AIM GROWTH SERIES, N-30D, 1999-03-08

AIM GROWTH SERIES
N-30D, 1999-03-08

Previous: AIM GROWTH SERIES, N-30D, 1999-03-08

Next: AIM GROWTH SERIES, N-30D, 1999-03-08

<PAGE>

ANNUAL REPORT / DECEMBER 31 1998

AIM NEW PACIFIC GROWTH FUND

ARTWORK

AIM LOGO

INVEST WITH DISCIPLINE-Registered Trademark-

<PAGE>

ARTWORK

MOUNTAIN AND PALM TREE LANDSCAPE BY SHERRI SILVERMAN, (BORN 1951, AMERICAN)

BEAUTIFUL AT FIRST GLANCE, SILVERMAN'S VIBRANT PAINTINGS OFFER EVEN GREATER
REWARDS TO THE CONTEMPLATIVE VIEWER. DRAWING THEIR POWER FROM THE SIMPLEST
SHAPES AND PUREST PIGMENTS, HER WORKS DISCARD REALISTIC REPRESENTATION IN
FAVOR OF INTENSE MOOD AND ATMOSPHERE. IN THE COVER PAINTING, SILVERMAN'S
TROPICAL COLORS MELT SEAMLESSLY TOGETHER INTO A DREAMLIKE VISION OF EXOTIC
LANDS.

AIM New Pacific Growth Fund is for shareholders who seek long-term growth of
capital. The Fund invests primarily in equity securities of companies located in
Pacific region countries other than Japan. Japan was eliminated from the Fund's
Primary Investment Area on January 21, 1994.

ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:

- - AIM New Pacific Growth Fund (formerly GT Global New Pacific 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.

- - 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 and Advisor Class shares will
differ from that of Class A shares due to differences in sales charge
structure and Class expenses.

- - 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.

- - 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.

- - International investing presents certain risks not associated with
investing solely in the United States. These include risks relating to
fluctuations in the value of the U.S. dollar relative to the values 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:

- - The Morgan Stanley Capital International (MSCI) Pacific ex-Japan Index is a
market-value-weighted average of the performance of selected securities
listed on five major Pacific Rim exchanges (Australia, Hong Kong, Malaysia,
New Zealand and Singapore).

- - The MSCI AC (All-Country) Pacific Free ex-Japan Index is a group of
unmanaged securities from all developed and emerging markets in the Pacific
Rim, excluding Japan, tracked by Morgan Stanley Capital International. A
"free" index includes only securities available to non-domestic investors.

- - 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 NEW PACIFIC GROWTH FUND

<PAGE>

ANNUAL REPORT / CHAIRMAN'S LETTER

Mr. Bauer's photo

DEAR FELLOW SHAREHOLDER:

During the fiscal year covered by this report, a variety of events converged to
produce harsh market conditions in several sectors and geographic areas: fallout
from currency devaluations in Southeast Asia, the seemingly intractable downturn
in Japan, Russia's default on much of its foreign debt, and later the gathering
crisis in Brazil, which devalued its currency shortly after the fiscal year
closed.

We understand how unnerving it is to have an investment lose value. While the
difficult market environment helps explain much of your Fund's poor performance,
it is not the whole story. When we added the former GT Global funds to our fund
family, we understood that several of them needed to bolster their performance
substantially. We also recognized their significant long-term potential, and now
that we are the funds' investment advisor, we will strive to see that potential
realized. Where necessary, we have begun to make the changes in management and
investment strategy we believe will enhance your Fund's performance. We intend
to continue managing your Fund with the careful oversight and disciplined
investment strategy used in all AIM funds, and we hope you will share our
patience as investors while we work to improve your Fund's performance.

On the pages that follow, your Fund's management team offers more detailed
discussion of how markets behaved, how they managed the portfolio during the
fiscal year, and what they foresee for your Fund and the markets where it
invests. We hope you find their discussion informative.

WE INTEND TO CONTINUE MANAGING YOUR FUND WITH THE CAREFUL OVERSIGHT AND
DISCIPLINED INVESTMENT STRATEGY USED IN ALL AIM FUNDS.

INVESTING FUNDAMENTALS UNCHANGED

The abrupt reversals of market sentiment during this reporting period reinforce
our conviction that markets are unpredictable in the short term. Since even the
best money managers cannot know exactly when to enter and exit a market, we
remain convinced that the wisest strategy is to stay fully invested despite
volatility and short-term disappointment.

However difficult many markets have been this fiscal year, the fundamental
principles of investing are unchanged: broad portfolio diversification, in which
this Fund is part of a complete investment strategy designed with your personal
financial goals in mind; realistic expectations, recognizing that the potential
for downturns is always present; and as always, long-term thinking.

Your financial consultant is your best resource for helping you construct a
diversified portfolio, weather turbulent markets, and keep your eye on your
long-term goals.

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 on 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,

Mr. Bauer's signature

Charles T. Bauer
Chairman, A I M Advisors, Inc.

AIM NEW PACIFIC GROWTH FUND

<PAGE>

ANNUAL REPORT / MANAGERS' OVERVIEW

FUND TAKES DEFENSIVE STANCE IN ASIA'S VOLATILE MARKETS

THE ASIAN CRISIS CONTINUED TO DEEPEN IN 1998. HOW DID THIS AFFECT THE FUND'S
PERFORMANCE?

Most Asian economies continued to deteriorate in 1998. A financial crisis in
Russia followed by one in Latin America further destabilized an already volatile
situation in Asia's markets. However, Asia started to rally in October, offering
a needed jolt to investor confidence. But overall the year was a difficult one,
and the Fund ended the reporting period with disappointing results.

Total return for the fiscal year ended December 31, 1998, was -19.09% for
Class A shares, -19.55% for Class B shares, and -18.51% for Advisor Class
shares. In comparison, over the same period the MSCI Pacific ex-Japan Index
returned -6.64% and the MSCI AC Pacific Free ex-Japan returned -4.86%.

The Asia Pacific Region

Map of Asia, Countries:
Bangladesh
China
Pakistan
India
South Korea
Hong Kong
Taiwan
Vietman
Philippines
Malaysia
Sri Lanka
Thailand
Singapore
Indonesia
Australia
New Zealand

WHICH FACTORS AFFECTED ASIAN MARKETS MOST?

Throughout 1998, Asia's markets were characterized by sharp movements in stock
prices. Slight gains at the beginning of the year were overshadowed by a deep
downturn in the summer. The decline was essentially a flight-to-quality
phenomenon spurred by worldwide currency troubles and Russia's foreign debt
default.

Relief came in the fall, when the U.S. Federal Reserve Board (the Fed) made a
series of rate cuts to help calm investors' nerves. The Fed's moves, a stronger
yen and falling interest rates across Asia gave investors courage to return to
the region. The magnitude of response was actually much stronger than expected.
Asia's markets experienced a dramatic upward reversal, led by interest-sensitive
sectors, with most of the gain concentrated in the first half of October.

HOW WAS THE FUND AFFECTED BY THIS REVERSAL?

