T. Global Variable Investment Trust. The
fee is calculated at the rate of 0.03% to the first $5 billion of assets and
0.02% to the assets in excess of $5 billion. An amount is allocated to and paid
by each such fund based on its relative average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or
director of the Manager, AIM Distributors or AFS $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
At December 31, 1998, all of the shares of beneficial interest were owned
either by the Fund or Invesco (NY), Inc.
NOTE 3-PURCHASES AND SALES OF 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 $710,371,237 and $898,879,718, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment
securities $70,168,213
- ---------------------------------------------------------------
Aggregate unrealized (depreciation) of investment
securities (8,497,878)
- ---------------------------------------------------------------
Net unrealized appreciation of investment
securities $61,670,335
===============================================================
Cost of investments is the same for tax and
financial statement purposes.
</TABLE>
NOTE 4-CALL OPTIONS 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 11,068 $2,262,028
- -----------------------------------------------------------------
End of period 11,068 $2,262,028
=================================================================
</TABLE>
Open call option contracts written at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
NUMBER 1998 UNREALIZED
CONTRACT STRIKE OF PREMIUMS MARKET APPRECIATION
ISSUER MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
- ------ -------- ------ --------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Cablevision Systems
Corp. Jan 99 45 1230 $ 371,546 $ 691,875 $ (320,329)
- -------------------------------------------------------------------------------------------------
Outdoor Systems, Inc. Jan 99 25 7010 1,699,675 3,548,812 (1,849,137)
- -------------------------------------------------------------------------------------------------
U S Foodservice, Inc. Jan 99 50 2828 190,807 106,050 84,757
- -------------------------------------------------------------------------------------------------
$2,262,028 $4,346,737 $(2,084,709)
=================================================================================================
</TABLE>
NOTE 5-SHARE INFORMATION
Changes in the Fund's 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 23,952,734 $ 505,999,810 24,801,099 $ 522,081,212
- --------------------------------------------------------------------------------
Class B 5,833,056 120,542,669 9,218,434 190,231,954
- --------------------------------------------------------------------------------
Advisor Class 887,277 18,970,978 1,056,271 23,267,932
- --------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 448,265 7,998,160 1,170,749 23,490,213
- --------------------------------------------------------------------------------
Class B 471,450 8,052,203 1,240,395 24,063,873
- --------------------------------------------------------------------------------
Advisor Class 2,579 46,305 5,993 120,751
- --------------------------------------------------------------------------------
Reacquired:
Class A (27,068,413) (573,338,009) (30,338,852) (637,412,658)
- --------------------------------------------------------------------------------
Class B (9,774,765) (198,229,942) (14,376,532) (293,260,545)
- --------------------------------------------------------------------------------
Advisor Class (896,015) (18,946,814) (1,103,923) (24,248,785)
- --------------------------------------------------------------------------------
(6,143,832) $(128,904,640) (8,326,366) $(171,666,053)
================================================================================
</TABLE>
NOTE 6-EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the year ended December 31, 1998, the
expenses of the Fund were reduced by $46,733 under these arrangements.
12
<PAGE> 15
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
outstanding during each of the years in the five-year period ended December 31,
1998 and for a share of Advisor Class capital stock outstanding during each of
the years in three-year period ended December 31, 1998 and the period June 1,
1995 (date operations commenced) through December 31, 1995.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------
1998(a) 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (0.24)(b) (0.20) 0.03 0.24 0.04(b)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.81) 3.00 2.96 3.93 2.55
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations (1.05) 2.80 2.99 4.17 2.59
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- (0.21) (0.02)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains (0.99) (2.56) (1.29) (2.58) (2.05)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.99) (2.56) (1.29) (2.79) (2.07)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 18.97 $ 21.01 $ 20.77 $ 19.07 $ 17.69
============================================================ ======== ======== ======== ======== ========
Total Return(C) (4.71)% 14.05% 15.65% 23.23% 15.69%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $180,258 $255,674 $343,427 $396,291 $196,937
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets:
With expense reductions and/or reimbursement 1.56%(d) 1.37% 1.36% 1.46% 1.58%
============================================================ ======== ======== ======== ======== ========
Without expense reductions and/or reimbursement 1.57%(d) 1.48% 1.41% -- --
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets
With expense reductions and/or reimbursement (1.09)%(d) (0.90)% 0.12% 1.24% 0.17%
============================================================ ======== ======== ======== ======== ========
Without expense reductions and/or reimbursement (1.10)%(d) (1.01)% 0.07% -- --
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate(e) 168% 190% 253% 71% 102%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on May 29, 1998.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and is not annualized for periods less than
one year.
