<PAGE> 1
SEMIANNUAL REPORT / APRIL 30, 1999
AIM
GLOBAL HEALTH CARE FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
-------------------------------------
BASKET OF APPLES BY LEVI WELLS PRENTICE
FRESH FRUIT IS FREQUENTLY ASSOCIATED WITH HEALTH AND WELL
BEING. SIMILARLY, THE COMPANIES REPRESENTED IN THE PORTFOLIO
OF AIM GLOBAL HEALTH CARE FUND ARE STRIVING TO IMPROVE THE
HUMAN CONDITION THROUGH PRODUCTS AND SERVICES DESIGNED TO
COMBAT DISEASE AND PROLONG LIFE.
-------------------------------------
AIM Global Health Care Fund is for shareholders who seek growth by investing in
companies around the world involved in health-care activities or in the design,
manufacture or sale of products and services used in connection with health care
or medicine.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Health Care 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 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
Fund expenses.
o Because Class C shares have been offered for less than one year, total
return provided is cumulative total return that has not been annualized
o Advisor Class shares were closed to new investors as of March 1, 1999.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o International investing presents certain risks not associated with investing
solely in the United States. These include risks relating to fluctuations in
the value of the U.S. dollar relative to the values of other currencies, the
custody arrangements made for the Fund's foreign holdings, differences in
accounting, political risks, and the lesser degree of public information
required to be provided by non-U.S. companies.
o Investing in a single-sector mutual fund may involve greater risk and
potential reward than investing in a more diversified fund.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of 30
actively traded primarily industrial stocks.
o The Morgan Stanley Capital International Health and Personal Care Index is a
market value-weighted average of the performance of 55 securities listed on
major world stock exchanges.
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 GLOBAL HEALTH CARE FUND
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
With only several months remaining in 1999, the question on
[PHOTO OF many of your minds may be, "How will the year 2000 computer
Charles T. issue affect AIM and my investments?" We would like you to
Bauer, feel comfortable.
Chairman of During March and April, AIM participated in an
the Board of industrywide test that gave us a chance to see how our
THE FUND technology systems might be affected by the changeover to
APPEARS HERE] the year 2000 (Y2K). Everything went as well as we had
hoped; in general, the industry sailed through the testing
process with flying colors. The financial industry has been
seen as a leader in planning for year 2000 concerns. Thus,
it was no surprise to most participants that the test was
an overwhelming success.
The general purpose of the process was to test
electronic interfaces among financial industry members in
the United States and to follow transactions through a
typical trading cycle--from order entry to the settlement process. Investment
banks, broker-dealers, custodian banks and mutual fund companies all worked
together to make this possible. Approximately 400 firms were involved in the
testing; AIM was one of 70 asset managers.
TEST RESULTS EXCELLENT
During the testing process, thousands of transactions were submitted and
approximately 260,000 steps were tested. Of those, only a handful experienced
minor glitches--just 0.02% of the total number of transactions. All problems
were worked through quickly before the hypothetical trades were settled. Of
course, AIM will keep testing and planning throughout 1999 as a precaution.
AIM'S INTERNAL EFFORTS CONTINUE
As you know from our previous communications to you, AIM has been addressing the
year 2000 issue for several years. During 1998, we made substantial progress on
our preparations. We are now in the final phases of the project, continually
testing internal applications and our interfaces with outside parties. On the
investment side, our portfolio management staff is evaluating the Y2K
preparedness of the companies in which we invest.
We feel that our preparations for 2000 are very comprehensive, and the
industrywide testing showed that our colleagues in the financial industry are
also working hard to be ready for the new year. We do not think shareholders
need to take any extraordinary measures with their investments to prepare for
2000. However, if you have any lingering concerns, it may reassure you to know
that AIM is finalizing contingency plans that will be ready if there are
unexpected problems. Our plans will give AIM employees guidelines to follow for
a wide variety of situations.
For a more comprehensive discussion of our Y2K efforts and for periodic
updates, please visit our Web site, www.aimfunds.com.
We are pleased to send you this report covering your fund's performance over
the last six months. If you have any questions or comments, please contact our
Client Services department at 800-959-4246, or e-mail your inquiry to us at
[email protected]. You can access information about your account through our
AIM Investor Line at 800-246-5463 or at our Web site.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
We appreciate your business.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
-------------------------------------
THE FINANCIAL INDUSTRY
HAS BEEN SEEN AS A
LEADER IN PLANNING FOR
YEAR 2000 CONCERNS.
-------------------------------------
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS LETTER IS DEEMED
AIM'S YEAR 2000 READINESS DISCLOSURE.
AIM GLOBAL HEALTH CARE FUND
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
FUND REGISTERS IMPRESSIVE GAINS
DURING THE REPORTING PERIOD, SOME HEALTH-CARE INDUSTRIES THRIVED WHILE OTHERS
STRUGGLED. HOW DID THESE TRENDS AFFECT AIM GLOBAL HEALTH CARE FUND?
The Fund's emphasis on the stocks of companies with strong earnings in the
better-performing segments of the health-care industry enabled it to post
superior returns for the six months ended April 30, 1999. Excluding sales
charges, cumulative total returns were 24.32%, 24.01% and 24.72% for Class A and
Class B shares and Advisor Class shares, respectively. Class C shares began
sales on March 1, 1999, and posted cumulative total return, excluding sales
charges, of 6.75%. The Fund significantly outperformed the MSCI Health and
Personal Care Index, which recorded gains of 4.75% over the same period.
WHAT WERE SOME OF THE KEY TRENDS IN THE STOCK MARKET IN GENERAL?
The venerable Dow Jones Industrial Average (the Dow) achieved a milestone on
March 29, 1999, when it closed above the 10,000 mark for the first time.
However, this record-setting performance masked a very narrow market. The stocks
of a handful of extremely large firms--the so-called "mega caps"--along with the
equities of fledgling Internet companies, including several that have yet to
realize a profit, outperformed other issues by a wide margin.
In a world of economic uncertainty, exemplified by the Brazilian currency
crisis in January, U.S. investors favored mega-cap stocks because of their
relative safety and liquidity. Internet stocks were attractive because of the
growth of the Web as a medium of commerce, communication and entertainment.
Toward the end of the reporting period, however, relatively expensive mega-cap
and Internet stocks lost some of their luster. Investors shifted their focus to
mid- and small-cap stocks and to equities that were undervalued relative to the
rest of the market.
HOW ABOUT EUROPE AND THE REST OF THE WORLD?
After strong performance in 1998, European stocks were basically flat during the
initial months of 1999. As the new year opened, once robust economic growth
began to slow in Europe. In this environment, large-cap stocks continued to be
the market leaders. Additionally, the strength of the dollar relative to the
euro, introduced as the common currency in 11 countries on January 1, 1999, hurt
returns for U.S. investors in European stocks.
