<PAGE> 1
ANNUAL REPORT / DECEMBER 31 1999
AIM ADVISOR FLEX FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
-------------------------------------
THE CIRCUS BY GEORGES PIERRE SEURAT, 1859-1891, FRENCH
ONE OF FRENCH ARTIST GEORGES SEURAT'S MOST FAMOUS PAINTINGS, "THE CIRCUS"
FEATURES A GRACEFUL RIDER BALANCING ON THE BACK OF A WHITE HORSE. WHILE THE
MOOD OF THE PAINTING IS CAREFREE, THE WORK WAS PAINSTAKINGLY EXECUTED. SEURAT
PIONEERED A TECHNIQUE CALLED POINTILLISM USING TINY BRUSHSTROKES OF CONTRAST-
ING COLORS. SEURAT PLANNED HIS PAINTINGS TO THE LAST DETAIL AND CAREFULLY
PLACED EACH DOT, MUCH THE SAME WAY A FUND MANAGER CHOOSES THE INVESTMENTS
FOR A PORTFOLIO. VIEWED AS A WHOLE, THE POINTS FORM A HARMONIOUS COMPOSITION.
-------------------------------------
AIM Advisor Flex Fund is for shareholders who seek to achieve a high total
return on investment through growth of capital and current income, without
regard to federal income tax considerations. The fund invests in a combination
of equity securities and fixed- and variable-income securities.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Advisor Flex Fund's performance figures are historical, and they reflect
changes in net asset value and the reinvestment of distributions.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B and Class C shares will differ from
that of its Class A shares due to different sales-charge structure and
expenses.
o During the fiscal year ended 12/31/99, the fund paid distributions of
$2.2705 per Class A share, $2.1185 per Class B share and $2.1185 per Class C
share.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lehman Government/Corporate Bond Index is generally considered
representative of intermediate and long-term government and investment-grade
debt securities.
o The unmanaged Lipper Flexible Portfolio Index represents an average of the
performance of the 30 largest funds in the flexible portfolio fund category
tracked by Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (S&P 500) is
generally considered representative of the stock market in general.
o An investment cannot be made in any index. Unless otherwise indicated, index
results include reinvested dividends and do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM ADVISOR FLEX FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
The fiscal year discussed in this report has reconfirmed our
[PHOTO OF faith in two long-established principles of investing:
Charles T. portfolio diversification and long-term thinking. We could
Bauer, title this report "What a Difference a Year Makes."
Chairman of An investor surveying conditions when the fiscal year
the Board of opened on January 1, 1999, would have seen a market
THE FUND dominated by large-capitalization stocks and high-quality
APPEARS HERE] bonds, especially U.S. Treasuries. During 1998, two
well-known indexes of large-capitalization U.S. companies,
the S&P 500 and the Dow Jones Industrial Average, were up
28.60% and 18.15%, respectively. By contrast,
smaller-company stocks in the Russell 2000 had lost 2.55%.
Overseas, many markets were languishing, especially in Asia,
where so many financial difficulties had originated in 1997.
In bond markets as well, name-brand quality was the
place to be. The Lehman Government/Corporate Bond Index,
which follows sovereign issues and investment-grade debt, was up 9.47%, while
the Lehman High Yield Index, which tracks riskier "junk bonds," had risen only
1.60%.
It would be easy for an investor to conclude that blue-chip issues, whether
equity or fixed-income, were the place to be, that it was time to divest himself
of everything else and put all his eggs in the blue-chip basket. The investor,
of course, would be wrong.
MARKETS TURN
While large-capitalization stocks continued to do very well, during 1999 markets
broadened dramatically with many investment sectors performing a complete
turnaround. For example, the small-cap stocks in the Russell 2000 were up 21.26%
for calendar year 1999, and many Asian markets, particularly Japan, had staged a
comeback.
The same holds true of bonds. The higher-quality Lehman index was down 2.15%
during 1999 while the Lehman High Yield index was up 2.39%.
The point, at the risk of sounding repetitive to those of you who have
invested with us for a long time, is that this is why diversification is a
fundamental investing principle. Market sectors and asset classes go in and out
of favor, but over the long run--and the long run is several years--the markets'
overall trend has been upward. Selecting an asset class or a market sector on
the basis of a short-term snapshot of conditions is usually unwise, as is
concentrating your portfolio in one asset class. Staying fully invested in a
diversified portfolio remains a compelling strategy and one of your best
prospects for long-term gain. We also continue to remind you that the past few
years have seen extraordinary gains in some markets, and there is no assurance
that this trend will continue.
LOOKING AHEAD
As we look about at the close of this fiscal year, we are encouraged by multiple
signs of economic health in Europe and Asia, not to mention the prolonged U.S.
economic expansion. However, we are aware of how easily an investor could have
been misled by conditions just 12 months ago. For our shareholders, we therefore
reiterate our commitment to investing through a financial advisor. In addition
to helping you select investments appropriate to your time horizon and risk
tolerance, a financial advisor can keep you informed about how changing market
conditions affect you and your portfolio--and help ensure that when you do alter
your investments, there's a logical reason for doing so. AIM believes every
investor should be guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the year ended December 31, how the markets behaved and
what they foresee for the near future. We trust you will find their discussion
informative. If you have any questions or comments, we invite you to contact us,
either at our Web site, aimfunds.com, or through our Client Services department
at 800-959-4246. Information about your account is also available through 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 I M Advisors, Inc.
-------------------------------------
STAYING FULLY
INVESTED IN A DIVERSIFIED
PORTFOLIO REMAINS
A COMPELLING STRATEGY
AND ONE OF YOUR
BEST PROSPECTS FOR
LONG-TERM GAIN.
-------------------------------------
AIM ADVISOR FLEX FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
AIM ADVISOR FLEX FUND FACES
CHALLENGING YEAR
HOW DID AIM ADVISOR FLEX FUND PERFORM OVER THE FISCAL YEAR?
The narrow equity market combined with a bear bond market led to disappointing
performance for AIM Advisor Flex Fund.
For the fiscal year ended December 31, 1999, the fund had total returns of
- -0.85% for Class A shares, -1.50% for Class B shares and -1.56% for Class C
shares. (These returns are at net asset value, which does not include sales
charges.) However, the fund's long-term performance remains solid as shown on
the chart on page 4.
WHAT WAS THE EQUITY MARKET LIKE DURING 1999?
1999 was a year in which many of the trends of 1998 reversed themselves. In
1998, the world was in the midst of a global economic crisis. In a flight to
safety, investors turned to relatively safe vehicles like U.S. Treasuries and
corporate bonds. As economies improved throughout the world in 1999, investors
pulled their money from bonds and invested in securities that offered the most
growth potential: technology stocks.
The ensuing bull market in technology dominated the equity scene throughout
the year. Every major index in the United States, as well as markets across
Europe, Asia and Latin America, hit new highs at year-end. But this tide did not
lift all boats. In fact, at the end of 1999, a third of New York Stock Exchange
and over-the-counter stocks were off 20% or more from their previous 12-month
highs. Among the S&P 500 stocks, 256 declined, 241 rose and three were
unchanged.
