<PAGE> 1
ANNUAL REPORT / DECEMBER 31 1999
AIM ADVISOR REAL ESTATE FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[ COVER IMAGE]
------------------------------------
NEW YORK, NEW YORK BY DIANA ONG
(BORN 1940, CHINESE-AMERICAN)
EVOLVING FROM BROWNSTONES TO SKYSCRAPERS, FROM EMPTY FIELDS
TO INDUSTRIAL PARKS, THE REAL ESTATE SECTOR HAS TRANSFORMED
ITSELF THROUGH THE DECADES. LIKE NEW YORK CITY, THE FUND IS
WELL POSITIONED TO TAKE ADVANTAGE OF FUTURE EXPANSIONS.
------------------------------------
AIM Advisor Real Estate Fund is for shareholders who seek high total return on
investment through capital appreciation and current income through a portfolio
invested primarily in publicly traded securities of companies related to the
real estate industry.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Advisor Real Estate Fund's performance figures are historical and
reflect reinvestment of all distributions and changes in net asset value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(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 Class A shares due to differences in sales charge structure and
expenses.
o Investing in a single-sector mutual fund may involve greater risk and
potential reward than investing in a more diversified fund.
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 NAREIT (National Association of Real Estate Investment Trusts) Equity
Index tracks the performance of all tax-qualified REITs listed on the New
York Stock Exchange, American Stock Exchange, and the Nasdaq National Market
System. Equity REITs are defined as REITs with 75% or more of their gross
invested book assets invested directly or indirectly in the equity ownership
of real estate.
o The 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 listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE 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 REAL ESTATE 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 REAL ESTATE FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
REITS STRUGGLE IN
TECHNOLOGY-DOMINATED MARKET
HOW DID AIM ADVISOR REAL ESTATE FUND PERFORM DURING THE FISCAL YEAR?
The technology sector's dominance during the fiscal year left REITs in the
doldrums. The challenging market environment was reflected in the disappointing
returns by AIM Advisor Real Estate Fund. For the fiscal year ended December 31,
1999, the fund's Class A shares returned -2.88%. The fund's Class B and Class C
shares posted -3.53 % and -3.54% returns, respectively. These returns were
calculated at net asset value, that is, without the effects of sales charges.
Fund performance was slightly better than the REIT market's average performance,
as measured by the NAREIT Index's 4.62% loss for the fiscal year.
Net assets under management totaled $46.1 million on December 31.
WHAT WERE THE MAJOR TRENDS IN FINANCIAL MARKETS DURING 1999?
Although there were several prominent shifts in market sentiment during the
fiscal year, the overriding theme for 1999 was the dominance of the technology
sector. During the first half of 1999, investors favored large-cap and cyclical
stocks. Then the markets began to broaden into small and mid-cap issues during
the third quarter, while technology stocks continued to soar through year-end.
Global equity markets ended 1999 at record levels. Every major index in the
United States, as well as markets across Europe, Asia and Latin America, hit new
highs at year-end. But in the midst of this prosperity we continued to struggle
with a stealth bear market. At the end of 1999, a third of the New York Stock
Exchange and over-the-counter stocks were off 20% or more from their previous
12-month highs.
This past year has been a challenging period for fixed-income investors.
Throughout 1999, downward pressure on bond prices came 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 and other income-producing securities,
including REITs.
WHAT WERE MARKET CONDITIONS LIKE FOR REITS?
In the face of continued solid earnings and dividend growth, share prices for
REITs deteriorated slightly during the second half of 1999 due to continuing
negative sector perception and adverse market psychology that had persisted for
small-cap, value and income-oriented securities throughout most of 1999. Warren
Buffett, the famed value investor, helped shake the REIT market out of its slump
when it was reported that a wallet he had donated to charity contained a
reference to a REIT security. As a result, the REIT market rallied in late
December. However, REIT securities once again came under pressure from
significant tax-loss selling and redemptions by dedicated REIT mutual funds.
These downward pressures have made REITs attractive from several
perspectives. Since the collapse of REIT stock prices in 1998, REIT valuation
levels have reached a new cyclical low. Moreover, REITs continued to offer solid
dividends. The average REIT dividend yield at year-end was 8.58%--over 200 basis
points above the 10-year U.S. Treasury bond. Thirdly, REIT stocks were trading
at an average discount to their net asset value of approximately 20% at the end
of 1999.
