<PAGE> 1
AIM ADVISOR
LARGE CAP VALUE FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT DECEMBER 31, 1997
<PAGE> 2
-------------------------------------
AIM ADVISOR LARGE CAP VALUE FUND
For shareholders who
seek a high total return
on investment
through capital appreciation
and current income,
without regard to
federal income tax considerations.
-------------------------------------
[COVER PHOTO
APPEARS HERE]
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Advisor Large Cap Value 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 5.50% sales charge, and Class C share
performance reflects the applicable 1% contingent deferred sales charge
(CDSC), which is applicable for 12 months following the date of each
purchase. The performance of the Fund's Class A and Class C shares will
differ due to differing fees and expenses.
o During 1997, the Fund paid distributions of $2.8583 and $2.7094 per share
on Class A and Class C shares, respectively.
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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Standard & Poor's Composite Index of 500 Stocks (S&P 500) is a group of
unmanaged securities widely regarded by investors to be representative of
the stock market in general.
o The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30
actively traded primarily industrial stocks.
o The unmanaged Lipper Growth & Income Fund Index represents an average of the
performance of the 30 largest growth-and-income funds. It is compiled by
Lipper Analytical Services, Inc., an independent mutual funds performance
monitor. Results shown reflect reinvestment of dividends.
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:
1997 proved an eventful year in securities markets. The Dow
[PHOTO OF Jones Industrial Average reached its all-time high--and also
Charles T. had its largest one-day point drop ever, though not its
Bauer, largest percentage drop. Volatility was unabated, and we
Chairman of experienced the first 10% stock market correction in the U.S.
the Board of since 1991.
THE FUND Never dull and occasionally unsettling, 1997 was also
APPEARS HERE] a very good year for many investments. For an unprecedented
third year in a row, domestic equities rose more than 20%.
Late in the year, in the uncertainty brought on by events in
Asia, bond markets, especially the U.S. Treasury market,
fulfilled their usual role as relative safe havens, and a
bull market in bonds took hold. Overseas, though Asian
markets plummeted, Europe thrived.
Market expectations performed an about-face during the
year. Worry about the inflationary potential of vigorous economic growth became
concern about the potential negative impact of Asia's financial crisis. At
fiscal year end, there was no consensus about how serious or widespread this
impact would be.
An interview with your Fund's managers appears on the following pages. They
discuss their investment strategies, how your Fund performed in this context,
and their outlook for the future.
In uncertain times like these, your financial consultant remains your best
source for information on market trends and for advice on how to invest
strategically rather than emotionally. We encourage you to visit your financial
consultant regularly to make sure your chosen investments still suit your goals,
risk tolerance, and time horizon.
INVESTOR EDUCATION EVENTS
In addition to professional guidance, every investor needs fundamental
information about the saving and investing choices offered by the marketplace.
AIM has always championed investor education, convinced a more knowledgeable
shareholder is a better customer. A great deal of investment information will be
available during two upcoming events, and we hope our shareholders will
participate in and learn from them to the greatest extent possible.
First, from March 29 through April 4, the Securities and Exchange Commission
(SEC) will sponsor Saving and Investing Education Week. As the SEC points out,
financial markets are more stable when investors are confident in them, and
knowledge is a major confidence builder. The week's theme is "Get the facts.
It's your money. It's your future." The aim is to inform citizens about the
saving and investment possibilities available and to build understanding about
how one's financial needs and goals change throughout one's life. The week's
awareness and education events will culminate with a national investors town
meeting at satellite-linked locations across the nation. You can find out more
from the SEC's Web site at www.sec.gov.
The second event concerns citizens' financial planning for retirement, a
subject of growing urgency as the population ages and the solvency of the Social
Security system is increasingly debatable. In July, the first National Summit on
Retirement Savings will be held at the White House. Under the auspices of the
Department of Labor, working through public-private partnership, the summit's
goal is to advance the public's knowledge of retirement savings through
development of a broad-based education program and to develop recommendations
for public/private action to promote private retirement savings among American
workers.
Look for further information on both of these investor education events in
the national and local press.
We are pleased to send you this report on your Fund. Please contact our
Client Services department at 800-959-4246 if you have questions or comments.
Automated information about your account is available 24 hours a day on the AIM
Investor Line, 800-246-5463. Account information and much more can be found on
our Web site, www.aimfunds.com.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
--------------------------------
In uncertain times like these,
your financial consultant
remains your best source
for information on market trends
and for advice on
how to invest strategically
rather than emotionally.
--------------------------------
<PAGE> 4
The Managers' Overview
DESPITE VOLATILE MARKET, FUND POSTS
EXCELLENT RETURNS
A roundtable discussion with the Fund management team for AIM Advisor Large Cap
Value Fund for the fiscal year ended December 31, 1997.