Stocks with no ties to technology faced a volatile year as investors worried
about inflation and interest rates. In June and August, the Federal Reserve
Board (the Fed) raised rates in two quarter-point moves. The Fed chose to leave
rates unchanged in October but increased them by another quarter-point in
November. In December, a Fed decision to leave rates unchanged sparked a market
rally.
HOW DID THE BOND MARKET PERFORM?
This past year has been a challenging period for bond investors. Throughout
1999, downward pressure on bond prices came
[GRAPHIC]
PORTFOLIO COMPOSITION
As of 12/31/99, based on total net assets
<TABLE>
<CAPTION>
========================================================================================
TOP 10 INDUSTRIES TOP 10 EQUITY HOLDINGS
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. U.S. Government Securities 9.39% 1. Morgan Stanley Dean Witter 1.73%
& Co.
2. Manufacturing (Diversified) 4.89 2. Repsol S.A.-ADR (Spain) 1.68
3. Banks (Major Regional) 4.31 3. Computer Associates 1.57
International, Inc.
4. Real Estate Investment Trusts 4.00 4. AT&T Corp. 1.54
5. Insurance 3.87 5. MGIC Investment Corp. 1.37
(Property and Casualty)
6. Telephone 3.49 6. Merck & Co. Inc. 1.32
7. Computers (Hardware) 3.38 7. Hewlett-Packard Co. 1.21
8. Electric Companies 3.20 8. Telefonos de Mexico S.A.-ADR 1.19
(Mexico)
9. Oil (International Integrated) 2.87 9. Exxon Mobil Corp. 1.19
10. Financial (Diversified) 2.78 10. Marsh & McLennan Cos. Inc. 1.16
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security.
========================================================================================
</TABLE>
PERCENTAGE OF HOLDINGS
================================================================================
[PIE CHART]
U.S. GOVERNMENT 9%
CORPORATE NOTES 13%
COMMON STOCKS 78%
NUMBER OF HOLDINGS: 175
================================================================================
-------------------------------------
WE INTEND TO REMAIN
INVESTED IN CORPORATE BONDS
AND MORTGAGE SECURITIES
TO CAPTURE AS MUCH YIELD
AS POSSIBLE WITHOUT
COMPROMISING ON QUALITY
AIM ADVISOR FLEX FUND
-------------------------------------
See important fund and index disclosures inside front cover.
AIM ADVISOR FLEX FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
from the U.S. economy's continued strong growth, improving global economies,
rising long-term interest rates and inflation fears. These factors contributed
to a market environment in which investors favored stocks over bonds. The
ensuing sell-off produced the worst calendar-year performance for bonds since
1994.
The Lehman Government/Corporate Bond Index, for example, returned -2.15% in
1999. The bellwether 30-year Treasury bond itself had the worst performance
since the Treasury began selling the security in 1977.
HOW DID YOU MANAGE THE FUND IN THIS ENVIRONMENT?
We maintained a high concentration in stocks relative to bonds. Our asset
allocation as of December 31, 1999, was 78% stocks and 22% government and
corporate bonds.
But even with this focus on equities, the narrowness of the stock market
hurt the fund. The best-performing sector of the market was technology, and the
fund was substantially underweight in this area relative to the S&P 500. The
fund also had a higher weighting in financials than the index, and many of these
stocks were hurt by the same inflation fears that plagued bonds.
In the fixed-income portion of the fund, we were overweight in corporate
bonds and mortgages compared to the Lehman Government/Corporate Index. This
helped fund performance, as corporate bonds fared much better than U.S.
Treasuries, especially in the fourth quarter of 1999. Since the last fund report
on June 30, 1999, we reduced our U.S. government securities from 17.08% to
9.39%, and increased corporate bond holdings from 11.88% to 12.97%.
Mortgage-backed securities also increased from 3.01% to 4.71% over the past six
months.
WHY WAS THE FUND UNDERWEIGHT IN TECHNOLOGY STOCKS?
On the equity side of the portfolio, we use a value investment discipline to
determine which stocks to buy. This discipline requires us to evaluate each
company's historical profitability relative to its current stock price. In 1999,
many technology stocks seemed greatly overvalued and did not meet our criteria
for inclusion in the portfolio.
We have been reducing some of our tech holdings to keep the fund within its
value-oriented parameters. At the same time, we have found some buying
opportunities in this sector, including Computer Associates International, an
independent software company, and Hewlett-Packard, one of the world's leading
computer hardware makers.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
Looking into 2000, many analysts believe that the Fed will need to raise
interest rates at least once--if not more--to slow economic growth to a more
sustainable pace. The expectation of rising interest rates could keep the
markets volatile for the near term. We plan to maintain our investment
discipline, looking for stocks that are selling at a discount.
Despite interest-rate concerns, we see a few positive signs in the
fixed-income market. The United States posted its second consecutive budget
surplus for fiscal 1999. This will enable the Treasury to continue reducing the
amount of debt it auctions, leading to a demand for Treasury securities and a
possible rally. We could also see strength in the corporate bond and mortgage
markets. We intend to remain invested in corporate bonds and mortgage securities
to capture as much yield as possible without compromising on quality.
[GRAPHIC]
TOP 10 FIXED-INCOME HOLDINGS
===============================================================================
% OF NET
COUPON MATURITY ASSETS
- -------------------------------------------------------------------------------
1. U.S. Treasury Bond 7.625% 2/15/2025 1.34%
2. U.S. Treasury Bond 7.250 8/15/2022 1.28
3. FHLMC 6.000 1/1/2029 1.08
4. Federal Home Loan Bank 5.500 7/14/2000 1.06
5. Wal-Mart Stores, Inc. 6.550 8/10/2004 0.82
6. General Motors 5.500 1/14/2002 0.81
Acceptance Co.
7. Atlantic Richfield Co. 5.550 4/15/2003 0.77
8. Wachovia Corp. 6.250 8/4/2008 0.77
9. Masco Corp. 7.750 8/1/2029 0.75
10. Bank of America Corp. 6.630 6/15/2004 0.74
===============================================================================
See important fund and index disclosures inside front cover.
AIM ADVISOR FLEX FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM ADVISOR FLEX FUND VS. BENCHMARK INDEXES
2/24/88-12/31/99
[GRAPH]
in thousands
================================================================================
LIPPER FLEXIBLE
AIM ADVISOR FLEX PORTFOLIO FUND
CLASS C SHARES S&P 500 INDEX
- --------------------------------------------------------------------------------
2/24/88 10,000 10,000 10,000
12/31/88 10,357 10,690 10,324
12/31/89 12,143 14,071 12,104
12/31/90 11,941 13,634 12,217
12/31/91 14,901 17,779 15,510
12/31/92 16,053 19,131 16,388
12/31/93 17,736 21,055 18,474
12/31/94 17,850 21,332 17,980
12/31/95 22,723 29,339 22,223
12/31/96 25,816 36,070 25,357
12/31/97 31,919 48,100 29,983
12/31/98 35,881 61,856 34,935
12/31/99 35,320 74,867 38,367
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
ABOUT THIS CHART
The chart compares your fund's Class C shares to benchmark indexes. It is
intended to give you a general idea of how your fund performed compared to these
indexes over the period 2/24/88-12/31/99. (Data for the indexes is for the
period 2/29/88-12/31/99.) It is important to understand the difference between
your fund and these indexes. An index measures the performance of a hypothetical
portfolio. A market index such as the S&P 500 is not managed, incurring no sales
charges, expenses or fees. If you could buy all the securities that make up a
market index, you would incur expenses that would affect the return on your
investment. It is important to note that the S&P 500 represents the stock market
only, while a portion of AIM Advisor Flex Fund is invested in the bond market.