GIVEN THESE MARKET CONDITIONS, HOW DID YOU MANAGE THE FUND?
Against this background, we believe that the large-cap names in the REIT
sector--those with continued access to capital, solid management and good
internal earnings growth prospects from their existing property portfolios--will
be the market leaders. In this vein, we have pared the number of holdings in the
fund, which totaled 33 on December 31, to focus our attention on large-cap
REITs.
------------------------------------
THE AVERAGE REIT
DIVIDEND YIELD
AT YEAR-END WAS ABOUT 8.58%--
OVER 200 BASIS POINTS
ABOVE THE 10-YEAR
U.S. TREASURY BOND.
------------------------------------
REITS OFFER SOLID DIVIDENDS
As of 12/31/99
================================================================================
REIT AVERAGE 10-YEAR U.S. TREASURY
DIVIDEND YIELD BOND YIELD
- --------------------------------------------------------------------------------
8.58% 6.44%
================================================================================
Source: Bear Stearns
See important fund and index disclosures inside front cover.
AIM ADVISOR REAL ESTATE FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 12/31/99, based on total net assets
================================================================================
TOP 10 EQUITY HOLDINGS
- --------------------------------------------------------------------------------
1. Equity Office Properties Trust 4.75%
2. Charles E. Smith Residential Realty Inc. 4.73
3. Equity Residential Properties Trust 4.63
4. Avalonbay Communities, Inc. 4.46
5. Public Storage, Inc. 4.32
6. Liberty Property Trust 3.84
7. Apartment Investment & Management Co. 3.83
8. Duke-Weeks Realty Corp. 3.81
9. Arden Realty Group, Inc. 3.47
10. Hospitality Properties Trust 3.43
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
================================================================================
================================================================================
PROPERTY-TYPE DIVERSIFICATION
- --------------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) 1.6%
DIVERSIFIED 3.2%
REGIONAL MALLS 7.9%
SHOPPING CENTERS 6.7%
INDUSTRIAL/OFFICE DIVERSIFIED 10.3%
SELF-STORAGE 4.3%
LODGING/RESORTS 3.6%
CASH/CASH EQUIVALENTS & OTHERS 10%
INDUSTRIAL 5.4%
APARTMENTS 23.2%
OFFICE 23.8%
================================================================================
We continue to diversify AIM Advisor Real Estate Fund by geographic region
and property type, emphasizing those areas where we believe that real estate
supply-and-demand fundamentals are favorable. During the fiscal year, we
maintained an emphasis on office and apartment REITs. The office sector has
balanced fundamentals and a high relative value compared to other REIT sectors.
The apartment sector continues to benefit from rising housing prices and higher
mortgage rates. Fund performance greatly benefited from the relative performance
by these sectors, which outperformed the NAREIT for the fourth quarter. In
addition, the worst-performing sector, lodging/resorts, was underweight in the
fund.
WHAT WERE SOME STRONG PERFORMERS IN 1999?
With respect to individual stock selection, the best performers for the fund
have been concentrated in the apartment and office sectors. Top fund holding
Equity Office Properties Trust is the nation's largest publicly held owner and
manager of office properties. The company owns or has an interest in about 280
office buildings and more than 15 stand-alone parking garages in central
business districts and suburban markets in 24 states.
Another notable performer has been Charles Smith Residential, which rents
luxury apartments at prestigious addresses in Washington DC, Boston, Chicago and
Miami. By concentrating on close-in properties that fetch high rents and have
limited new-development competition, the company taps the growing
"renter-by-choice" market. The fully integrated firm also owns, manages and
operates multifamily residential and retail properties, including around 24,000
apartment units. Charles Smith Residential's stock has recovered from its low of
approximately $28 in early 1999 to finish the year at around $35 per share.
WHAT IS YOUR OUTLOOK FOR 2000?
Overall, we are optimistic that the REIT market rally in late December could be
the precursor to a better year in 2000. We have history on our side in that
REITs have never had three down years in succession. The only economic
development trend that may have an effect on the fund in the coming months is
the possibility of higher interest rates in 2000, which could have a perceived
negative impact on many REITs. However, a rising interest rate environment could
also prove beneficial to apartment and manufactured home REITs.