In Asia, signs of economic recovery in South Korea, Singapore and several
other developing countries boosted stocks. And despite Japan's continuing
economic woes, its stock market was among the top performers for the reporting
period.
HOW DID HEALTH-CARE STOCKS FARE?
Within the health-care sector, the stocks of large-cap pharmaceutical,
biotechnology and medical-device companies were the best performers. These firms
benefited from robust sales of new and existing prod ucts. Although there has
been some recent weakness in the performance of pharmaceutical-company stocks,
drug firms continue to report strong earnings, and we remain optimistic about
their long-term prospects.
The stocks of health-care service providers, such as hospitals and health
maintenance organizations (HMOs), continue to perform very poorly. A change in
the Medicare reimbursement policy has eroded the earnings of hospitals and
long-term care facilities such as nursing homes. Instead of reimbursing all
expenses, Medicare now pays a fixed rate per patient per day. HMOs are being
hurt by an inability to raise client fees due to stiff competition and by the
rising cost of drugs.
HOW DID YOU MANAGE THE FUND DURING THE REPORTING PERIOD?
We completed the shift in the Fund's emphasis from small- to large-cap stocks.
At the end of the reporting period, large-, mid- and small-cap stocks made up
about 65%, 30% and 5% of the Funds holdings, respectively.
The Fund was about 60% invested in pharmaceutical-company stocks and
approximately 30% invested in the equities of medical-device firms. Its core
holdings consisted primarily of the stocks of large pharmaceutical companies
such as Warner-Lambert and Bristol-Myers Squibb. These were augmented by the
stocks of smaller firms expected to experience strong earnings growth. Companies
falling into this category included Amgen, a biotechnology company, and Guidant,
a medical device company.
As of April 30, 1999, the Fund had 60 holdings. Geographically, the Fund
was about 80% invested in the United States, 17% in Europe and 3% in Asia.
================================================================================
AVERAGE ANNUAL TOTAL RETURN
For the period October 31, 1998-April 30, 1999, excluding sales charges
Class A Shares 24.32%
Class B Shares 24.01%
Advisor Class Shares 24.72%
MSCI Health and Personal Care Index 4.75%
================================================================================
See important Fund and index disclosures inside front cover.
AIM GLOBAL HEALTH CARE FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
WHAT PHARMACEUTICAL COMPANIES DID YOU FIND ATTRACTIVE?
AstraZeneca, one of the Fund's leading holdings, was the product of Europe's
largest merger--a $35 billion transaction involving Sweden's Astra and Britain's
Zeneca. The two firms officially combined on April 6 to form the largest drug
company in Europe and the fifth largest in the world in terms of sales.
Bristol-Myers Squibb is perhaps best known for its personal care products
such as Clairol. However, more than half of the company's sales come from drugs.
The firm, which recently reported earnings above analysts' expectations, focuses
on treatments for cardiovascular disorders as well as anticancer and
anti-infective drugs.
Warner-Lambert continued to benefit from strong sales of its
cholesterol-lowering agent, Lipitor; its anti-convulsant medication, Neurontin;
and its new anti-depressant, Celexa. The company reported record earnings for
the most recent quarter
WHAT COMPANIES DID YOU LIKE IN OTHER HEALTH-CARE SECTORS?
Amgen, the world's largest biotechnology company and the Fund's top holding,
experienced impressive earnings growth largely because of strong sales of
Epogen, an anemia drug, and Neupogen, a cancer treatment. Biogen also saw its
earnings rise primarily because of the success of Avonex, a drug used to treat
relapsing multiple sclerosis. Genzyme profited from its wide array of gene
therapy treatments.
VISX, a medical device company known for its laser-vision correction
system, saw its stock price nearly triple since the beginning of 1999. The
stock's strong showing contributed significantly to the Fund's performance for
the reporting period.
WHAT IS YOUR OUTLOOK?
In the United States, conditions appear favorable for the stock market. Economic
growth is robust and many companies continue to report impressive earnings
growth. One ominous development was the dramatic and unexpected rise in the
inflation rate in April. That prompted the Federal Reserve Board (The Fed), at
its first meeting after the end of the reporting period, to shift to a bias of
raising interest rates. If the Fed actually does tighten monetary policy, it
could have a negative impact on stock performance.
Although economic growth has slowed in Europe in recent months, the
low-inflation, low-interest-rate environment, combined with the wave of
corporate mergers and restructurings, continues to make stocks attractive.
We remain optimistic about health-care stocks. Regardless of economic
trends, the demand for medical services and products is likely to increase as
the population ages in developed countries. Additionally, the rising quality of
medical care in emerging nations also is likely to give a boost to the
health-care industry. Such developments could bode well for the Fund.
-------------------------------------
REGARDLESS OF ECONOMIC TRENDS,
THE DEMAND FOR MEDICAL SERVICES
AND PRODUCTS IS LIKELY TO
INCREASE AS THE POPULATION AGES
IN DEVELOPED COUNTRIES.
-------------------------------------
PORTFOLIO COMPOSITION
As of 4/30/99, based on total net assets
<TABLE>
<CAPTION>
================================================================================
TOP 10 EQUITY HOLDINGS
- --------------------------------------------------------------------------------
<S> <C>
1. Amgen, Inc. (United States) 6.37%
2. Warner-Lambert Co. (United States) 6.22
3. Bristol-Myers Squibb Co. (United States) 5.60
4. AstraZeneca Group PLC (United Kingdom) 5.38
5. VISX, Inc. (United States) 5.22
6. Watson Pharmaceuticals, Inc. (United States) 5.11
7. Schering-Plough Corp. (United States) 5.06
8. Pfizer Inc. (United States) 5.06
9. Guidant Corp. (United States) 4.80
10. Agouron Pharmaceuticals, Inc. (United States) 4.51
The Fund's portfolio composition is subject to change, and there is no assurance
the Fund will continue to hold any particular security.
================================================================================
</TABLE>
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/99, including sales charges
CLASS A SHARES
Inception (8/7/89) 14.73%
5 Years 18.20
1 Year 10.45*
CLASS B SHARES
Inception (4/1/93) 18.06%
5 Years 18.58
1 Year 10.37**
CLASS C SHARES
Inception (3/1/99) 5.75%***
ADVISOR CLASS (no sales charge)
Inception (6/1/95) 22.64
1 Year 16.62
*15.97% excluding sales charges
**15.37% excluding sales charges
***6.75% excluding sales charges. Total return is cumulative total return that
has not been annualized.
================================================================================
See important Fund and index disclosures inside front cover.
AIM GLOBAL HEALTH CARE FUND
3
<PAGE> 6
SEMIANNUAL REPORT / FOR CONSIDERATION
TIME FOR A FINANCIAL TUNE-UP?
