<PAGE> 1
AIM ADVISOR
REAL ESTATE FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT JUNE 30, 1998
<PAGE> 2
-------------------------------------
AIM Advisor
Real Estate Fund
For shareholders who seek
high total return
on investment through
capital appreciation and
current income through a
portfolio invested primarily in
publicly traded securities of
companies related to the
real estate industry.
-------------------------------------
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Advisor Real Estate Fund's performance figures are historical and
reflect reinvestment of all distributions and changes in net asset value.
Unless otherwise indicated, the Fund's performance is computed at net asset
value without a sales charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the Fund's Class B and Class C shares will differ from
that of Class A shares due to differing fees and expenses.
o Because Class B shares have been offered for less than one year (since
3/3/98), all total return figures for Class B shares reflect cumulative
total return that has not been annualized.
o The Fund's average annual total returns for the periods ended 6/30/98,
including sales charges, were: Class C shares, 1-year, 4.87%, since
inception (5/1/95), 17.04%; Class A shares, 1-year, 1.59%, since inception
(12/31/96), 4.30%. Cumulative total return that has not been annualized for
Class B shares, since inception (3/3/98), -9.33%.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o Past performance cannot guarantee comparable future results.
o Investing in a single sector mutual fund may involve greater risk and
potential reward than investing in a more diversified fund.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The NAREIT (National Association of Real Estate Investment Trusts) Equity
Index tracks the performance of all tax-qualified REITs listed on the New
York Stock Exchange, American Stock Exchange, and the NASDAQ National Market
System. Equity REITs are defined as REITs with 75% or more of their gross
invested book assets invested directly or indirectly in the equity ownership
of real estate.
o The Morgan Stanley REIT Index is a capitalization-weighted index with
dividends reinvested of the most actively traded real estate investment
trusts and is designed to be a measure of real estate equity performance.
o Standard & Poor's Corporation is a credit-rating agency. The unmanaged
Standard & Poor's Composite Index of 500 Stocks (S&P 500) is widely regarded
by investors as representative of the stock market in general.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE;
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
When we last reported to you, for the fiscal year ended
[PHOTO OF December 31, 1997, equity markets worldwide were still shaken
Charles T. by the financial crisis in Asia. By June 30, 1998, the end of
Bauer, this six-month reporting period, most markets had recovered
Chairman of nicely, with domestic equities producing generous returns and
the Board of European markets outpacing the U.S. Only Asian markets
THE FUND remained in the doldrums. High-quality bonds have turned in a
APPEARS HERE] solid performance with generous real returns.
Good economic news has been arriving almost daily.
Inflation and joblessness in the U.S. have been at their
lowest levels in decades, consumer confidence at its highest.
The economic fundamentals in the U.S. appear sound, and we at
AIM remain cautiously optimistic that the current economic
expansion may continue for the foreseeable future although
market valuations are high compared to historical standards.
By the close of this reporting period, markets had become less ebullient.
Equities had declined slightly from the heights reached earlier in the period.
Many participants in the U.S. equity markets voiced concern about prices that
continued rising despite slowing earnings growth, especially for larger
companies. The performance of European markets had exceeded everyone's
expectations. Asia's economic woes, especially the continuing recession in
Japan, which markets had shrugged off for a while, seemed more troublesome as
the reporting period closed.
In the face of such uncertainty, the best course for investors is to remain
realistic. We are now in the fourth year of unprecedented market advances. Even
accounting for the steep drop in equities in early August, after the close of
this reporting period, equities still have the potential to produce returns
above 30% again for the full year. We have never experienced this before, and it
may have fostered unrealistic expectations among investors, who would do well to
remember that the long-term average return for equities is closer to 10% per
year.
A well-diversified portfolio is still one of the most effective tools for
coping with market shifts because different asset classes and different national
markets tend to move independently of one another. Your financial consultant
remains your best source of information about how to allocate your investments
based on your goals and situation.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Shortly before the close of the reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds. During
the next few months you will be receiving more details about this transaction
and the products it adds to The AIM Family of Funds --registered trademark--.
This transaction gives you, our shareholders, access to a greater variety of
investment choices. A complete list of the funds now included in The AIM Family
of Funds --registered trademark-- appears on the back cover of this report. We
encourage you to discuss with your financial consultant how these funds may fit
into your portfolio.
The transaction also helps strengthen AIM's position as a major participant
in the money-management industry worldwide. Such strength will enable us to
continue enlarging both the scope of our fund offerings and our menu of services
for our shareholders. AIM continuously reviews its products and services with a
view to enhancing our ability to help shareholders meet their investment goals.
YOUR FUND MANAGERS COMMENT
On the pages that follow, the managers of your AIM Fund discuss how the Fund
performed during the six months covered by this report and give their near-term
market outlook. We hope you will find their discussion informative.
We are pleased to send you this report on your Fund. If you have any
questions or comments, please contact our Client Services department at
800-959-4246 or visit our Web site at www.aimfunds.com. You can access
information about your account on our Web site and also on our automated AIM
Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
- --registered trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
-----------------------------------------------------
A well-diversified portfolio
is still one of the most
effective tools for coping with
market shifts because
different asset classes and
different national markets tend
to move independently
of one another.