While the October upswing was good news for the region, it was bad news for the
Fund. We had taken a defensive position for the first three quarters of 1998,
avoiding the crisis countries and interest-rate sensitive stocks. The strategy
served the Fund reasonably well through September. Unfortunately, our cautious
positioning caused us to miss out on much of the surprise rally in October.

THE FED'S MOVES, A STRONGER YEN AND FALLING INTEREST RATES ACROSS ASIA GAVE
INVESTORS COURAGE TO RETURN TO THE REGION.

WHAT CHANGES DID YOU MAKE IN THE FOURTH QUARTER?

During the fourth quarter, we increased the portfolio's exposure to such
interest-sensitive sectors as land development and finance. We concentrated
on opportunities in Hong Kong, Singapore, and Australia, where the banking
systems are more intact than in other parts of the region. We reduced our
cash holdings and focused on interest-rate sensitive stocks to take advantage
of the current lower interest-rate environment, but we also maintained our
exposure to stocks that are more defensive, such as utilities and
telecommunications companies.

These moves, as well as our macroeconomic analysis, led us to increase our
positions in Hong Kong, Korea and Taiwan. Of all the countries in the region,
Korea has made some of the most impressive steps toward reform. The government
has been very strict about rehabilitating its banks, in particular. We believe
Korea will continue to encourage further corporate and financial reform in 1999.
An example of a strong Korean holding in the portfolio at the end of the
reporting period was Samsung Fire and Marine Insurance, a company with growing
global ties and a strong domestic market.

Another significant change we made in the portfolio was to reduce our holdings
in India, where political uncertainty and weak government finances have hurt
market performance. We are also maintaining very limited positions in Malaysia
and Indonesia.

COULD YOU DISCUSS A FEW OF YOUR BEST HOLDINGS?

One of our favorites was Telstra, an Australian company that offers a broad
range of telecommunications options and information services mainly to the

SEE IMPORTANT FUND AND INDEX DISCLOSURES INSIDE FRONT COVER.

AIM NEW PACIFIC GROWTH FUND
2

<PAGE>

ANNUAL REPORT / MANAGERS' OVERVIEW

PORTFOLIO COMPOSITION
As of 12/31/98, based on total net assets

TOP 10 EQUITY HOLDINGS
<S> <C> <C>
1. Hutchison Whampoa (Hong Kong) 6.2%
2. Cheung Kong (Holdings) Ltd. (Hong Kong) 6.0
3. National Australia Bank Ltd. (Australia) 4.9
4. Telstra Corporation Ltd. (Australia) 4.3
5. Samsung Fire and Marine Insurance (Korea) 3.4
6. Brambles Industries Ltd. (Australia) 3.4
7. Australia & New Zealand Banking Group Ltd. (Australia) 3.3
8. AMP Ltd. (Australia) 3.2
9. CLP Holdings Ltd. (Hong Kong) 3.0
10. Singapore Press Holdings Ltd. (Singapore) 2.9

</TABLE>

TOP 5 SECTORS
<S><C> <C>
1. Finance 33.5%
2. Services 23.0
3. Consumer Durables 11.1
4. Multi-Industry Miscellaneous 9.6
5. Energy 8.7

</TABLE>

TOP 5 COUNTRIES
<S><C> <C>
1. Australia 35.9%
2. Hong Kong 27.0
3. Korea 13.9
4. Singapore 11.3
5. Taiwan 7.8

</TABLE>

Please keep in mind that the Fund's portfolio is subject to change. There is no
assurance the Fund will continue to hold any particular security.

Australian market, but also to other markets in the Asia-Pacific region. Telstra
has distinguished itself as a leader and innovator in mobile phone technology.
For instance, it was one of the first commercial outfits in the world to offer
Internet access via mobile phone. The company boasted double-digit earnings
growth rates in 1998 and has improved its margins through more efficient
management and production practices.

Cheung Kong Holdings of Hong Kong was another strong point in the portfolio.
The company is a diversified conglomerate with interests in a variety of
businesses, from infrastructure to hotels to retailing. Part of its success is
due to its position as Hong Kong's leading property developer. The company's
financial strength has allowed it to continue purchasing land at the current low
point in the industry's cycle.

WHAT IS YOUR OUTLOOK FOR THE MARKETS AND THE FUND?

Lower inflation and falling interest rates across Asia helped the region make
some important strides toward recovery in 1998. These improvements boosted
investor confidence late in the year and should support equity markets in the
near term. However, they may not be sufficient for a real economic recovery.

After years of excessive investing and overbuilding, Asia now is burdened with
substantial over-capacity. Consequently, it may be difficult for the region to
attract capital for new facility investment. The need for capital expenditure
has declined significantly, and the effect is likely to be anemic economic
growth in the near term. And despite the global easing in interest rates, the
threat of weak external demand remains. Furthermore, the negative effects of
Japan's uncertain outlook and Latin America's weak markets may weigh against any
positive recovery efforts in the Asia-Pacific region.

But the low point could also be the beginning of a needed change, and we may
see growth begin to pick up again later in 1999. We believe that in some parts
of Asia the scarcity of capital is encouraging more productive resource
allocation and more competitive business practices. The economic crisis, though
painful, may have helped correct institutional weaknesses in many Asian
economies and lay a stronger foundation for future growth.

We're hopeful about the long-term outlook in the region. Asia is still the
lowest-cost, most efficient manufacturing region in the world, boasting brand
new production infrastructure, high workforce productivity and advanced
production techniques. For the aggressive, long-term investor, the Fund offers
exposure to the region's potential.

SEE IMPORTANT FUND AND INDEX DISCLOSURES INSIDE FRONT COVER.

AIM NEW PACIFIC GROWTH FUND
3

<PAGE>

ANNUAL REPORT / PERFORMANCE HISTORY

YOUR FUND'S LONG-TERM PERFORMANCE

RESULTS OF A $10,000 INVESTMENT
AIM NEW PACIFIC GROWTH FUND VS. BENCHMARK INDEX

12/31/88-12/31/98

HYPO Chart AIM New Pacific MSCI AC MSCI Pacific
Growth Fund, Pacific Free ex-Japan Index
Class A Shares ex-Japan
Index
<S> <C> <C> <C>
12/31/88 $9,450 $10,000 $10,000
12/31/89 $13,996 $12,143 $11,597
12/31/90 $12,462 $10,703 $10,418
12/31/91 $14,090 $14,170 $14,235
12/31/92 $12,969 $15,570 $15,234
12/31/93 $20,829 $28,796 $27,488
12/31/94 $16,719 $25,170 $23,641
12/31/95 $17,964 $27,687 $26,804
12/31/96 $21,565 $31,189 $32,426
12/31/97 $12,023 $19,649 $22,454
12/31/98 $9,728 $19,242 $19,990

Past performance is no guarantee of comparable future results.