- --------------------------------------------------------------------------------
Q. IT WAS A TURBULENT YEAR IN THE STOCK MARKET. HOW DID THE FUND PERFORM?
A. Despite volatility and a major market correction, your Fund continued to
provide excellent returns. For the fiscal year ended December 31, 1997, the
Fund had a total return of 31.66% for Class A shares and 30.66% for Class C
shares, besting the 26.96% total return for the Lipper Growth and Income
Fund Index.
In managing the Fund, we emphasize stability and consistency of returns.
During the difficult fourth quarter of 1997, the Fund posted a total return
of 3.16% for Class A shares and 2.96% for Class C shares. That was better
than 1.05% total return for the Lipper Growth and Income Fund Index and the
2.87% total return for the Standard and Poor's Composite Index of 500 stocks
(S&P 500).
Q. WHAT WERE THE MAJOR TRENDS IN THE STOCK MARKET DURING THE FISCAL YEAR?
A. Although the DJIA soared to record heights in 1997, the market experienced
two major downturns, the first from mid-March to mid-April when the
industrial average lost nearly 10% of its value. The initial selloff stemmed
from concerns that inflation, the product of rapid economic growth, might
accelerate and erode corporate profits. However, inflation remained subdued
and the market resumed its upward climb at the end of April.
================================================================================
TOTAL RETURNS
- --------------------------------------------------------------------------------
As of 12/31/97
FUND CLASS A 31.66%
FUND CLASS C 30.66%
LIPPER GROWTH & INCOME FUND INDEX 26.96%
================================================================================
The second and more dramatic of the two selloffs occurred from early
August to late October and saw the DJIA lose 13.2% of its value, marking the
first correction of the seven-year bull market. A correction is generally
defined as a drop of 10% or more in the stock market. It was precipitated by
currency devaluations in Southeast Asia and culminated on October 27, when
the DJIA plunged 554 points or 7.2% in a single day.
Q. WHAT TRIGGERED THE EVENTS OF OCTOBER 27, 1997?
A. The Southeast Asian currency devaluations sparked a major selloff in the
Hong Kong market with global repercussions. Stock markets plummeted
worldwide. Although the sharp drop in the DJIA was followed by an impressive
rally on October 28, the stock market remained extremely volatile for the
remainder of the year because of the currency situation in Asia. The DJIA
was unable to recoup all of its losses and ended the year below the record
high it set in early August.
Q. HOW DID INVESTORS REACT TO SUCH UNSTABLE MARKET CONDITIONS?
A. For most of the year, investors tended to favor the more liquid stocks of
larger companies with more predictable earnings. This trend was interrupted
in the third quarter of 1997 when the lower-priced stocks of smaller
companies with greater earnings potential emerged as the market leaders.
However, when the problems in Asia jolted stock markets worldwide, investors
again shifted their focus to large-company stocks.
Q. HOW DID MARKET TRENDS AFFECT FUND PERFORMANCE?
A. With large-company stocks forming 85% of the portfolio, the Fund was in a
good position to take advantage of the market sentiment favoring large-cap
equities. Although mid-sized company stocks, which formed the remaining 15%
of the Fund's holdings, logged solid gains for the year, large-cap stocks
were the stronger performers. The Fund also benefited from its exposure to
the financial and health-care sectors.
Among the Fund's top sector holdings as of December 31, 1997, were:
financial, 19%; technology, 12%; and health care, 10%.
Q. WHAT WAS BEHIND THE STRONG PERFORMANCE OF FINANCIAL-COMPANY STOCKS?
A. The financial sector was the top-performing Dow Jones U.S. industry group in
1997. The sector benefited from declining interest rates, low inflation, and
a continuing wave of mergers and acquisitions. For example, First of America
Bank Corp., one of the top holdings in the portfolio, approved a merger
agreement with National City Corp. which is expected to be finalized early
in 1998. First of America Bank reported strong earnings in 1997.
The Fund also benefited from owning the stocks of First Chicago N.B.D
Corp., NationsBank Corp., and American
--------------------------------------
In managing the Fund,
we emphasize stability and
consistency of returns.
--------------------------------------
See important fund and index disclosures inside front cover.
<PAGE> 5
PORTFOLIO HOLDINGS
As of 12/31/97, based on total net assets
<TABLE>
<CAPTION>
====================================================================================================================================
Top 10 Equity Holdings Top 10 Industries
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. First of America Bank Corp. 2.61% 1. Electric Companies 8.04%
2. First Chicago N.B.D. Corp. 2.53 2. Oil (International Integrated) 6.24
3. Schering-Plough Corp. 2.50 3. Computers (Hardware) 5.73
4. Computer Associates International, Inc. 2.46 4. Health Care (Drugs--Major Pharmaceuticals) 5.54
5. UST, Inc. 2.44 5. Computers (Software & Services) 4.90
6. Electronic Data Systems Corp. 2.44 6. Financial (Diversified) 4.81
7. SUPERVALU, Inc. 2.27 7. Tobacco 4.46
8. Textron Inc. 2.26 8. Insurance (Property--Casualty) 3.70
9. Dun & Bradstreet Corp. 2.18 9. Banks (Major Regional) 3.30
10. International Business Machines Corp. 2.12 10. Health Care (Diversified) 2.96
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>
General Corp.