At this point we expect REIT prices to stabilize and, in due course, a
cyclical recovery may emerge. REIT stocks, which remain significantly
undervalued, could be the best bet for bargain hunters angling for greater
stability within their investment portfolios. For investors seeking a generous
stream of steady income, REITs may be worth another look. The two-year tumble in
REIT share values is ending, so the potential risk of eroding principal that can
lead to poor total returns is also diminishing. With many market watchers
expecting the prices of REIT shares to at least hold stable in 2000, we believe
that there may be renewed interest in this sector in the near future.
See important fund and index disclosures inside front cover.
AIM ADVISOR REAL ESTATE FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM ADVISOR REAL ESTATE FUND VS. BENCHMARK INDEXES
5/1/95-12/31/99
================================================================================
AIM ADVISOR NAREIT
REAL ESTATE EQUITY S&P 500
CLASS C SHARES INDEX INDEX
- --------------------------------------------------------------------------------
5/1/95 10,000 10,000 10,000
6/30/95 10,195 10,591 10,640
12/31/95 10,912 11,549 12,176
6/30/96 11,482 12,337 13,404
12/31/96 14,888 15,622 14,970
6/30/97 15,545 16,513 18,053
12/31/97 17,699 18,787 19,962
6/30/98 16,455 17,842 23,500
12/31/98 13,600 15,499 25,671
6/30/99 14,265 16,239 28,849
12/31/99 $13,119 $14,783 $31,071
Past performance cannot guarantee comparable future results.
================================================================================
Source: Lipper, Inc.
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
This 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 to these
benchmarks over the period 5/1/95-12/31/99. It is important to understand the
differences 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 your investment's return. In addition, it is worth noting that the S&P
500 represents stocks only, whereas your fund is invested primarily in real
estate investment trust (REIT) securities that produce much of their returns
through current income in the form of yields. An index of REITs, such as the
National Association of Real Estate Investment Trusts (NAREIT) Equity Index,
includes all tax-qualified REITs listed on the New York Stock Exchange, American
Stock Exchange and the NASDAQ National Market System, regardless of management
style and investment strategy. (Index returns are for the period
4/30/95-12/31/99).
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/99, including sales charges
================================================================================
C SHARES
Since Inception (5/1/95) 5.99%
1 Year -4.47*
*-3.54%, excluding CDSC
A SHARES
Since Inception (12/31/96) -4.96%
1 Year -7.48*
*-2.88%, excluding sales charges
B SHARES
Since Inception (3/3/98) -15.54%
1 Year -8.17*
*-3.53%, excluding CDSC
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class A and Class B shares will differ from that
of Class C shares due to differing fees and expenses. For fund data performance
calculations and descriptions of the indexes cited on this page, please refer to
the inside front cover.
AIM ADVISOR REAL ESTATE FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS &
COMMON STOCKS-90.09%
APARTMENTS-23.23%
Apartment Investment & Management
Co. 44,400 $ 1,767,675
- --------------------------------------------------------------
Avalonbay Communities, Inc. 60,000 2,058,750
- --------------------------------------------------------------
Charles E. Smith Residential Realty,
Inc. 61,700 2,182,328
- --------------------------------------------------------------
Equity Residential Properties Trust 50,000 2,134,375
- --------------------------------------------------------------
Essex Property Trust, Inc. 33,800 1,149,200
- --------------------------------------------------------------
Home Properties of New York, Inc. 30,000 823,125
- --------------------------------------------------------------
Post Properties, Inc. 15,600 596,700
- --------------------------------------------------------------
10,712,153
- --------------------------------------------------------------
DIVERSIFIED-3.19%
Beacon Capital 55,000 660,000
- --------------------------------------------------------------
Vornado Realty Trust 25,000 812,500
- --------------------------------------------------------------
1,472,500
- --------------------------------------------------------------
INDUSTRIAL PROPERTIES-5.40%
First Industrial Realty Trust, Inc. 50,000 1,371,875
- --------------------------------------------------------------
ProLogis Trust 58,000 1,116,500
- --------------------------------------------------------------
2,488,375
- --------------------------------------------------------------
INDUSTRIAL/OFFICE PROPERTIES-10.31%
Duke-Weeks Realty Corp. 90,000 1,755,000
- --------------------------------------------------------------
Liberty Property Trust 72,950 1,769,037
- --------------------------------------------------------------
Reckson Associates Realty Corp. 60,000 1,230,000
- --------------------------------------------------------------
4,754,037
- --------------------------------------------------------------
LODGING-HOTELS-3.61%
Hospitality Properties Trust 83,000 1,582,187
- --------------------------------------------------------------
MeriStar Hotels & Resorts, Inc.(a) 22,700 80,869
- --------------------------------------------------------------
1,663,056
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-1.57%
Sun Communities, Inc. 22,500 724,219
- --------------------------------------------------------------
OFFICE PROPERTIES-23.81%
Arden Realty Group, Inc. 79,800 1,600,987
- --------------------------------------------------------------
Boston Properties, Inc. 45,500 1,416,187
- --------------------------------------------------------------
Equity Office Properties Trust 89,000 2,191,625