</TABLE>

AVERAGE ANNUAL TOTAL RETURNS

As of 12/31/98, including sales charges

CLASS A SHARES
<S> <C>
Inception (1/19/77) 8.15%
10 years -0.27
5 years -15.09
1 year -23.57*

CLASS B SHARES

Inception (4/1/93) -7.09%
5 years -14.97
1 year -23.56**

ADVISOR CLASS SHARES

Inception (6/1/95) -15.60%
3 years -18.19
1 year -18.51

*-19.09%, excluding sales charges
**-19.55%, excluding CDSC

</TABLE>

Source: Towers Data Systems HYPO-Registered Trademark-.

Your Fund's total return includes sales charges, expenses, and management
fees. The performance of the Fund's Class B and Advisor Class 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 above compares your Fund's Class A shares to benchmark indexes. The
purpose of this comparison is to give you a general idea of your Fund's relative
performance.

It is important to understand the differences between your Fund and an
index. An index measures performance of a hypothetical portfolio. A market
index such as the MSCI Pacific ex-Japan Index or the MSCI AC Pacific Free
ex-Japan Index is not managed and incurs no sales charges, expenses, or fees.
You cannot invest in an index. However, if you could buy all the securities
that make up a market index, you would incur expenses that would affect your
investment's return.

Since the last reporting period, AIM New Pacific Growth Fund has elected to
use the MSCI All Country (AC) Pacific Free ex-Japan Index. This index more
closely reflects the performance of the securities in which the Fund invests.
The Fund will no longer be measured against the MSCI Pacific ex-Japan Fund,
the index published in previous reports to shareholders.

Because this is the first reporting period since we have adopted the new
index, SEC guidelines require that we compare the Fund's performance to both the
old and the new index.

AIM NEW PACIFIC GROWTH FUND
4

<PAGE>
ANNUAL REPORT / FOR CONSIDERATION

OF FINANCE AND THE FED

A few words from Federal Reserve Board Chairman Alan Greenspan can send the
markets into a frenzy or calm them down.

Why? In 1998, a year of record volatility in stock and bond markets, when
investors and analysts alike seemed genuinely puzzled as to what to do next, the
Federal Reserve Board became a constant in the midst of the unsettling
environment.

WHAT IS THE FED?

The Federal Reserve Board, or "The Fed," consists of seven presidential
appointees including Chairman Greenspan. In addition to overseeing the country's
Federal Reserve System--the central bank of the United States--members of the
Fed serve on the Federal Open Market Committee (FOMC), which decides monetary
policy. Other FOMC members include the chairman of the New York Federal Reserve
Bank and four other FOMC seats that are rotated among the remaining 11 Federal
Reserve Banks.

The FOMC meets eight times a year, and these meetings are always followed with
a great deal of interest because it is here that decisions on monetary policy
are made. Often these decisions involve changes in interest rates.

WHY ARE ADJUSTMENTS TO INTEREST RATES SO CLOSELY FOLLOWED?

Interest rate changes by the Fed are important for several reasons: (1) they
frequently reflect economic trends; (2) they immediately affect bond markets;
(3) they usually affect the stock market because when rates are high, people
tend to be less apt to take on the greater risks of stocks; and (4) they
often have a trickle-down effect.

For example, an interest rate hike was considered during the first half of
1998 when the U.S. economy seemed in danger of overheating and sparking
inflation. A rate hike would have helped slow things down by making borrowing
more expensive. Instead, myriad financial difficulties abroad affected
markets and slowed the U.S. economy enough to persuade the Fed to lower
short-term interest rates. Three rate cuts between late September and
mid-November spurred rallies in the stock market as a whole.

Consumers feel the effect of interest rate adjustments as they trickle down
through the banking system. Rate cuts by the Fed often prompt rate reductions
on home mortgages, car loans, and variable-rate credit cards. Conversely,
rate hikes make all forms of loans more expensive.

Although the Fed does not directly control the financial markets, its
influence over short-term interest rates makes it a potent force.

WHAT ELSE DOES THE FED DO?

The Fed is an integral part of the Federal Reserve System (FRS), created by
Congress in 1913. The FRS includes 12 regional Federal Reserve Banks in New
York, Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis,
Philadelphia, Richmond, St. Louis, and San Francisco. A Federal Reserve Bank

- - clears checks,
- - lends money to banks needing emergency reserves,
- - issues currency, and
- - holds reserve deposits of member banks.

A bank must hold a percentage of its loans as liquid reserves, meaning readily
available. The Fed decides what this percentage will be and can lower it to
inject more money into the economy or raise it to tighten credit.

While these other functions of the Federal Reserve System do not generate
as many headlines as its interest rate moves, they are crucial to the Fed's
purpose of keeping the nation's banking system safe, flexible and stable.

<TABLE>
<CAPTION>
FED RATE CUTS AND THE DOW

WEEKLY CLOSES, DOW JONES INDUSTRIAL AVERAGE*
7/3/98-12/31/98

<S> <C>
7/10/98 9105.74
7/17/98 9337.97 Dow reaches new high 9,337.97
7/24/98 8937.36
7/31/98 8883.29
8/7/98 8598.02
8/14/98 8425.00
8/21/98 8533.66
8/28/98 8051.68 8/28/98 Dow's weekly decline (-481.97)
9/4/98 7640.25
9/11/98 7795.50
9/18/98 7895.66
9/25/98 8028.77 9/29/98 1st rate cut
10/2/98 7784.69
10/9/98 7899.52
10/16/98 8416.76 10/15/98 2nd rate cut
10/23/98 8452.29
10/30/98 8592.10
11/6/98 8975.46
11/13/98 8919.59
11/20/98 9159.55 11/17/98 3rd rate cut
11/27/98 9333.08
12/4/98 9016.14
12/11/98 8821.76
12/18/98 8903.63
12/24/98 9217.99
12/31/98 9181.43

This graph shows the weekly closing levels for the Dow from July 3 through
December 31, 1998. While the Fed does not control the Dow, which is affected
by innumerable factors, its influence is clearly reflected in the index's
behavior.

* The Dow Jones Industrial Average (the Dow) is a price-weighted
average of 30 actively traded primarily industrial stocks.