An index of funds such as the Lipper Flexible Portfolio Fund Index includes
a number of mutual funds grouped by investment objective. Each of those funds
interprets that objective differently, and each employs a different management
style and investment strategy.
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/99, including sales charges
================================================================================
CLASS A SHARES
Inception (12/31/96) 9.76%
1 year -6.32*
* -0.85% excluding sales charges
CLASS B SHARES
Inception (3/3/98) 1.22%
1 year -5.89*
* -1.50% excluding CDSC
CLASS C SHARES
Inception (2/24/88) 11.23%
10 years 11.27
5 years 14.63
1 year -2.44*
* -1.56% excluding CDSC
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
For fund performance calculations and descriptions of the indexes cited on this
page, please see the inside front cover. The performance of the fund's Class A
and C shares will differ from that of Class A shares due to differing fees and
expenses.
AIM ADVISOR FLEX FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-72.48%
AEROSPACE/DEFENSE-1.52%
Boeing Co. (The) 65,000 $ 2,701,562
- --------------------------------------------------------------
Lockheed Martin Corp. 150,000 3,281,250
- --------------------------------------------------------------
Precision Castparts Corp. 154,500 4,055,625
- --------------------------------------------------------------
10,038,437
- --------------------------------------------------------------
AGRICULTURAL PRODUCTS-0.37%
Archer-Daniels-Midland Co. 200,000 2,437,500
- --------------------------------------------------------------
AIRLINES-0.71%
Southwest Airlines Co. 288,525 4,670,498
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-1.56%
Cooper Tire & Rubber Co. 160,000 2,490,000
- --------------------------------------------------------------
Genuine Parts Co. 180,000 4,466,250
- --------------------------------------------------------------
Snap-on, Inc. 125,000 3,320,312
- --------------------------------------------------------------
10,276,562
- --------------------------------------------------------------
AUTOMOBILES-0.99%
Ford Motor Co. 121,600 6,498,000
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-2.42%
Bank One Corp. 185,000 5,931,562
- --------------------------------------------------------------
FleetBoston Financial Corp. 100,000 3,481,250
- --------------------------------------------------------------
National City Corp. 275,000 6,514,062
- --------------------------------------------------------------
15,926,874
- --------------------------------------------------------------
BANKS (MONEY CENTER)-2.04%
Bank of America Corp. 150,000 7,528,125
- --------------------------------------------------------------
First Union Corp. 180,000 5,906,250
- --------------------------------------------------------------
13,434,375
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.54%
Anheuser Busch Co., Inc. 50,000 3,543,750
- --------------------------------------------------------------
CHEMICALS-1.18%
Praxair, Inc. 35,000 1,760,937
- --------------------------------------------------------------
Dow Chemical Co. (The) 45,000 6,013,125
- --------------------------------------------------------------
7,774,062
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.43%
Great Lakes Chemical Corp. 75,000 2,864,062
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-3.38%
Compaq Computer Corp. 250,000 6,765,625
- --------------------------------------------------------------
Hewlett-Packard Co. 70,000 7,975,625
- --------------------------------------------------------------
International Business Machines
Corp. 70,000 7,560,000
- --------------------------------------------------------------
22,301,250
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-2.59%
Cadence Design Systems, Inc.(a) 125,000 $ 3,000,000
- --------------------------------------------------------------
Computer Associates International,
Inc. 148,000 10,350,750
- --------------------------------------------------------------
Compuware Corp.(a) 100,000 3,725,000
- --------------------------------------------------------------
17,075,750
- --------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES &
GIFTS)-0.36%
American Greetings Corp.-Class A 100,000 2,362,500
- --------------------------------------------------------------
CONSUMER FINANCE-0.28%
Household International, Inc. 50,000 1,862,500
- --------------------------------------------------------------
CONTAINERS (METAL & GLASS)-0.51%
Crown Cork & Seal Co., Inc. 150,000 3,356,250
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.86%
SUPERVALU, INC. 285,000 5,700,000
- --------------------------------------------------------------
ELECTRIC COMPANIES-2.64%
DTE Energy Co. 75,000 2,353,125
- --------------------------------------------------------------
Entergy Corp. 255,000 6,566,250
- --------------------------------------------------------------
GPU, Inc. 200,000 5,987,500
- --------------------------------------------------------------
Teco Energy, Inc. 135,000 2,505,937
- --------------------------------------------------------------
17,412,812
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.84%
Emerson Electric Co. 50,000 2,868,750
- --------------------------------------------------------------
General Electric Co. 35,000 5,416,250
- --------------------------------------------------------------
Rockwell International Corp. 80,000 3,830,000
- --------------------------------------------------------------
12,115,000
- --------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.43%
W.W. Grainger, Inc. 60,000 2,868,750
- --------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.32%
Raytheon Co.-Class A 85,000 2,109,062
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.44%
Intel Corp. 35,000 2,880,937
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.78%
American General Corp. 90,000 6,828,750
- --------------------------------------------------------------
Fannie Mae 40,000 2,497,500
- --------------------------------------------------------------
MGIC Investment Corp. 150,000 9,028,125
- --------------------------------------------------------------
18,354,375
- --------------------------------------------------------------
FOODS-0.75%
Sara Lee Corp. 100,000 2,206,250
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOODS-(CONTINUED)
H.J. Heinz Co. 69,000 $ 2,747,063
- --------------------------------------------------------------
4,953,313
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.96%
Abbott Laboratories 204,500 7,425,906
- --------------------------------------------------------------
American Home Products Corp. 100,000 3,943,750
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 24,000 1,540,500
- --------------------------------------------------------------
12,910,156
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.67%
Mylan Laboratories, Inc. 175,000 4,407,813
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-2.51%
Lilly (Eli) & Co. 50,000 3,325,000
- --------------------------------------------------------------
Merck & Co., Inc. 130,000 8,718,125
- --------------------------------------------------------------
Schering-Plough Corp. 107,200 4,522,500
- --------------------------------------------------------------
16,565,625
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.78%
Columbia/HCA Healthcare Corp. 175,000 5,129,688
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.37%
Quintiles Transnational Corp.(a) 130,000 2,429,375
- --------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES-0.74%
Whirlpool Corp. 75,000 4,879,688
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.49%
Kimberly-Clark Corp. 50,000 3,262,500
- --------------------------------------------------------------
HOUSEWARES-0.25%
Fortune Brands, Inc. 50,000 1,653,125
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.35%
Torchmark Corp. 80,000 2,325,000
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.74%
Loews Corp. 80,000 4,855,000
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-3.55%
Allstate Corp. (The) 230,000 5,520,000
- --------------------------------------------------------------
Ohio Casualty Corp. 350,000 5,621,875
- --------------------------------------------------------------
Old Republic International Corp. 200,000 2,725,000
- --------------------------------------------------------------
SAFECO Corp. 140,000 3,482,500
- --------------------------------------------------------------
St. Paul Co., Inc. (The) 180,000 6,063,750
- --------------------------------------------------------------
23,413,125
- --------------------------------------------------------------
INSURANCE BROKERS-1.16%
Marsh & McLennan Cos. Inc. 80,000 7,655,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INVESTMENT BANKING/BROKERAGE-1.73%
Morgan Stanley Dean Witter & Co. 80,000 $ 11,420,000
- --------------------------------------------------------------