If the low-interest-rate, low-inflation environment persists, it should
be a boon to financial companies. However, firms that were heavily involved
in making loans in Southeast Asia could be adversely affected by the
currency devaluations in that region.
Q. IT WAS A DIFFICULT YEAR FOR THE TECHNOLOGY SECTOR. HOW DID THE FUND'S
TECHNOLOGY STOCKS PERFORM?
A. Although the technology sector was hard hit by the Asian currency crisis,
the technology stocks in the portfolio significantly outperformed their
counterparts in the S&P 500.
In selecting stocks for the portfolio, including our technology
holdings, we look for attractively priced issues of high-quality companies
that have been profitable in the past and are expected to be profitable in
the future.
Technology stocks that we liked included Computer Associates
International, Inc., the third largest independent software company in the
world. The company reported record earnings for the quarter ended December
31, 1997. The Fund also benefited from owning the stocks of Electronic Data
Systems Corp., a major provider of information technology services, and
Hewlett Packard, a leader in computer sales.
Q. WHERE WAS YOUR EMPHASIS IN THE HEALTH-CARE SECTOR?
A. Our main focus was on the stocks of pharmaceutical companies and
medical-product suppliers. These companies have been providing a steady
stream of products to the market to meet the needs of a health-conscious
population. One of the top-performing health-care stocks in the portfolio
was Schering-Plough Corp., a developer and marketer of prescription drugs,
animal health products, and over-the-counter drugs and products, including
several brand-name items. The company reported strong sales in 1997.
Other top-performing health-care stocks in the portfolio included Abbott
Laboratories, Merck & Co., Inc., and Lilly (Eli) & Co.
Q. WHAT IS YOUR OUTLOOK FOR THE FUTURE?
A. We continue to be optimistic about the stock market. In the U.S., the
economic fundamentals are sound: inflation is low, corporate profits are
strong, and the economy is growing at a healthy pace. However, after a
record three straight years of 20% or more returns, we believe that it is
unlikely that stocks will post similar gains in 1998. Moreover, the problems
in Asia could slow economic growth, reducing corporate profits and stock
returns.
1997 was one of the more volatile years in recent decades in the
financial markets, and that trend could persist over the coming months. In
such an environment, investors would be well advised to focus on their
long-term financial goals rather than transitory fluctuations in the
markets. Moreover, we believe the Fund is well positioned, regardless of
trends in the market.
See important fund and index disclosures inside front cover.
<PAGE> 6
Long-Term Performance
AIM ADVISOR LARGE CAP VALUE FUND VS. BENCHMARK INDEX
The chart below compares your Fund's Class C shares to a benchmark index. It is
intended to give you a general idea of how your Fund performed compared to the
stock market over the period 12/31/87-12/31/97. It is important to understand
the difference between your Fund and an index. An index measures the performance
of a hypothetical portfolio, in this case the Standard & Poor's Composite Index
of 500 Stocks. Unlike your Fund, an index is not managed; therefore, there are
no sales charges, expenses or fees. You cannot invest in an index. But if you
could buy all the securities that make up an index, you would incur expenses
that would affect the return of your investment.
GROWTH OF A $10,000 INVESTMENT
12/31/87-12/31/97
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AIM ADVISOR LARGE CAP S&P 500
VALUE FUND, CLASS C SHARES INDEX
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
12/87 $10,000 $10,000
12/88 11,403 11,650
12/89 13,890 15,330
12/90 13,502 14,852
12/91 18,037 19,358
12/92 18,908 20,831
12/93 20,640 22,921
12/94 21,196 23,232
12/95 27,613 31,931
12/96 32,272 39,243
12/97 41,740 52,317
================================================================================
</TABLE>
Past performance cannot guarantee comparable future results.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/97, including sales charges
Class C Shares
1 Year 29.66%**
5 Years 17.46
10 Years 15.39
**30.66% excluding sales charge
Class A Shares
Inception (12/31/96) 24.43%*
*31.66% excluding sales charge
================================================================================
Source: Towers Data Systems HYPO -- Registered Trademark --; Lehman Brothers.
Your Fund's total return includes sales charges, expenses, and management fees.
The performance of the Fund's Class C shares will differ from that of Class A
shares due to differing fees and expenses. For Fund performance calculations and
descriptions of the index cited on this page, please refer to the inside front
cover.