- --------------------------------------------------------------
Highwoods Properties, Inc. 52,950 1,231,088
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OFFICE PROPERTIES-(CONTINUED)
Kilroy Realty Corp. 45,700 $ 1,005,400
- --------------------------------------------------------------
Prentiss Properties Trust 71,700 1,505,700
- --------------------------------------------------------------
SL Green Realty Corp. 51,100 1,111,425
- --------------------------------------------------------------
Spieker Properties, Inc. 25,100 914,581
- --------------------------------------------------------------
10,976,993
- --------------------------------------------------------------
REGIONAL MALLS-7.93%
General Growth Properties 56,500 1,582,000
- --------------------------------------------------------------
Macerich Co. (The) 39,000 811,688
- --------------------------------------------------------------
Simon Property Group, Inc. 55,100 1,263,856
- --------------------------------------------------------------
3,657,544
- --------------------------------------------------------------
SELF-STORAGE-4.32%
Public Storage, Inc. 87,900 1,994,231
- --------------------------------------------------------------
SHOPPING CENTERS-6.72%
Federal Realty Investment Trust 23,000 432,688
- --------------------------------------------------------------
JDN Realty Corp. 54,500 878,813
- --------------------------------------------------------------
Kimco Realty Corp. 38,900 1,317,738
- --------------------------------------------------------------
Pan Pacific Retail Properties, Inc. 28,700 468,169
- --------------------------------------------------------------
3,097,408
- --------------------------------------------------------------
Total Real Estate Investment
Trusts & Common Stocks (Cost
$43,837,662) 41,540,516
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES-8.73%
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-8.73%
Disc. Notes,(b)
5.20%, 01/03/00 (Cost $4,024,665) $4,025,000 4,024,665
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.82% (Cost
$47,862,327) 45,565,181
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.18% 544,859
- --------------------------------------------------------------
NET ASSETS-100.00% $46,110,040
==============================================================
</TABLE>
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.
5
<PAGE> 8
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$47,862,327) $ 45,565,181
- ---------------------------------------------------------
Cash 1,474
- ---------------------------------------------------------
Receivables for:
Capital stock sold 621,622
- ---------------------------------------------------------
Interest and dividends 394,484
- ---------------------------------------------------------
Investment for deferred compensation plan 11,796
- ---------------------------------------------------------
Other assets 1,198
- ---------------------------------------------------------
Total assets 46,595,755
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 357,366
- ---------------------------------------------------------
Deferred compensation plan 11,796
- ---------------------------------------------------------
Accrued advisory fees 32,576
- ---------------------------------------------------------
Accrued administrative services fees 4,247
- ---------------------------------------------------------
Accrued distribution fees 69,412
- ---------------------------------------------------------
Accrued transfer agent fees 1,171
- ---------------------------------------------------------
Accrued operating expenses 9,147
- ---------------------------------------------------------
Total liabilities 485,715
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 46,110,040
- ---------------------------------------------------------
NET ASSETS:
Class A $ 16,278,924
=========================================================
Class B $ 9,839,261
=========================================================
Class C $ 19,991,855
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 1,534,334
=========================================================
Class B:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 924,769
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 1,882,276
=========================================================
Class A:
Net asset value and redemption price per
share $ 10.61
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $10.61 divided by
95.25%) $ 11.14
=========================================================
Class B:
Net asset value and offering price per
share $ 10.64
=========================================================
Class C:
Net asset value and offering price per
share $ 10.62
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $7,786 foreign withholding
tax) $ 2,693,620
- ---------------------------------------------------------
Interest 101,227
- ---------------------------------------------------------
Total investment income 2,794,847
- ---------------------------------------------------------
EXPENSES:
Advisory fees 473,702
- ---------------------------------------------------------
Administrative services fees 25,205
- ---------------------------------------------------------
Operating Services Fees 124,989
- ---------------------------------------------------------
Custodian fees 7,249
- ---------------------------------------------------------
Distribution fees-Class A 66,167
- ---------------------------------------------------------
Distribution fees-Class B 73,791
- ---------------------------------------------------------
Distribution fees-Class C 263,496
- ---------------------------------------------------------
Directors' fees and expenses 10,020
- ---------------------------------------------------------
Transfer Agent fees-Class A 21,664
- ---------------------------------------------------------