IRON & STEEL-0.96%
Nucor Corp. 115,000 6,303,438
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.20%
Mattel, Inc. 100,000 1,312,500
- --------------------------------------------------------------
LODGING-HOTELS-0.08%
Host Marriott Corp. 62,000 511,500
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.93%
Caterpillar, Inc. 100,000 4,706,250
- --------------------------------------------------------------
Deere & Co. 90,000 3,903,750
- --------------------------------------------------------------
Dover Corp. 90,000 4,083,750
- --------------------------------------------------------------
12,693,750
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-3.34%
Illinois Tool Works, Inc. 74,000 4,999,625
- --------------------------------------------------------------
Minnesota Mining and Manufacturing Co. 35,000 3,425,625
- --------------------------------------------------------------
National Service Industries, Inc. 100,000 2,950,000
- --------------------------------------------------------------
United Technologies Corp. 50,000 3,250,000
- --------------------------------------------------------------
Johnson Controls, Inc. 90,000 5,118,750
- --------------------------------------------------------------
Textron, Inc. 30,000 2,300,625
- --------------------------------------------------------------
22,044,625
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.91%
Federal Signal Corp. 160,000 2,570,000
- --------------------------------------------------------------
York International Corp. 124,600 3,418,713
- --------------------------------------------------------------
5,988,713
- --------------------------------------------------------------
METALS MINING-0.71%
Phelps Dodge Corp. 70,000 4,698,750
- --------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.36%
Phillips Petroleum Co. 50,000 2,350,000
- --------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-1.19%
Exxon Mobil Corp. 97,400 7,846,788
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.46%
Westvaco Corp. 93,400 3,047,175
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.95%
IKON Office Solutions, Inc. 340,000 2,316,250
- --------------------------------------------------------------
Xerox Corp. 175,000 3,970,313
- --------------------------------------------------------------
6,286,563
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.87%
Gannett Co., Inc. 70,000 5,709,375
- --------------------------------------------------------------
RAILROADS-0.52%
CSX Corp. 110,000 3,451,250
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS-4.00%
Arden Realty Group, Inc. 75,200 $ 1,508,700
- --------------------------------------------------------------
Avalonbay Communities, Inc. 59,100 2,027,869
- --------------------------------------------------------------
Beacon Capital 60,000 720,000
- --------------------------------------------------------------
Beacon Capital Voting Trust 2,705 254,543
- --------------------------------------------------------------
CarrAmerica Realty Corp. 57,300 1,210,463
- --------------------------------------------------------------
CBL & Associates Properties, Inc. 39,800 820,875
- --------------------------------------------------------------
Charles E. Smith Residential
Realty, Inc. 21,800 771,175
- --------------------------------------------------------------
Duke-Weeks Realty Corp. 60,000 1,170,000
- --------------------------------------------------------------
Equity Office Properties Trust 90,979 2,240,358
- --------------------------------------------------------------
Equity Residential Properties Trust 55,100 2,352,081
- --------------------------------------------------------------
First Industrial Realty Trust, Inc. 41,500 1,138,656
- --------------------------------------------------------------
Highwoods Properties, Inc. 46,800 1,088,100
- --------------------------------------------------------------
Hospitality Properties Trust 45,700 871,156
- --------------------------------------------------------------
Kimco Realty Corp. 34,200 1,158,525
- --------------------------------------------------------------
Liberty Property Trust 67,500 1,636,875
- --------------------------------------------------------------
New Plan Excel Realty Trust 35,060 554,386
- --------------------------------------------------------------
Prentiss Properties Trust 85,100 1,787,100
- --------------------------------------------------------------
Public Storage, Inc. 95,400 2,164,388
- --------------------------------------------------------------
Simon Property Group, Inc. 73,500 1,685,906
- --------------------------------------------------------------
Vornado Realty Trust 36,700 1,192,750
- --------------------------------------------------------------
26,353,906
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.07%
Lowe's Cos., Inc. 50,000 2,987,500
- --------------------------------------------------------------
Sherwin-Williams Co. 195,000 4,095,000
- --------------------------------------------------------------
7,082,500
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-1.04%
Dillards, Inc.-Class A 190,000 3,835,625
- --------------------------------------------------------------
J.C. Penney Co., Inc. 150,000 2,990,625
- --------------------------------------------------------------
6,826,250
- --------------------------------------------------------------
RETAIL (DRUG STORES)-0.68%
Rite Aid Corp. 400,000 4,475,000
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.37%
Albertson's, Inc. 75,000 2,418,750
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.25%
Office Depot, Inc.(a) 150,000 1,640,625
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.45%
First Data Corp. 60,000 2,958,750
- --------------------------------------------------------------
SPECIALTY PRINTING-0.77%
Deluxe Corp. 183,900 5,045,756
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.54%
AT&T Corp. 200,000 10,150,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-2.29%
Bell Atlantic Corp. 80,000 $ 4,925,000
- --------------------------------------------------------------
SBC Communications, Inc. 150,000 7,312,500
- --------------------------------------------------------------
US West, Inc. 40,000 2,880,000
- --------------------------------------------------------------
15,117,500
- --------------------------------------------------------------
TEXTILES (APPAREL)-1.45%
Liz Claiborne, Inc. 135,000 5,079,375
- --------------------------------------------------------------
VF Corp. 150,000 4,500,000
- --------------------------------------------------------------
9,579,375
- --------------------------------------------------------------
TEXTILES (SPECIALTY)-0.37%
Unifi, Inc.(a) 200,000 2,462,500
- --------------------------------------------------------------
TOBACCO-0.79%
Philip Morris Cos. Inc. 225,000 5,217,188
- --------------------------------------------------------------
WASTE MANAGEMENT-0.69%
Waste Management, Inc. 265,000 4,554,688
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $392,397,411) 477,849,929
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-5.17%
MEXICO-1.19%
Telefonos de Mexico S.A.-ADR
(Telephone) 70,000 7,875,000
- --------------------------------------------------------------
NETHERLANDS-0.75%
Unilever N.V.-ADR (Foods) 90,249 4,912,930
- --------------------------------------------------------------
NORWAY-0.88%
Norsk Hydro A.S.A.-ADR
(Manufacturing- Diversified) 135,000 5,771,250
- --------------------------------------------------------------
SPAIN-1.68%
Repsol S.A.-ADR (Oil-International
Integrated) 475,000 11,043,750
- --------------------------------------------------------------
UNITED KINGDOM-0.67%
Hanson PLC-ADR
(Manufacturing-Diversified) 110,000 4,448,125
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$18,887,089) 34,051,055
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CORPORATE BONDS & NOTES-12.97%
AUTOMOBILES-1.25%
Ford Motor Co., Unsec. Bonds,
6.50%, 08/01/18 $3,250,000 2,877,582
- --------------------------------------------------------------
General Motors Acceptance Corp.,
Unsec. Bonds, 5.50%, 01/14/02 5,500,000 5,344,845
- --------------------------------------------------------------
8,222,427
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-1.89%
Bank of America Corp., Notes,
6.63%, 06/15/04 5,000,000 4,890,750
- --------------------------------------------------------------
National City Corp., Sub. Notes,
7.20%, 05/15/05 1,000,000 989,810
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
BANKS (MAJOR REGIONAL)-(CONTINUED)
Nationsbank Corp., Sr. Notes,
5.38%, 04/15/00 $1,550,000 $ 1,546,776
- --------------------------------------------------------------
Wachovia Corp., Unsec. Sub. Notes,
6.25%, 08/04/08 5,500,000 5,069,240
- --------------------------------------------------------------
12,496,576
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.73%
Anheuser-Busch Cos. Inc., Unsec.