</TABLE>

AIM NEW PACIFIC GROWTH FUND
5
<PAGE>
PORTFOLIO OF INVESTMENTS

December 31, 1998

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (30.2%)
National Australia Bank Ltd. .............................. AUSL 371,750 $ 5,599,513 4.9
BANKS-MONEY CENTER
Samsung Fire & Marine Insurance ........................... KOR 10,500 3,937,500 3.4
INSURANCE - MULTI-LINE
Australia & New Zealand Banking Group Ltd. ................ AUSL 574,750 3,758,500 3.3
BANKS-REGIONAL
AMP Ltd.-/- ............................................... AUSL 285,150 3,609,801 3.2
INSURANCE-LIFE
HSBC Holdings PLC ......................................... HK 115,021 2,865,466 2.5
BANKS-MONEY CENTER
Lend Lease Corp., Ltd. .................................... AUSL 210,000 2,828,827 2.5
REAL ESTATE
Overseas-Chinese Banking Corp., Ltd. - Foreign ............ SING 400,000 2,715,975 2.4
BANKS-REGIONAL
Development Bank of Singapore - Foreign ................... SING 300,000 2,709,912 2.4
BANKS-MONEY CENTER
Cathay Life Insurance Co., Ltd. ........................... TWN 700,000 2,262,978 2.0
INSURANCE-LIFE
Hang Seng Bank ............................................ HK 220,000 1,966,542 1.7
BANKS-MONEY CENTER
DBS Land Ltd. ............................................. SING 800,000 1,178,539 1.0
REAL ESTATE
First Commercial Bank ..................................... TWN 700,000 979,173 0.9
BANKS-MONEY CENTER
------------
34,412,726
------------
Services (23.0%)
Telstra Corporation Ltd.-/- ............................... AUSL 1,060,800 4,955,898 4.3
TELEPHONE - REGIONAL/LOCAL
Brambles Industries Ltd. .................................. AUSL 158,050 3,846,768 3.4
BUSINESS & PUBLIC SERVICES
Singapore Press Holdings Ltd. ............................. SING 310,816 3,297,533 2.9
BROADCASTING & PUBLISHING
News Corp., Ltd. Preferred ................................ AUSL 535,350 3,255,003 2.8
BROADCASTING & PUBLISHING
Hong Kong Telecommunications Ltd. ......................... HK 1,300,200 2,274,104 2.0
TELEPHONE NETWORKS
TABCORP Holdings Ltd. ..................................... AUSL 358,600 2,195,708 1.9
LEISURE & TOURISM
Telecom Corporation of New Zealand Ltd. ................... NZ 431,200 1,870,481 1.6
TELEPHONE NETWORKS
Philippine Long Distance Telephone Co. .................... PHIL 60,290 1,555,871 1.4
TELEPHONE - LONG DISTANCE
Telekom Malaysia Bhd.{F} .................................. MAL 367,750 806,469 0.7
TELEPHONE NETWORKS
Woolworths Ltd. ........................................... AUSL 234,550 797,925 0.7
RETAILERS-OTHER
Cable & Wireless Optus Ltd.-/- ............................ AUSL 330,500 694,113 0.6
WIRELESS COMMUNICATIONS
</TABLE>

The accompanying notes are an integral part of the financial statements.

6
<PAGE>
PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Malaysia International Shipping Bhd. - Foreign{F} ......... MAL 458,000 $ 502,193 0.4
TRANSPORTATION - SHIPPING
Berjaya Sports Toto Bhd.{F} ............................... MAL 300,000 311,842 0.3
LEISURE & TOURISM
------------
26,363,908
------------
Consumer Durables (11.1%)
Cheung Kong (Holdings) Ltd. ............................... HK 950,000 6,836,429 6.0
HOUSING
Samsung Electronics ....................................... KOR 32,000 2,152,000 1.9
CONSUMER ELECTRONICS
City Developments Ltd. .................................... SING 300,000 1,300,394 1.1
HOUSING
New World Development Co., Ltd. ........................... HK 500,000 1,258,535 1.1
HOUSING
Sun Hung Kai Properties Ltd. .............................. HK 150,000 1,093,958 1.0
HOUSING
------------
12,641,316
------------
Multi-Industry/Miscellaneous (9.6%)
Hutchison Whampoa ......................................... HK 1,000,000 7,067,161 6.2
MULTI-INDUSTRY
Shanghai Industrial Holdings Ltd. ......................... HK 800,000 1,616,089 1.4
MULTI-INDUSTRY
China Development Corp. ................................... TWN 744,500 1,365,418 1.2
CONGLOMERATE
PT Telekomunikasi Indonesia ............................... INDO 2,500,000 865,385 0.8
MULTI-INDUSTRY
------------
10,914,053
------------
Energy (8.7%)
CLP Holdings Ltd. ......................................... HK 700,000 3,487,757 3.0
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" ................................... PHIL 430,000 1,387,097 1.2
ELECTRICAL & GAS UTILITIES
Hong Kong Electric Holdings Ltd. .......................... HK 400,000 1,213,357 1.1
ELECTRICAL & GAS UTILITIES
Electricity Generating Public Co., Ltd. - Foreign-/- ...... THAI 400,900 1,090,847 0.9
ELECTRICAL & GAS UTILITIES
PTT Exploration and Production Public Co., Ltd. -
Foreign-/- ............................................... THAI 140,600 994,298 0.9
OIL
Santos Ltd. ............................................... AUSL 327,200 877,509 0.8
OIL
Korea Electric Power Corp. ................................ KOR 35,000 869,167 0.8
ELECTRICAL & GAS UTILITIES
------------
9,920,032
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

7
<PAGE>
PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (5.7%)
LG Information & Communication ............................ KOR 85,562 $ 2,303,044 2.0
TELECOM TECHNOLOGY
Compeq Manufacturing Co., Ltd.-/- ......................... TWN 207,200 1,359,005 1.2
COMPUTERS & PERIPHERALS
Taiwan Semiconductor Manufacturing Co.-/- ................. TWN 550,000 1,213,864 1.1
SEMICONDUCTORS
Asustek Computer, Inc.-/- ................................. TWN 90,000 842,089 0.7
COMPUTERS & PERIPHERALS
Compal Electronics, Inc.-/- ............................... TWN 250,000 815,978 0.7
COMPUTERS & PERIPHERALS
------------
6,533,980
------------
Materials/Basic Industry (5.2%)
Broken Hill Proprietary Co., Ltd. ......................... AUSL 230,000 1,692,624 1.5
MISC. MATERIALS & COMMODITIES
Rio Tinto Ltd. ............................................ AUSL 116,000 1,374,724 1.2
MISC. MATERIALS & COMMODITIES
Western Mining Corporation Holdings Ltd. .................. AUSL 366,300 1,103,485 1.0
METALS - NON-FERROUS
North Ltd. ................................................ AUSL 661,000 1,076,583 0.9
METALS - STEEL
Hansol Paper Co. .......................................... KOR 57,000 650,750 0.6
PAPER/PACKAGING
------------
5,898,166
------------
Capital Goods (4.4%)
Samsung Display Devices Co. ............................... KOR 45,000 2,223,750 1.9
ELECTRICAL PLANT/EQUIPMENT
Singapore Technologies Engineering Ltd. ................... SING 1,800,000 1,680,509 1.5
AEROSPACE/DEFENSE
Cheung Kong Infrastructure Holdings ....................... HK 500,000 1,116,547 1.0
CONSTRUCTION
------------
5,020,806
------------
Consumer Non-Durables (2.9%)
Foster's Brewing Group Ltd. ............................... AUSL 1,209,371 3,273,001 2.9
BEVERAGES - ALCOHOLIC
------------ -----

TOTAL EQUITY INVESTMENTS (cost $112,323,801) ................ 114,977,988 100.8
------------ -----
<CAPTION>

NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Merrill Lynch - Kospi 300 Call Warrants, due 3/11/99
Performance linked to equity securities. Redemption amount
100% of the final closing price of the Korean Kospi 300
Index converted to the prevailing foreign exchange rate.
(cost $1,560,001){\/} .................................... KOR 626,456 3,323,850 2.9
------------ -----
INVESTMENT MANAGEMENT
<CAPTION>
NO. OF VALUE % OF NET
RIGHTS COUNTRY RIGHTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Samsung Fire & Marine Insurance Rights, expire 1/13/99 .... KOR 2,137 $ 411,729 0.4
INSURANCE - MULTI-LINE
</TABLE>

The accompanying notes are an integral part of the financial statements.