Transfer Agent fees-Class B 8,293
- ---------------------------------------------------------
Transfer Agent fees-Class C 29,612
- ---------------------------------------------------------
Other 21,903
- ---------------------------------------------------------
Total expenses 1,126,091
- ---------------------------------------------------------
Less:
Expenses paid indirectly (268)
- ---------------------------------------------------------
Fees waived by advisor (29,338)
- ---------------------------------------------------------
Net expenses 1,096,485
- ---------------------------------------------------------
Net investment income 1,698,362
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities (8,493,728)
- ---------------------------------------------------------
Foreign currencies 461
- ---------------------------------------------------------
(8,493,267)
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 4,697,040
- ---------------------------------------------------------
Foreign currencies (56)
- ---------------------------------------------------------
4,696,984
- ---------------------------------------------------------
Net gain (loss) from investment securities
and foreign currencies (3,796,283)
- ---------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(2,097,921)
=========================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 9
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 $ 1,698,362 $ 2,687,688
- -----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (8,493,267) (7,868,208)
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies 4,696,984 (13,364,502)
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (2,097,921) (18,545,022)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (880,747) (879,078)
- -----------------------------------------------------------------------------------------
Class B (292,274) (195,557)
- -----------------------------------------------------------------------------------------
Class C (1,010,658) (1,184,516)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A -- (434,776)
- -----------------------------------------------------------------------------------------
Class B -- (143,531)
- -----------------------------------------------------------------------------------------
Class C -- (703,226)
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A (2,285,404) 11,098,948
- -----------------------------------------------------------------------------------------
Class B 3,517,105 8,539,414
- -----------------------------------------------------------------------------------------
Class C (10,749,346) 1,916,228
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets (13,799,245) (531,116)
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 59,909,285 60,440,401
- -----------------------------------------------------------------------------------------
End of period $ 46,110,040 $ 59,909,285
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 64,744,590 $ 74,263,053
- -----------------------------------------------------------------------------------------
Undistributed net investment income (1,935) 490,850
- -----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (16,335,470) (7,850,489)
- -----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (2,297,145) (6,994,129)
- -----------------------------------------------------------------------------------------
$ 46,110,040 $ 59,909,285
=========================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor Real Estate Fund (the "Fund") is a series portfolio of AIM Advisor
Funds, Inc. (the "Company"). The Company is a Maryland corporation 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 $7,468, undistributed net realized gains increased by
$8,286 and paid-in capital decreased by $818 as a result of differing
book/tax treatment of foreign currency transactions 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. The Fund has a capital loss
carryforward of $14,698,073 as of December 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2007.
E. 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.
8
<PAGE> 11
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.90% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Realty Advisors, Inc. ("IRAI") whereby AIM pays IRAI an
annual rate of 0.35% of the first $100 million of the Fund's average daily net
assets, plus 0.25% of the Fund's average daily net assets in excess of $100
million.
The Company, pursuant to an operating services agreement with AIM, 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 $114,556 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 $10,433.
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 $25,205 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 $44,655 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 $47,262, $73,791 and $263,496, respectively, as
compensation under the Plans. During the year ended December 31, 1999, AIM
Distributors waived fees of $18,905 for Class A shares.
AIM Distributors received commissions of $13,906 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 $9,617 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 $1,198 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
custodian fees of $268, under an expense offset arrangement. The effect of the
above arrangement resulted in a reduction of the Fund's total expenses of $268
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.
9
<PAGE> 12
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.
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
$26,296,390 and $39,815,191, 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 $ 813,712
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (3,302,531)
- -------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(2,488,819)
=========================================================================
</TABLE>
Cost of investments for tax purposes is $48,054,000.