Notes, 5.38%, 09/15/08 5,500,000 4,828,890
- --------------------------------------------------------------
BUILDING MATERIALS-0.75%
Masco Corp., Unsec. Deb., 7.75%,
08/01/29 5,000,000 4,938,150
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.31%
Diageo Capital PLC, Unsec. Gtd.
Notes, 6.63%, 06/24/04 4,000,000 3,917,864
- --------------------------------------------------------------
Motorola, Inc., Notes, 6.50%,
03/01/08 5,000,000 4,738,300
- --------------------------------------------------------------
8,656,164
- --------------------------------------------------------------
CONSUMER FINANCE-1.33%
Beneficial Corp., Medium Term
Series I Notes, 6.63%, 09/27/04 3,000,000 2,871,870
- --------------------------------------------------------------
Commercial Credit Co., Unsec.
Notes, 5.55%, 02/15/01 3,000,000 2,959,470
- --------------------------------------------------------------
Ford Motor Credit Co., Sr. Unsec.
Notes, 5.13%, 10/15/01 3,000,000 2,909,931
- --------------------------------------------------------------
8,741,271
- --------------------------------------------------------------
ELECTRIC COMPANIES-0.56%
Penn Power & Lighting, First
Mortgage Notes, 6.55%, 03/01/06 3,900,000 3,715,296
- --------------------------------------------------------------
FOODS-0.67%
Bestfoods, Notes, 6.63%, 04/15/28 5,000,000 4,399,100
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.28%
Guidant Corp., Notes, 6.15%,
02/15/06 2,000,000 1,837,080
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-0.32%
Travelers Property Casualty Corp.,
Sr. Unsec. Notes, 6.75%, 11/15/06 2,200,000 2,110,218
- --------------------------------------------------------------
INSURANCE BROKERS-0.74%
Marsh & McLennan Cos. Inc., Sr.
Unsec. Notes, 6.63%, 06/15/04 5,000,000 4,886,100
- --------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.77%
Atlantic Richfield Co., Notes,
5.55%, 04/15/03 5,300,000 5,082,594
- --------------------------------------------------------------
RAILROADS-0.68%
Norfolk Southern Corp., Sr. Unsec.
Notes, 6.20%, 04/15/09 5,000,000 4,504,670
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.45%
Sherwin-Williams Co., Notes, 6.50%,
02/01/02 3,000,000 2,964,630
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
RETAIL (DISCOUNTERS)-0.82%
Wal-Mart Stores, Inc., Sr. Unsec.
Notes, 6.55%, 08/10/04 $5,500,000 $ 5,402,485
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.42%
AT&T Corp., Notes, 6.50%, 03/15/29 3,200,000 2,750,624
- --------------------------------------------------------------
Total Corporate Bonds & Notes
(Cost $89,114,354) 85,536,275
- --------------------------------------------------------------
ASSET-BACKED SECURITIES-0.36%
SERVICES (COMMERCIAL & CONSUMER)-0.36%
Discover Card Master Trust I,
Series. 1998-7 A, 5.60%, 05/16/06
(Cost $2,523,340) 2,500,000 2,382,813
- --------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-6.00%
FEDERAL HOME LOAN BANK-1.29%
Debentures
5.165%, 04/12/01 1,000,000 984,310
- --------------------------------------------------------------
Disc. Notes,
1.50%, 01/03/00(b) 529,000 528,956
- --------------------------------------------------------------
Sr. Unsec. Unsub. Notes
5.50%, 07/14/00 7,000,000 6,978,510
- --------------------------------------------------------------
8,491,776
- --------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-2.55%
Pass Through Certificates
6.50%, 07/01/01 to 05/01/29 5,382,998 5,136,553
- --------------------------------------------------------------
8.00%, 10/01/10 1,007,527 1,028,303
- --------------------------------------------------------------
5.50%, 01/01/14 3,791,232 3,528,196
- --------------------------------------------------------------
6.00%, 01/01/29 7,762,978 7,122,532
- --------------------------------------------------------------
16,815,584
- --------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION ("FNMA")-1.57%
Pass Through Certificates
8.50%, 03/01/10 904,828 933,665
- --------------------------------------------------------------
6.50%, 06/01/11 to 05/01/26 5,030,402 4,823,878
- --------------------------------------------------------------
7.50%, 11/01/26 to 05/01/29 4,685,919 4,641,791
- --------------------------------------------------------------
10,399,334
- --------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION ("GNMA")-0.59%
Pass Through Certificates
6.50%, 10/15/08 711,791 696,437
- --------------------------------------------------------------
7.00%, 10/15/08 728,732 724,403
- --------------------------------------------------------------
6.00%, 11/15/08 852,885 815,298
- --------------------------------------------------------------
7.50%, 03/15/26 1,651,987 1,640,621
- --------------------------------------------------------------
3,876,759
- --------------------------------------------------------------
Total U.S. Government Agency
Securities (Cost $40,475,868) 39,583,453
- --------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-3.39%
U.S. TREASURY BONDS-2.81%
9.25%, 02/15/16 $1,000,000 $ 1,234,120
- --------------------------------------------------------------
7.25%, 08/15/22 8,000,000 8,428,160
- --------------------------------------------------------------
7.625%, 02/15/25 8,000,000 8,862,640
- --------------------------------------------------------------
18,524,920
- --------------------------------------------------------------
U.S. TREASURY NOTES-0.58%
6.25%, 02/15/03 1,000,000 997,390
- --------------------------------------------------------------
9.375%, 02/15/06 2,500,000 2,852,525
- --------------------------------------------------------------
3,849,915
- --------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $23,232,422) 22,374,835
- --------------------------------------------------------------
TOTAL INVESTMENTS-100.37% (Cost
$566,630,484) 661,778,360
- --------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.37%) (2,466,184)
- --------------------------------------------------------------
NET ASSETS-100.00% $659,312,176
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Deb. - Debentures
Disc. - Discount
Gtd. - Guaranteed
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$566,630,484) $661,778,360
- ---------------------------------------------------------
Cash 710,099
- ---------------------------------------------------------
Receivables for:
Capital stock sold 173,662
- ---------------------------------------------------------
Interest and dividends 3,727,457
- ---------------------------------------------------------
Investment for deferred compensation plan 26,134
- ---------------------------------------------------------
Other assets 51,659
- ---------------------------------------------------------
Total assets 666,467,371
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 4,910,428
- ---------------------------------------------------------
Deferred compensation plan 26,134
- ---------------------------------------------------------
Accrued advisory fees 430,963
- ---------------------------------------------------------
Accrued distribution fees 1,650,981
- ---------------------------------------------------------
Accrued transfer agent fees 24,062
- ---------------------------------------------------------
Accrued operating expenses 112,627
- ---------------------------------------------------------
Total liabilities 7,155,195
- ---------------------------------------------------------
Net assets applicable to shares outstanding $659,312,176
- ---------------------------------------------------------
NET ASSETS:
Class A $ 39,194,936
=========================================================
Class B $ 10,075,882
=========================================================
Class C $610,041,358
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 2,230,312
=========================================================
Class B:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 572,966
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 34,692,912
=========================================================
Class A:
Net asset value and redemption price per
share $ 17.57
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $17.57 divided
by 94.50%) $ 18.59
=========================================================
Class B:
Net asset value and offering price per
share $ 17.59
=========================================================