(d) Ratios are based on average net assets of $216,642,403.
(e) Portfolio turnover rates are calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
<TABLE>
<CAPTION>
Class B Advisor Class
--------------------------------------------------- ----------------------------------
1998(a) 1997 1996 1995 1994(a) 1998(a) 1997 1996 1995
-------- -------- -------- -------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09 $21.10 $20.76 $19.05 $20.61
- -------------------------------------- -------- -------- -------- -------- ------- ------ ------ ------ ------
Income from investment operations:
Net investment income (0.38)(b) (0.34) (0.11) 0.10 (0.09) (0.17)(b) (0.15) 0.09 0.21
- -------------------------------------- -------- -------- -------- -------- ------- ------ ------ ------ ------
Net gains (losses) on securities
(both realized and unrealized) (0.78) 2.93 2.91 3.87 2.55 (0.86) 3.05 2.91 1.09
- -------------------------------------- -------- -------- -------- -------- ------- ------ ------ ------ ------
Total from investment operations (1.16) 2.59 2.80 3.97 2.46 (1.03) 2.90 3.00 1.30
- -------------------------------------- -------- -------- -------- -------- ------- ------ ------ ------ ------
Less distributions:
Dividends from net investment income -- -- -- (0.12) -- -- -- -- (0.28)
- -------------------------------------- -------- -------- -------- -------- ------- ------ ------ ------ ------
Distributions from net realized
gains (0.99) (2.56) (1.29) (2.58) (2.05) (0.99) (2.56) (1.29) (2.58)
- -------------------------------------- -------- -------- -------- -------- ------- ------ ------ ------ ------
Total distributions (0.99) (2.56) (1.29) (2.70) (2.05) (0.99) (2.56) (1.29) (2.86)
- -------------------------------------- -------- -------- -------- -------- ------- ------ ------ ------ ------
Net asset value, end of period $ 18.16 $ 20.31 $ 20.28 $ 18.77 $ 17.50 $19.08 $21.10 $20.76 $19.05
====================================== ======== ======== ======== ======== ======= ====== ====== ====== ======
Total Return(c) (5.41)% 13.35% 14.82% 22.42% 15.06% (4.59)% 14.54% 15.72% 6.01%
====================================== ======== ======== ======== ======== ======= ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $165,447 $255,468 $334,590 $348,435 $80,060 $913 $1,140 $1,986 $1,394
====================================== ======== ======== ======== ======== ======= ====== ====== ====== ======
Ratio of expenses to average net
assets:
With expense reductions and/or
reimbursement 2.21%(d) 2.02% 2.01% 2.11% 2.23% 1.21%(d) 1.02% 1.01% 1.11%(e)
====================================== ======== ======== ======== ======== ======= ====== ====== ====== ======
Without expense reductions and/or
reimbursement 2.22%(d) 2.13% 2.06% -- -- 1.22%(d) 1.13% 1.06% --
====================================== ======== ======== ======== ======== ======= ====== ====== ====== ======
Ratio of net investment income to
average net assets
With expense reductions and/or
reimbursement (1.74)%(d) (1.55)% (0.53)% 0.59% (0.48)% (0.74)%(d) 0.55% 0.47% 1.59%(e)
====================================== ======== ======== ======== ======== ======= ====== ====== ====== ======
Without expense reductions and/or
reimbursement (1.75)%(d) (1.66)% (0.58)% -- -- (0.75)%(d)(0.66)% 0.42% --
====================================== ======== ======== ======== ======== ======= ====== ====== ====== ======
Portfolio turnover rate(f) 168% 190% 253% 71% 102% 168% 190% 253% 71%
====================================== ======== ======== ======== ======== ======= ====== ====== ====== ======
</TABLE>
(a) The Fund changed investment advisors on May 29, 1998.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) Ratios are based on average net assets of $214,825,194 and $1,120,683 for
Class B and Advisor Class, respectively.