<PAGE> 7
SCHEDULE OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-97.26%
AEROSPACE/DEFENSE-1.99%
Lockheed Martin Corp. 35,860 $ 3,532,210
- -------------------------------------------------------------
AGRICULTURAL PRODUCTS-1.09%
Archer-Daniels-Midland Co. 89,250 1,935,609
- -------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.85%
Cooper Tire & Rubber Co. 62,000 1,511,250
- -------------------------------------------------------------
AUTOMOBILES-1.59%
Chrysler Corp. 80,000 2,815,000
- -------------------------------------------------------------
BANKS (MAJOR REGIONAL)-3.30%
First Union Corp. 60,000 3,075,000
- -------------------------------------------------------------
NationsBank Corp. 45,674 2,777,550
- -------------------------------------------------------------
5,852,550
- -------------------------------------------------------------
BANKS (MONEY CENTER)-2.53%
First Chicago N.B.D. Corp. 53,800 4,492,300
- -------------------------------------------------------------
BANKS (REGIONAL)-2.61%
First of America Bank Corp. 60,000 4,627,500
- -------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-1.75%
PepsiCo, Inc. 85,000 3,097,188
- -------------------------------------------------------------
CHEMICALS-0.97%
Dow Chemical Co. (The) 17,000 1,725,500
- -------------------------------------------------------------
COMPUTERS (HARDWARE)-5.73%
Compaq Computer Corp. 51,250 2,892,422
- -------------------------------------------------------------
Hewlett-Packard Co. 56,000 3,500,000
- -------------------------------------------------------------
International Business Machines Corp. 36,000 3,764,250
- -------------------------------------------------------------
10,156,672
- -------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-4.90%
Computer Associates International,
Inc. 82,500 4,362,188
- -------------------------------------------------------------
Electronic Data Systems Corp. 98,300 4,319,056
- -------------------------------------------------------------
8,681,244
- -------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-2.27%
SUPERVALU, INC. 96,000 4,020,000
- -------------------------------------------------------------
ELECTRIC COMPANIES-8.04%
Baltimore Gas & Electric Co. 55,500 1,890,469
- -------------------------------------------------------------
Cinergy Corp. 61,000 2,337,063
- -------------------------------------------------------------
Entergy Corp. 120,000 3,592,500
- -------------------------------------------------------------
PP&L Resources, Inc. 70,000 1,675,625
- -------------------------------------------------------------
SCANA Corp. 54,500 1,631,594
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRIC COMPANIES-(CONTINUED)
Texas Utilities Co. 75,000 $ 3,117,189
- -------------------------------------------------------------
14,244,440
- -------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.99%
General Electric Co. 48,000 3,522,000
- -------------------------------------------------------------
ELECTRONICS (DEFENSE)-1.12%
Raytheon Co. 39,400 1,989,700
- -------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-4.81%
American General Corp. 48,600 2,627,438
- -------------------------------------------------------------
Fannie Mae 40,000 2,282,500
- -------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover
& Co. 61,050 3,609,581
- -------------------------------------------------------------
8,519,519
- -------------------------------------------------------------
FOODS-1.67%
H.J. Heinz Co. 58,350 2,964,909
- -------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-2.96%
Abbott Laboratories 41,600 2,727,400
- -------------------------------------------------------------
American Home Products Corp. 32,900 2,516,850
- -------------------------------------------------------------
5,244,250
- -------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-5.54%
Lilly (Eli) & Co. 30,400 2,116,600
- -------------------------------------------------------------
Merck & Co., Inc. 30,900 3,283,125
- -------------------------------------------------------------
Schering-Plough Corp. 71,200 4,423,300
- -------------------------------------------------------------
9,823,025
- -------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-1.59%
Columbia/HCA Healthcare Corp. 95,200 2,820,300
- -------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-1.04%
Maytag Corp. 49,200 1,835,775
- -------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-1.11%
Kimberly-Clark Corp. 40,000 1,972,500
- -------------------------------------------------------------
HOUSEWARES-1.05%
Fortune Brands, Inc. 50,000 1,853,125
- -------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.06%
Jefferson-Pilot Corp. 24,000 1,869,000
- -------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-3.70%
Chubb Corp. 25,000 1,890,625
- -------------------------------------------------------------
General Re Corp. 13,500 2,862,000
- -------------------------------------------------------------
SAFECO Corp. 37,000 1,803,750
- -------------------------------------------------------------
6,556,375
- -------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MACHINERY (DIVERSIFIED)-0.98%
Dover Corp. 48,000 $ 1,734,000
- -------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-2.26%
Textron, Inc. 64,000 4,000,000
- -------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.82%
York International Corp. 36,700 1,451,944
- -------------------------------------------------------------
METALS MINING-0.70%
Phelps Dodge Corp. 20,000 1,245,000
- -------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-1.05%
Pitney Bowes, Inc. 20,700 1,861,706
- -------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-6.24%
Amoco Corp. 24,600 2,094,074
- -------------------------------------------------------------
Exxon Corp. 52,000 3,181,750
- -------------------------------------------------------------
Repsol S.A.-ADR (Spain) 60,000 2,553,750
- -------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR-New
York Shares (Netherlands) 59,600 3,229,575
- -------------------------------------------------------------
11,059,149
- -------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.89%
Westvaco Corp. 50,000 1,571,874
- -------------------------------------------------------------
PHOTOGRAPHY/IMAGING-2.08%