-----------------------------------------------------
<PAGE> 4
The Managers' Overview
NEGATIVE INVESTOR SENTIMENT HURTS
FUND'S RECENT PERFORMANCE
A roundtable discussion with the Fund management team for AIM Advisor Real
Estate Fund about the six months ended June 30, 1998.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A. In the midst of a difficult environment for real estate investment trust
(REIT) investors, the Fund's total return was -6.67% for Class A shares and
-7.03% for Class C shares for the six-month period ended June 30, 1998.
Since inception on March 3, 1998, Class B shares produced a cumulative total
return of -4.61%. The NAREIT Equity Index returned -5.03% while the Morgan
Stanley REIT Index returned -5.08% during the same six-month reporting
period.
Despite the recent downturn in the REIT market, the Fund's Class C
shares ended the reporting period with a 17.04% average annual total return
since its inception on May 1, 1995.
Q. WHAT WERE THE MAJOR TRENDS THAT CAUSED THE FUND'S PERFORMANCE?
A. Uncertainty reigned through the REIT market during the reporting period as
proposed legislative changes clouded the outlook for "paired-share" REITs.
Most of the concerns for paired-share REITs began just after the first of
the year because of the Clinton administration budget proposal to curtail
their future activities. This legislative action caused a general
overreaction by investors to an event that pertains to only four publicly
traded REITs. We believe that the ramifications of this proposed legislation
have been overly exaggerated, particularly by the media. Unfortunately,
investors ignored the potentially positive investment opportunities within
the industry and used the legislative uncertainty as an excuse to sell.
Q. WHAT IS A "PAIRED-SHARE" REIT?
A. A "paired-share" REIT consists of two companies that are paired together and
trade as one share. One company is a REIT and the other is an operating
company. The paired-share structure essentially allows a REIT to expand into
business well past the traditional business of leasing and managing
properties. There are only four public companies and one private company
that fall into this category. As a result of their grandfathered structure
by the federal government, the paired-share REITs have been able to expand
into operating-intensive businesses like hotel management and still retain
their REIT tax status.
Q. WHY DOES THE CLINTON ADMINISTRATION WISH TO CURTAIL THEIR ACTIVITIES?
A. The Clinton administration's budget proposal in January took direct aim at
the paired-share REITs because it felt their recent expansions into
untraditional real estate businesses goes outside the spirit of the initial
REIT structure established in the 1960s, which does not allow other REITs to
own operating companies. The paired-share REITs have the advantage of
allocating higher expenses to the operating company side of the "pair,"
thereby moving more of the total enterprise's net income to the non-tax
paying REIT side. Some legislators believe this gives the paired-share REITs
an advantage when bidding for potential acquisitions. The prime example
occurred late in 1997 when Starwood Hotels & Resorts outbid Hilton Hotels
for ITT Sheraton.
The Clinton proposal would allow the paired-share REITs to continue
operating the current businesses. However, their ability to acquire other
operating intensive properties or businesses using the same tax advantages
would be limited in the future. This proposal does not overly concern us as
it is only expected to moderate the long-term growth rate of the
paired-share REITs. It should be noted, though, that the paired-share REITs,
even with the Clinton proposal, may still exhibit some of the best earnings
growth in the REIT industry.
Q. HOW DID THE MARKET'S UNCERTAINTY AFFECT THE VALUATION OF REIT STOCKS?
A. We believe that REITs may be at their most attractive valuations in recent
history. REITs, relative to the Standard & Poor's 500 (S&P 500), were less
expensive based upon lower relative multiples at the end of the reporting
period than at any time during the last five years. According to Merrill
Lynch, the price/earnings multiple ratio of the S&P 500 was at a 2.14
premium to the cash flow multiple of REITs. This is well above its low of
1.20 and its five-year historic average of 1.53.
In addition to its positive valuations, REITs are projected to have a
higher growth rate than the S&P 500 for the first time in five years. REIT
cash flow per share is expected to grow about 14% during 1998, with roughly
50% to 60% of the growth expected to be generated from internal sources
(rental rate and occupancy increases). Conversely, S&P 500
------------------------------------------------
We believe that
REITs may be at their most
attractive valuations
in recent history.
------------------------------------------------
See important fund and index disclosures inside front cover.
<PAGE> 5
PORTFOLIO COMPOSITION
As of 6/30/98, based on total net assets
<TABLE>
<CAPTION>
=============================================================================================
TOP 10 HOLDINGS PROPERTY TYPE DIVERSIFICATION
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Starwood Hotels & Resorts 5.17% Other 4%
2. Patriot American Hospitality, Inc. 4.46
3. Mack-Cali Realty Corp. 3.39 Industrial/Office Mortgage Backed
4. Arden Realty Group, Inc. 3.23 Mixed 5% Securities 3%
5. Equity Office Properties Trust 3.01 Industrial 7% Self-Storage 1%
6. Tower Realty Trust, Inc. 2.92
7. First Industrial Realty Trust, Inc. 2.79
8. Prentiss Properties Trust 2.79 Retail 11% Health Care 1%
9. Highwoods Properties, Inc. 2.78 Residential 13% Hotel 17%
10. American General Hospitality Corp. 2.78 Diversified 16% Office 22%
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
=============================================================================================
</TABLE>
earnings estimates have been trending lower, with analyst expectations of
approximately 11% growth during 1998. Based on relative earnings growth
comparison, REITs may be more attractive than they have been during the
previous five-year period.