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 805,892 $ 9,057,241 1,866,966 $ 26,220,226
- -------------------------------------------------------------------------------------------------------------------
Class B 554,129 6,045,844 965,596 13,668,547
- -------------------------------------------------------------------------------------------------------------------
Class C 301,049 3,371,676 867,066 12,416,738
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 73,515 798,302 103,931 1,234,506
- -------------------------------------------------------------------------------------------------------------------
Class B 24,076 261,703 26,797 312,988
- -------------------------------------------------------------------------------------------------------------------
Class C 81,508 887,308 146,264 1,732,251
- -------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,098,601) (12,140,947) (1,266,277) (16,355,784)
- -------------------------------------------------------------------------------------------------------------------
Class B (254,623) (2,790,442) (391,207) (5,442,121)
- -------------------------------------------------------------------------------------------------------------------
Class C (1,372,447) (15,008,330) (933,062) (12,232,761)
- -------------------------------------------------------------------------------------------------------------------
(885,502) $ (9,517,645) 1,386,074 $ 21,554,590
===================================================================================================================
</TABLE>
10
<PAGE> 13
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 a share of Class C capital stock outstanding during each
of the years in the four-year period ended December 31, 1999 and the period May
1, 1995 (date operations commenced) through December 31, 1995.
<TABLE>
<CAPTION>
CLASS A(a) CLASS B
-------------------------------- --------------------
1999 1998(b) 1997(b) 1999 1998(b)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.46 $ 15.74 $ 14.19 $ 11.48 $ 15.34
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Income from investment operations:
Net investment income 0.42 0.58 0.34 0.32 0.37
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Net gains (losses) on securities (both realized and
unrealized) (0.75) (4.11) 2.39 (0.72) (3.58)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Total from investment operations (0.33) (3.53) 2.73 (0.40) (3.21)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.52) (0.50) (0.44) (0.44) (0.40)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Distributions from net realized gains -- (0.25) (0.74) -- (0.25)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Total distributions (0.52) (0.75) (1.18) (0.44) (0.65)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Net asset value, end of period $ 10.61 $ 11.46 $ 15.74 $ 10.64 $ 11.48
============================================================ ======== ======== ======== ======== =======
Total return(c) (2.88)% (22.54)% 19.78% (3.53)% (21.02)%
============================================================ ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 16,279 $ 20,087 $ 16,507 $ 9,839 $ 6,901
============================================================ ======== ======== ======== ======== =======
Ratio of expenses to average net assets(d) 1.61%(e) 1.55% 1.60% 2.35%(e) 2.31%(f)
============================================================ ======== ======== ======== ======== =======
Ratio of net investment income to average net assets(g) 3.70%(e) 4.37% 3.26% 2.96%(e) 3.62%(f)
============================================================ ======== ======== ======== ======== =======
Portfolio turnover rate 52% 69% 57% 52% 69%
============================================================ ======== ======== ======== ======== =======
</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 is not annualized for periods less than
one year.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.73% , 1.71% and 1.70% for 1999-1997 for Class A and 2.37% and 2.35%
(annualized) for 1999-1998 for Class B.
(e) Ratios are based on average net assets of $18,904,818 and $7,379,172 for
Class A and Class B, respectively.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 3.58%, 4.21% and 3.16% for 1999-1997 for Class A and
2.94% and 3.56% (annualized) for 1999-1998 for Class B.
<TABLE>
<CAPTION>
CLASS C(a)
------------------------------------------------------
1999(b) 1998(b) 1997(b) 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.46 $ 15.74 $ 14.19 $ 10.76 $ 10.00
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.33 0.50 0.36 0.33 0.16
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.73) (4.13) 2.26 3.51 0.75
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations (0.40) (3.63) 2.62 3.84 0.91
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.44) (0.40) (0.33) (0.31) (0.15)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains -- (0.25) (0.74) (0.10) --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.44) (0.65) (1.07) (0.41) (0.15)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 10.62 $ 11.46 $ 15.74 $ 14.19 $ 10.76
============================================================ ======== ======== ======== ======== ========
Total return(c) (3.54)% (23.16)% 18.88% 36.43% 9.12%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 19,992 $ 32,921 $ 43,934 $ 20,566 $ 5,565
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets(d) 2.35%(e) 2.31% 2.35% 2.40% 2.40%(f)
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets(g) 2.96%(e) 3.62% 2.54% 3.21% 4.68%(f)
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 52% 69% 57% 25% 7%
============================================================ ======== ======== ======== ======== ========
</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 and is not annualized for
periods less than one year.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.37% and 2.37% for 1999-1998.