8
<PAGE>
PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NO. OF VALUE % OF NET
RIGHTS COUNTRY RIGHTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Compal Electronics, Inc. Rights, expire 1/21/99 ........... TWN 250,000 389 --
COMPUTERS & PERIPHERALS
------------ -----

TOTAL RIGHTS (cost $0) ...................................... 412,118 0.4
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1998, with State Street Bank & Trust
Co., due January 4, 1999, for an effective yield of 4.50%,
collateralized by $2,730,000 U.S. Treasury Notes, 6.25%
due 4/30/01 (market value of collateral is $2,852,850,
including accrued interest). (cost $2,796,000) ........... 2,796,000 2.4
------------ -----

TOTAL INVESTMENTS (cost $116,679,802) * .................... 121,509,956 106.5
Other Assets and Liabilities ................................ (7,446,371) (6.5)
------------ -----

NET ASSETS .................................................. $114,063,585 100.0
------------ -----
------------ -----
</TABLE>

- --------------

-/- Non-income producing security.
{\/} U.S. currency denominated.
{F} Security considered illiquid due to currency and capital controls
mandated by the Malaysian government.
* For Federal income tax purposes, cost is $117,549,663 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 12,087,878
Unrealized depreciation: (8,127,585)
-------------
Net unrealized appreciation: $ 3,960,293
-------------
-------------
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

The Fund's Portfolio of Investments at December 31, 1998, was concentrated in
the following countries:

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 35.9 35.9
Hong Kong (HK/HKD) ................... 27.0 27.0
Indonesia (INDO/IDR) ................. 0.8 0.8
Korea (KOR/KRW) ...................... 10.6 3.3 13.9
Malaysia (MAL/MYR) ................... 1.4 1.4
New Zealand (NZ/NZD) ................. 1.6 1.6
Philippines (PHIL/PHP) ............... 2.6 2.6
Singapore (SING/SGD) ................. 11.3 11.3
Taiwan (TWN/TWD) ..................... 7.8 7.8
Thailand (THAI/THB) .................. 1.8 1.8
United States (US/USD) ............... (4.1) (4.1)
------ --- --- -----
Total ............................... 100.8 3.3 (4.1) 100.0
------ --- --- -----
------ --- --- -----
</TABLE>

- --------------

{d} Percentages indicated are based on net assets of $114,063,585.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

FORWARD FOREIGN CURRENCY CONTRACT OUTSTANDING
DECEMBER 31, 1998

<TABLE>
<CAPTION>
MARKET VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACT TO SELL: DOLLARS) PRICE DATE DEPRECIATION
- ---------------------------------------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Singapore Dollars....................... 3,166,553 1.64240 2/12/99 $ (455)
------------ -------------
Total Contract to Sell (Receivable
amount $3,166,098)................... 3,166,553 (455)
------------ -------------
THE VALUE OF CONTRACT TO SELL AS
PERCENTAGE OF NET ASSETS IS 2.78%
Total Open Forward Foreign Currency
Contract............................. $ (455)
-------------
-------------
</TABLE>

- ----------------
See Note 1 of Notes to Financial Statements.

The accompanying notes are an integral part of the financial statements.

9
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1998

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $116,679,802) (Note 1)............................ $121,509,956
U.S. currency.................................................................... $ 556
Foreign currencies (cost $922,547)............................................... 934,105 934,661
---------
Receivable from A I M Advisors, Inc......................................................... 497,914
Receivable for Fund shares sold............................................................. 158,884
Dividends receivable........................................................................ 93,264
Receivable for securities sold.............................................................. 93,230
Miscellaneous and interest receivable....................................................... 6,795
-----------
Total assets.............................................................................. 123,294,704
-----------
Liabilities:
Payable for Fund shares repurchased......................................................... 8,033,717
Payable for investment management and administration fees (Note 2).......................... 902,957
Payable for service and distribution expenses (Note 2)...................................... 124,251
Payable for transfer agent fees (Note 2).................................................... 58,789
Payable for custodian fees.................................................................. 33,539
Payable for professional fees............................................................... 25,912
Payable for printing and postage expenses................................................... 14,419
Payable for registration and filing fees.................................................... 4,970
Payable for Trustees' fees and expenses (Note 2)............................................ 3,618
Payable for fund accounting fees (Note 2)................................................... 3,020
Payable for open forward foreign currency contract (Note 1)................................. 455
Other accrued expenses...................................................................... 25,472
-----------
Total liabilities......................................................................... 9,231,119
-----------
Net assets.................................................................................... $114,063,585
-----------
-----------
Class A:
Net asset value and redemption price per share ($80,824,489 DIVIDED BY 15,576,633 shares
outstanding)................................................................................. $ 5.19
-----------
-----------
Maximum offering price per share (100/94.50 of $5.19) *....................................... $ 5.49
-----------
-----------
Class B:+
Net asset value and offering price per share ($31,836,790 DIVIDED BY 6,318,490 shares
outstanding)................................................................................. $ 5.04
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,402,306 DIVIDED
BY 270,869 shares outstanding)............................................................... $ 5.18
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................... $196,845,058
Accumulated net investment loss............................................................. (22,386)
Accumulated net realized loss on investments and foreign currency transactions.............. (87,598,203)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies................................................................................. 8,962
Net unrealized appreciation of investments.................................................. 4,830,154
-----------
Total -- representing net assets applicable to capital shares outstanding..................... $114,063,585
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>

The accompanying notes are an integral part of the financial statements.