(e) Annualized.
(f) Portfolio turnover rates are calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
13
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Mid Cap Equity Fund (formerly
AIM Mid Cap Growth Fund) and
Board of Trustees of AIM Growth Series:
In our opinion, the accompanying statement of assets and
liabilities, including the portfolio of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Mid Cap Equity Fund at December 31, 1998, and the
results of its operations, the changes in its net assets
and the financial highlights for the periods indicated,
in conformity with generally accepted accounting
principles. These financial statements and financial
highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with generally accepted auditing standards
which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 19, 1999
14
<PAGE> 17
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of G.T. Global Growth Series, now known as AIM
Growth Series (the "Trust"), was held on May 20, 1998. The meeting was held for
the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each Series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve replacement Rule 12b-1 plans of distribution with respect to
Class A and B shares of each Fund.
(4) To approve changes to the fundamental investment restrictions of each Fund.
(5) To approve an agreement and plan of conversion and termination for the
Trust.
(6) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
-------------- ---------- --------- -----------
<S> <C> <C> <C> <C>
(1) C. Derek Anderson........................................... 71,221,289 N/A 5,894,682
Frank S. Bayley............................................. 71,241,614 N/A 5,874,357
William J. Guilfoyle........................................ 71,251,357 N/A 5,864,614
Arthur C. Patterson......................................... 71,255,705 N/A 5,860,266
Ruth H. Quigley............................................. 71,264,495 N/A 5,851,476
(2)(a) Approval of investment management and administration
contract.................................................... 8,717,532 294,932 3,086,469*
(2)(b) Approval of sub-advisory and sub-administration contract.... 8,618,117 329,205 3,151,611*
(3) Approval of replacement Rule 12b-1 plans of distribution
CLASS A..................................................... 5,442,250 200,960 496,964
CLASS B..................................................... 5,217,695 150,220 541,029
(4)(a) Modification of Fundamental Restriction on Portfolio
Diversification............................................. 8,584,344 340,700 3,173,889*
(4)(b) Modification of Fundamental Restriction on Concentration.... 8,584,344 340,700 3,173,889*
(4)(c) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money.............................. 8,582,480 342,564 3,173,889*
(4)(d) Modification of Fundamental Restriction on Making Loans..... 8,583,864 341,180 3,173,889*
(4)(e) Modification of Fundamental Restriction on Underwriting
Securities.................................................. 8,584,344 340,700 3,173,889*
(4)(f) Modification of Fundamental Restriction on Real Estate
Investments................................................. 8,583,573 341,471 3,173,889*
(4)(g) Modification of Fundamental Restriction on Investing in
Commodities................................................. 8,582,480 342,564 3,173,889*
(4)(h) Elimination of Fundamental Restriction on Margin
Transactions................................................ 8,579,024 346,020 3,173,889*
(4)(i) Elimination of Fundamental Restriction on Pledging Assets... 8,579,195 345,849 3,173,889*
(4)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs.................... 8,580,326 344,718 3,173,889*
(4)(k) Elimination of Fundamental Restriction on Investing for the
Purpose of Control.......................................... 8,579,543 345,501 3,173,889*
(4)(l) Elimination of Fundamental Restriction on Purchasing