Class C:
Net asset value and offering price per
share $ 17.58
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 13,196,366
- ---------------------------------------------------------
Dividends (net of $195,724 foreign
withholding tax) 12,609,266
- ---------------------------------------------------------
Total investment income 25,805,632
- ---------------------------------------------------------
EXPENSES:
Advisory fees 5,635,894
- ---------------------------------------------------------
Administrative services fees 64,957
- ---------------------------------------------------------
Custodian fees 37,789
- ---------------------------------------------------------
Operating services fees 1,606,380
- ---------------------------------------------------------
Distribution fees-Class A 159,420
- ---------------------------------------------------------
Distribution fees-Class B 91,305
- ---------------------------------------------------------
Distribution fees-Class C 6,967,734
- ---------------------------------------------------------
Directors' fees and expenses 8,750
- ---------------------------------------------------------
Transfer Agent fees-Class A 17,905
- ---------------------------------------------------------
Transfer Agent fees-Class B 10,056
- ---------------------------------------------------------
Transfer Agent fees-Class C 184,755
- ---------------------------------------------------------
Other 87,966
- ---------------------------------------------------------
Total expenses 14,872,911
- ---------------------------------------------------------
Less: Fees waived by advisor (1,208,175)
- ---------------------------------------------------------
Expenses paid indirectly (4,752)
- ---------------------------------------------------------
Net expenses 13,659,984
- ---------------------------------------------------------
Net investment income 12,145,648
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities 98,684,082
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (110,583,574)
- ---------------------------------------------------------
Net gain (loss) from investment
securities (11,899,492)
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $ 246,156
=========================================================
</TABLE>
10
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 12,145,648 $ 8,482,076
- -----------------------------------------------------------------------------------------
Net realized gain from investment securities 98,684,082 59,176,179
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (110,583,574) 11,782,197
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 246,156 79,440,452
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (1,034,236) (693,499)
- -----------------------------------------------------------------------------------------
Class B (160,013) (14,661)
- -----------------------------------------------------------------------------------------
Class C (10,863,435) (7,001,855)
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS ON
INVESTMENT SECURITIES:
Class A (3,757,847) (3,877,358)
- -----------------------------------------------------------------------------------------
Class B (958,788) (270,410)
- -----------------------------------------------------------------------------------------
Class C (58,115,071) (56,203,971)
- -----------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (3,267,326) 21,305,857
- -----------------------------------------------------------------------------------------
Class B 7,515,438 3,715,719
- -----------------------------------------------------------------------------------------
Class C 9,573,755 55,402,752
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets (60,821,367) 91,803,026
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 720,133,543 628,330,517
- -----------------------------------------------------------------------------------------
End of period $659,312,176 $720,133,543
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $530,444,492 $510,018,210
- -----------------------------------------------------------------------------------------
Undistributed net investment income 952,680 938,111
- -----------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities 32,767,128 3,445,772
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 95,147,876 205,731,450
- -----------------------------------------------------------------------------------------
$659,312,176 $720,133,543
=========================================================================================
</TABLE>
See Notes to Financial Statements
11
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor Flex Fund (the "Fund") is a series portfolio of AIM Advisor Funds,
Inc. (the "Company"). The Company is a Maryland corporation registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of four separate portfolios. The
Fund currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B 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 growth of capital 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 amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the 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 closing bid price on that
day. 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 closing bid price. Debt obligations (including convertible bonds)
are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors
such as yield, type of issue, coupon rate and maturity date. Securities for
which market prices are not provided by any of the above methods are valued
based upon quotes furnished by independent sources and are valued at the
last bid price in the case of equity securities and in the case of debt
obligations, the mean between the last bid and asked prices. 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 officers in a manner specifically authorized
by the Board of Directors of the Company. Short-term obligations having 60
days or less to maturity are valued at amortized cost which approximates
market value. For purposes of determining net asset value per share,
futures and option contracts generally will be valued 15 minutes after the
close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair
value as determined in good faith by or under the supervision of the Board
of Directors.
B. Securities Transactions and Investment Income -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. On December 31, 1999, undistributed net investment income
was decreased by $73,395, undistributed net realized gains decreased by
$6,531,020 and paid-in capital increased by $6,604,415 as a result of
differing book/tax treatment of paydowns, equalization credits and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- Distributions from income are recorded on ex-dividend
date, and are declared and paid quarterly. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for federal income tax purposes.
D. 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.
E. Bond Premiums -- It is the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes.
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 0.75% of
the Fund's
12
<PAGE> 15
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.
The Company, pursuant to an operating services agreement with AIM, 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. The
agreement provided that AIM pay 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
year ended December 31, 1999, AIM was paid $443,754 under the agreement. As of
June 1, 1998, AIM 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 year ended December 31, 1999, AIM voluntarily waived
operating services fees in the amount of $1,162,626.
Pursuant to an amended operating services agreement effective July 1, 1999,
the Fund shall pay costs incurred for providing operating services, such as
accounting, legal (except litigation), dividend disbursing, transfer agency,
registrar, custodial, shareholder reporting, sub-accounting and recordkeeping
services and functions, including, but not limited to, registration fees,
shareholder meeting fees, and proxy statement and shareholder report expenses.
Further, the Fund's operating expenses are limited to 0.45% of the Fund's
average daily net assets.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a master administrative services agreement with AIM.