GET HELP FROM YOUR FINANCIAL CONSULTANT
Keeping track of your investment may require more than just glancing at its
total value. If you haven't checked the asset allocation of your portfolio in a
while, you should. It may look different now.
OUT OF BALANCE
Say you invested $50,000 in equity funds and $50,000 in fixed-income funds on
December 31, 1993, and simply reinvested your income and capital-gains
distributions for five years, making no new investments or withdrawals. (For
this example, we're using the S&P 500 Index and Lehman Aggregate Bond Index as
indicators of stock and bond performance.*) During those five years, stocks
produced average annual total return of 24.05%, while bonds grew only 7.27% per
year on average. As a result, you'd have $146,890 in stock funds and $71,028 in
bond funds for a 67/33 allocation on December 31, 1998. If you wanted to bring
your allocation back into balance, you'd need to shift $37,931 from stock to
fixed-income funds.
TAX CONSEQUENCES
One way to rebalance is to shift your assets among different funds: selling
equity shares and moving the proceeds into your fixed-income funds. But keep in
mind that this step may trigger tax consequences, since the movement of shares
from one fund to another represents the sale of a security.
Alternatively, you can let your asset allocation change gradually by
altering the proportions of your new investments. Simply raise the amount you
invest in fixed-income funds and lower the amount going into equity funds.
TAX-SHELTERED PLANS
Rebalancing within a tax-sheltered plan, such as a 401(k) or IRA, makes even
more sense, since there are no tax consequences for selling and buying new
shares.
PERIODIC CHECK-UPS
The key allocation to watch is your overall stock and fixed-income mix. It's
that mix that will have the biggest influence on your risk and return. However,
rebalancing doesn't mean fiddling constantly with your account or attempting to
time the market by moving money around to chase the hottest sectors. It simply
means revisiting your portfolio periodically to make sure it's still right for
you. Your financial consultant should be able to help you determine if your
current portfolio composition is meeting your short- and long-term financial
goals. That's why we recommend regular visits with your consultant as a way to
keep an eye on your nest egg.
YOU AND YOUR FINANCIAL CONSULTANT
Once a year, you and your financial consultant should meet to look ahead, review
investments and take another look at your goals, according to the Forum for
Investor Advice, a nonprofit association that educates investors about the role
and value of professional financial consultants.
TIME AND MARKETS SHIFT BALANCE
Market performance can affect the allocation of a portfolio. This example
illustrates an initial investment of $50,000 in equity funds and $50,000 in bond
funds. Five years later, the assets have shifted to $146,890 in stock funds and
$71,028 in bond funds, due to the strong performance of the stock market.
<TABLE>
<CAPTION>
================================================================================
12/31/98 12/31/93
<S> <C> <C>
Stock Funds 67% 50%
Bond Funds 33% 50%
================================================================================
</TABLE>
*The Lehman Aggregate Bond Index is an unmanaged index generally considered
representative of corporate debt securities. The Standard & Poor's Composite
Index of 500 Stocks (S&P 500) is a group of unmanaged securities widely regarded
by investors to be representative of the stock market in general. Results shown
assume the reinvestment of dividends. An investment cannot be made in any index
listed. Unless otherwise indicated, index results include reinvested dividends
and do not reflect sales charges.
================================================================================
AIM GLOBAL HEALTH CARE FUND
4
<PAGE> 7
SEMIANNUAL REPORT / FOR CONSIDERATION
Financial consultants can help you with every kind of financial goal, whether
that's saving up for a house, eliminating debt or saving for a comfortable
retirement. A consultant who knows you well and understands your needs can make
all the difference in your financial future. He or she can
o evaluate your total financial situation and help you formulate a
comprehensive financial plan;
o explain different types of investments, as well as their potential risks and
benefits;
o suggest an investment portfolio that can handle changing market conditions;
and
o help you make clear-headed decisions during market volatility.
GETTING THE MOST FROM YOUR PLANNING SESSION
Your consultant needs a complete picture of your financial status to prepare a
workable plan. Come prepared to talk about your financial situation, your goals
and your feelings about risk. And don't be afraid to ask lots of questions. Good
financial consultants take investor education seriously, so take advantage of
their store of knowledge and materials.
The Forum for Investor Advice suggests that you discuss the following with
your financial consultant:
o changes in the financial markets
o changes in your goals and current situation
o retirement plans
o estate planning
o outlook for the markets
Take along our checklist (right) to get you started on the path to good
planning. And don't forget to stay in touch. Maintaining regular contact with
your financial consultant can keep you moving toward your goals, especially when
your life circumstances or financial needs change.
CONSULTATION CHECKLIST
WHAT TO BRING:
o A list of all your assets, including real estate, life insurance, stocks and
bonds, and mutual funds
o A list of all your expenses, including likely future expenses
o A timetable of your financial goals, including an estimate of when you want
to retire
WHAT TO ASK:
o How can I estimate what my goals will cost?
o How much money do I need to invest, and how often?
o How many different kinds of investments do I need?
o How do I determine my risk tolerance?
o What are the possible risks of the investments you've suggested?
o What effect will these investments have on my taxes? What forms will I need
to file?
o How often do I need to revise my plan?
o How will I know how my investments are doing?
o How can I make changes to my plan?
o What kinds of communication will I get from you?
o Where can I get more information on what we've talked about?
o What do I need to do after this meeting?