10
<PAGE>
STATEMENT OF OPERATIONS

Year ended December 31, 1998

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $122,214).............................. $ 3,912,604
Interest income........................................................................... 696,245
Securities lending income................................................................. 308,990
-----------
Total investment income................................................................. 4,917,839
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 1,447,661
Transfer agent fees (Note 2).............................................................. 884,800
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 370,817
Class B.................................................................... 410,888 781,705
-----------
Printing and postage expenses............................................................. 218,595
Custodian fees............................................................................ 126,500
Registration and filing fees.............................................................. 121,000
Professional fees......................................................................... 85,489
Fund accounting fees (Note 2)............................................................. 40,387
Trustees' fees and expenses (Note 2)...................................................... 13,140
Other expenses (Note 1)................................................................... 113,073
-----------
Total expenses before reductions........................................................ 3,832,350
-----------
Expenses reimbursed by A I M Advisors, Inc. (Note 2).................................. (497,914)
Expense reductions (Note 5)........................................................... (88,368)
-----------
Total net expenses...................................................................... 3,246,068
-----------
Net investment income....................................................................... 1,671,771
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................. (42,030,213)
Net realized gain on foreign currency transactions........................... 1,956,431
-----------
Net realized loss during the year....................................................... (40,073,782)
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... (1,281,283)
Net change in unrealized appreciation of investments......................... 24,192,659
-----------
Net unrealized appreciation during the year............................................. 22,911,376
-----------
Net realized and unrealized loss on investments and foreign currencies...................... (17,162,406)
-----------
Net decrease in net assets resulting from operations........................................ $(15,490,635)
-----------
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
------------- -------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income.................................................... $ 1,671,771 $ 864,307
Net realized loss on investments and foreign currency transactions....... (40,073,782) (48,653,550)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ (1,281,283) 1,286,651
Net change in unrealized appreciation (depreciation) of investments...... 24,192,659 (113,591,619)
------------- -------------
Net decrease in net assets resulting from operations................... (15,490,635) (160,094,211)
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (863,346) (427,042)
From net realized gain on investments.................................... -- (15,152,919)
In excess of net investment income....................................... (13,453) --
Class B:
Distributions to shareholders: (Note 1)
From net investment income............................................... (87,694) --
From net realized gain on investments.................................... -- (6,636,532)
In excess of net investment income....................................... (1,367) --
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (19,467) (13,447)
From net realized gain on investments.................................... -- (179,887)
In excess of net investment income....................................... (303) --
------------- -------------
Total distributions.................................................... (985,630) (22,409,827)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 1,358,431,721 1,697,761,633
Decrease from capital shares repurchased................................. (1,421,007,158) (1,836,766,167)
------------- -------------
Net decrease from capital share transactions........................... (62,575,437) (139,004,534)
------------- -------------
Total decrease in net assets............................................... (79,051,702) (321,508,572)
Net assets:
Beginning of year........................................................ 193,115,287 514,623,859
------------- -------------
End of year *............................................................ $ 114,063,585 $ 193,115,287
------------- -------------
------------- -------------
* Includes accumulated net investment loss................................ $ (22,386) $ --
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

12
<PAGE>
FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.

CLASS A
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1998 (d) 1997 (d) 1996 (d) 1995 (d) 1994
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86
----------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.06* 0.05 0.02 0.11 0.02
Net realized and unrealized gain
(loss) on investments................ (1.30) (5.84) 2.44 0.79 (3.15)
----------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (1.24) (5.79) 2.46 0.90 (3.13)
----------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.05) (0.03) -- (0.10) (0.01)
From net realized gain on
investments.......................... -- (0.82) (1.81) (0.43) (0.55)
In excess of net investment income.... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- (0.07)
----------- ---------- ---------- ---------- ----------
Total distributions................. (0.05) (0.85) (1.81) (0.53) (0.63)
----------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 5.19 $ 6.48 $ 13.12 $ 12.47 $ 12.10
----------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ----------

Total investment return (c)............. (19.09)% (44.24)% 20.04% 7.45% (19.73)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 80,824 $ 135,807 $ 361,244 $ 383,722 $ 404,680
Ratio of net investment income (loss) to
average net assets..................... 1.30% 0.41% 0.17% 0.91% 0.11%
Ratio of expenses to average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.00% 1.66% 1.86% 1.89% 1.81%
Without expense reductions and/or
reimbursement........................ 2.40% 1.93% 1.99% 1.94% N/A
Portfolio turnover rate++............... 96% 80% 93% 63% 87%
</TABLE>

- ----------------

(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Includes reimbursement of Fund operating expenses per share of $0.02.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.

The accompanying notes are an integral part of the financial statements.

13
<PAGE>
FINANCIAL HIGHLIGHTS (cont'd)

CLASS B
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 (d) 1997 (d) 1996 (d) 1995 (d) 1994
----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79
----------- ----------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03* (0.03) (0.06) 0.03 (0.06)
Net realized and unrealized gain
(loss) on investments................ (1.26) (5.67) 2.38 0.75 (3.15)
----------- ----------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (1.23) (5.70) 2.32 0.78 (3.21)
----------- ----------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.01) -- -- (0.02) --
From net realized gain on
investments.......................... -- (0.82) (1.81) (0.43) (0.55)
In excess of net investment income.... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- (0.07)
----------- ----------- ---------- ---------- ----------
Total distributions................. (0.01) (0.82) (1.81) (0.45) (0.62)
----------- ----------- ---------- ---------- ----------
Net asset value, end of period.......... $ 5.04 $ 6.28 $ 12.80 $ 12.29 $ 11.96
----------- ----------- ---------- ---------- ----------
----------- ----------- ---------- ---------- ----------

Total investment return (c)............. (19.55)% (44.65)% 19.28% 6.54% (20.30)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 31,837 $ 55,820 $ 151,805 $ 130,887 $ 120,171
Ratio of net investment income (loss) to
average net assets..................... 0.65% (0.24)% (0.48)% 0.26% (0.54)%
Ratio of expenses to average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.65% 2.31% 2.51% 2.54% 2.46%
Without expense reductions and/or
reimbursement........................ 3.05% 2.58% 2.64% 2.59% N/A
Portfolio turnover rate++............... 96% 80% 93% 63% 87%
</TABLE>

- ----------------

The accompanying notes are an integral part of the financial statements.

14
<PAGE>
FINANCIAL HIGHLIGHTS (cont'd)

<TABLE>
<CAPTION>
ADVISOR CLASS+
----------------------------------------------------
JUNE 1, 1995
YEAR ENDED DECEMBER 31, TO
------------------------------------- DECEMBER 31,
1998 (d) 1997 (d) 1996 (d) 1995 (d)
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.45 $ 13.16 $ 12.45 $ 12.89
----------- ----------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.08* 0.08 0.07 0.09
Net realized and unrealized gain
(loss) on investments................ (1.28) (5.89) 2.45 0.05
----------- ----------- ----------- -------------
Net increase (decrease) from
investment operations.............. (1.20) (5.81) 2.52 0.14
----------- ----------- ----------- -------------
Distributions to shareholders:
From net investment income............ (0.07) (0.08) -- (0.15)
From net realized gain on
investments.......................... -- (0.82) (1.81) (0.43)
In excess of net investment income.... -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- --
----------- ----------- ----------- -------------
Total distributions................. (0.07) (0.90) (1.81) (0.58)
----------- ----------- ----------- -------------
Net asset value, end of period.......... $ 5.18 $ 6.45 $ 13.16 $ 12.45
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------

Total investment return (c)............. (18.51)% (44.26)% 20.56% 1.07%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,402 $ 1,488 $ 1,575 $ 935
Ratio of net investment income (loss) to
average net assets..................... 1.65% 0.76% 0.52% 1.26%(a)
Ratio of expenses to average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.65% 1.31% 1.51% 1.54%(a)
Without expense reductions and/or
reimbursement........................ 2.05% 1.58% 1.64% 1.59%(a)
Portfolio turnover rate++............... 96% 80% 93% 63%(a)
</TABLE>

- ----------------

The accompanying notes are an integral part of the financial statements.

15
<PAGE>
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997

- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM New Pacific Growth Fund (the "Fund") formerly, GT Global New Pacific Growth
Fund, is a separate series of AIM Growth Series (the "Trust") formerly, GT
Global Growth Series. The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended ("1940 Act"), as
a diversified, open-end management investment company. The Trust has eight
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 in 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 last available bid
price. 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, adjusted for foreign exchange
translation and market fluctuation, if any.