Pursuant to a master administrative services agreement, the Fund has agreed to
pay AIM for certain administrative costs incurred in providing accounting
services to the Fund. For the period July 1, 1999 though December 31, 1999, AIM
was paid $64,957 for such services.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a transfer agency and service agreement with A I M
Fund Services, Inc. ("AFS"). Pursuant to a transfer agency and service
agreement, the Fund agreed to pay AFS a fee for providing transfer agency and
shareholder services to the Fund. For the period July 1, 1999 through December
31, 1999, AFS was paid $135,055 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under
the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class
C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. AIM Distributors has contractually agreed to limit the
Class A shares plan payments to 0.25% for three years beginning August 4, 1997.
Of these amounts, the Fund may pay a service fee of 0.25% of the average daily
net assets of the Class A, Class B or Class C shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the year ended December 31, 1999, the Class A, Class B and Class
C shares paid AIM Distributors $113,871, $91,305 and $6,967,734, respectively,
as compensation under the Plans. During the year ended December 31, 1999, AIM
Distributors waived fees of $45,549 for Class A shares.
AIM Distributors received commissions of $22,488 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $133,285 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and directors of the Company are officers and directors of
AIM, AFS and AIM Distributors.
During the period July 1, 1999 through December 31, 1999, the Fund paid legal
fees of $1,446 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $515 and $4,237, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $4,752 during the year ended December 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests directors' fees, if so elected
by a director, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
13
<PAGE> 16
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$405,990,945 and $436,537,739, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $150,129,444
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (55,056,781)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 95,072,663
==========================================================================
Cost of investments for tax purposes is $566,705,697.
</TABLE>
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1999
and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 647,940 $ 13,033,761 1,076,842 $ 22,390,887
- ----------------------------------------------------------------------------------------------------------------------
Class B* 289,189 5,853,184 175,059 3,648,126
- ----------------------------------------------------------------------------------------------------------------------
Class C 3,933,740 79,330,393 5,318,582 109,967,149
- ----------------------------------------------------------------------------------------------------------------------
Issued in connection with acquisition**:
Class A 623,953 11,614,157 -- --
- ----------------------------------------------------------------------------------------------------------------------
Class B 256,293 4,785,508 -- --
- ----------------------------------------------------------------------------------------------------------------------
Class C 7,871,114 146,770,808 -- --
- ----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 240,465 4,199,593 223,596 4,399,200
- ----------------------------------------------------------------------------------------------------------------------
Class B* 59,674 1,031,441 14,140 277,225
- ----------------------------------------------------------------------------------------------------------------------
Class C 3,685,888 63,875,426 3,067,888 60,325,811
- ----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,589,802) (32,114,838) (266,823) (5,484,230)
- ----------------------------------------------------------------------------------------------------------------------
Class B* (211,198) (4,154,695) (10,191) (209,632)
- ----------------------------------------------------------------------------------------------------------------------
Class C (14,205,464) (280,402,871) (5,531,566) (114,890,208)
- ----------------------------------------------------------------------------------------------------------------------
1,601,792 $ 13,821,867 4,067,527 $ 80,424,328
======================================================================================================================
</TABLE>
* Class B shares commenced sales on March 3, 1998.
** On June 21, 1999, pursuant to a plan of reorganization and termination, AIM
MultiFlex Fund ("MultiFlex Fund") transferred all of its assets to the Fund.
The Fund assumed all of the liabilities of the MultiFlex Fund. Shareholders
of the MultiFlex Fund were issued full and fractional shares of the
applicable class of the Fund. The acquisition, which was approved by the
shareholders of MultiFlex Fund on June 16, 1999, was accomplished by an
exchange of 8,751,360 shares of the Fund for the 15,054,075 shares then
outstanding of the MultiFlex Fund. Based on the opinion of Fund counsel, the
reorganization qualified as a tax-free reorganization for federal income tax
purposes with no gain or loss recognized to the Funds or its shareholders.
MultiFlex Fund's net assets, including $21,805,397 of unrealized
appreciation, were combined with the Fund for total net assets after the
acquisition of $892,863,343.
14
<PAGE> 17
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the three-year period ended December 31,
1999, for a share of Class B capital stock outstanding during the year ended
December 31, 1999 and the period March 3, 1998 (date sales commenced) through
December 31, 1998, and for a share of Class C capital stock outstanding during
each of the years in the five-year period ended December 31, 1999.
<TABLE>
<CAPTION>
CLASS A(a) CLASS B
-------------------------------- -----------------
1999 1998 1997(b) 1999 1998
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.06 $ 19.74 $ 16.63 $ 20.06 $20.69
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Income from investment operations:
Net investment income 0.46 0.39 0.41 0.31 0.22
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Net gains (losses) on securities (both realized and
unrealized) (0.68) 2.16 3.63 (0.66) 1.22
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Total from investment operations (0.22) 2.55 4.04 (0.35) 1.44
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.48) (0.39) (0.43) (0.33) (0.23)
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Distributions from net realized gains (1.79) (1.84) (0.50) (1.79) (1.84)
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Total distributions (2.27) (2.23) (0.93) (2.12) (2.07)
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Net asset value, end of period $ 17.57 $ 20.06 $ 19.74 $ 17.59 $20.06
============================================================ ======= ======= ======= ======= ======
Total return(c) (0.85)% 13.26% 24.60% (1.50)% 7.25%
============================================================ ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $39,195 $46,286 $25,151 $10,076 $3,592
============================================================ ======= ======= ======= ======= ======
Ratio of expenses to average net assets(d) 1.13%(e) 1.23% 1.45% 1.86%(e) 2.00%(f)
============================================================ ======= ======= ======= ======= ======
Ratio of net investment income to average net assets(g) 2.30%(e) 1.99% 2.34% 1.57%(e) 1.22%(f)
============================================================ ======= ======= ======= ======= ======
Portfolio turnover rate 55% 34% 17% 55% 34%
============================================================ ======= ======= ======= ======= ======
</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) Calculated using average shares outstanding.
(c) Does not deduct sales charges and for periods less than one
year is not annualized.
(d) After fee waivers and/or expense reimbursements. Ratio of
expenses to average net assets prior to fee waivers and/or
expense reimbursements were 1.39%, 1.52% and 1.55% for
1999-1997 for Class A and 2.02% and 2.19% (annualized) for
1999-1998 for Class B.
(e) Ratios are based on average net assets of $45,548,558 and
$9,130,498 for Class A and Class B, respectively.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratio of
net investment income to average net assets prior to fee
waivers and/or expense reimbursements were 2.04%, 1.70% and
2.24% for 1999-1997 for Class A and 1.41% and 1.03%
(annualized) for 1999-1998 for Class B.
<TABLE>
<CAPTION>
CLASS C(a)
--------------------------------------------------------
1999(b) 1998 1997(b) 1996 1995
-------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.06 $ 19.74 $ 16.63 $ 15.66 $ 12.63
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.32 0.25 0.30 0.30 0.32
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.68) 2.14 3.60 1.81 3.09
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations (0.36) 2.39 3.90 2.11 3.41
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.33) (0.23) (0.29) (0.29) (0.32)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains (1.79) (1.84) (0.50) (0.85) (0.06)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (2.12) (2.07) (0.79) (1.14) (0.38)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 17.58 $ 20.06 $ 19.74 $ 16.63 $ 15.66
============================================================ ======== ======== ======== ======== ========
Total return(c) (1.56)% 12.41% 23.64% 13.61% 27.30%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $610,041 $670,256 $603,179 $489,918 $399,162
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets(d) 1.86%(e) 2.00% 2.20% 2.26% 2.28%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets(f) 1.57%(e) 1.22% 1.59% 1.81% 2.28%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 55% 34% 17% 26% 5%
============================================================ ======== ======== ======== ======== ========
</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) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.02% and 2.19% for 1999-1998.