AIM GLOBAL HEALTH CARE FUND
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-76.91%
BIOTECHNOLOGY-7.76%
Amgen, Inc.(a) 530,000 $ 32,561,875
- --------------------------------------------------------------
Biogen, Inc.(a) 2,000 190,125
- --------------------------------------------------------------
Genzyme Corp.(a) 182,000 6,870,500
- --------------------------------------------------------------
39,622,500
- --------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.04%
Monsanto Co. 5,000 226,250
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-2.27%
Bergen Brunswig Corp.-Class A 120,000 2,280,000
- --------------------------------------------------------------
Cardinal Health, Inc. 155,936 9,326,922
- --------------------------------------------------------------
11,606,922
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-3.27%
Varian Inc.(a) 425,000 3,851,562
- --------------------------------------------------------------
Varian Medical Systems, Inc. 430,000 7,390,625
- --------------------------------------------------------------
Varian Semiconductor Equipment
Associates, Inc.(a) 420,000 5,460,000
- --------------------------------------------------------------
16,702,187
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-14.49%
Abbott Laboratories 179,400 8,689,687
- --------------------------------------------------------------
Allergan, Inc. 24,500 2,201,937
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 450,000 28,603,125
- --------------------------------------------------------------
Johnson & Johnson 28,100 2,739,750
- --------------------------------------------------------------
Warner-Lambert Co. 467,800 31,781,162
- --------------------------------------------------------------
74,015,661
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-11.57%
Agouron Pharmaceuticals, Inc.(a) 390,000 23,034,375
- --------------------------------------------------------------
Barr Laboratories, Inc.(a) 75,000 2,254,688
- --------------------------------------------------------------
MedImmune, Inc.(a) 5,000 275,625
- --------------------------------------------------------------
Mylan Laboratories, Inc. 300,000 6,806,250
- --------------------------------------------------------------
Spiros Development Corp. II(a)(b) 59,000 593,688
- --------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 645,000 26,122,500
- --------------------------------------------------------------
59,087,126
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-15.14%
Lilly (Eli) & Co. 200,000 14,725,000
- --------------------------------------------------------------
Merck & Co., Inc. 130,000 9,132,500
- --------------------------------------------------------------
Pfizer Inc. 224,500 25,831,531
- --------------------------------------------------------------
Pharmacia & Upjohn, Inc. 32,000 1,792,000
- --------------------------------------------------------------
Schering-Plough Corp. 535,500 25,871,344
- --------------------------------------------------------------
77,352,375
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-4.84%
Columbia/HCA Healthcare Corp. 110,000 2,715,625
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
HEALTH CARE (HOSPITAL MANAGEMENT)-(CONTINUED)
Health Management Associates,
Inc.-Class A(a) 170,000 $ 2,656,250
- --------------------------------------------------------------
Quorum Health Group, Inc.(a) 207,000 2,561,625
- --------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 324,000 16,787,250
- --------------------------------------------------------------
24,720,750
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.43%
Ventas, Inc. 490,000 2,205,000
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-13.03%
Bausch & Lomb Inc. 75,500 5,662,500
- --------------------------------------------------------------
Boston Scientific Corp.(a) 60,000 2,553,750
- --------------------------------------------------------------
Guidant Corp. 456,500 24,508,344
- --------------------------------------------------------------
Medtronic, Inc. 100,000 7,193,750
- --------------------------------------------------------------
VISX, Inc.(a) 207,000 26,651,250
- --------------------------------------------------------------
66,569,594
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-4.02%
Stewart Enterprises, Inc.- Class A 1,032,800 20,526,900
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.05%
Shared Medical Systems Corp. 5,000 271,563
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $320,947,390) 392,906,828
- --------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED
STOCK-0.09%
BIOTECHNOLOGY-0.09%
Enzon, Inc., Series A Cumulative Conv. Pfd.(a)(c)
(Cost $400,000) 16,000 478,970
- --------------------------------------------------------------
FOREIGN STOCKS-18.87%
FRANCE-0.99%
Sanofi S.A. (Health
Care-Drugs-Generic & Other) 32,430 5,081,339
- --------------------------------------------------------------
GERMANY-0.36%
Altana A.G. (Medical-Drugs)(a) 30,000 1,841,567
- --------------------------------------------------------------
ISRAEL-0.08%
Teva Pharmaceutical Industries
Ltd.-ADR
(Health Care-Drugs-Generic &
Other) 8,700 398,025
- --------------------------------------------------------------
JAPAN-2.92%
Banyu Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic &
Other) 36,000 663,178
- --------------------------------------------------------------
Chugai Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic &
Other) 108,000 1,284,153
- --------------------------------------------------------------
Daiichi Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic &
Other) 39,000 633,536
- --------------------------------------------------------------
Eisai Co., Ltd. (Health
Care-Drugs-Generic & Other) 40,000 748,587
- --------------------------------------------------------------
Kissei Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic &
Other) 14,000 298,346
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
Kyowa Hakko Kogyo (Health
Care-Drugs-Generic & Other) 69,000 $ 399,238
- --------------------------------------------------------------
Rohto Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic &
Other) 76,000 578,472
- --------------------------------------------------------------
Shionogi & Co., Ltd. (Health
Care-Drugs-Generic & Other) 44,000 391,275
- --------------------------------------------------------------
Taisho Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic &
Other) 50,000 1,536,529
- --------------------------------------------------------------
Takeda Chemical Industries (Health
Care-Drugs-Generic & Other) 154,000 6,692,569
- --------------------------------------------------------------
Uni-Charm Corp. (The) (Paper &
Forest Products) 5,400 244,622
- --------------------------------------------------------------
Yamanouchi Pharmaceutical Co.,
Ltd. (Health Care-Drugs-Generic
& Other 46,000 1,455,976
- --------------------------------------------------------------
14,926,481
- --------------------------------------------------------------
NETHERLANDS-2.72%
Akzo Nobel N.V.
(Chemicals-Diversified) 280,000 12,646,903
- --------------------------------------------------------------
Akzo Nobel N.V.-ADR
(Chemicals-Diversified) 28,000 1,249,500
- --------------------------------------------------------------
13,896,403
- --------------------------------------------------------------
SWITZERLAND-3.45%
Novartis A.G. (Health
Care-Diversified) 2,000 2,927,181
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
SWITZERLAND-(CONTINUED)
Roche Holdings A.G.
(Conglomerates) 1,251 $ 14,709,930
- --------------------------------------------------------------
17,637,111
- --------------------------------------------------------------
UNITED KINGDOM-8.35%
AstraZeneca Group PLC
(Health-Care-Drugs-Major
Pharmaceuticals) 700,000 27,475,000
- --------------------------------------------------------------
Glaxo Wellcome PLC
(Health-Care-Drugs-Major
Pharmaceuticals) 215,000 12,523,750
- --------------------------------------------------------------
SmithKline Beecham PLC-ADR
(Health-Care-Drugs-Major
Pharmaceuticals) 40,000 2,627,500
- --------------------------------------------------------------
42,626,250
- --------------------------------------------------------------
Total Foreign Stocks (Cost
$84,275,817) 96,407,176
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT-1.99%(D)
State Street Bank & Trust Co.,
4.85%,
05/03/99 (Cost $10,169,000)(e) $10,169,000 10,169,000
- --------------------------------------------------------------
TOTAL INVESTMENTS-97.86% 499,961,974
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-2.14% 10,911,383
- --------------------------------------------------------------
NET ASSETS-100.00% $510,873,357
==============================================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Pfd. - Preferred
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Each unit consists of one callable common share of Spiros Development Corp.
II and one warrant to purchase 0.25 shares of Dura Pharmaceuticals.
(c) Security fair valued in accordance with procedures established by the Board
of Trustees.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Repurchase agreement entered into 04/30/99 with a maturing value of
$10,169,000. Collateralized by $7,715,000 U.S. Treasury Note, 8.875% due
08/15/17 with a market value at 04/30/99 of $10,376,675.