Q. WHAT SECTORS OF THE REAL ESTATE MARKET PARTICULARLY INFLUENCED THE FUND'S
PERFORMANCE?
A. In the second quarter of 1998, the Fund's performance was not helped by our
overweighted positions in the hotel, office, and office/industrial mixed
property sectors. Longer term, though, we believe that the strong office
fundamentals can be realized by the Fund. REITs specializing in the office
sector include Equity Office Properties Trust and Highwoods Properties,
Inc., both of which were among the portfolio's top 10 holdings.
We also feel that upscale hotels still have strong fundamentals, and
hotel companies that also own full-service hotels have significant
competitive advantages. Additionally, we favor hotel companies that add
value through renovations of existing properties.
Q. MERGERS WERE A HOT TOPIC AMONG REITS IN 1997. DID THIS TREND CONTINUE DURING
THE REPORTING PERIOD?
A. Yes it did. Three major mergers were announced in the first quarter: Felcor
Suite Hotels to buy Bristol Hotels; Bay Apartments to buy Avalon Properties;
and Meditrust to buy La Quinta Inns. This $6.8 billion in merger activity
continued to support our thesis of ongoing consolidation within the real
estate industry. Also completed during the first quarter were six equity
REIT initial public offerings totaling $700 million.
Additionally, the largest REIT merger in history closed during the
first half of 1998 as Starwood Hotels & Resorts, the Fund's largest single
position at just over 5% of the portfolio, completed its purchase of ITT
Sheraton, making Starwood Hotels & Resorts the largest hotel company in the
world. Following the $14.8 billion acquisition, Starwood Hotels & Resorts
has an equity market capitalization of over $11 billion.
Q. WHAT IS YOUR OUTLOOK FOR REITS IN THE NEAR FUTURE?
A. As we have mentioned, we believe that the REIT market's fundamentals remain
positive despite its recent disappointing short-term share price
performance. Valuations and projected earnings growth for REITs vs. the S&P
500 are very favorable. Not only are we seeing new companies with strong
fundamentals enter the REIT marketplace, but other long-time real estate
companies are adopting the REIT structure as well. We are very optimistic
about the investment potential for REITs, especially since the legislative
issues with the paired-share REITs have been resolved recently.
Perhaps more important, though, is the fact that the economic
fundamentals in the U.S. remain sound: inflation is low, corporate profits
are healthy, and the economy is growing at a manageable pace. These are very
favorable economic conditions for equities of all types. The markets almost
undoubtedly will remain volatile, though, and investors are encouraged to
focus on their long-term goals rather than short-term fluctuations in the
markets.
----------------------------------------------
Valuations and
projected earnings growth
for REITs
vs. the S&P 500
are very favorable.
----------------------------------------------
See important fund and index disclosures inside front cover.
<PAGE> 6
SCHEDULE OF INVESTMENTS
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS &
COMMON STOCKS-96.92%
DIVERSIFIED-15.73%
Beacon Capital(a) 55,000 $ 1,127,500
- --------------------------------------------------------------
Cadillac Fairview Corp. (Canada)(a) 45,800 1,053,051
- --------------------------------------------------------------
Catellus Development Corp.(a) 81,400 1,439,762
- --------------------------------------------------------------
Cousins Properties, Inc. 32,500 970,938
- --------------------------------------------------------------
Glenborough Realty Trust, Inc. 70,000 1,846,250
- --------------------------------------------------------------
RioCan Real Estate Investment Trust
(Canada) 115,000 813,025
- --------------------------------------------------------------
Security Capital U.S. Realty
(Luxembourg)(a) 74,800 994,840
- --------------------------------------------------------------
St. Joe Co. (The) 20,800 569,400
- --------------------------------------------------------------
TrizecHahn Corp. (Canada) 74,400 1,598,106
- --------------------------------------------------------------
Vornado Realty Trust 47,500 1,885,156
- --------------------------------------------------------------
12,298,028
- --------------------------------------------------------------
HEALTHCARE (DIVERSIFIED)-0.98%
Meditrust Corp. 27,400 765,487
- --------------------------------------------------------------
INDUSTRIAL PROPERTIES-6.63%
Bedford Property Investors, Inc. 53,800 981,850
- --------------------------------------------------------------
EastGroup Properties, Inc. 52,200 1,047,263
- --------------------------------------------------------------
First Industrial Realty Trust, Inc. 68,700 2,181,226
- --------------------------------------------------------------
Prime Group Realty Trust 56,600 969,275
- --------------------------------------------------------------
5,179,614
- --------------------------------------------------------------
INDUSTRIAL/OFFICE PROPERTIES-4.70%
Liberty Property Trust 58,450 1,494,129
- --------------------------------------------------------------
Prentiss Properties Trust 89,700 2,180,832
- --------------------------------------------------------------
3,674,961
- --------------------------------------------------------------
LODGING-HOTELS-17.32%
American General Hospitality Corp. 102,200 2,171,750