(e) Ratios are based on average net assets of $26,349,554.
(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 was 2.94% and 3.56% for 1999-1998.
11
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Advisor Real Estate Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Advisor Real Estate 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 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 an opinion
on these financial statements and the 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 financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Advisor
Real Estate Fund as of December 31, 1999, the results of
its operations for the year then ended, 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
12
<PAGE> 15
<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 Realty Advisors, Inc.
One Lincoln Centre, Suite 700
Edward K. Dunn Jr. Robert G. Alley 5400 LBJ Freeway/LB-2
Chairman, Mercantile Mortgage Corp.; Vice President Dallas, TX 75240
Formerly Vice Chairman, President
and Chief Operating Officer, Stuart W. Coco TRANSFER AGENT
Mercantile-Safe Deposit & Trust Co.; and Vice President
President, Mercantile Bankshares A I M Fund Services, Inc.
Melville B. Cox P.O. Box 4739
Jack Fields Vice President Houston, TX 77210-4739
Chief Executive Officer
Texana Global, Inc.; Karen Dunn Kelley CUSTODIAN
Formerly Member Vice President
of the U.S. House of Representatives State Street Bank and Trust Company
Edgar M. Larsen 225 Franklin Street
Carl Frischling Vice President Boston, MA 02110
Partner
Kramer, Levin, Naftalis & Frankel LLP Mary J. Benson COUNSEL TO THE FUND
Assistant Vice President and
Robert H. Graham Assistant Treasurer Ballard Spahr
President and Chief Executive Officer Andrews & Ingersoll, LLP
A I M Management Group Inc. Sheri Morris 1735 Market Street
Assistant Vice President and Philadelphia, PA 19103
Prema Mathai-Davis Assistant Treasurer
Chief Executive Officer, YWCA of the U.S.A. COUNSEL TO THE DIRECTORS
Renee A. Friedli
Lewis F. Pennock Assistant Secretary Kramer, Levin, Naftalis & Frankel LLP
Attorney 919 Third Avenue
P. Michelle Grace New York, NY 10022
Louis S. Sklar Assistant Secretary
Executive Vice President DISTRIBUTOR
Hines Interests Nancy L. Martin
Limited Partnership Assistant Secretary A I M Distributors, Inc.
11 Greenway Plaza
Ofelia M. Mayo Suite 100
Assistant Secretary Houston, TX 77046
Lisa A. Moss AUDITORS
Assistant Secretary
KPMG LLP
Kathleen J. Pflueger 700 Louisiana
Assistant Secretary Houston, TX 77002
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
AIM Advisor Real Estate Fund Class A, Class B, and Class C shares paid ordinary
dividends in the amount of $0.5215, $0.4375, and $0.4375 per share,
respectively, to shareholders during its tax year ended December 31, 1999. Of
these amounts 1.29% is eligible for the dividends received deduction for
corporations.
<PAGE> 16
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc.
AIM Aggressive Growth Fund AIM Money Market Fund has provided leadership in the
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund mutual fund industry since
AIM Capital Development Fund 1976 and managed approximately
AIM Constellation Fund(1) INTERNATIONAL GROWTH FUNDS $160 billion in assets for
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund more than 6.6 million
AIM Large Cap Growth Fund AIM Asian Growth Fund shareholders, including
AIM Mid Cap Equity Fund AIM Developing Markets Fund individual investors,
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) corporate clients and financial
AIM Mid Cap Opportunities Fund AIM European Development Fund institutions, as of December
AIM Select Growth Fund AIM International Equity Fund 31, 1999.
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund The AIM Family of Funds
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund --Registered Trademark-- is
AIM Value Fund AIM New Pacific Growth Fund distributed nationwide, and
AIM Weingarten Fund AIM today is the
GLOBAL GROWTH FUNDS eighth-largest mutual fund
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund complex in the United States
AIM Advisor Flex Fund AIM Global Growth Fund in assets under management,
AIM Advisor Large Cap Value Fund according to Strategic
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS Insight, an independent mutual
AIM Balanced Fund AIM Global Growth & Income Fund fund monitor.
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.
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