Xerox Corp. 50,000 3,690,625
- -------------------------------------------------------------
RAILROADS-1.23%
Illinois Central Corp. 64,200 2,186,812
- -------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-2.14%
Lowe's Companies, Inc. 46,200 2,203,163
- -------------------------------------------------------------
Sherwin-Williams Co. 57,300 1,590,074
- -------------------------------------------------------------
3,793,237
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (DEPARTMENT STORES)-1.36%
J.C. Penney Co., Inc. 40,000 $ 2,412,500
- -------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-2.18%
Dun & Bradstreet Corp. 125,000 3,867,188
- -------------------------------------------------------------
TELEPHONE-2.29%
Southern New England
Telecommunications Corp. 35,000 1,760,937
- -------------------------------------------------------------
Telefonos de Mexico S.A.-ADR (Mexico) 40,800 2,287,350
- -------------------------------------------------------------
4,048,287
- -------------------------------------------------------------
TEXTILES (APPAREL)-1.18%
Liz Claiborne, Inc. 49,800 2,082,262
- -------------------------------------------------------------
TEXTILES (HOME FURNISHINGS)-0.98%
Shaw Industries, Inc. 149,000 1,732,124
- -------------------------------------------------------------
TOBACCO-4.46%
Philip Morris Companies, Inc. 79,200 3,588,750
- -------------------------------------------------------------
UST, Inc. 117,000 4,321,689
- -------------------------------------------------------------
7,910,439
- -------------------------------------------------------------
WASTE MANAGEMENT-1.16%
Waste Management, Inc. 75,000 2,062,500
- -------------------------------------------------------------
Total Common Stocks 172,371,588
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT-2.73%(a)
Smith Barney Inc., 6.75%,
01/02/98(b) $4,839,870 4,839,870
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.99% 177,211,458
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.01% 16,369
- --------------------------------------------------------------
NET ASSETS-100.00% $177,227,827
- --------------------------------------------------------------
</TABLE>
Notes to Schedule of Investments:
(a) 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 insure 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 investments companies managed by the
investment advisor or its affiliates.
(b) Joint repurchase agreement entered into 12/31/97 with a maturing value of
$400,150,000. Collateralized by $395,097,000 U.S. Government obligations, 0%
to 13.875% due 01/07/98 to 12/15/43 with an aggregate market value at
12/31/97 of $408,000,323.
Abbreviations:
ADR - American Depositary Receipt
See Notes to Financial Statements.
6
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$109,675,167) $177,211,458
- ---------------------------------------------------------
Receivables for:
Capital stock sold 278,933
- ---------------------------------------------------------
Interest and dividends 406,277
- ---------------------------------------------------------
Investment for deferred compensation plan 2,092
- ---------------------------------------------------------
Other assets 4,436
- ---------------------------------------------------------
Total assets 177,903,196
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 56,225
- ---------------------------------------------------------
Deferred compensation plan 2,092
- ---------------------------------------------------------
Accrued advisory fees 110,771
- ---------------------------------------------------------
Accrued operating services fees 66,462
- ---------------------------------------------------------
Accrued distribution fees 422,994
- ---------------------------------------------------------
Accrued directors' fees and expenses 16,825
- ---------------------------------------------------------
Total liabilities 675,369
- ---------------------------------------------------------
Net assets applicable to shares outstanding $177,227,827
=========================================================
NET ASSETS:
Class A $ 5,000,130
=========================================================
Class C $172,227,697
=========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 207,399
=========================================================
Class C
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 7,153,303
=========================================================
Class A:
Net asset value and redemption price per
share $ 24.11
=========================================================
Offering price per share:
(Net asset value of $24.11 divided by
94.50%) $ 25.51
=========================================================
Class C:
Net asset value and offering price per
share $ 24.08
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 330,699
- --------------------------------------------------------
Dividends (net of $5,361 foreign
withholding tax) 3,197,343
- --------------------------------------------------------
Total investment income 3,528,042
- --------------------------------------------------------
EXPENSES:
Advisory fees 1,184,878
- --------------------------------------------------------
Operating services fees 710,927
- --------------------------------------------------------
Directors' fees and expenses 18,267
- --------------------------------------------------------
Distribution fees-Class A 5,462
- --------------------------------------------------------
Distribution fees-Class C 1,564,270
- --------------------------------------------------------
Total expenses 3,483,804
- --------------------------------------------------------
Less: Fees waived by distributor (1,570)
- --------------------------------------------------------
Net expenses 3,482,234
- --------------------------------------------------------
Net investment income 45,808
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM
INVESTMENT SECURITIES:
Net realized gain from investment
securities 17,674,268
- --------------------------------------------------------
Net unrealized appreciation of investment
securities 24,024,117
- --------------------------------------------------------
Net gain on investment securities 41,698,385
- --------------------------------------------------------
Net increase in net assets resulting from