- --------------------------------------------------------------
CapStar Hotel Co.(a) 52,700 1,475,600
- --------------------------------------------------------------
FelCor Suite Hotels, Inc. 29,700 931,838
- --------------------------------------------------------------
Patriot American Hospitality, Inc. 145,670 3,486,975
- --------------------------------------------------------------
Starwood Hotels & Resorts 83,700 4,043,757
- --------------------------------------------------------------
Sunstone Hotel Investors, Inc. 108,300 1,441,744
- --------------------------------------------------------------
13,551,664
- --------------------------------------------------------------
MANUFACTURED HOMES-0.90%
Asset Investors Corp. 44,000 701,250
- --------------------------------------------------------------
MORTGAGE BACKED SECURITIES-2.97%
American Residential Investment
Trust, Inc. 3,500 33,906
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MORTGAGE BACKED SECURITIES-(CONTINUED)
CRIIMI MAE, Inc. 130,700 $ 1,813,462
- --------------------------------------------------------------
Impac Mortgage Holdings, Inc. 30,300 471,544
- --------------------------------------------------------------
2,318,912
- --------------------------------------------------------------
OFFICE PROPERTIES-22.00%
Arden Realty Group, Inc. 97,500 2,522,813
- --------------------------------------------------------------
CarrAmerica Realty Corp. 69,100 1,960,712
- --------------------------------------------------------------
Cornerstone Properties, Inc. 35,700 629,212
- --------------------------------------------------------------
Equity Office Properties Trust 83,016 2,355,580
- --------------------------------------------------------------
Highwoods Properties, Inc. 67,350 2,176,246
- --------------------------------------------------------------
Kilroy Realty Corp. 38,700 967,500
- --------------------------------------------------------------
Mack-Cali Realty Corp. 77,100 2,650,313
- --------------------------------------------------------------
SL Green Realty Corp. 73,900 1,662,750
- --------------------------------------------------------------
Tower Realty Trust, Inc. 102,100 2,284,488
- --------------------------------------------------------------
17,209,614
- --------------------------------------------------------------
REGIONAL MALLS-5.43%
CBL & Associates Properties, Inc. 70,250 1,703,562
- --------------------------------------------------------------
General Growth Properties 22,000 822,250
- --------------------------------------------------------------
Simon DeBartolo Group, Inc. 52,900 1,719,250
- --------------------------------------------------------------
4,245,062
- --------------------------------------------------------------
RESIDENTIAL PROPERTIES-13.02%
Apartment Investment & Management Co. 48,100 1,899,950
- --------------------------------------------------------------
Camden Property Trust 36,432 1,083,852
- --------------------------------------------------------------
Charles E. Smith Residential Realty,
Inc. 53,800 1,721,600
- --------------------------------------------------------------
Equity Residential Properties Trust 45,500 2,158,406
- --------------------------------------------------------------
Essex Property Trust, Inc. 64,500 1,999,500
- --------------------------------------------------------------
Gables Residential Trust 37,350 1,013,118
- --------------------------------------------------------------
Merry Land & Investment Co., Inc. 14,200 299,087
- --------------------------------------------------------------
10,175,513
- --------------------------------------------------------------
SELF-STORAGE-1.33%
Public Storage, Inc. 20,300 568,400
- --------------------------------------------------------------
Shurgard Storage Centers, Inc. 16,850 467,587
- --------------------------------------------------------------
1,035,987
- --------------------------------------------------------------
SHOPPING CENTERS-5.33%
JDN Realty Corp. 45,000 1,434,375
- --------------------------------------------------------------
Pan Pacific Retail Properties, Inc. 72,100 1,469,037
- --------------------------------------------------------------
Philips International Realty Corp. 76,600 1,263,901
- --------------------------------------------------------------
4,167,313
- --------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SPECIALTY-0.58%
American Skiing Co.(a) 34,600 $ 449,800
- --------------------------------------------------------------
Total Real Estate Investment
Trusts & Common Stocks (Cost
$77,013,181) 75,773,205
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENT-3.89%(b)
Dean Witter Reynolds, Inc., 6.10%,
07/01/98(c) (Cost $3,038,983) $3,038,983 $ 3,038,983
- --------------------------------------------------------------
TOTAL INVESTMENTS-100.81% 78,812,188
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(0.81%) (630,749)
- --------------------------------------------------------------
NET ASSETS-100.00% $78,181,439
- --------------------------------------------------------------
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(c) Joint repurchase agreement entered into 06/30/98 with a maturing value of
$200,033,889. Collateralized by $203,366,000 U.S. Government obligations, 0%
to 9.375% due 07/01/98 to 09/21/04 with an aggregate market value at
06/30/98 of $209,153,696.