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $415,792,207) $ 499,961,974
- -------------------------------------------------------------
Cash 976
- -------------------------------------------------------------
Foreign currencies, at value (cost
$12,717,044) 12,590,097
- -------------------------------------------------------------
Receivables for:
Investments sold 187,494
- -------------------------------------------------------------
Fund shares sold 483,938
- -------------------------------------------------------------
Dividends and interest 553,221
- -------------------------------------------------------------
Other assets 119
- -------------------------------------------------------------
Total assets 513,777,819
- -------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 928,220
- -------------------------------------------------------------
Fund shares reacquired 1,006,352
- -------------------------------------------------------------
Accrued advisory fees 428,209
- -------------------------------------------------------------
Accrued distribution fees 324,970
- -------------------------------------------------------------
Accrued administrative services fees 11,700
- -------------------------------------------------------------
Accrued transfer agent fees 91,000
- -------------------------------------------------------------
Accrued trustees' fees 1,233
- -------------------------------------------------------------
Accrued operating expenses 112,778
- -------------------------------------------------------------
Total liabilities 2,904,462
- -------------------------------------------------------------
Net assets applicable to shares outstanding $ 510,873,357
- -------------------------------------------------------------
NET ASSETS:
Class A $ 393,205,985
=============================================================
Class B $ 111,619,678
=============================================================
Class C $ 316,398
=============================================================
Advisor Class $ 5,731,296
=============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 15,697,453
=============================================================
Class B 4,647,106
=============================================================
Class C 13,175
=============================================================
Advisor Class 223,176
=============================================================
Class A:
Net asset value and redemption price per
share $ 25.05
- -------------------------------------------------------------
Offering price per share:
(Net asset value of $25.05 / 95.25) $ 26.30
=============================================================
Class B:
Net asset value and offering price per
share $ 24.02
=============================================================
Class C:
Net asset value and offering price per
share $ 24.02
=============================================================
Advisor Class:
Net asset value, redemption and offering
price per share $ 25.68
=============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $125,143 foreign withholding
tax) $ 1,777,361
- ------------------------------------------------------------
Interest 805,094
- ------------------------------------------------------------
Securities lending 131,452
- ------------------------------------------------------------
Total investment income 2,713,907
- ------------------------------------------------------------
EXPENSES:
Advisory fees 2,435,604
- ------------------------------------------------------------
Administrative services fees 70,892
- ------------------------------------------------------------
Custodian fees 57,803
- ------------------------------------------------------------
Distribution fees -- Class A 964,160
- ------------------------------------------------------------
Distribution fees -- Class B 544,405
- ------------------------------------------------------------
Distribution fees -- Class C 191
- ------------------------------------------------------------
Trustees' fees 7,243
- ------------------------------------------------------------
Transfer agent fees -- Class A 360,282
- ------------------------------------------------------------
Transfer agent fees -- Class B 101,715
- ------------------------------------------------------------
Transfer agent fees -- Class C 109
- ------------------------------------------------------------
Transfer agent fees -- Advisor Class 5,593
- ------------------------------------------------------------
Other 308,262
- ------------------------------------------------------------
Total expenses 4,856,259
- ------------------------------------------------------------
Less: Expenses paid indirectly (3,173)
- ------------------------------------------------------------
Net expenses 4,853,086
- ------------------------------------------------------------
Net investment income (loss) (2,139,179)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
AND OPTION CONTRACTS:
Net realized gain from:
Investment securities 64,870,004
- ------------------------------------------------------------
Foreign currencies 55,815
- ------------------------------------------------------------
Option contracts written 4,705,538
- ------------------------------------------------------------
69,631,357
- ------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 39,485,958
- ------------------------------------------------------------
Foreign currencies (92,837)
- ------------------------------------------------------------
39,393,121
- ------------------------------------------------------------
Net gain from investment securities, foreign
currencies, and option contracts 109,024,478
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $106,885,299
============================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended April 30, 1999 and the year ended October 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1999 1998
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (2,139,179) $ (5,699,337)
- -------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 69,631,357 (805,542)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currencies 39,393,121 (18,545,458)
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 106,885,299 (25,050,337)
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (111,031,821)
- -------------------------------------------------------------------------------------------
Class B -- (34,132,236)
- -------------------------------------------------------------------------------------------
Advisor Class -- (1,792,960)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A (46,815,500) 14,570,400
- -------------------------------------------------------------------------------------------
Class B (11,759,490) (6,081,715)
- -------------------------------------------------------------------------------------------
Class C 322,239 --
- -------------------------------------------------------------------------------------------
Advisor Class (1,496,536) 913,897
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 47,136,012 (162,604,772)
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 463,737,345 626,342,117
- -------------------------------------------------------------------------------------------
End of period $510,873,357 $ 463,737,345
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $361,099,756 $ 420,849,043
- -------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (2,139,179) --
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts 67,871,765 (1,759,592)
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 84,041,015 44,647,894
- -------------------------------------------------------------------------------------------
$510,873,357 $ 463,737,345
===========================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Health Care Fund (the "Fund") is a separate series of AIM Investment
Funds (the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended ("1940 Act"), as
an open-end series management investment company consisting of twelve separate
series portfolios, each having an unlimited number of shares of beneficial
interest. The Fund currently offers four different classes of shares: Class A
shares, Class B shares, Class C shares and Advisor Class 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. Advisor Class shares are sold
without a 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 long-term growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
A. Security Valuations-Each equity security 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 last available bid. Each
security traded in the over-the-counter market (but not including securities
reported on the NASDAQ National Market System) is valued at the mean between
the last bid and asked prices based upon quotes furnished by market makers
for such securities. Each security reported on the NASDAQ National Market
System is valued at the last sales price on the valuation date or absent a
last sales price, at the closing bid price on that day. Debt securities 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
institution-size trading in similar groups of securities, developments
related to special securities, yield, quality, coupon rate, maturity, type of
issue, individual trading characteristics and other market data. 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 Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued on the basis of amortized cost. For purposes of determining net asset
value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments 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 at 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 such values are determined and the close of the NYSE, which will 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 Trustees of the Trust.
B. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Such distributions are
declared and paid annually.
C. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements. The Fund has a capital loss carryforward of
$1,387,673 as of October 31, 1998 (which may be carried forward to offset
future taxable gains, if any) which expires, if not previously utilized, in
the year 2006.
D. Expenses-Distribution and transfer agency expenses directly attributable to a
class of shares are charged to that class' operations. All other expenses are
allocated among the classes.