operations $41,744,193
========================================================
</TABLE>
7
<PAGE> 10
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 45,808 $ 302,211
- -----------------------------------------------------------------------------------------
Net realized gain from investment securities 17,674,268 5,485,198
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 24,024,117 14,241,394
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 41,744,193 20,028,803
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (6,926) --
- -----------------------------------------------------------------------------------------
Class C (10,706) (326,780)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (415,931) --
- -----------------------------------------------------------------------------------------
Class C (17,806,373) --
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 5,055,769 --
- -----------------------------------------------------------------------------------------
Class C 11,252,055 4,140,414
- -----------------------------------------------------------------------------------------
Net increase in net assets 39,812,081 23,842,437
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 137,415,746 113,573,309
- -----------------------------------------------------------------------------------------
End of period $177,227,827 $137,415,746
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $105,927,721 $ 89,619,897
- -----------------------------------------------------------------------------------------
Undistributed net investment income (loss) 5,961 (22,215)
- -----------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities 3,757,854 4,305,890
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 67,536,291 43,512,174
- -----------------------------------------------------------------------------------------
$177,227,827 $137,415,746
=========================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor Large Cap Value Fund (the "Fund", formerly INVESCO Advisor Equity
Portfolio) is a series portfolio of AIM Advisor Funds, Inc. (the "Company"
formerly, INVESCO Advisor Funds, Inc.) 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 seven
diversified portfolios. The Fund currently offers two different classes of
shares: Class A shares and Class C shares. Class A shares are sold with a
front-end sales charge. 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. 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. Information presented in these financial statements pertains
only to the Fund.
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 (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market (but
not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. Each security reported on
the NASDAQ National Market System is valued at the last sales price on the
valuation date, or absent a last sales price, at the mean of the closing bid
and asked prices. Debt obligations (including
8
<PAGE> 11
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the
above methods are valued at the mean between last bid and asked prices based
upon quotes furnished by independent sources. Securities for which market
quotations 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. 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.
D. 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 0.75% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Capital Management, Inc. ("ICM") whereby AIM pays ICM an
annual rate of 0.20% of the Fund's average daily net assets. Prior to August 4,
1997, the Company had an investment advisory agreement with INVESCO Services,
Inc. ("ISI") to serve as the Fund's investment advisor. Under the terms of the
prior investment agreement, the Fund paid ISI an advisory fee equal to an annual
rate of 0.75% of the average daily net assets of the Fund. Under the terms of
the prior sub-advisory agreement between ISI and ICM, ISI paid ICM a
sub-advisory fee equal to an annual rate of 0.20% of the Fund's average daily
net assets.
The Company, pursuant to an operating services agreement with AIM, has agreed
to pay AIM an annual rate of 0.45% of average daily net assets of the Fund 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
period August 4, 1997 to December 31, 1997, AIM was paid $313,139 for such
services. Prior to August 4, 1997, the Company had an operating services
agreement with ISI whereby the Fund paid ISI an annual rate of 0.45% of average
daily net assets of the Fund. During the period January 1, 1997 through August
3, 1997, the Fund paid ISI $397,788.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and Class C shares of the Fund. The Company has adopted a
distribution plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and the Fund's Class C shares (the "Plan"). The Fund,
pursuant to the Plan, pays AIM Distributors compensation at a maximum annual
rate of 0.35% of the average daily net assets attributable to the Class A
shares. AIM has voluntarily agreed to limit the Plan payments to 0.25% for three
years beginning August 4, 1997. The Fund, pursuant to the Plan, pays AIM
Distributors a maximum annual rate of 1.00% of the Fund's average daily net
assets attributable to the Class C shares. Of these amounts, the Fund may pay a
service fee of 0.25% of the average daily net assets of the Class A and C shares
to selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own shares of the Fund.
Any amounts not paid as a service fee under the Plan would constitute an
asset-based sales charge. The Plan also imposes a cap on the total sales
charges, including asset-based sales charges, that may be paid by the respective
classes. During the period August 4, 1997 to December 31, 1997, the Class A and
Class C shares paid AIM Distributors $3,069 and $683,679, respectively, as
compensation under the Plan. During the year ended December 31, 1997 AIM
Distributors and ISI waived fees of $1,570 for the Class A shares. Prior to
August 4, 1997, the Fund entered into a distribution plan with ISI in accordance
with Rule 12b-1 of the 1940 Act under substantially identical terms as described
for AIM Distributors above. During the period January 1, 1997 to August 3, 1997
the Class A and Class C shares paid ISI $823 and $880,591, respectively as
compensation under the Plan.