(e) Ratios are based on average net assets of $696,773,444.
(f) 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 1.41% and 1.03% for 1999-1998.
15
<PAGE> 18
INDEPENDENT AUDITORS REPORT
The Board of Trustees and Shareholders of
AIM Advisor Flex Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Advisor Flex Fund (a portfolio of AIM
Advisor Funds, Inc.), including the schedule of
investments, as of December 31, 1999, and the related
statement of operations for the year then ended, and the
statement of changes in net assets and the financial
highlights for each of the years in the two-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express and opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by
correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Advisor Flex Fund as of December 31, 1999, the results of
its operations for the year then ended, and the changes
in its net assets and the financial highlights for each
of the years in the two-year period then ended, in
conformity with generally accepted accounting principles.
KPMG LLP
February 4, 2000
Houston, Texas
16
<PAGE> 19
<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; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II SUB-ADVISOR
Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer INVESCO Capital Management, Inc.
1315 Peachtree Street, N.E.
Edward K. Dunn Jr. Robert G. Alley Atlanta, GA 30309
Chairman, Mercantile Mortgage Corp.; Vice President
Formerly Vice Chairman, President and TRANSFER AGENT
Chief Operating Officer, Stuart W. Coco
Mercantile-Safe Deposit & Trust Co.; and Vice President A I M Fund Services, Inc.
President, Mercantile Bankshares P.O. Box 4739
Melville B. Cox Houston, TX 77210-4739
Jack Fields Vice President
Chief Executive Officer CUSTODIAN
Texana Global, Inc.; Karen Dunn Kelley
Formerly Member Vice President State Street Bank and Trust Company
of the U.S. House of Representatives 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Carl Frischling Vice President
Partner COUNSEL TO THE FUND
Kramer, Levin, Naftalis & Frankel LLP Mary J. Benson
Assistant Vice President and Ballard Spahr
Robert H. Graham Assistant Treasurer Andrews & Ingersoll, LLP
President and Chief Executive Officer 1735 Market Street
A I M Management Group Inc. Sheri Morris Philadelphia, PA 19103
Assistant Vice President and
Prema Mathai-Davis Assistant Treasurer COUNSEL TO THE DIRECTORS
Chief Executive Officer, YWCA of the U.S.A.
Renee A. Friedli Kramer, Levin, Naftalis & Frankel LLP
Lewis F. Pennock Assistant Secretary 919 Third Avenue
Attorney New York, NY 10022
P. Michelle Grace
Louis S. Sklar Assistant Secretary DISTRIBUTOR
Executive Vice President
Hines Interests Nancy L. Martin A I M Distributors, Inc.
Limited Partnership Assistant Secretary 11 Greenway Plaza
Suite 100
Ofelia M. Mayo Houston, TX 77046
Assistant Secretary
AUDITORS
Lisa A. Moss
Assistant Secretary KPMG LLP
700 Louisiana
Kathleen J. Pflueger Houston, TX 77002
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
(UNAUDITED)
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Advisor Flex Fund Class A, Class B and Class C shares paid ordinary
dividends in the amount of $0.656, $0.504 and $0.504 per share, respectively, to
shareholders during the Fund's tax year ended December 31, 1999. Of this amount,
50.66% is eligible for the dividends received deduction for corporations.
The Fund also distributed long-term capital gains of $56,615,343 for the
Fund's tax year ended December 31, 1999. Of long-term capital gains distributed,
100% is 20% rate gain.
REQUIRED STATE INCOME TAX INFORMATION
Of the total ordinary dividends paid, 14.71% were for Class A, 13.07% for Class
B and 13.07% for Class C shares were derived from U.S. Treasury obligations.
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has
AIM Aggressive Growth Fund AIM Money Market Fund provided leadership in the mutual
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund fund industry since 1976 and managed
AIM Capital Development Fund approximately $160 billion in assets
AIM Constellation Fund(1) INTERNATIONAL GROWTH FUNDS for more than 6.6 million
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund shareholders, including individual
AIM Large Cap Growth Fund AIM Asian Growth Fund investors, corporate clients and
AIM Mid Cap Equity Fund AIM Developing Markets Fund financial institutions, as of
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) December 31, 1999.
AIM Mid Cap Opportunities Fund AIM European Development Fund The AIM Family of Funds--Registered
AIM Select Growth Fund AIM International Equity Fund Trademark-- is distributed
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund nationwide, and AIM today is the
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund eighth-largest mutual fund complex
AIM Value Fund AIM New Pacific Growth Fund in the United States in assets under
AIM Weingarten Fund management, according to Strategic
GLOBAL GROWTH FUNDS Insight, an independent mutual fund
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund monitor.
AIM Advisor Flex Fund AIM Global Growth Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS
AIM Balanced Fund AIM Global Growth & Income Fund
AIM Basic Value Fund AIM Global Utilities Fund
AIM Charter Fund
GLOBAL INCOME FUNDS
INCOME FUNDS AIM Emerging Markets Debt Fund
AIM Floating Rate Fund AIM Global Government Income Fund
AIM High Yield Fund AIM Global Income Fund
AIM High Yield Fund II AIM Strategic Income Fund
AIM Income Fund
AIM Intermediate Government Fund THEME FUNDS
AIM Limited Maturity Treasury Fund AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
TAX-FREE INCOME FUNDS AIM Global Health Care Fund
AIM High Income Municipal Fund AIM Global Infrastructure Fund
AIM Municipal Bond Fund AIM Global Resources Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications and Technology Fund(5)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(6)
</TABLE>
(1) Effective December 1, 1999, AIM Constellation Fund's investment strategy
broadened to allow investments across all market capitalizations. (2) AIM Small
Cap Growth Fund closed to new investors on November 8, 1999. (3) AIM Small Cap
Opportunities Fund closed to new investors on November 4, 1999. (4) On September
1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth Fund. Previously
the fund invested in all size companies in most areas of Europe. The fund now
seeks to invest at least 65% of its assets in large-cap companies within
countries using the euro as their currency (EMU-member countries). (5) On June
1, 1999, AIM Global Telecommunications Fund was renamed AIM Global
Telecommunications and Technology Fund. (6) Effective August 27, 1999, AIM
Global Trends Fund was restructured to operate as a traditional mutual fund.
Before that date, the fund operated as a fund of funds. For more complete
information about any AIM fund(s), including sales charges and expenses, ask
your financial advisor or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money. If used as
sales material after April 20, 2000, this report must be accompanied by a
current Quarterly Review of Performance for AIM Funds.
[AIM LOGO APPEARS HERE]
[DALBAR LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
A I M Distributors, Inc.
LTD-AR-1