E. Option Accounting Principles-When the Fund writes a call or put option, an
amount equal to the premium received is included in the Fund's "Statement of
Assets and Liabilities" as an asset and an equivalent liability. The amount
of the liability is subsequently marked-to-market to reflect the current
market value of the option. The current market value of an option listed on
an exchange is the mean between the last bid and asked prices on that day. If
an option expires on its stipulated expiration date or if the Fund enters
into a closing purchase transaction, a gain or loss is realized without
regard to any unrealized gain or loss on the underlying security and the
10
<PAGE> 13
liability related to such option is extinguished. If a written call option is
exercised, a gain or loss is realized from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received. If a written put option is exercised, the cost of the underlying
security purchased would be decreased by the premium originally received. The
Fund can write options only on a covered basis, which, for a call, requires
that the Fund hold the underlying security and, for a put, requires the Fund
to set aside cash, U.S. government securities or other liquid securities in
an amount not less than the exercise price, or otherwise provide adequate
cover at all times while the put option is outstanding. The Fund may use
options to manage its exposure to the stock market and to fluctuations in
currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of
the option. If an option which the Fund has purchased expires on the
stipulated expiration date, the Fund realizes a loss in the amount of the
cost of the option. If the Fund enters into a closing sale transaction, the
Fund realizes a gain or loss, depending on whether proceeds from the closing
sale transaction are greater or less than the cost of the option. If the Fund
exercises a call option, the cost of the securities acquired by exercising
the call is increased by the premium paid to buy the call. If the Fund
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium
originally paid. The risk in writing a call option is that the Fund may
forego the opportunity of profit if the market value of the underlying
security or index increases and the option is exercised. The risk in writing
a put option is that the Fund may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In
addition, there is the risk the Fund may not be able to enter into a closing
transaction because of an illiquid secondary market.
F. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
G. Forward Foreign Currency Contracts-A forward foreign currency contract is an
obligation to purchase or sell a specific currency for an agreed-upon price
at a future date. The Fund may enter into a forward foreign currency contract
to attempt to minimize the risk to the Fund from adverse changes in the
relationship between currencies. The Fund may also enter into a forward
foreign currency contract for the purchase or sale of a security denominated
in a foreign currency in order to "lock in" the U.S. dollar price of that
security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value of
the foreign currency changes unfavorably.
H. Futures Contracts-A futures contract is an agreement between two parties to
buy and sell a security at a set price on a future date. Upon entering into
such a contract the Fund is required to pledge to the broker an amount of
cash or securities equal to the minimum "initial margin" requirements of the
exchange on which the contract is traded. Pursuant to the contract, the Fund
agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in value of the contract. Such receipts or payments are
known as "variation margin" and are recorded by the Fund as unrealized gains
or losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed. The potential risk to the
Fund is that the change in value of the underlying securities may not
correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the stock market and to fluctuations in
currency values or interest rates.
I. Foreign Securities-There are certain additional considerations and risks
associated with investing in foreign securities and currency transactions
that are not inherent in investments of domestic origin. The Fund's
investment in emerging market countries may involve greater risks than
investments in more developed markets and the price of such investments may
be volatile. These risks of investing in foreign and emerging markets may
include foreign currency exchange rate fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
In addition, the Fund's policy of concentrating its investments in
companies in the health care industry subject the Fund to greater risk than a
fund that is more diversified.
J. Indexed Securities-The Fund may invest in indexed securities whose value is
linked either directly or indirectly to changes in foreign currencies,
interest rates, equities, indices, or other reference instruments. Indexed
securities may be more volatile than the reference instrument itself, but any
loss is limited to the amount of the original investment.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest, and extraordinary expense) to the maximum annual
rate of 2.00%, 2.50%, 2.50%, and 1.50% of the average daily net assets of the
11
<PAGE> 14
Fund's Class A, Class B, Class C, and Advisor Class shares, respectively.
A I M Fund Services, Inc. ("AFS") is the transfer agent of the Fund. The Fund,
pursuant to a transfer agency and service agreement, has agreed to pay AFS a fee
for providing transfer agency and shareholder services to the Fund. During the
six months ended April 30, 1999, AFS was paid $417,217 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and Advisor Class shares of the Fund. The Trust has
adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act with
respect to the Fund's Class A shares and Class C shares (the "Class A and C
Plan"), and the Fund's Class B shares (the "Class B Plan") (collectively, the
"Plans"). The Fund, pursuant to the Class A and C Plan, pays AIM Distributors
compensation at an annual rate of 0.50% of the average daily net assets of the
Class A shares and 1.00% of the average daily net assets of the Class C shares.
The Fund pursuant to the Class B Plan, pays AIM Distributors compensation at an
annual rate of 1.00% of the average daily net assets of the Class B shares. Of
these amounts, the Fund may pay a service fee of 0.25% of the average daily net
assets of the Class A, Class B or Class C shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the six months ended April 30, 1999, the Class A, Class B and
Class C shares paid AIM Distributors $964,160, $544,405 and $191, respectively,
as compensation under the Plans.
AIM Distributors received commissions of $21,384 from sales of the Class A
shares of the Fund during the six months ended April 30, 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 six months ended April 30,
1999, AIM Distributors received $3,185 in contingent deferred sales charges
imposed on redemptions of Fund shares. Certain officers and trustees of the
Trust are officers and directors of AIM, AIM Distributors and AFS.
AIM is the pricing and accounting agent for the Fund. The monthly fee for
these services paid to AIM is a percentage, not to exceed 0.03% annually, of a
Fund's average daily net assets. The annual fee rate is derived based on the
aggregate net assets of the funds which comprise the following investment
companies: AIM Growth Series, AIM Investment Funds, AIM Series Trust, G.T.
Global Variable Investment Series and G.T. Global Variable Investment Trust. The
fee is calculated at the rate of 0.03% of the first $5 billion of assets and
0.02% to the assets in excess of $5 billion. An amount is allocated to and paid
by each such fund based on its relative average daily net assets.
NOTE 3-INDIRECT EXPENSES
During the six months ended April 30, 1999, the Fund received reductions in
custodian fees of $3,173 under an expense offset arrangement. The effect of the
above arrangement resulted in a reduction of the Fund's total expenses of $3,173
during the six months ended April 30, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund, along with certain other funds advised and/or administered by AIM, has
a line of credit with BankBoston and State Street Bank and Trust Company. The
arrangements with the banks allow the Fund and certain other funds to borrow, on
a first come, first served basis, an aggregate maximum amount of $250,000,000.
The Fund is limited to borrowing up to 33 1/3% of the Fund's total assets.
Effective May 28, 1999, the above line of credit was superseded by the Fund's
participation 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) $975,000,000 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. 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. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 6-PORTFOLIO SECURITIES LOANED
At April 30, 1999, securities with an aggregate value of $17,882,688 were on
loan to brokers. The loans were secured by cash collateral of $18,433,122
received by the Fund. For the six months ended April 30, 1999, the Fund received
fees of $131,452 for securities lending.
For international securities, cash collateral is received by the Fund against
loaned securities in an amount at least equal to 105% of the market value of the
loaned securities at the inception of each loan. This collateral must be
maintained at not less than 103% of the market value of the loaned securities
during the period of the loan. For domestic securities, cash collateral is
received by the Fund against loaned securities in the amount at least equal to
102% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 100% of the market value of
the loaned securities during the period of the loan. The cash collateral is
invested in a securities lending trust which consists of a portfolio of high
quality short duration securities whose average effective duration is restricted
to 120 days or less.