AIM Distributors received commissions of $7,461 from sales of Class A shares
of the Fund during the period August 4, 1997 to December 31, 1997. ISI received
commissions of $999 from sales of Class A shares of the Fund during the period
January 1, 1997 through August 3, 1997. 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 period August 4, 1997 to December 31, 1997,
AIM Distributors received commissions of $570 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. During the period January 1, 1997 through August 3, 1997, ISI
received commissions of $8,692 in contingent deferred sales charges imposed on
redemptions of shares.
The combined effect of the master investment advisory agreements and operating
services agreement and the distribution plan for the Fund is to place a cap or
ceiling on the total expenses
9
<PAGE> 12
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 1.55% for Class A and 2.20%
for Class C; on the next $500 million of net assets, expenses shall not exceed
1.50% for Class A and 2.15% for Class C; on the next $1 billion of net assets,
expenses shall not exceed 1.45% for Class A and 2.10% for Class C; and on all
assets over $2 billion, expenses shall not exceed 1.40% for Class A and 2.05%
for Class C.
During the period August 4, 1997 to December 31, 1997, the Fund paid legal
fees of $625 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 year ended December 31, 1997 was
$52,014,131 and $53,036,580, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $68,808,948
- -------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (1,272,657)
- -------------------------------------------------------------
Net unrealized appreciation of investment
securities $67,536,291
=============================================================
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 years ended December
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A** 198,806 $ 4,859,057 -- $ --
- ----------------------------------------------------------------------------------------------------------------
Class C 745,080 17,246,229 1,052,644 19,738,118
- ----------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A** 15,389 365,541 -- --
- ----------------------------------------------------------------------------------------------------------------
Class C 683,868 16,255,395 13,084 248,270
- ----------------------------------------------------------------------------------------------------------------
Reacquired:
Class A** (6,796) (168,829) -- --
- ----------------------------------------------------------------------------------------------------------------
Class C (955,477) (22,249,569) (837,888) (15,845,974)
- ----------------------------------------------------------------------------------------------------------------
680,870 $ 16,307,824 227,840 $ 4,140,414
================================================================================================================
</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 A shares commenced operations on January 1, 1997.
10
<PAGE> 13
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the year ended December 31, 1997 and for a share of Class C
capital stock outstanding during each of the years in the five-year period ended
December 31, 1997.(a)
CLASS A:
<TABLE>
<CAPTION>
1997(B)
-------
<S> <C>
Net asset value, beginning of period $ 20.57
- ------------------------------------------------------------ -------
Income from investment operations:
Net investment income 0.23(c)
- ------------------------------------------------------------ -------
Net gains on securities (both realized and unrealized) 6.17
- ------------------------------------------------------------ -------
Total from investment operations 6.40
- ------------------------------------------------------------ -------
Less distributions:
Dividends from net investment income (0.15)
- ------------------------------------------------------------ -------
Distributions from capital gains (2.71)
- ------------------------------------------------------------ -------
Total distributions (2.86)
- ------------------------------------------------------------ -------
Net asset value, end of period $ 24.11
============================================================ =======
Total return(d) 31.66%
============================================================ =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 5,000
============================================================ =======
Ratio of expenses to average net assets(e) 1.46%(f)
============================================================ =======
Ratio of net investment income to average net assets(g) 0.77%(f)
============================================================ =======
Portfolio turnover rate 34%
============================================================ =======
Average brokerage commission rate(h) $0.0538
============================================================ =======
</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.
(e) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 1.56%.
(f) Ratios are based on average net assets of $1,570,213.
(g) After fee waivers. Ratio of net investment income to average net assets
prior to fee waivers was 0.67%.
(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.
CLASS C:(A)
<TABLE>
<CAPTION>
1997(B) 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.57 $ 17.60 $ 13.96 $ 14.90 $ 15.82
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.01(c) 0.05 0.10 0.09 0.10
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 6.21 2.97 4.11 0.32 1.35
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 6.22 3.02 4.21 0.41 1.45
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- (0.05) (0.10) (0.09) (0.10)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from capital gains (2.71) -- (0.47) (1.26) (2.27)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (2.71) (0.05) (0.57) (1.35) (2.37)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 24.08 $ 20.57 $ 17.60 $ 13.96 $ 14.90
============================================================ ======== ======== ======== ======== ========
Total return(d) 30.66% 17.17% 30.28% 2.69% 9.16%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $172,228 $137,416 $113,573 $ 77,929 $ 86,659
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets(e) 2.21%(f) 2.26% 2.28% 2.25% 2.25%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets(e) 0.02%(f) 0.24% 0.64% 0.61% 0.62%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 34% 19% 17% 21% 47%
============================================================ ======== ======== ======== ======== ========
Average brokerage commission rate(g) $ 0.0538 $ 0.0590 N/A N/A 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.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 2.25% and 0.62%, respectively, for 1993.