See Notes to Financial Statements
5
<PAGE> 8
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$80,052,164) $ 78,812,188
- ---------------------------------------------------------
Foreign currencies, at value (cost $10,824) 10,638
- ---------------------------------------------------------
Receivables for:
Investments sold 603,988
- ---------------------------------------------------------
Capital stock sold 481,396
- ---------------------------------------------------------
Interest and dividends 552,262
- ---------------------------------------------------------
Investment for deferred compensation plan 2,915
- ---------------------------------------------------------
Other assets 63,054
- ---------------------------------------------------------
Total assets 80,526,441
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 2,042,414
- ---------------------------------------------------------
Deferred compensation plan 2,915
- ---------------------------------------------------------
Accrued advisory fees 58,330
- ---------------------------------------------------------
Accrued operating services fees 25,077
- ---------------------------------------------------------
Accrued distribution fees 137,937
- ---------------------------------------------------------
Accrued directors' fees and expenses 78,329
- ---------------------------------------------------------
Total liabilities 2,345,002
- ---------------------------------------------------------
Net assets applicable to shares outstanding $ 78,181,439
=========================================================
NET ASSETS:
Class A $ 26,758,215
=========================================================
Class B $ 6,441,645
=========================================================
Class C $ 44,981,579
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 1,847,612
=========================================================
Class B:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 444,713
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 3,106,382
=========================================================
Class A:
Net asset value and redemption price per
share $ 14.48
=========================================================
Offering price per share:
(Net asset value of $14.48
divided by 95.25%) $ 15.20
=========================================================
Class B:
Net asset value and offering price per
share $ 14.48
=========================================================
Class C:
Net asset value and offering price per
share $ 14.48
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 101,148
- --------------------------------------------------------
Dividends (net of $4,810 foreign
withholding tax) 1,595,454
- --------------------------------------------------------
Total investment income 1,696,602
- --------------------------------------------------------
EXPENSES:
Advisory fees 325,055
- --------------------------------------------------------
Operating services fees 162,551
- --------------------------------------------------------
Distribution fees-Class A 40,482
- --------------------------------------------------------
Distribution fees-Class B 20,973
- --------------------------------------------------------
Distribution fees-Class C 224,537
- --------------------------------------------------------
Directors' fees and expenses 1,912
- --------------------------------------------------------
Total expenses 775,510
- --------------------------------------------------------
Less: Fees waived by advisor (19,676)
- --------------------------------------------------------
Net expenses 755,834
- --------------------------------------------------------
Net investment income 940,768
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 1,434,488
- --------------------------------------------------------
Foreign currencies (10,037)
- --------------------------------------------------------
1,424,451
- --------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities (7,610,350)
- --------------------------------------------------------
Foreign currencies (205)
- --------------------------------------------------------
(7,610,555)
- --------------------------------------------------------
Net gain (loss) from investment
securities and foreign currencies (6,186,104)
- --------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(5,245,336)
=========================================================
</TABLE>
6
<PAGE> 9
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE YEARS ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 940,768 $ 930,868
- ----------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 1,424,451 3,781,061
- ----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities and foreign currencies (7,610,555) 1,996,379
- ----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (5,245,336) 6,708,308
- ----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (349,096) (138,336)
- ----------------------------------------------------------------------------------------
Class B (67,895) --
- ----------------------------------------------------------------------------------------
Class C (463,353) (755,032)
- ----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A -- (609,759)
- ----------------------------------------------------------------------------------------
Class C -- (1,923,812)
- ----------------------------------------------------------------------------------------
Share transactions-net:
Class A 12,258,016 16,620,595
- ----------------------------------------------------------------------------------------
Class B 6,831,764 --
- ----------------------------------------------------------------------------------------
Class C 4,776,938 19,971,956
- ----------------------------------------------------------------------------------------
Net increase in net assets 17,741,038 39,873,920
- ----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 60,440,401 20,566,481
- ----------------------------------------------------------------------------------------
End of period $78,181,439 $60,440,401
========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $76,576,450 $52,709,732
- ----------------------------------------------------------------------------------------
Undistributed net investment income 132,808 72,384
- ----------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities 2,712,363 1,287,912
- ----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (1,240,182) 6,370,373
- ----------------------------------------------------------------------------------------
$78,181,439 $60,440,401
========================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor Real Estate Fund (the "Fund") is a series portfolio of AIM Advisor
Funds, Inc. (the "Company"). The Company is a Maryland corporation and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of five
diversified portfolios. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. The new Class B
shares commenced sales on March 3, 1998. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with a
contingent deferred sales charge. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is to achieve a high total return on
investment through capital appreciation and current income, without regard to
federal income tax considerations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of 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 followed by the Fund
in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange is valued at
its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date, or absent a last sales
price, at the mean of the closing bid and asked prices. Securities for which
market prices are not provided by any of the above methods are valued at the
mean between last bid and asked prices based upon quotes furnished by
independent sources. Securities for which market quotations are not readily
available or are questionable are valued at fair value as determined in good
faith by or under the supervision of the Company's Board of Directors.
Investments with maturities of 60 days or less are valued on the basis of
amortized cost which approximates market value.
B. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at the date of valuation. Purchases and sales of portfolio securities
and income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
D. Foreign Currency Contracts-A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
E. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements.