Securities of Issuers in Which Officers and Board Members of
the Trust and Its Affiliates Own Securities................. 8,580,477 344,567 3,173,889*
(4)(m) Elimination of Fundamental Restriction on Joint
Participation in a Securities Trading Account............... 8,581,560 343,484 3,173,889*
(4)(n) Elimination of Fundamental Restriction on Selling Securities
Short....................................................... 8,579,976 345,068 3,173,889*
(4)(o) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund........................................................ 8,584,039 341,005 3,173,889*
(5) Approval of an agreement and plan of conversion and
termination with respect to the Trust....................... 54,496,135 2,507,411 20,112,425*
(6) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
Independent Public Accountants.............................. 71,858,619 1,177,277 4,080,070
</TABLE>
- ---------------
* Includes Broker Non-Votes
15
<PAGE> 18
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
C. Derek Anderson Robert H. Graham 11 Greenway Plaza
President, Plantagenet Capital Chairman and President Suite 100
Management, LLC (an investment Houston, TX 77046
partnership); Chief Executive Officer, Dana R. Sutton
Plantagenet Holdings, Ltd. Vice President & Assistant Treasurer INVESTMENT MANAGER
(an investment banking firm)
Samuel D. Sirko A I M Advisors, Inc.
Frank S. Bayley Vice President & Secretary 11 Greenway Plaza
Partner, law firm of Suite 100
Baker & McKenzie Kenneth W. Chancey Houston, TX 77046
Vice President & Principal
Robert H. Graham Accounting Officer TRANSFER AGENT
President and Chief Executive Officer,
A I M Management Group Inc. John J. Arthur A I M Fund Services, Inc.
Vice President P.O. Box 4739
Arthur C. Patterson Houston, TX 77210-4739
Managing Partner, Accel Partners Melville B. Cox
(a venture capital firm) Vice President CUSTODIAN
Ruth H. Quigley Gary T. Crum State Street Bank and Trust Company
Private Investor Vice President 225 Franklin Street
Boston, MA 02110
Carol F. Relihan
Vice President COUNSEL TO THE FUND
Nancy L. Martin Kirkpatrick & Lockhart LLP
Assistant Secretary 1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
Ofelia M. Mayo
Assistant Secretary COUNSEL TO THE TRUSTEES
Kathleen J. Pflueger Paul, Hastings, Janofsky & Walker LLP
Assistant Secretary Twenty Third Floor
555 South Flower Street
Pamela Ruddock Los Angeles, CA 90071
Assistant Treasurer
DISTRIBUTOR
Paul Wozniak
Assistant Treasurer A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Mid Cap Equity Fund paid ordinary dividends in the amount of $0.7671 per
share to shareholders during its tax year ended December 31, 1998. Of this
amount, 3.13% is eligible for the dividends received deduction for corporations.
The Fund also distributed long-term capital gains of $3,904,078 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 leadership
AIM Aggressive Growth Fund(1) AIM Money Market Fund in the mutual fund industry since 1976 and managed
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund approximately $109 billion in assets for more than
AIM Capital Development Fund 6.2 million shareholders, including individual
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS investors, corporate clients, and financial
AIM Mid Cap Equity Fund(2), (A) AIM Advisor International Value Fund institutions, as of December 31, 1998.
AIM Select Growth Fund(3) AIM Asian Growth Fund The AIM Family of Funds--Registered Trademark--
AIM Small Cap Growth Fund(2), (B) AIM Developing Markets Fund(2) is distributed nationwide, and AIM today is the
AIM Small Cap Opportunities Fund AIM Europe Growth Fund(2) 10th-largest mutual fund complex in the U.S. in
AIM Value Fund AIM European Development Fund assets under management, according to Strategic
AIM Weingarten Fund AIM International Equity Fund Insight, an independent mutual fund monitor.
AIM Japan Growth Fund(2)
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.