(f) Ratios are based on average net assets of $156,522,171.
(g) 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
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of the AIM Advisor Funds, Inc.
In our opinion, the accompanying statement of assets and
liabilities, including the schedule 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 Advisor Large Cap Value Fund, one of the portfolios
of the AIM Advisor Funds, Inc. (hereafter referred to as
the "Fund") at December 31, 1997, the results of its
operations for the year then ended, the changes in its
net assets for each of the two years in the period then
ended 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, 1997 by correspondence with the custodian
and the application of alternative auditing procedures
where securities purchased had not been received, provide
a reasonable basis for our opinion expressed above.
PRICE WATERHOUSE LLP
Denver, Colorado
February 5, 1998
12
<PAGE> 15
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 Capital Management, Inc.
1315 Peachtree Street, N.E.
Jack Fields Dana R. Sutton Atlanta, GA 30309
Chief Executive Officer Vice President and Assistant Treasurer
Texana Global, Inc.; TRANSFER AGENT
Formerly Member of the Robert G. Alley
U.S. House of Representatives Vice President A I M Fund Services, Inc.
P.O. Box 4739
Carl Frischling Stuart W. Coco Houston, TX 77210-4739
Partner Vice President
Kramer, Levin, Naftalis & Frankel CUSTODIAN
Melville B. Cox
Robert H. Graham Vice President State Street Bank and Trust Company
President and Chief Executive Officer 225 Franklin Street
A I M Management Group Inc. Karen Dunn Kelly Boston, MA 02110
Vice President
John F. Kroeger COUNSEL TO THE FUND
Formerly Consultant Jonathan C. Schoolar
Wendell & Stockel Associates, Inc. Vice President Ballard Spahr
Andrews & Ingersoll
Lewis F. Pennock P. Michelle Grace 1735 Market Street
Attorney Assistant Secretary Philadelphia, PA 19103
Ian W. Robinson Nancy L. Martin COUNSEL TO THE DIRECTORS
Consultant; Formerly Executive Assistant Secretary
Vice President and Kramer, Levin, Naftalis & Frankel
Chief Financial Officer Ofelia M. Mayo 919 Third Avenue
Bell Atlantic Management Assistant Secretary New York, NY 10022
Services, Inc.
Lisa A. Moss DISTRIBUTOR
Louis S. Sklar Assistant Secretary
Executive Vice President A I M Distributors, Inc.
Hines Interests Kathleen J. Pflueger 11 Greenway Plaza
Limited Partnership Assistant Secretary Suite 100
Houston, TX 77046
Samuel D. Sirko
Assistant Secretary AUDITORS
Stephen I. Winer Price Waterhouse LLP
Assistant Secretary 950 Seventeenth Street
Suite 2500
Mary J. Benson Denver, CO 80202
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Advisor Large Cap Value Fund Class A and Class C shares paid ordinary
dividends in the amount of $0.2805 and $0.1315 per share, respectively, to
shareholders during the Fund's tax year ended December 31, 1997. Of these
amounts, 100% is eligible for the dividends received deduction for
corporations. The Fund also distributed long-term capital gains of $2.5779 per
share for Class A shares and Class C shares during the Fund's tax year ended
December 31, 1997. Of these amounts, 51.21% is 20% rate gain.
<PAGE> 16
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Asian Growth Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
[PHOTO OF GROWTH OF CAPITAL
11 GREENWAY PLAZA AIM Advisor International Value Fund
APPEARS HERE] AIM Blue Chip Fund
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Charter Fund
AIM Global Utilities Fund
HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
CURRENT INCOME AND HIGH DEGREE OF SAFETY
A I M Management Group Inc. has provided leadership in the AIM Intermediate Government Fund
mutual fund industry since 1976 and manages approximately AIM Limited Maturity Treasury Fund
$83 billion in assets for more than 3.7 million shareholders, AIM Money Market Fund
including individual investors, corporate clients, and financial AIM Tax-Exempt Cash Fund
institutions as of December 31, 1997. The AIM Family of
Funds--Registered Trademark-- is distributed nationwide, and *AIM Aggressive Growth Fund was closed to new investors on
AIM today ranks among the nation's top 15 mutual fund June 5, 1997. For more complete information about any AIM
companies in assets under management, according to Lipper Fund(s), including sales charges and expenses, ask your
Analytical Services, Inc. financial consultant or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully
before you invest or send money.
INVEST WITH DISCIPLINE-SM-
</TABLE>