F. Expenses-Distribution expenses directly attributable to a class of shares are
charged to that class' operations. All other expenses which are attributable
to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.90% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Realty Advisors, Inc. ("IRAI") whereby AIM pays IRAI an
annual rate of 0.35% of the Fund's average daily net assets on the first $100
million and 0.25% of the Fund's average daily net assets in excess of $100
million.
The Company, pursuant to an operating services agreement with AIM, has agreed
to pay AIM an annual rate of 0.45% of the Fund's average daily net assets for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. This
agreement provides that AIM pays all fees and expenses associated with these and
other functions, including, but not limited to, registration fees, shareholder
meeting fees, and proxy statement and shareholder report expenses. During the
six months ended June 30, 1998, AIM was paid $154,441 for such services. As of
June 1, 1998, AIM has
8
<PAGE> 11
voluntarily agreed to limit the operating services fees to an annual rate of
0.45% of the first $50 million of the Fund's average daily net assets and 0.10%
of the Fund's average daily net assets in excess of $50 million. During the
period June 1, 1998 through June 30, 1998, AIM voluntarily waived operating
services fees in the amount of $8,110.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.35% of the average daily net assets attributable to the
Class A shares and 1.00% of the average daily net assets attributable to the
Class C shares. AIM Distributors has voluntarily agreed to limit the Class A
shares plan payments to 0.25% for three years beginning August 4, 1997. The Fund
pursuant to the Class B Plan, pays AIM Distributors compensation at an annual
rate of 1.00% of the average daily net assets attributable to the Class B
shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average
daily net assets of the Class A, Class B or Class C shares to selected dealers
and financial institutions who furnish continuing personal shareholder services
to their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the six months ended June 30, 1998, for the Class A and Class C
shares and the period March 3, 1998 (date sales commenced) through June 30, 1998
for the Class B shares, the Class A, Class B and Class C shares paid AIM
Distributors $28,916, $20,973 and $224,537, respectively, as compensation under
the Plans. During the six months ended June 30, 1998, AIM Distributors waived
fees of $11,566 for the Class A shares.
AIM Distributors received commissions of $69,977 from sales of Class A shares
of the Fund during the six months ended June 30, 1998. Such commissions are not
an expense to the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the six months ended June 30,
1998, AIM Distributors received commissions of $15,662 in contingent deferred
sales charges imposed on redemptions of shares. Certain officers and directors
of the Company are officers and directors of AIM, A I M Fund Services, Inc. and
AIM Distributors.
The combined effect of the advisory agreements, operating services agreement
and the distribution plan for the Fund is to place a cap or ceiling on the total
expenses of the Fund, other than brokerage commissions, interest, taxes,
litigation, directors' fees and expenses, and other extraordinary expenses. AIM
has voluntarily agreed to adhere to maximum expense ratios for the Fund. To the
extent that the Fund exceeds the amounts, AIM or its affiliates will waive its
fees to reimburse the Fund to assure that the Fund's expenses do not exceed the
designated maximum amounts except for those items specifically identified above.
If, in any calendar quarter, the average net assets of the Fund are less than
$500 million, the Fund's expenses shall not exceed 1.70% for Class A and 2.35%
for Class C; on the next $500 million of net assets, expenses shall not exceed
1.65% for Class A and 2.30% for Class C; and on all assets over $1 billion,
expenses shall not exceed 1.60% for Class A and 2.25% for Class C.
During the six months ended June 30, 1998, the Fund paid legal fees of $1,098
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended June 30, 1998, was
$40,003,932 and $14,078,944, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1998, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 2,010,989
- -------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (3,250,965)
- -------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities $(1,239,976)
=============================================================
Investments have the same cost for tax and financial
statement purposes.
</TABLE>
NOTE 5-CAPITAL STOCK*
Changes in the Fund's capital stock outstanding during the six months ended June
30, 1998 and the year ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 1,133,113 $17,343,907 1,054,003 $16,739,222
- ------------------------- ---------- ----------- ---------- -----------
Class B** 629,136 9,536,498 -- --
- ------------------------- ---------- ----------- ---------- -----------
Class C 603,756 9,195,857 1,421,288 21,204,369
- ------------------------- ---------- ----------- ---------- -----------
Issued as reinvestment of
dividends:
Class A 21,685 313,539 47,730 725,852
- ------------------------- ---------- ----------- ---------- -----------
Class B** 3,771 54,460 -- --
- ------------------------- ---------- ----------- ---------- -----------
Class C 28,260 409,161 162,326 2,458,661
- ------------------------- ---------- ----------- ---------- -----------
Reacquired:
Class A (356,094) (5,399,430) (52,825) (844,479)
- ------------------------- ---------- ----------- ---------- -----------
Class B** (188,194) (2,759,194) -- --
- ------------------------- ---------- ----------- ---------- -----------
Class C (317,532) (4,828,080) (240,812) (3,691,074)
- ------------------------- ---------- ----------- ---------- -----------
1,557,901 $23,866,718 2,391,710 $36,592,551
========================= ========== =========== ========== ===========
</TABLE>
* Shares have been restated to reflect a 4 for 1 stock split, effected in the
form of a 300% stock dividend, on November 7, 1997.