12
<PAGE> 15
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1999 was
$256,147,332 and $246,914,398, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of April 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment
securities $ 93,306,171
- ----------------------------------------------------------------
Aggregate unrealized (depreciation) of investment
securities (9,508,324)
- ----------------------------------------------------------------
Net unrealized appreciation of investment
securities $ 83,797,847
================================================================
</TABLE>
Cost of investments for tax purposes is $416,164,127.
NOTE 8-CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 1999
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of period 0 $ 0
- -----------------------------------------------------------------
Written 44,905 14,235,755
- -----------------------------------------------------------------
Closed (36,218) (11,947,609)
- -----------------------------------------------------------------
Expired (7,608) (1,961,729)
- -----------------------------------------------------------------
Exercised (1,079) (326,417)
- -----------------------------------------------------------------
End of period 0 $ 0
=================================================================
</TABLE>
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the six months ended April 30, 1999 and the
year ended October 31, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1999 OCTOBER 31, 1998
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 5,820,716 $ 131,494,114 24,980,706 $ 526,818,779
- -------------------------------------------------------------------------------
Class B 337,283 7,700,615 3,933,442 81,783,021
- -------------------------------------------------------------------------------
Class C* 13,175 322,239 -- --
- -------------------------------------------------------------------------------
Advisor 10,764 256,185 2,760,416 60,020,116
- -------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A -- -- 4,212,044 87,484,194
- -------------------------------------------------------------------------------
Class B -- -- 1,393,872 27,961,083
- -------------------------------------------------------------------------------
Advisor -- -- 84,210 1,780,217
- -------------------------------------------------------------------------------
Reacquired:
Class A (7,867,923) (178,309,614) (28,318,023) (599,732,573)
- -------------------------------------------------------------------------------
Class B (868,808) (19,460,105) (5,554,950) (115,825,819)
- -------------------------------------------------------------------------------
Advisor (73,716) (1,752,721) (2,799,107) (60,886,436)
- -------------------------------------------------------------------------------
(2,628,509) $ (59,749,287) 692,610 $ 9,402,582
===============================================================================
</TABLE>
* Class C shares commenced sales March 1, 1999.
13
<PAGE> 16
NOTE 10-FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
APRIL 30, --------------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995 1994(a)
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.15 $ 27.98 $ 23.60 $ 21.84 $ 19.60 $ 17.86
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.09) (0.21) (0.25) (0.17) (0.15) (0.22)
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Net realized and unrealized gain (loss) on investments 4.99 (0.91) 6.48 4.79 3.73 2.02
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations 4.90 (1.12) 6.23 4.62 3.58 1.80
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Distributions to shareholders:
From net realized gain on investments -- (6.70) (1.85) (2.86) (1.34) --
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
In excess of net realized gain on investments -- (0.01) -- -- -- (0.06)
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Total distributions -- (6.71) (1.85) (2.86) (1.34) (0.06)
- --------------------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 25.05 $ 20.15 $ 27.98 $ 23.60 $ 21.84 $ 19.60
========================================================= ======== ======== ======== ======== ======== ========
Total return(b) 24.32% (4.71)% 28.36% 23.14% 19.79% 10.11%
========================================================= ======== ======== ======== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period (in 000's) $393,206 $357,534 $472,083 $467,861 $426,380 $438,940
========================================================= ======== ======== ======== ======== ======== ========
Ratio of net investment income (loss) to average net
assets: (0.75)%(c) (0.98)% (1.03)% (0.75)% (0.78)% N/A
========================================================= ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets: 1.84%(c) 1.84% 1.80% 1.84% 1.91% N/A
========================================================= ======== ======== ======== ======== ======== ========
Portfolio turnover rate 52% 187% 149% 157% 99% 64%
========================================================= ======== ======== ======== ======== ======== ========
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charge and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $388,860,061.
N/A Not Applicable.
14
<PAGE> 17
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
APRIL 30, ------------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995 1994(a)
--------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.37 $ 27.27 $ 23.15 $ 21.56 $ 19.46 $ 17.80
- --------------------------------------------------------- --------- -------- -------- -------- ------- -------
Income from investment operations:
Net investment income (loss) (0.14) (0.30) (0.37) (0.27) (0.25) (0.32)
- --------------------------------------------------------- --------- -------- -------- -------- ------- -------
Net realized and unrealized gain (loss) on investments 4.79 (0.89) 6.34 4.72 3.69 2.02
- --------------------------------------------------------- --------- -------- -------- -------- ------- -------
Net increase (decrease) from investment operations 4.65 (1.19) 5.97 4.45 3.44 1.70
- --------------------------------------------------------- --------- -------- -------- -------- ------- -------
Distributions to shareholders:
From net realized gain on investments -- (6.70) (1.85) (2.86) (1.34) --
- --------------------------------------------------------- --------- -------- -------- -------- ------- -------
In excess of net realized gain on investments -- (0.01) -- -- -- (0.04)
- --------------------------------------------------------- --------- -------- -------- -------- ------- -------
Total distributions -- (6.71) (1.85) (2.86) (1.34) (0.04)
- --------------------------------------------------------- --------- -------- -------- -------- ------- -------
Net asset value, end of period $ 24.02 $ 19.37 $ 27.27 $ 23.15 $ 21.56 $ 19.46
========================================================= ======== ======== ======== ======== ======= =======
Total return(b) 24.01% (5.20)% 27.75% 22.59% 19.17% 9.55%
========================================================= ======== ======== ======== ======== ======= =======
Ratios and supplemental data:
Net assets, end of period (in 000's) $111,620 $100,311 $147,440 $107,622 $70,740 $39,100
========================================================= ======== ======== ======== ======== ======= =======
Ratio of net investment income (loss) to average net assets: (1.27)%(c) (1.48)% (1.53)% (1.25)% (1.28)% N/A
========================================================= ======== ======== ======== ======== ======= =======
Ratio of expenses to average net assets: 2.34%(c) 2.34% 2.30% 2.34% 2.41% N/A
========================================================= ======== ======== ======== ======== ======= =======
Portfolio turnover rate 52% 187% 149% 157% 99% 64%
========================================================= ======== ======== ======== ======== ======= =======
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $109,783,342.
N/A Not Applicable.