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.

Portfolio securities which are primarily traded on foreign exchanges are
generally valued to the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.

(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.

The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from 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.

Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.

(C) 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.

(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract

16
<PAGE>
fluctuates with changes in currency exchange rates. The Forward Contract is
marked-to-market daily and the change in market value is recorded by the Fund as
an unrealized gain or loss. When the Forward Contract is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. The Fund could be
exposed to risk if a counter party is unable to meet the terms of a contract or
if the value of the currency changes unfavorably. The Fund may enter into
Forward Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.

(E) 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 listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. 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 and
bond markets and to fluctuations in currency values or 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.

(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on 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 and bond
markets and to fluctuations in currency values or interest rates.

(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. 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.

(H) PORTFOLIO SECURITIES LOANED
At December 31, 1998, stocks with an aggregate value of $5,772,440 were on loan
to brokers. The loans were secured by cash collateral of $6,131,138 received by
the Fund. For the year ended December 31, 1998, the Fund received securities
lending fees of $308,990.

For international securities, cash collateral is received by the Fund against
loaned securities in an amount at least equal to 105% of the market value of the
loaned securities at the inception of each loan. This collateral must be
maintained at not less than 103% of the market value of the loaned securities
during the period of the loan. For domestic securities, cash collateral is
received by the Fund against loaned securities in an 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 each loan. The

17
<PAGE>
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.

(I) 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, and unrealized appreciation of securities held, or for excise tax on
income and capital gains. The Fund currently has a capital loss carryforward of
$81,520,585, of which $3,081,427 expires in 2005 and $78,439,158 expires in
2006.

(J) 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.

(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. These risks of investing in foreign markets may
include foreign currency exchange rate fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.

(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may by 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. At the end of the year, restricted
securities, if any, (excluding 144A issues), are shown at the end of the Fund's
Portfolio of Investments.

(M) 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.

(N) 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 and Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first served 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 had no loans outstanding.

For the year ended December 31, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $6,800,494 with a weighted average interest rate of 6.15%. Interest expense
for the year ended December 31, 1998, was $94,155 and is included in "Other
expenses" on the Statement of Operations.

2. RELATED PARTIES
A I M Advisors, Inc. (the "Manager"), an indirect wholly-owned subsidiary of
AMVESCAP PLC, is the Fund's investment manager and administrator, and INVESCO
(NY), Inc., (formerly, Chancellor LGT Asset Management, Inc.) is the Fund's
investment sub-adviser and sub-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. Also, as of the close of business 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, as of the
close of business on September 4, 1998, A I M Fund Services, Inc. ("AFS"), an
affiliate of the Manager and AIM Distributors, replaced GT Global Investor
Services, Inc. ("GT Services") as the transfer agent of the Fund.

The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% of the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly.

AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor.

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
retained sales charges of $23,466. 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
and GT Global collected such CDSCs in the amount of $19,510 and $2,399 for the
year ended December 31, 1998, respectively. AIM Distributors also makes ongoing
shareholder servicing and trail commission payments to dealers whose clients
hold Class A shares.

18
<PAGE>
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 $90,711 and $124,324,
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 ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the 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 Class A Plan would
have been incurred within one year of such reimbursement.

For the period ended May 29, 1998, pursuant to the 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 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
continues 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 Funds. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares. Under 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. Of these amounts, the Fund may pay a
service fee of 0.25% of the average daily net assets of the Class A or Class B
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 Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. 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 AFS an annualized fee
of $24.85 per shareholder accounts that are open during any monthly period (this
fee includes all out-of-pocket expenses), and an annualized fee of $0.70 per
shareholder account that is closed during any monthly period. Both fees shall be
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 Services, an affiliate
of the Manager and AIM Distributors, 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 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 Investment Portfolios,
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 GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.

3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1998, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $129,155,679 and $167,008,919, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.

19
<PAGE>
4. CAPITAL SHARES
At December 31, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:

CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------- ------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold.................................. 220,054,764 $ 1,179,166,766 110,903,994 $ 1,213,154,082
Shares issued in connection with reinvestment
of distributions........................... 151,132 760,569 2,058,341 13,577,615
------------ --------------- ------------ ---------------
220,205,896 1,179,927,335 112,962,335 1,226,731,697
Shares repurchased........................... (225,597,779) (1,226,798,121) (119,529,679) (1,324,924,362)
------------ --------------- ------------ ---------------
Net decrease................................. (5,391,883) $ (46,870,786) (6,567,344) $ (98,192,665)
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------

<CAPTION>
CLASS B
- ---------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................. 29,096,684 $ 151,336,461 37,888,593 $ 423,842,967
Shares issued in connection with reinvestment
of distributions........................... 15,481 77,283 856,732 5,478,474
------------ --------------- ------------ ---------------
29,112,165 151,413,744 38,745,325 429,321,441
Shares repurchased........................... (31,689,112) (166,703,231) (41,705,872) (470,119,000)
------------ --------------- ------------ ---------------
Net decrease................................. (2,576,947) $ (15,289,487) (2,960,547) $ (40,797,559)
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS
- ---------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................. 5,119,563 $ 27,073,240 4,493,439 $ 41,526,678
Shares issued in connection with reinvestment
of distributions........................... 3,439 17,402 25,872 181,817
------------ --------------- ------------ ---------------
5,123,002 27,090,642 4,519,311 41,708,495
Shares repurchased........................... (5,082,992) (27,505,806) (4,408,085) (41,722,805)
------------ --------------- ------------ ---------------
Net increase (decrease)...................... 40,010 $ (415,164) 111,226 $ (14,310)
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>

5. 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 Fund's
expenses were reduced by $88,368 under these arrangements.

- --------------
FEDERAL TAX INFORMATION (UNAUDITED):

For the fiscal year ended December 31, 1998, the amount of income received by
the Fund from sources within foreign countries and possessions of the United
States was $.1659 per share (representing a total of $3,975,000). The amount of
taxes paid by the Fund to such countries for the fiscal year ended December 31,
1998 was $.005 per share (representing a total of $120,535). The following table
provides a breakdown by country of ordinary income dividends and foreign taxes
paid by the Fund during the fiscal year ended December 31, 1998:

<TABLE>
<CAPTION>
COUNTRY GROSS INCOME % FOREIGN TAX PAID %
- --------------------------------------------- -------------- ------------------
<S> <C> <C>
Australia.................................... 30.91 --
Hong Kong.................................... 30.30 --
Malaysia..................................... 1.40 5.32
New Zealand.................................. 2.51 13.30
Phillipines.................................. 0.80 7.02
Singapore.................................... 9.86 60.18
Taiwan....................................... 2.59 12.81
Various...................................... 0.50 --
------- -------
78.87 98.63
Nonqualifying................................ 1.14 1.37
United States................................ 19.99 --
------- -------
100.00% 100.00%
------- -------
------- -------
</TABLE>

20
<PAGE>
REPORT OF
INDEPENDENT ACCOUNTANTS

- --------------------------------------------------------------------------------