** Class B shares commenced sales March 3, 1998.
9
<PAGE> 12
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the six months ended June 30, 1998 and the year ended
December 31, 1997, for a share of Class B capital stock outstanding during the
period March 3, 1998 (date sales commenced) through June 30, 1998 and a share of
Class C capital stock outstanding during the six months ended June 30, 1998,
each of the years in the two-year period ended December 31, 1997 and the period
May 1, 1995 (date operations commenced) through December 31, 1995.
<TABLE>
<CAPTION>
CLASS A(a) CLASS B
------------------------- ---------
JUNE 30, DECEMBER 31, JUNE 30,
1998 1997(B) 1998
---------- ------------ ---------
<S> <C> <C> <C>
Net asset value, beginning of period $ 15.74 $ 14.19 $ 15.34
- ------------------------------------------------------------ ---------- ---------- ---------
Income from investment operations:
Net investment income 0.22(c) 0.34(c) 0.11(c)
- ------------------------------------------------------------ ---------- ---------- ---------
Net gains (losses) on securities (both realized and
unrealized) (1.27) 2.39 (0.82)
- ------------------------------------------------------------ ---------- ---------- ---------
Total from investment operations (1.05) 2.73 (0.71)
- ------------------------------------------------------------ ---------- ---------- ---------
Less distributions:
Dividends from net investment income (0.21) (0.44) (0.15)
- ------------------------------------------------------------ ---------- ---------- ---------
Distributions from net realized gains -- (0.74) --
- ------------------------------------------------------------ ---------- ---------- ---------
Total distributions (0.21) (1.18) (0.15)
- ------------------------------------------------------------ ---------- ---------- ---------
Net asset value, end of period $ 14.48 $ 15.74 $ 14.48
============================================================ ========== ========== =========
Total return(d) (6.67)% 19.78% (4.61)%
============================================================ ========== ========== =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 26,758 $ 16,507 $ 6,442
============================================================ ========== ========== =========
Ratio of expenses to average net assets(e) 1.58%(f) 1.60% 2.34%(f)
============================================================ ========== ========== =========
Ratio of net investment income to average net assets(g) 3.12%(f) 3.26% 2.36%(f)
============================================================ ========== ========== =========
Portfolio turnover rate 21% 57% 21%
============================================================ ========== ========== =========
Average brokerage commission rate(h) $ 0.0652 $ 0.0584 $ 0.0652
============================================================ ========== ========== =========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct sales charges and is not annualized for periods less than
one year.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.70% (annualized) and 1.70% for 1998-1997 for Class A and 2.36%
(annualized) for 1998 for Class B.
(f) Ratios are annualized and based on average net assets of $23,324,270 and
$6,379,387 for Class A and Class B, respectively.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 3.00% (annualized) and 3.16% for 1998-1997 for Class A
and 2.34% (annualized) for 1998 for Class B.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold.
10
<PAGE> 13
NOTE 6-FINANCIAL HIGHLIGHTS-continued
<TABLE>
<CAPTION>
CLASS C(a)
-------------------------------------------
DECEMBER 31,
JUNE 30, --------------------------------
1998 1997(B) 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.74 $ 14.19 $ 10.76 $ 10.00
- ------------------------------------------------------------ ------- -------- -------- --------
Income from investment operations:
Net investment income 0.17(c) 0.36(c) 0.33 0.16
- ------------------------------------------------------------ ------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (1.28) 2.26 3.51 0.75
- ------------------------------------------------------------ ------- -------- -------- --------
Total from investment operations (1.11) 2.62 3.84 0.91
- ------------------------------------------------------------ ------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.15) (0.33) (0.31) (0.15)
- ------------------------------------------------------------ ------- -------- -------- --------
Distributions from net realized gains -- (0.74) (0.10) --
- ------------------------------------------------------------ ------- -------- -------- --------
Total distributions (0.15) (1.07) (0.41) (0.15)
- ------------------------------------------------------------ ------- -------- -------- --------
Net asset value, end of period $ 14.48 $ 15.74 $ 14.19 $ 10.76
============================================================ ======= ======== ======== ========
Total return(d) (7.03)% 18.88% 36.43% 9.12%
============================================================ ======= ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $44,982 $ 43,934 $ 20,566 $ 5,565
============================================================ ======= ======== ======== ========
Ratio of expenses to average net assets(e) 2.34%(f) 2.35% 2.40% 2.40%(g)
============================================================ ======= ======== ======== ========
Ratio of net investment income to average net assets(h) 2.36%(f) 2.54% 3.21% 4.68%(g)
============================================================ ======= ======== ======== ========
Portfolio turnover rate 21% 57% 25% 7%
============================================================ ======= ======== ======== ========
Average brokerage commission rate(i) $0.0652 $ 0.0584 $ 0.0601 N/A
============================================================ ======= ======== ======== ========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(e) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.36% (annualized) for 1998.
(f) Ratios are annualized and based on average net assets of $45,279,462.
(g) Annualized.
(h) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements was 2.34% (annualized) for 1998.