15
<PAGE> 18
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS C ADVISOR CLASS
----------------- --------------------------------------------- JUNE 1, 1995
MARCH 1, 1999 YEAR ENDED OCTOBER 31, TO
TO APRIL 30, ----------------------------- OCTOBER 31,
APRIL 30, 1999(a) 1999(a) 1998(a) 1997(a) 1996(a) 1995
----------------- ------------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 22.50 $20.59 $28.34 $23.77 $21.88 $18.66
- ---------------------------------------------- -------- ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) (0.02) (0.03) (0.10) (0.12) (0.05) (0.02)
- ---------------------------------------------- -------- ------ ------ ------ ------ ------
Net realized and unrealized gain (loss) on
investments 1.54 5.12 (0.94) 6.54 4.80 3.24
- ---------------------------------------------- -------- ------ ------ ------ ------ ------
Net increase (decrease) from investment
operations 1.52 5.09 (1.04) 6.42 4.75 3.22
- ---------------------------------------------- -------- ------ ------ ------ ------ ------
Distributions to shareholders:
From net realized gain on investments -- -- (6.70) (1.85) (2.86) --
- ---------------------------------------------- -------- ------ ------ ------ ------ ------
In excess of net realized gain on
investments -- -- (0.01) -- -- --
- ---------------------------------------------- -------- ------ ------ ------ ------ ------
Total distributions -- -- (6.71) (1.85) (2.86) --
- ---------------------------------------------- -------- ------ ------ ------ ------ ------
Net asset value, end of period $ 24.02 $25.68 $20.59 $28.34 $23.77 $21.88
============================================== ======== ====== ====== ====== ====== ======
Total return(b) 6.75% 24.72% (4.28)% 29.00% 23.82% 17.10%
============================================== ======== ====== ====== ====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in 000's) $ 316 $5,731 $5,892 $6,819 $1,152 $ 539
============================================== ======== ====== ====== ====== ====== ======
Ratio of net investment income (loss) to
average net assets: (1.27)%(c) (0.27)%(c) (0.48)% (0.53)% (0.25)% (0.28)%(d)
============================================== ======== ====== ====== ====== ====== ======
Ratio of expenses to average net assets: 2.34%(c) 1.34%(c) 1.34% 1.30% 1.34% 1.41%(d)
============================================== ======== ====== ====== ====== ====== ======
Portfolio turnover rate 52% 52% 187% 149% 157% 99%
============================================== ======== ====== ====== ====== ====== ======
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $117,937 and
$6,036,345 for Class C and Advisor Class, respectively.
(d) Annualized.
N/A Not Applicable.
16
<PAGE> 19
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
C. Derek Anderson Robert H. Graham 11 Greenway Plaza
President, Plantagenet Capital Chairman and President Suite 100
Management, LLC (an investment Houston, TX 77046
partnership); Chief Executive Officer, Dana R. Sutton
Plantagenet Holdings, Ltd. Vice President and Treasurer INVESTMENT MANAGER
(an investment banking firm)
Samuel D. Sirko A I M Advisors, Inc.
Frank S. Bayley Vice President and Secretary 11 Greenway Plaza
Partner, law firm of Suite 100
Baker & McKenzie Melville B. Cox Houston, TX 77046
Vice President
Robert H. Graham TRANSFER AGENT
President and Chief Executive Officer, Gary T. Crum
A I M Management Group Inc. Vice President A I M Fund Services, Inc.
P.O. Box 4739
Arthur C. Patterson Carol F. Relihan Houston, TX 77210-4739
Managing Partner, Accel Partners Vice President
(a venture capital firm) CUSTODIAN
Mary J. Benson
Ruth H. Quigley Assistant Vice President and State Street Bank and Trust Company
Private Investor Assistant Treasurer 225 Franklin Street
Boston, MA 02110
Sheri Morris
Assistant Vice President and COUNSEL TO THE FUND
Assistant Treasurer
Kirkpatrick & Lockhart LLP
Nancy L. Martin 1800 Massachusetts Avenue, N.W.
Assistant Secretary Washington, D.C. 20036-1800
Ofelia M. Mayo COUNSEL TO THE TRUSTEES
Assistant Secretary
Paul, Hastings, Janofsky & Walker LLP
Kathleen J. Pflueger Twenty Third Floor
Assistant Secretary 555 South Flower Street
Los Angeles, CA 90071
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</TABLE>
<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 provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual-fund industry
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately
AIM Capital Development Fund $112 billion in assets for more than 6.3
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS million shareholders, including individual
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund investors, corporate clients and financial
AIM Large Cap Growth Fund AIM Asian Growth Fund institutions as of March 31, 1999.
AIM Mid Cap Equity Fund(2), (A) AIM Developing Markets Fund(2) The AIM Family of Funds--Registered
AIM Select Growth Fund(3) AIM Europe Growth Fund(2) Trademark-- is distributed nationwide, and AIM
AIM Small Cap Growth Fund(2), (B) AIM European Development Fund today is the 10th-largest mutual-fund complex
AIM Small Cap Opportunities Fund AIM International Equity Fund in the United States in assets under management,
AIM Value Fund AIM Japan Growth Fund(2) according to Strategic Insight, an indepen-
AIM Weingarten Fund AIM Latin American Growth Fund(2) dent mutual-fund monitor.
AIM New Pacific Growth Fund(2)
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund GLOBAL GROWTH FUNDS
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund
AIM Advisor Real Estate Fund AIM Global Growth Fund
AIM Balanced Fund
AIM Basic Value Fund(2), (C) GLOBAL GROWTH & INCOME FUNDS
AIM Charter Fund AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund
INCOME FUNDS
AIM Floating Rate Fund(2) GLOBAL INCOME FUNDS
AIM High Yield Fund AIM Emerging Markets Debt Fund(2), (D)
AIM High Yield Fund II AIM Global Government Income Fund(2)
AIM Income Fund AIM Global Income Fund
AIM Intermediate Government Fund AIM Strategic Income Fund(2)
AIM Limited Maturity Treasury Fund
THEME FUNDS
TAX-FREE INCOME FUNDS AIM Global Consumer Products and Services Fund(2)
AIM High Income Municipal Fund AIM Global Financial Services Fund(2)
AIM Municipal Bond Fund AIM Global Health Care Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Infrastructure Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Resources Fund(2)
AIM Global Telecommunications and Technology Fund(2), (E)
AIM Global Trends Fund(2), (F)
</TABLE>
(1)AIM Aggressive Growth Fund reopened to new investors November 16, 1998.
(2)Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds. 3On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth
Fund. (A)On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B)On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C)On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D)On September 8, 1998, AIM Global High Income
Fund was renamed AIM Emerging Markets Debt Fund. (E)On September 8, 1998, AIM
New Dimension Fund was renamed AIM Global Trends Fund. (F)On June 1, 1999, AIM
Global Telecommunications Fund was renamed AIM Global Telecommunications and
Technology Fund. For more complete information about any AIM Fund(s), including
sales charges and expenses, ask your financial consultant or securities dealer
for a free prospectus(es). Please read the prospectus(es) carefully before you
invest or send money.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE--Registered Trademark--