To the Shareholders of AIM New Pacific Growth Fund (formerly GT Global New
Pacific Growth Fund) and Board of Trustees of AIM Growth Series (formerly GT
Global 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 New Pacific Growth 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

21
<PAGE>
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................................................... 11,693,926 634,322 4,652,980*
(2)(b) Approval of sub-advisory and sub-administration contract.... 11,590,097 692,700 4,698,431*
(3) Approval of replacement Rule 12b-1 plans of distribution
CLASS A.................................................... 10,816,023 808,717 795,305
CLASS B..................................................... 3,926,156 165,435 311,237
(4)(a) Modification of Fundamental Restriction on Portfolio
Diversification............................................ 11,676,053 710,295 4,594,880*
(4)(b) Modification of Fundamental Restriction on Concentration.... 11,676,053 710,295 4,594,880*
(4)(c) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 11,675,357 710,991 4,594,880*
(4)(d) Modification of Fundamental Restriction on Making Loans..... 11,675,751 710,597 4,594,880*
(4)(e) Modification of Fundamental Restriction on Underwriting
Securities................................................. 11,675,920 710,428 4,594,880*
(4)(f) Modification of Fundamental Restriction on Real Estate
Investments................................................ 11,670,267 716,081 4,594,880*
(4)(g) Modification of Fundamental Restriction on Investing in
Commodities................................................ 11,669,030 717,318 4,594,880*
(4)(h) Elimination of Fundamental Restriction on Margin
Transactions............................................... 11,667,353 718,995 4,594,880*
(4)(i) Elimination of Fundamental Restriction on Pledging Assets
........................................................... 11,675,318 771,030 4,594,880*
(4)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 11,673,231 713,117 4,594,880*
(4)(k) Elimination of Fundamental Restriction on Investing for the
Purpose of Control......................................... 11,673,661 712,687 4,594,880*
(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............. 11,666,878 719,470 4,594,880*
(4)(m) Elimination of Fundamental Restriction on Joint
Participation in a Securities Trading Account.............. 11,675,880 710,468 4,594,880*
(4)(n) Elimination of Fundamental Restriction on Selling Securities
Short...................................................... 11,660,507 725,841 4,594,880*
(4)(o) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-Fund.... 11,674,140 712,208 4,594,880*
(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

22
<PAGE>

BOARD OF TRUSTEES

C. Derek Anderson
President, Plantagenet Capital
Management, LLC (an investment
partnership); Chief Executive Officer,
Plantagenet Holdings, Ltd.
(an investment banking firm)

Frank S. Bayley
Partner, law firm of
Baker & McKenzie

Robert H. Graham
President and Chief Executive Officer,
A I M Management Group Inc.

Arthur C. Patterson
Managing Partner, Accel Partners
(a venture capital firm)

Ruth H. Quigley
Private Investor

OFFICERS

Robert H. Graham
Chairman and President

Dana R. Sutton
Vice President & Assistant Treasurer

Samuel D. Sirko
Vice President & Secretary

Kenneth W. Chancey
Vice President & Principal
Accounting Officer

John J. Arthur
Vice President

Melville B. Cox
Vice President

Gary T. Crum
Vice President

Carol F. Relihan
Vice President

Nancy L. Martin
Assistant Secretary

Ofelia M. Mayo
Assistant Secretary

Kathleen J. Pflueger
Assistant Secretary

Pamela Ruddock
Assistant Treasurer

Paul Wozniak
Assistant Treasurer

OFFICE OF THE FUND

11 Greenway Plaza
Suite 100
Houston, TX 77046

INVESTMENT MANAGER

A I M Advisors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046

SUB-ADVISOR

INVESCO (NY), Inc.
1166 Avenue of the Americas
New York, NY 10036

TRANSFER AGENT

A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739

CUSTODIAN

State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110

COUNSEL TO THE FUND

Kirkpatrick & Lockhart, LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800

COUNSEL TO THE TRUSTEES

Paul, Hastings, Janofsky & Walker LLP
Twenty Third Floor
555 South Flower Street
Los Angeles, CA 90071

DISTRIBUTOR

A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046

AUDITORS

PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109

<PAGE>

HOW AIM MAKES INVESTING EASY FOR YOU

- - LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.

- - 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.

- - 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.

- - 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.

- - SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least
$50 monthly or quarterly through a systematic withdrawal plan.

- - 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.

- - 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.

- - 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.

- - 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>

THE AIM FAMILY OF FUNDS-Registered Trademark-

GROWTH FUNDS
AIM Aggressive Growth Fund(1)
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM Mid Cap Equity Fund(2), (A)
AIM Select Growth Fund(3)
AIM Small Cap Growth Fund(2), (B)
AIM Small Cap Opportunities Fund
AIM Value Fund
AIM Weingarten Fund

GROWTH & INCOME FUNDS
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Basic Value Fund(2), (C)
AIM Charter Fund

INCOME FUNDS
AIM Floating Rate Fund(2)
AIM High Yield Fund
AIM High Yield Fund II
AIM Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund

TAX-FREE INCOME FUNDS
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund

MONEY MARKET FUNDS
AIM Money Market Fund
AIM Tax-Exempt Cash Fund

INTERNATIONAL GROWTH FUNDS
AIM Advisor International Value Fund
AIM Asian Growth Fund
AIM Developing Markets Fund(2)
AIM Europe Growth Fund(2)
AIM European Development Fund
AIM International Equity Fund
AIM Japan Growth Fund(2)
AIM Latin American Growth Fund(2)
AIM New Pacific Growth Fund(2)

GLOBAL GROWTH FUNDS
AIM Global Aggressive Growth Fund
AIM Global Growth Fund

GLOBAL GROWTH & INCOME FUNDS
AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund

GLOBAL INCOME FUNDS
AIM Emerging Markets Debt Fund(2), (D)
AIM Global Government Income Fund(2)
AIM Global Income Fund
AIM Strategic Income Fund(2)

THEME FUNDS
AIM Global Consumer Products and Services Fund(2)
AIM Global Financial Services Fund(2)
AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
AIM Global Trends Fund(2), (E)

A I M MANAGEMENT GROUP INC. HAS PROVIDED LEADERSHIP IN THE MUTUAL FUND
INDUSTRY SINCE 1976 AND MANAGED APPROXIMATELY $109 BILLION IN ASSETS FOR MORE
THAN 6.2 MILLION SHAREHOLDERS, INCLUDING INDIVIDUAL INVESTORS, CORPORATE
CLIENTS, AND FINANCIAL INSTITUTIONS, AS OF DECEMBER 31, 1998.

THE AIM FAMILY OF FUNDS-Registered Trademark- IS DISTRIBUTED NATIONWIDE,
AND AIM TODAY IS THE 10TH-LARGEST MUTUAL FUND COMPLEX IN THE U.S. IN ASSETS
UNDER MANAGEMENT, ACCORDING TO STRATEGIC INSIGHT, AN INDEPENDENT MUTUAL FUND
MONITOR.

(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.

NPG-AR-1