(i) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
11
<PAGE> 14
Directors & Officers
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II SUB-ADVISOR
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President INVESCO Realty Advisors, Inc.
One Lincoln Centre, Suite 700
Edward K. Dunn Jr. Dana R. Sutton 5400 LBJ Freeway/LB-2
Chairman, Mercantile Mortgage Corp.; Vice President and Assistant Treasurer Dallas, TX 75240
Formerly Vice Chairman and President,
Mercantile-Safe Deposit & Trust Co.; and Robert G. Alley TRANSFER AGENT
President, Mercantile Bankshares Vice President
A I M Fund Services, Inc.
Jack Fields Stuart W. Coco P.O. Box 4739
Chief Executive Officer Vice President Houston, TX 77210-4739
Texana Global, Inc.;
Formerly Member Melville B. Cox CUSTODIAN
of the U.S. House of Representatives Vice President
State Street Bank and Trust Company
Carl Frischling Karen Dunn Kelley 225 Franklin Street
Partner Vice President Boston, MA 02110
Kramer, Levin, Naftalis & Frankel
Jonathan C. Schoolar COUNSEL TO THE FUND
Robert H. Graham Vice President
President and Chief Executive Officer Ballard Spahr
A I M Management Group Inc. Renee A. Friedli Andrews & Ingersoll, LLP
Assistant Secretary 1735 Market Street
Lewis F. Pennock Philadelphia, PA 19103
Attorney P. Michelle Grace
Assistant Secretary COUNSEL TO THE DIRECTORS
Ian W. Robinson
Consultant; Formerly Executive Jeffrey H. Kupor Kramer, Levin, Naftalis & Frankel
Vice President and Assistant Secretary 919 Third Avenue
Chief Financial Officer New York, NY 10022
Bell Atlantic Management Nancy L. Martin
Services, Inc. Assistant Secretary DISTRIBUTOR
Louis S. Sklar Ofelia M. Mayo A I M Distributors, Inc.
Executive Vice President Assistant Secretary 11 Greenway Plaza
Hines Interests Suite 100
Limited Partnership Lisa A. Moss Houston, TX 77046
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
12
<PAGE> 15
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds --registered trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds. Certain restrictions
apply.
o RETIREMENT PLANS. You may purchase shares of the fund for your Individual
Retirement Account (IRA) or any other type of retirement plan, and earn
tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o www.aimfunds.com. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
----------------------------------------------
Current shareholders
can call our
AIM Investor Line at
800-246-5463
for 24-hour-a-day
account information.
----------------------------------------------
<PAGE> 16
The AIM Family of Funds --Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS
[PHOTO OF AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund
11 GREENWAY PLAZA AIM Blue Chip Fund AIM Asian Growth Fund
APPEARS HERE] AIM Capital Development Fund AIM Developing Markets Fund(2)
AIM Constellation Fund AIM Emerging Markets Fund(2)
AIM Mid Cap Growth Fund(2) AIM Europe Growth Fund(2)
AIM Select Growth Fund(3) AIM European Development Fund
AIM Small Cap Equity Fund(2) AIM International Equity Fund
AIM Small Cap Opportunities Fund AIM International Growth Fund(2)
AIM Value Fund AIM Japan Growth Fund(2)
AIM Weingarten Fund AIM Latin American Growth Fund(2)
AIM New Pacific Growth Fund(2)
GROWTH & INCOME FUNDS
GLOBAL GROWTH FUNDS
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund
AIM Advisor MultiFlex Fund AIM Global Growth Fund
AIM Advisor Real Estate Fund AIM Worldwide Growth Fund(2)
AIM America Value Fund(2)
AIM Balanced Fund GLOBAL GROWTH & INCOME FUNDS
AIM Charter Fund
AIM Global Growth & Income Fund(2)
INCOME FUNDS AIM Global Utilities Fund
AIM Floating Rate Fund(2) GLOBAL INCOME FUNDS
AIM High Yield Fund
AIM Income Fund AIM Global Government Income Fund(2)
AIM Intermediate Government Fund AIM Global High Income Fund(2)
AIM Limited Maturity Treasury Fund AIM Global Income Fund
AIM Strategic Income Fund(2)
TAX-FREE INCOME FUNDS
THEME FUNDS
AIM High Income Municipal Fund
AIM Municipal Bond Fund AIM Global Consumer Products and Services Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Financial Services Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
MONEY MARKET FUNDS AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
AIM Dollar Fund(2) AIM New Dimension Fund(2)
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
</TABLE>
(1) AIM Aggressive Growth Fund was closed to new investors on June 5, 1997.
(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. 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.
A I M Management Group Inc. has provided leadership in the mutual fund industry
since 1976 and managed approximately $101 billion in assets for more than 5.2
million shareholders, including individual investors, corporate clients, and
financial institutions, as of June 30, 1998. The AIM Family of
Funds--Registered Trademark-- is distributed nationwide, and AIM today is
the ninth-largest mutual fund complex in the U.S. in assets under management,
according to Strategic Insight, an independent mutual fund monitor.
INVEST WITH DISCIPLINE(SM)
